Category Archives: Economy

Government Works Don’t Work

Economy, Government, Inflation, The State

The bailout bonanza, based as it is on borrowed and counterfeited money, continues unabated.

Huge ‘public’ works are in the offing—every bit as big as Bush’s welfare and warfare programs.

I’m wasting my breath in the increasingly socialist and statist America. But let me try once again:

No government can create jobs; only economic growth in the private sector can create employment opportunities.

Basic understanding of economics is necessary to grasp that there is no free lunch. For every job “created” by government, an unidentifiable job will, tit-for-tat, be destroyed in the private sector.
The images of earnest men and women put to work by the Obama and Bush bailouts will flood the propagandist news networks.

The multitudes thrown out of work because private economic activity has been crowded out by taxing or borrowing to finance job programs will remain invisible. Also invisible will be the destruction of jobs and reduction in investments, purchasing and overall wealth that ensues when money is taxed away from Americans and funneled to the politicians’ patronage playground.

Investors will suffer the same fate and will be much less likely to take employment-generating risks with their capital. Government borrowing simply serves to reduce capital available to the private sector. A further diminution of assets occurs when government expands the money supply and causes inflation in order to finance job creation schemes.

Creating good long-lasting employment lies in producing goods or services for which there is a legitimate consumer demand. Hence jobs in the private sector are real jobs because they are sustained by consumer preferences. Unsustainable government make-work schemes merely usurp the wishes and needs of consumers, and substitute them with the wishes of bureaucrats who are beholden to their political masters.

There is an ethical dimension to job creation in the private sector — it is a voluntary agreement into which both parties enter with a view to mutual benefit. Government job creation, however, involves bureaucrats and job recipients—The Big Three, the Financial Sector, and all other bailout bandits—in a beneficial and voluntary exchange but leaves out of the loop those who pay for the programs through taxes or through unemployment in their neck of the woods.

A multi-billion-dollar government job-creation program is never a good thing, especially during a recession. For one, government-created work schemes and the kinds of jobs government will be creating are well paid, irrespective of productivity.

For another, government workers are covered by rigid, “prevailing wage” legislation. This precludes the necessary flexibility in wage structure, so essential during an economic downturn.

Is Germany’s Finance Minister An Austrian?

Capitalism, Economy, Federal Reserve Bank, Inflation, Political Economy

Is Germany’s finance minister really an Austrian … economist, that is?

I don’t know if Peer Steinbrück is with von Mises, but Chancellor Angela Merkel is fortunate to have him in her cabinet. He has been vetoing the assorted Pan-European economic rescue responses, which would fall on Germany’s back.

The Social Democratic finance minister is talking a little like a free market Austrian economist—advocating what this column, Ron Paul, Peter Schiff, and other libertarians advocate: suck it up.

Read the entire interview, “‘It Doesn’t Exist!: Germany’s outspoken finance minister on the hopeless search for ‘the Great Rescue Plan.'”

Newsweek being Newsweek, Steinbrück’s assessment of the a “crass Keynesianism” undertaken by the US, UK, and EU will be like pearls before swine. Here are some particularly poignant excerpts (the kind you’ve heard before here):

• No matter how much any government does, the recession we are in now is unavoidable.
• The speed at which proposals are put together under pressure that don’t even pass an economic test is breathtaking and depressing.
• The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking. When I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn’t this the same mistake everyone is suddenly making again, under all the public pressure? [The Mercer version: “A crisis that was created by cheap credit must be corrected by less of the same.”]
• The risk is greater of burning money without significant effects and in the end having a budget weighed down with even more debt. [Remember, Germany is not bankrupt like the USA is.]
• I’m ambivalent about leadership. [Mercer’s version: “’Leadership’ is a euphemism for overriding the will of the people. No sooner does the pesky popular will intrude into the debate than the top Republican contenders begin to yammer about their obligation to demonstrate ‘leadership.'”]

Here we have a European “Social Democratic” who’s more free market than the American centrists (which is what Republicans pride themselves on being).

The Big Three Uniquely American? My Eye!

Business, Capitalism, Economy, Government, Socialism

“We’re lectured that the automobile industry is a ‘uniquely American’ industry; its workers more American—and, hence, more deserving—than the rest of us. Since equality before the law is no longer apple-pie, I’d like to know what’s so quintessentially American about a failing industry. If anything, failure is un-American.”

