BEN WEINGARTEN

Reader. Writer. Thinker. Commentator. Truth Seeker.

Category: Economy (Page 2 of 5)

When Progressive Policies Cause Creative Destruction

Be sure to check out my latest article over at The Federalist, where I examine the collision course we are on between technological advancement/automation and progressive policies that are ironically causing technological advancement/automation to accelerate, low-skill progressive voters be damned.

Here’s a taste:

For years now, we have seen headlines foretelling a doomsday scenario in which mass numbers of Americans are thrown out of work, replaced by computers, robots, and other time-saving, liability-minimizing machines. Human capital is not static, and not all process changes will happen all at once. Different industries evolve at different speeds, and human beings are adaptive. Yet it is only natural that businesses need continually seek ways to lower costs to profit and survive, and automation is a key means by which to do so.

In an age in which the “deadweight loss” attributable to taxes, compliance, and hyper-regulation is massive, automation will become far cheaper than having to hire, train, and pay severance to human beings. Since regulation is the mother of innovation, so artificially high costs from other forms of government intervention will force businesses to innovate by first replacing full-time workers with temporary ones, and eventually with cost-effective machines that do not require health and welfare benefits and pensions.

This presents an interesting conundrum for a Progressive coalition that relies in part upon the very poor. To the degree to which large-scale Progressive reforms like Obamacare and the recently popular $15 minimum wage raises the cost of doing business, the move to automate will only accelerate, hurting most those lower-skilled, generally poorer constituencies, which happen to be politically Progressive. This “creative destruction” will be an unwelcome development to many manual laborers, a betrayal to the Progressive political class.

Read the whole thing here.

China Chills ‘Rumor Spreaders’ Because It Can’t Handle The Truth of Communist Wreckage

The recent collapse of the Chinese stock market, and the inability of the country’s central planners to “successfully” intervene and stop the slide of prices artificially elevated thanks to their previous intervention is a serious rebuke to the Communist regime.

That is why today the Chinese government is seeking out scapegoats, reportedly arresting around 200 people for “rumor-mongering” or related “violations” in connection with the market selloff and recent Tianjin chemical factory explosion.

This follows a series of other desperate moves:

Since an epic stock boom went bust this summer, China’s government has struggled to contain the crisis, ordering the press to downplay the story, and periodically singling out scapegoats, from hostile foreign forces, to“malicious” short-sellers, to the U.S. Federal Reserve and now, the press.

Notably, concerning this latest round of illiberal and ill-conceived “damage control,” the Chinese authorities forced a financial journalist named Wang Xiaolu to “confess” on Chinese state television to one such supposed violation resulting from a report he published in late July in which he indicated that the China Securities Regulatory Commission (CSRC) was contemplating ceasing share price “stabilization” efforts.

And all of this because the Communist Chinese regime cannot handle the truth that it has blown a bubble of epic proportions that like all bubbles must end in liquidation; all of this because the Communist Chinese regime cannot bear to take responsibility for its failed central planning reflected in plunging financial asset prices.

The free flow of information, like the free flow of ideas and capital, is anathema to totalitarian regimes, and indeed dangerous to them.

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Apparently ISIS Doesn’t Realize What The Fed Has Done to the Dollar

I grant that ISIS may be more knowledgeable about the “enslaving, imperialist dollar” than it appears, given that they feature a clip from former Rep. Ron Paul in their latest propaganda video about bringing down our currency and replacing it with ISIS’ gold money, but one gets the sense that the jihadists are unaware of The Fed’s historical record.

Namely, since its founding in 1913, The Fed has utterly debauched the dollar.

Had ISIS consulted the handy US Inflation Calculator, they would have learned that it takes roughly $2,400 today to purchase what would have cost $100 at the inception of the Fed. 

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7 Minutes With Jim Grant Tells You All You Need to Know About World Markets Today

A must-watch interview with the publisher of the great Grant’s Interest Rate Observer conducted by Reason’s Matt Welch:

For a much deeper dive with Jim Grant from several months back, check out my interview with him on the insightful and ever-relevant The Forgotten Depression.

I spoke about it with TheBlaze’s Mike Opelka starting at 21:43 below:

 

Featured Image Source: YouTube screengrab/Reason.

21 Thoughts About The Fed, China, Markets and #BlackMonday 2015

First, if we really are entering a global bear market worldwide, this must be said up front:

The Fatal Conceit aside, here are my 2 Bitcoins worth of thoughts in the wake of today’s market convulsions:

1) People ought to stop thinking The Federal Reserve can drop manna from the heavens.

The Fed is not G-d. It is a group of very mortal central planners who control the cost of money. Unfortunately now, they control so much more, in an attempt to manipulate the prices of financial assets and prop up whole industries.

We should pray for a world in which people’s lives do not hinge on transcripts of Fed minutes.

2) The Fed has zero incentive to raise rates and extricate itself from financial markets.

It will always find an excuse (turbulence in the markets, tepid growth, political uncertainty) to follow the path of least resistance (in this case keeping the Fed Funds rate at 0% ad infinitum). What political reason could it possibly have to allow interest rates and prices to normalize?

