Friday, April 29, 2016

Why Trump’s Mexican Remittance Ban Scheme Won't Work (Not Even for 24 Hours)

Alex Nowrasteh says it is possible Trump's remittance ban scheme might even spur more illegal immigration into the U.S.


Thursday, April 28, 2016

MAP: How Many People in Each State Make the Federal Minimum Wage

In other words, the number of people (percentagewise) in each state most vulnerable to getting laid off because of a hike in the minimum wage.



(chart via Business Insider)

The Most Under-Reported Sentence in Donald Trump's Foreign Policy Speech

Yesterdays foreign policy speech by Donald Trump has received extensive coverage.

However, one sentence in his policy speech is not receiving any coverage in mainstream media. The sentence deserves extensive coverage,

It is this sentence:
We need to think smarter about areas where our technological superiority gives us an edge. This includes 3-D printing, artificial intelligence and cyberwarfare.
In the paragraph above this, Trump said, "We are also going to have to change our trade, immigration and economic policies to make our economy strong again – and to put Americans first again. "

This suggests that Trump is thinking in terms of some sort of national industrial policy, perhaps infant industry protection.

A google search for news relating to "Trump industrial policy'" turned up my comment yesterday on the matter but there were no other links related to Trump's speech and industrial policy.

Murray Rothbard considered industrial policy to be a left-Keynesian policy (See: Making Economic Sense  chapter 32).

Specifically, with regard to infant industry protection, Rothbard wrote (See: The Rothbard Reader chapter 13):
The “infant-industry” argument has been considered as the only justifiable ground for a protective tariff by many “neoclassical” economists...

Protectionist economic historians are under pains to assert that no important infant industry can be established without substantial tariff protection against entrenched foreign competition. The high degree of tariff protection in the greater part of the history of the United States, has made this preeminent industrial country a favorite “proof” of the infant-industry argument.

Ironically, it is the United States that provides the most striking illustrations of the fallaciousness of the infant-industry doctrine. Within its vast borders, the United States offers an example of one of the world’s largest free-trade areas. The frequent regional shifts in American industries provide numerous examples of birth and growth of infant industries, and decline of old, established industries.
James E. Miller wrote when discussing Paul Krugman's book Pop Internationalism:
Krugman's basic premise throughout the book is that free and globalized trade is not something a wealthy country such as the United States should fear, but rather something it should embrace. Protectionist fears of free trade such as "massive unemployment" and "trade deficits" are unjustified according to Krugman, because what drives trade is comparative rather than absolute advantage....  
Krugman points out that the idea of a country adopting an industrial policy to help certain "high-value" industries to be competitive in the world economy is superfluous. "Why," Krugman asks, "weren't private markets already doing their job?"
He goes on to state that "the productivity of the average American worker is determined by a complex array of factors, most of them unreachable by any government policy."..To top off his embrace of market efficiency over government policy, he even goes on to acknowledge that government intervention to improve competitiveness can ultimately lead to "misallocations of resources."

It is extremely difficult to see how far down the  road of central planning Donald Trump would go as president. Though it is clear his own guiding principle is the Führer Principle, that is, the view that the economy needs a strong guiding leader. In his version of the Führer Principle, it is to "cut deals."

He talks of negotiating with China and Russia but from a free market perspective what is there to negotiate? They are not threatening us. Free trade is about open borders. This does not require negotiations with other countries. It requires only an order from the President to U.S. customs guards: "Allow goods and service to flow in and out."

But the industrial policy heavy sentence of Trump's implies, he thinks differently. He wants to manage trade. He wants to manage some industries This is indeed left-Keynesian talk, It is socialist talk.

Yes, Trump may shake-up the establishment but he may replace it with something much worse, new directions in a planned economy and society overall and everyone of those yahoos cheering at his rallies will be primed useful idiots to report to the government anyone that is not going along with the plan.

-RW 




Koch-Funded Economist Calls for ECB Money Printing to Bailout Greece



The Greek financial crisis is heating up again.

