Classical economic theory and the American recovery

UPDATE ABOVE: Birthday pressies from the family who seem to know me quite well.

Modern economics explains to governments how they and their crony capitalist mates can steal from you while pretending they are doing you good. And before we go any farther, here is something you should know before you listen to another word from anyone in government: Government spending never creates a net increase in employment. Government spending only creates jobs in one place at the expense of jobs somewhere else, and does it by giving money to the government’s best friends to run projects no firm, based on profit and loss, would ever undertake. And if the project is loss making, which government projects almost invariably are, it has taken the economy backwards – that is, people in general invariably become less well off than they otherwise would have been had these projects not gone ahead – even if those to whom the government has paid money are better off, which they almost invariably are. Government spending, unless there is a genuine and calculated return above the cost, is a ripoff, and it is you who are being ripped off. They pick your pockets and pretend they are doing you good.

Let us look at the alternative. The turnaround in the American economy over the past year is astonishing and almost unprecedented; you might have to go back to Harding in 1921 to find a parallel. No modern macroeconomist can explain it. The supply-side of the economy is not only invisible to almost every economist miseducated today, but so far as their demented demand-side models go, is irrelevant to raising growth and employment. Here is what I wrote in November 2016, with the only bit I got wrong being how quickly things have turned around.

Getting a recovery from here, from within the mess that Obama has left behind, will be a task of such Herculean difficulty that only because Trump is president do I think it is even possible. And one of the most important virtues he may have is not listening to economists such as this one discussed in the article at the link: The brilliant economist who designed the failed 2009 stimulus plan tells us that Donald Trump’s economic plans are going to fail. Here we are dealing with Harvard economist, i.e. Keynesian economist, Lawrence Summers, about whom the article states:

At this point, we have to note that the esteemed Dr Summers was the architect of President Obama’s 2009 stimulus program, the American Recovery and Reinvestment Act of 2009, an $831 billion boondoggle which was promised to hold unemployment to a maximum of 8%; it reached 10.0% in October of 2009, and stood at 9.2% in June of 2011, when it was projected to be below 7%. There are many economists who still justify the stimulus bill by saying that while the effects of the recession were worse than estimated, they’d have been worse yet without the ARRA. That, of course, is unprovable, but when the designer of such a huge, failed program tells me that someone else’s economic plans won’t work, I have to look at his statements with a jaundiced eye.

Trump has spending plans of his own that aside from The Wall, which if it significantly reduces the size of the American welfare bill may pay for itself many times over, will also add to the burdens on the economy. But he also intends to cut energy costs, improve decaying infrastructure, free up the regulatory framework that suppresses industry, renegotiate trade deals that are intended to work for American industry, and lower government outlays generally. He will also remove Obamacare, which has raised the cost of full-time employees, while lowering the cost of health insurance. Interest rates will also start to rise which should assist in the shifting of resources into more productive areas of the economy, and will also add to the willingness of many to save.

I definitely do not say it’s easy, and no one can guarantee things will turn round rapidly enough to show results soon enough to work politically, specially in the midst of the hostile media circus Trump will have to deal with. But at least I feel that for the most part the changes that will be introduced will generally shift things in the right direction. Here is the alternative Summers has in mind:

I have long been a strong advocate of debt-financed public investment in the context of low interest rates and a decaying U.S. infrastructure, so I was glad to see Trump emphasize it. Unfortunately, the plan presented by his advisers, Peter Navarro and Wilbur Ross, suggests an approach based on tax credits for equity investment and total private-sector participation that will not cover the most important projects, not reach many of the most important investors and involve substantial mis-targeting of public resources.

There is no learning from history other than that economists never learn from history. You also know that Congress will fight like cats to maintain expenditure since that is almost entirely what they have to maintain their support. Whether there is a constituency for re-building the private sector is still to be discovered, but at least with Trump you know he will want to try.

You really do have to wonder whether economists will learn a thing from what they’ve just seen. Given the experience of the past, there is not the most remote chance in the world that they will. But what you’ve seen has been the result of following classical economic policy – the economics of John Stuart Mill – in just the way it would have been done before Keynes published his General Theory, a book that has destroyed the coherence of economic theory for three generations of economists and counting.

