Archive for the ‘Economics’ Category

Looking Out the Window

September 17, 2014

I caught this article in Rolling Stone about the looming threat of climate change and what can be done about it. As you might expect from a magazine that usually covers music, it is short on science and reason and long on alarmism. There are only a few points here and there in the article I want to mention, so I am not going over the whole thing. Feel free to follow the link if you want.

After 25 years of failed climate negotiations, it’s easy to be cynical about the upcoming talks in Paris. But there are at least three factors that make a meaningful agreement next year possible.

The first is that climate change is no longer a hypothetical problem – it’s happening in real time all around us. Droughts, floods, more destructive storms, weird weather of all sorts – just look out your window. In the latest reports from the Intergovernmental Panel on Climate Change, the world’s top scientists called the fact that the Earth is warming “unequivocal” and stated that humans are the cause of it. Without dramatic action, the planet could warm up as much as 4 degrees Celsius (7.2 F) by the end of the century, which would be catastrophic. As Kerry said of a report last September, “The response must be all hands on deck. It’s not about one country making a demand of another. It’s the science itself demanding action from all of us.”

If I look out my window, I would see two relatively mild summers in a row with a brutally cold winter between them. Ought I to conclude that the planet is getting cooler? Of course not. Looking out my window tells me nothing about the state of my local climate, much less the climate of the whole world. Looking at the weather for the past year or two also doesn’t tell us very much. In any case, we have not, in fact, been having more floods, droughts, more destructive storms, or weird weather over the whole world for the last decade.

I want you to look at this graph from the Paleomap Project. It shows how the Earth’s temperature has varied over time.

globaltemp

 

The Earth’s average temperature is presently around 17° Celsius or 61° Fahrenheit. Notice that the Earth has warmed, and cooled, quite a bit more than the four degrees that is supposed to be catastrophic. Contrary to what the global warming alarmists seem to believe, the Earth has not existed at a delicate equilibrium temperature for millions of years only to be disrupted by man. The Earth is a dynamic system, which is why it is so difficult to figure out what is actually going on and to what extent human beings are responsible.

The second factor is that until now, the biggest obstacle to an international agreement to reduce carbon pollution has been the United States. But that’s starting to change. Thanks to Obama’s recent crackdown on pollution, as well as the boom in cheap natural gas, which has displaced dirty coal, carbon emissions in the U.S. are on the decline. “What the president has done is very important,” says Robert Stavins, director of the Harvard Project on Climate Agreements. “It allows the U.S. to look at other countries and say, ‘Hey, what are you doing?'”

Well, yes. No previous president has been as willing to disrupt the American economy as much as President Obama has. Don’t look for many other world leaders to be as foolish as he is, however.

The final reason for hope, paradoxically, is China’s relentless demand for energy. China is in the midst of a profound economic and social transformation, trying to reinvent itself from an economy based on selling cheap goods overseas to an economy based on selling quality consumer goods at home, while keeping growth rates high and cutting dependence on fossil fuels. Energy demand is expected to double by 2030, and at that pace, there is not enough oil, coal and gas in the world to keep their economy humming. So China’s ongoing energy security depends on the nation developing alternative energy sources in a big way. “We need more of everything,” says Peggy Liu, a sustainability leader who works across China. “Wind, solar, a modernized grid. We need to leapfrog over the past and into a clean-energy future.”

China’s leaders are also waking up to the fact that recent decades of hypergrowth, most of it fired by coal, have exacted a steep price. Air pollution in China’s big cities is among the worst in the world; one recent report found that poor air quality contributed to 1.2 million premature deaths in 2010. As Hank Paulson, former Secretary of the Treasury and longtime China observer, has put it, “What is another point of GDP worth, if dirty air is killing people?” Earlier this year, a riot broke out in Zhongtai, a town in eastern China, when protests against a new waste incinerator turned violent, leaving police vehicles torched and at least 39 people injured; in southern China, protests erupted over the construction of a coal-fired power plant. Similar clashes are increasingly frequent in China as pollution-related illnesses rise.

And it’s not just the air that’s a problem in China. More than 20 percent of the country’s farmland is polluted. Sixty percent of its groundwater supply is unfit for human consumption. Rivers are industrial sewers. Last year, 16,000 swollen and rotting dead pigs were found dumped in the Huangpu River near Shanghai.

The Chinese are not going to stop using coal. They may invest in alternative sources of energy to supplement their fossil fuel but they are not going to let their economic growth slow down just to appease Barack Obama and John Kerry. The Chinese do have an awful lot of work to do towards cleaning up their environment and actual anti-pollution laws that are actually enforced would go a long way towards improving the quality of life in China. China cannot afford to be distracted by global warming alarmism.

The second revelation is that the Paris agreement is likely to be more about money than about carbon. That is not inappropriate: Climate change is, at its base, an environmental-justice issue, in which the rich nations of the world are inflicting damage on the poor ones. One question that has always haunted climate agreements is, how should the victims be compensated? In past U.N. agreements, developed countries have promised aid to poorer nations. But in translating these general commitments into hard numbers, says Elliot Diringer, a climate-policy expert at the Center for Climate and Energy Solutions, “the cash flows really have never been enough.”

In Paris, they will try again. The delivery vehicle of choice is called the Green Climate Fund, which was one of the few concrete accomplishments to come out of Copenhagen. The idea is simple: Rich countries pay into the fund, the fund’s 24-member board examines proposals from developing countries for clean-energy and climate-adaptation projects, and then it awards funds to those it finds worthy.

The Green Climate Fund was born in the closing days of the Copenhagen negotiations, when then-Secretary of State Hillary Clinton tried to lure China and other developing nations into a deal by promising that, in exchange for agreeing to a binding cap on carbon pollution as well as outside monitoring and verification of pollution rates, rich nations like the U.S. would pledge a combined $100 billion a year to help poor nations. Many negotiators thought it was a clever (or not so clever) ploy by the U.S. to make China take the fall for the collapse of the Copenhagen deal, since it was clear that China considers emissions data a state secret and would never allow outsiders to pore through the books. But regardless of the intentions, the deal fell apart. The $100 billion promise lingered, however, and was codified in later agreements. (Although $100 billion sounds like a lot, it’s a small part of the $1 trillion a year that will be necessary to transform the energy system.)

