DiLorenzo Destroying Democratic Socialism

Monday, November 14, 2016, 7:30 p.m. Trustees Pavilion

Should the future of America be Democratic Socialism?

Dr. Thomas DiLorenzo is Professor of Economics at Loyola University Maryland and a Senior Fellow of the Ludwig von Mises Institute in Auburn, Alabama. He holds a Ph.D. in economics from Virginia Polytechnic Institute and State University and a B.A. in economics from Westminster College in New Wilmington, Pennsylvania. He is the author of dozens of academic journal articles in publications, including the American Economic Review, Economic Inquiry, Public Choice, International Review of Law and Economics, Southern Economic Journal, andQuarterly Journal of Austrian Economics.

Dr. DiLorenzo is also the author/co-author of fifteen books, most recently: The Problem with Socialism (July 2016); Organized Crime: The Unvarnished Truth About Government; Hamilton’s Curse: How Jefferson’s Arch-Enemy Betrayed the American Revolution and What it Means for Americans Today; Lincoln Unmasked; How Capitalism Saved America: The Untold History of Our Country; from the Pilgrims to the Present, and The Real Lincoln.

Refreshments will be served at 7 p.m.
RSVP to msabrin@ramapo.edu by Thursday, November 10.

Funding for this project was provided by the John Templeton Foundation through a grant from the Institute for Human Studies.

NOTE: The event will be streamed live at https://www.ramapo.edu/sabrincenter/nine-things-millennials-know-socialism/

How to Get a First Class Upgrade Every Time

By Eric Rosen

Until recently, if you had even mid-tier elite status with an airline, you could bet on getting upgraded from economy to business or first class on many, if not most, of your flights. Not anymore. These days, scoring a free upgrade has become the exception rather than the rule of frequent flying. Here’s why—and what you can do about it.

“Upgrades are getting harder to come by,” explains Gary Leff, founder of the points-and-miles blog View from the Wing, “because airlines are monetizing first-class seats in a way they didn't used to.”

A healthy economy in the United States and other countries means there are more premium fliers—and more people with cash to lay out on paid upgrades. Plus, says Leff, first-class fares aren’t as expensive as they used to be, so it’s easier to lure travelers into buying. 

Some forty airlines, including Singapore, Etihad, and Virgin Atlantic, are now offering up premium seats for auction through a bidding platform called Plusgrade. Most of them let you make a bid a week before the departure date and notify you within a few days if you've won. And unsurprisingly, each successful bidder claims a seat that might have once gone to a frequent flier—for free. 

American legacy carriers have thus far resisted the auction trend, but upgrade availability has thinned for other reasons.

For one thing, major airline mergers—like those of Delta and Northwest, United and Continental and, most recently, American Airlines and US Airways—have concentrated the number of elite fliers into fewer programs. While the number of elites vying for upgrade spaces has ballooned, the number of premium airplane seats has remained constant.

All of this changes the dynamics of supply and demand. Says Leff, “Given how difficult it is to get upgraded, it incentivizes passengers to confirm their upgrades, for instance by redeeming miles, in advance. There are more miles in circulation now, too, so that's become easier as well.” The more fliers who redeem those miles for upgrades ahead of time, the more elite fliers there are commiserating in the back of the plane.

Even with the dwindling upgrade space and fiercer competition, you can still try your hand at an elite upgrade. If you understand how airlines dole them out, the system is yours to play, although by and large, carriers prefer to be cagey about their algorithms.

Each airline makes its own rules and weights various factors such as elite-status tier, specific fare codes, how much you’ve spent on your tickets, and whether you have a co-branded credit card. Parsing the terms and conditions of each carrier on your own could be a full-time job, so we’ve done the legwork for you.

Read the rest here.

WARNING The Never-Ending Contest in Politico-Economic Life

By Robert Higgs

A contest is under way in the world between the forces of creation, improvement, and progress and the forces of destruction, spoliation, and retrogression. This contest has been going on for thousands of years, and except during brief interludes the negative forces always kept the positive forces firmly in check. Roughly 200-300 years ago in Western Europe and some of its overseas offshoots, however, the positive forces began to outpace the negative ones, and economic progress slowly became more or less the long-term norm, eventually propelling first Europeans and ultimately most populations in the world to much higher levels of living and economic well-being. Scholars continue to debate precisely what brought about this Great Enrichment.

We know for certain, however, that the negative forces did not disappear. They were merely outpaced or circumvented most of the time in more and more places. The efforts of private inventors, innovators, investors, and workers created the process of normally positive economic growth. But government officials, regulators, influential busybodies, and misguided ideologues always tried to put obstacles in the positive path—always, of course, for what struck them as the best of reasons. They even fancied—at least in public—that they were making a positive contribution to the process, although owing to their lack of understanding of sound economics, they usually did nothing of the sort even when they really were trying.

In any event, a great variety of special interests always understood that if they could capture the powers of government to back their schemes of enrichment and empowerment, they could make themselves better off at the expense of everyone else. So with the spread of “democracy,” the plunder that had previously been confined to a much narrower set of plunderers was made much more comprehensive, giving rise to the real war of all against all. Of course, this ceaseless political war-making wreaks havoc with the creative forces that private individuals and organizations are exerting, and sometimes it overwhelms them completely, as during serious business contractions and great wars.

