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Why Government Control Is Overrated

Why Government Control Is Overrated

There is much confusion from Republicans and Democrats about what’s torturing the American landscape.  Middle American red state towns have slipped into a self-induced opioid coma.  Wealthy blue state cities along the east and west coasts are rotting from the inside out.

Both parties, nonetheless, are committed to big government, and big deficit spending, to bring about the new paradise.  But do the President and Congress believe that more of the problem – big government – is somehow the solution to the nation’s ails?

As far as we can tell, this is the wrong question to ask.  The real question is a question of control.  That is the government’s desire to attain complete control over people, places, and things.  To have complete control over your life, your property, your wealth, and your future earnings.  That’s what they’re after; much more than MAGA.  Their track record proves it.

At best, control is about eliminating uncertainty.  That, somehow, perfect order can be delivered to the world through some sort of advanced social engineering and planning.  That with perfect order, equal results, regardless of inequal effort or inequal merit, will be heaped upon the populace.

That a world without risk, with perfect certainty, with equal benefits for all, will be a better world.  That roaming about in a world of complete control, where outcomes are predetermined, and lethargy’s rewarded, is a privilege to be bestowed by politicians and agency officials.  Here at the Economic Prism we have some reservations…

An Unthinkable Alternative

Complete control and the elimination of uncertainty is a desirable objective when managing an aquaculture system.  With some experience and diligence, system outputs can be forecasted with greater than 95 percent accuracy.  But when it comes to managing an economy, complete control and the elimination of uncertainty is an utter disaster.

 …click on the above link to read the rest of the article…

Don’t Be So Sure Hyperinflation Can’t Hit the U.S.

Don’t Be So Sure Hyperinflation Can’t Hit the U.S.

Some progressives back piling on even more debt to pay for social programs. That could be risky.

Marking time.  Photographer: Ramin Talaie/Getty Images North America

Discussions of big government spending programs often revolve around the question of how to pay for them. For example, Representative Alexandria Ocasio-Cortez touted her proposal for a 70 percent tax rate on income above $10 million by saying it would help pay for the Green New Deal, a broad package of environmental and economic initiatives.

Implicit in this concern is the idea is that government debt shouldn’t get too big. This is a common belief — polls regularly find that Americans are worried about the national debt. The national debt clock in Manhattan is a famous symbol of this anxiety. The idea is also formalized in mainstream economic models, which tend to assume that in the long run the government has to balance its books. Writing at Brookings Institution, David Wessel expresses this conventional wisdom when he declares that “federal debt cannot grow faster than the economy forever.”

But what if this is a fallacy? What if the government doesn’t have to pay back what it borrows, now or ever? This is the provocative thesis of an unorthodox economic theory that is rapidly gaining credence on the political left called modern monetary theory, or MMT. The concept isn’t new — economist Abba Lerner endorsed something similar in the 1940s, under the name of “functional finance.” But the theory has enjoyed a popular resurgence since it was embraced by some progressives, who want to enact a federal job guarantee and other ambitious economic plans paid for by government borrowing.

…click on the above link to read the rest of the article…

Trump buys into the Krugman con

Trump buys into the Krugman con - Peter Diekmeyer (08/08/2018)

Leading economic indicators suggest that the Republicans are headed into the fall mid-term election season with the wind at their backs.

Real GDP growth hit 4.1% during the second quarter. The unemployment rate recently slipped to 3.9%, and the US Federal Reserve is finally starting to meet its inflation targets.

Things are so good that U.S. president Donald Trump calls it “the greatest economy in the history of America.”

Yet while all appears well on the surface, there are growing concerns among gold investors about the sustainability of the current pick-up.

Works well in practice… but does it work in theory?

Part of the problem relates to the old joke about French university professors. “It works well in practice,” they reportedly ask. “But does it work in theory?”

The same question underlies Trump’s economic practices. They are clearly generating short-term results. But they don’t appear to adhere to any underlying philosophy.

Republicans liken Trump’s tax cuts and his deregulation efforts with policies implemented by the Reagan Administration. However, the comparison is far from perfect.

For one, the Trump Administration’s growing tariffs on imported goods, which amount to hidden sales taxes, are gradually undoing the effects of his earlier tax cuts.

Worse, the Trump Administration’s practice of choosing which sectors will benefit from protective tariffs and which won’t amounts to a drastic increase in government intervention in the economy.

Making government great again

Taking a step back, Trump’s policies incorporate many of the “big government” themes advocated by mainstream economists from both major political parties during much of the past four decades.

Led by Paul Krugman, a Nobel Prize winner, New York Times columnist and professor at CUNY, the economics profession has consistently advocated growth in government spending, borrowing and credit creation in the hopes of spurring economic growth.

