Sunday, October 4, 2015

Oil and the Monopoly Myth

Those who oppose free markets often cite monopolies and large corporations as needing to be tamed by a bureaucratic apparatus designed to "protect the public."

The energy "crisis," as it used to be known, was a clash between growing energy demands and limited supplies.  The Club of Rome, remember them, argued in the 1960s and1970s that the world was going to soon run out of fossil fuel energy and therefore economic growth should be shut down before the lack of energy supplies shut it down.  This argument persisted well into the twenty-first century until it was overwhelmed by massive increases in fossil fuel energy. Another Malthusian specter vanished as if by magic.

Think of all the newsprint and talk media wasted decrying the world's output outrunning it's energy supplies.

So, the ground shifted.  The "global warming" story replaced the Club of Rome argument, but led to the same conclusion: shut down economic growth.  As the "warming" story ran up against contrary facts on the ground, the "climate change" story began.  But, the conclusions are always the same: shut down economic growth.

Thus who push this line believe that there is a knowledgeable elite -- usually, themselves -- who can rescue us from all of this, if only we abandon free markets and let them decide who gets what and what goods and services can be produced in their vision of the brave new world.

It  is amazing that so many folks think their views should supplant the views of ordinary folks regarding what to produce and consume.  The great virtue of free markets is that, acting only with local information, average citizens in their personal efforts to improve their standard of living, provide benefits for everyone in increased production and increased consumption through economic growth.  No elite bureacrats are needed.

So, myths are created, that require elites to come to the rescue.  Is it time to reign in big steel, big oil, big autos, big old IBM.....?  It is obvious that the view that these monopolies controlled our very existence turned out to be ridiculous.  These so-called monopolies couldn't find a way to provide for their own survival, much less control the rest of us.  Monopolies carry the seeds of their own destruction as new products and new ideas push the monopolies out of the way.  Free markets win out, even over monopolies.

There is no bureaucracy that can protect us.  Bureaucrats can only enslave us.  Only free markets and human initiative can protect us and permit us to improve our lives.

Friday, October 2, 2015

Job Numbers Show Economic Stagnation

Job creation in the US is grinding to a halt.  That is the clear direction of the job numbers released today showing 142,000 jobs created last month and reduced earlier numbers by 58,000.  Net-net, the figures show 84,000 new jobs created for the month of September.  It doesn't get much worse than that for an economy, not yet in recession.

These pitiful economic numbers are the natural outcome of the economic policies of the Obama Administration that focus upon increases in taxes and regulations.  Cheerleaders for the Obama Administration in the media were expecting 200.000 or more new jobs.  The actual reported number, after corrections, was 40 percent lower than media expectations.  That tells you how accurate Obama cheerleaders are at forecasting economic numbers.

Sadly, the situation is not temporary.  This is the new world order.  Europe killed off economic growth decades ago; the US is a late comer to the party.  But now, both Europe and the US have bought into the constant economic pie plan and numbers show it.

Those on the stagecoach have nothing to fear.  Bureaucrats will continue to see their income rise and the wealthy will do fine in the stagnant economy.  The middle income and below will struggle and find their standard of living declining.  Big government is the winner -- the average American will be the loser.

No surprises here.

Thursday, October 1, 2015

Why So Much Regulation?

America is strangling under policies of excess regulation. These regulations are coming from several levels of federal, state and local government.  Is there any company without a large and growing "compliance" effort.  What consumer good is produced by the compliance department.

There are many ways to kill off the free market and stifle economic progress.  Excessive regulation is one of the more subtle.  An excess of regulation guarantees the power position of folks at the top of the pile and provides jobs for lawyers and clerks, who produce no products of value that any consumer would ever willingly consume.  These regulations kill off business formation and make criminals out of the poor who have the courage to step forward with their own entreprenurial efforts.

You don't need to deal with paperwork if you are a drug dealer, but if you do anything legitimate in our poorest communities, your are forced to endure an enormous amount of paperwork to satsify bureaucrats at all levels of government.  Otherwise you may be subject to civil and criminal penalties.

Selling lemonade at a lemonade stand would take more than 12 months to get the necessary approvals from various levels of government in most American cities.  So much for the lemonade stand.

No wonder, drug trafficking has such an appeal in the poorest communities.  If all forms of entrepreneurship are illegal (because as a practical matter compliance is impossible), then why not enter drug trafficking where the profits may be worth the risks.

But regulations serves the interest of rent-seekers.  A rent-seeker is someone who has no intention of providing a product or service that anyone would voluntarily purchase.  Instead a rent-seeker seeks to make their money by latching onto the regulatory world and punishing those who are trying to provide a product or service that folks would actually like to buy.  Rent-seeing activities are like leeches.  They suck out the blood of a vigorous economy and provide nothing in return.

America has become the land of the regulator.  In my state of Virginia, any home built with a single room that doesn't have electrical outlets cannot get an "occupancy" permit.  What conceivable reason can there be for this regulation?  If the homeowner wants to have a room without electrical outlets to protect small children, he/she cannot do it.  How did that become an issue to be determined by the state?  A family is forbidden to protect their children thanks to regulation.  There are so many examples where regulations make folks less safe and reduce their standard of living.

Who wins?  Lawyers and folks at the top of the pyramid.  These regulations don't bother them.  In some cases, Senators like Elizabeth Warren, exempt themselves from regulations that terrorize the average citizen.  After all, Elizabeth Warren, perched on top of the stage coach, need not bother to play by the same rules that she foists on every other American.

So, regulatory overkill continues to punish those at the bottom of the economic pile with little or no benefit to anyone but the bureaucrats (and their ever-present media fan club).

