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John Tamny in RealClearMarkets: Joe Biden, the New York Times, ‘Dark’ Winters, and ‘Terrifying Surges’

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By John Tamny – Editor

November 11, 2020

“We have found that students are responding well to our voluntary, convenient, and free walk-up testing sites.” The latter is from a press release produced at Penn State University, and that was released this week to the New York Times. It seems Penn State, much like U.S. universities in all 50 states, has an aggressive coronavirus testing program as a way of keeping close track of the virus’s spread on campus.

Please think about the fact that testing for the coronavirus in what is the world’s richest country is increasingly very convenient, and free. Please think about it relative to March and April when tests weren’t anywhere close to this accessible. Not too long ago a quick coronavirus test in the United States cost a privileged subject $400 and above, but in November of 2020 it’s more and more the case that the tests can be had for nothing.

From there, let’s travel to Indonesia on the other side of the world. This country can claim 270 million citizens versus roughly 330 million in the United States. Where it gets interesting is that according to a recent report in the Wall Street Journal, Indonesia has reported 11,000 deaths related to the coronavirus versus nearly 240,000 in the U.S.

At this point the Trump deranged will no doubt rant and rave about how “Trump did it,” that he has no empathy, and that his lack of it has resulted in many sadly quiet, unhappy homes around the U.S. Worse is that according to president-elect Joe Biden, what’s bad now is about to be really bad as the winter months force people inside only for the virus to be given new life. As Biden has put it, Americans face “a dark winter.”

Biden’s likely newspaper of choice, the New York Times, similarly engages in hyperbole. While it routinely reports that nearly half of all U.S. coronavirus deaths have been associated with nursing homes, it leads with splashy front-page headlines that give a rather different impression to readers. Or at least headline readers. The Tuesday, November 10 edition actually led with an alarmist header that included Biden. It read like this:

“BIDEN CALLS FOR UNITED FRONT AS VIRUS RAGES.”

So the virus “rages” if the front page is to be believed, but on A6 those who bothered to look beyond the headlines were able to find the nuance that is not allowed on the front page, and that Biden the politician perhaps understandably can’t employ. You see, on page A6 readers who bothered would have seen the above-referenced press release from Penn State. Think about it again.

In the United States, testing is increasingly convenient to get, plus it’s more and more free. Just a few weeks ago the Wall Street Journal’s Holman Jenkins reported that over 150 million coronavirus tests had been administered in the United States. One guesses that number is dated at this point. That it is, and that the New York Times reports daily about a “raging” coronavirus is arguably related. And it doesn’t take a doctor or statistician to understand this.

Stating what should be obvious, the coronavirus “rages” in the U.S. only insofar as Americans have the curiosity and means to be tested for it. If you test hundreds of millions of people you’re going to happen on lots of cases. And even all those U.S.-based tests likely don’t scratch the surface. As Jenkins pointed out after the Kamala Harris/Mike Pence debate, her lament that 7.5 million Americans had contracted the virus was probably off by something like 70 million.

Bringing this all back to Indonesia, it would be fascinating to witness the perpetually alarmed explain the low number of “coronavirus deaths” there. Are Indonesians genetically immune to infection from the virus, do they religiously wear N-95 masks while studiously avoiding touching their faces, do they have their own “genius” Dr. Fauci equivalent whose gameplan has been brilliantly embraced by President Joko Widodo, or is it possible that Indonesia has a low death count precisely because it has a low testing rate?

You see, according to the Journal, testing in Indonesia has been very rare. 8 per 1,000 inhabitants kind of rare. Keep in mind that Mexico can claim 13 tests per 1,000 and even the Philippines can point to roughly 30 per 1,000. Readers with a little bit of common sense probably get where this is going.

The more a country tests, the more infections that country will unearth. Doctors and other experts can decide for themselves whether relentless testing is good, bad, or not terribly relevant, but it presumably explains a lot when it comes to virus spread in the U.S. Rich country that we are, we test a lot which means we have a lot of cases. One guesses tests here will soar even more if the testing procedures ever move beyond the uncomfortable method used now. And as even more Americans get tested, more coronavirus infections will be discovered.

Which is exactly as the CDC predicted early on. As the ever-helpful Jenkins has reminded readers on occasion, the CDC’s website alerted visitors from the outset that eventually everyone would be infected. Routine testing in the U.S. presumably supports this contention.

This is a long or short way of asking readers to cast a skeptical eye on dire predictions of “a dark winter” ahead by politicians, along with nail-biting headlines about “terrifying surges.” Probably more than politicians and sub-editors want to admit, their predictions and headers are really just statements of a not so dark or terrifying obvious.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His next book, set for release in March of 2021, is titled When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. Other books by John Tamny include They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers, The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets.com

John Tamny in Forbes: They’ve Been Writing America’s Obituary Since Before It Was America

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By John Tamny – Contributor (Policy)

November 1, 2020

There are croakers in every country, always boding its ruin. – Benjamin Franklin

“I was shocked by how little dissent was tolerated at Harvard. Anyone who disagreed with the new orthodoxy was automatically branded a racist or a sexist or a homophobe.” “The prevailing orthodoxy was that concepts like ‘truth’ and ‘beauty’ had no place in contemporary education.” Intimacy with female Harvard students meant “you had to seek the woman’s formal permission at every stage in the seduction process.” One professor “had to abandon teaching his class on the ‘Peopling of America’ after he was dubbed ‘racially insensitive.’” His error was to talk about America’s native “population as ‘Indians’ rather than ‘Native Americans.’”

Harvard University has really gone over the edge. It’s hard to imagine that this is what’s happening at what is realistically the U.S.’s most prestigious university, if not the world’s. Higher education is surely in trouble, which means the U.S. is.

Of course the punch line to this weak attempt at a good set-up is that the above recollections weren’t those of a 2019 grad; rather they’re a few tidbits picked up from Toby Young’s classic 2001 memoir, How to Lose Friends and Alienate People. It seems Harvard was ahead of the political correctness pack as the 20th century closed until it’s understood that Young was writing about the Harvard he encountered in 1987. After graduating from Oxford, the essential Young (please bookmark his website Lockdown Sceptics) was given a Fulbright Award, which enabled him to spend a year at Harvard.

Up front, Young would likely admit that part of what makes him so interesting and entertaining is his use of playful exaggeration. We’re talking about someone talented enough to have worked at Vanity Fair in its heyday, but who wrote a memoir about all of all his blunders while there.

Looked at through the prism of his time at Harvard, it’s not unreasonable to speculate that Young cherry-picked the most egregious examples of political correctness. He might admit that the vast majority of students have grand ambitions for their lives after Harvard, many of them are financially motivated, which means most aren’t too politically active one way of the other. Young’s examples of PC-stupidity have a wow factor precisely because they’re kind of rare.

Still, for the purposes of this piece they’re a reminder that PC ridiculousness is hardly an early 21st century concept. It’s as old as higher education is. As I point out in my 2019 book They’re Both Wrong, William F. Buckley published God and Man at Yale in 1951. The great British novelist David Lodge published Changing Places, a classic novel about PC-nonsense at Euphoria State (Cal-Berkeley) in 1975. Stanford English professor John L’Heureux published The Handmaid of Desire about the PC-craze at The University (yes, Stanford) in 1996.

All of this requires mention simply because self-serious academics and pundits continue to warn us in grave tones that “this time is different” on college campuses. If the alarmists are to be believed, they’ve expertly uncovered a certain sign of the decline of America as we know it. In truth, they’re revealing how blind they are to history.

The latest academic to sound the alarm is Andrew Michta, dean of the College of International and Security Studies at the George C. Marshall Center for Security Studies. Writing in the Wall Street Journal last week, Michta alerted readers to the sad truth that “The American Experiment Is on Life Support.” According to the dean, America’s decline is to a high degree a consequence of “five decades of neo-Marxist indoctrination in American schools, colleges and universities.” Michta goes on to write that “The left’s ‘long march’ through the institutions is all but complete. Extreme intolerance has now replaced the liberal notion of negotiated compromise that is the sine qua non of democracy.”

Michta laments that “America’s young, especially those raised in middle-class or affluent homes, have been so brainwashed that they no longer notice how absurd it is to call for the eradication of their own nation-state, and to do so in the lingo of Iran’s mullahs.” If Michta is to be believed, their “ignorance of history is the hallmark of the current crisis.”

America in crisis. Because of young people. Where have we heard this before? The view here is that Michta is overreacting, as pessimists about the U.S. always have.

For one, what’s his basis for making a blanket statement about “America’s young”? Is there a sample size he can point to, or is he, like others have always done, cherry-picking the most shocking examples? If so, let’s please keep in mind that wondrous as country prosperity is, it frees people to be stupid in ways that they can’t where mere survival on a daily basis is less than certain. Hard as it may be for some to grasp, raging stupidity can be a contrarian, and very bullish, indicator.

Investment flows support the above assertion. While Michta would give the impression of “America’s young” as this massive blob of thumb-suckers unable and unwilling to contemplate what doesn’t feel or sound right, investors around the world continue to aggressively invest copious amounts of capital in the U.S. Can Michta be right and markets wrong?

Speaking of, assuming “America’s young” were arriving on campus in normal form only to be “brainwashed” as Michta moans, wouldn’t markets correct here too? Would middle class and affluent parents continue to spend gargantuan amounts to have their offspring ruined? And why do America’s businesses, you know the most valuable ones in the world, continue to hire what Michta deems “absurd” creations of “neo-Marxist indoctrination”? Really, does Michta know something that the most successful businesses in the world don’t?

Probably not. Not only does he base his overdone pessimism on provocative anecdote, his anecdote is only original insofar as he himself suffers the very “ignorance of history” that he decries in America’s youth. Needless to say, people like Michta have existed as long as America has existed, and realistically before. They’ve never been right.

I’m the editor of RealClearMarkets, and a senior economic adviser to Toreador Research & Trading. I’m also the author of five books. The next is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason (Post Hill Press). Others are They’re Both Wrong (AIER, 2019), The End of Work (Regnery, 2018), , Who Needs the Fed? (Encounter, 2016) and Popular Economics (Regnery, 2015).

View Original Article on Forbes Website

John Tamny in RealClearMarkets: Wouldn’t Republicans Be Ill If Masks Were Effective?

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By John Tamny – Editor

October 22, 2020

Here’s a revelation that it’s probably redundant to refer to as a revelation: nearly every Republican and libertarian-leaning person I know doesn’t wear a mask. No doubt they wear them where they’re required, most notably inside businesses, but generally the masks come off in places they’re not required; outside in particular.   

