Thursday, June 30, 2016

Economic Growth Remains the Sine Qua Non

For all the political rhetoric flowing around, the overwhelming issue for the US and Europe is economic growth.  There is no economic growth in either region, there hasn't been any substantive economic growth for a generation.

The absence of economic growth means those at the bottom of the economic pile will find their situation deteriorating.  That's what we've been observing. 

So what are the politicians advocating?  Virtually all of the proposals from western politicians involve finding more ways to slow economic growth.  Since we've reached zero, these proposals imply negative economic growth in the future.

Negative economic growth means: (i) the stock market rally is over, perhaps for good; (ii) the economic plight of lower and middle incomes will continue to worsen; (iii) the situation for minorities will become dramatically worse.

What does negative economic growth mean for the wealthy, the bureaucrats and the elite?  The best analogy is Venezuela.  In the early years of the Hugo Chavez' regime, the Chavez gang lived well and parts of the public lived well by expropriating assets that belonged to someone else.  This theft, reminiscent of the old Soviet regime, perpetuated the regime of Chavez and his successors. 

Today the wealthiest person in Venezuela is Hugo Chavez's daughter.  She did great!  Meanwhile, ordinary citizens battle each other daily in the streets of Maracaibo to try to find food to eat.  This food fight has become a daily spectacle in what was once one of the most properous countries in Latin America.  Now Venezuela is a country and a society that is unraveling.  The economy has fallen apart and civil society has completely disintegrated.

In America, the next shoe to fall is the state of Illinois.  Both the city of Chicago and the state of Illinois are bankrupt.  The state of Illinois has unpaid, immediate bills due in excess of $8 billion.  This is a city that was run for decades by one family -- the Daley family.  There used to be the idea that Mayor Daley made things work.  Daley mortgaged Chicago's future with massive debt, he caved in to any and all demands of public employee unions, and managed a process that could only end in the bankruptcy of Chicago.  Now that process is approaching its inevitable end.

Other cities and states are not far behind Illinois.  High on the list is the state of California, which has zero chance of avoiding eventual bankruptcy.  Meanwhile, California, squandering it's marvelous climate and geographic advantages, continues to drive businesses from it's state, with the conceit that California will always be able to survive regardless of how punitive the anti-business climate.  That conceit is wrong.  California will go bankrupt.  And, the end game is not far down the road.

The majority of American states and almost every large city are on a pathway to bankruptcy.  There are a lot of reasons, maybe the biggest is the public pension debacle -- but, even without the public pension debacle, there are plenty of other reasons for the coming bankruptcies.  Meanwhile, the infrastructure in most American cities is crumbling and there are no resources left to do anything about it.

What does the current American administration think is the biggest "threat" to American welfare?  Climate Change.!  Guess what, climates change.  Earlier geologic ages had over sixteen times as much carbon dioxide in the atmosphere as we have today with absolutely no discernible impact upon global temperatures.  That's what the facts show, as opposed to the current clamor to further shut down economic growth by punitive, irrational, anti-business measures being promulgated in the name of the absurd battle cry of battling "climate change."  Climate change is the "Y2K" of the current generation, but much more damaging to the economic prospects of the vast majority of persons living on today's planet.

Unless there is a return to a concern for economic growth, only the rich and the comfortable and the bureaucrats of the world have a bright future.  The vast bulk of mankind has little to look forward to as long as the elites preserves their hegemony over the peoples of the world.

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.

Friday, June 24, 2016

Poor Andrew Ross Sorkin

Andrew Ross Sorkin is both a NY times correspondent and a morning anchor on CNBC.  Poor guy.  He is so sad this morning about Brexit.

He said this morning that he is surprised that the reaction is so muted to the Brexit vote. True, markets are down, but he, no doubt, was hoping and expecting a much larger negative reaction to the Brexit vote.

He mused that when Lehman went bankrupt, there was very little reaction for several days and then all hell broke loose.  He left out the key part of that story.  The Lehman bankruptcy is not what sparked the massive stock sell-off in the Fall of 2008.  What sparked the sell off were the announcements coming from the Federal Reserve and the US Treasury.

