Maverick Philosopher

U. S. Treasuries Still a Safe Haven?

Argument contra. Excerpt:

Even though the U.S. government’s debt-fueled spending response began as a national emergency under former President Trump, excessive spending continued under the Biden-Harris administration. It continued long after the emergency faded and continues today.

By continuing it, the Biden-Harris administration squandered the opportunity to refill the U.S. government’s credit reservoir to restore its risk-free status. They could have reduced spending to sustainable levels after the pandemic ended, but instead, they failed this basic test of fiscal responsibility.

The national debt in relation to the U.S. economy has now reached levels not seen since the end of World War 2. It may be helpful to consider how politicians of that time tackled this challenge. After the war, they adjusted their spending habits and stopped investing money in a war that had already ended. This decision ensured that the U.S. government’s credit reservoir would be replenished for future generations.

It’s a history lesson that today’s politicians either never learned or have chosen to ignore. Because they haven’t heeded the lesson, debt issued by the U.S. government has become riskier to the nation’s creditors. Because it has become riskier for those who lend money to the U.S. government, that same debt has become much more costly to U.S. taxpayers.

“If something cannot go on forever, it will stop.” It’s only a question of when and how painful it will be when it does.

Here we have yet another reason why anyone who supports Harris-Walz is a contemptible fool.  Is it not one of the marks of the fool to be unaware of, or unconcerned with, one's long-term best self-interest, where such self-interest correlates closely with the long-term best self-interest of one's country? 

Meanwhile the spot price of gold hovers around 2500 USD/oz.  That says something, doesn't it?

When we have gold we are in fear . . .

. . . when we have none we are in danger.  (English proverb)

A proverb whose pertinence is proven  by  recent  developments. Gold hit 2400 USD/oz. a day or two ago, but has backed off some.   Joe Biden and his shills lie their heads off about everything including the health of the economy, but, with respect to the latter,  the surging price of gold suggests otherwise.

Economic Gaslighting

The Left's economic gaslighting  is well-exposed and refuted by Jeffrey H. Anderson at City Journal:

“The economic news in 2023 was almost miraculously good,” the New York Times’s Paul Krugman enthuses, as the American “economy continues to look like an amazing success story.” The title of a Financial Times article emphasizes the “strange lack of electoral reward for the success of Bidenomics.” CNN’s MJ Lee reports that the president himself is confused by the “significant gulf” between an economy that seems to be “humming along” and “the public’s stubbornly grim sentiment.”

In an article for Time, Lee Drutman opines that the disconnect between the economy’s performance and voters’ attitudes “is bad news for our democracy,” as it “means that performance doesn’t matter for presidential incumbents.” Walking out even further on a limb, MSNBC’s Stephanie Ruhle asks, “Is it the ‘economy’ Americans are talking about, or is that code for life itself? In other words, how do people feel about life right now? . . . Here’s an example: Connecting with friends and family.” Who knew that the perceived shortcomings of the economy are really attributable to shortfalls in personal intimacy?

And you are still a Democrat?

Another by Anderson: A Border Crisis by Design

Vito Caiati on the Tension between Corporate Capitalism and Conservatism

Dr. Vito Caiati by e-mail (emphasis added):

I am increasingly convinced that we on the Right are caught up in a set of contradictions of our own making, in that we wish to uphold, on the one hand, a particular political, social, and cultural inheritance and, on the other, an economic system, which in the past was largely supportive of or at least conducive to the former but which now, that is, in the form that it has attained in the last century, its principal solvent.  The capitalism of which we often so glowingly speak on the Right is long-gone, along with the social classes and modes of life tied to it. How do we not fall into the trap of denouncing the latter while upholding the former?  I see this as the hardest of puzzles to solve, and it may well mean that something is at work deep in the American social formation that deprives us on the Right of a firm footing in existing reality, which would explain why the Left has succeeded in conquering one political and cultural institution after another: The nature of contemporary capital, not merely its economic nature but the ways of life and cultural norms that arise from it, is inherently antagonistic to the nation state, classical liberal polities and rights, and traditional forms of civic society and belief systems. If this is so, then the Right has the unenviable task of opposing all forms of collectivist organization and control, public and private (that is, corporate), the latter of which is the inevitable form of corporate capitalist development today, while proposing some viable alternative, one that would inevitably result in a direct challenge to the dominance of the present ruling class. This is a very contradictory situation for the defenders of order, since we ordinarily do not seek to undermine the leading institutions of society. At best, we on the Right have so far only snipped at this dominance, speaking of outsourcing of manufacturing or corporate censorship, but all of these efforts leave the beast intact. What would a real assault from the Right look like, and how could it be mounted without giving up basic philosophical commitments to private property and initiative? For me, this is a real dilemma, but perhaps you disagree?

The following may serve as an illustration of Vito's dilemma.  Consider Amazon.com.

I love it and its fabulously efficient services. I fund it to the tune of about $100 per month buying books and other merchandise.  The company is a perfect example of how a man with an idea can make it big in America and enrich the lives of millions with his products. This is made possible by capitalism and the rule of law, not one or the other, but both in synergy. An enterprise like Amazon is unthinkable under socialism. The man in question, Jeff Bezos, is now the Croesus of the modern world. I have argued many times that there is nothing wrong with economic inequality as such. But money is translatable into power including the power to shape attitudes and work cultural changes.  Bezos' vast resources translate into formidable political and cultural clout. As you know, Bezos owns the left-leaning Washington Post.

By buying from Amazon, I support the Left nolens volens and its censoring of conservative books, not all of course, but many that only a hard-core leftist would think of censoring.  I also aid and abet the hollowing out of that buffer zone between the individual and the state apparatus that is called civil society. Amazon puts small book stores out of business which are not merely places of business but meeting places for citizens. But haven't I called repeatedly for the defunding of the Left? I have. Ought I not use Amazon? But that would be an impotent protest on my part. The company is a juggernaut that won't be stopped by any boycott or influenced in its corporate policies by any boycott.

There is a tension between advanced corporate capitalism and conservative values. The question I would have for Dr. Caiati, however, would be whether advanced corporate capitalism is inherently or essentially antagonistic to conservative values as he maintains. (See bolded sentence above)   Perhaps there is no necessity to this antagonism and that a sufficiently strong state headed by a nationalist such as DJT could rein in such corporate behemoths as Amazon. 

Why Was Italy Hit So Hard?

I have been puzzling over this.  Now I have an answer:

The coronavirus that originated in Wuhan, China, has now swept through 126 countries, infected close to 170,000 people worldwide, and is responsible for more than 6,400 deaths as of March 15. China is leading the world in the number of confirmed cases and deaths. What many people find shocking is that Italy and Iran are the second- and third-hardest hit nations in this outbreak.

By any common-sense measure, both countries should have much lower numbers of confirmed cases and deaths because they are geographically far from the epicenter of the outbreak. The reason these two countries are suffering the most outside China is mainly due to their close ties with Beijing, primarily through the “One Belt and One Road” (OBOR) initiative.

UPDATE (3/24). Dr. Vito Caiati comments (bolding added to express my approbation):

In support of your small post of yesterday (“Why Was Italy Hit So Hard?”), which, referencing Helen Raleigh’s article in The Federalist, calls attention to Italy’s integration into Communist China’s OBOR scheme, the data on the large number of Chinese citizens residing in that Mediterranean country is particularly salient. 

