Monthly Archives: February 2016

The OECD and IMF are economic cranks

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In February 2009 Quadrant published my article on The Dangerous Return to Keynesian Economics. There you will find the following:

Just as the causes of this downturn cannot be charted through a Keynesian demand-deficiency model, neither can the solution. The world’s economies are not suffering from a lack of demand, and the right policy response is not a demand stimulus. Increased public sector spending will only add to the market confusions that already exist.

What is potentially catastrophic would be to try to spend our way to recovery. The recession that will follow will be deep, prolonged and potentially take years to overcome.

I also immediately began work on my Free Market Economics which I am now about to complete its third edition. Here is how the second edition is described:

The aim of this book is to redirect the attention of economists and policy makers towards the economic theories that prevailed in earlier times. Their problems were little different from ours but their way of understanding the operation of an economy and dealing with those problems was completely different. Free Market Economics, Second Edition will help students and general readers understand the economics of that earlier time, written by someone who believes that this now-discarded approach to economic thought was superior to what is found in most of our textbooks today.

Nothing that has occurred in the seven years since the GFC has been anything other than what I expected. As certain as I was then that Y=C+I+G is the road to economic disaster, nothing I have seen since has done anything other than strengthen my belief that Keynesian theory is wrong in every particular. All of which is brought to mind by this article dealing with those crackpots at the IMF and OECD: As jobs go, global economy falters, says G20 report. How is this for evidence that no one learns from history:

Scott Morrison will come under pressure at his first G20 meeting in Shanghai this weekend to use the budget to launch a new round of stimulus spending — the first since the global financial crisis — as the IMF warns finance ministers that the world is at risk of a new downturn.

In a bleak report prepared for the meeting — and against the backdrop of thousands of new job losses in Australia after the closure of the Dick Smith retail chain — the International Monetary Fund says the global economy is faltering and governments have done too little to boost demand.

“The global economy needs bold multilateral actions to boost growth and contain risk,” it says. “The G20 must plan now for co-ordinated demand support using available fiscal space to boost public investment and complement structural reform.”

Idiotic and ignorant. Impervious to the lessons of our recent past. Uncomprehending of what happened during the Costello years when budget deficits disappeared and Australia had zero debt – the absence of debt being unique across every country during the entire Post-War world. The economics profession seems incapable of learning a thing.

My wife was right after all and it is a disgrace

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My wife says this all the time about which I always say that the Israelis must already know this and are doing everything they can, but perhaps not: Israel needs an effective PR machine. If this is true, then there is something seriously wrong:

Barry Shaw, Senior Associate for Public Diplomacy at the Israeli Institute for Strategic Studies wrote (February 10, 2016) in Israel National News that, “It is disgraceful how incompetent the Israeli government is when it comes to public diplomacy. It is not shockingly bad, it’s actually dangerously damaging to us.” Shaw goes on to say, “They concentrate on international diplomacy, government to government, government to international institutions, and what a mess they are making of that when it comes to protecting Israel from de-legitimization, anti-Israel resolutions, labeling, and a host of other slanders. They don’t really know how to deal with the problem, even when we are getting hit by so-called friendly countries. They’re clueless.”

This is based on another article, The Israeli government and public diplomacy; a national disgrace where we find:

When it comes to Israeli advocacy they’re incompetent in the Knesset, they’re incompetent in the government ministries and they’re incompetent in the global embassies.

How we have come to such a pass is beyond me. And when it comes to it, where would I get a fact sheet that lays out the Israeli answer to all of the BDS arguments we hear? If there is no source for such material, then incompetent is much too soft a word for what is going on.

We few, we happy few, we band of brothers

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Here I am, the grandson of Polish Jews who emigrated to Canada just after the turn of the twentieth century. But whatever my origins, among the most extraordinary bits of travel of my life was in 2014 when I went off to see Jean-Baptiste Say’s factory in north-west France which just happened to be located exactly midway between the battlefields of Agincourt and Crécy, both of which we visited with great pleasure. And these were not great victories of the English against the French, these were victories in which I have always taken personal pride and pleasure. And then coming back along the battlelines of the First World War, I stopped at Vimy Ridge and Fromelles, which are my battle sites – the first Canadian, the second Australian – in which we fought and laid down our lives for our way of life. I don’t begrudge anyone else their own histories and heritage, but these are part of mine.

Which brings me to this: ‘Brexit of Champions’: How Britain May Trigger A Political Earthquake, the earthquake caused by the UK’s departure from the EU. Had it been up to me, they would never have gone in. Now, were it up to me, out they would come. Here is part of what the author has to say about Obama’s opposition to Brexit, further confirmation that leaving the EU is the right thing to do, but do read it all.

