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WILL IT TAKE FOOD SHORTAGES TO END SUPPORT FOR THE SHUTDOWN?
Will It Take Food Shortages to End Support for the Shutdown?
Americans are uniquely privileged, to the point of simply imagining they can stay home for months and months without suffering severe economic hardship as a result. Our unique privilege is delusion, the mentality that America is rich and will remain rich without particular effort on our part. Abundance simply materializes around us, regardless of incentives, and the job of politicians is to rearrange this abundance more equitably.
Polls such as this one showing widespread American support for quarantines and business shutdowns are evidence of this American privilege. Eighty percent of respondents think shutdowns by various state governors are justified as a response to the COVID-19 virus, and one-third support extending closure for another six months!
This reflexive and unthinking complicity from the American public is partially explained by media hype, of course, over an illness which at this writing has killed fewer than sixty thousand Americans. Fear and hysteria always sell. The press clearly wants the coronavirus to be a major event, one that unseats Trump in the fall. (For its part, the administration is doing a terrible job, starting with the awful Dr. Fauci, whom the president should have sacked months ago.) And clearly the various governors’ responses are wildly out of proportion to the actual public health threat, even if initially well intentioned due to sheer uncertainty of the virus’s lethality.
But something far more fundamental is at work here. Americans simply fail to understand, or even much think about, the fragility of distribution chains and the goods and services we rely on. Earlier this week the chairman of conglomerate Tyson Foods warned that disruptions at processing plants could create very serious shortages of beef, chicken, and pork in US grocery stores, and decimate livestock farmers. And of course this was bound to happen as the dominos fell: the shutdowns would not only impact “nonessential” goods, but everything.
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The COVID-19 “Lockdowns” Are What Twenty-First-Century Mob Rule Looks Like
The COVID-19 “Lockdowns” Are What Twenty-First-Century Mob Rule Looks Like
As of April 6, forty-one states have statewide “stay-at-home” decrees in place. These orders vary widely from place to place. In some states, there are long lists of exempted industries including marijuana dispensaries, liquor stores, hardware stores, and of course, grocery stores. In some states with these edicts, public lands, state parks, and beaches remain open. In some states, city parks are more crowded than ever as local residents, with little else to do, attempt to recreate. In other places—such as California—one can be arrested for paddleboarding all alone in the ocean.
Yet in all of these places, the current regime of rule by decree will have—and already has had—a devastating effect on many small and medium-sized businesses and their employees. As governments have created new arbitrary definitions of what constitutes an “essential” business, some businesses find themselves forced to close. Employees have lost these jobs. The owners of these enterprises will likely lose far more as debts mount and business investments are destroyed. As unemployment and poverty increase, the usual pathologies will arise as well: suicides, child abuse, and stress-induced death.
Yet the politicians—mostly state governors, mayors, and unelected bureaucrats—remain popular. In New York State, where the lockdown orders are among the most draconian in the nation, it is now claimed that 87 percent of those polled approve of Governor Andrew Cuomo’s handling of the situation. As Donald Trump’s administration has recommended ever harsher government limits on the freedom of Americans, his poll numbers have only improved.
Meanwhile, among critics there appears to be a misconception of these lockdowns (which are very often only partially imposed or enforced) as being imposed over the howls of the local population, which is being silenced and cowed by jackbooted local police.
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Why Central Planning by Medical Experts Will Lead to Disaster
Why Central Planning by Medical Experts Will Lead to Disaster
A great deal of the coverage of the COVID-19 crisis has been apocalyptic. That is partly because “if it bleeds, it leads.” But it is also because some of the medical experts with media megaphones have put forward potentially catastrophic scenarios and drastic plans to deal with them, reinforced by assertions that the rest of us should “listen to the experts,” because only they know enough to determine policy. Unfortunately, those experts don’t know enough to determine appropriate policies.
Doctors, infectious disease specialists, epidemiologists, etc. know more things about diseases, their courses, what increases or decreases their rate of spread, and so on than most. But the most crucial of that information has been browbeaten into the rest of us by now. Limited and imperfect testing also means that the available statistics may be very misleading (e.g., is an uptick in reported cases real or the result of an increasing rate of, or more accuracy in, testing, which is crucial to determining the likely future course COVID-19?). Further, to the extent that the virus’s characteristics are unique, no one knows exactly what will happen. All of that makes “shut up and listen” advice less compelling.
More important, however, may be that in making recommendations to address COVID-19, those with detailed knowledge of the disease (the experts we have been told to obey) do not have sufficient knowledge of the consequences of their “solutions” for the economy and society to know what the costs will be. That means that they don’t know enough to accurately compare the benefits to the costs. In particular, because of their relative unawareness of the many margins at which effects will be felt, the medical experts we are being told to follow will likely underestimate those costs. When combined with their natural desire to solve the medical problem, however severe it might get, this can lead to overly draconian proposals.
This issue has been brought to the fore by the increasing number of people who have begun questioning the likelihood of the apocalyptic scenarios driving the “OMG! We need to do everything that might help” tweetstorms, on the one hand, and those who are emphasizing that “shutting down the economy” is far more costly than planners recognized, on the other.
