Trump

Our Quasi-Soviet Fiscal Policy

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“It’s like deja vu all over again.”

Do Yogi Berra’s words of wisdom apply to the “new” trillion dollar “public infrastructure” program? The last program, still unpaid, focused on “shovel-ready” projects but somehow missed most potholes. Meanwhile, private companies are prepared to spend $100’s of billions on a new fiber optic internet super highway.

Is the current proposed public spending program more likely to pay off for taxpayers than the last one?

Historical Precedent

When the hammer and sickle flag was lowered for the last time in Moscow on December 25, 1991, the international finance agencies created in Bretton Woods in 1944, led by British economist John Maynard Keynes and the Undersecretary of the U.S. Treasury Harry Dexter White, found a new mission.

The International Monetary Fund (IMF), which is a “bank” according to Keynes, provided the financial infrastructure for international trade. The World Bank (WB), or a “fund” according to Keynes, was promoted by, known communist and accused Russian spy, Undersecretary White to help reconstruct European infrastructure, but primarily Russia’s infrastructure, in the wake of WW II destruction.

The IMF lost its raison d’être in 1971 after President Nixon eliminated dollar convertibility into gold, ending the Bretton Woods function. Russia turned down World Bank membership, so the Bank turned to lending for infrastructure projects in the “underdeveloped” nations, which by 1991 faced overwhelming political obstacles.

Assisting in the conversion of formerly centrally planned economies into capitalist market economies became the finance agencies’ new post-Soviet mission. However, few people had much of an idea of how to accomplish this. It had never been done before, and the IMF and WB were particularly ill-equipped as their charter limited them to lending only to governments. They were essentially statist organizations with little experience with (or sympathy for) competitive private markets (which helps explain why they remain chronically underdeveloped).

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The Riot at Middlebury College and Academic Life.

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Recently, Charles Murray, author of the book, “The Bell Curve,” a study of intelligence in the population, was invited to speak at Middlebury college, a liberal arts college in Vermont. His attempt to speak was interrupted by a riot which injured a professor at the college.

Inside Higher Ed’s story on the event explains that college officials admonished the students prior to the talk that they could protest but not disrupt Murray’s talk, which was to be about the way white America is coming apart—the title of his latest book—along class lines. Unfortunately, that admonition did no good. “As soon as Murray took the stage,” we read, “students stood up, turned their backs to him and started various chants that were loud enough and in unison such that he could not talk over them.

The confrontation continued after he had left the stage and attempted to move to another location.

And then matters turned worse. Fearing that there might be a raucous, disruptive mob instead of an audience of students willing to listen and consider Murray’s arguments, school administrators had set up a contingency plan. Once it became clear that the mob had killed the lecture, they moved to another location where Murray would give his talk, which would be live-streamed to students.

Sadly, that location was soon beset by the mob, with banging on windows and pulling of fire alarms. Murray and Professor Allison Stanger, who was the moderator for the talk, tried their best to continue a rational discussion.

Finally, Murray, Professor Stanger, and a few others tried to leave campus.

Mayhem resulted when Professor Stanger, who had been willing to state her agreement that Murray should not have been invited, was injured.

Why did this happen ? Tribalism ?

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Worthwhile Reading & Viewing

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Some people find it very upsetting that President Trump likes to put ketchup on steak.  (Not something I’d do, but then I never put ketchup on french fries, either…)  Matthew Continetti says:  It is hard to read stories like these without coming to the conclusion that so much of our elite’s abhorrence of Trump is a matter of aesthetics.

There’s considerable truth in that point, I think.  Lead and Gold quotes GK Chesterton:  The modern world will not distinguish between matters of opinion and matters of principle and it ends up treating them all as matters of taste.  Follow the link to read what L&G has to say about the worship of ‘taste’, using the Bloomsbury group as an example.

How Communism became the disease it tried to cure:

Contrary to the socialist promises of making a new man out of the rubble of the old order, as one new stone after another was put into place and the socialist economy was constructed, into the cracks between the blocks sprouted once again the universals of human nature: the motives and psychology of self-interested behavior, the search for profitable avenues and opportunities to improve one’s own life and that of one’s family and friends, through the attempt to gain control over and forms of personal use of the “socialized” scarce resources and commodities within the networks and interconnections of the Soviet bureaucracy.

