Pickpockets don’t die rich

Posted on by
Reply

An article that hits all the right notes by Stephen MacLean on Government is the Cause of “Brexit-Trump Syndrome”. This is truly my cup of tea:

As the classical economist John Stuart Mill observed, nothing is more patently false than the political nostrum ‘that the more you take from the pockets of the people to spend on your own pleasures, the richer they grow . . .’ GDP exceeds median incomes because stats are swollen by coercive contributions to government redistribution and, adding insult to injury, to compensate the labours of ‘beneficent’ state redistributors.

Those in office will be gone before this house of straw falls over, and maybe they won’t even be blamed if they are luckier still. My worry is that Trump will be made to take the fall. He will have to be very nimble indeed if he is to avoid a calamitous crash when the re-adjustment begins. At least this way there will be re-adjustment. Under Hillary, it would have been a continuous easing into the mud from which we would never have emerged. And there is no certainty that it may not already be too late.

Albrechtsen F

Posted on by
Reply

Since the editorial page of The Australian began its aversion therapy I no longer find it possible to read the centrally directed messages from RM. Today, apparently, Janet Albrechtsen is continuing her adventures in fantasy politics by doing a report card on the Liberals, and has given Malcolm a B+! I know this only because it came up on Andrew Bolt: Albrechtsen’s report card: Turnbull B+, Bishop A+.

She lost me slowly at first and then completely when she went for Malcolm. And then, again by behaving in an appropriate corporate way, by slagging Trump time and again. She is part of the reason that Murdoch journalists are becoming so mistrusted. Their biases are to the left while pretending to be partial to the right side of politics. Our Megan Kelly, I guess. Think I might go and see what’s in The Age.

When was economics not radical?

Posted on by
Reply

The History of Economic Thought online discussion forum has had this request posted:

I would be interested in your thoughts and reactions to this article: When Economics Was Radical. The article was published in The Chronicle of Higher Education [CHE].

My response is below.
___________

This is how I would summarise the point of the article, whose provenance is given away by its title, “When Economics was Radical”.

Economics had the opportunity to enter into radical economics during the late nineteenth century but missed the boat. Now the time has come again, when we can jump aboard by taking up Thomas Piketty’s call to arms over income distribution.

So here are my thoughts and reactions.

First, since I think economics has gone downhill pretty much since the time of John Stuart Mill, I’m not sure that we have missed many of the leftwards currents that have affected the political world that surrounds our studies. By the 1880s, laissez-faire had been long gone – pushed overboard by many including JSM. But what remained was a very robust subject that maintained the central role for free markets. The market mechanism had to be overseen and regulated by governments but the direction that the economy would take would and should be left to itself. Not sure anyone could say that about economic theory today.

Second, economics has remained outside the complete embrace of Marxist thought mainly because the labour theory of value remains an entirely empty theory of value, although no doubt there are still those who will come to its defence. It completely discredits Marxist thought since it is so indefensible. There are nevertheless many economists who have gone full Marx, but they have had to find other ways to reach these conclusions than through Das Kapital. I am well prepared to be corrected on this, but I cannot think how someone could use a modern first year economics text to explain what has happened to the Venezuelan economy. I imagine most of us can do it in an ad hoc sort of way, but not by using the latest editions of Samuelson of Mankiw as the guide.

Third, Piketty’s Capital for the Twenty-First Century tries to do today what Marx’s Kapital for the nineteenth century did not quite manage to do, which is to give central direction of an economy the imprimatur of economic theory. For Marx, it was to raise living standards or something by ridding us of the capitalist class. For Piketty, it is to achieve economic equality by taking from the rich and giving to the poor, and if I understand him right, it is not just to be done within individual societies, but to take from the rich capitalist nations and pass this wealth on to the less wealthy ones. As noted on Wikipedia, “Piketty offered ‘a possible remedy: a global tax on wealth’.” The authors of the article in CHE had this to say about Piketty, just in case you may think I am missing the point:

“[Piketty] had many harsh things to say about the field’s methodological narrow-mindedness and self-absorption and their cost: the absence of a convincing theory of rising inequality, downward social mobility, and resulting pathologies — and, in the absence of such a theory, a foot-stomping insistence that these phenomena either don’t exist or don’t matter.”

