Yearly Archives: 2014

Statistically speaking, Keynesian economics is in steep descent

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gross output

It’s the subtitle that matters, Gross output will correct the fallacy fostered by GDP that consumer spending drives the economy. The actual title is “At Last, a Better Economic Measure”, it’s from The Wall Street Journal and written by Mark Skousen who has been agitating the statistical agencies in the US for around twenty years to provide just such a measure. And so now they have.

Starting April 25, the Bureau of Economic Analysis will release a new way to measure the economy each quarter. It’s called gross output, and it’s the first significant macroeconomic tool to come into regular use since gross domestic product was developed in the 1940s.

GDP is a formless mess of a statistic that was devised in the 1940s as a measure that went along with the Keynesian notion that higher spending would lead to higher employment. By embedding consumer and government spending into GDP, its put a poisoned apple into the middle of this stat so that now a shift in GDP driven by higher public spending is as misleading an indicator as it is possible to have. GDP does not measure value added although it’s supposed to and therefore does not provide much of an indication about the growth in employment-generating production. So now there is to be a new measure, Gross Output, an economic indicator that will actually provide an indication of what we are interested in knowing. As Skousen writes:

In many ways, gross output is a supply-side statistic, a measure of the production side of the economy. GDP, on the other hand, measures the “use” economy, the value of all “final” or finished goods and services used by consumers, business and government. It reached $17 trillion last year.

The measure of the economy’s gross output has been around since the 1930s. It was developed by the economist Wassily Leontieff, but he focused on individual industries, not the aggregate data as a measure of total economic activity. Gross output has largely been ignored by the media and Wall Street because the government issued the number annually, and it was two or three years out of date. That should change now that it will be released along with GDP every quarter. Analysts and the media will be able to compare the two.

Why pay attention to gross output? For starters, research I published in 1990 shows it does a better job of measuring total economic activity. GDP is a useful measure of a country’s standard of living and economic growth. But its focus on final output omits intermediate production and as a result creates much mischief in our understanding of how the economy works.

In particular, it has led to the misguided Keynesian notion that consumer and government spending drive the economy rather than saving, business investment, technology and entrepreneurship..

Misguided isn’t saying the half of it. For the first time we will have a quarterly stat that focuses on the production side of the economy and ignores the Keynesian idiocies of saying that consumer demand and government spending actually drive an economy forward. Outside the textbooks, Keynesian economics is becoming deader by the day.

My 1000th post

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Started on September 23, 2012 and today number 1000. Mostly unread with a few who seem to come regularly but still for my own indulgence. I had the largest number of hits ever on this site through a casual reference from Mark Steyn and the traffic went to five times the previous high and then over the course of the week fell back to normal. It reminded me that even if that were the number of people who came here regularly, it would still be mostly a private blog of no interest to anyone. Mostly for fun and while I do blow through an enormous number of hours doing this, it is still a labour of love. Most people who show up on this site have googled something and been referred to some earlier post of mine that I had forgotten all about so reading those again after a period of months, and now even sometimes from more than a year ago is quite pleasant and interesting. Anyway, hi Joshi. Still reading?

The youtube video above, by the way, I have taken from a blogging colleague who used it to commemorate his 2000th post. I hope he won’t mind. But for something more my style and reflecting my own personal history as well we have Peggy Seeger and Pete Seeger in concert.

When is a scandal not a scandal?

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When it involves Democrats stealing an election in plain view of everyone.

I’ve just stumbled across this by accident since it does not seem to have been given much play anywhere. That no one even breathes the virtual certainty that the 2012 presidential election was stolen seems to be part of the silence that has descended on the process by which the election was conducted. Dollars means votes, especially in the US system. By denying tax-free status for Republicans of the Tea Party variety when Democrat organisations just sail through the process, the IRS prevented an immense amount of money from flowing into the Republican campaign. We now have documents showing that Lois Lerner, the head of the IRS, not only wanted to stop these groups from forming, she wanted them prosecuted by the Justice Department:

Judicial Watch has been chipping away at the IRS stonewall with Freedom of Information Act requests, and just released some new emails that show Tax Exempt Organizations director Lois Lerner was talking to the Justice Department about criminal prosecutions for the groups targeted by her organization. She was also trying to get the Federal Elections Commission – where she used to work, under similar suspicions of politicized abuse of her authority – involved in the witch hunt. Judicial Watch previously discovered that the IRS handed tax returns for conservative groups over to the FEC, an action of both questionable utility and dubious legality.

