Wednesday, June 29, 2016

The Thomas Friedman Method of Argument

Thomas Friedman's op-ed in the NY Times describes the Brexit argument as totally one-sided.  Those who support Brexit are morons, trying to advance their careers and ignoring what is obviously the virtue of the "Remain" argument. 

This is so typical of the left (and the NY Times). There aren't two sides to any argument.  There is only one side -- their side.  Anyone who disagrees with Friedman and his ilk is some combination of ignorant, evil or totally self-interested. Only Friedman has a command of the facts and logic and the moral high ground.

Friedman does not believe in discourse; he believes in demonizing those who don't happen to share his views.  Rather than present cogent arguments, Friedman's debate strategy is to label those who disagree with him as morally unbalanced and stupid.  One wonders what Friedman thinks of free speech, quite unnecessary given his world view -- that only he is high minded and rational.  Everyone else is an evil idiot in Friedman's view.

Trump and His Critics on Trade

Donald Trump's speech yesterday on international trade announces policies that would damage the US economy.  Making international trade more restrictive hurts the US.  Job creation is not done by restricting trade.  Job creation comes routinely from free market activities of entrepreneurs and companies. If you want jobs, reduce the role of government, don't start restricting transactions freely entered into between willing individuals.

Trump's critics are fatuous.  They act as if NAFTA and the TPP are free trade agreements.  They aren't.  Not even close.  They are loaded up with special concessions to unions and environmentalists that rob both agreements of much of the benefits that free trade would provide.

The idea that Trump is waging war on laissez-faire, espoused today by Eduardo Porter in the NY Times, is beyond ridiculous.  We don't have laissez-faire.  What we have is rigidly and tightly controlled trade policies that restrict the free movement of goods and services between countries.  These rigidities are part and parcel of NAFTA and TPP.  True enough, Trump's policies would make things worse.  But, the current situation is not free trade. It is politically hampered trade.

Trump and his critics are both wrong.  The US needs free and unhampered trade and free markets in its own domestic economy.  At the moment, it has neither.  The result:  a stagnant economy.

Tuesday, June 28, 2016

Sorkin and Summers on the Impending EU Breakup

Andrew Ross Sorkin and Larry Summers were opining today on CNBC about further unraveling of the European Union.  Neither seem to have a clue why the EU is unraveling.  Summers uses the euphism "nativism," to describe one of the primary emotions behind the "breakup" sentiment.  Sorkin and Summers fall into the camp of believing that average citizens should continue to suffer their declining living standards in silence.

Sorkin and Summers will never be unemployed. They will likely never suffer a decline in their personal income or wealth.  They live in a world completely and totally divorced from the world that everyday westerners have to deal with.  Sorkin and Summers are both wealthy and elite.  So, from their perch, the desire by the Brits, the Italians, the Dutch, the French to escape the EU seems irrational and primitive.  Surely, Sorkin and Summers don't want their wonderful world to break up.  They are doing great.

Sorkin and Summers throw polemical brickbats at the working class Brits who voted this week to escape the EU.  They can't understand why ordinary folks can't simply keep quiet, as their economic well being sinks into the quagmire.

Neither Sorkin or Summers has any respect for free markets.  They both think that the answer to the EU's economic woes is more government regulation, more government spending, higher taxes, and higher pay for bureaucrats (and more of them).

This is an unbridgeable divide.  Wealthy plutocrats like Sorkin and Summers echo the Marie Antoinette philosophy of "let them eat cake."  Dealing with the very real economic woes that ordinary folks have to deal with every single day is remote from the Sorkin-Summers world.

Draghi Worries About EU Growth

Mario Draghi, the head of the ECB (European Central Bank) seems to have, finally, noticed the absence of economic growth in the European Union.  Yesterday, he called on the EU to "co-ordinate" economic policies. Mainly, he called for more government spending by everyone.  With deficit/GDP ratios all well above one throughout the European Union, Draghi seems to think the Greek example is the one to follow.

Draghi concludes that reform hasn't worked.  One wonders what "reform" Draghi is referring to.  Perhaps in his own country, Italy, the law that makes it illegal to fire an employee might be considered for review.  If companies can't fire people, why would a company ever rationally hire anyone?

Meanwhile, Spain's economic growth of 0.7 percent this quarter is the strongest economy in the EU.  Little matter than Spain's unemployment rate remains well above 20 percent.  As long as the bureaucracy and the wealthy are doing well, why worry?

Anyway, Draghi himself is doing fine.  As he moves around Europe in jets, limousines and six star hotels, he muses over the absence of more big government spending, not even mildly concerned about the ever-exploding sovereign debt levels that sooner or later will bankrupt every EU country.

Monday, June 27, 2016

Recession Fears in the Eurozone?

As the stock markets around the world gave ground after the Brexit vote, pundits were quick to stoke the fears of a possible recession for Britain and for the Eurozone.  Goldman Sachs announced today their prediction of a 2017 recession in Britain.

Listening to these folks, you would think that the Eurozone had been humming right along until the Brexit vote.  Far from it.  The Eurozone has had net zero growth for more than a decade.  Just exactly what would the Eurozone be recessing from? Europe is economically stagnant and will remain so, with or without the Brexit vote.

As for the US, employment numbers, retail sales, durable goods have been cratering recently in the midst of the most sluggish economic recovery in American history.  Does anyone seriously think that Brexit has anything at all to do with America's absurdly weak economy, which has been growing since 2008 at less than half the historical growth rates for all prior American economic recoveries from recessions?

