Sat, 18 Apr 2020 19:43
The New COVID-19 Authoritarians Will Only Give Up Power If They Fear BlowbackIt was autumn 1989. Momentous things were taking place in the world.
The Berlin Wall had fallen. The people of the Eastern Bloc had succeeded at getting to the West through Hungary. The firm line between east and west was wavering. The situation was moving away from the course that...
It was autumn 1989. Momentous things were taking place in the world.
The Berlin Wall had fallen. The people of the Eastern Bloc had succeeded at getting to the West through Hungary. The firm line between east and west was wavering. The situation was moving away from the course that Warsaw Pact communist governments had charted: that their populations must remain captive within the borders of the Communist Bloc.
It was unclear whether this social contagion for freedom would spread into Czechoslovakia.
But then November 17, 1989, arrived, a day etched in history. This was Students Day, a legal holiday. Everything had to close under government fiat. People were off school and off work. But some folks were agitated about prior government actions which many saw as abuses.
When the government gave the people of Czechoslovakia that day off, it was like a match to tinder. The small flame grew into a big one.
It was a revolution noted for its bloodlessness. The Velvet Revolution, we call it today, leaning on what the Czechs called it. People, for as far as the eye could see, gathered in a giant square in Prague and called for the ouster of their government.
In the face of the idea that saying the wrong words politically could be toxic to one's health, much like in America today, some did not resort to speaking words against their government. They merely pulled their keys out of their pockets and jingled them.
The message was clear.
Imagine tens of thousands of people jingling their keys at once.
Imagine the horror that would fill you, as a member of the communist government, looking out the window at a crowd, visible as far as the eye could see, and knowing that this delicate sound being made by each individual, growing into a horrifying sound in unison, called for your ouster.
What could a government minister, sitting at their desk, overlooking the square, even have imagined that sound to have been the first time it arose?
How ominous. How threatening. How deeply horrifying it must have been to peer out that window. The day of reckoning had finally arrived.
At that moment, a question was answered for them: what is the last thought that goes through a tyrant's head? That is the thought that flashed through theirs as they realized what that sound was: reckoning. It had finally arrived. Were the government ministers thinking those thoughts as the keys jingled below them?
The people of Czechoslovakia remained largely peaceful.
By the end of the year, Czech dissident Vaclav Havel, who had been in prison earlier that year, would be installed in Prague Castle. The beloved Alexander Dubcek, the Slovak hero of the 1968 Prague Spring, would be his right-hand man.
The present-day American state's response, in ways, goes beyond the communism of even the USSR. The Soviets actually wanted their economy to work. They wanted to beat the West. Churches remained open and remained an important part of society, both for political use, and because the people wouldn't have it any other way.
But just as the communists of Eastern Europe didn't back down until they were forced to, the lockdowns of today won't stop unless government officials fear resistance.
There is a chance right now, with many unhappy Americans and many idle hands, much like Students Day, November 17, 1989, to tell the government ''no more.''
Will they be pushed out of office? Will it be peaceful? I don't know. Time will tell.
But it is time for this to stop. And daily, more people grow angry at being lied to as they witness the mass destruction of their country and culture in the spring of 2020.
It wasn't the jingling of keys that escorted the evil communists from power in 1989. It was the threat of what all those people jingling keys could do if those in power did not step aside.
Retaining political influence depends dearly on timing. Some of those communists who knew when to step aside, who knew how to apologize, had prosperous careers long after the revolution, some to this very day.
In sharp contrast, the far more stubborn Nicolae Ceausescu of regional neighbor Romania was put to death by a firing squad on December 25, 1989.
We have reached a point where government officials have yet to admit that there is a real cost in terms of life and health that comes with bringing the economy to a standstill. And these same politicians and experts have yet to show that the benefits of their lockdowns are greater than the costs imposed. The models have been shown to be wrong.
Everyone is entitled to a mistake. But to continue making the same mistake repeatedly, destroying lives, amounts to malice.
In my daily life, I am increasingly seeing my country turn into a tinderbox that the disconnected leaders, elected and unelected, cannot imagine and must not toy with. To do so is dangerous for us all.
Not next month, not next week, not tomorrow. Today is the day for the government-imposed lockdowns to stop.
