Monday Forum: September 26, 2016

Posted in Open Forum | 959 Comments

Where have all the Flowers gone?

Gone to the first debate, that’s where. American politics is in a class of its own.

Monday night in America, Tuesday morning here, 11am-1pm (AEST).

Posted in American politics | 127 Comments

Rafe’s Roundup Sept 24

Gerard Henderson’s Media Watchdog. Accuracy in Academia. CIS Policy Quarterly is available on line. Spectator Life. Spiked. Read about Freedom for Freshers on campus.

Freshers’ week, once a time full of boozing, socialising and awkward dorm-room fumblings, is now little more than an induction into a brave new world of campus authoritarianism. New students today – arriving to find consent workshops, trigger warnings and fancy-dress bans – aren’t treated like adults, starting an exciting new chapter in their lives. Instead, they’re treated like children, in need of constant coddling and intervention. That’s why, this freshers’ week, spiked’s Down With Campus Censorship! campaign has brought together students, recent graduates and young writers to wage a war of words on the campus madness. Read our ‘Freedom for the freshers’ coverage below. And, if you’re a freedom-loving student, join the campaign today.

You could not make it up. The Californians do it again. Regulating cow emissions.

One of the main methane culprits: manure. Per the bill, dairy farmers have to cut methane emissions to 40 percent below 2013 levels by 2030. Under a cap-and-trade plan, farmers will receive aid from the $50 million or so raised via polluter fees, which they can then put toward machinery that uses methane to create energy they can in turn sell to electric companies.

The state’s Air Resources Board can also now regulate bovine flatulence, as long as there are practical ways to reduce the cows’ belching and breaking wind.

A new book peels back layers of deception on global warming.

12) In summation, do you believe that climate change is not the real issue?

No, the real issue is the hunger for power to change economic and political systems in order to achieve a wide-ranging agenda. In the words of former UNFCCC Secretary Christiana Figueres, the goal of “the whole climate change process is the complete transformation of the economic structure of the world.”

13) Any final words for our readers?

Again, it will take a determined effort by people of faith and conscience to convince our political leaders that they have been gulled by a political movement exploiting fear of climate change to push a utopian, humanist agenda that most people would find abhorrent. As it now stands, politicians are throwing money that they do not have at a problem that does not exist in order to finance solutions that make no difference. The time has come to call a halt to this nonsense and focus on real issues that pose real dangers. In a world beset by war, terrorism, and continuing third-world poverty, there are far more important things on which political leaders need to focus.

Judith Curry’s week in review.

From the Peter Coleman file. On the career of Robert Manne. He moved from the correct side in the cold war to the dark side in the culture wars.

As soon as the Cold War ended, according to Irving Kristol, the real cold war began. This is, he said, the war against American-style liberalism—the left-liberalism which has ruthlessly corrupted sector after sector of public and private life. He had in mind political correctness, big government, and the network of radical policies for family, school, “gender”, environment, culture and religion. This cold war would be more spiritually engaging than anticommunism had ever been. He envied those young enough to be fighting it.

How lucky we are! (sarc)

Vintage books for children.

A beautiful piece of memoire by Don Aitkin. A quiet achiever and a national treasure.

How did my worldview form? An early timing, I think. Thereafter, my lived experience modified or emphasised the effects of growing up in a particular family at a particular time, through instruction, reading, observing and arguing. School and university were important, even if I did not think so at the time. I became a craftsman in writing, and go on offering my analysis and opinion, occasionally in print, but much more often on my website, which garners about 20,000 hits a month. I find that some of what I am saying there is remarkably similar to what I was saying in newspaper columns nearly fifty years ago. And there is still an audience for it. Google Analytics tells me that three-quarters of my readers are under forty-five, which gives me hope for the future!

Don Aitkin AO, a historian, political scientist and novelist, was the Foundation Chairman of the Australian Research Council and the Vice-Chancellor of the University of Canberra from 1991 to 2002. He blogs here.

Texts of talks at the Sydney Institute now on line The Sydney Papers.

For nerds
The decline of liberalism. How the left lost the plot.

The collection supports the view that true liberalism could win any number of battles on economic policy but still lose the war through being outflanked on the cultural front. It often seems that liberals of the libertarian kind have not been very active on this front or even aware of the issues at stake. Conservatives tend to be more alert to the dangers in this area and more active in responding to them, as the contributors to this collection have done.

