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ideological culture obituary political economy

The Bomb That Fizzled

Paul Ehrlich was a biologist whose 1968 The Population Bomb went off when I was just a lad. He died last week at the ripe old age of 93. Professor Ehrlich warned of the dangers of overpopulation, proclaiming that in “the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.”

It didn’t happen.

Instead, for the first time in history, the percentage of the human population living in misery and dire poverty declined steadily.

But that did not mean his work was shelved as a bad theory, falsified by evidence.

Everywhere, when I was growing up, I witnessed a rising tide of anti-natalism, the doctrine that young adults shouldn’t have babies, or — if they did — should have only a few. Mankind was a cancer on the planet, we were told, and too many believed it.

Which affected breeding patterns.

And policy.

The current population reality is the opposite of what the Ehrlichs said it would be. All over the world, except for places in Africa, legacy populations are declining. In the United States, our population would be declining were it not for immigration. Elsewhere, the replication rate is plummeting — and it’s not just the West, but in China and Taiwan; both Koreas, as different as they are; and in Japan.

Without growing populations, our modern (if jury-rigged) social safety net pension systems are jeopardized, as is the possibility of finding caregivers to aging-and-dying populations.

We cannot blame it all on Ehrlich of course. There are many factors at work. But is it possible to be more wrong than he was? 

What should the young do now, to mark Ehrlich’s passing?

You could do worse than make some more babies.

This is Common Sense. I’m Paul Jacob.


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free trade & free markets national politics & policies political economy

Stupid About Greed

Tough times. You encounter a politician. He takes your side on an important issue. He speaks eloquently and with apparent sense. But then switch the subject and suddenly he blurts out such stupidities that you wonder about his sanity, the state of the nation’s education, the very meaning of life itself.

Well, not that last one.

Let’s turn the page in our anti-hymnal to Representative Tim Burchett (R.-Tenn.). I’ve quoted him. He’s given off detectable glimmers of hope. Yet now he (in the words of an enthusiastic twitterer) “exposes the price of gas increasing in America has nothing to do with the Iran war.”

But what does he say?

“How much oil does America get from Iran? Zero.”

True enough. But so what? 

Our president’s un-declared war has resulted in conflagrations of oil wells and a cessation of petroleum transportation through the Strait of Hormuz. But while acid rain descends upon Iranians, it’s gas prices that concern Americans. And Burchett is disgusted.

“That’s how much this is a scam,” he said. “And these oil companies, shame on ’em. They’re using this opportunity to make record profits once again.”

We’ve heard this logic before. 

“It’s greed!”

No, it isn’t. Sure, I’m no economist — but I understand that the market for petroleum products is a worldwide one, and if supply collapses on the other side of the world, it’s going to affect prices over here. We may not buy from Iran, but folks elsewhere do, and when they cannot get what they need, they’ll go to competitors, and world prices will be bid up.

To avoid this natural process, we’d have to simultaneously decrease demand. And how would Burchett do that? 

The first casualty of a price hike is common sense.

Not here, though, for this is Common Sense. I’m Paul Jacob.


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political economy property rights regulation too much government

Too Damn High?

It’s getting tougher to rent a place to live.

Applications now often entail fearsomely intrusive scourings of financial history. And, writes Jeffrey Tucker, “if you are unbanked or missed a payment at some point, you can forget it.”

This is about more than digital intrusiveness or the end of privacy. It’s about aversion to risk. 

The aversion may have many causes. Tucker stresses a factor that’s pretty glaring once you think about it: the federal government’s assault on private property rights during the COVID-19 pandemic. Some tenants eagerly exploited a federally imposed moratorium on rent payment — plus ban on evictions — only finally stopped by a 5-4 decision by the Supreme Court. 

At the state level, evictions continued to be outlawed until 2022.

So property owners assume that they cannot at all count on government to be in their corner. If a tenant fails to pay rent, folks in government (who include the ones with guns) protect the person who cannot or will not pay his or her bills. 

