Monthly Archives: October 2019

Home is where the welfare cheque is issued

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From Trump: Europe Won’t Help, and We’re Not Going to Hold Thousands of ISIS Fighters at Guantanamo Bay. Watch the video and hear PDT say it himself.

“We’re not bringing 50, 60, 70 – or even 100,000 people to Guantanamo Bay in Cuba,” Trump told reporters at the White House. “We’re not going to be paying them for the next 50 years – or paying to take care of them for the next 50 years.”

He characterized the European response to Washington’s appeals as another example of allies taking advantage of the U.S., and treating it as a “sucker.”

Meanwhile, who has any idea of which side who is on or what they are fighting for or against. And same again here. Who should we support, do you think?

The Syrian Democratic Forces (SDF) are dominated by fighters from the Kurdish People’s Protection Units (YPG), whom Turkey views as terrorists because of links to the Kurdish Workers’ Party (PKK) – a radical group which Turkey, as well as the U.S. and European Union, has designated a terrorist organization.

Of course none of these countries want these jihadists back. To continue the story:

European governments have voiced reluctance to repatriate citizens who joined ISIS’ jihad. Reasons vary, but include concerns that difficulties in obtaining clear evidence of wrongdoing will see suspects dodge conviction and be released back into society.

In France, public opinion runs strongly against repatriating jihadists, although there is considerable support for allowing the French wives and children to return home.

There is no saving anyone from their own stupidity.

The radical left is an infectious disease

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I have just been reading Alan Bloom’s The Closing of the American Mind which I first read when it was published in 1987. It is remarkable for many things, but most incredibly how none of it has aged in the years since it was written. Things are, of course, worse since academics like Bloom have almost completely disappeared, but the cowardice of the academic world seems to have been a constant. This is from the chapter on “The Sixties” an era I know only too well.

To be isolated in the university, to be called foul names by their students or their colleagues, all for the sake of an abstract idea, was too much for them. There were not in general strong men [or women], although their easy rhetoric had persuaded them that they were – that they alone manned [guarded] the walls protecting civilization. Their collapse was merely pitiful, although their feeble attempts at self-justification frequently turned victorious. In Germany the professors who kept quiet had the very good excuse that they could not do otherwise. Speaking up would have meant imprisonment or death. The law not only did not protect them but was their deadly enemy.” (Bloom 1987: 318)

We are not there yet, and there is plenty of reason to hope we might still get past the latest green-socialist disease. But there is also plenty of reason to think we may not. There is also no one else to defend our way of life other than us. I have paid attention to the ongoing discussion about the Kurds and how PDT has given them away and etc etc etc, all with further laments about who will ever again be able to trust the US etc etc etc. This from the people who surrendered in the Vietnam War in 1975, giving up on a won position and thereby causing the horrors of Cambodia. These are the kinds of decisions presidents are asked to make and it may be right and it may be wrong, but none of us is likely to know. Should this decision cause anyone to move even a milli-smidgeon towards not supporting Trump in 2020 would demonstrate only how shallow their understanding of current events is and how vast the dangers we face actually are.

So let me come back to Alan Bloom who is writing about the world we are in today, even though he published the book in 1987. Following the passage above, he discusses a conversation he had had with an academic at Cornell who had been party to surrendering to a violent student uprising in 1969.

The “social contract,” he averred, was about to be broken, and we would have returned to “the state of nature,” the war of all against all, the worst evil, so that anything to keep that from happening was justified. He proved therewith that he had never understood what he had been teaching, for the contract theorists all taught that the law must never be broken, that the strength of the law is the only thing that keeps us away from the state of nature, therefore that risks and dangers must be accepted for the sake of the law. Once the law is broken with impunity, each man regains the right to any means he deems proper and necessary in order to defend himself against the new tyrant, the one who can break the law.” (Bloom 1987: 319)

Despite what these self-important know-nothing demonstrators may think, we are not in Nazi Germany, which they understand perfectly well. None of them really believe that the world will come to an end in twelve years or even in their own lifetimes. None of them believe there is a single thing Australia can do to lower carbon emissions when China is building coal-fired power plants at a prodigious rate.