Although the world at large has been gaining recently as more economic liberty has been gained by people previously oppressed by pervasive states (most notably in China and India), the process in some of the leading countries, such as the USA, has been faltering. Government intervention in monetary and financial institutions, health-care-related areas, environmental management, labor relations, taxation, and regulations in practically every sphere of life have caused investors to hunker down, especially in regard to their long-term investments, and led many millions of workers to abandon the labor force. Regime uncertainty and regime worsening have thus taken the steam out of the process of economic growth and general improvement.

Some analysts believe that the positive forces retain the edge; others are skeptical and expect a tendency toward secular stagnation or even economic retrogression. We know that such reversals are possible: witness such cases as Argentina since the 1930s and Venezuela in the past several decades. In these countries rapacious pseudo-populist governments turned steadily growing economies into basket cases plagued by chronic political instabilities and hence tremendous regime uncertainty and economic retrogression. Such reversal might happen even in such formerly leading countries as the USA, where the two major-party candidates for the presidency now vie with one another in promoting destructive economic policies that would stymie positive economic forces in the private sector.

Whatever occurs in the near term, however, we know that the contest is never-ending, because its two sides represent in effect the two sides of the human heart: the one side yearning to act decently, responsibly, and productively, and the other side longing to get something for nothing at the expense of others. Because we can scarcely anticipate that this duality of human nature will change, we are simply stuck with the ongoing contest. At times fortunate institutional and legal changes may eliminate or diminish some of the existing negative forces, but we can be sure that in one guise or another, they will reappear sooner or later.

The above originally appeared at the Independent Institute.

Inferno and the Overpopulation Myth

By Jonathan Newman

Inferno is a great thriller, featuring Tom Hanks reprising his role as Professor Robert Langdon. The previous movie adaptations of Dan Brown’s books (Angels and Demons and The Da Vinci Code) were a success, and I expect Inferno will do well in theaters, too.

Langdon is a professor of symbology whose puzzle solving skills and knowledge of history come in high demand when a billionaire leaves a trail of clues based on Dante’s Inferno to a biological weapon that would halve the world’s population.

The villain, however, has good motives. As a radical Malthusian, he believes that the human race needs halving if it is to survive at all, even if through a plague. Malthus’s name is not mentioned in the movie, but his ideas are certainly there. Inferno provides us an opportunity to unpack this overpopulation fear, and see where it stands today.

Thomas Malthus (1766-1834) thought that the potential exponential growth of population was a problem.  If population increases faster than the means of subsistence, then, “The superior power of population cannot be checked without producing misery or vice.”

Is overpopulation a problem?

The economics of population size tell a different, less scary, story. While it is certainly possible that some areas can become too crowded for some people’s preferences, as long as people are free to buy and sell land for a mutually agreeable price, overcrowding will fix itself.

As an introvert who enjoys nature and peace and quiet, I am certainly less willing to rent an apartment in the middle of a busy, crowded city. The prices I’m willing to pay for country living versus city living reflect my preferences. And, to the extent that others share my preferences or even have the opposite preferences, the use and construction of homes and apartments will be economized in both locations. Our demands and the profitability of the varied real estate offerings keep local populations in check.

But what about on a global scale? The Inferno villain was concerned with world population. He stressed the urgency of the situation, but I don’t see any reason to worry.

Google tells me that we could fit the entire world population in Texas and everybody would have a small, 100 square meter plot to themselves. Indeed, there are vast stretches of land across the globe with little to no human inhabitants. Malthus and his ideological followers must have a biased perspective, only looking at the crowded streets of a big city.

If it’s not land that’s a problem, what about the “means of subsistence”? Are we at risk of running out of food, medicine, or other resources because of our growing population?

No. A larger population not only means more mouths to feed, but also more heads, hands, and feet to do the producing. Also, as populations increase, so does the variety of skills available to make production even more efficient.  More people means everybody can specialize in a more specific and more productive comparative advantage and participate in a division of labor. Perhaps this question will drive the point home: Would you rather be stranded on an island with two other people or 20 other people?

Malthus wouldn't be a Malthusian if he could see this data

The empirical evidence is compelling, too. In the graph below, we can see the sort of world Malthus saw: one in which most people were barely surviving, especially compared to our current situation. Our 21st century world tells a different story. Extreme poverty is on the decline even while world population is increasing.

Hans Rosling, a Swedish medical doctor and “celebrity statistician,” is famous for his “Don’t Panic” message about population growth. He sees that as populations and economies grow, more have access to birth control and limit the size of their families. In this video, he shows that all countries are heading toward longer lifespans and greater standards of living.

Finally, there’s the hockey stick of human prosperity. Estimates of GDP per capita on a global, millennial scale reveal a recent dramatic turn.

The inflection point coincides with the industrial revolution. Embracing the productivity of steam-powered capital goods and other technologies sparked a revolution in human well-being across the globe. Since then, new sources of energy have been harnessed and computers entered the scene. Now, computers across the world are connected through the internet and have been made small enough to fit in our pockets. Goods, services, and ideas zip across the globe, while human productivity increases beyond what anybody could have imagined just 50 years ago.

I don’t think Malthus himself would be a Malthusian if he could see the world today.

The above originally appeared at Mises.org.

Leaked Email Reveals Google Chairman Wanted To Be Clinton Campaign’s ‘Head Outside Advisor’

Eric Schmidt, executive chairman of Google’s parent company Alphabet, wanted to be “head outside advisor” to the Hillary Clinton campaign, according to Clinton campaign chairman John Podesta in an email released by WikiLeaks.

