This Jobs "Recovery" Is Turning into a Long Slog

This Jobs "Recovery" Is Turning into a Long Slog

08/08/2020Ryan McMaken

Growth in total employment slowed in July, following two months of big gains in employment, during May and June. But it all comes after the US economy shed more than 19 million jobs during March and April.

In July, the US added 591,000 payroll jobs, with total employment rising to 139.1 million. This is a sizable slowing from June, when more than 5 million jobs were added. At its most recent peak in November 2019, more than a 153 million Americans were employed. From November to July, the US is down 14 million jobs, or 6.7 percent of the US's working age population.

In other words, the US remains well below peak employment, and at three months since enormous job losses began to mount, it remains unclear if the jobs recovery will require several years, as was the case after the 2008 financial crisis.

As of July, total employment is at 90 percent of peak levels, which is below anything we saw during the previous four recessions. At its nadir, employment fell to 91 percent of the peak during the 2007–09 recession (the Great Recession). But from that point, four years went by before employment returned to its former peak level.

Many commentators on the current crisis have insisted that the US will experience a rapid "V-shaped" jobs recovery. This result, however, is far from guaranteed, especially if the world's governments revert to mandating forced "lockdowns" and business closures again this summer or later this year.

The graph shows total employment indexed to the previous peak. For example, the black line shows the number of months since the previous jobs peak (November 2019), during which jobs remain below peak levels. Similarly, the brown line shows the number of months after the June 2007 jobs peak that total employment remained below peak levels. Recent jobs recoveries have taken significantly longer than was the case during the 1980s and 1990s.

The unemployment rate remains at recessionary levels as well. July's unemployment rate was 10.5 percent, slightly below the peak unemployment rate during the Great Recession, when it was 10.6 percent. In any case, of course, this is a high unemployment rate.

So, is there any sign yet that the jobs recovery will soon come roaring back?

Not really.

The Labor Department also released new data on initial unemployment claims, and new claims data shows only very slow progress being made.

As of the week of August 1, 984,000 workers filed for initial unemployment benefits. This is a decrease from the previous week's total of 1.2 million, and it is well down from the the 6.2 million newly unemployed that filed for benefits the week of April 4. However, at nearly 1 million, the number of newly unemployed remained higher than during any week recorded during the Great Recession.

Moreover, these are just newly unemployed. Continued unemployment claims as of the week of July 25 still showed that more than 15.8 million Americans were receiving unemployment benefits. This is more than double than what we saw at the peak of the Great Recession, when continuing claims hit 6.4 million.

Looking at the unemployment claims and payroll data combined, it is extremely likely the US now has at least 15 million unemployed workers, and there is no guarantee that most of these can look forward to a quick rehire so long as there remains the looming threat of government-forced shutdowns. Thanks to threatened shutdowns, regime uncertainty remains immense for employers, which is likely to reduce the demand for employees or business expansion.

What Can Be Done?

What could be done to help the situation? The first necessary step would be to end the threat of forced government shutdowns and forced changes in business capacity. As it is, the current spate of executive orders being issued by the one-man rule-by-decree regimes in place in most US states amounts to a huge expansion of the regulatory state. Business shutdowns and new requirements on building use and building capacity impose enormous financial and regulatory burdens on business owners. Naturally, hiring suffers as a result. If policymakers wanted to actually do something about unemployment—as well as the enormous public health burden that results, in the form of suicides and other threats to health—they would immediately announce that the threat of business closures has passed. Until this happens, expect hiring to remain lackluster.

This isn't to say that businesses would not need to adapt to a public that—even in the absence of government mandates—is likely to reduce spending on certain goods and services that are now less attractive in light of fears over the covid-19 disease. However, so long as governments continue to hand the threat of shutdowns and additional regulations over the heads of employers, this will continue to hamstring businesses' ability to adapt to new realities and will greatly hamper employment.

A second important step would be to reduce the overall regulatory burden. This would include regulations that predate the current round of job-killing mandates. These include rules on hiring such as minimum wage laws, licensing regulations, and other measures designed to limit hiring and employment in the alleged pursuit of higher quality or "higher wages." The real result from all these measures is that employment is outlawed for wide swaths of the population and entrepreneurs are prohibited from expanding their own services or from hiring others.