Both the Fed and the Treasury embarked upon major bailouts, completely unnecessary and dramatically unsettling to the markets.  Compared to the announced Fed bailout policies and the TARP program put forth by the Treasury, the Lehman bankruptcy was a non event.  It was the US government policy reaction to the Lehman bankruptcy that caused the sell-off.  The markets, after the government bailouts were in place, lost more than 40 percent of its value from the date of the announcement of the bailouts.   The markets barely reacted at all to the Lehman bankruptcy, which occurred several days earlier.

Go back and look at the facts.  Facts are facts.  Even Andrew Ross Sorkin, trying to spin things his way with the "delayed reaction" interpretation is simply refusing to face reality.  The markets hit the nail on the head in the Fall of 2008 when they spun out of control as soon as the policy response to the Lehman bankruptcy was announced.  The Lehman bankruptcy was not that big a deal and markets knew it. Revising history, as Sorkin is wont to do, is just sour grapes expressed by one of the leading elitist pundits.

Today, we know those markets were correct.  The 2008 Fed and Treasury policy responses are responsible for the pitiful economic recovery that we have endured for the past eight years.  Lehman wasn't the problem; the bureaucrats were, and still are, the problem.

The Elites Sound the Alarm

Political elites in the western world seem unanimous in their new-found concern for economic growth.  Having presided over the obliteration of economic growth from the western economies over the last three decades, now, suddenly the elites are sounding the alarm.

They seem to think that, absence their guidance, the western economies will collapse.  Hello!  The western economies have been stuck in the mud for a generation, thanks to their guidance.

There is no economic growth in Europe, no opportunity for the young and disadvantaged.  The western economies are great for bureaucrats and for the wealthy elites, but they are a disaster for the average citizen.  Finally, the average citizen got a vote.  Now, the elites are forecasting doom.

One of the pundits today made the following comment while expressing his views:  "I don't think that's debatable."  That statement is so typical of the elitists that destroyed economic progress in the western world.  These are the same folks that think climate change is "settled science," as if such a term made any sense at all.

These elites have used their political position to deprive ordinary citizens of the opportunity to freely participate in the economy.  They have used regulations, wage and work hour laws, government health care and education to freeze their societies to protect the hegemony of the elite and the wealthy.  Sooner or later, ordinary citizens will resist these chains.  That's what yesterday's vote reveals.

Only a return to free markets will advance the opportunities for ordinary folks.  Brexit may not take Britain in the right direction; that remains to be seen.  Staying in the EU all but guaranteed economic stagnation and ultimate sovereign bankruptcy for the Brits, with no say along the way.  Brexit is certainly better than that.  It provides hope for the average Brit, who had no hope living under the thumb of the Brussels bureaucrats.

Brits Vote to Escape The Brussels Bureaucrats

With heavy pluralities from working class precincts, Britain confounded the pundits and voted to leave the European Union.  The elitists took it on the chin.  It's interesting to notice that, as global stocks fell this morning, British stocks fell much less than German and French stocks and far, far less than the stock collapses in Spain and Italy. 

Why did the British market do so much better than the EU nations?  Maybe the British voter knew something the pundits didn't know.

The "remain" supporters accused the average Brit of racism because the immigration issue was the dominant reason for the "leave" vote.  Why racism?  Every poll in Muslim nations in the Middle East shows that more than 90 percent of these Muslim populations hate and despise westerners and western culture. 

Does it make sense to bring in and provide financial support for hundreds of thousands of folks that are quite frank about their hatred of you and your society?  What are the chances of assimilating folks with this view of the world? 

There are no elected British officials in Brussels.  Under the EU, Britain has no vote on anything the EU does.  It's leave or be ruled by folks that answer to no one.  The Brits made the right decision.

Thursday, June 23, 2016

NYTimes Lays Another Egg

The NY Times has given up any pretense of being objective in their economic news analysis.  The summary of Fed Chairman's testimony this week before Congress, penned by Nelson Schwartz in today's NY Times, is little more than a political polemic aimed at defending the Obama Administration and excoriating Obama's (and, obviously, Nelson Schwartz's) political enemies.

