Monday, March 8, 2021

$2 Trillion Divided by 145 Million . . .


Tom DiLorenzo writes:

. . . is $13,793.   That’s the average cost per taxpayer of the new $1,400 checks that some of them are being promised.  (145 million is the approximate number of federal taxpayers according to the IRS).

If every single American citizen were give $1,400 it would cost about $435 billion.  Not that everyone will get a check — those earning above $80,000/year are “phased out.”  I wonder what all the rest of the “COVID relief” money is for.

-RW

I'm Saving This Clip for When the Price Inflation Starts to Soar...

 and it all ends up screwing the masses.

The Biden Administration appears to be filled with people who have no understanding of economics.

The head of the National Economic Council is Brian Deese, who has a law degree. Not once when being interviewed has displayed any fundamental economic understanding. He is all about getting legislation passed.

Biden's head of the Council of Economic Advisers is Cecilia Rouse who is best known for her paper “Orchestrating Impartiality: The Impact of ‘Blind’ Auditions on Female Musicians,” co-authored with Claudia Goldin.

I would venture to guess that Nicolás Maduro has advisers around him that have better economic understadning.

-RW

Crude Oil Price Explodes Over $70 a Barrel After Attacks Aimed at Saudi Oil Facilities; When is the Price Climb Going to Stop?

(Via Zero Hedge)

As if we don't already have a major driver of higher oil prices as a result of Federal Reserve money printing.

Oil prices jumped above $70 a barrel for the first time in 14 months after Saudi Arabia said its energy facilities had been attacked on Sunday.

A drone attack from the sea on a petroleum storage tank at Ras Tanura, one of the largest oil shipping ports in the world, took place on Sunday morning, reports the Financial Times.

Then in the evening, shrapnel from a ballistic missile fell in Dhahran, where state oil company Saudi Aramco has its headquarters and near where thousands of employees and their families live.

Yemen’s Iran-allied Houthi fighters claimed responsibility for the attacks and said they had also focused on military targets in the Saudi cities of Dammam, Asir and Jazan.

A Houthi military spokesperson said the group had fired 14 bomb-laden drones and eight ballistic missiles in a “wide operation in the heart of Saudi Arabia”.

While Saudi Arabia’s ministry of energy said the attacks “did not result in any injury or loss of life or property," FT notes the attacks have still unsettled oil markets that have rebounded strongly in recent months.

Brent crude, the international benchmark, has traded as much as 2.9 per cent higher to $71.38 a barrel overnight in Asia.

Even before the attack, Azerbaijan’s Socar Trading SA and Bank of America forecast that oil could climb over $100 per barrel.

Jeffrey Currie of Goldman Sachs and Christyan Malek of JPMorgan, according to FT, are confident that oil is ready for the next supercycle—a prolonged rise in the price of oil.

-RW

Sunday, March 7, 2021

Why a Wealth Tax is a Horrific Idea


The wealth tax is a horror.  In this edition of "This Week in Economics," I discuss the problems with the tax and how it results in the lowering of the general standard of living.

The podcast version is here or on your favorite podcast platform.

-RW

This is What is in the COVID-19 $1.9 Trillion Spending Bill That Was Passed by the Senate on Saturday and What You Will Get Out of It


The Senate passed President Biden’s $1.9 trillion coronavirus spending package Saturday along party lines, 50-49.

The package now heads back to the House, which must approve the Senate-revised legislation before sending it to the White House for Biden’s signature. 

House Democrats appear on track to approve the Senate's changes. House Majority Leader Steny Hoyer (D-Md.) said the House would take it up Tuesday.

The legislation provides $300 in weekly unemployment benefits through Sept. 6, sends $1,400 direct payments to most Americans, direct $350 billion to state and local governments, funds vaccine distribution and expands the child tax credit, among other items.

It should be pointed out that the federal government has no funds to finance this spending. 