The concern must be even more intense if an owner’s property is located in a town with a track record of demonizing landlords and in the process of launching further assaults on property rights. (Example: New York City, where high rents are now officially called rip-offs.)

Landlords want to avoid tenants who would use any law or bureaucratic tendency to rationalize skipping rent payment. Since owners can’t count on government to protect their property rights, they are becoming ultra-cautious. 

That is why conscientious prospective tenants who may have a blot or two in their financial history are paying the price.

This is Common Sense. I’m Paul Jacob.


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ideological culture political economy too much government

Capitalism’s Communism?

The problem is communism — in finance.

That’s the world according to Robert Kiyosaki, says an Epoch Times profile. “Kiyosaki described the U.S. Federal Reserve Bank — established in 1913 with a goal of stabilizing the nation’s monetary supply following years of extreme volatility, and preventing panic — as a Marxist organization,” Travis Gillmore writes.

“When the Fed came to America, it was the end of America,” states Kiyosaki, who co-authored a bestselling investment book, Rich Dad, Poor Dad, in 1997, “and our freedom is being stolen via our money.”

This is a familiar theme. Attacking crony capitalism as a massive swindle, and central banking as the lynchpin of bad government practices and general exploitation, that’s so basic to my view of “political economy” that I hardly bring it up anymore. It’s just so obvious.

But is our central bank communist

If you don’t like “communist” or “socialist” you can add the suffix -ic: communistic or socialistic.

“As most people know, there’s a big movement to end the Federal Reserve Bank, because it’s not federal, it’s not a reserve, and it’s not a bank,” adds Kiyosaki. 

“U.S. currency was once tradeable for silver or gold,” Gillmore’s article summarizes. “The Federal Reserve notes in circulation today, however, carry no guarantees, which results in significantly devalued currency. . . .

“Marxists want to destabilize society by ‘taking the currency,’ Kiyosaki said,” blaming this kleptocracy for the rising tide of homelessness along with other maladies.

The Epoch Times ends on a hopeful note, but does not quote recent tweets by Kiyosaki, warning us that the “biggest crash in history” is underway, predicting millions would “lose everything” while prepared investors (like himself) get richer.

All very familiar?

Sure.

But that does not mean there is no truth in it.

This is Common Sense. I’m Paul Jacob.


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Accountability folly political economy

Green Goes Red

Well, at least they were earnest. Hopeful. Committed.

Swedes in the north part of their country channeled State pension funds — billions of kronor! — into climate-friendly projects.

Well, I’m not sure to what degree Swedish citizens were for this ideologically driven investment portfolio, but Swedish politicians sure were!

And now those investments appear iffy. “State pension fund AP2 had invested £117.7 million in Northvolt before its collapse,” explains GBN News, out of Great Britain. “It also holds £46.8 million in Stegra, plus a further £15.6 million exposure through its investment in Al Gore’s Just Climate fund.” And both Northvolt and Stegra — “once flagship companies of the energy transition,” as Blackout News puts it — teeter at the abyss of failure.

Northvolt was once Europe’s leading Great Green Hope, an electric vehicle battery company with a commitment to sustainability; in November it filed for bankruptcy protection.

Stegra was until recently seen as Sweden’s high-profile “green steel” leader, but now faces an £858 million funding gap.

There has been some shuffling of management, but even were the world’s most magical managers to pull these companies’ feet out of the fire — even if the endeavors can limp out of the current fire-sale conflagration — ask yourself: does it ever make sense to leave pension funds in the hands of zealots who seek to change the world for some utopian dream? 

It makes far more sense to let private equity fund risky projects, for private fund managers have more (voluntarily given funds) on the line.

Politicians, after all, are notoriously irresponsible — always willing to bet your future on their dreams.

This is Common Sense. I’m Paul Jacob.


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international affairs political economy regulation

Rents After the Chainsaw

Argentina’s Ministry of Deregulation — yes, it now has one — reports that by June 2024, little more than half a year after chainsaw-wielding libertarian candidate Javier Milei won the presidential election, the housing market boomed . . . into a magnificent recovery.

