Category Archives: Economics

Animal’s Daily News

Carl's Jr knows where it's at.
Carl’s Jr knows where it’s at.

Sanders supporters take note:  Here is socialism’s end game, in Venezuela where a burger now costs the equivalent of $170US.  Excerpt:

If a visitor to Venezuela is unfortunate enough to pay for anything with a foreign credit card, the eye-watering cost might suggest they were in a city pricier than Tokyo or Zurich.

A hamburger sold for 1,700 Venezuelan bolivares is $170, or a 69,000-bolivar hotel room is $6,900 a night, based on the official rate of 10 bolivares for $1.

But of course no merchant is pricing at the official rate imposed under currency controls. It’s the black market rate of 1,000 bolivares per dollar that’s applied.

But for Venezuelans paid in hyperinflation-hit bolivares, and living in an economy relying on mostly imported goods or raw materials, conditions are unthinkably expensive.

Even for the middle class, most of it sliding into poverty, hamburgers and hotels are out-of-reach excesses.

“Everybody is knocked low,” Michael Leal, a 34-year-old manager of an eyewear store in Caracas, told AFP. “We can’t breathe.”

triple-facepalmOf course you can’t – the richest nation in South America has been laid low by decades of market-crushing, socialist policies.  And there as here, when socialist policies inevitably fail, the response from the political Left has two parts:

  1. We just need the right Top Men in charge, then it will work.
  2. We just need to socialism harder.

I would almost be supportive of an initiative requiring anyone who is feeling the Bern to go spend a month in Venezuela, so they can see what they are really voting for.

On the burger tangent:  The CEO of Carl’s Jr gets it.  He is advertising his burgers with bikini-clad supermodels, and he doesn’t give two shits about who may be offended by it.  Good for him.

Interestingly, the music in the background is a cover of Ted Nugent’s Stranglehold.  Also, I’m suddenly hungry.

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

This just in from National Review’s Kevin D. Williamson; Socialism On the Left: It’s the Whitest Privilege.  Excerpt:

The curious task of the American Left is to eliminate “white privilege” by forcing people to adopt Nordic social arrangements at gunpoint.

Progressives have a longstanding love affair with the nations of northern Europe, which are, or in some cases were until the day before yesterday, ethnically homogeneous, overwhelmingly white, hostile to immigration, nationalistic, and frankly racist in much of their domestic policy.

In this the so-called progressives are joined, as they traditionally have been, by brutish white supremacists and knuckle-dragging anti-Semites, who believe that they discern within the Nordic peoples the last remnant of white European purity and who frequently adopt Nordic icons and myths, incorporating them into an oddball cult of whiteness. American progressivism is a cult of whiteness, too: It imagines re-creating Danish society in Los Angeles, which is not full of Danish people, ascribing to Scandinavian social policies certain mystical tendencies that render them universal in their applicability.

Call it “Nordic Exceptionalism.”

You know who else believed in Nordic Exceptionalism?

But never mind that.  At least for now.  NR’s Williamson is right about one thing, and that is that the more radical portions of America’s Left – largely supporters of the loony old Bolshevik Sanders – are definitely people of pallor.  Look at any non-BLM college protest; take a good look at the mostly-white, mostly-middle to upper-middle class yutes screeching for more Free Shit.

Leaping Wet BearThere’s another lesson from Europe, though; unchecked, uncontrolled immigration from Third World shitholes, aided and abetted by the leaders of modern nations, often results in a backlash.  The Scandinavian nations are beginning to show nationalist tendencies; in Germany, Frau Merckel is beginning to be the target of rising German ire.

Historically, rising tides of nationalism in Germany hasn’t ended up well for anybody.  But who knows?  Maybe this time they’ll take Tehran.

Animal’s Daily News

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

A Hippie Discovers Economics.  Guess What Happens Next?  Excerpt:

A post from Facebook has been making the rounds, where I came across it by way of my Federalist colleague Scott Lincicome.

Here’s the mind-blowing argument: “If we each grow a large crop of different food, we could all trade with each other and eat for practically free.”

Where to start?

Well, for one thing, growing your own food isn’t exactly “free,” not even “practically free.” As anyone who has his own vegetable garden knows, it requires seeds, fertilizer, irrigation, weeding, protection from insects and birds and animals, and a lot of work. The cost may not all be measured in monetary terms, but it isn’t free. In fact, it’s notoriously easy for a vegetable garden to end up costing more money than it saves, which is why most of us do it just as a hobby.

