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 that 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 usually blots out the accident of birth advantages of 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.

Saturday, September 26, 2015

Why Ignorance Matters

No doubt, Pope Benedict is well intentioned.  So were lots of people whose good intentions caused untold misery for humanity throughout history.  Good intentions, combined with ignorance, can be counterproductive.  And so it is, with Pope Benedict.

What Cuba needs is not more good intentions.  Those good intentions were provided by the Castro brothers as they slaughtered millions of innocent Cubas seeking to purify the body politic.  Meanwhile Castro abolished private property, effectively giving himself and his brother the entirety of Cuban property, leaving nothing for the Cuban public.  The Pope this week embraced the Castro brothers.

Meanwhile, the Pope lectures Congress on climate change, a subject he knows absolutely nothing about. Then, he went on to complain about capitalism, as if capitalism was the enemy of the people.  I suppose he preferred Stalin's version of compassion.  Stalin, too, railed against capitalism.  How about the Pope's buddies in Venezuela?  How is that experiment in human compassion going?

The Pope has allied himself with some of the worst folks in human history.  Have we forgotten earlier Papal handholding with Nazi Germany.  Where do these Popes draw the line?  How much latitude should Papal ignorance be given?

Is there any evil, other than capitalism, that the Pope opposes?  If there is, it certainly wasn't obvious in his recent visit.  Seems like just another entitled rich guy, claiming to be virtuous, while supporting tyranny, and opposing free institutions.

Friday, September 25, 2015

Another Completely Irrelevant Topic -- The Fed

Who cares what the Fed is doing?  Does it really matter?  Can the Fed push up rates even if wants to (which seems to be the case)?

Global economic growth is collapsing.  That is the reality.  The Fed watch is a total waste of everyone's time.

Why is the global economy collapsing?

The answer: politics.

Why has Europe had no growth for a decade?  Why is the US economic performance the worst post-recession performance in the country's history?  Why are Brazil, India, and Russia imploding?
The answer to these questions is the same answer in every case.  Too much government; too little free markets.

China is the only country that seems to be headed in the right direction.  Over time, China continues to loosen government control and learn from its policy mistakes.  The US and Europe double down on bad policies, blinding themselves to an unpleasant future reality.

China will, no doubt, suffer a downturn -- a very natural downturn correcting excesses of explosive economic growth.  But, China will come surging back and it will happen quickly.  In one of history's great ironies, the Chinese communist government has more respect for free markets than can be found in the capitals of the US and Europe.

So, why all the attention to the Fed?  Mostly an unwillingness to confront reality.  The western economies are unlikely to ever really have significant economic growth again -- ever.  The dramatic lack of support for free markets in western politics has changed the landscape.  Unless there is some major political reversal in western politics, such as occurred in the Reagan-Thatcher days, the western economies have entered a state of permanent economic stagnation.

Talking about the Fed makes it seem as if the wizard behind the curtain can make things chug along once more.  But, the wizard is out of bullets and has lost its way in a sea of political and economic confusion.

Until individuals are free to make economic decisions based upon what is in their best interest, the incentives that lie behind economic growth aren't there any more.  The western economies are going to learn, painfully, what the Chinese government seems to know-- when you enact a legislative regime that eliminates incentives, you eliminate economic growth.

Almost all of the economic policies advocated by western politicians (including their spiritual bedfellow -- the Pope) would serve to reduce economic growth and plunge the poorest people in the world into a dungeon from which they cannot escape.  Good intentions often work this way.

So, the attention to the Fed is mainly a useful way to change the subject and avoid reality.

Avoiding a Shutdown

Mitch McConnell, Senate Majority Leader, is holding extensive discussions to avoid a government shutdown over the upcoming "continuing resolution" to fund the government.  The issue -- funding planned parenthood. McConnell's plan is to force Obama to veto the bill which contains defunding planned parenthood.  Then, after the veto, the President wins as the "continuing resolution" provides the funding to continue on.  Net effect -- zero.