Any reader wishing to understand the economic issues in front of the Fed and the history of the US economy is going to be seriously misled by Schwartz's utterly incompetent article.  The NY Times should be renamed the "NY Times Daily Democrat."  The Schwartz article is incredibly ignorant and misleading.

Wednesday, June 22, 2016

Retail Food Stocks Getting Killed

The push to boost mandated wage rates, ignoring the free market for political considerations, is costing jobs and crushing employers.  In the past, retail food operations, like McDonalds, have provided the first leg up for minorities and low income employees.  That leg has now been chopped off.

Retail food stocks -- think Wendys, McDonalds, Five Guys -- are getting crushed by the stock market, which represents a growing recognition that big government is changing the business model.  Just as the left destroyed hundreds of thousands of jobs in the energy sector, they are now destroying hundreds of thousands of jobs in the retail food sector.  The business model in this sector will be changed to eliminate human employment.

Less than a decade ago, the minimum wage was $ 5 per hour.  Now, in many communities, the mandated minimum is $ 15.  That is a triple.  If your employer was required by law to pay you three times as much as he paid you less than a decade ago, what do you think your chances of holding on to your job would be?  That's right.  Zero.

The argument is that you can't live on less than $ 15.  The remedy -- live on nothing.  But, then, of course, the welfare system kicks in.  So, the left is moving folks from the job market to the welfare system.  More than 100 million Americans of working age, no longer look for work.  That leaves a huge burden for the remaining Americans to carry.

Meanwhile, the stock market is recognizing the coming re-tooling of retail fast food.  Employees will be replaced by automation.  In five years, when you enter a fast food establishment, there will be likely no humans to interact with.  Those folks will now simply be added to the welfare rolls.

This is the ultimate liberal dream.  Either shift everyone to government work or put them on welfare rolls.  One way or another, eliminate the private sector.  The left is well on their way to accomplishing this goal.  Increasing the minimum wage is one of the most effective ways to destroy opportunities for the less-advantaged members of our society.  Meanwhile, fast food prices are on the way up for the average American.

This is a lose-lose proposition.  There are no long-run winners in the higher minimum wage environment.

Tuesday, June 21, 2016

If Yellen Has Expertise, What Is It?

Once again, Janet Yellen has occupied a lot of television and media time telling the public what it already knows.  What does she know?  Other than reciting facts already put into the public arena by the various agencies of government, Yellen never advances our knowledge one iota.

Yellen is such a product of the modern groupthink that dominates academia that she provides little if any insight into the economy or into what policies may or may not help.  Today, Yellen is sharing the fact that she reads the paper with Congress as she testifies before the Senate banking committee.

"Monetary policy remains accomodative," says Yellen.  What does this mean?  That rich people will get richer?  Certainly the cconomy is going nowhere.  Is the historically slow progress of the recovery a result of "accomodative monetary policy?"

Has Yellen noticed the massive overkill of regulation now crippling the American financial sector?  Who cares what rates are, if most Americans can't get a loan thinks to regulatory overkill.  Only the wealthy and well-heeled benefit from this absurd mix of contradictory policies.

And these folks wonder why average Americans, the poor and the minorities are losing ground?  Maybe Janet Yellen, as well as other Obama acolytes, should take a deep and long look into the mirror, if they want to know where things have gone wrong and why the American economy is a mere shell of what it was a generation ago.

Yellen needs to read Adam Smith's Wealth of Nations.  It's pretty clear what made the industrial revolution take place when and where it did.  It is also clear why the American economic engine was once the most powerful economic force in the world. 

No longer, thanks to folks like Janet Yellen, whose conversation could be reproduced by a robot who has combed over the most recent editions of the NY Times. 

No amount of infrastructure spending, higher minimum wages, further restrictions on business and finance is going to help the average American, whose desperate need for the freedom to work and invest as they wish without interference from Yellen, Obama and all of the other millions of bureaucrats, whose sole purpose is to restrict the freedom of average Americans to provide for their families.

According to Yellen, the 2007-2008 period is still the cause of our current problems.  What about the Whisky Rebellion or the negative effects of the American revolution?  Are they also holding us back? 

It took Germany and Japan less than a decade to achieve dramatic double digit economic growth after having their countries and populations devastated by years of warfare.  Why is it going to take America a quarter century, if ever, just to get back to growth rates that were once considered average for the American economy?

