Friday, May 29, 2015

The Left Kills

It happens over and over again, but never ceases to amaze me. GMOs (Genetically Modified Organisms) are genetically altered seeds that make farming safer and more economic. One seed might require less water than the original, another might be pest resistant, require fewer pesticides and herbicides, and another able to withstand severe weather. In years to come they will produce more and more nutritious fruits and vegetables and other yet unimagined features. Chipotle restaurants announced last week that they would no longer use GMOs  in any of their foods.

The world rejoiced when the first seeds were successfully developed. They were expected to help feed the hungry, to give enhanced nutrition to children and adults alike, and allow farmers to grow more with less work, fewer crop losses, while increasing arable land and yields. It has done exactly that. Better and better seeds are being developed every day, improving lives around the world. Who could object? True to form the Left has, with Chipotle being a loyal follower. Why, and what is the effect of this inexplicable decision?

GMO naysayers claim all manner of illnesses have plagued the world since their development. They talk about the possibility of catastrophic events (all imagined without any evidence) from GMOs gone wild. Of course this is the same as most of what the Left says, slanderous lies. There is not one case of illness attributable to GMOs, but there are millions of people who didn’t starve because of them. The Left creates authoritative looking documents by authors with impressive sounding credentials (credentials awards and degrees awarded by other Leftists) who are willing to speculate, exaggerate and outright lie. It is impossible to prove what will happen in the future, but these wonderful discoveries have led to better healthier lives for literally hundreds of millions people.

When Chipotle bans GMOs from their menu, they give credibility to baseless assertions, scaring people away from nutritious life saving foods. Chipotle’s action is a metaphor for the Leftist policies. All motives and policies are promoted as being for the good of mankind, claim to be based on science, yet most have devastating consequences worsening the condition they set out to correct.

Rudy Giuliani was elected Mayor of NY in 1993, a time when crime was so rampant the city was regarded by many as ungovernable. With his police commissioner Bill Braton they implemented the “broken windows” theory of crime prevention, where the police were instructed to go after minor crimes with the expectation major crimes would be reduced. The idea worked. I won’t explain why, but it worked unbelievably well. New York city went from one of the highest crime rates in the US to the lowest. The real estate market has boomed ever since because people from around the world want to go there. The cultural centers are healthier as is every business. Even with tax reductions tax revenues have skyrocketed. Prosperity is everywhere. So what is the radically left Mayor de Blasio proposing; to abandon broken windows and go back to the failed theories used in the bad old days. Just as quickly as the murder rate came down under Mayor Giuliani and Mayor Bloomberg, it will go up under de Blasio. The Left kills.

Have you heard that measles have made a comeback after decades of near extinction? Why? Because in the face of repeated studies by prestigious institutions consistently concluding the opposite, the Left claims that vaccines are bad for children. Parents who believe this have stopped vaccinating their children, and we have these unprecedented outbreaks as a result. Vaccines can have adverse effects, but they are well worth the risk when measured against mumps measles and polio. For whatever reason, Left could care less.

They advocate public policies which even a cursory examination would make clear are harmful to everyone. The Left has supported the Teachers Union and opposed charter schools and vouchers for decades, making all manner of fictional claims about how such policies (vouches and charter schools) would undermine a good education. Meanwhile they have increased school budgets every year for 40 years. During this time teachers salaries have gone up dramatically, work rule protections have gone up, and class room size has gone down. Yet education has steadily declined. More and more children fall farther and farther back in reading, mathematics, and life itself. The Left also destroys hope.

In 1965 Lyndon Johnson declared war on poverty. He began to subsidize everything from rent to food to medical care. Here we are 50 years later and poverty is alive and well, arguably more prevalent than it was then. Meantime all manner of social pathologies have developed, from drugs to out of wedlock births, to a murder rate never before experienced. One must understand that under the Left’s system, if someone collects welfare he cannot work or he will lose the benefit, and if he is on Medicaid he cannot save any money, or he will lose the small health protection it provides. These perverted incentives mean once someone is in the system it is almost impossible to get out.

