Type of bind: Hardcover
Dewey Decimal Number: 320.512
EAN num: 9780130621122
ISBN number: 0130621129
Label: Financial Times/Prentice Hall
Manufacturer: Financial Times/Prentice Hall
Quantity: 1
Page Count: 384
Printing Date: September 24, 2001
Publishing house: Financial Times/Prentice Hall
Sale Popularity Level: 628094
Studio: Financial Times/Prentice Hall
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Brings free market economics to life through stories of those who have discovered it in their own lives. David R. Henderson, one of the world's most vigorous advocates of free markets, celebrates those in American society, and around the world, who are fighting to get government off their backs.
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Most Americans are in the 15 percent tax bracket and pay 3 to 4 cents per dollar in State tax. On top of that American's pay 7.65 percent in social security and medicare taxes. Thus, even the modest-income people are in an overall marginal tax bracket ranging from 26 to 33 percent tax. High income people in states with income taxes are in a moverall marginal tax bracket of 50 percent. High tax rates cause deadweight losses in two ways: 1. loses by spending tax revenue wastefully. "When government spends money on things, there's a strong basis for believing that those things are worth less than the items we would have bought with our money." "Governments have little or no incentive to spend money carefully because it's not their money." 2. Every tax causes people to alter their behavior in some way. These distortions in behavior designed to reduce the amount of taxes they pay. The deadweight loss from a tax is proportional to the square of the tax rate. The main thing we need to do is cut taxes drastically, especially at the federal level. The flat tax will create two taxes, one for income and the other for sales. Proponents of big government oppose tax cuts. "The reason they give is that such tax cuts generate disproportionate higher benefits for high-income people than for low-income people. The top 5 percent made 32.5 of the income. Low and middle income people would gain from tax cuts. Higher-income people would work harder because they could keep more of their earnings and lower marginal taxes would give people an incentive to save. The more capital and high-skilled workers there are for low-skill workers, the more productive and higher paid the workers become. EITC has incentive problems and may encourage pushes for bigger government and EITC incentives exist causing low income people to elect not to earn additional disqualifying dollars. The death tax is unjust. The death tax is unfair because it levy on people wh have already paid tax on what they have accumulated. The capital gains tax is unjust. "The tax on capital gains is another particular unjust tax because is does not take account of the increase in asset prices that is caused by inflation." The capital gain tax does not allow individuals to index their prices so that they are paying capital gains taxes on real capital gains and not on phantom capital gains.
Roughly 80 percent of payroll taxes collected from current workers yesterday are sent out to current retirees The Social Security Administration claims they will be solvent until 2037 meaning "the last of the special federal government bonds that the SSA has bought and kept in the Social Security Trust fund will be sold off to the US Treasury." This sale is between the left and right hands of government. 2024, the cost of benefits will exceed income from payroll taxes. In 1987, Michael Boskin presented data on the rate of return earned by the social security tax and calculated it to be minus 0.79 to 6.34 percent dependant of the peron's age, income level, and martial status. A person born in 1915, the sole wage earner for a married couple earned 6.34 percent. Every other category of income earner earned a lower return percentage. At the same time index portfolio of stocks earned about 7.7 percent adjusted for inflation. 4 percent is a good pessimistic real rate of growth. 4 percent represent a portfolio of stocks for the worst 30 year period for stocks. A person working from the period 1929 to 1994, would have been $120,00 better off with a private savings plan instead of social security. A minimum wage earning for his whole life would have still been $9,000 better off without social security. Social security cost the maximum wage earners $262,000 in lost wealth and cost the average wage earner to lose $160,000. Absent social security people would save for their retirement. In 1991, the median financial assets of households with heads aged 55 to 64 were only $8,300. Social security is one of the main reasons people don't save. Steps to save social security without increased taxes are to 1. increase the retirement age 2. change the benefits formula 3. change the index of benefits. The author proposes, "I would allow anyone who is at least 45 years old and who ahs paid social security taxes for at least 10 years to immediately leave the social security system. A person who left would never be allow back in and would give up all claim to past taxes paid and future benefits." 70 percent of generation X does not believe they will receive social security benefits. Bad proposals include : tax rate increase, government investment in stocks, and affluence tests that reduce claims on benefits.
Heilbroner pointed to the Soviet Union, China, and Eastern Europe as giving "the clearest possible proof that capitalism organizes the material affairs of humankind more satisfactorily than socialism." In the Soviet union, no one person ... Read More
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This is an enjoyable book. It is part autobiography and part political philosophy and, perhaps best of all, it provides well supported and practical solutions to many of our country's biggest problems -- including the environment, public schools, social security and medicare, health care, etc. I rarely read a book where I feel, as I did with this one, that I would love to meet the author and discuss these issues. A very clear and intelligent writer who doesn't pretend to know all the answers. He clearly has a great deal of experience with these issues but has none of the ego or arrogance that we so often see these days. This is an excellent book.