One thing is for sure, Yellen herself is doing very well in this economy.  So is the Obama family.  Centillionaire Clintons are doing great.  Soros and Buffet aren't doing too bad either.  All of these folks speaking for the downtrodden, have to leave their limos, mansions, yachts and jets to get in front of a microphone to state how concerned they are about the rest of us.  Thanks.

How about giving the average American the opportunity to make a living, raise a family without interference from the government?  Maybe Yellen should think about that for a while, instead of memorizing her cue cards.  Yellen is a living testament to the bankruptcy of the economics profession.

Brexit Predictions

Would that it were so easy. 

The "Remain" group, which now includes George Soros, ever the spokesman for the downtrodden from his yacht, his jet or his limousine, now argues that leaving the EU will create economic catastrophe for Britain.

Keep in mind that Europe is one of the weakest economic regions on the planet.  How is staying joined at the hip in a declining economic zone, overburdened with absurd regulations, good for the British?

Adding to the economic problems is the immigrant crisis which has been so badly mishandled by Angela Merkle.  Why can't Britain decide its own immigration policies?  Look at what has already happened in continental Europe because of a poorly thought-out immigration policy.  Immigration can't work if the entering population has no interest in assimilating into the existing population.

Let's face it.  Europe is an economic disaster in the making.  There has been no economic growth in Europe in a generation and things are getting worse, not better.  Why?  Because government run economies always, ultimately, fail.  Europe will not be an exception.  The Brits should beat a retreat from this nightmare while they still can.

Who cares what happens to the pound?  According to Daddy Warbucks Soros, the pound will fall to 115 dollars per pound.  We'll see.  But, what difference does it make really.  If anything a lower pound will mean higher exports and an improved British economy.

But, whatever.  There is no long term impact of a change in the value of one currency for another.  If there was, it would certainly make economic policy a pretty simple affair.

Britain should renounce its EU membership and embark on a return to free market economic policies.  Then, and only then, will the British economy return to strength and vigor.

It's interesting that Obama has weighed in on this.  He has presided over the worst economic recovery in the history of his country.  He certainly qualifies as an expert on how to torpedo economic growth.  Maybe Obama is an example of the "misery likes company" syndrome.

Under Obama, minorities and low income Americans have seen their relative economic standing plummet.  Meanwhile, Soros and Buffet have done great.  Soros and Buffet love Obama, as well they should.  His policies have been good for the extremely wealthy.  But, for the average American, as for the average Brit, only free market economics will provide any real hope for their future.

Don't listen to the extremely wealthy elitists who only have an interest in preserving their hegemony over the masses.

Monday, June 20, 2016

The Non-Profit Scam

How often do I hear young folks say, glancing at themselves admiringly in the mirror, "I am going to work for a non-profit."

The idea of a non-profit suggests charity, helping others, making personal sacrifices.  But, what is the real truth.

There are many, many non-profit employees with incomes that would make Wall Streeters blush.  Multi-million dollar compensation packages, unsupervised by anyone, are rife in the non-profit world.  Who is sacrificing so that these folks can live the life of luxury in the non-profit world?

Guess who!  Taxpayers....albeit, unwittingly.

Non-profits avoid taxation.  You can argue they don't produce anything of value that anyone would willing pay money for.  Thus, they are not subject to tax.  But, that is not likely to be an argument that non-profit folks would like to endorse.

"Non-profits" live off of contributions from individuals, other tax exempt organizations and governments at all levels.  At the end of the day, this means that the average American family is devoting a good part of their income to subsidize these "non-profits."  The average American trying to take care of their family, provide for their own retirement, educating their children is footing the bill.

Who works in these non-profits? Think of the Clinton Foundation as a good example.  Key Clinton political operatives live large off of the Clinton Foundation, which really means that they live large off unwitting taxpayers.

So, who profits from "non-profits?"  The relatively affluent, once again riding on the backs of the poor and the middle class, while engaging in absurdly narcissistic rhetoric about personal sacrifice.

There is no market test, no accountability for most "non-profit" activity.

