It’s been five years of this Keynesian mess with the notion that economies are driven from the demand side. At the start it was direct government spending. As an approach to recovery it has comprehensively failed as no one now denies. So we have now gone to the monetary policy approach with Quantitative Easing, pour money out into the economy and low interest rates will finally lift things up. Also not working but no one quite knows why. So here’s why. Economies are driven forward by increases in value adding supply and by absolutely nothing else. Others can tax, steal or otherwise appropriate the productivity of others and squander what they get. But this will NEVER lead to a recovery, not ever. So we have kept rates low and watched as nothing has happened.
Anyway, it’s that time of year again. Macro follies continue and no one seems to have learned a thing. And it’s not just consumer spending but all unproductive spending that is a draw down on productivity. Consumer demand is, of course, the reason for bothering with any production at all. But if we are thinking about growth and employment, consumer and government demand has nothing to contribute, nothing whatsoever. Nor does mis-directed investment spending. No do low interest rates. But we are persistent if nothing else.
I cannot find the post written, I suspect, at the beginning of Obama's first term, in which I prognosticated that the political mood in America was soon going to experience a depressive dent from stark disillusionment about the character of Obama and his policies. Much later than I had expected the disillusionment seems to be setting in.
Remember President Barack Obama's mother? Though the airwaves currently echo with his vow "If you like your plan . . ." I keep remembering Obama's account of his mother being denied coverage by her insurance company as she lay dying of cancer.
The moving and infuriating story was a staple on the 2008 campaign trail. His mother had insurance, he explained, but when she came down with cancer, her insurance company claimed her disease was a "pre-existing condition" and refused to pay for her treatment. In a debate with Sen. John McCain, Obama said: "For my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they're saying that this may be a pre-existing condition and they don't have to pay her treatment, there's something fundamentally wrong about that."
There would be, if it had been true. But when New York Times reporter Janny Scott researched the issue for her biography of the president's mother, she discovered letters proving beyond doubt that Cigna never denied Stanley Ann Dunham coverage for her disease. The dispute was over a disability plan that would have paid some of her other expenses.
The White House did not deny Scott's account, but shrugged it off as something that had happened long ago. Not so long that it couldn't be milked one last time though, for a 2012 campaign film. In "The Road We've Traveled," the message remained unchanged -- a greedy insurance company had cut off Obama's mother at her moment of maximum vulnerability, and it cost Dunham her life.
The dupability and the almost non-existing vetting standards with regard to Obama's presidential aspirations are simply astounding.
An example of puffery is the description of Mr. Obama as a former "professor of constitutional law." Mr. Obama was a part time instructor at the University of Chicago law school, without the title or status of professor. And, according to blogger Doug Ross, he wasn't very popular with the real professors.
"I spent some time with the highest tenured faculty member at Chicago Law a few months back," Mr. Ross wrote in March 2010. "According to my professor friend, [Obama] had the lowest intellectual capacity in the building. ... The other professors hated him because he was lazy, unqualified,"
I am particularly interested in what Hayman have to say about Japan, as there is generally not much useful analysis available on the idiosyncratic fate of the Japanese economy; and unfortunately the Misesian orbit too is conspicuous with a regrettable paucity of insights - with such a long history of radically manipulating interest rates one would expect Japan to be a constant focal point of Misesian analysis.
The entire document is worth reading; the assessment of Japan begins at page 16.
The standard argument underlying the theorem of rational voter ignorance strikes me as more evidence for (a) academics mindlessly copying academics (including even the excellent Mark Pennington) and (b) academics ignoring the real world.
Mind you, the conclusion that voters are rationally ignorant is correct in my view, but not on account of the reasons habitually given (see "conclusion" below).
