Archive for the ‘Economics’ Category

Venezuela’s tragedy: be careful how you vote

August 8, 2017

Chavez & his mentor

It began in 1992 when paratrooper Hugo Chavez tried a military coup. He failed and was jailed, but vowed he wasn’t done. Released, in 1999 he won a democratic election as president.

Be careful how you vote.

Chavez strutted as an adversary of “U.S. imperialism” and avatar of “21st century socialism,” earning adoration from a Hollywood claque and the usual left-wing moral morons, bedazzled by the word “socialism” into excusing all manner of anti-democratic repression.

Chavez did enjoy much genuine support among poorer Venezuelans, whom he basically bought off by distributing the country’s oil wealth — while he crippled that very industry by nationalizing it and stuffing its ranks with political types, and wrecking the rest of Venezuela’s once-rich economy with an insane farrago of anti-market, statist policies.

Dwindling oil revenues could not sustain the game, the rich got poorer, and so, ultimately, did the poor too. Chavez died of cancer at 58 in 2013 before the mierda fully hit the fan. His chosen successor, former bus driver Nicolas Maduro, narrowly won a 2013 presidential election.

Maduro

Be careful how you vote. Though Maduro’s win was almost surely fraudulent, he couldn’t have pulled that off without votes from nearly half the electorate.

Then Venezuela really went off the rails, the economy collapsing in structural disarray, producing nothing, inflation exploding, people unable to get food or medicine. Instead of reversing the economic idiocies causing this, Maduro doubled down, and blamed the troubles on supposed U.S.-inspired sabotage. But few fell for this nonsense, his political support also collapsed, and the opposition won big in 2015 congressional elections. Only more fraud and manipulation denied them a decisive two-thirds majority. Maduro’s policy was now to intimidate, emasculate, and simply disregard the congress.

Meantime, the opposition also gathered more than enough signatures to force a presidential recall vote, pursuant to the Chavez-promulgated constitution. That too the regime quite simply disregarded, refusing to hold the vote.

All this plays out against a background of increasing repression (opponents jailed; forget a free press) and rising violence as protests by an increasingly desperate citizenry escalate, and the regime responds brutally. Its intransigence made negotiation efforts useless. President Maduro, who cannot win a fair vote, has now moved to seal Venezuela into a Cuban-style dictatorship by convening an all-powerful “constituent assembly” of handpicked stooges to supplant the congress and rewrite the constitution. That assembly’s “election” was — of course — another farcical fraud. (Even the company that ran it said so.)

Ortega

One of the assembly’s first acts was to fire Attorney General Luisa Ortega, a former regime stalwart, with at least a vestige of integrity that couldn’t stomach Maduro’s extreme illegal power grab, which she condemned.

And where, in all this, you might wonder, is the army? Why doesn’t it step in to protect the constitution, congress, and democracy? Because the army is part of the regime, long since packed with loyalists. Its guns are what really keep Maduro in power. It’s the army brass, not the people, he needs to keep happy. And this is not about ideology. The “socialist” and “anti-imperialist” rhetoric continues, but that’s just a fig-leaf cover for the reality. The regime, and its army, are a gang of thugs ruling Venezuela exactly as Al Capone ruled Chicago, and for the same purpose — their own criminal enrichment.

As ordinary Venezuelans sink into an abyss of deprivation, the regime and its army feed off their flesh and suck their blood. Having destroyed the normal economy, so that not even food can be purchased normally, the army has been tasked with bringing in and selling food — profiting hugely. It’s grubby fingers are in many other businesses too. Further, while the currency has become virtually worthless, they maintain an inflated official exchange rate, at around 1,000 times the Bolivar’s actual value. Why? Only insiders can exchange Bolivars for Dollars at that phony rate, plundering the state to enrich themselves. That’s why they won’t give up power. And because if they do, they’d expect punishment for their crimes.

Here is your “21st century socialism.”

What is the sad lesson of Venezuela? Be careful how you vote.

“The Fix” — What is real leadership?

July 9, 2017

Jonathan Tepperman’s book The Fix is prefaced with a quote: “Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies.” It’s from Marx. (Not Karl but Groucho.)

My daughter gave me this book for Christmas. The Fix is great.

