Monday, June 27, 2011

**JP**

 

 آج کاانتخاب

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شاعر  : افضل گوہر

اسی لئے تو بہت تلخ ہے زباں میری
کہ بات سُنتا نہیں ہے تیرا جہاں میری

میں اپنے پاؤں بہ چلنا ہی بھول گیا ہوں
زمیں کھینچتا ہے جب سے آسماں میری

ذرہ سا بات کا لہجہ بدل گیا ہے تو کیا
نئی نہیں ہے تیرے واسطے زباں میری

کبھی زمیں کی کشش سے نکل ہی جاؤں گا
ابھی پروں میں ہے اک آخری اُڑان میری

تمام جسم گھٹن کا شکار ہے گوہر
کبھی ہوا کی طرح آ کے سانس چھان میری

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TAXPAYER ALERT: Obama wants to 'invest' tax-dollars to expand government power over business




TAXPAYER ALERT: Obama wants to 'invest' tax-dollars to expand government power over business

Looks like Obama wants to 'invest' taxpayer dollars to get himself reelected and is picking new friends to help line his campaign coffer.

(CNSNews.com) - In his weekly address released Saturday, President Barack Obama called for a campaign of "nation building here at home," citing as an example of what is needed to rebuild the American economy an initiative he announed Friday to "invest" tax dollars in what he called a "partnership" between the federal government and an initial group of 11 major corporations.

The administration's corporate partners in this venture include Caterpiller, Corning, Dow Chemical, Ford, Honeywell, Intel, Johnson and Johnson, Allegheny Technologies, Stryker and Proctor and Gamble.

Obama is not seeking new legislation from Congress to authorize his government-corporate partnership program--which he is calling the "Advanced Manufacturing Partnership"--and he did not say how the corporations in the partnership had been chosen.

Under Obama, Congress has become obsolete and powerless.

"The President's plan, which leverages existing programs and proposals, will invest more than $500 million to jumpstart this effort," the White House said in a statement released Friday.

watch?v=7AaBGLWKZgU&feature=player_embedded

"Even though we've turned our economy in the right direction over the past couple of years, many Americans are still hurting, and now is the time to focus on nation building here at home," Obama said before explaining the partnership in his Saturday address.

Just ignore the terrible economic, unemployment, housing and GDP numbers and you can believe Obama.

...The White House said the creation of the government-corporate partnership program was based on a recomendation by the President's Council of Advisers on Science and Technology (PCAST). PCAST is co-chaired by John Holdren, head of the White House Office of Science and Technology Policy.

John Holdren is Obama's science czar and he is a scary progressive. He actually believes in forced abortions and mass sterilization via drinking water. This is the reason Obama recessed-appointed Holder into position.

In Human Ecology: Problems and Solutions, a 1973 book that he co-authored with Paul Ehrlich and Anne H. Ehrlich, Holdren and his co-authors wrote: "A massive campaign must be launched to restore a high-quality environment in North America and to de-develop the United States."

"De-development means bringing our economic system (especially patterns of consumption) into line with the realities of ecology and the global resource situation," Holdren and the Ehrlichs wrote.

"Resources must be diverted from frivolous and wasteful uses in overdeveloped countries to filling the genuine needs of underdeveloped countries," Holdren and his co-authors wrote. "This effort must be largely political, especially with regard to our overexploitation of world resources, but the campaign should be strongly supplemented by legal and boycott action against polluters and others whose activities damage the environment. The need for de-development presents our economists with a major challenge. They must design a stable, low-consumption economy in which there is a much more equitable distribution of wealth than in the present one. Redistribution of wealth both within and among nations is absolutely essential, if a decent life is to be provided for every human being."

So, Obama and his wacko science czar wants to use taxpayer dollars to redistribute taxpayer's wealth and to de-develop the U.S. so we can be on par with all those 3rd world countries. This is hope and change?

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He did take it with him







Gravesite ATM


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Whitey Bulger Demands His Depends, Metamucil Back









CAP News
Whitey Bulger Demands His Depends, Metamucil Back
Whitey Bulger Demands His Depends, Metamucil Back
A security camera captures fugitive Whitey Bulger on a shopping trip shortly before his arrest.

BOSTON (CAP) - Feared legendary mobster James "Whitey" Bulger seemed to have lost none of his swagger or arrogance in his first court appearance after 16 years in hiding, brazenly asking the judge to "return my Depends and my Metamucil, gosh darn-nabbit!"

"Do you want me to wet myself right here on the bench, for cryin' out loud?" he added, then coughing up and apparently swallowing a large wad of phlegm. "And you better darn well get me my Metamucil. You don't wanna see me when I'm not regular."

He then glared icily at the prosecutor in what could have been a soulless look of pure evil, or gas.

FBI agents captured the 81-year-old Bulger in Santa Monica, Calif., after following him home from the Bay Cities Deli, where the mobster had allegedly eaten a corned beef sandwich, lean, on marble rye with a pickle spear and a club soda, followed by some lime jello.

"He was driving very suspiciously," said FBI Special Agent Josh Harwood, who noted that he was going about 10 miles per hour below the speed limit, cut off two other drivers and then shook his fist at them like it was their fault, and took an extremely roundabout way to get to his home, apparently trying to avoid having to make left turns.

"And his blinker was on the entire time," noted Harwood.

FBI lured Bulger out of his apartment by sending two young boys onto the front lawn of his apartment complex, ostensibly to retrieve a baseball that had rolled there.

"Get offa my lawn, you darn kids!" witnesses quoted Bulger as yelling at the boys. "Or I'll give ya something to complain about, gosh-a darn it!"

"That's when we slapped the cuffs on him," explained Harwood.

Bulger did not resist, according to authorities, although he did convince agents "make a pit stop" at a Wilshire Boulevard 7-Eleven on the way to FBI headquarters, where he spent approximately 45 minutes in the rest room generating various bodily noises as agents stood awkwardly outside the door, checking their watches.

"And we couldn't go in there for about two hours afterwards," said store owner Praveen Nawwaf, waving his hand in front of his nose as if to indicate a strong odor. "It was very unpleasant," he noted, adding however that it's something he's gotten used to with the up-tick in senior citizens coming in to buy cat food since social security ran out.

FBI agents, who reportedly consider the capture their biggest coup since the dozens of arrests they made on last year's Cyberstalking Saturday, are said to have been questioning Bulger for hours on end, attempting to garner information about possible collusion between mobsters and law enforcement agents in the 1970s and '80s.

"But he basically just tells the same old war stories over and over again - he keeps saying, I think I mighta told you this one, and when we say that yes, he did, he keeps telling it anyway," explained Harwood.