The Left constantly advocates increasing the minimum wage, suggesting the only effect would be the employers would earn a little less. Of course the truth is far different. Minimum wage laws should be renamed “Unskilled and Youth Job Training Destruction Program,” because that is exactly what they do. These laws destroy jobs for those just entering the work force, denying the most needy, the most in need of job training, the opportunity to enter the middle class and lead productive, dignified lives. The worst part is that being frozen out of the work force leads to any number of social pathologies. “Idle hands are the devils workshop." Is it any wonder the growth in pathologies track very close to the growth in government subsidies and minimum wage? If I were a fourth generation welfare recipient, my career goal would likely be getting as much from government programs as possible. I would know nothing about the more fruitful career path of working productively. The War on Poverty has become a Poverty Prison.

Obama care is the law of the land. Forget the Presidential lies and bribes that birthed it, the Left claims there are 14 million fewer uninsured. They predicted that emergency room use would decline as these formerly uninsured using them would be able to go to Medicaid doctors. Emergency rooms are busier today than ever. There are weeks and months of waiting to see a Medicaid doctor because so few doctors will participate, so the formerly uninsured patient still goes to the same emergency room. Anyone who thinks the government can set up a health program (or any program) that works need look no farther than the Veteran’s Administration. Even after fraudulently compiling the figures making things appear less ugly than they are, the waiting times, maltreatment and deaths at the VA are still off the charts. The fact is one can look at any government program, and the execution is pathetic when compared to any comparable private sector effort.

But the Left plays their games on a far larger and a far more deadly scale. Communism was “based on science” according to the early advocates. They preached that nirvana was at hand if only people ceded their individual rights to the state, their property to the state (guns first and foremost), and renounced their faith in favor of the state. Stalin proceeded to kill 80 million people, Mao killed 60 million, Pol Pot 3 million,  and an endless list of other tyrants selling the same garbage killed and imprisoned unfathomable numbers. The lucky ones were condemned to a life of poverty while the free world prospered.

Castro has kept his people in an island prison for 60 years, yet the Left toasts him as a hero. Che Guevara, his executioner, is for some unknown reason revered among progressives. When Chavez took over Venezuela he made the same promises every communist tyrant does. It was easily predictable that the economy would collapse, and of course it has. The point is that after this horrendous record, under  banners ranging from communist and progressive to socialist and liberal, the Left has gained power while systematically destroying whatever it touched.

The only “communist" success was actually a capitalistic movement in China. After the death and devastation of Mao’s “great leap forward,” his name for the promise of communism, the country turned to capitalism. It has improved every aspect of the lives of a billion people, growing the economy from minuscule to the second largest in the world. For some reason China still maintains the communist label, but they anything but communists. 50 years ago Pinochet moved Chile from the devastation of Allende’s totalitarian communist rule (and poverty) to a free market system. Chile became the economic miracle of South America. In 1945 Argentina had a living standard equal to pre war France. The communist governments since have left them far behind their former economic equal. Look around the world. Look at history. Every time a country moves towards free markets, freedom soars as does the living standard, lifespans, and everything else a society strives for. Look at those countries who have moved away from free markets. Repression and economic failure has always been the best result, with death resulting for the more unfortunate.

Chipotle and their ilk (Starbucks, Whole Foods etc,) have a choice. They can jump on whatever bandwagon the Left is selling without regard to the consequences, or they can do some real good and stick to their business. If there is a need to enter into policy discussions, I would argue that in the long run the truth will serve them far better than leftist propaganda.      

Monday, December 15, 2014

Elizabeth Warren Is Only A Distraction For Hillary

The political pundits advising Hillary to move to the left in order to pre-empt a threat from Elizabeth Warren have it wrong. It is questionable if such a move will gain her any votes, but it is unnecessary to win the primary and will hurt her in the general election. In 2004 Howard Dean had the same crowd of radical leftist groups like backing him. Up until the actual voting he polled great. Of course once the battle began he crashed and burned, losing to the more "centrist" candidate John Kerry.

In 2008 Obama started with the same supporters as Dean, but he won. There was one major and telling difference. Black voters represent about 25% of Democratic primary voters. and traditionally the vote is divided. Obama entered the primary and true to form it remained divided because no one thought he had a chance of winning. But once he won in Iowa, people realized he could win the nomination and the entire black community lined up behind him. Hillary would have won in a landslide absent the black vote, and would have won decisively had the black vote been divided. In 2016 the it will be divided, and Hillary will win the nomination easily. After all, wasn't Bill Clinton "the first black president"?  