Somehow this constitutes a legislative priority for McConnell -- a totally empty gesture.  Obama will be delighted to provide the veto.  Obama certainly has made no effort to hide his support for planned parenthood, so the veto would provide voters with absolutely no new information.

So, what is the point?

The point is to appease Republican voters who would like a Republican dominated Congress to show some backbone.  That's obviously not going to happen.

Instead, more taxpayer money will be wasted by McConnell and the Republican leadership trying to convince their base that empty gestures have meaning.

But, empty gestures have no meaning.  Obama has made complete fools of the Republican leadership.  McConnell has no more belief in free markets than the President.

Empty gestures are not worthy of anyone's time.   A Senate majority is no different than a Senate minority.  That is all that McConnell is proving.

Thursday, September 24, 2015

Inequality and Economic Growth

Only economic growth reduces inequality.  All efforts to legislate equality with arbitrary rules and income transfers simply preserves the position of the powerful at the expense of the weak.

A primer for how to increase inequality would include the following recommendations:

1. Enact a minimum wage and increase it regularly
2. Have an extremely progressive income tax and consider a wealth tax
3. Enact employer mandates that provide workers with health care, old age benefits, etc.
4. Encourage constant litigation between employees and employers
5. Mandate price controls on drugs and other essentials
6. Discourage the formation of new business by excessive rules on licensing and massive regulation.  Continue to add to these licensing and regulatory mandates so that new business are effectively precuded from any hope of success

If you pursue the above agenda faithfully, inequality of income, wealth, and power will be the inevitable result and the inequality gaps will grow over time.  Those in power use the policies cited above to maintain their position, regardless of merit or effort, because each of the above penalize merit and effort and reward political and social influence. (The last thirty years in the US provide important anecdotal evidence of the effects of 1-6 on the level of inequality).

So, to preserve the position of the rich, you should join forces with those who advocate the policies listed above and you will get your wish -- a society with dramatic inequality of income and wealth (the old Soviet Union, modern day Cuba, North Korea, Venezuela are excellent contemporary examples of income and wealth extremes.  In each of these societies, extreme versions of policies 1 through 6 were/are enforced at the point of a gun and were successful at implanting extreme inequality in their societies).

Wednesday, September 23, 2015

Volkswagen and German Politics

Holman Jenkins of the Wall Street Journal tells the tale of Volkswagen and their disastrous business and ethical decisions over the past decade.  This sleazy story of corruption, deception and duplicity is a natural outgrowth of the "stakeholder" theory of corporate governance.

When you no longer use maximizing shareholder value and move off to fuzzy thinking justified as doing social good, inevitably, you end up doing social bad.  Volkswagen is just the latest example. 

Shareholders and the public are always the losers when corporate boards muddy their mission with "feelgood" policies that undermine their commitment to maximizing shareholder value.  Shareholders, who provide the capital, that fuels capitalism deserve to have their interests represented in the boardroom.  That's not what happened at Volkswagen, a firm that professed to be a friend of labor and an adopter of "green" policies.

Just saying that you are environmentally friendly, as Volkswagen did, seems to justify the most egregious policies of environmental damage and harm to consumers.  No shareholder maximizing firm can long afford absurd and dangerous corporate policies such as those in place at Volkswagen justified as "social justice" policies.

Corporate boards should stick to their knitting -- maximize shareholder value and stop pretending to represent stakeholders.  No one wins with the stakeholder approach -- least of all the shareholders or any legitimate "stakeholders," whatever that might mean.

Monday, September 21, 2015

The Republican Debate is Mostly Irrelevant

Does it really matter who wins the presidential election in 2016?  No one is discussing economic growth, economic opportunity for those in poverty, improved education for the least fortunate, returning to free market policies.  Do these issues matter anymore?

The rare occasion when the economy is mentioned, the answers are disconcerting.  All of the Republican candidates who have commented on the minimum wage have announced their support,  though they vary in their enthusiasm.  No one has mentioned vouchers.  Entitlement reform is mostly a taboo topic.  The entire Republican Congressional leadership favors bringing back the Export-Import bank, an insult to free market economics, though most of the candidates say little on this topic. 