As of 1 January 2019, these equaled 299, 823 persons, or almost 6 percent of all foreigners living in Italy. In terms of the Chinese virus that is devastating the world, the data is even more revealing, since five of the six regions in Italy with the greatest morbidity from this disease (Lombardia, Toscana, Emilia Romagna, and Piemonte [“Coronavirus, “La Mappa del contagion in Italia,” La Corriere della Sera, 24 March 2002, 1) are those with the highest numbers of foreign Chinese residents (“Cinese in Italia” (https://www.tuttitalia.it/statistiche/cittadini-stranieri/repubblica-popolare-cinese/ ). 

Overall, these five regions account for 35% of the total number Chinese nationals in the country, and the industrial and commercial center of Italy, Lombardia, which has been hardest hit by the epidemic, had the greatest number such persons, 34,182, or 12 percent of the overall national total. 

Every effort will be made by the globalist elite in Italy and their European and American counterparts to hide this and other disturbing truths about the origins, initial history, and propagation of this disease, since their revelation would jeopardize the material and ideological foundations of their hegemony.

Regards,

Vito 

Might we speak of the Silk (Rail) Roading of Italy?

Some wit just e-mailed me: "One Belt and One Road and One Virus."

Is Greed the Engine of Capitalism?

I must have written this in 2004. It makes good on yesterday's promise to say more about why greed is not the origin of capitalism.

.....................................................

The C-Span Washington Journal of 31 May 2004 with Steve Scully at the helm was particularly excellent.  One of the guests was a sweet old lady by the name of Mary Alice Herbert, the vice-presidential candidate of the Socialist Party USA in 2004.

She spouted a lot of nonsense, but the assertion that really got my blood up was the claim that, and I quote from my notes, "The engine of capitalism is greed." This is no better than saying that the engine of socialism is envy.

Greed (avarice) and envy are vices. A vice is a habit. Habits don't float in the air; they are dispositions of agents. A greedy person is one who is disposed toward inordinate acquisition, while an envious person is one who is disposed to feel diminished by the success or well-being of others to the extent of hating them for their success or well-being. Clearly, one can support, and participate in, a free market economy without being greedy. Anyone who is reading this post is most likely an example. Equally, one can support, and participate in, a socialist economy without being envious. Think of all the good Russians who really believed the Commie nonsense, made their selfless contributions, but ended up in the Gulag anyway, not to mention non-Russians who succumbed as well, Freda Utley being one example among many.

Winifred Utley (January 23, 1898 – January 21, 1978), commonly known as Freda Utley, was an English scholar, political activist and best-selling author. After visiting the Soviet Union in 1927 as a trade union activist, she joined the Communist Party of Great Britain in 1928. Later, married and living in Moscow, she quickly became disillusioned with communism. When her Russian husband, Arcadi Berdichevsky, was arrested in 1936, she escaped to England with her young son. (Her husband would die in 1938.)

In 1939, the rest of her family moved to the United States, where she became a leading anticommunist author and activist.^[1] She became an American citizen in 1950. ^[2]

Greed is not what drives a free market economy; indeed, greed is positively harmful to such an economy. Take Enron. The greed of Jeffrey Skilling, Kenneth Lay, et al. led to the collapse of the company and to massive losses for the shareholders. Please don't confuse greed with acquisitiveness. A certain amount of acquisitiveness is reasonable and morally acceptable. Greed is inordinate acquisitiveness, where 'inordinate' carries not only a quantitative, but also a normative, connotation: the greedy person's acquisitiveness harms himself and others. Think of the miser, and the hoarder. What's more, greed cannot be measured by one's net worth. Bill Gate's net worth is in the billions. But he is not greedy as far as I can tell: he benefits millions and millions of people with his software, the employment and investment opportunities he provides, and the vast sums he donates to charities. 

C-Span viewers who called in to object to Herbert that socialism has failed everywhere it has been tried were met with the standard Marxist response, namely, that capitalist encirclement, capitalist opposition, is responsible for socialism's failure. This is an example of the classic double standard leftists employ. The problems of capitalism are blamed on capitalism, but the problems of socialism are ALSO blamed on capitalism. Another form of the double standard involves the comparison of capitalist reality, not with socialist reality, but with socialist ideality, socialist fiction, socialist utopia. A reality-to-reality comparison issues in an unfavorable judgment on socialism.

Finally, there is a problem with the sort of 'bottom up' or democratic socialism that people like Herbert espouse. This is supposed to avoid the problems attendant upon the sort of 'top down' socialism attempted in the Soviet Union. The latter required a revolutionary vanguard unequal in power to those on whom it sought to impose socialism — in obvious contradiction to the ultimate socialist desideratum of equality. Simply put, if equality is the end, the means cannot be dictatorship by the Party or by one man of steel. No entity, once it gains power, is likely to give it up. This is why Castro still rules his island paradise, forty six years after his 1959 ousting of Battista. [Remember, this was written in aught-four.] The will to power is the will to the preservation and expansion of power. 

Therefore, many socialists nowadays call themselves democratic socialists. But this smacks of a contradiction in terms. If socialism is to replace capitalism — as opposed to being confined to isolated pockets of society such as communes — then it must be imposed by force by a central authority. For there are just too many of us who cannot see why material (as opposed to formal) equality is even a value. 

Addendum 29 March 2019:

I've modified my view a bit. Then as now I hold that  there is nothing wrong with material inequality as such, assuming that it has arisen by just means and thus not by force and fraud, and that the worthy worst-off have the minimal needed.   But that strikes me now as logically consistent with saying that a reduction in material inequality would be a good thing.  X can be axiologically preferable to Y even if no one is under any moral obligation to bring about X over Y.

Inequality is a breeding ground for envy, an ugly thing indeed, and one of the Seven Deadly Sins to boot. But you would be morally obtuse if you thought that clamping down on the liberty that naturally issues in material inequality is a moral requisite.  Envy is a free choice of the morally benighted who practice the vice. Inequality may be conducive to the exercise of the vice, but nothing and no one forces anyone to be envious.

More on Economic Inequality

Just in from Anthony Benvin:

 

In What's Wrong with Economic Inequality? you write: 

 

"The economy is not a zero-sum game. If I "mix my labour" (Locke) with the soil and grow tomatoes, I have caused new food to come into existence; I haven't taken from an existing stock . . . ."

 

You may find interesting a short essay I wrote several years ago at American Thinker.  It was intended as an economic primer of sorts to distinguish between the workings of government economic interference and less fettered economies.

 

At the risk of self-promotion I just wanted to bring it to your attention because it dovetails with the points you make here today. 

 

Thanks for your continuing blog.  Along with Neonecon you are one of my of my daily cyber visits.

 

What's Wrong with Economic Inequality?

We are naturally unequal with respect to empirical attributes, both as individuals and as groups, and this inequality results in economic inequality. Is this inequality evil? Why should it be?  Is economic inequality as such morally wrong? I have a right to what I have acquired by my honest hard work, deferral of gratification, and practice of the ancient virtues. It is therefore to be expected that I will end up with a higher net worth than that of people who lack my abilities and virtues.  It seems to follow that there is nothing morally wrong with economic inequality as such.

