“My lack of experience is my greatest attribute. I have no experience in ruining the country,” said a witty Peter Schiff, who announced (on MSNBC’s “Morning Joe”) a run for the US Senate in his home state of Connecticut. After whipping the Republicans, we hope, Schiff will challenge Democrat Chris Dodd, the poster boy for the “experience” that has ruined this country.
Update (Sept. 19): Van Wijk is correct: As a financial analyst with a considerable clientele, Schiff has wisely steered clear from being excessively political. To me, this means that he is a careful man, who thinks hard before mouthing off. The more issues one expatiates upon as a commentator, the more people one risks angering and alienating. I should know. Why do you think that so-called “courageous” columnists such as Ann Coulter stick to a limited range of issues—“liberal this; liberal that, the wonders of war, and the horrors of abortion, etc.”—while avoiding the hard ones (immigration, the “national question,” the economy)? Because by being completely uncontroversial she never risks alienating the base.
I always come back to Kevin Michael Grace’s aphorism: “The secret to becoming a successful right-wing columnist,” quipped the Canadian conservative, “is to echo the mob while complimenting yourself on your daring.”
Schiff has been fearless on matters economical—fearless and correct. He is also a libertarian and a former adviser to Ron Paul. His positions—and he’ll come out with them in the fullness of time—would correspond with Paul’s.
Another thing: everything does boil down to an understanding that one cannot spend funds one doesn’t have. Think about the Republicans who ran in the primaries. Did you ever hear any of them say, “folks, I’d love to indulge your phony rah-rah-for-the-troops patriotism and keep the army in Iraq, but we’re out of money”?
Following the deductive genius of Austrian economics, many of us have been warning that Obama’s policies are plunging the country into a depression. The best book on the topic, of course, is America’s Great Depression By Murray N. Rothbard. Now, in a study endorsed by Nobel laureate James Buchanan, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute contend that Obama’s “policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century.”
According to the British Telegraph, “There are ‘troubling similarities’ between the US President’s actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.”
“… the White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.
“The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: ‘[Franklin D Roosevelt’s] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows.'”
The researchers err in their support for “the Federal Reserve’s moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system.” That goes against the grain of what the authors have contended.
Truly scary, but nothing that Austrians have not been bracing for, is the warning “that greater intervention could set the US back further. It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron.”
“The paper … recommends that the US return to a more laissez-faire economic system rather than intervening further in activity.” Dah!
SaidJames Buchanan: “We have learned some things from comparable experiences of the 1930s’ Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work.”
GOVERNMENT IS. “The government will have to hire some 600,000 people during the four years of President Obama’s term. That would bump up the current workforce by a third,” reports MSNBC.
The New York Times informs that, “While the private sector has shed 6.9 million jobs since the beginning of the recession, state and local governments have expanded their payrolls and added 110,000 jobs, according to a report issued Thursday by the Nelson A. Rockefeller Institute of Government.”
It then adds a stupendously silly afterthought:
“Government jobs are always more stable than private sector jobs during downturns, but their ability to weather the current deep recession startled Donald J. Boyd, the senior fellow at the institute who wrote the report.”
[SNIP]
Government jobs come into being by political fiat, not by market forces or necessity. Political will is what sustains them; it is state force that accounts for their stability and longevity. This is why these jobs, so to speak, “write” their own conditions of employment.
“Government job creation schemes are predicated on government taxing, borrowing or inflating the money supply—activities that reduce capital available to the private sector. Such programs are politically popular because they are visible. However, for every job ‘created’ by government, an unidentifiable job will be destroyed in the private sector.”
It’s a zero-sum game: The parasite is sucking the lifeblood of the host. The larger he gets, the weaker the host grows.
The growth of government, of course, means that many more leaches will be implementing onerous rules and regulations that make it even harder for the struggling private economy to recover.
Still, the Times is perplexed at “the disparity between the public and private sector job market.”
