Monthly Archives: July 2015

Marco Rubio as it happened

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At Freedomfest – Marco Rubio: “America’s Dream: Restoring Economic Opportunity for Everyone”. This was written down as he spoke this evening.

There he is, right there, on stage. He’s just like his pictures, young and apple cheeked. He is telling his life story. The American dream is about happiness and fulfilment as you define it. And why is it possible? Because the US is founded on spiritual principles, where the rights come from the creator. The only power we give to the government is the power to protect those rights.

I love the system of free enterprise, he says. It is the only governing principle that allows success. I can become better off without someone else becoming worse off. His dad used to say that he had a job because someone else took the risk to open the business to employ him.

Two major changes. First, economy is becoming global. Now even America cannot get away with higher taxes and increased regs. Must work at being competitive whereas in the past no one was in their zone.

Second is improved technology. Ten years ago if I told you I was going “to google” you you would have been offended. Tech changes coming at a rapid rate.

We must become more competitive. Must fix the tax code. Tax reform is critical to become more globally competitive. We must also reduce regulations. Regs are used by established firms to prevent new firms from taking their place. He got rid of the taxi opposition in Florida to Uber! Regulatory reform is critical if we are going to be competitive.

Big on privatisation.

Need more skills. Four year degrees is the way to education at the moment. Higher ed is controlled by a cartel. Only unis can give degrees and the universities have created this monopoly for themselves. And loans are so expensive. We don’t teach welding and plumbing. We don’t teach people to do that any more.

We have single mothers working for $11 an hour who cannot educate their way up. MOOC should be coming. We need to open higher ed to competition. If you know something, you should get credit for it and then education will fill the gaps. What matters is what you know and not where you learned it.

There are things about other countries we might admire but America is the greatest. The 21st century is made for America. Big government is a disastrous idea for the 21st century. It is free enterprise that is the future. The world is going in our direction, so why would we go in theirs.

America owes me nothing. I owe America everything. My dad had to work for a living. He made sure that the life he could not have would be available to his son. That is the American dream. Whether we remain a special country will depend on whether the journey from poverty to wealth can be opened to more.

We can leave our children as the richest country that has ever been but the work is in front of us.

God Bless America!

Dinesh d’Souza v Christopher Hitchens – On Atheism

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A live blog. Hitchens is, of course, dead but d’Souza is very much not.

The Bible is not a book of arguments, but of claims. Hitchens employs the Oxford style of sarcastic debate to use reason to trump revelation. Yet both are together the founding stones of Western civilisation. Athens and Jerusalem is where we are based.

Athens – hated trade and business. Loved blood and spectacle. A very alien society from us. We could not bring this back.

Much better to have a real debate entirely on reason alone as Hitchens would want. Which way would a reasoned debate go? Will look at the issue at life after death. Take the typical arguments to show how unreasonable such ideas are.

Virtually all cultures have had this belief and aspiration. If the belief is irrational why do all cultures have it? Where does such a belief come from? Hitchens argued that it was from wish fulfilment. Our wishful thinking drives this belief.

So let’s test it. But after death, there is not just heaven but also hell. There is no wish fulfilment in that? Why come up with something that is worse than life? Hitchens then conceded, after the debate, to say that there was more to it.

What is the evidence for no life after death? What is the basis for asserting there is nothing on the other side? In fact, neither of us know. The difference between them is that a “believer” (which is not a “knower”). The real difference is that a believer is based on faith, but a non-believer is that he thinks the other view is based on reason.

The scepticism of belief must be posed against the reality of the need for action. But for some things, there must be a leap of faith. Must decide in the present. Even though life after death is unknowable, you have to decide. Nothing we know about the nature of existence rules out life after death.

There seems to be some settling of cosmic accounts. Morality is that strange being inside us that makes claims on us. The voice of right and wrong is a part of us. Morality is not some etherial thing, but is within us. Yet nevertheless seems to be a force. Self interest is the opposite of morality. Where does morality come from? Is it protecting genes or reciprocity? Not really – might explain about a third. There is a tribunal called conscience.

One last thought: it seems that both the believer and the non-believer are on a common quest. Hopeful that this is a dialogue that can be engaged with in a cordial manner.

Q: What must an atheist believe?

A: Intelligent design argument occurs where the evidence is weakest. Evolution is not an argument. The watchmaker evidence is even stronger today than in the time of Paley. The universe has to be as old and as big as it is and to have the properties it has for us to have this conversation. Seems to suggest design. Others have to explain such exact precision and their own answer is the multiverse. So ask for the evidence and there is none at all. To get rid of one invisible God you must postulate an infinity of universes.

Q: Atheism is also a faith-based religion.

