Fantastic, readable, essay here: http://mises.org/daily/5407/Is-Higher-Inflation-Inevitable

Nice. Simple. Important.

I think this is a ridiculous combination of Marxism and Keynesianism typical of high-level government officials, with a stress on Marxism, perhaps indicative of a former Labor Secretary.

1) A Marxist devotion to egalitarianism. Good and bad are evaluated in terms of less equal and more equal. Marxisms relies on a fervent hatred of the rich. Here’s an example of why pure egalitarian analysis is flawed:

Imagine a rich town where infant mortality is 3/100,000, and a poor town where infant mortality is 6/100,000. Imagine some technological breakthrough which reduces it by one in each town. So infant mortality becomes 2/100,000 and 5/100,000. Normal people would hail this as an improvement. But Marxists see that it represents an INCREASE in inequality. Instead of infant mortality being twice as high in poor areas, it’s now two and half times as high.

2) He claims we should hate the rich and that there’s a budget deficit because the rich aren’t paying their share.

Shouldn’t the fact that government spending doubled under Bush, and tripled under Obama enter into this analysis? Isn’t that a no-brainer?

Even if the government slaughtered all the rich people and took their money (something which had been attempted in Ukraine and elsewhere), even if the government took 100% of the profits from all fortune 500 companies, we still couldn’t afford the 2011 budget.

Here’s Iowa Hawk’s wonderful illustration: http://www.youtube.com/watch?v=661pi6K-8WQ#t=2m29s

There’s also the fact the rich aren’t the same people from decade to decade. There’s a lot of mobility.

3) “instead of joining together” workers are competing

The Marxist dichotomy of all workers vs. all employers is bullshit. Workers compete against each other and employers compete against each other. Only politicians claim that the interests of huge groups of people are identical. Politicians need large groups of people to hate and/or fear other large groups of people.

4) The middle class can’t borrow, lacks purchasing power = high unemployment.

Spending does not drive the economy, and debt certainly doesn’t drive the economy. Savings do. When people spend less on consumer goods, it means they are saving more (ie planning for the future). In a free economy, this would mean that investment money becomes available for long term projects that will produce goods in the future.

Certain business need to close but opportunities are created for long term projects. The structure of production needs to change, and we ought to simply let it change.

In our Keynsian economy, the government tries to keep spending going, even though people are trying to save.

5) He’s also suggesting something completely ridiculous and wrong headed. He says that politically connected people have too much sway over government, and wants to fix this by giving the government more power. This would back fire if he ever had his way. Giving more resources and power to government means more incentive for people to control government. Letting people keep more of their money is a much better solution.

Also, Austrian School economist Robert Murphy addresses of glaring falsehoods in the former Labo Secretary’s presentation:

* non-aggression principle

* applying the same moral standards to the state as we do to individuals

* divine right of kings -> common good / public welfare / fallibility of market

* taxation as legalized / organized theft

* emotivists vs. utilitarians vs. natural rights (absolutist)

* a theory of justice in property (23:30) — hypothetical case of government-granted property

* @ 28:40 the connection between self ownership and property ownership

* extrapolation to ownership of goods & land

* attributing actions to collective nouns like “society” or “nation” instead of individuals. (noted by historian Parker T. Moon)

* “the very words conceal the facts and make international relations a glamorous drama in which personalized nations are the actors, and all too easily we forget the flesh and blood men and women who are the true actors.”

* definition of freedom (private property not invaded)

* shouting fire in a crowded theater
* “Empire building is done not by nations but by men. The problem before us is to discover the men — the active interested minorities in each nation who are directly interested in imperialism and then to analyze the reasons why the majorities pay the expense, and fight the war necessitated by imperialistic expansion.”

In case you missed it, here’s the original:

This is Anarcho Capitalism:

I’ve listened to the discussion of private security, likely the business of insurance companies five times already. It lasts from about 31:00 to 41:00.

Part 2

Part 3

Part 4

Part 5

Part 6

In part 6, he mentions that East German authorities claimed they shot escapees because the escapees were thieves who were stealing themselves from the state.

For Austrian Economic nerds:

wow.

A friend of mine: Any time you think that the government employs people who are in any way cognizant of reality…remember this: High ranking Obomba economic adviser claims tsunami could “temporarily boost” the japanese and global economy. Broken window fallacy…did anyone fail to learn this in econ 101? if you burn down your house and have to build another, are you better off?