The economy is not a zero-sum game. If I "mix my labour" (Locke) with the soil and grow tomatoes, I have caused new food to come into existence; I haven't taken from an existing stock of tomatoes with the result that others must get fewer.  If my lazy neighbor demands some of my tomatoes, I will tell him to go to hell; but if he asks me in a nice way, then I will give him some. In this way, he benefits from my labor without doing anything. Some of my tomatoes 'trickle down' to him.  To mix some metaphors, a rising tide lifts all boats. Lefties hate this conservative boilerplate which is why I repeat it. It's true and it works. When was the last time a poor man gave anyone a job? When was the last time a poor man gave anyone a loan?  When was the last time a poor man made a contribution to a charity?  Who pays taxes? 

I deserve what I acquire by the virtuous exercise of my abilities. But do I deserve my abilities? No, but I  have a right to them. I have a right to things I don't deserve. Nature gave me binocular vision but only monaural hearing. Do I deserve my two good eyes? No, but I have a right to them. Therefore, I am under no moral obligation to give one of my eyes to a sightless person. (If memory serves, R. Nozick makes a similar point in Anarchy, State, and Utopia.)

At this point someone might object that it is just not fair that some of us are better placed and better endowed than others, and that therefore it is a legitimate function of government to redistribute wealth to offset the resultant economic inequality. But never forget that government is coercive by its very nature and run by people who are intellectually and morally no better, and often worse, than the rest of us. Their power corrupts them and you can be sure they will do all they can to preserve their power, pelf, and privileges all the while professing to be democrats and egalitarians.

The levellers are not on the same level as us, and they are often 'not on the level.' You catch my drift, no doubt.

The equalizers have vastly unequal power compared to us.  So there is a bit of a paradox here, to put it mildly. One would have to be quite the utopian to imagine  that the socialist-communist  Leviathan will "wither away" in the fullness of time, as Lenin and Lennon 'imagined.'

And surely it is the silly liberal who imagines that we are the government or that the government is us. That is mendacity that approximates unto the Orwellian.

The evil of massive, omni-intrusive government is far worse than economic equality is good. Besides, lack of money is rooted in lack of virtue, and government cannot teach people to be virtuous. If Bill Gates' billions were stripped from him and given to the the bums of San Francisco, in ten year's time Gates would be back on top and the bums would be back in the gutters.

Perhaps we can say that economic inequality, though axiologically suboptimal, is nonetheless not morally evil given the way the world actually works with people having the sorts of incentives that they actually have, etc.  There is nothing wrong with economic inequality as long as every citizen has the bare minimum.  But illegal aliens have no right to any government handouts.

Kimball on Kapitalismus

The man's a classy polemicist:

Capitalism is the greatest engine for the production of wealth that the ingenuity of man has ever devised. But after it achieves a certain level of prosperity, it regularly excretes characters like Ms. Ocasio-Cortez, beneficiaries of capitalism whose contempt for its strictures is equaled only by their ignorance of its tenets. 

I say, "Up with capitalism, down with Ocasionalism!"  Does the silly goose have a cortex?

It is a paradox of plenty: our fabulous success and prosperity have spawned an army of know-nothings bent on destroying what their betters have constructed over centuries.

The Left: Morally Obtuse and Economically Retarded

As witness the Deep Thoughts of Chelsea Clinton:

Has abortion made America more prosperous? Chelsea Clinton seems to think so.

The former first daughter spoke recently at a “Rise up for Roe” event in New York City, one of a series of meetings organized by NARAL and Planned Parenthood to oppose the confirmation of Brett Kavanaugh to the Supreme Court. In the course of her remarks, she suggested that one way to strengthen support for keeping abortion legal and readily available is to emphasize what a boon Roe v. Wade has been for the US economy.

Read it all, as we say in the blogosphere.

Chelsea in 2020!

Ocasionalist Economics

Should we call the followers of the twenty-something know-nothing ocasionalists? ( A philosophy insider joke.)

On Relative Poverty and Status

I have a little disagreement going with the Dark Ostrich. He asserts, "Relative poverty is all about status."  In an earlier entry, I quoted him as maintaining that 

We are born with a natural inequality which soon turns into economic inequality. The reason it turns into economic inequality, I believe, is that humans have a natural desire for status.

I replied,

Yes, we are naturally unequal, both as individuals and as groups, and this inequality results in economic inequality. But I wouldn't explain this in terms of the desire for status.  Status is relative social standing, and depends on how one appears in the eyes of others. But this is relatively unimportant and has little to do with money and property which are far more important. I can live very well indeed without name and fame, accolades and awards, high social position and the perquisites that come in its train.  But I cannot live well without a modicum of material wealth.  

It is not desire for status that [primarily] explains economic inequality  but the desire for money and property and the sort of material security they provide.

I would guess that no one who reads this weblog is absolutely poor, i.e., bereft of life's necessities, and that every one who reads it is relatively poor, and significantly so. What do I mean by 'significantly so'? Suppose A has a net worth of four billion USD and B a net worth of 3.9 billion. Then B is  poor relative to A. I will call this insignificant relative poverty.  But the Ostrich and I, though we have far more than we need, are significantly relatively poor as compared to, say, the late Fidel Castro, that man of the people and hero of the Left.

The Ostrich tells us that relative property is all about status. I take that to mean that it is the drive for social status alone that brings about economic inequality and with it relative poverty.  That is empirically false. I am the counterexample:  I live wisely and frugally and my net worth keeps going up. But I don't care  about status, which is relatively unreal, being mainly a matter of what's going on in the heads of others.  I carefully husband my resources because I want to be in a position to take care of myself and others when the inevitable disasters occur and not be a burden on others. What others think of me, though of some importance, is of less importance to me than my material well-being.

But let's be charitable. Perhaps what the Ostrich means to say is that it is the lust for status that mainly brings about economic inequality and relative poverty.  I concede that that might be so. It is an empirical question and cannot be answered from the arm chair.

But there are a couple of normative questions in the vicinity and these are what really interest me. One is whether it is morally permissible to pursue loot and lucre, property and pelf, for social standing. The other is whether it is rational to pursue these things for social standing. I will leave the moral question for some other time.

As for rationality, it can be understood in two different ways.

An agent is instrumentally rational if he chooses means conducive to the achievement of his ends.  A rational agent in Phoenix who intends to travel to Los Angeles by car in eight hours or less will head West on Interstate 10. If he were to head East he would show himself to be irrational, at least in respect of this particular goal or type of goal.  This says nothing about the rationality or irrationality of driving to Los Angeles. Indeed, there are those who will say that it makes no sense to speak of ends as either rational or irrational, that such talk is meaningful only in respect of means.

On a second way of thinking about rationality, one can coherently speak of ends themselves as rational or the opposite. Consider social status and material security. Which is a higher value? Which is more choice-worthy? Which would it be more rational for a being of our constitution to pursue? To me the answer is obvious. Material security, which includes wealth well beyond what one needs physically to survive, is a higher value that social status. Modifying slightly what I said above,

I can live very well indeed without name and fame, accolades and awards, high social position and the perquisites that come in its train.  But I cannot live well without  material wealth in excess of what is needed for necessities.