The need to reduce barriers to employment is greater now more than ever. In July, more than 32 percent of Americans missed their housing payments. Evictions are mounting. More Americans, due to income losses, are unable to pay the rent. Politicians—in the the thrall of well-paid and out-of-touch health bureaucrats—have decided this is no big deal and refuse to take the necessary steps to allow entrepreneurs and employers to usher in a jobs recovery. So long as these "public health" officials dictate economic policy, more and more Americans will become unemployed and destitute. Many will become homeless. The effects of the jobs implosion are just beginning to be felt.

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Will Kirkpatrick Sale's Collapse of 2020 Come True?

09/17/2020Doug French

America is about growth and getting big, supersized, or bigly, as the president would say. There’s no debate, growth is good, in fact essential; bigger is better.

One man who believes the end of all this bigness is nigh is Kirkpatrick Sale, a prolific author, most notably of Human Scale and Human Scale Revisited, and a notable proponent of secession. Simply put, Sale believes the world is destroying itself. In a piece for LewRockwell.com Sale wrote, “the government we have in this country is too incompetent, inept, corrupt, wasteful, and inefficient, too centralized, undemocratic, unjust, and invasive, and too unresponsive to the needs of individual citizens and small communities, and all because it is too big.”

For readers wanting a warm-up before launching into the meaty Human Scale, Sale’s latest book is The Collapse of 2020, which started with a $1,000 bet Sale made in 1995 with Wired magazine editor Kevin Kelly that civilization would collapse by, well, 2020. At the time, that year sounded a long way off and Sale, who in those days had little more than a thousand bucks to his name, figured $1,000 would be inflated away to virtually nothing by 2020.

Not quite, of course, and civilization hasn’t completely collapsed, but Sale believes we are close and now puts the doomsday year at 2030. He has produced a pithy little book (44 pages) to give us a status report. The author tells us the earth has experienced five previous extinctions: a meteor strike which changed the climate and four others caused by greenhouse gases. The sixth is underway.

“Industrial civilization,” Sale writes, “in other words, is an inherently self-destructive system with limits beyond which it cannot survive, and utterly consumes itself like the self-burning tree of Gambia discovered by Mungo Park.”

Political collapse is underway in 43 percent of all nations on earth, without including “a dozen smaller nations that are locked into autocracy and poverty.” There are plenty of examples in the political collapse category for Mr. Sale to cite: Brexit, the Trump election “(and the subsequent attempt to overturn it),” and protracted protests in Poland and Hong Kong. Sale mentions the work of two political scientists who claim that “the state system seems to be failing all over the world” and believe work must be done to study “how to grow, maintain, and fund states so as to avert their collapse.” Anarchists would cheer “let them fail!”

Political collapse stems, Sale believes, from the world’s population, which, like everything else, has grown too big. There will be wars and competition, because “there will be no diminution in overpopulation--it has grown steadily and irredeemably by 83 million people a year since 1975.” Sale describes the United Nations as a waste of time and money; “in short,” he writes, “[the U.N.] is an example of the collapse of politics at the global level.”

Also collapsing on a global scale are capitalism, which Sale says “has everywhere turned into a disputative autocracy or a failed anarchy,” and the Catholic Church, which “has proven itself incapable of self-reform or doctrinal coherence.”

These examples of political collapse have led to increasing rates of addiction, suicide, and mental illness around the globe, while rates of marriage and religious affiliation have declined.

Individual contempt and distrust of government are increasing, with terms like “deep state” and “the swamp” being common pejoratives.

The author sees the economy as “the Sophoclean and Shakespearean heroes who go into disasters unable to change.” The problem in a word is debt—government, corporate, and individual combine to unsustainable levels. The weight of all that debt will collapse the dollar. Sale quotes a Swiss banker as saying that “The long-term trend of the dollar is clear: it will go into oblivion faster than anyone can imagine.” China and Russia are of the same opinion and have added to their gold holdings at an increasing pace while unloading the dollar.

In the end, Sale believes the collapse will be due to “Heedless technological advances pushing heedless exponential growth beyond human capacity to control…, just as I predicted.”

