Category Archives: Political Economy

UPDATE II: Lazy Boy To China: Quit Producing, Start Printing

Barack Obama, China, Debt, Europe, Federal Reserve Bank, Inflation, Political Economy

This is not even a case of the pot calling the kettle black. It’s plain insane. Barack Obama is the president of a country that is, with full presidential imprimatur, devaluing its coin and all private savings in order to conceal the ever-accreting public debt. China’s monetary policy, which is its business, is geared toward production; toward growing its economy out of any foreseeable economic straits.

Brainy boy is so stupid as to demand that China strive for a “balance” (of what? Debt and credit?)

“The president, speaking at a news conference in Seoul, suggested China bears much of the blame for global trade imbalances, The New York Times reported. He abandoned his usual cautious language on the subject and said China and other countries should not assume ‘their path to prosperity is paved simply with exports to the United States.'”

Wow, BHO is unaware that China produces for the world. But then Americans do think America is the world. In that, BHO is very American, and not so much of an alien.

Recall that Lazy Boy issued the same dire warning to Germany’s Ms. Merkel:

“U.S. President Barack Obama [has called] for Germans to aid the global recovery by spending more and relying less on exports.”It is not only Germany that Obama wishes to knee-cap economically, but Canada, Japan and China too. Given that big-spending Americans exist at the sufferance of the frugal, productive Chinese, I don’t quite know how this would work.

“Ms. Merkel countered that Germany’s growth and employment are rising—and therefore the world’s fourth-largest economy has no reason to rethink its dependence on its powerhouse industrial sector and large trade surplus.”

UPDATE I: WSJ: “We don’t like to see U.S. Treasury Secretaries so completely shot down by the rest of the world, except when they are so clearly misguided.” An understandable sentiment, except that from where I’m perched, I can’t recall when last an American president went abroad on a worthwhile mission.

Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America’s problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world. …
But why should anyone heed this U.S. refrain? The Germans are growing rapidly after having rejected Mr. Geithner’s advice in 2009 to join the U.S. stimulus spending blowout. China is also growing smartly having rejected counsel from three U.S. Administrations to abandon its currency discipline. The U.K. and even France are pursuing more fiscal restraint. Only the Obama Administration is determined to keep both the fiscal and monetary spigots wide open, while blaming everyone else for the poor domestic results. …Meanwhile, China and other Asian economies see first-hand that rather than spurring more U.S. growth (on which Asian exporters still depend), U.S. monetary ease has flooded the developing world economies with dollars they’re not able to absorb; produced exchange-rate turmoil to the detriment of the region’s traders; and sent the world’s dollar-denominated commodity prices climbing.

No one is giving voice to the following thought—and whenever I mention this point, posters on this blog equivocate—but truly, the austere economic policies leaders are pursuing in Europe and the UK bespeak of some love of country and sense of duty. These Obama, and Bush before, is without. The terrible two have done things that, ultimately, hurt their countrymen horribly; they’ve trashed the country and its coin via war, welfare and debt.

UPDATE II (Nov. 13): What do busybody conservatives have against China for producing in response to demand? Why is the centrally planned, state counterfeiting of money even remotely comparable to the production of made-in-china junk in response to the demands for made-in-china junk? Mad at the Chinese for their exports? Why do you buy them?

American Sinophobes should remember that “China has undergone considerable economic restructuring and market reforms, the consequence of which is a 300 million strong Chinese middle class. Poverty levels have receded from “53 percent in 1981 to 8 percent in 2001. Only about a third of the economy is now directly state-controlled. As of 2005, 70 percent of China’s GDP was in the private sector.” The Chinese financial system is duly being liberalized—banking is diversifying and stock markets are developing. Protections for private property rights are being strengthened as well.”

“China is changing. It is ‘out of the red’ in more ways than one. The US is changing too: It’s in the red and getting redder.”

How Is The Oink Sector Holding Up?

Debt, Economy, Government, Labor, Political Economy, Socialism, Taxation, The State

How surprised is everyone that, as Cato Institute scholars affirm once again, “Federal workers make substantially more than private workers, not less, in addition to having a large advantage in benefits.”

Says USA Today: “Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.”

“Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector.”

“Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.”

What’s more, “The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds”.

“The fast-growing pay of federal employees has captured the attention of fiscally conservative Republicans who won control of the U.S. House of Representatives in last week’s elections. Already, some lawmakers are planning to use the lame-duck session that starts Monday to challenge the president’s plan to give a 1.4% across-the-board pay raise to 2.1 million federal workers.” … MORE.