Given how benighted human beings are, it may well be instrumentally rational to pursue wealth for the sake of status. That's an empirical question. But no reasonable person prefers status to wealth, just as no reasonable person prefers transient sense pleasures to long-term physical health.

So the Ostrich and I may be at cross-purposes.  I am making normative claims while he remains at the level of the merely factual. 

Now suppose someone asserts that the good is whatever satisfies desire, and that there is no way of ranking desires as objectively higher or lower, and their objects as more or less choice-worthy.  Could I refute such a person?  I don't think so.  Contradict yes, refute no. For it all comes down to whether one has correct value intuitions. Some of us do and some of us don't. Just as some of us are color-blind, some of us are value-blind, wertblind in the terminology of Dietrich von Hildebrand. While color blindness is a defect in the eye of the head, value blindness is a defect in the 'eye' of the soul.

Related articles

Is Economic Inequality Morally Acceptable?

Is Economic Inequality Morally Acceptable?

This from a reader:

We are born with a natural inequality with soon turns into economic inequality. The reason it turns into economic inequality, I believe, is that humans have a natural desire for status. It is an essential part of the human condition, and I believe impossible to eradicate, indeed it is impossible to conceive human nature or existence without the existence of status, and our desire to improve it. It is part of any organisation, including academia or the church. This is an evil, I believe, but to eradicate it would involve destroying our freedom, which is a worse evil. 

Yes, we are naturally unequal, both as individuals and as groups, and this inequality results in economic inequality. But I wouldn't explain this in terms of the desire for status.  Status is relative social standing, and depends on how one appears in the eyes of others. But this is relatively unimportant and has little to do with money and property which are far more important. I can live very well indeed without name and fame, accolades and awards, high social position and the perquisites that come in its train.  But I cannot live well without a modicum of material wealth.  

It is not desire for status that explains economic inequality  but the desire for money and property and the sort of material security it provides.  Obviously, other factors come into the explanation including living in a politically stable capitalist country under the rule of law.  There are socialist crap holes in which everyone except the apparatchiki are poor but equal, but impoverished equality is not an equality worth wanting.  This is why commie states need walls to keep legals in while the USA needs a wall to keep illegals out.

Is the desire materially to improve oneself  evil? I would say no as long as the the pursuit of wealth remains ordinate, and therefore subordinate to higher values.  Is the resultant economic inequality evil? No again. Why should it be?  I have a right to what I have acquired by my hard work, deferral of gratification, and practice of the ancient virtues. It is to be expected that I will end up with a higher net worth than that of people who lack my abilities and virtues.

The economy is not a zero-sum game. If I "mix my labour" (Locke) with the soil and grow tomatoes, I have caused new food to come into existence; I haven't taken from an existing stock of tomatoes with the result that others must get fewer.  If my lazy neighbor demands some of my tomatoes, I will tell him to go to hell; but if he asks me in a nice way, then I will give him some. In this way, he benefits from my labor without doing anything. Some of my tomatoes 'trickle down' to him.  A rising tide lifts all boats. Lefties hate this conservative boilerplate whoch is why I repeat it. It's true and it works. When was the last time a poor man gave anyone a job? Etc.

I deserve what I acquire by the virtuous exercise of my abilities. But do I deserve my abilities? No, but I  have a right to them. I have a right to things I don't deserve. Nature gave me binocular vision but only monaural hearing. Do I deserve my two good eyes? No, but I have a right to them. Therefore, I am under no moral obligation to give one of my eyes to a sightless person. (If memory serves, R. Nozick makes a similar point in Anarchy, State, and Utopia.)

At this point someone might object that it is just not fair that some of us are better placed and better endowed than others, and that therefore it is a legitimate function of government to redistribute wealth to offset the resultant economic inequality. But never forget that government is coercive by its very nature and run by people who are intellectually and morally no better, and sometimes worse, than the rest of us.

The evil of massive, omni-intrusive government is far worse than economic equality is good. Besides, lack of money is rooted in lack of virtue, and government cannot teach people to be virtuous. If Bill Gates' billions were stripped from him and given to the the bums of San Francisco, in ten year's time Gates would be back on top and the bums would be back in the gutters.

Perhaps we can say that economic inequality, though axiologically suboptimal, is nonetheless not morally evil given the way the world actually works with people having the sorts of incentives that they actually have, etc.  There is nothing wrong with economic inequality as long as every citizen has the bare minimum.  But illegal aliens have no right to any government handouts.

Ten Political-Economic Theses

Here are ten theses to which I subscribe in the critical way of the philosopher, not the dogmatic way of the ideologue.

1.  There is nothing wrong with money.  It is absolutely not the root of all evil.  The most we can say is that the inordinate desire for money is at the root of some evils.  I develop this theme in Radix Omnium Malorum.

 

2. There is nothing wrong with making money or having money.  There is for example nothing wrong with making a profit from buying, refurbishing, paying propery taxes on, and then selling a house.

 

3. There is nothing wrong with material (socio-economic) inequality as such.  For example, there is nothing wrong with Bill Gates' having a vastly higher net worth than your humble correspondent.  And there is nothing wrong with the latter's having a considerably higher net worth than some of his acquaintances. (When they were out pursuing wine, women, and song, he was engaging in virtuous, forward-looking activities thereby benefiting not only himself but also people who come in contact with him.)   Of course, when I say that there is nothing wrong with material inequality as such, I am assuming that the inequalities have not come about through force or fraud. 

 

4. Equality of outcome or result is not to be confused with equality of opportunity or formal equality in general, including equality under the law.  It is an egregious fallacy of liberals and leftists to infer a denial of equality of opportunity -- via  'racism' or 'sexism' or whatever -- from the premise that a certain group has failed to achieve equality of outcome.  There will never be equality of outcome due to the deep differences between individuals and groups.  We must do what we can to ensure equality of opportunity and then let the chips fall where they may. This is consistent with support for government-run programs to help the truly needy who are in dire straits through no fault of their own.

 

5. We the people do not need to justify our keeping of what is ours; the State has to justify its taking.  We are citizens of a republic, not subjects of a king or dictator or of the apparatchiks who have managed to get their hands on the levers of State power.

 

6. Private property is the foundation of individual liberty.   Socialism and communism spell the death of individual liberty.  The more socialism, the less liberty.  "The bigger the government, the smaller the citizen." (D. Prager)

 

7.  The individual is the locus of value, not any collectivity, whether family, tribe, race, nation, or State.  We do not exist for the State; the State exists for us as individuals.

 

8.  Property rights, contra certain libertarians, are not absolute: there are conditions under which an 'eminent domain' State seizure (with appropriate compensation) of property can be justified.  This proposition tempers the individualism of the preceding one.

 

9.  Governments can and do imprison and murder.  No corporation does.  Liberals and leftists and 'progressives' have a naive faith in the benevolence of government, a faith that is belied by that facts of history: Communist governments in the 20th century murdered over 100 million people. (Source: Black Book of Communism.)  Libs and lefties and progs are well-advised to adopt a more balanced view, tranfering some of their skepticism about corporations -- which is in part justified -- to Big Government, especially the omni-intrusive and omni-competent (omni-incompetent?)sort of governments they champion.