These are the reactions from House Oversight chair Darrell Issa (R-CA) and Subcommittee on Economic Growth, Job Creation, and Regulator Affairs chair Jim Jordan (R-OH). I wish I could sense the outrage but perhaps they are just weary of battling the sea of indifference and media hostility. But this is what they said:

“The release of new documents underscores the political nature of IRS Tea Party targeting and the extent to which supposed apolitical officials took direction from elected Democrats,” said Chairman Issa. “These e-mails are part of an overwhelming body of evidence that political pressure from prominent Democrats led to the targeting of Americans for their political beliefs.”

“Now I see why the IRS is scared to give up the rest of Lois Lerner’s emails,” said Chairman Jordan. “Not only do these e-mails further prove the coordination among the IRS, the Federal Election Commission (FEC), the Justice Department and committee Democrats to target conservatives, they also show that had our committee not requested the Inspector General’s investigation when we did, Eric Holder’s politicized Justice Department would likely have been leveling trumped up criminal charges against Tea Party groups to intimidate them from exercising their Constitutional rights.”

The US is heading to the slagheap and this is a large part of the reason why.

Army-McCarthy hearings began sixty years ago today

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This largely anti-Joe McCarthy article by Jesse Walker points out that the Army-McCarthy hearings began exactly sixty years ago today. He has put his story under the title, Four Great Myths of the McCarthy Era so let us get into the two most important myths raised. First there’s this:

The great radical myth of the Red Scare is that it was nothing but a scare—that the Americans accused of being Russian agents were virtually all innocent. (It’s hard to maintain that position now that the Venona files have been released and some of the left’s biggest causes célèbres have come crumbling down—at this point even Julius Rosenberg’s children have acknowledged that he was a spy—but some folks still hold onto the dream.)

So with Venona there is no longer any denying that McCarthy was onto something. But these guys never give up. Here is the modern version of the attacks on McCarthy in the voice of a “libertarian” who apparently thinks defending ourselves by identifying communists in positions of influence is somehow against the rules:

The great conservative myth of the period, meanwhile, is that the espionage justified the witch-hunts. People like Ann Coulter and M. Stanton Evans have taken to declaring that McCarthy was right without acknowledging that the bulk of his accusations were false.

So let me look at the evidence that Stanton-Evans and Ann Coulter were wrong and that the bulk of McCarthy’s accusations “were false”. I have divided the core passage from this article cited as evidence by Walker (but which is not itself Walker’s article) into two parts, firstly focusing on the accusation that McCarthy’s approach was over the top and harmful to the anti-Communist cause, and then into a second part where it is conceded McCarthy wasn’t entirely wrong. Note that in the original article the two halves were mixed together but I have here separated the two distinct threads out. Here’s the attack on McCarthy and those who continue to defend him.

McCarthy’s scattershot approach to the facts greatly damaged the cause of anti-communism and greatly emboldened, even legitimized, communism’s apologists. It also raised serious civil liberties questions: Should you lose a government job merely for your political opinions? How far left could you drift and remain employed [in the State Department!]? . . .

But what of those specifically accused by McCarthy of being either security risks or agents of the Kremlin? Here Evans is on shakier ground. . . .

