Civil Disobedience (Continued)

It seems like Charles Murray’s call for conservative civil disobedience is garnering more interest. An interview of Murray by a somewhat skeptical Conor Friedersdorf of The Atlantic magazine has just been published, where Murray says substantially the same things he suggested to Michael Barone. In the words of Friedersdorf,

He [Murray] is advocating for massive civil disobedience of a particular kind, wherein Americans willfully ignore the most absurd, unfair rules and penalties imposed by independent regulatory agencies, meanwhile paying into a legal defense fund that covers costs for whoever bears the brunt of the government’s always-selective enforcement efforts.

The idea is that if government authorities at all levels of government get hit with increasing numbers of offenses to inane, stupid government regulations and laws, then both the expense of the lawsuits and the disapproval of the electorate will drive governments to eliminate said tyrannical regulations and laws. I think I would be willing to contribute to a legal defense fund for those brave individuals who would dare to confront an arbitrary, tyrannical, and ever more onerous government. It would be the ultimate in “David versus Goliath” conflicts. How about you?

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Causes of the 2007-2008 U.S. Financial Crisis

Although we discussed some of the reasons why the U.S. economy has not recovered very robustly from the 2007-2008 financial crisis, we have not looked at exactly why the crisis happened. Since the reasons for the collapse are, I believe, quite a bit different from the reasons commonly given, and since the exact causes are relevant to the analysis of the Dodd-Frank Act and its effects, we must take a close look at the crisis in this post.

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The Debilitating Effects of Obamacare

So now the Supreme Court has ruled that it does not matter what the plain language of a legislative bill is. They claim to be able to sense what the language should say from the obvious (to them) intent. It is not as if there is a lack of evidence confirming the plain language, given Jonathan Gruber’s many videotaped confessions. Every single justice must have known that the Congress meant that only in states with an Obamacare exchange could subsidies be given. The disingenuous justices of our Supreme Court must be depending on the stupidity of the American voter in exactly the same way that Gruber and the Obama administration did.  Continue Reading…

Echoes of the Great Depression: Japan

I was expecting “Japan’s lost decades” to be an easy story to tell. However, when I started researching for this post, I discovered a controversy existed on whether a lost decade for Japan even existed. For example consider this post on Forbes by Eamonn Fingleton. He claims that the population of Japan increased so slowly in the 1990s that Japan’s per capita GDP grew at a respectable rate. A response to this claim is given by Noah Smith in the Bloomberg View, in which he says the assertion Japan is now in its third lost decade is a myth, but so is the declaration that Japan never had any lost decades at all. Continue Reading…

Echoes of the Great Depression: Europe

For all of my life the nations of Europe have been very much to the left of center. I suppose this condition is the legacy of dirigisme and socialism in France, Bismarck’s welfare state in Germany, and socialism and utilitarianism in Great Britain. Whatever the reasons, Europeans in general have not shied from enabling the state to control a nation’s economy. In particular the modern welfare state and labor market regulation are well developed throughout Europe. With this kind of background, one should not be surprised that non-socialist economic thought centers around Keynesianism.  Continue Reading…

Echoes of the Great Depression: America, Europe, and Japan

Although we are technically no longer in a recession, the rate of economic growth is so low that the economy for many people seems like it is in recession. Below is a chart I created using data from the St. Louis Federal Reserve Bank that compares GDP growth rates under Obama with those under Ronald Reagan. The time axis shows months from the beginning of their respective administrations. The dotted curves shows the trends of the GDP growth in the two presidencies obtained by bezier spline smoothing.

GDP Comparison:Reagan & Obama

Comparison of GDP growth during the Obama administration compared with the Reagan administration

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Why Did the Great Depression Last So Long?

