Must Reads For The Week 10/14/17

Posted October 15, 2017 by austrianaddict
Categories: Must Reads For The Week

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ECON MUST READS

Our Crazy-Making, Profiteering Education Career Maze, by Charles Hugh Smith, at oftwoinds.com. CHS lists 7 things that you would do if you wanted an education system that fails. He calls our current education system a “career maze”. By design, a maze is difficult to get out of. The question is; who does our education system benefit? The students? No! The beneficiaries are the receivers of the borrowed money.

Excerpt from the article: “Clearly, it would be enormously beneficial to teach the skills needed to learn on one’s own and adapt successfully to changing circumstances. The current system is a hierarchy of credentialing that enriches those dispensing and funding the credentialing…………When the student graduates after borrowing a fortune and discovers their diploma has low value in the marketplace or is in a field they’ve found they loathe, then suggest the “solution” is to borrow another fortune and invest more years in obtaining another credential.”

The answer is always the same. Do more of what got you in the mess in the first place.

How Higher Education Became A Obscenely Profitable Racket That Enriches The Few At The Expense Of The Many (Student Debt Serfs), by Charles Hugh Smith, at oftwoinds.com. Another article by CHS concerning our education system. He offers great analysis. Excerpt from the article: “Student loan lenders are skimming tens of billions in profits guaranteed by the taxpayers…….The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34…..While the higher-ed status quo is failing the students, it’s enriching itself immensely Assistant deans of student loans and thousands of other administrators who be managed to do without a generation ago are racking in huge salaries and fat benefits/pensions.

Financialization And The Destruction Of The Real Economy, by Charles Hugh Smith, at oftwominds.com. What happens when government leaders regulate a free market economy so much it becomes a crony capitalist (or crony socialist) economy, and the central bank (our Federal Reserve) prints (counterfeits) money? The real economy starts to consume it’s own seed corn (capital). Whoever has access to the printed money first is stealing the production of the people who don’t have access to the printed money (that would be you and me). The economy gets hollowed out similar to what termites do to wood. Termites eat the joists in a floor and the studs in a wall from the inside out so all that remains is the veneer of stability, but no interior strength.

Excerpt from the article: “Strip an economy of capital, productive incentives, talent and yes, ethics and what are we left with? An economy spiraling toward an inevitable collapse…….like a Yellowstone forest fire. The deadwood of bad debt, extreme leverage, zombie companies and all the other fallen branches of financialization pile up. But the central banks no longer allow any creative destruction of umpayable debt and mis-allocated capital; Every brush fire is instantly suppressed with more stimulus, more liquidity ad lower interest rates. As a result the deadwood sapping the real economy of productivity and innovation is allowed to pile higher. The only possible output of this suppression is an economy piled high with explosive risk. Eventually Nature supplies a lightning strike, ad resulting conflagration consumes the entire economy.”

More Spending Does Not Drive More Employment, by Per Bylund, at mises.org. Excerpt from the article: “There is no escaping the fact that production precedes consumption in a very real and fundamental sense: that entrepreneurs endeavor in production before they know that they will be able to sell the goods produced. Spending is a possible outcome of entrepreneurial production, but not the other way around. The former does not employ people, but the latter does…..What drives the economy is not demand or spending, but entrepreneurship and production. In other words, entrepreneurs bear the uncertainty of their enterprise. They anticipate that consumers will value their goods and, based on this, estimate the price. That price, in turn, determines what costs and entrepreneur can reasonably expect to cove in production, which means the entrepreneur’s actual choice is for the cost structure in production – the price is an anticipation of consumer value.”

What does this mean? Production is the creation of wealth. The more you produce the more wealthy you become. Spending on the other hand, is the consumption of what has been produced. It is the destruction of wealth. This is true even though we know the reason we produce is so we can consume. We either consume what we produce, in the present, or we save what we produce for consumption in the future. We also use what we save for future production. It is like saving a portion of the corn we produce so we can plant it in the future in order to produce more corn. Production has to stay ahead of consumption or we start eating our seed corn (capital consumption).

