Monthly Archives: July 2014

The rhetoric of progressives

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You think America has no further distance to fall. These are Elizabeth Warren’s 11 Commandments of Progressivism. Who’s Elizabeth Warren? Senator from Massachusetts and if Hillary doesn’t get the nomination, then she will. The only question is how long before we hear Bill Shorten saying the same:

– “We believe that Wall Street needs stronger rules and tougher enforcement, and we’re willing to fight for it.”

– “We believe in science, and that means that we have a responsibility to protect this Earth.”

– “We believe that the Internet shouldn’t be rigged to benefit big corporations, and that means real net neutrality.”

– “We believe that no one should work full-time and still live in poverty, and that means raising the minimum wage.”

– “We believe that fast-food workers deserve a livable wage, and that means that when they take to the picket line, we are proud to fight alongside them.”

– “We believe that students are entitled to get an education without being crushed by debt.”

– “We believe that after a lifetime of work, people are entitled to retire with dignity, and that means protecting Social Security, Medicare, and pensions.”

– “We believe—I can’t believe I have to say this in 2014—we believe in equal pay for equal work.”

– “We believe that equal means equal, and that’s true in marriage, it’s true in the workplace, it’s true in all of America.”

– “We believe that immigration has made this country strong and vibrant, and that means reform.”

– “And we believe that corporations are not people, that women have a right to their bodies. We will overturn Hobby Lobby and we will fight for it. We will fight for it!”

And the main tenet of conservatives’ philosophy, according to Warren? “I got mine. The rest of you are on your own.”

This kind of rhetoric is like catnip to the perpetually uninformed which in the US is now well beyond 50% of the voting population and climbing. That things only get worse when people like this are elected is just one of those things that defy explanation for those who nevertheless vote this way.

The fiscal policy of Warren Harding

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Warren Harding succeeded Wilson in 1921 as the American economy fell into a post-World War I inflationary recession. Although almost never mentioned, he turned an incipient Great Depression into the Roaring Twenties. I use this story in class as the last example of a classical economic policy ever put into play. Here is how his approach is described:

Harding’s pledge to restore America to a condition of “normalcy” led to his landslide victory in November 1920. In office, he cut government spending to the bone and reduced federal income tax rates across the board. As he said to Congress, the government acted during the war as if “it counted the Treasury inexhaustible”; if that pattern continued, it would result in “inevitable disaster.” To get government spending under control, Harding established the nation’s first Budget Bureau (the forerunner of today’s Office of Management and Budget) in the Treasury Department. As a result, federal spending dropped from $6.3 billion in 1920 to $5 billion in 1921 and then $3.3 billion in 1922. He supported the Revenue Act of 1921, which eliminated the wartime excess-profits tax, lowered the top marginal income tax rate from 73 to 58 percent, decreased surtaxes on incomes above $5,000, and increased exemptions for families. . . .

Many people, he noted, benefited from the gains made “as a result of the economic measures he implemented.” Unemployment fell from 15.6 percent to 9 percent. The industrial side of the economy revived at a rapid pace. A boom took place in construction, clothing, food, and automobile sectors. From 1921 to 1923, the volume of manufacturing climbed 54 percent.

Cut public spending, cut taxes and balance the budget. A radical idea even then and today beyond the pale.

Global cooling

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The sun has gone quiet…solar cycle 24 continues to rank as one of the weakest cycles more than a century is the story. And this is why it matters:

If history is a guide, it is safe to say that weak solar activity for a prolonged period of time can have a negative impact on global temperatures in the troposphere which is the bottom-most layer of Earth’s atmosphere – and where we all live. There have been two notable historical periods with decades-long episodes of low solar activity. The first period is known as the “Maunder Minimum”, named after the solar astronomer Edward Maunder, and it lasted from around 1645 to 1715. The second one is referred to as the “Dalton Minimum”, named for the English meteorologist John Dalton, and it lasted from about 1790 to 1830. Both of these historical periods coincided with below-normal global temperatures in an era now referred to by many as the “Little Ice Age”. In addition, research studies in just the past couple of decades have found a complicated relationship between solar activity, cosmic rays, and clouds on Earth. This research suggests that in times of low solar activity where solar winds are typically weak; more cosmic rays reach the Earth’s atmosphere which, in turn, has been found to lead to an increase in certain types of clouds that can act to cool the Earth.

