Monthly Archives: November 2013

Where from here?

Posted on by
Reply

The new Middle East:

Tehran boasted at home that the accord recognised its ‘right’ to enrich uranium – which it says is for peaceful purposes – but Western leaders said the deal made no such reference.

Hassan Rowhani, whose election as Iran’s president in June raised hopes of a thaw with the West, insisted ‘Iran’s right to uranium enrichment on its soil was accepted in this nuclear deal by world powers’.

But US Secretary of State John Kerry was adamant: ‘This first step does not say that Iran has the right of enrichment, no matter what interpretative comments are made.’

I would say that Obama and Kerry are fools except that this is exactly what they want. The Iranian President is merely letting cats out of bags. No one is in any doubt about the troubles this is intended to cause.

The thing about being on the left when I was young was that there were adults still in charge who took a sober view of our interests and tried to act on them. We could go off to protest but it wouldn’t matter, and we knew it wouldn’t matter, because there were people at the top who paid no attention to us. Now there are no protests and the people at the top, if they are not opposed to our success and our way of life, certainly have an odd way of showing it.

If you are a nation dependent on American support, you would be wise to look for other kinds of friends and alliances. That Israel and Saudi Arabia may now make common cause is one more example of my enemy’s enemy is my friend. All this from Drudge today.

Netanyahu: ‘Historic Mistake’…
Appeasement…
Deal leaves Israel few options…
Obama calls…
BOLTON: Abject Surrender…
Six-Month Freeze, but Enrichment Issues Remain…
Iranians hail ‘smiling’ FM…
A STEP…
GOP sour…
Secret US-Iran talks…
Anger, jitters in Mideast…
Disagreements emerge…
‘Iran got what it wanted’…
Relief sweeps Tehran…
REPORT: Israelis inspect Saudi bases for possible strike…

Where from here? Two out of three of the “axis of evil” to have nuclear weapons. And it is American foreign policy to do nothing to stop it.

UPDATE: I hadn’t seen this but was sent to me by a friend. This is from Obama’s second inaugural:

And we must be a source of hope to the poor, the sick, the marginalized, the victims of prejudice–not out of mere charity, but because peace in our time requires the constant advance of those principles that our common creed describes: tolerance and opportunity; human dignity and justice.

The phase is possibly not accidental but intended as directly in your eye to everyone who would like to maintain our way if life. But if just there by the force of words and concepts, then in itself in betrays the cast of mind and the personal beliefs that lie behind it. It’s not even si vis pacem, para bellum. The President may himself be a fifth column. We give up our freedoms so that a bunch of layabouts can have free phones.

Quentin has done us a favour by showing why an elected G-G is a terrible idea

Posted on by
Reply

OK. Professor Julia Gillard, in her retreat by the sea in Adelaide, feels she has something to contribute on our current controversy with Indonesia. She is not only welcome to do so, but as an almost perfect direction finder on policy – do the opposite of what she suggests – she actually does contribute to the debate. Have her out in front, I say. Make sure she remains the most visible member of the Labor Party. Never deprive her of an opportunity to speak whenever she feels the need. I will defend her right to free speech etc etc etc.

However, this is not also the case of Quentin Bryce whose views seem to be as inane as the views of the former Prime Minister but the thing about those personal views is that we are not supposed to know them. She is permitted freedom of opinion, but given the job as Governor-General, she is not free to express them. I again think that by speaking her mind in public, she has actually damaged the causes she favours but that is so far from the point that it is almost not worth mentioning. It’s really this incredible lack of judgment in neither respecting nor understanding her role in a Parliamentary system that is the concern.

Indeed, she almost perfectly underscores why an elected President would cause great harm to the governance of this country. The job of the Governor-General is to hold a series of reserve powers to be applied in those very rare cases of constitutional division and deadlock. In the meantime, it is to be as far from possible from political engagement. If she doesn’t understand that she should by now. And if an apology is owed anywhere by anyone in this country, it is she who owes a private apology to Tony Abbott, and a sincere one.

But if she were an elected President, then she would feel a greater licence to say what she wants in public since she would have the authority of the approximately 50% of the country who had voted for her as President. And rather than commenting here or there on some issue of some kind, the elected Governor-General would feel free to become involved with any and every issue of the day since they would feel they have a constituency of their own.

The Governor-General has done us a favour by giving us just a taste of a world in which our head of state might feel free to enter the political debate. It is why electing the Governor-General would be the worst of all possible constitutional arrangements we might possibly construct.

Never apologise, never explain

Posted on by
Reply

As a fan anyway of our Prime Minister I am still astonished at his sure footed ability to handle our latest controversy with Indonesia. Everybody “spies” on everybody else because in foreign relations it’s important to keep surprises to a minimum. You do want to know what they’re up to and you also are not averse to ensuring they know what you are up to, unless you are up to no good.

