It’s rare that a single article demonstrates such a sweeping misread of the forces of wealth in free society, but Frank Rich’s recent New York Time article, “Who Will Stand Up to the Superrich?“, proves that such events do occur.

Right of the bat, Rich draws the wrong conclusion in his account of wealthy Republican candidates who collectively spent deep into nine figures trying to get elected.  I say God bless ‘em. At least we have a system that allows such people to try.   Advertising, marketing and communications firms around the country positively love these people, and thousands of employees probably owe their jobs to them.  Indeed, to argue that money doesn’t matter in political campaigns is to argue that the entire advertising industry is a fraud.   However, where Rich says these candidates “tried to buy Senate seats and governor’s mansions”, can we finally agree that that’s simply not possible, and move on?

Continue reading at Forbes Opinions…

Eleven months ago, in the face of a gauntlet of headwinds that the Obama administration was creating in front of the American job creation engine, I came to the following conclusion:

“If you were an entrepreneur, or a business owner or manager with the ability to start large new initiatives, perhaps ones requiring large numbers of new employees, in the face of the above legislative uncertainty, would you dare proceed?”

The resulting economic lockup, and the trillions of private capital sitting in fear on the sidelines, has become the story of the day.

Predicting this story was not difficult, due to the nature of The Machine itself.  Driven by a lust for power, fueled by environmental extremism, economic illiteracy, and class warfare, and financed by a self-serving cycle of union cronyism, there can only be one conclusion:  The Machine is antithetical to the founding principles that made this country great, and can only produce seizure.   Here’s how it breaks down: Continue reading »

Just what happens to the mind when the bank account crosses the billion dollar mark?  Do all those dollars exert some kind of Big Government Tractor Beam that only the few can escape?   Or is it just the logical conclusion of crony capitalism?

Let’s examine two of the most influential billionaires of our times, Warren Buffett and George Soros.  One squanders opportunities to promote and enhance the system that made both of them rich, while the other actively seeks to destroy it. Continue reading »

“All politics is local”

– Thomas “Tip” O’Neill, Speaker of the U.S. House of Representatives from 1977-1987

Oh really?    Increasingly, it seems like Washington didn’t get the memo.

In Arizona, an overwhelming majority of citizens have had their legislative directives overturned by a federal judge that towed the Obama administration’s political line.   According to an April Rasmussen poll,  70% of Arizonans (but far fewer journalists) supported their law which would have permitted local police to seek immigration status documentation in their course of work.   Note that having to provide your car registration to the police upon being pulled over for “reasonable cause” is already a widely accepted practice; being able to prove that you’re in this country legally doesn’t seem like a big stretch from there.

But this is just one of a number of increasingly high-profile interventions by the federal government into the affairs of an individual state.   Continue reading »

Keynesian economics, that economic theory that is once again running the country, was shown to be a complete sham this past Tuesday by a fifth grade student in small Midwestern town during a routine math assignment.    The student’s teacher and school principal were impressed enough to issue a press statement, excerpted below:

“I was working on my decimal and percentage multiplication for homework”, the student said, “and I could hear my dad complaining about how his paycheck was smaller because of all the taxes they take out.  He said his check was about 75% of what he earned.   I asked him where the other 25% went and he said to the government, but that the government was spending a bunch of that money to stimulate the economy.”

“So I thought some more about that, and it occurred to me that they can’t simply take whatever they tax from my dad and spend it somewhere else, because some other moms and dads working for the government have to get paid, too.    Of my dad’s taxes, I bet they can probably only spend maybe half of that on stuff they think will grow the economy.   Continue reading »

I feel slighted.  For years I’ve been going to my dentist, and not once has he come over to my house to buy anything.   Likewise, my supermarket has never offered to purchase produce from my backyard garden.   And the mechanic at the place where I get my car repaired has never had me repair one of his on my driveway.

I think I’m running a “trade deficit” with each of them.   At least that’s what I’m led to believe by listening to people who claim we have large trade deficits with certain countries, like China.

“You nimwit!”, says the ghost of my tenth grade accounting teacher.  “You’ve forgotten your T-Accounts!  All year long we drew those things on the board, and this is the thanks I get?!”

Oh, yeah, the T-Accounts…   What would the T-Accounts say about my “trade” with my dentist?

Continue reading »

Photo by Ira Block

[This essay was originally entitled “Lessons from Grand Central Station”, until several readers pointed out that the correct name is Grand Central Terminal.  It was an error that I could not let stand.  The permalink (URL) reflects the original title so as to not break existing references. — Author/Admin]

Every weekday morning, trainloads of people are dumped into New York’s Grand Central Terminal and sent on their way.  Thousands per hour traverse the huge main room as they make their way to their desired subway stations, taxi stands and exits in all directions.  Arteries of traffic spontaneously form and disperse — you can join one that’s going in your general direction, get swept along its path and then step out at your stop.   The human pathways will intersect each other with the precision of a champion marching band.   Collisions between any two people amongst the throngs are rare, even amongst those who clearly don’t know where they’re going.

Photo by Ira Block

What’s most remarkable about the above is that no one manages this process.   There are no human traffic cops in white gloves waving some people on and telling others to stop.  There are no ropes herding commuters one way or another.    There are no rules dictating which path you must take to get from point A to point B.   The room manages itself, based on essentially one unwritten rule:  common courtesy. That is to say, you can’t charge through the crowd like a running back, stiff arming people as you go.   What might initially appear as chaos is instead a model of simplicity and efficiency.

Continue reading »

Perhaps you also caught CNBC’s Erin Burnett and Mark Haines interviewing AFL-CIO President Richard Trumka last Thursday morning in front of the New York Stock Exchange, prior to a labor union rally near Wall Street later in the day.  Talk about shock and awe!