A: Don’t agree. Religion requires a belief in the supernatural. An atheist goes beyond the evidence. When it comes to law, why can we have a statue of Voltaire but not of Moses, when all we are debating the evidence of history on religion.

Paul Krugman vs Steve Moore

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Live from Freedomfest in Las Vegas, a debate between Paul Krugman and Steve Moore. The official title is, “How can we restore the American Dream?” which, no doubt, will enter into the issue of economic management and Keynesian theory. We shall see. This is a live blog.

First question, why are we struggling?

K: Worst financial crisis – cut public spending too soon. Lots of wealth created but not much trickling down. Income inequality is a problem.

M: Agrees with K over the level of intervention. Bailouts were a mistake. Stimulus did not create jobs. Obamacare a mistake. Lots of problems. We had a Keynesian experiment that did not work. Reagan v Obama; Reagan turned out well. Obama thought the govt was the solution.

K: Problem for Reagan was inflation. Obama problem was a slowdown in activity. Different problem. If that’s your best answer, you have no answer. Stimulus v austerity you can see a strong positive correlation between spending and growth. The Obama stimulus was not huge; about 2% of GDP at its max. Wasn’t enough. Needed more as often stated.

M: Economists on the left used the Keynesian playbook, and it happened and it did not make a dent in our unemployment. Would more have been better. No one believes that. Reagan was also dealing with a recession. Tax cuts led to a recovery. Obama policies did not work according even to their own estimates.

K: Obama’s predictions was not my prediction. Aftermath of financial crisis is always slow. There is only a few times we need govt intervention. The Reagan policy was one when you did not need one. In 2008-09 we did.

Q: Is the private sector being stifled by excessive regulation?

K: Obamacare is a hybrid. Working quite well. Would like to have a single-payer system. Private companies are the conduit. Bad process. Has turned out to be cheaper than expected. Not blowing a hole in the budget. Repealing Obamacare would lead to a blow out in the budget.

M: Education and healthcare are govt dominated and that is where the costs have risen the most. Third party payments drive up costs. Premiums are blowing out. What about the tax on medical devices?

K: Healthcare costs rise because of innovation. Therefore costs go up. Everywhere else has lower costs where there are national health care. Govt intervention is more efficient than private. Third party payments are a problem.

M: Competition missing.

K: No one goes comparison shopping after a heart attack.

Q: Labour participation rate is low – minimum wage laws. Should they go up?

K: A place I have changed my views. Raising the minimum wage a lot will cost jobs. However, cannot find evidence that higher minimum wages cost jobs. Happy with $15 per hour and if no impact then up to $20.

M: Mostly about kids who are being locked out. Sinister trend. How bout a teenage minimum wage?

K: No evidence that I can see. Re teenagers – I’m willing to think about it but I am against over-complexity of the legislation.

Q: Red State v Blue State job creation.

M: Red State have more free market policies and more employment growth. Lower taxes in red states. Less regulation.

K: Red State employment growth better than in Blue State. What determines who grows faster? Warm winters! Air conditioning is changing employment patterns. The one policy that makes the difference is land use policy. Restrictive land use policies raise housing costs. The factors that matter are:

. weather
. land use policy

Regulation doesn’t matter as much.

M: What about the policies?

K: People like to live where they can buy houses.

M: What about Greece?

K: Advocate of a strong social safety net. Not a big government guy. Govts do a terrible job with the steel industry or the post office.

Q: Favourite economist: Smith, Keynes or Marx?

K: No brief for Marx. Favourite economists Smith AND Keynes. Must sometimes protect the public interest through regulation. With Keynes understand why economies go off.

M: JEL article on The Age of Milton Friedman. My problem is that we live in the Age of Keynes. When have they ever worked?

Q: Welfare Reform Act. Should we attempt to lower welfare.

K: Dispute the premiss. No upward trend in welfare dependancy until the GFC. Then the worst slump and the safety net programs. Alleviated some of the worst suffering. We are not creating a welfare class. You may want to believe it but it’s not true.

M: Post 1996 Welfare Reform Act number of people on welfare fell.

K: Not hardline against welfare reform. Now we have no system for providing income. I think of this as fairly trivial. Food stamps and Medicaid both work and don’t see much need of change.

Q: What three policies would you advocate to restore the American dream? How about privatisation of social security and education.

K: 1) Land use restrictions need to be reduced. Cheaper housing needed.
2) Program to promote equality. Born into a lower class family will reduce future income.
3) Empowering workers, with minimum wage at the start. Increase the bargaining power of unions.

M: Need to help the middle class. And unions contaminate everything they touch.
1) Voucher to every child in the country to promote advantage.
2) Ownership of their own companies.
3) 16-17% flat tax rate.