There’s politics here and in Indonesia. The Indonesians have to be “outraged”. Their politics demands at least some sense of having been officially offended by the routine use of listening and other devices that they no doubt use themselves. So the politics will play out but should be an absolute nothing one year from today. There are and will be many other things to worry about.

The apology demanded by some, even of the weakest kind, admits fault, and there is nothing some people like better than to exploit weakness and to play the injured party. We would be making a massive mistake to end up with anything resembling an apology. We would never hear the end of it. Toughing it out now means that this should peter out with no permanent harm done.

November 22, 1963

Posted on by
Reply

It’s a date that remains edged in black for me always. Oddly, as incompetent as his execution was in many respects, John F. Kennedy, if he had the same views today that he had then, would have been a member of the Republican Party – and a very conservative member at that – because no modern Democrat has views as stridently pro-market and as militantly anti-communist as he did. His only stimulus was to cut taxes, not to increase spending. His brother Robert, the attorney-general in the Kennedy administration, worked for Senator McCarthy in the search for communists in the State Department.

He was shot down by a communist, a defector to the Soviet Union, a militant member of the Fair Play for Cuba Committee. But he was shot in Dallas, in the South, and so the story remains as told by the usual suspect sources that he was killed by those crazy right wingers. He was killed by a madman on the left, and a thousand conspiracy theories later, it remains firm in my mind that it was Oswald acting alone.

Ronald Reagan said that he hadn’t left the Democrat Party; the party had left him. Who can know what Kennedy would have done had he lived. The world is only partly shaped by the “forces of history”. It is also shaped by its great leaders. I still think of Kennedy as one of the great might-have-beens. It remains a tragedy that he died so young and so early before his promise could be fulfilled. Fifty years ago today.

Half way there

Posted on by
Reply

Yesterday I discussed a comment on the History of Economics website about the growing need to be wary about Keynesian economics and today there’s an article at the Wall Street Journal about the same thing, this one titled, Worse than Obamacare which it is. Let me pull out two bits before I get to my main point:

In February 2009, he got $831 billion of stimulus spending. Not even seismographs can detect the results. Every speech he outputs about “middle-class folks” offers them the same solutions: more public spending on education, on public infrastructure projects and, even now, on alternative energy. As he tirelessly repeats what remain promises, the Labor Department’s monthly unemployment-rate announcement on Friday mornings has become a day of dread.

No one any longer expects an upturn in the American economy. Long, slow and tortured is now the way things are. And finally people are getting around to thinking that it may well be Keynesian theory that is in itself the problem:

You know the theory here: Spend a public dollar and you get $1.50 of economic output. It hasn’t happened, but Barack Obama is gonna crank his old Keynesian Multiplier, created during the 1930s in the era of the Hupmobile, until it sputters to life.

Well, you’ve been hearing from me from the start that it was never going to work and for some reason it has taken five years for the penny to drop. It was never going to work because the underlying Keynesian theory is false from surface to core. But it’s only obvious if you understand the economics that existed before Keynesian economics entered the scene and return to the specific proposition that Keynes derailed.

There are others who think they can see Keynesian economics off the lot through some other means but I don’t believe it. It is only if you understand the classical theory of the cycle and Say’s Law can you make sense of why the stimulus did not achieve a single one of its aims. Stimulating demand cannot work because you cannot stimulate demand by increased spending on anything at all. You can only increase economic activity through increases in value adding supply, the very thing no government can ever do. What governments do is waste and the effect is to deaden the economy, and the more waste there is, the deader it becomes.

In seeing that Keynes must go we are only half way there. The other half is to restore the economic theory that Keynesian economics replaced.

[My thanks to Julie for the WSJ link.]

Keynesian economics is on the way out

Posted on by
Reply

A neat and sensible assessment of where Keynesian economic theory is today. I suspect there are many who think like this but are reluctant to say so in public. This is accurate and to the point. It comes from the History of Economics discussion website and was posted by Doug MacKenzie.

The historical facts of this debate, and of the policy itself, are quite clear, and it does not simply boil down to proving that the multiplier is (or is not) zero.

1. Keynes himself recognized (in the GT) that the multiplier is not stable and can be ineffective. To quote Keynes:

“It would seem (following Mr. Kahn) that the following are likely in a modern community to be the factors which it is most important not to overlook (though the first two will not be fully intelligible until after Book IV. has been reached):

(i) The method of financing the policy and the increased working cash, required by- the increased employment and the associated rise of prices, may have the effect of increasing the rate of interest and so retarding investment in other directions, unless the monetary authority takes steps to the contrary; whilst, at the same time, the increased cost of capital goods will reduce their marginal efficiency to the private investor, and this will require an actual fall in the rate of interest to offset it.