For myself, I don’t find this very hard to explain, but here is neither the time nor the place.

Fourth, there is no doubt that the juices of envy are everywhere. It has been a long-time red rag for the left to worry about income distribution and how unfair it is. As it happens, Piketty was in Melbourne about a month or so back and I was the fourth in line to ask a question. Unfortunately for me, there was only time for three questions so I missed out. So I will put my question down here:

We are meeting in the Melbourne Town Hall, built when Australia was the richest country in the world, and Melbourne was the richest city in the world’s richest country [around 1890]. Back then, no one had a car, a computer, a radio or TV. Few had indoor plumbing, hot and cold running water and electric lights. No one flew to London, went to the movies or surfed the net. Antibiotics had not been invented. What possible difference could it make to anyone whether income distribution in some measure that is invisible to everyone without a dataset and a computer happens to be more skewed in one direction today than it was at some moment in the past?

Fifth, as my question suggests, income inequality is not an economic question, it is a political question. There have been no mainstream laissez-faire economists since the time of John Stuart Mill. The need to find some means to assist the poor and disadvantaged has always been part of economic theory. We have a much larger surplus today than we did back then, so we are able to assist others to a greater extent. But the issue is not inequality but welfare. Inequality has nothing to do with economic theory, other than to point out that you either have a market system where individuals earn what they can by selling to others, or you have some kind of centralised system where income is generally disassociated from one’s contribution to total output and income distribution is determined by political will – “from each according to his ability, to each according to his needs”. Well, who decides that and how would they do it? There are no economic answers here.

It’s at times like this that economists need to be able to explain what went wrong in Venezuela. And if you cannot do it without saying that it was the fault of the capitalists and the rich, you are not an economist and your answers have nothing to do with economic theory. I find this kind of call to arms from the CHE article perfectly ridiculous:

“It’s hard to escape the conclusion that in exiling radicalism from the AEA and from mainstream economics, its practitioners attained enormous intellectual prestige and elite approval by sacrificing the disinterested search for answers to the most controversial questions in economics.”

Aux barricades, comrades etc.

And as a sixth and last point, I have to say this did give me some pleasure:

“A re-evaluation of classical economics has been proceeding in recent years, highlighted by the publication of Piketty’s Capital in the Twenty-First Century.”

Well, no one is more interested in seeing a re-evaluation of classical economics than I am, but the last place I would send you to is Piketty. J.S. Mill, J.E. Cairns, Simon Newcombe, Henry Clay, that is where I would send you. In fact, I have just had an article published on Clay if you are interested in these kinds of things, with the ultra-neutral title, “The Hundredth Anniversary of Clay’s Economics: the Best Introduction to Economics Ever Written”. You can find the article here if a re-evaluation of classical economics really is your thing.

There is a limited case for reading Keynes today

Posted on by
Reply

I am returning to the question of whether it is worth one’s while to read The General Theory since I may have been a little hasty in my previous advice. It is not to be read for entertainment, nor to understand how an economy works. But if you are interested in the history of economic theory, then that is a different story altogether. I have now replied again.

Thinking over what you had written, of course since you are an historian of economics you have to read The General Theory. You are not looking for enlightenment in the normal sense but to see how economics has “progressed”, and to understand in detail the steps along the way. Importantly, you will be reading it backwards in time, so that you are looking at it from now and trying to understand the origins of what we find in our texts. My original copy of The GT has become so fragile that I had to buy a second copy that I look at instead since the older one is disintegrating. And while I have probably read at one time or another every page of the book, I have not read them in order, from page 1 to the end. But I have read the index! And all of the footnotes. Never ignore the footnotes.

