Suffering conditions worthy of Anglo-Saxon countries

Posted on April 3, 2016 by lawofmarkets

Is this the very letter of what it means to be living in a bubble, Labour law revolt across France humiliates President Hollande.

A day of chaos left Mr Hollande under pressure to perform another humiliating U-turn, after his climb-down over new anti-terrorism laws on Wednesday.

So what has got him into such hot water after he found it impossible to introduce new laws restricting the rights of terrorists?

The labour legislation, promoted by Prime Minister Manuel Valls, was touted by spin doctors as a brave bid to improve the stuttering economy by lengthening France’s notoriously short working week, while making it easier for companies to lay off staff.

The economy is without doubt stuttering, and the 35-hour week has been a major handicap since it was introduced in the 1980s. It has also been impossible for a firm to reduce employee numbers whether or not those employees were actually needed by the business. So you don’t really have to look all that far to see what the economic problems are. But this is the bit I liked the best:

The under-25s are now prominent in a protest movement whipped up by student unions claiming that the workers of the future will suffer conditions worthy of Anglo-Saxon countries.

Well given how things are going, they won’t have to worry about economic conditions being like ours in a few years, or about other conditions as well.

“Wealth is not a fact of nature”

Posted on March 29, 2016 by lawofmarkets

I met Alan Kors a year ago. He is, among other things, one of the co-founders of The Foundation for Individual Rights in Education, FIRE. He has also survived 43 years at the University of Pennsylvania, largely because he can be used as evidence that all sides of the political spectrum are represented on campus. In fact, he is unique, not just there but virtually across the Western world. The ignorance is truly scandalous.

The presentation is about socialism, an idea so bad that it has swept the world and now the West. As he says, it is by no means clear to whom the future belongs. It runs an hour and a half, with questions making up the last half hour. Very impressive.

Cuba before and after

Posted on March 27, 2016 by lawofmarkets

That this is not part of our universal understanding of the difference between communism and capitalism is itself enough to condemn modern education in the West. The picture on the left is from sixty years ago. Obama’s words again:

“So often in the past there has been a division between left and right, between capitalists and communists or socialists, and especially in the Americas, that’s been a big debate.

“Those are interesting intellectual arguments, but I think for your generation, you should be practical and just choose from what works. You don’t have to worry about whether it really fits into socialist theory or capitalist theory. You should just decide what works.”

How moronic do you have to be not to have already decided.

[The picture’s from Steve Hayward at Powerline]. For a modern incarnation, try Venezuela.

You know, I cannot even begin to think of a title that can capture how surreal this is

Posted on March 26, 2016 by lawofmarkets

The story comes with a title that exactly captures what an American president can now say in public: OBAMA: ‘THERE’S LITTLE DIFFERENCE BETWEEN COMMUNISM AND CAPITALISM’. And it is not just that the American president is a vacuous cypher, but that it has been evident from the beginning that everything he said today is what he has always believed. That it will only be the usual suspects who are riled by these words that is the disaster. Since he can say them without much worry about capsizing his presidential boat, you now know a very great deal about the country that elected him, its education system, and possibly about why the American economy refuses to recover.

Obama responded to a question about nonprofit community organizations and the necessity of attracting funding from both the public and private sectors.

“So often in the past there has been a division between left and right, between capitalists and communists or socialists, and especially in the Americas, that’s been a big debate,” Obama said.

“Those are interesting intellectual arguments, but I think for your generation, you should be practical and just choose from what works. You don’t have to worry about whether it really fits into socialist theory or capitalist theory. You should just decide what works,” he added.

Obama went on to praise Cuba’s socialist system under dictator Raúl Castro, touting the country’s free access to basic education and health care, although he acknowledged that Havana itself “looks like it did in the 1950s” because the economy is “not working”.

A phenomenon of idiocy. And it is not just the march through the institutions, but comes right down to the way we teach economics that he can be as ignorant as he is since it is an ignorance now shared with many. That the article merely states that Obama “has stoked controversy” shows even the writer of the story sees nothing much out of the ordinary. It’s not even the feature story at Drudge where this was found.