…click on the above link to read the rest of the article…

Vicious Cycle: How Government “Solutions” Spiral into Bigger Problems

The Hydra serpent with many heads

Vicious Cycle: How Government “Solutions” Spiral into Bigger Problems

Government creates a problem. Government becomes more authoritarian to solve that problem. This creates more problems. Government becomes even more authoritarian…

This is basically the story of the war on drugs, the oppression of teens, the wars in the middle east, every bubble, burst, and bailout, ad infinitum.

Where the government intervenes, you can be sure that bigger problems will spring forth.

Like the Hydra of Greek Mythology, two more serpent heads sprout each time one is severed.

Denmark Considers Draconian Measures to Assimilate Immigrants

European countries have been quite liberal in accepting immigrants from the middle-east. In itself, this is not a problem. But the countries also liberally dole out public benefits, costing taxpayers ballooning sums to support the new population.

But now many countries want to attach strings after the fact.

Denmark has proposed new rules that could land immigrant parents in prison if they take their children on extended vacations to their homeland which interfere with schooling. The legislation leaves “extended” open to interpretation.

Other rules require children from any of 25 identified “ghettos” to attend 30 hours of daycare per week until age six. Parents will lose welfare benefits if their kids miss too much school.

Another rule would make penalties for the same crime in certain areas. So if you shoplift in a predominantly Danish area of a city, you might get a fine, while a shoplifter from a predominantly Muslim area could get jail time.

All of this is an attempt to integrate new immigrants. It is a backlash from vastly different cultures clashing.

But why would the government of Denmark think forced integration would produce the desired results? It seems more likely to produce a counter-backlash from immigrants who resent having different rules than the Danes.

…click on the above link to read the rest of the article…

Michael Cohen, Tony Podesta, and the Nauseating Corruption Enabled by Big Government

Michael Cohen, Tony Podesta, and the Nauseating Corruption Enabled by Big Government

Corruption and big government have always gone hand-in-hand.

Ordinary Americans have a low opinion of Washington, but they’re underestimating the extent of the problem.

The nation’s capital is basically a playpen for special interests. It’s now the richest region of the country, with lobbyists, bureaucrats, contractors, politicians, and other insiders and cronies getting fat and happy thanks to money that is taken from people in the productive sector of the economy.

Republicans play the game and Democrats play the game, with both sides getting undeserved wealth at our expense.

Let’s take an up-close look at how this sordid game is played.

Here are some excerpts from a column by Catherine Rampell in today’s Washington Post.

The GOP is no longer the Party of Reagan. It’s the Party of Michael Cohen. …the Cohen blueprint for achieving the American Dream: Work minimally, if you can, and leverage government connections whenever possible. …following Donald Trump’s unexpected presidential victory, Cohen cashed in. …Cohen told companies that he could provide valuable “insights” into the new administration. Huge multinational corporations lined up to purchase these “insights,” dumping millions into Essential Consultants LLC… Cohen is hardly the only prominent Trumpster invoking White House connections… Cabinet members and other senior government officials, too, have enjoyed a sweetheart apartment deal, lobbyist-arranged vacations and private jet rides. These are not amenities secured through brains, honesty and hard work, the virtues that Republicans traditionally say are required for upward mobility and financial comfort. They are the fruits of luck, cronyism and a loose approach to ethical lines.”

This is disgusting. Republicans often come to Washington claiming they’re going to “drain the swamp.” Many of them, however, quickly decide it’s a hot tub.

But don’t forget that sleaze is a bipartisan activity in Washington.

Here are excerpts from a Wall Street Journal report about influence-peddling on the other side of the aisle.

…click on the above link to read the rest of the article…

Leonard Read’s Vision of a Liberty-Loving Government

Leonard Read’s Vision of a Liberty-Loving Government

In a dramatic contrast with political candidates’ promises to violate moral principles and other people’s property, Leonard Read recognized that “Nothing is in our nation’s capital except that which is taken from individuals.”

In Richard Ebeling’s “This Is What a True Liberty-Loving Politician Would Look Like,” he provides a sharp contrast between politicians as we know them and politicians who would advance liberty. But there is another little-remembered source that provides a similarly inspirational example of a politician “who loves liberty better than power” rather than panderers who love power better than liberty. That is Leonard Read’s 1948 Pattern for Revolt, written for that year’s presidential campaign. Revisiting some of his insights also remind us of how invaluable our liberties, and all the blessings they provide, are.

The all-authoritarian state marches on…abetted by an ever-increasing number of gravy-trained citizens.