Although he wrote before the covid-19 outbreak, Sale predicted that new deadly infections would spread to all continents. Perhaps this is the canary in the coal mine.

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Judy Shelton Won't Toe the Fed's Party Line. So She Can't Get the Votes for Confirmation.

09/17/2020Robert Aro

On Tuesday Reuters reported comments made by Republican senator John Thune:

Judy Shelton, U.S. President Donald Trump’s controversial pick to serve on the Federal Reserve’s interest-rate-setting panel, does not currently have the votes to win confirmation in the U.S. Senate.

Hope still remains as Senator Thune’s role as majority whip requires him to track votes made by Republicans; the official vote has not yet happened. In the senator’s words:

She’s a priority for the White House. It’s the Federal Reserve. It’s important. So, obviously, we want to get it done. But we’re not going to bring it up until we have the votes to confirm her.

The story is troubling because Republican’s have a 53–47 senate majority, but still not enough votes to approve the nomination. This raises questions for the Grand Old Party; mainly, what is the hesitation?

The Wall Street Journal echoed the “controversial selection” narrative:

Ms. Shelton has been a longtime proponent of a return to the gold standard, which would limit the Fed’s ability to influence inflation and employment, and concedes that her views are outside the mainstream of economics.

Of course, limiting the Fed’s ability to influence the free market, including inflation and employment is the purpose of the gold standard. The controversy centers around members of Congress and the Fed who may not want to concede the power to influence the market. It’s dangerous to those at upper levels of government and the Fed, as their control rests in the ability to manipulate interest rates and create US dollars in order to buy assets and run perpetual budget deficits.

A month ago a group known as “Fed Alumni,” comprised of various former Federal Reserve employees, as well as several presidents, published an open letter to the Senate with thirty-eight signatures asking them to reject the nomination. The number now stands at seventy-seven signatures.

Upon reading the letter, the problem with mainstream economics is revealed:

She has advocated for a return to the gold standard; she has questioned the need for federal deposit insurance; she has even questioned the need for a central bank at all.

The dogma is followed by hubris:

The Fed has serious work ahead of it. While we applaud the Board having a diversity of viewpoints represented at its table, Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand.

If there is a controversy, it should be about the “serious work” the Fed has ahead of it. With the new goal of aiming to “achieve inflation moderately above 2 percent for some time,” it appears very few are asking the purpose behind this. Especially since the Fed is moving away from the belief in there being a tradeoff between inflation and unemployment, there seems little reason to push for higher price inflation any longer.

Contrast this sentiment with those in science, math, or physics, where questions and the ability to refute or prove theories allows these fields to advance. Yet economics is devoid of this advancement; as we can see, when someone offers ideas such as a return to the gold standard, the result is contempt. But it’s one thing to petition congress claiming lack of qualifications, yet quite another to offer coherent arguments, articulating where exactly the problem lies. So far, we’re still looking for a critique which goes beyond being discredited for brainstorming economic solutions.

This somewhat explains why economics is divided into “orthodoxy” and “heterodoxy,” which normally refer to religious doctrine—heterodoxy for beliefs falling outside the mainstream. Perhaps it’s time for the Fed to stop treating economics like a religion and start searching for the truth, where someone like Judy Shelton is praised instead of punished for questioning economic tradition.

Much uncertainty remains as we wait for 51 democratically elected senators to give their blessing, allowing Ms. Shelton to ascend to the hallowed halls of the Eccles Building, where she can join the ranks of those select few who have the almost godlike ability to decree paper (or its electronic equivalent) legal tender. Maybe long-standing beliefs like money creation leading to prosperity should be widely questioned: If it holds up to scrutiny then great; if not, then why should we adhere to it?

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The Fed's Inflation Obsession

09/17/2020Robert Aro

If one needs convincing the Fed and mainstream economists are divorced from reality, read detailed economic explanations from those so called “experts.” A few sentences in reveals no economic theory employed, as exemplified by Fed head, Jerome Powell, addressing the world on the Fed’s new inflation objectives as part of the updated monetary policy strategy at the August 27 Jackson Hole symposium.

The persistent undershoot of inflation from our 2 percent longer-run objective is a cause for concern.