Six years of depressed employment and counting

Posted on March 21, 2016 by lawofmarkets

On the twenty year lost decade in Japan, from my Dangerous Return of Keynesian Economics:

It ought to be the textbook case now for why all such forms of economic stimulus should be avoided at all costs. Because, say what you will about the causes of the Japanese downturn and the failure to recover, all major economies experienced the same deep recession at the start of the 1990s, but only the Japanese economy has never fully recovered its previous strength.

That is, only the Japanese tried a public sector stimulus to end their recession in the 1990s and their economy has never recovered. So we take you now to the United States: Half of U.S. May Endure ‘Lost Decade’ of Depressed Employment

Economic recovery has been unusually sluggish and uneven across regional U.S. job markets, with employment set to stay low for years to come in areas that endured the recession’s worst, according to new research.

At the current pace of improvement, employment rates across the U.S. won’t return to normal levels until the 2020s, “amounting to more than a relative ‘lost decade’ of depressed employment for…half of the country.”. . .

Based on the current trend, employment rates won’t converge to their normal levels until sometime in the 2020s. . . .

“We’re at six years of depressed employment and counting.”

Only about a dozen years to go to catch up with the Japanese, who by then may be in the 30th year of their lost decade.

Mr Morrison’s golden rule

Posted on March 18, 2016 by lawofmarkets

It’s not exactly good news as in things will only get better from here on in, but it is pleasing to see the Treasurer finally figuring out what has to be done to make things work. The headline says it all: Morrison to cut company taxes; income taxes to wait years. I wonder how hard he had to fight our good news Prime Minister to get this policy up.

Salary earners will have to wait some years for an income tax cut after Treasurer Scott Morrison confirmed on Thursday that company tax cuts will be his priority in the federal budget.

After indicating on Tuesday that the government had ditched plans for the income tax cuts it has been pledging for several months, Mr Morrison told Parliament the best way to fund income tax cuts was through economic growth. And the best way to drive economic growth was by reducing the 30 per cent company tax rate.

“We understand the burdens faced by people who are paying higher and higher rates of income tax. We understand that and we understand the best way to deal with that … [is to] grow the economy so you can grow revenues to support those changes,” he said.

“That’s the way you do it and that’s what this government is seeking to do. We’ll focus our changes on things that will drive investment, as we’ve considered many tax measures over the course of the past six months.”

Mr Morrison said the “golden rule” was to choose tax changes that would drive jobs and growth. “These are the benchmarks we set against the tax measures of this government,” he said.

This has always been the political answer to the years of Labor waste and mismanagement. If the country really wants all that free stuff, they will have to pay for it. And if the Budget is used to underscore the lesson of first the effort and then reward, we will be all the better for it. Let Labor become the party of the magic pudding and free lunch. Let the Libs finally turn themselves back into the party that reminds everyone there is no such thing.

No, not an effects test

Posted on March 17, 2016 by lawofmarkets

Who needed more proof that Malcolm is to the left of the Greens without the slightest evidence he has idea how an economy works or ought to work? Here is something that I spent a good deal of time fighting off when I was working for business, and this was on behalf of the Chamber of Commerce where 90% of it members were small business. This is from Andrew Bolt.

Malcolm Turnbull yesterday triggered a rift with the nation’s peak business group by announcing the introduction of an “effects test” to competition law, allowing small operators to sue larger companies for behaviour that diminishes competition, even if their conduct was not intended to have that effect.

How is that for utter stupidity! You have a supposedly pro-business provision that is universally opposed by business who, you may be sure, know what is good and bad for themselves. I’m sure some small business know-nothing somewhere can be trotted out to say that having a larger competitor charging lower prices is harming their profitability, and no doubt it is. But if we are going to make it illegal to charge a lower price than someone else, the ACCC will never run out of work, as the forces of competition are dulled by one of the most stupid anti-market pieces of legislation you are ever likely to see. Seriously, what evidence is there that Malcolm understands a single thing of importance to Australia’s future? You should go to Andrew’s post to see the comments by Terry McCrann and Stephen Bartholomeusz.

