Category Archives: Economics

Rule Five Economic Illiteracy Friday

Thanks once again to The Other McCain for the Rule Five links!

The daffy old socialist from Vermont is once more up to his usual shenanigans, this time proposing a universal health care scheme estimated to cost more than the entire Imperial budget.  Excerpt:

Not only has Sanders’ office not done its own serious accounting for the Senator’s signature policy objective, the maligned “Koch-funded” piece of propaganda…closely reflected other academic estimates of single payer’s price tag.  Indeed, in our post yesterday, we cited a study by the left-leaning Urban Institute that ran the math and came up with a nearly identical cost projection — via the Washington Post:

The government’s price tag would be astonishing. When Sen. Bernie Sanders (I-Vt.) proposed a “Medicare for all” health plan in his presidential campaign, the nonpartisan Urban Institute figured that it would raise government spending by $32 trillion over 10 years, requiring a tax increase so huge that even the democratic socialist Mr. Sanders did not propose anything close to it.

When right-leaning and left-leaning think tanks produce strikingly similar calculations, perhaps we should sit up, pay attention, and take the results seriously. As for the “savings” canard, the Urban Institute analysis guesstimated that BernieCare would increase overall costs by more than $6 trillion over a decade, so how can Sanders claim that the Mercatus numbers point to a multi-trillion-dollar decrease?  Economist Brian Riedl of the Manhattan Institute, an expert on these matters, explains the context: “The claims of lower total economy-wide health savings only [materialize] because Blahous charitably accepted the Bernie assumption that we can lower all payment rates to Medicare payment rates,” Riedl tells me.

Here’s the conclusion:

When Blahous applied his institutional knowledge to the math, Sanders’ fanciful savings evaporated, and a higher tab of roughly $4 trillion over ten years emerged.  And notice — again — the relatively similar projections from both Blahous and the Urban Institute.  Riedl also notes that both entities’ analysis align closely with extrapolations from state-level estimates from Vermont and California, where single-payer schemes were abandoned by left-wing legislatures due to totally untenable costs.  We mentioned in our breakdown of Ocasio Cortez’s magical thinking that she did not propose anything even remotely approaching a plan to pay for all of this.

Well, there’s are a couple of obvious answers:

  1. We’ll just add a bunch of zeroes to the currency, and it will all work out.  (The Venezuela solution.)
  2. We’ll just borrow the money!  (The U.S. Congress solution.)

The usual answer to this involves the iron fist of government being employed to slash prices at gunpoint.  That results in fewer providers entering into medical career fields; it results in fewer facilities, it results in fewer companies manufacturing devices and drugs; it results in rationing.  See the formerly-Great Britian’s National Health Service for an example.

Our own Colorado voted down a single-payer solution.  California’s loony legislature abandoned a similar initiative after seeing the numbers.  Ditto for Vermont.  And, to be honest, the daffy old socialist from Vermont’s idea isn’t going anywhere at the Imperial level, either.  He will keep on campaigning for it; his self-awareness is so low that he’s handing the GOP a gift every time he speaks on the topic.

Not that that’s anything new for him.

Animal’s Daily Iran Currency Plunge News

This came in over the counter from a regular reader; it seems the threat of renewed sanctions is causing Iran’s currency to take a nose-dive.  Excerpt:

Iran’s currency traded at a fresh record-low of 119,000 to the dollar on Tuesday, a loss of nearly two-thirds of its value since the start of the year as US sanctions loom.

The Iranian rial has been crashing in recent days as the country anxiously awaits the reimposition of full US sanctions, starting on August 6.

It hit 100,000 to the dollar for the first time on Sunday and continued its decline, losing 18 percent of its value in less than two days.

On January 1, the dollar was worth 42,900 rials.

The government has been in crisis mode, replacing its central bank chief last week.

The central bank issued a statement on Monday, blaming the currency volatility on the “enemies’ conspiracy” and vowing fresh counter-measures “in the coming days”.

And it couldn’t happen to a nicer bunch of mullahs.

We could argue the sense of our foreign policy re: Iran all day, but that last statement is the one that caught my eye:  Iran is ‘vowing fresh countermeasures “in the coming days.”

Uh huh.

