Saturday, July 30, 2016

Free Trade Falls Victim to Over-Regulation

Free trade was once popular.  In an economy with strong job creation, no one worries much about losing jobs to Mexico or anywhere else.  If good jobs replace those that are no longer globally competitive, everyone wins.

By over-regulating the economy and replacing free markets with government controlled and regulated markets, the political process has obliterated the strong job creation that characterizes free market economies.  Thus lost jobs are not replaced.

But the enemy is not free trade. The enemy is big government and over-regulation.

Blocking free trade just means an economy will be less healthy, less productive and provide fewer jobs.  Unfortunately, both political parties have now signed onto this foolish program.

Combining the elimination of free trade with increasing mandated minimum wages means that the burden falls substantially upon the poor and unemployed.   These policies, endorsed by both political parties, will slow the economy, make inequality worse, and exacerbate political divisions.

If you want a healthy economy, support freedom and free markets.

Friday, July 29, 2016

The Obama Boom Continues

Second quarter GDP up 1.2 percent (that is actually the same as the Eurozone, 0.3 percent for the quarter, the 1.2 percent number for the US is annualized, unlike the Eurozone number).

So, same old, same old.  Buoyant forecasts, abysmal results.  Never in American history have we seen a recovery like the pitiful showing of the past seven years.  But, this is what over-regulation and big government guarantee. Don't expect anything much better in the future.  This is the new normal, even though forecasters will continue to predict that prosperity is just around the corner.

The Boom in Europe Continues

The Eurozone clocked in at 0.3 percent GDP in the second quarter (that's 0.3 percent absolute growth over first quarter).  For the umpteenth time, forecasters had been overly optimistic.

“Second-quarter growth is disappointing given the forecasts,” French Finance Minister Michel Sapin said, according to the Wall Street Journal.

It's always disappointing, but never unusual.  Both the US and the Eurozone no longer have any economic growth worth announcing, even through economists continue and will continue to forecast 3+ percent growth. It just never, ever happens.  Instead, we get post-mortem comments like that at Michel Sapin above.

US GDP for the second quarter is soon to be released.  Look for a big number, near or above 3 percent, and then look for that number to be later revised down to reflect the absymal reality.  But, for now, the Democratic Party needs some good news.  Look for the Commerce Department to provide temporary relief by bragging about an economy that is sorely in need of some pep, instead of a pep rally.

Wednesday, July 27, 2016

Is Trump a Free Market Guy?

Trump is about as far from a free market advocate as one can imagine. He is not a socialist in the normal tradition.  He is more a corporate statist who leans heavily on contentious legal actions to produce his personal wealth.  Trump does say that he opposes regulation, but his support for a return to Glass-Steagall belies an anti-regulation philosophy.  His approach to free trade, like virtually all politicians these days, is also not friendly to a free market agenda.

Trump's views on entitlements are bizarre.  Perhaps he hasn't thought about the subject much.

If there is any virtue about the Trump candidacy, maybe it is that he really hasn't thought about any of this very much.  The same could have been said about Harry Truman and he turned out to be a pretty good president.  But, who knows? Harry Truman was a pretty humble fellow, unlike Donald Trump.

Trump is a big, big question mark.  He could be a great president, he could be a terrible president. 

Tuesday, July 26, 2016

Socialism versus Free Markets -- The Record

Socialism has a record.  Historically, it is the oldest economic system in the world and most prevalent.  Free market economies are relatively rare.  They both have records for all to see.

Socialism leads to economic collapse and political tyranny.  Free markets lead to economic growth and prosperity for its citizens.  The poorest citizens in free market economies live in in circumstances any socialist citizen could only dream of, other than the political elite.

Hitler Germany, Stalin's Soviet Union, and modern day Venezuela are the outstanding socialist models.  We know how they turned out.  The US, Britain, and the eastern half of today's China are the outstanding examples of free market models.  Which of these would you have preferred to live in.

We know Bernie Sanders preferences.  When married, he chose Moscow for his honeymoon at a time when Stalin's henchmen were still firmly in power.  Certainly Sanders recognized what his goals were and what examples inspired him. 

The Bernie Sanders Platform

The Democratic platform, if enacted, would obliterate any hope for economic progress in the future for the US.  Virtually nothing is left for the free market.  In many ways, it is advocating the system that was in place in the old Soviet Union, where the rhetoric was helping the poor and eliminating inequality, but the reality was dictating virtually every aspect of life.  Individual freedom is not in this platform.  Government mandates are all that this is about.