I’ve long said that the Comedy Central series South Park is some of the best social satire of our time.  In the Season 9 episode Die, Hippie, Die, a group of hippie-dippie college freshmen explain to Stan and Kyle what a hippie utopia would look like:

CartmanHippie 1:  Right now we’re proving we don’t need corporations. We don’t need money. This can become a commune where everyone just helps each other.

 Hippie 2:  Yeah, we’ll have one guy who like, who like, makes bread. A-and one guy who like, l-looks out for other people’s safety.

 Stan: You mean like a baker and a cop?

 Hippie 2:  No no, can’t you imagine a place where people live together and like, provide services for each other in exchange for their services?

 Kyle:  Yeah, it’s called a town.

Hippie 3:  You kids just haven’t been to college yet. But just you wait, this thing is about to get HUGE.

This episode ran in 2005, but if the hippie college freshmen were being portrayed now, eleven years later, one could only portray them as Sanders supporters; the kind of economic illiteracy displayed by the hippies in the linked article and the hippies in South Park is precisely of the same order as that displayed by the supporters of the loony old Bolshevik Sanders and the $15/hr minimum wage crowd.  Look upon our works, ye mighty, and despair; our parody has become reality.

Animal’s Daily News

Out on a limb.
Out on a limb.

Here’s a little tidbit that hits home for me, the peripatetic contract jobber:  In Defense of Freelancing.  Excerpt:

Here in Pittsburgh, Uber is destroying the local Yellow Cab monopoly, one of the worst taxi companies in the country. It’s getting drunk drivers off the roads in unknown numbers. It’s energizing the city’s nightlife. It has clearly been a boon for the city’s young women, allowing them to move around safely, reliably, and affordably at night, alone or in packs of three and four. It has also created hundreds of part- or full-time jobs for Pittsburghers.

Steven Hill hates it.

Hill, a senior fellow at the New America Foundation, is the author of Raw Deal, a grueling sermon accusing Uber—and similar “peer-to-peer” businesses, such as Airbnb and TaskRabbit—of exploiting part-time workers and eroding the wealth and security of the American workforce. These so-called “sharing economy” companies connect the buyers and sellers of goods, services, and labor online. For Hill, the people who run them and the venture capitalists who fund them “have conceived of nothing less than a wholesale redesign of the U.S. workforce, the quality of employment and the ways we live and work.” This powerful, diabolical, apparently conspiratorial new species of techno-entrepreneurs has planned “a dead end for U.S. workers, as well as the national economy” by creating what Hill dubs “the freelance society.”

BearLaughing1To put it bluntly, Steven Hill is full of  more shit than a Christmas goose.

You know what companies like Uber do, besides offering fast, convenient rides on demand, with clean, modern cars and friendly, courteous drivers?  Uber removes all the bullshit from grabbing a ride in a new town – or maybe even in your own town on a night when you’ve had one too many.  The endless union negotiations and graft associated with cab companies are kaputt.  The Uber workers work when and where they feel like it, and make pretty decent money doing so.  And no, nobody is “exploited.”  Only government can force people to do or not do something; every single driver for Uber is doing so voluntarily.  Just as I work in my industry as a freelance, freewheeling consultant (I’ve often thought of putting a black chess knight on my business cards with the slogan “Have Laptop, Will Travel”) we do so freely, knowing the risks, and doing so because we choose it.

And in the case of Uber, they are shutting city cab companies down.  Good.  Capitalism has always been a process of creative destruction.  If the cab companies can’t compete, screw ’em.

And while we’re at it, screw Steven Hill, too.

Animal’s Daily News

Office-Bear_HibernateWorried about the loss of low-skills job at your favorite fast food franchise?   Don’t blame the company.  Blame the minimum wage.  Excerpt:

Overregulation: Carl’s Jr. and Hardee’s CEO Andy Puzder has people all in a huff over his idea to automate restaurants. But why be upset with Puzder? This is an inevitable consequence of massive minimum wage hikes by the government.