"Frankly, If I have to hear one more time about the time he and Stephen 'The Rifleman' Flemmi pantsed Eddie Connors in that bar in Revere in 1973, I think I might shoot myself," Harwood added.
CAUGHT ON FILM
Fatah and Hamas representatives pause for a photo op with the Palestinian Posse at the record release party for the new Fatah-Hamas rap album.
FROM THE VAULT
Greenspan Blasts Bernanke In Online Rap Video
June 27, 2008

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Shovel Ready Gal Part 3


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Shovel Ready Gal Part 2


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Moochelle the Shovel Gal


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Re: What Neocons Don't Understand About War

Some writers and intellectuals have argued that criticism of
neoconservatism is often a euphemism for criticism of Zionist Jews
---------------------------------------

Until Rahm Emanuel was made White House Chief of Staff. Then,
shhhhhh!!!

He's gone now. Its back on the table

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Re: How Whitey Bulger Bought Boston

Required high school reading at my kids school.

Whitey is in trouble, and I don't mean legally, I mean lethally

On Jun 27, 8:22 am, MJ <micha...@america.net> wrote:
> How Whitey Bulger Bought BostonThe Brothers Bulger: How They Terrorized and Corrupted Boston for a Quarter Century, Howie Carr, Warner Books, 342 pagesby William Norman Grigg
> June 23, 2011
> Peggy Westcoat was a woman of small skills and modest ambitions. Just before Christmas in 1980, two men broke into the single-family home Peggy shared with a live-in boyfriend in southwest Dade County. The intruders threw a rope around the boyfriend's neck and hanged him near the front door. They then grabbed Peggy, shoved her against the kitchen sink, draped a noose around her neck, and began feeding the other end of the rope into a garbage disposal.
> With the rope tight enough to terrify the victim without rendering her unconscious, the assailants turned off the grinder and began asking the terrified woman about her work as a cashier at the Miami "fronton" (or arena) of World Jai Alai, an exotic Iberian sport that had been controlled by Bostonians since the 1920s. A few months earlier, World Jai Alai had been sold to a new owner, and Boston's Winter Hill mobled by James "Whitey" Bulgerwanted to know if the new owners had discovered the mob's skimming operation. Satisfied by Peggy's panicked answers, the invaders flipped the switch on the disposal.
> "When the cops found the two bodies the next day," notesBoston Heraldcolumnist Howie Carr inThe Brothers Bulger, "they chalked it up as another Miami drug deal gone bad." In fact, it was just one of scores of murders committed by a Boston crime combine that wedded the Irish mob to the FBI. That marriage eventually broke up in 1996, when Bulgertipped off by his FBI handler, John Connollyfled the United States one step ahead of several murder indictments. He is presently number two on the FBI's Most Wanted list, below another one-time asset of the federal government named Osama bin Laden.
> Connolly, convicted of various racketeering charges, is in prison until at least 2010. He also faces first-degree murder charges in Florida for allegedly providing information that led to the murder of Peggy Westcoat's one-time boss, World Jai Alai president John Callahan.
> At the time of Peggy Westcoat's murder, the head of security for World Jai Alai was retired FBI Special Agent H. Paul Rico. Rico had taken note of Whitey Bulger in the early 1950s, when the future head of the Irish mob was a small-caliber hoodlum working as a homosexual prostitute. Rico, writes Carr, "could justify his sojourns to the Bay Village gay clubs as reaching out to new 'sources.'"
> From the very beginning of his career as a South Boston thug, Bulger was an informant. Gangsters planning to hijack a truck "might mention something about a future score to Whitey, just in passing, and sure enough, when they showed up to grab the truck, the FBI or the local cops would be there waiting," Carr recounts. "H. Paul Rico's personnel file soon included commendations from the director, J. Edgar Hoover. At the same time, no one suspected Whiteyit was inconceivable that one of Southie's own would become a rat."
> Sent to prison in Atlanta for bank robbery in 1956, Whitey volunteered to serve as a test subject in LSD experiments in exchange for time off his 20-year sentence. "We were recruited by deception," Bulger later complained, recalling that he was supposedly helping find "a cure for schizophrenia." Dr. Jules Pfeiffer, who supervised the experiments, was working off a grant provided by the CIA, which probably wasn't interested in humanitarian applications of the drug.
> Whitey returned to Southie in 1965, just in time to benefit from three critical developments. First, the FBIin keeping with Robert Kennedy's prioritieshad decided to tear into La Cosa Nostra (better known as the Mafia). Special Agent Rico thus began to cultivate informants and allies within the Winter Hill mob, the Mafia's deadly rival.
> Second, just days before Whitey's return, one of Rico's informants, Jimmy "The Bear" Flemmi, murdered an undistinguished thug named Edward Deegan. In order to protect their informant, the Boston FBI office conducted a cover-up, sending four admittedly unsavory men to prison for Deegan's murder, which they didn't commit. By collaborating in that murder and cover-up, the Boston FBI office effectively "made its bones" as a full-fledged ally of the Irish mob.
> But for Whitey Bulger the most propitious development was the emergence of his younger brother Billy as a rising political star in Bay State politics, which Carr describes as seamlessly integrated with the underworld.
> In 1961, when the Kennedy family entered the White House and Billy Bulger made his debut as a state legislator, the informal rules of conduct on Beacon Hill "boiled down to three points: Nothing on the level; everything is a deal; no deal [is] too small," writes Carr. Massachusetts novelist Edwin O'Connor describes state politics as "a special kind of tainted, small-time fellowship" through which "even the sleaziest poolroom bookie managed, in some way, however obscure, to be in touch with the mayor's office or the governor's chair."
> Billy Bulger would eventually become president of the state Senate, a post that allowed him to dispense patronage as he saw fit. Boston-born FBI agents like Paul Rico, who confronted mandatory retirement at 50, were eager to cultivate Billy Bulger's favor. By racking up arrests of Italian mobsters, the G-men could earn promotions and plaudits. By taking care of the Bulger family, they could supplement their federal paychecks and maybe arrange cushy post-retirement sinecures at Boston Edison or some other hack habitat.
> Before leaving Boston for Miami in 1970, Rico recruited Steve Flemmi, a close associate of Whitey Bulger who was also tied in with the Italian mob, as a "top echelon informant." Five years later, Whiteywho had by then established himself as a secure but unremarkable racketeerwas also granted "top echelon" status. Flemmi would scrape up intelligence on the Italians, and Whitey would pass it along to the feds. As Flemmi later described it, this relationship produced a perverse alchemy: "Me and Whitey gave [the Feds] sh-t, and they gave us gold."
> Why was Whitey included in this package deal, when Flemmi was the one with the mob contacts? As Carr points out, the Boston FBI office "didn't need Whitey nearly as much as they needed his brother Billy"and the favors that Billy could dispense on those who took care of his interests, including Whitey.
> By 1980, Whitey, Stevie, and the FBI "were partners," notes Carr. "And from the beginning, it was a one-sided deal. Each side would do 'favors' for the other, but the FBI's were a lot more valuable than the cash and gifts that Whitey and Stevie would pass on to their agents." Whitey and his handler, Special Agent Connolly, had grown up a few blocks apart from each other. They both wanted to take down Boston's Italian mobConnolly because doing so was the key to promotion within the bureau and Bulger because he wanted to clear the field of any rivals.
> Connolly, who has tried unsuccessfully to sell a screenplay lionizing himself as the man who took down the Boston branch of the Mafia, has described his entente with Bulger as a brilliant "business" strategyprotecting one mob chieftain to take down scores of others. But that business arrangement was nothing less than a license for Bulger and his cronies to murder, extort, and rape with impunity. They also seized control over the local narcotics trade even as Bulger was heralded in theBoston Globeas a kind-hearted Robin Hood who was "keeping drugs out of Southie."
> In his own memoir,Brutal,one-time Bulger henchman Kevin Weeks observed of Whitey that while "nothing seemed to relax him or feel quite so good as a murder," he was "calculating" and disciplined in killing. Flemmi, on the other hand, "would kill someone, anywhere, anytime." Bulger and Flemmi were also incorrigible pederasts, the latter indulging a taste for underage girls, the former preying on children of both sexes.
> Weeks also claims that Connolly and his corrupt fellow agents did more than merely look the other way. He asserts that Bulger "had six [agents] he could call on anytime and they would willingly hop in the car with him with the machine gun." Being on the take was quite profitable for Connolly. A former secretary testifies that she once saw no fewer than ten uncashed federal paychecks in Connolly's deska potent illustration of the contempt he felt for the substantial if unspectacular wages paid to an honest G-man.
> While Connolly and his ilk were living large, honest Southies were living in terror. Carr and Weeks both describe the plight of Steve "Stippo" Rakes, a Southie who in 1983 scraped together enough money to buy a small piece of commercial property that he turned into a liquor storethe only one on Old Colony Avenue with convenient parking. As Rakes's store began to prosper, anonymous death threats came spilling from his telephone. He soon fell prey to a Bulger protection racket and was forced to sell his business on concessionary terms. Renamed the South Boston Liquor Mart, the pilfered business soon became a favored hang-out of Bulger's political allies.
> During the 1987 Christmas season, relates Carr, "agents of the Boston FBI office bought the booze for the annual holiday party at the South Boston Liquor Mart. For the FBI the price was always right." At John Connolly's retirement party three years later, after the corrupted agent had heaped praise on Billy Bulger for getting him his job at the bureau and arranging his post-retirement gig at Boston Edison, he was handed a bottle of wine he was told came "courtesy of South Boston Liquors." "No finer liquor store in the commonwealth," replied Connolly with a knowing smirk.
> What of Steve Rakes, who had that liquor store stolen from him by the FBI's "top echelon informant"? Summoned to testify before two grand juries, Rakeswho had a wife and two daughters to protectrefused to talk. He was eventually convicted of perjury and sentenced to probation. Facing destitution, Rakes sought out a hack job with the Massachusetts Bay Transportation Authority. A friendly politician arranged one for himin exchange for a $3,000 bribe.
> "Absent justice," wrote Augustine inThe City of God, "what are kingdoms but vast robberies?" The unfathomably corrupt union of the criminal underworld and political "overworld" described by Carr offers a compelling illustration of what Augustine had in mind.William Norman Grigg is the author of four books and Senior Editor ofThe New Americanmagazine.http://www.amconmag.com/blog/how-whitey-bulger-bought-boston/

