Victoria is heading for financial disaster

Victoria is heading for financial disaster that will make the lockdown look like a minor incident along the road to Dan Andrew’s destruction of the state he has been overseeing. It’s only a small story, of course, but at least it is being mentioned: Building boom blamed for blowouts. It’s described as an “Exclusive” mostly because none of the other members of the Victorian media will go near it. You will never see this on the ABC for example.

VICTORIAN road projects are suffering big cost blowouts as the Andrews government battles to rein in the rising cost of labour and materials. The Sunday Herald Sun can reveal a series of suburban road upgrades have cost more than $50 million more than first planned, and some projects have blown out by nearly a quarter of the original cost…. Cost blowouts also affected works to strengthen bridges in regional Victoria, and just one of seven planned upgrades was completed last year because of changes to projects and rising costs.

It’s modern economic theory that is partly to blame, since everyone is now taught how public spending is necessary to create jobs. Absolutely wrong, of course, but everyone thinks it so that phenomenal amounts of money are poured into one wasteful project after another, projects that will never ever recover their costs in the value of their retunrs to the community. But it is possible that help is on the way, or at least a small modicum of coherence. I’ve emphasised the bits that need to be understood and then become the focus of attention, first for the Opposition and then for the rest of the community.

Opposition Transport spokesman David Davis said the government could not manage the finances of major projects. “Everywhere you look … costs have blown out and timelines are shot,” he said. “The community expects projects to be built on time, they don’t expect money to be wasted or squandered. “Many projects are delayed and its all down to the government’s own incompetence.”

The issue is NET costs, that is, the relative size of the return as against the costs of doing whatever is being done. Seems basic, but there is not a socialist government in the world that gets it right, with almost as many non-socialists as clueless as the socialists.

Marriner Eccles

Marriner S. Eccles was another of the early Keynesians of which there were quite a few. Keynes wrote the book but the ideas were in the air then as they remain today. This is from Wikipedia.

Marriner Stoddard Eccles (September 9, 1890 – December 18, 1977) was an American bankereconomist, and member and chairman of the Federal Reserve Board.Eccles was known during his lifetime chiefly as having been the Chairman of the Federal Reserve under President Franklin D. Roosevelt. He has been remembered for having anticipated and supporting the theories of John Maynard Keynes relative to “inadequate aggregate spending” in the economy which appeared during his tenure. As Eccles wrote in his memoir Beckoning Frontiers (1951):

As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth … to provide men with buying power. … Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. … The other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped….

Eccles was and is seen as an early proponent of demand stimulus projects to fend off the ravages of the Great Depression. Eccles was famously rebuked by Congresswoman Jessie Sumner (RIL) during a House of Representatives hearing on the increasingly liberal policies of the Roosevelt administration and the Federal Reserve, when she said, you just love socialism.” He became known as a defender of Keynesian ideas, though his ideas predated Keynes’ The General Theory of Employment, Interest, and Money (1936). In that respect, he is considered by some to have seen monetary policy having secondary importance and that as a result he allowed the Federal Reserve to be sublimated to the interests of the Treasury. In this view, the Federal Reserve after 1935 acquired new instruments to command monetary policy, but it did not change its behavior significantly. Further, his defense of the Federal Reserve-Treasury accord in 1951 is sometimes seen as a reversal of his previous policy stances.

Economic clowns at every turn

Fascinating title from an article in the Financial Times: Why economists keep being wrong on policy. It comes with a bit of interesting content in its description of the nature of economic theory and policy:

The abiding sin threaded through it all was that of certitude. Perfectly plausible but untested theories, whether about the money supply, fiscal balances and debt levels, or market risk, were elevated to the level of irrefutable facts. Economics, essentially a faith-based discipline, represented itself as a hard science. The real world was reduced by the 1990s to a set of complex mathematical equations that no one, least of all democratically elected politicians, dared challenge.

Thus detached from reality, economic policy swept away the postwar balance between the interests of society and markets. Arid econometrics replaced a measured understanding of political economy. It scarcely mattered that the gains of globalisation were scooped up by the super-rich, that markets became casinos and that fiscal fundamentalism was widening social divisions. Nothing counted above the equations.