Peter Schiff agrees:

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99 Things Worth Reading Every Day If You Possibly Could

One question I get asked frequently by friends and colleagues is, “What do you read?”

Without fail, this leaves me fumbling for my phone as I pull up my RSS feeds on Feedly — perhaps a good reflection of the fact that we care more about content these days than brands, plus are incapable of memorizing anything thanks to the moral hazard of smartphones.

Instead of fumbling, I have decided to compile some of my favorite sources into one post that from this point forward I can easily share.

Here are the sources:

Newsletters

1) Ben Domenech’s The Transom
2) Jim Geraghty’s Morning Jolt
3) Matt Levine’s Money Stuff
4) Omri Ceren’s Email Distribution

Websites

1) Abnormal Returns
2) Ace of Spades HQ
3) Algemeiner
4) Althouse
5) American Thinker
6) Andy McCarthy
7) Ann Coulter
8) Breitbart
9) Business Insider
10) Cafe Hayek
11) Caroline Glick
12) Commentary Magazine
13) Conservative Review
14) ConservativeHQ
15) Daniel Greenfield (FrontpageSultan Knish)
16) Debkafile
17) Diana West
18) Drudge
19) Eli Lake
20) FiveThirtyEight
21) Free Banking
22) Free Republic
23) FT Alphaville
24) Gates of Vienna
25) Gatestone Institute
26) Gateway Pundit
27) Gavin McInnes
28) George F. Will
29) Ginni Thomas
30) Hot Air
31) Instapundit
32) Jeffrey Lord
33) Jihad Watch
34) Johnson’s Russia List
35) Josh Rogin
36) Judicial Watch
37) Kurt Schlichter
38) Le·gal In·sur·rec·tion
39) Lucianne.com
40) Melanie Phillips
41) MEMRI
42) Michelle Malkin
43) Monica Crowley
44) Mosaic Magazine
45) National Review Online
46) New York Sun
47) New York Times Editorial Page
48) New York Times Upshot
49) Noisyroom
50) Pajamas Media
51) Patrick Poole
52) Patterico’s Pontifications
53) POLITICO Magazine
54) Powerline
55) RealClear Books
56) RealClear Markets
57) RealClearPolitics
58) Reason Magazine
59) RedState
60) Richard Epstein
61) Roger Kimball
62) Seeking Alpha
63) Small Wars Journal
64) Spengler
65) Steve Coughlin
66) SteynOnline
67) Tablet Magazine
68) The Altucher Confidential
69) The Big Picture
70) The Daily Caller
71) The Daily Reckoning
72) The Daily Signal
73) The Federalist
74) The Freeman
75) The Hill
76) The Long War Journal
77) The Pragmatic Capitalist
78) The Reformed Broker
79) The Times of Israel
80) The Volokh Conspiracy
81) The Washington Times
82) The Weekly Standard
83) The XX Committee
84) TheBlaze
85) Thomas Sowell
86) Townhall
87) TrevorLoudon
88) Truth Revolt
89) Twitchy
90) Wall Street Journal Editorial Page
91) Walter E. Williams
92) Washington Examiner
93) Washington Free Beacon
94) Watchdog.Org
95) Zero Hedge

John Tamny on George Gilder on Information Theory and the Gold Standard

John Tamny is one of the most Hazlitt-ian writers of the modern era — a true treasure when it comes to elucidating free market principles, and in particular making the case for sound money simple. As a brief aside, I had the chance to speak with the RealClear Markets editor and Forbes Political Economy editor about his “Popular Economicshere, a conversation I relished.

So it should could as no surprise that Tamny’s review of prolific writer, futurist and Reagan’s most quoted living economist George Gilder’s new monograph, The 21st Century Case for Gold: A New Information Theory of Money, would contain a wealth of insight.

(Image Source: American Principles Project)

Gilder’s revolutionary application of information theory to economics was presented comprehensively in a 2013 title that deserves more attention than it has received to date, Knowledge and Power. Here’s a handy listicle I published that provides a substantive overview of Gilder’s work.

At its most simple, Gilder argues that information is the key to all economic growth. If it has a clean medium in which to be disseminated — namely an environment in which private property rights are protected, taxes are low and money is sound — we will flourish.

Here is how Gilder puts it:

Entropy is a measure of surprise, disorder, randomness, noise, disequilibrium, and complexity. It is a measure of freedom of choice. Its economic fruits are creativity and profit. Its opposites are predictability, order, low complexity, determinism, equilibrium, and tyranny. Predictability and order are not spontaneous and cannot be left to an invisible hand. It takes a low-entropy carrier (no surprises) to bear high-entropy information (full of surprisal). In capitalism, the predictable carriers are the rule of law, the maintenance of order, the defense of property rights, the reliability and restraint of regulation, the transparency of accounts, the stability of money, the discipline and futurity of family life, and a level of taxation commensurate with a modest and predictable role of government. These low-entropy carriers do not emerge spontaneously. They are the effects of political leadership and sacrifice, prudence and forbearance, wisdom and courage. Sometimes they must be defended by military force. They originated historically in a religious faith in the transcendent order of the universe. They embody a hierarchic principle. It is these low-entropy carriers that enable the high-entropy creations of successful capitalism.