Its subtitle is How Nations Survive and Thrive in a World in Decline. Tepperman begins, like my own Rational Optimism book, with “The Litany” — the familiar catalog of everything wrong with the world. Admittedly that list has grown since I wrote in 2008. Yet I still don’t see, in the big picture, “a world in decline.”

Neither does Tepperman, really. He deploys exactly what I meant by rational optimism — not Pollyanna’s rose-colored glasses, but a belief that problems can be solved through reasoned effort. He discusses ten in particular (“the terrible ten”) and, for each, how one nation at least did solve it. Mostly how leaders solved them, because leadership is key.

Lula

The first issue is inequality; the country Brazil; the leader Lula. Of course Brazil hasn’t completely eradicated inequality, but it was previously one of the most unequal nations, and has made great strides. Lula came to the presidency in 2003 (on his fourth try) seen as a Marxist radical. But he defied expectations by acting instead as the most orthodox steward of the economy. That gave him the credibility to implement his Bolsa Familia program.

Government programs for the poor typically entail “doing things for them” — which is complicated, inefficient (much bureaucracy), costly, and prone to corruption. Bolsa Familia instead just hands out cash. But to get it, your kids must go to school and get immunizations and medical check-ups. This helps them escape the poverty trap, with better future prospects. Also smart is giving the money to the mothers, sidestepping feckless dads and empowering women. And its simplicity makes the program actually quite cheap, costing less than half a percent of GDP; moreover, by turning the poor into consumers, it boosted the economy, arguably more than paying for itself. All this helped sell the program to skeptics.

Next is immigration, and Canada — one of the world’s most welcoming nations. In fact, Canada seeks out people to come — most of them nonwhite. It uses a point system encompassing factors like education and skills (in contrast to America’s relationship-based system — “extremely irrational” says Tepperman).

Canada’s system developed to kill two birds with one stone. The vast nation was underpopulated. And it was experiencing ethnic tension between English and French speakers. The solution, spearheaded by Prime Minister Pierre Trudeau, was to subsume those differences into a broader ethos of multiculturalism.

The point system makes most Canadians see immigration as a plus, without the kind of xenophobic feelings so prevalent elsewhere. In fact, most actually consider multiculturalism important to their national identity.

On December 10, 2015, Prime Minister Justin Trudeau (Pierre’s son) stood in an airport arrivals hall handing out winter coats to the first of the 25,000 Syrian refugees Canada was welcoming. “You’re safe at home now,” he told them. While Trumpmerica currently bars all Syrian refugees.

But America is not the book’s villain. Indeed, one of its chapters is a good news story about the USA (imagine that). It concerns our recent energy revolution. (What, you didn’t notice?) It’s the fracking explosion (poor choice of words) to extract natural gas from shale, turning America into one of the world’s biggest energy producers.

No other country has tapped into shale gas to such an extent. Tepperman explains why. American property owners (unlike elsewhere) own everything under their land. That creates a huge incentive to exploit those resources; which has led to a proliferation of small energy companies; and competition among them has triggered a wave of technological innovation.

Remember how we pined for “energy independence?” Seemed hopeless — until the frackers got busy and started producing. Likewise all the Cassandra warnings about “peak oil.” Don’t hear that phrase much anymore either.

But I know what you’re thinking. At one time our local paper was filled with almost daily commentaries and reader letters expressing fear of fracking — a widespread movement which led some jurisdictions, including New York State and much of Europe, to ban it. But Tepperman dismisses all that fearmongering in barely a paragraph. The fact is that while fracking does (like every technology) entail risks, it has advanced sufficiently to deal with them quite well. So fracking has gone on for years now, producing bazillions of granfaloons of energy, and all the horror stories have proved to be basically chimaeras.

Peña Nieto

Another tale concerns Mexico, but has great relevance for the U.S. Mexico’s President Peña Nieto came to office upon a background of bitter partisan gridlock, among three main parties, no less. But he initiated a dialog among key leaders, that wound up committing all three parties to a big package of important reforms.