On the negative side those who take up philosophical issues have hardly drawn upon the two most powerful liberal philosophers of our time, namely Hayek and Popper. There are some fleeting references to Hayek but none at all to Popper. This is rather like going into a big ball game with your two strongest players on the bench. Some of the contributors (Scruton, Kimball and Windschuttle) would probably not even want Popper on the squad, judging from their comments on his work in other places.

Posted in Uncategorized | 12 Comments

Where are the critics of Keynesian economics today?

aust unemployment stats

The thing about these Keynesians is that they have no shame. The nonsense that Australia avoided recession after the GFC is one of those self-serving myths that will not stand an ounce of analysis. The data above (from the IPA) are the latest much-revised version of what happened to the unemployment rate during the GFC. A rise in the unemployment rate by two-plus percentage points over the course of a few months is recession enough for me, whether or not we actually had two consecutive quarters of a falling GDP. Ken Henry was Secretary of the Treasury at the time, and his advice was “go hard, go early”. So Rudd and Co went hard and early, with the results before us for all to see.

So now the self-same Ken Henry is on the front page of The Australian today with some advice on how to fix the problem that hard and early have led to: Fix budget before the crunch hits, urges Ken Henry.

National Australia Bank chairman and former Treasury chief Ken Henry warns that Australia faces an unacceptable risk with its budget deficit and fears the nation will wait for a painful economic crunch before confronting true ­financial repair.

In an exclusive interview, Dr Henry issued his most powerful warning about the failure of politicians and the national parliament, saying responsible fiscal policy had become a “pretence”, the economic reform narrative “no longer exists” and politicians are fixated by “appeals to populism”.

Dr Henry said Australia was now running the risk that its AAA sovereign credit rating might be downgraded, coinciding with another global financial disturbance, and in this situation the consequences for Australia “would be truly catastrophic”.

He said this was a “small risk” in relative terms but “the consequences are so large you cannot take the risk”.

Dr Henry said politicians through domestic economic ­policy failures were now exposing the nation to such risks that the entire reason for the reforms of the 1980s and 90s had been ­forgotten.

Unless the momentum was recovered, Australia would find “we are right back with Paul Keating’s banana republic statement”.

Well Ken, what a disaster we have created for ourselves. You must tell us where we went wrong. The following gets to the heart of the matter, which one would have hoped a Treasury Secretary would already have known. The quote is from Henry Hazlitt’s Economics in One Lesson which was brought to our attention by Tel on a previous post.

When the government comes to repay the debt it has accumulated for public works, it must necessarily tax more heavily than it spends. In this later period, therefore, it must necessarily destroy more jobs than it creates. The extra heavy taxation then required does not merely take away purchasing power; it also lowers or destroys incentives to production, and so reduces the total wealth and income of the country.

The only escape from this conclusion is to assume (as of course the apostles of spending always do) that the politicians in power will spend money only in what would otherwise have been depressed or “deflationary” periods, and will promptly pay the debt off in what would otherwise have been boom or “inflationary” periods. This is a beguiling fiction, but unfortunately the politicians in power have never acted that way. Economic forecasting, moreover, is so precarious, and the political pressures at work are of such a nature, that governments are unlikely ever to act that way. Deficit spending, once embarked upon, creates powerful vested interests which demand its continuance under all conditions.

Hazlitt also published his Critics of Keynesian Economics of which it is said:

Henry Hazlitt confronted the rise of Keynesianism in his day and put together an intellectual arsenal: the most brilliant economists of the time showing what is wrong with the system, in great detail with great rigor. With excerpts from books and articles published between the 30s and 50s, it remains the most powerful anti-Keynesian collection ever assembled.

And here’s the thing. The book was published in 1960 and other than Mark Skousen’s sadly out-of-print Dissent on Keynes (Praeger 1992) there has not been another attempt to do the same until my own modest What’s Wrong with Keynesian Economic Theory? which was only released last month. It is thus almost twenty-five years since anyone has has brought together a series of critics of Keynesian economics and more than fifty years since the only other. And as scarce as they were even then, critics of Keynes were easier to find, let me tell you, in the 1930s, 40s and 50s [and I might mention that Hazlitt included two nineteenth century articles of sublime excellence by J.-B. Say and J.S Mill]. Such economists are almost completely gone today in spite of there being every reason to think they should be found at every turn.