What about at home? Forget about it. As for indoors with friends, most often not. Sometimes jokes are made about them.

About this, it should be made clear that death and sickness are not jokes to any of the people I know. Particularly during the early days of March, most of the people I know were quite a bit more cautious. This was a known that the New York Times reported: in those red, allegedly science denying states that were the last to impose hideous and needless lockdowns, citizens were taking greater care on their own. Among the Republicans and libertarians whom I know, the notion of laws or forced lockdowns bring and brought new meaning to superfluous. If illness or death threatens, who would need to be told to be careful?

To repeat, no one I know laughs at illness or death. On the other hand, the Republicans and libertarians I know tend to think masks not terribly effective at deterring illness. As for death, the New York Times in particular has been a rather excellent source of information about the virus. Though the Times routinely runs headlines that would give the impression that there’s Covid blood on every American street, a read of the stories with alarmist headlines has routinely revealed a sad, but less tragic truth within: nearly half of all U.S. deaths related to the virus have been associated with nursing homes. From this, many Republicans and libertarian leans in my world have had a tendency to conclude that a high percentage of Covid deaths in the U.S. were associated with already ill people who were also very old. Which is why the same Republicans have a greater tendency to wear masks around the old and ill. Again, people don’t need a law to be more respectful about and around those who are both elderly and sick.

As for those who are just old, my parents fall into the late seventies category. So do their friends in Pasadena, CA. Though they abide business rules, they don’t wear masks while socializing with one another. Nor do they require their offspring to wear masks around them. While their age has them increasingly aware of their mortality, they don’t view the virus as a major threat. They continue to live as they used to, before politicians decided we couldn’t be trusted to look after ourselves free of force.

Realistically, all that’s been written so far is redundant. The mask-reverent already know all-too-many Republicans don’t share their alarmism. Just turn on MSNBC for confirmation of this truth, or sign up for a neighbhorhood list serve. Those who don’t wear masks are pilloried by the expert reverent. It’s purely anecdotal, but I’ve been accosted in an outdoor parking lot by a “Karen” for not wearing a mask. Once, while in an elevator, the door opened to a “Ken.” In the company of others I don’t know, I always wear masks, But I was alone in this case. That I was didn’t keep “Ken” from telling me to “Wear a mask, Dude.” Oh well, add up enough anecdotes and you have statistic. My experiences with the self-righteous are hardly unique. They’re on a mission to get everyone to mask up.

Except that it’s not happening. Call if defiance, call it reverence for research that doesn’t view masks as protectors (really, it’s not “science” without doubt), or call it political, but the Republicans and libertarians in my world increasingly dismiss masks in haughty fashion. And in truth, they’ve dismissed them for months.

The above is important simply because reality has a way of intruding on stridency. Or hubris. About anything. And it changes behavior. If our behavior causes us harm, we tend to change the behavior. I don’t know anyone who is Republican or libertarian who doesn’t aggressively avoid what could make him or her sick. Colds, fevers and flus are awful. We try to avoid all three, but at the same time we once again dismiss masks.

Which raises an obvious question: have Republicans been abnormally sick the last four to five months, or seven? They should be, or should have been assuming masks were a powerful barrier to the virus. Statistics reveal the opposite. Figure that the states with the most cases and deaths have largely been Democratic leaning. But correlation isn’t always causation, not to mention that it could be science and mask-denying Republicans in those blue states taking up the most hospital beds.

The main thing is that if Republicans who despise masks were getting sick in dominant fashion, it’s not unreasonable to suggest that they would be morphing into GOP Karens and Kens due to illness that was a consequence of mask denial. If not Karen or Ken, it’s easy to at least say that a surge in virus infections among Republicans would increase mask usage among them. Except that there’s no evidence supporting a GOP or libertarian coronavirus lean, nor is there evidence that they’re wearing masks with greater frequency.

So what of the Democrats who are more reverent of masks and the experts telling them to don them? Are they notably healthy relative to Republicans, or do the masks not make much of a difference? Do they just enjoy being told what to do?

Or maybe it’s just political. Maybe Democrats are equally cynical about masks; aggressive about wearing them in public, but Nancy Pelosi, Chris Cuomo, and Barbara Feinstein-like in private. If so, shame on them. Hundreds of millions around the world are racing toward starvation based on parts of the U.S. locking down due to the coronavirus. No compassionate person would continue this public, and very hysterical charade if privately doubtful.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets Website

John Tamny in RealClearMarkets: The New York Times and Trump’s Critics Can’t Have It Both Ways

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By John Tamny
October 16, 2020

The internet is a long time. More realistically, the internet is forever.

This is a worthwhile jumping off point in consideration of the latest whine from the perpetually outraged about the Trump administration allegedly providing crucial “inside information” to investors about the coronavirus. Supposedly these investors attained unique insights unavailable to the rest of us that they were able to profit from handsomely in late February. Except that such a speculation is utter nonsense.

Proof of the above comes from the similarly perpetual internet. “Based on history, if Larry Kudlow and Wilbur Ross sound the all clear it’s time to head for a bomb shelter.” Guess who said the latter. It was Paul Krugman on April 13th.

“Completely inappropriate for Trump to send Kudlow out to pump markets. But also crazy that anyone still thinks investors trust his investment advice. Markets have fallen more than 10% since Kudlow confidently urged people to “buy the dip” on Monday.” Guess who made the previous assertion on February 28th? It was Catherine Rampell, an economics writer at the Washington Post.

If readers want more, they need only look back to 2016 when Kudlow’s name was floated for CEA Chairman. The arrows and guffaws from his critics were endless. And vicious. And they broadly made the point that Kudlow was a walking, talking contrarian indicator.

That they were unfair would be to miss the point. Politics is a bloody, ugly game. Kudlow knew what he was getting into, so he endured the insults. He’s actually a very fascinating person who is very smart. There’s so much that can be learned from him. Is he always right? Of course not. No one is. The best traders in the world freely admit to being wrong almost as wrong as theyre right. The difference with Kudlow is that when he’s wrong, he’s wrong in public. Most of us get to be incorrect out of the public eye.

Krugman surely knows how to be wrong. Stupendously so. Look it up. Rampell’s surely got a few assertions she’d like to take back, along with some analyses.

All of this is brought up to expose as shallow the newest Trump “scandal.” Matt Egan, CNN’s rather emotional stock-market reporter, put out an opinion piece yesterday claiming that officials in the Trump White House were “privately revealing concerns” about the coronavirus to board members of the Hoover Institution in late February. Egan laments the “unequal” quality of the Administration’s briefings, and claims it’s “everything that’s wrong with the stock market.” Privileged information. All that. Oh grow up. The critics can’t have it both ways.

As the quotes from Krugman and Rampell make plain, as do thousands of other comments and quotes about Trump and his advisers, they’re the men and women who can’t shoot straight. They’re clueless. Per Rampell, no one trusts Kudlow’s investment advice as is. Kudlow told the Hoover board members that containment of the virus was “pretty close to airtight” in February, but according to Krugman it’s “time to head for a bomb shelter” if Kudlow signals all clear.

In that case, why are White House critics claiming now that Kudlow et al somehow knew something in late February? Really, what changed? Wasn’t the point that Kudlow is always wrong? If so, why would investors have listened to him about the coronavirus? Of course, if he’s always wrong as his critics maintain, they would have logically sold with abandon once he publicly gave the all-clear in late February. Right?

Trump said the virus was “very much under control” in late February, but according to the President’s critics, he only tells lies as is; meaning, this know-nothing liar either talked out of turn toward the end of February, or he told the truth by lying to the public. Again, critics can’t have it both ways.

The internet is yet again forever. If Kudlow’s always wrong, and if Trump is lying when his lips are moving, what would it matter what they’re reported to have conveyed to Hoover Institution board members in February?

What lends what’s ridiculous a little bit of credibility is that stock markets were correcting at the time of the meeting between top Trump officials and Hoover board members. Except that the correction was unrelated to the virus. Markets had been pricing its arrival with great calm since January. Anyone with a pulse knew this.

More realistically, in late February Bernie Sanders looked like he might take the Democratic presidential nomination. Markets logically corrected at the time to price at least the possibility of a socialist in the White House. Notable is that they stopped correcting after Joe Biden won the South Carolina primary. In fact, the Monday after Biden’s Saturday win the Dow Jones Industrial Average had its biggest one day point gain in history. This happened after Trump officials who are said to never be right and to never be truthful allegedly told the truth to Hoover types. Get it? The big stock movements were politics related, not virus related.

No doubt stocks did eventually correct in March. The virus did factor this time. With good reason. Investors hadn’t priced in the horrid possibility that politicians would respond to the coronavirus by forcing an economic contraction. Rest assured that the eternal optimist in Kudlow didn’t speak about that in February. Neither he, nor anyone imagined politicians would try to defeat a virus with economic desperation. Surprise drives big market lurches, not what’s known. There’s no “there” to the story by Kate Kelly and Mark Mazzetti.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets’ Website

John Tamny in RealClearMarkets: With Facebook, Antitrust Officials Advertise Astonishing Ignorance

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By John Tamny
October 8, 2020

Entrepreneurs open up shop with dreams of profoundly changing how us consumers do things. Yes, monopoly profits are their goal. Thank goodness they’re the goal. They’re trying to win our business by virtue of making our lives so much better that we cease patronizing their competitors.

Really, what’s the point of going into business unless it’s to achieve market dominance? How obnoxious for a wannabe entrepreneur to hog precious capital if the goal is mediocrity. How is that helping consumers? Think about it.

Hard as this will be for the overly sensitive to accept, monopoly profits are a triumph. For consumers. Think about that for a second. Or maybe more. Monopoly profits signal that a previously unmet market need was met brilliantly, or a whole new need was fulfilled that existing businesses never knew existed.

It’s a reminder of antitrust law’s near-matchless stupidity. Antitrust lawyers quite literally want to penalize entrepreneurs for either exposing competitors as inept, or for creating an all new good or service that existing market participants were clueless about. Translated, antitrust lawyers are anti-consumer.

Antitrust officials never, ever discover a monopoly ahead of time. Stop and think for a few more minutes why the previous assertion is true. If you’re confused, remember that “monopoly” signals control of a product or service. The latter is realistically only a consequence of an entrepreneur yet again creating an all-new product or service, or creating an all-new way of delivering an existing product or service. It’s a sign that the entrepreneur devised a way of doing something that was uniformly rejected by other commercial players. Indeed, a business wouldn’t be a monopoly or have immense “market power” if its business plan were admired, or the source of rapid imitation by others.