The charitable deduction should be eliminated in all cases where a multi-million dollar compensation package is the ultimate recipient.  This argument would apply to, among others, all charitable deductions for higher education as a starting point.

The Sanders End Game -- Food Riots in Venezuela

Bernie Sanders believes that things can be produced in an economy, even if no one produces them.  That same view motivated the late Hugo Chavez.

The essential idea is that a society's wealth and production is simply a given.  It doesn't really depend upon anything.  Wealth and production is simply there for all to divide.  Thus, the policy prescriptions that follow are pretty simple (and obvious).  Divide the wealth and production equally.  Since no one produces anything, according to the Sanders-Chavez view, why let the wealthy folks keep anything?

This argument plays well to poor folks and the affluent young.  You can see it in the Sanders support.  If you polled the wealthy, elite colleges in America, Bernie Sanders would, far and away, lead the polls, just as Chavez was extremely popular with the wealthy left in Venezuela.

If you are born with a silver spoon in your mouth, it is never exactly clear how that spoon got there.  You didn't put it there.  So, why can't the poor share that spoon. The argument is very appealing to young people who never saved or sacrificed to produce wealth.  They simply woke up one day and found the necessary resources right there in front of them.

The problem is that someone needs to produce the wealth and provide for the production.  In order to do that, incentives have to be structured to encourage the necessary work effort and personal sacrifice required for the creation of wealth and the production of economic goods and services.

The Sanders-Chavez (and indeed Clinton) program is to eliminate the incentives for wealth creation and the production of economic goods.  They view these incentives as evil -- the word "greedy" comes to mind.

Instead, the Sanders-Chavez-Clinton agenda is to remove individuals from the consequences of their actions.  Big government will provide.  The problem is: who will provide the resources for big government if private incentives are legislated out of existence?

History provides the answer to this puzzle.  Revisit the old Soviet Union.  How did people live, once the government stripped away the incentives to produce and outlawed the holding of private wealth?  How are things going in modern-day Venezuela (or Greece for that matter)?

Once those who make the necessary sacrifices to produce wealth are viewed as criminals, it is only a matter of time until the country degenerates into a Venezuela situation.  Then only armed forced, as used in the old Soviet Union, can maintain the Sanders-Chavez-Clinton paradise.  Venezuela is a glimpse into the future of the Sanders agenda.

Saturday, June 18, 2016

Education in the Digital Age

The world is a different place in the digital age.  So, shouldn't education acknowledge how different the world is today, than it was two or three decades ago?

What are the trends in education today?  The simplest and most general goal of the education establishment from K through 12 to the elite universities is to establish uniformity of thought about political issues.

Diversity and multi-cultural programs are the biggest growth areas in virtually all of America's educational institutions. Why?  Because it is easy to do.  Actually educating people so that they can make decisions in the future is a much, much more difficult proposition.

If teaching useful skills for the future was of interest, then teaching computer science and computer skills generally would be near the top of the education agenda.  In fact, requiring students to learn computer science and develop computer skills is considered largely irrelevant in today's evolving education curricula.

Instead, learning to repeat specific political dogma and restricting speech to avoid "micro-aggressions" is the top issue on the modern university campus.  Banning speakers, whose political views are centrist or right wing is high on the list of priorities for the modern university administrators.

Curricula is being revised at all levels of education to insist upon political indoctrination, much in the old Soviet style.  If you don't believe or say things in a very specific way, acceptable to the speech police that now roam the modern university, you will find yourself in a heap of trouble.

Meanwhile, learning things like mathematics, writing skills, foreign languages, computer skills have few defenders among folks who run today's universities.  These things may be useful for the economic future of students, but they hold little or no interest to "educators," whose main interest is enforcing a political agenda.

The plan for ideological uniformity is the dominant theme of public education as well.  The failure of our public schools is primarily attributable to the lack of interest by the educational establishment in developing the skill sets for their students that are required to be successful in the modern economy.

This educational abyss is the main reason that the US is growing increasingly non-competitive on the world stage.  Asian countries are going the other way.  Asian education emphasizes math, language and computer skills, while Europe and the US are mostly engaged in thought control.