WikiLeaks has continued to reveal Schmidt’s cozy relationship with the Clinton campaign. In a previously leaked email, a memo showed that Schmidt was working directly with the Clinton campaign on setting up various backend features to their website.

In an April 2014 email from Podesta to Clinton campaign manager Robby Mook discussing the launch of Hillary’s campaign, Podesta describes how much Schmidt wants to work with the campaign.

“I met with Eric Schmidt tonight. As David reported, he’s ready to fund, advise recruit talent, etc. He was more deferential on structure than I expected. Wasn’t pushing to run through one of his existing firms. Clearly wants to be head outside advisor, but didn’t seem like he wanted to push others out,” Podesta wrote. He added, “Clearly wants to get going. He’s still in DC tomorrow and would like to meet with you if you are in DC in the afternoon. I think it’s worth doing. You around? If you are, and want to meet with him, maybe the four of us can get on the phone iN the am.”

(Via The Daily Caller)

More Questions for Trump and Other Protectionists and Mercantilists

By Don Boudreaux

Donald Trump is a protectionist like many other politicians, save that he unfurls his vast economic ignorance more fully and more proudly than do more seasoned politicians.  I’ve more questions for Trump and his fans, and, indeed, for protectionists of all stripes, colors, and temperaments.  Such as….

– If you buy your tomatoes and okra from a stranger across town and, in response, your neighbor hires a gang of neighborhood thugs to rough you up if you don’t start buying your tomatoes and okra from him, do you regard your neighbor’s actions as just?  After all, his actions increase demand for his output and make him richer.

– If the neighborhood thugs succeed in getting you to buy fewer tomatoes and okra from the stranger across town and more from your neighbor, and if (as is indeed likely) your neighbor is enriched by this thuggery public policy for the neighborhood, do you believe that your neighbor’s increased wealth necessarily means that your neighborhood is thereby made wealthier?  Are you thereby made wealthier?

– Do you believe that the success of the neighborhood thugs in getting you to buy more of your neighbor’s tomatoes and okra will encourage your neighbor to be more attentive to your wishes as a consumer – your wishes as someone who buys tomatoes and okra?  Do you believe that the quality of the tomatoes and okra that you buy from your neighbor under these circumstances will be as high as would the quality of the tomatoes and okra that you buy were there no neighborhood thugs to rough you up whenever you purchase tomatoes and okra from outside of your neighborhood?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that you and your neighbors have for several years running bought larger dollar amounts goods and services from people who live outside of your neighborhood than people who live outside of your neighborhood bought from you and your neighbors.  Your neighbor explains that this fact – this “neighborhood trade deficit” – is reason enough for him to employ local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood.  Would you excuse your neighbor?  Would you, in light of these fine facts and figures, volunteer to pay part of the salaries of the thugs who rough you up whenever you spend your money outside of the neighborhood?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that he hasn’t been working in his garden as much as he normally does, and that the reason is that there is now less-than-typical demand for the tomatoes and okra that he grows and offers for sale.  “Normally,” says your neighbor, “I’d have neither an ethical right nor a good economic justification for employing local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood.  But because I’m now not working as much as I normally do in my garden, I’m now both ethically and economically justified in employing local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood.”  Do you accept your neighbor’s reasoning?

– Suppose that your neighbor shows you indisputably correct facts and figures that prove that a homeowners’ association outside of your neighborhood spends part of its budget encouraging its residents to grow more tomatoes and okra.  Your neighbor explains that this fact – this “subsidization of produce by an outside-of-our-neighborhood collective-decision-making entity” – is reason enough for him to employ local thugs to rough you up each and every time you buy tomatoes and okra from outside of the neighborhood.  Would you excuse your neighbor?  Would you, in light of this revelation, volunteer to pay part of the salaries of the thugs who rough you up whenever you spend your money outside of the neighborhood?

– Suppose that you question your neighbor’s claim that subsidization of outside-of-our-neighborhood production of tomatoes and okra by an outside-of-our-neighborhood homeowners’ association justifies his use of thugs to rough you up each and every time you buy tomatoes and okra from outside of your neighborhood.  Your neighbor replies that “such use by that outside-of-our-neighborhood homeowners’ associations of its homeowners’ funds is a clever and crafty way to make that other neighborhood richer at our neighborhood’s expense!”  Do you find this explanation compelling?  Does its asserted truth justify your neighbor employing local thugs to rough you up each and every time you by tomatoes and okra from that other neighborhood?

– Suppose instead that your neighbor shows you compelling evidence that the other neighborhood has been overtaken by a gang of brutish thugs who violently extract resources from the citizens of that other neighborhood.  These brutish thugs spend these extracted resources subsidizing the production of tomatoes and okra grown in that other neighborhood and the sale outside of that neighborhood of those tomatoes and okra.  Your neighbor informs you that these thugs are thereby “strategically” enriching that other neighborhood at our neighborhood’s expense – which is why (your neighbor continues with his scholarly explanation) your neighbor is justified in “strategically” employing local thugs to rough you up each and every time you purchase tomatoes and okra from that other neighborhood.  Do you believe that the gang of brutish thugs in the other neighborhood are really making the people of that neighborhood, as a whole, more prosperous?  Regardless of your answer to the previous question, do you believe that your neighbor is justified in using local thugs to rough you up each and every time you buy tomatoes and okra from that other neighborhood?

…..