Back in March, Reason magazine observed that listings on the Argentinian real-estate platform Zonaprop had increased from 5,500 before Milei’s deregulation “to 15,300 today, a staggering 180 percent rise.”

Why the big jump?

Strict national rent controls had been imposed in 2020, by the previous administration. When Milei lifted them, replacing them “with nothing,” tenants and landlords could then make whatever arrangements they could agree upon.

One method of evading the punishing controls had been switching to an Airbnb model of renting, with contracts renewable every three months. Such expedients were almost mandatory . . . given Argentina’s galloping inflation. But they introduced their own kinds of uncertainty.

Owners also took units off the market.

Annual rentals plummeted under this anti-market regime. In late 2023, Valentina Morales saw maybe “12 apartments advertised in the entire Palermo neighborhood,” a region with a population of almost 250,000.

Rents on the few apartments available with annual contracts skyrocketed. Tenancies were required by regulation to last for three years, with arbitrary and unrealistic caps on rent increases. And rent had to be paid only in pesos. But since inflation did not pause under the pre-Milei regime, owners were forced to guess how high inflation would go over the three years . . . and they charged accordingly.

Now? All such nonsense is gone.

This is Common Sense. I’m Paul Jacob.


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budgets & spending cuts international affairs political economy

Was Milei Bailed Out?

You saw it on the news, newscasters almost gloating: Argentina’s peso plunged — triggered by  low reserves and political defeats for President Javier Milei.

Then the U.S. Treasury under Secretary Scott Bessent finalized a $20 billion currency swap line with Argentina’s central bank. This was on top of direct U.S. purchases of pesos in the market and plans for another $20 billion from private sources. The deal was seen as a U.S. strategic play to counter instability in Latin America.

Some called it a bailout.

Were Milei’s radical reforms saved at the expense of the U.S. taxpayer?

Bessant was asked this, yesterday, directly on MSNBC, and had a response: “Do you know what a swap line is?”

I had to brush up on it. (I don’t engage in any cross-currency swaps, understandably, not being a major corporation, a central bank, or a sovereign state.) A currency swap is a financial agreement between two parties to exchange principal amounts and interest payments in different currencies over a set period — a temporary loan in one currency backed by collateral in another, designed to provide liquidity, hedge exchange rate risks, or access cheaper funding without the full risks of outright borrowing.

“In most bailouts you don’t make money,” Bessent said. “The U.S. government made money.”

In an exchange, both parties gain. But in any exchange involving extended spans of time, there is risk, so any initial win for Treasury could be wasted by a failure of Milei’s course.

Unlike American politicians opposing inflation, Milei’s been quite honest with Argentinians: “To cure inflation, you have to go through a recession. There is no way around it.” So why Milei didn’t just peg the Argentine peso directly to the U.S.; why a “crawling peg” rather than strict? Milei has been clear: he lacked political clout.

Milei insists that his crawling peg reform isn’t gradualism (which he despises), and that the swap isn’t a bailout; Bessant agrees, saying the swap’s “a profitable move for America.”

This is Common Sense. I’m Paul Jacob.


Note: Milei’s party gained in the most recent election.

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national politics & policies political economy regulation

Ultra-Absurd?

Sen. Josh Hawley (R-Missouri) is oh-so-ultra.

USA Today dubs him a “conservative” in the title of a recent article on a proposed minimum wage hike, and then an “ultraconservative” (emphasis added) in the first word of the article itself

Why does this “ultraconservative” join a Democratic senator in raising the federal minimum wage to $15? They both seem to assume that minimum wage laws raise wages.

For hundreds of years, economists have argued they don’t. On the face of it, these laws merely prohibit jobs paid below a certain rate. They disemploy. 

When the government prohibits low-wage compensation, businesses shift productive processes to keep afloat; when a factor is suddenly made more expensive, they adjust. With more automation, for example.