I realise the left has a great deal invested in global warming, but if they are wrong, and there’s plenty to show that they are, then they are preparing for a very different kind of future from the one we are actually going to have. Warmer makes the planet more lush, specially if accompanied by increased concentrations of carbon dioxide. Colder shortens growing seasons and increases the need for an ability to heat our homes. In my own lifetime, the planet’s population has risen from two billion to seven billion. If the world is warming, we can accommodate the lot. If it is cooling, we cannot, specially if we go out of our way to impair our ability to develop economical forms of energy supplies.

Obama is mentally deranged

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I think it often about the American president, but this latest story makes me wonder even more just out of it he really is:

‘It looks like it may be a terrible tragedy’: Obama goes AWOL again with just 40-second mention of Malaysian plane crash feared to have killed Americans before his jokey 16-minute transport speech.

Seriously, how detached from reality must someone like this be:

President Barack Obama provoked fury in the U.S. on Thursday by casually devoting less than a minute to the deaths of 295 people aboard a Malaysian airliner, as he began an often jokey 16-minute speech about the need to expand America’s transportation infrastructure. . . .

Obama declared in Wilmington, Delaware that ‘it looks like it may be a terrible tragedy,’ but not before enthusiastically declaring that ‘it is wonderful to be back in Delaware.’

‘Before I begin, obviously the world is watching reports of a downed passenger jet near the Russia-Ukraine border. And it looks like it may be a terrible tragedy. Right now we’re working to determine whether there were American citizens on board. That is our first priority.’

‘And I’ve directed my national security team to stay in close contact with the Ukrainian governemnt. The United States will offer any assistance we can to help determine what happened and why. And as a country, our thoughts and prayers are with all the families and passengers, wherever they call home.
Obama then jarringly quickly returned to his prepared remarks.

‘I want to thank Jeremie for that introduction’ he said. ‘Give Jeremie a big round of applause.’

‘It is great to be in the state that gave us Joe Biden. We’ve got actually some better-looking Bidens with us here today. We’ve got Beau and his wife, Hallie, are here. Give them a big round of applause. We love them.’

No one says it although many must think it. Since it is apparently unsayable, it is also certain that no one will do a thing. Three more years, capped by his parting list of presidential pardons.

Say’s Law goes to the movies

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A while back I posted Say’s Law as Literature about a book of the name Waffle Street written by James Adams. The book is now being turned into a movie, and the story is now out in the open as they have now signed Danny Glover to play the lead role of Edward Collins. This is from the press release:

Legendary actor Danny Glover (Lethal Weapon 1-4, The Color Purple, Dreamgirls) has signed on to star in the upcoming feature film, Waffle Street. The drama-comedy tells the story of James Adams, a VP of a $30 billion hedge fund who lost his job in the recent market crash and wound up working as a waiter in a waffle shop. Amid the greasy madness of the 24-hour diner, Adams befriends ex-con grill master Edward Collins (played by Glover), who serves up hard lessons about finance, life, and grits.

Waffle Streets riches-to-rags tale is an adaptation of James Adams 2010 memoir of the same name (published by Sourced Media Books), which chronicles the financiers foray into the food industry. After being laid off at the hedge fund where he worked, and further jaded by his culpability in the crisis, Adams chose to work at a popular 24-hour diner where he claims most of his financial knowledge has been gleaned. Offering a fresh take on the fallout of corporate greed, Adams is a tale of the redemption and unlikely friendship found under the tutelage of Glover’s character Edward, the best short-order cook in town.