And what is the conclusion?

And now? After Donald Trump, Brexit and Covid-19, it seems we are back at the beginning. Time to dust off Keynes’s general theory.

It does make me laugh. Donald Trump created the greatest economic upturn in American history but that remains completely invisible to these clowns. It would never occur to them to examine just what happened and why it might have worked. But the notion that Keynes and his General Theory have been absent from policy and need to be brought back may be the most stupid comment I have seen on economic theory and policy in a very long time.

“A perspective on the operation of an economy that has unfortunately entirely disappeared”

Here is a very nice review of my Classical Economic Theory and the Modern Economy in The History of Economics Review, written by Nathan Saunders, linked here. I can only say how grateful I am to find a review of the book written in sympathy with its aims and arguments. Here is his opening para:

The aim of Steven Kates’s latest book – Classical Economic Theory and the Modern Economy – is for readers to appreciate John Stuart Mill’s deep and broad understanding of economics along with the whole of the classical school from around the middle of the nineteenth century through to its final and complete disappearance with the publication of The General Theory in 1936. Moreover, Kates argues, it is our loss that we have primarily ignored the timeless principles embedded within classical theory. Presented between the covers are many arguments as to why Mill and his classical contemporaries should be front and centre within the economics discipline to this day. The following are five arguments from his book, presented in no particular order, with which I strongly agree.

He then goes through the five reasons why classical theory should be at the forefront of our understanding of how economies work. Of course the main reason is that modern economic theory, with its Keynesian demand management ethos embedded at every stage in the process, has never been able to provide a solution to a single economic downturn on even a single occasion since The General Theory was published. As discussed in the review:

Kates presents Mill’s fourth proposition on capital: ‘Demand for commodities is not demand for labour’. This proposition has not been refuted by the Keynesian revolution, nor by anyone else for that matter. Kates states: ‘The level of employment was unrelated to the level of aggregate demand … [and Mill] understood the errors embedded in any such attempt’ for policy-makers (221). Mill emphasized the harm embedded in such policies, an understanding that has disappeared, even as an issue to be debated. Mill kept all four of his propositions on capital pragmatic, commonsensical, and timeless. Moreover, Kates defends this momentous fourth proposition not only by drawing upon his knowledge of the history of economic thought, but also through a discussion of the many failed efforts to short-circuit recessions through increases in public spending.

Dead on. Let me recommend the book to you, but also might I suggest that you ask your local library to order a copy both for yourself to read along with others.

BTW the heading is taken from Nathan’s own text.

Educating people about the victims of capitalism

This is from Quora: How can I educate people about the millions of victims of capitalism?

Great question, this is easy! [Answered by Paul O’Brien, CEO of MediaTech Ventures found in Austin, Texas.] Here’s his answer.


Explicitly define capitalism:

An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.

Right? We have to be clear about what it is if we’re going to then educate people properly about something.


List some countries in which the country’s trade and industry are controlled by private owners…

Singapore, Hong Kong, and New Zealand are the closest we can get.

Shoot, this isn’t as easy as I thought.

Okay, back up… according to the The Heritage Foundation, which reports on this stuff, those are the only 3 countries in which trade and industry are almost entirely controlled by private owners.

From there, the ranking of that control drops quite a bit, with Australia, Switzerland, and Ireland next. Then it slides pretty rapidly from there.

The United States, troublingly argued by many to have these capitalists and respective victims, is actually way down the list at about 17. And when I think about it, I can’t think any example of anything in the United States that is controlled by private owners – the government is involved in every aspect of business and trade.

Still, let’s roll with what we’ve found so far; we can only educate given the facts, right?

So, 3 countries to which to refer.


Explain what each of these countries and their capitalists do, that’s terrible.

1. Singapore. Singapore has been ranked as the top city in Asia in terms of quality of living according to global human resource consultancy, Mercer. Singapore is also regarded as the ‘Happiest country in South-east Asia’ according to the 2018 World Happiness Report .

[crepe]… this isn’t starting out so well is it?

Its sustained extraordinary performance has resulted in one of the world’s highest per capita incomes and solid rates of GDP growth.