Friday, April 25, 2014

Larry Summers; Wrong Again

The supposed mainstream economists have absolutely no idea about what macro economic forces causes what. There is no logic to what they say and a complete ignorance of economic history.

This morning prior to an Export Import Bank meeting, Larry Summers, former Treasury Secretary, President of Harvard University and lifelong darling of leftist economists, was on Bloomberg TV discussing economic policy. I can’t quote him exactly but here is the gist of what he said. Export Import Bank subsidies (some of which go to healthy large corporations like Boeing) support US exports and labor. He added that he can’t understand why some economists oppose those subsidies and at the same time support corporate tax reduction, which, he said, only add to corporate profits. This is a perfect example of the Lefts one dimensional thinking and their complete ignorance of how capitalism works.

So far as corporate profits go he is right, but only to a point. A reduction in the corporate tax rate would boost profits temporarily, but (everything being equal) competition would kick in and prices would decline below where they were before the tax cut. The former tax revenue would find it’s way into the customers pockets, not the shareholders.

In a free market system a product is priced in order to return the maximum profit to shareholders. But, that price is not freely arrived at. Competition determines what that maximum price is, and if everyone competing eliminates an expense (as in corporate taxes) at least one competitor will reduce prices proportionately, forcing everyone else to do so.

Of course a profit is necessary to survive, putting a floor on prices, but in theory that price level was determined before the tax reduction and would remain the same afterwards. Better marketing, cheaper production costs and a host of other things always cause variations in pricing and profitability, but these things are ongoing with or without tax reductions. If the coffee growers price goes down you can be sure after an adjustment period the supermarket price will go down as well. The first Ford car cost about $5,000, but after Henry Ford successfully reduced production costs with his assembly line, the price came down to $500. It is no different with taxes.

I will only briefly mention the other positive ramifications of corporate tax reduction. Cheaper prices that would result are a benefit that every consumer enjoys, not only that reviled 1%. Consumer price reductions equate to an earnings increase for everyone, although liberal economists are loath to point that out. And although this simple concept seems too abstract for geniuses such as Summers, lower taxes and thus lower prices support wealth production and economic growth.

My question is, are these ridiculous one dimensional (in a multi dimensional universe) liberal economic theories honestly (albeit foolishly) believed, or are the always decorated liberal economists really doing leftist marketing disguised as scholarship?

Tuesday, April 1, 2014

How Did Obama Get Elected?

How is it possible that Barack Obama got reelected? One might explain his original ascendency, however unlikely, to his hidden nature, something the press studiously avoided talking about. But to make the same mistake again is almost unfathomable. He is a man that sat in the pews of a racist, Jew hating, America hating preacher and called him his mentor. He refers in his autobiographies (the plural is not a typo, he has two of them) to Frank, who is Frank Marshall, another mentor. Marshall was a lifelong communist, as thus an apologist for Joseph Stalin, the murderer of 80 million people. He cut his teeth in Chicago politics at the home of Bill and Bernadette Ayres, convicted domestic terrorists. He attended events for fundraisers for Hamas, terrorists in the middle east. And if anyone doubts that past is prologue, he has governed using the same destructive principles that the aforementioned rogues gallery advocate. Who would vote for such a man? How could this happen?

The founding fathers believed that a representative democracy could only flourish if the voters had a vested interest in the long term health of the country. It is often the case that the long and short term interests are opposite one another. Some men are willing to delay gratification in order to enhance long term benefits, while others seek instant gratification at the expense of long term health. Our founding fathers understood that allowing everyone to vote was a recipe for disaster. Too many voters would opt for instant gratification regardless of the longer term costs. It was almost self evident that any system embracing one man one vote was doomed to fail.