The Making of Modern Economics third edition

Posted on March 13, 2016 by lawofmarkets

Economists barely understand the history of their own subject today, in large part because most economists no longer even understand what role it could play in making an economist a better economist. I wrote my own book on this very subject, Defending the History of Economic Thought, when many historians of economics were themselves conspiring to remove HET from within economic theory. Strangely, many still are, and it is a battle for the soul of economics that continues. If you would like to have some idea of what would be lost to economists by ridding themselves of their own history, and to learn how economics became what it is, the hands down best history of economics ever written is by Mark Skousen who has just brought out the third edition of his exemplary text. Aside from everything else, it has the astonishing additional feature of being readable and entertaining. You cannot genuinely understand economic theory without understanding its history, and there is no better place I know for learning this history than from this book. Below is the notice put out on the release of the third edition.

March 9, 2016 was the 240th anniversary of the publication of “The Wealth of Nations,” by Adam Smith. On this day Dr. Mark Skousen announced the publication of the new third edition of his bestselling history, “The Making of Modern Economics.”

As you can see from the cover, the heroic figure in Skousen’s book is Adam Smith and his “system of natural liberty.” (Interestingly, the official pub date of the first edition of Skousen’s history was March 9, 2001.) All of the “worldly philosophers” – Ricardo, Say, Mill, Marshall, Menger, Marx, Fisher, Keynes, Schumpeter, Friedman, Krugman — are judged as defenders or critics of the great Scottish philosopher, and whether they advanced or attacked the House that Adam Smith Built.

Routledge, the top British academic publisher (famous for publishing the works of Hayek, another hero in Skousen’s work), is now the publisher of this bold history of the great economic thinkers.

What’s new in the third edition?

What’s the new edition all about?

First, Skousen expands his chapter on Adam Smith, including a new discussion and quotations from Smith’s “Theory of Moral Sentiments.” He also comments on the startling new discovery that Smith’s singular reference to the famous “invisible hand” metaphor is located in the mid-point of both “The Wealth of Nations” and “The Theory of Moral Sentiments.” Purposeful or coincident? Find out in chapter 1, “It All Started with Adam.”

Second, the third edition updates the chapter on Karl Marx, particularly the resurrection of the Marxist-inspired “liberation theology” in Latin America, with comments about Pope Francis and his severe criticism of capitalism. The growth of socialism and corruption in Latin America is discussed.

Third, the final chapter, “Dr. Smith Goes to Washington: Market Economies Face New Challenges,” has been completely revised. Here Skousen focuses on the West’s decline in economic freedom in consequence of higher deficits, taxes and regulations, and the growing debate over inequality, austerity, and the need for a new brand of capitalism following the financial crisis of 2008. The chapter ends on a positive note, with discussions on the advances in game theory, auction design, experimental economics, behavioral finance, and other aspects of the new “imperial” science.

How to Buy a Copy

The third edition (500 pages) of “The Making of Modern Economics” is available in hardback, paperback, Kindle, or audio. You can order on Amazon here.

The new edition is also available directly from the author at a discount. Amazon charges $47.95 for the paperback, but you can buy directly from the author by calling toll-free 1-866-254-2057. You pay only $30 plus $5 P&H. (Orders from outside the US, please add $15 extra for airmail–$45 total.) Or order online at http://www.miracleofamerica.com.

Awards and Translations

In 2009, “The Making of Modern Economics” (the 2nd edition) won the Choice Book Award for Excellence in Academia. It was recently ranked #2 in the Ayn Rand Institute’s Top Ten List of “Must Read Books in Economics.” It has been translated into five languages — Spanish, Chinese, Turkish, Mongolian and Polish.

What’s Different about “The Making of Modern Economics”?

Skousen’s history is a bold, new account of the lives and ideas of the great economists–Adam Smith, Karl Marx, John Maynard Keynes, Ludwig von Mises, Milton Friedman, and many others–all written by a top free-market economist. Presented in an entertaining and persuasive style, Professor Mark Skousen tells a powerful story of economics, with dozens of anecdotes, illustrations and photographs of the great economic thinkers.