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Re: What Neocons Don't Understand About War

Some writers and intellectuals have argued that criticism of
neoconservatism is often a euphemism for criticism of Zionist Jews,
and that the term has been adopted by the political left to stigmatize
support for Israel. In The Chronicle of Higher Education, Robert J.
Lieber warned that criticism of the 2003 Iraq War had spawned[74]
a conspiracy theory purporting to explain how [American] foreign
policy... has been captured by a sinister and hitherto little-known
cabal. A small band of neoconservative (read, Jewish) defense
intellectuals... has taken advantage of 9/11 to put their ideas over
on [Bush]... Thus empowered, this neoconservative conspiracy, "a
product of the influential Jewish-American faction of the Trotskyist
movement of the '30s and '40s" ([Michael] Lind)... has fomented war
with Iraq... in the service of Israel's Likud government (Patrick J.
Buchanan and [Eric Alterman).
Time magazine's Joe Klein has suggested it is legitimate to look at
the religion of neoconservatives. He does not say there was a
conspiracy but says there is a case to be made for disproportionate
influence of Jewish neoconservative figures in US foreign policy, and
that several of them supported the Iraq war because of Israel's
interests, though sometimes in an unconscious contradiction to
American interests:
"I do believe that there is a group of people who got involved and had
a disproportionate influence on U.S. foreign policy. There were people
out there in the Jewish community who saw this as a way to create a
benign domino theory and eliminate all of Israel's enemies....I think
it represents a really dangerous anachronistic neocolonial
sensibility. And I think it is a very, very dangerous form of
extremism. I think it's bad for Israel and it's bad for America. And
these guys have been getting a free ride. And now these people are
backing the notion of a war with Iran and not all of them, but some of
them, are doing it because they believe that Iran is an existential
threat to Israel."[75]
David Brooks derided the "fantasies" of "full-mooners fixated on a...
sort of Yiddish Trilateral Commission", beliefs which had "hardened
into common knowledge... In truth, people labeled neocons (con is
short for 'conservative' and neo is short for 'Jewish') travel in
widely different circles..."[76] Barry Rubin argued that the
neoconservative label is used as an antisemitic pejorative:[77]
First, 'neo-conservative' is a codeword for Jewish. As antisemites did
with big business moguls in the nineteenth century and Communist
leaders in the twentieth, the trick here is to take all those involved
in some aspect of public life and single out those who are Jewish. The
implication made is that this is a Jewish-led movement conducted not
in the interests of all the, in this case, American people, but to the
benefit of Jews, and in this case Israel.

