Self-evident Economy

Posts tagged Politics

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Why It Doesn't Feel Like the Economy Is Getting Better

Because it’s not.

Economic growth comes from free people making their own decisions and knowing that they must live with the consequences of those decisions. Every time the government intervenes to tell us what we should or should not buy, or to rescue people and companies from bad decisions that they freely made, the government stifles the forces of economic growth. Until politicians give up the fiction that they can make better decisions for us than we can make for ourselves, we’re going to continue to see record unemployment—regardless of whether or not the official figures admit it.

Filed under economy politics stimulus

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A Measured Rebuttal to China Over Solar Panels

I thought we wanted people to use solar power instead of carbon based energy.

The Commerce Department said on Tuesday that it would impose tariffs on solar panels imported from China after concluding that the Chinese government provided illegal export subsidies to manufacturers there.

This is actually a great example of the problems with tariffs and protectionism. China may be subsidizing their solar industry, but why is that a problem? We certainly aren’t a country that should complain. We subsidize all sorts of industries, especially agriculture (see sugarcane). If China is subsidizing its solar industry, what does that mean for us?

It mostly means that U.S. consumers get greater access to solar panels at a more affordable price. It also means that Chinese tax payers are the ones footing part of the bill. It makes solar panels more cost effective when compared to other sources of energy which encourages their use and thus increases our usage of solar power. When we slap tariffs on goods, the consumer suffers and business owners profit. In this case, the environment also suffers. In truth, even the solar industry suffers because there is less competition. They don’t have to be as innovative which prolongs advances in solar technology.

This tariff is a perfect example of corporate welfare and crony capitalism. Take from the general public (a tariff is essentially a tax) and give it to a well connected manufacturing sector. The only people who win are the owners of the solar panel plants and the politicians that receive contributions from them.

Filed under solar economics tariffs protectionism politics

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The Constitution

I ran into this video today:

"How do you know if the Constitution has been perverted if you haven’t read it."

Politicians, especially conservative politicians, drive me crazy sometimes because they just blatantly ignore the Constitution. Conservatives drive me more crazy because they pretend to care about it.

Attorney General Holder recently make a distinction between “due process” and “judicial process” while justifying Obama’s killing of U.S. Citizens (terrorists) overseas. Frightening stuff (see this Colbert clip for an entertaining recap). Apparently due process can be “the president decides to kill you, and then does” and it’s “Constitutionally” considered “due process” by this administration. In this case this politician HAS read the Constitution and is trying to twist the words to subvert it.

Then you have people like Newt Gingrich, a supposed historian, who apparently has no clue what it says and/or doesn’t care. Actually, he probably DOES know what it says, but like the guy in the video suggests, knows people won’t challenge him because they have never read it.

“Any American, who actively advocates killing Americans, places themselves in our Constitution as a traitor,” Gingrich added. “The American who the president authorized killing in Yemen was an enemy combatant. Enemy combatants don’t get Miranda rights. I think it’s very important that this is a war…the president, in this one area, is right.” - Newt

Ok… they are a traitor according to the Constitution. True. But what does the Constitution ACTUALLY SAY about traitors NEWT!?

Article III, Section 3
Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court. The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attained.

It’s not even an amendment, it’s just part of the body of the Constitution!

Filed under politics constitution newt gingrich Eric Holder

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The GOP in Athens-Clarke County, GA railroad the democratic process, breaking their own rules in order to get a pre approved slate of delegates to the district and state conventions instead of going through the required nomination and approval process. It’s one thing to hear about voter fraud and such, but it’s something else to witness it on camera.

Filed under Ron Paul delegates fraud politics

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Inflation Scenerio: China’s Giant Pool of Dollars

A letter to Planet Money’s David Kestenbaum and Jacob Goldstein:

David Kestenbaum and Jacob Goldstein’s broadcast this morning on China’s Giant Pool of Dollars focuses mostly on what they see as positive aspects of China’s rising currency. I’m just wondering if they have considered any of the potential problems that could also occur.

As the U.S. continues to devalue its currency and China allows its currency to rise, demand for U.S. goods and services will increase. The commentators (along with most everyone else) see this as creating jobs in the United states. Dollars will “stop piling up in China” and elsewhere, and will start flowing back into the United States.

While this will likely create jobs, what is also very likely to happen is that IF the flow of money into the United States is faster than the flow of goods out, prices will begin to rise. Given the amount of money the Chinese and other countries have (the dollar being the reserve currency of the world), we may face some serious inflation.

Economists (depending on who you listen to) have been saying for quite some time that the United States has been exporting inflation. When foreign countries, central banks, and foreign citizens gobble up the dollars we print and hoard them, inflation is more or less kept in check. But if for some reason people see the value of those dollars start to decline (they can buy less with each dollar over time), they will start buying goods now instead of saving dollars to use later.

There may also be the potential for a snowball effect where inflation begins to rise faster and faster, encouraging more and more people, banks and governments to buy what they can, while they can, as fast as they can, from the United States. This kind of hyperinflation is a worst case scenario of course, but the potential is there.

Cheers,

Craig Kohtz

Filed under politics inflations economics NPR

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How is Capitalism Totalitarian?

Nobody ever wins arguing in internet forums, but I couldn’t help myself. The following short conversation inspired a brief essay on my part.