The fathers wanted to insure that only voters with a long term interest qualified to vote. Because women were considered ignorant in the ways of government and business, and a man not owning property was thought to be too young and inexperienced to cast a thoughtful ballot, or simply unqualified by virtue of his station in life, they were excluded from voting. Land was prized above most  things (this was a time when Ben Franklin said of our agrarian society, “All wealth will come from the ground.”), so that or a minimum amounts of land, savings or taxes paid were used as a criteria to qualify to vote.

Below are quotes illustrating the thinking at that time. It applies today as much as it did then. My thesis is that if only people with a vested interest in the long term survival of the US were voting, this aberration of an Obama re-election could never have happened.

'Property requirements were widespread. Some colonies required a voter to own a certain amount of land or land of a specified value. Others required personal property of a certain value, or payment of a certain amount of taxes. Examples from 1763 show the variety of these requirements. Delaware expected voters to own fifty acres of land or property worth £40. Rhode Island set the limit at land valued at £40 or worth an annual rent of £2. Connecticut required land worth an annual rent of £2 or livestock worth £40.

John Adams, signer of the Declaration of Independence and later president, wrote in 1776 that no good could come from enfranchising more Americans:
Depend upon it, Sir, it is dangerous to open so fruitful a source of controversy and altercation as would be opened by attempting to alter the qualifications of voters; there will be no end to it. New claims will arise; women will demand the vote; lads from 12 to 21 will think their rights not enough attended to; and every man who has not a farthing, will demand an equal voice with any other, in all acts of state. It tends to confound and destroy all distinctions, and prostrate all ranks to one common level.

The true reason of requiring any qualification, with regard to property, in voters, is to exclude such persons as are in so mean a situation that they are esteemed to have no will of their own. If these persons had votes, they would be tempted to dispose of them under some undue influence or other. This would give a great, an artful, or a wealthy man, a larger share in elections than is consistent with general liberty. 

Interesting that the quote above believes limiting who can vote would protect against wealth having an undue influence. What has happened since the one man one vote policy was adopted is not that wealthy individuals have gained undue influence, but the government itself has become the wealthy force that trades favors for votes. The never ending expansion of the social programs has provided a framework for Democrats to gain and expand power. These programs have proven to be cancers destroying the nations economic and social fabric under the false banner of compassion, but they succeed in garnering votes. 

Most Democratic voters have no idea what philosophy the party employs, they don’t know who the Vice President is, who their senator is, or anything else related to the economy, civics or the legal system. But they do know how to apply for welfare, food stamps, aid to dependent children, heating subsidies  rent subsidies and Obama phones, and they know what party to vote for to insure the money for these programs keeps flowing.    

Whether these laws limiting voting accomplished their purpose, or could have been crafted better is open to debate. Even if there was merit at the time to the prohibition on women voting, it certainly would be an absurdity today. But the idea that letting the entire public vote would destroy the democracy is as true today as it was then. In order to expand the class of uninformed voters, the Obama crowd routinely insults our intelligence with nonsensical claims such as arguing that identifying oneself at a polling place is undemocratic and an undue burden. To the contrary it is both democratic and a small step in the right direction if this nation is to survive.

Early critics of a democratic system said a democracy can only exist until the voters learn they can vote themselves the other guys money. I fear our system, one man one vote, will prove those early critics right. We are seeing it in real time with the election of the most unqualified, most dangerous, man to ever run for much less hold the office of the President. He is an ideologue with no sense of history, no experience in the real world, no understanding of capitalism or any other economic system, whose world view has been shaped by intellectually arrogant and intellectually bankrupt, unaccomplished, fringe radicals.  

Tuesday, January 28, 2014

Castro And His Friends

My daughter Kathryn wrote this a couple of years ago. It is a reminder of the power of the mythology regularly embraced by the Left.