Iran’s nutbars-in-charge are always vowing fresh countermeasures.  They are a paranoid bunch, and rant as they will, they just plain have no cards to play here.  The U.S., largely in part to eased restrictions and (more so) technical advances on drilling, is far less dependent on Middle Eastern oil than we used to be.  I have a funny feeling President Trump’s response to Iranian threats is going to be on the order of “knock yourselves out, cupcakes.”

Personally I’ll settle for not sending them any more pallets of U.S. currency.

The Iranian theocracy is dying at any rate.  They have an increasingly restive younger generation, their birthrate is declining, and they have bad economic problems even without Western sanctions.  Theocracies are, happily, a governing model destined for history’s trash heap.  In the case of Iran, it can’t happen soon enough.

Rule Five Fundamental Misunderstandings Friday

This guy has a serious, fundamental misunderstanding of what capitalism is.  Excerpts, with my comments, follows:

But the fact is, capitalism moves and energizes the modern world.

Sort of.  Unfettered, laissez-faire capitalism is not actually practiced anywhere in the modern world.  What we do have is a combination of cronyism and mercantilism.

And what capitalism values, our world does more of; what it doesn’t, we do less of.

Yes, this is true.  And that’s precisely how it should be.

Many of us feel like the activities of a normal life are becoming harder and harder to accomplish.

So, how many is many?  That’s a content-free assertion.  “Many” is very relative.  Three can be “many.”  I wouldn’t want to have three people standing on my tongue.  That would be too many.

So the question becomes: In a system where capitalism is a prime determinant of value, how can we preserve what we truly value as humans, what matters to us beyond money?

With free trade and free markets, obviously – in other words, capitalism.  And, as I’ve said before and will say again, there really is no “-ism” in laissez-faire capitalism; there is no underlying ideology other than liberty.  An honest free-market system consists of nothing more than free people deciding, freely, for themselves what to do with their money, their talents, skills and resources.

Here’s where the author, one Andrew Yang, goes off the rails, in defining his “reformed” capitalism:

Human capitalism would have a few core tenets:
1. Humanity is more important than money.

Again, a content-free statement.  That means precisely nothing; you can’t quantify it or even define it.

2. The unit of an economy is each person, not each dollar.

See above.

3. Markets exist to serve our common goals and values.

This is real dinger.  Yang seems to be of the stripe that “people should be free to make choices, as long as the choices are ones I approve of.”

There are no common goals or values.  Only individuals have goals and values, and those may vary widely.  You can’t define common goals or values and assign them without the iron hand of government telling people what to do.  Quis custodiet ipsos custodes applies here; there is no way to have markets “serve our common goals and values” without someone in power deciding what those common goals and values are, and imposing those goals and values on the population as a whole.

There’s only one answer to such a suggestion:  Fuck off, slaver.

Animal’s Daily Venezuelan Meltdown News

Barter has taken over, as the wreckers and kulaks in the Worker’s Paradise of Venezuela are exploring every possible alternative to the train wreck that is that nation’s “official” economy.  Excerpt:

“There is no cash here, only barter,” said Mileidy Lovera, 30, walking along the shore with a cooler of fish that her husband had caught. She hoped to exchange it for food to feed her four children, or medicine to treat her son’s epilepsy.

In the hyperinflationary South American country, where bank notes are as difficult to find as chronically scarce food and medicine, Venezuelans are increasingly relying on to barter for basic transactions.

Payment for even the cheapest of goods and services would require unwieldy piles of banknotes, and there simply are not enough of those in circulation.

But it seems the problem is just that the government is not printing money fast enough:

Economists say the central bank has not printed bills fast enough to keep up with inflation, which according to the opposition-run congress, reached an annual rate of almost 25,000 percent in May.

Once one of Latin America’s wealthiest countries, Venezuela’s economic collapse under President Nicolas Maduro’s government drove nearly one million people – 3 percent of the population – to emigrate between 2015 and 2017.

Maduro, reelected to a fresh six-year term in May in elections condemned by the United States, blames spiraling consumer prices and constant shortages of food and medicine on an “economic war” led by the opposition and Washington.

The economic meltdown in Venezuela is due to one thing:  Socialism.  Socialist systems always end in this kind of a meltdown; even in a country as enormous, as rich in resources as the once and former Soviet Union, was perpetually in the “stand-in-line-for-beets” economic stage. With socialism, it is always steak yesterday and steak tomorrow, but never steak today.

Mark Twain is reputed to have once said “History seldom repeats, but it often rhymes.”  We’re seeing it rhyme now, in the colossal socialist failure that is Venezuela.