The people [have] no choice except between power-seeking personalities and groups, each offering a superior administration of government-as-master. Such a choice…is no choice at all.

The voice of expediency…must mislead because it represents the rejection of moral principles for the hope of temporary gain…a truly liberal party would have been asking “How can we liberate the individual from the tyranny of the State.”

Transfer of power from one party to the other is important only if the ascending party has principles which it is important to substitute for the principles of the party in power.

Government should not be so expanded…Men in government, therefore, should be those who aim at making government as unnecessary as possible.

In every field where arbitrary authority is imposed we shall inquire how it may be removed and replaced by a reliance on the initiative and enterprise of individual citizens. We must give to the art of self-government its American renaissance.

…click on the above link to read the rest of the article…

 

It’s What’s Happening Beneath the Surface That Matters: Moral Decay and Rising Inequality

It’s What’s Happening Beneath the Surface That Matters: Moral Decay and Rising Inequality

These disintegrative forces are easy to see but elusive to pin down. Nobody defines themselves as self-serving, greedy and lacking in virtue. Everyone feels trapped in the system.
With the media’s hyperactive three-ring circus blasting 24/7, it’s easy to forget that everything consequential is happening beneath the surface, out of sight and largely out of mind.
What’s going on beneath the surface is structural and systemic–for example, the 4th Industrial Revolution that is transforming the global economy and social order, regardless of political ideologies or our wishes.
Centralization–the “solution” to every problem since 1940–is now the problem.Centralization generates corruption, privilege, rentier skims, institutionalized rackets and pushes one-size-fits all failure down the chain of command.
Another “solution”–issuing more costly credentials–has also failed. An over-abundance of credentials pushes wages down, even for the highly educated, while the credential mill of higher education has become a bloated, ineffective cartel that charges outrageous fees for increasingly valueless credentials.
The structural changes in the economy are visible in these charts:
The civilian participation rate is plummeting, despite the “recovery:”
The civilian participation rate for men is in a multi-decade decline:
As a percentage of GDP, wages have been declining for decades.
The rich have managed to gain wealth and income while the bottom 95% have gotten poorer as the cost of living soars and their wages stagnate.
There is more going on here than changes wrought by technology. Consider how many analysts identify central banks as a key cause of rising inequality and debt burdens. Consider how many people identify “money in politics” as a key factor in the corruption of governance.
…click on the above link to read the rest of the article…

A Mess 30 Years in the Making

“We have assembled a best-in-class team of policy advisors to drive President Trump’s bold plan for job creation and economic growth.”

– Gary Cohn, Chief Economic Advisor to President Trump

The art and science of spending other people’s money is not an occupation suited to just anyone.  Rather, it’s a skill reserved for the professional world-improver.  To be successful, one must act with a zealous devotion to uplifting the down and out, no matter the cost.

Donald Trump’s chief economic advisor Gary Cohn – as some observers have noted, he represents one of the factions in the wider circle of economic advisors (there are many advisors who are not members of an official body such as the Council of Economic Advisors, but reportedly have the president’s ear). This is considered problematic, or rather confusing, on the grounds that in some cases the views of these advisors appear to be diametrically opposed. The question is whose views will eventually prevail.     Photo credit: Kena Betancur / AFP / APA

Lawyers, bankers, economists, and government philosophers with fancy resumes, who attended fancy schools.  These are the devoted fellows who comprise President Trump’s team of economic policy advisors.  Moreover, these are the chosen associates who are charged with bringing Trump’s economic vision to fruition.  Are they up to the task?

Only time will tell.  But, already, it is quite evident that Trump’s economic policy advisors have their work cut out for them.  During Trump’s speech to Congress on Tuesday night, he called for more jobs, more education, more military, and more affordable health insurance.

By all accounts the speech sounded delightful.  Promises were made to spread the government’s slop far and wide.  Trump pledged offerings that just about anyone and everyone – with the exception of grumpy face Bernie Sanders – could stand behind and applaud.

 

…click on the above link to read the rest of the article…

Take Cover—–Now Comes The Gong Show

Take Cover—–Now Comes The Gong Show

It was a bad hair night for the Beltway. Among the roughly 515,000 votes cast in the New Hampshire primaries, about 55% or 280,000 went to Bernie, the Donald and Senator Cruz. That is, the preponderance of Republican, Democrat and independent votes alike went for the anti-establishment candidates.

Since the latter are basically campaigning against the Imperial City and all of its careerists, cronies and corruptions, the first impulse is to cheer them on. After all, nothing could be worse than the self-perpetuating gang of war mongers, welfare statists, K-Street lobbyists and pork-barreling politicians who rule the nation today from their permanent berths in Washington DC.