The Myth Of Infrastructure Spending, by Ryan McMaken, at mises.org. Does infrastructure spending stimulate economic growth and create jobs? On the surface it seems logical that they do. Deeper analysis shows us a different picture. Excerpt from the article: “….it is assumed that government infrastructure programs were all necessarily “proven winners” for the metaphorical construct known as “the economy……But infrastructure spending is not some one-time thing that blesses the nation with new wonderful things that everyone can use indefinitely. It is often a commitment to simply spend much more money in the future. So, you’d better be sure you’re buying exactly what you need……. Building a new bridge or a new road brings totally unproven or hypothetical benefits, especially….. in less industrially dense areas. What’s worse, the promoters of such spending do not take into account the opportunity cost of the spending. After all, this sort of spending requires that the money must first be removed from the pockets of taxpayers. It is assumed that this is justified because it creates “stimulus.” It creates new jobs in building highways, and makes roads everyone can use. But what would the taxpayer and the worker have done in the absence of that spending?”

“……Borrowing immense sums to spend on infrastructure that doesn’t boost productivity actually cripples an economy by channeling scarce capital and tax revenues into projects that only boost spending for a few years at best, while the costs of borrowing the money pile up for decades to come……If a new highway is needed in Peoria, let the Peorians pay for it, either with a toll road or local taxes. If the benefits of infrastructure spending is so abundantly obvious, then it will pay off for every metro area that builds a new road. The great benefit of federal spending on infrastructure, however, is that the new spending can be forced on the taxpayers with much less political effort than would be required to obtain a new local tax.”

Paul Krugman Destruction Worshiper, at ecoomicpolicyjournal.com. It is hard to believe that economists could think that destruction of things which still have years of service left is some how stimulative to an economy. Have they never heard of the ‘broken window fallacy’? Or are they too smart to understand something so basic? Excerpt from the article: “ Ludwig von Mises once allegedly tried to encourage his students to speak up more freely in class by saying: “Don’t be afraid to speak up. Remember, whatever you say about the subject and however wrong it might be, the same thing has already been said by some eminent economist.”

 

CARTOONS

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The R’s And D’s Are On The Same Side – We Are On The Other Side

Posted October 13, 2017 by austrianaddict
Categories: Government and Politics

Tags: , , ,

What do I mean when I use the term R’s and D’s?  I am talking about party insiders in positions of power in DC, and insiders who have direct access to the people in these positions of power. I’m not talking about you and me. We are outside the party structure. We are only important to the insider R’s and D’s on election day.

The trick for each party is to get voters (you and me) to think the insiders of the other party are the wolfs, while at the same time portraying themselves as the sheepdog. Unfortunately we have bought into this trick. In reality the R’s and the D’s both want government power to grow. Increasing government power benefits insiders of both parties. When Government grows you and I are forced to give up our freedom and our money. Insiders will choose any policy that increases the power of Government.

We are reaching a point where enough of us are finally realizing that the battle is between us and the insiders of both parties. We should be fighting them not each other.

I found these cartoons of Ralph E. Wolf and Sam Sheepdog. It shows the R and D political model that we have been duped into accepting. Ralph E Wolf and Sam Sheepdog seem to be on opposite sides. But they are on the same side. Each one is just playing his role at any given moment.

 

 

Related ArticleFiscal Cliff or Political Theater, at austrianaddict.com.

Related ArticleA Look Behind The Curtain At The Fiscal Cliff Political Theater, The Joke’s On You! at austrianaddict.com.

Related ArticleBurger King, Corporate Tax Inversions, and Political Theater, at austrianaddict.com.

Must Reads For The Week 10/7/17

Posted October 8, 2017 by austrianaddict
Categories: Must Reads For The Week

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To Combat “Hate,” Make Government Weaker, by Justin Murray, at mises.org. Excerpt from the article: “Politicians are actively tapping into modern stress that is generated by the state itself. Emotion is a powerful political motivator. People are heavily motivated to believe things that hit their emotions strongly……..Simply asking people to get along isn’t going to work so long as there is a massive power structure in place that is driving the actual fear. If the people are afraid of the Trumps and KKKs of the world, they could demand their politicians dismantle the power structures at the federal level so it cannot be taken over by disfavored groups and reinstall them at a local level where it is far easier to control who hold the reins of power.”