No doubt the Federal Reserve will step in to monetize most of the spending. Indeed, the Treasury already has $1.4 trillion chit sitting at the Federal Reserve that the Treasury can pump into the economy as dollars at any time. Count that as Fed monetization.

This explosion of new money will add to the upward pressure now developing on prices.

The unfunded spending spree is the most irresponsible thing coming out of the Federal Reserve, the Treasury, Capitol Hill and the White House in many decades.

Here is the breakdown as to how much of the money pump will come your way:

Who is eligible?

  • Generally, if you are a U.S. citizen or resident alien, and you are not claimed as a dependent on someone else’s income tax return, you are eligible to receive a payment if you fall within the relevant income thresholds.
  • If you file your taxes as an individual and your annual income is $75,000 or less, you are eligible for a full payment of $1,400. If you earn between $75,000 and $80,000, you are eligible for a reduced payment.
    • For married couples who file joint returns, you are eligible for a full payment of $2,800 if your joint annual income is $150,000 or less. If you earn between $150,000 and $160,000, you are eligible for a reduced payment. These amounts will differ if you have children and/or adult dependents; see below for more details.
    • If you are a single parent or caretaker and you file as a head of household, you are eligible for a full payment if your annual income is $112,500 or less, and a reduced payment if you earn between $112,500 and $120,000. Your payment amount will depend on how many dependents you have.
  • If the credit amount determined by your 2021 tax return exceeds the payment amount you received (which will be based on your 2020 or 2019 tax return), you can claim the difference on your 2021 tax return. If, on the other hand, you receive a larger payment than the maximum credit allowed based on your 2021 tax return information, you will not be required to repay any amount.
  • In general, taxpayers without an eligible Social Security Number are not eligible for the payment. However, married taxpayers filing jointly where one spouse has a Social Security Number and one spouse does not are eligible for a payment of $1,400, in addition to $1,400 per dependent with a Social Security Number.
    • For eligible households in which at least one spouse is a member of the U.S. Armed Forces (and at least one spouse includes their Social Security Number on the tax return), the couple may receive up to the full $2,800.

Amount of payment

  • The payment is $1,400 per eligible family member: $1,400 per taxpayer ($2,800 for married couples filing jointly), and an additional $1,400 per dependent, including both children and non-child dependents.  An eligible family of four will receive up to $5,600.
  • Payments start to phase out for those with incomes exceeding $75,000 for singles; $150,000 for married couples; and $112,500 for single head-of-household filers. Your income is based on your 2020 or 2019 tax return, whichever is the latest on file with the IRS.
  • If your income exceeds the phase-out threshold, your credit amount will be reduced proportional to your income in excess of the phase-out threshold, divided by $5,000 (individual), $10,000 (married couple), or $7,500 (single head-of-household). So, if you are a single filer earning $78,000: $1,400 * (1-(($78,000-$75,000)/$5,000)) = $560
  • No payments will go to: single filers earning more than $80,000; joint filers earning more than $160,000; and single head-of-household filers earning more than $120,000.

-RW

Saturday, March 6, 2021

Hyperinflation Pushes Venezuela to Print 1,000,000-Bolivar Bills

Venezuela said it will introduce new large-denomination bolivar notes as hyperinflation roars in the country, reports Bloomberg.

The country’s central bank posted a statement on its website Friday saying it would begin circulating the new 200,000, 500,000 and 1,000,000 bills to “fulfill the current economy’s requirements.”

At current foreign exchange rates, the 1,000,000 note -- the largest in the nation’s history -- is worth only $0.53 cents.

Inflation has soared 3,000% in the last 12 months, according to Bloomberg News’s Cafe con Leche Index.

President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation

-RW

Thank You, Federal Reserve: Tom Brady Rookie Card Edition



Tom Brady's rookie card just sold for $1.32 million in an online auction. It is the highest price ever paid for an NFL card, according to the auction house PWCC Marketplace.

Brady is a great quarterback but the card wouldn't have climbed to these heights without  Fed chairman Jay Powell in the game as the 12th man money printer.