As for his definitions, Keynesian terminology is now so pervasive you will not stumble on a thing. Even his idiotic term “marginal efficiency of capital” is straightforward enough so that won’t be the obstacle it was at the start – his adoption of “marginal” concepts was a stroke of genius given when he was writing, although there is nothing “marginal” about mec and the mpc. The general problem will be that the presuppositions of the classical era will have evaporated so that it is less obvious what he’s going on about and why any of it matters. In it’s own way, because of my focus on Say’s Law, it was the first three chapters and then Book VI, which are the last three chapters, where I began and that led me to the rest. But since everything since 1936 has depended on acceptance of aggregate demand, which everyone now does accept, the book seems less idiotic to a modern reader than it did to Frank Knight and Henry Clay. And even then, since there was a consensus even among classical economists to increase spending to diminish the impact of The Great Depression, the radical nature of The GT remains in disguise. Seriously, can anyone really understand what this means and why it is so important?

“Say’s law, that the aggregate demand price of output as a whole is equal to its aggregate supply price for all volumes of output, is equivalent to the proposition that there is no obstacle to full employment.” (GT: 26)

This may be the least controversial statement in the entire General Theory over which literally no controversy of any serious kind occurred. Yet it is this statement that has made economics into the useless mess it is, wrecking our economies without hardly a soul understanding what’s involved and why it matters.

Keynes knew what he was up to. So once you understand that the entire book is aimed at demonstrating that Say’s Law as Keynes understood it is wrong, reading the book is then a walk in the park – at midnight in the midst of a hurricane.

Monumental error

Posted on by
Reply

A donation request I am going to ignore. It’s a joke, and I don’t really take pleasure in piling on Hillary since she is gone for all money. I only put it up because I think it is crucial to remember how monumentally rotten Obama was as president. I give him no marks for effort, since I think of him as nothing other than an Alinskite liar, with an incredible ill will towards the United States and the West in general. But it’s nice to read all the same.

Dear Friends:

I have the distinguished honor of being a member of the Committee to raise $50,000,000 for a monument to Hillary R. Clinton. We originally wanted to put her on Mt. Rushmore until we discovered there was not enough room for her two faces.

We then decided to erect a statue of Hillary in the Washington, D.C. Hall of Fame. We were in a quandary as to where the statue should be placed. It was not proper to place it beside the statue of George Washington, who never told a lie, or beside Barack Hussein Obama, who never told the truth, since Hillary could never tell the difference.

We finally decided to place it beside Christopher Columbus, the greatest Democrat of them all. He left not knowing where he was going, and when he got there he did not know where he was. He returned not knowing where he had been, and did it all on someone else’s money.

Thank you,
Hillary R. Clinton Monument Committee

P.S. The Committee has raised $2.16 so far.

My thanks to TMc for sending along.

If this is true, how can Malcolm continue to lead the Libs?

Posted on by
Reply

I’m on annual leave and away from it all with only the occasional look at the papers. But there was this at Andrew Bolt, Hinch blames Turnbull for ABCC backtrack. If it is true and nothing is done about the leadership of the party, then they are preparing for dishonourable defeat the next time we have an election.

Derryn Hinch was attacked as a CFMEU stooge for telling the Turnbull Government to add a two-year delay in making the anti-union provisions binding on companies in exchange for his vote. Now he says it was Malcolm Turnbull who suggested it to him.

Malcolm is the politically most inept person I have ever witnessed in politics, but for him this would be even more idiotic than his typically abysmal norm. The implication, as I read it from Hinch, is that he would have voted for the legislation in any case but added this two-year delay because he was asked to by Malcolm. So the two questions, in order, are:

1) Is it true?

2) If it is true, why is Malcolm still the leader?

Maybe everyone already knows the answer and I will find out when I return from the moon. But if not, then how can this be allowed to stand?

If I had a hammer

Posted on by
Reply

There is another discussion, picked up at Instapundit, on folk songs and in particular, on Pete Seeger. Where we find:

What passed for “folk music” in the 1940s and 1950s, by contrast, was the remnant of English ballad preserved in isolated Appalachian communities, as rediscovered by musicologists. Joan Baez made a specialty of such things. John and Alan Lomax gathered Appalachian music, African-American music, and other scraps and shards distant from the American mainstream as an expression of authentic “folk” culture. The entire “folk” movement was Stalinist through and through (including Woody Guthrie, who was a Communist Party hanger-on and probably a member. How do I know this? My late mother was Arlo’s nursery-school teacher in the Red Brooklyn of the 1940s).