First and foremost, Skousen tells the remarkable untold story of free-market capitalism’s long-running battle against Keynesianism, Marxism, socialism and other isms. It is an account of high drama with a singular heroic figure, Adam Smith and his celebrated “system of natural liberty.” The running plot involves many unexpected twists and turns; sometimes our hero is left for dead, only to be resuscitated by his free-market friends; the story even has a surprise ending.

A Full-Scale Critique of All Major Doctrines

All previous histories tend to give a dry, disjointed, and helter-skelter account of economists and their contradictory theories. But Skousen unifies the story of economics by ranking all major economic thinkers either for or against the invisible hand doctrine of Adam Smith. Thus, Marx, Veblen and Keynes are viewed as critics of Smith’s doctrine, while Marshall, Hayek and Friedman are seen as supporters.

Using this ranking system, The Making of Modern Economics offers a full-scale review and critique of every major school and their theories, including classical, Keynesian, monetary, Austrian, institutionalist and Marxist.

A Complete History

Skousen’s history is comprehensive. He makes a point of discussing all schools of economics and not just the ones he agrees with. Too many economists have omitted major characters from the history of economics, a practice bordering on intellectual dishonesty. Robert Heilbroner’s popular book, The Worldly Philosophers, for example, virtually ignores the laissez-faire French, Austrian and Chicago traditions. (His latest edition does not even mention Milton Friedman by name!)

Think of The Making of Modern Economics as a contra-Heilbroner history.

It’s a perfect antidote to all those biased, inaccurate attacks on the free market and its proponents.

Skousen records the lives and ideas of important economists often ignored in other histories, such as Montesquieu, Ben Franklin, J. B. Say, Frederic Bastiat, Friedrich List, Herbert Spencer, Ludwig von Mises, Knut Wicksell, Philip Wicksteed, Max Weber, Irving Fisher, Roger Babson, Frederick Taylor, A. C. Pigou, Joan Robinson, Murray Rothbard, and the three Paul’s: Paul Sweezy, Paul Samuelson and Paul Krugman.

Skousen’s book also restores the vital role of the Austrian and Swedish schools in the marginalist revolution and the development of monetary economics. It emphasizes the impact of other disciplines on economics, such as evolution, sociology, and religion.

“Tell All” Biographies

Skousen’s book brings history alive with exciting new insights into the lives of the great economists through in-depth biographies and the author’s own research, revealing an amazing tale of idle dreamers, academic scribblers, occasional quacks and madmen in authority.

The Making of Modern Economics does its best to entertain, with provocative sidebars, humorous anecdotes, even music selections reflecting the spirit of each major economist. Samples:

–Why Adam Smith burned his clothes…and then burned his papers.
–The “satanic verses” of the poet Karl Marx.
–Were Malthus, Ricardo, Marshall and Keynes anti-female?
–The infamous grading technique of Chicago’s Jacob Viner (he regularly flunked a third of his class).
–The sexual scandals of Karl Marx, Carl Menger, Joseph Schumpeter and Friedrich Hayek.
–The story behind Marx the phrenologist, Jevons the astrologer, –Keynes the palm reader, and Friedman the amateur hand-writing analyst.
–Which famous economist is buried next to rock star Jim Morrison in Paris?
–How Darwin and Wallace discover their theory of evolution after reading Malthus.
–Why Malthus and the doomsdayers have been proven wrong about overpopulation and environmental crises.
–The strange case of David Ricardo: Why Schumpeter, Keynes, and Samuelson admired him–and deplored him.
–Why Malthus refused to have his portrait made until age 67.
–Why Hayek blames John Stuart Mill, a hero of classical liberalism, for popularizing socialism among intellectuals in the 19th century.
–The real origin of the epithet “dismal science,” and why critics are now calling economics the “imperial” science, with ever-increasing applications in law, finance, history, and politics.
–How John Stuart Mill and the disciples of David Ricardo became hostage to the Marxists, and how Carl Menger and the Austrians revived the laissez faire model of Adam Smith from oblivion.
–The inside story of three multi-millionaire economists–David Ricardo, Irving Fisher and John Maynard Keynes.
–The bizarre story of Jeremy Bentham: from democratic reformist to utilitarian fascist.
–The socialist origins of the American Economic Association and the London School of Economics.
–Veblen’s incredible prophecies about World War I and II.
–Thorstein Veblen versus Max Weber: Who had a better vision of capitalism?
–How Irving Fisher became an advisor to the fascist Mussolini.
–The little-known story of how the economics establishment in the West (including economists at Cambridge, Harvard and Yale) failed to forecast the 1929-32 economic collapse.
–How Austrian economists Ludwig von Mises and Friedrich Hayek were able to predict the 1929-33 crisis, yet failed to convince the world of their theories.
–How the 1929 crash served as a catalyst for Keynes’s “general theory.”
–How Keynes saved the world from Marxism in the 1930s.
–The truth about Keynes’s homosexuality and the rumor that his Cambridge colleague, A. C. Pigou, was a Soviet spy.
–Gross Domestic Product (GDP)–how a Keynesian statistic was invented by a Russian.
–How Irving Fisher’s misinterpretation of his quantity theory of money led to his losing a fortune on Wall Street, and how Milton Friedman avoided repeating Fisher’s blunder.
–Why Friedman and the Chicago school triumphed over Mises and the Austrian school in discrediting Keynesianism and restoring the Adam Smith model of market capitalism.