Since antirust officials by definition cannot detect monopoly profits ahead of time, they’re as a rule looking backwards. And in looking backwards, they’re penalizing the successful for having had the temerity to push aside the mediocre.

Which brings us to Facebook. Those who probably don’t know any better think it should be forced to sell Instagram, WhatsApp and other business lines that have combined to make Facebook one of the world’s most valuable companies. By now, readers should be wise to the absurdist nature of the antitrust breakup calls. If not, please read on. There’s an absurd pattern with antitrust.

To see why, consider what Facebook paid in order to acquire Instagram in 2012. $1 billion. A huge number, but a small fraction of Instagram’s speculated worth today. Which is the point. That Instagram “only” fetched $1 billion in 2012 is a reminder that market actors in the then nascent social media space didn’t have a clue about the company’s potential. Facebook did, or at least it had an idea of its potential. But if the broad market had shared Facebook’s 2012 optimism about Instagram, then it’s safe to say the cost of acquiring it would have been well north of $1 billion; that, or the marketplace would have been drowning in Instagram look-a-likes.

Though Facebook seeks market dominance like any other company does, the fact that it acquired Instagram for a small slice of its present value is the surest sign that Facebook’s market dominance is likely ephemeral. Instagram once again sold for $1 billion in 2012. That it did signals that Facebook’s competitors weren’t terribly impressed with the acquisition. They, like antitrust officials, only discovered that Facebook fulfilled a wildly unmet need after the fact. Translated, we should be cheering on Facebook for having seen what others didn’t, all the while knowing that a lightly regarded company of the moment will soon push Instagram aside, and eventually Facebook itself. Market dominance is a consequence of it being incredibly difficult for entrepreneurs and businesses to understand evolving consumer needs. That’s why today’s brilliant companies are frequently not tomorrow’s.    

After that, it’s worth pointing out that as opposed to Facebook’s ownership of Instagram signaling immense “market power,” the actual truth is quite the reverse. Facebook acquired Instagram, WhatsApp and other apps because it understands what the antitrust ankle-biters plainly don’t: the present of commerce rarely predicts the future. When the 21st century began AOL and Yahoo were the gold standard for internet companies. In truth, they were sitting ducks. They had no idea what was about to hit them. How could they have? Mark Zuckerberg was only in high school at the time.

Zuckerberg and others pushed AOL, Yahoo and other mediocrities into the proverbial dustbin, at which point it’s not unreasonable to speculate that Facebook, Google and others like it are the sitting ducks of today. Rest assured that Zuckerberg gets this. Which is why Facebook is such an aggressive investor in new ideas, and purchaser of existing ones. If Facebook doesn’t evolve, it will die. Bank on it. Though Facebook has described a forced breakup as a “nonstarter,” Zuckerberg is way too smart to think Facebook will still be Facebook in 3, 5 or 10 years if it rests on its Instagram and WhatsApp laurels. Its $736 market cap confirms the previous assertion.

Indeed, $736 billion is blood in the water for venture capitalists who see the money that can be made by rendering Facebook the AOL or Yahoo of the 2020s. In short, Facebook’s market cap is the surest sign that hundreds and realistically thousands of well-capitalized companies are vying for ways to knock the Palo Alto giant off its perch. History says one of them will unless Facebook discovers new business lines that elongate its relevance in ways that its existing business lines surely won’t.

Which is what’s so funny and sad about the federal government’s focus on Instagram and WhatsApp. It’s as though antitrust officials want to advertise their ignorance. If Facebook is to remain dominant and relevant, readers can rest assured that it will remain on top precisely because Instagram will eventually be yesterday’s news within Facebook; the photo and video-sharing juggernaut of the moment eclipsed by business lines or apps that market participants are presently dismissive of, undervaluing, or both.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets

John Tamny in RealClearMarkets: Wise Up Alarmists, Tax Avoidance Is a Tax Cut for Everyone

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By John Tamny – Editor

October 1, 2020

As is always the case, the economics debate would be quite a bit more reasonable if it were understood that all money transfers reflect the transfer of goods and services.

We work in order to get things. The dollars we take in for our work represent our demand for the goods, services and luxuries we need, and sometimes desire. Savings are what’s left over after individual needs and desires are met. Very important here is that savings don’t signal a lack of consumption as much as they signal a shift of consumptive power to someone else, or to an entrepreneur or business accessing the savings of others with an eye on expansion, innovation or both.

With taxes paid to governments, we’re transferring the consumptive or savings worth of our work to politicians. As opposed to workers getting to fully enjoy the fruits of their labor, or private borrowers, or private businesses seeking to expand or innovate with our unspent wealth, politicians attain spending power.

Which is why government spending is such a burden on economic progress. Every dollar that reaches the U.S. Treasury is an extra dollar of control over the economy that politicians have. U.S. politicians don’t take in our tax dollars to stare lovingly at them; rather our dollars represent a growing economic role for politicians whose swagger and prestige is wholly a consequence of the production of others.

It sadly doesn’t stop there. When politicians levy rates of taxation on us, they’re arrogating to themselves an ongoing portion of our income.

That they’re able to legislate access to the production of others is particularly notable in a country like the United States that is populated by some of the world’s most enterprising people. Savers around the world see this, and logically line up to lend to a country that legislatively “owns” a portion of the earnings of such productive people.

As a result, U.S. politicians aren’t just economic participants care of our current earnings. With the world’s savers confident in our future earnings, they make it possible for the political class to borrow extensively from around the world based on the certain presumption that American workers will be extraordinarily effective long into the future, and as a result, swimming in dollar income that the U.S. political class will help itself to a healthy portion of.

Those with a free market lean and an odd focus on deficits continue to claim that Congress has a spending problem; thus the deficits. No, Congress has a revenue problem. Too much revenue, now and into the future. Expectations of soaring revenues make the U.S. an attractive country to lend to. If you want lower deficits, the paradoxical truth is that you must substantially lower federal revenues. This truth is lost on the chin scratchers on both sides of the ideological debate.

For now, and for the purposes of this piece, it should just be said that federal spending is a huge tax on growth, while a focus on debt and deficits is a distraction. The problem yet again is that politicians have too big of a claim on our present and future income. That they do means that politicians like Nancy Pelosi, Chuck Schumer, Mitch McConnell and Kevin McCarthy get to allocate trillions worth of privately produced resources annually. That they have so much power over private production logically means that Jeff Bezos, Fred Smith, Peter Thiel and Warren Buffett have fewer resources to allocate. Spending burdens us now. 

Which brings us to Donald Trump and the alleged “scandal” about taxes paid. The perpetually offended are up in arms that a billionaire allegedly only paid $750 in federal income taxes just a few years ago. It’s supposedly a sign of a “broken system” that favors the rich. Really, try to be serious. Do you the reader really think the U.S. Treasury is the biggest borrower in the world at the lowest rates in the world all based on its ability to fleece the middle? Think again. Lost in all the emotion about one rich person’s taxes is that the top 1 percent of earners account for over 40 percent of federal income tax revenue. If the “system” is supposed to pick-pocket the rich, then it’s doing just that. Too bad it is. 

Back to Trump, he should be celebrated if he only paid $750. Think about it. If so, it means his tens or hundreds of millions in annual income has long gone untaxed. Untaxed income once again doesn’t sit idle; rather it exists as capital for businesses and entrepreneurs. Some will reply that Trump’s just not rich, that there’s no major income. That he’s a failure. Ok, so which is it? Did he seriously underpay or do his business activities not rate much taxation? If the latter, stop complaining. Really, stop complaining either way. You’re advertising your ignorance. 

Indeed, aggressive tax avoidance redounds to us all, particularly when it’s the rich doing the avoiding. They generally can’t spend it all in one place. That they can’t means that short of hiding their millions and billions in coffee cans, the unspent wealth of the rich is frequently directed toward the creation of new companies, along with the expansion of existing ones.

Conversely, tax overpayment or a lack of aggressive avoidance burdens us all for it resulting in Pelosi and McCarthy having more control over the most dynamic economy in the world. Imagine if they had less. Government spending is yet again a tax. That it is will hopefully cause the overly emotional to wise up. Tax avoidance is heroic. We need more of it.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets

John Tamny in Forbes: Will Michael Bloomberg Cause The Fed Obsessed To Finally Turn The Page?

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By John Tamny – Contributor

September 27, 2020

If you’re in politics, money will find you. This little statement of the obvious is perhaps too easily forgotten by politicians. 

They vote themselves occasional pay increases as though their annual pay represents the limits to their compensation. No, that’s not serious. If you’re part of a governmental body that doles out trillions annually, money will yet again find you. It could be after your time in Congress when connections built up enable you to lobby former colleagues doling out trillions, or it may occur while in office when the desirability of your family members oh-so-coincidentally soars as your power does….Think about it. 

That’s why it’s always been comical to witness Democrats and Republicans bemoan “the role of money in politics.” Money is said to play too much of a role in political outcomes. Let’s fix this inequity! Such a view isn’t serious. Money is a consequence in all walks of life. That which yet again doles out trillions annually is going to have lots of money riding on where those trillions go. If you want money out of federal politics, reduce the cost, size and scope of government. It’s very simple. 

Absent that, no amount of legislation meant to shrink the role of money in politics will have any kind of impact. Life isn’t terribly complicated. 

At present, presidents are way too powerful much like members of Congress are. Just as money finds congressmen, so does it find those who might eventually live in the White House. Though Democrats talk a big game about governing for the people, and removing money from politics, billionaire Michael Bloomberg is said to be spending hundreds of millions to help Joe Biden win Florida. If so, Donald Trump’s path to a second presidential term is near certainly shut off.

Wait a second. How could Bloomberg spend so much in support of Biden? Didn’t McCain-Feingold pass with much fanfare in 2002 with an eye on limiting money in politics? Wasn’t the law particularly written to limit the ability of the rich and powerful to swing elections? Nice try. So long as presidents are powerful, so long as what they do has the potential to profoundly affect the richest country in the world, money will find them. 

Which brings us to the Federal Reserve. While it’s somewhat of a known quantity in policy circles that money will always and everywhere be a given wherever there are politicians, those same policy types follow what the central bank does breathlessly.

Supposedly the Fed can cause “recessions” just by moving its funds rate upward, and just the same, the Fed can make money “easy” by reducing the rate to zero. Allegedly serious people believe this. Translated, allegedly serious people believe what isn’t a serious view. Sorry, but the Fed can’t force money where it’s not going to be productively utilized, nor can it drain it from where it will be.

To see why, consider politics once again. Why does money flow so readily to candidates and elections despite laws passed meant to limit that same flow? It’s a waste of words to say it once again, but money finds politicians precisely because there’s wealth to be gained from influencing the decisions of politicians. On the federal level alone they move trillions around each year. 