Wednesday, September 30, 2015

Economic Success -- How and Why?

The new movements on American campuses focus around the idea that economic success is based upon "western ideals."  Instead economic success, they argue, should be based upon something else.  What is that something else?

Egalitarianism -- except where they are personally concerned.  The arrogance and elitism of this point of view is breathtaking.  Those sitting atop the stagecoach of life peering down upon the masses get to decide the rules.  Capitalism, which favors hard work, personal initiative, thrifty and honesty is seen as representing "western values."  Instead such values should be replaced by distributing the goods of society as these new thinkers see fit -- a view that Hitler, Stalin, Castro, Hugo Chavez and the various folks running North Korea certainly would agree with.

Merit, it turns out, is a western value.  That someone can emerge from poverty to become economically successful is an abhorrent idea to the leaders of the modern university.  Instead, these leaders argue, they should personally decide who gets what.  Hillary Clinton has glommed on to this idea to parlay political influence into hundreds of millions of dollars of wealth.  Is there a left wing spokesman for the poor, who isn't personally worth hundreds of millions of dollars?

The war on poor people is alive and well on today's college campuses as concepts of truth, merit, hard work are struggling to find defenders.

Tuesday, September 29, 2015

Academic Absurdities

Increasingly, a university education in an elite school is little more than an indoctrination program.  Large numbers of faculty are no longer engaged in activities than most folks would describe as either research or teaching.  Instead, point of view is what matters.  The result: more and more students spend four years tacking on the political perspective of their "mentors," while gaining little in skills useful to compete in a modern economy.

If you want to see this in action, go online to any top 25 school and read the student newspaper.  You will be amazed.  The new codeword is "privilege," usually preceeded by the obvious racial adjective.  As if anyone at an elite school is anything but privileged.  Most of this is an exercise in self-flagellation, since it is rare to see anyone in an elite school anymore who is not comfortably among the one-percenters.

Throughout history, the most radical folks tend to come from "privileged" backgrounds, yet rail against privilege.  Capitalism, on the other hand, draws its winners from all backgrounds and the one-percenters usually phase out within a generation or two.  There is a reason for this.

The level of energy and work ethic necessary to succeed in capitalism is usually blotted out by the accident of birth in a wealthy family.  Accident of birth is the ticket in socialist societies and was a dominant fact of power in Soviet Russia and modern day China, Venezuela, Cuba, North Korea.  That's where real "privilege" holds sway.

Free market capitalism is the only institution in the modern world that rewards merit.  Those rewards can be blunted by big government programs that preserve the position of the rich and powerful.  Minimum wage laws, for example, help to keep the poorest among us from having the opportunity to escape poverty.  The wealthy tend to like minimum wage laws.  Note campus activity on the "living wage" -- a great example of how to keep poor people from the possibility of economic progress by substituting one class of workers for another.

Those who claim to represent those in poverty usually oppose anything that could help lift folks out of poverty -- vouchers, repealing minimum wage laws, reducing regulations on small businesses and ending onerous licensing requirements for the poorest entrepreneurs.  I guess it helps to have a large group of poor people if your main vocation is speaking up for the poor -- an activity very different from actually helping the poor get out of poverty.

Meanwhile academics, whose pay corrected for hours worked rivals that of baseball players, continue to drone on about "privilege."  They should know.

Monday, September 28, 2015

Trump Economics

Donald Trump, like President Obama, hasn't spent much time thinking about economics and, as a result, the Trump-Obama economic game plans are amateurish at best.  Neither seems to understand capitalism, except how to exploit capitalism for their own personal benefit.  Grand, over-arching principles are completely absent in the worldview of Donald Trump or President Obama. 

Trump has begun to demonize the rich, a persistent theme of almost all politicians these days, without noting that most Trump (and Obama) policies would permanently enshrine wealth and power of the rich.  Trump, like Obama, seems to have no understanding of why America became a great economic power in the first place. One is suspicious that neither really cares.  Neither Trump or Obama offers any policies that would help the poorest Americans climb out of poverty nor any policies that would improve the prospects of average Americans.  Just the opposite.

Trump's idea of capitalism is to get a bunch of rich folks together and decide how to run things.  That about sums it up.  Trump, himself, has never produced a product for a market place, but has instead weazled his way through the bankruptcy laws and peddled his personal fame to extort his way to whatever money he has.  How much, we will never really know.  But, does anyone really care.

Sunday, September 27, 2015

The Export-Import Bank Gets New Life

John Boehner seems to be a very nice man, but a uniquely unproductive Speaker of the House.  Rather than risk another bruising fight with conservatives, Boehner chose to step down as Speaker of the US House of Representatives last week.

Boehner has long been a supporter of crony capitalism.  The poster child for crony capitalism is the Export-Import, which provides subsidies to a handful of big businesses to promote their export activities.  Using government to line your pockets is supposed to be something that small-government Republicans oppose.  But, generally they don't.  Republicans, just like their Democratic brethren, are only too eager to find ways to use taxpayer money to enrich their wealthy patrons.  And so, the Export-Import Bank is back on the table as one of several initiatives that Boehner has been prevented from putting forward by the conservatives in the Republican caucus.

The plan is that Boehner in his final days, free from the normal obligations of Speaker, will use his lame-duck power as Speaker to pursue the various items on Harry Reid's wishlist.  The Export-Import is the symbolic crown prince of the Harry Reid-Nancy Pelosi wish list and Boehner is determined to deliver for his friends in the Democratic party and his buddies in the crony capitalism wing of the Republican party.

So, the tears that should be shed are tears for free market capitalism.  Boehner may be a nice man, but he is no friend of free market capitalism.