Posted in Classical Economics, Economics and economy | 19 Comments

The mysterious and inexplicable survival of Keynesian economics

Now this was very promising: The Reasons Behind the Obama Non-Recovery:
It wasn’t the severity of the Great Recession that caused the weak recovery, but government policies
, an article by Robert Barro which I was alerted to by a post at Powerline. The Global Financial Crisis was over within six months. The deep and ongoing recession we are in is due to the Keynesian policies that were followed.

The essence of a Keynesian policy is to start with Y=C+I+G, assume that the problem is demand deficiency and then try to fix things by raising the level of G. As I have also pointed out in the past, unless government spending is value adding – that is, until whatever is being produced earns revenues greater than their costs – such expenditure is a drain on the economy and will make you worse off, not better. I am near enough the only person I ever come across saying this, so here I lived in hope that perhaps Barro would start to say it. Someone has to say it before we wreck ourselves totally by following one Keynesian idiocy after another.

Here’s the thing. Neither the words “Keynes” nor “Keynesian” show up neither in the original article nor in the comment at Powerline. The vast waste of our resources in one mis-guided stimulus program after another goes unmentioned (although it does show up in a few of the comments on Barro’s article). Almost no one even thinks that the problems with policy is the nature of modern economic theory.

The strange thing about my What’s Wrong with Keynesian Economic Theory? is how unique it is. No one seeks to go after the actual problem, which is macroeconomic theory based as it is on deficient aggregate demand. Indeed, no one would even dare to suggest Say’s Law may actually be true, the absolute fundamental guide to managing an economy.

Here it is as it seems to me. I said in 2009 that the stimulus would be a disaster. I wrote my article for Quadrant, The Dangerous Return to Keynesian Economics in which everything that has occurred was mapped out before it began. I started writing my Free Market Economics which is now heading for a third edition. But really, I never thought the reasons for this catastrophic fall in our living standards would remain such a mystery and for so long.

Posted in Classical Economics, Economics and economy | 23 Comments

Guest Post: Robert Carruthers – Some bad ideas never die

Invective against Trump makes clear how easy it is to take something out of context, twist it and give it another meaning. Trump may be a blowhard braggart who is temperamentally unsuited to be President. But I’ve seen nothing to suggest he favours genocide at home and war abroad, as claimed by some. Quite the reverse.

The elite, empowered beneficiaries of the status quo tend to fight against changes raising the status of others relative to themselves. This can include using convincing cognitively captured mouthpieces and twisting the truth until it is effectively a lie. Obtaining the full context of “gotcher” media reports can reveal when this is occurring. If the full statement seems reasonable, but the reported extract not, then the media reporting is deceptive. Doing this soon gives a lie to the Trump as “Hitler” meme.

Many are concerned by Trump’s support for the nation state, for countries having borders and cultures which are worth preserving. EM Smith puts it well:

“The fundamental philosophical fight today. Those who are “pro-Nation”, whatever their nation may be, and the “Non-Nationals” lead by Soros and his money.

IF you value your nation, be it Russia, China, India, Kazakhstan, Ukraine, Germany, Australia, the USA or “wherever”, then do realize you are under attack by NGOs, funded and directed by Soros, who’s main goal it to eliminate “Tribalism” and “Nationalism”, that is, your Nation as a Nation. Your culture as a culture.

His history and track record show this is not a theory, but a report of historical fact.”

Smith makes clear that Soros is not doing this for nefarious reasons. Soros is trying to stop war and persecution, which he witnessed as a Jewish child in Hungary during WW2. Others think Soros misguided and his position likely to result in the very misery he is trying to avoid. They regard their nation state as protective of their liberties, freedoms, culture, property and lives. They do not want to lose it or them.

In the last century more people were killed by their own governments than foreign ones. This often occurred as part of some “progressive” project to perfect people and society. The Soros initiative appears to be of the same ilk. I had thought advocating unaccountable elites dictating to the masses went out of fashion in the West along with colonialism. But I guess such ideas never really die.

It is easy to let our wishes override our reasoning. It is human to do so. But good intentions do not necessarily good policy make. As evidenced by the millions slaughtered by national and international socialists. Our societies and their structures need to cater to people as they are, not as we would like them to be. Truly the road to hell is paved with good intentions.