(ii) With the confused psychology which often prevails, the Government programme may, through its effect on “confidence”, increase liquidity-preference or diminish the marginal efficiency of capital, which, again, may retard other investment unless measures are taken to offset it.

(iii) In an open system with foreign-trade relations, some part of the multiplier of the increased investment will accrue to the benefit of employment in foreign countries, since a proportion of the increased consumption will diminish our own country’s favourable foreign balance; so that, if we consider only the effect on domestic employment as distinct from world employment, we must diminish the full figure of the multiplier. On the other hand our own country may recover a portion of this leakage through favourable repercussions due to the action of the multiplier in the foreign country in increasing its economic activity.

Furthermore, if we are considering changes of a substantial amount, we have to allow for a progressive change in the marginal propensity to consume, as the position of the margin is gradually shifted; and hence in the multiplier. The marginal propensity to consume is not constant for all levels of employment, and it is probable that there will be, as a rule, a tendency for it to diminish as employment increases; when real income increases, that is to say, the community will wish to consume a gradually diminishing proportion of it.” JMK chapter 10 GTEIM

So one can admit to possibilities that planned saving and planned investment don’t always line up correctly when implemented, without concluding that fiscal policy works in a reliable and useful fashion. Crowding out effects are real and Keynes knew all about it.

2. There is zero evidence of Lerner’s functional finance working as planned. Politicians have most definitely not run surpluses during booms, but have accumulated debt. Buchanan and Wagner have provided plausible explanations of debt-bias in policy.

3. Friedman’s Long and Variable Lags argument has stood the test of time, Keynesians have no substantive answer to this challenge. Given the length of a ‘normal recession’ politicians in a democracy are not at all likely to implement appropriate fiscal policy in a timely fashion.

4. Estimates of the actual fiscal multiplier come in at very low levels anyway. Data indicates that fiscal policy has little or no effect. Barro leans towards saying its no effect (see here), Krugman says there is still a small multiplier effect. Nobody finds the strong and reliable effect that Keynesians originally hoped to use in “fine tuning the economy”.

The 2008-2013 experience is highly relevant because the slump has been long enough to negate the Long and Variable Lags issue – politicians have had more than enough time to act, they have acted with historic monetary and fiscal “stimulus” and the effects were less than originally predicted. After the fact speculation by Mark Zandi that things could have been worse and by Krugman that the deficits should have been larger are not based on hard statistical facts, but are the product of faith and shaky analysis.

I don’t see how anyone can look at relevant theory and the data both and walk away thinking that there is a strong case for activist fiscal policy. It has not worked. The overall case is at best very weak.

D.W. MacKenzie, Ph.D.
Carroll College, Helena MT

Obama – still the people’s choice

Posted on by
Reply

It’s not a coincidence that Australia and the US ended up with the worst governments in our history at exactly the same time. The lame brain media, who could not identify a sensible policy if their lives depended on it, have backed incompetence to the hilt because they know no better. In Australia, with some luck, things should come good. In the US, it is hard to see how any of this could end well.

Obama’s disapproval ratings show him at the lowest level of his presidency. A survey conducted by ABC in the US figures no doubt correctly that it’s the Affordable Care roll out that has brought him so low. They’re a shrewd lot the American media. But what has taken five years for people to work any of this out:

He’s at career lows for being a strong leader, understanding the problems of average Americans and being honest and trustworthy – numerically under water on each of these (a first for the latter two). His rating for strong leadership is down by 15 points this year and a vast 31 points below its peak shortly after he took office. In a new gauge, just 41 percent rate him as a good manager; 56 percent think not.

But with everything that’s going on this is not in the least a bad result. It’s not the 56 percent who think he’s not all that crash hot that’s the phenomenon, it’s the 41 percent who still think he is a good manager who need their heads read. The US is becoming a nation of serfs. And if the election were run again today?

Registered voters divide numerically in Mitt Romney’s favor, 49-45 percent, if they had a mulligan for the 2012 presidential election.

45 percent still prefer Obama who’s only down by four percentage points! Well they’re welcome to him. But you do have to wonder what they must think a bad president would be like.

The US statistical agency faked the jobs report just before the 2012 election

Posted on by
Reply

That Obama’s election victory in 2012 was a stolen election must be obvious to Mitt Romney and others in the Republican hierarchy but what are they going to do? The IRS scandal of itself diverted enormous amounts of both time and money away from the political process. There are then the uncountable number of fraudulent voters which is inevitable in a system where everyone is capable of voting without any form of identification, not even evidence that one is a citizen. The laughable 59 voting booths in Philadelphia where not a single Romney vote was recorded, not even by accident, is an example of what happens in parts of America where the Democrats who count the votes are never going to be challenged by anyone from the other side, not even when there are more votes cast than there are eligible voters on the voters’ list. And these are merely efforts to steal votes although there are other ways in which the numbers were affected but that’s for another time. The US is dangerously close to becoming a one-party state, at least at the Federal level, and the Democrats are the party. The following tale therefore enters as one more strand in an immense effort to undermine the Republican vote and artificially strengthen the Democrats.