Take his treatment of one of the better-known McCarthy cases. In 1950, the senator denounced the China scholar Owen Lattimore as Russia’s “top spy” in the State Department, an influential “China hand” who deliberately “lost” that country to Mao’s communists by seeking to undermine Washington’s support for Nationalist leader Chiang Kai-shek. McCarthy’s initial accusations, such as his risible claim that Lattimore acted as Alger Hiss’ “boss,” were demonstrably false, something McCarthy himself quickly realized, beating a hasty retreat from his wilder charges. It was a damaging concession, red meat to the growing ranks of McCarthy haters, but one which receives just a single sentence in Evans’ narrative.

Nobody was going to get it 100% right and the ability to backtrack when the evidence could not be fully supported is reasonable since the pressure from every direction was on McCarthy and the evidence was very hard to come by. So from that same passage, I now extract the bits that are a concession to McCarthy’s accuracy. These points were originally interwoven within the passages just quoted:

McCarthy was broadly correct; most of those accused were members of the Communist Party. But what does this add up to? Was the assemblage of New Deal liberals, fellow travelers, and communist agents that McCarthy tossed together “the product of a great conspiracy,” as he famously bellowed on the Senate floor, “a conspiracy on a scale so immense as to dwarf any previous such venture in the history of man”? . . .

Evans’ recapitulation of events begins plausibly enough, with an outline of what readers probably already know: The Soviet Union operated a sophisticated network of agents in the United States, many of whom—including Hiss, Julius Rosenberg, Justice Department employee Judith Coplon, and White House economist Lauchlin Currie—passed secrets to Moscow.

Evans does demonstrate that Lattimore was an “indefatigable shill for Moscow.” There is little new here, though it is still a much needed corrective to the widely held view, successfully advanced by Lattimore himself, that he was in fact a generic New Deal liberal and an anti-communist. McCarthy grilled Lattimore on his previous writings, such as his view that Soviet forced collectivization “represent[ed] a kind of ownership more valuable to them than the old private ownership under which they were unable to own or even hire machines.”

Such touching gullibility even after all these years. With the left media, driven and supported by the communist underground, blowing a trumpet in his ear at every turn, it is a wonder that McCarthy got so much of it right. It matters not whether Marshall was personally a member of the communist party if everything he did was favourable to Soviet interests and harmed the interests of the West. So he wasn’t a paid agent, merely acted like one. Better to have a fool like Marshall in place than an actual agent if you can get him to do exactly what you want. The question “who lost China?” is far from an empty one, and McCarthy’s answers even today seem more plausible than any I have come across from any other source.

The shrinking US middle class

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Here’s a story from The New York Times via Instapundit that should surprise no one if they’ve been paying attention, The American Middle Class Is No Longer the World’s Richest. Because it is The New York Times, it is unable to understand the problem, since it puts it down to rising income inequality as the cause, but then there is hardly any major social issue it is willing any longer to discuss honestly, assuming the kinds of people who write for The New York Times any longer even have a clue what causes what. They do, however, take note of this, in a country with the largest expenditure on education per student in the world:

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

But it’s not just the middle class who are being nailed:

The poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

But as pointed out here, the plundering of the middle class from both below and above is now standard in the US. This is not from The New York Times:

Much of America’s moneyed elite has already shifted its allegiance to the Left, especially in cities. Wealthy, educated urbanites hold generally liberal social values and can afford the higher taxes “blue” cities like Chicago impose—especially when those taxes help pay for the upscale amenities they desire. Even when the mayoral administration is less friendly, the urban elite tends to get its needs met. At the same time, the urban poor have remained loyal to the Democrats, no matter how little tangible improvement liberal policies make in their lives. And the various unions, community organizers, and activist groups that advocate for the poor profit handsomely from the moneys directed toward liberal antipoverty programs.

The US is a nation living on its capital and not its income. It will not end well.

National statistical falsification and fraud are rampant in the US

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The level of corruption in the US seems to know few bounds. Robbing the law abiding and productive to buy the votes of the improvident and shameless in a system where everyone abides by the election result irrespective of how many votes are stolen along the way makes it dead easy for the Democrats to control the process. Not perfect, but good enough to get the job done. It is no longer even imaginable that the Republicans will win a presidential election anytime in the conceivable future. Even with the American economy in swift descent into an Argentinian future if not the full Venezuelan, there is virtually no chance the next president will be from the supposedly right side of politics.