San Franciscans Pissed To Learn Their Liberal Policies Caused A Wave Of Restaurant Failures, at zerohedge.com. Socialists in San Fran are dealing with the consequences of their economic policies. Restaurants are closing because of the increase in the minimum wage, heath care costs and rents. Because of the closings, it is difficult for them to find fine dining at an affordable price. The sad thing is they probably don’t understand that it is their policies that caused the closings.

To Seattle City Council: Do Higher Prices And Wages Reduce Demand Or Not? , by Mark J. Perry, at carpediemblog.

Here Are The Congressional Aides that Traded On Insider Information Over The Past Year, at zerohedge.com. This is the breakdown of the rule of law. When our “public servants” don’t have to follow the law, regular people get pissed off. Especially when they are getting dinged for a seat belt violation or speeding ticket. If laws don’t apply to them, we won’t follow the laws. The breakdown of the rule of law starts with them. Not us.

NCAA Violations Are Now Federal Crimes? William L. Anderson, at mises.org. Excerpt from the article: “So far, we are looking at what, frankly, are garden-variety (with the added twist of shoe company money) NCAA violations in which players or their families receive monetary or in-kind compensation that goes beyond the standard athletic scholarship of meals, books, tuition, fees, and board. Furthermore, the prospect of making these actions into federal crimes truly brings a new and, frankly, perilous dimension to federal criminal law.

Obama-Era Surveillance Timeline, at SharylAttkisson.com. You must look at the timeline in this article. It will blow our mind. You have probably forgotten most of these incidences.

Utah Cop Wants To Apologize For Cuffing Nurse, at nypost.com. A few weeks ago we posted the video of the cop who temporarily arrested the nurse because she wouldn’t let him draw blood from a patient (click here to see the post). Now he wants to apologize for the “mistake” he made. Watch the video and ask yourself if this was a “mistake”. What does the word mistake mean. A mistake is when you make a math error in your check book. This guy acted intentionally.

The Progressive Octopus, at victorhanson.com. From the media, to Hollywood and entertainment, to sports, to our education system especially colleges, you can’t escape the progressive ideology. Most non progressives have reached their limit and won’t concede any more ground. Finally!

California Mulls Combustion-Engine Car Ban: “You Can Stop All Sales By 2030, at zerohedge.com. The politicians in California are going to try to do away with the economic law of supply and demand. If you out law gasoline powered cars. And you’re thinking about mandating your state go to all green energy by 2040. Can you produce enough energy to power your state? Will the price of that energy be low or high? The utopian world of politicians can’t exist in the real world.

7 Independence Movements That Could Destroy The EU, at zerohedge.com. Decentralization of government power is what the masses want. They are sick of being told what to do by the anointed. Tyrants with government sanctioned power will not want to give up that power. We are living in interesting times.

 

 

Hurricane Irma: Credentialed Ignorance vs. Uncredentialed Intelligence.

Posted October 5, 2017 by austrianaddict
Categories: Econ. 101

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The credentialed ignorance of NY Federal Reserve president William Dudley is revealed by Evelyn’s uncredentialed intelligence. Evelyn quotes Henry Hazlitt, Frederic Bastiat, and Thomas Sowell to make her economic argument that the destruction by hurricane Irma is ‘the broken window fallacy’ on a much larger scale.  Fed president William Dudley seems to think the destruction by hurricane Irma will improve the economy. I bet William Dudley has never read anything written by Hazlitt, Bastiat or Sowell.

INTELLIGENCE.

Here is Evelyn’s short video about the Broken Window Fallacy.

IGNORANCE.

Now watch the credentialed ignorance exhibited by NY Federal Reserve President William Dudley in this CNBC interview (click here).

If we believe the economic ignorance of William Dudley we would think that Puerto Rico’s $73 billion debt problem (read here) will magically go away because the island was almost destroyed by hurricane Maria. I bet the people of Puerto Rico don’t realize how lucky they were that Maria hit them directly.

CONCLUSION

You don’t need an economics degree to understand economics. But I think you need an economics degree in order to become ignorant about economics.

