Who drives the economic system? What creates economic growth?
Is it consumer spending?
Is it government spending and stimulus?
Is it the investment of capitalists and business-to-business spending of entrepreneurs?
Or maybe it’s all just rainbows and unicorns.
Politicians seem to think it’s the latter, who can be seduced by fine words and solecisms. Too many economists think it’s the first two – and they have a measurement, GDP, that seems to prove it – that’s constantly misunderstood as a thing that measures “growth,’ that “shows,” or seems to, that consumer spending represents two-thirds of the economy.
But that’s bullshit out of both holes.
GDP doesn’t measure all economic acitivity in the econoic system; only measures so-called final output and by so doing assumes it captures it all. Yet business-to-business spending is almost double the total amount of consumer spending – and is most volatile across the business cycle -- it’s just that too few economists bother to notice any of this.
Mark Skousen explains the gross error, and explains the new measure, Gross Output (aka Gross Domestic Expenditure), that corrects it.
Q: How do you know when a politician is lying? A: Their lips are moving.
Yet despite this, and despite everyone knowing this, millions tuned in to watch and then talk about two liars in a debate that isn’t one*, that is then reported as if it were a boxing match instead of two candidates making up their own facts.
PS: And here’s an annotated transcipt of last night’s lies, boasting and failed innuendo of both participants, which has the added bonus of not having to either look at or listen to either of them.
* A debate is neither a two-way interview nor a panel discussion. In a debate, the moderator says nothing and carries a timepiece. And that’s all.
“Whatever reasons there may be for forcibly keeping out of the country honest people who come here to work, and forcibly removing honest people from their jobs, homes, and families... ...it is not that the country is collectively-owned, like a members-only club, where the membership committee decides who can belong.” ~ Keith Weiner
The easy money bubble is about to pop, says Justin Spittler from Casey Research in this guest post.
As you probably know, the American Federal Reserve has been desperately trying to stimulate the economic system since the 2008–2009 financial crisis.
It’s held its key interest rate near zero for the past eight years. And it’s “printed” more than $3.5 trillion out of thin air.
These radical policies were supposed to grow the economy. But all they’ve done is inflate financial asset prices.
The S&P 500 has soared 218% since 2009. A few weeks ago, it set an all-time high. Bond and commercial property prices have also soared to record highs.
At first glance, one might think the U.S. economic system is doing well. After all, financial assets are supposed to follow the economy. But the US economy is barely standing right now.
Since 2009, American GDP has grown at just 2.1% per year. That makes the current “recovery” the slowest on record. And it’s only got worse this year. Through June, GDP grew at an annual rate of just 1.0%.
This clearly isn’t sustainable. Eventually, financial assets will have to come down to earth.
That’s why we’ve been encouraging readers to get out of the stock market. Now, many of the world’s smartest investors are saying the same thing.
• Tad Rivelle thinks the Fed is losing its grip on the markets…
Rivelle is one of the world’s most respected investors. He is the chief investment officer of TCW Group Inc., which manages more than $160 billion.
Last week, Rivelle published a chilling letter. He warned that the eight-year easy money bubble was about to burst:
While every asset price cycle is different, they all end the same way: in tears… [S]uccessful, long-term investing is predicated on not just knowing where the happening parties are during the reflationary parts of the cycle but, even more importantly, knowing when the time has come to leave the dance floor. In our view, that time has already come.
• Like us, Rivelle says the Fed created this dangerous situation…
Rivelle wrote last week:
The Fed’s playbook on this is well worn: first, policy rates are lowered. This triggers a daisy-chain of events: low or zero rates promote a reach for yield; the reach for yield lowers capitalisation rates across a variety of asset classes which, in turn, spurs a rise in asset prices. Rising asset prices – the so-called wealth effect – “rescues” the economy by rebuilding balance sheets and restoring the animal spirits. And voila! Aggregate demand rises, businesses invest, and a virtuous growth process is launched. [Or so they think – Ed.}
Of course, the Fed’s easy money policies never “rescued” the economy at all. All they did was lift stock, bond, and commercial property prices.
• Rivelle says the Fed’s “stimulus” measures were doomed to fail…
According to Rivelle, economies grow when companies “make themselves more productive by delivering goods more efficiently or by innovating products valued by the marketplace.”
But that was never the Fed’s plan. Its goal has always been to get people to borrow and spend more.
According to Casey Research founder Doug Casey, these kind of policies don’t just fail… They actually destroy economies:
It’s part of the Keynesian view, in which spending and consumption drive the economy. This isn’t just wrong, it’s the exact opposite of what’s true. It’s production and saving that drive an economy. You have to save to build capital, and capital is necessary for…everything. What these people are doing is destructive of civilisation itself.
• U.S. financial assets have never been more out of touch with the “real” economy…
The chart below compares the value of financial assets (stocks, bonds, and real estate) with the proxy measure for economic output that is GDP.
Remember, financial assets and the economy should generally track together. When the value of financial assets greatly exceeds the value of the economy, it’s called a bubble.
You can see that the current bubble is far bigger than the one that triggered the 2008–2009 financial crisis.
