Monthly Archives: May 2014

A failure to deal with debt

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yellin us federal debt

The only bit that is ridiculous in this story is that the timeframe is projected into the future, Fed Chair: ‘Deficits Will Rise to Unsustainable Levels’. What do they think happens when the government diverts output down various plug holes, that the entire country disappears into thin air? What happens is that over so slowly real incomes begin to fall and the communal environment begins to crumble. There will certainly still be many wealthy people, but the average will move in only one direction.

In the US they pretend that time is on their side but it isn’t. Things are long past being just line ball. There will be a fall in living standards. The only question is whether there will be a recovery and if so when. Personally I do not see the slightest evidence of a will to change things around in the US.

But at least here we do have just that chance. We are dealing with a junior version of just this debt problem ourselves. The ALP talks about what geniuses they had been since debt-to-GDP was only about 37% when they left office. They never dwell on the figure when they came into office – ZERO – nor where debt levels are likely to go if nothing is done.

This stuff is hard and generally uninteresting for most people. Just gimmee the loot or I’ll bring in the other mob who will. We here may not quite be at that stage but perhaps we are. What Janet really would like to say is what Joe Hockey’s been saying: HELP! HELP! HELP! THE HOUSE IS ON FIRE! but she can’t because she does not wish to bite the hand that fed her. But she knows.

You want to see lying in politics, I’ll show you lying in politics

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Let me come back to this business about political lying. This is from Rush Limbaugh discussing how the Media Knew the Truth About Obamacare:

Do you think that Obama would have been reelected in 2012, do you think Obamacare would have passed if the news had gotten out to everybody that your employer could legally cancel your insurance, drop you from your plan, and force you to go to the government? Do you keep that bill would have passed? There is no way.

Because what was happening while all this was going on? Obama was lying for three years. “You like your doctor? You get to keep your doctor! You like your plan? You get to keep your plan!” All along, the law said that businesses, starting in 2014, could dump their employee-covered health plans over to Obamacare or to the exchanges, whatever they called them. So people believed the president, and the president lied. . . .

The same news organizations lied when the individual plans were being canceled. I mean, the individual plans were gonna be canceled all along. Remember, everybody thought, “No, no. I can keep my plan. I can keep my doctor. Obama said so!” Everybody knew that that wasn’t true when he was saying it!

But still they love their President, at least the media do, specially the media. To hear the media discuss political lying is beyond irritation since they are the worst offenders.

Now that’s an interesting question

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From John Hinderaker at Powerline, Why did Hillary Clinton Defend Boko Harum? Why indeed? Here is the start of his post:

Boko Haram, the Islamic terrorist organization in Nigeria, is in the news because it kidnapped more than 200 teenage girls and now threatens to sell them into slavery. (That’s what a real war on women looks like.) This is just the latest of many outrages committed by Boko Haram, which is guilty of many acts of mass murder. But it has now come out that for two years, Hillary Clinton blocked efforts to add Boko Haram to the State Department’s list of terrorist organizations.

This wasn’t just an episode of bureaucratic indifference. The Justice Department, the FBI, the CIA and many in Congress lobbied the State Department to list Boko Haram, but Clinton stood firm in defense of the Nigerian terrorists. Now, with the kidnapping outrage in the news, Hillary is tweeting away on behalf of the Nigerian girls. (THAT will do a lot of good!) But where was she in 2011 and 2012?

But seriously, why ask her? The one you should ask is her Chief of Staff.

“There will be no balanced budget under a government I lead”

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Suppose Gillard had said that, suppose she had said there would be no balanced budget under a government she led, and had then broken the promise. Suppose she had done that. You know what? It wouldn’t have bothered me a bit.

The problem with the broken promise on carbon taxes was not just that she had lied but that it was bad policy. The carbon tax has sent manufacturing industry out of this country, made Australia a very expensive place to live and do business, and raised government revenue which it was able to squander at every turn.

The carbon tax lie was a game changer. It brought the ALP into government in a hung Parliament. If she hadn’t said it, Tony Abbott would have been Prime Minister three years sooner than he was.

The last election did not turn on whether or not there would be tax increases as part of a package to balance the books. The last election turned on whether we could get a decent set of economic managers, along with a slew of other things such as stopping the boats.

The Government we now have looks set to deliver an adult government. I have plenty of bones to pick with what it is doing (or not doing) but nothing they do to taxation will make the slightest difference to my wish to seem them succeed as the government of this country which so far they are doing infinitely better than the mob they have replaced.