Incredibly, President Obama has been urging Britain to stick with Europe. Two years ago, he warned that if Britain were to pull out of Europe, it would lose influence there and even here.

My own theory is that Mr. Obama actually prefers the kind of socialist regulatory thinking that obtains in Brussels, where the union has its headquarters. Senator Sanders is openly campaigning for a European-style system.

In recent months, Mr. Obama has turned nastier. His trade representative, Michael Froman, told Britain in October that if it makes a bid for independence, it should forget about any separate trade agreement with America.

America, Froman sneered, is “not particularly in the market” for free-trade agreements “with individual countries.” He warned that an independent Britain could face the kind of tariffs America imposes on Red China.

What an insult to a wartime ally with whom America has long maintained a special relationship. What blindness to an opportunity to strengthen our relations with the mother of parliaments.

Obama will be gone in less than a year. Perhaps his lasting legacy will be that the rest of us will wake up in time to scramble to safety before it is too late.

Time to embrace the inevitable

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Here’s the best advice from Roger Simon: The Republican Establishment Needs to Stop Worrying and Love the Donald. I will highlight the particular para that is most to the point:

Now that Donald Trump has wiped the floor yet again with the other Republican candidates in the Nevada caucuses, it’s time for the GOP to face reality — barring force majeure, they have a presidential candidate, like it or not.

The so-called establishment has a choice: Get on the Trump bandwagon or try some desperate maneuver to stop him. But what would that be? A Rubio-Cruz ticket, assuming they would do it? At the time of this writing, the two men added together don’t equal the Trump vote in Nevada — and that’s even assuming their voters would hold, which is a risky assumption, given the current momentum. I mean — Donald won 46% of the Hispanics! Enough already.

A lot of my Republican friends are depressed about this situation. They worry that Trump is not a real conservative. They cringe at his vulgarity. They are concerned he’s a bully, even totalitarian.

I’m not. And I am not depressed, even though I admire many of the other candidates in the race. Given the gravity of the situation, what Obama has done to this nation and the candidates being offered by the Democrats, a world class liar and a Eugene V. Debs retread, a personality as large as Donald may be necessary to revive our country. In fact, I think I’ll take the “may” out of that.

This is what I think the electorate senses and what the Republican establishment fears. Rather than being afraid that Donald will lose, many establishment folks, I suspect, are afraid he will win. It will not be business as usual and most human beings seek business as usual, especially successful ones. What, for example, is more conventional and unchanging than the Democratic Party? They have patented stasis under meaningless junk terms like “liberal” and “progressive.” Nothing ever changes. Republicans are at risk of doing the same thing with the word “conservative.” If I hear another candidate claim to be the most “conservative,” I think I’ll bang my head against the table. I can’t be the only one who feels that way.

So if I were a member of the Establishment, whatever that is, I would quit bellyaching, embrace Donald and make him my friend. He’s ready and willing. If you bother to check that ultimate news source the Daily Mail, you’d see that already he is hobnobbing with such Republican stalwarts as Rudy Giuliani, Arthur Laffer and Steve Moore. Unless I missed it, I didn’t notice the article mentioning David Axelrod or James Carville.

And listen to what Trump is actually saying. He’s for lower taxes and a strong defense and he’s not really against free trade. He just wants a better deal. Who wouldn’t and who wouldn’t assume he’d get a better one than the Obama crowd? Or the Bush crowd for that matter, on just about anything. He’s also pro-life, despite soreheads like Erick Erickson screaming that Trump supports Planned Parenthood when he has said explicitly he does not support what they do on abortion, only on other women’s health issues. Does Erickson oppose pap smears for cervical cancer? (Frankly, I don’t want to know.)

People like Erickson and pundits far more sophisticated suffer from Trump Derangement Syndrome. Because he’s not part of “Their Crowd” they can’t really grasp what he’s saying. Time to end that. Don’t fight Donald. Be smart, co-opt him. Or, as we used to say, be there or be square. Next November depends on it.

And this comes via Ed Driscoll at Instapundit so it’s time the rest of you got with the program.

The first example in modern history of a science actually going backwards

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It is now regularly stated that we have to take the larger denomination bills out of circulation to combat crime. Makes no sense, but on the other hand, this seems very plausible. From Steve Hayward: KOMPULSORY KEYNESIANISM?.

