Worldwide Growth is Stagnating, and Everyone has a Theory.

The central banks of the world are explaining worldwide economic stagnation on insufficient aggregate demand. For some reason people do not have enough money to buy things and drive the economy, or people are frightened and choose to save instead of consume.

Their solution is lower interest rates, or negative interest rates, to make more money available, discourage saving, encourage borrowing and increase demand.

Other academics say that we need an engine of growth, in the 1970 it was a computer revolution that was followed by innovation in networking (the Internet), than globalization and liberalization of China, then sophisticated financialization of assets. Now we are out of new prods to growth.

I would say it is plainly evident that growth naturally occurs. It is the natural state of free people if they have relatively low corruption, rule of law, private property and contract. The United States from 1800 to 1900 moved from agrarian ex-colony to  one of the most powerful and largest economies in the world with no policy directing growth, no central bank, no business incentives, no master plan. In fact I would say there was no national goal to grow the economy or become a world economic power at all. It was simply free individuals trying to better their lot that made things better for everyone and made a powerful economy.

So why the stagnation today? Obviously the conditions for people to better their lot have deteriorated.

There is more official corruption. There is less incentive to better you lot and invest in producing something if you are not secure in enjoying the results of your efforts.

The rule of law is being eroded. When I was in law school, if the professor wrote a hypothetical on the exam, there was basically a correct answer. Common law develops by actual cases coming before courts and the decision made in each case becomes the rule for future similar cases. One could tell objectively what a future set of facts should result in given knowledge of the prior cases.

Only in Constitutional Law as that not true. In Con Law there were not Rules you could outline from the cases, there were balancing tests. The Court instructed future judges to balance, for instance the value of the category of speech against the societal costs. What would they weigh “value of speech,” how would they weigh “societal costs?”

Compare and contrast to the rule from Regina v. Dudly and Stevens. Four ship wrecked sailors facing starvation kill and eat one so that the others could live. After an improbable rescue, murder charges are brought. The defense is necessity. If they had not killed one sailor all four would have perished. The rule of the case: necessity does not justify killing. Verdict, Murder. The only things that justifies taking the life of another is self-defense. Ironically if Richard Parker (the boy killed by Dudley and Stevens) had turned the knife on them and killed them both he might have been acquitted of murder. One thing you have to glean from this case is application of a rule without respect to emotional considerations. The seamen endured 28 days in an open boat thousands of miles from land with no hope of rescue. The boy Parker was weakest and likely to die first anyway. The court that condemned Dudley and Stevens even noted “Other details yet more harrowing, facts still more loathsome and appalling, were presented to the jury, and are to be found recorded in my learned Brother’s notes.”  There was no balancing of the interests of Dudley and Stevens against the interests of Parker. There was no subjective holistic attempt to provide cosmic justice. There was a rule of law, necessity does not justify murder. Anyone could discern it and apply it. You could tell if the court was correct or not.

As a matter of fact, there was an institution capable of weighing the intangible relative factors outside of facts the law was able to consider. The Queen of England pardoned Dudly and Stevens.

 

The United States Federal Government is not Broke.

I used to be upset about the amount of money the United States Government (USG) is borrowing, and promising to pay in the future. National Debt is about $20 Trillion. Add unfunded liabilities, like Social Security, Medicare and Medicaid, and the total may be $126 trillion.

Since the entire output of our nation, all business, everything is about $18 trillion per year, we seem to be in deep dodo.  Many commentators say that default or massive inflation to inflate away the debt is inevitable.

Its like an individual having debt 7 times his annual income.  If you income was $ 200,000 pa, you debt would be $ 1.4 million dollars! Holey Mackerel.

Yet I know lots of people who have under $500 thousand pa income and a $2 million house (with a $2 million mortgage).

The issue is, they have very large debt, but they have very large assets. Most homeowners with massive debt only get in trouble if the value of their real estate assets takes a dive, then in essence they then have massive debt and little assets.