Singapore is one of the world’s most prosperous nations, with a business-friendly regulatory environment and a very low unemployment rate.

okay okay… okay. Let’s move on.

2. Hong Kong. Hong Kong is a world financial center with low taxation rates and free trade. The city is connected by a well-developed but cheap public transportation system and offers extensive international travel connections for its large expat community. Adding its ease of doing business, the free public wifi, high safety rating.


The ongoing political and social turmoil has begun to erode its reputation as one of the best locations from which to do business, dampening investment inflows.

A ha! SEE!!!!! Atrocities.

no, no… wait a second… that’s because of the incoming government and the transfer of power of Hong Kong to China.

Okay, moving on…

3. New Zealand. Alright, we have to have something here! New Zealand… right? Come on. That country where Lord of the Rings was filmed. Seriously, where did they get all those Orc extras if not for it being a terrible place to live. Let’s take a look…

New Zealand ranks above the average in health status, income and wealth, environmental quality, personal security, civic engagement, housing, subjective well-being, education and skills, jobs and earnings, and social connections but below average in work-life balance.

seriously?!?! you gotta be kidding me…

Let’s move on to the forth step and really get this message across


Go to the other extremes and give the counter point. In order to effectively educate, we:

  1. define and explain
  2. Give valid examples
  3. Give counter examples

So, counter examples.

Bottom on the list of economic freedom where private owners retain the liberty to control what they do and decide how it works… That is, the places LEAST capitalist:

North Korea, Venezuela, and Cuba.


Okay okay, let’s give it the benefit of the doubt and work further up the list, increasingly toward countries with more private ownership and control of trade and industry…

Eritrea, Republic of Congo (isn’t that where they recently wrapped up a civil war?), Bolivia, Zimbabwe, Sudan (wait, as in the Darfur genocide?!), Sierra Leone, Liberia, Iran…

screw it, I give up.


You make your point in summation.

And it seems that what we’ve learned is that the victims of capitalism are the people who have lost capitalism to increasing governance, regulation, and control.

How can I educate people about the millions of victims of capitalism?

I’d proceed by educating thusly..

Throughout the world, hundreds of millions of people lack private ownership and control. As a result, capitalism is the victim and people caught living in countries where capitalism has been taken from them, live in poverty, war, in horrific health conditions, and without civil liberties and human rights.

You can aid people. You can make a difference.

We see through countries such as Hong Kong, that the sacrifice of private ownership, the loss of capitalism, leads millions to protest, often violently; fearful of falling under the same governance and economic circumstances of a place like China.

Countries such as Singapore, New Zealand, Ireland, and Australia, Switzerland to the surprise of many perhaps, are the counties we might admire, are they not? Countries with few, if any, victims; where people are healthy, thriving, and prosperous.

What’s the difference? These are countries in which government and public ownership and control of people is severely restricted. Private ownership of trade and industry is near paramount, and capitalism is protected.

Fight back the loss of human rights and fight for private ownership. Start saving millions who are suffering from capitalism being lost to them.

William Trufant Foster

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The Social Emergency: Studies in Sex Hygiene and Morals (Dodo Press) by William  Trufant Foster, Paperback | Barnes & Noble®

Foster and Catchings wikipedia entry

Pre-Keynesian American underconsumption theorists.

In their undergraduate years at the turn of the century, William Trufant Foster and Waddill Cathings had been classmates together in at Harvard.  Foster went on to become an college educator, while Catchings had gone into finance.  In 1919, they came together again at the Pollack Foundation for Economic Research – Catchings providing the economic expertise,  Foster providing the expository rhetoric – and promptly set about addressing the post-war slump.

Foster & Catchings main theses were worked out in Profits (1925) and Money (1928).  They argued that insufficient consumer income is what leads to collapses in consumption and hence profits, prices and outputs.  They base their theory on a primitive but clumsy version of a multiplier-accelerator mechanism.   If retained company profits are hoarded (rather than being lent out), then consumer income is insufficient for consumers to absorb output. They argued that even if the firm invests this hoarded money itself (and thus pays the income out to workers), the problem is not solved: increased investment increases demand, yes, but it also pushes out output even further.  The imbalance between aggregate demand and supply, Foster and Catchings argue, will thus maintain itself. 

