7 Liberal Myths Debunked

7 Liberal Myths Debunked

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By GRANT PHILLIPS

Liberal media personalities and pages often make claims that appeal to emotion but also contain a very small inkling of fact. Many of them appear to be true on the surface, but a little bit of source checking and scrutiny more often proves them to be patently false or extremely misleading.

Here are seven liberal claims that I commonly encounter on the internet.

 

 

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1. US Uncut’s Carl Gibson: “Planned Parenthood costs the average taxpayer $31 and Big Pharma costs them $1,914.”

The article cited by Gibson estimates that “government patents raise the price of prescription drugs by $270 billion.” Gibson uses this figure and divides by the total number of tax returns. That gives him the result of $1,914.

Only one problem: government patents are not subsidies and any additional cost is incurred by consumers. If you’re a tax payer and don’t take prescription drugs, you haven’t lost a single dollar – by Gibson’s method. Also, using his method would mean that subsidies to big pharma total $233.5 billion, which is about 25% of discretionary federal spending.

The FDA approval process is extremely costly. After such a large investment, one can financially understand why a firm would want the protection. Any mention of doing away with this process, however, will surely have you labeled an extremist – never mind that it would actually save billions.



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2. FB page Winning Democrats: “The 13 states that raised their minimum wage at the beginning of 2014 saw employment increase by 45% more than the 37 states that didn’t raise their minimum.” [as evidence that minimum wages do not kill jobs]

They support this claim with a CEPR that has many variables worth mentioning. First, of the 13 states, only four raised the minimum via legislation and nine raised it with inflation.

The average employment increase for the four states was 0.34% – compared to 0.99% for the nine and 0.68% for the rest. In other words, states that legislated a minimum wage performed below average of the others.

For the nine states, nothing actually happened economically speaking because their minimum wage is indexed to inflation. Inflation is a rise in the price level and it affects all prices. When the price of everything increases X%, indexing the minimum wage by X% doesn’t change anything to the price structure of the labor structure. The price floor is effectively the exact same thing as it was before.

Regardless, according to the cited report, “While this kind of simple exercise can’t establish causality, it does provide evidence against theoretical negative employment effects of minimum-wage increases.”

What’s actually presented as strictly observational and theoretical has now been presented as relevant and causal.


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3. Occupy Democrats: “Companies pay their CEOs thousands per hour and therefore can afford to pay their workers a $15 minimum wage.”

My colleague from We Are Capitalists demolished their empty claim with some high quality math. A CEOs salary is irrelevant to whether or not a company can “afford” to pay a $15 minimum wage. Additionally, the randomly cited companies would be subject to a $15 minimum wage just as much as your neighborhood store.

But is it true? Nope. You could literally eradicate 100% of each CEOs pay, give it all to their employees, and you still wouldn’t come close to a $0.50 raise per worker; let alone doubling of it.


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4. Occupy Wall Street blames capitalism for: 18 million poverty related deaths; large food production and millions hungry; 5 vacant homes per homeless person; 77.5% of households in debt.

First, poverty related deaths do not happen in capitalist countries. In the cited report, most of the deaths are in third world dictatorships and war torn countries. Dead poor people are not lining the streets of market economies.

Food production, in metric tons, is 1.18 times the world population, but only if you take total volume and compare it to the population. This essentially ignores that production is not just for consumption, but also for the purpose of more farm production and production in other industries – whether it be feeding livestock or producing biofuels. As a matter of fact, undernourishment from 23.3% to 12.9% over the last decade. The UN cites “political instability and civil strife” as the cause of hunger – not capitalism. The UN and OECD recommend more of that.

As for vacant homes, they loosely apply the word “vacant” to home status. By their definition, a vacation home, rental property not in rent, home for sale, or migrant worker residence are all “vacant”. These are all other people’s property. They are not abandoned for homeless people to use. Only about 4.5% of homes are vacant in the way most people think of the word.

Finally, debt isn’t necessarily a bad thing. In fact, that’s one reason it’s very easy to claim that 77.5% of households are in debt. Do you earn a decent income and have debt? You count. Have a mortgage? Car payment? You’re in debt. Didn’t pay off your credit card bill entirely? You’re now being “pursued by debt collectors”. None of this, of course, means that your living is spiraling downward into poverty. Only 3.4% of mortgages are 90 days delinquent and credit card delinquency is right about pre-recession levels (10%).