It is true, people know infinitely less than they ought to in order to make an informed choice. Hence, voting is based on nonsense. And I agree with Bryan Caplan (hat tip to Laura), who belongs to the last of three schools: (i) the first arguing that democracy works well in that it faithfully reflects the will of the people, (ii) the second school holding that democracy is not working well at all, since it is NOT faithfully reflecting the will of the people, and (iii) the third school suggesting that democracy is a bit of a catastrophe because it DOES represent the will of a highly uninformed and ideologically misled electorate.
As for my introductory propositions (a) and (b), in contradistinction to the theory, virtually no-one is making probability-based cost-benefit assessments in order to decide whether to go to the booth or not. People participate in voting simply because they have been conditioned into a number of habits that encourage them to vote.
Elections are a festival, a virtual orgy of the unthinking, including the fact that few things are less likely than finding a voter who has ever seriously thought through the pros and cons of democracy. When I was allowed to vote for the first time, voting was to me like a rite of passage, a proof of my maturity; and for a long time I did think that my vote mattered - vaguely following the line of reasoning, if at all, whereby my party would have no chance to win if each of its supporters thought their individual vote was not significant enough to warrant participation in the election.
People are divided in their opinion about who is going to win the presidential election. Just compare here (Obama very likely to win), here (Romney sure to win), and here (intuiting Romney will win) - the latter with an interesting link to an article on the manner polling works and fails.
Concerning the first link, I immediately concluded that Obama was very likely to win, but do the permutational options really support my expectation?
I am an uninterested and very superficial observer of the presidential election. But, again, how much gain is there in more extensive efforts at being in the picture?
Conclusion:
Voting is simply a different form of cheap talk. You can get a big kick at very little expense. Finding out what is really going on would be prohibitively expensive and without commensurate reward, indeed depressing. It is better to dream of nicer things, as everyone else does. One votes in order to do the done thing, feel socially accepted, even important.
If voting helps you feel good about yourself, so much the better. If it does not, never mind - what cost is there involved? The rational ignorance tenet should perhaps be rephrased thus: It is rational to vote, despite being uninformed and misinformed, for it can make you achieve a desired state of mind at little expense. And since long-term consequences, indeed any kind of consequences can be made part of achieving "a desired state of mind at little expense", they need not bother the voter.
PS
Bryan Caplan as well as his rather short, yet still too long book ("The Myth of the Rational Voter") are overrated, however I do not regret having read the book, and his main conclusion, reported above, alone is worth the reading. Mind you, Caplan seems to dream of a world ruled by economist kings (like himself), rather than representatives of 'the plebs' (i.e. people who do not know as much economics as he does). However, in his exorbitant confidence in the wisdom of economists, he comically fails to recognise the wide spectrum of divergent and incompatible views among economists and the fact that large numbers, probably the majority of them support the same irrational world for which 'the plebs' is casting their votes.
UPDATE - The result is in: Apparently, the prize goes to the Erbsenzähler (literally: pea counters; bean counters, nit-pickers). Some media outlets are excited because they think the award honours scientists dealing with yet a range of supposedly ubiquitous market failures. However, Peter G. Klein puts the matter sensibly in perspective in this insightful post at The Circle Bastiat.
I suppose, this year's choice of winners only goes to underscore the gist of Peter Schiff's point in his below video:
The inestimable Peter Schiff reveals a huge slice of truth about the academic establishment in economics:
Anyone in a mood for some weekend reading on economists and their noble flashes of wit, find below a number of starting points:
Though an ordinary mortal and not at all a noteworthy economist, for some awkward reason, I have met in person a number of Nobel prize winning economists and even collaborated with one (Merton H. Miller) -- Solow, Sen, Scholes, Miller and Modigliani.
Speaking of Rand Paul, Master Gamesman, have you seen the ads that RandPAC is running? This piece on Business Insider sums up the politics, pointing out that while Paul is targeting Democrats who disagree with him on foreign spending, it's pretty unusual for sitting Senators to target each other directly and so harshly. Here's one example:
Now my take on all this? First, that's an odd race for Paul to spend money on, because Democrat Manchin is a moderate who is currently leading the race by quite a bit. But I have a hunch that foreign policy spending could be a popular discussion in moderate circles, so watching the polls to see if these ads have any effect in the race will be interesting. If this message gains traction, look for other politicians to adopt it.