Right now, developed nations have a long way to go to live up to Clinton’s promise. The Green Climate Fund has taken four years to get up and running, and still nobody knows if it will primarily make loans or grants. So far, only Germany has come through with a meaningful pledge, offering $1 billion over the next nine years. Stern says the U.S. is putting “a lot of blood, sweat and tears” into getting the fund set up right, and that the $100 billion a year will come from a variety of sources, including private investment. But if the point of the fund is to demonstrate the commitment of rich nations to help the poor, it will need them to make real financial commitments. “Big new public funds are not viable,” says David Victor, a climate-policy expert at the University of California, San Diego. “This could be a train wreck of false expectations.”

Here we get to the real motive behind all this, money. This is not really about climate change or the future of life on Earth. This is about “environmental justice”. Like every other time that the noun justice is modified, environmental justice has little to do which justice and more to do with a left wing agenda, in this case the transfer of money from rich nations to poor nations.

This post is getting to be too long but there is only one more paragraph to highlight.

A few hours later, Kerry and his team jet off to Afghanistan. The world is a big, complicated place, and everyone – even the most committed climate warriors like Kerry – has a lot of other things to think about beyond how much carbon we are dumping into the atmosphere. And that, in a way, is always the problem: There is always something more urgent, more immediately catastrophic to seize the attention of policymakers – and in the coming years, many of the crises that will distract us from dealing with the realities of climate change will largely have been caused by climate change. Through all these short-term emergencies, the Earth will keep warming, the droughts will get worse, food will grow scarce, ice will vanish, the seas will rise, and starting around 2030, climate change will emerge from the background and eventually become the only thing we talk about. It will be the story of the century.

We’ll see what actually happens in 2030. My guess is that we are going to be told that there is some catastrophe looming around the corner and if we don’t take immediate action, the Earth will be uninhabitable by the year 2050. I also predict that the immediate action will consist of more government control over our lives and a willingness to accept a lower standard of living. Their rhetoric hasn’t changed in the last forty years and it won’t change in the next forty years, regardless of actual events.

 

The Last Refuge

August 15, 2014

Samuel Johnson once famously said that patriotism is the last refuge of a scoundrel. It is not known in what the precise context was in which Johnson made this statement. He was not disparaging patriotism in general, since he considered himself to be a patriotic Englishman. It is most likely that he said in the the course of a discussion on politics. Perhaps he was referring to a politician who he believed was not really a patriot, but who found it convenient to pose as one. Whatever the context, it is true that scoundrels of all sorts have tried to conceal their motives and actions under a cloak of patriotism.

Speaking of patriotism and scoundrels, here is an e-mail I received from Organizing for Action the other day.

 

Friend –

What Walgreens did last week was a big deal.

The pharmacy giant publicly decided to do the right thing by refusing to exploit a tax loophole.

The loophole — called a tax inversion — is when a company in the United States purchases a foreign company, and then claims residency in that country for tax purposes. It’s something that could cost our country $20 billion over the next 10 years.

Right now, dozens of American businesses across the country are weighing this decision.

This is an important time to take a stand — say you’ll fight for closing corporate tax loopholes and help make sure everybody pays their fair share and plays by the same rules.

To a lot of us, this issue is pretty clear cut: President Obama said it’s a question of “economic patriotism.”

The companies that take advantage of tax inversions don’t have to move their headquarters or CEO. They can continue to enjoy all the benefits of operating in our country while drastically cutting how much they contribute in taxes.

That means when they “leave,” you and I get stuck with paying an even bigger share of the bills for things our country needs, like funding for our roads and bridges.

That’s why it’s so heartening to see a company as big as Walgreens reject tax inversions.

The more Americans who stand up and make their voices heard, the more that other companies will choose to do the right thing.

Let’s close this loophole — add your name today:

http://my.barackobama.com/Fight-Corporate-Tax-Loopholes

Thanks,

Nico

Nico Probst
Director of Special Projects
Organizing for Action

Patriotism, like justice, is a noun that does not usually require any modifier. If someone modifies the word justice with adjectives to make phases like social justice, climate justice, or food justice, justice is not really what they have in mind. Likewise, adding an adjective to patriotism to make something like economic patriotism might indicate that the speaker is not really interested in patriotism, as it is generally understood. They wish to use patriotism as a way to shame or coerce people to work against their own interests or to respond to bad policies. In this case, the people behind Organizing for Action, the Obama administration, have done their best to make the United States a hostile place for businesses and then are surprised when businesses decide to relocate to places with a better business climate or take advantage of every loophole to lower their tax bill.

One obvious way to encourage businesses to stay in the United States might be to lower the corporate tax rate. Right now, at 39.1 % the US has the highest corporate tax rate in the developed world. I know that most businesses don’t actually pay that rate, but surely finding ways to reduce their tax bills must be expensive and burdensome. If we were to lower that tax rate to something they would pay while decreasing the number of loopholes, everyone  might benefit. It is better to tax people, and corporations, at a lower rate they will pay than a higher rate they will only seek to evade. But, it is easier to appeal to economic patriotism than to change bad policies, especially if you happen to be a scoundrel.

Portrait of Samuel Johnson commissioned for He...

He knew a scoundrel when he saw one.  (Photo credit: Wikipedia)

 

 

 

 

Dollar Crash

August 4, 2014

Here is an e-mail I received recently.

Dear Fellow Citizen,

Ron Paul recently told us that we will soon experience a “Major Crash of the Dollar”. We see signs that it’s coming every day …

But what if Dollar Crash has already begun? Consider …

Value of a $1 Federal Reserve Note in 1913 Dollars

If your retirement savings are exposed:

Thanks to an Extraordinary IRS “Loophole”, now you can legally move your IRA or 401(k) out of a dying dollar and into Gold – it’s what Dr. Paul calls his “insurance against the dollar fiasco.”

While you still can: We have an Information Guide on Gold ready to send you – there is ZERO cost and ZERO obligation to you.

You can Get Your FREE Info Guide Here.

This comprehensive, 16-page guide reveals how gold and silver:

  • Safeguard from a falling dollar,
  • Protect in times of uncertainty, and
  • Offer tremendous growth potential

    ==>

    Click HERE to Get Your Information Guide
    (ZERO cost and ZERO obligation to you)

    Sincerely,
    Birch Gold Group
    The Precious Metal IRA Specialists

As far as I can tell, the Birch Gold Group is some sort of brokerage firm that deals in gold and silver. I have to wonder, if I agree to use their services and have my 401k account transferred into gold, how am I expected to pay for it? Do they take a share of the gold or do I pay them in the rapidly decaying dollar? If the dollar does crash and takes the American economy with it, what makes them think that gold will be worth anything? Will people be paying for things with gold coins? If I retire, will they send me gold instead of depositing money in a bank account? What happens if the price of gold collapses?