This notion of a “2% inflation” target may seem as though it has been in effect forever, but it was only officially made a goal by the Fed in 2012. Unofficially, it began in countries around the world in the late 80’s to early 90’s. Contrary to what we’ve been conditioned to believe, economic policy was not always this way. An article on the origins of the inflation target was shared this week, where it was noted by the New York Times how the 2% goal was literally “plucked out of the air” with no empirical evidence ever presented to support the target.

After suggesting inflation below 2% would be cause for concern, Powell follows up with:

Many find it counterintuitive that the Fed would want to push up inflation. After all, low and stable inflation is essential for a well-functioning economy. And we are certainly mindful that higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes.

Here's the tricky part; for the last decade, we’ve been told by the Fed, the media, and popular economists consumer price inflation has been low. While technically true that it has been low according to their measurement, the problem lies in the measurement itself. It’s not a matter of getting the “correct” inflation number; it’s that no such number exists. These calculations rely on so called experts to arbitrarily choose a basket of goods and assign a relative weight of importance to each item. Yes, it amounts to data, but no, it’s not credible since it cannot factor in the countless reasons which cause price fluctuations, nor can it calculate the sheer number of inputs required to arrive at a figure that can be adequately applied to an entire nation. Anecdotally for the average American, who is not a central banker, the cost of goods and services has increased at a rate much greater than 2% per annum for a very long time.

Unfortunately, even though Powell acknowledges the burden inflation places on families, he dismisses the gravity by saying:

Inflation that is persistently too low can pose serious risks to the economy. Inflation that runs below its desired level can lead to an unwelcome fall in longer-term inflation expectations, which, in turn, can pull actual inflation even lower, resulting in an adverse cycle of ever-lower inflation and inflation expectations.

Fortunately, the train of thought is revealed: if low “inflation expectations” materialize into pulling “actual inflation” lower, higher inflation expectations should push actual inflation higher. In this regard, we see the Fed rely on unproven theories more than anything else. Consider, if inflation expectations influenced actual inflation, why does the Fed continually struggle with “the persistent undershoot” of inflation? Despite never providing empirical evidence to support inflation expectations, it remains paramount to the Fed, especially since:

Expected inflation feeds directly into the general level of interest rates….

By taking a little time reading a speech from a central banker, it becomes apparent something just doesn’t add up. For an organization which claimed “monetary policy is data dependent,” they have failed to justify the 2% inflation target or proven that inflation expectations actually work. One would be hard pressed to see any data to support their assertions, which is probably why it’s best they maintain an air of mystique around them ignoring Austrian economics entirely.

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The Origins of the 2 Percent Inflation Target

09/16/2020Robert Aro

Inflation targets are part and parcel of central banking policy, the Fed’s mandate centering around the 2 percent inflation target. But when was the last time anyone asked why a 2 percent inflation target?

To address this while avoiding potential "bias," we can look at history through the lens of one of the largest mainstream newspapers in the world, the New York Times. The following article takes us back to 2014 when the paper published "Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel."

It all started in 1989, when Don Brash, managing director of the New Zealand Kiwifruit Authority accepted the position of head of the Central Bank of New Zealand. Appearing to have no understanding of Austrian economics, he and his finance minister devised a plan to combat the surging price inflation of the '70s and '80s.

As fate would have it, Mr. Brash remembered the former finance minister telling the media he was “aiming for inflation of around zero to 1 percent.” Brash recalls that “it was almost a chance remark,” yet it sparked one of the most destructive policy decisions of all time, which has only worsened since. He admitted:

The figure was plucked out of the air to influence the public’s expectations.

Ultimately the bank settled on an "inflation target" between 0 and 2 percent. The announcement was considered a "radical idea" at the time, but lo and behold:

It created a kind of magic of its own. Merely by announcing its goals for inflation…New Zealand made that result a reality.

Of course, no proof has ever been offered of how an "inflation target" can be met simply by stating it as a goal. If it were that easy, the Fed would have met the target decades ago.

Luckily for Brash, inflation in New Zealand was 7.6 percent in 1989 when the target started and only 2 percent by the end of 1991. This bit of providence accelerated the idea as the head of the central bank

did a bit of a global campaigning, describing New Zealand’s success to his fellow central bankers at a conference in Jackson Hole, Wyoming.