 

10.  Our social and political troubles are rooted in our moral malaise, in particular, in inordinate and disordered  desire.  It is a pernicious illusion of the Left to suppose that our troubles have an economic origin solely and can be alleviated by socialist schemes of redistribution of wealth.

Bozo de Blasio versus Walmart

Why should Gotham's mayor be against it? Because it helps the poor?

Walmart’s benefits are obvious to shoppers and to economists like Jason Furman, who served in the Clinton administration and was chairman of the Council of Economic Advisers under President Obama. In a paper, “Walmart: A Progressive Success Story,” Furman cited estimates that Walmart, by driving down prices, saved the typical American family more than $2,300 annually. That was about the same amount that a family on food stamps then received from the federal government.  

Political Legitimacy and Rent Seeking

David P. Goldman:

This is not an election fought over competing policies but a struggle for legitimacy. A very large portion of the electorate (how large a portion we will discover next month) believes that its government is no longer legitimate, and that it has become the instrument of an entrenched rent-seeking oligarchy.

By and large, I agree with this reading. "America's economy is corrupt, cartelized and anti-competitive," I wrote in August. It is typical of rent-seeking that Lockheed Martin's stock price has tripled during the past three years, and payment to its top management team has risen from $12 million a year to over $60 million a year, while Lockheed Martin's F-35 languishes in cost overruns and deployment delays. Produce a lemon and get rich: that's Washington. It is not a trivial matter, or unrepresentative of our national condition, that the FBI director who declined to prosecute Mrs. Clinton for mishandling of classified material just returned to government from a stint at Lockheed Martin, where he was paid $6 million for a single year's service. I don't know whether FBI Director Comey is corrupt. But it looks and smells terrible.

That's why it was so important for Trump to talk about jail time for his opponent. If things had not gotten to the point where former top officials well might belong in jail, Trump wouldn't be there in the first place. The Republican voters chose a reckless, independently wealthy, vulgar, rough-edged outsider precisely because they believe that the system is corrupt. They are right to so believe; if the voters knew a tenth of what I know about it, they would march on Washington with pitchforks.

What is rent seeking? Here:

"Rent seeking” is one of the most important insights in the last fifty years of economics and, unfortunately, one of the most inappropriately labeled. Gordon Tullock originated the idea in 1967, and Anne Krueger introduced the label in 1974. The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors. Elderly people, for example, often seek higher Social Security payments; steel producers often seek restrictions on imports of steel; and licensed electricians and doctors often lobby to keep regulations in place that restrict competition from unlicensed electricians or doctors.

Price Changes 1996-2016

Graph from the American Enterprise Institute.  Commentary mine.

One irony here is that the more worthless college education becomes (in the non-STEM areas at least), the more outrageously expensive it becomes, while with electronics, the use value of the gear skyrockets while  prices plunge.  

In the 'higher education' sector, a trifecta of corruption and stupidity.  The federal government underwrites huge loans with no oversight; greedy and mostly useless administrators proliferate like rabbits, raising tuition and fees because of the availability of federal funds; stupid students go deep into debt to finance worthless degrees.

The degrees are not only economically worthless; they are intellectual junk to boot.  Outside of the STEM areas, and the medical schools, the universities of the land have become leftist seminaries and hotbeds of political correctness.  

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If Sanders the superannuated socialist smokes, here is something for him to put in his pipe.

One good thing I will say about Bernie Sanders, though, is that he is not a stealth socialist like Obama and Hillary.  He flies the flag.  

Mona Charen on the Left-Leaning Pope Francis

Here (emphasis added):

According to "The Black Book of Communism," between 1959 and the late 1990s, more than 100,000 (out of about 10 million) Cubans spent time in the island's gulag. Between 15,000 and 19,000 were shot. One of the first was a young boy in Che Guevara's unit who had stolen a little food. As for quality of life, it has declined compared with its neighbors. In 1958, Cuba had one of the highest per capita incomes in the world. Today, as the liberal New Republic describes it:

"The buildings in Havana are literally crumbling, many of them held upright by two-by-fours. Even the cleanest bathrooms are fetid, as if the country's infrastructural bowels might collectively evacuate at any minute.

"Poverty in Cuba is severe in terms of access to physical commodities, especially in rural areas. Farmers struggle, and many women depend on prostitution to make a living. Citizens have few material possessions and lead simpler lives with few luxuries and far more limited political freedom."

This left-leaning pope (who failed to stand up for the Cuban dissidents who were arrested when attempting to attend a mass he was conducting) and our left-leaning president have attributed Cuba's total failure to the U.S.

It's critically important to care about the poor -- but if those who claim to care for the poor and the oppressed stand with the oppressors, what are we to conclude?

Much is made of Pope Francis' Argentine origins -- the fact that the only kind of capitalism he's experienced is of the crony variety. Maybe. But Pope Francis is a man of the world, and the whole world still struggles to shake off a delusion -- namely, that leftists who preach redistribution can help the poor.

Has this pope or Obama taken a moment to see what Hugo Chavez's socialist/populist Venezuela has become? Chavez and his successor (like Castro, like Lenin, like Mao) promised huge redistribution from the rich to the poor. There have indeed been new programs for the poor, but the economy has been destroyed. The leader of the opposition was just thrown in jail. Meanwhile, the shops have run out of flour, oil, toilet paper and other basics.

If you want moral credit for caring about the poor, when, oh when, do you ever have to take responsibility for what happens to the poor when leftists take over?

We know what actually lifts people out of poverty: property rights, the rule of law, free markets. Not only do those things deliver the fundamentals that people need to keep body and soul together, but they accomplish this feat without a single arrest, persecution or show trial.

Memo to Pope Francis: Capitalism is the Solution, not the Problem

I mean if he is serious about reducing poverty.  Stephanie Slade in a very good Reason article:

He has been called the "slum pope" and "a pope for the poor." And indeed, it's true that Pope Francis, leader to 1.3 billion Roman Catholics, speaks often of those in need. He's described the amount of poverty and inequality in the world as "a scandal" and implored the Church to fight what he sees as a "culture of exclusion."

Yet even as he calls for greater concern for the marginalized, he broadly and cavalierly condemns the market-driven economic development that has lifted a billion people out of extreme poverty within the lifetime of the typical millennial. A lack of understanding of even basic economic concepts has led one of the most influential and beloved human beings on the planet to decry free enterprise, opine that private property rights must not be treated as "inviolable," hold up as the ideal "cooperatives of small producers" over "economies of scale," accuse the Western world of "scandalous level[s] of consumption," and assert that we need "to think of containing growth by setting some reasonable limits."

Given his vast influence, which extends far beyond practicing Catholics, this type of rhetoric is deeply troubling. It's impossible to know how much of an impact his words are having on concrete policy decisions—but it's implausible to deny that when he calls for regulating and constraining the free markets and economic growth that alleviate truly crushing poverty, the world is listening. As a libertarian who is also a devout Roman Catholic, I'm afraid as well that statements like these from Pope Francis reinforce the mistaken notion that libertarianism and religion are fundamentally incompatible.