It seems that the candidates are mostly interested in planned parenthood, the definition of marriage and immigration.  Not that these issues are irrelevant, but they have sucked the air out of the room and belief in free markets seems absent from the discussion.  Most of these candidates seem to have no problem with big government.  They just want big government to do what they want, not what Obama and Clinton want.

As far as one can tell there are no Ronald Reagans or Margaret Thatchers in this crowd.

Sunday, September 20, 2015

George Will on Papal Economics

No doubt the Pope is a nice man with good intentions.  But good intentions, absent any concern for cause and effect, has and continues to condemn hundreds of millions of human beings to poverty, disease and hopelessness.  The Pope's policy positions, as George Will points out in an editorial today, would exacerbate the poverty of the world's poorest people and reduce the standard of living of those hundreds of millions of people who have escaped the ravages of poverty in the last two generations.

Good intentions are not worth much and often deflect us from the reality.

Other than isolated individuals no group of people in the history of the world has ever escaped poverty except by the beneficial impact of free markets.  That's right -- capitalism!

World history, until the seventeenth century, was a history of one band of thugs exerting power over another band of thugs, while the mass of humanity was in bondage.  Not until capitalism and free markets came along did the mass of humanity have any hope at all.  Meanwhile earlier Popes, as George Will points out, were busy condemning folks like Galileo for their heretical views that, at the time, they thought were inimical to the interests of humanity.  Not much has changed.

Folks that spend their lives in cloistered jet planes and fancy palaces are quick to claim that they represent poor folks -- the Pope, Hillary Clinton, John Kerry, Nancy Pelosi, Al Gore, Elizabeth Warren, Bernie Sanders and on and on.  These folks have no idea idea how poor people live.  How would they?  Yet they claim to speak for the poor as they condemn free markets and rail against capitalism.

But, as George Will notes today, free markets and capitalism and have been the only friends that poor folks have ever had and rich pro-government folks will continue to oppose free markets and capitalism in order to preserve their position and status.  Add the Pope to the list of those opposed to freedom and free markets.

Saturday, September 19, 2015

DeBlasio's Plan to Waste $ 186 Million

Mayor DeBlasio of New York City has found another way to funnel money to his political allies, while doing nothing for the people of New York.

Realizing that the school system is failing to teach students to read -- yes, you read that right -- NYC schools fail in the most fundamental responsibility a school system can have.  Of course, these failures are concentrated upon the poorest families in New York.  The rich do fine.  Typical of the outcomes of big government advocates.

Instead of offering these problems up to the free market with a voucher system and letting human ingenuity figure out how to teach these students to read, DeBlasio's solution is to waste $ 186 million pouring more money into solutions thought up by politicians, whose motives are obviously less than pure.  DeBlasio's solution is basically to funnel this money to his political allies, who haven't had a new or original thought about childhood education since the early 19th century.

Too bad for the kids who won't be able to read thanks to Mayor DeBlasio.

Friday, September 18, 2015

Republicans for the Minimum Wage

No economic issue could be clearer in its impact than a legislated minimum wage.  Like any other legislated "minimum price," the minimum wage results in lower demand for labor.  It also changes the quality of the labor demanded since workers do not all come with the same skill and experience levels.  Higher minimum wages mean that the costs are disproportionately borne by the citizens with lowest skill levels. Indeed, a minimum wage is effectively a barrier, perhaps a permanent barrier, to economic improvement for the poorest members of our society.

So, when Ben Carson and Rick Santorum championed the minimum wage in last night's Republican presidential candidate debates, you have to wonder if there are any advocates of free markets left.  Peggy Noonan's op-ed in today's WSJ described Santorum's fervent pitch for a higher minimum wage as his "best" moment in the debate.  That tells you where Noonan's head is.  Meanwhile, no candidate on the stage told the real truth about the minimum wage and even Fiorina seemed supportive, though unwilling to advocate increasing its level.