Did You Read April's Beige Book?On April 15, the Federal Reserve released its latest Beige Book. This is the third of the eight yearly Beige Books, which are released prior to scheduled Federal Open Market Committee (FOMC) meetings. The book is just under thirty pages long and provides a ''summary of commentary...
On April 15 , the Federal Reserve released its latest Beige Book. This is the third of the eight yearly Beige Books, which are released prior to scheduled Federal Open Market Committee (FOMC) meetings. The book is just under thirty pages long and provides a ''summary of commentary of current economic conditions'' for the period from February 25 to April 6, 2020. The report does not quantify any of the Fed's data but instead uses qualitative and anecdotal information from various members of each district's community, such as bank directors, businesses, and economists, as well as ''market experts, and other sources,'' according to the report.
The FAQ on the Fed's website answers further questions and explains that this information ''supplements the data and analysis used by Federal Reserve economists and staff to assess economic conditions.'' See below for two highlights from the national summary that begins the report:
AtlantaEconomic activity declined, and the labor market deteriorated due to COVID-19. Non-labor costs remained stable. Retail sales for non-discretionary products grew as sales of non-essential items fell. Tourism and hospitality contacts reported significant declines in activity. Housing activity softened, and commercial real estate decelerated. Manufacturing declined, but new orders held steady. Banking activity was mixed.
ChicagoEconomic activity declined, but the intensity of decline varied by industry. Consumer spending decreased sharply; business spending, construction and real estate activity, and manufacturing production decreased moderately. Retail and hospitality payrolls plunged. Wages edged up and prices were little changed. Financial conditions deteriorated substantially, as did prospects for agricultural income.
It is interesting to consider these two summaries within the context of the twelve districts, for which there are similar individual summaries and high-level anecdotes, even though the Fed's likely aim was to provide more depth to the analysis.
These excerpts exemplify the tone of the report and are exactly as described in the prefatory remark, both qualitative and anecdotal. How interviews and sentiments help central bankers determine the optimal money supply and interest rate needed, remains unclear. If it is any consolation, at least the Fed's FAQ tries to explain this repetitive nature, noting that in 2017 there was a redesign:
To a degree, the redesign also standardizes the content in the reports from each Federal Reserve district while preserving the ability of each to highlight its regional economy's unique features.
The value of this data is questionable not because the collection method is unknown to the public or because it is qualitative and anecdotal, but because this information is used in conjunction with the Tealbooks A and B (formerly the Bluebook and Greenbook) to help central bankers centrally plan the economy. The Tealbooks contains a lot of the valuable quantitative data that the Fed relies upon. According to the Fed's description, the books are officially titled the ''Report to the FOMC on Economic Conditions and Monetary Policy'' and ''contain in-depth analysis of current economic and financial conditions and projections, along with background and context on monetary policy alternatives.''
If anyone would like to see what's included in the Tealbook they will likely have to wait a while, considering that the latest release on the Fed's website is from 2014 and may include redacted information. At that blazing rate, we probably won't know what the Fed considered for this latest Beige Book until sometime around 2026!
The Kantian Origins of Mises's PraxeologyTo trace the epistemological basis of praxeology, it is necessary to understand that Ludwig von Mises, "takes from Kant his central conceptual and terminological distinctions, as well as some fundamental Kantian ideas about the nature of human knowledge" (Hoppe, Economic Science and the Austrian...
To trace the epistemological basis of praxeology, it is necessary to understand that Ludwig von Mises, "takes from Kant his central conceptual and terminological distinctions, as well as some fundamental Kantian ideas about the nature of human knowledge" (Hoppe, Economic Science and the Austrian Method (2007), p. 17). It is therefore obligatory to review the Kantian postulates.
According to Kant, although experience induces thought, and as such is located previous to all knowledge in time, this does not mean that all knowledge comes from experience. This is because the truth of knowledge (the existence of experience) is not determined by experience. Consequently, knowledge that is dependent on experience is different from that which is not. The first is called a posteriori knowledge, the second a priori knowledge.1
A priori knowledge necessarily comes from the understanding2 and therefore enjoys a strict universality, its validity determined by the principle of noncontradiction. This is unlike the a posteriori knowledge, which, coming from sensations, only offers "a merely assumed and comparative universality (through induction), so that, properly speaking it must be formulated: so far as we have observed until now, no exception has been found to this or that rule" (Kant, Crtica de la rzon pura (The Critique of Pure Reason) (2002), p. 99). That is, experience shows us something as it is but does not indicate that it cannot be otherwise.