How was this remarkable breakthrough achieved? Tepperman: “quiet negotiations, painful compromise, political leaders willing to take risks and keep their word, and above all a recognition that zero-sum politics accomplishes nothing.” He also stresses the virtues of pragmatism as opposed to wearing ideological blinders. I was surprised Tepperman didn’t quote Deng Xiaoping: “It doesn’t matter whether a cat is black or white, so long as it catches mice.” Deng was defending policies that shredded Communist orthodoxy. Of course, ideologies are not arbitrary irrelevancies: we have reasons for what we believe, and those beliefs guide what one thinks is the right answer to a problem. But the trouble is that other people may think differently. Tepperman argues for satisficing — making the kinds of compromises among competing viewpoints and interests such that everyone gets something, though nobody achieves their maximum goals. As ever: don’t let the perfect be the enemy of the good.

Returning to Mexico’s reform pact, Tepperman sees no reason, in principle, why it couldn’t be repeated in America. I’m skeptical. While Mexico’s deal did encounter cries of “Treason!” such compromises here would meet a firestorm from enflamed partisans. And as Tepperman highlights, Mexico’s political parties were losing popularity because of the prior stalemate. America’s geographic political segregation and gerrymandering create a different set of incentives; despite abysmal approval ratings for Congress, its members almost all get re-elected.

Still, one of the book’s key points holds true: leadership matters. America has suffered from a notable lack of the kind of leadership Tepperman depicts. Obama certainly did not have it. He created the Simpson-Bowles commission to produce a big compromise plan like Mexico’s, then walked away from it. Unlike Peña Nieto, Obama was content to let the partisan dynamics just play themselves out, with predictable results. And as for our current president: oy.

My contribution to our China trade deficit

June 13, 2017

Our yearly trade deficit with China is around $340 billion and rising. That is, we import from China $340 billion worth of goods more than we export to China. Trump fulminates obsessively about this, saying China “rapes” us to the tune of that $340 billion.

Confession: I have personally added to our past China trade deficits, by importing many thousands of dollars worth of goods.

Typical Northern Song coin

They were old Chinese coins, bought mainly from one Shanghai dealer, Luo. I think he actually got rich in the process. But I made money too. For example, I’d get Northern Song Dynasty (960-1127 AD) coins, 10,000 at a time; cost around 13¢ apiece (shipping included). I’d sort through them, cleaning many, picking out better ones to sell for a buck or two, and the rest typically at $20 per hundred. Collectors loved such inexpensive thousand-year-old coins.

A middleman or trader like me has traditionally been seen as a kind of economic parasite. After all, I produce nothing myself. However, what I do is to get coins from people who value them less to ones who value them more. That creates what economists call a “consumer surplus,” making both my suppliers and my buyers better off. That’s economically beneficial.

I sell much to other dealers too. They retail the stuff to other collectors, creating still more customer value. And meantime, Luo got the coins from other Chinese sellers. They too profited and were made better off.

Also it’s not exactly the case that I produced nothing. My work of sorting, cleaning, and identifying coins added value to them.

Did any of this entail any job losses? On the contrary, my profits made me richer and hence able to buy more goods; and enabling my customers to buy coins cheaper than they would otherwise pay left them with more money to spend on other things. All this added buying power triggers creation of more jobs, to produce the additional goods and services now wanted. Similarly, Luo’s enrichment, and that of his Chinese suppliers, enabled them to spend more, contributing to Chinese job growth. And more jobs in China means Chinese can buy more goods made in America.

So is China “raping” us? What nonsense. Trade is win-win. That’s why people do trade. Being able to buy imported goods cheaper than they can be made here puts something like a trillion dollars annually in American consumer pockets; and spending that extra cash creates lots of jobs — surely more than the few trade might displace.*

Trump refuses to understand this. In his ignorant diseased mind, all deals have a winner and a loser. Sad.

My personal trade imbalance with China ultimately reversed. Chinese coins got much more expensive in China; Luo stopped selling those and switched to other stuff, which he’s been buying in recent years from me. Alas, my profit margin on those is much smaller.

* Another perspective on our China trade imbalance is that as Americans buy more Chinese goods than Chinese buy from us, money flows from the U.S. to China, which translates into China saving and investing at a higher rate than Americans do. Net annual saving by U.S. citizens has hovered around zero. And we finance our combination of consumer spending plus government spending by borrowing (much from China, lending us back the money we’ve spent for their goods). But that’s another issue.

Trump’s climate speech — full of covfefe

June 3, 2017

America first? Really? Who’d ever thought a U.S. president could make his Russian and Chinese counterparts appear better global citizens than us? But now even Putin and Xi Jinping are on the climate change high road, while America slithers down the other (accompanied only by the dictators of Syria and Nicaragua).