I think I will pass on this deal and just continue to use dollars.

 

Ignorance is Bliss

July 10, 2014

Two recent e-mails I have received prove this old saying true. First there is one from Moveon.org.

Dear MoveOn member,

If you thought House Republicans couldn’t get worse, I’ve got bad news. Speaker John Boehner is now threatening to sue President Obama because House Republicans are mad that President Obama is using his executive authority to get things done where Congress won’t act.1

Such a ridiculous lawsuit would be a wasteful and inappropriate use of taxpayer dollars for political purposes, and we’ve hatched a plan to fight back.

Our legal team is investigating options to hold Speaker Boehner accountable if he moves forward—from launching a lawsuit of our own, to filing a formal complaint in Congress, to other responses. And we are planning protests outside of Republicans’ district offices and other tactics that can break into the news. Together, we can help expose the lawsuit for the cynical political ploy that it is and generate press coverage that holds Republicans accountable as the November elections loom.

Because MoveOn is its members, we want to know what you think before we decide whether to proceed. Do you think we should move forward—or do you want us focused on other things? Click to let us know:

Yes, MoveOn should fight to hold Speaker Boehner and House Republicans accountable if they use taxpayer dollars to sue President Obama.

No, I’d prefer for MoveOn to focus on other things (and tell us which other things).

Thanks for all you do.

–Anna, Bobby, Matt, Amy, and the rest of the team

Checks and balances? What’s that. As it happens, I don’t think Speaker of the House Boehner should sue the president either. There are other options Congress can use to rein in an over bearing president. The House of Representatives, in particular, has the power of the purse. I think it would be better if John Boehner worked as hard as he could to get as many Republicans elected as possible. With a majority in both houses of Congress, they have a much better chance of stopping Obama. Suing him will only fire up the liberal base. I could say something similar about calling for impeachment. The Republicans have a good chance of winning big this year, but both of these tactics could ruin things.

I wish, though, that the people at Moveon.org, and elsewhere, would think very carefully about the statement that the President must act by executive authority because Congress won’t. What exactly do we have a Congress for? If the only legitimate role of Congress is to rubber stamp everything the president decrees,than why bother to have a Congress at all? Why not just make the President a dictator who we elect every four years? They seem to think we should have a system like the old Soviet Union or some banana republic in which there is a phony legislature that pretends to be passing the laws while the Leader is calling all the shots. Haven’t any of these people stopped to think that there may come a time when someone they thoroughly detest becomes president and enacts policies they oppose over the will of Congress, maybe we might even get another Republican as president? When that time comes, they may wish we still had the checks and balances they worked so hard to eviscerate.

The other e-mail is from Organizing for Action.

Friend –

Big news in the fight to raise the minimum wage:

In the last few months, four states have passed laws to raise the wage, and several cities and local governments are following suit.

That’s how we make progress, even if a minority in Congress is blocking it.

OFA’s petition to lawmakers already has nearly half a million signatures on it — yours belongs on it, too. Add your name to the petition today.

A higher minimum wage isn’t just good for workers, it’s the right idea for our economy.

More money in minimum wage earners’ pockets means more money to spend at area businesses.

That’s why governors and legislators on both sides of the aisle are working to raise the wage. Just since May, we’ve seen Maryland, Michigan, Hawaii, and Massachusetts pass higher state minimum wage laws.

This fight is also happening on the local level. Seattle, Philadelphia, and Richmond, California, have all taken steps forward to raise the wage for thousands of workers in their cities.

In Las Cruces, New Mexico, supporters delivered more than 6,000 petition signatures to put a minimum wage increase measure on the ballot this fall.

That’s grassroots energy, and it’s proof that when we make our voices heard, progress is possible — with or without Congress.

This petition is how we’re going to send a message that the other side can’t ignore. We’ve got hundreds of thousands of signatures.

Right now, it looks like your name is missing, but that’s alright.

You can add your voice today, and tell lawmakers it’s time to raise the minimum wage:

http://my.barackobama.com/Raise-the-Wage-Petition

Thanks,

Lindsay

Lindsay Siler
National Director of Issue Campaigns
Organizing for Action

Raising the minimum wage helps the economy because people have more money to spend in area businesses. There is something that doesn’t add up here. I have dealt some of the problems with raising the minimum wage before. Yes, the people who work at or slightly above minimum wage will have more money to spend at area businesses. But the increase in labor costs caused by the mandated increased in wages will mean that the area businesses will have a lower profit. You might think, “So what. The greedy capitalists shouldn’t be making such a large profit”. Remember that for a small business owner, that profit is their wage. That is what they are trying to live on. Even for a large corporation that profit is what they use to expand their business and pay put dividends to their stockholders. In order to maintain their profits in the face of rising labor costs, businesses, both small and large, will be forced to consider ways of cutting costs, making do with fewer employees, and increasing income, raising prices. In terms of purchasing power, many of those people who received a raise will eventually find themselves back where they were before.

It must be nice not to have to think things through, to just go with whatever feels good at the moment. You can support all sorts of foolish policies that may ultimately harm the people you intend to help, but if you never stop to consider the unintended consequences of such policies that  thought will never cross your mind. Ignorance is bliss.

 

Ayn Rand Contra Human Nature

July 7, 2014

I have had somewhat ambiguous feelings about Ayn Rand and her philosophy of Objectivism ever since I first discovered her in college. I agree with much of what she had to say: freedom, capitalism, and the use of reason are good; tyranny, socialism, and living off others are bad. Nevertheless, I have always felt vaguely repelled by her writings. Perhaps it is because I feel a slight malevolence underlying much of what she wrote. Ayn Rand was never one to forgive an enemy or maintain a friendship with someone of an opposing philosophy. Maybe the figures in her fiction are not much like real human beings. The heroes are completely good with no flaws, the villains completely evil with no redeeming characteristics. I am sure.