Goodbye, Blue Monday

Goodbye, Blue Monday!

Thanks once again to Pirate’s Cove for the Rule Five links!

Some of you True Believers probably ingested some ethanol over the weekend just past, in various forms – I know I did.  The problem is, your car or truck is ingesting it too, and unlike your consumption, your vehicle’s ethanol is heavily subsidized by the Imperial government.  We could save folks a lot of money by getting rid of the whole ethanol scam.  Excerpt:

The Scientific American reports that roughly 40% of America’s corn crop goes to manufacture ethanol added to gasoline. That is more than the second largest use of corn — as feed for cattle, pigs and chickens — which consumes 36% of the annual corn crop. Is it wise to burn food for fuel, more than for feeding a hungry world?

Using so much of the corn crop for fuel has already caused world corn prices to rise sharply. That is not noticed in rich countries, but it has caused food riots in poor, Third World countries, where poor families consequently suffer hunger.

This is particularly outdated in a world flooded by oil and natural gas, due to the effects of modern fracking. That flood has already caused world prices of oil and gas to sink.

Contributing to these perverse effects is the U.S. Renewable Fuel Standard (RFS). That policy requires all transportation fuels sold in the U.S. to contain a minimum level of renewable fuels, such as ethanol.

Ethanol lobbyists say the RFS promotes economic growth. But the RFS is more like a tax increase than economic growth. The free market will always choose the least costly fuel alternative, without the need for any regulatory mandate. The ethanol mandate just raises costs above whatever the least costly alternative is.

The ethanol subsidy is, of course, heavily lobbied for in the farm states; a candidate cannot be elected dogcatcher in places like my own home state of Iowa if they don’t support various agricultural subsidies, including the ethanol horseshit.  And also, in those same places, you’ll hear a lot of rhetoric from pols about protecting the “family farm.”

But a farm – full disclosure, I come from a long line of farmers on both sides of my family – is not a holy calling.  It’s just a business, like any other.  And business models change.  Big corporate farms produce goods for consumers at lower cost than family farms, and subsidies in agricultural goods, like with any other goods, just screw up the self-regulating nature of markets and are always, in the end, inflationary.

Markets, not governments, should pick winners and losers.  That applies to fuels, foods, and everything else.

Rule Five Government Theft Friday

Let me begin by saying this:  Any government elected, appointed or hired official who supports civil asset forfeiture should be tarred, feathered and run out of town on a rail.  This family had their life savings stolen – yes, fucking stolen- by an illegitimate act of a government gone mad.  Excerpt:

Rustem Kazazi, 64, was headed to his native Albania to visit relatives in October, according to a federal lawsuit that he, his wife, Lejla, and son, Erald, filed this week in Ohio against the agency and others.
The suit alleges Customs and Border Protection used civil forfeiture laws to take the money without arresting or charging anyone with a crime.

Kazazi had planned to spend six months in Albania and buy a vacation home for retirement on the Adriatic coast, according to court documents. He also wanted to help members of his extended family, who are struggling, the court documents said.

To make the transactions easier and avoid bank fees, he reduced his family’s life savings to cash, packed it in a carry-on and brought it with him to the airport, according to the family’s lawsuit.

“He counted the cash several times, separated it into three stacks of $20,000, $19,100 and $19,000 each, and then, after counting again, labeled each stack with the amount it contained. He then placed the three stacks in a single envelope and wrote ‘$58,100’ on the outside,” the documents state.

Transportation Security Administration agents spotted the money inside Kazazi’s bag as he went through security on October 27 at Cleveland’s airport to catch a flight to Newark, New Jersey, before flying out to Albania, according to court documents. TSA called Customs and Border Protection agents, who took Kazazi’s passport and driver’s license, according to the filing.

He was put in a small private room for a body search, the documents state.

Kazazi speaks limited English, according to the lawsuit.

Customs agents “interrogated him without a translator, and then seized his family’s life savings without charging anyone with a crime,” according to the Institute for Justice, whose attorney, Wesley Hottot, is representing the Kazazi family in the lawsuit.

So, Mr. Kazazi – who is in the United States legally, legally worked and contributed to our economy and his community, wanted to take some of the resources he earned back to his country of origin to buy a home their and oh, by the way, help his family.  His resources.  Resources he earned, legally.

And government officials just seized the money.  Because fuck you, that’s why.