Canada, Sweden, and Britain soon followed in New Zealand's footsteps and eventually even the Fed. Our fate was sealed on the whim of policymakers.

It was not without opposition, though, as there were some naysayers who believed that

A dollar today should have the same buying power as a dollar in a decade, or two or three.

However, the "alternate" view was that keeping inflation low could be dangerous. This was championed by an up and coming Fed governor, Janet Yellen, who expressed concern that zero inflation could "paralyze the economy," especially during economic downturns. In a 1996 July Federal Open Market Committee (FOMC) meeting she offered an idea to support targeting:

To my mind the most important argument for some low inflation rate, is the "greasing-the-wheels argument" on the grounds that a little inflation lowers unemployment by facilitating adjustments in relative pay in a world where individuals deeply dislike nominal pay cuts.

Here we see the “Phillips curve” argument that is used to justify inflation by linking it to unemployment. This is move that now, twenty-four years later, the Fed is shying away from by claiming that the “Phillips curve is flat”—in other words, it’s not working as planned. Or, as Fed vice chair Clarida expressed it, models of maximum employment "can be and have been wrong."

Adding to the prophetic quotes, Yellen said in 1996:

A little inflation permits real interest rates to become negative on the rare occasions when required to counter a recession. This could be important.

The rest, as they say, is history. In time, the idea of a 2 percent target became economic orthodoxy—so much so that former Fed vice chair and Princeton economist Alan Blinder declared that

Central bankers have invested a lot and established a great deal of credibility on their 2 percent inflation target, and I think they’re right to be very hesitant to give it up.

By choosing an inflation target of 2 percent, the field of economics spent several decades barely advancing. Instead, academics and planners remained preoccupied with manipulating the data and providing guidance fueled by a narrative that was plucked out of thin air, aided by catchy phrases such as "greasing the wheels," and propagated by outdated economic models like the Phillips curve. Sadly, with 2 percent inflation the conclusion came first, followed by the theory. Economic explanation was only needed to support the theory at all costs.

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Human Action Was Published on This Day in 1949

09/14/2020Mises Institute

Ludwig von Mises's Human Action was published on this date in 1949. From the beginning, the Mises Institute's mission has been to champion this book's importance in the history of economic thought.

In the words of Henry Hazlitt, in his New York Times Review:

Human Action is, in short, at once the most uncompromising and the most rigorously reasoned statement of the case for capitalism that has yet appeared. If any single book can turn the ideological tide that has been running in recent years so heavily toward statism, socialism, and totalitarianism, Human Action is that book.

Thanks to our generous donors, the vital ideas in this book are more widely accessible than ever before. This is true not only due to translations that have birthed entire Austro-libertarian movements around the world, but also in the ways it is available to anyone sincerely interested in the ideas that build a peaceful and prosperous civilization.

The Mises Institute has long made the text of Human Action available for free online as an HTML, PDF, and EPUB, as well as an audiobook. Also available is Robert Murphy's invaluable study guide. Both are also available in physical form at the Mises Bookstore.

In order to make Human Action even more accessible to modern readers, Jeff Deist dedicated his Human Action Podcast to a full series on the book. Each episode pairs a section of the book with an important Austrian scholar, helping to flesh out and explain the most important parts of the book.

"Why You Should Read Human Action in 2020 with Dr. Shawn Ritenour"
"Human Action Part One with Dr. David Gordon"
"Human Action Part Two with Dr. Robert Murphy"
"Human Action Part Three with Dr. Per Bylund"
"Human Action Part Four with Dr. Jeffrey Herbener"
"Human Action Part Four with Dr. Joe Salerno"
"Human Action Part Four with Dr. Mark Thornton"
"Human Action Part Five with Ryan McMaken"
"Human Action Part Six with Dr. Peter Klein"
"Human Action Part Six with Jeff Deist"
"Human Action Part Seven with Dr. Tom Woods"

For those who prefer articles, the Institute also has a number of articles highlighting the book's historical significance, and modern relevance. These include:

"Human Action: A Chapter-by-Chapter Summary" by Martin Stefunko
"Why You Should Read Human Action—Very Carefully" by Joseph T. Salerno
"The Place of Human Action in the Development of Modern Economic Thought" by Joseph T. Salerno
"Covid Lockdowns Crippled the Division of Labor, Setting the Stage for Civil Unrest" by Jonathan Newman
"America's Riots Are Just the Latest Version of Marxist 'Syndicalism'" by Mark Thornton

The Mises Institute is proud to be the only American research organization dedicated to developing new generations of Misesian scholars. Thanks to our donors, the Austrian school of economics is stronger now than ever before, with scholars around the world. Our new graduate program will only further this cause in the future.