 

By the way. Evelyn uses one of my favorite Thomas Sowell quotes: “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first rule of politics is to disregard the first lesson of economics.

 

Related ArticleHurricane Sandy And The Broken Window Fallacy, at austrianaddict.com.

Related ArticleThe Broken Window, at mises.org.

Related ArticleA Keynesians Dream; Cruise Missile Strikes In Syria. at austrianaddict.com.

Must Reads For The Week 9/30/17

Posted September 30, 2017 by austrianaddict
Categories: Must Reads For The Week

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GOVERNMENT WON’T LET GO

Catalan Police Ordered To Close And Occupy Polling Stations To Stop Vote Going Ahead, at zerohedge.com. Government is force. Catalonia wants to vote to secede from Spain. Spain won’t let the vote take place. In the words of the great philosopher Neil Sedaka; “breaking up is hard to do”.

Kurds Vote Overwhelmingly For Independence From Iraq, at cnn.com. Brexit started the independence dominoes tumbling. The world is changing. Upsetting the tyranny of the status quo is a good thing in the long-term, even though there is short-term pain.

GOVERNMENT INTERVENTION CREATES ECONOMIC PROBLEMS

You can’t solve economic problems through the political process. You can only make them worse. Unless you get rid of the government regulations that caused the problem in the first place. Of course we know Government can never get rid of any regulations. They can only pass new regulations to solve the problems created by their previous interventions.

Six-Figure Pensions For University Of California Teachers Surge 60% Since 2012, at zerohedge.com. Public pensions have promised more than they will be able to deliver. These pensions are underfunded. Someone will have to either pay more, or receive less.

Teachers Demand $3.200 From Each Kentucky Household To Fund Pension Ponzi For Two Years, at zerohedge.com. I guess the pension beneficiaries are not in the mood to receive less. They want people to pay more. They must feel entitled.

Default Looms: Hartford Downgraded Further Into Junk Status, at economicpolicyjournal.com. Politicians can’t figure out that you can’t spend more than you have for very long. They have no incentive to stop spending, unless they go bankrupt.

2018 Obamacare Premiums Surge 45% In Key Swing State Of Florida, at zerohedge.com. The Affordable Care Act has made healthcare unaffordable. People who understand economics are not shocked by this.

The Agony Of The Welfare State, Finnish Style, at mises.org. Finland’s population is shrinking. There welfare system needs more taxpayers to fund it. “Houston we have a problem”.

Uber To Cease Operations In Quebec, at economicpolicyjournal.com. Competition lowers prices. Quebec is getting rid of competition. The taxi monopoly is back in business. Will prices rise?

California Mulls Combustion-Engine Car Ban: “You Could Stop All sales By 2030”, at zerohedge.com. Excerpt from the article: “The end result of this effort to ‘save the environment’ will be more expensive vehicles, landfills full of lithium-ion batteries and more coal-fired generation plants…but, somehow we suspect those ‘inconvenient facts’ are lost on our politicians and enviros who seem determined to subsidize Elon’s trip to Mars.” Politicians think they can create their utopian world at no cost.

Hey, Congress: If You Really Want To Help Puerto Rico Recover, Dump The Jones Act, at reason.com. A crony capitalist regulation passed in 1920 to protect American shipping will hurt Puerto Rico’s Recovery. Trump To Temporarily Lift Jones Act To Help Puerto Rico Recovery, at the hill.com. If lifting the Jones Act temporarily is good for economic activity. Wouldn’t it be better for economic activity to permanently lift it?

In Florida, You Can’t Use Your Own Solar Panels In A Crisis, at zerohedge.com. I guess you don’t own the power produced from your solar panels. Excerpt from the article: “Florida Power and Light’s lobbying wing has fought hard against letting Floridians power their own homes with solar panels. Thanks to power-company rules, it’s impossible across Florida to simply buy solar panel and power your individual home with it. You are instead legally mandated to connect your panels to your local electric grid. More egregious, FPL mandates the if the power goes out, your solar-power system must power down along with the rest of the grid, robbing potentially needy people of power during major outages.

