"Most people are in arrested development and cannot use logic." Jacob.
"Competition and capitalism are hated to-day because of their tendency to destroy poverty and privilege." William Hutt
"America is unique in that our economy is totally dependent on global charity." Peter Schiff

Thursday, May 17, 2012

All about Greed.

Hard to find a more thorough smackdown of Greed, and how it is responsible for all our current woes, than right here:

'Greed is the Beginning of Everything' from Der Spiegel.

Trouble is, it's all wrong. The article is too long to quote in full, so Smiling Dave will just quote snippets and critique. To get the full relish and juice of my wonderful rebuttal, I humbly suggest you read the Spiegel article first, or maybe side by side.

[Originally, I wrote is as a reply to someone on redditt, so the style is that of addressing him, as opposed to you, dear reader. But I'm sure that will not be a problem.]

Without further ado, Smiling Dave's comments on the article:

The very title is a big mistake. It's not greed, but the desire to improve ones lot in life for oneself and for ones family. Or is he opposed to that?

The beginning is just hot air and moralizing. The first half-way serious sentence is, "One can expand the supply of goods and the purchasing power needed to acquire them. That's the hedonistic program, which we have chosen since the days of the Greeks and Romans, but which threatens to fall apart in the debt crisis. The monetization of our society has strengthened the illusion that all the things we desire are within our reach."

He's saying the debt crisis is making the ancient system of increasing the supply of goods and of purchasing power fall apart. Rubbish. The debt crisis is the direct result of NOT increasing the supply of goods. If the modern Greeks, for example, had produced more goods, they would not be in debt in the first place.

Not sure what he means by the monetization of our society. I doubt he means the ever increasing printing of digital money , but if he does mean that, he would be right. It does give some people illusory wealth.

Next he goes on to how wonderfully better off we all will be if only we had a lot less of everything. Not sure how he knows everyone feels the same way.

Then Speigel makes the ridiculous comment that, "SPIEGEL: The debts of Western countries haven't grown in the last 30 or 40 years as a result of need, but of abundance."

We had so much stuff we couldn't afford to pay for it all, and had to go into debt to have it? This contradicts that portion of Say's Law that all economists agree to.

"Man has a need for fairness and, therefore, for a fair distribution of wealth."
Dangerous words. Luckily, he preceded this by saying that most people can be trusted give charity without coercion [though he did not relaize that is what he was saying] when he declared that, "Only a truly egomaniacal person can live happily in a society in which he is the only rich one."

"He [=Adam Smith] clearly distanced himself from his contemporary Bernard Mandeville and his theory that private vices generate public advantages, and that the general welfare stems from the self-interest of the individual." I call BS. Prove this absurd statement.

Then Spiegel has his only intellignet thought of the night, though he doesn't realize it, when he says, "If the invisible hand of the market alone were capable of transforming self-interest into the common good, we wouldn't need government regulation at all." You got it. That's so right. The premise is true, as is the conclusion.

"The interdependence between capital and the state became obvious during the crisis. The financial system would have collapsed without government help..." False. Some banks would have gone bankrupt, yes, as they deserved to and had to. They were kept alive at the expense of everyone else [=the taxpayer] impoverishing the country and keeping incompetents at the helm of our financial institutions.

This whole piece is just propaganda. The point is that we need the govt to save us from our greed, and that less of everything is good for your soul, so get ready for it.

"Regulation may be a loaded concept, so let's talk about coordination instead. " This is meant to be serious economics? Calling something by its real name is unpleasant, so let's call it something else.

Suddenly, the article takes a decided turn for the better. I am stunned. Look at these sound Austrian statements:

"Instead of maximizing the gross domestic product, the goal should be to minimize debt." YES!

"In a free-market democracy, politicians should be deprived of the right and the authority to incur debt, just as they have already lost the right to print money." YES! [though of course, only a handful of politicians have lost the right to print money, with many retaining that "right"].

Then he goes on to some more nonsense, winding up with a few real idiocies:

"An economic policy that only pursues growth will always lead to debt."
Actually, the economic policy that pursues growth is one of hands off and let the free market be free. It is false that it will always lead into debt. They are unrelated. Debt is when the govt or when individuals borrows money. What has this to do with economic growth?

Of course, profitable businesses also borrow money, but always with the assumption on their part and the banks' part that the business will be able to repay the debt, since the money will be used to increase profits. But this is not a bad thing.

More moralizing to finish the article off.
Bottom line: He clearly has no understanding of basic economics.

Friday, May 11, 2012

The Chinese are ruining us with their unfair tricks, says Dick Morris.

I'm just going to copy two posts from the mises.org forum. The first quotes one Dick Morris. The second is my reply to said Morris.