But what they do not understand is that the West, the only place where democratic, free and prosperous institutions have ever taken root, will disappear if these ignorant youths are able to shift public opinion enough to put the lever of power into the hands of the people who lead them on these demos.

This has happened before. There is no reason to think it cannot happen again, or that it cannot happen here.

The illegitimate spawn of a relic from the Great Depression

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From Judy yesterday: A Keynesian solution even Keynes would have tossed. A program Keynes came up with during the Great Depression when unemployment was 25% is still being applied by moron economists 80+ years later who are ruining our economies while rewarding their friends. Crony capitalism is the illegitimate spawn of a depression level theory, that was useless even back then. She begins:

I thought active demand management or fine-tuning the economy had gone out with the ark — or, to be more precise, in the 1970s. Stagflation — high rates of unemployment and inflation — put paid to that party trick.

Of course, the idea of central authorities or governments controlling the pace and nature of economic growth was preposterous. Mind you, you could understand the reasons for this naive belief, particularly among those affected by the hardships associated with the 30s Depression.

Now the only people who come out ahead are millionaire recipients of the money paid out for the various projects governments come up with. Judy again:

And let’s not forget the waste in so much government spending. Can anyone forget the fiasco of the pink batts scheme: four deaths, and hundreds of millions of dollars to remediate the problems? Or what about the school halls program where the cost of building the new structures was at least 20 per cent greater than the efficient price?

Value for money from government! The idea is as nonsensical as it gets.

I also liked this from David in the comments, of which everything he says is true:

I’m not expert but it is one of the great ironies of world economics to me that the 1980’s were spent identifying inflation as the enemy of the economy and taking all measures possible to lower it and now the world experts want inflation back and can’t get it. What is more when it was at its highest most governments quietly changed the method of measuring inflation so now we have the position where officialdom says inflation is low but we in the streets who go to buy anything know how prices have risen considerably if not dramatically in many areas. But they are doing so without increase in real production the secret to any good economy.

I will finish off with a bit more from Judy:

Then there are the many ill-­educated media commentators and finance sector “economists” who dismiss concerns about ongoing budget deficits and rising government debt. The government must take action, according to this tribe. Clearly, they never understood anything beyond Macroeconomics 101.

And for myself, it would make hardly any difference had they gone on to graduate school since almost everything now taught in an economics course is valueless bilge.

Piketty returns ignorant as ever

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This is a review of Thomas Piketty’s new book, Capital and Ideology. From The Financial Times in London, demonstrating that the capitalist class has no concerns about the jerks who write articles where the final para reads, “Advocates of inequality will come up with the usual justifications. But now is the redistributionists’ best chance.” What chance that is I have no idea.

The thing is that a billionaire has virtually nothing to distribute. Their billions comes from owning businesses that produce things like iron and steel or caustic soda, not from having a mountain of consumer goods stashed away that they keep to themselves and refuse to share with others. What they do own are the means of production with which the goods and services sought are produced. There is plenty of sharing the wealth that goes on already, especially with many who do nothing themselves to help create that wealth, living quite all right. The writer of this article is a typical modern twit with no idea about anything at all, even though he works for the financial press. The Jeff Bezos and Mark Zuckerbergs of the world must laugh themselves silly at the pretension idiocies these people write.

Of course, for many the surest way to wealth, often their only way to wealth, is to enter politics on the left. I think there is a need for psychiatric evaluation for the people who vote for socialists, although oddly every psychiatrist I have ever met has been on the left themselves. Here’s the article.

Thomas Piketty’s new book, Capital and Ideology, appears in English translation next March. But I got a sneak preview by walking into my local Parisian bookshop and handing over €25 for the French edition. My conclusion: the 1,200-page tome might become even more politically influential than the French economist’s 2013 overview of inequality, Capital in the Twenty-First Century.

