The socialist takeover of the American economy

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What we are getting is an economy that will be shaped and driven by government decisions rather than by business decisions. The size of the public sector will increase relative to the private sector, but that is the very aim of what is being done. Taxes replace business revenue as the means to finance these decisions. Just expect real personal incomes to fall, but economic statistics to show a continual improvement in the pseudo-outcomes GDP and employment data provide. The rise in prices will be about the only stat that will remain available to show something is wrong, because there will be no disguising the fall in living standards that is to come.

And where America leads, others in “the free world” are sure to follow.

Opportunity Cost

I received a letter from an old friend who asked:

I have a friend who is a writer and artist. One of his current projects is a novel. At one point he needs to explain opportunity cost. It recalled for me that you wrote a book for kids explaining the fundamental principles of economics.

Would be willing to share the text with us?

This was my reply.

I would of course be willing to share my text with you. The title is Economics for Infants. However, not sure you find opportunity cost discussed, at least not explicitly. However, there is always this you can look at (it can be ordered by the library and the paperback is pretty cheap):  

Free Market Economics, Third Edition. An Introduction for the General Reader The Elgar webpage is  here. And I do notice that Opportunity Cost is discussed on four separate occasions within the book, once even using a diagram. Highly recommended, if I do say so myself. In fact, I do say so myself. 

I just put up a blog post referring to the book, which I will copy below. Here is what I said: 

From The switch to green energy can be the biggest bonanza in history.

“Australia is the best placed nation on earth to be the global winner in the net-zero world, with 672,000 jobs created and $2.1 trillion in economic activity generated by 2050.

“Jobs can be created by getting rid of technology. Economic activity can be driven forward by useless and non-productive forms of “investment”.

“But living standards can only rise if the value of output is greater than the value of the inputs used up. If you think massively increasing the cost of inputs through alternative forms of energy will increase value added, and therefore living standards, you are an economic incompetent. Value added is the core concept surrounding opportunity cost, which also necessitates understanding the economic meaning of cost within economics.

“In my economics text, Free Market Economics, the single most important chapter is the third, on Value Added. No other modern textbook that I know of actually discusses value added beyond a para or two, but without value added at the core of one’s grasp of economics, you will never understand a thing that matters.”

Which reminds me of this, which I may or may not ever have sent to you before: I, Mechanical Pencil: Why a socialist economy can never work. There you find this, which is near enough the core concept of opportunity cost as it is practised in the market: 

What prices must do is reflect how much something costs. And what information about costs does is help entrepreneurs work out which is the least costly way to produce whatever it is they produce. It is important to find the least costly way to produce because the fewer resources used up in making each particular good or service, the more resources are left over to produce something else. Keeping production costs down is essential to maintaining and building our prosperity. This is why prices matter so much. If prices are properly set in the market, the revenue received by each entrepreneur will cover all the costs of production. If every producer sets their own prices, then the prices charged for every input will provide the essential guidance to entrepreneurs on how to keep production costs down.” 

Whether any of this ends up in the book I may never know.

Possibly the single most ignorant sentence on the economy I may have ever read

From The switch to green energy can be the biggest bonanza in history.

Australia is the best placed nation on earth to be the global winner in the net-zero world, with 672,000 jobs created and $2.1 trillion in economic activity generated by 2050.

In my economics text, Free Market Economics, the single most important chapter is the third, on Value Added. No other modern textbook that I know of actually discusses value added beyond a para or two, but without value added at the core of one’s grasp of economics, you will never understand a thing that matters.

Jobs can be created by getting rid of technology. Economic activity can be driven forward by useless and non-productive forms of “investment”.

But living standards can only rise if the value of output is greater than the value of the inputs used up. If you think massively increasing the cost of inputs through alternative forms of energy will increase value added, and therefore living standards, you are an economic incompetent.

Even this is not peak absurd but surely it’s getting close


Sometimes the things you read are so absurd that they just cannot be true. From Biden Banking Nominee Scrubs Karl Marx Paper From Résumé. Try to find something more outrageously insane than this:

President Joe Biden’s pick for the nation’s top banking regulator, who received a scholarship named for Vladimir Lenin, scrubbed her résumé of a reference to a thesis she wrote on Karl Marx while a student at Moscow State University.

They even tell you what the thesis was so it’s not even hidden from those who made the decision.

Omarova, who Biden tapped to head the Office of the Comptroller of the Currency, listed a paper titled “Karl Marx’s Economic Analysis and the Theory of Revolution in The Capital” on her résumé as recently as 2017.

Who better to regulate the American banking system than a Marxist communist graduate of Moscow State University?

The Great Reset

From Glenn Beck so make of this what you please.