• Rivelle says “we’ve lived this story before”…
As you may remember, American housing prices skyrocketed in the early 2000s. Eventually, home prices became so disconnected from the real world that they crashed in 2007.
The collapse of the US housing market nearly triggered a full-blown banking crisis. The S&P 500 plunged 57% in just two years…and the US economic system entered its worst downturn since the Great Depression.
Rivelle says we’re in a similar situation today. Unfortunately, the US economy is even more fragile today than it was then.
According to research by The TCW Group, the amount of US federal debt held by the public has jumped from 35% of GDP in September 2007 to 76% today.
Meanwhile, gross leverage, which measures how indebted US companies are, is now 2.9 after peaking at 2.1 in 2007. (The higher the ratio, the more debt a company has.)
• All that debt comes at a steep price…
Rivelle warned last week:
[B]uying growth today with credit that needs to be repaid tomorrow is not a free lunch! […]Leverage goes up faster than the income available to service it. As such, the credit-fuelled expansion inevitably comes to a bad end. We’ve lived this story before: indeed, while every cycle is distinctly different, they all end up suffering from the same central banker induced maladies.
According to Rivelle, it’s only a matter of time before the average investor realises “the central banking Emperors have no clothes.”
Whether the government admits it or not, the economy is headed for serious trouble…
* * * *
Chart of the Day
American corporate debt levels are spiralling out of control.
Since 2010, US corporations have borrowed almost $9 trillion in the bond market. That’s 50% more than US corporations borrowed in the seven years leading up to the financial crisis.
This huge explosion in corporate debt wouldn’t be such a big problem if the economy was doing well. But that’s not the case. Remember, the U.S. economy is limping through its worst recovery on record.
You can see in today’s chart why this is so concerning. This chart shows how much debt non-financial corporations owe relative to GDP. The higher the ratio, the more outstanding corporate debt there is relative to the size of the economy.
You can see that this key ratio is now approaching a record high. The last three times corporate debt raced ahead of the economy like this, recessions followed.
“There will be no adult on stage during [this afternoon]'s presidential debate,” observes Reason magazine. And let’s be honest, there’ll be no actual debating either – since by debate is meant an event in which participants address the issues and each other moderated only a fellow with a bell.
That’s not at all what’s on offer this afternoon.
There have been great presidential debates before that have been actual debates with genuine moderation, i..e, events in which the moderator is timekeeper not interviewer. There have been great political debates before moderated along those lines, most notably the justly-celebrated Lincoln-Douglas debates in which third-party candidate Abraham Lincoln famously denounced slavery, demolished his opponent, and set the stage for his later selection and inauguration.
But in this afternoon’s “debate” neither real debate nor third-party candidate is wanted – and in the selection of Trump and Clinton by their respective parties no sane, serious adult is welcome either.
So what we’re talking about instead is really an unscripted two-way interview with morons on both sides and little of substance separating them. An un-debate. A kind of managed “reality television” in which important issues can be safely ignored in favour of hype, fluff, bluster and insults, every one of which will be breathlessly reported while every important issue is wiped clean from every single headline.
The following is an incomplete list of at least seven issue areas in which sensible and frequently popular viewpoints will not be offered by either of the "major"-party presidential candidates tonight, because a contrary Libertarian who will be on the ballot in all 50 states will nonetheless sit excluded, 28 miles away. 1) The country's grim long-term fiscal outlook… This reticence to grapple with the America's perilous balance sheet is new, and actively dangerous… 2) Federalism [& the Constitution] …. the only presidential candidate talking about it is Gary Johnson. [The others would prefer to shred it.] 3) Trade. Forget for a moment the controversies (libertarian or otherwise) over the Trans-Pacific Partnership, and instead drill down into one salient and gruesome fact: Both candidates on the debate stage tonight are campaigning on promises to punish U.S. companies for relocating… 4) Military interventionism… Hillary Clinton … has spent the 21st century as a largely unrepentant warmonger. Donald Trump [merely continues the theme]. 5) Domestic surveillance. Hillary Clinton still defends the PATRIOT Act, wants to ban encryption and give the feds access to your iPhone, and denies that Edward Snowden is even a whistleblower. Donald Trump supports re-authorizing the PATRIOT Act, supports the National Security Agency's bulk metadata collection, and has repeatedly called for Snowden's execution. Gary Johnson would repeal the PATRIOT Act, dismantle the NSA, and pardon Edward Snowden… 6) Free speech… "Both candidates have abysmal records on First Amendment issues." 7) Prohibition… [You couldn’t slip a cigarette paper between the two on this one either, and even as the jails continue to fill up with Prohibition’s victims and police increasingly use it as an excuse for shooting and tasering the innocent, it will be a question noteable only by its absence from the un-debate stage.]
“It's worth noting too,” notes Reason, “that some of the most critical questions were edited out long before the debate began.” So subtract these seven issues from those that should be talked about and you have a recipe for a slinging match based on contentless fluff, as all the while “the[ir] nation careens toward fiscal calamity.”