On Jun 25, 11:03 am, MJ <micha...@america.net> wrote:
> What Neocons Don't Understand About WarBy Conor Friedersdorf
> Jun 24 2011Politics shapes strategy in conflicts of choice -- which is another reason to avoid themInNational Review,The Weekly Standard, and theWashington Post, leading War on Terror hawks are expressing outrage at the timeline President Obama set for troop reductions in Afghanistan. Their complaint: politics is driving American policy. "So why September 2012?" Bill Kristol writes. "Because, one has to conclude, Election Day is November 6, 2012. The deadline will allow candidate Obama to say that he has completely withdrawn the surge forces, and that we're on our way out of Afghanistan and coming home. The timetable President Obama has set isn't based on military considerations, diplomatic strategies, or financial calculations."
> Perhaps it's time to let these guys in on a secret: elected officials are constantly playing politics. Even on matters of national security. As they wage foreign wars, they concern themselves with the mood of the American people, support for hostilities in Congress, and how troop levels might affect their prospects for being re-elected. Almost inevitably, the strategy and tactics they employ depend at least partly on all those factors, and other political considerations besides.
> Most adults know this.
> For that reason, it's wise to refrain from waging wars of choice, a label that arguably didn't apply to Afghanistan circa 2001, but certainly started applying at some point over the last decade. When our safety isn't imminently threatened, it is tempting to avoid the slaughter of our sons and daughters, especially if it saves billions of dollars. It's tempting even when it isn't militarily optimal.
> Guys like Kristol constantly urge us to undertake ever more wars of choice anyway. It's as if they're blind to the fact that the American people tire of adventures abroad on a timetable that doesn't correspond to however many decades are required to prevail in them (if in fact winning is even possible). A prudent decision-maker, weighing whether to launch or extend a foreign war, would presume the eventual war weariness of the populace, and the political nature of presidents.
> Kristol and those who trust his foreign policy judgment aren't prudent decision-makers. In their telling, the US would've prevailed if only we stuck it out longer in Vietnam. Islamist extremists wouldn't have been emboldened if only we'd stuck it out in Beirut. Iraq would've gone better if only we'd invested in a bigger military during the 1990s and sent more troops in earlier. We'd win all our wars of choice if only Americans would give neo-cons a blank check, unlimited troops, and no deadline! That the conditions they deem necessary for victory are fantastical doesn't bother them.
> It doesn't help that their desire to wage new wars causes them to mislead the American people about how long victory might take. Here's Bill Kristol on October 1, 2001: "Saddam Hussein, because of his strategic position in the Persian Gulf and the Middle East, surely represents a more potent challenge to the United States and its interests and principles than the weak, isolated, and we trust, soon-to-be crushed Taliban. And unlike the Taliban, Saddam Hussein may soon have at his disposal not only terrorist networks, but biological, chemical, and even nuclear weapons."
> Here he is on November 26, 2001: "WITH THE TALIBAN DISLODGED and Osama bin Laden increasingly shorn of allies, the endgame seems to be in sight in Afghanistan." It's no wonder the American people are war weary and uninclined to trust the assurances of hawks that we just need to stay a little bit longer - but without any timetable for withdrawal - to assure American victory. They've been telling us for a decade that victory is just over the next hill. Why trust them now?http://www.theatlantic.com/politics/archive/2011/06/what-neocons-dont-know-about-war/240956/

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Obama to Meet with Senate Leaders on Deficit Plan


Obama to Meet with Senate Leaders on Deficit Plan
"One day ahead of a meeting with President Obama, the Senate's top Republican insisted again Sunday that tax increases would not be a part of any deal with Democrats and the White House to raise the nation's $14.3 trillion debt ceiling…. Mr. Obama is scheduled to meet separately at the White House with the Kentucky Republican and with Majority Leader Harry Reid, Nevada Democrat, to try to jump-start the debt talks that broke down on Capitol Hill last week." ( Washington Times)

No new (or higher) taxes!

The Progressive Income Tax
John Chamberlain
April 1981 • Volume: 31 • Issue: 4 •

This article, reprinted from the November 1961 Freeman, will help regular readers of "A Reviewer's Notebook" better appreciate John Chamberlain's firm grasp of the basic principles of freedom.

Expenditures, says Parkinson in his famous Law, always rise to meet income.

It is too bad that Parkinson, that canny man, wasn't around way back in 1913 when the progressive income tax was first adopted in America. If he had been on the scene, he might have shocked at least a few people into sobriety by observing that his Law, as it applies to government, must be phrased this way: "The expenditures of the State always rise to meet potential income." In other words, the politico, with the people's total earnings at his potential legal disposal, will inevitably move toward taking it all. In return for votes the politico will, of course, hand most of it back as welfare­or as legalized patronage. But even in handing it back there will be strings attached to it: following Galbraith, the politico will tell the people how the money is to be spent.

Looking back on 1913, one can only be amazed at the incredible innocence of that generation of Americans. When the Sixteenth (the progressive income tax) Amendment to the Constitution was formally ratified, the Congress responded by adding a seemingly quite inoffensive federal income tax rider to the Underwood Tariff Act. The rider called for rates running up to a maximum of 7 per cent on the last bracket of a $200,000-a-year income.

Although the principle of the income tax had been subject to a long controversy (it had been declared unconstitutional by the Supreme Court in 1894), the legislators took it lightly. When famed attorney Joseph Choate remarked ominously that, in time, the tax could go to 50 per cent or even higher, Senator William E. Borah arose and shook his massive head. The very idea that anyone could ever be taxed at a 50 per cent rate seemed silly to the Progressive Republican from Idaho. Hurling his rhetoric directly at Choate, Borah asked: "Whose equity, sense of fairness, of justice . . . does he question?"

As things have turned out, Joseph Choate was altogether too moderate a prophet: today [1961] the top income tax rate is 91 per cent, and the 50 per cent rate begins at the $16,000-a-year level. In 1913 dollars, $16,000 a year is worth a mere $5,350. During World War I the tax took its first swift leap upward, only to fall back after the Peace of Versailles. Ever since the revenue act of 1934 first turned the full fury of a depression-ridden generation on anyone and everyone with an income of $25,000 a year or more, the rates at the top have been deadly.


Just to Keep Pace

The change in the tax temperature over the span of the past thirty years can be most graphically perceived if we consider what a Babe Ruth would have to be paid today to give him a take-home purchasing power comparable to his 1931 earnings. Out of a salary of $80,000 in 1931, Babe Ruth had $68,535 after federal income taxes. If "The Babe" were alive in 1961, he would need a salary of about $960,000 to give him as much purchasing power, after inflation and other federal income taxes, as he had in 1931.

Long before Joseph Choate voiced his prophecy, English economists were taking a dim view of what might happen under progressive taxation. Said Ramsay McCulloch in 1845: "The moment you abandon . . . the cardinal principle of exacting from all individuals the same proportion of their income or their property, you are at sea without rudder or compass and there is no amount of injustice or folly you may not commit." And he continued: "The reasons that made the step be taken in the first instance, backed as they are sure to be by agitation and clamor, will impel you forwards . . . . Why not take 50 per cent from the man of two thousand pounds a year, and confiscate all the higher class of incomes before you tax the lower? . . . . Graduation is not an evil to be paltered with . . . . The savages described by Montesquieu, who to get at the fruit cut down the tree, are about as good financiers as the advocates of this sort of taxes."

It was only three years after McCulloch's warning that Karl Marx and Frederick Engels, in the Communist Manifesto, advocated a heavy progressive tax as a means of despoiling the "bourgeoisie" and softening middleclass society up for the dictatorshp of the proletariat. Walter Bagehot, editor of the London Economist, feared that the Marxians would prevail: he predicted that the progressive tax, in combination with the principle of universal suffrage, would result not only in the destruction of the rich but in the very dissipation of the productive capital which gives society (the poor included) its margins of comfort.

The predictions of McCulloch and Bagehot have not yet come to pass in their ultimate direness; maybe they failed to reckon with the adaptability of man. Psychologically speaking, there is obviously some point where the progressive tax must recoil upon itself, destroying the base from which it might hope to achieve a maximum of "take." Just where the point is we cannot tell: there is no way of measuring businesses that are unborn, or energies and creative enthusiasms that simply fail to well up. But when a progressive tax dampens the impulse to generate income, then the tax base itself must narrow and diminishing returns set in.