What else made this ad buy especially interesting is Lindsey Graham's reaction: in one of those moves that would cause wailing and hostility from the GOP if a Paul had dared such a thing, he went way over a line. He joined the Democrat Manchin on a campaign conference call to support the big spending colleague.
Did you get that? He is campaigning for a Democrat. Against a Republican. I suppose he knows that the media and the party won't question this, it's obviously putting policy over politics, and is for the public good. Right?
OK, enough snark. Next question: Do you know who Senator Tom Davis is? The force is strong in this one, and speculation is that he might be preparing a primary run against Graham in 2014. It certainly isn't hard to imagine that Graham could leave the GOP and join the Democrats rather than face an actual fiscal conservative in a primary election.
And while I wouldn't want to predict a winner in that race, I would point out that Jim DeMint is retiring in 2016, so even if we can't oust Graham in 2014, Davis certainly has a chance at 2016.
Hope lives!
***Update***
Heh! Came back home, and saw that Rand Paul has now apparently noticed Graham's shenanigans. According to Politico:
“I don’t see myself campaigning against a Republican in a general election ever, that’s why I think it’s extraordinary that Graham is supporting a Democrat in a general election,” Paul told POLITICO. “That’s fairly extraordinary to do that.”
Never fear! The Democrat quickly rushed to Graham's defense:
(Manchin) accused Paul of a “callous” act that put “politics over your country.” Manchin also accused Paul of acting as a partisan while portraying himself as a bipartisan rabble-rouser. Manchin said Paul was “putting more gasoline” on the partisan fires in Washington.
“He showed me his true colors, and it’s a shame,” Manchin told POLITICO. “That’s not how we’re going to move this country forward with that type of an attitude and mentality.”
Silly me. I didn't realize that Republicans were supposed to be bipartisan in the general election. Gee, I wonder which side of this argument the Republican in the race will come down on?
I seem to be taking an unintentional partial sabbatical from blogging. It’s not deliberate—I just seem to be somewhat overwhelmed with other things to do.
Where do I start?
School. Two more classes, and then a final exam, in each of the two courses. I have a bunch of papers I need to get graded yet, but seem to have 20 other things demanding time, as well.
Politics. Wow. The Republican Liberty Caucus of Nebraska is working very hard to get people to attend our County GOP Conventions that take place between June 1 and 10th. We recruited a number of people who filed as delegates, but now we’re trying to train them…which means I’ve been on the road, and doing conference calls with lots of groups in the last week, and have several yet to come. We’re having some fun, and may be able to make a little difference at our county and state conventions. It’s very exciting to see all of the “young” folks getting involved. I’ve run into more 20-somethings who are eager to take on leadership roles in the Party—not *just* work for Ron Paul. THAT gives me hope for the future.
Aging. I will hit a significant milestone in life next week—assuming that I survive the next few days of travel on the road to help delegates to our county conventions, and the rush of adrenaline that I’ve been feeling leading up to the conventions! I can’t say 50 feels like it’s going to be substantially different from 40 (although we’ve added Isaac to our family since my 40th birthday, so I suppose that’s a little different). But I don’t take the George Burns, “I Wish I Was 18 Again” approach to life, I guess. I’m pretty happy where I am. And besides, as I told my 46 year old sister the other day, “50 is the new 35”.
Summer. We had a perfectly delightful long weekend with my extended family at a family reunion. Limited internet access, swimming pools, lots of walking and great food—I was exhausted from all that relaxation when we got home, but it was a needed respite from the political madness and end of the term rush that I have going on. My kids are old enough to stay home by themselves for limited periods of time, so I’m a little freer to pursue other things, and life is good!
