Tag: economy

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ideological culture political economy

The “Failure” of Capitalism?

bully, economy, Covid, corona virus, Wuhan, epidemic, pandemic,

“As the lock-downs come to an end,” writes economist Daniel Kian Mc Kiernan, “it will be expected by many — including many not on the political left — that the economy will pick-up at about where it was before the lock-downs.”

Mc Kiernan thinks a popular misconception will get in the way. 

Those who see the economy as “a kernel of processes that take inputs and produce outputs based upon purely technologic considerations” will let this techocratic model cloud their thinking. Viewing this “kernel” as producing not only “everything necessary to maintain itself” but also, and more importantly, a surplus that they treat as a zero sum affair — requiring the State to redistribute — they will regard the re-start as if a mere flipping on of a switch.

But the economy is not something to be un-plugged and plugged back in, and the lock-down super-quarantine was not a mere interruption of service. It was a huge blow that will demand uncountable adjustments. Those quite necessary adjustments may seem random, even wild, and because of this those on the “political left” will, Mc Kiernan predicts, do what they always do: “diagnose the failure to restore the economy quickly as ‘a failure of capitalism.’”

In other words, the bully knocks the victim down, stomps on him, and then taunts him for not getting up right away. 

Still worse: those taunts will become excuses for more kicking and stomping. And the flailing economy will be seen as all the more justification for more of the bully-boy Big Government policies that caused the “failure.”

This is Common Sense. I’m Paul Jacob.

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bully, economy, Covid, corona virus, Wuhan, epidemic, pandemic,

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Common Sense free trade & free markets government transparency insider corruption local leaders media and media people national politics & policies too much government

Never Trust a Politician

salt, lies, politicians, politics, Donald Trump, truth, economy, trade

One of my more persistent critics on this site asked, last week, why I might believe anything the current president says — considering all the lies.

For reasons of decorum I won’t repeat his exact wording.

The odd thing about the comment was not the vulgarity, though (unfortunately). It was the idea that I was relying upon belief in Donald Trump’s veracity. The whole point of my commentary regarding Trump’s handling of trade and foreign policy was to read between some lines.

I try never to believe anything . . . er, everything . . . any politician says.

In Donald Trump’s case, though, there are lies and there are fictions and there are exaggerations. And corkers . . . and “negotiating gambits.” Separating the wheat from the chaff from the grindstone is not always easy.

Based not only on some of what he says, but also on results-thus-far from the EU negotiations, Trump’s idea of “fair trade” appears to be multilateral free trade. But he has chosen a bizarre method to get there: the threat of high-tariff protectionism — which in the past has led to multilateral protectionism, not free trade.

Trump sees everything as a contest. Trade isn’t a contest as such. It’s win-win. But trade negotiations are contests. And Trump’s game of chicken is dangerous.

Regarding foreign policy generally, though, he seems to be playing a more familiar game: we can outspend everybody. The recent increase in Pentagon spending is bigger than Russia’s annual military budget!

So, who pays? Americans in

  1. higher taxes and 
  2. the consequences of massive debt, as well as in
  3. the higher prices from his tariffs.

That’s awfully daring of him. For us.

This is Common Sense. I’m Paul Jacob.

 

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Accountability free trade & free markets general freedom ideological culture media and media people national politics & policies

Driven to Sanity

Washington Post, economics, economy, control, government, limited

Having the federal government centrally plan the economy is “a huge waste of everyone’s time and resources” states an amazingly common-sensical Washington Post editorial.

“In a well-functioning modern economy, businesses are generally free to buy and sell the things they need, absent a compelling public need for government intervention,” the editors further expound.

Hmmm, a capitol-town rag that regularly extols the virtues of big government regulation of everything now notices the importance of freedom.

Of avoiding, especially, a system where bureaucrats and other government bullies micromanage commerce.

“Were we directed from Washington when to sow and when to reap,” Thomas Jefferson wrote long ago, “we should all want for bread.”

And aluminum.

“Worse,” the Post argues, the system “also politicizes — and, indeed, corrupts — economic life. Companies that feel threatened by any particular tariff exclusion request have the right to present their objections to the Commerce Department, meaning that each decision represents a high-stakes competition for federal favor between at least two companies with every incentive to influence it through lobbying, campaign contributions, you name it.”

Correct. It seems we may have Donald Trump to thank for opening the Post’s eyes. 

“[T]he way to get ahead in Mr. Trump’s economy,” those editors conclude, “is not making better products for the people, but making better connections in Washington.”

Tragically true.

But, sadly, true long before Mr. Trump entered the White House. No new powers have been given to Trump. 

Let’s drain the stinking Washington swamp. Let’s end the corrupting influence of a regulatory state run amok. Let’s limit the power of the people wielding political power.

How?

Free the markets!

This is Common Sense. I’m Paul Jacob.

 

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Accountability folly general freedom government transparency moral hazard national politics & policies porkbarrel politics responsibility too much government

While the Clock Ticks

national debt, debt clock, Mercatus Center, economics, economy, folly,

Pushing annual federal spending over a trillion bucks into the red?

It has consequences.  