Lots of countries with lots of debt have very little in value of assets. The government of Greece has some really nice islands that they would be loath to sell. Otherwise the purchasing and debt service power of Greece is mainly its ability to tax its citizens.  You can’t get blood from a stone. They are in the situation the USG would be with $126 trillion obligations and a $18 trillion economy to skim money off of. You ain’t going to get anywhere  for decades.

The USG, however, has lots of assets.  It has the largest gold reserves of any nation by far. Unfortunately all the gold in Ft. Knox is worth less than a half of one trillion dollars. A drop.

The USG is a big landowner: The Federal Government owns nearly 650 million acres of land – almost 30 percent of the land area of the United States. What so you think 30% of the land in the USA is worth if sold at auction?

The USG ownes about $128 trillion in energy resources.

 

 

Is the White House Plagued by Leaks or Fake News

Many are reporting that the White House is leaking like crazy and making it very difficult for the POTUS to get anything done.

The leaks are always by unnamed sources, meaning that there is no way to confirm that there was a leaker or that the reported content was accurately represented. Quite simply, you are taking the word of a reporter, or editor or news organization. You actually do not know their internal policy on validating a reporter who reports a leak. Maybe one or more higher ups somehow check on the story, maybe not.

The whole leak story rests on one thing, the integrity of the press outlet. The press is so partisan now, I believe they would lie to forward their agenda. With reporting of White House leaks, if one report was a lie there is no way for it to be discovered.  A White House official cannot refute it because the leaker’s identity is secret. Another reporter cannot investigate the story because the provider of the information is unknown. Insiders with knowledge that leaked reports are inaccurate cannot even confirm that because they would be leaking privileged information them selves.

So the sole foundation of a reported White House leak is trust in the media organization reporting it.

TrumpCare Fails!

Big news: Obamacare is not replaced by Trumpcare.

Do you really want one quarter of the economy and your ability to purchase lifesaving and life improving interventions managed by, designed by, and named after a politician who never delivered any health care or ran an insurance company?

Washington had no computer policy yet IBM, Microsoft, and Silicon Valley developed by voluntary organic self-organization. Somehow we get lots of computer provided products at reasonable or free prices.

Washington had no individual transportation policy, yet Detroit grew and produced cars affordable to the average American. This all occured before Eisenhower created a national highway system.

Washington had no entertainment policy (perhaps entertainment was not important enough to deserve Washington meddling). Now we have free and low cost entertainment that is so good the whole world inports our products.

Washington has no kitchen appliance policy, or footwear policy, or vacation package policy, or book and magazine policy, or (until very recently) Internet policy. All those areas are horrible for consumers, right? Oh, wait.

Where does Washington have it flagship policies?

Well there is housing.  Washington had to intervene in the housing market to encourage more ownership and by the right people. Lets see the results. The housing market experienced an unsustainable bubble and then crashed bankrupting all the banks in the country and the Washington backed mortgage finance companies.  Requiring taxpayers to provide millions or billions of their hard earned money to bail out the housing finance “system” (banks, Freddie Mac, Ginny Mae, mortgage backed securities, etc) or face economic collapse.  Nice work Washington.

Lets look somewhere else.

Well there is college education. To help less advantaged students gain a college education, Washington provided guaranteed, non-dischargeable, subsidized loans to anyone who wanted to dream of a college degree. The waterfall of money led colleges to raise prices to soak up all the free money sitting on the table. Washington certainly benefited the colleges – the local college is the only nice place in most declining areas. From Johns Hopkins in Baltimore to Lafayette in Easton, PA, the college is the only thing with money to make a nice appearance.   Of course, the students cannot repay the loans. Taxpayers will have to have their hard earned dollars used to forgive student loans that never should have been made in the first place.