What’s true nationally is also true in states. California’s economy is the world’s fifth largest. This might help explain why longtime California State Assembly speaker Willie Brown was known to drive rather fancy cars. Think about that too. 

Back to the world of commerce, money finds great business ideas for the same reason it finds politicians: there’s money to be made matching the talented with capital. In truth, there’s lots of money. 

Former Senate Majority Leader Trent Lott semi-famously alluded to Washington being where the money is for ex politicians, which was Lott telling whomever that the sky is blue. For politicians eager to cash in on their relatively low earnings during years in “public service,” staying in Washington is the best way to collect. 

Thankfully, however, the real money is still found outside of politics. There are a lot more billionaires in New York, Los Angeles, San Francisco, Dallas, and Chicago then there are in political capitols like D.C. Thank goodness there are. Though money always finds politicians, it really finds those eager to rush the future into the present via entrepreneurial endeavor. 

And as evidenced by the pay of investment bankers, money similarly finds those skillful at raising money and devising proper capital structures for businesses and entrepreneurial concepts. Without a hint of hyperbole, investment banking is one of the world’s most noble professions. It’s one thing to come up with an innovative idea, and quite another to turn it into an actual business. Financiers move mountains. 

The main thing is that there’s lots of money to be had by virtue of matching an innovative idea with capital, and then there’s billions to be made by the talented capable of turning an idea into a world-changing business. The previous truth exposes all the hand wringing about what the Fed will or won’t do as over-the-top ridiculous. Does anyone think the Fed can erect barriers to that which enriches entrepreneurs, financiers and investors alike? 

If you’re still unsure how to answer, just tack back to Joe Biden. A billionaire is spending hundreds of millions to ensure that the former Vice President wins Florida. Money found Biden with ease. Yet you think the Fed can induce recessions by raising rates?

I’m the editor of RealClearMarkets, and a senior economic adviser to Toreador Research & Trading. I’m also the author of five books. The next is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason (Post Hill Press). Others are They’re Both Wrong(AIER, 2019), The End of Work (Regnery, 2018), , Who Needs the Fed? (Encounter, 2016) and Popular Economics (Regnery, 2015).

View Original Article at Forbes

John Tamny in RealClearMarkets: Do New York Times Headline Writers Believe Their Headlines?

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By John Tamny
September 24, 2020

Café Phillip is a sandwich shop on the NE side of K Street in Washington, D.C. Call this the historically unfashionable K Street versus K Street NW where the major lobbying shops have historically located. Until March of 2020, Café Phillip was booming. Staffed with energetic and highly professional immigrant employees, it did huge business in a part of D.C. that was increasingly filling up with office workers and residents.  

Then came the political panic related to the coronavirus. Even though there were no indications from the virus’s origin, or Asia more broadly, that it was terribly lethal, U.S. politicians panicked. In their panic they quite literally chose to fight the virus with strict lockdowns that resulted in soaring unemployment, bankruptcy, and economic desperation. It would be hard to imagine a more wrongheaded approach to a health threat. Think about it.  

Economic growth has historically produced the resources for scientists and doctors that have made victories over viruses possible. Yet in their panic, politicians on the local, state and national levels forced the very contraction that would logically shrink economic resources, only to follow up with the extraction of trillions from the private economy in order to throw money at the horrendous problems they created. You really, really can’t make this up.   

If Washington, D.C. Mayor Muriel Bowser can sleep at night, it’s a miracle. Café Phillip is instructive in this regard. What was formerly packed, what was formerly defined by frenzied sandwich making in keeping with its enormous popularity, is generally empty during the day. Café Phillip is still open, at least for now. Other businesses in the area are beginning to close. Panicked politicians who will never miss a meal or a paycheck decided we the people couldn’t be trusted to go to work. We might spread the virus. Lockdowns were instituted, supposedly for our own good. 

Sorry, but economic growth is what’s for our own good. It doesn’t just produce resources for those eager to find cures for viruses that make us ill or kill us, economic growth also frees us to quarantine or shelter-in-place if we feel some kind of virus threatens us. Please think about this. While many had the choice to work from home amid this panic, their options would have been great deal more limited in 2000. In 1980, forget about it.  

Back to Café Phillip, to walk in nowadays is to see formerly energized employees with forlorn looks on their faces, mostly immobile as they wait for customers. It’s a far cry from what it used to be. And these are the employees that the Café still employs. The staff is a fraction of its former self, and it’s not unreasonable to speculate that if D.C.’s strict rules with regard to restaurants and offices continue, the Café will shut down.  

It’s all a sickening reminder of how quickly politicians can wreck things. How they can thoughtlessly break things. They’re way too powerful on all levels.  

Worse is that they’re breaking things in response to a virus that is once again not very lethal. What was obvious in the early part of 2020 when deaths didn’t soar in China is still obvious now.  

To put a number to all this, the New York Times has reported all summer that over 40% of U.S. coronavirus deaths took place in nursing homes. The people dying with the virus tend to be very old, and with some kind of pre-existing malady or maladies. Who knows what the actual numbers are, but it’s no reach to conclude that of the 200,000 reported deaths related to the coronavirus, some (or maybe a lot) were on the verge of death either way.  

To the above, some will respond that the musings are those of a heartless person. No, they’re not. In truth, they’re the words of a realist.  

As this is being written, the global death count from the virus is a million people, but it should once again be at least suggested that the number is inflated. To die with something isn’t necessarily to die of it.  

Still, for the purposes of this piece, let’s assume it’s a million. Better yet, let’s assume two million since the virus was traveling around the world for months before anyone was really testing.  

The deaths are of course sad, but the same New York Times reporting that over 40% of U.S. virus deaths have happened in nursing homes has also projected that over 285 million of the world’s inhabitants are rushing toward starvation. Yes, you read that right. The Times won’t say it directly, but the panicked political reaction to the virus that revealed itself in contraction-inducing lockdowns and other limits on activity has parts of the world’s economy collapsing, and as a consequence hundreds of millions rushing back into poverty, starvation and death. Poverty is easily the biggest killer man has ever known. Nothing else comes close.  

This would ideally get more attention from the Times. Consider the newspaper’s above-the-fold headline from Monday: “A Nation’s Anguish As Deaths Near 200,000.” Really? One senses the headline writers don’t even believe this. When old people die it’s sad, and sometimes very sad. But it’s rarely – if ever – a tragedy. Figure that death from old age is a very modern concept born of healthcare advances made possible by the very economic growth that politicians mindlessly snuffed out in their panic.  

Thinking about anguish, the true anguish is born of hundreds of millions rushing back to poverty, starvation and death thanks to politicians fighting a virus with forced contraction. After that, a successful business is a bit of a miracle too. Most don’t make it, but when they do they lift up owners, employees and customers alike. Tragic is seeing what improves people, gives dignity to workers, and wealth to owners being snuffed out by politicians who will once again never miss a meal.  

The New York Times might think about this as it publishes alarmist headlines that obscure actual truths reported within the paper. It’s sad when we lose our grandparents and old people more broadly, but it’s tragic to read of people starving, and heart-wrenching to contemplate formerly productive workers sitting, waiting for customers; increasingly aware that what puts a roof over their heads will no longer. Proportion New York Times, proportion.  

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article At RealClearMarkets

The Market Makes the Fed Irrelevant | Not Fake News with John Tamny

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Originally Posted: September 14, 2020 | 3:00PM EST

The Market Makes the Fed Irrelevant | Not Fake News

John Tamny reveals that the Federal Reserve isn't as all-powerful as many would like us to think on today's Not Fake News!

Posted by FreedomWorks Foundation on Monday, September 14, 2020

John Tamny reveals that the Federal Reserve isn’t as all-powerful as many would like us to think on today’s Not Fake News!

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John Tamny in RealClearMarkets: Just What Is It That Judy Shelton’s Critics Are So Afraid Of?

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By John Tamny | Editor

September 17, 2020

Have you ever wondered why the U.S. dollar is accepted as payment around the world? Better yet, have you ever wondered why the dollar liquefied exchange in Iron Curtain countries during the 20th century, and still liquefies trade in countries like Cuba, Iran and North Korea today?

That the dollar continues to facilitate global exchange is a reminder of a simple truth that regularly eludes economists, politicians and pundits: no one trades money, lends it, or borrows it. Underlying any financial transaction is the flow of actual resources. Those who lend dollars are lending resource access to others, and those who borrow dollars are borrowing access to resources. Considering buying and selling, when a grocer accepts $50 dollars for various food items, the $50 is accepted precisely because it can be exchanged for goods of roughly equal value.

When we buy, sell, lend or borrow, it’s always products for products. Money is just the agreement about value that referees the exchange.

That the dollar is utilized globally, and in countries that allegedly despise “America,” is certain evidence of the above truth. That no one would exchange market goods for North Korean won, or take a paycheck denominated in bolivars from Venezuela similarly supports this basic truth.

Gresham’s Law is a myth. Bad, untrustworthy money is very hard to find. Good, trustworthy money is everywhere. People generally don’t accept money that others don’t accept.

In that case, imagine if the dollar as a measure of value was constant. As in, imagine if the commitment from U.S. monetary authorities was something along the lines of maintaining the dollar’s value today, tomorrow and ten years from now. If so, it’s not unreasonable to speculate that “supply” of dollars around the world would skyrocket. That dollar supply would soar is just another way of saying that as producers, we exchange products for products. Eager to receive value equal to what we produce, stable money facilitates just that. Since it does, stable money is everywhere.

Along these lines, supply of dollars soared 63x from the late 18th century to the early 20th. The U.S. was on the gold standard during the time in question. That’s why supply of dollars rose so substantially. When money is trusted, demand for it as a facilitator of exchange increases relentlessly.

People also want to earn money that’s trusted. Think about it. While we earn “money,” we really earn what money can be exchanged for. No one would want to earn money that authorities are routinely devaluing. They wouldn’t for obvious reasons. The devaluation would amount to theft of one’s work.

All of which brings us to Federal Reserve board nominee Judy Shelton. It was reported recently that her nomination is imperiled. Supposedly a big factor is that Shelton “has been a longtime proponent of a return to the gold standard, which would limit the Fed’s ability to influence inflation….”

Ok, but implicit in Shelton’s past gold-standard advocacy is that she’s decidedly not for limiting so-called “money supply.” A gold standard is all about imbuing money with the utmost credibility as a measure of value, which is all about increasing supply of the money measure in question.

Implicit in Shelton’s desire for a stable currency is that she sees the genius of individual specialization. Good money facilitates exchange, which means good money facilitates the specialization that powers productivity.