Their theory contains a fatal flaw in the “long-run”, but seen in a short-run, dynamic manner, it is reminiscent of that of Malthus during the General Glut controversy.  They publicly offered a cash award to any economist who could prove their argument flawed. Dozens upon dozens of people submitted proofs (e.g. Friedrich Hayek, 1929), but while they acknowledged minor errors, Foster and Catchings maintained that their central thesis remained correct.  Apparently, Foster and Catchings had early sympathizers in Paul H. Douglas and Charles F. Roos.

Robert Dimand Brief Bio of WTF

The educator and heterodox monetary economist William Trufant Foster was born in Boston, Massachusetts, on 18 January 1879, and died in Winter Park, Florida, on 18 October 1950. After his father’s early death, Foster worked his way through high school and Harvard University, graduating first in his class in 1901. After teaching at Bates College in Lewiston, Maine, he returned to Harvard to take an A.M. in English in 1904, followed by a Ph.D. from Teachers College of Columbia University. His exceptional success as a teacher of rhetoric and a textbook author, and the vision of an ‘ideal college’ presented in his doctoral dissertation (published in 1911), led to his remarkably early promotion from instructor to full professor at Bowdoin College in Brunswick, Maine, in 1905, and his appointment at the first president of Reed College in Portland, Oregon, in 1910. Foster served as an inspector with the American Red Cross in France after US entry into the First World War. Health problems from overwork, together with controversy over his pacifism, led Foster to resign from Reed College in December 1919. He then became director of the Pollak Foundation for Economic Research, founded in Newton, Massachusetts, by his Harvard classmate Waddill Catchings, an investment banker.

The economic consequences of Covid

Voters on the left are only slightly more stupid than the people they vote for. Ten months of lockdown and look what happens:

World witnessing greatest rise in inequality on record… Billionaires thriving as poor suffer…

Sharpest Rise in Poverty Rate in More Than 50 Years…

If you stop production [ie enforce lockdowns on our economies] you stop consumption, and that is the order in which things happen. And this is just the start of it.

What’s united about the United States?

What a mess! The only part that unites the Democrats is that the president is no longer Donald Trump. Let them enjoy it while they can since from here on it things will only get worse. All from just now.


Don’t Call Biden’s Plan ‘Stimulus’ — It’s Just Another Keynesian Fantasy Issues & Insights, by The Editorial Board Original Article Joe Biden’s promised stimulus is meant to boost an economy devastated by the Democrats’ national shutdown by handing out more checks and imposing a $15 national minimum wage. Sorry, it won’t work. “We must act now, and we must act decisively,” Biden said. Sounds good, but do we really? What he and Congress have proposed is an incoherent mess that will do the precise opposite of what he says it will. Even worse, it’s premised on the long-discredited idea that the government can stimulate the economy by spending more. From false premises come bad policies that will hurt many low-income

Is it really “long-discredited”? I thought it was mainstream macro. Maybe this time it will be discredited, but hope springs eternal in the socialist breast.

_______________The rest were all here before

The painful symbolism of the 26,000 National Guard Troops in D.C. American Thinker, by Andrea Widburg Original Article  Those of you who are reading this post are the type of people who pay attention to things. That’s why you already know that 26,000 National Guard troops drawn from all over America and from Puerto Rico, have assembled in Washington, D.C., in advance of Joe Biden’s inauguration on Wednesday. (That’s about three divisions worth of troops.) But have you given serious thought to what the troops’ presence means? (snip) I’m inclined to agree with Tucker Carlson’s brilliant Monday night opening monologue regarding the deeper meaning behind a massive D.C. lockdown

Joe Biden: Amnesty for Everyone Who Was Here on January 1 Breitbart Economy, by Neil Munro Original Article President-elect Joe Biden’s amnesty plan will reportedly provide the glittering prize of U.S. citizenship to everyone who can show they were in the United States illegally on January 1, if Congress passes the wage-cutting, nation-changing legislation amid a deep economic recession.“To qualify, immigrants must have been in the United States as of Jan. 1, a move meant to blunt any rush to the border,” according to a description provided “by transition officials” to the Washington Post.But the “rush to the border” is likely because migrants and the coyotes’ smuggling industry can backdate documents