Now slightly reword each of the above questions so that “neighborhood” is replace by “country,” “thugs” replaced by “government authorities,” and “tomatoes and okra” is replace by “goods and services.”  I’m distressed, dear protectionist friends, to guess that your answers change when the questions are so reworded.  Can you explain why?

The above originally appeared at Cafe Hayek.

Is the Fed Political?

It has been since its creation!

Some great history from Nomi Prins

PAIN The Largest Premium Hikes Coming for Benchmark Obamacare Plans

Arizona:......... 116%
Oklahoma: .......69%
Tennessee: .......63%
Minnesota: .......59%
Alabama: .........58%
Pennsylvania:... 53%
Nebraska: .......51%
Montana: ........44%
Illinois:............ 43%
Kansas:.......... 42%

(via Fox Research)

Is Unemployment Undercounted?

A great report from Alex Tabarrok.

Self Driving Cars and Liability

Kevin emails:

Regarding the Uber Robot Truck that delivers 45k cans of Budweiser, I think you've left out one very important point - liability in the event of an accident. Would love for you to post on that topic as this is going to be a very big deal going forward. I've read articles saying the robot should be granted personhood (as if the threat of jail to a robot means anything).

 RW response:

The liability would fall to the owner of the truck (or assigned renter). The truck is a tool of a human just like any other tool.

It makes no more sense to grant "personhood" to a truck any more than it makes sense to grant personhood to a hammer, a ballon or a gun. There is a lot of confusion out there about robots and automation but they are just tools that attempt to make life easier for humans.

For Those Who Still Don't Get It

We are not in the down phase of the Federal Reserve created boom-bust cycle.

The below chart shows the current situation versus the situation as it was during the great recession.

-RW

NEW An Introduction to Austrian School Economics with Richard Ebeling

This is an important and thorough presentation.

The full video series is here.

Economic Ideas: Mercantilism as Monarchy’s Planned Economy

Richard Ebeling emails:

I have a new article on the Future of Freedom Foundation (FFF) website on, “Economic Ideas: Mercantilism as Monarchy’s Planned Economy.”

There is little new under the sun. The types of regulated and planned economies that we have experienced over the last century were imposed and implemented four hundred years ago, and was known as the economic system of Mercantilism.

In the seventeenth and eighteenth centuries, the modern State was consolidating its centralized power and the economic method used by the European monarchies of that time was called Mercantilism. International trade was considered part of a zero-sum game between monarchs wishing to increase and consolidate their domestic and foreign power. To facilitate this, all imports and exports were under the regulatory control of the state, with the goal of creating “positive” balances of trade.

But this extended to domestic commerce, industry and trade under which not one facet of economic life was left out of the oversight by the government of the king. Prices and wages were fixed by the State, production methods and locations were strictly controlled, and punishments for violation of the regulations and restrictions were severe.

But the market always is own corrections, and in the face of the Mercantilist planned economy, that was the black market and the enterprising smuggler, who later proponents of freedom and free enterprise look back upon and even considered to be heroic “reformers” helping to undermine the spiders’ webs of government economic control.

But soon the French Physiocrats appeared offering the economic ideas that would help to undermine this earlier system of central economic planning.
 
http://www.fff.org/explore-freedom/article/economic-ideas-mercantilism-monarchys-planned-economy/


Best,
Richard

If Trump Loses the Election Could He Become An Agent for Employees?

Don Boudreaux sends a letter to a correspondent:

Mr. Bill Sieta

Mr. Sieta:

Objecting to my criticisms of Trump’s trade policies, you write that you “look forward to President Trump getting tough with China, demanding it buy much more of our exports, AND stop exporting so much to us.”

I’ve a suggestion.  If (as is likely) Trump loses the election, hire him to be your employment agent so that he can at least do for you what he’ll be unable to do for the country.  Agent Trump will get tough with your employer, demanding that your employer work you much harder, AND stop paying so much to you.

If you believe that such ‘tough’ bargaining by Agent Trump would enrich you and your family, please continue to applaud Trump’s proposed trade policies, for a Pres. Trump would do for all Americans exactly what Agent Trump would do for you and your family.  But if you understand that such ‘tough’ bargaining by Agent Trump would make you and your family poorer, please consider rethinking your support for Trump’s policies.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek. 

Economist Magazine Starts Banging the Pro-Inflation Drums

As price inflation starts to heat up, the establishment magazine, owned by the Rothschilds, The Economist,  tells us we should be cheering.

From its current issue:

It has been reckless of the Fed to allow inflation to remain so low for so long. We should be cheering the slight, recent acceleration in prices and hoping for more.

Get ready.

 -RW

Gary Gensler May Not Get a Top Position in a Clinton Administration

Politico is reporting that a senior Democrat on Capitol Hill has been assuring bank lobbyists that former CFTC Chair (and ex-Goldman Sachs exec and current chief financial officer of the Clinton campaign) Gary Gensler will probably not be getting a top spot in a potential Clinton administration.

Word going around the Hill, according to Politico, is that Gensler will only get a “second tier” position.

The Elizabeth Warren camp is reportedly furious.

Gensler backstabbed his old bankster cronies while at the CFTC and helped drive the adoption of the Warren inspired Dodd-Frank Act of 2010. His name, a Republican regulator once said, according to InsideSources.com“is like a curse word” on Wall Street. “I’ve never seen anything like it.”

Anything that makes Camp Warren furious is usually a good thing but does this mean crazed inflationist Lael Brainard is a lock for Treasury Secretary?

Hug your gold coins tonight.

