Even More Lies Progressives Tell To Themselves!

A progressive regarding the world!

A progressive regarding the world. Be careful what you buy from him!
(c) Can Stock Photo / ezumeimages

In my last essay  I was only able to cover two of the major subsidiary lies progressives tell to both themselves and to others. By subsidiary I mean the falsehoods are told to buttress progressives’ ability to uphold their most fundamental offense to the truth, which is: Government actually has the capability to solve or ameliorate all social and economic problems without creating even worse problems. I discussed this fundamental lie in the post The Lies Progressives Tell (Especially To Themselves!). In my last post, More Lies Progressives Tell To Themselves, I debunked two of the supporting lies progressives often trot out in support of their policies. Those untruths were: first, that the ideological opponents of progressives and a large fraction of the American people are racists and fascists; and second, that free-markets encourage increasingly unequal income distribution. In this essay I want to continue the effort by rebutting four more progressive lies.

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The Trump Era Begins

President Donald J. Trump delivering his inaugural address, January 20, 2017

President Donald J. Trump delivering his inaugural address, January 20, 2017
Screenshot of ABC News broadcast

Uncompromising. That was the major tone of Donald Trump’s inaugural address on the west side of the Capitol building yesterday. Rather than being a partisan speech giving a list of what he would try to accomplish, it was a scathing indictment of the establishments of both political parties. In the words of the inestimable Peggy Noonan in the Wall Street Journal,

He presented himself not as a Republican or a conservative but as a populist independent. The essential message: Remember those things I said in the campaign? I meant them. I meant it all.

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Say’s Law Vs. Keynes Law: At the Heart of the Argument

Left: Jean-Baptiste Say (5 January 1787 - 15 November 1832), Wikimedia Commons Right: John Maynard Keynes (5 June 1883 - 21 April 1946), Wikimedia Commons / National Portrait Gallery

Left: Jean-Baptiste Say (5 January 1787 – 15 November 1832), Wikimedia Commons 
Right: John Maynard Keynes (5 June 1883 – 21 April 1946), Wikimedia Commons / National Portrait Gallery

At the very heart of the argument between neoclassical economists and Keynesians is the dispute over which economic law best reflects reality: Say’s Law of Markets or Keynes Law. Much of the discord between dirigistes and neoliberals (aka conservatives or classical liberals) would evaporate if this argument could be settled to general satisfaction. At its core the argument is about what changes affect market supply-demand balances the most: changes in supply or demand.

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The Progressives’ Sisyphean Labors

Punishment of Sisyphus

Sisyphus and his rock
Photo Credit: Wikimedia Commons / Titian(1490-1576), Prado Museum

Sisyphus is a figure from out of ancient Greek mythology, the founder and king of the city Ephyra, which was (supposedly) later renamed Corinth. He sinned against the gods, particularly against Zeus, by being avaricious and deceitful. He killed travelers and guests, a violation of the Greek laws of hospitality called xenia, a particular sin against Zeus in his role as the protector of guests.

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U.S. Economy and Stock Markets, October 2016

The time evolution of the Atlanta Fed's GDPNow statistic for Q3 2016

The time-evolution of the GDPNow statistic  from the Center for Quantitative Economic Research of the Federal Reserve Bank of Atlanta.
Image Credit: Federal Reserve District Bank of Atlanta/Center for Quantitative Economic Research

The graph above  of the GDPNow statistic produced by the Atlanta Federal Reserve confirms what the bulk of economic statistics are saying to me. By now it should be obvious to even the most dense that something is very, very wrong with our economy.  Continue Reading…

Why Is There Economic Optimism?

The Bull is charging!

The Bulls Are Charging!
Photo Credit: Charging Bull — NYC via photopin (license)/ Sam Valadi

Every now and then, I experience  a modicum of doubt about my pessimistic picture of the economy. In an effort to persuade myself I am not insane, given the many optimistic voices out there, I am writing this essay.      Continue Reading…

Economics Is Mostly About Human Psychology

An African market, where economic balances are discovered

An African market: a place where economic balances are discovered
Photo Credit: Freeimages.com/Stewart Aston

Last night I was musing about how I could persuasively sell the idea that an economy’s functions are fundamentally based on microeconomic phenomena. Those who currently dominate the economic councils of government in the United States, Europe, and Japan, and probably most other places as well, have a very different mindset. What the economically powerful, the Keynesians, believe is that in economic bad times a simple macroeconomic push, provided either by the fiscal or monetary policies of government, can get a stalled economy running again. Their ultimately fatal error is not realizing that the health of an economy is determined primarily by a mind-bogglingly humongous  number of relations between economic agents, not by aggregate demand and and aggregate supply.    Continue Reading…

The Fed Hangs Fire on Interest Rate Rise

Janet Yellen, Chairman of the U.S. Federal Reserve System

Janet Yellen, the Chairman of the Federal Reserve Board of Governors
Wikimedia Commons/U.S. Federal Reserve

As widely expected, the Federal Reserve Open Market Committee (FOMC) hung fire on raising the Fed Funds interest rate yesterday. The Fed Funds rate is the interest charged by the Fed to member commercial banks overnight for borrowing funds from the Federal Reserve. Inevitably it becomes the short-term interest rate charged to banks’ best, most credit-worthy customers.