Helped a little by that book, inequality has soared up the left’s agenda, especially in the particularly unequal US and UK. Now Elizabeth Warren has a shot at becoming the most redistributionist US president since Franklin D Roosevelt, while an electable post-Corbyn Labour leader could achieve similar in Britain.

Piketty explains why this could be the moment for a turn to equality, and which policies could make that happen.

His premise is that inequality is a political choice. It’s something societies opt for, not an inevitable result of technology and globalisation. Whereas Marx saw history as class struggle, Piketty sees it as a battle of ideologies.

Every unequal society, he says, creates an ideology to justify inequality. That allows the rich to fall asleep in their town houses while the homeless freeze outside.

In his overambitious history of ­inequality from ancient India to today’s US, Piketty recounts the justifications that recur throughout time: “Rich people deserve their wealth.” “It will trickle down.” “They give it back through philanthropy.” “Property is liberty.” “The poor are undeserving.” “Once you start redistributing wealth, you won’t know where to stop and there’ll be chaos” — a favourite argument after the French Revolution. “Communism failed.” “The money will go to black people” — an argument that, Piketty says, explains why inequality remains highest in countries with historic racial divides such as Brazil, South Africa and the US.

Another common justification, which he doesn’t mention, is “High taxes are punitive” — as if the main issue were the supposed psychology behind redistribution rather than its actual effects.

All these justifications add up to what he calls the “sacralisation of property”. But today, he writes, the “propriétariste and meritocratic narrative” is getting fragile. There’s a growing understanding that so-called meritocracy has been captured by the rich, who get their kids into the top universities, buy political parties and hide their money from taxation.

Moreover, notes Piketty, the wealthy are overwhelmingly male and their lifestyles tend to be particularly environmentally damaging. Donald Trump — a climate-change-denying sexist heir who got elected president without releasing his tax returns — embodies the problem.

In fact, support for redistribution is growing even faster than Piketty acknowledges, especially in the US. Twice as many Americans now feel more distrust than admiration for billionaires, according to a HuffPost/YouGov poll. Millennials are especially suspicious of success.

More American adults under 30 say they believe in “socialism” than “capitalism”, report the pollsters Gallup. This generation owns too little property to sacralise it.

Centre-right parties across the west have taken up populism because their low-tax, small-state story wasn’t selling any more. Rightwing populism speaks to today’s anti-elitist, anti-meritocratic mood.

However, it deliberately refocuses debate from property to what Piketty calls “the frontier” (and others would call borders). That leaves a gap in the political market for redistributionist ideas. We’re now at a juncture much like around 1900, when extreme inequality helped launch social democratic and communist parties.

Piketty lays out a new redistributionist agenda. He calls for “educational justice” — essentially, spending the same amount on each person’s education. He favours giving workers a major say over how their companies are run, as in Germany and Sweden. But his main proposal is for wealth taxes.

Far from abolishing property, he wants to spread it to the bottom half of the population, who even in rich countries have never owned much. To do this, he says, requires redefining private property as “temporary” and limited: you can enjoy it during your lifetime, in moderate quantities.

He proposes wealth taxes of 90 per cent on billionaires. From the proceeds, a country such as France could give each citizen a trust fund worth about €120,000 at age 25. Very high tax rates, he notes, didn’t impede fast growth in the 1950-80 period.

Warren (advised by economists who work with Piketty) is proposing annual taxes of 2 per cent on household fortunes over $50m, and 3 per cent on billionaires. She projects that this would affect 75,000 households, and yield revenues of $2.75tn over 10 years. Polls suggest most Americans like the idea.

Paradoxically, the plutocratic US may be ideal terrain for a wealth tax. Mark Stabile, economist at Insead, points out that, first, rich Americans now have so much wealth that even if Warren captures just a small proportion, it could add up to a lot; second, Americans are taxed on their passports, so moving wealth abroad won’t save them (and Warren would slap hefty exit taxes on anyone giving up citizenship); last, thanks to SwissLeaks and the Panama Papers, we’ve learnt a lot about how the rich hide money.