Fully Illustrated with Over 100 Photos, Portraits and Graphs

Finally, The Making of Modern Economics is the first fully-illustrated history of economics, with over 100 charts, portraits, and photographs, including a picture of….
…Keynes in bed (where he made his millions),
…Eugen Boehm-Bawerk in official regalia as finance minister of Austria,
…Alfred Marshall trying to hide his oversized left hand,
…the preserved body of Jeremy Benthem in London,
…the only known photograph of Irving Fisher smiling (before he lost millions in the stock market), and
…over 75 rare and unusual photos and portraits of famous economists.

Provocative Chapter Titles

Here are the titles of each chapter of The Making of Modern Economics:

1. It All Started with Adam (Adam Smith, that is)
2. The French Revolution: Laissez Faire Avance!
3. The Irreverent Malthus Challenges the New Model of Prosperity
4. Tricky Ricardo Takes Economics Down a Dangerous Road
5. Milling Around: John Stuart Mill and the Socialists Search for Utopia
6. Marx Madness Plunges Economics into a New Dark Age
7. Out of the Blue Danube: Menger and the Austrians Reverse the Tide
8. Marshalling the Troops: Scientific Economics Comes of Age
9. Go West, Young Man: Americans Solve the Distribution Problem in Economics
10. The Conspicuous Veblen Versus the Protesting Weber: Two Critics Debate the Meaning of Capitalism
11. The Fisher King Tries to Catch the Missing Link in Macroeconomics
12. The Missing Mises: Mises (and Wicksell) Make a Major Breakthrough
13. The Keynes Mutiny: Capitalism Faces its Greatest Challenge
14. Paul Raises the Keynesian Cross: Samuelson and Modern Economics
15. Milton’s Paradise: Friedman Leads a Monetary Counterrevolution
16. The Creative Destruction of Socialism: The Dark Vision of Joseph Schumpeter
17. Dr. Smith Goes to Washington: Free-Market Economies Face New Challenges

What Others Are Saying

“A story rarely told….It’s unputdownable!”
–Mark Blaug (University of Amsterdam), author of Economic Theory in Retrospect

“I champion Skousen’s book to everyone. I keep it by my bedside and refer to it often. An absolutely ideal gift for college students.” –William F. Buckley, Jr., founder, National Review

“One of the most original books ever published in economics.”
–Richard Swedberg (University of Stockholm), author of Schumpeter: A Biography

“Provocative, engaging, anything but dismal!”
–N. Gregory Mankiw (Harvard University)

“Lively and accurate, a sure bestseller. Skousen is an able, imaginative and energetic economist.” – Milton Friedman

“Mark Skousen has emerged as one of the clearest writers on all matters economic today, the next Milton Friedman.” – Michael Shermer, Scientific American

“Irreverent, passionate, entertaining, sometimes mischievous, like the author himself!”
–David Colander (Middlebury College), coauthor of The Making of an Economist