It's hard to take a candidate serious as a defender of free markets if they can't master the simple economics of the minimum wage.  That the issue may be confusing to working class Americans is no excuse to pass laws that eliminate any upside for the folks at the bottom of the economic pile.

I noticed no one took a swipe at the pitiful public education afforded the poorest in our society.  Vouchers have the potential to revolutionize the education of the poorest children in America, but the quest for vouchers founders on the elaborate tenure provisions that protect some of the worst teachers in America.  No Republican spoke up for these children.  They should.  We shouldn't protect relatively wealthy teachers, whose average pay and benefits greatly exceed the averages for the families whose children they "teach," while abandoning these children to a hopeless future.

Republicans should know better.

Saturday, September 12, 2015

The Implications of a Safety Net

The phrase "safety net," intended to describe the plethora of government funded programs providing cash and other benefits to Americans of all income levels (Warren Buffet collects social security and is receiving medicare benefits) was first coined by a Republican.  That Republican was, at the time, speaking in defense of the safety net.  There seems to be a general acceptance that a government-provided "safety net" is a good thing, worth preserving.  Is it?

If the so-called safety net were targeted toward people who were truly unable to help themselves and had no other resources available, then who could object.  But that isn't what the American safety net is all about.  Wealthy Americans typically receive two to three times the social security cash benefits that are paid to low income Americans.  Buffett receives approximately $ 40,000 per year and his wife is likely eligible for even more.  Is Buffett someone who is in need of a safety net?  This is Robin Hood robbing the poor to provide money for the Sheriff of Nottingham.  Indeed, much of the American safety net is exactly of this character.

The historical reasons that families save and provide for their children is that no one else is going to do that job.  Increasingly, the US government claims that they can do that job better than parents -- a claim, reminiscent of Lenin's argument after the Russian revolution that the state should take over the raising of children since parents are ill-suited to the task.  In any event, the safety net in the US has reduced private savings to near zero, as Americans grow accustomed to the idea that someone else is responsible for their most basic needs -- income, health, housing, food, education.  Not much is left for private initiative.  Is it any wonder that the culture of America is changing dramatically.

There was no safety net as America grew to be most powerful economic engine on the planet, from the end of the civil war to the end of the first world war.  There was no safety net in China as 350 million people moved from a per capita income of $ 200 per year to a per capita income of $ 20,000 per year in a single generation.  The absence of a safety net meant that families had to make do.  That meant work, savings, and responsibility.

Yes, many fell through the cracks during rapid economic growth, as many fall through the cracks today, even with an elaborate safety net.

The difference is that Americans in the early twentieth century and Chinese today were optimistic about their future and could expect their standard of living to grow dramatically in the future. No American today seriously expects the standard of living for the average American to do much of anything in the future.  The idea of a stagnant economic pie is widely accepted, hence the constant political battle to divide it.

An elaborate safety net preserves and extends income and wealth inequality.   The past forty years are a dramatic testament to that fact.  Back in the good old days, before the dawn of the safety net, wealth and income inequality were on the run and economic opportunity in America was unparalleled in human history.  That isn't the case any longer as big government increasingly dictates worker income levels and in what form workers can receive that income (sick leave, paid leave for a variety of reasons, vacations, over time, health care payments, litigations rights, etc.).

Like it or not, the American worker today has very little say over the composition of the pay received.  Big daddy government dictates the composition of income and makes it a crime to substitute one form of payment for another (the minimum wage makes it a criminal offense to take worker training as payment as opposed to cash).

The ultimate effect of the safety net is a stagnant economy where the winners are folks like the Clintons who seek payments from political entities in return for government favors.  The Clintons have never faced a market test where they had to produce a product for the enormous amount of money that they have extracted from American citizens and ruthless global dictatorships around the world.  Instead they trade government favors for money.

In a world of an elaborate safety net, politics not economics determines who gets what.  If you like big government dictatorships where wealth and income are distributed on the basis of political favoritism, then an ever-expanding safety net is the ticket for you.