End discussion. Questions from the floor.

Q: Why health care costs going up and benefits going down?

K: Obamacare has been a lifesaver for certain people. Some people are paying more, but overwhelmingly the effect has been positive.

M: Republicans will change the system. Need more choice.

Q: Debt and deficits

K: Debt levels and growth high correlation, but what is the causation? Debt levels should not be a preoccupation. High debt without one’s own currency is a problem. We are many many percentage points away from a maximum load and it is falling.

M: Depends on what you buy with the debt. Should use debt to finance lower taxes. Low interest rates is what is keeping the country going.

K: The private sector was deleveridging. The lack of spending is why we have a recession. If everyone is cutting back to retain income where will the demand come from? The deficits saved the world from a great depression. Compared with what happens in your ordinary financial crisis, the GFC was not bad.

M: Obama recovery was the worst post-war recovery.

Pig Iron Mal

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Picked up at Andrew Bolt that Malcolm Turnbull wishes to line up on the New York Times side of every issue, in this case possibly the single most important foreign policy issue of our generation. On the ABC naturally, Communications Minister Malcolm Turnbull says Islamic State threat should not be inflated. OK, but it all depends on what you mean by inflated. Here is Malcolm showing off his lack of political imagination:

Daesh is not Hitler’s Germany, Tojo’s Japan or Stalin’s Russia.

Really? What year we talking about, Malcolm? How about 1933? Same kind of stupid remark could have been made about all three at the time. Why don’t we leave it alone to fester a bit. Remember 911? That was the date. The year was 2001, fourteen years ago. Leave this one alone and where will we be fourteen years from now? Like Pig Iron Bob, we now have pig ignorant Mal.

Bern vs the Donald 2016

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An underestimate but still closer to reality: Bernie Sanders Says ‘Real’ Unemployment Rate Is Actually 10.5 Percent, DOUBLE The Official Rate [VIDEO].

Meanwhile, over on the other side, Trump: ‘Infectious disease is pouring across the border’.

Still waiting to hear what they think of the nuclear deal with Iran, but both have been able to overcome the media blockade and have brought genuine issues into the national conversation.

And perhaps funniest of all, the NYT thinks that being opposed by the Castros is political poison in the US. As the article points out, it can only do him good except for those who vote for Hillary or Bern or work at the New York Times and Washington Post.

Keynesian policy in the United States

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july 4 washington

In Washington, and went to the Mall last night for the fireworks. The best fireworks display I have ever seen, the sky was at the end entirely covered with colour and sound. They were even able to send up in the middle of it a set of rockets that, when they burst, spelled out “USA”. But the very few chants of “USA” also died away as quickly as the fireworks. There’s too much reality around at the moment.

As to reality, there is, of course, this:

Even after another month of strong hiring in June and a sinking unemployment rate, the U.S. job market just isn’t what it used to be.

Pay is sluggish. Many part-timers can’t find full-time work. And a diminished share of Americans either have a job or are looking for one.

The rest of the article is fumbling idiocy as the journalist tries to explain away the actual reality of the American labour market. You need to contrast this great Keynesian disaster with the last time a classical policy was applied in the US.

Beginning in January 1920, something much worse than a recession blighted the world. The U.S. suffered the steepest plunge in wholesale prices in its history (not even eclipsed by the Great Depression), as well as a 31.6% drop in industrial production and a 46.6% fall in the Dow Jones Industrial Average. Unemployment spiked, and corporate profits plunged.

What to do? “Nothing” was the substantive response of the successive administrations of Woodrow Wilson and Warren G. Harding. Well, not quite nothing. Rather, they did what few 21st-century policy makers would have dared: They balanced the federal budget and—via the still wet-behind-the-ears Federal Reserve—raised interest rates rather than lowering them. Curiously, the depression ran its course. Eighteen months elapsed from business-cycle peak to business-cycle trough—following which the 1920s roared.

At the end of my Say’s Law presentation to the Keynesian symposium I attended at Dartmouth I was asked to explain why a classical policy works, which it does. And the fact is, the presuppositions are so different that it is almost impossible to latch onto the differences. If these things interest you – and I am all too aware how few actually, really are – go to my lead article at the Liberty Fund and carefully read the section that deals with the diagram I have there. There you will find macroeconomics before Keynes summarised in less than 1000 words. This is the theory that sat under the policies of the early 1920s. Hoover, and then Roosevelt in spades, a decade later would introduce “Keynesian” policies, the first of many such failures in a policy that has never had a success.

To identify with the left ought to be a mark of great shame

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I will merely link to this story, but won’t quote from it since it is so disheartening. The title tells you what it’s about and you can read it for yourself: ISIS’S SEX SLAVES COMMIT SUICIDE: WESTERN FEMINISTS SILENT.