After Trump’s European trip, Germany’s leader Merkel judged that the era of U.S. leadership is over and Europe is on its own. Trump proved her point with his announcement of withdrawal from the Paris climate accord. A grown-up nation does not renege on its promises. Far from making America great again, he’s deformed it from an upstanding world leader into a child in a temper tantrum. America has never been this ungreat.

Trump says it’s to protect U.S. jobs. He just says things without regard to any reality; it’s just more covfefe.

It is true that even if carbon emissions went to zero, global temperatures would still rise, only a little less than otherwise. So if we were to curb emissions by reducing industrial output, to combat climate change, the economic harm would outweigh any benefit. But that’s not what Paris does.

Instead, it merely recognizes carbon’s effect on climate and the desirability of minimizing it to the extent we can. Simple common sense. Its targets are not binding commitments, with any penalties for noncompliance, but rather just earnestly expressed ambitions. Which virtually every other nation on Earth agreed are wise.

So no job losses. Zip, zero, zilch. Nor any transfer of wealth from America to other nations — more nonsensical Trump covfefe. His whole speech was a farrago of nonsense detached from reality, an embarrassment to the country. Transitioning sensibly from dirtier to cleaner energy sources can only have economic (as well as environmental) benefits. Trump’s coal fetish is simply insane. Coal blights the planet as well as miners’ health, and is a comparatively costly energy source. Even China, the world’s leading coal nation, is assiduously cutting back on it. And clean energy is creating around ten times as many jobs.

So why would Trump go out of his way to trash what he himself referred to as a “non-binding” agreement? To pander to his base of course — the rest of the world can go hang. Sensible heads in both government and business almost unanimously advised him against withdrawing from Paris. Polls show a majority even of Trump supporters opposed doing it. So this is aimed at the hard core of the hard core. Even politically it seems insane.

But it sticks a thumb in the eye of the world order, so Trump can play the disruptor. And it reflects yet again his bottomless ignorance about the world, the willful ignorance of a fool who thinks he knows it all. And perhaps also Trump, even in his literally diseased mind, could see that his record so far is not his lie of triumphant accomplishment but a train wreck. Trashing Paris was at least one thing he’d said he’d do that he could actually do. To him a no-brainer. Too bad it really is brainless.

In the Rose Garden he said the world was laughing at us for agreeing to Paris, and that will stop. Trump has an uncanny thing for turning reality exactly inside out. They weren’t laughing at us then, but now they are, while shaking their heads sadly.

My credo

January 18, 2017

 

unknownAs our political transition unfolds, I find myself caught between the Scylla of a Democratic party increasingly romanticizing socialist economics hostile to enterprise and trade, and a Republican Charybdis fallen into a dark hole of nativism romanticizing a past that won’t return and shouldn’t. Today’s real divide is between mindsets of openness and closedness. With irresponsible foolishness of every sort running rampant, trampling sound classically liberal principles, I will not give up on them, but will continue to defend them in the years ahead. Here I recap those core principles.

 

  • Democracy and rule of law, so government is accountable to citizens, its powers over them restricted.

 

  • Freedom of speech, expression, and argument. images-1No idea immune from critical examination – even if that offends or discomfits some. This is not only integral to personal freedom, it is also crucial for society to evaluate ideas and progress thereby.

 

  • Limited government, filling only roles that individuals cannot. People able to choose for themselves how to live and act, with society dictating only when its reasons are compelling; basically, only to protect others from harm.

 

  • Free market economics is the best way to grow the pie so all can prosper. images-2Profit-seeking business is how people’s needs and desires get satisfied. That is best promoted when businesses are forced to compete openly and fairly with each other, none gaining advantage through government intervention. Instead government should function to remove barriers to competition and business enterprise.

 

  • This does not mean businesses unregulated. They too are subject to laws to protect others from harm.

 

  • Inequality is the inevitable result of people striving to better themselves, and is not unjust or an evil. Successful people are not the enemy, nor the cause of want. But a market economy generates enough wealth that we can afford to give everyone a decent living standard, out of simple humanity.

 

  • When another country can sell us something cheaper than we can produce it ourselves, we benefit as well as they. images-3Impeding such trade only impoverishes both nations. The gains from freer global trade, through lower consumer prices, vastly exceed the costs in any jobs lost.