The mainstream media tells a consistent story about Cuba’s past and present—Cuba’s healthcare and education are better than the United States’, and Fidel Castro is a romantic revolutionary who saved his people from the evils of Batista. Dan Rather was so enamored that he referred to Fidel as “Cuba’s own Elvis.” Castro's supporters admit that although he may have “infringed on a few human rights,” such is the cost of a revolution, one that has vastly improved the Cuban quality of life.
This narrative portrays Che Guevara as a young martyr, inspired by the injustices he saw. He looked to Marxism for the answer. This image is pervasive throughout every leftist center in the world.  His face is plastered on t-shirts and stickers of trendy hipsters. Little do they know they are wearing the face of a sadistic mass murderer. Castro too is a cold-blooded killer who has kept 6 million people in an island prison for 60 years.  
I was lucky enough to interview Humberto Fontova, a Cuban American author who escaped with his family in 1961.  Tragically, his father was killed in the process.  Fontova has worked for years to expose Castro’s lies. He wrote two books on the subject, Exposing the Real Che Guevara and the Useful Idiots Who Idolize Him, and Fidel: Hollywood’s Favorite Tyrant. For those who are skeptical of what follows, please note that Fontova’s work is all footnoted and well sourced.
Here are some facts he presents comparing pre Castro Cuba with the present  Pre-revolution Cuba had a higher per capita income than most Western countries.  It was a first world country from the 1940s until 1959 when Castro seized power.  Today it is one of the poorest countries in the western hemisphere. Prior to Castro, Cubans were free to leave if they chose.  Today emigration is not permitted and is punishable by death.  Before Castro more Americans lived in Cuba than Cubans lived in the United States. Today Cubans risk their lives daily trying to escape.  Before Castro, Cuba had the 13th lowest infant mortality rate in the world. Today it is 50th. Before Castro, Cuba had more doctors and dentists per capita than the US. Today 75% of doctors who have escaped to the US fail the exam to practice medicine.  Worse, over half fail the examination to simply practice as nurses.  The average height of Cubans has decreased over the last two decades, a clear sign of malnutrition. There have been outbreaks of Dengue fever, which had been completely eradicated prior to Castro. The "quality education" claims are preposterous. What Castro calls education is mere indoctrination.  Cuba has the highest abortion rate in the Western hemisphere. Women undergo forced abortions if any pregnancy hints at trouble in an effort to keep the infant mortality rate down. Malformed infants are routinely murdered in secret. In short, it is a failed state run by a murderous tyrant.
What about political freedom? Cuba has the highest incarceration rate on earth right now. There are so many speech and assembly restrictions that it is hard to determine who is a political prisoner and who is a common criminal. Fontova thinks that 90% of those in jail are there for political reasons. Authorities can throw anyone into prison without reason if they perceive political threat.
So what’s the attraction? Why has Castro been so embraced by the left? Fontova said Che and Fidel exude coolness to liberals.  “Look, Che looks like Jim Morrison. Fidel looks like Jerry Garcia. They both nailed the coolness cache of being hippies who were bringing freedom to Cuba. Picture the United States in the late 50s. The US is reigned over by an old bald golfer, Eisenhower.  America is filled with white picket fences and families watching June Cleaver. All of a sudden these bearded long-haired guys pop up and they seem so cool. They were the first beatniks."
This cache persists. Fontova explained, “One might have hoped that the veil would have fallen by now. Castro and Che jailed more political prisoners as a percentage of the population than Stalin.  They murdered more political prisoners in first three years in power than Hitler in his first six.  They introduced Stalinist horror to western hemisphere imprisoning 10,000 women, hundreds of whom were murdered, and committed countless other atrocities. One would think the cache might have worn off. Well if you do think that, you are wrong.”