Capitalists aren’t fiscally irresponsible like large federal governments.


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5. Every liberal ever: “The UK is proof that gun control works.”

We Are Capitalists published a video about this recently. The UK handgun ban, instituted in 1997, did not affect overall homicide rates. The average number of firearm offenses was also 31% higher after the ban. Total homicides did not improve after the ban either.

In fact, the violent crime rate is higher in the UK than in the United States – 776 per 100,000 vs 403 per 100,000, respectively. The US is actually one of the safest countries in the world.


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6. Bernie Sanders laments a loss of over $5 million manufacturing jobs since 2,000.

Per his usual rhetoric, Sanders commits the fixed pie fallacy. Yes, manufacturing employment has declined – albeit mostly low skilled employment. During that time, however, the economy produced a NET gain of over 3 million jobs. Labor is not a zero sum game; jobs are not lost and never created again. If that were true, we would all be unemployed by now.

Three notable industry employment growth and their wages:

  • Health Care and Social Assistance: 3.4 million; $22.34 to $25.38
  • Professional and Business Services: 1.9 million; $24.76 to $20.08
  • Leisure and Hospitality: 1.7 million; $12.39 to $14.34

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7. Occupy Democrats believes Canada has an ideal model for a thriving middle class.  

My fellow admin of We Are Capitalists heavily researched this comparison and found many caveats worth mentioning.

The original source of data used to claim that Canada had “surpassed” the United States doesn’t actually say anything about that; only that the two have very similar incomes. Here’s from the original source titled Luxembourg Income Study Database: “”Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980.” Meanwhile, “median income also rose 20 percent in Canada (between 2000 and 2010) to the equivalent of $18,700.” Median income is the exact same during the cited period. If anything, Gallup’s results show a higher purchasing-power-adjusted median income for the United States.

Canada doesn’t have a federal minimum wage. Occupy Democrats presents the average across all provinces. However, the presented minimum of $10.45 is NOT in US dollars; that is in Canadian dollars. It still needs to be converted to be a valid comparison. Once you do that, it’s $7.94 and, if you average all the states minimum wage since some are higher, the effective United States minimum is $7.95 – nearly identical.

Since 1980, Canada’s (inflation adjusted) incomes have either hovered around the same level or increased, yet during the same period, Canada’s unionization rates have DECLINED. In fact, from 1981 to 2012, Canada’s unionization rate specifically declined from 38% to 30%. This should call into question the narrative that high unionization rates contributed to an increase in per capita income, since in reality, prosperity increases mostly occurred only AFTER the unionization rates had DECLINED.

The United States’ top marginal tax rate (on regular income) is 39.6%. In Canada, it’s 29%. Furthermore, the top capital gains tax rate in the United States is 25%. “In addition, taxpayers have to pay state and local income taxes on their capital gains income from zero percent in states that do not levy an individual income tax to as high as 13.3 percent in California.” Meanwhile, Canada’s capital gains tax structure is actually quite different. Only HALF of ANY capital gain is actually taxed, and that half is taxed “as income,” meaning it follows the combined provincial and federal tax rates. Since the actual rate ONLY applies to half of the capital gain, the EFFECTIVE tax burden is less than that found in the United States, where 100% of the capital gain is susceptible to taxation.

In November 2014, the Fraser Institute released its 24th annual measurement of waiting times for medically necessary treatments in Canada. This most recent measurement shows that the national median waiting time from specialist appointment to treatment increased from 9.6 weeks in 2013 to 9.8 weeks in 2014. In total, Canadians waited for an estimated 12.3 million weeks in 2014, much larger than the 11.8 million weeks estimated for 2013.

The U.S. housing market did not collapse due to “weak” banking laws, so this is not even a realistic comparison. It collapsed due to weak underwriting & loan criteria forced upon banks via legislation, regulation, and the executive branch, specifically through the Community Reinvestment Act, the Equal Credit Opportunity Act, and the Fair Housing Act. Per a National Borough of Economic Research Study entitled, “Did the Community Reinvestment Act (CRA) Lead to Risky Lending?,” the conclusion was simple: “Yes, it did.”

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