True education provide skills and tries to develop free and independent inquiry.  Unfortunately, US education is mostly devoted to stifling independent thought and silencing free speech.  Skill development appropriate to the digital age seems, to the educational establishment, largely irrelevant.

Wednesday, June 15, 2016

Yellen Tells Us What We Already Know

Janet Yellen, Fed Chairman, held a press conference today without saying much of anything that was not already well known.  She admitted to some surprise that parts of the American economy were as weak as they are.  This weakness was used as an excuse to postpone changing the targeted overnight repo rate.

Much ado about nothing.

The December rate liftoff by the Fed raised the repo rate 25 basis points.  Subsequently, all other interest rates dropped substantially.  So what was the point?

Yellen seemed completely unaware that the US economy has been operating only slightly above stall speed since 2009.  Yellen seems also unaware that monetary policy is totally irrelevant to the macro economy.  So who cares, really, what the Fed does.

Stock market pundits talk incessantly about the Fed, likely because they can't think of much else to talk about.  Ditto for Brexit.  Remember how much conversation was once devoted to Y2K. 

Yellen referred to the slowdown in job growth last month as concerning.  Really?  What about the anemic job growth for the past seven years?  Has Yellen noticed that?  Is she concerned?

What is needed is less Federal Reserve action and a return to free economic markets.  The Fed is a completely unnecessary actor on an increasingly irrelevant stage.

Brexit Will and Should Happen

It is not as if there are no costs to British citizens if Britain remains in the European Union.  Just because Germany wishes to underwrite Greece, Spain, Italy, Portugal and, in time, France, why should the average Brit want to do so?

Britain has enough sovereign debt without taking on the burdens of southern Europe, which is exactly what Germany's plan is for the EU.  The Brits can't afford it.  Neither can the Germans, by the way.  In fact, no country can afford to bankroll these countries.  The Angela Merkel plan makes no sense.

Greece, Spain, ltaly, and Portugal should, and will in time, go bankrupt.  They could then do a restructuring with their creditors and begin anew.  Why should their neighbors be on the hook for their profligacy (and the stupidity of their lenders)? 

Besides taking on the debt of others, the average Brit should be concerned about the regulatory regime installed in Brussels.  Gradually, the absurd labor and regulatory rules of other European countries are being implanted on EU members.  This just means weakened economies.  Of what benefit is a weaker British economy to the average Brit?

What does Britain give up if it leaves the EU?  I guess it loses the goodwill of President Obama, who has never found economic freedom to his liking.  British trade will suffer only if Britain itself erects large tariff walls.  If Britain can resist that temptation, they will do just fine.  Better, in fact, than the moribund European Union, which has had no economic growth for over a decade.

Politicians and media pundits have a different agenda.  They don't care about the take home pay of the average Brit.  So, they fear a Brexit.  But, the average Brit would benefit from Brexit with higher incomes, more economic freedom, and more control of their own destiny.

Monday, June 6, 2016

The One Area of Real Growth

Americans, in increasing numbers, have given up looking for work.  Part of this is that the welfare system makes taking a job very expensive, because many of the welfare benefits disappear as income rises.  But, that isn't the only source of folks giving up.  The other source is the lack of job opportunities in a no-growth economy.  The only thing growing is the number of Americans who no longer consider themselves part of the labor force. That number is at an all time record in absolute value and in percentage of the population.

That fact is the complete explanation for the relatively low unemployment rate of 4.7 percent.  The numerator only contains people actually looking for a job.  If people give up, they are not counted. So that the nearly 100 million Americans who are not working and not looking are not considered unemployed.

We are witnessing the slow and gradual euthenasia of the American economy. The media thinks this is great and is a marvelous economic recovery, even though growth rates in this recovery are less than half of the recovery rates of any previous recovery.  This is a pitiful economy and it is getting worse.

So, who does well in an economy like this.  The answer:  the wealthy and those with "protected" jobs.  The biggest classes of "protected" jobs are government bureaucrats and teachers.

Those who suffer the most are the poor, the minorities, the least-advantaged members of our society.  Those who work in the private sector are not generally protected, so they will find their real incomes continue to decline.

Meanwhile the bureaucrats and the protected will sing the praises of this economy.  Why shouldn't they like it.   It works for them.