Of course, it was all a put-on. Woody Guthrie was a middle-class lawyer’s son. Pete Seeger was the privileged child of classical musicians who decamped to Greenwich Village. The authenticity of the folk movement stank of greasepaint. But a generation of middle-class kids who, like Holden Caulfield, thought their parents “phony” gravitated to the folk movement. In 1957, Seeger was drunk and playing for pittances at Communist Party gatherings; that’s where I first met him, red nose and all. By the early 1960s he was a star again.

To Dylan’s credit, he knew it was a scam, and spent the first part of his career playing with our heads. He could do a credible imitation of the camp-meeting come-to-Jesus song (“When the Ship Comes In”) and meld pseudo-folk imagery with social-protest sensibility (“A Hard Rain is Gonna Fall”). But he knew it was all play with pop culture (“Lone Ranger and Tonto/Riding down the line/Fixin’ everybody’s troubles/Everybody’s ‘cept mine”). When he went electric at the Newport Festival to the hisses of the folk purists, he knew it was another kind of joke.

Pathetic stupidity. Here is the top comment which captures my mood although he is not hard enough on these cultural vandals.

You know, sometimes I think we overthink these things. John Steinbeck was never an Okie, but he wrote a good book about them, and followed that with a lot of other good books about people he wasn’t. And sure, he was an Upton Sinclair socialist (at least) but he grew up, and his Nobel Prize address is something everyone should read.

Woody Guthrie was a child of the middle class, but he also spent some years as a hobo, and he wrote some good songs that people still love.

Bobbie Zimmerman wrote a helluva lot of songs people loved, and if he was *ever* a lefty, he’s over it now. And he clearly isn’t taking this Nobel Prize thing seriously, unlike, say, Sartre, who practically made a second career out of declining.

What purpose is served by the agita?

As for Pete Seeger, this is what I wrote when he passed away. If you don’t like folk music, or the 1960s folk revival, or folk singers or their politics, well that’s great. If you can think what purpose is served by any of this rummaging through the political past of some of the greatest folk musicians who ever lived, well I would like to hear it. Whatever you might think about their politics, their music is among the treasures of our culture which we must do what we can to preserve and protect. Listening to these critics, I am reminded of Islamists as they topple ancient monuments in the Middle East to prove some political point of their own.

Should you read The General Theory?

Posted on by
Reply

I have been asked by an economist friend, who is quite well versed in macro, whether it is worth reading The General Theory and if not, what should be read instead to get a sense of what Keynes wrote. This was my answer:

My view is that there is no reason that I can think of to read The General Theory cold without some specific purpose and question in mind.

Today, it’s a book for scholars alone, even more so than in 1936 when it was published. But then, all the presuppositions of classical theory were alive so that many of the issues and statements made were clear enough to everyone so that they knew what he was on about. A great deal of time of mine has been understanding the presuppositions of classical theory – the beliefs that were so entrenched that no one even bothered to state them – so that I can read what Keynes was saying against the background of a classical understanding of how things worked. Since that is basically what I do believe is true, I can read Keynes almost the same way as Frank Knight, say, and can see things as they might have.

But what has given me an entirely different perspective is that I came to Keynes not just with the presuppositions of the 1930s in my mind, but also with the presuppositions of the 1840s. It’s with the conceptual approach of John Stuart Mill that I read the GT, and from that perspective, the book is so backwards, so incoherent and so illogical, that it defies belief to me every time I open it. But the presuppositions of almost all economists today are founded on the Keynes-Hicks-Hanson-Samuelson axis which make Keynes seem sensible and Mill incomprehensible. For me, as for Mill, it is so unmistakably true that demand is constituted by value adding supply that I am amazed that no one else can see it or why it matters. And even though a Keynesian stimulus has failed on each and every occasion it has been applied, the belief in aggregate demand independent of aggregate supply remains so entrenched that it is literally impossible for an economist to understand why the latest attempts at a stimulus did not work, and must come to the conclusion that things would have been even worse had the stimulus not been applied. It is not that they are dishonest or lack the most intensive economics education we can provide today. It is that their professional deformation, that began with their first principles course, has never gone away.