Likewise, Kant offers a second classification, this time by the relationship between the subject and the predicate in a trial (i.e., statement or proposition). Judgments in which the predicate is contained in the subject are called analytical or explanatory, since the predicate is a part of the subject concept. Likewise, judgments in which the predicate is not contained in the subject are called synthetic or extensive, because the predicate cannot be extracted from a decomposition of the subject concept.
By virtue of the classifications set out above, Kant proposes the main characteristic of his philosophy: a priori synthetic judgments. In these judgments, the subject and predicate, as well as their linkage, derive from a proposition that is conceived as valid in itself. For the human mind, the denial of these judgments results in ''nonsense.'' The human being (understood as a being that thinks'--and acts) conceives them as inherent to himself. As such, these judgments constitute the pure representation of an object (that which is external to the human being) and establish the constant relations between objects.3
But Kant, according to Hoppe (2007), although he gave indications, did not give an answer on how the synthetic judgments a priori are adjusted to the environment.4 But Ludwig von Mises, as an exceptional Kantian, resolves this question by recognizing that ''both human thought and action depend on the same root: they are products of the human mind'' (Mises, "Ciencia social y ciencia natural" ("Social Science and Natural Science") (2006), p. 278). As Hoppe explains:
We must recognize that such necessary truths are not simply categories of our mind, but that our mind is one of people who act. Our mental categories have to be understood as ultimately based on categories of action'....As categories of action, they have to be mental things as well as characteristics of reality. Because it is through action that mind and reality come into contact. (Hoppe 2007, p. 20)
And:
The epistemology that proposes the existence of a priori true synthetic propositions becomes a realistic epistemology. Since it is understood as ultimately based on categories of action, the abyss between the mental and the real, external and physical world is overcome'....With his recognition of action as the bridge between mind and external reality, he has found a solution to the Kantian problem of how a priori true synthetic propositions can be possible. (Hoppe 2007, p. 20)
Here are the origins of Mises's praxeology,5 a theoretical and systematic science of a priori that aspires to formulate theorems of a purely formal and general nature about human action through logical deduction6 from the axiom of action'--''man acts'''--a proposition evident in itself (Mises, Los fundamentos ºltimos de la ciencia econ"mica (2012), p. 29). In that order of ideas, having already determined the main categories of human action, the praxeological work extends to make imaginary constructions in order to determine the special forms that action can take.7 To carry out this work, experience is a very useful tool, serving as a guide for the curiosity of the praxeologist.8
As of Late March, Weekly Mortality Data Has Yet to Show a SurgeInformation on total deaths through March 28 shows no indication of a general surge in deaths in the United States. It's quite possible we'll see April's total mortality begin to show levels well above normal, but the weekly data we have so far show no indication of this.
We now...
Information on total deaths through March 28 shows no indication of a general surge in deaths in the United States. It's quite possible we'll see April's total mortality begin to show levels well above normal, but the weekly data we have so far show no indication of this.
We now have data up through week 13 (the week ending March 28) for this year, as can be found here. As of April 15, the week 13 data is not yet quite complete, although the CDC lists that data as 93 percent complete.
The missing data may yet slightly push up these totals, but given that data from hard-hit New York, New Jersey, and Michigan is already accessible for week 13, big increases from the current total are unlikely. After all, week 13's total would need to increase by 27 percent just to match 2019's week 13, as can be seen here (week 1 is the column on the left for each year. Week 13 is the column on the right):
The average for the first thirteen weeks of the year during 2020 is 53,529. That's below 2019's average of 57,928, and well below 2018's average of 60,115. This is not surprising, since the 2017''18 flu season was especially deadly.
For additional context, I have broken out New York State. Here we do finally see a surge in total deaths during week 13.
New York was at clearly elevated levels at the end of March, although total deaths remained below what was reported during week 2 of 2018. But even with this late-month surge, total average deaths for the first thirteen weeks of the year were down in New York when compared to 2017, 2018, and 2019. If we assume New York's week 13 total points toward its high reported COVID-19 numbers, we will likely see a surge in weeks 14 and 15.
