Monthly Archives: December 2018

Gary North’s Keynes Project

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Not to be missed: The Keynes Project: A Critical Analysis of the Economics of John Maynard Keynes from an Austrian School Perspective.

John Maynard Keynes was the most influential economist of the twentieth century. This speaks poorly of the twentieth century. 

In October 2009, I wrote an article for Lew Rockwell in which I outlined a plan to refute Keynes, line by line. Austrian economists are not found on major university campuses. I wrote it for a younger, untenured academic economist at some private college or obscure university who is willing to devote his career to the task. I still hope such a person takes up my challenge. I am not optimistic, however.

I have shifted focus here. The Keynes Project is a model for a multimedia effort. It focuses on his 1936 book, The General Theory of Employment, Interest, and Money, but it is not limited to this volume. It considers his earlier writings as a prelude to The General Theory.

The Keynes Project project will be both offensive and defensive, as any comprehensive critique should be. It will show what was wrong with Keynes’ economic theory, but it will use these critiques to provide an introduction to what is correct in economics — specifically, Austrian School economics.

The project must be guided by a single principle, a single theme: to refute Keynes’ single theme. The project must ask two questions.

1. If the problem is insufficient demand, where does the state confiscate the resources necessary to increase demand?
2. What would the original resource owners have done with these resources?

Keynes made the mistake that Bastiat warned against: the fallacy of the thing not seen. It is the broken window fallacy.

It goes back to one source: Bernard Mandeville’s poem, The Grumbling Hive (1705). This is why Keynes in The General Theoryquotes from it. Refute it. Start here: //www.garynorth.com/public/13333.cfm.

Then go to J. B. Say. Defend him. Show that Keynes misrepresented Say’s law.

Then go to the classic refutation of Keynes: Henry Hazlitt’s The Failure of the “New Economics” (1959).

Always return to these two questions. Never let the reader forget these two questions.

This project is governed by this presupposition: You can’t beat something with nothing. It is not just that Keynes was wrong. It is that he was wrong in specific ways, violating specific insights of generations of previous economists, but especially those of Ludwig von Mises and F. A. Hayek, Keynes’ chief rival in 1935.

Death where is thy sting?

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The back cover of a book I picked up on the weekend titled, The Dying Generations. It is filled with doom and gloom about our ecological future and published in 1971, not only before global warming came on the scene but even before global cooling. These people are psychos, looking for a cause and a meaning in life. Pathetic, sad, but extremely dangerous.

Nancy Pelosi sexist

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Is what Nancy Pelosi said intended to be an insult: Pelosi Mocks Trump: ‘As If Manhood Could Ever Be Associated With Him’?

Let’s get this parsed correctly.

1) Pelosi is trying to insult the President.

2) In intending to insult the President, she says: “It’s like a manhood thing for him. As if manhood could ever be associated with him. This wall thing.”

3) This is only insulting if manhood is a positive attribute which Pelosi denies is present in PDT.

4) The intended insult is that the President lacks manhood, whose absence diminishes PDT’s being since its presence is positive.

5) Thus “manhood” is understood by Pelosi to be preferable to its absence.

6) Manhood is an aspect of “the patriarchy”, almost by definition.

7) There are therefore aspects of the “patriarchy” whose presence is a positive feature in any male.

8) Such aspects of the patriarchy, such as manhood, are useful features in a president.

9) Can a woman show “manhood”?

10) Is Nancy Pelosi being a blatant sexist?

A modern libertarian discusses the problems of immigration

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This is from Gary North in the Journal of Libertarian Studies: The Sanctuary Society and its Enemies

In the United States today, the waiting period for citizenship is as short as five years. The waiting period is similar in other democratic nations. This, not the threat of economic competition, is the problem of immigration for the free society. Because the citizen authoritatively declares the law and seeks to impose it on others, he can become a threat to the free society. The problem is the moral content of his confession of faith and his possession of civil sanctions, not his productivity and his possession of economic sanctions. Mises was short-sighted here: a nineteenth-century, anti-clerical, would-be value-free analyst, i.e., a liberal. It is not the welfare state as such that creates the problem of immigration; rather, it is the confession of faith of the would-be immigrants. If their confession inherently threatens the moral and judicial foundations of the free society, then immigration is a problem, with or without the presence today of a welfare state. Freedom is based on more than private contracts. It is based on a moral vision, which includes a vision of the moral boundaries of the state.

This is the single most important issue of our time. Read it all.

No such thing as “the level of demand” at an aggregate level

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Through the whole of the Costello years as Treasurer, I would say that everyone would live through these exceptionally good economic times, but no one would learn a thing. And it’s not just that we had balanced budgets, but had ZERO DEBT. Only country ever to do this and we floated on air. So then we elected Labor and then we had the GFC, and then we had the advice from Treasury to go early and go hard, and so here we are today, in a crumbling economy with living standards heading south. Which is a preamble to this: Peter Costello and later treasurers right to stress benefit of surpluses. Not so sure about those later treasurers, but Peter was the legitimate article, Australia’s greatest Treasurer.