Tyler Cowen, professor at Koch-funded Geroge Mason University, tells a Greek newspaper, which identified him as  “America’s hottest economist,”what to expect:
[T]he [Greek] bailout programs were never going to work in the first place. The debt is too high and is more of a political weapon than anything which can be paid back. And the Greek economy requires very serious structural reform, more than the Greek people seem to wish to accept. That is two impossibilities in the situation right there, and then on top of that we have a dysfunctional EU, slow global growth across the board, and the refugee crisis. In that setting, can one expect anything other than failure?
---
It’s all a big bargaining game, and at the end of the day pulling the plug will have to be up to the Greeks. Everyone’s expectations are unrealistic, and everyone knows that, including the IMF and EU and many others too. But who will pull the plug? Tsipras almost did, and then backed away. In my view, sooner or later Greece will leave this arrangement because it simply isn’t workable. I don’t look forward to the resulting economic carnage.
But in a decidedly non-Austrian school, non-libertarian perspective, he argued for the European people to bail out  Greece via European Central Bank money printing:
I’d like to see the European Central bank monetize a big chunk of the Eurozone debt, though at this point that doesn’t seem so likely.

 -RW 

If You Are Homeless There is No Price Inflation...

U.S. Rent inflation:


(via ZeroHedge)

MarketWatch: The U.S. Is in the Midst of a Historic Bull Market



MarketWatch correctly notes:
A bull market that has been derided as fake, doomed and history’s most-hated just earned a new title: the second-longest ever.
Dodging and weaving through three 10 percent drops in the last 19 months while avoiding the 20 percent decline that denotes a bear market, the advance that began seven weeks after Barack Obama’s first inauguration in January 2009 has now lasted 2,607 days. That matches a rally from 1949 to 1956 which straddled the presidencies of Harry Truman and Dwight D. Eisenhower. Only the dot-com bubble of the 1990s lasted longer at 3,452 days.

The idea held by many, including Krugman-Keynesians and Austrian-lites, that the Fed can no longer creates the boom side of the boom-bust Fed created business cycle, is simply absurd.

And as far as the Austrian-lites go, reflects a complete failure to understand what the business cycle is in the first place.

-RW 

Is This the Future of America?


Unless the masses start to demand economic freedom (and they don't have a clue about it now), this is exactly what lies ahead for America .

(Photo from the cover of the 2011 book, United States of Banana, by Giannina Braschi. )

Obama's Economic Legacy

President Barrack Obama tells Andrew Ross Sorkin of NYT:
I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform.By that measure, we probably managed this better than any large economy on Earth in modern history.

This, of course, ignores a number of important factors. The president's early economic policy initiatives were responsible for extending the "wrenching financial" crisis. To the degree we can say we are in a recovery is not because of Obama policies but Federal Reserve money manipulations that have simply put us in the boom phase of another Fed-created boom-bust cycle.

If Obama leaves any significant economic legacy, it will be Obamacare, If not reversed in a Donald Trump presidency, Obama's healthcare plan will ultimately result in a health economic system that sees life expectancy crashing.

And for this reason, Obama should be considered just a few notches below Mao as a horrific leader.




-RW 

Alex Jones Talks with Leading Climate Expert Lord Christopher Monckton

After listening to Lord Christopher Monckton in this clip, it is clear the certainty of the climate fearmongers and their unwillingness to debate is very similar to the unwillingness of social justice warriors to debate.

They fear debate.



-RW 

Wednesday, April 27, 2016

What Really Went Down Before the Paris 2016 Climate Agreement

Via Der Chief Policy Advisor des Science and Public Policy Institute,Christopher Monckton.



(ht Chandra Duggirala MD)

Trump Economic Policy Madness



Donald Trump delivered what was billed as a foreign policy speech in Washington D.C. at the Mayflower Hotel (The venue was moved from the National Press Club because room for more attendees was needed).

For the most part, the speech did stick to his aggressive foreign policy, but there were plenty of hints as to the types of economic policies Trump would adopt as president.

The speech made it increasingly clear that Trump is not an advocate of free markets. He is anti-free market well beyond his absurd mercantilist trade views and seems to view the role of president as manager of the economy.

During his speech, he, of course, made the absurd claim that China was committing "theft of American jobs."

This was expected, though, it does show once again that Trump neither understands comparative advantage nor how jobs are fundamentally created.