-RW (ht Mike Spilotros)

Senate Rejects Sanders’ $15 Minimum Wage Bid

Bernie Sanders

A small bit of sanity in the Senate.

The Senate voted 58-42 very late Friday night (10:53 PM) to reject Sen. Bernie Sanders’ effort to add a $15 minimum wage provision to President Biden’s $1.9 million COVID-19 bill.

Eight Democratic caucus members joined all 50 Republicans in rejecting the ammendment.

Democratic Sens. Joe Manchin of West Virginia, Jon Tester of Montana, Jeanne Shaheen of New Hampshire, Kyrsten Sinema of Arizona and Maggie Hassan of New Hampshire voted against the Sanders' effort. So did two close Biden home state allies, Chris Coons and Tom Carper of Delaware. 

Sen. Angus King (I-Maine), who caucuses with the Senate Democrats, also opposed it.

-RW

Top Economist Says Federal Reserve Chairman Powell is Delusional

Jat Powell

Steve Hanke, professor of applied economics at Johns Hopkins University, is probably the most solid economist that you will find at a top-ranked university.

 In the interview below, he says some very interesting things about bitcoin, listen to that if you are interested in bitcoin, but at the 14-minute mark he starts to discuss Federal Reserve policy under Jay Powell, don't miss that.  Hanke is correct, Powell is delusional and appears to be running policy in line with mad MMT policy thinking.

   

 -RW

Friday, March 5, 2021

John McAfee Indicted On Cryptocurrency Fraud Charges

John McAfee

The curious John McAfee, a one-time Libertarian presidential candidate, has been indicted on charges related to securities fraud, cryptocurrency manipulation and money laundering, according to the Justice Department.

McAfee and his adviser Jimmy Watson have been accused by federal prosecutors  of using McAfee's Twitter account to promote cryptocurrencies to his 1 million+ followers in order to artificially inflate their market price.

During the period from in or about December 2017 through in or about October 2018, JOHN DAVID MCAFEE and JIMMY GALE WATSON JR., and other members of the McAfee Team, perpetrated two fraudulent schemes relating to the promotion to investors of cryptocurrencies qualifying under federal law as commodities or securities. 

The first scheme involved a fraudulent practice called “scalping,” which is sometimes referred to as a “pump and dump” scheme.  This scalping scheme generally consisted of the following.  First, MCAFEE, WATSON, and other McAfee Team members bought large quantities of publicly traded cryptocurrency altcoins, which qualified as commodities or securities, at inexpensive market prices with advance knowledge that MCAFEE planned to publicly endorse them via his widely followed Twitter account (the “Official McAfee Twitter Account”).  Second, after these purchases, MCAFEE published false and misleading endorsement tweets via his Official McAfee Twitter Account recommending those altcoins to members of the investing public for investment in order to artificially inflate (or “pump” up) their market prices without disclosing that MCAFEE owned large quantities of the promoted altcoins, even though MCAFEE had given false assurances that he would disclose such information in various tweets and public statements during the scalping scheme.  Third, MCAFEE, WATSON, and other McAfee Team members then sold (or “dumped”) their respective investment positions in the promoted altcoins into the temporary but significant short-term market price increases that MCAFEE’s deceptive tweets typically generated, often for significant profits.  From in or about December 2017 through in or about January 2018, MCAFEE, WATSON, and other McAfee Team members collectively earned more than $2 million in illicit profits from their altcoin scalping activities while the long-term value of the recommended altcoins purchased by investors declined substantially as of a year after the promotional tweets.  From in or about December 2017 through in or about October 2018, MCAFEE, WATSON, and other McAfee Team members engaged in various efforts to liquidate the digital asset proceeds of their scalping activities into United States currency. 