In what sane world are civil forfeiture laws not a gross violation of the Fourth and Fifth Amendments?  Mr. Kazazi was subjected to an unwarranted search, and had a considerable amount of property, the aforementioned $58,100, stolen by agents of the Imperial government with no due process.  Giving him a receipt for an unspecified amount of U.S. currency was just adding insult to injury.

This kind of horseshit should have been slam-dunked by the courts years ago.  Why hasn’t it been?

One my suspect the answer:  A court decision against this practice would dry up a big source of unearned increment (excrement?) for various levels of government.

If you’ve ever looked for reasons to strip government of power, this practice should be high up on the list.

Goodbye, Blue Monday

Goodbye, Blue Monday!

Thanks as always to Pirate’s Cove and The Other McCain for the Rule Five links!

Moving along:  You can’t make this stuff up.  Excerpt:

At an island resort off the coast of Singapore, U.S. event planners are working day and night with their North Korean counterparts to set up a summit designed to bring an end, eventually, to the North’s nuclear-weapons program.

But a particularly awkward logistical issue remains unresolved, according to two people familiar with the talks. Who’s going to pay for Kim Jong Un’s hotel stay?

The prideful but cash-poor pariah state requires that a foreign country foot the bill at its preferred lodging: The Fullerton, a magnificent neoclassical hotel near the mouth of the Singapore River where just one presidential suite costs more than $6,000 a night.

The mundane but diplomatically fraught billing issue is just one of numerous logistical concerns being hammered out between two teams led by White House deputy chief of staff Joe Hagin and Kim’s de facto chief of staff, Kim Chang Son, as they strive toward a June 12 meeting.

So, if that batshit-crazy Stalinist regime can’t afford The Presidential Suite at the Fullerton, why not go for whatever the Singapore equivalent is of a Motel 6?  Honestly, it’s North Korea.  The short bus of nation states.  A Motel 6 ought to be good enough for a stunted little gargoyle with bad hair.

President Trump could always call ahead, ask the hotel to leave the light on for the Nork party.

Seriously, the Imperial government may deem it worth the shekels to spring for the rooms if it will get the Norks to the table.  But that seems a damned slim justification to me.  The message here should be “we are negotiating a deal that might result in crushing sanctions finally being lifted from your looney-tunes little excuse of a country.  You can damn well arrange your own lodgings.”

But that’s just me.

Rule Five Progressive Utopia Friday

Have a look at the reality of leftist utopias from someone who lived in one.  Excerpt:

I grew up in one of the most progressive societies in the history of humanity. The gap between the rich and poor was tiny compared to the current gulf between the ‘haves’ and the ‘have-nots’ we find across much of the West. Access to education was universal and students were paid to study and offered free accommodation. Healthcare was available to all and free at the point of use. Racial tensions were non-existent, with hundreds of different ethnic groups living side by side in harmony under the mantra of ‘Friendship of the Peoples.’ Women’s equality was at the very heart of Government policy. According to the prevailing ideology “all forms of inequality were to be erased through the abolition of class structures and the shaping of an egalitarian society based on the fair distribution of resources among the people.”

You are probably wondering whether the idyllic nation from which I hail is Sweden or Iceland. It was the Soviet Union.

And:

Low levels of wealth and income inequality were achieved by making everyone poor and restricting access to basic goods such as food, domestic appliances, and basic clothing. The ’emancipated’ women of the USSR were denied the evil fruits of misogynistic Western civilisation such as tampons, washing machines, and the ability to feed their children. And while healthcare provision was universal, it was also universally poor and entirely corrupt. Only people with influence, connections, and the ability to pay bribes could actually obtain good treatment.

University places which paid students to study were subject to the same corruption with examiners able to solicit bribes and favours. In exchange for an education, you forfeited the right to a future career of your own choosing—instead, you would be allocated a job by the state system, often in a completely different part of the country.

This is the inevitable result of socialism, folks, followed by economic collapse and either a peaceful restructuring in to a more market-based economy (see eastern Europe n the Nineties) or a complete meltdown (see Venezuela, right now.)  In the first case you get a reasonable transition that leads to more personal freedom, more economic freedom and greater prosperity.  In the latter, you get increasingly brutal government crackdowns and people starving and, due to increasing desperation, violent revolution.