Shelton supports the gold standard precisely because she doesn’t support the theft of our work effort. She understands that devalued money robs the worker of the fruits of work.

Understand that governments didn’t happen upon gold as a definer of money. Markets did. The commodity “least influenced” by the factors that cause other commodities to bounce around in value, gold came to define money precisely because money most lives up to its name when its value is largely unchanging.

Shelton’s critics lament that her support for gold-defined money would “limit the Fed’s ability to influence inflation,” but then there’s no inflation to speak of if the currency in question is stable as a measure of value. Which means that the real lament is that Shelton’s preference for dollar-price stability would limit the ability of monetary authorities to devalue the dollar. Yes, Shelton once again abhors the devaluation of work. And this disqualifies her because….?

Some will say devaluation during slow economic periods boosts economic growth, which is just a reminder that some haven’t the faintest clue about what powers economic growth. Devaluation certainly doesn’t when it’s remembered that Americans are the U.S. economy, and Americans earn dollars. Alas, investment is what drives economic growth, investors are delaying consumption of dollars now in the hope of attaining more in the future, which means devaluation is a huge tax on the very investment without which there is no growth.

Oh well, the dollar’s exchange value or stability of same has never been part of the Fed’s portfolio as is. Despite this, Shelton’s support for a stable “Federal Reserve Note” disqualifies her? Why?

Funny about this manufactured controversy is that while a return to a gold-defined dollar would be a marked improvement on what we have now, the Federal Reserve is not empowered to bring about a return. And as Shelton would be the lone Fed board member promoting a stable dollar, what she wants is not what the Fed would deliver even if it could.

So what is it that Shelton’s critics are so afraid of? Ideally they’ll be required to explain what has them biting their nails assuming Shelton is voted down. If their reluctance is tied to a yellow metal, please be prepared for explanations that sound like Joe Biden sans a teleprompter. Those who despise the gold standard really don’t know what they despise.

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John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article at RealClearMarkets.com

John Tamny in RealClearMarkets: Are the Corona-Lockdowns An Election 2020 Ransom Note?

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By John Tamny | Editor

September 15, 2020

“We don’t realistically anticipate that we would be moving to either tier 2 or reopening K-12 schools at least until after the election, in early November.” Those are the words of a west coast health director. No in-person schooling until after the election? Hmmm.

Please think about what was said. It reads as kind of a ransom note. Vote for science-reverent candidate Joe Biden, or else….

Really, what else could the utterance mean? What does November 3rd have to do with re-opening schools? Why would it be safer to open on the 4th of November versus the present?

Unless the implicit point is that corona-reverence is far more political than the believers have previously felt comfortable admitting. If so, what’s happening borders on child abuse. Kids will be held hostage by an election?

Think about what this means. For one, not every parent can afford a babysitter. More than some want to acknowledge, there’s a “day care” quality to schooling. And when school isn’t in person, parents without the means to hire babysitters either must reduce work hours, leave their kids without supervision, or quit work altogether.  

Day care aside, what about the kids? While there’s an argument that the learning aspect of education is a tad overstated, does anyone think virtual learning will be very effective? With kids? For the adult readers done with school, think back to how attentive you were on substitute teacher days. Does anyone think a lot of learning is happening remotely?

What about kids with disabilities? How can they be instructed effectively via Zoom?

On a Frontline episode from last week titled “Growing Up Poor In America,” one of the impoverished kids had an ADHD problem. She was expected to learn virtually. Anyone want to guess how this will turn out? Some may respond that ADHD says much more about young people than it does a specific affliction, which is precisely the point. Young people need the structure of a classroom. They need to know they could be called on in class only to face the stares of fellow students if they lack an answer. Pressure concentrates the distracted mind.

The girl with attentiveness problems has an older sister. Understand that the Frontline episode followed three poor families during the spring. Her older sister was supposed to attend the prom. It was going to be her first date. Compassionate politicians and teachers took this exciting first from her.

Is the point that public school teachers don’t feel safe? If so, isn’t the right answer to give those uncomfortable returning to work an out, as opposed to discontinuing in-person schooling altogether?

Of course, if teachers don’t feel safe, a not unreasonable question is why they don’t? It’s not unreasonable to ask simply because retailer Target recently reported its strongest quarterly sales growth in decades. Target was “allowed” to remain open during the lockdowns, and while the political picking of winners and losers brings new meaning to reprehensible, the fact remains that Target has done very well amid the economic contraction forced on us by witless politicians. Translated more clearly, Target stores have at times been very crowded. So have Walmarts, Safeways, Ralph’s, Whole Foods, etc. etc. etc.

That they have raises an obvious question: have workers at those stores been falling ill or dying with any kind of frequency? Half-awake readers know the answer to this question, as should teachers reluctant to return to the workplace. Those employed at the major retailers have largely avoided illness and death. If they hadn’t, media members and politicians desperate to promote a blood-in-the-streets narrative would be letting us know the horrid stories in detail.

Who knows why, but it probably goes back to the statistics reported by the New York Times deep within articles that start with alarmist headlines, but those who pass with the virus tend to be quite a bit older. Or in nursing homes. According to the Times, over 40 percent of U.S. coronavirus deaths have been associated with nursing homes. The latter isn’t meant to minimize the cruelty of a virus as much as at least as of now, virus deaths skew toward the much older who also have pre-existing conditions. In short, just as retail workers have largely been spared illness and death, so logically would teachers who would be exposed to exponentially fewer people each day than retail workers. There’s also the distance thing. Instructors tend to be at the front of a classroom. Get it?  

One more thing about businesses that have remained open: another impoverished child profiled in the aforementioned Frontline episode talked of missing being with his friends. Missing playing sports with them. It’s not allowed. There’s that distance thing. One bright spot in his day is McDonald’s. The one near his family’s home in The Plains, OH offers free lunches for school-age kids. Hopefully readers have this truth internalized the next time some know-nothing decries big business, or “excessive profits,” or calls for increased taxation on the big and successful. They somewhat uniquely have the means to help those who can’t always help themselves.

Back to the quote that begins this piece, some with the ability to keep schools closed are literally tying their re-opening to the presidential elections. This is shameful on too many levels to list; the most obvious being that kids shouldn’t be the victims of political brawls. It’s really very sickening.

And it yet again raises a question about the why behind the continued limits placed on people, schools and businesses. They’ve never made sense in consideration of how thankfully rare death (or even serious illness) has been as a consequence of the virus, epecially in recent weeks. 

Unless it’s always been political; as in, the most actively corona-reverent have been stoking ongoing virus fear as a veiled ransom note. If so, those who would mess with people, schools and businesses for political reasons are truly the sick ones.

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John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

View Original Article on RealClearMarkets.com

John Tamny in Forbes: America’s Puzzling Theft Of TikTok Mocks ‘IP Theft’ Paranoia

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John Tamny – Contributor | Policy

September 7, 2020

For the longest time American conservatives have properly venerated Hong Kong’s wholly free market ways, along with what protects its economy from the grasping hands of politicians. The wealth there is of the mind. The wealth is people. Hong Kong has no physical wealth like oil, which means what makes the city great can’t be taken. If ever politicians overreach (are you listening, Beijing?), the people who make Hong Kong amazingly prosperous will take their talents, as in what’s inside their heads, elsewhere.

Lest we forget, a major driver of Hong Kong’s brilliant post-WWII ascendance was the tragic rise of Mao and communism in China. As Jonathan Kaufman explained it in his new book The Last Kings of Shanghai, in response to Mao’s rise “100,000 people from Shanghai would arrive in Hong Kong, providing – along with the local Cantonese – the skills and economic infrastructure that would bring the city forward.” Translated, Shanghai’s brilliant capitalists moved their genius to where it wouldn’t be suffocated. Mao and his murderous cronies thieved billions worth of wealth, including $500 million worth of properties and businesses amassed by Victor Sassoon alone, only for the wealth taken to vanish. Stating what should be obvious, wealth disintegrates when it’s forcibly ripped from the hands of those who created it. Politicians destroy things, which explains why a regime of light taxation is always best when it comes to economic progress.

That wealth taken by force rarely grows in the hands of the takers has long been an article of faith among American conservatives. So properly convinced were they of this truth that they actually took to lamenting countries “rich” in natural resources like oil, gold, land, or anything else with physical qualities. They referred to tangible wealth as the “resource curse.” If the wealth just exists it theoretically saps innovation, but more important is that physical wealth can be taken. See Venezuela with its oil. See countless African countries. Hong Kong will never go the route of confiscated wealth simply because what makes it staggeringly rich is its people. Take them out of the equation via confiscation, and Hong Kong would be poor.

Which brings us to the shameful theft of Chinese company TikTok by the political class in the U.S. Yes, that’s what’s happening. Let’s not hide from this embarrassing truth. Though the greatest technological innovations of the internet age have largely been hatched stateside, with TikTok the Chinese happened on a globally popular concept ahead of American technologists. Amen to that!

With China’s economy increasingly free, it’s only natural to assume that there are more than a few Steve Jobs and Jeff Bezos equivalents in this country in a hurry. Let’s hope! Just as Apple [AAPL -3.3%] Inc.’s growth has been hugely bolstered by sales in China (1/5th of Apple’s iPhone sales happen there), and to the betterment of the Chinese people, let’s hope Chinese innovators now and in the future match Jobs when it comes to creating goods and services that massively increase living standards stateside. The only closed economy is the world economy, so if the Chinese prove skilled at rushing the future into the present via remarkable innovations, Americans will benefit as though the technology had been hatched right next door.

With TikTok, the Chinese created something that Americans fell in love with, only for conservatives to disappointingly cheer the Trump administration’s threat to ban the app unless its U.S. operations were sold to a U.S. technology company. One conservative editorial oddly claimed that the shameful mugging of TikTok was an example of the “market increasing business competition and solving a political problem at the same time.” No, that’s not right. Conservatives used to be clear that the politicization of commerce was an example of market forces being pushed aside to the detriment of wealth creation and progress.

Worse, this embarrassing conservative embrace of thievery plainly ignores what conservatives have long believed about the source of Hong Kong’s genius. It’s once again the people. Embarrassing as the theft of TikTok is, what’s happening with it supports this very point.

Indeed, as Wall Street Journal reporters Liza Lin, Aaron Tilley and Georgia Wells reported last week, the forced sale of TikTok by the allegedly market-friendly Trump administration is proving a bit of a challenge. The reasonably aware surely know why.