Shock at the blatant hypocrisy.   Awe at the depth and breadth of economic illiteracy.   This was populist demagoguery at it’s finest, and one could write a book on the distortions, fallacies and misinformation in just this one seven minute interview.    Let’s take a look at some highlights:

Haines:   What do you want?  What are you trying to prove or point out today?

Trumka:  Well there’s three things that we want to say.   These guys destroyed eleven million jobs.  They wrecked the economy.   They got bailout money.   And they haven’t learned a lesson.   So we want them to do three things.   We want them to pay their fair share, to create the jobs that they destroyed.   Two, we want them to stop fighting Wall Street reform, because they send a legion of lobbyists to D.C. to stop it from happening.   Three, we want them to start lending to small and mid-size banks so they can create jobs.

Have we entered the Twilight Zone? Continue reading »

It seems like whenever a particular market has hurt a bunch of people, and we all know that’s happened lately with a lot of markets and a lot of people, the chorus rises up against that group that surely must have made things worse: speculators.    But amidst the hysteria and hand-wringing, it’s instructive to calmly walk through the scenarios that speculators and their trading counterparties find themselves in as they go about their business.

Merriam-Webster defines “speculate” as:

1 a : to meditate on or ponder a subject : reflect b : to review something idly or casually and often inconclusively
2 : to assume a business risk in hope of gain; especially : to buy or sell in expectation of profiting from market fluctuations

So it seems that to be a speculator, you need to have a view on something.   That’s generally the easy part, in that most people will express a view on just about anything.  Whether it is “correct” is another matter entirely, as is the issue of who decides what “correct” is.   But acting on those meditations and reflections results in the market itself:  two people having different views on the value of some tradable thing, each being willing to swap ownership.

Continue reading »

In June of 2008, Stephanie Simon wrote a great article entitled “The Greenest Show On Earth:  Democrats Gear Up for Denver”.  She described the trials and tribulations of the planners trying to implement Denver Mayor John Hickenlooper’s charge of making “the greenest convention in the history of the planet”.   Here’s a short excerpt:

Consider the fanny packs.

The host committee for the Democratic National Convention wanted 15,000 fanny packs for volunteers.  But they had to be made of organic cotton.  By unionized labor.   In the USA.

Official merchandiser Bob DeMasse scoured the country.   His weary conclusion:  “That just doesn’t exist.”

Seventeen months and one victorious Presidential election later, as the Democrats run all three rings of our government’s circus, it is clear that the folly and/or paralysis described in Simon’s article was merely a foreshadowing of things to come.

The fundamental problem facing the Democrats right now is that their understanding of how an economy works is flat-out wrong.    It’s not like their policies will not work.   They simply can not work, any more than Newton could will the apple to fall from the top of his head back onto the branch.   Consider the following plans of action:

Economic “Stimulus”: Proclaim to know how to direct the resources of the economy in synergistic fashion, like some kind of nuclear fusion reactor creating more output than the inputs used.   Continue to pursue a strategy that is based on class-warfare, envy and redistribution.   Refuse to acknowledge that taking resources from one part of the economy via a political process, and handing them over to some other part of the economy, will not and can not produce a net positive.   Recoil from the possibility that their very attempts to manage the economy are in fact the cause of the economic woes they now try to combat.

Cap & Trade:   Propose a $200 billion dollar/year boondoggle to extract additional resources from the economy to be re-allocated to some supposedly wiser-purpose, all for a negligible change in the supposed villain, average global temperature.  Maintain the overarching vision the that humans can control the climate of a planet.   Support the silencing of dissenting points of view, and blame any dissenters that slip past the gates on Rush Limbaugh.

Card Check: Hammer home the belief that the economy can be made better off by eliminating workers’ rights to a private ballot as to whether or not they should form a union.   (Whatever one thinks of unions, this simple fact about this proposal should make it DOA, but it remains a top legislative goal).

Health Care: Take an already over-regulated one sixth of our economy, call it a “market”, proclaim that markets don’t work, and seek to take it over instead.   Hold up the structurally bankrupt programs of Social Security, Medicare and Medicaid as models to emulate.   Vilify the insurance industry and proclaim the desire for competition, but do not allow the insurance companies to compete with each other across state lines.    Make no mention of medical-malpractice and tort reform.    Lastly and most importantly, do everything possible to hide the successes of Health Saving Accounts and similar freedom-based, patient-empowering programs.

Taxation:  Stay on track to allow the Bush “tax cuts for the rich” to expire.  Maintain the class-warfare required to support such policies.   Ignore the fact that “the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined.”    Continue the path towards having 50% of wage earners pay no income taxes at all (standing at roughly 43% right now).    Make no connection between high corporate tax rates and companies sending jobs overseas.

If you were an entrepreneur, or a business owner or manager with the ability to start large new initiatives, perhaps ones requiring large numbers of new employees, in the face of the above legislative uncertainty, would you dare proceed?

Hopefully as the Democrats keep themselves tied up in logical knots, they will succeed in passing nothing in the way of major additional economic legislation.  Eventually, perhaps requiring several election cycles, the pursuit of such hamstringing policies will be dropped (or those enacted, repealed) and the true engines of growth will be unleashed.  In the meantime, as the party of Biggest Government (yes, the Republicans have their sad recent history of being the party of Bigger Government), the Democrats can not do the right thing because doing so would require them to repudiate their very worldview.   Solutions to our economic problems based on a worldview that an ever-expanding government can create a utopia-on-Earth are every bit like Bob DeMasse’s sought-after fanny packs.   They just don’t exist.