Brexit is largely irrelevant to economic growth in Europe, Britain or the US.  These economies are all stagnant and will remain so.  Only the wealthy and the bureaucracy are happy and prosperous in these economies.  The economic position of lower and middle incomes continues to deteriorate every single year and will continue to do so.

Economic growth requires free markets.  Free markets are rare and getting rarer in the Eurozone.  Some of the Brexit vote was a vote for free markets, though most was likely motivated by forced immigration.  In any event, until bureaucracies are reigned in, there is zero chance that Europe, Britain or the US will show any significant economic growth.  Brexit is irrelevant to this problem, unless it permits Britain to institute reforms on its own.  We shall see.

Meanwhile, stock markets assume that there will be strong economic growth in the future, an extremely unlikely scenario.    That's why stocks are five percent lower in the US today than than they were in November of 2014.  Once economies stop growing, stock markets, in time, will stop rising as well.

Brexit, while it may well be good for the Brits politically, is largely irrelevant to the economic future of Europe, Britain, or the US.

Sunday, June 26, 2016

Brexit Aftermath

Check out the NY Times and the Washington Post. Once again, if you disagree with the Times or the Post, then there is something fundamentally wrong with you.  You are a racist, a homophobe, or something worse.  Rational debate is not possible in the Times or the Post. They have it figured out and, if you don't agree, you are some kind of evil demon.

Once you run out of arguments, then, like the Times and the Post, you simply resort to name calling.  That seems the strategy for those who think ordinary Brits should no longer control their own destiny.  Either submit to Brussels or you are branded a racist.  Such an edifying discussion.

The cold hard truth is the European Union is a no-growth economy that pits the rich and bureaucrats against average working people.  The elites could care less about the fact that living standards for low income folks are cratering in the western economies.  And none of this has anything to do with international trade, tariffs, or the like.  Over-bearing bureaucracy is what is destroying economic opportunity in the western economies.

Why should the average citizen listen to folks climbing out of their limousines and jets to call them racists and homophobes?  These elitists in their limos and jets have no idea what life is like for the average Brit or the average citizen in the EU (or the US).  Their main interest is in preserving their power and their hegemony over the citizenry.

Bureaucrats worldwide and their protectors in the media have formed an unholy alliance with the extremely wealthy to clamp down on opportunities for ordinary folks.  The Brexit vote shows that ordinary folk are fed up with the elites and reject the notion that their desires for a better life represent some kind of racist outburst.

Freedom from the bureaucracy is what the Brits voted for.  Hopefully, more nations will follow the lead of the average Brit and escape the Brussels nightmare.  Meanwhile, the pundits, the wealthy and bureaucratic elite will continue the name-calling strategy, since they no longer have rational reasons to buttress their plans for securing their own power.

Saturday, June 25, 2016

Why the European Union Was and Is Doomed

The idea of a single currency and a free trade zone are both great ideas and make sense for Europe.  But the implementation of both the European Union and its smaller subset - the Eurozone - were doomed to failure from the beginning.

From the very beginning, the EU violated its own rules by letting countries join without satisfying the rules for entrance -- especially the fiscal rules that were required before entrance.  Then, later, when countries openly flouted these rules, the EU looked the other way. "Rules don't matter" became the watchword for the EU from the start and continue to this day.

Second, the Greek bailout was an unnecessary disaster brought on by the hubris of Angela Merkel and Nicholas Sarkozy.

Greece should have been permitted to default on its sovereign debt -- in whole or in part.  That way, no other member state of the European Union would have been on the hook.  The euro would have survived intact.  The losers would have been the folks stupid enough to purchase Greek debt.  Those folks deserved to lose and should have paid the piper for their bad due diligence.  Greece, by now, would have a thriving economy and could have easily returned to the international debt market (think Argentina, who has defaulted twice on its sovereign debt in the last two decades).

Third, the Brussels bureaucracy, unelected by anyone, is dominated by far leftist bureacrats who tried to spread nanny-state rules throughout Europe.  For example, a child under the age of eight is forbidden by law (by Brussels rulemakers) to blow up a balloon.  Such activity is now a crime in the European Union. That kind of absurdity is typical of the elitist rule-makers in Brussels.  Who wants to live under that?

Fourth, the straw that broke the camel's back was the mandated migration of Middle East and African refugees into EU member states against the will of the ordinary citizens living in those member states.  The problem with these immigrants is not their race or ethnicity.

The problem is that every poll taken among these particular immigrant populations shows that more than 90 percent of these immigrants hate and despise westerners and their culture.  What are the chances of assimilation of this crowd?   Who wants hundreds of thousands of new neighbors requiring massive financial assistance and government services, whose main emotion is hatred of you, your country and your culture?

Had the EU consistently followed its own rules, instituted democratic rule as opposed to the oppressive Brussels un-elected bureaucracy, not underwritten the absurd fiscal practices of the Greeks, and not brought sworn enemies into the neighborhoods of ordinary folk, then maybe the EU could have survived.

Instead, wealthy elitists followed the Obama-Clinton-Merkel-Sarkozy-Hollande game plan of forcing ordinary folks to endure elitists dictates.  After all Obama, Clinton, Merkel, Sarkozy, Hollande will never, ever have to deal with the kinds of problems that they seem hell bent on imposing on ordinary folks.

Meanwhile, the wealthy elitists and bureaucrats are now publicly bemoaning their losses in the Brexit vote, as well they should.  Ordinary Brits woke up and rejected the arbitrary tyranny of Brussels and the rule of unelected elitists, bent on destroying their day-to-day existence.  The Brits were right to vote for their own freedom to decide their own destiny by themselves and throw off the yoke of the Obama-Merkel-Hollande crowd.

Look for other countries to follow suit.