Fontova further explained why the world believes so many lies about Cuba.  Castro has a genius propaganda machine. “He began the initiative before he reached ‘office’ to bamboozle the US media while he was still a so-called rebel,” said Fontova. “There is a passage in Che’s diary where he said ‘more valuable to us than military recruits for our guerrilla force were media recruits from America to spread our propaganda.’ In 1954 Castro was in jail in Cuba. He wrote a letter to a revolutionary colleague stating, ‘propaganda is at the very heart of our struggle.  We can never abandon propaganda.’” He recognized the importance of his control of the US media.  He still commits any number of heinous crimes that the world never hears about because of his skill in controlling the information flow.
Castro has a near flawless system controlling the media. Every mainstream American news source must report through the state controlled Havana Bureau, which reports only what the state approves.  It seems that since the end of the Cold War, Americans have forgotten what news from a Communist regime is like. “Thirty years ago years ago during the Cold War, people knew what Communism was and no one would believe any reports coming from a communist source,” explained Fontova.  “It’s really laughable. You knew they were liars. Nowadays, we have CNN (Castro News Network), ABC, CBS, Reuters, et. al. reporting out of Cuba only what is handed to them from Castro’s propaganda ministry. “
The left’s blind acceptance of this ruthless thug as an inspirational revolutionary is best highlighted by an episode here at Harvard. Castro had applied to Harvard Law School in 1948 and been rejected. In April 1959 Harvard Law Dean McGeorge Bundy decided to correct this "injustice." Encouraged by the adulation of the Harvard student body and faculty, the Dean had hardly declared, “I’ve decided to admit him!” before the crowd erupted with delight. In April 1959 while Castro was speaking at to standing ovations at the school, his firing squads were murdering hundreds of Cubans, including women and children as young as 17.
I asked Fontova about the debate between conservatives and liberals on how to deal with Cuba.  Conservatives generally believe sanctions are the best way to bring Castro down, while liberals believe sanctions have not worked and engagement would be more effective.  It seems like both sides make reasonable arguments.  Fontova disagrees.  “The verdict is in, and anyone who cares to look at the evidence will determine that engagement has failed abysmally.”  He went on to list some frightening statistics. Contrary to US State Department claims, there is no real US embargo. Until last year, the US was Cuba’s largest food supplier and fifth largest commercial trading partner. Nearly 500,000 Americans legally visited Cuba last year. Nearly $3,000,000,000 reaches Cuba annually from the US.  Only Chavez’s Venezuela is a larger trading partner with Cuba.
Obama’s recent policy changes allow even more open travel and money to be sent to Cuba. Fontova believes this is keeping Castro’s regime alive.  He said that they are nearly bankrupt. This past December Raoul Castro (Fidel's brother and newly appointed head of the state) said, “the life of the revolution hangs in the balance. We either reform or we sink.”  The Italian ambassador to Cuba publicly stated that Cuba would almost certainly be bankrupt by 2011.  “But just as they reach the tipping point, Obama throws them a life line.  Hundreds of thousands more Americans will put money directly into Castro’s pocket,” said Fontova.  This is not just from direct payments. The government controls the tourism industry. Every type of travel there directly funds the regime.
He believes that that a real change can only occur after Castro and Raoul die. Raoul’s recent ascendancy has done nothing for change in Cuba. He was a Communist party member before Fidel.  The regime is composed of  “the abject failures and common criminals who have absolutely nothing to gain by adopting capitalism. But there are younger men in the bureaucracy who feel left out.  The older guys make all of the money. The younger men, simply for materialistic reasons, want in.  This will probably start the reform after the biological solution” (the death of the leaders).  “It’ll unwittingly open things up.”
A genuine embargo would certainly help. Fontova pointed to South Africa as an example of a successful US embargo. We should set the international example. Political support is essential to do this. The American public needs to be educated. Let us hope that with alternative news sources available, people will stop believing the nonsense spit out by the mainstream media and will start getting the true story.