The world today needs the ideas of Ludwig von Mises, as articulated in Human Action, as much today as ever before.

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The Covid Crisis Has Shown Police Will Likely Enforce Any Law, No Matter How Unjust

09/14/2020Justin McCarthy

If 2020 has taught us anything, it’s that police throughout the Western world will not hesitate to forcefully impose arbitrary and absurd government regulations.

Consider just a few examples from this month alone. In Australia a pregnant mother was arrested in front of her family for a Facebook post inviting fellow Aussies to an antilockdown protest. In Spain a fourteen-year-old boy who refused to wear a mask was thrown to the ground by an officer who then kneeled on the boy’s back as he screamed in pain. In the US two policemen removed a mother and her year-old child from an airplane, because the infant’s face was not covered.

Incidents such as these are often reported with indignation by pundits in the right-wing media. Conservative commentators rightfully warn us that government is overstepping its bounds and that we may be the next to get an unwanted visit from the police or even a shove to the ground and a knee to the back.

Yet it’s the same right-wing pundits who are the first to defend the most excessive police brutality whenever someone refuses to comply with an officer’s orders. They faithfully “back the blue” with almost blind loyalty and even support arming the police with military-style weapons and equipment.

Do these conservatives fail to see their own contradictions?

Ask yourself: If full-fledged socialism comes to the Western world, who will be on the front line imposing it? It won’t be the beta male bureaucrats forcing you to comply. It will be the “thin blue line” of the police—equipped with their military-grade weaponry—that will physically force you to obey orders. Don’t think they’ll do it? Just look at the cases I cited.

I am not advocating "defunding" the police. Nor am I suggesting that a security force is antithetical to a free society. We need some form of law enforcement personnel. Rather, I’m asking conservatives to reflect for a moment on their contradictory views. In our current system, government and law enforcement are one and the same organization. You cannot be critical of laws that infringe on our liberties while praising the men and women who dutifully enforce those laws—if necessary with violence.

Our freedom depends on a healthy skepticism toward government. That skepticism should be applied to all facets of the state, especially the police.

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Lew Rockwell and I Discuss Commie Cowboys

09/11/2020Ryan McMaken

A reader recently reminded me of this great old podcast from 2013. Lew Rockwell and I talk for half an hour about my little book Commie Cowboys, the politics of the Western genre, and why the anti-Westerns were better than those old John Wayne ones.

We cover lots of stuff about the frontier, war, pop culture, and more. Lew cracks some great jokes in here.

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The Fallacies behind the Wealth Tax

09/09/2020Dakota Hensley

Kevin Carson and I had a tiny Twitter fight on the wealth tax (taking place a few days ago as of August 21, 2020). He defended such an anti-individualist and authoritarian measure, and I criticized it. Twitter, however, is not the place for discussion (seeming to be nothing but a swamp of radicalism), and here I shall disprove the idea that a wealth tax is in any way beneficial to workers or the poor or to the nation as a whole.

The first major problem with a wealth tax is quite obvious. If such a tax were implemented, the wealthy would abandon the country and take their money and businesses elsewhere. This would lead to mass poverty and hurt hundreds of thousands or even millions of families. A 2006 Washington Post article on France's experimentation with a wealth tax showed that it led to capital flight. The French tax raised $2.6 billion a year, but cost the economy $125 billion.

If you'd like to see this in action in the US, look at cities affected by white flight. Black people moved to the city hoping to start a new life. White people, fearing the idea of having to live next to someone not of their race, moved away and took their businesses and money elsewhere. The new black residents don't have the skills to run the now abandoned factories and businesses (and, even if they could, the sheer number of businesses would be too much to handle) thus leading to widespread poverty and disrepair to infrastructure.