In an era in which reality TV stars are king (and nearly president) ’m sure it will be “great television.”
But count me out.
PS: So what will the “contrary Libertarian candidate who will be on the ballot in all 50 states” be doing this afternoon instead? He’ll be live-Facebook-interviewing, and he and his running mate will be live-tweeting – which may both prove far more entertaining, and undoubtedly more informing.
Recent evidence confirms that recruits to ISIS are almost wholly ignorant of the religion under whose banner they wish to fight – ordering up copies of The Koran for Dummies and Islam for Dummies to “prepare themselves for jihad.” Suggesting not just that those who devise book titles enjoy stating the obvious, but that ignorance of the religion itself is not a barrier to recruitment in its jihad, but a boon.
The jihadi employment form asked the recruits, on a scale of one to three, to rate their knowledge of Islam. And the Isis applicants, herded into a hangar somewhere at the Syria-Turkey border, turned out to be overwhelmingly ignorant. The extremist group could hardly have hoped for better.
Turns out those very western recruits of whom everyone is so fearful are just idiots with empty lives seeking something seemingly meaningful to fill them. (Reflect, for example, on the comment on the would-be Garland terrorist: “He had been going down a bad path and then he found Islam.") These empty heads with empty lives are perfect fodder for an empty jihad for a religion that inhabits a vacuum – which perfectly describes their knowledge of it:
An Associated Press analysis of thousands of leaked Isis documents reveals most of its recruits from its earliest days came with only the most basic knowledge of Islam. A little more than 3,000 of these documents included the recruit's knowledge of Sharia, the system that interprets into law verses from the Quran and "hadith" — the sayings and actions of the Prophet Muhammad. According to the documents … 70 per cent of recruits were listed as having just "basic" knowledge of Sharia — the lowest possible choice. Around 24 per cent were categorized as having an "intermediate" knowledge, with just five per cent considered advanced students of Islam. Five recruits were listed as having memorized the Quran. The findings address one of the most troubling questions about Isis recruitment in the United States and Europe: Are disaffected people who understand Sharia more prone to radicalisation? Or are those with little knowledge of Islam more susceptible to the group's radical ideas that promote violence? The documents suggest the latter.
So these Jihadists know even less about the Quran than you and I do. Meaning that they are not being radicalised by the teachings of Islam, within which there is precious little to be inspired by anyway, but by the bullshit of their barbaric recruiters keen to harvest warm bodies willing to sacrifice for a cause. And for these empty heads who’ve heard from every corner that the willingness to sacrifice is the mark of a full life, these recruiters are there and willing and eager to pick up their remnants. And the emptier the head, the more useful the recruit,
because [it rurns out] those who claimed advanced knowledge in Shariah on the Isis entry documents were less likely to want to become suicide bombers, according to a study by the US military's Combating Terrorism Center, an academic institution at the United States Military Academy. "If martyrdom is seen as the highest religious calling, then a reasonable expectation would be that the people with the most knowledge about Islamic law (Sharia) would desire to carry out these operations with greater frequency," said the report. However, despite the religious justification that Isis uses for suicide missions, "those with the most religious knowledge within the organisation itself are the least likely to volunteer to be suicide bombers," the study found.
Empty heads filled up with a siren song of sacrifice.
These are empty heads not running to the recruiters for love of Islam; they’re invariably kids with empty lives running away from something else. Islam itself is simply the vacuum into which they’re sucked.
Islam still inhabits a vacuum; it always has. It’s an opportunistic ideology inhabiting, like a nest of cockroaches, all the dark forgotten corners of existence. Always has; still does.
Its empire was born only from the collapse of two others, born in the vacuum created by the collapse of the Roman and Persian powers and the demise of their religions) -- its military “strength” a reflection only of those two once-mighty empires’ fading power; its “scriptures” cobbled together from what they found in the Hebrew,Zoroastrian and heretical cultural remnants of the desert towns and waadis in the vacuum between crumbling empires that its marauding bands occupied. (Read Tom Holland’s ground-breaking history In the Shadow of the Sword.)
Its subsequent historic golden age was not wholly its own work, but the result of borrowing from much earlier Greek thinkers and with remarkably few original additions—and it was stopped overnight by the Arabic philosopher Al-Ghazali, more responsible than any other for turning Islam into the thing that now occupies its own Dark Age. (Read my own post ‘The Greatest Story (Hardly) Ever Told’ and Andy Clarkson’s ‘Yes, You Can Blame This Guy For Paris’)
Even its horrors enacted today are neither self-funded nor self-armed. The oil wealth without which neither Shia not Sunni violence could continue was created by and then stolen from western companies, income from which is now almost wholly provided by the oil purchases of the west. Its weaponry is aso from elsewhere, from the stockpiles of left-behind western military matériel, and from matériel donated directly to these butchers in pursuit of mistaken western strategic aims – and its belligerent limits are imposed only by the acquiescence and appeasement of of western political and intellectual leaders. (Read the relevant chapters of Daniel Yergin’s classic The Prize: The Epic Quest for Oil, Money & Power and Elan Journo’s Winning the Unwinnable War.)