In the second scheme, MCAFEE, WATSON, and other McAfee Team members also used MCAFEE’s Official McAfee Twitter Account to publicly tout fundraising events called “initial coin offerings” (“ICOs”) in which startup businesses (“ICO issuers”) issued and sold digital tokens qualifying as securities to the investing public, without disclosing and, in fact, concealing that the ICO issuers were compensating MCAFEE and his team for his promotional tweets with a substantial portion of the funds raised from ICO investors.  As the United States Securities and Exchange Commission had publicly warned, and as MCAFEE and WATSON well knew, the federal securities laws required them to disclose any compensation paid by ICO issuers for touting securities offerings styled as ICOs.  From approximately on or about December 20, 2017 through on or about February 10, 2018, MCAFEE, WATSON, and other McAfee Team members collectively earned more than $11 million in undisclosed compensation that they took steps to affirmatively hide from ICO investors.  In each instance, MCAFEE and WATSON failed to disclose to ICO investors that the ICO Issuers were paying the McAfee Team a substantial portion of the funds raised from ICO investors for their touting efforts, despite knowing that they were required to disclose such compensation under federal securities laws.  Furthermore, in several instances during this ICO touting scheme, MCAFEE and WATSON took active steps to conceal their secret compensation arrangements with ICO issuers from ICO investors, and MCAFEE made false and misleading statements and omissions to hide such deals from ICO investors.  From approximately in or about December 2017 through in or about October 2018, MCAFEE, WATSON, and other McAfee Team members engaged in various efforts to liquidate the digital asset proceeds of their ICO touting activities into United States dollars.

During the period from in or about December 2017 through in or about October 2018, MCAFEE and WATSON caused another McAfee Team member to engage in banking transactions to launder proceeds of the fraudulent ICO touting scheme.
-RW

How the Government Will Shutdown Bitcoin

As a follow up to my post, Harvard Professor Warns Central Banks Will Never Allow Bitcoin to Go Mainstream, David Brown emails:

It would be helpful to understand the details when you say “The hammer is there whenever they want to use it”. The bitcoiners will say BTC is uncontrollable. My sense is, the devil is in the details. I have yet to hear a clear discussion of the “plumbing" of how they will clamp down, and the bitcoiners’ counter-arguments. It would be very enlightening.

RW response: 

Well, bitcoiners would like you to focus on the "plumbing." 

They have all kinds of fancy arguments of this kind and that. 

From another commenter at the post who talked about the plumbing:

Point being is that the selling point for bitcoin is that its payments are completely uncensorable as a result of the CPU cycles. Nothing and no one can stop you from sending a payment over the bitcoin network to whomever you want to.

Second level solutions can be built on top of bitcoin so you can buy your coffee, but having an unchangeable; indisputable, uncensorable way to send value is extremely valuable, even if you never buy coffee with it.

But shutting down bitcoin, in a way, is simple so you could never be able to buy coffee with it. It doesn't matter what the plumbing is. Here is the law that could be enacted:

"The government hereby makes it illegal to conduct transactions in bitcoin."

This instantly eliminates the ability for bitcoin to be used in retail transactions or in banking---or for an individual to be paid wages in bitcoin. If there are severe penalties, and there would be, what retailer or bank or cafe or other business is going to accept bitcoin in a transaction?

As for the uncensorable element, again we are talking about plumbing that has nothing to do with human exchanges.

Making bitcoin illegal would push bitcoin into the shadows, uncensorable or not. What are you going to do with bitcoin if it is in the shadows? Being a bitcoin dealer would be an extremely high-risk business. Transaction costs would soar. Indeed because of the nature of bitcoin transactions, the risk on any given exchange being exposed would be a lifetime proposition.

Bitcoiners focused on the "plumbing" fail to look at the situation from the non-plumbing transaction part of the exchange.

I hasten to add that as a first step, I don't expect the government to shutdown bitcoin or other cryptocurrency trading right away. The first step will be more regulations to identify bitcoin holders.

In a discussion I had just yesterday on another topic with some Silicon Valley people, we talked for a bit about bitcoin. Our thinking went this way:

There is a massive amount of money to be made in shutting down bitcoin.

