Monday, September 19, 2016

The left's long lingering history of racism

Listen to the news about the immigration of Syrians to Europe and you think free marketeers are racists because the media labels opponents of immigration the “extreme right.” After all, promoters of freedom are positioned to the right while socialists are on the left, right? But the historical facts tell a different story.

Economists of the mid-nineteenth century opposed slavery. The greatest, David Ricardo, was a Jew and knew something about racism and oppression. The advocates of slavery opposed the economists. Thomas Carlyle, a socialist, dubbed economics the “dismal science” because the freedom that economists demanded would create a “dismal” world in which white people were equal with the “inferior” races, such as the people of Africa.

Leftist regressives, who called themselves Progressives, invented the truly dismal science of eugenics in order to suppress the population of minorities in the UK and US and force them to reduce their birthrates. They introduced the minimum wage in the US to prevent minorities such as Jews, Africans, Chinese, Mexicans and Native Americans from getting jobs. Regressives assumed that if those minorities couldn’t get jobs then they wouldn’t marry and have children. For details check out Princeton scholar Thomas C. Leonard's book Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era. 

Friday, September 9, 2016

Socialists stuck on luck

In May of this year The Atlantic offered another hymn to the goddess of luck. Not only is worshiping the goddess a good thing according to the author, but agnostics are stingy and selfish:
Seeing ourselves as self-made leads us to be less generous and public-spirited...
A recent study by the political scientists Benjamin Page, Larry Bartels, and Jason Seawright found that the top 1 percent of U.S. wealth-holders are “extremely active politically” and are much more likely than the rest of the American public to resist taxation, regulation, and government spending. Given that the wealthiest Americans believe their prosperity is due, above all else, to their own talent and hard work, is this any wonder? Surely it’s a short hop from overlooking luck’s role in success to feeling entitled to keep the lion’s share of your income—and to being reluctant to sustain the public investments that let you succeed in the first place.
Traditionally, religion explained what we couldn’t understand. Today, it’s randomness. Choosing randomness, or luck, is a description, not an explanation of a phenomenon, and an admission of ignorance. There are quite a few books promoting the goddess of luck. Keynes blamed recession on the “animal spirits” of businessmen, an allusion to randomness and not pagan beliefs. Nassim Taleb’s books on black swans was my first introduction to her. Then I read Burton Malkiel’s A Random Walk Down Wall Street: A Time-Tested Strategy for Successful Investing. Recently, The Drunkard’s Walk: How Randomness Rules Our Lives by Leonard Mlodinow came out.

Monday, September 5, 2016

The Fed is flummoxed – ABCT has the cure

Last week the Wall Street Journal printed a report card of Fed activity for the new millennium. The writers think the Fed failed most of its curriculum.
"In the past decade Federal Reserve officials have been flummoxed by a housing bubble that cratered the financial system, a long stretch of slow growth they failed to foresee and inflation persistently undershooting their goal."
Part of the Fed’s problem is that it believed the media’s hyperbole about former Fed chairman Greenspan, referring to him as the maestro during the “Great Moderation” of the decade of the 1990s. Fed officials didn’t comprehend that the mainstream media is very socialist and will grossly exaggerate every apparent success by a government agency. The Fed and most mainstream economists took the praise from the media to heart and began to believe they were invincible. They even announced that they had slain the dragon of business cycles. Meanwhile, Austrian economists warned that the corpse resembled a wind mill more than a dragon.

Friday, August 26, 2016

Shocking! NIRP causes savings not spending

The whole point of negative interest rates (NIRP) in Europe and Japan was to force people to spend by punishing them for clutching their cash. The rationale goes deep into the middle ages before modern economics: the economy is sluggish because people are saving too much instead of spending. Good economists thought they had buried that monster by the 1930’s, but Lord Keynes resurrected it and gave it a title of nobility. That’s how medieval economics came to dominate mainstream academics and central banks for 90 years. If you don’t believe in zombies, you haven’t followed mainstream economics for long.

Saturday, August 20, 2016

The rich are getting richer - Baptists and bootleggers

Hillary and Bernie dusted off and hoisted aloft the old medieval standard “the rich get richer while the poor get poorer” during their primary contest. Republicans tended to respond with, “So?” During the Olympics, Hill promised to make the rich pay their fair share in her TV ads. Hill and Bernie imply that the rich have become wealthy at the expense of the rest of us, another medieval economics principle.

Attacking the wealthy always inflames envy, draws a crowd and extorts campaign contributions. That’s why politicians use it so often, as Helmut Schoeck noted in his masterpiece, Envy: A Theory of Social Behavior.

The truth is that Bernie and Hill are half right: inequality is growing. They're just wrong about the reasons. However, free marketeers do a lot of damage to the cause by ignoring the issue or denying that anything is wrong. Worse, some even defend growing inequality. 

Sunday, August 14, 2016

Where's the growth?!!!

Decades ago an old lady yelled, “Where’s the beef?” when handed a burger in a fast food commercial. It became a catch phrase for occasions when people wanted to advertise that an idea lacked substance. So while the media proclaims the virtues of the current economy, many economists are asking, “Where’s the growth?”

The Bureau for International Settlements (BIS), the central bankers’ bank, recently issued a report card on the efforts of their client central banks to boost growth since the last recession and given them a failing grade. In the report “Unconventional monetary policies: a re-appraisal,” the BIS economists wrote:
We reach three main conclusions: there is ample evidence that, to varying degrees, these measures have succeeded in influencing financial conditions even though their ultimate impact on output and inflation is harder to pin down;

Sunday, August 7, 2016

Free trade can't help a socialist nation

Good economists, that is, free marketeers, are appalled by Republican nominee for President Donald Trump’s attacks on free trade. All of us have examined and approved David Ricardo’s theory of trade and comparative advantage. Trade is not a form of war. Exports do not enrich a nation any more than imports impoverish it. It does not matter if the trading partner isn’t playing “fair.” Trading even with a communist country will benefit the home nation.

As Mises wrote in Omnipotent Government, “...the inference from Ricardo’s free-trade argument was irrefutable. Even if all other countries cling to protection, every nation serves its own interest best by free trade. Not for the sake of foreigners but for the sake of their own nation, the liberals advocated free trade (OG 75).”