A Theory of Justice

To make a tax acceptable, it must be levied in accordance with a theory of justice that is an article of faith with the majority. When justice, or the appearance of justice, fails, revolt is inevitable: the Puritan Revolution in England, the American Revolution of 1776, and the French Revolution of 1789 are all cases in point. The theory of justice behind the progressive income tax is that it imposes "equality of sacrifice"­and as long as this is believed, the tax will be palatable to a majority. "Equality of sacrifice" is the democratic way.

Time was when the progressive tax would not have been accepted as equitable even by a majority of the poor. Traditional equity required that taxes should be levied proportionately, not progressively. This was in accordance with the belief that' a man's property, or his income, was an index of deserving achievement, or of value contributed in the market place to society. True, some men inherited their property or incomes -- but that was something to be handled or regulated under laws of inheritance. In any case the erosion of time could be counted on to take care of the inefficient use of inherited fortune­"shirtsleeves to shirt-sleeves in three generations" expressed the common wisdom in this matter of luck in the choice of one's parents.

Under the proportional theory of tax equity, a rich man would pay more taxes than a poor man, naturally. But every dollar of assessed property value, or of income, or of spending, would be taxed in equal amount, at flat 'percentage rates. Dollars would be treated equally, no matter who owned them, or spent them. Thus the citizens would be accorded the "equal protection of the laws" -- and their "privileges and immunities" would be equal, as provided for in the United States Constitution. Any other way of treating taxation was regarded as discriminatory, or as putting penalties on ability, ambition, and success.

It was Marxian socialism -- "From each according to his abilities, to each according to his needs" -- which fathered the great attack on proportional tax equity: a "heavy graduated income tax" is a salient feature of the Communist Manifesto of 1848. But the Marxians would have made little headway if non-Marxian economists had not come unwittingly to their support with the theory that "it is not equal to treat unequals equally." In cases of charity, this is undoubtedly true, but no comprehensive legal system can be reared on a rule which begins by regarding everybody as an exception.


The Value of the Last Dollar

To rationalize their inapposite view, these economists sought the support of "marginal utility" analysis; they argued that the "utility" of the rich man's "last dollar of income" must be considerably less to him than the utility of the poor man's last dollar to the poor man. To take more of what the rich man valued less was, to these economists, a way of achieving tax justice. They based their theory of tax gradation from bracket to bracket on the old pleasure-pain calculus of the English utilitarian philosophers: obviously, so they said, there must be more pleasure and pain involved in satisfying (or in failing to satisfy) basic hungers than in buying a Rolls-Royce or subscribing for a seasonal box at the opera. By taking more of the supposedly less-valued "Rolls-Royce dollar" than of the highly-valued bread-and-beer dollar, "equality of sacrifice" could theoretically be translated into a law which would satisfy the ethical sense of the majority.

Superficially considered, there is a certain amount of rough practical justice in this way of regarding the "last dollars" -- or the upper brackets -- of a man's income. If it is merely a question of satisfying the basic hungers for food, shelter, clothing, and the minimal cultural decencies, "last dollars" undoubtedly mean much; they may even mean life and death. But this is an argument for a basic exemption from taxation, not for levying progressively steeper surtaxes in the middle and upper brackets.

Beyond a certain subsistence and cultural minimum, the idea that "last dollars" can be rated in accordance with a scale of "marginal utility" to the individual becomes a fiction. Since men differ by inherited temperament, by circumstance, by ambition, and by training, every living human being values his "last dollars" differently. If intensity of avarice could be measured, the French peasant clutching his franc of profit and Hetty Green clutching her millions might come out at the same place. A Huckleberry Finn­or an ascetic St. Simeon Stylites seated on his column­will care little enough even for a "first dollar," whereas a Major Armstrong, intent on raising the money needed to protect his patent rights to a radio amplifier, may desperately value­and need­his "last million."

Who is to say whether the "last dollar" of a poor man taking a flyer on the "daily double" at the race track is worth more to the individual than the "last dollar" of a biochemist who wishes to buy a year's leisure to experiment with rare bacterial cultures? Who is to say whether the last dollar spent by a housewife on a new Easter hat is worth more to its owner than the last dollar thrown into the kitty by a Rockefeller to plant Easter lilies or tulips at Rockefeller Center?


"Equality of Sacrifice"

Money has such protean uses that its personal valuation can take a thousand-and-one turns. It can command leisure, freedom, security, adventure, education, veneration, esthetic gratification, and appendicitis operations­plus the whole economic gamut of ordinary goods and services. It can command both power and the protection of the individual against power. As a cynical wit has put it, though you may be able in some instances to buy happiness with money, you can't buy money, with happiness­which could conceivably give the "last dollar" of income a "one-up" position even to a man in love.

To make the attempt to force "equality of sacrifice" by taking more of what the well-to-do man presumptively values less is, then, to pursue a chimera into a quagmire. The utility of a dollar­any dollar­to an individual is a purely subjective phenomenon, and cannot be measured in any known unit. One cannot multiply quantities by qualities and get a mathematically respectable answer, as Sir Isaac Newton observed long ago. To suppose that anybody values his "last dollars" less than anybody else is to substitute mind reading (and emotion reading) for objective measurement. It puts a self-righteous and wholly tyrannical power into the hands of a majority, or into the hands of the politicians who represent what they think is the majority.

As for the value of an individual's last dollar to society, this depends wholly on the uses to which it is put. It is the responsibility, the ingenuity, and the creativity of the individual which establishes the social "marginal utility" of the last dollar of income. But here, also, utility cannot be expressed in a priori terms, by taxing a man because he might waste his tax dollars.

The pleasure-pain calculus is wholly impotent when it comes to comparing a poor man's ticket to the dog races (theoretically of little use to society) and a rich man's investment in a job-creating business. Or, for that matter, the poor man's contribution to the Red Cross and the rich man's evening dissipation at the Copacabana. Even where the comparisons are freighted with seemingly unarguable moral distinctions, there are quicksands within quicksands. A night club might support a struggling musician while he is composing a great rhapsody, and a dog track could conceivably lead to far-reaching discoveries in canine genetics. On the other hand, charity -- or a newly-created industry -- may result in prodigious waste.

Used in price analysis, marginal utility has something objective to work on: the amount of goods which clear the market when the price is either raised or lowered. By utilizing theoretical supply-and-demand curves, one can even make reasonable guesses about the future. But marginal utility, which is of no use whatsoever in judging the intensity of personal feelings, cannot legiti mately be used to give society a right to political dictation of the social uses of "last dollars." To tax possible investment capital on the theory that "society," as represented by government, might invest it better is to indulge in a wild guess. Measurement (via a tax) cannot be undertaken before the dollars are spent. This is why men have traditionally been left the use of their dollars to spend them or to invest them as they please. When the market decides, there is no uncertainty about the comparative rating of men's desires.