Advocates of inequality will come up with the usual justifications. But now is the redistributionists’ best chance.

What exactly is to be done?

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Here’s the challenge, but where’s the plan? Let’s stand up to globalist cant. There we find written:

Journalist Sebastian Haffner, writing on Hitler’s rise in Germany, refers to the ­absence of conservative resistance: “They went along with everything: the terror, the persecution of Jews … They were not even bothered when their own party was banned and their own members arrested.” ­Alexander the Great similarly ­observed that the people of Asia were slaves because they had not learned the word “no”.

I do not believe this is even remotely true, that conservatives “went along with everything: the terror, the persecution of Jews … they were not even bothered when their own party was banned and their own members arrested.” I bet they were bothered quite a lot, possibly even alarmed and frightened and would have refused to go along with any of it had there been any actual choice. Tell me what they should have done?

It is almost certainly the case that the tanks have so far been kept out of Hong Kong only because of the presence of Donald Trump in the White House. The most interesting aspect of the present moment in our political history is to find that, as has occurred over and again in the past, the left have declared war on the established rules that we “conservatives” count on to preserve our way of life and wellbeing.

So what’s the plan? What should we be doing exactly that we are not doing already? What should Donald Trump be doing?

Look at these ignorant yokels sitting on the streets of Melbourne. What exactly do you intend to do to get their attention. How are you going to get them to see how inane their concerns are?

Protesters sit on the ground on a major road in Melbourne. Picture: AFP

Smiling and cheerful. A lark and a day in the park. How about this for a contrast.

Image result for hong kong protest

Are we there yet? Where are we exactly? As Lenin himself asked at a different time and in a different place: What is to be done? There’s plenty of caution to go around but it’s all very well to rabble rouse those of us who leave things to our democratic institutions. We voted in Tony Abbott and Donald Trump and both uncovered a very deep institutional state of very dangerous people who will do anything to overturn the will of the people which does not coincide with the will of the “elites”, morally worthless scum though they be. And then there’s Boris as well so we are not without forces of our own.

I will tell you what the only plan we have is. To continue arguing our case in public, and to hope that we can get at least half the population to understand the dangers “climate change” and “socialism” and all the rest of it have for themselves and for their own futures.

If I have told this story before, well here it is again. I taught something like 1500 students over the years and I used to say when I came to my History of Economics section that I would give an automatic “A” to anyone who could tell me a single historical fact about John Stuart Mill. And no one ever did. Look at those dimwits in the street. They are not only your future, they are their own future. If you’re not worried you should be.

Distributing incomes to match what each of us deserves

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I received a very kind note from someone I had spoken with at the Historians of Economics conference the other day which I had discussed here. She sent me two articles, one from the economist Greg Mankiw, and the other from a philosopher, Peter Bauman. Mankiw was trying to justify the distribution of income in a market economy, and the philosopher, oddly, was almost trying to defend Mankiw. Neither, however, satisfied me, so this is what I wrote back.

Had a quick read of the two articles. Mankiw was such superficial nonsense I could barely stand it. I was pleased that the reply by the philosopher picked out some of what I thought. It was not what I thought you had meant since we were talking about pricing in a market economy, which does have a major ethical dimension since if you try to manage an economy without using the market mechanism you end up like Venezuela. Not understanding that and having such folly turned into national policy has left millions destitute and in the hands of tyrants everywhere.

As for distribution of income, the core issue of an economy is how do you get people to undertake the various jobs that need to be done, such as cleaning blocked sewage pipes. And then if you are looking at questions like how do we make economies grow and how do we get innovation, well there are additional questions that need to be answered.

As a first approximation, which you may not like, as I was reading the articles, it occurred to me that the greatest injustice – far beyond anything related to incomes – is the injustice that the teams each of us follow almost never win the Grand Final. Some people therefore get fantastic pleasure in life while the rest of us have to get by supporting losing teams, often for years and years on end. Seems very unfair to me. You may not think that is much of an analogy, but it is closer than you think. As Bauman was trying to point out, the nature of the world makes it difficult to relate economic contribution to reward.