Stuart Schneiderman writes about nationalism vs internationalism, and Don Sensing has some thoughts on tribalism.  Both are well worth reading.

Why college graduates still can’t think:

Traditionally, the “critical” part of the term “critical thinking” has referred not to the act of criticizing, or finding fault, but rather to the ability to be objective. “Critical,” in this context, means “open-minded,” seeking out, evaluating and weighing all the available evidence. It means being “analytical,” breaking an issue down into its component parts and examining each in relation to the whole.  Above all, it means “dispassionate,” recognizing when and how emotions influence judgment and having the mental discipline to distinguish between subjective feelings and objective reason—then prioritizing the latter over the former…I assumed that virtually all the readers (of a post on a higher-education website) would agree with this definition of critical thinking—the definition I was taught as a student in the 1980s and which I continue to use with my own students.

To my surprise, that turned out not to be the case. Several readers took me to task for being “cold” and “emotionless,” suggesting that my understanding of critical thinking, which I had always taken to be almost universal, was mistaken.

Some great pictures of villages around the world.  (via Craig Newmark)

An Interesting Theory on Muslim Immigration.

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I have been wondering why the political left, and to some extent the right, has been so enthusiastic about Muslim immigration. Islam is just not compatible with the liberal traditions of the West. So why the continued efforts to import Muslims ?

Here is a novel theory.

There’s no economic argument for importing Syrians or Turks. Muslims are overwhelmingly represented on the welfare roles. In Denmark, people from MENA countries make up 5% of the population, but consume 40% of welfare benefits. This is a story across Europe. It is not just the new arrivals. Turks in Germany have been there for a couple of generations and have been the worst performing economic group in the country. Estimates put the total working population at 20%, while the rest live off welfare benefits. Then there is the issue of sky high Muslim crime rates.

The incident in London yesterday made clear that assimilation is not going to solve the problem. The terrorist was British born. Most of the sexual abusers in Rotherham were British born to Muslim immigrants.

In September 2012, investigations by The Times based on confidential police and social services documents, found that abuse had been much more widespread than acknowledged.[24][25] It uncovered systematic sexual abuse of white girls by British Asian men (mostly of Pakistani origin)[26] in Rotherham for which people were not being prosecuted.

Not only were they not being prosecuted but the British authorities had been covering up the abuse for years Why ?

Is there popular support for importing these people, despite their uselessness as citizens? Again, there’s no data to suggest this is the case. European leaders could have put the issue to the voters, but they fanatically avoid it. In fact, anyone who dares run on the issue is branded a Nazi. Politicians love democracy when they are assured of winning. They avoid it when they are assured of losing. Therefore, it is safe to assume they don’t think this is a winner for them.

So, the politicians seem to favor the immigrants over their own citizens. Why ?

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Free Trade with a Hostile Mercantilist Empire?

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2017 marks the 200 year anniversary of David Ricardo’s publication on the theory of comparative advantage that underlies the economic case for free trade. Several years later Frederic Bastiat wrote the satirical Candle Maker’s Petition debunking the arguments in favor of protectionism. This was an ironic choice, as candle makers were politically protected by the Founding Fathers as necessary for the Revolutionary War. These protections lasted several centuries, and in 2016 Senator Chuck Schumer sought it re-instated on grounds of unfair competition from China.

President Trump’s trade representative economist Peter Navarro is making both the political and economic case against free trade with China, which he considers a mercantilist trader with military ambitions hostile to the U.S.

Navarro’s political case is an update of that faced by the Founders regarding candle making. China is viewed as pursuing a trading strategy to accumulate wealth and technical know-how to challenge the U.S. militarily in the South China Sea and globally. China’s mercantilist trade practices result in huge export surpluses with the U.S. He argues that China uses this advantage to weaken America’s industrial base and future defensive capability.

While economists can’t reject this political concern out of hand, it does seem several decades premature given the relative size of the two countries’ navies. At present the US could quickly secure sources of supply for military purposes, and protectionism tends to linger for decades or even centuries.

The second case against free trade with a mercantilist trader relates mostly to the loss of jobs due to “unfair” competition, i.e., not due to inherent comparative economic advantages as much as political subsidies, in China’s case a purportedly cheapened currency and weak labor and environmental protections. The standard argument is that such trade generally benefits consumers at the expense of high cost producers, resulting in a less political more fair distribution of consumption as well as a higher overall level.

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