You have the floor, Dick:
The Chinese lend us money because they have to. They buy dollars to make our currency artificially expensive and theirs’ commensurately cheap. With their currency manipulation, our products are 40% more costly in their markets and theirs’ are 40% cheaper in our stores, fueling the imbalance of trade. Once they own the dollars, what are they going to do with them? The only safe thing is to buy U.S. Treasury notes, hence they “lend” us money. If they stopped buying dollars and acquiring an unfair trade advantage over us, we wouldn’t need them to keep lending us money, our economy would be thriving.
We cannot sit by complacently and let China rob us blind, hacking our technology, our military secrets, and our power grid. We need a president who will stand up for America.
And my reply, where I requote Morris line by line in italics, and comment in normal font: [BTW, here is a fine article that elaborates on the relevant ideas: http://mises.org/rothbard/protectionism.asp. For a general understanding of imports and exports [which Mr. Morris clearly lacks] have a look at my humble article, "Imports and Exports, Which One is Good" ]
The Chinese lend us money because they have to.
As he will explain, I imagine.
They buy dollars to make our currency artificially expensive
1. Erm, who is selling those dollars to China? We are. Are they pointing a gun to our heads? No. So we must be doing it because there is some advantage for us.
Now what could that advantage be? Why on Earth would you, dear reader, sell your dollars and get Chinese money in return? After all, the only thing you can do with Chinese money is buy Chinese goods. You know, the stuff that is being sold in every store in the USA, the stuff that fills every room of your house. In other words, the Chinese only "buy dollars" when we buy their stuff.
So don't attack the Chinese for their "buying dollars". Thank them for being foolish enough to agree to be paid in useless dollars for their valuable stuff which we no longer make ourselves.
2. Also, what do you mean by a dollar which is "artificially high"? You are complaining that our dollar has more purchasing power than it "should have"?
and theirs’ commensurately cheap.
Which is, of course, a great free gift to us. We get to buy those Chinese goodies much cheaper than we would otherwise. The Chinese govt prints so much moolah that their money goes down in value compared to the dollar, letting us get a nice discount on their stuff.
With their currency manipulation, our products are 40% more costly in their markets and theirs’ are 40% cheaper in our stores,
Not sure where he got those numbers. But really, what do we even make that they would buy if it was 40% cheaper? I mean, are our exports to other countries so huge? Is it only those sly Chinese that sell us more than we sell them?
As Wikipedia says,"...the EU is the largest trading partner of the US with $367.8 billion worth of EU goods going to the US and $268.6 billion of US goods going to the EU..." For a deficit of a cool 100 billion bucks. We also have a deficit with Mexico of 65 billion, with Japan of 62 billion, with Cananda of 35 billion, with Saudia Arabia and Venezuala of 30 billion each, with Taiwan, India, and South Korea of about 14 billion each. Our biggest trade surplus is with tiny Singapore, a piddling 12 billion bucks. We do only 50 billion of annual trade with them anyway, compared to 600 billion with the EU, where we have that 100 billion dollar deficit.
So guys, we have a trade deficit with everyone, more or less, not just China. Kind of hard to blame the Chinese for the whole world not buying our stuff.
fueling the imbalance of trade.
Spoken like a true Mercantilist, making an imbalance of trade sound like something evil. Mr. Morris, it's just the opposite. They are giving their stuff away to us for free. Mr Morris, do you buy only from the USA, and boycott Chinese goods, to do your part to balance our trade? Do you pay 40% more for your things, out of patriotism? Or do you think, when it comes to your own wallet, that the USA is best served if its citizens pay less for their needs?
Once they own the dollars, what are they going to do with them? The only safe thing is to buy U.S. Treasury notes, hence they “lend” us money.
This is true, but for the word "safe". Treasury notes are a disaster waiting to happen, in fact a disaster already happening. The dollar is losing value at 10% a year [look in the supermarket and at the gas station and at your insurance and medical bills], and the interest on those Treasuries is piddling. The Chinese are losing money as we speak, every second they hold on to those Treasuries. 
Note the quotation marks Mr Morris put around the word "lend". It's an old Soviet trick, to mock something by putting quotes around it, when there is nothing to mock. Yes, they are indeed lending the US govt money when they buy Treasuries. No quotation marks.
If they stopped buying dollars
They aren't buying dollars. We are buying their products, and they are doing us a big favor by accepting our worthless money in payment.
and acquiring an unfair trade advantage over us,
Unfair? What do you mean by unfair? Are they doing something we aren't? Does the US govt sit idly by and not print money? The accurate description is that the Chinese are doing us a HUGE favor, making sure we get their products dirt cheap. Or would you rather pay 40% more for everything?
we wouldn’t need them to keep lending us money,
Let me get this straight. Say you have trouble making ends meet. You have huge credit card debt. In an inspired moment, you realize, "If only the stores charged me 40% more for everything, then I could pay off all my debts."
our economy would be thriving.
Poor soul, you have no clue as to what makes an economy thrive. Hint: Expensive prices for imports is not the answer.
We cannot sit by complacently and let China rob us blind,
This is a new one. When a store sells stuff at a 40% discount, it is robbing the customers blind.
hacking our technology, our military secrets, and our power grid.
All these claims are either unsubstantiated, or from very unreliable sources [=US govt hacks].
We need a president who will stand up for America.
Glad we agree on that. But you can only stand up for America if you know what America needs.
Imagine a poor little old lady [=the USA] who is having a hard time paying her bills. Her young heroic son, Dick, assures her he will stand up for her and set things right.
"Well Momma, I went to the supermarket and the electric company and all the places you owe money to, and I stood up for you."
"Oh, thank you son. Will they give me a senior citizens' discount?"
"No, Mamma, I got you something much better. They will charge you 40% more."