 

  • America prospers best in a world wherein democracy, free trade, and peaceful development prevail among other countries, making them too more prosperous; so promoting those values must be the core of our foreign policy. Forces in the world threatening those values must be actively combated.

 

  • Government spending and taxation must be brought into a sustainable balance. Heedlessly piling up excessive debt will not end well.

 

  • Truth and facts should be sought objectively, and should shape our beliefs, rather than our beliefs shaping what we think are facts. unknown-1Confirmation bias is the enemy of reason. We acquire truth through science, a method of rational inquiry which progresses by self-correction as more facts become known and understood.

 

  • No religion is better or truer than any other. All are equally false; and that false consciousness can only impede people in grappling with challenges all too real.

 

  • Human beings are natural animals, resulting from Darwinian evolution. Ultimately the only thing that matters in the Universe is the well being of creatures capable of feeling. All people have equal dignity and worth (except for those who imagine their kind is superior, thereby proving they are inferior).

 

  • Over the centuries, the increasing application of all these principles has made for enormous global progress, with ever more people able to live ever better lives. unknown-2Abandoning these principles endangers that progress.

Jobs of the future and Idiocracy

January 9, 2017

The Economist magazine recently tried to identify where America’s job growth will come from. Of course, pessimists are always seeing the opposite, afraid that advancing technology will put people out of work – starting with the 19th century Luddites, who campaigned against factory automation – and could not have foreseen the explosion of new jobs that technologies like railways, telegraphy, and electrification would soon bring.scan-2

So using data from the U.S. Bureau of Labor Statistics, The Economist presented the job categories that should see the highest growth rates in the years ahead, to 2024. Now, America, judging from current politics, is fixated upon old-time factory jobs (like Carrier’s). But here’s what struck me from that Economist article. It’s not just that such factory jobs aren’t in it. Of course not. However, I asked myself whether the kinds of people who did such factory jobs can switch into these other professions. I don’t think so.

Well, maybe for one or two of the 16 shown, like “ambulance drivers.” Though even that may overlook the advance of self-driving technology.

images-1The top job growth category is “wind turbine service technicians,” reflecting increasing emphasis on alternative energy technologies. But most of the list reflects a different trend: ageing populations, and the panoply of services they’ll require. And, as The Economist notes, “[t]hese are all tasks that require empathy and social skills.”

Again – not the métier of America’s army of less educated assembly line jockeys. They’re yesterday’s men.

The Economist’s writer also points out that the analysis doesn’t take into account job categories that don’t exist yet. Some will be related to technologies that are just emerging, like virtual reality and drones. unknownHe notes that his 16-year-old daughter wants to be a robopsychologist (who figures out why robots are misbehaving). Such jobs don’t exist now, but probably will soon. And then there are all the future jobs we can’t even conceive of today.

A lifeline for all those yesterday men? Not a chance. Yet we’re still producing such people. Our educational system still spits out a sizeable cohort of folks without even a high school diploma. Some can do those remnants of low skill jobs that aren’t automated away. Many though have to be supported by the productive population, in one way or another; the “disability” system covers a lot of people whose “disability” is really just being useless.

unknown-1The movie Idiocracy (one of those dystopian-future flicks) began by contrasting two families. A highly educated, brainy couple agonize over having even a single child. While a bunch of doofuses pops them out right and left. Result, after multiple generations: a nation of doofuses. Apparently everyone is supported somehow because technology dispenses with a need for human work. Not very realistic.

The fact is that, to support all our yesterday’s men (and women) we’ll need a lot of tomorrow people, capable of doing the tomorrow jobs that the former cannot. And Idiocracy wasn’t entirely cuckoo in highlighting that advanced modern populations are not reproducing themselves. So where will we get the tomorrow people we need? Immigration.

Indeed, a key reason why America’s economy has been more dynamic than Europe’s is our greater ability to assimilate immigrants. They fill the gaps our own natives cannot. Our schools don’t produce enough Americans to do all the high tech and skilled service jobs; a lot of them are done by immigrants (especially from Asia).

unknown-2The idea that other countries send us losers and scroungers is stupid. People willing to uproot themselves and start fresh in a new and unfamiliar environment are, to the contrary, full of the kind of enterprise and drive we need.

America’s fixation on manufacturing jobs – and its growing hostility toward immigration – are a double whammy of, well, idiocracy.