Tsunami an economic disaster? Not necessarily
HONOLULU (HawaiiNewsNow) – The natural disaster of a tsunami could actually provide a temporary boost to the global economy.

Larry Summers, former director of President Obama’s economic council and a former head of the World Bank, said rebuilding could temporarily boost the Japanese economy.

Summers suggested this in an interview Friday on CNBC. He added that the global economy is more resilient than most people think.

In Hawaii, disruptive weather events are good for some businesses but bad for others.

Stores that sell generators and hardware supplies experience a run on these items when a tsunami or bad weather approach; other retailers find their usual sales interrupted as people focus on evacuating and stockpiling essential supplies instead of their usual shopping.

HawaiiNewsNow correspondent Tannya Joaquin found three gas stations that had run out of fuel more than an hour before the first harbor wave was to have arrived.

The tsunami is an expense item for hotels, which have extensive plans in place to take care of guests’ needs, usually through “vertical evacuation,” escorting guests at least three stories up. Much of the expense comes from bringing in extra people to take care of guests. (from hawaiinewsnow.com)

Larry Summers needs to take a break from corrupting the minds of Harvard students and see what the outside of classroom looks like. He can start by reading this:

Natural Disasters, It Turns Out, Are Bad
It seems that we may never rid ourselves of the broken-window fallacy.

Hurricane Katrina certainly did not stop economists from proclaiming the silver lining of natural disasters. On September 9, 2005, Labor Secretary Elaine Chao told USA Today that demand could create a labor shortage that could push up wage rates and that “We’re going to see a tremendous boom in construction.” On December 3rd, 2005, Nigel Gault, chief domestic economist at Global Insight, said, “We are now at the point where Hurricane Katrina’s effects are adding to job creation rather than detracting from it.”

And it’s not only that disasters just have a silver lining: economists have long believed that natural disasters and wars are actually good for the economy! Until recently they have not made any attempt to empirically test their views. However, in 2002 Mark Skidmore and Hideki Toya published a paper where they found a positive correlation between disasters and human capital, productivity, and GDP growth.

Now the good news. A recently published paper in Economic Inquiry by Cuaresma, Hlouskova, and Obersteiner brings the positive benefits of disasters into question. Not only does it counter the silver lining of new construction jobs, it also finds that disasters actually subtract from economic performance. In addition the paper provides clues to the entire confusion over this issue.

Economists have generally rested their case for the benefits of disasters on “creative destruction,” but our authors are quick to point out that Schumpeter’s view of creative destruction is one that is driven by competition, where those associated with disasters are not; they are just destruction. (Read more from mises.org)

7 March 2011

Mr. Ian Fletcher

Dear Ian:

In your latest essay at The Huffington Post, you allege that supporters of free trade are guilty of “social snobbery” (“The Social Snobbery of Free Trade,” March 7). You offer three, and only three, pieces of evidence for this proposition. The first is a quotation from New York Times columnist Thomas Friedman, and the second is a quotation from Barack Obama – each suggesting that working-class people too quickly blame trade for whatever economic misfortunes they suffer. The third piece of evidence is the fact that, while most members of the mainstream media are center-left on a majority of issues, they are well-paid and “lean right” on trade.

You masterfully massacre a straw man. Contrary to your explicit claim in the case of Friedman, and your implication in the case of Obama, the pronouncements of economically confused journalists and professional politicians aren’t even remotely appropriate examples of the best arguments for free trade.

Here’s a challenge for you. Search for examples of snobbery in the arguments for free trade made by scholars such as Adam Smith, Frederic Bastiat, Jagdish Bhagwati, Henry George, Daniel Griswold, Douglas Irwin, Fritz Machlup, Martin Wolf, and other economists and researchers who are recognized authorities on trade. You’ll come up empty. (Note: pointing out that many people do not understand economics is not an instance of snobbery.)

If nothing else, you have chutzpah to pin the label “snobs” on free traders – who argue that individuals ought simply be left free to spend their money in whatever ways they choose – while you promote a policy of giving third-party strangers in Washington the power to obstruct, for some allegedly higher good, these private, individual consumption choices.

Sincerely,
Donald J. Boudreaux (Read more from cafehayek.com)