I’ve never issued a warning like this before…

I’m typically an optimistic, easy-going guy. In 30 years, I’ve served as a high-level tech executive, investment analyst, and I’ve even been asked to consult with prominent U.S. senators on tech-related issues…

I have not felt an urgent need to warn the American public…

Until now.

You see…

There is a dangerous idea being pushed by members of several world organizations…

Something being referred to as the “Great Reset”…

You may have heard of it…

Time magazine, for example, recently featured it as their cover story…

The World Economic Forum has been pushing hard for this “reset”…

And even the Catholic Church is talking about it… stating that “forces of the “Great Reset” have used COVID to advance an “evil agenda.” But what exactly is this “Great Reset”? And what does it mean for you and your money?

I’ve spent significant time on the website of the group pushing the Great Reset…

I’ve appeared on television with Glenn Beck to discuss the topic…

And I’ve even been tweeted about by Donald Trump for my work on this subject…

And what I’ve found is startling. The Great Reset is essentially a controlled demolition of the American financial system. The events in the months ahead will make the events of the last few months feel insignificant in comparison. That’s why I’ve put together a free presentation to explain the big picture, and to show you what you can do to prepare. Go here to see my shocking conclusions.

Regards,

Jeff Brown

Is it murder to withhold medication that would cure them from someone with an illness?

This is the story at the link: Australia admits it is banning ivermectin for COVID because it interferes with universal vaccine agenda. That is, since Ivermetin will stop Covid in its tracks, no one would be vaxxed if Ivermectin weren’t banned by the Australian Therapeutic Goods Administration (TGA). As it says in the post:

There are a number of significant public health risks associated with taking ivermectin in an attempt to prevent COVID-19 infection rather than getting vaccinated. Individuals who believe that they are protected from infection by taking ivermectin may choose not to get tested or to seek medical care if they experience symptoms. Doing so has the potential to spread the risk of COVID-19 infection throughout the community.”

That’s it! That is the reason they not only oppose ivermectin here and in Australia, but oppose hydroxychloroquine, budesonide, fenofibrate, and any and all forms of preventive and outpatient treatment. Doctors have even told me they have had prescriptions blocked by pharmacists for antibiotics or prednisone, if they think they are being used for COVID. This is the most evident admission yet from the Australian government that it can’t afford to get rid of the virus with something so cheap because it will obviate the need for the vaccine … and the totalitarian agenda accompanying it.

Then there’s this which comes next:

Officials don’t like the dosage being used by doctors prescribing for COVID. “Secondly, the doses of ivermectin that are being advocated for … are significantly higher than those approved and found safe for scabies or parasite treatment,” writes the TGA in the press release. “These higher doses can be associated with serious adverse effects, including severe nausea, vomiting, dizziness, neurological effects such as dizziness, seizures and coma.”

Which, even if true, has an obvious solution which is to prescribe dosage levels which do not lead to harm. But as pointed out:

Studies have already been done for years showing that ivermectin is safe to take at much higher doses than the 0.2-0.6 mgs per kilogram of weight that most doctors are prescribing. A 2002 randomized, double-blind, placebo-controlled trial of ivermectin use for head lice in Miami found zero evidence of toxicity even for people talking 30-120 mgs of ivermectin, exponentially higher than any COVID dosing.

Lastly, Ivermectin has become so popular, that there are shortages developing to treat people who have scabies and other non-fatal parasitic diseases. This is the TGA speaking:

“Finally, there has been a 3-4-fold increased dispensing of ivermectin prescriptions in recent months, leading to national and local shortages for those who need the medicine for scabies and parasite infections.”

So it’s safe for scabies but not for Covid. And no one is worrying about overdoses here.

The final sentence:

If ivermectin is guilty of something, it’s that it actually works.

If we’re looking for the guilty party, it’s the TGA.

Just because it never ever worked before is no reason not to try it again


Both of these are about public spending as the road to economic growth, as in there is no such thing.

GREAT MOMENTS IN CENTRAL PLANNING: Watch: Insane footage shows China blowing up 15 skyscrapers that had sat vacant for nearly a decade.

Flashback: 34 Unforgettable Photos Of China’s Massive, Uninhabited Ghost Cities.

Plus this.

Amity Shlaes on Biden As the New FDR: It’s the same old bad deal for jobs.

Not until World War II did joblessness finally begin to subside, in good measure because of military mobilization — important, but not the same as peacetime employment.

As often discussed, errors in monetary policy contributed to the misfortune that was the 1930s. The cause of the duration of the Depression, though, was Washington’s persistent intervention. The chief economist at Chase, Benjamin Anderson, noted that after failing by playing God, the government chose not to retire but simply “to play God more vigorously.”