I'm a conservative, not a libertarian, but the above is basically on the right track.   Read it all.  When I say capitalism is the solution, I mean, of course, capitalism under the rule of law.  It is curious that neither capitalism nor the rule of law fare well under administrations like the current one in the USA.

Empty Rhetoric, Disregard for Reality

Thomas Sowell versus Barack Obama.

The Poor are not Poor Because the Rich are Rich

As Robert Samuelson points out.

The two conditions are generally unrelated.

[. . .]

It's also not true, as widely asserted, that the wealthiest Americans (the notorious top 1 percent) have captured all the gains in productivity and living standards of recent decades. The Congressional Budget Office examined income trends for the past three decades. It found sizable gains for all income groups.

True, the top 1 percent outdid everyone. From 1980 to 2010, their inflation-adjusted pretax incomes grew a spectacular 190 percent, almost a tripling. But for the poorest fifth of Americans, pretax incomes for these years rose 44 percent. Gains were 31 percent for the second poorest, 29 percent for the middle fifth, 38 percent for the next fifth and 83 percent for the richest fifth, including the top 1 percent. Because our system redistributes income from top to bottom, after-tax gains were larger: 53 percent for the poorest fifth; 41 percent for the second; 41 percent for the middle-fifth; 49 percent for the fourth; and 90 percent for richest. [Emphasis added.]

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Once Again, Pope Francis. Excerpt:

It is interesting that the Pope refers to compassion in the way he does, given that the contradiction that is the “welfare state” has not only ruined the most needy and has led to growing exclusion, but has degraded the notion of charity which refers to the voluntary surrender of personal resources and not to a third party forcibly taking something from someone else’s labor.

Papal Economics

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The Pope is a Buffoon When it Comes to Economics

There is too much buffoonery in high places.

It would be nice to be able to expect from popes and presidents a bit of gravitas, a modicum of seriousness, when they are instantiating their institutional roles.  What they do after hours is not our business.  So Pope Francis' clowning around does not inspire respect, any more than President Clinton's answering the question about his underwear.  Remember that one?  Boxers or briefs?  He answered the question!  All he had to do was calmly state, without mounting a high horse, "That is not a question that one asks the president of the United States."   And now we have the Orwellian Prevaricator himself in the White House, Barack Hussein Obama, whose latest Orwellian idiocy is that Big Government is the problem, not him, even though he is the the poster boy, the standard bearer, like unto no one before him in U. S. history, of Big Government!

But I digress.  Here are a couple of important points in rebuttal of Francis (emphasis added):

To begin, we note that “trickle-down” economics is a caricature used by capitalism’s critics and not its defenders. Those of us who embrace free markets do so not out of a belief that the breadcrumbs of affluence will eventually reach those less well-off, but, rather, out of a conviction that the free market is the best mechanism for increasing wealth at all levels. As for being confirmed by the facts, we believe the empirical evidence is conclusive. Compare the two sides of Germany during the era of the Berlin Wall or the China of today with the China that hadn’t yet embraced an (admittedly imperfect) form of capitalism. The results are not ambiguous.

To this I would add that it is a mistake to confuse material inequality with poverty.  Which is better: everyone being equal but poor, or inequality that makes 'the poor' better off than they would have been been without the inequality?  Clearly, the second. After all, there is nothing morally objectionable about inequality as such.  Or do you think that there is a problem with my net worth's being considerably less than Bill Gates'?  There is nothing wrong with inequality as such;  considerations of right and wrong kick in only when there is doubt about the legality or morality of the means by which the wealth was acquired.  My net worth exceeds that of a lot of people from a similar background, but that merely reflects the fact that I practice the old virtues of frugality, etc., avoid the vices that impoverish, and make good use of my talents.  I know how to save, invest, and defer gratification.  I know how to control my appetites.  The relative wealth that results puts me in a position to help other people,  by charitable giving,  by hiring them, and by paying taxes that fund welfare programs and 'entitlements.'  When is the last time a poor person gave someone a job, or made a charitable contribution?  And how much tax do they pay?  There are makers and takers, and you can't be a giver unless you are a maker, any more than you can be a taker if there are no givers.  So, far from inequality being the same as poverty or causing poverty, it lessens poverty, both by providing jobs and via charity, not to mention the 'entitlement' and welfare programs that are funded by taxes paid by the productive.

You don't like the fact that someone has more than you?  Then you are guilty of the sin of envy.  And I think that Francis is aware that envy is one of the Seven Deadly Sins.  Here is a question for socialists, redistributionists, collectivists, Obaminators: Is your redistributionism merely an expression of envy?  I am not claiming that envy is at the root of socialism.  That is no more the case than that greed (also on the list of Seven Deadlies) is at the root of capitalism.  But it is the case that some socialists are drawn to socialism because of their uncontrollable envy, a thoroughly destructive vice.

There’s a more fundamental misunderstanding at work here, however. When Francis talks about “economic power,” he misapprehends a fundamental aspect of free markets – they only provide power consensually. Apart from government, no one can force you to buy a product or purchase a service. There’s a similar error in his citation of Saint John Chrysostom’s aphorism: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood.” The economics of capitalism are not zero-sum. Trade only occurs when both sides are made better off by the transaction. The wealthy don’t get rich at the expense of the poor.

Lefties hate business and especially big corporations.  I give the latter  no pass if they do wrong or violate reasonable regulations.  But has Apple or Microsoft ever incarcerated anyone, or put anyone to death, or started a shooting war, or forced anyone to buy anything or to violate his conscience as the Obama administration is doing via its signature abomination, Obamacare?

On the other hand, did the government provide me with the iPad Air I just bought?  You didn't build that, Obama!  Not you, not your government, not any government.  High tech does not come from politicians or lawyers, two classes that are nearly the same -- yet another problem to be addressed in due course.

 Be intellectually honest, you lefties.  Don't turn a blind eye to the depredations of Big Government while excoriating (sometimes legitimately) those of Big Business.

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Here

Ode to the Welfare State (1949)

A tip of the hat, and greetings of the season to Bill Keezer for this:

I, Pencil

Watch it, then send it to your liberal friends.

Could the USA Go the Way of Detroit?

Why not, given the incorrigible stupidity of reactionary liberals?  Krauthammer:

But Detroit is an object lesson not just for other cities. Not even the almighty federal government is immune to Stein’s Law. Reactionary liberalism simply cannot countenance serious reform of the iconic social welfare programs of the 20th century. Nancy Pelosi and Harry Reid are pledged to their inviolability. President Obama will occasionally admit that, for example, Medicare cannot go on as is, but then reverts to crude demagoguery when Republicans propose a structural reform, such as premium support for Medicare or something as obvious as raising the retirement age to match increasing longevity.

On the contrary. Obama added one enormous new entitlement (Obamacare) and, in his last State of the Union address, proposed yet another (universal preschool).

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Victor Davis Hanson on Generation Screwed

Here. Are the Obaminations of the current administration inadvertently building a libertarian-leaning youth movement that will unseat both the RINOs and the leftists?  One can hope.

Many young people voted for Obama because they think him 'cool.'  Well, he is one cool dude, no doubt about it, except that the criterion of cool is not germane.  Appreciation of that truth, however, tends to come after the bloom of youth has worn off.  In the meantime, opponents of nanny-statism need to front a cool candidate.  Maybe the vigorous young Rand Paul can supply the cool the youngsters crave.  But first they need to learn that they are only screwing themselves by supporting the fiscally irresponsible Dems.