What’s the idea behind negative interest rates? A hidden subsidy for mattress manufacturers perhaps? Nope: given that the various monetary and fiscal stimuli haven’t generated much growth either here or in Europe, negative interest rates are intended to enlist everyone as involuntary Keynesians—spend your money or we’ll take it from you. So who wants to keep their money in a bank—even a Swiss bank. Another example of a liberal idea so good it has to be made mandatory.

That is to say, the smaller is the largest note, the more difficult it is to merely hold money so everyone is forced to spend. Nothing has worked so the efforts to get people to spend will be re-doubled. This is that same crackpot Keynesian theory as ever, that economies are made to grow by increase in spending. This comment that followed the article captures the central economic idiocy of our time:

Monetary and fiscal “stimuli” are the same old economic frauds perpetrated over and over again. They’ve never worked in the past, and there is no chance they will work in the future. The only thing they have going for them is that they’re excuses for more government spending and government control of the economy.

The amounts of fiscal and monetary “stimulus” applied during the Obama years have exceeded all past efforts, with the result that we’ve had the worst “recovery” since the 1930s with no end in sight. As always, the Keynesian economists’ excuse is that we just haven’t taken enough of their poison.

Economic science is the first example in modern history of a science which is actually going backwards. Classical economists knew more about how to stimulate an economy 100 years ago than Keynesian economists know today.

Indeed it is so but how are you to find out?

The music of the spheres – now settled science

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The strangest story I may ever have encountered on the net, which is compensated for by being almost certainly untrue: Physicists Prove Classical Music Inhabits Separate Realm, Inaccessible To Humans. Let us work under the assumption it is only a joke. Since I listen to nothing but classical myself, I am willing to take on the idea that Beethoven and Brahms really is the music of the spheres and representative of a higher form of art. It’s a post-modern world so I can believe what I like. Here is the article in full:

Physicists affiliated with the European Organization for Nuclear Research (CERN) released a report Wednesday revealing that classical music exists in a field of reality entirely removed from the four-dimensional spacetime inhabited by human beings.

Scientists were performing a routine search for fifth-dimensional activity using the Large Hadron Collider, the immense particle accelerator famous for proving the existence of the Higgs Boson, when they came across the entire corpus of Western classical music from 9th-century plainchant to Nico Muhly.

According to the report, the innumerable works making up this body of repertoire exist in a continuum that resides just beyond the limits of human perception.

“Classical music transcends both the linear, forward flow of time and the Euclidean space we are used to,” said Rolf-Dieter Heuer, the director general of CERN. “A musical work is a mysterious entity whose essence totally eludes our senses.”

Physicists claim that any given performance or recording of a classical music piece is a kind of audible hologram projected into our everyday reality by the true musical work, which vibrates eternally in an ethereal medium floating in and around us at all times.

“Think about Beethoven’s Fifth Symphony. Sure, maybe you’ve looked at the score, and maybe you’ve heard this or that orchestra play it. But have you ever encountered it in its pure form?” Heuer asked. “When you leave a museum, you know the paintings are still there. But where does Beethoven’s Fifth go when you’re not around? Now we know.”

While scientists have measured classical music’s density and charge and tracked its position in the cosmos, its role in the universe still cannot be explained.

Some astrophysicists have speculated that the Western classical canon may in fact be the so-called “dark matter” that is thought to account for 95% of the matter in the universe. Others are less sure.

“Classical music exists in a dimension impenetrable to human beings, so we may never fully comprehend it,” said Stanford theoretical physicist Leonard Susskind.

“It’s exciting that science has finally proven that classical music inhabits an independent, autonomous realm, detached from our mundane experience,” he continued. “But the question remains, what is classical music even doing in our universe in the first place?”

Still looks like a joke, but certainly more plausible than if it had been rock or jazz. And it has come via the ever-reliable Instapundit so what else is there to say?

The promise of Donald Trump

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trump wins nevada

UPDATE:

TRUMP WINS NEVADA

Now read below why it matters.

The title only one quarter gets what the story actually says: The Anti-Establishment Vote. If Trump represented “the establishment” I would be very happy to support the status quo. The following bits of an article you should read from end to end exactly picks up what I would say myself:

Trump supporters variously favor him because he is not of the Washington establishment, because he is politically incorrect, because he is unafraid to call it as he sees it, and because he is beholden to no one, to no Republican, to no Democrat, to no media icon, and to no conservative intellectual. Trump supporters reject groomed politicians who, together with their advisors, weigh the meaning of every word spoken and fear offense.