“I want to try it,” CEO Puzder told Business Insider. He’s looking at something “where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

Is he being heartless? No. Just responding to the government’s foolish plans to jack up the minimum wage and put restaurants, hotels, bars and other service industries out of business. “With government driving up the cost of labor, it’s driving down the number of jobs,” said Puzder. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

He’s right. That’s why whenever the minimum wage rises above the market-set prevailing wage, jobs are destroyed. Who would pay someone $15 an hour to do a job that’s worth less than that? No one.

This isn’t rocket science or even advanced economics. It’s plain common sense — something that populist demagogues on the left seem to be missing entirely.

Of course they do – because they aren’t appealing to people who understand economics at all, much less the basic principle that the actual minimum wage has been and always will be the same – zero.

CashAnd that’s where increasing minimum wages always drive that segment of the population that typically fills the lowest-skill jobs.

Now, it’s typically the Democrats that support increasing minimum wages.  It’s a bit cynical, perhaps, but also understandable to hold the view that this is a feature, not a bug, of Democrat (and many Republicans) supporting the increases.  After all, the best way for career politicians and bureaucrats to retain power is to increase the number of people depended on Uncle Sugar – and driving the low-skills workers, who are also frequently low-information voters, into the arms of dependency meets that goal.

After all, when you give a man a fish, you feed him for that day.  But when you teach a man to fish, you run the risk that he might start feeling some independence and start thinking for himself.  Worse still, he might start selling fish to his neighbors, then buying some fishing boats and hiring people so he can sell fish in neighboring towns as well.  Next thing you know, you’ve created a… *gasp* capitalist!

But back to Carl’s Jr.; this is probably – no, certainly – a wise move on their part.  It will increase their competitiveness and in all honestly will probably increase the quality of their product, while keeping prices low, which benefits consumers.

Smart businesses deserve support.  It’s been many years since I ate fast-food burgers.  Maybe it’s time to throw a few shekels this way.

Rule Five 2017 Budget Friday

2016_03_26_Oshima Yuko Rule Five (1)Today’s package of proposed budget reforms are brought to you by Japanese singer and model Yuko Oshima!

Take a look at the Heritage Foundation’s publication, “A Blueprint for Balance.”  Full pdf available for download here.  It’s a bit of uncommon good sense; you should take the time to at least scan the whole 180-page document.  Go ahead and do so; I’ll wait right here.

Finished?  OK, let’s look at some of my favorite bits.

This is from the introduction:

2016_03_26_Oshima Yuko Rule Five (2)Congress should use four criteria to assess every federal program in developing the FY 2017 budget.

Congress should determine whether:

1. Eliminating the program would increase opportunity or reduce favoritism;

2. The program would better serve the American people if it were administered and financed by the private sector;

3. The program would be better administered by state or local governments; or

4. The program is wasteful or duplicative.

2016_03_26_Oshima Yuko Rule Five (3)Hell, I’d settle for that alone!  But read this bit on tax policy:

Federal taxes exist to raise only those revenues necessary to fund the constitutionally prescribed duties of the federal government. Revenues should be collected in the least economically damaging manner. The U.S. system fails Americans on both fronts: Taxes are too high and their collection is inefficient.  The U.S. tax code’s complexity and structure stifles economic freedom, removing vibrancy and prosperity from the economy. Fundamental tax reform would alleviate the harm caused by the tax system and thereby significantly expand the size of the economy. Stronger economic growth would substantially improve the incomes of Americans, and enhance 2016_03_26_Oshima Yuko Rule Five (4)economic opportunities.

Fundamental tax reform would lower individual and business tax rates; establish a consumption tax base, rather than the hybrid income-consumption tax base that the current system uses; eliminate the bias against saving and investment; eliminate tax preferences and simplify the tax system; and make the U.S. tax system more transparent so that taxpayers understand how much they pay to fund the federal government.

Heritage misses one point here; it isn’t just tax policy that disincentivizes saving, although it sure as hell goes a long way towards that.  It is also the fact that the Fed has held interest rates 2016_03_26_Oshima Yuko Rule Five (5)so close to zero as makes no difference for years; there is just no reason to let money sit in an account to no purpose.  Instead money has flowed into equity markets, producing a huge inflationary effect there – in other words, another bubble.

By all means, do read the entire proposal.  It’s an uncommon piece of good sense, it would produce some good, solid, pro-growth policies and would probably usher in (at least) a 1980s-style boom.

That’s probably why nobody in either major political party will ever seriously propose even part of it.