Speaking of fiscal irresponsibility, I was pleased to see that the prolific Hanson  has taken aim at Krazy Krugman in Krugman's California Dreaming.  See also The Ahistorical Krugman.

'What-me-worry?' Krugman is an easy target, and I land some punches in Left, Right, and Debt and The Household Analogy.

 

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Fiscal Irresponsibility as Politically Rational: The Fiscal Prisoners' Dilemma

Glenn Hubbard and Tim Kane, Regaining America's Balance. Excerpt:

There are two paths toward reducing deficits and debts of the magnitude we face: raising taxes or cutting spending. A balanced compromise would involve some amount of both, but the two political parties face strong electoral incentives to do neither. If Republicans push for reduced spending, they are criticized for taking away the benefits people rely on. If Democrats push for raising taxes, they are decried for swiping workers' hard-earned dollars. Both solutions are seen as taking money away from voters, and are thus fraught with political peril.

Consider the matrix above, in which both Republicans and Democrats in Congress have two policy choices. Republicans always promise lower taxes, so their choice is whether to cut or maintain spending levels. Democrats, in contrast, want to keep spending high, so their choice is whether to raise taxes or keep them low.

A close look at the matrix shows that it is politically rational for the Republicans to maintain today's unsustainable levels of spending when faced with either behavior from Democrats. And, campaign rhetoric aside, that is what they tend to do. Republicans have learned that whenever they actually legislate spending cuts, they are attacked by their opponents and tend to lose elections. They are not keen to do the fiscally responsible thing when the price is giving up power.

Likewise, whether Republicans cut or maintain spending, Democrats are politically better off if they allow taxes to stay low. This explains why, despite President Obama's rhetoric about raising taxes, he and other Democrats have generally refrained from actually doing so, especially at the levels needed to pay for their spending. That the expiration of the Bush tax cuts was postponed until after the 2012 election was not a coincidence.

To be sure, politicians in both parties make noises about good economic choices (from their perspectives) that balance the budget, but their actual behavior is what matters. President George W. Bush oversaw the expansion of spending on entitlements, as well as on defense, education, and other discretionary programs. President Obama serially preserved Bush's tax cuts. Politicians know what is best for the country in the long term, but they have no easy way to change their behavior now during a period of polarization in which the institutions and incentives are set up for imbalance.

This amounts to an institutional failure. For most of the nation's history, the rules of the budget game worked. Today, however, they no longer function. Politically rational behavior is now fiscally perverse. Addressing this institutional failure thus requires changing the rules of game. The only remedy to our political prisoners' dilemma, therefore, is to change those rules so that they in fact rule out structural fiscal imbalance — by imposing painful penalties on lawmakers for failing to budget responsibly.

Bad Economic Reasoning About the National Debt

When I study the writings of professional economists I sometime have to shake my shaggy philosopher's head.  Try this passage on for size:

$16 trillion is the amount of Treasury debt outstanding at the moment. The more relevant figure is the amount of debt the federal government owes to people and institutions other than itself. If, for some reason, I lent money to my wife and she promised to pay it back to me, we wouldn’t count that as part of the debt owed by our household. The debt owed to the public is about $10 trillion these days.

What a brainless analogy!  Suppose I loan wifey 100 semolians.  She issues me a 'debt instrument,' an IOU.  Has the family debt increased by $100?  Of course not.  It is no different in principle than if I took $100 out of my left pocket, deposited an IOU there, and placed the cash in my right pocket.  If I started with exactly $100 cash on my person I would end the game with exactly the same amount. 

But I do not stand to the government in the same relation  that I stand to my family.  Suppose I buy 100 K worth of Treasury notes, thereby loaning the government that sum.  Has the Federal debt increased by $100 K?  Of course it has.  I am not part of the government.  Whether the government owes money to U. S. citizens or to the ChiComs makes no difference at all with respect to the amount of the debt.  The citizens plus the government do not form a "household" in the way my wife and I form a household.  Citizens and government are not all one big happy family.

The analogy is pathetic.

The author would have you think that "the more relevant figure" is $16 trillion minus $10 trillion = $6 trillion.  False, because based on a false analogy. 

This shows how ideologically infected the 'science' of economics is.  Only a leftist ideologue could make the collectivist assumption that I have just exposed.  The Marxian "From each according to his ability, to each according to his need" is a viable principle at the level of the family, but it is pernicious nonsense on stilts when applied to the state in its relation to the citizenry. 

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It's the Welfare State, Stupid

When one reads a piece by Robert Samuleson, one feels oneself in the presence of a clear, penetrating, and honest intellect:

By all means, let's avoid the "fiscal cliff": the $500 billion in tax increases and federal spending cuts scheduled for early 2013 that, if they occurred, might trigger a recession. But let's recognize that we still need to bring the budget into long-term balance. This can't be done only by higher taxes on the rich, which seem inevitable. Nor can it be done by deep cuts in defense and domestic "discretionary" programs (from highways to schools), which are already happening. It requires controlling the welfare state. In 2011, "payments for individuals," including health care, constituted 65 percent of federal spending, up from 21 percent in 1955. That's the welfare state.

Compare Samuelson to the  leftist ideologue, Paul Krugman:

It’s not just the fact that the deficit scolds have been wrong about everything so far. Recent events have also demonstrated clearly what was already apparent to careful observers: the deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net.

From Samuelson, we learn something.  We get facts, figures, cogent arguments. From Krugman, we get an ad hominem attack.    The fiscal hawks, we are in effect told, are motivated by a dastardly desire to "shred the social safety net," not by any objective economic considerations.  Krugman impugns their motives while ignoring their arguments.

I am not opposed to the impugning of motives in all cases.  It is legitimate to do so when the other side has no arguments or has transparently worthless ones.  In earlier posts I impugned the motives of those who oppose photo ID at polling places, but only after I carefully argued for such ID procedures and refuted the flimsy 'arguments' of the oppostion.   

Go read the two articles in question and decide for yourself who is talking sense.   

Why We are Headed for a Fiscal Cliff

A short video.  It explains the difference between discretionary and mandatory spending and why not even mandatory spending is covered by tax revenues.  Mandatory spending comprises the entitlements and the interest on the national debt.  A balanced budget is not possible given the way the government is currently structured.  A re-design is needed.  It must begin by a posing of the question: What is the proper role of government?

This philosophical question will  be neither seriously posed by the people in power, nor answered. And so it is is to be expected that we will go off the cliff.  I am talking about the ultimate cliff, not the one coming in early 2013 when  $500 billion in tax increases and federal spending cuts are scheduled to kick in.

So you might think that Romney's loss is of no real consequence.  It just doesn't matter who presides over the collapse.  But if you are headed for a cliff and certain death, would you rather be mounted on a nimble Obama jackass or a plodding Romney elephant?  In the long run we're dead.  But later is better than sooner.  There is more time to prepare.

And there is more time for the owl of Minerva to ascend and survey the passing scene until she too must pass away.

Does Government Create Jobs?