I see all those folks who read Marx when he was first published for whom nothing could have even possibly been done at the time to make their lives one tenth more prosperous and less difficult than lives turned out to be half a century later, although these were different lives. And lives became even better half a century after that by 1960, and then half a century later we are where we are today, living much better than anyone in the 1860s. And still so many are dissatisfied. Income distribution is a misery index with no practical value since however you slice it, the distribution of income in a market economy is closely related to the production of goods and services. Disturb the first and you disturb the second, and not only is no one better off, but tens of millions become much worse off. Did I mention Venezuela?

The politics of envy has ruined more lives than almost any other human trait, other than the lust for power.

Have these people never heard about this thing called the market?

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As I sometimes mention, the only area I really disagree with Donald Trump about is interest rates. Keeping rates high enough to sort out good investments from bad actually makes an economy more productive and growth oriented. The Fed is really trying to harm the President but may actually be helping him create the economic boom the American economy is surely enjoying. It is possible for rates to be too high, of course, but it is also very possible for rates to be too low. No chance in the world central banks have the slightest understanding of any of this, or at least little chance given how they behave.

Let me give you a very clear example of pandering to economic ignorance:

The big four banks are reaping an extra $14bn a year in interest ­repayments after withholding a quarter of all Reserve Bank rate cuts since 2011 while at the same time reducing term deposit interest rates in excess of official cash rate reductions.

An analysis of standard variable rates for mortgages and interest rates paid to savers, carried out by comparison website RateCity on behalf of The Australian shows standard variable rates have fallen by just 2.99 per cent since October 2011. Over the same period, the RBA has reduced the cash rate by 4 per cent.

The big four banks’ margin on average standard variable home loans has grown to 4.05 per cent over the cash rate, wider than the 3 per cent difference when the RBA began its latest round of monetary easing in 2011.

The margin is now double the 2 per cent margin that existed ­before the global financial crisis.

And while I can see why the PM has these views, since he, too, must think the lower the rate of interest, the stronger the level of investment will be. But this is just wrong.

Scott Morrison rebuked the big banks last week over their failure to pass on in full the RBA’s Oct­ober rate cut of 0.25 to a record-low 0.75 per cent. After the rate announcement, the CBA cut its owner-occupied rate by 0.13 per cent and ANZ by 0.14 per cent while NAB and Westpac cut by 0.15 per cent.

“Mortgage holders … have a reason to be disappointed in the banks, basically, profiteering,” the Prime Minister said.

He was only “disappointed” from which I assume he does not intend to wield any big stick at the banks. Hope so. Labor of course understands none of it:

Opposition Treasury spokesman Jim Chalmers said on Sunday Labor would consider, as part of a broader raft of potential packages, whether to increase the 0.06 per cent tax on the big four banks, plus Macquarie, to increase competition in the sector….

“All of these options should be on the table,” Dr Chalmers told Sky News.

Higher taxes to increase competition! What economic buffoons these people are.

Dealing with the resistance

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Spent the night in hospital because of an infection. I had gone to my GP last Monday with a very red and painful infection on my leg, which he looked at and put me straight onto a course of antibiotics. He said it should clear up in about a week. By Saturday it had become much worse and so I took myself off to the hospital which put me straight onto an anti-biotic drip which will now continue until whatever it is goes away. Looking to next Thursday at the earliest for this to finally be under control.

The twenty-first century will have its share of problems to deal with many of which are already visible. Included in this is the growing resistance of bacteria to anti-bacterial diseases of various kinds. Koch and Pasteur at the end of the nineteenth century put tools into the hands of doctors that allowed them for the first time in the history of the medical profession actually to cure disease and not just set bones and cut out diseased tissue (and let me remind you here of the blessings of anaesthetics).

This was a personal experience of what will be a problem of the highest order if we are not able to maintain our ability to control such diseases into the future. It is literally only a century ago that millions died from the influenza epidemic at the end of World War I.