2016_03_26_Oshima Yuko Rule Five (6)

Animal’s Daily News

Standing-BearThis just in from the Mises Institute:  The Long History of Government Meddling In The American Marketplace.  Excerpt:

Although the causes of economic crises recurring throughout US history and often spreading worldwide can’t be proven using empirical means, oppressive government regulations favoring special interests in relevant industries have preceded every crisis.

Typically, cronyism involves support of politicians in exchange for regulations denying others the freedom to compete with the moneyed interests (e.g., monopolies). Less competition leads to higher costs and lower quality. It reduces economic growth, jobs, wages, innovation, and productivity. Attempts to control economic growth through government spending and/or manipulating interest rates (e.g., stimulate growth with low rates) generally leads to more severe crises.

None of these things are recent phenomena, but can be found again and again throughout American history.

It’s important to note that neither major political party really takes a libertarian stance with regards to economic issues.  Both engage (heavily) in cronyism, and while the GOP’s Trump wing advocates for nationalism and trade restrictions, the Democrats are even more into cronyism (for an example, look at the billions dumped into ‘clean energy’ projects to little or no return.)

Angry-BearThere’s an obvious solution:  Remove as much power as possible from the hands of the political class.  “Special interests” won’t pay for special favors from government if the government has no power to deliver; they will instead have to rely on persuading customers to engage in free trade on the open market.

Sadly, that ain’t gonna happen.  Government never voluntarily surrenders power.  Power corrupts, and absolute power tends to build institutions that have more staying power than kudzu.

Goodbye, Blue Monday

Goodbye, Blue Monday!
Goodbye, Blue Monday!

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

Bye, bye, Jeb Bush!  So much for money influencing elections, at least this go-round; Jeb! had tons of cash, but no personality.   (I’m about 80% certain he is actually an android.)  An inevitable exit, and one that won’t change the state of the race too much.

Speaking of the race, ever wondered why the loony old Bolshevik Sanders is gaining traction?  Read this, from the always-worth-reading Dr. Thomas Sowell:  The Lure of Socialism.  Excerpt:

Many people of mature years are amazed at how many young people have voted for Senator Bernie Sanders and are enthusiastic about the socialism he preaches.

Many of those older people have lived long enough to have seen socialism fail, time and again, in countries around the world. Venezuela, with all its rich oil resources, is currently on the verge of economic collapse, after its heady fling with socialism.

But, most of the young have missed all that, and their dumbed-down education is far more likely to present the inspiring rhetoric of socialism than to present its dismal track record.

Socialism is in fact a wonderful vision — a world of the imagination far better than any place anywhere in the real world, at any time over the thousands of years of recorded history. Even many conservatives would probably prefer to live in such a world, if they thought it was possible.

Who would not want to live in a world where college was free, along with many other things, and where government protected us from the shocks of life and guaranteed our happiness? It would be Disneyland for adults!

Free college of course has an appeal to the young, especially those who have never studied economics. But college cannot possibly be free. It would not be free even if there was no such thing as money.

Confused BearBut the youths (and many of the older folks) who are so enthusiastically supporting the nutty old Bolshevik Sanders are not concerned about economic reality.  They are worried about the stagnant economy, worried about their student loan debt, worried about a million things – and Bern, like a weird, white-haired old Pied Piper, is promising them everything from free college to unicorn farts.  Damn the expense!

It won’t work, of course.  There is ample evidence from history; even from current events (Venezuela.)

What Sanders promises is Free Shit.  What he will deliver is misery.  Dr. Sowell concludes:  Worst of all, government giveaways polarize society into segments, each trying to get what it wants at somebody else’s expense, creating mutual bitterness that can tear a society apart. Some seem to blithely assume that “the rich” can be taxed to pay for what they want — as if “the rich” don’t see what is coming and take their wealth elsewhere.

It’s happened before.  It will happen again.  Will the siren song of Free Shit lead to it happening here?

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

Is loony old Bernie Sanders a Democratic Socialist, or just a plain old Marxist?  (Note:  The fact that I have repeatedly referred to the Bern as “that nutty old Bolshevik” might yield a hint as to what I think on the issue.)  John C. Goodman has weighed in.  Excerpt:

When is the last time you were in Denmark? Or Norway? Or Sweden?

If you have had the pleasure of visiting these lovely places you may have noticed something really odd. Nobody there talks the way Bernie Sanders talks.