Face it, the only reason we talk so frequently about this double-damned religion is because from a population of 1.5 billion Muslims worldwide a few dozen terrorists and just a few thousand ISIS fighters, financed by states long known to finance terrorism but for which the west has little appetite to say so, are allowed because of that appeasement to put whole continents on the alert. (Witness if nothing else the bowing and scraping of mute westerners at airports and sports events.)
Jihadists truly are the mouse that roars militarily.
Because these fuckers can’t even send their own fighters to do their job! Astonishingly, little has been written on this highly telling fact, but reflect on this: that with only trivial exceptions all those carrying out the horrors in Europe and the US, from London to Glasgow to Madrid to Paris to Boston to New Jersey, have not been poor fighters sent on a mission from far away through some secret refugee or immigrant network but have often been prosperous and almost alwayshomegrown. Just think about the implications of that for a moment. (And read for instance my 2014 post ‘Home-grown horror’ and Adam Taylor’s recent piece ‘The Islamic State wants you to hate refugees: And the plan may be working’.)
So it is simply not true that this evil is strong; like all evil, in itself it is impotent. Like communism, which could only survive by looting capitalists, and like all anti-life evils, it is necessarily parasitic on the good.
But as with communism, of those most opposed to it few realise the vacuum at its unbeating heart. Too few seem to realise that. So while western hipsters download zombie films in their droves, portraying artistically the perfect replica of the ISIS drone, we have allowed ourselves to be attacked by literal self-made zombies—zombies that are self-admitted death worshippers.
So how can a place that fights back by stripping down at airplane gates ever get itself off its knees to fight back? How can a civilisation bewildered by burkinis and cowed by campus millennials ever summon the resolve to defeat Islamic terrorists? Oddly enough, in the culture and on the campus may be among the places to begin fighting back. Because that’s where the corruption starts. When these awkward kids see the west’s intellectual and political leaders so brazenly apologetic about the values of their own culture, especially at a time when the contrast between life and anti-life is so stark, then why in hell (those few who are seduced must wonder) should anyone at all take these western values at all seriously?
When they see a handwringing good appeasing a morally righteous evil, why wouldn’t they start to wonder if there isn’t something to be said for a fundamentalism from the stone age – even if they know neither jot nor tittle of what it stands for apart from the virtue of sacrifice they hear western leaders themselves embrace?
Why wouldn’t they embrace meaning then where they do find it—in revolt, in sacrifice, in barbarism … ?
But remember, evil itself is impotent:
“The truly and deliberately evil men are a very small minority; it is the appeaser who unleashes them on mankind; it is the appeaser’s intellectual abdication that invites them to take over. When a culture’s dominant trend is geared to irrationality, the thugs win over the appeasers. When intellectual leaders fail to foster the best in the mixed, unformed, vacillating character of people at large, the thugs are sure to bring out the worst. When the ablest men turn into cowards, the average men turn into brutes.” ~ Ayn Rand (from ‘Altruism as Appeasement,’ The Objectivist, Jan. 1966)
By espousing the moral clarity eschewed by the appeasers in the west, even when they know nothing of the religion itself, young homegrown jihadis find something they hadn’t realised existed—and once again Islam steps into a vacuum of others’ creation.
The primary problem here of course is that westerners who are sure of their values are largely silent in defence of the values and virtues that made the west great, while pretending that a stone-age culture is in some way equal – leaving 0000the powerful moral certainty to come from the Dark Ages. In this compromise between a handwringing good and a crusading evil, it’s astonishing only that evil has as few victories as it has. But as Daniel Pipes asks, how is that “a majority population accepts the customs and even the criminality of a poorer and weaker community? It is the result of a conquest ideology taking the measure of a civilisation that no longer values its heritage, no longer regards itself as worthy of defence.”
some of these [homegrown killers] will simply be psychologically susceptible to the nastiness of a violent religion. But what else are they hearing? Where are the voices proclaiming the virtues of reason, individualism and liberty? Where today will they hear these values proclaimed proudly and unashamedly? Where will they learn of the superiority of reason over religion, of freedom over tyranny? When Britain was exporting liberty to much of the known world, these values were unapologetically front and centre. These were the values that built western civilisation. These were values absorbed by immigrants and locally-born alike. People moved to Britain and the west because of these values [and still do!]. What happened? In a word: multiculturalism. Multiculturalism teaching that the values of civilisation and those of barbarism are equal. Teaching that liberty and slavery are simply different choices. Teaching that if any culture should be shamed it should be western culture. That the west is responsible for all the world’s horrors, and the rest of the world simply a victim. This is the perversion now taught and promulgated in schools, in universities and in learned commentaries peddled by perfumed academics for the consumption of the self-anointed. So for all the decades that we’ve been told that Islamic terror is the result of ignorance and poverty, leading westerners have been silent about the superiority of western health, wealth and freedom over a stone-age theocracy in which beheadings, clitorectomies, slavery and crucifixions still play a part.