As the Journal reporters explained it, those interested in bidding on TikTok “believe a large portion of the value of TikTok is in the suggestion algorithms that keep users glued on the app.” As they went on to write, “A person close to the talks likened TikTok without its algorithms to a fancy car with a cheap engine.” Bingo! When it comes to technological wealth, it’s not physical, rather it’s metaphysical. What makes TikTok great is the people. American politicians whom we shouldn’t expect to know better, but cheered on by conservative pundits who should know better, have forgotten that wealth taken from others isn’t terribly valuable absent the brilliant minds who made what’s been taken valuable to begin with. Translated for conservatives, TikTok isn’t TikTok minus those who made it TikTok.

That the forced taking of what’s someone else’s is proving a bit of a challenge has implications beyond just the theft of TikTok. In particular, it eviscerates the modern conservative obsession with the Chinese and their alleged “theft” of intellectual property. The embarrassing American attempt to take TikTok is a reminder of how overdone such paranoia is. The value of technology is yet again a consequence of those operating it. In short, if U.S. technology is brilliant, which it is, politicians needn’t fear its theft. Like TikTok, the value is in the people who created it. The Chinese can’t steal American genius, and the American political class can’t steal Chinese genius.

Which is why this whole episode has been so thoroughly awkward. Come on Americans, the whole world is watching. We know better. History is clear that when governments take things from private hands by force, what’s taken usually loses its value. What applies to the rest of the world also applies to us. Let’s please free TikTok from the U.S.’s odd and economy-sapping flirtation with industrial policy.

View Original Article at Forbes

John Tamny: How Deep Is Your Coronavirus Religion? | Not Fake News

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How Deep Is Your Coronavirus Religion? | Not Fake News

John Tamny reveals the Not Fake News on the human cost of the COVID-19 lockdowns, both in the US and around the world, and asks if the "cure" is worse than the disease.

Posted by FreedomWorks Foundation on Tuesday, September 8, 2020
John Tamny reveals the Not Fake News on the human cost of the COVID-19 lockdowns, both in the US and around the world, and asks if the “cure” is worse than the disease.

John Tamny in RealClearMarkets: A Few of the Many Reasons to Celebrate the United States

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By John Tamny – Editor

September 3, 2020

There are so many reasons to celebrate the United States of America. Thankfully too many reasons to celebrate what’s spectacular. Countless books, articles and songs speak to this happy truth. In that case, this write-up will lightly cover just three of many reasons to cheer what rates a routine standing ovation.

The U.S. is defined by fierce individualism. Sorry, but we’re not “all in this together” in the Land of the Free. In truth, the inspiring idea that led to the U.S. was the rather novel notion that a very limited government would exist to protect the rights of individuals to live as they want. People would be free to conform, rebel, or somewhere in between so long as their pursuits didn’t trample on the rights of others.

Crucial is that this elevation of a “live and let live” ethos proved a magnet for the world’s strivers. They risked it all, including crossing oceans, for the chance to be a part of a great American experiment rooted in freedom. The ability to live and think freely overwhelmed the very real possibility that they would die before getting the chance to.

All of which speaks to another reason to celebrate America: its very existence rejects so much conventional wisdom. For the purposes of this piece, the narrow focus will be on why the U.S. mocks all the hand wringing about inequality, and the laughable contention that the gap between the rich and poor harms the poor.

The United States is living proof of why this isn’t true. Indeed, it would be hard to find a country more wealth unequal than the United States. To be fair, massive inequality was the U.S. design. See fierce individualism yet again. If the individual right to freedom of thought and action was going to be protected, it was only natural that some courageous enough to take their talents here would achieve in amazing ways. And so they have. Great wealth has always defined the U.S., and it does to this day.

Yet the world’s poorest keep risking it all to get here, don’t they? Ronald Reagan used to say something along the lines of “facts are stubborn things,” and the facts are that the world’s poorest continue to flock to what is one of the world’s most unequal countries. That they do thoroughly wrecks the popular narrative that wealth inequality harms the poor, and/or that they’re inflamed by it. In truth, they take huge risks in order to live and work where inequality is greatest.

If anyone doubts the above assertion, consider where the poorest Americans migrate to once they’re in the U.S. It’s rarely Buffalo, Flint and Jackson, but often New York, Los Angeles and San Francisco. That’s the case given the basic truth that opportunity is greatest where the density of superrich is greatest.

It’s not just that the mass production of former luxuries by the rich (think cars, air conditioners, mobile phones, and computers) lifts our living standards in incredible ways, it’s also that the location of their innovations tends to be where other talented people cluster, only for the range of work options that lift all manner of skill sets to explode. The U.S. is a magnet for the world’s strivers because of its elevation of freedom, and freedom logically correlates with wondrous inequality as varied talents are free to showcase them in endless ways.

Which brings us to the third reason to celebrate the United States: its appeal to those with natural “get up and go” means that it’s the epicenter of entrepreneurialism. Think about it.

The U.S. is in so many ways separated from the old world of Europe and Asia. In an historical sense, it’s the distant new world. The act of leaving the past behind in pursuit of freedom and opportunity (as opposed to security) in the United States is and was the ultimate entrepreneurial act. Imagine leaving the known for a country that offers freedom, but not much else. Such a country would naturally attract the motivated, the visionary, the dreamers….

Having attracted those willing to risk it all just to taste freedom, it’s no surprise that so many Americans and their descendants have risked it all in a commercial sense. Populated by the motivated, those same motivated people regularly channel their herculean energy into creating new ways of doing things.

As a nation of people from “somewhere else,” these entrepreneurial wanderers restless in their search for better relentlessly bring the future into the present. Crucial is that they’re able to rush tomorrow to today precisely because they’re able to express their intrepid nature in a country that exists specifically to protect their right to do just that.

In short, it’s no speculation to say that the late Steve Jobs, who descended from Syrian immigrants, could never have created Apple in Damascus. Neither could Andrew Carnegie have revolutionized the steel industry in Dunfermline. The U.S. is where energetic dreamers become entrepreneurs precisely because the U.S. is where those who see the future differently are free to show why it will be different.

Thank goodness for the U.S. and its design that enables wondrous human flourishing. If the U.S. didn’t exist now, it would have to be invented so that a still primitive planet could be propelled into the future by human capital formerly suffocated by a world that cruelly lacked its most essential country. Let’s celebrate the U.S. indeed.

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John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com. 

View Original Article on RealClearMarkets.com

John Tamny in RealClearMarkets: How Deep Is Your Coronavirus Religion?

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By John Tamny

September 1, 2020

“I wanted to stay put in Colombia to build a better future for my daughter, but we have to go back.” Those are the words of Nelson Torrelles to Wall Street Journal reporter John Otis. As Otis reported in the August 31 edition of the Journal, the “haggard and hungry” Torrelles along with his wife and 5-year old daughter are walking back to Venezuela on a Colombian highway.

They’d initially moved to Colombia to escape Venezuela’s socialist hellhole, only for Torrelles to get a job as a waiter at a barbecue restaurant in Bogota. But when Colombia joined much of the rest of the alarmed world in shutting down its economy in March in response to the coronavirus, Torrelles lost his job and soon enough the family apartment that he couldn’t make rent on. Hard as it may be to imagine for those of us lucky enough to live in the United States, the hungry Torrelles and his family are moving back to Venezuela.

Please stop and think about this for a minute. Please stop and imagine the pain Torrelles is in. It surely extends well beyond hunger. Imagine not being able to adequately provide for your family, including a daughter too young to understand that your failures are largely beyond your control. Words don’t begin to describe what Torrelles must be going through, nor can someone lucky enough to be in the United States understand just how awful things must be for Torrelles and his family.

About the coronavirus shutdowns, this column will stress yet again what it always has: the greater the presumed lethality of any virus, the less of any kind of need for shutdowns or government intervention. Practicality is behind this simple assertion.

For one, economic growth has long been the biggest enemy of virus and disease precisely because economic growth produces the surplus resources that can be mobilized in pursuit of cures for what ails us. If something threatens us with sickness or even death, no reasonable person would respond with forced economic contraction.

Second, the greater the presumed lethality of any virus, the more that any laws or rules meant to limit its spread are superfluous. Really, what about the high possibility of sickness or even death requires a law? People don’t need to be told to not hurt or kill themselves. No reasonable person would seek to expand government power over human action during the spread of a virus precisely because wise people would govern themselves.

To which some who absolutely revel in being told what to do will respond that not everyone is rational when it comes to protecting themselves. So true.

All of which speaks to the third reason any kind of governmental response to a virus is impractical. It is because accepted wisdom rarely ages well. Think back to AIDS in the 1980s, and the popular view that it could be spread by people merely existing in the same room.

Some people will most certainly throw caution to the wind about any virus, and it cannot be stressed enough that these people are crucial. Their indifference or their disagreement with accepted wisdom means essential information will be produced. Specifically, those who don’t share the alarmism of doctors like Anthony Fauci and Scott Gottlieb, two individuals who in no way face the risk of going without food, shelter or life’s comforts if it turns out they’re wrong, can tell us if those who aim to protect us are wrong or right. In particular, if some wholly ignore the Faucis and Gottliebs of the world only to experience no ill health effects for doing just that, the medical profession and society more broadly will be much smarter as a consequence.

Lest we forget, Fauci was the doctor who told us a husband could pass on AIDS to his wife just by being in the same room. This was 1983. He knew so little. So did everyone. The past raises an obvious question about the present: why would doctors and scientists eager to know the truth be so adamant as Fauci and Gottlieb are about ongoing governmental limits on human action? Those wholly interested in the truth would presumably cheer those not eager to follow official, or unofficial rules and accepted societal norms. They produce information as important, and arguably more important than the rule followers. Again, there’s so much we don’t know.

At the same time, what we know is that per the CDC, the hospitalization rate for those infected with the virus is .1 percent? As for deaths, the New York Times reported once again on August 18th that “More than 40 percent of all coronavirus deaths in the United States have been tied to nursing homes.” “Once again” is operative mainly because the Times has long reported this fact, and it’s one that has long led the half-awake to a very simple conclusion: some, or maybe a lot of the U.S. coronavirus deaths have been a consequence of the elderly dying with the virus as opposed to having died directly because of it.

It turns out the CDC agrees with this blinding glimpse of the obvious. It recently released a report indicating that over 94 percent of the U.S. coronavirus deaths occurred among individuals with “underlying medical conditions” like diabetes, heart failure, respiratory failure, and other maladies. So while there’s so much so many don’t know, including doctors, what’s long been apparent is now being accepted even by the CDC; U.S. death counts related to the virus are overstated. Perhaps wildly so.