On the other hand, Colorado, an alleged "emerging area of concern" shows no signs of a surge in total deaths. In fact, week 13 in Colorado was near a multiyear low for total deaths. For the first thirteen weeks of the year, the 2020 average (815 deaths per week) was higher than the 2019 average of 795 per week, and higher than 2018's average of 801 per week.
Unless COVID-19 was present in Colorado long before many experts insist is possible, the higher death totals have mostly occurred before COVID-19 had time to spread. The first four weeks of 2020, for example, were already at elevated levels, and the very high total of 865 people recorded during week 8 occurred in late February.
Of course, it is entirely possible that total deaths are pushed down by social distancing practices. With fewer vehicles on the road, there are fewer auto accidents. Diseases other than COVID-19 might be spread less often as well. On the other hand, economic collapse exacerbated by social distancing may be leading to more suicide and stress-related health problems. The extent to which these various factors contribute to overall mortality is unknown, and may never be known. Moreover, the total number of deaths due to COVID-19 is unreliable since deaths are increasingly attributed to COVID-19 even when no test is performed and when other serious medical problems are present. But what does appear evident is that deaths due to COVID-19, at least so far, have not been sufficient to increase total mortality to a level that significantly exceeds what has been seen in the past decade.
Jeff Deist on "Part of the Problem"On this episode of Part Of The Problem, Dave Smith interviews Jeff Deist. Dave and Jeff discuss the future of a Post COVID-19 world; how rights once taken are rarely given back; and how a free market would be better prepared for a crisis than our system of regulation.
On this episode of Part Of The Problem, Dave Smith interviews Jeff Deist. Dave and Jeff discuss the future of a Post COVID-19 world; how rights once taken are rarely given back; and how a free market would be better prepared for a crisis than our system of regulation.
Can "Special Drawing Rights" Save the World?On Tuesday in an interview with Reuters, the chief economist of the International Monetary Fund (IMF), Gita Gopinath, said that one hundred countries seek pandemic aid. This was only a few weeks after the managing director of the very same IMF, Kristalina Georgieva, said in an emergency...
On Tuesday in an interview with Reuters, the chief economist of the International Monetary Fund (IMF), Gita Gopinath, said that one hundred countries seek pandemic aid. This was only a few weeks after the managing director of the very same IMF, Kristalina Georgieva, said in an emergency statement that the IMF is ready to deploy all of its $1 trillion lending capacity. So far they have been making good on their promises, providing $114.49 million to Niger, $115.3 million to Burkina Faso, and $389 Million to El Salvador in just one day, as an example of financial aid packages to come.
This poses various economic problems, namely the impossibility of economic calculation under socialism, which Mises talked about in Human Action. Under this scenario, the question one must ask is: why did Niger ''only'' get $114 million while El Salvador received $389 million? Whether this was determined by a single economist or was a decision by an "expert committee," we must consider how such an allocation could have been made in a way that was not completely arbitrary or simply based on guesswork.
Supranational organizations such as the IMF and the World Bank raise numerous questions about sovereignty, freedom, and liberty; however, the economics of these organizations also deserve attention. What happens when the IMF runs into a liquidity issue and finds that it is short on funds to lend to member countries?
Enter the SDRFor those unfamiliar with precisely what special drawing rights (SDR) are, a definition can be found on the IMF's factsheet. The problem is that this definition is not very enlightening:
The SDR serves as the unit of account of the IMF and some other international organizations. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
According to the IMF, the SDR is not a currency, but like a currency it can be created out of thin air and exchanged for the currencies of other countries. The exchange may be voluntary, but not always, because ''if required, the IMF can also designate members to buy SDRs.''
Per Georgieva's emergency statement:
And we are looking at other available options. Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership.
If the IMF does exhaust its $1 trillion lending capacity, it could simply issue more SDRs and allocate them among member nations and then instruct some nations to buy SDRs from others using their own currencies. A Financial Times article agrees that a new issuance of SDR is vital to helping poor countries, using an argument that can only be described as anticapitalist in nature:
Help must indeed be forthcoming. This is a moral duty and a practical necessity. The pandemic and its economic outcomes will only be defeated if they are defeated everywhere. But how? A large part of the answer is ''with money'', as in rich countries. Worries about moral hazard are absurd.
What does this all mean for the average American? According to the same article, it probably means nothing, since:
Some will argue that a big new issue of SDRs would be inflationary. Yet, set against the monetary expansions now under way, even SDR 1tn is negligible.