In his book on Australian treasurers, Bowen describes Costello as the country’s first post-Keynesian treasurer, rejecting the idea that taxes and spending should be used to manage the level of demand in the economy, with that task left to the Reserve Bank. The pursuit of a budget surplus was seen as evidence of good economic management and became an end in itself. Costello was able to distil his political message into a simple message: “Surpluses are good and Liberals deliver surpluses,” Bowen writes.

Half way there. There is no such thing as “the level of demand” at an aggregate level. You cannot manage it. You cannot cause it to go up and down. Aggregate demand has no separate existence apart from aggregate supply. It is Keynesian junk theory whether it is spending or adjusting rates. It will not work and never has, ever. Modern macro is false from end to end. As John Stuart Mill put it, and found in my Free Market Economics where it is explained at great length: “demand for commodities is not demand for labour”. That was written 170 years ago. The idea that there is progress in economic theory is just plain wrong.

PLUS THIS: From Max in the comments:

“Austrian theorist Henry Hazlitt argued that aggregate demand is ‘a meaningless concept’ in economic analysis. Friedrich Hayek , another Austrian, wrote that Keynes’ study of the aggregate relations in an economy is ‘fallacious’, arguing that recessions are caused by micro-economic factors.”

“The Keynesian is a collectivist methodologically. He looks at aggregates. He recommends government programs that affect aggregates.”

“Keynes argued, and his disciples still argue, that the cause of unemployment is insufficient aggregate demand. This is another way of saying that the cause of unemployment is excessive aggregate supply. The fact that Keynesians never put it this way does not affect the analytical truth of the argument.”

Absolutely dead on. Is this the source: Illegal Aliens and Unemployment: Causes and Effects by Gary North?

On veut vivre pas survivre!!

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France today, and who knows who’s next:

• The French state has been bankrupt since 2004. A minister finally admitted it in 2013.

• French GDP hasn’t risen above 2% in 50 years. Yes – FIFTY. The average annual GDP growth rate between 1949-2018? 0.78%.

• In 2018, 14% of the population in France live below the poverty line (they earn less than 60% of the median income).

• Worse, more than 50% of French people have an annual income of less than €20,150 a year (about $1,900 US per month).

• The ‘official’ unemployment rate is 10% – about 3.5 million citizens (in reality, it’s much higher).

• The youth unemployment rate is 22%. Yes, you did read that right.

• Astonishing but true: the French government employs 25% of the entire French workforce…and it’s impossible to fire them.

• Because the citizens make such little money, they pay no tax. Less than 50% of French pay any income tax at all; only around 14% pay at the rate of 30%, and less than 1% pay at the rate of 45%.

• The government can’t deliver services without taxes, so it borrows money. France’s debt-GDP is now 100%.

The world of my youth is virtually gone. It’s a fantastic loss. What will replace it? What could replace it?

From Understanding the Gilets Jaunes Uprising which you should read through for some real insight.

Anti-Semitism and the Women’s March

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From The Women’s March is Melting Down.

The development of the origins of the Women’s March and its transformation into a vehicle that promoted a small coterie of women—three of whom bizarrely professed their admiration for the openly anti-Semitic, homophobic, and misogynistic Nation of Islam preacher Louis Farrakhan—was a deliberate act, one that had nothing to do with the general spirit out of which the March was born….

According to several sources, it was there—in the first hours of the first meeting for what would become the Women’s March—that something happened that was so shameful to many of those who witnessed it, they chose to bury it like a family secret. Almost two years would pass before anyone present would speak about it.

It was there that, as the women were opening up about their backgrounds and personal investments in creating a resistance movement to Trump, Perez and Mallory allegedly first asserted that Jewish people bore a special collective responsibility as exploiters of black and brown people—and even, according to a close secondhand source, claimed that Jews were proven to have been leaders of the American slave trade. These are canards popularized by The Secret Relationship Between Blacks and Jews, a book published by Louis Farrakhan’s Nation of Islam—“the bible of the new anti-Semitism,” according to Henry Louis Gates Jr., who noted in 1992: “Among significant sectors of the black community, this brief has become a credo of a new philosophy of black self-affirmation.”

Liars, racists and anti-semitic.

 

Almost every significant city in the eastern Mediterranean world was destroyed

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Total collapse of civilisation in the 12th century BC.

One of the biggest mysteries in history is the late Bronze Age Collapse. There’s no good explanation for why an early globalized civilization should suddenly disappear at around 1177 BC. “Within a period of forty to fifty years at the end of the thirteenth and the beginning of the twelfth century almost every significant city in the eastern Mediterranean world was destroyed, many of them never to be occupied again.”

There is no explaining the inexplicable, but one may nevertheless still wonder. A story I have never come across before, told as if it is common knowledge.