User 1: I think it’s stupid to talk about communism when the topic is the unhealthy impacts of Capitalism.

There you see how you’re effed by both (totalitarian) systems.

User 2:  totalitarian? To quote a Spaniard, I do not think that words means what you think it means.

User 1: I know what it means and I know what I mean.
Of course not the totaltarism of a fascist regime as you may think. A little more abstract.

Me: Actual capitalism is equivalent to complete freedom of choice in what you do, what you buy, and how you use it (ie. FREE markets). How is that in any way totalitarian?

User 1: Think about.

Me: …

Here are my thoughts on how can capitalism be totalitarian.

I think it would have to be through the use of force. In most societies, especially democracies, the only sanctioned use of force is through the government. The reason the government is sanctioned to use force is so it can protect citizen A from citizen B if citizen B decides to use force to get what he wants. If I as citizen B did not want to use force in fear of government reprisal, the logical step would be to petition the government to use force for me. Since governments are run by people, and people desire power, corruption is possible. The more power a government has, the more incentive there is to be in government and thus to be susceptible to corruption (provide favors - you scratch my back, I scratch yours). But it has to be relatively covert, at least at first. Again, laws (which are enFORCEd) must be used to “protect” citizens or citizens become angry and a) vote elected officials out of office or b) overthrow their dictators through violence.

Here is a real world example. At one time, banks could only loan out the capital they had on deposit. To lend out more was actually illegal. Even so, some would loan out more money then they had (greedy bastards) and people would get wind of it and want their money back. This caused a run on the bank which, if the bank couldn’t pay them all back, would be forced close and liquidate. The owner of the bank would be broke and destitute (perhaps even go to jail) until he found another means of employment. Depositors also would be hurt, so would look for banks they could trust. This kept banks in check.

Enter the power of the government. Bankers wanted to be able to lend more money than they had so they could make more money. Since bankers were usually wealthy, and officials in government need money to stay in power, they petitioned the government to legalize reserve banking (more money in the economy encourages growth and helps everyone!). So now banks can legally lend more money then they have on deposit. Runs on the bank are still possible, but since reserve banking is legal, a bank can borrow money from another bank in times of need. Unfortunately, it was still very possible for a bank to fail. And if a bank failed, it might take the other banks that lent it money with it. This still limited the risks banks could take with their money.

Enter central banking. Instead of currency being created by the free market, governments force one sanctioned currency on citizens by creating a central bank. This of course is to make things better for the citizens - one currency to avoid confusion and make commerce easier. So now with a central bank and the power to print money, banks could borrow from the central bank instead of other banks. After all, it is risky to lend to a failing bank because if it fails, you don’t get your money back and may also fail. Unfortunately, pesky gold standards can make printing money difficult. So central banks can only do so much to protect a bank. There is still the possibility of a run, and thus failure. What to do!?

The answer is simple. Protect the depositor! Create fees that banks must pay (which, btw raises the barrier of entry for new banks and reduces competition) and create a department called the FDIC. When a bank fails, depositors no longer lose their money. This removes the incentive for fearful depositors to get their money out of a failing banks. No more banks runs. Banks then are free to take extraordinary risks with little consequence. They become too big to fail. They gain undue influence over all levels of government, and the government becomes bigger and more powerful in the process. They create laws, not to protect citizen A from citizen B, but to give Corporation/Bank A power over Corporation/Bank B, C, & D. Unfortunately markets (individual people making individual decisions) always win. Even with all these protections, banks fail because of the extraordinary risks they take. Except they don’t fail because the government protects them.

So I suppose this could make people think capitalism is totalitarian. However, at this point, what we have is no longer capitalism. It is crony capitalism, where gains are kept by those in power and loses are socialized by taxing society to pay for their mistakes.

Filed under capitalism economics federal reserve freedom politics central banks

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"The Black Swan" author Nassim Taleb Cheers Ron Paul’s Economic Platform on CNBC

He says it like it is. There is no easy solution. Republican or democrat, nobody except Ron Paul has the solution and he will not support anyone else.

Filed under Ron Paul politics

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Ed DeMarco's Refusal on Principal Reductions Grounds for Firing

From his perch as acting director of the Federal Housing Finance Agency, DeMarco oversees Fannie Mae and Freddie Mac, the government-owned mortgage behemoths that collectively control about half of all home loans in the land. What he does shapes both the national housing market and the ability of troubled borrowers to hang on to their homes. What he has been been doing lately has been so unhelpful that Democratic lawmakers and grassroots advocacy groups are properly demanding his ouster.

I don’t know… if so Democratic lawmakers and grassroots advocacy groups are “demanding his ouster”, it sounds like he might be doing a pretty good job!

Also, the worst analogy ever:

If DeMarco were fire chief and your house became engulfed in flames, you could forget about calling 911. By his reasoning, the taxpayer would be best served by keeping the fire engines in the station, lest they get damaged in the line of duty. It would not matter whether the flames licking your windows were the result of your recklessness or the product of an explosion at, say, the methamphetamine lab down the street. He would not run up the municipal water bill by saving your block.

It’s the fire department’s job to put out fires. It is NOT the tax payer’s job to pay other people’s mortgages.

Filed under politics Fannie Mae Freddie Mac mortgages bailouts Housing Bubble