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Corona Virus? The Chinese Central Bank Has a “Solution”
Corona Virus? The Chinese Central Bank Has a “Solution”
In response to the economic paralysis brought about by the coronavirus, the Chinese central bank has pumped $243 billion into financial markets. On Monday February 3 2020, China’s equity market shed $393 billion of its value.
Most experts are of the view that in order to counter the damage that the coronavirus has inflicted, loose monetary policy is of utmost importance to stabilize the economy. In this way of thinking, it is believed that the massive monetary pumping will lift overall demand in the economy and this in turn is likely to move the economy out of the stagnation hole.
On this way of thinking consumer confidence, which has weakened as a result of the coronavirus could be lifted by massive monetary pumping.
Now, even if consumers were to become more confident about economic prospects, how is all this related to the damage that the virus continues to inflict? Would the increase in consumer confidence due to the monetary pumping cause individuals to go back to work?
Unless the causes of the virus are ascertained or unless some vaccine is produced to protect individuals against the virus, they are likely to continue to pursue a life of isolation. This means that most people are not going to risk their life and start using the newly pumped money to boost their spending.
It seems that whenever a crisis emerges, central banks are of the view that first of all they must push plenty of money to “cushion” the side effects of the crisis. The central bankers following the idea that if in doubt “grease” the problem with a lot of money.
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The State of the Union: An Annual Reminder of Inevitable Default
The State of the Union: An Annual Reminder of Inevitable Default
Last night’s State of the Union was particularly noteworthy for its showmanship. Scholarships were given away, medals were awarded, families reunited. At a time when national politics is bad theater, President Trump is clearly its most gifted star.
Trump also knows what sells. As a political figure, he’s motivated not by any consistent ideology, but rather by transactional legislation. Following the performance, an MSNBC pundit noted that the speech was a “microtargeted ad” to various demographics aimed at expanding his base before next year’s election.
Combined with his Super Bowl ads highlighting criminal justice reform, his focus on charter schools and honoring a hundred-year-old Tuskegee airman are aimed at eroding away the Democrats’ 90 percent control of black voters. The cameo by Venezuela opposition leader Juan Guaidó was an appeal to Hispanic families who have fled communist regimes—perhaps a poke at Bernie Sanders. Paid family leave, a policy focus of his daughter, is intended to help him with suburban women.
What doesn’t sell? Fiscal responsibility.
The political equivalent of Crystal Pepsi, the Republican Party has given up its long-standing façade of budgetary restraint. As Donald Trump told donors earlier this year, “Who the hell cares about the budget?”
Of course, some people do care, particularly those who understand the real costs of runaway spending. Unfortunately, politics isn’t about the economic literacy of the few, but the prevailing ideology of the masses. As Jeff Deist noted in 2016, the implicit ideology of the American population is much closer to Bernie Sanders than it is to Ludwig von Mises. As such, it should be no surprise that the policies of the country align more closely with the “deficits don’t matter” vision of Modern Monetary Theorists than the sober analysis of Austrians economists.
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Why Sweden Ended Its Negative Interest Rate Experiment
Why Sweden Ended Its Negative Interest Rate Experiment
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists, who start with a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and that therefore saving must be penalized to stimulate the economy. Excuse the bluntness, but it is a ludicrous idea.
Inflation and growth are not low due to excess savings, but because of excess debt, perpetuating overcapacity with low rates and high liquidity, and zombifying the economy by subsidizing the low-productivity and highly indebted sectors and penalizing high productivity with rising and confiscatory taxation.
Historical evidence of negative rates shows that they do not help reduce debt, they incentivize it. They do not strengthen the credit capacity of families, because the prices of nonreplicable assets (real estate, etc.) skyrockets because of monetary excess, and the lower cost of debt does not compensate for the greater risk.
Investment and credit growth are not subdued because economic agents are ignorant or saving too much, but because they don’t have amnesia. Families and businesses are more cautious in their investment and spending decisions, because they perceive, correctly, that the reality of the economy that they see each day does not correspond to the cost and the quantity of money.
It is completely incorrect to think that families and businesses are not investing or spending. They are only spending less than what central planners would want. However, that is not a mistake from the private sector side, but a typical case of central planners’ misguided estimates, which come from using 2001–7 as a “base case” of investment and credit demand instead of what those years really were: a bubble.
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The Wealth Redistribution Scam that Is “Inflation”
The Wealth Redistribution Scam that Is “Inflation”
The world over people are told that central banks pursue “price stability” by making sure that consumer goods prices do not rise by more than 2 percent per annum. This is, of course, a big sham. If the prices of goods rise over time, it does not take that much to understand that prices do not remain stable. And if the prices of goods increase over time, it necessarily means that the purchasing power of the money unit declines.
As money loses its purchasing power, income and wealth are stealthily redistributed. Some individuals and groups of people are enriched at the expense of others. Savers and workers are swindled out of their deserved income and retirement benefits, while those who own goods that rise in value or who borrow money typically reap a windfall profit. Clearly, the banking industry is a major beneficiary of monetary debasement.