Sanders frequently points to northern European countries, especially Denmark, as examples of how he would like to remake the United States economy — by which he mainly means higher taxes and more social services. But the main difference between the tax systems of the US and Denmark is not high taxes on the rich. It’s higher taxes on the middle class. (See my previous post on this.)

By and large, people in Denmark do not demonize the rich. They don’t think that successful people are the reason why average incomes aren’t higher. Nor are they clamoring to confiscate the wealth of those at the top of the income ladder.

Take inheritance taxes. The U.S. has higher estate taxes than virtually any country in Europe. According to the Tax Foundation, our top estate tax rate is 40%. In the Netherlands it’s 20%. In Denmark it’s 15%. In Norway and Sweden, there is no estate tax!

Mind you, Bernie Sanders has not even a nodding acquaintance with economic realities.  And here is the real money quote of the article here:

Cash
Not J.K. Rowling.

Bill Gates is estimated to be the world’s richest man. J. K. Rowling is estimated to be the world’s richest woman. Did either of these two ever take money out of your pockets?

Gates got rich by providing the software that I am using at this very moment as I create this editorial. It’s well worth what I had to pay for it. Rowling got rich because people all over the world like to read Harry Potter novels and enjoy watching Harry Potter movies. How could anyone object to that?

Well, nutty old Bolshevik Bernie objects to that because inequality, or something.

Sanders whines about “income equality,” and in his abject economic ignorance he advocates not for equality of opportunity – a facet of one of the United States’ founding principles, equal protection under the law – but for equality of outcomes, which is not compatible with liberty.

You can have liberty or you can have equality.  You can’t have both, and in socialist countries, the inequality is even greater than in free-market societies, because of the absolute power of the thugs in charge.  See the Soviet Union, Cuba, Venezuela, Zimbabwe, or North Korea for illustration.

Goodbye, Blue Monday

Goodbye, Blue Monday!
Goodbye, Blue Monday!

Are we heading into a recession?  After seven years of Obamanomics, it would be amazing if we were not heading into a recession.  Excerpt:

Stocks are diving, retail sales are slumping, and economic bellwether Wal-Mart is shuttering 154 U.S. stores. Meanwhile, China’s markets are in free fall. Is it too early to mention the “R” word?

We’ve been accused of being Pollyanna-ish in our views, which tend toward the optimistic when it comes to the flexible, naturally buoyant U.S. economy.

And, to be sure, the stronger employment growth – payroll jobs increased an average 230,000 a month last year – and the decline of the unemployment rate to 5% are both positive signs.

But not everything is going so well – starting with the stock market. The S&P 500 has skidded 8% since Jan. 1, its worst start ever. As USA Today reckons, $2.3 trillion in shareholder wealth has been wiped out – a huge hit that will be felt across the economy.

Even before the market decline, however, clouds were gathering. Retail sales fell 0.1% in December and were up just 2.2% year over year. And Friday’s announcement by Wal-Mart that it’s closing 269 stores – 154 of them in the U.S. – can only be bad news.

Then there’s China. Its stock market index has plummeted more than 40% since the middle of 2014 as the nation’s once-booming export- and investment-driven economy goes bust. Around the world, factories and businesses built to satisfy China’s insatiable demand for raw materials and capital goods have fallen silent.

Coming from Investor’s Business Daily, normally a pretty savvy publication on economic issues, this line is particularly jarring:

And, to be sure, the stronger employment growth – payroll jobs increased an average 230,000 a month last year – and the decline of the unemployment rate to 5% are both positive signs.

Really?

Here’s a more relevant look at the labor force picture, from the notoriously right-wing (sarcasm, yes) Bureau of Labor Statistics; this is the labor force participation rate since 2005:

Labor Participation Rate, 2005 – Present

Not so good, eh?

This is a much harder look at what is happening with employment in the U.S. today.  The unemployment statistic only represents people who are un- or under-employed and who are actively seeking work; it doesn’t take into account those who have given up looking for work, or those who are joining the ever-increasing rolls of those on some form of disability or enrolled in transfer programs like SNAP, which are at record levels.

There is an old truism that involves how best to help the poor; it states that those on the Left measure success of their programs by how many people are on public assistance, while those on the Right measure success by how many people no longer need it.

The Obama Administration clearly uses the former model.