 

Eat the Rich

December 17, 2016

unknownP. J. O’Rourke is the funniest serious writer I know. Or the most serious humorist. Even the “Acknowledgments” section of his book Eat the Rich is hilarious. Its subtitle is A Treatise on Economics – often called the dismal science. Some dispute that – denying economics is a science. But it’s normally no laff riot. O’Rourke makes it one while actually treating the subject in deadly earnest.

O’Rourke asks why countries are rich or poor. It’s not obvious. He starts by naming the usual suspects – brains, education, natural resources, culture, history, hard work, technology, government – and exonerating them all with counter-examples. Admittedly that’s a mite glib. While he says government doesn’t cause affluence, because places with a lot of government are often broke, the kind of government matters.

unknownSo he visits countries, seeking enlightenment. First stop, Albania. So dysfunctional is Albania in O’Rourke’s telling that it’s a mystery Albanians don’t just starve. He titles the chapter “Bad Capitalism,” but capitalism per se is not Albania’s problem. It’s a deficiency of civil society. Albanians never got the memo about living decently among other people.

Next, Sweden: “Good Socialism.” This “socialist utopia” is often romanticized – the common mistake of confusing labels with reality. O’Rourke: “When the Social Democrats did get in office, they made socialism work by the novel expedient of not introducing any.” Instead, they retained a free market capitalist economy, and heavily taxed the resulting prosperity to fund egalitarian redistribution and social welfare spending. Swedes bought into this because, on the civil society spectrum, they’re at the opposite end from Albanians – really nice people who believe in egalitarianism and social welfare.

unknown-1But unfortunately, O’Rourke explains, politicians found they could buy votes with ever increasing hand-outs. Whereas originally, benefits mainly went to working people, now non-work started to pay.

Guess what. Redistributing the fruits of prosperity might fly, but not redistributing fruits you’re not producing. Sweden got into a deep hole. But at least, being Swedish and sensible, they saw the need for retrenchment. So today’s Sweden is very much not what lefties dream.

images-1Then on to Cuba: “Bad Socialism.” Worse even than Albania which at least actually has an economy, sort of. I won’t go into details, but if you’re one of those ideologues who thinks Cuba is the cat’s meow (the healthcare! the healthcare!) – you’re an idiot.

I mean, come on, really, you are.

O’Rourke quotes a Cuba guidebook that a museum’s antique furniture was “recovered from the great mansions of the local bourgeoisie” – “Tactfully put,” he says. “Outside the tourist areas, however, there was a fair danger of experiencing some freelance socialism; you might find that you were the local bourgeoisie from which something got recovered.”

Finally, Hong Kong: a tiny place with huge population density and no natural resources, poor as dirt when the Brits came in. They made it rich. How? By doing nothing. Just letting Hong Kongers freely do their own thing. The freest market economy on Earth. Today its per capita income exceeds Britain’s own (the Brits partly socialized themselves).images-2

This sets the stage for O’Rourke’s summing-up chapter – a cogent, compelling defense of free market capitalism.

In pre-industrial times, nearly everyone was poor as dirt. Economic growth was approximately squat. Since then, growth has multiplied average incomes around tenfold. More efficient production is part of it. But you also need secure property rights, rule of law, and democratic (hence accountable) government. These are interconnected, and part of a society’s culture.

unknown-2So is a free market – enabling people to freely utilize their abilities to improve their lot, and enjoy the fruits of their efforts. No freedom is more fundamental. This is also more moral than any alternative – even though it results in inequality, which some deem unfair. O’Rourke: “The market is ‘heartless.’ So are clocks and yardsticks.” Blaming inequality on free markets is like gaining twenty pounds and blaming the bathroom scale.

The common error is thinking Joe’s wealth causes Sue’s poverty. As though there’s a fixed amount of wealth to go around, and Joe having more means Sue having less. Not so. Mainly, the world’s Joes get richer by producing something of value, enlarging the pie, enabling Sue to have more too. So wealth is not an evil, it’s a good thing. And actually, the ethic of capitalism, as opposed to mere wealth, is to reinvest riches, not just hoard them. This also grows the pie.

unknown-1Adam Smith, in 1776, called it the “invisible hand.” The truth that folks striving to enrich themselves wind up enriching society. Many still don’t get it. Why? Because it is invisible. Yet because of it, globally, the gap between rich and poor is in fact narrowing, not just in money, but in quality of life measures like literacy, infant mortality, longevity, etc. Some unfairness is a reasonable price to pay for the betterment of all (or most).

unknown-3But O’Rourke deems it actually wrong to care about fairness. He invokes the Tenth Commandment: don’t covet thy neighbor’s stuff. Get your own. A message to socialists, egalitarians, and fairness fetishists.