It is for that reason that I read Greg Nyquist’s Ayn Rand Contra Human Nature. Mr. Nyquist is a critic of Ayn Rand, but he takes a different approach than most of her critics. He does not spend much time examining the details of her philosophy, except to note where Objectivism is contradictory or incomplete. He does not refute Objectivism on a philosophical basis. In fact, at some points he concedes, for the sake of argument, that Objectivism is the most ideal philosophy imaginable. He also does not criticize Ayn Rand on a personal basis, except to show where her personality characteristics shaped Objectivism.

download

What Greg Nyquist does instead is ask whether Ayn Rand and Objectivism actually works. Mr. Nyquist does not have much use for windy speculations about metaphysics or wordy conjectures about the way things ought to be. He is a practical man. He wants to know whether the assumptions about humanity and the world made by Ayn Rand that form the basis of Objectivism are actually in accordance with the observed facts. To this end, he has written Ayn Rand Contra Human Nature.

This book is divided into eight chapters, each chapter dealing with some aspect of Ayn Rand’s philosophy, her theories of human nature, history, epistemology, metaphysics, ethics, politics, and aesthetics. The final chapter considers the future of Objectivism. It should not be a surprise that Nyquist finds Ayn Rand’s theories wanting. In particular, he criticizes her ideas on human nature as being unrealistic. She was more concerned with human beings as she believes they ought to be rather than how they really are. She believed that human nature can be changed and that the widespread acceptance of Objectivism will cause people to think and act more rationally. Ayn Rand argued that people act according to the fundamental premises of their particular philosophy and if that philosophy is changed from one that accepts mysticism and collectivism to one that follows reason and individualism, then we can create a utopia of reason and capitalism. Nyquist disagrees, noting that human nature has changed little, if at all, throughout the centuries. People do not often follow a consistent philosophy. They act according to desires and interests and adapt their personal philosophy to justify their actions. He notes that history is less the result of various philosophical and ideological movements, as Ayn Rand asserted, but is more influenced by people’s desires and interests, particularly those of the ruling class. There is a lot more to his criticism, but the general idea is that Ayn Rand simply did not seek any sort of empirical verification of her ideas. She preferred to think about things rather than go out and see how things really are.

On the whole, I agree with Greg Nyquist’s criticism. I think that after some point, Ayn Rand lived in an imaginary world with John Galt and Howard Roarke. I have noticed in her nonfiction, she tended to refer to or quote her characters as if they were real people. She tends to make assertions that are completely reasonable and logical, but with she seldom presents actual evidence that these assumptions are true. I have also found her knowledge of history to be shallow.

While Greg Nyquist presents himself as a practical man, he sometimes crosses into cynicism. He seems to have a very negative opinion on human nature and regards politics as nothing more than the elite getting their way. While this is all true, it is not the whole truth. He believes that even if Ayn Rand’ s ideal of laissez-faire capitalism and the minimalist state is the best system possible, they will never come about into actuality because no political/economic elite will allow them to. Ayn Rand and her followers are idealists who fight for a cause no pragmatic politician would waste his time with.

In the end, I am going to side with the idealists. The idealist will sometimes bring about needed change because he doesn’t know it is impossible and even if he fails, he can at least push things in the right direction. The practical man knows it is impossible and so doesn’t bother to try.

Hobby Lobby Outrage

June 30, 2014

Today, the Supreme Court  ruled that a company need not cover contraceptives if it is against their religious convictions. This is a victory for religious freedom in this country, and really for freedom generally. If Hobby Lobby does not wish to pay for their employees’ contraceptives, they shouldn’t have to. If someone wishes to have their employer pay for their contraceptives, they should consider working for a company that does cover them.

Naturally the Democrats don’t see it that way. I have already received fund raising e-mails telling of their disgust and outrage over this decision and asking for money to elect Democrats to make sure it doesn’t happen again. Either they are quick writers, or they had already pre-written their appeals in the event of this decision.

Here is one from Stop the GOP.

Friend — It’s outrageous: Just hours ago, the Supreme Court handed corporations the power to deny women birth control coverage. It’s a sad day for America.

Mitch McConnell’s reaction? He’s gloating, and he just vowed to vote on “limiting abortions if Republicans take control of the Senate in November,” according to Rachel Maddow.

But mark our words: If we let the GOP steal the momentum in the wake of this decision and take the Senate, we will DEEPLY regret it. You MUST stop McConnell and the GOP.

With just 12 hours to go before the most critical FEC deadline of this election, please pitch in to stop a GOP Senate takeover. Your gift will be triple-matched.

Supporter Record: VN96C28FDA1
Mid-year Deadline: 12 hours

If you’ve saved your payment information with ActBlue Express, your contribution will automatically be processed when you click the links below:

EXPRESS DONATE: $3

EXPRESS DONATE: $8

EXPRESS DONATE: $17

EXPRESS DONATE: $25

EXPRESS DONATE: $35

Or donate another amount.

Republicans are ALREADY seizing on this ruling to push even more extreme policies.

Their Tea Party candidates are fighting for EVEN MORE radical policies — a COMPLETE ban on some forms of birth control and EXTREME abortion restrictions.

Don’t let them take the momentum and deliver a crushing blow to women’s rights.

Pitch in immediately to fight back against extreme Republicans before the deadline hits in 12 hours.

Thanks for your support,
Stop the GOP

But the Supreme Court didn’t vote to allow corporations to deny women birth control nor was this a crushing blow to women’s rights. They simply said a corporation could not be forced to pay for something that is against its religious convictions. There is nothing to stop a woman, or man for that matter, from paying for their own contraceptives. Hobby Lobby is not preventing them from doing  whatever they want with their own money. Why should Hobby Lobby, or any other company, pay for contraceptives if they don’t want to? Where did these people get the idea that if I choose not to pay for something someone else wants, I am preventing them from getting it?

Here is another, this one from the Democratic Senate Campaign Committee.

Friend — It’s disgusting: The Supreme Court just ruled that corporations can deny women insurance coverage for birth control.

It’s a shameful day for our country. But we CAN’T let the GOP use this to steal the momentum, erase our lead, and take over the Senate. The consequences would be dire.

With just 14 hours to go before the most critical FEC deadline of this election, please pitch in to stop a GOP Senate takeover. Your gift will be triple-matched.

If you’ve saved your payment information with ActBlue Express, your contribution will automatically be processed when you click the links below:

EXPRESS DONATE: $3

EXPRESS DONATE: $8

EXPRESS DONATE: $17

EXPRESS DONATE: $25

EXPRESS DONATE: $35

Or donate another amount.