What to read instead? All I can say is that I wrote my Free Market Economics at the start of the post-GFC stimulus because there was then no other economics text anywhere to explain why a stimulus would make things worse. The best I can therefore suggest is the second edition which is the economics of Mill brought up to date as best I could do it.

Dealing with the despicable, disgusting, depraved and deranged

Posted on by
Reply

I don’t think I broke any friendships during this election and only one in 2012. It’s not me, of course. I am always ready and willing to discuss politics with anyone, any time, and usually in a civil way, even if they are idiots. Here are the ten from Dennis Prager’s list of 10 Reasons Left-Wingers Cut Trump Voters From Their Lives.

1. Just like our universities shut out conservative ideas and speakers, more and more individuals on the left now shut out conservative friends and relatives as well as conservative ideas.

2. Many, if not most, leftists have been indoctrinated with leftism their entire lives.

This is easily shown.

There are far more conservatives who read articles, listen to and watch broadcasts of the left and have studied under left-wing teachers than there are people on the left who have read, listened to or watched anything of the right or taken classes with conservative instructors.

As a result, those on the left really believe that those on the right are all SIXHIRB: sexist, intolerant, xenophobic, homophobic, Islamophobic, racist and bigoted. Not to mention misogynistic and transphobic.

3. Most left-wing positions are emotion-based. That’s a major reason people who hold leftist views will sever relations with people they previously cared for or even loved. Their emotions (in this case, irrational fear and hatred) simply overwhelm them.

4. Since Karl Marx, leftists have loved ideas more than people. All Trump voters who have been cut off by children, in-laws and lifelong friends now know how true that is.

5. People on the right think that most people on the left are wrong; people on the left think that most people on the right are evil. Decades of labeling conservative positions as “hateful” and labeling conservative individuals as “sexist,” “intolerant,” “xenophobic,” “homophobic,” “racist” and “bigoted” have had their desired effect.

6. The left associates human decency not so much with personal integrity as with having correct — i.e. progressive — political positions. Therefore, if you don’t hold progressive positions, you lack decency. Ask your left-wing friends if they’d rather their high school son or daughter cheat on tests or support Trump.

7. Most individuals on the left are irreligious, so the commandment “Honor your father and your mother” means nothing to those who have cut off relations with parents because they voted for Trump.

8. Unlike conservatives, politics gives most leftists’ lives meaning. Climate change is a good example. For leftists, fighting carbon emissions means saving human existence on Earth. Now, how often does anyone get a chance to literally save the world? Therefore, to most leftists, if you voted for Trump, you have both negated their reason for living and are literally destroying planet Earth. Why would they have Thanksgiving or Christmas with such a person?

9. The left tends toward the totalitarian. And every totalitarian ideology seeks to weaken the bonds between children and parents. The left seeks to dilute parental authority and replace it with school authority and government authority. So when your children sever their bond with you because you voted for Trump, they are acting like the good totalitarians the left has molded.

10. While there are kind and mean individuals on both sides of the political spectrum, as a result of all of the above, there are more mean people on the left than on the right. What other word than “mean” would anyone use to describe a daughter who banished her parents from their grandchildren’s lives because of their vote?

I think “mean” is too good for them. Despicable, disgusting, depraved and deranged is much closer.

Socialists everywhere you turn

Posted on by
Reply

My wife knows I don’t read The Oz any more so she opened the paper to the page while I sat down to dinner. And on the page there was this: Does the National Broadband Network work? What a question! Initiated by Labor and then taken up by Malcolm, with a pair of socialists responsible for the outcomes you shouldn’t even have to ask. But the newspapers have got to pretend, but it’s hard going. This is the contrast the story will provide.