It’s a reminder that the answer to any illness or any other presumed problem must always begin with freedom. Not only does it produce crucial information that truth-focused doctors and scientists would plainly want to know, not only does it produce the growth that provides cures, it also helps those with the least avoid what Nelson Torrelles is enduring right now.

Again, please stop and imagine the many layers of his agony. Having done that, please ask yourself in your relative comfort just how deep your corona-religion is? Is it so deep that you’ll continue to turn a blind eye to the global suffering that’s taking place so that you can feel safe from a virus that thankfully kills so few? Please think deeply about this. The lives of hundreds of millions of innocent people with exponentially less than you hang on your level of alarmism, and the strange joy you derive from being told what to do.  

view original article at realclearmarkets

John Tamny in RealClearMarkets: Europeans Discover the Myth About ‘Safety Nets’ the Hard Way

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By John Tamny

August 27, 2020

Economic discussions would be much better if it were understood that no one receives dollar, euro, yen, pound or yuan “aid.” They receive the goods that those currencies can be exchanged for. Money on its own doesn’t feed, shelter or clothe. It’s only useful insofar as it’s accepted by the producers of actual goods and services.

This simple truth is hopefully useful as a backdrop to what’s happening in Europe right now. As Liz Alderman of the New York Times reported on Tuesday, Europeans are presently suffering rather painful job cuts. In Alderman’s words, “At BP, 10,000 jobs. At Lufthansa, 22,000. At Renault, 14,600.”

To the half awake in our midst, what’s happening is a statement of the obvious. Some of the most stringent lockdowns related to the coronavirus happened in Europe. The shutdowns in France were the strictest, including limits on simply leaving one’s home. The virus spread despite, but so did economic contraction.

That contraction spread was a blinding glimpse of the obvious. Lockdowns by their very name limit activity, including that related to work. With Europeans suddenly experiencing reduced personal and economic mobility, production was naturally going to decline.

All that, plus the only closed economy is the world economy. A not insubstantial portion of Europe’s economic vitality is a consequence of production elsewhere. Translated, tourism looms large on a continent that increasingly limited the inflow of tourists. European goods of the car and clothes variety similarly enchant the world’s citizenry, but with global demand a consequence of supplying first, it’s no insight to say that Europe’s countries suffered economically the lockdowns that took place far from Europe.

But wait, some will say, Europe has a “safety net.” Its countries are led by enlightened types who place a cushion under the economically displaced. Don’t readers remember all the fawning reports from Europe in April and May? It was said then that Europeans believe in science (hence the lockdowns), and their belief in science positioned governments to shut things down sans protest. The latter was muted because those same enlightened governments subsidized corporate maintenance of jobs that were rendered rather redundant by a major decline in economic activity.

Europe got it right was the view. Its people stayed home in order to keep the virus at bay (except for where this didn’t work very well – think France once again….), plus they kept their jobs.

Except that they didn’t. Whether public or private, corporations aren’t charities. Eventually they were going to run out of the funds to prop up the alarmism of enlightened European leaders and citizens.

This happened precisely because European governments ran out of money. Or there were limits to their subsidizing the impossible whereby in the words of Alderman, “European countries ordered businesses to shutter and employees to stay home,” only for the governments in those countries to “shield workers from the prospect of mass joblessness, extending billions to businesses to keep people employed.” What’s that Thatcher said about socialists, that eventually they run out of other people’s money?

The above truth would be easier to understand if it were better understood that money itself once again isn’t wealth. Money merely moves actual wealth around. European governments couldn’t continue to subsidize idle workers simply because an ability to not work is – gasp – a consequence of production. Get it?

Governments don’t or can’t just pull money from the sky no matter how many times the central-bank obsessed claim they can. In truth, governments can only subsidize a lack of work insofar as others are working in prodigious fashion. Translating what really doesn’t require translation, there’s no such thing as government spending. What’s real is that governments can give out access to food, clothing and shelter only insofar as they can arrogate to themselves a piece of the actual production in an economy.

Europe’s governments were never generous as much as the productive in Europe were long willing to be fleeced to varying degrees so that politicians would handle the dirty work of clothing, feeding and sheltering those who lacked the means to do for themselves. Major social welfare programs are never where there’s there little production, and ubiquitous to varying degrees where there’s lots of it.

What’s happening now is that Europeans are unwittingly happening on the basic truth that Say’s Law is real. Consumption is what happens after production. By definition. Wouldn’t so many love to be free to consume without the toil that enables it? Yes, all too many of us would love to be heirs.

Of course, too easily forgotten is that heirs are able to consume with abandon precisely because those who came before them produced with abandon. Consumption is a consequence, not a driver of economic growth.

Which is why Europeans are now being forced to face up to a cruel reality. No country or continent ever consumed its way to prosperity. Consumption is the reward after the production.

Oh well, European politicians sidelined the continent’s producers only to hand them euros, pounds and francs so that they could continue consuming. It’s sustainable for a while, but if much of a continent and much of the world isn’t producing, eventually the producers of the wealth that enable the handouts are going to be confronted with their own reality. The latter is one that says no business will remain as one if those in its employ are idled. As for governments, they once again can only subsidize a lack of toil insofar as people are toiling.

This collision of reality brought Europe to a logical conclusion. The money that is a consequence of production, and that only has value where there’s production, plainly ran out. Hence the layoffs. Crucial is that government can’t reverse this bit of reality. Only private production can. Which brings us back to what’s simple and easy: if countries want their economies revived, they must end the restrictions that are limiting the private production without which governments have nothing to hand out.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is titled They’re Both Wrong: A Policy Guide for America’s Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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John Tamny in Forbes: Dismiss The Federal Reserve Alarmism, There’s No Such Thing As ‘Dollar Shortages’

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By John Tamny – Contributor

August 23, 2020

In his recently released book The Last Kings of Shanghai, author Jonathan Kaufman wrote about Elias Sassoon’s travels up to Shanghai with an eye on expanding the reach of the Sassoon financial empire. While making his way to China’s commercial center, Elias “followed his father’s strategy of financing shipments of opium and textiles,” while “offering loans to smaller merchants.”

It’s the “offering loans to smaller merchants” that most stood out. Clearly it was a throwaway line for Kaufman given how it describes what financiers do to this day, but there’s bigger meaning to it. The short line is a reminder that if you’re productive economically, the money will find you. Access to credit isn’t so much a driver of productive economic activity as it’s a consequence. Where there’s productivity, there’s always “money” facilitating the exchange of the production.

Fast forward to the present, and there’s a reason that investment banking remains one of the most competitive professions in the world. It is because those skillful at financings, capital structurings, and corporate combinations are aggressively competing with countless other similarly skillful financial types eager to put money to work.

Why are they so eager to move money to a higher use? The answer is so obvious that it’s almost a waste of words to put on paper. Needless to say, investment bankers relentlessly search for production to finance precisely because the financial rewards are so great for doing just that. Where there’s innovation there’s always, always, always finance nearby.

All of this rates mention in consideration of a popular theme among monetarist-style thinkers of the present. Like the monetarists who misunderstood money before they did, their view is that the U.S. economy of the present suffers from a “dollar shortage.” If dollars were just more plentifully supplied, an economy that’s sputtering would soon be roaring.

No doubt some readers see this and detect a Keynesian quality to the monetarist school of thought. With good reason. Monetarism is the mirror image of Keynesianism. While Keynesians believe that more government spending will stimulate economic growth, monetarists believe that increased “money supply” will boost output. Each religion puts the cart before the horse.

Government spending is a consequence of economic growth that already happened, and that is expected to happen. It’s not that politicians in Honduras lack the zeal to spend in the way that U.S. politicians do. Arguably their zeal is greater. The reason they can’t spend with abandon is because there’s little growth to tax. U.S. politicians can spend enormous sums because they’ve captured for themselves a high percentage of an economy that booms. But to be clear, the government spending can’t stimulate vitality simply because it’s a result of it. Keynesianism is a monument to double counting.

So is monetarism. Money supply can’t be decreed on the way to growth. If it could, poverty in the U.S. and around the world would have long ago been erased by central bankers. Sluggish economic growth? Just add dollars, euros, yen, yuan….

What monetarists obsessed with money supply have long missed is that money is the sequel, not the original feature. That’s why it’s so plentiful where production is already abundant. Translated, there’s no “dollar shortage” in Palo Alto right now, nor is there one in Seattle or Austin. The Elias Sassoons of modern times are feverishly financing the productivity of the moment. Production first, then money. Get it?

Money flows reflect the flow of goods, services and labor. Monetarists think money growth care of central banks instigates activity, but the simpler truth is that money has no purpose in cities, states and countries bereft of economic activity. Trillions could be deposited in Mississippi banks, only for the funds to instantly flow well outside of it to more productive activity. Just as government spending is what happens after economic growth, “money supply” is what happens after production. There are more investment bankers aggressively trying to move money to its highest use in Washington State than there are in West Virginia. Keynesians and monetarists are incorrectly focused on the effects of growth rather than the drivers. They double count.

Right now, monetarists claim slow growth springs from dollar shortages. No, dollars are circulating less precisely because there’s less production. This is what happens when politicians lock down economic activity to varying degrees. Money supply reflects production, and there’s less production at the moment.

But wait, monetarists tell us, the Fed is paying interest on bank reserves such that there are fewer dollars circulating. The Fed is keeping “money supply” unnaturally low. Oh well, if we ignore how small a piece of the financial pie traditional banks are, and if we ignore that the Fed pays interest on reserves only to re-enter the market with dollars borrowed from banks, we can’t ignore the simple reality that any “shortage” created by the Fed represents opportunity for investment bankers and other sources of finance.

Assuming what’s laughable, as in monetary “tightness” caused by the Fed’s payment of microscopic interest for bank reserves; that just represents opportunity for domestic and global sources of finance. If the Fed is really making “money” more “costly” to attain, the higher margins ascribed to central bank meddling represent opportunity for financiers.

Some literally believe the Fed is sitting on money, plus “big business” is borrowing it only to similarly do nothing with it, but the greater truth yet again is that money is a consequence of production. Short of being stuffed in coffee cans, money never lays idle simply because there’s too much money to be made moving goods, services and labor to a higher use.

So when monetarists look at you in conspiratorial fashion, only to lay slow growth at the feet of “dollar shortages,” the only answer is to laugh. Where’s there’s growth there’s never a problem of too little money.

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John Tamny in RealClearMarkets: Dear Keynesians, Last Week’s GDP ‘Catastrophe’ Mocks Your Dopey Religion

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By John Tamny
August 04, 2020

At risk of sending some readers into shock in consideration of how much they, their parents, the federal government, or all three spent on their college education, odds are they learned very little if their major was economics. That is so because the professorial class near monolithically believes “consumption” is the driver of economic growth. Imagine that!