The second major problem is that the wealth tax raises too little revenue to be effective. According to the OECD (Organisation for Economic Co-operation and Development) tax economist Sarah Perrett, the wealth tax was ineffective "because many assets were exempt, and wealth taxes were easy to avoid." Asked about its track record, she responds, "I would say, in general, it hasn't been great."

How, then, can we redistribute wealth? Mutual banks, privatized currency, deregulation, and the free market. This will allow individuals the means to found their own businesses and have less barriers to enter the market. This will allow the raising of incomes and eat away at corporations and their wealth. We see this in Vietnam and Mexico. In Vietnam, street food is so abundant and cheap that corporations like Burger King and McDonald's cannot enter the market. In Mexico, tacos are so common and so cheap that Taco Bell could not enter the market. Mutual banks and privatized currency will allow individuals the ability to borrow the money to fund a startup. Deregulation will allow the cost of doing business to be low. This will create so much competition that no corporation could survive and there would be better products, cheaper products, and lower prices. This will be like the situation in Vietnam and Mexico but across all sectors of the economy.

My friend believes in authority, not liberty. His belief that the free market cannot redistribute wealth is proof he is a statist dressed in anarchist clothes. The wealth tax would create job loss and result in the decimation of the American economy. Just because my colleague has a Wikipedia page doesn't mean he is right.

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A Strategy to Restore Liberal Education

09/08/2020Atilla Sulker

The term “liberal education” is very commonly thrown around in American political discourse pertaining to higher education. But what does it really mean?

The University of Mississippi notes that a liberal education is “about nurturing human freedom by helping people discover and develop their talents.”

The Concise Oxford Dictionary of Politics defines liberalism as “the belief that it is the aim of politics to preserve individual rights and to maximize freedom of choice.”

A host of different political factions have adopted the label “liberal” over the years—each with differing views on economics and society. But liberalism—broadly conceived—always signified the welcoming of debate and an open society. It encouraged seeing all sides of the issue.

In higher education institutions, liberalism meant that students would be taught how to think, not what to think. What has emerged in recent years is hardly a liberal education. It is pure indoctrination.

What can those seeking to advance a genuine liberal education do?

Rage and frustration alone do not suffice in the effort to restore the liberal education. This indignation must be translated into tangible pressure put on the American higher education bureaucracy.

There are at least three ways in which pressure can surmount the higher education thought police:

1. Drying up money resources: the old cliché “money talks” never seems to fall short. The higher education bureaucracy consists of many people who couldn’t be categorized as leftists. Generally, these are centrist Republicans at best, and moderate Democrats at worst. Some decision-makers may be on the far left, but these people generally don’t represent the majority.

On the other hand, far leftists are very vocal and can—to some extent—push around moderate and fair-minded administrators. At the end of the day, higher education administrators are required to raise funds for their university or college. Sometimes, this goes against the demands of leftist students and professors. But other times, raising money may well fall in line with certain “what to think” agendas. It’s easy to see how a mandatory antiracism course can funnel in more money to a university.

Many wealthy conservatives also become big donors to universities. They are often blind to the fact that their contributions fund the efforts of leftist professors.

Thankfully, some efforts have been made to reach out to such people. DivestU, a project of Turning Point USA (of which I’m no fan!), focuses on drying up the donor money stream to universities. Imagine if millions of dollars of donations all of a sudden disappeared. Administrators would have to change something.

Donors alone would not suffice. Fans who attend football games must be willing to forgo buying tickets. They must be willing to see that the same people who sell them overpriced tickets also imply the broader community—which includes fans—is “racist.”

Paradoxically, fans may even lose their mascots and the names of their favorite football stadiums if they keep giving universities money.

2. Embarrass higher education administrators: too often, Americans get absorbed in abstract notions that the roles of policymakers and administrators encompass “uniting” the interests of everyone. More often than not, this means compromising something, or favoring one group over another. It is unwise to heckle policymakers, so the argument goes.

But this is precisely the way to take back the university. When administrators clearly bend the knee to small, vocal mobs of leftists, they need to be called out—in one form or another. Frustrated students should write to their local papers, try to appear on media outlets, and file complaints to their universities. Negative attention is a very tangible form of pressure on administrators.