Well, for a start, we can stop taking these losers at their own estimation. Let's treat them, not as soldiers, but as common criminals. Instead of making documentaries about powerful, shadowy terrorist networks, let's laugh at the pitiable numpties who end up in our courts. Let's mock their underpants bombs and their half Jafaican slang and their attempts to set fire to glass and steel airports by driving into them and their tendency to blow themselves up in error. Let's scour away any sense that they represent a threat to the state – the illicit thrill of which is what attracts alienated young men trawling the web from their bedrooms. At the same time, let's stop teaching the children of immigrants to despise the [west]. Let's stop deriding and traducing our values. Let's stop presenting our history as a hateful chronicle of racism and exploitation. Let's be proud of our achievements – not least the defence of liberty … The best way to defeat a bad idea is with a better one. Few ideas are as wretched as the theocracy favoured by IS; few as attractive as Anglosphere freedom. I'm not saying that patriotism alone will finish the jihadis. Like the urban guerrillas in the 1970s, they must be treated primarily as a security problem rather than a political one. But what ultimately did for the Red Army Faction and all the rest was the fall of the Berlin Wall and the almost universal realisation that revolutionary socialism was no alternative to Western democracy. It comes down, in the end, to self-belief. Not theirs; ours.
Do you have it?
Because a war of ideas is more preferable to the other kind. And even that other kind amounts in the end to ideas.
Wars are not won just by military hardware or political re-arrangements [points out Mary Kenny]. They are won by ideas. They are won by men and women who have convictions and values which give them the impetus to pursue victory… There's nothing wrong with tolerance and a universalist outlook: these are good things. But if a host society is craven and defeatist about its own history and traditions, then it is asking for trouble. Western societies must uphold the achievements based on our values, and do so with fortitude… Isis will not be defeated by drones, military action or even politics alone, but by ideas and leaders who really and truly believe in their own values and traditions. After James Foley was beheaded, it was triumphantly announced that: "The sword is mightier than the pen." But ideas, and the conviction to carry them, are still stronger than all else.
So let’s fight for the enlightenment—for Reason, Science, Liberty, Modernity, and Civilisation—and fill the vacuum the jihadis are so fitfully filling.
The Enlightenment is a long-term strategy. In fact, many westerners would have to discover the enlightenment. The Enlightenment encourages us to be reflective. But to reflect on whether we are doing the right thing, isn’t an invitation to stop doing the right thing. As a civilisation we have become paralysed by self-doubt when we should have become energised by self-reflection. As we have discovered (or as many knew all along) a moral and ideological vacuum will be filled by others – as it turns out, by savages and barbarians.
What qualifies this woman to give folk stuff that doesn't belong to them, to tell them what to do in any aspect of their life? Nothing more than her lust for power, says Daniel Mitchell in this guest post. What has she ever accomplished in life?
Because of my disdain for the two statists that were nominated by the Republicans and Democrats, I’m trying to ignore the election. But every so often, something gets said or written that cries out for analysis.
Today is one of those days. Hillary Clinton has an editorial in the New York Times entitled “My Plan for Helping America’s Poor” and it is so filled with errors and mistakes that it requires a full fisking (i.e., a “point-by-point debunking of lies and/or idiocies”).
We’ll start with her very first sentence.
The true measure of any society is how we take care of our children.
I realize she (or the staffers who actually wrote the column) were probably trying to launch the piece with a fuzzy, feel-good line, but let’s think about what’s implied by “how we take care of our children.” It echoes one of the messages in her vapid 1996 book,It Takes a Village, in that it implies that child rearing somehow is a collective responsibility.
To be fair, Hillary’s column then immediately refers to poor children who go to bed hungry, so presumably she is referring to the thorny challenge of how best to respond when parents (or, in these cases, there’s almost always just a mother involved) don’t do a good job of providing for kids.
…no child should ever have to grow up in poverty.
A laudable sentiment, for sure, but it’s important at this point to ask what is meant by “poverty.” If we’re talking about wretched material deprivation, what’s known as “absolute poverty,” then we have good news. Virtually nobody in the United States is in that tragic category (indeed, one of great success stories in recent decades is that fewer and fewer people around the world endure this status).
For the sake of argument, though, let’s assume we’re using the conventional definition of poverty. Let’s look at how Mrs. Clinton intends to address this issue.
She starts by sharing some good news.
…we’re making progress, thanks to the hard work of the American people and President Obama. The global poverty rate has been cut in half in recent decades.
So far, so good. This is a cheerful development, though it has nothing to do with either the American people or President Obama. Global poverty has fallen because nations such as China and India have abandoned collectivist autarchy and joined the global economy.
And what about poverty in the United States?
In the United States, a new report from the Census Bureau found that there were 3.5 million fewer people living in poverty in 2015 than just a year before. Median incomes rose by 5.2 percent, the fastest growth on record. Households at all income levels saw gains, with the largest going to those struggling the most.
This is accurate, but a grossly selective use of statistics.
If Obama gets credit for the good numbers of 2015, then shouldn’t he be blamed for the bad numbers between 2009-2014? Shouldn’t it matter that there are still more people in poverty in 2015 than there were in 2008? And is it really good news that it’s taken Obama so long to finally get median income above the 2008 level, particularly when you see how fast income grew during the Reagan boom?