Here’s my own summation – also a concept that eludes many people (like Bernie, the Cuban government). All wealth comes from producing goods and services people need or want. Whatever encourages (or at least doesn’t hinder) folks getting on with it is good economic policy.

That is all ye know on earth,
And all ye need to know.

Trump: Making China great again

November 27, 2016

unknownThanks to president-elect Trump’s opposition, the Trans-Pacific Partnership (TPP) trade deal is dead. And considering all his China-bashing in the campaign, it’s a supreme irony that they’re high-fiving each other in Beijing – because Trump has handed China one gigantic geopolitical triumph.

This is America forfeiting – to China – Pacific region trade leadership. The TPP, painstakingly negotiated over many years, was our way to unite the other regional nations with us to resist Chinese bullying. unknown-2With America pulling back, now they’re left to fend for themselves, which will mean accommodating to China as the region’s big Kahuna.

But the words “trade deal” have become so politically toxic here. Shame on Democrats for their cowardly unwillingness to defend one of President Obama’s key initiatives. He himself was forced to give up on it. Not to mention Republicans, who until recently knew better on this issue too.

America’s share of global manufacturing has not been falling. Manufacturing jobs have been disappearing — but due more to technological advancement than trade. And trade-related job losses are overwhelmed by the benefits to U.S. consumers when prices we pay are lower. That savings translates into more consumer spending, which creates jobs, making up for any lost. Furthermore, if trade makes countries like China and Mexico richer, that’s good for us — they can buy more from us. And anyhow, the TPP would not actually have given other countries much added ability to sell us stuff – our tariffs were already quite low. unknown-1But it would have required those other nations to reduce their trade barriers, enabling U.S. businesses to sell more to them. For us, it was a no-brainer. But I guess we have no brains now.

The Debate

September 27, 2016

images-2I sat down with a sense of dread; and a bowl of popcorn to medicate the pain. Conventional wisdom said Clinton had to tread a lot of fine lines, some mutually incompatible. Whereas all Trump had to do was not appear deranged.

Half an hour in, I was gaping in horror. He seemed to be having his way with her.

Of course I knew everything he said was ridiculous, but tried to see it from the eyes of a voter still (amazingly) undecided – uninformed, unengaged, impressionable. And I recalled bin Laden’s aphorism that when people see a strong horse and a weak horse, they like the strong one. unknown-1Trump was all bold colors, forcefulness, conviction; full of soundbites to which the yahoo will shout, “Yeah, that’s right!” While Clinton was full of standard left-liberal politician boilerplate droning that puts one to sleep.

But I also remembered a commentator’s suggestion to watch the debate with the sound off – TV being, after all, primarily a visual medium. I had told Clinton to smile, but I thought she overdid it, with an often sappy-looking clown-grin. unknownHowever, Trump’s facial dynamics were much worse. Not at all the visage of a serious public man. He almost flunked the non-derangement test.

Still, I was surprised by the consensus verdict of polls* and pundits that Clinton won big (or “bigly” in Trumpanese). I’d feared more people would fall for his alpha-male shtick and snake oil. If not, that’s reassuring.

He did seem to kill her on trade. Clinton basically had no come-back because she’d compromised herself by pandering to her party’s anti-trade left. Too bad Gary Johnson (the Libertarian nominee) wasn’t there to point out that importing goods made cheaper overseas than we can make them here benefits consumers through lower prices; enabling them to spend more on other things; which creates jobs, making up for those lost. And Trump’s condemnation of trade deals like NAFTA is utter rubbish. There’s scant evidence it cost us jobs – but it sure helped Mexico – and richer Mexicans can buy more from us, again adding to U.S. jobs. How tragic that free trade is undergoing a brainless political lynching.