-RW

The Guy Who Said the Internet Would Never Amount to More Than the Fax Machine is Now Running Debt Charts Out to the Year 2046

You have to hand it to Paul Krugman, failure does not stop this man.

He said in 1998:

The growth of the Internet will slow drastically...By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

After sort of missing the mark with his  7-year projection on the value of the internet, he now takes to the New York Times to write a comment based on 30-year debt projections and the chart below.

What is great about the extreme absurdity of Krugman commentary is that I doubt there are even 5 years left before the goofiness of using this chart will reveal itself.

Filed for the record.

 -RW

Don Boudreaux: "It Literally Hurts My Brain to Read the Economic Idiocy Emitted by Trumpkins"

A Don Boudreaux letter to the Wall Street Journal:

Wilbur Ross’s and Peter Navarro’s defense of Donald Trump’s economic policies is mostly a mash of bunkum (“A Vote for Trump Is a Vote for Growth,” Oct. 26).  Consider this claim: “Donald Trump will cut taxes, reduce regulation … and eliminate our trade deficit through muscular trade negotiations that increase exports, [and] reduce imports….”

Cut taxes?  Bunk.  Trump famously promises to raise taxes on Americans who buy imports.  Reduce regulation?  Rubbish.  Trump promises moregovernment intrusions into Americans’ commerce with foreigners.

As for ‘eliminating’ our trade deficit, Trump might indeed succeed on that front.  But such ‘success’ would be regrettable, for it would be the inevitable outcome of the American economy being made an unattractive destination for investment.  (Ross and Navarro seem to be unaware that to “eliminate our trade deficit” – such as was done, for example, during the Great Depression – is to eliminate net contributions by foreigners to increasing the size of America’s capital stock.)

But Trump’s most absurd promise is to enrich Americans by increasing exports and reducing imports.  Imports are what we voluntarily buy and exports are the price we pay.  Therefore, a policy meant to increase exports while decreasing imports is a policy meant to force Americans to pay more to foreigners and to receive less in return – a decidedly unartful deal the architect of which would deserved to be fired.

But the Trump camp’s confusion runs even more deeply.  Exporting for Americans is worthwhile only because it supplies us with the means to purchase imports, either currently or in the future.  So a policy that aims both to increase exports and to decrease imports is akin to a policy that aims both to increase people’s spending power and to decrease it.  It’s a policy meant to give Americans greater means for acquiring imports as it simultaneously strips Americans of the freedom to use those means.  It’s the economic policy equivalent of an attempt to square a circle.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek. 

New Ad Ties Vulnerable Democrats to Obamacare’s Rising Costs

This ad is too disjointed but it is attacking a major Democratic vulnerability.

(via The Blaze)

Tyler Cowen Comes Out Against Universal Basic Income

His full argument is tortured in a way that could only come from someone who spends too much time inside the Beltway but, still, it must be an indication as to the way the wind is blowing if Cowen feels comfortable writing this in his Bloomberg column:

I used to think that it might be a good idea for the federal government to guarantee everyone a universal basic income, to combat income inequality, slow wage growth, advancing automation and fragmented welfare programs. Now I'm more skeptical...

It's fair to ask whether a universal income guarantee would be affordable, but my doubts run deeper than that. If two able-bodied people live next door to each other, and one works and the other chooses to live off universal basic income checks, albeit at a lower standard of living, I wonder if this disparity can last. One neighbor feels like she is paying for the other, and indeed she is.

BUT he wants to combat phony income inequality and phony automation concerns?

Has Cowen gone from being an economist to a Beltarian version of Paul Krugman?

Bottom line: If you offer to pay some people not to work, they will not work. If there is no "safety net," they will find a job.

This is not complicated.

 -RW

The Obama Administration Is Brought To You By Citigroup by an Apparent Deep State Guy

.@WikiLeaks: This @BarackObama Administration Is Brought To You By Citigroup pic.twitter.com/9wFRqSrymv

— The Young Turks (@TheYoungTurks) October 26, 2016

Note: Micahel Froman was on President Obama's transition team which explains the large number of names submitted by him.  But this doesn't negate any of the analysis about Citi influence.

Most fascinating, Froman and Obama knew each other from their days together at Harvard Law School. But here is the kicker, Froman grew up in northern California but hooked up again with Obama,13 years after Harvard Law, to provide "policy advice" to Obama's 2004 Illinois U.S. Senate campaign.

Conspiracy theorists who hold the view that Obama was picked early on to be a presidential candidate should look deeper into Froman. If there ever was a guy that looked like a deep state guy and Obama's control, Froman sure does.

From Wikipedia:

Michael B. Froman (born August 20, 1962)is an American lawyer who has served as the U.S. Trade Representative since 2013. He has been Assistant to the President of the United States and Deputy National Security Advisor for International Economic Affairs, a position held jointly at the National Security Council and the National Economic Council. In that position he served as the United States sherpa to the G7, G8, and G20 summits of economic powers. On May 2, 2013 President Barack Obama nominated him to succeed Ambassador Ron Kirk as the U.S. Trade Representative...

 He was Deputy Assistant Secretary for Eurasia and the Middle East, where his work was related to economic policy towards the former Soviet Union, Central and Eastern Europe, as well as economic components of the Dayton Accords.[2] He was a Senior Fellow at the Council of Foreign Relations and a Resident Fellow at the German Marshall Fund.

Expect Froman to be a major influence in a Clinton Administration if Hillary is elected.