“Our debt is growing, and it’s growing fast,” writes Veronique de Rugy at Reason. “Though it’s a shame that lawmakers passed tax cuts without cutting spending to offset short-term losses in revenue, there’s no doubt that Social Security and Medicare deficits are almost entirely to blame for our impending debt crisis.”

Ms. de Rugy, a senior research fellow at the Mercatus Center, has a typo in the version of her article that I read (it has probably since been corrected): “Based on current trends, the debt held by the public is set to reach $15.7 trillion by the end of this year and continue rising to $28.7 trillion by 2028.” She surely meant “$25.7 trillion,” since the current debt clock figure shows the U.S. public debt at over $21 trillion. Still, $25.7 seems a bit high . . . but at this point we can leave the exact numbers to the professionals.

We just know that the debt’s too damn high.

As de Rugy explains, it has present as well as future cost. And, yes, entitlements are the biggest problem — but even more than Ms. de Rugy suggests. Congress owes the Social Security “trust fund” (in Al Gore’s infamous and non-existent “lock box”) nearly $3 trillion.

Our solons would have to (painfully) switch from revenue deficits to revenue surpluses just to pay off its debt to a much-relied upon institution.

What will happen, though, is surely this: Congress will borrow more from elsewhere to pay what Social Security needs — which all too soon will be a lot more than $3 trillion.

That’s not Common Sense. (But I am Paul Jacob.)

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Accountability free trade & free markets moral hazard national politics & policies responsibility

It’s the Stupid Economy

HIllary Clinton, Obama, Bill Clinton, economy, election, illustration

When Bill Clinton ran for president, the slogan inside his campaign’s war room was a blunt reminder to focus on “the Economy, Stupid.” This was Clinton’s first enduring contribution to the American stock of catch-phrases.

Now, Bill’s wife, Hillary, seeks the top banana position. But she has a harder job than Bill: he could fight against a lackluster incumbent caught in a big lie (“No New Taxes,” another slogan). Hillary is almost required to defend the outgoing president, in no small part because she served in his Cabinet.

If she were candid, she’d address the weak recovery and long-term stagnation.

Her slogan could be, “It’s the Stupid Economy.”

No matter what politicians say, however, secular (long-term) stagnation is a thing. Lots of people have given up, are off the roles of job-searchers and so don’t appear in official unemployment statistics, and too many people have taken early retirements on trumped-up disability claims.

At least, economist Lawrence Summers is decrying it, jet-setting around the world to meet with financial leaders and political functionaries.

I doubt his diagnosis, however. Summers talks Keynesian, pointing to inadequate aggregate demand. While there may be something to the general shift in the desire to hold monetary assets, leading to deflation and even negative interest rates, I bet the underlying problem is regime uncertainty — when widespread fears of the future and doubts about governmental consistency and follow-through lead the owners of capital to withhold investing in production.

There are also the effects of general regulatory and redistributionist kludge.

When the problems stem from your favored policies, you can’t revive FDR’s slogan “nothing to fear but fear itself” and let it go at that.

Hillary will surely explain — Thursday night.

This is Common Sense. I’m Paul Jacob.   

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Accountability folly free trade & free markets general freedom ideological culture moral hazard national politics & policies political challengers responsibility tax policy too much government

Berating Bernie?

Bernie Sanders, Glass Steagall, ratings, agency, Common Sense, illustration, Paul Jacob, James Gill

Bernie Sanders has risen in the polls. He may even beat Hillary Clinton in the first caucus and primary contests for the Democratic presidential nomination.

A cause for celebration! Witnessing a huge hunk of Americans accept Mrs. Clinton, the consummate and corrupt insider, is too disheartening.

Bernie Sanders, for all his faults, is at least not an insider like Hillary.

And even when he’s obviously wrong, he’s a breath of fresh atmosphere. Take his recent call for turning the credit ratings institutions into non-profits, or into government-run bureaus. It’s good to hear someone on the left blame something other than the partial repeal of Glass-Steagall as the cause of the Crash of 2008, and (thus?) of the current “Great Recession.” Glass-Steagall was utterly irrelevant to the institutions that were hit hardest in 2008’s collapse; it has, nevertheless, served as leftists’ idée fixe for years now. Embarrassing.

The ratings agencies, on the other hand, did play a part in the crash.

Still, remember: their prominence and importance (and very existence) in financial sectors rests entirely upon one provision of FDR’s New Deal.

More importantly, Bernie’s favored solution — government bureaus — is no solution at all. Europe’s ratings system failed in 2008, too, as Mark A. Calabria has noted, and “it was the international financial regulators, not the rating agencies, who decided that Greek debt was ‘risk-free.’”

Earth to Bernie: government regulatory failure is normal.

Calabria agrees that we need to have a political conversation about the ratings agencies, but insists it be “based on facts,” not ideology.

I’m all for the facts, but ideologies are inevitable. And ideologies promoting Big Government inevitably fail.

This is Common Sense. I’m Paul Jacob.

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Bernie Sanders, Glass Steagall, ratings, agency, Common Sense, illustration, Paul Jacob, James Gill