The fall of the Soviet Union was somewhat in the middle, with an initially more liberal (in the classical sense) government slowly sliding back to authoritarianism under Czar Putin.  But it’s the comments on “equality” in this article that bring up that inevitable truism, that capitalism presents the equal distribution of opportunity, while socialism presents the equal distribution of misery.

Don’t expect this lesson to sink in with American lefties, though.  The counter-argument always seems to be that all of those failed socialist experiments just didn’t have the right Top Men in charge.  “They didn’t do it right.  We will.”

Uh huh…

This isn’t a cultural battle that will ever be won or lost, no matter how convinced either side is of the rightness of their cause.  And it’s sad, because one side is arguing for freedom, and the other, servitude.  There are elements of this longing for control in both major American political parties, sadly, and in pols of every description.  Robert Heinlein said it best:

Political tags — such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth — are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire. The former are idealists acting from highest motives for the greatest good of the greatest number. The latter are surly curmudgeons, suspicious and lacking in altruism. But they are more comfortable neighbors than the other sort.”

Remember that next election season.

Animal’s Daily Seattle Stupidity News

Seattle has a homelessness problem.  So, as John Stossel notes, they are reacting by punishing businesses.  Go figure.  Excerpt:

Members of Seattle’s city council want all big Seattle businesses to pay a tax of $500 per employee.

In response, Amazon stopped building a new complex. Construction workers joined Amazon in protesting the new tax.

On the other side are city council members like Kshama Sawant. She and members of her political party, Socialist Alternative, demonstrated in support of the tax. They chanted, “Housing is a human right!”

Seattle does have large encampments of street people. Some are mentally ill. Some are young people looking to get stoned and live free. Some are homeless simply because they cannot afford apartments. There are many reasons for that, but one is that Amazon and other companies have brought so many new jobs to Seattle that the demand for housing exceeds the supply.

Normally, when that happens, the free market quickly solves the problem. Builders view the rising prices as a wonderful thing. They quickly build new housing to sell to the new customers. But in Seattle, and many towns in America, politicians make that very hard.

Seattle’s building code is 745 pages long.

If you want to build apartments, you better hire lawyers and “fixers” to keep you on the right side of the rules.

But at least the city’s overlords can see reason:

Monday, after Amazon’s pushback, the city council imposed a tax of $275 per worker instead of the originally proposed $500 tax.

The money raised, supposedly, will go to “solve” the homeless problem.  One consultant reckons that this will cost the city $400 million; funds they are unlikely to raise when their policies are driving major employers out of the city.

Stupid is as stupid does, and the Seattle City Council is being gobsmackingly stupid here.  Never mind the destructive head tax; never mind the ruinous zoning restrictions.  It’s a rule of nature that what you tax you get less of, and what you subsidize you get more of.  Seattle is proposing to tax employment and subsidize homelessness.  This won’t end well.

Animal’s Daily Doubling Down on Stupid News

Thanks as always to Pirate’s Cove and The Other McCain for the Rule Five links.  And, emphatically, thanks to all readers for your kind words on yesterday’s post.

Moving on:  California has evidently decided to address their housing affordability crisis by making things worse.  Excerpt:

For seven years, a handful of homebuilders offered solar as an optional item to buyers willing to pay extra to go green.

Now, California is on the verge of making solar standard on virtually every new home built in the Golden State.

The California Energy Commission is scheduled to vote Wednesday, May 9, on new energy standards mandating most new homes have solar panels starting in 2020.

If approved as expected, solar installations on new homes will skyrocket.

Just 15 percent to 20 percent of new single-family homes built include solar, according to Bob Raymer, technical director for the California Building Industry Association.

“California is about to take a quantum leap in energy standards,” Raymer said. “No other state in the nation mandates solar, and we are about to take that leap.”

The proposed new rules would deviate slightly from another much-heralded objective: Requiring all new homes be “net-zero,” meaning they would produce enough solar power to offset all electricity and natural gas consumed over the course of a year.

Now, I’ll admit one thing; if there’s a state where solar panels on roofs might be effective, it’s sunny Californey.  And I would never, ever object to someone deciding that solar panels on their roof was a good idea.  Where the stoopid comes in is in the comment:  “No other state in the nation mandates solar…”

Mandates, that’s the dumb part.  An appropriate response from California builders would be “fuck off, slavers” but I doubt that will be the case.  What will happen now is that California’s already high housing prices will rise even higher, and the exodus of the middle class from the Left Coast will accelerate.

Bug?  Or feature?