But happily Clinton nailed Trump on his despicable business practices, though she could have been more forceful. The thousands of lawsuits deserved mention. She did note his multiple bankruptcies but failed to explain that a bankruptcy has victims – all those whose bills go unpaid, and whose investments are wiped out. His whole fortune comes from stiffing, ripping off , screwing people.

images-1And why no mention of Trump University? Here we have the extraordinary, odious circumstance of a presidential candidate on trial for fraud. And this doesn’t even come up?

Then there’s his refusal to reveal his tax returns. It’s a lie that being audited prevents this; the IRS itself refutes it. Today’s paper says Trump has never actually shown evidence that he is in fact being audited! And what of his boast that not paying income taxes was “smart?” Who ever imagined a candidate saying such a thing? If that’s not a gaffe, I don’t know what a gaffe is.

But Trump is a clever manipulator of factoids and verbiage – a true BS artist. This was displayed in his twisty answer on birtherism. Hillary’s response could have been stronger. I wanted to hear, “Donald, that’s just complete nonsense, that insults our intelligence. Everyone knows you were the leading promoter of birtherism. It was always a lie, you knew it, yet you kept at it, and now you’re still twisting the facts.”

I always felt that at the end of the day, while many voters seem up for a crazy roll of the dice with Trump, more would opt for the less exciting, uninspiring, more conventional, definitely compromised, yet steadier, saner, safer choice. Response to the debate suggests this outcome.

unknown-2Having that vile creep on a presidential debate stage is already a national degradation. Let us hope that this will mercifully end in November with Trump defeated.

Bigly.

* Forget the online polls, they mean nothing.

Ban the box?

September 20, 2016

unknown-1Since 2007, eleven states have enacted bans on checking a job applicant’s credit score. The aim is equality and fair hiring – since someone with low credit would more likely be black, poor, and/or young. Yet when two economists (Robert Clifford and Daniel Shoag) studied these bans, they found hiring more racially biased.

Why so? Another well-intentioned liberal utopian idea whacked by the law of unintended consequences. It seems that when employers cannot see applicants’ credit scores (often a good predictor of reliability on the job), they give added weight to factors like educational attainment and experience – on which young, poor, and black people do even worse.

imagesThe Americans with Disabilities Act similarly aimed to help a disadvantaged class, by giving them a litany of on the-job-protections — enforceable through litigation. Thusly turning disabled workers into lawsuit bombs, making employers wary of employing them at all.

Well, you may say, what’s wrong with requiring employers to treat disabled staff fairly, and penalizing them if they don’t? But even an employer with all the goodwill in the world would realize that what she considers fair, someone else might not, and in today’s litigious culture, that’s a big risk. unknown-2Some lawyer sharks make their livings by cooking up dubious ADA cases and shaking down businesses for settlements. (The ADA was a bigger boon for lawyers than for disabled people.)

It’s all part of a trend to see businesses as enemies of society. As if people should provide you with goods and services with no profit, selflessly, as a public service. A friend of mine constantly whines about supermarkets making profits, asking why they can’t just give up some profit and cut prices. But she likes being able choose among thousands of products in one store. Supermarket profit margins average around 1%.

Now we have the “ban the box” movement – referring to the job application checkbox, “have you ever been convicted of a crime?” As though it’s somehow unfair for an employer to know this about a job seeker. Applicants do have rights; but don’t businesses have some rights too? Isn’t it, indeed, unfair to require a business to hire someone without knowing their credit rating, or criminal record? Those tell something about the person. And while people with bad credit or jail time deserve some consideration, are they entitled to be treated as though those facts about them aren’t facts?

unknown-3And I’m dubious anyway that “ban the box” would actually help the intended beneficiaries – let’s face it, mainly young black men. Who, percentagewise, have a greater likelihood of criminal justice encounters. Businesses know that. If barred from learning whether a black applicant has a clean record, a common response would be wariness about hiring him – making it harder for black men to get jobs. Just like with credit scores.

Sometimes the “unintended consequences” are not even a surprise. Sometimes they stare you in the face. But that never seems to daunt liberal do-gooders in their effort to repeal reality.

After I wrote this up, an article in The Economist reported on another study, showing states with “ban the box” laws, sure enough, do experience lower black hiring.

unknown-4And now Massachusetts has banned employers from asking job applicants what their present salary is. Fairness to women is the stated aim.

Why not just go for total fairness and require businesses to hire workers knowing nothing about them at all?