An Equality of Misery

Equality is an idea that leads inevitably to contradictions, depending on the values of the individual who advocates it. One can begin with the theory that everyone should start with the same advantages in life: such advantages as equality before God and the law, equal opportunity for education, and a basic subsistence that will keep one from being warped or stunted during the growing period. This is an idea of equality that is firmly imbedded in the American dream; it has also been roughly attainable in American practice. Granted this equality, however, people who are clever, able, persistent, or merely persuasive must soon outdistance the rest. As a people we have accepted this, traditionally, as being eminently fair.

It does not, however, result in an equalitarian society. Does true equality consist, then, of pulling everyone who has exceptional abilities back into the pack at stated intervals? Does it entail the consistent discouragement of excellence by means of periodic cancellation or retraction of rewards? If it does, then mankind must automatically be deprived of the benefits normally ac cruing to it from the natural variation of human beings. With the fostering of a widespread "what's the use" attitude, new inventions, new qualitative changes, new theories, ideas, and fashions, must falter; the standard of living must recede; the birth rate must drop; and the equality thus achieved will be an equality of misery.


Periodic Redistribution, Motivated by Envy

Insofar as it results in "equality," the progressive income tax is a spawn of the second idea. It attempts to pull the exceptional at least part way back into the pack by canceling a good part of the previous year's gain every April 15. Since it is not a tax on capital, the progressive income tax cannot do the whole job of diffusing a more or less complete equalitarianism throughout society. But it keeps newcomers from amassing capital on their own out of savings -- and, taken in conjunction with stiff inheritance taxes, it could carry out a revolutionary job of leveling within the space of a few generations.

How "moral" is this approach to equality via the tax collector? If the end to be achieved were a benevolent brotherhood, then there might be something to be said for it. But the means are neither relevant to nor consistent with such an end. Equality via the tax collector operates through the social motive of envy, not love or charity. It begins with the politics of "soak the rich." Soon the definition of "rich" is expanded to include the middle classes. And it all ends with the exaltation of the bureaucrat, who is in charge of spending the spoils. Minorities are inevitably put at the mercy of majorities­and everybody is at the mercy of the politicos, who get first whack at the resources of the state.


A Psychology of Depredation

Instead of fostering brotherhood, then, the progressive income tax introduces a psychology of depredation into society. Pressure groups everywhere go for their share of the spoils. The arid states want big dams-at the expense, not of willing investors, but of the common people who have chosen to stay in greener, though more densely populated, New Jersey and Connecticut. Everyone has his pet scheme for spending other people's money, and empires grow in Washington as the politicos cater to the schemers. As money income is taxed away, there is a tremendous competition to get income in terms of social services (untaxed). The state is called upon to provide more money for schools, medical services, pensions, what-not. Producers, who have their own corporate income taxes to worry about, struggle for special tax write-offs; every different productive group, from agriculture to labor, wants exemptions. The result is an intense materialism which is rendered all the more ugly because it puts guns into the hands of any group which thinks it has a chance of transforming a minority into a majority by the mere offer of a trade in votes.

The depredation psychology has its reflex within voluntary associations which are compelled to sly expedients in order to retain assets, earning capacity, or mere utility. Businesses are diverted from thinking about productivity; decisions are often made with a primary eye to "tax advantage."


Capital Gains as a Way Out

Take the case of a small sponge rubber company in Connecticut's Naugatuck Valley, for example. It has been built up by hard-working partners. But the partners find their only way of cashing in on their creation in their old age is via capital gains. So they sell their business to a big Akron, Ohio, rubber company, with their sons receiving stock as their inheritance instead of a going share in a family business. A somewhat similar instance of a small business firm disappearing into the maw of a larger, forms the substance of Cameron Hawley's novel, Cash McCall.

Many a small businessman is tempted to sell out for capital gains rather then continue to work for an annual income. The result is that big companies grow as small family businesses disappear. In the big companies salaries are paid partly in cash, partly in "future income" via such things as pension rights, commitments to retainers for "advisory aid" in the years after retirement, and stock options leading to capital gains. Expense allowances go up as entertainment, housing, car use, medical examinations, and va-cations-cure-business trips are all allocated to "business costs." For its own part, labor devotes a great deal of its organizational energy into fighting for "fringe benefits" that will not appear on the ordinary tax forms as income. "Fringe benefits" result in an uneven diffusion of gains among the workers, for, while everybody foregoes a possible raise in order that the company may finance a fringe benefit, not everybody collects on the benefit to the extent of his due.


Undistributed Profits

As a defensive reflex against the depredation psychology, high individual tax rates result in the retention of earnings by corporations. The proof of this is objective: undistributed profits made up some 30 per cent of corporate profits after tax in 1929 and some 50 per cent in 1959. By leaving potential dividend money in a business, the investor gets a capital appreciation that is taxed at 25 per cent of income limit if he chooses to sell his stock. In addition to helping the shareholder stay out of a higher tax bracket, this also provides a method whereby ownership can duck the effects of double taxation of dividend money. While it may be immaterial to a given company that it chooses to finance its future growth out of retained earnings (or undistributed profits) instead of going into the market for share capital, this method of financing robs the investor of his flexibility of decision. The investor sticks, perforce, to his "old company" instead of surveying the field for new options. And the "old company" may do the diversifying which the investor used to do for himself; it may branch out into unrelated lines, which can have good or bad effects depending on the ability of management to handle diversification within a single corporate set-up. In any event, business must pay some cost for being tax-oriented, not production-oriented. Some efficiency is lost if only because tax lawyers come high.


Tax Avoidance

If the need to defend against a depredation psychology has its subtle effects on voluntary associations, it also puts a premium on slyness as practiced by the individual taxpayer. A well- known book company advertises a "Federal Tax Course" and offers a special report guaranteed to show what deductions can legally be claimed for business expenses such as transportation, entertainment, lodging, gifts, theatre tickets, club dues, and bills, and "your wife's expenses if she travels with you." Another special report is advertised as showing how "men in the $20,000 to $100,000 class can virtually cut their tax in two" by dividing income among the family. In come can be transferred to minor children; property used in a business can be turned over to a member of the family and leased back (at a rent deduction); income-producing property can be sold from one member of a family to another to gain a depreciation advantage; and so on. All of this comes under the heading of "tax avoidance," which is perfectly legal. Nevertheless, a great deal of energy is necessarily diverted into the business of defending oneself against the government­a loss of energy which might be put to far more productive purposes, with society the richer for it all around.


Tax-Exempt Securities

Finally, to protect against depredation psychology, the rich seek refuge in tax-exempt bonds. Thus potential risk capital disappears into the sink of dead-horse debt. This is the ultimate commentary on progressively taxing "last dollars." Ironically, it would take a "degressive tax," i.e., one that taxed "last dollars" least, in order to bring money from tax exempts back into the pool of risk money that should be available to the man with a new idea.