In 2020, it does not matter if the economic advice comes from the head of the IMF, a prominent economist, or from a financial news article. The answer is always the same. Whatever the issue is, the economic panacea championed by anyone unfamiliar with Austrian economics is always creating more money. Whether it be a housing crisis, a debt crisis, or global pandemic, the only real question is ''How much?'' In 2021, when central bank balance sheets across the world are at unfathomable levels and interest rates are still zero bound, will the masses finally learn, or will they just demand more money?
Las Vegas's New Football Stadium Is on Its Way to Becoming the "Bailout Bowl"The stadium naming curse is well known. Enron Field, Adelphia Coliseum, and MCI Center are just a few examples of bankruptcy following a company's name adorning its home team's stadium or arena. Financial trouble typically comes after the name is attached and the team plays some games...
The stadium naming curse is well known. Enron Field, Adelphia Coliseum, and MCI Center are just a few examples of bankruptcy following a company's name adorning its home team's stadium or arena. Financial trouble typically comes after the name is attached and the team plays some games.
In the newest case, the company is struggling before a game has been played. Last August, Allegiant Airlines inked a deal with the NFL's used-to-be Oakland, used-to-be Los Angeles, used-to-be Oakland (again), and now Las Vegas Raiders for the naming rights to the new 65,000-seat and partially taxpayer-funded stadium, which sits along I-15 in Clark County, Nevada.
Terms of the deal were not disclosed, but the Las Vegas Review-Journal (LVRJ) reported, ''experts with experience on similar deals say Allegiant is likely paying between $20 million and $25 million in cash and in-kind services a year to put its name on the building.''
Raiders owner Mark Davis let this slip at the time, ''I look forward to learning a lot more about the Allegiant brand. We've got 30 years ahead of us, so let's make the best of it.''
Allegiant may be wishing it hadn't made a thirty-year deal. Eli Segall writes in today's LVRJ that ''Allegiant Air's parent is burning through at least $2 million in cash per day and hundreds of workers are taking two-month leave at half pay as the carrier grapples with the fallout from the coronavirus pandemic.''
March revenues were down 40''45 percent from a year ago and its prospects are likely to get much worse. The company is applying for funding from the federal government's Paycheck Protection Program to keep its doors open. Meanwhile, ''management expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year and is 'continuously' re-evaluating its flight schedule 'in light of low demand for future bookings,''' Segall reports.
Allegiant (ALGT) stock has fallen from $183 plus per share in December to a close below $80 today. The company sported over $457 million in cash at year end: a couple hundred days' worth at the current burn rate, excluding a payment to the Raiders, of course.
Allegiant Stadium may work out like New York's Citi Field, known in the years after the 2008 financial crisis as Bailout Ballpark. CNBC reported,
On the heels of announcing a naming deal that cost Citigroup $20 million a year over 20 years, the company was forced to take $45 billion in government bailouts and saw its stock price drop nearly 94 percent from its November 2006 levels. Because of the heavy taxpayer support given to Citigroup, lawmakers began urging the company to scrap the names rights deal. But the company stuck with its plans, and has managed to avoid bankruptcy.
Allegiant Stadium will likely be the Bailout Bowl, with construction requiring $750 million of taxpayer largesse and now more government bailout money required for the Bowl's name holder to pay its Raiders bill.
Americans Have No Savings. Thank (in Part) the Fed.Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people.
And last week, on March 27, Trump signed a stimulus...
Two weeks ago, during a March 17 address to the nation in response to the COVID-19 outbreak, President Donald Trump asked that Americans work from home, postpone unnecessary travel, and limit social gatherings to no more than 10 people.
And last week, on March 27, Trump signed a stimulus package of over $2 trillion dollars to provide relief to an economy on the precipice of collapse.
The aid package includes handouts and loans to individuals, small businesses, and other distressed industries.
Despite Trump's allegedly ''having created the greatest Economy in the history of our Country'' just before the markets tanked, massive and immediate government intervention was the only thing left to forestall a total collapse.
Or so we were told.
So why can't the greatest economy in the world handle a temporary shock without needing trillions of dollars injected just to stay afloat?
Central banks' war on savers is one reason.
