May 2011


It’s about time someone wrote about Sen. Charles Schumer’s (D-NY) racket.  And his deplorable economic record.

It’s certainly true that the economies of Greece, Ireland, and Portugal—the three countries committed to austerity programs as conditions for European and International Monetary Fund bailouts—have shrunk over the past year. The unemployment rate is above 10 percent in all three. Meanwhile, the U.K. economy is growing sluggishly. But to infer from this that the United States can postpone serious attempts at fiscal stabilization would be completely wrong—and deeply dangerous.

Here. Two comments. GDP measurements count government spending as increasing GDP, so more spending increases GDP. Government austerity will cause a lower GDP number to be reported but that can mask the benefits of reduced spending. Second, government spending can increase employment by, for example, have one group of people dig ditches and another group fill them in. That, obviously, is not wealth-producing, but nonetheless is counted towards increased GDP.

But Palin differs, saying, “We’ve got to allow the free market to dictate what’s most efficient and economical for our nation’s economy. No, at this time, our country can’t afford the subsidies. Before, though, we even start arguing about some of these domestic subsidies that need to be eliminated — should be — we need to look at ending subsidies and loans to foreign countries and their energy production that we’re relying on, like Brazil.”

Here.

The lady needs to verbiage to describe free markets.  Doesn’t quite make sense.  The “free market” is not a dictator.  It is a process of give-and-take, trial-and-error, and discovery.  It is what works. Further, subsidies are not luxuries we cannot afford. They are political actions implemented by government that distort what buyers and seller truly want. They prevent sellers from discovering what buyers truly want because sellers have to satisfy a new party to transactions: politicians.

There’s just something about people who run for office. Many lust to lord it over people. We’ve heard the phrase, “nanny state” for years. But as the busybodies pass more rules, America is becoming more like a “bully state.” Politically unpopular folk are pushed around by those who are intoxicated with their power.
. . .
Don’t smokers have rights too? Banning smoking in public is the tyranny of the majority.

Here.

Here’s a tune to accompany that.

Voters need to send “a whole new team” to town to change the perception that Washington is hostile to business and job creation, potential Republican presidential candidate Rick Santorum told CNBC.

Here. That may be true but can you assemble a team who are not central planners? Who can deregulate and let people engage in peaceful commerce from the bottom instead of top-down?

Gee. Why is that? Background:

The professors reviewed more than 16,000 common stock transactions carried out by about 300 House members as revealed in the members’ financial-disclosure forms from 1985 to 2001.

Here. Two clarifications: 1) all corporate employees are restrained by insider trading laws, not just executives. It isn’t legal for non-executives to trade on insider information. 2) These laws are not limited to Wall Street. Again, the article is not clear. It isn’t legal for employees in industries other than financial services to trade on insider information.

Mark Perry links to a Bloomberg article that plots a country’s share of world oil production against that country’s democracy index.  Then he links to an article in the NY Times about the Eagle Ford Field in Texas.

It does not quite support my thesis that oil supplies are constrained by government ownership of petroleum fields but it comes close. Prices are high because governments own those fields and they have to approve the extraction of petroleum. That holds back supply and keeps an artificially high price. You can see the reluctance of U.S. politicians to approve new domestic drilling.

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