And a bit more:

Economic growth springs not chiefly from incentives—carrots and sticks, rewards and punishments for workers and entrepreneurs. The incentive theory of capitalism allows its critics to depict it as an inhumane scheme of clever manipulation of human needs and hungers scarcely superior to the more benign forms of slavery. Wealth actually springs from the expansion of information and learning, profits and creativity that enhance the human qualities of its beneficiaries as it enriches them. Workers’ learning increasingly compensates for their labor, which imparts knowledge as it extracts work. Joining knowledge and power, capitalism focuses on the entropy of human minds and the benefits of freedom. Thus it is the most humane of all economic systems. [Emphasis mine]

In his RealClearMarkets review of Gilder’s new book on money, Tamny makes four critical points in particular:

1) On the “seen and the unseen” of currency speculation attributable to centrally planned money

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Venezuela Isn’t Cooking The Books Under Mass Inflation. It’s Lighting Them On Fire.

America’s government has gradually watered down its economic data over time, thereby painting a rosier picture of conditions on the ground than actually exists. Consulting economist John Williams has dedicated his life in fact to exposing its manipulation of economic data and backing into the real numbers.

But you will know when America has really hit full on panic mode when the feds stop printing figures altogether, and the only way to measure price inflation is through tracking the daily price increase of say, cronuts, or some other confection.

This is the position sadly but all-too-predictably in which Venezuela finds itself today. Writes the Wall Street Journal:

On monthly trips to his native Venezuela, Miguel Octavio heads to the same restaurant for the cornmeal cakes he enjoyed as a boy known as arepas, which are a staple here. The price, however, is never the same.

Over nine months, the Miami-based financial analyst and blogger has recorded a fourfold increase in what he calls his Hyperinflated Arepa Index, a yardstick he created to trace soaring consumer prices in this economically crippled country.

President Nicolás Maduro’s government stopped publishing monthly inflation data last December when the level hit 68% annually, the world’s highest. With the Venezuelan economy worsening and the ruling party facing tough congressional elections this December, the central bank hasn’t reported inflation, balance-of-payments or gross-domestic-product figures all year.

That has prompted economists and analysts like Mr. Octavio to compile their own indicators, basing calculations on everything from anecdotal evidence to federal tax revenue to banking-sector loans.

We know that central planning fails, but in Venezuela the not-so-benevolent dictators must have done so on an epic scale if they are no longer cooking the books but rather lighting them on fire.

Why has Venezuela’s economic decline been so sharp?

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The Upside of European Demographic Decline? Beautiful Villages for Sale.

From the Christian Science Monitor comes a story that one suspects will be manifesting itself across other parts of secular progressive Europe: Entire emptied Spanish enclaves for sale.

You probably know the backstory:

All of Europe is rapidly aging, as women choose to have fewer children, or none at all, and immigration – despite the shrill news about a flood of migrants into Europe – has failed to reach the corners of the Continent where populations are the oldest.

Demography is quick becoming the key policy challenge of Europe’s leaders, as countries scramble to figure out how to keep labor systems running and pensions paid.

But it is also having a profound impact on the physical landscape of Europe, from maternity wards and schools closing their doors, to churches being turned into art venues and leisure centers.

What is fascinating is the way in which Spaniards in the Galicia region are seeking to cope with the new demographic normal:

Here in this corner of the Iberian Peninsula, the business of selling abandoned villages has even become something of a policy tool. One mayor is trying to give away an abandoned village in his district for free, so long as “buyers” promise to restore it and add back value – ideally drawing young people while they do so.

If Galicia cannot turn back its demographic trends, says Xoaquin Fernandez Leiceaga, a former lawmaker and professor of economics at the University of Santiago de Compostela, parts of it could quickly turn into wildland.

“Already villages of Galicia are being overrun by weeds and bushes,” he says.

Sounds a lot like parts of modern-day Detroit.

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The Left’s Minimum Wage ‘Compassion’ Actually Reflects Contempt for Entry Level Workers and Entrepreneurs

Writing in the Wall Street Journal, Steve Caldeira, CEO of the International Franchise Association, alerts us to the latest plan to ensure “economic justice” through raising worker pay by government decree.

New York Governor Andrew Cuomo, believing that the Empire State is free from the strictures of supply and demand curves — or more likely that he must appease Big Labor — is promoting a plan to raise the minimum wage to $15 an hour from $8.75 an hour for workers in fast-food restaurants with 30 or more locations.

Supply Demand

(Image Source: Danieljmitchell.wordpress.com)

Such a plan may be politically astute — how can anyone be so heartless as to oppose higher pay — but its practical effects will illustrate that as with most all such policies, progressives hurt most those those they purport to want to help.

As Caldeira notes, when prices are set by fiat, you get adverse consequences. Under Gov. Cuomo’s plan:

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