[SNIP]

From “Life in the Oink Sector”: “In the private sector a worker is paid for his productivity. If he were overpaid—in other words, remunerated more than he produces—the proprietor would go belly up. No business means no jobs.”

“Set aside the question of whether productivity—output per unit of labor—is the appropriate gauge in an enterprise, government, that confiscates and distributes wealth, but produces nothing. Understand this: Backed by the power of the State, the sponger sector has unlimited access to income not its own—it has the power to tax, borrow and mint money out of thin air. With such usurped authority, why would public debt that runs to the trillions deter the ongoing orgy?”

“By the standards of honest, if unorthodox, accounting, government workers, moreover, don’t pay taxes, but are paid out of taxes. In other words, they pay taxes out of money confiscated from taxpayers, who, in turn, pay taxes twice: on their own income and on the income of members of the bureaucracy.”

At the very least, state workers should not be allowed to vote, since a group that is able to vote itself raises and other perks, will do so with a vengeance. Again, why the surprise? This is why government should not be a source of so many professional parallels. Privatize these positions, the market will sort out the rest.

Republicans Already Teed Off With Tea Party

Classical Liberalism, Conservatism, Federal Reserve Bank, Inflation, libertarianism, Political Economy, Republicans, Ron Paul

Well of course the Republicans will back Rep. Jeb Hensarling (R-Texas) for the post of GOP conference chair, “the fourth-highest House leadership position,” in the new Congress, over “Rep. Michele Bachmann (R-Minn.), a ‘Tea Party heroine.'”

If the Daily Beast, run by airhead Tina Brown—“the author of a gossipy, somewhat obese book about the anorexic dolt, Diana Spencer”—and the life-style libertarians at Reason Magazine (which calls the former outfit an “indefatigable friend”), both favor an establishment Republican over Michelle Bachmann—take it to the bank that Bachmann is the better bet.

Jacob Sallum, a master at sweating the smaller, safer stuff, has concluded that Bachmann, one of the few people in Congress who understands and protests monetary policy, is a philosophical spender because of the “agricultural subsidies her family farm has [allegedly] received.”

Sallum’s case is not worth a straw. I am sure one can find occasions when Ron Paul has fallen short on such minor (albeit important) matters. But when it comes to the big issues—monetary policy (around which the girls at Reason cannot wrap their heads)—he more than makes up for it. Ditto Michelle Bachmann, who joined Ron Paul to do battle against Ben Bernanke.

Of course, the “High Priests Of Pomposity” at Reason panned Ron Paul too.

Reason is famous for its “35 Heroes of Freedom,” which established their criteria for “cool and cosmopolitan”: William Burroughs, a drug addled, Beat-Generation wife killer, whose “work is mostly gibberish and his literary influence baleful,” was included, as well as Larry Flynt, Madonna, Martina Navratilova and Dennis Rodman.

Madonna Reason has exalted for, as they put it, leading “MTV’s glorious parade of freaks, gender-benders, and weirdos who helped broaden the palette of acceptable cultural identities and destroy whatever vestiges of repressive mainstream sensibilities still remained.” This sounds like the unscrambled, strange dialect spoken by a professor of Women’s and Gender Studies.”

I mean “Womyn’s Studies.”

If you lost the post’s thread, here’s the gist: Bachmann understands monetary policy and grasps its importance. Republican leaders, who don’t, are choosing to back their boy over Bachmann for the position of GOP conference chair. Beltway libertarians are backing the boy and his masters.

The Craven Krugman

Debt, Economy, Political Economy, Pseudo-intellectualism

A reader has forwarded a recent editorial by Paul Krugman, “Mugged by the Moralizers.” Attached was the following incredulous note:

“[This editorial] is the perfect inversion of morality and logic, in the name of justifying taking money from people to give it to other people.
It is so calm and composed a statement of the credo of cave dweller-takers by force that I felt obliged to pass it along as a perfect exhibition piece. I’ve never seen anything so useful like this. Maybe he decided to let all the stops out in the days before the election.”

Leave aside the moral void, you can drive a 4X4 through Krugman’s logical lacunae:

For example: The idea that there is a spending “hole created by the debt overhang” that has to be filled, or else: this is merely a theoretical/political construct. That’s all. It is not necessarily true; it doesn’t necessarily comport with reality.

And: “If one group of people — those with excessive debts — is forced to cut spending to pay down its debts, one of two things must happen: either someone else must spend more, or world income will fall.”

That follows only if the fallacy upon which the Krugman fatuity is premised is true. And it isn’t. His assertions most certainly don’t exhaust the possibilities. Less spending could also mean more saving. More saving would translate into investment and, eventually, production—these are the wellspring of prosperity.