WPA workers photo

Because of the complexity of the Great Depression, there are several different ways in which you can date the beginning and ending of this immense event. Many people date the beginning from October 1929 with the crash of the stock market. However, if nothing else occurred other than the stock market crash, this one event would probably have caused only a garden-variety recession. What really made the Depression an historically unique event was the partial collapse of the banking system. This collapse started in 1930. So purely for the purposes of this discussion, I will arbitrarily set the beginning of the Depression as the beginning of 1930. If one defines the end as the time when the economy recovered to where the real GDP surpassed its output in 1929, the ending would be sometime in the neighborhood of 1939. This gives us about nine years of recession by this reckoning, or 108 months of recession. Compare this duration with the duration of the 1920-21 depression of 18 months. Yet the government did exactly nothing to end the 1920-21 depression. The obvious questions are: (1) what was different with the Great Depression that it lasted so much longer, and (2) could it be that the actions of government actually prolonged the Great Depression? Continue Reading…

Iran: the Present and Future Enemy

There are times when I get an almost surreal feeling that we are hurtling toward Armageddon. In the midst of American negotiations with Iran on limiting their nuclear program, international inspectors from the International Atomic Energy Agency have just reported that Iran has increased its fissile uranium supply over the past 18 months by approximately 20%. The Obama administration had told us that the Iranians had frozen their program during this time. Why would Iran do this while they are still developing intercontinental ballistic missiles to carry nuclear warheads? You can find that little tidbit in this unclassified Pentagon report dated January 2015. Although it was prepared this last January, it was not delivered to Congress as required by law until this month. Reportedly, the reason for the late delivery was that the Obama administration did not want to upset the Iranians while the nuclear talks were ongoing. Continue Reading…

The Long Arm of the Federal Government Monster

This morning I read something immensely disturbing on the Wall Street Journal opinion page (access requires subscription). It reconfirms for me (as if I were ever in doubt) how controlling the federal government wants to be of our everyday lives. They want to be the arbiters of what we eat, what our healthcare should be, how we express our political beliefs (recall the IRS scandals here, and here, and here), and now what we should be allowed to learn. Continue Reading…

The Causes of the Great Depression

Bank_run_photo

No event in history evokes the ideological split between Keynesians and neoclassical economists more than the Great Depression (see here and here). Ditto the split between progressives and conservatives. It was the traumatic effect of the Great Depression that made Keynes’ ideas attractive to people for the first time. They wanted to believe that government polices and actions could make the depression disappear. All that neoclassical adherents could offer was that the economy would heal itself if left alone, which at the time was less than comforting.

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What If They Threw a Recession and Nobody Came?

Rich Danker in the Weekly Standard writes in the guise of a book review about a favorite conservative theme: How a distressed economy in recession, left to its own devices without government interference, will heal itself. The book, The Forgotten Depression by James Grant, is about a financial crash in 1920-1921 (see here and here) during the administrations of President Warren Harding and President Calvin Coolidge. Amity Shlaes has written another excellent history of the period in the biography Coolidge.

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Beware BEPS!

The acronym BEPS stands for “Base Erosion and Profit Shifting” and the BEPS project is an effort by the OECD to study perceived flaws in international tax rules. The perception that multinational corporations were avoiding taxes of some countries by using these flaws was the main motivation for the ongoing study. The Group of 20 Nations (the G20) meanwhile has taken this study as a reason for increasing and tightening taxes on multinationals. Not surprisingly, the Obama administration has endorsed the BEPS project with the belief the American tax base would be buttressed and Washington would able to capture more corporate taxes from multinationals.

The New York Times, however, reports that the way the new tax rules were written, the damage done to the U.S, will be due to a lot more than just capturing more taxes from multinationals. Continue Reading…

The Keynesian- Neoclassical Ideological Conflict (2)

When we left this discussion, we had found that a Keynesian economist believes government stimulus spending must be used to kick-start (pump-prime?) the economy out of recession.

Neoclassical economists on the other hand believe care must be taken not to damage an already distressed economy further. Continue Reading…

The Keynesian- Neoclassical Ideological Conflict (1)

Quite possibly the most consequential ideological conflict within Western nations today is the battle of economic ideas between Keynesian and neoclassical thought. Since Keynesian ideas mandate greater power and a larger role for government in the economy, progressives almost universally adopt Keynesian ideas, while conservatives mostly follow neoclassical ideas. Almost all progessive-conservative clashes involve some component of the Keynesian-neoclassical rivalry, even in fights over welfare and government regulations of all kinds.

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Stock Market Getting Sicker

In a  previous post I gave evidence that a lot of people are jumping out of the American stock market. In addition, people’s suspicions that all is not right with the economy are increasing (see here and here and here). This being the case, I thought that now would be a good time to review the recent time history of the two most important stock market indices, the Dow Jones Industrial Average (an average of the prices of 30 large industrial companies) and the broader Standard and Poor’s 500 index (an average over 500 large companies). Continue Reading…

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