There will be winners.  Take a trip to Washington DC and walk through the NW section of the District.  Most work days you will see people walking their dogs, jogging quietly through the beautiful homes and lush landscape.  This is where the modern bureaucracy lives.  These folks have protected lives, protected jobs.  These folks graduated from the elite schools that most Americans can no longer afford.  They live in a sheltered, protected world free from the struggles of ordinary Americans, who they consider their inferiors.

They think that most Americans are ignorant slobs that require their (dictatorial) guidance.  These elitists feel that the Americans who love their churches, their guns, obey local laws, have respect for law enforcement and the American flag are contemptible racists.

It's now all about going to the right elite schools, parroting the same politically correct ideology to pave your way into political power or plant your feet into the bureaucracy to live the good life.  Those other Americans who are out fending for their economic lives in what is left of the private sector are beneath contempt to these elitists who bask in the self adulation that they and they alone occupy the moral high ground.  No need to permit dissent, when you have all the answers.

In short, these are the new class that Miljovan Djilas spoke about when he opined on the rise of the communist apparatus in the old Yugoslavia and the Soviet Union.  Those who make the rules don't have to live by the rules.  Congress and the bureaucracy don't pay minimum wage to their interns, but everyone else is required by law to do so.  Do as I say, not as I do. Why the double standard?  Because the folks in power have the "correct" ideology.  They went to the "right" schools and believe the "right" things.  Everyone else is destined to follow the rules made by this elite.

These kinds of double standards are encoded in the Democratic platform adopted by its convention on Monday. Everything from abolishing the energy industry to eliminating due process from a variety of everyday activities are in this platform.  What is completely absent in this platform is any effort to deal with the public school disaster that millions of Americans have to deal with every day.  No concern with the lack of jobs that forces increasing numbers of millenials back into their childhood homes after well past adulthood.  This is the old Soviet model absent respect for the rule of law.  The next thing to come will be forcing families to combine into small dwellings, normal housing no longer affordable in the brave new world that this platform leads to.

The Democrats will soon nominate a candidate who thinks the rule of law applies to others, but not to the wealthy and powerful.  This is always where contempt for free markets leads.

Donald Trump is no angel.  Far from it.  But he has yet to give up completely on free enterprise.  The Democrats, if you believe their platform, give freedom no room to maneuver, in the economy or anywhere else.  Only the wealthy and the bureaucracy will win if the Democratic platform becomes the law of the land.

Once economic freedom has been totally proscribed, as required by the Democratic platform, the Venezuela model kicks in.  Political freedom will be obliterated as well.  There is already movement in that direction in the current adminstration's effort to silence those who disagree with the "climate change" religion.  Again, the old Soviet model is instructive.  Force dissent out, force orthodoxy in.

Once you think you have right on your side, then get might on your side, so goes the theme of the Democratic party and platform.  Then, the next stop is modern day Venezuela.

Monday, July 25, 2016

The Millennials Love Socialism

The left has a history of eating its own. That's why today's fascination with socialism by the millennials is so intriguing.  Virtually all of the millennials who like socialism were born in the lap of luxury fed by a history of capitalism.  Where has socialism ever produced any economic prosperity?  The answer: no where.

The millennials in socialist countries are too busy combing garbage cans to find food to indulge in political speculation.  The millennials should read "The Gulag Archipelago" for a little insight to what goes on in socialist countries, or perhaps "One Day in the Life of Ivan Denisovich" to see how working folks fare under socialism.

We can already see in America how well socialism performs.  Look at government run health care.  Try the VA hospital system.  Try dealing with any government agency.  Try getting a permit to do something from your local government.

Bureaucrats are the winners in socialism.  Ordinary people are the losers, some might even say the prisoners. 

Eventually, the socialists eat their won.  Modern day Venezuela is the socialist end game.  Or try the old Soviet model where real disposable income declined over the life of the Soviet Union and hundreds of millions were shot or starved by their socialist leaders.

Socialism is not pretty in practice and the world has had lots of practice:  Hitler, Mussolini, Stalin, Chavez, Castro, and the list goes on and on.  Which of those leaders would the millennials like to live under?  Maybe Bernie can tell us.