 -RW

The BLS, the Labor Market, and You

Erica Lynn Groshen the Commissioner of the Bureau Labor Statistics will be speaking this evening at Murray Sabrin's Ramapo College.

Will Murray get a chance ask some penetrating questions?

Murray, we are counting on you.

It will be streamed live here. (Note: The page has a typo.  It should be Thursday, Oct. 27.)

-RW

Virtual Reality is the Future of Video Conferencing?

VR is the future of video conferencing. #WSJDLive and @SansarOfficial. Game changer for distributed teams. #futureofwork pic.twitter.com/1uYxWKZrfL

— Stephane Kasriel (@skasriel) October 26, 2016

(via Stephane Kasriel)

Nigerian Price Inflation: The IMF vs. The Truth

Per usual, the #IMF is clueless. It projects Nigerian inflation to avg 15.4% - my calculations show it is 104.8% https://t.co/3Sbl6qKA0k

— Prof. Steve Hanke (@steve_hanke) October 23, 2016

WATCH YOUR WALLETS: ObamaCare Individual Plan Rate Hikes

(via USA Today)

Watch Uber’s Robot Truck Deliver 45,000 Cans of Budweiser

I love free market innovation.

The world's first shipment by self-driving truck, a 120-mile journey with no driver in front seat.



  -RW

What Kind of Immigrant Are You?

By Thomas Sowell

Despite controversies that rage over immigration, it is hard to see how anyone could be either for or against immigrants in general. First of all, there are no immigrants in general.

Both in the present and in the past, some immigrant groups have made great contributions to American society, and others have contributed mainly to the welfare rolls and the prisons. Nor is this situation unique to the United States. The same has been true of Sweden and of other countries in Europe and elsewhere.

Sweden was, for a long time, one of the most ethnically homogeneous countries in the world. As of 1940, only about 1 percent of the Swedish population were immigrants. Even as the proportion of immigrants increased over the years, as late as 1970, 90 percent of foreign-born persons in Sweden had been born in other Scandinavian countries or in Western Europe.

These immigrants were usually well-educated, and often had higher labor force participation rates and lower unemployment rates than the native Swedes. That all began to change as the growing number of immigrants came increasingly from the Middle East, with Iraqis becoming the largest immigrant group in Sweden.

This changing trend was accompanied by a sharply increased use of the government’s “social assistance” program, from 6 percent in the pre-1976 era to 41 percent in the 1996-99 period. But, even in this later period, fewer than 7 percent of the immigrants from Scandinavia and Western Europe used “social assistance,” while 44 percent of the immigrants from the Middle East used that welfare state benefit.

Immigrants, who were by this time 16 percent of Sweden’s population, had become 51 percent of the long-term unemployed and 57 percent of the people receiving welfare payments. The proportion of foreigners in prison was 5 times their proportion in the population of the country.

The point of all this is that there is no such thing as immigrants in general, whether in Europe or America. Yet all too many of the intelligentsia in the media and in academia talk as if immigrants were abstract people in an abstract world, to whom we could apply abstract principles, such as “we are all descendants of immigrants.”

Read the rest here.

Jack Lew Headed to Israel, Saudi Arabia and the Oxford Union

Some serious global plotting is ahead for the Treasury Secretary.

The Treasury has announced that Secretary Lew will travel to Riyadh, The Kingdom of Saudi Arabia; Israel; and London and Oxford, United Kingdom from October 26-31, 2016.

During his travel, Lew will meet with senior government officials and private sector and non-governmental leaders "to discuss policies to promote shared economic growth and stability, to combat terrorist financing, and to advance regional and global cooperation."

On October 27 in Riyadh, the Secretary will participate in a meeting of the Gulf Cooperation Council Finance Ministers.  On October 31 in Oxford, Secretary Lew will address the Oxford Union.
  -RW

Obamacare Architect: Obamacare Premium Increases Are Going to be Severe for About a Million People

Earlier today on CNN’s “The Lead,” Dr. Ezekiel Emanuel, one of the architects of Obamacare, stated that “There’s a million people” for whom Obamacare premium increases are “going to be severe — or uncomfortable.”

Ezekiel is the brother of Rahm and I consider him more evil than the very evil Rahm. Ezekiel is a monster.

This is what I had to say about this evil monster in 2009:

There is no other way to put this. Ezekiel Emanuel is probably the most dangerous man on earth. He wants to decide whether you live or die, "for the good of society." He thinks there are too many new drugs coming on the market. He has the ear of the President and his brother sits next to the President as chief of staff.

If you lump all the mad scientists that have been put on the big screen by Hollywood, you are still not going to come up with the mad, totally insane ideas of Ezekiel Emanuel.

This is what I said about him in 2011:

Emanuel is a real trip. The quack thinks he can plan the entire health care industry....

I wouldn't want Emanuel designing and limiting my cell phone options and I sure as hell don't want him planning and limiting healthcare options. Where does this guy get off thinking he knows what the best healthcare plan is for every person in the United States? And yet this dude is a key player in Obama's healthcare plan. Scary.

The video of this guy on CNN today trying to spin the disaster he has created is here.

  -RW

A Stake in the Heart of Bitcoin Fanboys

On its website, IEEE, the world's largest technical professional organization dedicated to advancing technology, reports on a new attempt to create an anonymous digital currency. The e-currency is called Zcash.

I have no opinion on Zcash, itself. There are far from enough details in the article to make a judgment---other than to say it is at least a clever attempt to bring true annonomity to an e-currency but I am unconvinced. However, in advancing Zcash, the article does an excellent job of demolishing the idea that Bitcoin is some kind of anonymous currency.