Using central bank''created fiat money introduces a dilemma. Because of inflationary monetary policy, Americans have long been forced to select from among three undesirable options:
A) Save. Hold the central banks' paper money and be guaranteed a loss of at least 2 percent in purchasing power every single year (assuming the 2 percent inflation standard).
B) Consume. Spend Federal Reserve notes on immediate goods and services to get the most out of current purchasing power.
C) Speculate. Try to beat the central banks' planned price inflation, seeking a higher return by investing in higher-risk asset markets.
With businesses and Americans defaulting on their rent and other obligations only days into the collapse, the problem is clear: few have any savings'...and why should they, when saving their money at negative real rates of return has been a sucker's game?
Lack of sound money, or money that doesn't maintain its purchasing power over time, has discouraged savings while encouraging debt-financed consumption.
American businesses and individuals are so overleveraged that once their income goes away, even briefly, they are often left with no reserves at all.
Meanwhile, small-time savers who can't get big returns from making high-risk investments have a lot to lose. Although it is true to some that small 2 percent-per-year losses can go easily unnoticed, over just ten years 2 percent price inflation amounts to a loss of nearly 20 percent in purchasing power.
Needless to say, this makes it harder to save and maintain one's standard of living.
Now, with central banks slashing short-term interest rates even more, and with the Fed moving rates to zero, the dollar has been further destroyed as a method of preserving savings. (And negative nominal interest rates could be coming next.)
Inflationary economic policy, absent the guardrails of sound money, has created a situation with an obvious and deadly conclusion: that many Americans lack savings to protect themselves against downturns.
This situation isn't necessarily the fault of the people, but rather of a system in which discouraging and punishing savers is a crucial tenet.
The Federal Reserve, the US Treasury, and the White House are trying to reassure the public that everything is ''under control,'' that ''the U.S. economy's fundamentals are still strong,'' and that the economy will skyrocket once COVID-19 is taken care of. What if they're wrong?
Five Ways Policymakers Get Cause and Effect BackwardThere are many reasons why socialism fails everywhere and every time it is tried. One primary reason is the propensity of socialists to confuse the cause and effect relationship. Due to this confusion, the remedies put forth by socialists and Keynesians try to solve the effect instead of...
There are many reasons why socialism fails everywhere and every time it is tried. One primary reason is the propensity of socialists to confuse the cause and effect relationship. Due to this confusion, the remedies put forth by socialists and Keynesians try to solve the effect instead of tackling the cause. It is analogous to treating symptoms instead of the disease.
In this article, I will highlight this tendency with a few examples and show how government does damage to society through misguided actions arising out of this confusion between cause and effect.
One: Economic Growth Is Stimulated By Increasing the Circulation of Money In a healthy economy, more money circulates in the economy because consumers buy more products and businesses invest more to produce new products and services.
Cause = healthy economy
Effect = higher circulation of money
Keynesians, however, assume the relationship holds in reverse. That is, they think that higher rates of economic growth can be generated by promoting faster circulation of money. Thus follows the misguided Keynesian prescriptions of ultralow interest rates, quantitative easing, capital injections, bailouts, and deficit spending to combat recessions.
Two: Eliminating Cash Transactions Leads to Higher Economic Growth Recently, the government of India imposed on its people a misguided policy called ''demonetization'' in an effort to promote a ''cashless economy.'' The logic is as follows: in developed nations, people mostly use electronic monetary transactions with relatively few cash transactions. Therefore, eliminating cash transactions and forcing people to use electronic transactions will lead to healthier economic conditions similar to those of developed nations.
In truth, in poor nations people predominantly use cash because monetary transactions are too low in value to justify investment in infrastructure to support electronic transactions. As an economy grows and people get wealthier, the average cash transaction will be high enough to justify electronic transactions. So, the relationship is the other way around. Higher economic growth leads to elimination of cash transactions.
The misguided policy of the Indian government is leading to disastrous economic consequences for poor people in India, who rely on small cash transactions in their daily lives.
Three: Deadly Diseases Lead to Poor Economic Growth and Higher Poverty Rates In what regions of the world are people least affected by diseases like malaria, dengue and cholera? Developed nations. Even in nations with high poverty rates, people who are well off are less susceptible to these diseases, because they can afford medicines, hospital care, and prevention measures such as mosquito repellents and environments free of stagnant water, where mosquitos can breed.