“Inflation” Is a Rise in the Quantity of Money
Central banks are the very source of the phenomenon that all prices of goods tend to rise over time. They hold the money production monopoly and increase — in close cooperation with commercial banks — the outstanding quantity of money through credit expansion, an increase in the supply of credit that is not backed by real savings. It goes without saying that it is rather profitable to be active in the money-production business.
The increase in the quantity of money results, and necessarily so, in higher prices compared to a situation in which the quantity of money has not been increased. This is no arbitrary assertion but stems from logical reasoning: a rise in people’s money holding lowers the marginal utility of the additional money unit, meaning that the marginal utility of other goods that can be exchanged against money rises.
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The Warfare State Lied About Afghanistan, Iraq, and Syria. They Will Lie Again.
The Warfare State Lied About Afghanistan, Iraq, and Syria. They Will Lie Again.
Today the Washington Post published a bombshell report titled “The Afghanistan Papers,” highlighting the degree to which the American government lied to the public about the ongoing status of the war in Afghanistan. Within the thousands of pages, consisting of internal documents, interviews, and other never-before-released intel, is a vivid depiction of a Pentagon painfully aware of the need to keep from the public the true state of the conflict and the doubts, confusion, and desperation of decision-makers spanning almost 20 years of battle.
As the report states:
The interviews, through an extensive array of voices, bring into sharp relief the core failings of the war that war is inseparable from propaganda, lies, hatred, impoverishment, cultural degradation, and moral corruption. It is the most horrific outcome of the moral and political legitimacy people are taught to grant the state. persist to this day. They underscore how three presidents — George W. Bush, Barack Obama and Donald Trump — and their military commanders have been unable to deliver on their promises to prevail in Afghanistan.
With most speaking on the assumption that their remarks would not become public, U.S. officials acknowledged that their warfighting strategies were fatally flawed and that Washington wasted enormous sums of money trying to remake Afghanistan into a modern nation….
The documents also contradict a long chorus of public statements from U.S. presidents, military commanders and diplomats who assured Americans year after year that they were making progress in Afghanistan and the war was worth fighting.
None of these conclusions surprise anyone that has been following America’s fool’s errand in Afghanistan.
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De-Dollarization: Europe Joins the Party
De-Dollarization: Europe Joins the Party
The ongoing “World War of Currencies”, as the German journalist Daniel D. Eckert called it, the battle for the future of the world monetary system is not a shallow action film but more like Game of Thrones – a complex series with hundreds of actors and locations, stretching over decades and demanding full concentration from the viewer.
The bottom line is that what has been true for decades still applies. The US dollar continues to enjoy the confidence of markets, governments, and central banks. But faith in the US dollar weakens a little every year. Europe, China, Russia and many small countries set new initiatives every year to make themselves independent. And gold, too, plays a major role in this slow departure from the US dollar. But for the world financial system, none of their currencies offer a viable, fully-fledged alternative to the US dollar yet, which is why any news of the death of the US dollar is definitely exaggerated.
Europe’s Small Uprising
Since the Greek crisis of 2012, the American media have often given the impression that the EU and the euro have already broken up or are about to break up. This is not the case. Twenty years after its creation in 1999, the euro area is larger than ever. Of course, nothing is perfect in the EU. The debt problems of the southern states have hardly improved. The structure of the euro zone itself is also often criticized and described as being in need of renovation.
Against this backdrop, the celebrations to mark the 20th anniversary of the euro were not particularly large and pompous. But there was a lot of talking going on.
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Freedom or Government Control — There Is No True “Third Way”
Freedom or Government Control — There Is No True “Third Way”
Every government intervention into the economy may not besocialism, but it is a step toward socialism.
Interventionists claim to advocate for a ‘third way’ of economic organization, one that preserves the productive nature of capitalism, while merely reining in some of its destructive excesses.
For instance, Sen. Elizabeth Warren last year described herself as a “capitalist to the bone,” even declaring “I believe in markets and the benefits they can produce when they work.”
However, she added the caveat that it is “markets with rules” that can create value and insisted “markets worked better” during the timeframe of 1935 to 1980 in large part due to “more aggressive regulation of markets.”
But is there a reasonable “third way”?
The defining difference between socialism and capitalism, as described by Ludwig von Mises in his 1950 essay “ Middle of the Road Policy Leads to Socialism,” is “the substitution of public control of the means of production for private control.”
More properly understood, socialism would eliminate the private ownership of the means of production by capitalists.
So efforts to impose “more aggressive regulation of markets” – which typically amount to more confiscatory taxes and stricter government regulations – may fall short of actual socialism, but erode the defining characteristic of capitalism, namely private ownership over the means of production.
It is important here to note that ownership implies the right to utilize, trade or otherwise dispose of property as the owner sees fit, as long as his actions don’t infringe on the rights of others.
Any restrictions on the owner’s use, therefore, represents an erosion of private property rights over the means of production, and a step in the direction of centralized, or public, control over those means.
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