“How uniquely American is a $75.86 hourly compensation package? How many un-uniquely American workers are rewarded to the tune of $133,000 a year? The truly American (because productive), local workers of Toyota and Honda cost their employers, all told, $44 an hour. The Bureau of Labor Statistics puts the average hourly remuneration for regular Americans, benefits and all, at around $28.50.”

“The workers of The Big Fat Three are unique alright; they’re freaks of industry, as they receive 150 percent more in compensation than the average, American working stiff.”

The excerpt is from my new WND column, “The Big Three Uniquely American? My Eye!”

Update II: The Commie Who Controls the Economy From the Grave

Communism, Democrats, Economy, Political Economy, Republicans, Socialism

The excerpt is from my new WND column, “The Commie Who Controls the Economy From the Grave“:

“Republicans are as devout about Keynes as are [Democrats] Reich and Krugman. Nixon famously declared, ‘We are all Keynesians now.’ But my comment is redundant; Bush has bested the most committed Keynesian. ‘Nixon’s Keynesian conversion … looks positively quaint compared with the fiscal and monetary stimulus’ Bush has initiated, quipped Steven Pearlstein of the Washington Post.”

“How much to hand out; who to hand it to; which handout makes the best use of taxpayer money; do the Big Three submit a business plan with their bailout requisitions, or not—that’s the depth of the ‘philosophical’ to-be-or-not-to-be among Republikeynsians.”

“So who was this man, John Maynard Keynes, who controls the economy from the grave?”

“Keynes was a Fabian socialist strongly opposed to private enterprise. … Fabians departed from communists on the use of force. Whereas the communists believed in ‘attaining power by violence,’ Fabians perfected a form of the Islamic takiya—lying to spread the faith, in their case, state-socialism.”

Read “The Commie Who Controls the Economy From the Grave.” You need to know who Comrade Keynes was!

Update I (Dec. 5): Speaking of Republikeynsians, I heard Tony Blankley, editor of the Washington Times, tell the Obama Headquarters@Hardball, care of Chris Matthews, that the government must spend inordinate amounts of money. Demand has fallen. When consumers stop spending (at last!), urged Blankley, the government must step in and fill the gap; in other words spend like the consumer would have spent had he had the money, but since he can’t spend what he doesn’t have, the government must step in and spend what it doesn’t have.

This glut; this orgy of idiocy, reminds me of a Fellini film, I think it was, where the heroes decide to get together and eat themselves to death. Anyone old enough to remember its name?

This won’t keep the nausea at bay, but I recommend reading “Keynes and the Reds” by historian Ralph Raico. More examples of takiya à la socialism–the myths Keynes’s acolytes have spun around him. His theories ought to have been sufficient to discredit him.

Update II (Dec. 9): In case readers have disobeyed me and failed to read Raico’s “Keynes and the Reds, here is an excerpt:

“…it is commonly held, Keynes was a sincere, indeed, exemplary, believer in the free society. If he differed from the classical liberals in some obvious and important ways, it was simply because he tried to update the essential liberal idea to suit the economic conditions of a new age.”

“But if Keynes was such a model champion of the free society, how can we account for his peculiar comments, in 1933, endorsing, though with reservations, the social “experiments” that were going on at the time in Italy, Germany, and Russia? And what about his strange introduction to the 1936 German translation of the General Theory, where he writes that his approach to economic policy is much better suited to a totalitarian state such as that run by the Nazis than, for instance, to Britain?” …

“A notable feature of Keynes’s praise of the Soviet system is its total lack of any economic analysis. Keynes appears blithely unaware that there might exist a problem of rational economic calculation under socialism, as outlined a year earlier in a volume edited by F. A. Hayek, Collectivist Economic Planning, which featured the seminal 1920 essay by Ludwig von Mises, ‘Economic Calculation in the Socialist Commonwealth.'”

“Economists had been debating this question for years. Yet all that concerns Keynes is the excitement of the great experiment, the awe-inspiring scope of the social changes occurring in Soviet Russia under the direction of those ‘disinterested administrators.'”

“This brings to mind Karl Brunner’s comment on Keynes’s notions of social reform: ‘One would hardly guess from the material of the essays that a social scientist, even economist, had written [them]. Any social dreamer of the intelligentsia could have produced them. Crucial questions are never faced or explored.'”

Read the complete essay “Keynes and the Reds, and report back.