We then get a sentence in Hillary’s column that actually debunks her message.
Nearly 40 percent of Americans between the ages of 25 and 60 will experience a year in poverty at some point.
I don’t know if her specific numbers are accurate, but it is true that that there is a lot of mobility in the United States and that poverty doesn’t have to be a way of life.
…one of my top priorities will be increasing economic growth.
But then she goes off the rails by asserting that you get growth by spending (oops, I mean “investing”) lots of other people’s money.
I will…make a historic investment in good-paying jobs — jobs in infrastructure and manufacturing, technology and innovation, small businesses and clean energy.
And, if she gets her way, fewer jobs for low-skilled workers along with less opportunity for women (even according to the New York Times).
And we need to…rais[e] the minimum wage and finally guarantee… equal pay for women.
The comment about equal pay sounds noble, though I strongly suspect it is based on dodgy data and that she really favours the very dangerous idea of “comparable worth” legislation, which would lead to bureaucrats deciding the value of jobs.
…we will work to double investments in Early Head Start and make preschool available to every 4-year-old.
Wow, what a list. Now perhaps you’ll understand why I felt the need to provide a translation of her big economic speech last month.
The moral of the story, based on loads of evidence, is that making America more like Europe is not a way to help reduce poverty.
P.S. The only other time I’ve felt the need to fisk an entire article occurred in 2012 when I responded to a direct attack to my defense of low-tax jurisdictions.
Daniel J. Mitchell is a senior fellow at the Cato Institute who specialises in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the ‘Cayman Financial Review.’ This post first appeared at FEE.
Philosopher Robert Mayhew discusses what he calls “Ayn Rand’s sacred atheism”:
At the age of thirteen, Ayn Rand decided she was an atheist. Her reason: “the concept of God is degrading to man.” One major form of this degradation is religion’s effect on genuine values, including sacred values. This idea is prominent in her early writings and continues to be featured in ‘The Fountainhead’ and ‘Atlas Shrugged,’ as well as in her nonfiction.
“God, whatever you choose to call God,” she recognised, “is one’s conception of the highest possible.” If the highest possible is both unknowable and omnisicient, then that places the source of our values elsewhere – and it places our consciousness in a state of subservience.
A state inappropriate to life on this earth, and degrading to anyone calling themselves a man.
“Can a whole generation retire and live on speculation? … In speculation, your profit comes from the savings of someone else. You bought the asset, hoping the next guy will buy it off you at a higher price. Well, that guy buys in the hope that the next-next guy buys it at an even-higher price. Speculation converts one man's wealth into another man's income.” ~ Keith Weiner
“Quite simply, if helping the least well off in society is a priority, then fixing housing should be the focus.” Help the poor by fixing housing – Jason Krupp, NZ INITIATIVE
“We hear constantly about record levels of immigration into New Zealand, and claims that this immigration drives the increasingly overpriced Auckland housing market.” But the only thing that is at record numbers is net migration. (“From 2013, New Zealand’s net migration has entirely comprised people identifying as New Zealand residents returning from short visits (less than a year) overseas, minus the same group of people embarking on short visits overseas.”) And the movement of NZers is mainly “a reduction of people migrating to (mainly) Australia from provincial New Zealand.” Hmmm. Keith Rankin’s Chart for this Month [below]: Immigration – EVENING REPORT Immigration and Auckland Housing – why Unitary Plan is flawed and bubble burst prediction – Keith Rankin, DAILY BLOG
“After years of being in the ascendant, the centre-Left is being ruthlessly and methodically routed. Brexit is the most important incarnation of this revolution, of course, but Westminster is only just beginning to grasp the scope and scale of Britain’s coming transformation.” Rejoice! The liberal Left that once ruled over Britain is now being destroyed – Allister Heath, TELEGRAPH
“Americans’ trust and confidence in the mass media “to report the news fully, accurately and fairly” has dropped to its lowest level in Gallup polling history.” Americans' Trust in Mass Media Sinks to New Low – GALLUP
“Why don’t people like Hillary Clinton? Why do they always believe the worst? Why, when some supposed scandal breaks and someone says she’s hiding something, do people, including many of her supporters, assume it’s true?" Travel Back to an Early Clinton Scandal – Peggy Noonan, WSJ
“As usual, Hollywood is pushing a narrow box of choices through celebrity blowhards. For all the lip service these blowhards pay to ‘democracy,’ when put to the test, it's only a great system when everybody votes the way they prefer.” And Now, a Condescending Message from Hollywood - Sean Malone, FEE
“Bottom Line: The only thing worse than killing elephants is leaving elephants vulnerable to murder. We can save them just as we save dogs and cats -- by giving them owners who value them, sometimes as dead trophies but more often as a thriving, growing herd.” Demand for elephants can save elephants – David Zetland, AGUANOMICS
“What is politically defined as economic planning is the forcible superseding of other people’s plans by government officials.” ~ Thomas Sowell