To think if we would just “consume” more that the economy would magically grow.

Funny about all this is that most economics majors learned right away about the bogus nature of their classroom instruction once they entered the working world. Presumably it dawned on them then that consumption is what happens after production. Those who proved very productive on the job found that their capacity to consume was extensive. Those who weren’t terribly productive found that this directly limited their ability to buy things. And then those whose productivity was so low that they were rendered unemployed, soon found that their ability to consume at all was a function of the productivity of others being shifted to them.

Nothing against the fun and friends of college, but life is the ultimate teacher. Life teaches us in sometimes brutal fashion how dopey is the notion that consumption powers economic growth. No, it’s a consequence.

Which brings us to the latest “catastrophic” GDP number. About the economy, it should first be said that what politicians on the local, state and national level did to it was and is nothing short of inhumane. Even though economic growth has been the biggest historical foe of virus, disease and death, politicians eager to be seen “doing something” decided that “doing something” in response to a new coronavirus was to force a contraction on the economy via lockdowns of varying stringency. Wow!

Fight a virus with economic desperation, even though economic growth produces the resources necessary to experiment on the way to protections from what sickens and kills? Furthermore, what about the potential for illness and death requires governmental force to avoid as is? Historians will surely marvel at the shocking stupidity that informed the U.S. response.

Back to GDP, this most backwards of measures revealed a 32.9% decline last week. That it did serves as a reminder of how worthless the calculation is.

Indeed, as a Wall Street Journal editorial pointed out, consumer spending “fell 34.6% and accounted for some 25 percentage points of the GDP decline.” You see, GDP largely measures what happens after people are productive.

Notable here is that a decline in healthcare spending “subtracted 9.5 percentage points from GDP.” Healthcare is said to be “12% of the U.S. economy,” but it similarly is a consumptive consequence of production. Americans spend a lot on consumer goods, including healthcare, precisely because they’re so productive.

Of course, all of this decreased consumption speaks to why economies generally recover so quickly when left alone, and also why investors are optimistic about the future despite the needless wreckage created by politicians. Investors who populate “markets” can’t operate based on theory. Reality ultimately intrudes in the marketplace.

So while nail-biting economists focus on the reduced spending that is forming their dire forecasts about the present and future, anyone with a clue can see that wrongheaded as the forced contraction was, the seeds of revival are being planted. Stated simply, the reduced consumption that brought on a “catastrophic” GDP print sets the stage for rebound.

It does simply because savings and investment, not consumption, are the true drivers of economic growth. Entrepreneurs cannot innovate, and companies can’t grow or be founded without savings first. There’s no getting around this truth.

And when thinking about “companies,” readers should never forget that companies are people. When people are matched with investment, their ability to produce in abundant fashion grows and grows. Making simple what already is, does high speed internet of the present enable a much more productive work experience than did the dial-up that was the norm in the 2nd half of the 1990s? The question answers itself.

That it does explains why the markets that so many say are “decoupled” from reality are actually just discounting what will happen once politicians free the people to work and produce again. Their capacity to produce will be bolstered by a huge surge in savings.

None of this is to defend the economic tragedy that politicians around the world foisted on their people, but it is to say that enhanced savings that are a consequence of past production, and that bring down backward measures of economic growth, do bring with them a silver lining. Savings set the stage for a rebound precisely because savings are what drive economic growth.

Just don’t expect to hear this simple truth from most any economist. Deep believers in the religion that is consumption, they can’t see that the latter is the easy part. That what really powers growth is the capacity to save the fruits of one’s production so that workers can produce (and ultimately consume) even more.

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John Tamny in RealClearMarkets: $1900 Gold Will Depress Growth. So Did $1,200, $500 and $36 Gold

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By John Tamny 
July 28, 2020

If Tom Brady wanted, he could be the NFL’s fastest player. His personal trainers or someone on the Tampa Bay staff would simply need to redefine two seconds as one second, at which point Brady’s 6+ second 40-yard dash time would be 3 seconds. NFL’s fastest man like that!

To which the half-awake would gently point out that changing the length of the second wouldn’t alter Brady’s speed one iota. He’d still be one of the NFL’s slowest quarterbacks and players. A second is just a measure. Changing the measure doesn’t change reality. So very true.

Too bad economists and politicians don’t understand what is so basic to the densest of dense sports fans. The dollar, like the second or foot, is just a measure. Movements in its value don’t alter the real price of anything. 

Which brings us to the gold price. As of this writing, the dollar buys 1/1935th of an ounce of gold. In January of 2017 a dollar purchased 1/1200th of an ounce of gold. In January of 2000, a dollar purchased 1/266th of a gold ounce. In 1970, a dollar purchased 1/35th of a gold ounce.

Some may respond that gold has “soared” since 1970. In truth, the dollar has sunk in value. Gold has long been a way to measure the value of money precisely because its value is so stable due to unique stock/flow characteristics. As 19thcentury free thinker John Stuart Mill explained it about gold, it is “least influenced by any of the causes which produce fluctuations of value.” That’s why currency regimes around the world have for centuries gravitated toward the yellow metal as their definer. Since it generally doesn’t move, movements of gold in the currencies in which it’s priced signal a decline, increase or stability in the purchasing power of the currency.

So when gold moves up in value in dollars, that’s merely a sign that the dollar’s purchasing power is shrinking. Though President Richard Nixon delinked the dollar from 1/35th of a gold ounce peg for good in 1973, he didn’t erase the gold signal. His move signaled that the Nixon administration wanted a weaker dollar. Markets complied. The dollar price of gold rose throughout the 1970s under Presidents Nixon, Ford and Carter. The economy performed badly, at least by U.S. standards. That it did was a blinding glimpse of the obvious.

To understand why, never forget that no one earns money. They earn what money can be exchanged for. The dollar’s devaluation in the 1970s signaled a major tax on work simply because the dollars earned while working were exchangeable for fewer and fewer market goods.

For businesses, much the same was at work. To this day it’s assumed that devaluation improves prospects for businesses. No, they earn dollars. Devaluation shrinks the value of their earnings. After which, no business creates products or services without global cooperation. Something as basic as the pencil is a consequence of global production.

If the dollar is devalued, the dollar cost of production increases. A statement of the obvious. Currency devaluation is an explicit acknowledgement that the currency commands fewer market goods, which means the dollar cost of production rises.

And then there is investment; the driver of economic progress. Investors invest by purchasing shares or lending money, but no one invests dollars; rather they shift resources to someone else or some other corporation in the hope of attaining greater resource access (an investment return) in the future. In other words, they hope to get back more wealth than they committed to said venture. But if the dollar is devalued, so by definition are investment returns devalued. Investment is what enables greater productivity among those who comprise any economy, but if policy favors devaluation, investment becomes less enticing.

If the currency is in decline, as in if monetary authorities are shrinking its exchangeable value, there’s a tendency to protect what’s being devalued. Translated, investors hedge against inflation, which is currency devaluation.

More specifically, when currencies are being devalued there’s a tendency among investors to consume hard assets (think land, housing, rare stamps, art), or wealth that already exists, instead of investing in stocks and bonds; both claims on wealth that doesn’t yet exist. Wealth that already exists is more of a sure thing than claims on what might eventually amount to wealth.

Looked at in terms of the dollar and gold, the dollar has always merely been a measure of wealth facilitating the exchange of the goods, services and labor that represent real wealth. And while the dollar is still the world’s currency, the measure has shrunk substantially since the 1970s versus the constant that is gold.

During weak dollar stretches since 1973, a great deal more money has found its way into hard assets like land, housing, rare stamps, art, gold, and other commodities least vulnerable to the dollar’s decline. Translated, wealth that already exists does best during periods of devaluation. Think the 1970s. Think the 2000s. Investment, which is the purchase of uncertain future returns, doesn’t do as well during periods of devaluation. Why risk stretching for uncertain returns if, assuming you get them, they come back in dollars exchangeable for fewer and fewer goods, services, and labor?

Fast forward to the present, Donald Trump has made plain since before he was president that he wanted a weaker dollar. Currency markets have complied over time. As previously mentioned, a dollar purchased 1/1200th of an ounce of gold in January of 2017 when Trump was inaugurated. Its value has slowly declined ever since.

The decline hasn’t crushed the economy, but it’s made the purchase of existing wealth like housing more and more attractive a la the 1970s and the 2000s. People have been consuming wealth that already exists in slowly higher amounts over investment in the creation of future wealth. This is the definition of slower growth. Consumption is the easy part. It’s the abstinence that drives progress as new ideas are invested in.

Right now the yellow metal is at all-time highs. Which means the dollar is at all-time lows. This will slow investment, and with it, the economy. If it continues, it will destroy the economic portion of Trump’s presidency much as it did those of Nixon, Carter, Bush 43, and Obama.

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Bernie Sanders And Elizabeth Warren Mistake Money For Wealth

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It’s often said about 1960s and 70s Wall Street that a stockbroker could leave for lunch heavily in debt, only to return an hour later rolling in cash. Such was life in the financial world of a few decades ago. So high were commissions on stock trades that a big order placed with a licensed sales assistant or colleague manning the desk could make the stockbroker’s day, and sometimes year.

No doubt stories like that were traded between Wall Street veterans and newbies this past week. With the announcement that Charles Schwab and Ameritrade would no longer charge commissions on stock trades, yet another formerly expensive act was essentially reduced to zero.

Notable about Schwab’s decision was that it in a very real sense was inevitable. In a capitalistic society, the capitalists get rich by mass producing former luxuries, and relentlessly pushing down the prices of everything. Along similar lines, airplane flying was prohibitively expensive at the same time that buying and selling shares was. This rates mention since in the same week that Schwab and Ameritrade made their announcements, so did Southwest Airlines promote $49/one way sales. The Southwest fare sale is a reminder that within ten years private flight will be increasingly enjoyed by everyday Americans. Within twenty years, it will be very much the norm thanks to enterprising individuals who will earn billions for freeing us all from the TSA frustration. Bank on it.

All of this came to mind while reading a front page New York Times story by Alan Rappeport and Thomas Kaplan about Democratic presidential candidates Bernie Sanders and Elizabeth Warren, and their proposed wealth tax. The Times writers explained it this way:

“As they compete for the Democratic presidential nomination, Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have proposed wealth taxes that would shrink the fortunes of the richest Americans. Their plans envision an enormous transfer of money from the wealthy to ordinary people, with revenue from the wealth tax used to finance new social programs like tuition-free college, universal child care and ‘Medicare for all….”

Read more at Forbes

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