And he appears far from a small government budget guy. He said:
"We will spend what we need to restore our military." (He wants a larger standing army, more planes and more ships)
How is he going to pay for this? Through cuts elsewhere?

Not quite. He said it will be paid for when he "makes the economy strong so that tax revenues will grow."

Most shocking, he appears to have hinted at a possible national industrial policy. He stated that 3d-printing and artificial intelligence were important growth areas for the country.

Donald Trump: Central planner.

-RW 

Saudi Prince Hits Manhattan Club Looking Like an Average Slob


 A portly and disheveled man in dad jeans and sandals with a cane, sipping soda through a bendy straw, who hit a Manhattan nightspot on Monday, turned out to be Saudi Prince Abdul Aziz bin Fahd, whose fortune likely eclipses $10 billion, reports NyPo.

The 43-year-old prince is the youngest, and believed to be favorite, son of the late King Fahd bin Abdul Aziz al-Saud, who died in 2005 at the age of 82 after a 23-year reign over Saudi Arabia.

According to NyPo, Bin Fahd rolled up to the swanky Chelsea hot spot Avenue an exclusive two-story club on 10th Avenue near West 17th Street with about 15 Mercedes-Benz sedans — most of which were only occupied by a driver,

The prince was surrounded by an entourage of private security guards.

 Bin Fahd in more traditional garb.

NyPo says Bin Fahd owns a $1 billion property portfolio in the United States alone.

-RW 

The Costs of Mad Regulations to Protect Against Environmental Catastrophe

By William O'Keefe

This year’s Earth Day celebrations, dating from 1972, followed a predictable script: they predicted environmental catastrophe unless developed countries change their profligate life styles and plunder of resources. As icing on the Earth Day cake, President Obama signed the Paris Agreement on climate change, which aims to keep the world below two degrees Celsius of warming.

In 1972, the major environmental concerns were air and water pollution and the apocalypse that would take place by the end of the 20th century from the exhaustion of the earth’s natural resources. The predictions of dread, whether they be the exhaustion of food supplies, the depletion of oil resources, a growing cancer epidemic, or deadly urban air pollution have all proven false. Since 1998, the ultimate threat to mankind has been sold as the threat of climate change.

Although these predictions were political contrivances, the cost to society in addressing them as if they were real has continued to grow and weakened our economic resiliency. Economic growth is stalled at 2 percent, productivity has declined to less than 1 percent, over $2 trillion in potential investment is held offshore, and labor participation is at 1970s levels.

The Code of Regulations, a proxy for the burdens imposed on industry, has grown from about 23,000 pages in 1960 to over 175,000 pages in 2014. And, it keeps growing, now measuring over 24 feet high. The effect of this complexity of regulation falls disproportionately on younger firms, which according to economists John Haltiwanger, Ron Jarmin, and Javier Miranda in a National Bureau of Economic Research paper, are the engines of new job creation.

Read the rest here.

A Conservative Tax-Cutting Keynesian vs. a Big Government Obama Keynesian

Fox Business host Stuart Varney versus Austan Goolsbee, a University of Chicago economics professor and former chairman of President Obama's Council of Economic Advisers, debate.

Both of them think there is no room for government spending cuts in the near term.

They are both wrong in believing in the necessity for big government spending, but Goolsbee is worse than Varney.



-RW 

S&P Strips ExxonMobil of Triple A Rating

ExxonMobil has been stripped of its long-held triple A rating by credit agency Standard & Poor’s.

According to S&P, the downgrade to double A plus reflected the ballooning of Exxon’s debt and analyst views that the largest US oil group and fourth-largest publicly traded American company would have to increase capital expenditure in the coming years to maintain production.

The downgrade from S&P leaves just two publicly traded US companies with triple A ratings: Microsoft and Johnson & Johnson.

Prior to the downgrade, Exxon had held its triple A status since 1930,

Exxon said in a statement: “Nothing has changed in terms of the company’s financial philosophy or prudent management of its balance sheet.”

It added that it “places a high value on its strong credit position” and was focused on creating long-term shareholder value “despite near-term market volatility”.

-RW