Eliminating diseases does not lead to economic growth. Many deadly diseases such as smallpox and polio have been eliminated. Many charitable organizations invest in disease prevention and health improvement initiatives. The Gates Foundation invests heavily in reducing infant mortality in India. Jimmy Carter has been successful in raising billions of dollars for health education and disease prevention in Africa. Yet these initiatives and billions of dollars make little difference in improving the macroeconomic conditions in poor nations.
What Africa and India need are conditions that stimulate rapid economic growth. As people become richer they can afford better medical care and better living conditions that help them fight diseases and stay healthier.
Diseases do not cause poverty. Poverty is the reason for the higher prevalence of deadly diseases.
Four: Proliferation of Small Firearms is Impeding Economic Development in Africa Peter Thum, an American entrepreneur and ''humanitarian,'' was so appalled by the proliferation of guns and other small firearms in Africa that he started a company called Founderie 47 to tackle the problem. His company buys small firearms from Africans, destroys them, and uses the recycled parts to make high-end designer watches and jewelry that sell at prices ranging from $25,000 to $200,000. The funds thus obtained help in the procurement and destruction of thousands more weapons.
Behind Thum's venture is the assumption that the proliferation of firearms is causing the youth of Africa to participate in destructive civil wars instead of engaging in economic activity that will improve the well-being of Africans.
Brilliant idea? Not so fast! Peter Thum's got it backwards. The reason the youth of Africa are picking up firearms is because they don't have jobs. In other words, lack of economic development is the reason for the proliferation of firearms, not the other way around.
Believe it or not, given a choice between a decent job and joining a group of militants, almost all people will choose jobs.
Five: Illiteracy leads to PovertyWhat is the most important thing that India needs to eliminate poverty? ''Education,'' replied a friend of mine. By ''education'' he meant formal school and college education.
Most people in India believe that lack of education is why poor people are unable to escape poverty. So, the Indian government, which is always dominated by socialists regardless of which party is in the majority, allocates billions of rupees towards providing schooling and college education at a highly subsidized cost. As people get better education, they can get jobs and thus escape poverty. Right?
Wrong! Take Cuba and Nicaragua, for example. The communist governments of these countries launched massive campaigns to eliminate illiteracy. They were successful in almost eliminating illiteracy decades ago. Yet, Cuba and Nicaragua today are among the poorest nations in the world, with per capita GDP rankings of 128 and 165.
This is another example of socialists confusing the cause and effect relationship. Illiteracy in Cuba and Nicaragua was high because of poverty. As people's economic conditions improve, they prefer to obtain better education for their children. This is what happened in the four Asian tigers'--Korea, Taiwan, Hong Kong and Singapore'--over the latter half of the twentieth century.
Treat the Disease, Not the SymptomsIlliteracy, the prevalence of deadly diseases, violent civil wars, and uncontrolled population growth are all effects of poverty, which stems from low economic growth. They are not the causes of low economic growth. All of them can be eliminated by creating conditions for rapid economic growth.
The easiest and fastest way to achieve high economic growth rates is through free enterprise systems and free markets. Let's create free market conditions, such as less centralized government control (democratic and dictatorial), and more free trade. Good things will follow.
Medical Mask Resellers Punished in Canada Recently here in Vancouver, Canada, medical mask resellers were punished by authorities, with their inventory seized and fines imposed. This is the second time resellers have been punished in recent weeks. This action is the exact opposite of what the government should do if it wants to...
Recently here in Vancouver, Canada, medical mask resellers were punished by authorities, with their inventory seized and fines imposed. This is the second time resellers have been punished in recent weeks. This action is the exact opposite of what the government should do if it wants to see an increase in supply of medical masks to people who need them.
A local mayor, Brad West, has called the acts of the resellers to "egregious, so irresponsible, so selfish and so motivated by greed." It is this writer's contention that unless the resellers stole those masks, it is the actions of local authorities which are egregious and irresponsible. West is presuming that those who buy those masks have no legitimate need for them. The CDC now states that wearing masks helps reduce the risk of COVID-19 exposure. How is it that the voluntary selling, and buying, of medical masks to protect you and your family is considered egregious and irresponsible?
