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Thursday, August 30, 2018

Is Legal Pot A Big Libertarian Issue?

If you follow libertarian political debate, you have probably picked up that libertarians are no friends of the Trump administration. One reason is their animosity toward legalization of marijuana, a policy that was recently reaffirmed by a multi-agency effort to counter pro-legalization campaigns

Wednesday, August 29, 2018

The Short-Term Nature of Business Investments

The Bureau of Economic Analysis has published its second estimate for GDP growth in the second quarter. Counting quarter to quarter, the number looks very good at 4.2 percent, but the meaningful number - the number that tells us what the trend looks like - is the year-to-year number. In chained dollars, which are adjusted for inflation, that growth rate is 2.89 percent. It was 2.85 percent in the first estimate. 

This is a good growth rate, but not spectacular. The trend, though, remains good:

Monday, August 27, 2018

Another Paid Leave Pundit Bites the Dust

I try very hard not to take jabs at people in the public policy arena. It is distractive and disrespectful. However, there are rare occasions when someone's intellectual circuit breaker has kicked in and interrupted the flow of analytical thinking. When that happens, it is difficult to debate their arguments without at least noting the analytical malfunction. 

Shielding Government from Recessions

There is an interesting issue rising in the Wyoming gubernatorial race, an issue that has national interest. Democrat candidate Mary Throne has stated repeatedly that she wants to take the Wyoming economy out of its boom-and-bust cycle. In reality, she wants to shield government from the business cycle that is inherent to the private sector.

Thursday, August 23, 2018

The Distortionary Growth in Government

Government in America is too big. We are not (yet) at European levels, but unless we turn around the reform trend in the welfare state - which currently points to even bigger government in the near future - we are going to end up with the same macroeconomic problems as the Europeans have

Wednesday, August 22, 2018

Fiscal Fascism and Industrial Poverty

Never bark at the Big Dog. The Big Dog is always right.

Four years ago, in my book Industrial Poverty, I explained how the destructive austerity policies behind the Greek crisis, and applied in many places across the continent, would trap Europe in a perennial state of economic stagnation. I used the term "industrial poverty" for this state of economic quagmire: people have access to all the basic necessities and conveniences of an industrialized economy, such as indoor plumbing, reliable power, reliable access to basic necessities such as food and clothes, a basic place to live and a low but reasonably reliable mode of transportation.

Tuesday, August 21, 2018

How Does Europe Pay For Its Welfare State?

It is well known that European countries almost without exception have higher taxes than America. In an article for the Foundation for Economic Education, Dan Mitchell of the Center for Freedom and Prosperity explains that those taxes are particularly burdensome for lower income taxpayers.* There are two reasons for this, one being that that the Europeans have run out of rich people to tax. The other is easily explained by the economic theory behind the Laffer Curve:

Monday, August 20, 2018

Sweden: An Escalating Crisis

Yesterday I explained that Sweden, once a pinnacle of stability in northern Europe, is bound for an economic and political crisis of disturbing proportions. As reputable investor Erik Penser put it in an interview with Bloomberg, this is a good time to move money out of Sweden, secure it in U.S. dollars and shield whatever is left in Sweden from a macroeconomic calamity (my words, not Penser's).

Sunday, August 19, 2018

Sweden in Crisis: A Hotbed of Instability

Sweden, once the pinnacle of economic, social and political stability, is emerging as a European crisis hotbed. After a quarter century struggling to keep its fiscally unsustainable welfare state afloat, the country is now approaching a perfect storm of political and economic instability. There is still a possibility that the crisis will be contained, but the risk of a runaway crisis is high enough that the world needs to pay close attention.

There are two parts to the crisis, one economic and one political. As always when we are dealing with an advanced welfare state, the two are intertwined to a point where a decline in one will pull the other with it.

Friday, August 17, 2018

Facts that Socialists Don't Want You to Hear

The rise of socialism in the Democrat party is a source of concern for all of us - we can laugh it off as some left-fringe kooks showcasing their monumental ignorance of history. In reality, though, socialism is the logical next step for the American left in general. As I explain in my book The Rise of Big Government, the egalitarian ideology from Europe's welfare states has already conquered America.

Institutionally, we are an egalitarian country:

Thursday, August 16, 2018

Rubio's Paid Leave: A Bribe for Higher Taxes

Senator Marco Rubio (RINO-FL) has proposed a big, new entitlement program to provide paid family leave for every parent of a newborn baby. The technical solution is to let parents withdraw their social security benefits ahead of retirement; when they get old, they compensate the social security system by waiting longer with retirement.

As I explained recently, there are so many things wrong with this proposal that it is difficult to understand how the good senator from the Sunshine State bought into it in the first place. It does not help that it originated with Independent Women's Forum, a conservative think tank.