Must Reads For The Week 9/23/17

Posted September 24, 2017 by austrianaddict
Categories: Must Reads For The Week

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The Obamacare “Death Spiral”: Health Plans Now Cost Employers More Than A New Car, at zerohedge.com. The results of the Affordable Care Act aka Obamacare are obvious. Nothing has been made affordable (whatever your definition of affordable is). This was predicted by people who were against the government take over of healthcare. You would logically think that it would be easy to get rid of the policy that caused the problem. But Obamacare was an increase in the power of government. And once government increases its power it is almost impossible to make them give it up. That is why the Republicans are only talking about fake repeal right now. They want to pass a bill that can be spun as keeping their promise to repeal Obamacare, even though it doesn’t.

GOP Leaders Are Trying To Bribe An Alaska Senator To Repeal Obamacare – By Letting Her State Keep Obamacare, at reason.com. This is evidence of what I talked about concerning the above article. No other comment is needed.

Pension Storm Coming: “This Will Become One Of The Most Heated Battles Of My Lifetime”, at zerohedge.com. What happens when there is not enough in the funds to pay the increasing number of retirees on public pension plans? At some point someone is going to have to give something up. Unfortunately it is usually the tax payer. Which is really starting to get old.

Illinois Unpaid Vendor Backlog Hits A New Record At Over $16 Billion, at zerohedge.com. Here is another example of what happens when year after year Government spends far above what it takes in taxes. Who is going to pay for this? You and me! Until we don’t produce enough to pay for it anymore and then these States will have to go bankrupt.

Price controls Lead To Predictable Shortages, at reason.com. Socialist policies can’t stop the laws of economics. In fact economic laws eventually reveal the folly of socialist policies. Venezuela is a disaster and it isn’t getting the media coverage it deserves. I wonder why?

Electrical Workers In Fl. Are Paid 2-3X The Normal Hourly Wage And Regarded As Heroes. But Aren’t They Price Gougers? at carpediemblog. Great question. Why aren’t these workers called price gougers? By ‘political’ definition they are price gouging. If government wouldn’t have allowed them to raise the price of their labor, would they have gone down there to ‘help’?

The Much-Deserved End Of Obama’s Operation Choke Point, at freedomandprosperity.org. This is the kind of government abuse of power that most people don’t know about. Good riddance. If you haven’t heard of Operation Choke Point, check out the article.

Climate Models Run Too Hot: Settled Science Again, at reason.com. Global warming is based on ‘scientific’ models. What do you do when the models don’t match reality? Well that depends on if you’re conducting your scientific modeling because of politics or if it is a real scientific discovery process. Remember two things. Science is never settled and everything is political.

Bay Area Sues Big Oil For Billions, at zerohedge.com. San Fran and Oakland are suing oil companies for their effect on climate change. When I told my brother about this article, he asked; Can everyone who uses products made with oil also be sued? People use these products with full knowledge of what global warming scientists are saying. Even the people suing the oil companies have to use products made from oil just to survive everyday.

Study: Seattle Minimum Wage Increase Led To More Restaurant Hygiene Violations, at freebeacon.com. Here is another unintended consequence of government intervention.

San Diego Begins Bleaching Streets To Contain Outbreak Of Hepatitis A, at zerohedge.com. People take the flush toilet and indoor plumbing for granted. Fecal matter contains disease. The flush toilet takes fecal matter far away from people. The flush toilet saves lives.

 

CARTOONS

From the burningplatform.com

Political Cartoons by Glenn McCoy

Political Cartoons by Tom Stiglich

 

 

Must Reads For The Week 9/16/17

Posted September 16, 2017 by austrianaddict
Categories: Must Reads For The Week

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Obamacare Repeal Is Dead. Here Come The Bailouts, at reason.com, by Peter Suderman, at reason.com. Outside of the freedom caucus, Republicans never really wanted to get rid of Obamacare. Excerpt from the article: Even if congressional Republicans wanted to take another shot at rewriting the health law, they have little time left, thanks to Senate rules: The reconciliation instructions that would have allowed the bill to pass in the upper chamber with a simple majority expire at the end of the month.” Socialists of both parties want Obamacare.