The commercial actions of resellers, if anything, help boost supply of those masks to the consumer market. Retails stores and pharmacies are out of inventor,y because their supplier can't ostensibly meet retail demand. Now, a reseller, through his own resourcefulness and researching of the wholesale market, has come upon a supplier who is willing to provide inventory to him. The reseller contacts the supplier and arranges for the purchase and shipment of those masks. He allocates time and energy to make this transaction, taking certain risks that the masks might not arrive in a timely manner or might be withheld by customs, or otherwise might not be delivered by a deceitful and unscrupulous wholesaler.
For his time and effort, the reseller is paid a profit (i.e., wages) over the wholesale price. His customers get hold of masks in a time when all store shelves are empty. The more resellers there are, the more orders are given to wholesalers and manufacturers, and the more of the product is made available to the consumer market. As demand gets satiated, prices eventually come down.
What the government has done is effectively shut down productive distribution and reseller channels, which are vital and very necessary in ensuring that retail customers get what they want. They have disincentivized entrepreneurs from going out and sourcing suppliers who can help satisfy demand.
And to make a bad situation even worse, the government has shut down a source of income for entrepreneurs who are now out of work due the lockdown and must now rely on employment insurance and other forms of government welfare, putting an even greater strain on government coffers (i.e., taxpayer money).
When will government ever learn?
The Fed's New Asset-Buying Programs: Nationalization of Financial Markets?That central banks are distorting markets is no longer a surprise to anyone. But the current pandemic succeeded in what the financial crisis of 2008 failed to achieve, namely to put the Federal Reserve's balance sheet under political control. The Federal Reserve aims to intervene in financial...
That central banks are distorting markets is no longer a surprise to anyone. But the current pandemic succeeded in what the financial crisis of 2008 failed to achieve, namely to put the Federal Reserve's balance sheet under political control. The Federal Reserve aims to intervene in financial markets to limit losses caused by the coronavirus pandemic, but the collateral risks of such a decision outweigh the benefits pursued.
With the supply shock caused by the forced shutdown, the Federal Reserve felt the need to intervene decisively in the functioning of the markets. If reducing the interest rate by 150 basis points only temporarily calmed the markets, the Fed decided to use all the instruments at its disposal. Thus, it initiated repo programs worth about $1 trillion dollars a day and new quantitative easing (QE) programs. But in addition to all this, new programs have been introduced that will be used to act directly on some segments of the financial market.
In this way, we have seen the introduction of "Secondary Market Corporate Credit Facility," marking the first time the Fed has included exchange-traded funds (ETFs) in the purchasing programs; the "Primary Market Corporate Credit Facility," buying corporate bonds directly from the issuer; or "Main Street Business Lending Program," which aims to loan directly to small-to-medium enterprises, most probably through an agency of the state. But in order to carry out these operations, the Federal Reserve needed a "waiver," which it obtained after concluding a collaboration with world's largest asset manager, BlackRock, Inc. BlackRock Inc. will act as an investment manager for two special-purpose vehicles (SPVs), these being legal entities created for a specific purpose. Since the Fed does not have the legal right to purchase securities that do not have government guarantees, BlackRock and special-purpose vehicles were a solution. At the same time, BlackRock will be the investment manager of a vehicle responsible for the acquisition of mortgage- and commercial property''backed assets issued by certain government agencies, as Fannie Mae, Freddie Mac, and Ginnie Mae.
In this way, BlackRock will act through SPVs in both primary and secondary markets of corporate bonds or ETFs. The problem is represented by the way these acquisitions are financed, here being the danger of nationalization of financial markets. The New York Fed will fund these vehicles on behalf of the Treasury, with the Treasury actually owning these securities. In this way, the Fed's balance sheet will come under political influence, the Treasury having the decision-making power, determining what exactly will be purchased and in what volume. Thus, the involvement of politics in the acquisition of corporate bonds, besides the fact that it will accentuate the misallocation of resources, with many bonds being purchased from companies considered too big to fail, will create all the premises of a nationalization, the price system being severely affected. In this way, we will witness sharp increases in capital market indices and the continuation of speculative bubbles facilitated by the extremely low interest rates. The lack of an economic readjustment, together with the direct financing of capital-consumption companies, will lead to serious economic imbalances.
Not all the technical details of the Fed-Treasury-BlackRock collaboration are known, but one thing is certain: the financial market will not be the same, and Japanification will eventually reach the American economy.