(1) It’s a huge drain on the nation’s finances and a source of political division and grandstanding.

(2) But Australia’s National Broadband Network is starting to pay dividends for some everyday users.

So what we find are first discussions about what a pile of junk it all is:

The just-released Telecommunications Industry Ombudsman annual report cites a doubling in complaints about the NBN from July last year to July this year. New complaints about faults with NBN services jumped by 147.8 per cent and complaints about NBN connections rose by 63.2 per cent. NBN complaints represent 11.9 per cent of new complaints to the ­ombudsman.

Complaints span all modes of NBN delivery: fibre to the home, fibre to the node, the Sky Muster satellite service and fixed wireless. “But the rate of growth is lower than the growth of active services,” says ombudsman Judi Jones. “Delays in connections, faults including unusable services and dropout of services were regularly reported, which is of concern.”

In the bush, people battle to get NBN satellite connections and suffer prolonged outages and high costs. Being offline in the bush means not only digital isolation but potential safety hazards such as missing a bushfire alert.

All this is contrasted with Mr and Mrs Untypical who have experienced an improvement from their dial-up.

But there are some happy NBN customers. For Geoff Quattromani at The Ponds, in Sydney’s northwest, the NBN transition was effortless. Quattromani and his wife simply walked into a new home with the pre-installed NBN fibre to the home.

In their previous home in Windsor, the family had ADSL1. It forced them to be “picky and choosy” about visiting websites — those with autoplay videos were a no-no. The family could connect online only one device at a time. They couldn’t watch YouTube, and Netflix, subject to pausing and data buffering, was a pain to watch.

Great, they move from the bush to Sydney and find their internet service has improved. Billions of dollars later, we are dealing with possibly the most expensive white elephant ever, but since both sides are complicit, it will remain a political secret. Let me add a couple of comments that follow the story just to round it off.

1) I have had nothing but trouble since connecting to NBN. It is a bit like the little girl with the curl. My main complaint is with the complaints process. The call centre, which sounds as if it is in India, seems incapable of communicating with local service providers. The steps one is asked to perform to get the same advisor do not work and no notice is taken of information one gives to the ‘support person’.

I had a technician working in the Telstra pit outside my home and the Internet and phone ceased working while he was there. He assured me he would check with me before leaving. He did not. It took me a month, several no shows and two technician visits before somebody went to the pit and discovered wrong connections. I was then told I should not attribute the loss of Internet to any action by the technician in the pit.

There is poor communication between Telstra and the NBN and the inability to speak to a local technician is maddening, particularly when one has to identify oneself over the phone with full name, date of birth and drivers licence number every time one communicates with someone with an alias in a call centre.

2) I have fibre to the home in an apartment in inner city Melbourne. After multiple inconvenient and unpredictable contractor visits in the installation process, none of whom seemed to be in communication with the others, I now have a considerably worse service than prior to NBN. There are times when it is so slow during the day that it is impossible to work and frequently the internet drops out altogether. Progress??? i don’t think so. It has been suggested that I should complain to Telstra, but I know the frustration that is involved with that process so I will just battle on with a lesser service than I had before.

It is just socialism “at work” which both parties seem to prefer. And if you think that we will be spared from these idiocies by our journalist class even within our major financial press, right opposite the story on the NBN was another about Cuba, reprinted from The Wall Street Journal, which is about as cluey nowadays as The Economist. The sickening part of the story is how benign the transition appears, as if the past fifty years have not been a horror story of the deepest kind. Two examples.

1) The economy has been hit hard by the decline of Venezuela, its key ally and a source of billions of dollars in free oil for the past decade.

2) “Would a new leader be able to secure legitimacy without free elections?” said Carlos Pagni, a ­renowned Argentine political commentator.

These people are so ignorant that “the decline in Venezuela” is simply isolated from the even greater decline in Cuba. And the notion that the Cuban terrorist government that has existed since the 1950s is in any way concerned with legitimacy is an idiocy almost too breathtaking to believe. Do these people have any idea about anything?