Posted in Guest Post | 7 Comments

Open Forum: September 24, 2016

Posted in Open Forum | 1,531 Comments

Another Keynesian at the RBA

So what’s the new RBA governor like? He is standard issue Keynesian, that’s what he’s like, which means he will never have a clue what’s going on. This is so depressing: Reserve Bank governor Philip Lowe urges government to invest in infrastructure. The opening paras:

Incoming Reserve Bank chief Philip Lowe has appealed to the Turnbull government to help him out with economic management by borrowing big for infrastructure, saying there’s only so much that further cuts in interest rates can do.

In what amounted to a plea to the Prime Minister and Treasurer to take advantage of near-record low interest rates and borrow now that the Reserve Bank’s cash rate was close to zero at 1.5 per cent, he told a parliamentary hearing that monetary policy is “not working as effectively as it might have”.

“One response is to keep doing more of it in the hope that it finally works, he said. “My judgment is that that has not been particularly useful.

“Another option is for some entity in the economy to use the low interest rates to increase its spending. The government could either use its balance sheet or its planning capacity to do infrastructure spending.”

Does he not know that we have already tried the public spending and that it didn’t work. We have also tried low interest rates, and that didn’t work either.

Only private sector spending, where a genuine profit and loss statement in involved, will generate recovery. How about cutting deficit-increasing expenditures and reducing the weight of business regulation? Having seen his first go at giving policy advice, I am not encouraged by what he will now do to rates. As for public infrastructure, right under the AFR story on the RBA, there was this: Communications Minister Mitch Fifield eases NBN charge concerns. Wherein we read:

Investors saw the first real impact of the high wholesale access charges on Tuesday after David Teoh’s TPG Telecom warned that its margins will be cut as more users switch to the NBN under the current pricing model. TPG shares have been savaged since, dropping 24.5 per cent since Tuesday, while shares in Vocus Communications have dropped 10.4 per cent.

Mr Fifield said that “NBN is acutely aware of this issue.” The NBN is under increasing pressure over the charges as telco entrepreneurs warn that the industry may reach a point where some companies may go broke.

NBN would not even exist except for the billions blown by both governments on this ridiculous project. It is now the white elephant in the room and is threatening to devastate the industry. This is government infrastructure at its finest, a perfect example, along with unusable desal plants, green energy projects, billion-dollar Myki cards and beyond the idiocies found across the globe, we in Victoria have non-existing billion dollar roads-to nowhere. Let me give you my favourite quote from Adam Smith.

[Governments] are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.”

Written in 1776 and with the words “always” and “without any exception” found in a quote from the normally cautious and careful Dr Smith. No one who has ever read that passage in all the years since it was written has ever seen a government that could be described as in any way different from what was described. It is a passage our new RBA Governor needs to read and take to heart, while he goes back and has a look at Wicksell at the same time. Haven’t these people ever heard of the private sector?

Posted in Classical Economics, Economics and economy | 49 Comments

Cross post: “World Health Organization Uses Exclusion to Silence Debate” Says Former Australian Minister

The World Health Organization (WHO) has been severely criticised in a comprehensive report launched today by former Australian Government Minister, Dr Gary Johns, who claims that a forthcoming WHO international tobacco convention lacks the transparency and dialogue which underpin United Nations values.

The launch of the report coincides with the closing date for nominations for the election of the next WHO Director-General onSeptember 22nd.

The Framework Convention on Tobacco Control (FCTC), which takes place in New Delhi in November, is refusing entry to relevant stakeholders or media to discuss new developments which could save lives around the world.

The WHO FCTC is a closed shop which uses exclusion to silence debate.  This is one of the many issues the next WHO Director-General must urgently address if the organisation is to survive said Dr Johns, who recommends that the Convention throw open its doors to all-comers, and to new ideas in a bid to cut deaths from smoking, particularly with vaping products now considered considerably less harmful than conventional cigarettes.

Dr Johns added: It is my experience, as a former Australian Labor Minister, that the most effective policies incorporate a wide range of stakeholders and viewpoints, even if you disagree. These meetings should be held in a transparent fashion and in public view.

The FCTC Secretariat does not have the expertise or resources to deal with two big challenges of the Convention: finding a path for reduced harm alternatives to smoking, and tackling illicit trade in tobacco. As long as the sole strategy is to reduce supply and demand without considering every perspective, there will be little progress.