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The Keynesian Emperors Have No New Clothes!

The Emperor has no clothes!

The Emperor has no new clothes!    
Image Credit: Wikimedia Commons/Vilhelm Pedersen (1820-1859)

Given all their failures in suggesting successful economic policies around the world, one would have thought Keynesians would have been generally scorned by now, their doctrines almost universally rejected. Continue Reading…

The Thoughts that Haunt Me

A profligate spending your money!

A profligate government bureaucrat with you behind him!
(c) Can Stock Photo

More and more, the words haunting me are the ones I wrote in the final sentence of my last post:

The federal debt may be the single biggest threat to national security — bigger even than Russia, China, Iran, or North Korea.

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An Indonesian Reagan

Joko Widodo, President of Indonesia

Joko Widodo, President of Indonesia
Photo Credit: Wikimedia Commons/Government of Indonesia

For a country that is widely reputed to have a lot of crony capitalism, Indonesia is pretty lucky to have Joko Widodo as its president. Previous to his election as president in 2014, he had been Mayor of Surakarta from 2005 to 2012 and Governor of Jakarta from 2012 to 2014. According to his Wikipedia entry, he is the first Indonesian president not to have come from the country’s political elite or as an army general. Wikipedia also tells us that he is “widely seen as reflecting popular voter support for ‘new’ or ‘clean’ leaders rather than the ‘old’ style of politics in Indonesia.”

What makes him important for our purposes however is that he is instituting a number of economic reforms that should cause the Indonesian economy to vigorously grow. The Wall Street Journal informs us Widodo started a deregulation drive last year, easing rules on foreign ownership of companies in a wide range of industries. It appears that as a result of this pruning of government regulation, that GDP growth has increased a little to 5% annualized growth in the first quarter of this year.           Continue Reading…

The Fecklessness of the U.S. Federal Reserve

From Top Left Clockwise: Janet Yellen, Federal Reserve Chairman; Haruhiko Kuroda, Governor, Bank of Japan; Mario Draghi, President, European Central Bank

From Top Left Clockwise: Janet Yellen, Federal Reserve Chairman; Haruhiko Kuroda, Governor, Bank of Japan; Mario Draghi, President, European Central Bank
Wikimedia Commons/ US Federal Reserve, World Economic Forum, Asian Development Bank

My last report on the value of the Atlanta Federal Reserve’s instant prediction of what first quarter 2016 annualized GDP growth will be was 0.7 percent. A quick look on the Atlanta Fed’s web page publishing this number from their GDPNow forecast model shows that on April 18, the forecast fell to 0.3 percent, and the next update of GDPNow will be on April 26. Yet, I have picked up a disturbing rumor from former congressman and presidential candidate for the Libertarian Party, Ron Paul, that the next GDPNow estimate will be even worse.      Continue Reading…

U.S. Stock Markets and the Economy, April 2016

Dow 30 and S&P 500 indices as of 3/31/2016

Candle charts of Dow 30 index on top, S&P 500 on bottom. Blue overlay curves are 50 day moving averages, Red curves are 100 day moving averages.
Images courtesy of StockCharts.com

Confirmation that “Bad is Good” Meme Is Back!

From the charts for the Dow 30 and the S&P 500 shown above, you can see confirmation the “Bad is Good” stock market meme has been restarted. Despite the fact corporate earnings have been in recession for almost an entire year, the major stock market indices have recovered most of their losses since the beginning of the year. The betting now is that average S&P 500 earnings per share (EPS) in the first quarter of 2016 will have fallen about 4% year-over-year from the EPS in the first quarter of 2015. If that turns out to be true – and we should find out in April – then corporate earnings will have been in recession for an entire year.     Continue Reading…

Rational Expectations, Market Clearing, and Real Business Cycles

University of Chicago

The University of Chicago, where much of New Classical Economics was built by Robert Lucas, Jr.
Photo Credit: Wikimedia Commons

In my last post I began an examination of what is at present the only viable alternative to New Keynesian economics: New Classical economics. There may be many who are perplexed that socialism would not be considered a candidate for our economic organization, but socialism has given ample historical reasons for being rejected. If you are not convinced,   Continue Reading…

Alternative to the Keynesians: New Classical Economics

The Muir portrait of Adam Smith

Adam Smith (1723-1790), founder of classical economics, which has flowered into New Classical Economics
Image Credit: Wikimedia Commons/By Unknownhttp://www.nationalgalleries.org/object/PG 1472, Public Domain

At this time in history, the dominant school of economics is that version of Keynesian economics known as New Keynesian economics. As the New Keynesian school self-destructs all over the world with its bad predictions and prescriptions, we should look for more accurate alternatives. The corresponding school of neoclassical economics is known as the New Classical economics, sometimes also called the New Classical macroeconomics. Just as the New Keynesians added ideas of microeconomics in what they call the “new neoclassical synthesis”, the New Classical economists added ideas of macroeconomics derived from neoclassical economics.    Continue Reading…

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