This outrageous decision shows that some Supreme Court justices are just politicians in robes. They’re simply another wing of the Republican Party.

It’s revolting — but if we let the Republicans take the Senate because of this, we’ll never forgive ourselves. PItch in immediately — before the most crucial deadline of the election.

Thanks for your support,
DSCC Breaking News

I am getting just a little tired of the phony outrage these people are always writing about. They seem to be eternally outraged and disgusted by the latest foul deeds and extreme positions of the Republicans, conservatives, the Tea Party, or the Koch Brothers. It has a little of the 1984 Hate Week mentality behind it.

As for what happens next with Hobby Lobby, they have dared to oppose the State and Leader and have resisted the process of Gleichschaltung. I am sure they will be punished for it. I would guess that next year the IRS will find all sorts of irregularities in their taxes. Meanwhile, attempts to drive Hobby Lobby out of business, threats of boycotts, etc. Now might be a good time to shop there.

The Paradise of the Real

April 26, 2014

That is the title of  an article by Kevin D Williamson at National Review Online that should be required reading for anyone who has ever had a discussion about economics with a liberal. I can’t even begin to express how informative this article is and can only provide a few excerpts. You really have to read it all.

Word Problem No. 1: It’s lunchtime for Mrs.Piketty’s second-grade class. Bobby has 20 GummiWorms, and Jenny has 20 SweeTarts. Bobby and Jenny both like Gummi Worms and SweeTarts, but both like SweeTarts a little bit more, so Jenny trades three of her SweeTarts for four of Bobby’s GummiWorms. Both are happy with this trade, so they do it again. Question: How many pieces of candy do the two students end up with for dessert?

Word Problem No. 2: Mrs. Piketty is unhappy with the inequality in her second-grade classroom. Jenny’s 20 SweeTarts are valued much more highly than are Bobby’s 20 Gummi Worms, trading at a rate of 3:4. To even things out, Mrs.Piketty gives Bobby a voucher for seven SweeTarts. Question: How many pieces of candy do the two students end up with for dessert?

Word Problem No. 3: Mrs. Piketty’sattempt to solve the problem of inequality in her classroom has yielded unsatisfactory results. Bobby has his 20 Gummi Worms, and Jenny has her 20 SweeTarts, and SweeTarts still trade for Gummi Worms at a rate of 3:4. So Mrs. Piketty enacts some new policies. First, she hires Bobby as a hall monitor and decrees that hall monitors receive a minimum income of at least ten SweeTarts or the equivalent value in Gummi Worms. Also, she decrees that the high price of SweeTarts — three of them cost four Gummi Worms — is oppressive, but she’s not an all-the-way-to-the-wall outright red, either, more of a social-democrat type with a subscription to The Nation, so she simply enacts some counteracting price supports for Gummi Worms, decreeing that they cannot be traded at a price less than 13/15th of a SweeTart. She enlists Mrs. Yellen from the next classroom over to provide zero-interest financing for the purchase of up to fiveSweeTarts per lunch period, increases Bobby’s voucher allowance to nineSweeTarts per lunch period, and offsets that on her budget with a “fairness” tax of two SweeTarts per lunch period on Jenny, who is the sole member of her tax bracket. Question: How many pieces of candy do the two students end up with for dessert?

Answers: (1.) 40; (2.) 40; (3.) 40. There are only 40 pieces of candy, and rules, vouchers, taxes, zero-interest loans, redistribution, and mandates do not magic more pieces of candy into existence. If Jenny does not like the trading price imposed by Mrs. Piketty, she can keep all of her SweeTarts, while Bobby gets none. If Mrs.Piketty sends out her second-grade tactical SWAT unit to seize Jenny’s SweeTartsand put some serious asset-forfeiture and social-by-God-justice up in her smug little1-percenter face, Jenny can still leave her SweeTarts at home, eating them before or after school, and maybe even save them up in the hopes that her third-grade teacher next year will not be a howling moonbat.

Forty is forty is forty, 10 times 4, 8 times 5, 6.32455532034 squared, 23 plus 17. You can set the trading ratio of apples to oranges however you like, but if you have 20 of each, you have 40 pieces of fruit at any price — and the only way to bring more of it into the world is to plant trees, cultivate them, and pick the fruit.

The whole of progressive economics, as well social policy is to deny that two plus two equals four. Naturally the person who insists that two and two make four is a racist, bigoted, homophobic, sexist hater.

Here is something for those concerned about  increasing income inequality.

Measured by money, things look relatively grim for the American middle class and the poor. Men’s inflation-adjusted average wages peaked in 1973, and inflation-adjusted household incomes for much of the middle class have shown little or no growth in some time. The incomes of those at the top of the distribution (which is not composed of a stable group of individuals, political rhetoric notwithstanding) continue to pull away from those in the middle and those at the bottom. The difference between a CEO’s compensation and the average worker’s compensation continues to grow.

But much of that is written into the code. If, for example, you measure inequality by comparing the number of dollars it takes to land at a certain income percentile, with a hard floor on the low end (that being $0.00 per year in wages) but no ceiling on the top end, and if you have growth in the economy, then it is a mathematical inevitability that incomes at the top will continue to pull away from incomes at the bottom, for the same reason that any point on the surface of a balloon will get farther and farther away from the imaginary fixed point at its center as the balloon is inflated. 

The rich are getting richer but the poor are also getting richer. What people are complaining about amounts to the fact that the rich are getting richer faster than the poor. That may be a concern but it is not true that the rich are getting richer by stealing from the poor. When the economy grows, everyone benefits, some more than others but I would be wary of killing the goose that lays the golden eggs by pursuing policies of redistribution.

With economic models, we are a little like Neo in The Matrix, before he takes the red pill: We are not in the real world, but in a simulacrum of it, one that has rules, but rules that can be manipulated by those who understand the code. Economic models and analysis are very useful, but it’s worth taking the occasional red-pill tour, leaving behind the world of pure symbolism and taking a look at the physical economy.

That is an important point to remember.