Well there is the retirement system. Washington said, left on your own you would invest in the American economy hoping it would fund your retirement years. Foolish Americans. The American economy is risky – look at 2008 when the stock market lost over 50% of its value in a few months.  Much better to give your money to the USG in the form of payroll taxes and in return for the USG promising to give you lots of money when you retire. While the USG can borrow unlimited amounts at near zero costs to spend anything it wants, this is a good deal. Greece had the same deal when Germany lent it any amount of euros. When repayment became an issue, Greece became a nation of people looking at tree bark for nutrition. If you like the prospects of the social security system, bravo. Most younger people understand that there will be nothing in the social security system for them in the future. It is a scheme of Washington that will end in tears for most everyone.

What next for our technocratic masters in Washington?

 

 

How Do We Spend for the Tax Increase?

The new administration is talking about reducing business income taxes from the highest in the developed world to one of the lowest.

Everywhere on the TV and in newspapers I see people (the establishment) asking how will we “pay for” the proposed tax reductions. Will it be a new value added tax? a border adjustment tax? something else?

Well, if we have to “pay for” any tax reduction with new taxes, what do we do when taxes are raised. When I buy something I have to pay for it. When I sell something, as in a yard sale, I get to spend for it. So if we have a tax increase, do I get to spend for it?

I suspect the “we” in these formulations are the government and not the people. How will we (the government) pay for a reduction in corporate income tax? In no way. The non-government portion of the country will have more money, the government portion of the country will have less. The only people with a problem about how to pay for tax cuts are the people who get to spend tax revenue.  That is not you and me.

 

The Men Will Retire to the Library for Brandy and Cigars.

Am I mistaken or was it not the norm in upper class households during the Victorian and post-Victorian era for the men and women to go to different rooms for after dinner conversation?

The men’s conversations would be courser; the women’s more genteel. No cad of a man would subject women to the uncensored content of the men’s salon. If a woman entered the men’s library the men would stand and immediately adopt language more fitting for feminine sensibilities.

Now of course, women demand the right to hear and participate in the men’s conversation. After all, if men have it, it must be better than what they were relegated to by the patriarchy.

 

Democratic Strategy

Suppose your party’s candidate is going to lose the election in a landslide. What follows? A resounding mandate for the other side. Lots of effective policy from the office of the widely supported President.

Why just sit and take it? One way to be a spoiler is to delegitimize the other candidate. I believe the FBI passed on Clinton to  avoid stepping into a political turd. First, FBI employees would be vilified and attacked in the mainstream media without mercy. Second, the resulting Trump victory would be viewed by many as not an endorsement of his policies but as the inevitable result of an undemocratic criminal prosecution. Even if you think Hillary personally committed crimes, you probably do not want all the people who believe in her positions disenfranchised.  If there were time for the Democratic Party to put up a replacement candidate you would be perfectly happy with the contest, but there is not.

Now of course you can say she should have thought of that before she betrayed her supporters. In a way, however, people who believe in her politics shouldn’t pay for supporting the only representative of their views on offer.

Much more important is that disqualifying her candidacy delegitimizes her opponent’s victory. Do you want the President selected by the discretionary decision of an FBI director, even if you agree with his conclusion? What of the people who do not agree with his decision? You cannot tell them they lost fair and square in a vote, except with a very sophisticated argument with many logical steps (don’t run criminals and you should know if your candidate is a criminal). Surely a victory at the ballot box without indictment of your opponent is the better foundation for a successful Presidency.

So now it appears criminal investigations of the email server, the foundation, the Dept of State grind onwards towards what? Do these Democrat controlled bureaus really want to bring charges against their candidate three months before the election with no possibility of resolution before the public is asked to decide? Are they impartial dispensers of justice or strategists trying to at least spoil the other side’s victory?

 

Collectivism Sucks

Thomas Szatz claimed that one of the ways people influence or control other people is by literalizing a metaphor.  Wikipedia says that “A metaphor is a figure of speech that refers to something as being the same as another thing for rhetorical effect.” An example might be calling a joke “sick.” A joke might have some similarities to an illness, such as causing revulsion, but no one would say that the teller of sick jokes should be given an antibiotic to stop the practice.