Update I: “CANADA’S private sector added 49,200 workers in August, the first time they have hired more than fired since September,”reports the AP.
Of greater interest is the fact that, “while the U.S. has seen 81 banks fail in 2009 alone, Canada has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis north of the border, where the financial sector is dominated by five large banks.”
Update II (Sept. 5): MILTON FRIEDMAN (Via Roy B.) on the fallacy of government as an agent of wealth creation and on needing production—goods and services—not spending:
Update III (Sept. Eighth): SWITZERLAND HAS “knocked the United States off the position as the world’s most competitive economy” (via Reuters & Drudge).
The U.S. as the world’s largest economy lost last year’s strong lead, slipping to number two for the first time since the introduction of the index in its current form in 2004.
The study also factors in a survey among business leaders, assessing for example the government’s efficiency or the flexibility of the labor market. …
The WEF applauded Switzerland for its capacity to innovate, sophisticated business culture, effective public services, excellent infrastructure and well-functioning goods markets.
If to go by the report, the depression is some kind of swine flu, which randomly infects some, but not other, banks. However, American banks were leveraged like no other financial institutions in the world. (I’m not including Zimbabwe’s banks, although maybe I should, given how close the US is to Tanzania with respect to the soundness of its banks: “In the assessment of banks’ soundness, the Alpine country still ranked 44th. U.S. banks fell to 108 — right behind Tanzania — and British banks to 126 in the ranking, now topped by Canada’s banks.”)
Wait until the insurance industry collapses because of an Obama decree against “discrimination” based on health status. This is the very definition of insurance. Remove the costs of risk taking and you remove the incentives to avoid risks. Doesn’t Dipstick associate this incentive structure with his oft-repeated objective: inculcating healthy habits in the population? Moreover, unless the industry can charge premiums based on risk, it becomes a non-profit. Remove profit from the insurance equation, and the industry will be on its way to croaking.
“Let’s suppose a business employed ten workers in June. Along came Barack Obama and huffed and puffed and blew six jobs away. Four employees now run a pared-down operation. The next round of retrenchments will invariably entail fewer than six people. The president, or any other wolf in sheep’s clothing, may declare that our proprietor has shed fewer jobs in the month of July. But he may not frame a mathematical inevitability as a sign of economic recovery.
Fewer jobs lost probably means that there are fewer jobs to lose.
Nevertheless, this is exactly how the president spun the static employment market—and, to be fair, this is the way all presidents, aided by statisticians at the Bureau of Labor, finesse unemployment. …
The fig leaf of a “jobless recovery” is yet another unbeatable bit of political fraud.
A jobless economic recovery is the equivalent of a housewarming for the homeless. …
Update (August 28): Today, on Chuck Wilder’s nationally syndicated CRN show, “Talkback,” we briefly discussed “Those Invisible Jobs.” I immediately tackled, without being asked to, a possible argument against the case I make in the column’s first paragraph:
Let’s suppose a business employed 10 workers in June. Along came Barack Obama and huffed and puffed and blew six jobs away. Four employees now run a pared-down operation. The next round of retrenchments will invariably entail fewer than six people. The president, or any other wolf in sheep’s clothing, may declare that our proprietor has shed fewer jobs in the month of July. But he may not frame a mathematical inevitability as a sign of economic recovery.
Fewer jobs lost probably means that there are fewer jobs to lose.
The employment market is not static; it’s dynamic. Jobs are destroyed and created all the time. Efficiencies and productivity also reduce and improve the labor force. However, it’s safe to say that if ever the labor market was static, it’s now. And for a good reason. As a snapshot in time, the logical example I give above holds. Because—again, for good reasons—there are fewer jobs to be had, the number of jobs lost will also diminish. But this is because of 1) a relatively static job market. 2) A private economy, “penetrated and enervated by a tentacular bureaucracy.”
For ideologues out there slowly learning, on BAB, to meld reason, reality and ideology, don’t be rigid Postrelians (from Virginia Postrel’s dynamism folly).