“"Two hundred years ago, before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. If he was born poor, he always remained poor, and if he was born rich—a lord or a duke—he kept his dukedom and the property that went with it for the rest of his life. “As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people (ninety percent or more of the European population) worked the land and did not come in contact with the city-oriented processing industries. This rigid system of feudal society prevailed in the most developed areas of Europe for many hundreds of years." The History of Capitalism – Ludwig Von Mises, MISES WIRE
“I wish there were a trillion humans in the solar system. Think how cool that would be. You’d have a thousand Einsteins at any given moment—and more. There would be so much dynamism with all of that human intelligence. But you can’t do that with the resources on Earth or the energy on earth. So if you really want to see that kind of dynamic civilization as we expand through the solar system, you have to figure out how to safely move around and use resources that you get in space.” Jeff Bezos on nuclear reactors in space, the lack of bacon on Mars and humanity’s destiny in the solar system – WASHINGTON POST
“In Equal Is Unfair, Yaron Brook and I argue that one of the problems with the concept of “economic inequality” is that it lumps together two fundamentally different things: inequality that reflects differences in productive achievement and inequality that reflects some people’s ability to gain unearned wealth. Package-deals like this lay the groundwork for injustice.” The Trouble With “Rent Seeking” – Don Watkins, VOICES FOR REASON
The richest family in America is the one that best serves the poor. More Silly Arguments Against Walmart – Don Boudreax + commenters, CAFE HAYEK
A must-read – and free! ”I know only too well how hopeless it seems to convince impassioned supporters of the Socialist Idea by logical demonstration that their views are preposterous and absurd. I know too well that they do not want to hear, to see, or above all to think, and that they are open to no argument. But new generations grow up with clear eyes and open minds. And they will approach things from a disinterested, unprejudiced standpoint, they will weigh and examine, will think and act with forethought. It is for them that this book is written.” Socialism: An Economic and Sociological Analysis – Ludwig Von Mises, MISES LIBRARY
"Instead of prosperity, socialism has brought economic paralysis and/or collapse to every country that tried it. The degree of socialisation has been the degree of disaster." ~ Ayn Rand.
“Enesto Sirolli began his career working for an Italian non-profit … teaching Zambians how to grow food… “Sirolli’s colourful message: ‘If you arrive in a community with arrogance, and you don't listen to the local people ... you are going to have your pride chewed off by the local hippos.’” The Pretense of "Thinking Globally" – Barry Brownstein, FEE
“Listening to Janet Yellen splitting hairs and blathering in circles about the state of the economy yesterday was enough to put you in mind of a paint-by-the-numbers robot built in the labs at MIT and programed by its Keynesian economics department.” Duck And Run—-The Robot Doth Blather – David Stockman, CONTRA CORNER
Is a US$15 minimum wage a good idea? The always insightful and entertaining Don Boudreaux debates Mike Konczal.
“While all economic views of productivity growth may have a grain of truth, I argue that all of these theories of productivity growth are fundamentally wrong. The economic evidence shows clear relationships between the trend of decline in productivity growth and the trend in declines of the U.S. patent system.” Causes and Consequences of Productivity Growth Declines – Neal Solomon, IP WATCHDOG
More regulation => more barriers to entry => more monopolies. How to reduce monopolies? Reduce regulation:
“While Edward Snowden has done heroic things to expose our government's unjust mass surveillance programs, he's unfortunately promoting the same theory of privacy that gave rise to those programs.” ~ Amy Peikoff …
“This woman has quite obviously penetrated the [popular] consciousness in a way that few, if any, modern philosophers have. So, why do we not study her?” Objectivist philosophy should be taught in the classroom – Ethan Davis, THE DM ONLINE
“Through the lens of David Kelley’s polemical work, A Contested Legacy of Ayn Rand, a few critical issues in Objectivism get revealed.” On David Kelley’s Idea of The Legacy of Ayn Rand – Anoop Verma, VERMA POST
“Here’s something you probably didn’t do this morning: Look in the mirror and ask, am I a jerk?” How to Tell If You're a Jerk – Eric Schwitzgebel, SPLINTERED MIND
“Poor research design and data analysis encourage false-positive findings… The persistence of poor methods results partly from incentives that favour them, leading to the natural selection of bad science.” The natural selection of bad science - Paul Smaldino, Richard McElreath, ROYAL SOCIETY OPEN SCIENCE
“Do you know what’s happening in this picture [below]? Literally one of the most important events in human history… But here’s the most amazing part of the story: Hardly anyone paid attention at the time.” When You Change the World and No One Notices – COLLABORATIVE FUND
“A heartwarming family recipe that isn't fucking gross! I’m gonna eat the fuck out of this.”
To the Big 3 Tenors add the name of saxophonist Ben Webster. The Big 3 Tenors – uDISCOVER MUSIC
Especially for those for whom the words “new King Crimson” makes your heart beat faster! (“A taster from the new King Crimson album – Radical Action to Unseat the Hold of Monkey Mind.")
And new, very solemn, Cave.
