Economy


Pols and regulators should butt-the-hell out of corporate mergers and other actions that disrupt the status-quo. See Democrat primary loser and hypocrite for supporting corporate shill Hillary Clinton Bernie Sanders for example. Trump also said he opposes it.

Employees of the merging firms must figure out how best to serve their customers and shareholders.

Remember folks, firms have to work within the current regulatory and legal framework. If gov’t wants to do something useful it should deregulate telecom and scrap net neutrality. Those constrictions led the decision-makers in this deal to view a merger as a way to drive growth.

The interventionist fear is based on outdated definition of monopoly. Standard Oil’s so-called “monopoly” lowered kerosene prices “from 58 to 26 cents from 1865 to 1870. Competitors disliked the company’s business practices, but consumers liked the lower prices.” https://en.wikipedia.org/wiki/Standard_Oil.

Yet, some politicians and activists want to stop this merger because they are simply afraid of change.

You can let firms experiment and innovate to figure out how to serve customers and grow, or you can let politicians protect the status quo and continue with 1% GDP.

 

Project Belle  is a website that allows licensed cosmetologists to schedule appointments with prospective clients. Instead of going to a salon, customers can have hairstylists or makeup artists come directly to their homes or businesses (Source).

The connect professionals for haircuts and styling, yoga, makeup, manicures, personal training, beauty & health.

Looks like it serves the Nashville, TN area.

 

From Don Lavoie’s excellent 1985 volume National Economic Planning: What Is Left?:

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The government does not play the role of agent for the social will but simply joins in the self-serving struggles of the private sphere.  The public sector interferes with the operation of the private sphere, making war with the private decision-making order, while the competing participants from the private sector respond and attempt to circumvent such interference, to engage in defensive maneuvers, to try to grab state power for themselves and use it against their competitors.

An open letter to Trump economic advisor Peter Navarro here.

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This claim is untrue.  Nothing at all in economic theory says that it’s abnormal for a country to run trade deficits for over a decade, or even for over a century.  Nothing in economic theory implies that years, decades, or even centuries of unbroken annual trade deficits are evidence of ‘unfair’ trade practices by foreigners or of self-destructive economic policies at home.

If investment opportunities available in the United States this year are especially attractive relative to opportunities elsewhere, the U.S. will run a trade deficit this year as global investors use some of their dollars, not to buy American exports but, instead, to invest in America.  If next year the U.S. economy again offers especially attractive investment opportunities, America will run a trade deficit again next year.  Ditto for two years from now if the relative attractiveness of American investment opportunities continues for that year.  For an innovation-filled economy, such as that of the U.S., in a world in which the size of the capital stock can grow, there is no natural limit to the number of attractive investment opportunities that arise each year.  Nor is there a natural limit to the number of consecutive years that a country can, or will, continue to remain a disproportionately attractive destination for investment funds.

 

Daniel J. Mitchell performs a fisking on an article in The Economist magazine:

Writing about the stagnation that is infecting western nations, the magazine beclowns itself by regurgitating stale 1960s-style Keynesianism. The article is worthy of a fisking (i.e., a “point-by-point debunking of lies and/or idiocies”), starting with the assertion that central banks saved the world at the end of last decade.

The point I want to make is about the Phillips Curve, which Dan refers:

According to adherents, all-wise central bankers can push inflation up if they want lower unemployment and push inflation down if they want to cool the economy.

This idea has been debunked by real world events because inflation and unemployment simultaneously rose during the 1970s (supposedly impossible according the Keynesians) and simultaneously fell during the 1980s (also a theoretical impossibility according to advocates of the Phillips Curve).

The common understanding of the Phillips Curve is not based on what Mr. Phillips actually studied. This is from John P. Hussman.

The Phillips curve, named after economist A.W. Phillips, is widely understood as a “tradeoff” between inflation and unemployment. The idea is so engrained in the minds of economists and financial analysts that it is taken as obvious, incontrovertible fact.

John agrees with Dan about the common definition and its acceptance but there is another problem with the Phillips Curve.

See, the Phillips Curve takes its name from a 1958 Economica paper by A.W. Phillips, which studied the relationship between unemployment and wage inflation in Britain, using a century of historical data through the 1950’s. What Phillips found was this: when unemployment was low, wage inflation tended to be above-average, and when unemployment was high, wage inflation tended to be subdued. . . .

The answer is simple. During most of the period that Phillips studied, Britain was on the gold standard. As a result, the general price level was actually very stable, with very little general price inflation at all. . . .

The true Phillips Curve, then, is a relationship between unemployment and real wages.

Note, when analysts use the word “real” like this it means adjusted for inflation.

John delves into detail if you wish further explanation.

Monica Crowley was on the Bill O’Reilly’s television program this week.

They both asserted the superiority of capitalism and Monica added something to the effect of needing government to check the excesses of capitalism. Sounds reasonable, no? Not so fast.

You see, politicians, regulators, central bankers (aka government) have been trying to check the excesses of capitalism since the early 1900’s.  They’ve tried taxes, regulations, manipulation of interest rates, government spending, public provision of services, the war on poverty, the war on drugs, import tariffs, bans, wars against other countries. There’s no end to the social engineering and interference in our lives.

We are now at the point in history where they’ve checked it so much the capitalist organism is crippled. Hence the economic stagnation, discontent, fear and anger.

No, government’s basic job is to protect life, liberty, and property. That’s enough to keep it busy.

We need to guard against government’s excess control of capitalism.

 

Stanford-trained economist John Hussman on the economy’s persistent weakness:

Instead, the true wealth of a nation is embodied in its capacity to produce, as measured by the stock of real investment (productive capital, stored resources, infrastructure, knowledge) it has accumulated as a result of prior saving.

. . .

One of the hallmarks of the bubble period since the late-1990’s is that the growth rate of real U.S. gross domestic investment has slowed to less than one-quarter of the rate it enjoyed in the preceding half-century.

. . .

Over the past 16 years, U.S. real gross domestic investment has crawled at a growth rate of just 1.0% annually, compared with a growth rate of 4.6% annually over the preceding half-century. There’s your trouble.

 

. . . The path forward:

Simply put, the only thing QE really does is to distort the financial side of the economy, enabling and encouraging yield-seeking speculation and massive sectoral imbalances that we observe as wealth disparities and bizarrely distorted securities markets. The proper course of economic policy is to expand productive investment at every level of the economy through the action of Congress (including infrastructure investment, corporate investment tax incentives, workforce development credits, and other measures ideally tied to the creation of new jobs). The Federal Reserve is not a source of prosperity. It is the single most dangerous and unregulated risk factor in the U.S. economy. We should have learned that during the yield-seeking mortgage bubble and the collapse that followed. We have not, so we now face the equivalent prospect again.

Here.

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