The story is a story of redemption for both the author, James Adams and for Edward Collins, who has found himself in productive work. How this relates to Say’s Law is through the “lessons about finance, life and grits” which includes experiencing the core understanding of economic life that the law of markets provides. This is from the review of the book by the President of the Mises Institute, Doug French:

But Adams does scrap with John Maynard Keynes in the pages of Waffle Street, lamenting, “How far we’ve fallen” in the area of economics education. Pointing out that Say’s Treatise was once the top economics textbook in America, he explains that now, “Instead of learning sound doctrine, today’s undergraduates are inundated with principles that will not bear the scrutiny of common sense and experience.”

I am still waiting to hear who will play Jimmy and then his wife. An amazing story. I’ve never been to a Hollywood premier before, but this is one I do not intend to miss. Meanwhile, you should read the book.

Beating up on the TTC

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Fancy this on Instapundit, an article on Streetcars in Toronto. Apparently, the National Post is running a series of horror stories collected from those who have ridden the red rocket. Rode one just the other day myself and found it as good as ever. Very helpful drivers too, who guided me into the subway at just the right stop. But not everyone has as pleasant a time as I did:

A geyser of unrest from streetcar riders erupted Tuesday after the National Post published a columnist’s account of his “horror show” streetcar commute. Readers from all over Ontario sent more than 50 emails and posted 500 comments online; our hashtag #streetcarnage trended Tuesday on Twitter. Travellers detailed their own streetcar nightmares and offered suggestions for improvement.

There must be a million rides a week and if the best you can get is 50 emails and 500 comments, it’s a beat up.

Stealing the election

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It has seemed pretty straightforward that Obama stole the election in 2012, with the IRS suppression of opposition funding at the very core. The various precincts in Pennsylvania that went something like 52000 to zero – Obama v Romney – is an impossibility. In this post April Sands, a woman working for the Federal Electoral Commission, who as it happens was also a former co-worker of Lois Lerner’s, was running partisan, pro-Obama, messages from her office during the election. But the truly grotesque aspect is what happened when they came to investigate:

The FEC has a far-reaching mandate into the operations of elections, which means that partisanship in that agency is particularly corrosive. The Hatch Act requires strict neutrality of all federal employees while on duty, and one would expect that to be particularly observed in the FEC. Instead, Sands tweeted partisan messages from her office in 2012; sent out fundraising pleas for Obama’s re-election campaign, called Republicans her “enemy,” and said they should shut up and “stand down.”

When the Inspector General came knocking, however, the evidence had vanished. The FEC “recycled” her hard drive, which meant that criminal charges could not be pursued. How exactly could this have happened? Sands was under suspicion of a crime under a statute which would be updated later that year, in a bill signed by Barack Obama himself. Shouldn’t the FEC have taken steps to secure evidence rather than destroy it?

There is not, of course, any doubt at all that the hard drive would reveal massive illegality, just as would the also now lost hard drives of Lois Lerner.

And then there’s this from the UK, which means that they do the same in the US, which discusses a toolkit of software programs used to manipulate online traffic, infiltrate users’ computers and spread select messages across social media sites including Facebook and YouTube:

A number of interesting tools and their short descriptions are below:

ASTRAL PROJECTION: Remote GSM secure covert Internet proxy using TOR hidden service
POISON ARROW: Safe malware download capability
AIRWOLF: YouTube profile, comment and video collection
BIRDSTRIKE: Twitter monitoring and profile collection
GLASSBACK: Technique of getting a target’s IP address by pretending to be a spammer and ringing them. Target does not need to answer.
MINIATURE HERO: Active skype capability. Provision of realtime call records (SkypeOut and SkypetoSkype) and bidirectional instant messaging. Also contact lists.
PHOTON TORPEDO: A technique to actively grab the IP address of MSN messenger user
SPRING-BISHOP: Finding private photos of targets on Facebook
BOMB BAY: The capacity to increase website hits, rankings
BURLESQUE: The capacity to send spoofed SMS messages
GESTATOR: Amplification of a given message, normally video, on popular multimedia websites (YouTube)
SCRAPHEAP CHALLENGE: Perfect spoofing of emails from Blackberry targets
SUNBLOCK: Ability to deny functionality to send/receive email or view material online
SWAMP DONKEY: A tool that will silently locate all predefined types of file and encrypt them on a targets machine
UNDERPASS: Change outcome of online polls (previously known as NUBILO).
WARPATH: Mass delivery of SMS messages to support an Information Operations campaign.
HUSK: Secure one-on-one web based dead-drop messaging platform.