One poll cites that Republican college students are three times more likely to self-censor than Democratic students. To bring back the liberal education, this epidemic of indifference must be reversed.

3. Troll the heck out of administrators: if all else fails, and students are forced to participate in mandatory “diversity” trainings, they may best be suited by trolling administrators—giving them a taste of their own medicine, so to speak.

For example, if students are told by staff that they are “inherently oppressive” and have “implicit biases” against LGBTQIA+ people, they may want to respond with something along these lines: “Why aren’t you voicing your concern for the rights of aromantic people? Why is this minority never represented? Therefore, why are you perpetuating hate and exclusivity?”

All in all, it doesn’t matter if a student uses this line or a different one. The point is to completely delegitimize the efforts of leftists trying to indoctrinate students by arguing within their framework. Say things that are just as ridiculous as what they say.

The Future of Higher Education

There is a lesson to be learned from all of this: all it takes to sway and push around a diffident majority is a small, vocal, and vigilant mob. And this is how the academy was taken over.

Luckily, independent institutions have slowly been proliferating around the country, holding true to the promise of a liberal education. The Mises Institute—a free market economics educational organization in Auburn, Alabama—for example, recently launched a new graduate program led by carefully selected professors from around the country.

This new decentralized approach to learning may pave the future for a free society. If the liberal education can’t be restored in universities, it will be restored elsewhere. No consolidation of power can stop the spread of powerful ideas.

Originally published by Townhall.

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The Fed's Brilliant Plan? More Inflation and Higher Prices

09/08/2020Ron Paul

Listen to the Audio Mises Wire version of this article.

Federal Reserve chairman Jerome Powell recently announced that the Fed is abandoning “inflation targeting,” where the Fed aims to maintain a price inflation rate of up to 2 percent. Instead, the Fed will allow inflation to remain above two percent to balance out periods of lower inflation. Powell’s announcement is not a radical shift in policy. It is an acknowledgment that the Fed is unlikely to reverse course and stop increasing the money supply any time soon.

Following the 2008 market meltdown, the Fed embarked on an unprecedented money creation binge. The result was historically low interest rates and an explosion of debt. Today total household debt and business debt are each over $16 trillion dollars. Of course, the biggest debtor is the federal government.

The explosion of debt puts pressure on the Fed to keep increasing the money supply in order to maintain low interest rates. An increase in rates to anything close to what they would be in a free market could make it impossible for consumers, businesses, and (especially) the federal government to manage their debt. This would create a major economic crisis.

The Fed has also dramatically expanded its balance sheet since 2008 via multiple rounds of “quantitative easing.” According to Bloomberg, the Fed is now the world’s largest investor and holds about one-third of all bonds backed by US home mortgages.

Congress has expanded the Fed’s portfolio by giving the central bank authority to make trillions of dollars of payments to business as well as to state and local governments in order to help the economy recover from the unnecessary and destructive lockdowns.

Contrary to what most “mainstream” economists claim, a general increase in prices is an effect—not a cause—of inflation. Inflation occurs whenever the central bank creates money. Increasing the money supply lowers interest rates, which are the price of money, distorting the market and creating a bubble (or bubbles) that provides the illusion of prosperity. The illusion lasts until the inevitable crash. Since the distortions come from money creation, the system cannot be “fixed” by just requiring the Fed to adopt a “rules-based” monetary policy.

Once the lockdowns end, the Fed’s actions may lead to a short-term boom. However, the long-term effect will be even more debt, continued erosion of the average American’s standard of living, and the collapse of the fiat money system and the welfare-warfare state. The crisis will likely be brought on by a rejection of the dollar’s reserve currency status. This will be supported both by concerns about the stability of the US economy and resentment over America’s hyperinterventionist foreign policy.

The question is not if the current system will end. The question is how it will end.

If the end comes via a meltdown, the result will likely be chaos, violence, and increased support for authoritarian movements as desperate people trade their few remaining liberties in hopes of gaining security.

However, if proliberty Americans are able to force Congress to begin cutting spending—starting with the money wasted on militarism—and to move toward restoring a sound and sane monetary policy that includes ending the Federal Reserve, we can minimize an economic crisis and begin restoring limited constitutional government, a free market economy, and respect for liberty.

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