The first lesson of this sorry account is that an arbitrary national economic campaign from atop generates damaging uncertainty in the economy. However charmingly it reverberates, the very phrase “bold persistent experimentation” stifles growth.

The second point is that what helps the union hurts the worker. President Biden’s proposal to end “Right to Work,” if it becomes law, will dramatically stifle employment.

Flashback: FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.

Both from Instapundit.

“Transitory” inflation is on its way


I don’t know what I would do without Paul Krugman and his unerring ability to get things wrong, but bless him, there he is again.

Krugman doesn’t get quite understand any of this, but he does come close. The issue between the classics and the Keynesians over why recessions occur was over whether they were due to structural imbalances or demand deficiency. We live in a world where lack of demand is now the accepted truth which Krugman does go on about, although of all things, by first noting the structural imbalances that now exist.

The pandemic really did produce an Austrian-style reallocation shock, with demand for some things surging while demand for other things slumped. You can see this even at a macro level: There was a huge increase in purchases of durable goods even as services struggled….

We’re finally having the kind of economic crisis that people like Hayek and Schumpeter wrongly believed we were having in the 1930s.

Of course, the reason we are in recession right now is because our governments have shut much of the private sector down as an act of policy. Entirely insane, and we will pay for this and in no uncertain terms, which Krugman even kind of notes in his very last line which is really the central point of this post.

And in case you’re wondering, the Fed, by accepting transitory inflation, is getting it right.

You’ve been warned. Inflation is on its way. What to do about it I have no idea. Our governments will eventually be coming after us for all the money they can put their hands on. Transitory of course means that this inflationary period will end, eventually, but when that might be is anyone’s guess. Saving us from the Chinese flu will not have come cheap.

A study in cynicism and the modern world

Here’s the actual title, Diary of an Acclimatised Beauty: Treating, but it really is a study in cynicism and the modern world. Here is the passage that first caught my eye, just in case you were wondering why there are so many covid cases in the US.

American hospitals are actually paid 20 percent more for a coronavirus diagnosis and therefore ‘you can rest assured they are telling people to ‘put it on the DRG‘ which he explained is some code for getting the highest reimbursement from the government. The reimbursement didn’t make that much sense to me as I well understood the U.S. was not all on one shared government programme but he further explained that since Covid, there were nearly no private hospitals anymore; and that everyone had become dependent on the government dollar. He also explained it was the same for anyone getting a Covid test, and although I’d already interacted with a dozen or so hospital employees—they would indeed test me for Covid before I left.

It’s a fascinating article on so many levels. This bit is from close to the end.

‘I’m really not happy about a conversation I just had about the business model of a hospital, and I thought I was getting better care in the U.S., than from the National Health.’

‘You probably are.’ Daddy said, ‘But it is a business, and not a very successful one either. Most hospitals are losing money, so there’s an incentive to lie about the diagnosis. Even a positive coronavirus test while treating your eye injury will mean they can bill for 20 percent more so if you want to do them a favour why don’t you tell them you have symptoms of flu.’

‘I’m serious, Daddy.’

‘As am I.

It’s the way of the world.

The only way to create wealth and personal freedom is through markets

This is the overview of a presentation I gave to the IEA in London in 2011: The Basic Axioms and Fundamental Principles of a Free Market Economy. It also provides a brief bio. There is not much to add since then other than the titles of a number of books and articles that I have published since that time.

Most discussions of how economies work start in the middle where there is already a functioning economy. Indeed, it is always assumed in every economics text that markets are already in operation, money exists, labour is at work and capital is in place. What such discussions do not do is explain the basic economic problem that humans have always had to face in trying to make their way in a world in which they must create their own economic circumstances out of their own ingenuity and hard work. This presentation is taken from one of the opening chapters of Dr Kates’ Free Market Economics: an Introduction for the General Reader, a book being co-published by Edward Elgar and the IEA. It is in this chapter that he explains why the only way to create wealth and personal freedom is through markets, individual freedom and government regulations that are based on allowing markets to work. If you are interested in understanding why there is no alternative to a market economy if prosperity and personal freedom are your aims, this is a presentation not to be missed.

For most of his career Dr Kates worked for industry having been for a quarter of a century the Chief Economist for the Australian Chamber of Commerce and Industry (the Australian equivalent of the CBI). As part of this work, he was responsible for the preparation of economic submissions on behalf of business in every area of economic policy. His professional interests have therefore been closely related to the formation of economic theory in line with the needs of policy. He has recently completed an appointment as a Commissioner on the Australian Productivity Commission. His Say’s Law and the Keynesian Revolution, originally published in 1998 but released again in paper in 2009 following the GFC, discussed the loss to economic theory of the disappearance of the classical theory of the cycle.