The US is near enough a one-party state in which it is almost impossible to imagine how, short of a catastrophe of some kind, a Republican president could again be elected any time soon.

The manifest ignorance of Joe Stiglitz

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I have just caught up with the article written by Joe Stiglitz on the Australian economy, American Delusions Down Under. I have had serious doubts whether he understands his own economy given his Keynesian orientation, but that he has no idea about Australia is manifest.

What matters more for long-term growth are investments in the future – including crucial public investments in education, technology, and infrastructure. Such investments ensure that all citizens, no matter how poor their parents, can live up to their potential. . . .

To be sure, given its abundance of natural resources, Australia should have far greater equality than it does. After all, a country’s natural resources should belong to all of its people, and the “rents” that they generate provide a source of revenue that could be used to reduce inequality. And taxing natural-resource rents at high rates does not cause the adverse consequences that follow from taxing savings or work (reserves of iron ore and natural gas cannot move to another country to avoid taxation). But Australia’s Gini coefficient, a standard measure of inequality, is one-third higher than that of Norway, a resource-rich country that has done a particularly good job of managing its wealth for the benefit of all citizens.

Well I see fit to comment on the American economy although I live here, so he is welcome to comment on ours even though he is out of his depth on everything he says. But it is a wonder that he doesn’t stop to think about his own empty rhetoric when we find in between the above two paras these two paras:

There is something deeply ironic about Abbott’s reverence for the American model in defending many of his government’s proposed “reforms.” After all, America’s economic model has not been working for most Americans. Median income in the US is lower today than it was a quarter-century ago – not because productivity has been stagnating, but because wages have.

The Australian model has performed far better. Indeed, Australia is one of the few commodity-based economies that has not suffered from the natural-resource curse. Prosperity has been relatively widely shared. Median household income has grown at an average annual rate above 3% in the last decades – almost twice the OECD average.

Most of that growth he discusses was under a Coalition government that made it a matter of policy to balance the budget and contain its spending. That is the Australian model from which the US, and Joe Stiglitz, might learn something he is apparently clueless about.

“There is something strange about fighting debt by incentivizing more debt”

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We have had no recovery from 2008-09. Instead of recovery which a business cycle should bring following a downturn, we are on a precipice of even worse. This is from an interview with the head of the Bank for International Settlements:

The world economy is just as vulnerable to a financial crisis as it was in 2007, with the added danger that debt ratios are now far higher and emerging markets have been drawn into the fire as well, the Bank for International Settlements has warned.

Jaime Caruana, head of the Swiss-based financial watchdog, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield.

“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,” he told The Telegraph.

Mr Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis.

Nothing like the path to recovery that has been pursued over the past five years. Everything not only unimproved but a massive potential fall now before us. And might I say, with this economic disaster there has been not a thing apparently learned from the policy errors made in 2009. What would be done if another recession comes to pass? This is the world now unlike how it was then.

Credit spreads have fallen to to wafer-thin levels. Companies are borrowing heavily to buy back their own shares. The BIS said 40pc of syndicated loans are to sub-investment grade borrowers, a higher ratio than in 2007, with ever fewer protection covenants for creditors.

The disturbing twist in this cycle is that China, Brazil, Turkey and other emerging economies have succumbed to private credit booms of their own, partly as a spill-over from quantitative easing in the West.

Private credit booms, as in a flood of credit with no real return.

Climate change once again in the news

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You don’t often find anything about Australia the headline item on Drudge, but so it is today:

Oz city hits coldest temperature in 103 years

And below the fold there was this as well:

JULY FREAK: CHICAGO BRACES FOR RECORD LOW TEMPS…

Coldest Antarctic June Ever Recorded…

If the planet is cooling and not heating, and who’s to say it’s not, the consequences will be truly catastrophic.