But in case the demographic shifts, multiple voting and ballot-box rigging aren’t quite enough, there is now this.

Others who work at Census in different areas of the country are stepping forward to tell me similar stories about data being changed at the whim of supervisors who are more concerned about making quotas than protecting the integrity of information that is used for everything from cost-of-living adjustments for Social Security recipients, monetary policy decisions by the Federal Reserve and business plans by companies in the US.

“I can tell you that waste, falsification and fraud are rampant,” says one of my new sources, who works as a Census supervisor in the Midwest and handles a number of surveys, including those on jobs, health and crime.

When this source complained, higher-ups “told me to shut my mouth.” When that didn’t happen, the source was deprived of work.

If they can get away with the IRS they can get away with anything. This is small-time stuff relative to the rest. As a country, however, the US is done for.

Mark Steyn discussing Brendan O’Neill interviewing George Brandis

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A bit convoluted, but here goes. Mark Steyn has an article, Medieval Moralists, in which he quotes from an interview with George Brandis conducted by Brendan O’Neill which may be found in a posting with the heading, Free Speech Now. This is the passage Steyn has taken from that Brandis interview with O’Neill:

Brandis says he’s been a fan of free speech for ages. He reminds me that in his maiden speech to the Senate, given 14 years ago when he was first elected as senator for Queensland, he let everyone know that ‘one of my most fundamental objectives would be to protect freedom of thought and expression’. He tells me he has long been agitated by ‘the cultural tyranny of political correctness’. But there were two recent, specific things that made him realise just what a mortal threat freedom of speech faces in the modern era and that he would have to dust down his Mill, reread his Voltaire, and up the ante in his war of words against, as he puts it, the transformation of the state into ‘the arbiter of what might be thought’. The first thing was the climate-change debate; and the second is what is known down here as The Andrew Bolt Case.

He describes the climate-change debate – or non-debate, or anti-debate, to be really pedantic but also accurate – as one of the ‘great catalysing moments’ in his views about the importance of free speech. He isn’t a climate-change denier; he says he was ‘on the side of those who believed in anthropogenic global warming and who believed something ought to be done about it’. But he has nonetheless found himself ‘really shocked by the sheer authoritarianism of those who would have excluded from the debate the point of view of people who were climate-change deniers’. He describes as ‘deplorable’ the way climate change has become a gospel truth that you deny or mock at your peril, ‘where one side [has] the orthodoxy on its side and delegitimises the views of those who disagree, rather than engaging with them intellectually and showing them why they are wrong’.

He describes how Penny Wong, the Labor Party senator for South Australia and minister for climate change in the Julia Gillard government, would ‘stand up in the Senate and say “The science is settled”. In other words, “I am not even going to engage in a debate with you”. It was ignorant, it was medieval, the approach of these true believers in climate change…’

The great irony to this new ‘habit of mind’, he says, is that the eco-correct think of themselves as enlightened and their critics as ‘throwbacks’, when actually ‘they themselves are the throwbacks, because they adopt this almost theological view, this cosmology that eliminates from consideration the possibility of an alternative opinion’. The moral straitjacketing of anyone who raises a critical peep about eco-orthodoxies is part of a growing ‘new secular public morality’, he says, ‘which seeks to impose its views on others, even at the cost of political censorship’.

And as for free speech being free, if you go to the article you can find a bit of first-person experience shared by Steyn in replying to some Canadian nong, Adam Stirling, who finds it a bit tedious to hear Steyn go on about free speech:

The only reason Master Stirling can read me in a Canadian national newspaper is because Maclean’s and I fought a long, hard public battle and won it! And we’ve got seven-figure legal bills to prove it! How funny is that?

And therein lies a tale, which Steyn’s article also discusses.