“The people of this country don’t want …”

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Full story: PELOSI, SCHUMER PLEAD TO TRUMP: ‘LET’S DEBATE’ BORDER FUNDS ‘IN PRIVATE’. Instead, very public with the best bits in the video above. Might also mention this as well: Pew Survey: Out Of 27 Nations Polled, Zero Want More Immigrants to Move to Their Country and that includes Australia. As for Trump and the Dems, here’s the transcript of the relevant bits on border protection:

TRUMP: “We need border security. People are pouring into our country including terrorists. We have terrorists — we caught 10 terrorists over the last very short period of time. Ten. These are very serious people. Our border agents, all of our law enforcement has been incredible, what they have done, but we caught 10 terrorists. These are people that were looking to do harm. We need the wall. We need — more important than anything, we need border security of which the wall is just a piece. It’s important. Chuck, did you want to say something?”

SCHUMER: “Yes. Here’s what I want to say. We have a lot of disagreements here. ‘The Washington Post’ today gave you a whole lot of Pinnocchios because they say you constantly misstate how much of the wall is built and how much is there, but that’s not the point. We have a disagreement about the wall, whether it’s effective or not —“

TRUMP: “’The Washington Post’ —“

SCHUMER: “— not on border security, but on the wall. We do not want to shut down the government. You were called 20 times to shut down the government. You said, ‘I want to shut down the government.’ We don’t. We want to come to an agreement. If we can’t come to an agreement, we have solutions that will pass the House and Senate right now and will not shut down the government. That’s what we are urging you to do. Not threaten to shut down the government.”

TRUMP: “If you don’t want to shut down the government —“

SCHUMER: “Let me just finish. Because you can’t get your way — let me say something, Mr. President. You just say, ‘My way or we shut down the government.’ We have a proposal that Democrats and Republicans will support to do a C.R. that will not shut down the government. We urge you to take it.”

TRUMP: “If it’s not good border security, I will not take it.”

SCHUMER: “It’s very good border security.”

TRUMP: “If it’s not good border security, I will not take it.”

SCHUMER: “ It’s what —“

TRUMP: “Because when you look at these numbers of the effectiveness of our border security and when you look at the job we are doing —”

SCHUMER: “You just said it is effective.”

TRUMP: “Can I tell you something?”

SCHUMER: “You just said it is effective.”

TRUMP: “These are only areas where you have the walls. Where you have walls, Chuck, it’s effective. Where you don’t have walls, it’s not effective.”

PELOSI: “Let’s call a halt to this. We have come in here with the first branch of government. Article One. The legislative branch. We are coming in in good faith to negotiate with you about how we can keep the government open.”

SCHUMER: “Open.”

TRUMP: “We are going to keep it open if we have border security. If we don’t have border security, Chuck, we are not going to keep it open.”

PELOSI: “We will have border security.”

SCHUMER: “You are bragging about what has been done. We want to do the same thing we did last year this year. That’s our proposal. If it’s good then, it’s good now and it won’t shut down the government.”

TRUMP: “We can build a much bigger section with more money.”

SCHUMER: “Let’s debate in private.”

TRUMP: “We need border security. I think we all agree that we need border security.”

SCHUMER: “Yes, we do.”

TRUMP: “See? We get along. Thank you, everybody.”

REPORTER: “You say border security and the wall. Can you have border security without the wall?”’

TRUMP: “You need the wall. The wall is a part of border security.”

REPORTER: “Can you explain what it means to have border security?”

TRUMP: “Yeah. We need border security. The wall is a part of border security and you can’t have very good border security without the wall.”

PELOSI: “That’s not true. That’s a political promise. Border security is a way to effectively honor our responsibility.”

SCHUMER: “The experts say you can do border security without a wall, which is wasteful and doesn’t solve the problem.

TRUMP: “It totally solves the problem and it’s very important.”

PELOSI: “This spiraled downward from when we came at a place to say how do we meet the needs of American people, who have needs. The economy, people are losing jobs and the market is in a mood. Our members are already —“

TRUMP: “We have the lowest unemployment that we’ve had in 50 years.”

PELOSI: “People in the Republican Party are losing their offices now because of the transition. People are not —“

TRUMP: “And we gained in the Senate. Nancy, we gained in the Senate. Excuse me. Did we win the Senate? We won the Senate.”

SCHUMER: “When the President brags that he won North Dakota and Indiana, he is in real trouble.”

TRUMP: “I did. We did win North Dakota and Indiana.”

PELOSI: “We came in here in good faith and we’re entering into this kind of a discussion in the public view.”

TRUMP: “But it’s not bad, Nancy. It’s called transparency.”

PELOSI: “I know. It’s not transparency when we are not stipulating to a set of facts and we want to have a debate about you, confront some of these facts.”

TRUMP: “You know what? We need border security. That’s what we will be talking about. Border security. If we don’t have border security, we will shut down the government. This country needs border security. The wall is a part of border security. Let’s have a talk. We will get the wall built and we have done a lot of wall already. It’s a big part of it.”