In their last presidential debate, President Obama strangely agreed with Governor Romney when the latter said that "Government does not create jobs."

But of course government does create jobs.  There are all sorts of government jobs.  That perfectly obvious point was underscored in a recent NYT op-ed piece.  So both the president and the governor were wrong to claim that government does not create jobs.

But, as one would expect, the NYT piece missed the real point, which is what the governor had in mind but did not clearly state, namely, that government does not create economically productive jobs.

Where does the money come from to pay government workers?  From taxes and loans.  Such money is not available for consumption.  The economy expands, and jobs are created, when people buy things.  The point is made well by Robert Samuelson in Flat-Earth Economics.

So if the Obama Administration claims that it has created x jobs, ask yourself: what sort of jobs?  The ones that count, the ones that will have a real effect on expanding the economy, are not government jobs.  Private sector jobs are what we need and these are precisely the ones that government cannot create.

So if you have any sense, you will vote for Romney-Ryan.

Left, Right, and Debt

A reader writes, " I enjoy your philosophical and theological views, but unfortunately disagree with your political and economic views.  I recommend large doses of Paul Krugman, beginning with Nobody Understands Debt. "

I got a kick out of that because I should think that the febrile Krugman  is absolutely the last person to convince me of anything.  I tend to see him as living proof that the Nobel Prize, except perhaps in the hard sciences, is a meaningless accolade bestowed by the politically correct upon their own.   I consider the man a fool on the level of Nancy Pelosi, Harry Reid, and Joe Biden.

The column cited is one I read when it first appeared.  Now, thanks to the reader,  I have an opportunity to comment on it.  But first we need to back up a step for a wide-angle view.  Why is the national debt such a big deal to conservatives, but of relatively little concern to leftists?  Dennis Prager provides a cogent answer in his new book, Still the Best Hope (Broadside 2012, p. 29, emphasis in original):

The Left's great fight is with material inequality, not with evil as normally understood.  Thus, the Left has always been less interested in fighting tyranny than in fighting inequality.  That is why Leftist dictators -- from Lenin to Mao to Pol Pot to Ho Chi Minh to Fidel Castro and Hugo Chavez -- have had so much support from Leftists around the world . . . .

This explains the Left's relative disinterest in creating wealth.  The enormous and unsustainable debts facing the individual American states and the United States as a country from 2009 on have disturbed the American Right far more than the American Left [. . .] The reason is that the Left is not nearly as interested in creating wealth as it is in erasing inequality.

Prager's explanation fits Krugman well.  The latter thinks that the focus on deficit and debt reduction is "misplaced."  I disagree vehemently.  Not only is this a very serious matter if we want to survive as a nation, but also one on which we all ought to agree.  Left and Right will never agree about abortion, capital punishment, gun control,  and a host of other issues, but one would think that when "money talks, ideology walks." Unfortunately our leftist pals will hold to their ideology even unto fiscal doom.

Krugman's 'argument,' if you want to call it that, consists in an attack on an analogy between individual and government debt:

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.       

This is, however, a really bad analogy in at least two ways.

Krugman's first reason is that families have to pay off their mortgages, but governments don't have to pay back what they borrow.  First of all, it is false that mortgage holders have to pay back their loans.  One can easily structure a mortgage in such a way that it is held indefinitely and passed on to heirs.  One pays interest month by month without reducing the principal.  There are also negative amortization loans in which the borrower digs his hole deeper month by month.

Ready for Krugman's second reason?  It's a real winner: "Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves."

That's bullshit, which is presumably why nobody gets it except him of the simian countenance. It makes no clear sense to say that the debt  is money we owe ourselves.  So each of us owes a portion of the debt to every other one of us? 

Suppose I decide to invest in treasuries, T-bills, say.  I buy 10 at $10,000 a pop.  What I have done  is loaned the government  $100 K.  In return I get two things; a safe haven for my money and a bit of interest.  There is probably no safer place to park your cash since it is, as they say, "backed up by the full faith and credit of the U. S. government," a phrase that means rather less than it used to, but still means something.

It is the government that owes me the money I lent it.  The government, which is not to be confused with the citizenry.  Furthermore it owes these debts only to those who loaned the government money by buying T-bills and T-bonds and such.  It is simply not the case that we owe that money to ourselves.  The government owes it to some of us.  Only some of us get a return on that investment, and only some of us help the government out by loaning it money.

Now the interest paid by the government to foreign and domestic bond holders is money that is pissed away and can't be used for constructive purposes.  The analogy with the homeowner is apt: money one spends on mortgage interest can't be used for constructive purposes.  The truly foolish home buyer overextends himself and ends up losing his house to foreclosure.  The U. S. does not of course face foreclosure, but it faces something analogously dire: turning into Greece -- or California.

The homeowner analogy is pretty good.

No analogy is perfect, of course.  A perfect analogy would be an identity, and you can't compare a thing to itself --except vacuously.

Krugman is a hate-America leftist whose fetishization of material equality blinds him to obvious realities.

Obama: Fiscally Clueless

Here.

You say the Republicans are not much better?  I don't disagree.  But think of it this way. 

A jackass and an elephant are heading for a cliff, a fall from which will be fatal.  The jackass, being a jackass, is moving faster towards disaster.  The elephant is moving slower.  You must choose to ride on one or the other.  Upon which animal would you prefer to be mounted?

Obama is an utterly clueless jackass.  With a 'Ryanized' Romney there is some hope that we can avert disaster or at least postpone it.

The Fallacy of Redistribution

Thomas Sowell:

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. The communist nations were a classic example, but by no means the only example.

In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler's Holocaust in the 1940s. [Professor Sowell is referring to the forced collectivization of the Ukraine.  If you want to inform yourself of the horrors thereof, I recommend  Robert Conquest, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine, Oxford UP, 1986.]

How can that be? It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth -- and that future wealth is less likely to be produced when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops, when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally keep tending and feeding while raising them to maturity.

Sowell is right of course.  People typically do not allow themselves to be jerked around.  If California is not business-friendly, business people will move to states like Texas, and the once 'Golden State' will sink deeper into the mire.  (Bill Bennett in a recent speech referred to California as the "The Lindsay Lohan of states.")  If you tax me at 100% for any amount earned above $100,000, I will arrange things so that my taxable income will be less than that amount.  It is just human nature to resist being screwed.

The current debate about redistribution on shows like the O'Reilly Factor is close to moronic.  O'Reilly talks as if Obama is for redistribution while Romney is not.  But redistribution has been with us for a long time in the form of a progressive income tax code, and that is not going away any time soon.  (And I am not even convinced that it should.)  So the issue is not redistribution versus no redistribution.  The issue is is whether we are going to have more of it, or less of it, or reduce the rate of its increase. 

Under Obama we will most assuredly have more of it, a lot more.    This will depress the economy, the national debt will increase even more, and we will be on the way to financial ruin.

Anyone who votes for the fiscally irresponsible Obama is a fool  who does not understand his own long-term best self-interest.  And anyone who thinks that it doesn't matter who is in the White House is also a fool, despite the fact that Romney is a milque-toast and a wimp.

Never forget: politics is always about the lesser of evils.  Better a milque-toast and wimpy businessman who understands how the economy works than a incompetent leftist who doesn't.