If You Can’t Beat ‘Em ….Ban Em’, at ericpetersautos.com. If you can’t sell enough electric cars even with tax payer subsidies, what is your next move? Get bureaucrats to use government power to ban the sale of cars with internal combustion engines. Why would you mandate a more expensive way to travel and ban a less expensive way to travel? The only way for an economy to become and remain wealthy is increases in productivity. Banning more productive methode is how an economy becomes poorer.

Elon Musk Magically Extends Battery Life Of Teslas Fleeing Irma, at zerohedge.com. Excerpt from the article: “Tesla CEO Elon Musk has magically unlocked the batteries of every Tesla in Florida to maximize the distance that people fleeing from Hurricane Irma can travel before stopping to refuel at one of the company’s “superstation” charging centers….this is either a generous act of charity or an unnerving example of the control Tesla exercises over the vehicles it producers, or perhaps both.”

Trucker: ‘Overregulation’ Looks Like Deciding When I Work, Eat, And Sleep, by Matthew Garnett at thefederalist.com. An example of government central planners knowing more about trucking than the people who actually drive the rigs. Government busybodies know no bounds.

Republicans Furious After Trump’s DOJ Declines To Charge Lois Lerner, at zerohedge.com. This is why there is a breakdown of the rule of law. The rules only apply to us peons and not to our betters in the ruling elite.

FDA: To Keep Your Kid From Peanut Allergy, Introduce Peanuts Early, by Joy Pullman, at thefederalist.com. Try to protect kids from germs and allergens when they are young makes them more susceptible as they grow older. Don’t try to be smarter than the human immune system. It has a purpose. Let it work.

Hey Advertisers: The Data-Mining Emperor Has No Clothes, by Charles Hugh Smith, at oftwominds.com. Excerpt from the article: “The data-mining advertisement industry as it stands can’t identify which clicks are fraudulent or accidental, which ads actually trigger a sale, or which ads actually alienate potential customers. When a big advertiser pulls its online adverts and its sales remain unchanged, that tells everyone who’s paying attention something important: the industry isn’t doing a very good job for the billions it’s being paid.” As for me. I don’t pay any attention to any advertisements. The reliance on data and algorithms to predict outcomes can’t overcome the most important fundamental in economics; Human Action. Human action guarantees one thing; predicting is unpredictable.

ECONOMIC STUFF

3 Good Things About “Price Gouging“, Robert P. Murphy, at mises.org. Prices convey knowledge to producers and consumers about the supply of and demand for scarce resources. Resources are scarce under normal market conditions and have to be rationed some how. Prices are the most efficient and “fair” (I can’t believe I just used the dreaded four letter “F’ word) way to accomplish the rationing of these scarce resources. How much more are free-flowing prices needed when a disaster hits and resources become more scarce?

In an unrelated article: Which Do You Prefer: High Prices For Goods That Are Available vs. Low Prices For Goods That Are Not Available, by Mark J. Perry, at carpediemblog. When bureaucrats and politicians set price floors and ceilings on scarce goods, this will be your choice.

In another unrelated article from Mark J. Perry: Photo Of The Day: If Only There Were Some Market Mechanism To Discourage This Type Of Over-Buying. This photo shows why there should be no price controls. Let prices do their job. Free market prices utilize more knowledge than a whole army of bureaucrats and macro economists could ever possess.

How The Feds Blocked Effective Flood Insurance, by Dale Steinreich, at mises.org. When bureaucrats intervene in the market, knowledge about real world circumstances are distorted. Risk can’t be assessed properly and the cost of paying for the risk is usually shifted to the tax payer and away from the parties making the risky decision.

Does Government Spending Create More Economic Growth? by Frank Shostak, at mises.org. Government produces nothing. In order for Government to spend anything it must first take resources from producers in the real economy. So whatever amount government bureaucrats and politicians spend, is the same amount not spent by the people in the real economy because it was taken from them. Government spending produce no more economic growth than if the resources were used by the people who produced them in the real economy. In fact we can make the argument that economic growth is negative when government spends the confiscated resources. Why? Because resources are taken from wealth producers in the market and transferred to wealth consumers in the government.

 

CARTOONS

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Political Cartoons by Tom Stiglich

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