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The Joy of Freedom is like Atlas Shrugged in that reading both books ignites a passion for liberty in me. Henderson, like Rand, is a zealous advocate of freedom. The difference between the two books and their authors, however, is that Rand tends to be combative whereas Henderson tends to deliver a pleasant message.
Henderson tells of his intellectual journey as a free-market economist and libertarian. Along the way he applies the principles of freedom and free-market economics to the vital issues of the past, present, and future. "This book", he writes, "is about freedom, about how well freedom works and how government, by crushing freedom, messes up our lives."
Henderson didn't take economics until his final year of college. His evaluation of introductory economics: "The course was a profound disappointment." The text and the lectures did not raise questions that were interesting to him about how markets work. The model of "perfect competition" turned him off, as it does many students. Fortunately, Henderson attended lectures by economist Harold Demsetz who did explain how markets work, which rekindled Henderson's interest in economics.
What sort of questions does Henderson find interesting? In 1969 he asked Hubert Humphrey: "Then how do you reconcile your belief in the Thirteenth Amendment [prohibiting slavery] with your belief in the draft?" Henderson devotes an entire chapter to property rights and emphasizes their efficacy throughout. He poses the following scenario: "You walk by a yard and see someone painting a house. Pointing a gun at him is another man who orders the very first man to stop painting." Then he asks: "Who is in the right?" Henderson might alter your view of the world. Consider this way of thinking about taxes: "Imagine that a thief takes your money at gunpoint, uses your money to buy a steak, and then brings the steak to your house and gives it to you." His question is: "Would you say that he didn't steal from you?" He even dares to ask: "Should we have taxes at all?" He raises the question of why the standard of living in the U.S. rises despite the shortcomings of government schools. About schools, he also asks: "If you went to a government school, or if your children go to a government school, is `exciting' the very first adjective, or even the fifth adjective, you would use to describe the experience?" Concerning the environment, he asks: "How far could we go in the direction of using private property to solve environmental problems?"
A reader of this book can expect to encounter many thought-provoking points as well as serious contributions to policies on social security, health care, education, and the environment.
Rated by buyers -
Henderson is one of the few economists who can cogently communicate the "Joy of Freedom" passionately to an audience new to the magic of markets without getting sidetracked. Too often, when one reads introductory economics texts they cast the science as boring, impassionate, and overly analytical. Most other introductory books I've read begin by prematurely stating that economists must be value neutral and going on to immediately talking about supply, demand, elasticity, and trying to use a graph of supply and demand with an extra line and some shading to convince new, reluctant minds that policies such as price controls and the minimum wage are inefficient. This runs in sharp contrast to the introductory texts of other sciences, such as sociology and psychology, which openly begin with sometimes corny lines about the relevance of their thoughts and feelings to society. Although I believe that the authors in these other sciences often lack a solid background in critical thought and data analysis, they generally are more effective in getting new people to think about their fields.
Henderson is the welcome and notable exception that tactfully extends the "invisible hand" to readers who might hold very biased prejudices against economics and economists to guide them to a whole new world of thought and analysis. Through a collection of personal experiences backed by a reasonable and digestible amount of economics in each chapter, he is effective in his goal of doing what most economists cannot -- explaining the most relevant aspects of economics to the most important audience. Ultimately the effectiveness of the highlighting the implications of public policy for the lives of common people is more influental in changing the world than any article in the American Economic Review. While adding to existing knowledge is vital, attracting new thinkers and altering the biased beliefs of the Median Voter is at least equally as important.
Rated by buyers 
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Professor Henderson does not disappoint with this book. During the early 1990s, I had the pleasure of taking a class from Professor Henderson at the Naval Postgraduate School. Professor Henderson was then, and I expect he still is, one of the most popular teachers at the school. That isn't because he's an easy grader or that he has an incredible grasp of economics. It is because he possesses an innate ability to communicate the most difficult of subjects with ease and clarity. He is an engaging advocate for liberty. In fact, economics is not the dismal science when he instructs.
He explains, in a sometimes-personal way, how markets work and many of the issues that we face yesterday with a pointed lucidity. The arguments put forward are not new. In fact, I'd be surprised if many readers have not heard them already. What makes this book different and so enjoyable is how Professor Henderson's optimistic outlook and perspective pervades his explanation of issues so critical to our understanding of the world and our personal freedom. More importantly, Professor Henderson is an advocate for liberty. In a world that is increasingly controlled by government, this is a must read.
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