Thursday, September 10, 2015

Cuomo Plans to Outlaw Skill Development for the Poor

Andrew Cuomo is planning to  introduce a plan to make it a state crime in New York for the poor to work in exchange for skill development, unless they already possess skills worth more than $ 15 per hour.  This plan is the minimum wage law of $ 15 per hour.  One more roadblock to the path of exiting poverty by the poorest of New York State's citizens.

Those who already possess skills and are driven around in limousines, like Governor Cuomo, seem determined to destroy the aspirations and hopes of those who are desperate to dig their way out of poverty.

The "Brave New World" in Health Care

The Institute for Clinical and Economic Review, funded basically by taxpayers (because it is a so-called non-profit organization) is opining on the "correct price" for drugs.  Last year they opined on the "correct price" of new drugs to treat hepatitis C and this week they opined on the "correct price of new drugs that treat cholesteral.

Instead of letting you and the free market decide, now, because of Medicare, Medicaid, and Obamacare, a team of bureaucrats decide your health future and whether or not saving your life is really worth the cost!  This team is also deciding whether or not future research that can cure cancer, treat dementia, and on and on, will take place.  Putting arbitrary government restrictions on drug pricing eliminates the incentives necessary for the free market to produce new medicines, drugs, and technologies to improve health.

Too bad you won't get to decide your future.

Wednesday, September 9, 2015

European Growth Surge?

Whoop-te-do.  Eurozone growth has been revised upward to 1.5 percent for the past twelve months.  That's barely a pulse.  It is a sign of the times, that pitiful growth rates like this are cheered as if the outcome of a successful economy.

The disconnect between booming stock prices and a stagnant world economy is playing out in grand relief.  Don't expect much from the stock market until free markets develop a few fans in the political arena.  An elaborate safety net and extensive regulations, penalize entreneurship, innovation, and workplace motivation.  The outcome: 1.5% is as good as it gets.

Tuesday, September 8, 2015

Give Up on Public Schools in Chicago

It's time for a free market solution to the public disaster in Chicago.  Read Mark Peters article in today's Wall Street Journal if you want to see how government and government-employee unions can break a city and a state and provide zero services in the process.

The free market can deliver schools that work, if given a chance.  Vouchers would be cheaper and more efficient and would encourage innovations that could help solve the problem of educating children from dysfunctional families.  We know for certain that public schools can't solve the problem -- that we know.

There is no way that free market education could do worse than what we have now in Chicago.

Monday, September 7, 2015

Keynes Would Be Embarrassed

The media conversation about the global economic weakness would make a serious economist blush.  Perhaps the greatest economist of the twentieth century, John Maynard Keynes, argued that what drives an economy to prosperity are the "animal spirits" of entrepreneurs.  When does the media reference "animal spirits?"

In the name of Lord Keynes, today's pundits push ridiculous policies that waste resources, incentivize rent-seeking behavior, and stifle "animal spirits."  The so-called "stimulus plan" enacted in 2009 is a perfect example of such policies. Nearly $ 1 trillion was washed down the government rat-hole in the "stimulus plan."  The supporters of the "stimulus plan" argued that they were making "investments" for the public good, but virtually no roads or public facilities were built or even improved.

Instead, the 2009 stimulus plan redirected resources away from the private sector and down the government-corruption spigot.  Result: slowest economic recovery in US history.  All of these absurd policies cite Keynes as their inspiration.  Were Keynes alive today, he would be embarrassed by this nonsense.

"Animal spirits" require the rule of law, official encouragement of free markets, and respect for the capitalist process, all of which are in retreat in modern America.  Meanwhile, charlatans pushing government favors for special interests are praised by the media -- examples abound.

Free markets reward imagination, hard work and thrift.  Modern American (and European) economic policies increasingly penalize all three.  Only Asia is moving in the right direction as the Western world moves in the opposite direction.