Sunday, December 1, 2013

Pope Francis and Wrong Ideas

I am a great admirer of the Catholic Church, even though it has been under attack by the left and their media allies for decades. The child abuse scandal is the most recent of many failures during the Church’s 2000 years history. Popes have been less than infallible, the church has often been intolerant, cruel, self indulgent and power hungry. But none of that should be unexpected. The Church is made of men,  and men are by definition failed, even men of God. Therefore the institutions made of these men are failed as well. How could it be otherwise? However, failure does not mean evil. When all the church’s wrong doing is tallied, and there is a great deal of it, the sum total is tiny when compared to the massive good it has done for centuries.

For example…how many readers are aware that one third of all healthcare in the United States is provided by a Catholic institution. Imagine what that number would be if all the christian faiths were included. One quarter of healthcare worldwide is provided by the church. Education, adoption services, all manner of care for the poor and infirmed and other charitable works too numerous to name are staples of the church.

I could go on and on about their good works, but these are but a small part of what the church does for society. It works every day to provide a moral framework, a guide to life, teaching people how to maintain the important building blocks of self, the family, and community. There is no metric I know of to quantify this, but I do know we would be in a Hobbesian state of nature without it. The church is at the heart of our social structure, healing the sick, feeding the hungry, and nourishing the mind and spirit. There are many valid arguments why moral behavior is self serving. But at the end of the day right for right’s sake is indispensable for a civil society, without which it would crumble into chaos. Teaching this through God and His goodness is the church’s raisnon d’ĂȘtre.

This is why I am distressed by the recent 84 page apostolic exhortation from Pope Francis. Some of what he says is insightful and of great value to us all. But much of it shows a complete blindness to economic and social history, and no understanding of the dynamics of either. He is seeking a Utopian dream instead of advocating capitalism, the only path for the material betterment of mankind.

The paper refers to unfettered capitalism as “a new tyranny.” It criticizes the “idolatry of money” and beseeches politicians to guarantee all citizens “dignified work, education and healthcare.” If ever there was an argument against papal infallibility, the certain abuses to come from these ideas would make a compelling case.

In the movie Wall Street Gordon Gekko said, “For lack of a better term, greed is good.” He was right. Instead of condemning greed and unfettered capitalism, the Pope should be condemning theft, fraud, misrepresentation and dishonesty in all its forms, but pursuing wealth through honest means should be celebrated. To condemn greed is to condemn most men’s call to greatness. Would the Pope condemn Beethoven for wanting to write great symphonies, Michelangelo’s want to create unfathomable beauty, or Newtons rewriting of the laws of physics? Was their push for the perfection of their craft a sin? If they pursued it seeking fame and fortune, was what they did any less valuable to society? Why then would the Pope condemn a man’s want to create more and more wealth? The creation of wealth is as important a public good as the works of any of the great men listed above. It rewards its creator, but it rewards society far more.

Bill Gates, his employees and shareholders made untold billions. But that is trivial when compared to what the people using his products made. His work lifted people out of poverty and improved the lives of everyone. None of the goodness Microsoft did could have been done without profits. The magnitude of those profits reflect the magnitude of what society gained. Walmart is the richest largest retailer in the world, making more money than probably the next 10 retailers combined. But the impoverished are the biggest beneficiaries of their high quality and low prices. Would Pope Francis want Walmart to cease operations? Profits are the life blood of these wealth producing machines. This is a debate about capitalism, unfettered as the Pope would say, and socialism, the anti-christ of economic prosperity.  

Look at history. In every case capitalism has fed the poor while socialism has created more of them.
Thanksgiving calls to mind one such example. The first arrivals here from England set up a socialist system in the Plymouth Colony of New England in 1623. It failed miserably. Food and other essentials were scarce and everyone suffered. Out of desperation the Governor switched to a free market system (privatized property, eliminated collective farming etc.) and the colony flourished. It produced more food and staples than could be consumed, and was the start of our great economic machine, the greatest  in history.

Chile was destitute in 1973 under it’s socialist system. Pinochet took over and changed it to a capitalist one and Chile quickly became the economic miracle of South America. Is there poverty still in Chile…of course. But far less than before, and everyone, even those still impoverished, are far better off than before. In 1945 under a capitalist system Argentina had a standard of living equal to France. Then the communists took over and a country blessed with more oil and minerals than most languished in economic purgatory. In China Mao Zedong promised Utopia to the people, but instead gave them poverty and death… 60 million to be exact. Stalin promised the same, and like Mao, delivered death, 80 million. Castro has promised a workers paradise for over 50 years but instead created a police state that survives on denial, lies, and locking its people in this impoverished island prison. Beacons of capitalism like Hong Kong and Singapore support their children, elderly and infirmed as well as any country on earth.

With this record why is the siren song of Sir Thomas More’s Utopia sung by many great men like Pope Francis? Utopia values the group over the individual, and assumes that everyone can be indoctrinated to share that perspective. This has never and will never be done. Man will always act in his own individual interest…period. The idea of working for the collective has wonderful outcomes in story books, but in the real world it always ends tragically. It is an unachievable fantasy.

The goals and aspirations of this apostolic exhortation are laudable. Who could disagree? But the Pope’s tacit endorsement of socialism and condemnation of capitalism has plotted a road not to those ends, but one that undermines what he is seeking to achieve. Socialism breeds tyranny, misery and death. Unfortunately, the Pope is a spokesman with a huge megaphone, and advocating for these ideas gives currency to those who appeal to the masses with impossible dreams, while leading them towards disaster.