Metaphors work because the comparison conveys an understanding, or is intended to convey an understanding to the listener. When I say “that is a cutting remark,” I mean you to focus on the harmfulness and pain caused by your words.

Often people coin metaphors to try to get you to treat one thing in the way you treat some other thing which has some similar characteristics. When they coined “war on drugs” they meant that we should pursue reducing drug use in a way similar to an all out military operation, as opposed to a police operation or a mental health operation.

A more extreme step its to literalize the metaphor. Getting people to treat one object as exactly the same as another object, even when it is not. I suspect that he eucharist is a literalized metaphor. Jesus said that this bread is my body and this wine is my blood when he knew the jig was up and Rome was soon to arrest him.

Collectivist politicians compare society  to a single organism. A collectivist would have no trouble saying something is in the public interest. Unless the interest is unanimous, there really is no public interest. There is only the interests of individuals. There may be a majority’s interest. In fact politicians would have a much more difficult time selling laws if they were correctly identified as “in the majority’s interest.” The majority of people may be benefited by an FDA that banned drugs not sufficiently shown to the FDA as safe and effective. A minority of gravely ill people denied effective treatments because the FDA is not yet convinced would not be benefited.

Aristotle thought that the art of metaphor cannot be taught.

The question is always whether the metaphor is  apt.   It is possible, however, to recognizing when a metaphor is being literalized. In that case the intent is always to mislead because two different things are never exactly the same in all respects.

 

 

 

Democratic Socialism

Bernie Sanders is not the first person who believed that democracy could produce a kinder and gentler socialism.

Love, as much as it may guide us to greatness, can also blind us to the perilous paths we have chosen. And the perils of democracy are more bountiful than that of any femme fatale. Unfortunately, because democracy flatters the vast majority of the human race with the allure of its siren’s song—its chorus constantly promising “the people” that they are naturally fit to rule—many people today are still quite smitten despite the red flags.

 

These are not flaws of a know-nothing reactionary movement but features of democracy itself.

 

Yet, this may mean we are simply overdue for a massive heartbreak. As unpleasant facts would have it, 2016 appears destined to go down in history as the year when democracy’s scorned lovers finally call her a harsh mistress. Word is, democracy has found a new paramour, one Donald J. Trump, and much to her former lovers’ dismay, she insists on parading around with him in public.

Orwell understood the tendency of socialism to lead to tyranny, but he was an open avowed socialist. He thought democracy could lead to a less murderous form of socialism.

But democracy is turning its back on the Progressives who previously ran things: elites who control academia, the legacy media and certain parts of the US government (State yes, Pentagon no, Presidency sometimes, SCOTUS half and half). Academics get to use the tremendous prestige of “SCIENCE” to influence the public, the press gets to use distortions, omissions, and emotional visuals to influence the public, USG organs use their mantle of authority and expertise to forward their shared agenda.

 

The Progressive State has been winning all contests, taking over industry after industry with regulation (finance, health care, now, the internet).

 

[As an aside it is interesting that Progressives previously took over shipping, railroads, airlines and trucking through tariff regulation until it became clear that the USG was about to destroy all four industries. The Department of Transportation  and Interstate Commerce Commission deregulated airlines and trucking to save the industries, and competition supplied undreamed of inexpensive fares. US flag shipping is probably still moribund.]

 

The elite loved democracy as long as they could panic and guide the public to the results they desired. They loved democracy because they believed it would be a source of power for themselves. We got more and more democracy, direct election of Senators (reducing State power in the Federal government), arguments to replace the electoral college with popular vote, etc.

 

Unfortunately for the elite, several developments now undermine their influence on voters. The Internet gives every citizen the equivalent of a newspaper and a broadcast studio at trivial cost. Donald Trump can do an end run around the spin and filters of the legacy media with his twitter account. Academia is earning black eyes daily which undermines its authority. USG organs are having trouble keeping the public’s trust.