Read this and weep Bitcoin fanboys. The truth is out:

 ZCash is identical to Bitcoin in a lot of ways. It’s founded on a digital ledger of transactions called a blockchain that exists on an army of computers that can be anywhere in the world. But it differs from Bitcoin in one critical way: It will be completely anonymous. Although privacy was a motivating factor for Bitcoin’s flock of early adopters, it doesn’t deliver the goods....

Bitcoin, the first and most widely used digital currency established the blockchain as a revolutionary technology. Blockchains provide a way for disparate, mistrustful parties to jointly maintain a public ledger of transactions and to do so in a way that renders all entries permanent.

The problem with Bitcoin as it is implemented today is that the entire history is public. Transactions are attributed to random identifiers that in themselves carry no information about the person controlling the accounts. But if users are not extremely careful, network analysis can reveal both the financial behavior and the real identities of the people behind the accounts. (Several companies, such as Chainalysis, now provide such a service.)

  -RW

Finally a Full Analysis: Renminbi vs. Yuan

When it comes to renminbi vs. yuan, Tyler Cowen ends the mystery, when in China use “kuai'":

The style guide of The Economist magazine, after explaining the difference between the two terms, leaves no ambiguity about what its reporters should use: “Renminbi, which means the people’s currency, is the description of the yuan, as sterling is the description of the pound.  Use yuan.”  The Financial Times favors the use of renminbi over yuan by a six-to-one ratio.  But Financial Times reporters seem to believe its readers are sophisticated enough to be able to shift back and forth between the two terms without further explanation.

That is from new and useful Gaining Currency: The Rise of the Renminbi, by Eswar S. Prasad.

And here is the BBC:

“Renminbi” is the official name of the currency introduced by the Communist People’s Republic of China at the time of its foundation in 1949. It means “the people’s currency”.

“Yuan” is the name of a unit of the renminbi currency. Something may cost one yuan or 10 yuan. It would not be correct to say that it cost 10 renminbi.

I did not know this:

The word “yuan” goes back further than “renminbi”. It is the Chinese word for dollar – the silver coin, mostly minted in the Spanish empire, used by foreign merchants in China for some four centuries.

If you wish to pursue it further:

As it happens, Chinese people rarely talk about renminbi or yuan.

The word they use is “kuai”, which literally means “piece”, and is the word used historically for coins made of silver or copper.

Sheila Bair Unloads On Larry Summers

"Total Diva" Sheila Bair

The latest fun find in the Wikileaks dump of John Podesta emails.

In an email to Hillary Clinton speechwriter/policy adviser Dan Schwerin, Sheila Bair unloads on Larry Summers:

From: Sheila Bair <sbair@pewtrusts.org>
Date: Thursday, February 12, 2015 at 10:23 AM
To: Dan <dschwerin@hrcoffice.com>
Subject: RE: Pleased to e-introduce Sheila Bair to Secretary Clinton's lead for policy, Dan Schwerin


Dear Dan,

I appreciate that.

I must say it gave me pause when I read in Sunday’s NY Times that Larry Summers is taking such a prominent role in her policy operation (or at least, that was the impression he was trying to create). I don’t think people view him as someone who understands or is sensitive to middle class issues, and justifiably so. Frankly, the policies he has embraced have done a lot to help Wall Street but not much for Main Street. I am not a Democrat, but it seems clear that he will be a divisive, not a unifying force, among your Party’s differing constituencies.

Best,
Sheila

Hee, hee,

Schwerin forwards the email to Clinton campaign chairman John Podetsa, Clinton policy adviser Jake Sullivan and former Hillary chief-of-staff Tamera Luzzatto.

 Luzzatto in an email, comments on "Total Diva" Bair:

From:luzzatto@aol.com
To: dschwerin@hrcoffice.com, Jake.Sullivan@gmail.com, john.podesta@gmail.com
Date: 2015-02-12 13:39
Subject: Re: Sheila Bair

you can be sure that's IT, so good for her for 'fessing up. Despises him, and as you all know, she's in the Warren Camp full of such resentments. I think if you decide you want to confer with her, which would be good for the rumblings on the "hundreds" being involved in economic and tax policy, you consider a high level outreach who can verbally put Summers' role (or non-role) in perspective. She's a total diva, all the time, I know in being responsible for her at Pew!

Tamera Luzzatto
luzzatto@aol.com
M: 202-329-6864
W: 202-540-650

  -RW

A Fascinating New Book for All Economics Junkies (And those interested in any and all Nobel Prizes)

An important new book review by Walter Block of The Nobel Factor: The Prize in Economics, Social Democracy and the Market Turn is here.

Dissecting the ATT Bid for Time Warner From an Economic Money Flow Perspective

At the EPJ Daily Alert, I probably get more comments along the lines of "Hey, this happened before the last crash and it is happening again."

My regular response is that you have to understand the deep details and specifics of a situation, not just some silly headline corollary that means next to nothing.

I received an email along these lines following the announced $85 billion bid by ATT for Time Warner.

Here is how I went beyond the simple corollary in the ALERT to respond to the email.

AT&T Inc. (NYSE:T) and Time Warner Inc. (NYSE:TWX) have announced they have entered into a definitive agreement under which AT&T will acquire Time Warner in a stock-and-cash transaction valued at $107.50 per share. The agreement has been approved unanimously by the boards of directors of both companies

Time Warner shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock.