Wednesday, August 15, 2018

The Reason Why Single-Payer Is Cheaper

You have probably heard the arguments about how much cheaper single-payer health care would be than a market-based health system. For example, last summer the New York Times suggested:
Total costs are lower under single-payer systems for several reasons. One is that administrative costs average only about 2 percent of total expenses under a single-payer program like Medicare, less than one-sixth the corresponding percentage for many private insurers. 
This is an accounting ruse. 

Tuesday, August 14, 2018

Why Is the European Economy Standing Still?

Many economists and other analysts have been asking this question lately: why is the European economy not growing? The latest contribution to the conundrum is an article from yesterday by Paul Hannon in the Wall Street Journal (page A2, print edition):
The eurozone's [economic] slowdown initially appeared to be due to temporary factors, including unusually cold weather in the early months of the year, coupled with a series of labor strikes and an outbreak of influenza that hit construction and manufacturing activity.

Monday, August 13, 2018

The Price for Saving the Welfare State

In my recent paper for the Center for Freedom and Prosperity, I explained how the U.S. economy is at risk of a Greek-style fiscal crisis. It is very important that our elected officials understand the seriousness of this situation. Once we go over the edge, there is no coming back: as I explain in my book Industrial Poverty, after Sweden plunged into a fiscal crisis in the early 1990s, the country never returned to its heights of prosperity as before the crisis. Likewise, after the fiscal crisis during the Great Recession Greece has plummeted into a permanent state of industrial poverty.

Friday, August 10, 2018

Single Payer Health Care: The Theory

Democrats are getting ready to push single-payer health care as their big issue in 2020. They will make the presidential election a national referendum on killing off the remainders of a private health-care system that has given Americans access to the world's best medical services.

In this article I will discuss the theoretical aspects of single-payer health care. In a follow-up piece next week I will work through the evidence suggesting that America would be making the mistake of a century if we allowed the last parts of our private health care system to be wiped away by an all-out government system.

Wednesday, August 8, 2018

Elon Inflates Tesla Stock with Hot Air

On Tuesday, Elon Musk tweeted that he is considering a buyout of the company from the stock market. The Wall Street Journal explains:
The notion of a buyout, which would value Telsa above $70 billion, is itself extraordinary, as it would be far larger than any previous take-private deal. ... While Mr. Musk continued tweeting about the possibility over the next few hours on Tuesday, Tesla's public-relations team and main Twitter account remained silent, adding to the intrigue. 

Tuesday, August 7, 2018

Structure of the American Economy, Part 2

One of the worst parts of "economic development", a.k.a., corporate welfare, is that it creates a habit that is hard to break. Businesses get used to being able to ask for subsidies, special tax breaks and government loans that neutralize the credit market's risk assessments. This in turn has led to an increased interest in political influence from the business community, including lobbying and campaign contributions. 

Monday, August 6, 2018

Rubio's Paid Leave: A Highway to Fiscal Hell

Never bark at the Big Dog. The Big Dog is always right. 

Ever since early 2017 I have predicted that the conservative movement to create a paid family leave program will open the entitlement flood gates for a massive, new entitlement program costing taxpayers hundreds of billions of dollars per year.

Now that Senator Marco Rubio (RINO-FL) has presented his paid-leave legislation, everything I have said about this disaster in the making, turns out to be true. 

Friday, August 3, 2018

Structure of the American Economy, Part 1

As I explained the other day, the idea that government should provide "economic development" is both intellectually ridiculous and economically dangerous. Yesterday I offered an example of "economic development" disasters in the form of Tesla Motors

Thursday, August 2, 2018

Economic Evolution: The Tesla Scam

Before we delve into statistics on the structure of the U.S. economy, there is one story on corporate welfare that belongs right in the middle of this subject: the Tesla electric car scam. 

First things first: I don't like electric cars in the first place. I don't see how it can be healthy for us in the long run to drive around in high-voltage magnetic field generators. There is a notable silence in the academic literature on this subject, but you can find quite a bit of studies on the harmful effects of magnetic fields in other contexts. 

Wednesday, August 1, 2018

Government and Economic Evolution

Some ten years ago the prevailing wisdom in the public discourse was that "we don't manufacture anything here in America anymore". Given the outsourcing of manufacturing jobs to Asia, there was a grain or two of truth in this statement. However, that is only part of the truth - in fact, it is only a small part of the truth. The U.S. economy has been changing structurally for a long time; in fact, economies are constantly changing. There is nothing dramatic about this; what is dramatic is the obsession that politicians have with injecting themselves into the evolutionary process of our economy.