Going through the books program by program

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Let’s suppose we had what we need: some form of balanced budget amendment. What would the Government then do? Labor left the hole in the revenue stream relative to the expenditures it chose. So this government is going to fix it if it can and subject to the detail, I’m all for it. From The Australian, Joe Hockey to swing axe on public sector:

MORE than 200 spending programs will be slashed in next week’s federal budget as Joe Hockey vows to shrink the size of government in a “big, structural change” to save billions of dollars.

Agencies will be closed and thousands of staff retrenched over the coming months in a drastic overhaul that will start with the loss of 3000 positions in the Treasurer’s own portfolio.

The axe will fall in major portfolios including environment, transport, industry, agriculture and indigenous affairs.

Mr Hockey told The Australian that spending cuts would do the “heavy lifting” in fixing the deficit, despite growing criticism of looming tax hikes including a lift in fuel excise.

“Revenue is not doing the heavy lifting in this budget,” Mr Hockey said.

The question will end up being whether there is a constituency for a government that lives within its means. Watching Anna “I’m a Socialist” Burke the other night on Q&A was too much of a reminder of the kinds of idiocy we are up against. Labor has not learned a thing from the problems it created. If anything, it is more proud of itself than ever for its waste and misdirection. What we are going to find out over the next few months, it seems, is whether there is or is not a constituency for a genuinely smaller, more efficient government. And since it is impossible to rid ourselves of the NBN and everyone is signed up for the NDIS, the rest is now a process of going through the books program by program. I only wish they did the politics better.

Say’s Law and the failure of Keynesian economics

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I am very happy to say that the best paper I have ever written was just yesterday accepted for publication. It’s on John Stuart Mill’s Fourth Proposition on Capital which he published as part of his Principles of Political Economy in 1848. In his own lifetime it was never challenged. Leslie Stephen (who incidentally was Virginia Wolf’s father) described it in 1876 as “the best test of a sound economist”. And yet by 1890 and ever since, although some of the great minds of economics have had a go at it, no one has been able to make straightforward sense of what Mill had meant. And when I say some of the great minds of economics, I am including Alfred Marshall, Friedrich Hayek and Allyn Young.

I should also add that understanding Mill may be amongst the most important issues of our time. Keynesian economic theory, which argues the exact opposite of what Mill had written, has had a devastating effect on every economy in which a Keynesian policy has been applied. Our economies are sinking under the weight of useless public spending and misdirected expenditures under the delusion that such spending will actually do us some good. Mill and every one of his classical contemporaries perfectly well understood that wasteful non-value-adding spending would not only do no good, it would actually do positive harm.

So what was this Fourth Proposition. It may not look all that formidable but in it there lies a truth that may yet save our economies. What Mill wrote was this: “Demand for commodities is not demand for labour.” Or restated using the jargon of today: an increase in aggregate demand will not lead to an increase in employment. The principle stated here is the classical pre-Keynesian meaning of Say’s Law, which has vanished from amongst economists and been replaced by the Keynesian theory which had been specifically designed to refute Say.

For me, the disastrous outcome of the application of Keynesian policies was a certainty. It was beyond any doubt in my mind that the stimulus would not just fail but bring ruin in its wake. I put my views into print in February 2009 just as the stimulus programs were being put into place and my five-year review was published in March this year. In 2009 it was mostly just theory although there had been plenty of Keynesian failures before that. By 2014, the evidence has become so overwhelming that there should no longer be the slightest doubt that a Keynesian stimulus will sink your economy into a coma and leave it that way for years on end. If you want to know why, you can read Mill, or if you find a thousand pages of mid-nineteenth century prose a bit on the heavy duty side, you can read this instead.

Torah studies in China

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Now here’s a story, from Michael Ledeen. It’s called The Chinese and the Jews. This is how it starts:

Over the past couple of decades the Chinese have become more interested in the Jews. Of late the Chinese regime has been bringing Jewish scholars and theologians to the People’s Republic to discuss Torah, Talmud, Mishnah and even some of the more mystical tracts.

Now why would that be? Again some answers:

Back when the country’s greatest modern man, Deng Xiaoping, converted the PRC economy to capitalism, Chinese “social scientists” went to work trying to figure out what makes capitalists tick. They were quickly baffled. They kept running into problems; that “knack” we’ve got somehow eluded their new system. After a while, they figured out that the capitalists’ success couldn’t be entirely explained by the nuts and bolts of the marketplace, or by institutions like private property, important though they were. Yes, it would have been easier just to read Michael Novak’s magnum opus, but they got to his end place: religion is an essential part of successful capitalism.

In their amazing way of organizing most anything, the Chinese launched churches, and of course millions upon millions of them attended Christian (mostly Catholic) services. To be sure, the Party kept a suspicious eye wide open, and some of the churches were deemed too dangerous, even in the cause of Communism. But on they went, convinced they were on the right path. If anyone doubted it, they had mountains of research and even Tocqueville to justify the turn to religion.