If you short it before the shutdown, you could make a lifetime-size amount of money that puts you on easy street if you are leveraged. 

When the major league insiders are ready, this is what will happen.

Right now the more buying of bitcoin, the better for them. The more liquid the market, the more bitcoin can be shorted when the time is right. And the time will eventually come. 

It is a rigged game in favor of the insiders and you are not one of them. There is no way that the Fed is going to want to compete with bitcoin and other cryptocurrencies when the Fed is ready to introduce a Fedcoin.

I don't doubt the Treasury and Fed are polling right now to test and see what story the public finds as the most acceptable justification for shutting down cryptocurrencies.

Thursday, March 4, 2021

Uh Oh: Fed Hires a Chief Innovation Officer

Sunayna Tuteja

Sunayna Tuteja has been appointed as the Federal Reserve System’s chief innovation officer, a new role at the central bank.

This may not be a good sign for cryptocurrencies. 

Prior to joining the Fed, she was managing Director, Head of Digital Assets & DLT (Blockchain, Crypto).

You can be sure she wasn't brought into the Fed to help promote bitcoin or ethereum.

This is another indication that the Fed is getting serious about launching a Fedcoin.

“She will be collaborating with business and technology leaders to formulate an agenda that advances technology research and leverages the great innovation work already underway across the Fed,” said Federal Reserve Chief Information Officer Ghada Ijam.

Ahem.

Tuteja will be a senior vice president in the Fed’s National IT organization.

-RW

(ht Chris Clark)

Harvard Professor Warns Central Banks Will Never Allow Bitcoin to Go Mainstream

Kenneth Rogoff

Harvard Professor of Economics and former chief economist at the International Monetary Fund Kenneth Rogoff told CNBC that central banks won’t allow bitcoin and other cryptocurrencies to become mainstream. “Eventually over the long course of history, the government first regulates and then it appropriates, and I think we can see that happening here,” he warned.

 “Clearly, there are a lot of wealthy people and well-known financiers, often very senior, who publically said they are investing in it [bitcoin] and that has given confidence. But I have to say, regulation is in its early innings – if there is no final use case for bitcoins, [and] I don’t think it’s going to be, [then] ultimately this bubble will pop, but it could take a decade,” he said.

 “As it really starts to compete with ordinary, fiat currencies, government currencies, I think they’ll clamp down on it like a ton of bricks. They are not going to allow that to happen,” he added.

Rogoff knows of what he speaks. He is a major league, top-tier government technocrat, who has the ear of governments globally. I think he is a despicable statist, (He wants to ban cash) but he does understand the state's perspective. 

The price advance in bitcoin is extremely powerful at present but the government is not going to allow any cryptocurrency, outside of its own, to exist as a general medium of exchange.

“I don’t think regulating it is all that difficult,” Rogoff said and he is correct.

The hammer is there whenever they want to use it.

. -RW

What Developing Countries Desperately Need To Do To Reinvigorate Their Economies Post-COVID Lockdowns


By Richard M. Ebeling

The coronavirus and the government responses with shutdowns and lockdowns, along with restrictions on international travel and disruptions of the global supply chains that crisscross countries and continents, have made a fuller and more rapid recovery difficult in the Western industrialized countries, but even more so in many places in what used to be called during the Cold War, the underdeveloped nations of the “Third World.” The question is what may be the best domestic and trade policies for these countries to follow in such trying times?  

To where and to whom might we turn for some advice for these developing countries in the aftermath of the economic disaster caused by governments due to their responses to the coronavirus? I would like to suggest that one place to start might be with the policy recommendations offered by the Austrian economist, Ludwig von Mises (1881-1973), about 80 years ago, when he was asked to present an agenda for economic reform and growth for Mexico after he completed an extensive stay in and study of that country’s situation and possibilities. 