The late Professor Henry Simons of the University of Chicago economics faculty argued that the case for drastic progressions in income taxation "must be rested on the case against inequality." If the human race has a natural interest in human variation, then the case for progressive taxation is indeed "uneasy" (to use the phrase of Walter Blum and Harry Kalven, Jr.). But if equality (in the leveling sense) can by any stretch of the imagination be considered the touchstone of the good society, then the progressive tax falls into place as a relevant means to the achievement of social justice. But it is only one relevant means, and if it is left to operate alone it will not achieve its leveling end.

For better or worse, the progressive income tax in America has obviously not achieved an equalitarian result. This does not mean, however, that it should be written off as socially innocuous. Instead of introducing a leveling principle into society, it has resulted in some strange distortions of the social pyramid. While it has not produced equality, it has resulted in a very practical denial of the old American ideal of "equality of opportunity."

The reason for this is that it tends to stratify classes as they are. Since it is a tax on income, not a capital levy, it leaves old ownership intact without encouraging new -- or additional ownership. The rich (within inheritance tax limits) tend to keep their fortunes. But Joe Doakes can hardly aspire to amassing a fortune -- or even a sizable nest egg -- on his own if he attempts to do it out of saving for investment purposes. (The fact that millions have risen into "middle income status" since the time of the income tax amendment has been due to the fecundity of American production, with its fantastically efficient machine development, not to any "redistribution" effected by the tax.)


The System Favors Present Owners of Large Fortunes

What the progressive income tax cannot do is to cut down the money-mobility of the rich. A man with a fortune can protect his equity by moving money about on the board of opportunity. He can invest his money in supermarkets in Venezuela, or buy oil rights in Western Canada, or become a partner in swiftly growing industries such as plastics, electronics, or aviation. Thus he can circumvent the ravages of inflation and expand his fortune via capital gains.

But while the well-to-do have a continuing access to opportunity (which they can also open to their sons by making them partners in expansive situations), the middle classes are denied the chance of building fortunes in the first instance to protect. Under progressive taxation an Averell Harriman, a Joseph P. Kennedy, a John Hay Whitney can keep their financial status (and even become ambassadors to the Court of St. James). But the deck is stacked against the emergence in our times of new ambassadorial material. During the past generation the "middle condition of man" has been ground between the upper and nether millstones of inflation and steeply rising progressive tax rates. Reckoned in terms of "disposable income" in "1939 dollars," the purchasing power of the $18,000-a-year man in 1961 is no more than that of the $6,000-a-year-man of 1935. If the middle income man has been committed to insurance payments, his equity in saving has been cut in half. But the rich, who have invested in the insurance companies, have preserved their equities intact.


Soak the Middle Class, Penalize the Erratic Earner

The fairness of the tax even within its own "ability to pay" rationalization is entirely questionable. The tax exempts the poorer taxes them at such a low rate of progression that it is negligible. And, as we have seen, it tends to exempt the rich, who have ways of compensating for loss of dividends by the capital appreciation route. It is the people in the middle income brackets who do most of the paying. Thus what started as "soak the rich" has become "soak the middle class."

Moreover, the tax bears down with peculiar cruelty on the erratic earner, who may be compensated in a single high-tax spurt for years of patient effort. An author or a playwright may struggle for a decade to master a technique (or a subject) and then produce a single best-seller. But the gains for which the years have been preparing will not be commensurate with the effort and dedication involved. A doctor spends his young manhood in medical school, internship, and building a practice: then, relatively late in life, his income may hit the stratosphere without leaving him much after taxes for his old age. To gain crude equity for himself, the doctor will, in turn, grade his fees on an "ability to pay" basis, taking more from the rich and less from the poor.

Then there is the case of the public performer whose income is clearly related to the state of his muscular reflexes, or the youthfulness of his (or her) face and figure. Ballplayers are lucky to last in the big leagues (and the big money) after the age of 33 or 34. A Joe Louis may earn millions in a brief heyday as heavyweight champion­and then spend his middle age in .irretrievable hock to the government for back taxes for the mere sin of having depended on altogether-too- sanguine income tax accountants. A Sugar Ray Robinson may be forced back into the prize ring after retirement to recoup a fortune which will prove to be just another mirage when the tax collector is satisfied. In the case of the professional tennis player, a single year in the big money is the most to which the average-good-amateur-turned-pro can aspire. Once the crowds have seen him on one round of the circuit, he is through.

As for movie stars and Broadway performers, they may be able to make the jump from ingenue charm or youthful agility to middle-age character parts. But not every starlet becomes a continuing star­and in such an event the high earnings of youth will never afford the basis for a middle-age income.

Since the onerousness of the present progressive tax rates are becoming obvious to too many voters, a trade has been proposed: let the many present legal "loopholes" (big expense accounts, the oil depletion allowance, and so on) be closed in return for an across-the-board cut in the progressive rates. Vain delusion! The closing of the "loopholes" will mean more income for government. But (to invoke Parkinson once more), expenditures rise to meet income. So why should the state give any of that "loophole" money back in the form of a tax cut? The "loophole" money will support lots of bureaucratic job holders­and as Parkinson's Other Law says, work expands to fill up the time of those available to do it.

No, we as a people are on the rack for having accepted an unjust Constitutional Amendment in the first place. We will remain right where we are until a limitation is placed on the principle of the progressive income tax itself.


http://www.thefreemanonline.org/columns/the-progressive-income-tax/

McDonald's as the Paradigm of Progress


McDonald's as the Paradigm of Progress
Monday, June 27, 2011
by Jeffrey A. Tucker

The nice folks at the local McDonald's know me well, but even they were puzzled when I snapped a dozen images of their newly restored interior, which is absolutely beautiful. Like most fast-food places, the management is used to customers but still a bit surprised by dedicated fans like me.

I feel vindicated by recent data on this company's hiring in the midst of terrible economic times.

The national labor-participation rate has been falling for a decade and is now as low as it was during the 1982 recession. If people were leaving the workplace with wads of cash and every intention of living out their dream of a life of leisure, this might be good news.

Sadly, all evidence runs the other direction. People want remunerative work but can't find it, and their situation is getting worse not better, thanks mainly to legal restrictions and artificial burdens borne by institutions that would otherwise be hiring.

McDonald's appears to be responsible for more than half the new jobs being created right now: its April jobs fair added 30,000 people to its payrolls. It has bucked the trend -- a bit like swimming against the tide.

But instead of congratulating this great company for doing the impossible, the judgment in the press is harsh. Burger flipping is the only work to be had out there? Surely this is evidence of how pathetic economic growth is.

The trouble with this line is that it doesn't recognize how difficult it is for an institution to adapt itself and still grow in this climate. And how does McDonald's do it? It is an old recipe: watch the markets, emulate the successful, adapt and change, and slavishly serve the consuming public.

The reinvention of McDonald's began only two years ago, as its management noted the new vogue for healthy food and fancy coffees and fruit smoothies served up in a posh environment such as Starbucks offers. Can McDonald's, the very embodiment of the lowbrow urge for a greasy burger and fries, actually horn in on this market?