After a couple of decades of this, there were still problems, and their social scientists took another look. This time around, they found–surprise!–lots of Jews involved in capitalist enterprises, from banks to stock exchanges to corporations. Indeed, the Jews had a history of doing it. Maybe the Jews knew something the others didn’t? Well, look at Israel…or New York…

And so they’re talking to Jews, not about capitalism but about Judaism. State radio now broadcasts in Hebrew. The Jewish experts who are brought to China find themselves speaking Hebrew with their Chinese interlocutors. Chinese students can now learn Hebrew, and immerse themselves in Jewish studies.

The world can sometimes be hilarious.

The sex life of the Australian marsupial

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antechinus

Not all Australians, just marsupials. And not all marsupials, just the antechinus, one of our very own you’ve never heard of but should have. This is from a story with the title, This Marsupial Has Marathon Sex Until It Goes Blind and Drops Dead:

For these three weeks of sexual kamikaze, antechinus males are concerned with nothing–absolutely nothing–other than mating with as many females as they possibly can. Ecologist Andrew Baker of Australia’s Queensland University of Technology, who studies these critters’ astonishing habits, has even picked up a copulating pair, who ignored him entirely and went about their business in his hands. “It’s pretty frenzied,” said Baker. “There’s no courtship or anything like that. The males basically just grab the females and go for it.”

Read my lips: no new taxes

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Here’s some interesting news from just yesterday for those capable of learning from history: George H.W. Bush honored for courage with 1990 tax hikes, honoured by Democrats, that is:

Former U.S. President George H.W. Bush showed courage in breaking his “read my lips: no new taxes” campaign pledge to broker a 1990 budget compromise that may have cost him re-election two years later, the John F. Kennedy Library Foundation said on Sunday.

The organization honored the 41st U.S. president with its 2014 Profile in Courage Award, praising the Republican leader’s “decision to put country above party and political prospects” in the deal with congressional Democrats.

“America’s gain was President Bush’s loss,” Jack Schlossberg, grandson of former president John F. Kennedy and a member of the award committee, said during a ceremony at the library in Boston. . . .

In September 1990, two years into George H.W. Bush’s first term, the United States was saddled with a $200 billion budget deficit. Months of partisan wrangling over possible tax increases and spending cuts had ended in a stalemate.

Despite the potential political backlash, Bush announced a compromise with congressional Democrats that would cut $500 billion from the deficit in five years, in part by raising “luxury taxes” on items including yachts and pricey cars, among other tax hikes.

“The time for politics and posturing is over,” Bush said in an October 1990 speech. “The time to come together is now.”

The budget passed, but Bush’s concession on a tax increase rankled members of his party and stood at odds with his “no new taxes” campaign promise. He lost re-election to Democrat Bill Clinton in 1992.

The National Socialist Alliance on Q&A

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Watching Q&A was more than usually entertaining. The real surprise to me was not that it happened but that it had never happened before. A live broadcast ought to have been a very tempting target. Yet for all their idiocies, it was the people on the panel who were the one’s that spooked me, specially Anna Burke who could not have been more out to lunch had she been scripted for it. I now think the Coalition will win the next election. Just get people like Burke back before a camera mouthing off the usual platitudes and the Libs will win in a walk.

In its own way what I found so pathetic about the protestors is how old time they are. We were doing the same ourselves back in the 1960s when it was new and fresh. Pathetic and disgusting but new and fresh. The left in both its tactics and ideas seems to be locked into a mould that ought to have died on the vine thirty years ago. But for all their empty rhetoric and curiously vacant ideas, these people are a high level danger to the social order. It reminded me of a recent post by Stacy McCain talking about American universities:

Scarcely a day goes by that we don’t hear some report of the increasing turn toward totalitarianism by the campus Left. Progressive hegemony on university faculties, a humanities curriculum heavily influenced by crypto-Marxist “theory,” and the radicalization of students through an identity-group Culture of Grievance, all contribute to this growing climate of intolerance. Administrators, when not actually in sympathy with the radicals, abdicate authority in the face of intimidation tactics employed by the militant Left at universities and colleges.

On a university campus few will stand up, often because administrators sympathise with those who protest. But to have taken their national socialist tactics into the greater world beyond the campus gates was a mistake. The usual Trot approach is the worse the better. The worse the establishment comes down on their heads, the better conditions will become in getting us to the revolution. They are likely to end up all the worse for what they did. Whether that leads to better as they define it, of this I have very great doubts.