Sunday, September 6, 2015

It Takes Two To Shut Down the Government

When the Congress and the President disagree there is an automatic assumption of the news media that the Congress should capitulate.  The President has come to expect that.  But why?

Inevitably the so-called "shutdown" crisis arises because the President has vetoed or has threatened a veto of a Congressional action or has encouraged a minority of the US Senate to block Congressional action with a filibuster.  It takes two to tango.  It also takes two to shut down the government.

The Congress should call the President's bluff and proceed to a government shutdown.  If the President refuses to budge, let him.  Sooner or later, the government is going to be forced to shut down anyway as medicare and social security funding overwhelms the ability of the government to stay afloat.  It is just a matter of time.  One way or another a government shutdown is in our future.

The Constitution gives the House of Representatives the sole power to originate government spending bills -- not the President, not the US Senate.  The House should simply pass a budget, pass the budget in the Senate and then let the President do whatever he wants.  If he wants to shut down the government, he can veto the budget.  Let him and then let him answer for the shutdown. 

If a filibuster blocks action on a House-passed budget in the Senate, effectively preventing a vote on a House-passed budget, then let it.  Let those who filibuster answer for shutting down the government.

Saturday, September 5, 2015

NYTimes and the Minimum Wage

The NY Times is often proclaiming that Americans who do not share their "opinion" on climate change are ignorant and refuse to accept "established science."  Meanwhile, today the Times editorialized on the minimum wage, praising advocates who argue that the minimum wage should be raised to $ 15 per hour.

Talk about ignorance!  In essence, the logical argument by the NY Times in today's editorial is that increasing a price has no impact on demand.  All demand curves, according to the NY times are independent of price.  Give that view, why not raise the minimum wage to $ 100 per hour, since that action, by the logic of the NY Times' editorial, would have no effect on the demand for workers, nor would it affect the profitably of businesses.

To reiterate the obvious: (i) a minimum wage law reduces the demand for labor, thereby causing unemployment; (ii) a minimum wage makes it a criminal offense for workers to trade their labor for training in job skills.  Trading labor for job skills is something that is absolutely indispensable for the future of the poorest Americans; (iii) increasing the minimum wage alters who gets hired as employers will no longer consider workers with a lower skill set; workers who would have been hired at the lower wage.

The conclusion: the minimum wage is a dagger in the back of poor people and helps entrap the poor in an endless cycle of poverty and hopelessness.  Raising the minimum wage just exacerbates the problem and plunges ever more Americans into this government-created poverty trap.

Those writing editorials for the NY Times never had to compete for a minimum wage job as they cruised through their prep schools and elite colleges and now move back and forth in their limousines to their NY Times editorial offices.  Increasing the minimum wage, even to $ 100 per hour, won't have any impact on the lives of the editorial staff of the NY Times.  But it will affect those who have no hope of ever reaching the plush lives of an editorial writer for the NY Times.  The lives of poor people are permanently diminished by minimum wage laws, while the rich and affluent bask in their arrogant view that they are somehow helping humanity by keeping a boot-heel on the hopes of the poor.

Friday, September 4, 2015

How to Stifle Economic Growth

There are so many roadblocks to American prosperity now that it is hard to see how true economic prosperity can return.  An economy that easily generated 4.6 percent economic growth in the 1950s, 4 percent economic growth in the 1960s and 1980s, is now an economy that considers itself lucky to produce 2 percent growth.

There is no longer any expectation of strong and vigorous economic growth in the US.  The media treats corporations as evil institutions that kill and maim people for profit - Mr. Robot is just one example of this pervasive theme.  When was the last time you saw a movie or a tv show that portrayed a business or a businessman or woman in a good light?

Meanwhile the folks who promote the government strangulation of the cconomy slip casually from their limousines into their private jets while promoting even more ways of stifling the free enterprise system -- a system that they despise and intend to destroy.

Until free market policies are permitted once again in the US, don't expect much on the economic front.  This is bad news for those in the bottom half of the income distribution, though it matters little for those how never leave the cocoon of the limousine-private jet life.