I suspect that I’ll have lots of exciting things to report in the coming weeks from my part of the world. Stay tuned!
Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government.
This post is by way of addendum to Eric Parks' recent article The last exit ramp on the road to unlimited government. I find Eric's post noteworthy not least because it reminds me of how undiscerning and crude people have become in the face of the most blatant violations of justice and the rule of law. The position taken by the Institute for Justice (see Eric's post) is a pleasant exception, deserving wide dissemination.
On a different level, this post on Hayek's thesis that in a politicised society the worst get to the top forms part of the background to Eric's observations.
I like the author's definition of a statist, i.e. a person passionately asking for leadership by the worst:
“Someone who learns nothing from human nature, economics, or experience, and repeats the same mistakes over and over again without a care for the rights and lives of people he crushes with his good intentions.”
Even the worst features of the statist reality, Hayek showed, “are not accidental byproducts” but phenomena that are part and parcel of statism itself. He argued with great insightfulness that “the unscrupulous and uninhibited are likely to be more successful” in any society in which government is seen as the answer to most problems. They are precisely the kind of people who elevate power over persuasion, force over cooperation. Government, possessing by definition a legal and political monopoly of the use of force, attracts them just as surely as dung draws flies. Ultimately, it is the apparatus of government that allows them to wreak their havoc on the rest of us.
It is ironic but perhaps sadly appropriate that Attorney General Eric Holder would choose a law school, Northwestern University, to deliver a speech earlier this month in which he demolished what was left of the rule of law in America.
In what history likely will record as a turning point, Attorney General Holder bluntly explained that this administration believes it has the authority to use lethal force against Americans if the President determines them to be a threat to the nation. He tells us that this is not a violation of the due process requirements of our Constitution because the President himself embodies “due process” as he unilaterally determines who is to be targeted. As Holder said, “a careful and thorough executive branch review of the facts in a case amounts to ‘due process.’” That means that the administration believes it is the President himself who is to be the judge, jury, and executioner.
As George Washington University Law Professor Jonathan Turley wrote of the Holder speech:
“All the Administration has said is that they closely and faithfully follow their own guidelines — even if their decisions are not subject to judicial review. The fact that they say those guidelines are based on notions of due process is meaningless. They are not a constitutional process of review.”
It is particularly bizarre to hear the logic of the administration claiming the right to target its citizens according to some secret selection process, when we justified our attacks against Iraq and Libya because their leaders supposedly were targeting their own citizens! We also now plan a covert war against Syria for the same reason.
I should make it perfectly clear that I believe any individual who is engaging in violence against this country or its citizens should be brought to justice. But as Attorney General Holder himself points out in the same speech, our civilian courts have a very good track record of trying and convicting individuals involved with terrorism against the United States. Our civilian court system, with the guarantee of real due process, judicial review, and a fair trial, is our strength, not a weakness. It is not an impediment to be sidestepped in the push for convictions or assassinations, but rather a process that guarantees that fundamental right to be considered innocent until proven guilty in a court of law.
I am encouraged, however that there appears to be the beginning of a backlash against the administration’s authoritarian claims. Just recently I did an interview with conservative radio talk show host Laura Ingraham who expressed grave concern over using these sorts of tactics against Americans using the supposed war on terror as justification. Sadly, many conservative leaders were silent when Republican President George W. Bush laid the groundwork for this administration’s lawlessness with the PATRIOT Act, warrantless wiretapping, indefinite detention without trial, and other violations. Similarly, as Professor Turley points out, “Democrats previously demanded the ‘torture memos’ of the Bush administration that revealed poor legal analysis by Judge Jay Bybee and Professor John Yoo to justify torture. Now, however, Democrats are largely silent in the face of a president claiming the right to unilaterally kill citizens.” The misuse of and disregard for our Constitution for partisan political gain is likely one reason the American public holds Congress in such low esteem. Now the stakes are much higher. Congress and the people should finally wake up!
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