Dr Johns is concerned that harm reduction is not a focus of the Convention, and that the WHO has pursued a single strategy of supply and demand reduction despite the evidence that smokeless tobacco products could play a key role in a harm reduction strategy.

The United Nations welcomed world leaders, the media, external stakeholders and the public to the Paris Climate Change Conference in November 2015, hosting 3,000 accredited journalists at its Paris Climate Change Conference. It constantly updated an online news-hub, providing updates on decisions and activity, while also providing an e-mail news update feature. The Paris Conference also posted publicly available drafts of the key texts negotiated at the meeting and webcasts of sessions, debates and press conferences.

The FCTC provides no such window into its decision-making process with the public, media, industry, law enforcement and other key external stakeholders likely to be barred from entry. Decisions for previous conferences have been posted after the fact with no context as to how they were reached.

Dr Johns added: As a taxpayer in Australia, my taxes support the Convention, but it is not certain that I would be allowed to observe the proceedings, such is the secrecy surrounding the Convention.

All interested parties must be allowed to observe COP 7 proceedings, as is standard procedure with other United Nations conferences. The alternative is that tobacco consumers will be exposed to more harm than could otherwise be the case.

Originally published here and Gary Johns’ latest book available here.

Posted in Cross Post, Take Nanny down | 7 Comments

The nightmare scenario

The front page of The OZ: Interest rate cuts losing power: RBA. The premise is that there was a time that interest rate cuts had done some good, but if so, that was only when they had been set too high. If you would like to understand why interest rates can be too low, and have been much too low everywhere for quite a long time, you should look at the last two chapters of my Free Market Economics. But the main message is that the era of low interest rates is over. Let me therefore take you two articles on the same theme.

The first is Yellen helps Clinton dodge a bullet which comes with the sub-head: “Federal Reserve policymakers keep their key interest rate steady, putting the central bank on the sidelines until after Election Day.” The first sentence of the article is merely about politics. The economics is about what lies in wait. But first that opening sentence:

Scratch one big economic worry off the list for Hillary Clinton.

The worry being scratched off is that interest rates will be raised before the election. Trump knows what a problem this would be for the Democrats better than anyone. Yellen knows exactly what Trump knows, but says the thing which is not like the rest of her leftist tribe:

Fed Chair Janet Yellen also strongly rejected claims lobbed at her by GOP presidential nominee Donald Trump that she is keeping rates artificially low to boost stock prices and aid Democrats.

“I can say emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy,” Yellen said at a news conference after the Fed announced its decision. “We do not discuss politics at our meetings and we do not take politics into account in our decisions.” . . .

“The Federal Reserve is not politically compromised,” she said. “I can’t recall any meeting that I have ever attended where politics has been a matter of discussion. I think the public if they had been watching our meeting on TV today would have felt that we had a rich, deep, serious, intellectual debate about the risks and the forecasts for the economy.”

Since she cannot say otherwise, that was the pre-fab answer. But they of course do think politically 100% of the time, and know full well what will happen when rates start to rise, or even if they hinted that they would rise. It will happen immediately if it’s Trump, more slowly if it’s Hillary, but up they will go. As noted at the end of the article:

The decision [to leave rates where they are] should be a bit of a boost for Clinton, more because it avoids a nightmare scenario than does much to strengthen the economy.

“Nightmare scenario”? What could they possibly mean?

There is then this second article dealing with the same issues: Yellen rejects Trump charges that Fed plays politics. Shorter and again outlines Trump’s complaints in the company of Yellen’s untruths. But it ends with this:

By statute, the Fed is an independent body intended to be shielded from political pressure and whose operations are not funded by the US Congress.

But Fed governors are nominated by the White House and approved by the Senate.

You can see the cynicism in the article but there is even more in the comments to the story. I will just list one, which is like most of the others, and which follows more or less my own sentiments about all of it:

Her denial proves the point. Yellen is a marxist who does Obama’s bidding. If Trump wins in November this fool will raise interest rates in December. Bet the farm on it.

For all that, the sad fact is that the only way our economies can ever get on track is for rates to rise. It will be a rough ride, but without the redirection of savings in productive directions, there is no chance of a recovery either short term or long.

Posted in Classical Economics, Economics and economy | 21 Comments