This is, in fact, such a big story, but with all the other stories, as big as this one is it’s small. The article beats around the bush but the central point eventually emerges many paras down. Even more weirdly, this is an “exclusive” so as a general news item that will go across the country there is no probability at all. This is an interview with a Bureau of Census employee who was found to have faked the unemployment data that were published during the three months leading up to the US election in November 2012.

The Census employee caught faking the results is Julius Buckmon, according to confidential Census documents obtained by The Post. Buckmon told me in an interview this past weekend that he was told to make up information by higher-ups at Census. . . .

‘It was a phone conversation — I forget the exact words — but it was, “Go ahead and fabricate it” to make it what it was,’ Buckmon told me.

And here are the paras leading up to that para:

In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.

The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated.

And the Census Bureau, which does the unemployment survey, knew it.

Just two years before the presidential election, the Census Bureau had caught an employee fabricating data that went into the unemployment report, which is one of the most closely watched measures of the economy.

And a knowledgeable source says the deception went beyond that one employee — that it escalated at the time President Obama was seeking reelection in 2012 and continues today.

‘He’s not the only one,’ said the source, who asked to remain anonymous for now but is willing to talk with the Labor Department and Congress if asked.

The Census employee caught faking the results is Julius Buckmon, according to confidential Census documents obtained by The Post. Buckmon told me in an interview this past weekend that he was told to make up information by higher-ups at Census.

Don’t tell me the election wasn’t stolen. The system is as corrupt as it has ever been. The methods perfected in Chicago have gone national and are unlikely to be contained any time soon.

And once you know this about their unemployment date, then you also know there is not a number published by the American statistical agency, not a one, that you could guarantee for yourself that it is not an advocacy number, crafted to provide a picture but not an accurate reflection of the data collected. Post modern statistics. The numbers are whatever you need them to be, or at least they are if you are a Democrat.

‘This is going to be outright war,’ he said

Posted on by
Reply

It’s now in The Australian. I have been following this for a while (see here), but matters, it seems, have now escalated:

TORONTO’S city council has voted to strip Mayor Rob Ford of most of his remaining powers, in further sanctions against him following admissions of crack smoking and binge drinking.

The move, which Ford vowed to fight, effectively makes the city’s chief magistrate a figurehead, which Ford vowed to fight. [“Vowed to fight” twice in a sentence; he must really mean it.]

Leading up to the vote, debate on the motion descended into farce as Ford taunted hecklers in the public gallery, calling them ‘punks’, and at one point accidentally bowled over a female councillor as he charged across the chamber.

The civic leaders of Canada’s largest city had already voted last week to curb Ford’s official duties and yesterday went further in order to ‘restore the confidence of the public in the government of Toronto’, according to the deputy mayor.

But Ford, who has apologised for his hell-raising lifestyle and for obscene public outbursts, has vowed to fight both in court and at the ballot box to keep his job.

‘This is going to be outright war,’ he said.

So not how it was, but then nothing is. And as James Delingpole reminds us:

In 2001 he proposed that city councillors should have their $200,000 personal budgets slashed: ‘If we wiped out the perks for council members, we’d save $100 million easy.’ True to form he paid his own expenses out of his salary. He was also one of only four councillors to vote against a hike in property taxes. As Mayor, he has continued in this tradition by slashing the city’s bloated public sector payroll in the teeth of strikes and protests from the unions.

You know what Lincoln said when told that General Grant was drinking whiskey.

Tell me what brand of whiskey that Grant drinks. I would like to send a barrel of it to my other generals.

If you think the issue is that he was smoking crack and talking dirty you have obviously not been following politics over the last few years.

MY OWN VIEW: I probably should make it clear that my own view is that he is done for and must go as mayor. There are some lines that cannot be crossed and that is one. It is true that he was monitored perhaps smoking crack a year ago but the photographic evidence was ambiguous. Now that he has admitted it, however, he cannot stay in public life. Had he been on the other side, no one would ever have known, but he’s not on the other side so everyone now does know. These are the rules, and while they ought to be the same rules for both sides, that’s not how it is. But it is still remarkable to me that someone like him can become mayor of Toronto. It’s a very different place from how it was. Think of him as mayor of Melbourne, the Canadian version of Sir Les Patterson.