The physical economy — the world of actual goods and services — looks radically different from the symbolic economy. Measured by practically any physical metric, from the quality of the food we eat to the health care we receive to the cars we drive and the houses we live in, Americans are not only wildly rich, but radically richer than we were 30 years ago, to say nothing of 50 or 75 years ago. And so is much of the rest of the world. That such progress is largely invisible to us is part of the genius of capitalism — and it is intricately bound up with why, under the system based on selfishness, avarice, and greed, we do such a remarkably good job taking care of one another, while systems based on sharing and common property turn into miserable, hungry prison camps.

We treat the physical results of capitalism as though they were an inevitability. In 1955, no captain of industry, prince, or potentate could buy a car as good as a Toyota Camry, to say nothing of a 2014 Mustang, the quintessential American Everyman’s car. But who notices the marvel that is a Toyota Camry? In the 1980s, no chairman of the board, president, or prime minister could buy a computer as good as the cheapest one for sale today at Best Buy. In the 1950s, American millionaires did not have access to the quality and variety of food consumed by Americans of relatively modest means today, and the average middle-class household spent a much larger share of its income buying far inferior groceries. Between 1973 and 2008, the average size of an American house increased by more than 50 percent, even as the average number of people living in it declined. Things like swimming pools and air conditioning went from being extravagances for tycoons and movie stars to being common or near-universal. In his heyday, Howard Hughes didn’t have as good a television as you do, and the children of millionaires for generations died from diseases that for your children are at most an inconvenience. As the first 199,746 or so years of human history show, there is no force of nature ensuring that radical material progress happens as it has for the past 250 years. Technological progress does not drive capitalism; capitalism drives technological progress — and most other kinds of progress, too.

Read those last paragraphs over and over until you get it. We are living in an age of unprecedented peace and prosperity. A lot of people have come to believe that this is the norm. It is not. The norm is poverty and misery. There is a lot more here on this but I will skip ahead a little.

For the conservative, people are anasset — in the coldest economic terms, a potentially productive unit of labor. For the progressive, people are aliability — a mouth to be fed, a problem in need of a solution. Understanding that difference of perspective renders understandable the sometimes wildly different views that conservatives and progressives have about things like employment policy. For the conservative, the value of a job is what the worker produces; for the progressive, the value of a job is what the worker is paid. Politicians on both sides frequently talk about jobs as though they were economic products rather than contributors to economic output, as though they were ends rather than means. The phrase “there aren’t enough jobs” is almost completely meaningless, but it is a common refrain.

Remember all the talk about overpopulation that was popular a couple of decades ago. The people who worry about that sort of thing see people only as blind consumers, stomachs that need to be fed. The truth is that a more people is a net asset since each person has two hands that can work and a brain that can think.

This next part is great.

For example, The Nation yesterday published a hilariously illiterate essay by Raúl Carrillo, who is a graduate student at Columbia, a Harvard graduate, and an organizer of something called the Modern Money Network, “an interdisciplinary educational initiative for understanding money, finance, law, and the economy.” All three of those institutions should be embarrassed. Mr. Carrillo is the sort of man who thinks that 40 pieces of candy can be divided and recombined in such a way as to arrive at a number greater than 40. His essay, “Your Government Owes You a Job,” argues that the federal government should create a guaranteed-job program, “becoming our employer of last resort.” Mr. Carrillo’s middle-school-quality prose must be read to be appreciated — “Would jobs for all skyrocket wages and prices, spurring inflation? Such unfounded belief holds the jobless hostage to hysteria” — but his thinking is positively elementary. It does, however, almost perfectly sum up the symbolism-over-literal-substance progressive worldview: “You need dollars to eat,” he writes, “and unless you steal the dollars, you generally have to earn them.”

But you do not need dollars to eat. You need food to eat. Experiment: Spend six months locked in room with nothing other than a very large pile of dollars; measure subsequent weight loss.

I sometimes hear commercials on the radio and on the internet stating that the economy is due to collapse and therefore I should buy gold. If we end up in a sort of Mad Max style post-apocalyptic society, gold is going to be completely useless. You can’t eat gold. A dollar bill is just a piece of green paper. It is the goods and services that the dollar can buy that is important. Don’t confuse wealth with money.

Mr. Carrillo’s intellectual failure is catastrophic, but it is basic to the progressive approach. Mr. Carrillo argues that a guaranteed-job program would “pay for itself,” mitigate deficits, empower women, strengthen communities, liberate us from Walmart and McDonald’s — I half expected him to claim that it would turn asandwich into a banquet. But the question he never quite gets his head around is: Jobs doing what? Americans in guaranteed government jobs “needn’t construct trains or solar panels,” he writes. Instead, they could be employed in “non-capital intensive” sectors such as “child-care, eldercare, and” — focus in here, kids — “community gardening.” Experiment: Offer for sale at a price of $250 a voucher entitling its bearer to one year’s worth of meals at McDonald’s, one year’s worth of groceries at Walmart, or one year’s worth of produce from your local community garden; compare sales figures.

Mr. Carrillo cites William F. Buckley Jr., who once recommended that welfare dependents be put to work tidying up parks. What Mr. Carrillo does not understand is that Mr. Buckley’s case was not an economic one but a moral one; he believed idleness to be a sin. (“I get satisfaction of three kinds,” he said. “One is creating something, one is being paid for it, and one is the feeling that I haven’t just been sitting on my ass all afternoon.”) Mr. Carrillo’s argument is an explicitly economic one, and it is illiterate. The economic difference between paying a man to engage in “community gardening” and paying a man to sit on his ass all afternoon is negligible, as good as the spade in the soil might be for his soul. Our food does not come from community gardens for the same reason that we do not generate our own electricity at home or build automobiles in a million mom-and-pop shops across the fruited plains.

I think this is what Cliven Bundy was trying to express with his controversial remarks.

The more removed you are from actually producing anything, the more likely you are to be a progressive.

The farther away we move from the physical economy into the manipulation of symbols through public policy, the more progressive ideas make apparent sense. And symbolism is more comfortable for progressives in general, owing to a disinclination to literally get their hands dirty. There is, for example, no environmentally clean way to produce energy, and the really productive ways of producing energy — like fracking for gas in Pennsylvania — give them the fantods. There is no environmentally clean way to build a man a house, either, or provide him with clean drinking water, or to heat that house, or to grow a crop of wheat, or to make that wheat into bread. If you think you can have health care and electric cars without steel mills and oil refineries, you are mistaken. But actually expanding physical production within our own political boundaries, for instance by building more pipelines to connect petroleum producers with petroleum refiners, scandalizes the progressives. Every smokestack is another Barad-dûr to them — even as they bemoan the loss of “good factory jobs,” the largely mythical former prevalence of which provided their political forebears with a deep bucket of solutions to throw at the problem of potentially bumptious poor people. They detest the economic use of undeveloped lands, whether for energy or timber or grazing cattle — as though beef comes from Trader Joe’s. They refuse to understand that if you want more oranges and apples, you have to plant some trees — maybe even cutting down some other trees to make room for them, or, angels and ministers of grace defend us, harassing a tortoise in the process.