It doesn't seem likely, but the company gave it a try. There were new breakfast items like fruit parfaits. There was an apple-and-walnuts salad, along with many other premium salads, for lunch. There was a new premium burger made of Angus beef (which to me tastes as good as a restaurant-style burger). There were new fruit smoothies that taste as good (or better) than the ones that cost twice as much at the hip smoothie bars.

Not that McDonald's merely chases public fads. The company responded to an earlier outcry for diet food by making the McLean sandwich in the mid 1990s. No one bought it. The company dropped it from the menu. The lesson is that public piety is not the same thing as actual spending habits. Future development would be rooted in reality, and it certainly is today.

Most of all there was the addition of new coffee drinks. Each is made from freshly ground beans, with the addition of fresh milk (whole or low fat), all made upon order. McDonald's added its own spin. The most annoying aspect of Starbucks, as everyone knows, is the wait. Everything is done by hand, from the cleaning to the packing of grounds.

McDonald's has a new machine that does everything. The beans fall through a large funnel. The milk is sucked out of gallons from the doors underneath. The nozzles and containers are cleaned after each drink by superhot steam blasts. The human hand only gets involved at the beginning to push buttons and at the end to give it all one last stir. The time it takes to make this fresh treat is reduced to half or even one-third of the Starbucks time.

Then there is the cost issue. A latte at McDonald's costs 40 percent less than the same at Starbucks. And you don't have to use strange words like venti or grande when you order. At McDonald's, they seem to understand normal English words like small, medium, and large.

There was just one element of change missing: the interior of the restaurants. Mostly they have been unchanged for decades. The dining room was filled with tables with a fixed number of attached chairs, suggestive of a school cafeteria. The company did its research and rethought the entire issue of what a fast-food dining area could look like.

In the same space, it created many different styles: a round booth, long tables with movable chairs, small round tables with bar-style seating, along with traditional booths. Each place you sit amounts to a separate environment of your own choosing. You can be private or sociable, intimate or public, alone or engaged with others. The seating area is separated from the ordering area by Plexiglas sheets from floor to ceiling that appear both modern and artistic. I don't know much about the art of interior design, but the whole scheme strikes me as brilliant.

So certain is the company that these changes are going to make a difference, it is spending a minimum of $1 billion on the renovations in all 14,000 US restaurants. The first 800 will be complete in 2011, costing some $250,000 per store. Our own local restaurant started renovations in early June and completed them in a mere two weeks time -- all the while keeping the drive-through window open and doing a vigorous business.

And what is the point of all of this? It should be obvious: to serve the public better. Better service, more attractive environments, and more menu choice lead to higher profits, and therefore more expansion and job creation.

In a striking way, this approach is deeply embedded in the company's history. The first restaurant opened in 1940 and closed for renovations in 1948, only to reopen as the first drive-through restaurant. Its first indoor-seating restaurant didn't open until 1962. Since then, the company has taken glorious steps forward that have foreshadowed global change: it opened in Moscow in 1990, Warsaw in 1992, and on the Web in 1996.

Let's be clear here. It's not the case that the management of this company has an unusually high devotion to the well-being of humanity. The management is following the pricing signals and making entrepreneurial judgments all in the service of the consuming public. It is a great competitor, relentlessly reinventing itself in an effort to win the affections of the eating-out public.

The managers here might be the greatest humanitarians in history or they might be the greediest and most selfish people on earth. It really doesn't matter. The market is the driving force and the profitability signals are the test of whether the company is or is not doing the right thing. This is the very heartbeat of the capitalistic process -- the one spotted and dissected centuries ago by economists in France, Spain, Italy, and England.
McDonalds offers free wireless Internet access.

These old liberals saw that the capitalistic process is the answer to the great social and moral problems raised by thinkers of all ages precisely because it pours every manner of human motivation into the grand project of satisfying the needs and wants of all society's members. If economic science had one main point to contribute to the world of ideas, this was it.

A most impressive feature of capitalism that is highlighted in the McDonald's case is how its institutions so beautifully adapt themselves to change. The drift is always upward: new and improved. And this drift is like a wind that never stops blowing unless it is stopped by the organized force of the state.

When the reinvention of this company began in 2009, it was not preceded by national campaigns and platforms. There were no public votes. Billions were not spent on lobbying for change. There were no public debates, advertising campaigns, frenzied conventions, or door-to-door campaigning. It was a decision made by the management -- an entrepreneurial judgment that could be right or could be wrong -- in an effort to please the stockholders who are the owners. And the final test is always the same: are people willing to buy?

Meanwhile, in the world of politics, decade after decade goes by with endless rounds of "reinventing government," school reform, bureaucratic reform, rearrangement of spending priorities, and regulatory change to make stuff work better. In the end, it amounts to little or nothing. Crucially, there is no real test to determine whether these changes were worth the cost or whether they really accomplished the goal. In politics, it is not even clear what the goal is! And, of course, the result is predictable. There is no change, no reinvention, no real improvement.

The addition or removal of the king-consumer from the process of reform amounts to a fundamental change in the whole raison d'être of an institution. It's true that McDonald's is not entirely sustained by the market alone, and even overly scrupulous libertarians have jumped on the attack. It's true that it has been reported that some of its business loans were backed by TARP money after the crisis of 2008, and, of course, it benefits indirectly from subsidies on corn and the like.

By the same token, it is also wickedly punished by the state, paying 30 percent taxes on earnings and shoveling some $2 billion into the federal treasury every year -- all money that might otherwise be used for capital upgrades, dividends, or expansions.

The crucial way to tell a predominantly market-based company from a state-based company is to investigate its primary institutional interest: does it serve the state or does it serve the consuming public? There can be no question where McDonald's is on this spectrum, and the result is not just a beautiful model for serving up food but a beautiful model for social service in general.

McDonald's is a prime example of how the market has overcome a fundamental human problem: getting enough to eat. This is a problem that vexed the whole of humanity from the beginning of time. Now it appears to be almost entirely solved, thanks to institutions such as McDonald's, which people feel entitled to criticize and smear because they seem to be such a fixed element in the universe.

But such institutions are not fixed. They are not permanent. They are the result of wild entrepreneurship embedded in a global market order rooted in ownership, exchange, freely floating prices, and human cooperation. It is a constant struggle to stay on top in this world in which every success can be imitated by a competitor, where consumers are as fickle as they want to be, and where even the best entrepreneur can make terrible mistakes.

This market is so robust, so vigorous, so innovative, that it even overcomes every obstacle that the anachronistic state puts in its way. Despite it all, McDonald's is hiring: people helping people get by and even live better.

The market blesses us every day, and society responds by, on the one hand, snobbishly cursing its productivity over cocktails, and, on the other hand, grabbing a value meal from the drive-through on the way home.



Jeffrey Tucker is the editor of Mises.org and author of Bourbon for Breakfast: Living Outside the Statist Quo.

http://mises.org/daily/5411/McDonalds-as-the-Paradigm-of-Progress