In December 1941, Mises was invited to spend most of January and February of 1942 in Mexico, lecturing at the School of Economics of the National University of Mexico. There he delivered a series of lectures on “The Organization of Social Economy,” and two seminar series – “The Role of Economic Doctrines in Present-day Political Antagonisms” and “Fundamental Problems of Money and Credit.” He also delivered two lectures at the Independent Law School in Mexico City. In total, Mises gave twenty-three lectures over that six-week period.

The following year, in June 1943, Mises finished a monograph on “Mexico’s Economic Problems,” which he had prepared for a market-oriented business association in Mexico City. His purpose was to develop a series of detailed economic policy proposals that a country like Mexico could follow with two underlying goals in mind: to foster that nation’s industrial development and to integrate that nation’s economy into the global system of division of labor.

Mises started out by emphasizing that regardless of the policies of other countries and the general international conditions, sound economic policy always begins at home and never loses sight of the long run.

He explained the counterproductive consequences for Mexico resulting from the country’s intellectual and political leadership having accepted many of the premises of socialist and interventionist ideology. Wrong ideas had prevented Mexico’s economic development. What Mexicans had to realize was that, “The only way toward an improvement of Mexico’s economic situation is economic liberalism, that is, the policy of laissez-faire; what Mexico needs is economic freedom.”

Mises contrasted two methods for Mexico’s path toward industrialization, what he called the “closed door” and the “open door” methods. The closed-door method is what became widely known in the post-World War II period as the import-substitution method of industrialization. Under this approach, industrialization was to be forced through trade restrictions and high tariff barriers behind which domestic industries would be stimulated into existence at artificially high prices, far above those in the general global market. Mises pointed out that countries implementing such policies inevitably made their own people poorer and less productive.

Mises argued, Mexico needed to follow the “open door” approach to industrialization, initially selling mostly raw materials and resources on the world market, and thereby earning the means to import capital and so raise the standard of living of its workforce, from which domestic saving and investment would be generated over time. Many sectors of the Mexican economy could make a fairly easy and smooth adjustment to an immediate shift to a free trade policy, he estimated. But there were, admittedly, other sectors that had become significantly dependent upon the tariff walls behind which they had developed over the years. Of course, he went on, “A sound industrialization program for Mexico has to repeal all import duties.”

What the Mexican government and political parties needed to do immediately was to publicly declare that henceforth economic policy would be based on: (a) no expropriation of private property; (b) no confiscatory taxation of profit; (c) no controls or restrictions on the foreign exchange market; and (d) no direct or indirect interference with the management and decision-making of private businesses. It was important to attempt to recreate confidence in the Mexican business climate to attract foreign investors as well as creating a sense of security for Mexican entrepreneurs.

If Mexico was to succeed in its market-driven industrial development it was essential that neither government legislation nor trade union power be used to artificially raise wage rates above those set on the market, and most certainly there should be no attempt to raise them to comparable United States levels. Mexico was a capital-poor country, Mises emphasized, with a relatively large supply of unskilled labor. That necessarily meant that labor productivity was far lower than that of American workers. To be competitive Mexican workers had to specialize in those lines of production in which they had a cost-advantage in international markets.

Mises argued that the private sector should be neither taxed nor expected to directly provide workers with social insurance of any kind. If the employer is burdened with financing social insurance schemes, the cost of employing workers rises, since the full cost of hiring is both the money wage agreed to as well as the taxes for or the direct costs of providing social security, public housing, medical care, and so on. These additional labor expenses result in some workers again being priced out of the market or some jobs never being created.

Equally important, Mises said, is that mandatory social insurance limits the freedom of the employee. “It only restricts his freedom to spend his earnings ad libitum. It forces him to provide for illness, disability, and to spend a minimum for housing and so on,” whether or not this reflects the worker’s personal preferences about how best to allocate his income as he understands his own circumstances.