 

Though there are many exceptions, the closer a man’s occupation takes him to the physical economy, the more skeptical he is of progressive central-planning ambitions. You do not meet a great many left-wing corn farmers, copper-mine operators, oil drillers, or house builders. You do meet a fair number of progressives on Wall Street and Silicon Valley and on the campus of Harvard utterly failing to teach the likes of Mr. Carrillo the fundamentals of economics, prose composition, or anything else. Follow that road to its terminus and you end up at the place in which the secret to national prosperity appears, self-evidently, to be stimulating demand, as though the nation could grow wealthier by wanting more rather than by making more, as though we could consume that which has not been produced.

What can I say? Read the whole thing again and again, and remember that two plus two equals four. No politics can change that in the slightest. You cannot just legislate prosperity.

 

 

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Corporations Are People

January 26, 2014

The title of this post is taken from the 1973 film Soylent Green, set in the dystopian, overpopulated world of 2022. The bulk of the world’s population subsists on manufactured food called Soylent Green. Charlton Heston plays a police detective charged with investigating the murder of a wealthy businessman. At the end of the movie, Heston discovers that Soylent Green is made from human remains and, seriously injured, he tries to spread the word that Soylent Green is people.

Corporations are not people in a physical or moral sense, of course. No corporation could be mistaken for a human being. Nevertheless, corporations are considered to be persons in a legal sense. Before I get into explaining this, I should begin by saying just what a corporation actually is.

Many people on the Left seem to think  that a corporation is some sort of alien entity that dropped down from outer space and is intent on using up all the world’s resources. While there are certainly corporations that act like that, that is not what a corporation is. A corporation is simply an entity that has been incorporated through legislation or a registration process established by law. A corporation is one of three ways in which businesses are legally organized in the United States, the others being sole proprietorships and partnerships. A sole proprietorship is owned by one person while a partnership is owned by more than one person. In each case, the owners of the business are entirely responsible for any debts or damages the business accrues and there is no legal distinction between the owners of the business and the business itself. With a corporation there is a legal distinction the  between the owners of the business (the shareholders) and the business itself. A corporation is a separate legal entity from its owners and this is where corporate personhood comes in.

Because a corporation is a legal person, the owners or shareholders can enjoy limited liability for the debts or damages incurred by the corporation. They are separate from the corporation and are not financially responsible for the corporation beyond what they have invested in it. There are actually some very good reasons why corporations are considered persons.

Suppose you own a few shares of Acme Widgets. This makes you a part owner of Acme Widgets, even if the shares you own are only .01% of the total number of shares. Now, suppose someone is injured when one of Acme’s widgets explodes and he decides to sue Acme Widgets for negligence. If the corporation were not a separate legal entity, or a person, you could be held partially responsible for Acme’s negligence and you could be required to appear in court, along with thousands of other shareholders. If the court rules against Acme, you could be required to pay part of the damages. If Acme Widgets goes out of business because their widgets keep exploding, you could find Acme’s creditors at your door, demanding that you pay your share of Acme’s debt. Also, that man who decided to sue Acme Widgets might find it very difficult to sure a thousand separate owners of Acme Widgets. Since the corporation is a legal person, it can be represented in court as a person, and found liable for damages, indicted for crimes, etc. Considering corporations as persons makes it much easier for the courts to deal with them.

This limiting of liability is the most important advantage the corporation has over other ways of organizing business. Because liability is limited, investing in the company is less risky. Were it not for limited liability, only the very wealthy, or reckless, would be able to invest in the stock market, and companies would find it much more difficult to raise capital. There are a number of controversial issues relating to corporate personhood, especially regarding just what rights corporations have compared to actual human beings, and like anything else, the concept can be abused, but the idea of corporate personhood itself is a beneficial one.

 

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Who Creates the Jobs?

January 5, 2014

In an economy in which it is necessary to provide more jobs to people, everyone should agree that encouraging the people who create the jobs should be a high priority. The question is, who actually creates the jobs and what policies should be perused. There are many on the right who have argued that “rich people” create the jobs and that tax cuts for the rich are necessary to grow the economy. There is some truth to this assertion, but it is not the whole truth, as I’ll explain. Lately, liberals have retorted that it is not the rich who create the jobs, but the customers, and that policies that redistribute wealth from the rich to the middle class are necessary to provide more money for the customers to buy things. Again, there is some truth to this idea, no company can prosper unless customers buy its products. But, again, it is not the whole truth and the remedy suggested is not likely to help anyone, except the politicians.

So, who are the real job creators? The real job creators are not customers or “the rich”. The people who create the jobs are the investors, the people, rich or not, who provide the capital necessary to establish or expand a business. Customers are an important part of the process, as are the employees who create the goods or services that the company sells, nevertheless, none of the process of creating the products or the company would be possible if the capital were not available. Customers cannot buy a product that is not available or that does not yet exist. Investors provide the funds that enable a company to be established before its first sale to any customer. Investors provide the funds for research and development to create new products before customers ever decide they want to buy them.

Please note that I did not say rich people. The income or amount of wealth that an investor has is irrelevant, except that a wealthy person is more likely to possess more money to invest. A rich person who keeps all of his money in a money bin, like Scrooge McDuck is doing absolutely no good to anybody, least of all himself. A person of modest means who invests his life savings in a 401k account or even has a savings account is providing capital that will eventually be used to create jobs.

Scrooge's signature dive into money.

Rich people don’t actually do this. (Photo credit: Wikipedia)

If you want a growing economy that provides jobs for people, you must pursue policies that encourage people to invest their money to provide the capital necessary to create and expand businesses. This includes keeping taxes low, not just for the wealthy but for everybody. Taxes and regulations should not be so onerous as to make potential investors decide that it would be easier to keep their money hidden in their mattresses or send it to a tax-free account in the Cayman Islands. Punishing people who have become successful is simply not helpful. To put it another way, we don’t want policies that benefit rich people, we want policies that encourage people to become rich, and thereby benefit others.