Democrats the party of failure

The Democrats are the party of failure. When they are not causing such failures themselves their dearest hope is that others will be even worse. They are socialists to the core and therefore have nothing positive to contribute. Their only hope is to create enough mendicants to vote them in, and if there aren’t enough native-born Americans to do the job, to bring in welfare-hungry immigrants to make up the numbers. For Democrats, the worst imaginable outcome for them is that PDT should succeed, which actually means that he is successful in managing the American economy and the foreign mess that has been left for him to fix. In other words, they are worried that he will improve the lives of Americans. With nothing positive to contribute themselves, they live on the misery they do so much to cause and do nothing to repair.

Seinfeld no longer about nothing

From Tim Blair:

Last month Seinfeld performed in Tel Aviv – for the second time – ending his show with a rousing pro-civilisation call:

“Thank you, we love Israel, we stand with you!”

Even better, he also took his family to an Israeli counterterrorism and security training academy.

Jerry Seinfeld’s recent visit to Israel included making Israelis laugh (a certain crime in the eyes of the Israel haters and BDS-holes), as well as visits to Ramon airbase, and the old city of Jerusalem – all while looking happy to see us.

As you’d expect, the reaction from Israel haters was extreme.

See more at the first link.

To become a Swiss citizen refugees must first repay all of the welfare money they received

Self-reliance is an old idea from well before the creation of capitalist economies and democratic states. So here’s a thought that others might think about: Switzerland Rejects Citizenship Bids Of Residents Who Were Once On Welfare.

Switzerland doesn’t mess around.

The idyllic nation — where the average annual GDP per capita is nearly $80,000 — doesn’t like deadbeats. The nation recently enacted a new civil rights act that prevents residents who received welfare benefits from becoming citizens until they pay back the money they took.

The new regulations took effect January 1. Asylum seekers and refugees who received handouts in the previous three years can’t become permanent residents without paying back the government.

What’s more, refugees must prove they are making efforts to integrate into society in order to win citizenship. They must show that have “cultivated contacts” with a number of Swiss people, according to Kronen Zeitung. There are also new language requirements, which vary depending on the canton they are living in, the Daily Mail reports.

Via Zylocast on an open thread.

Maybe people should get serious about nuclear weapons in the hands of North Korea and Iran

Nuclear War will come to us when someone starts a war on the West. They will attack us. And this is a taste of what it would be like, as we have just seen for ourselves.

 

Wouldn’t you want something done to make sure it doesn’t happen? Any thoughts on what that something might be? Any suggestions about who should do what can be done? Who, in fact, is the only person who is actually trying to do something? Weakening the only government Americans have by Americans themselves does not seem like a good strategy in dealing with America’s enemies.

The books you do [and don’t] see in bookshops

It is the first time in years I have seen a book of mine on a bookstore shelf, and a mere $39.95 as well. Has only happened twice before but incredible to see. I imagine it may have been because the title is so ambiguous – Art of the Impossible – so that it might have been anti-Trump as was every other political tract sharing the shelf. You can also buy the book from The Book Depository for A$29.21 and with worldwide free delivery. In my view, the farther we move from the election, the better the book becomes. It puts everything in context and helps you remember the might have beens, every one of which is a horror story we are not being made to endure. No book a decade from now will be able to make you understand the 2016 election the way this book does.

What has also amazed me is that even with all the interest in PDT across the world, I have never ever seen one of his own books anywhere for sale, other than in op-shops, where I am the only one to buy them at $3 a copy. In particular, why does no one sell or buy his Art of the Deal which has always been plain sailing to get through and would teach you something about the man who is president you cannot otherwise find out.

FROM THE COMMENTS: And quite unpleasant as well.

It is good to see the author is modest enough to try and wrap some sort of narrative around his ham fisted attempt to create interest in his book

So let me introduce another concept that may be foreign to some people, that it is almost a certainty that most people who write books do so in the hope that others will read them. And I will add this as well – for the author who goes to the trouble of writing these books, it is usually not to make money but just to be part of a conversation. One of the lessons, let me also add, that comes from frequenting secondhand bookshops is that you get a true understanding of how all is vanity. Every book you see – unsaleable at 50 cents – would have taken its author at least a year, and often much much more, from conception to publication. And there they now are, mouldering away, as are most of their authors. That said, every book was also something someone had once wished to do and had taken genuine effort to bring to completion. You should therefore not be resentful if an author suggests that you might read his book. In this one instance, and there are few others in life, you may be sure they are really trying to do you a good turn whatever you may think yourself.