Trump supporters do believe in limited government, a strong national defense, and free enterprise. They reject government solutions to economic problems and favor a restoration of a vibrant, free enterprise economy unfettered by excessive government regulation. They reject a foreign policy stymied by advocates of social justice who will not allow this nation to annihilate its terrorist enemies, to revoke the appeasement deal with Iran, and to rebuild American military might and alliances. They reject international trade bargains built on concepts of “managed trade” where select industry insiders with political clout are favored in lieu of a true free trade arrangement. They want to secure America’s borders and ensure that the United States does not become a haven for terrorists. . . .

Fundamentally Trump’s supporters are fed up with all things characteristics of the Washington establishment. They do not want a candidate who can eloquently articulate viewpoints pleasing to their ears because they have watched politician after politician do that, then assume elected office only to betray the promises made. They want someone who has neither financial nor political ties to those in power, who will restore American greatness by courageously and unrelentingly breaking down all barriers to that greatness erected by those now in power and their cronies in the market. In short, they mean to take down the protectionist government that is, unleash the power of the private sector to restore American greatness, erect immigration limits and border security capable of stemming the flow of illegal aliens and terrorists, and rebuild American military might and power in the world. For that revolution, they seek a private sector titan not beholden to the Washington establishment. Trump perfectly fits that bill.

In Trump, they find a person who speaks his mind fearlessly; who stands toe to toe with those tied to the Washington establishment and has no problem directly exposing their duplicity and weakness; who promises to shake things up in Washington such that barriers to economic growth, border protection, and a strong national defense are eliminated; who promises lower tax rates for corporations and individuals; and who plans to free the market rather than regulate it in politically preferred directions. . . .

Trump is viewed as unapologetic, strong, and sincere, a man who gets things done rather than prattles on about what he will do without a sincere interest in doing what he says and without the stamina required to withstand stiff opposition. Trump is the antithesis of political correctness. Trump supporters are fed up with groomed politicians who profess to be possessed of an elite knowledge and skill but who do nothing consequential in office. They want to remove government from the control of the political class and vest it in those who are from outside the realm of politics, who are citizen politicians. They do not accept the legitimacy of the campaigners who hail from the political class and, so, they place little credence in the attacks they level against Trump.

We may be wrong in believing that Trump can and will do the things that he has undertaken to do, but there is only one way to find out. The one certainty is that no one else would even try.

“A narcissistic, fearmongering authoritarian peddling a destructive, fascistic policy agenda”

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The quote is from an article at Reason.com aimed at Donald Trump. But in spite of the author’s aversion to common sense, the article is quite interesting, coming as it does with the following title, How Political Correctness Caused College Students to Cheer for Trump. You are advised to read it all, but this gets to the essence of the matter. I will say here that the author seems blinded by his own prejudices but notwithstanding any of that, he was still able to work some of this out:

College students and Trump supporters, have at least something in common: both groups are plagued by legitimate economic anxieties: middle-class job losses and burdensome loan debt, for example. But the argument can certainly be made that these concerns are trumped (pardon the pun) by cultural issues, at least as evidenced by the priorities of both groups. And when it comes to the culture wars, they are on opposite sides.

The masses of people who show up at rallies for Trump—and have propelled him to Republican frontrunner status—are thought to be uneducated, coarse, and intolerant of immigrants [zero out of three in my case]. College students, on the other hand, are so tolerant their tolerance is borderline oppressive. Trump’s backers despise the political correctness of liberal elites: students think liberal elites are closet reactionaries who disdain leftist goals and refuse to nominate black actors and actresses for Oscars. The two groups might possess a shared distrust of social progress—Trump people, because it’s happening too quickly, and student protesters, because it’s not happening quickly enough—but they are on opposite ends of that fight, and virtually all others.

Not every college student is a SJW, and libertarians and conservatives least of all. Trump does have policies that make sense, although if you start from the standard presuppositions of our present much deformed age, you will have no idea what they are or how much sense they make. But it is very nice to see that even on an American university campus, Donald Trump’s message is able to get through at least to some.

Via Instapundit who, by the way, chose the following quote to highlight the article:

“For these students, Trump is not the leader of a political movement, but rather, a countercultural icon. To chant his name is to strike a blow against the ruling class on campus—the czars of political correctness—who are every bit as imperious and loathsome to them as the D.C.-GOP establishment is to the working class folks who see Trump as their champion.”

We working class folk have got to go somewhere, and to Trump we are now going, along with the occasional anti-PC student, and then some others like Rudy Giuliani and Art Laffer.