 

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The Triumph of Capitalism

December 23, 2013

Cracked.com is a humor website that besides being funny is also surprisingly informative. You can learn all sorts of interesting facts from the writers while laughing. One recent article listed five amazing pieces of good news that nobody is reporting. News reporting usually focuses on dramatic events and these stories are happening in the background without anybody really doing anything, so they tend not to be noticed. I remain a little skeptical about number 5, we are closing in on world peace.

This one seems laughable — mankind has gone from fighting with swords, to muskets, to machine guns — right up to the modern era of poison gas and nukes that can murder every human on the planet in minutes. Mankind’s technological growth has been marked mainly by increasingly efficient ways to slaughter each other.

Sure enough, the 20th century had to have been the most violent in human history. Two world wars, conflict in Southeast Asia, constant war in the Middle East — and those were just the ones that America was directly involved in. At the beginning of the 21st century, with Afghanistan, Iraq, Libya, and rumblings of war with Syria, it seems like the world is a pack of rabid dogs about to pounce on a Snausage pinata.

The Good News:

Even with wars in Afghanistan and Iraq, the first decade of the 21st century saw the number of annual battle deaths at its lowest ever in history.

Professor Joshua Goldstein put it best: “If the world feels like a more violent place than it actually is, that’s because there’s more information about wars — not more wars themselves.” Overall, we’re in the midst of an unheard of “long peace,” as no major powers have clashed since World War II, replacing them with smaller wars that historically would count as skirmishes — the U.S. lost 3,400 soldiers in Afghanistan, which is terrible, but during the American Civil War, 4,700 troops were killed on one side of one single battle. Here it is in graph form:

Via Wsj.com
Sans screaming.

OK, so maybe this is just a temporary breather after the bloodbath that was the previous century? Nope — it’s part of a long-term trend. As crazy as it seems to suggest it, the past couple of hundred years have been the most peaceful in world history. That’s including the world wars.

Yes, in absolute numbers, more people died violently in the 20th century than in any other century — but that’s because there are so many more people now. The chances that a person living in the 20th century would die violently were about 3 percent. That’s a historically low number — it was five times higher in prehistoric societies. In tribal societies, war was a daily occurrence — just the process of everyone settling down into large-scale governments, even violent ones, was an improvement. If our hunter-gatherer ancestors could see us now, they’d be confounded by the complete lack of annual head smashing and face stabbing (if you ever unfreeze a caveman, show him our violent video games — he’ll go nuts for that shit).

And it’s not just war, it’s all violent deaths — in 14th century England, some cities had a homicide rate as high as 110 per 100,000 citizens. London’s homicide rate in 2012 was just under 1 per 100,000. And we’ve previously talked about how violent crime is dropping to historic lows, even in the gun-crazy USA. No matter how you break it down, violence is slowly going out of style.
Maybe, but they were making similar statements back in 1913 and the international situation today is frighteningly similar to the situation just before World War I.
But I am more interested in the last piece of good news they present, number one, world-wide, poverty is dropping at a shocking rate. Please excuse the language.
For decades now, we’ve watched commercials that feature some retired actor stumbling through some impoverished village in some undisclosed location to make viewers feel bad enough to donate money. Considering that we’re mired in a worldwide recession, it’s a sensible question: “Does any of this shit even make a difference?”

Yes! Even though lately it seems like the whole world is in a race to the bottom, the poorest of the poor are actually climbing out of the financial shithole. From 1990 to 2012, the number of the world’s extreme poor was cut in fucking half. In case you were wondering, that would be the first significant global decline in extreme poverty.

Ever.

Not bad, right?

And these aren’t just statistical tricks here — when they calculate this, they’re not just counting income, they account for total living conditions — infrastructure, schools, access to clean water, everything. A billion people have that stuff for the first time. And what’s really encouraging is that this all happened three years ahead of the official estimates, which pegged 2015 as the soonest such a lofty goal could be achieved.

So how did this happen? International aid helped, but the big jump has been in the increased participation of previously isolated countries in international trade. You know how people are always complaining about how “they’re shipping our jobs overseas!” Well, this is where they went — to people who previously had no jobs at all. And that boom that swept across China and India is expected to continue in places like Sierra Leone, Ethiopia, and Rwanda — all of the places you previously only heard about in the context of heart-breaking ads begging for donations. If things continue at this pace, countries like Nepal and Bangladesh would likely see extreme poverty shrink to near-nonexistent levels.

What is the cause of this amazing reduction of poverty all over the world? The expansion of international trade and also the expansion of free market economics or capitalism. No system of economics or politics made by human beings is perfect and capitalism does have its flaws. Nevertheless, the expansion of free market reforms has been responsible not just for a reduction in absolute poverty but also for the rise of a middle class throughout the developing world. Countries like India and China, where the great mass of people have known nothing but poverty and near starvation now, at least, have a chance to live with some small degree of prosperity. For the first time in human history, the obese outnumber the starving.

Yet capitalism continues to be maligned as a system that enriches the few and impoverishes the many. Why is this? Are the critics of capitalism simply ignorant of these facts? Perhaps. Or, it may be that many of the fiercest critics of capitalism prefer to see the poor stay poor. Capitalism has a way of disrupting hierarchies. In a free market; the ambitious, the inventive or the hard-working can rise. The lazy or foolish can sink, even if they belong to an old family or a special caste. It is perhaps no coincidence that the defenders of the idea that the markets must be controlled and regulated tend to be those already on top. Think of how many grandchildren of successful industrialist embrace various forms of Socialism, or how successful European firms didn’t have a problem with Fascism or Nazism, or even Democratic Socialism. The biggest supporters of Big Government tend to be Big Businesses. As long as they have a hand in setting the rules,they can set them to their advantage. And, if you advocate the redistribution of wealth, you have many opportunities of redistributing wealth and power to yourself and your cronies.

I am a defender of capitalism because I am a defender of freedom, and because I would prefer that the poor not starve. As a system defined by the free exchange of goods and services, capitalism is the only economic system that promote freedom. Other economic systems such as Socialism or Feudalism are based on the forcible taking of goods and services from those that produced them to those deemed deserving by some elite. That way lies slavery and poverty.

 


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