Activists: Biden’s Embrace of Transgender Athletes a Blow to Women’s Rights Breitbart Sports, by Penny Starr Original Article President-Elect Joe Biden’s promise to embrace transgender ideology will likely include supporting biological men who say their gender identity is female to compete in sports against biological women. Attorneys representing transgender athletes and women athletes expect Biden’s Department of Education to reverse course in two lawsuits in Idaho and Connecticut that the Trump administration had backed to protect women’s rights. (Snip) Transgender athletes are getting an ally in the White House next week as they seek to participate as their identified gender in high school and college sports — although state legislatures, Congress and the courts are all expected to have their say this year, too.

Trump’s 1776 Commission slams schools for trying to paint the US as an ‘evil country’ with ‘distorted histories’ on slavery, defends the Founding Fathers and urges teachers to reject ‘activist propaganda’ in MLK Day report Daily Mail (UK), by Luke Kenton & Lauren Fruen * Original Article The Trump administration’s 1776 Commission has slammed what it calls ‘re-education attempts’ that re-frame the United States as ‘an evil country’ in a scathing report released on Martin Luther King Jr. Day. The 45-page document blasts ‘destructive scholarship’ that the commission says misrepresents the history of slavery and racial discrimination in the nation’s schools and colleges. It also likened American liberals to the Italian fascist leader Benito Mussolini, who the commission said ‘sought to centralize power under the management of so-called experts.’ ‘States and school districts should reject any curriculum that promotes one-sided partisan opinions,

Incoming White House Climate Team Blames Systemic Racism’ for Climate Change Washington Free Beacon, by Collin Anderson Original Article A pair of top incoming White House environmental aides has blamed “systemic racism” as a driver of climate change in an attempt to justify a government-led economic overhaul.President-elect Joe Biden named progressive policy adviser Maggie Thomas as Office of Domestic Climate Policy chief of staff and climate advocate Cecilia Martinez as “senior director for environmental justice” on Thursday. Both Thomas and Martinez have cited racial inequality as perpetuating climate change, arguing that the Biden administration’s environmental policy must be centered on “racial and economic justice.”

NY Times Says We Need A Return To Trump’s Booming Economy But CNN Admits Biden Has No ‘Magic Wand’ Hot Air, by John Sexton Original Article According to the NY Times, Biden’s incoming economic team has one goal: Get back to the booming pre-Covid economy of the Trump administration: As President-elect Joseph R. Biden, Jr. prepares to take office this week, his administration and the Federal Reserve are pointed toward a singular economic goal: Get the job market back to where it was before the pandemic hit. The humming labor backdrop that existed 11 months ago — with 3.5 percent unemployment, stable or rising work force participation and steadily climbing wages — turned out to be a recipe for lifting all boats, creating economic opportunities for long-disenfranchised groups and lowering poverty rates.

Socialists can never be convinced that socialism does not work


Q: Why do people keep defending socialism if it had never worked before? Why do people keep defending socialism?Capitalism keeps harming them again and again if it had never worked before

A: Says who? Our socialist military defeated the fascists in WWII, in association with the Socialist Soviets. We built public schools, roads, utility grids, public water supplies, drug testing, food quality testing and many other things. They work pretty well. I was also reminded that the Inca and early Christian’s were socialists in practice, though the term was not yet in use.


Socialists are a pretty stupid lot. The above is from Quora where you do find quite a lot of ignorant fools defending socialism as above. Does he really think the Incas were socialists? Were all of those Victorians who built public schools and roads etc socialists?

Here’s how you tell a socialist from a non-socialist in one easy lesson. A socialist believes an economy can be run like a single business, with all of the decisions made by head office, usually located in the capital city. Public works and public schools are not evidence of socialism. Central planning and the replacement of private firms by the public sector is. And most important of all, in a market economy there needs to be a price mechanism to allocate the resource base between different uses whereas among socialists they just spend the money on their favourite projects.

For a bit more on this, you might have a look at my I, Mechanical Pencil in which I explain in more detail the role of the price mechanism which can never be explained sufficiently well for those who are determined to introduce a socialist economy guaranteed to impoverish just about everyone.