Finally, on monetary and fiscal matters Mises argued that Mexico should establish a functioning gold standard that would secure a stable currency not open to direct or easy manipulation and abuse by the government. A stable, gold-based currency would also help to create a market climate more likely to attract foreign investment, without which Mexico’s climb to industrial development would be that much more difficult. With this goal in mind, the government had to maintain a balanced budget by keeping expenditures within the bounds of taxes collected, and with those taxes being kept generally low.

Almost 80 years since Ludwig von Mises penned these words and advice, it may be said that they remain as true and important now as in the 1940s, for any country wishing to improve the economic circumstances of its people. Indeed, his warnings about misguided government policies remain just as relevant if not more so today, as we see in our own time a new push for increased interventionism, expanded welfare statism, and renewed calls for socialist-style centralized planning. As Mises said, if we want, peace, freedom and prosperity, there is no alternative to the free market economy respectful of competitive entrepreneurship and consumer choice.

Dr. Richard M. Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina.

He is also the co-editor of When We Are Free (Northwood University Press, 2014), an anthology of essays devoted to the moral, political and economic principles of the free society, and co-author of the seven-volume, In Defense of Capitalism (Northwood University Press, 2010-2016). 

The above is an abridged version of an essay, Post-Covid Policy Advice from Ludwig von Mises for Developing Countries, that first appeared at aier.org.

Wednesday, March 3, 2021

Senate Confirms Expert in Orchestra Audition Sexism to Head the Council of Economic Advisers

 Cecilia Rouse

 As Beethoven might put it, "Ta ta ta taaaaa!"

The Senate just voted 95-4 to confirm Cecilia Rouse to lead the Council of Economic Advisers.

The Joe Biden pick is best known for her paper “Orchestrating Impartiality: The Impact of ‘Blind’ Auditions on Female Musicians,” co-authored with Claudia Goldin.

Expertise in sexism when it comes to orchestra auditions should really help her deal with providing Joe with sound advice when it comes to the developing explosion in price inflation and government debt. 

Rand Paul, Tom Cotton, Rick Scott and Tommy Tuberville stepped up against the madness and voted against the nomination.

-RW

What Joe Biden Gets Wrong About Unions (Pop Up Edition)

Is Joe Biden correct when he says unions built the middle class? In this pop-up edition of "This Week in Economics with Robert Wenzel," I discuss the problems with Joe Biden's take.

 

 You can listen to this edition via podcast here or on your favorite podcast platform.

 -RW

Tuesday, March 2, 2021

The Worst Column Paul Krugman Has Ever Written

Paul Krugman

In his latest New York Times column, Paul Krugman writes:

It’s true that both Economics 101 and conservative ideology say that more choice is always a good thing. Milton Friedman’s famous and influential 1980 TV series extolling the wonders of capitalism was titled “Free to Choose.”

The spread of this ideology has turned America into a land where many aspects of life that used to be just part of the background now require potentially fateful decisions. You don’t get a company pension, you have to decide how to invest your 401(k)...

Some, maybe even most, of this expansion of choice was good. I don’t miss the days when all home phones were owned by AT&T and customers weren’t allowed to substitute their own handsets.

But the argument that more choice is always good rests on the assumption that people have more or less unlimited capacity to do due diligence on every aspect of their lives — and the real world isn’t like that. People have children to raise, jobs to do, lives to live and limited ability to process information.

And in the real world, too much choice can be a big problem... I’d suggest that an excess of choice is taking a psychological toll on many Americans, even when they don’t end up experiencing disaster...

So the next time some politician tries to sell a new policy — typically deregulation — by claiming that it will increase choice, be skeptical. Having more options isn’t automatically good, and in America we probably have more choices than we should.


 How idiotic can a New York Times columnist get? 

More choices mean more flexibility and if there develops a situation where it is too difficult for many to choose via myriad options, why wouldn't the market develop simple options?

This is probably Krugman's worst column he has ever written.

It presents an absurd scenario where the only solution is less choice for all and more government authoritarianism.

Krugman is clearly out front, ahead of the pack, for the 2021 Stalin Award.

-RW