"Incomparable and bewildering,” said Debussy.”Parsifal is one of the most beautiful monuments of sound ever raised to the serene glory of music." Sibelius reckoned "Nothing in the world has made so overwhelming an impression on me.” Debussy and Sibelius were smart men.
The authors of Auckland’s Unitary Plan took on the issue of how the city should be allowed to grow by the planners. Disallowing people’s freedom to choose themselves how the fuck they live, they characterised it as a choice between up versus out.
The best choice within this perverted planning framework would have been to say both-and.
The very worst choice of all would have been to largely prohibit building out while severly limiting where people will be allowed to build up – which is what the city has ended up with.
Cities that have curbed their expansion have – with limited exception – failed to compensate with densification. As a result they have produced far less housing than they would otherwise, with severe national implications for housing affordability, geographic mobility and access to opportunity, all of which are keenly felt today as we approach the top of housing cycle.
Part of the reason is that, as urban-research economist Issi Romem finds, cities do fail to compensate for not building out by making it far too difficult to build up either.
But the other reason is that simple urban land economics means that because the planners’ ring-fence around the city “destroys the competitive market for land on the urban fringe,” the jolt in prices there feeds through to every single home in the city.
Near 50 years ago, legendary urbanologist Sir Peter Hall suggested that “soaring land prices …. certainly represent the biggest single failure of the system of planning introduced with the UK’s 1947 [Town and Country Planning] Act” (see: The Costs of Smart Growth Revisited: A 40 Year Perspective). Urban containment policy, the principal strategy of forced densification, cannot repeal the law of supply and demand. Seventy years of experience prove that.
The writers of Auckland’s Unitary Plan could not care less about that proof.
Now about Auckland’s would-be home-buyers locked out of the housing market by their strangling of it.
"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorises it and a moral code that glorifies it." ~ Frederic Bastiat in Economic Sophisms
Where would all workers be without unions? Probably much better off says Gary Galles in this guest post.
There is a well-established tradition in which unions claim credit for every worker gain. Among their most common assertions, often incorporated in attributing negative wage trends to eroding union power, is that unions raise all workers’ wages. Unfortunately, while sometimes raising those of their own members, unions retard rather than raise the real earning power of all workers in general.
Unions leverage special government-granted powers (e.g., unique exemptions from antitrust laws) allowing current employees to prevent competition from others willing to do the same work for less. This is a form of collusion that, done by any business, would be legally prosecuted.
The higher union wages that result are then credited for raising all workers’ wages because they supposedly force up other employers’ wages to keep their workers from leaving for those better-paying alternatives. However, their claim cannot be true without violating the law of demand.
Higher Wages, Fewer Jobs
Higher wages from unions’ government-imposed monopoly power would push up others’ wages only if it increased the number of such high-paying jobs. The reason is that employers need only outbid employees’ actual options to retain them. But by artificially forcing up the cost of hiring their workers, unions reduce rather than increase the number of such jobs offered by employers, reflecting the reduced output consumers will buy at the higher costs and prices that result. Instead of improving the alternatives available to non-union workers, they are worsened, as the displaced workers are forced into competition with others for non-union jobs.
Those displaced workers increase the labour supply for non-union employment. That pushes wages for all workers in those jobs down, not up. Consequently, union wage premiums do not benefit all workers; benefits come primarily from other workers’ pockets.
With only about 18% of America’s private sector workforce remaining unionised, union power therefore cuts the real incomes of more than 4 out of 5 workers. And since unions also hike government service costs directly, as well as through other cost-increasing policies (e.g., the “Living Wage” nonsense and project labour agreements) which big labour’s political clout has pushed through, all other workers are also harmed as taxpayers.
Union Opposition to International Trade
Unions have also used the same “big lie” technique of constantly repeating the opposite of the truth as fact in other areas. For example, aware that their monopoly power to exclude competing workers stops at the border, unions have long been the core backers of protectionism. They focus their attention on those getting special protection, then assert that their benefits will also spread throughout the economy to benefit others.
But they ignore protectionism’s much larger harms — to all other workers who would have gained from expanded exports; to all other workers who, as consumers, have their access to lower cost and superior imports (and domestic production forced to compete with it) restricted; and to all other workers adversely affected by the reduction in real wealth and income produced by domestic protectionism and induced foreign protectionist responses.
Given that Labor Day in the US has been considered the traditional start of “serious” presidential campaigning, it is an appropriate time to remember just how damaging unions’ “big lie” strategy is. Its illogical twist can derail accurate understanding of the harm unions impose on almost all Americans, offering a sobering reminder that “It ain’t ignorance that does the most damage; its knowing so derned much that ain’t so.” After all, when people know they are ignorant of important variables that bear on their decisions, they usually don’t bet the house on them, but when they think they know what is false to be true, they often lose the house.
Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. A version of this post appeared at the Mises Wire.
I realize she (or the staffers who actually wrote the column) were probably trying to launch the piece with a fuzzy, feel-good line, but let’s think about what’s implied by “how we take care of our children.” It echoes one of the messages in her vapid 1996 book,
But then she goes off the rails by asserting that you get growth by spending (oops, I mean “investing”) lots of other people’s money. 