At least, the USA Today article mentions, briefly, that the Congressional Budget Office forecasts that some individual workers and families would see their livelihoods diminished by the higher minimum — which is the only part of the coverage of the new, more restrictive (higher) minimum wage regulation that gets to the meat of the issue: what minimum wage laws actually do. 

A related article back home in the Springfield News Leader (a member of the “USA TODAY NETWORK”) explores the question of Missouri’s minimum wage and what activist economists call the state’s “minimum living wage” — and it is relevant at least to this extent: states have different economic climates, and wage rates differ region to region in the United States, so it’s very relevant to a senator from his state affecting his state’s economy with a regulation applying equally to all states.

Which is to say that the minimum wage issue should be a state issue.

If an issue at all.

“Ultraconservative” Hawley’s bill is ultra-misguided.

This is Common Sense. I’m Paul Jacob.


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Out of Poverty

“So, who brought who out of poverty?” asks Frank Dikötter about China’s economic rise.

The Dutch historian and author of four excellent books on Chinese history — Mao’s Great Famine; The Tragedy of Liberation; The Cultural Revolution; and China After Mao — Dikötter recently spoke at length with Peter Robinson, host of the Hoover Institution’s “Uncommon Knowledge” podcast.

Calling it “conventional wisdom,” Robinson offers that “the number that I found over and over again was eight to 900 million people lifted out of poverty since Deng Xiaoping announce[d] his reforms in ’78.”

“That’s all propaganda,” declares Dr. Dikötter. “The people in the countryside have lifted themselves out of poverty.”

Even before Mao’s death in 1976, the Cultural Revolution ended and the “army, which was deployed in every farm, every factory, every office from 1968 onwards, that army goes back to the barracks and is purged in turn,” he explains. “People in the countryside realize there’s nobody there to supervise them. There’s nobody there to tell them, go and work in the collective fields.”

Mr. Robinson chimes in: “The boot is off their neck.”

“So,” Dikötter expounds “they start operating underground factories; they open black markets; they trade among themselves.”

Deng “merely [put] the stamp of approval on something that escapes them altogether, namely the drive of ordinary villagers to claim back the freedoms they had before 1949.

“Allow ordinary people to get on with it,” he says, “they will!

“But this is not a party,” concludes Dikötter, “that will allow ordinary people to get on with it.”

This is Common Sense. I’m Paul Jacob. 


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media and media people national politics & policies political economy tax policy

The Trump-Tariff Question

“To this day I cannot tell you what Trump truly believes about tariffs,” Daily Wire’s Michael Knowles recently confessed. “Does he want tariffs instrumentally, to increase trade? Does he believe in tariffs as a revenue-raising mechanism? And is he hard-core on tariffs? I couldn’t tell you; the man is inscrutable.”

In “Tariffs Are Awful, But The Income Tax May Be Worse,” economist Walter Block seems less confused. “Donald Trump supports them on the ground that the McKinley administration was prosperous, and relied upon tariffs,” Walter’s Eurasia Review op-ed posits. Our free-market economist notes that this rests on a fallacy: “since A precedes B, A must be the cause of B.”

Professor Block offers a better “historical episode to shed light on this matter, the Smoot-Hawley Tariff of 1930.” You know, the tariff hike that worsened the Great Depression.

The best part of Walter Block’s refutation, however, follows his explanation of the Law of Comparative Advantage. He discusses the gains to our economy if the expert workers Trump fires from the IRS were to find work in the private sector.

And, contemplating the idea of switching from income taxes to tariffs, our widely-published octogenarian notes that “it takes relatively little labor to run a tariff system. Hey, we already have tariffs in place. An increase in their level would hardly call for much more manpower, likely hardly any more at all.” The gains of nixing income taxes would be vast; the harms of higher tariffs would be comparatively minuscule.

An interesting argument? Sure. But I don’t see politicians giving up the income tax any time soon.

This is Common Sense. I’m Paul Jacob.


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