UPDATE: Here is Mark Steyn again discussing The slow death of free speech. It all needs to be read but here is a bit from the middle:

I’m opposed to the notion of official ideology — not just fascism, Communism and Baathism, but the fluffier ones, too, like ‘multiculturalism’ and ‘climate change’ and ‘marriage equality’. Because the more topics you rule out of discussion — immigration, Islam, ‘gender fluidity’ — the more you delegitimise the political system. As your cynical political consultant sees it, a commitment to abolish Section 18C is more trouble than it’s worth: you’ll just spends weeks getting damned as cobwebbed racists seeking to impose a bigots’ charter when you could be moving the meter with swing voters by announcing a federal programmne of transgendered bathroom construction. But, beyond the shrunken horizons of spinmeisters, the inability to roll back something like 18C says something profound about where we’re headed: a world where real, primal, universal rights — like freedom of expression — come a distant second to the new tribalism of identity-group rights.

“A lot of these guys are basically shysters and crooks”

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James Delingpole has a new book out, The Little Green Book of Eco-Fascism: The Left’s Plan to Frighten Your Kids, Drive Up Energy Costs, and Hike Your Taxes!. He is being interviewed here by Ed Driscoll.

“I’m not a scientist and actually given what I’ve seen of scientists in my experiences following the global warming scam, I’m glad I’m not a scientist because a lot of these guys are basically shysters and crooks. They’re not some kind of white-coated elite with a special hotline to the truth. In fact, they’re just ordinary guys and girls trying to earn a living like the rest of us but slightly more dodgily than the rest of us in the one or two egregious cases.”

The left seems to have a system for achieving power by finding some element in every issue that is a giant step too far and then harping on it. No one is uninterested in “the environment” and everyone wants to preserve the planet whatever that might mean. But global warming is so inane and so lacking in evidence that it separates those who have common sense from some kind of herd of conformity. But it also absorbs almost all of the attention so that people who are not interested in seeing the Great Barrier Reef, let us say, ruined if it is in danger from some commercial proposal are still seen as outsiders to these crusaders for a green environment. Their extremism is the problem and their leaders are to an incredible extent in it for the money and political power it gives.

The solitary life meets longevity

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This is such a depressing story, Hooray for sexual liberation! Now I can die lonely and poor. The central point:

I am a feminist, I really am (I’ve never let a man pay for anything), but feel the current generation of women in their 60s, the first to abandon the way of life of their mothers, which meant they pursued careers, married and had children late, had affairs then got divorced, all in the name of liberation, are now imprisoned in debt, alcohol abuse and loneliness, wishing they could die, and do it soon.

Long life only works if you are in the middle of a village-like family atmosphere. Old age has only terrors for those who must do it on their own.

[From FiveFeetofFury]

100-year collection of 85,000 historic films now on youtube

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This is quite extraordinary if you are the sort of person for whom history is of interest. The above video of the Rolling Stones arriving in Sydney in 1965 is one example out of 85,000 news reels that are now on Youtube. This is the full story found in Variety under the heading, British Pathé Uploads Entire 85,000-Film Archive to YouTube in HD:

British Pathé, the U.K. newsreel archive company, has uploaded its entire 100-year collection of 85,000 historic films in high resolution to YouTube.

The collection, which spans 1896 to 1976, comprises some 3,500 hours of historical footage of major events, notable figures, fashion, travel, sports and culture. It includes extensive film from both World War I and World War II.

“Our hope is that everyone, everywhere who has a computer will see these films and enjoy them,” British Pathé GM Alastair White said in a statement. “This archive is a treasure trove unrivaled in historical and cultural significance that should never be forgotten. Uploading the films to YouTube seemed like the best way to make sure of that.”

Personalities captured in the newsreels include Princess Diana, Arnold Schwarzenegger, Elizabeth Taylor, Marilyn Monroe, Fidel Castro, John Lennon, Salvador Dali, Mother Teresa, Muhammad Ali and Charlie Chaplin. British Pathé already makes numerous clips available on its website free for personal use, and it licenses the archive to TV and film producers and other companies and organizations.

This is the link to the entire collection.