They of the progressive label, the members of the left, think of themselves as the best the world has produced and they are amongst the worst. The civilisation that grew out of the Judeo-Christian tradition is now dying, inherited by an anti-Christian horde who do not deserve the great good fortune they live in but are bringing to ruin.

The lost republic

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Linked from Roger Simon who writes re Obama:

He is the man who assures us he successfully reformed our healthcare and saved our economy despite adding about eight trillion to the national debt (nearly doubling it) and overseeing an all-time low in labor participation, approaching a hundred million souls not even looking for work. (Why should they? They can get all the sushi they want on food stamps anyway.)

Okay, there have been a few setbacks on the racial front, but not to worry. He is a master of foreign affairs. So what if those religious sociopaths in Tehran get the bomb? They’re our friends now. We’re not going to be any higher than third or fourth on their target list. And, yes, it’s true that jayvee team from Rakka has taken over half of Iraq and Syria and is threatening just about everywhere else (including wherever you are right now) but that’s sports. Upsets happen. Didn’t you see Nadal go out in the third round at Wimbledon on Thursday?

It’s about a dumbed-down country as it can be, with no ethos of public service, only a weak set of sentiments that are now the reverse of self-help and independence. The Republic is lost and the rest of us are on our own.

My lead article on John Stuart Mill at the Liberty Fund

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It has been a great honour for me to have been asked to write the lead article for the Liberty Fund online discussion forum for July 2015, which is on the economics of John Stuart Mill. The article has now been published and may be found here. It will be followed by commentaries from three of the world’s great scholars on Mill, after which there will then be open discussion thread from readers. The following is the Liberty Fund’s introduction to my article and the three commentaries:

In this month’s Liberty Matters online discussion we reassess the economic ideas of John Stuart Mill as found in his classic work Principles of Political Economy (1st ed. 1848, 7th ed. 1871) and other writings. In the Lead Essay by Steven Kates of the Royal Melbourne Institute of Technology it is argued that in the light of the evident failures of Keynesian economics to solve the problems of the boom and bust cycle, and that of ongoing high unemployment and economic stagnation, that we should go back to Mill’s “Four Propositions on Capital” for enlightenment. In Kates’s view there is “more insight into the operation of an economy than any of the Samuelson clones that have been published to explain what Keynes meant in trying to raise aggregate demand.” The commentators are Nick Capaldi, the Legendre-Soulé Distinguished Chair in Business Ethics at Loyola University New Orleans; Richard M. Ebeling, the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina; and Sandra J. Peart, who is dean of the Jepson School of Leadership Studies at the University of Richmond.

If nothing else, this article and the three commentaries should alert you to the virtual certainty that modern economic theory is not even near being the best economics there has ever been.

Hiding the decline in employment

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Here’s a story I wouldn’t normally have looked at, Hillary Clinton to campaign in Hanover Friday, but seeing I will be in Hanover on Friday, am there now, it sprang off the page. More detail:

Democratic presidential candidate Hillary Clinton will visit Hanover this afternoon at 12:30 p.m. and speak at a “grassroots organization event,” according to Clinton’s campaign website.

This is not, need I point out, Hanover in Germany, but Hanover in New Hampshire, where may be found the campus of Dartmouth University. I am here for a small symposium on Keynes, but was all set to abandon ship, except that this “grassroots” event is more like the “tallest poppies” event, in that it would cost thousands to get in the door. Will therefore stick to Keynes.

Which brings me to the latest news on the American economy, this from Drudge – and you will not find the first part of this anywhere near the front of The New York Times, or USA Today, but you will find the second.

Record 93,626,000 Not in Labor Force…
Unemployment rate drops to 5.3%…

Rush Limbaugh did a take on this today as well, where he discussed the disastrous labour market in the US, where the stats keep showing improvement despite the vast disappearance of jobs:

Twice as many people left the workforce in May as found jobs, which cancels out the 223,000 jobs created. If 223,000 jobs are created and 432,000 jobs were lost, would somebody explain to me where all this job creation is? Now, the AP and the rest of the Obama sycophant media is not telling you about the decline in the labor force. Some are talking about the labor force participation rate, and they’re relying on the fact that most in the low information category are not going to understand it. “Labor force participation, what’s that? It doesn’t matter to me, Mabel.” All they’re going to hear is the unemployment rate is 5.3%. (laughing)

I laugh too, but it’s not funny at all. But Obama has ramped up welfare so that people do not starve to death in the street, but the numbers are shocking.

And what’s it got to do with Keynes? Everything, alas, but where are the economists to point it out. They must be working at the bureau of stats in this massive effort to hide the decline.