Some are suggesting that this may be the sign of a top in the market...

The last time Time-Warner was involved in a mega merger was January 2000, when AOL acquired the company for $182 billion in what was the mega deal of the last tech bubble...

I repeat once again: You must look at the specifics behind historical data and not just look at headlines and say: "Ah ha! The last great takeover of Time Warner came at the start of a crash. It is happening again!"

Yes, the AOL acquisition of Time Warner by AOL in 2000 for all practical purposes marked the start of the tech bubble and the  beginning of the recession that was to come.

But here is the thing, the 2000 deal was an all stock deal.It was just moving paper around. The current deal is 50% cash. That's $42.5 billion in cash!

Do you want to know how the money the Fed is printing is getting into the system? This is a perfect example of how.

The economist Fritz Machlup in his important book, The Stock Market, Credit, and Capital Formation  discussed the different methods of buybacks, takeovers, debt raising etc. It is not as simple at just looking at a deal without understanding the financing going on and to understand what is resulting in more money in the system.

The 2000 deal did not result in any new money in the system. This time it is different.

Unlike the 2000 deal that was all stock, the fact that this one is $80 billion in cash suggests the potential for a huge new money flow into the stock market--which is right in line with my expectation that the money flows indicate a strong stock market at the start of 2017.

An  ALERT subscriber responded to my commentary:

Hi Robert. I am a tax lawyer and have been back to a large large firm since 2014, after a 12-year hiatus. When I left the large firm in 2002, all the major acquisitions I had worked on from 1979 thru 2002 involved mostly stock and seller financing. My tax practice was focused on tax-free reorganizations for which stock is the major component. No one had the kind of cash needed for cash acquisitions. Upon my return in 2014, I was surprised to see that my first acquisition was all cash. And that turned out to be no fluke. Since 2014, I have not worked on a single tax-free acquisition involving stock. Every single deal has been all cash. I've been disappointed that my expertise in tax-free stock acquisitions has not been needed. It looks like every seller is getting all cash and paying massive taxes on those taxable sales. Thanks to my subscription to EPJ Daily Alert, I pretty much had figured out what you are saying today - that cash is everywhere now. It is pouring out of the woodwork.  

 -RW

White House Says Obamacare Premiums Will Rise By Double-Digits Next Year

Are they trying to crash this thing on purpose to bring on full socialized medicine?

It would be a Saul Alinsky-style move.

The Obama administration now says insurance premiums will rise by double-digit percentages in 2017.

Premiums will increase at an average of 25 percent across the 39 states serviced by the online marketplace healthcare.gov, according to the Obama administration, reports The Daily Caller.

This year’s expected increase is triple the size of 2016, and will have a direct effect on 16 percent of consumers who are not protected by subsidies, The Hill reports.

 -RW

No One Bids for John Nash Nobel Prize

John Nash received a Nobel Prize in economics for his work in game theory.

It was estimated by the auction house Sotheby's that the medal would go for between $2.5 million and $4 million.

No one bid for the medal.

What a spectacular way to witness disrespect of a theory that I view as having little practical value.

(And his theory about which women to pick up in a group, as portrayed in the film A Beautiful Mind, was all wrong.)

 -RW

Barry Ritholtz 1, Strawman 0

A Don Boudreaux letter to the editor of BloombergView:

Editor, BloombergView

Sir or Madam:

Observing that Seattle’s economy continues to thrive following that city’s recent hike in its minimum wage, Barry Ritholtz dismisses opponents of minimum wages as politically biased purveyors of doom who are ignorant of economics (“Doomsayers Keep Getting it Wrong on Higher Minimum Wages,” October 21).  Alas, Mr. Ritholtz slays a strawman.

Contrary to Mr. Rithholtz’s impression, no serious economist predicts that minimum-wage hikes cause unemployment to “skyrocket,” the economy to “collapse,” and “restaurants and small businesses [to] close en masse.”  Instead, the chief prediction is that raising the minimum wage reduces employment of the least-skilled workers, both by destroying jobs outright for some of them and by reducing the number of hours that others of them work.  Yet because the percentage of workers who are so lacking skills that they are directly affected by minimum wages is, thankfully, small, these negative effects can, and often do, occur even as the larger economy and workforce flourish.

Mr. Ritholtz here is akin to someone who, upon discovering that a modest poll tax does not cause democracy to “collapse,” polling places to “close en masse,” and the number of people who steer clear of polling places on election day to “skyrocket,” concludes that opponents of poll taxes are economically ignorant “doomsayers” whose opposition to poll taxes is politically biased and should be ignored.

By the way, had Mr. Ritholtz consulted a serious study of Seattle’s minimum wage – such as that released in July by the University of Washington’s Seattle Minimum Wage Study Team – he would have discovered evidence that is indeed consistent with the standard economic case against minimum wages.  This team finds that, while of course low-skilled workers who remain employed receive higher wages, “the unintended, negative side effects on hours and employment muted the impact on labor earnings….  The effects of disemployment appear to be roughly offsetting the gain in hourly wage rates.”*

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* “Report on the Impact of Seattle’s Minimum Wage Ordinance on Wages, Workers, Jobs, and Establishments Through 2015,” Seattle Minimum Wage Study Team, University of Washington (July 2016), p. 33.

(I thank Jeff Jacoby for alerting me to Ritholtz’s essay.)

The above originally appeared at Cafe Hayek.