Unfortunately, there is something worse. When you combine the mindless raw populism of Bernie and The Donald with the rapidly advancing lunacy and desperation of Janet and her baleful band of money printers you have a combustible recipe for abrupt system failure. American capitalism and democracy as we have known it could blow sky high by the time this election cycle is complete and a new President settles into office.

Before elaborating on that dismal note, however, let me first dispatch with Senator Ted Cruz. He unfortunately has the Ronald Reagan mutation when it comes to his political genome. I admire his resolute opposition to Big Government at home and his demonstration in Iowa that you can standup to a big, thieving special interest group like the Ethanol Lobby, and still win elections.

On that score, I recall my third election to Congress in 1980 from a small town district in Michigan. Even though it was a hotbed of Chrysler supplier plants and evangelical right-to-lifers, I helped lead the charge against the Chrysler bailout on the House floor and voted against the Hyde anti-abortion amendment dozens of times, thereby earning the wrath of Chrysler CEO Lee Iacocca in Detroit and the so-called pro-life lobby in Washington.

…click on the above link to read the rest of the article…

War, Big Government, and Lost Freedom

War, Big Government, and Lost Freedom

We are currently marking the hundredth anniversary of the fighting of the First World War. For four years between the summer of 1914 and November 11, 1918, the major world powers were in mortal combat with each other. The conflict radically changed the world. It overthrew the pre-1914 era of relatively limited government and free market economics, and ushered in a new epoch of big government, planned economies, and massive inflations, the full effects from which the world has still not recovered.

All the leading countries of Europe were drawn into the war. It began when the archduke of Austria- Hungary, Franz Ferdinand, and his wife, Sophia, were assassinated in Bosnia in June 1914. The Austro-Hungarian government claimed that the Bosnian-Serb assassin had the clandestine support of the Serbian government, which the government in Belgrade denied.

How a Terrible War Began and Played Out

Ultimatums and counter-ultimatums soon set in motion a series of European military alliances among the Great Powers. In late July and early August, the now-warring parties issued formal declarations of war. Imperial Germany, the Turkish Empire, and Bulgaria supported Austria-Hungary. Imperial Russia supported Serbia, which soon brought in France and Great Britain because these countries were aligned with the czarist government in St. Petersburg. Italy entered the war in 1915 on the side of the British and the French.

The United States joined the conflict in April 1917, a month after the abdication of the Russian czar and the establishment of a democratic government in Russia. But this first attempt at Russian democracy was overthrown in November 1917, when Vladimir Lenin led a communist coup d’état; Lenin’s revolutionary government then signed a separate peace with Imperial Germany and Austria-Hungary in March 1918, taking Russia out of the war.

The arrival of large numbers of American soldiers in France in the summer of 1918, however, turned the balance of forces against Germany on the Western Front.

World War I May

…click on the above link to read the rest of the article…

Things Fall Apart

Things Fall Apart 

“Things fall apart”is an apt sub-title for historians to apply to the first half of the 21st century. The phrase properly describes the collapse of the domestic and foreign policy of the United States. Further, it also is appropriate to describe the happenings in Europe, the Middle East and Asia.

freedom15Things fall apart describes the economy of every developed nation and the balance of power that the world has known since the end of World War II.

The powers that be have lost control. After almost a century of playing the Wizard of Oz, the curtain is disintegrating. Institutions to ensure control, stability and prosperity are failing. People and markets were not to be trusted and most of these institutions were established to protect against such freedom. Bureaucrats, central planners and big governments were to be the answers for a better world.

The damage of nearly a century of this nonsense is suddenly becoming evident. Things fall apart is characterized by institutions that no longer are trusted or believed in. Few institutions are seen to work and when they do they are increasingly seen as favoring the elites at the expense of the masses. No institution is under greater scrutiny as the cloak of wisdom is being destroyed by the hard facts of reality is that of central banking, the corner piece of socialism even at the height of the Thatcher–Reagan movement back toward markets. The Daily Bell writes about the US Federal Reserve, although other central banks are incurring similar doubts and distrust:

Things Fall Apart Around Janet Yellen

By Daily Bell Staff – October 16, 2015

yellen7 - CopyFed policymakers downplay divisions on U.S. rate hike … Federal Reserve policymakers are not as divided as it may appear and are generally operating under the same framework for determining when to raise interest rates, one Fed official said on Thursday, while another said the differences of opinion reflect the countervailing economic data. Many Fed watchers are exasperated by the mixed messages from the U.S. central bank in recent weeks. Fed Chair Janet Yellen and other officials have said they expect a rate hike will be needed by the end of this year, but two Fed governors this week urged caution. – Reuters

…click on the above link to read the rest of the article…

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