“I have read Mark’s book three times. It’s fun to read on every page. I have recommended it to dozens of my friends.” – John Mackey, CEO, Whole Foods Market

“I loved the book–spectacular!”
–Arthur B. Laffer

“I couldn’t put it down! The musical accompaniments for each chapter are a wonderful touch. Humor permeates the book and makes it accessible like no other history. It will set the standard.” –Steven Kates, RMIT University, Australia

“Skousen gets the story ‘right’ and does it in an entertaining fashion, without dogmatic rantings.” – Peter Boettke, George Mason University

“Both fascinating and infuriating…engaging, readable, colorful.” – Foreign Affairs

“Lively….amazing….good quotations!” – Journal of Economic Perspectives

About the Author

Mark Skousen (Ph. D., economics, George Washington University) is a Presidential Fellow at Chapman University in California. He has taught economics, finance and business at Columbia Business School, Barnard, Mercy and Rollins colleges, and Chapman University. Since 1980, Skousen has been editor in chief of Forecasts & Strategies, a popular award-winning investment newsletter (www.markskousen.com). He was analyst for the CIA, a columnist to Forbes magazine, chairman of Investment U, and past president of the Foundation for Economic Education (FEE) in New York. He is the editor of his own website, http://www.mskousen.com, and is the producer of FreedomFest, “the world’s largest gathering of free minds,” which meets every July in Las Vegas (www.freedomfest.com). His economics works include The Structure of Production (NYU Press), The Big Three in Economics (ME Sharpe), The Making of Modern Economics (Routledge) and Economic Logic (Capital Press). His investment books include Investing in One Lesson (Capital Press), and The Maxims of Wall Street (Eagle Publishing). In honor of his work in economics, finance and management, Grantham University renamed its business school, “The Mark Skousen School of Business.” Based on his work The Structure of Production (NYU Press, 1990), the federal government now publishes Gross Output (GO) every quarter along with GDP.

A history of the minimum wage in Australia

Posted on March 13, 2016 by lawofmarkets

1969 – Equal Pay rally at the Trades Hall, Carlton, Victoria.

There are many unique features about Australia but amongst them stands out our system of wage fixation. There is now a quite fascinating exhibition at Fair Work Australia in Melbourne on The History of the Minimum Wage which now has a history going back more than a century. Few economists have ever understood what every industrial officer in the middle of a strike has understood, that if you want the work done, you have to get the workers to do it. And you will only make the wages system work if it is seen as fair. To tell someone that fairness is shown by the equality of supply and demand has never convinced anyone yet. So we have the system we have and it has been with us since 1907.

The exhibition has been put together by my old comrade in fighting these wage increases, Reg Hamilton, now Deputy President of the Fair Work Commission. You can see the exhibit on the 7th floor of the Fair Work Commission in the Sir Richard Kirby Library at 11 Exhibition Street in Melbourne. If you get the chance, you should have a look.

“Sometimes it’s nice to be told what to do”

Posted on March 2, 2016 by lawofmarkets

Someone forwarded me an article from The Wall Street Journal he thought I might like, and he was definitely right about that. It is titled, Could You Pass Sixth Grade Economics? but for all that is a quite sinister description of a supposedly innovative way to teach the dismal science. They divide the class up into different groups and have them trade with each other using some kind of barter system. These are the final two paras with no comment by the author who, for all we know, even agrees with Ms Chase about how economies ought to be run:

In Ms. Higgins’ classroom, the lesson shifted to different types of economic models. It turns out the city states of Babylon were once run as a command economy, where production and prices of goods and peoples’ incomes are decided centrally by the government. The students concede that while the market economy has made them wealthier, trading for the good life is exhausting.

“To be honest I like the exercises that center on a command economy,” says 11-year‐old Mairead Chase of city state Eshnunna. “I like authority. I like to have a goal,” she shrugs and smiles. “Sometimes it’s nice to be told what to do.”

So much for the free market. You begin to see the attraction Bernie Sanders has for the young if this is what they end up believing.

[My thanks to Ivan R. for sending the link along.]

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