The inequality of income the Pope condemns is a symptom of good, not evil. A healthy economy is an expanding universe. It is not, as the Popes statements and those on the Left suggest, finite. A finite economy requires someone to lose a dollar for every dollar someone else gains. There is no creation or destruction of wealth. That is not the real world. An expanding economic universe, which is real, increases wealth for everyone. Wealth production is greater for those at the top, but this concentration of wealth allows investment by those people creating even more wealth. That is a gift to us all. One just needs to think about the Microsoft and Walmart examples to understand. The same applies to every business, large or small. In this real world there are only two choices. We can expand the gap between those of great means and those of little, while raising both up, or reduce the gap, while driving both downward.

Wealth creation fuels new and better cures for illnesses, feeds more people, builds better housing for less money, protects the environment, and generally helps us all.  Capitalism works because that very greed that the Pope refers to (I would call it self interest), in a capitalist society is harnessed so that the “greedy” man’s interest and society’s interest are aligned. Henry Ford said, “A man gets rich thinking how much he can give for a dollar, not how little.”

The Pope’s paper suggests that we need a group of well intended politicians. We have a few, a very few. That is because self interest is a stronger force than altruism. I would suggest we might sooner find a benevolent dictator than politicians so disposed, with both being very unlikely.

A capitalist must entrust his survival to the consumer. That consumer votes with his dollars every day with every purchase. The capitalist can never relax and rest on his laurels, no matter how successful he has been. He must win every election every day by producing improved products for less money, for if he fails, if someone else does that job better than he, he will cease to exist. The magic of capitalism is its ability to direct mankind’s survival instinct in a way that works for us all. If only Pope Francis understood that.

Wednesday, November 6, 2013

Nobel What?

Schiller got the Nobel prize and I am floored. Not because he got it. Not because the work he did is shoddy or wrong. I don't even know what it is about. I am amazed because due to the award, he has been in the news talking about a variety of things. He has made clear that he has absolutely no understanding of basic economics, no idea of the principles that guide economic development.

On CNBC he railed against the income gap. He said that the debt is unsustainable (true), the day of reckoning is coming (true), and that since raising taxes on the rich is the only way to correct it (false by lightyears), raising them now will be less painful than after the crisis occurs (maybe). When asked about the philosophical differences between himself and the other Nobel Prize in Economics winners he said that the difference is more political, their coming from University of Chicago and his being from Yale.

Is not economics supposed to be a scientific inquiry? If so, is empirical evidence political? Is Newtonian physics left or right leaning? How about relativity? His statement is an absurdity. Yes, supply side economics is commonly referred to as from the right and Keynesian economics from the left. But they are mutually exclusive. One is correct and one is wrong. Political ideology is a total irrelevancy (the exception being climate change, which was spawned by political goals, nurtured by political agitation, and falsely promoted as science in a way that would make Marx, Goebbels and Freud blush).

Needless to say, "leftist economics" are completely wrong. Ir assumes that people act the same regardless of what is imposed (taxes and regulations) by government. Worse, it assumes that the economic pie is finite. Therefore raising taxes raises government revenue. Again, this is absurd. Increased revenue comes from an expanding economy. Bleeding wealth producers of the currency needed to expand the economy and imposing senseless regulations decreases revenue to everyone, the producers, government and the poor as well. See Cuba, the former Soviet Union or Venezuela for details. The entire Keynesian idea makes no sense and it's failure has been demonstrated every time it has been employed. Conversely, supply side has never failed. There is no argument.

The question about Schiller is why is he so blind. Another idea he supports is the efficient market theory. That is just more garbage. If it were true, how would certain individuals make money year after year investing while others consistently underperform? It wouldn't happen. It does because companies get mis-priced, people have varying degrees of talent, understanding and work ethics. People buy and sell with differing amounts of information, different macro assumptions, and different personalities allowing some to be patient while others cry our in pain every time things go against them. I won't answer why Schiller is blind because it is off topic. I will say that maybe his left and right political ideas should be looked at.