Power & Market
In the age of Trump, many American conservatives are adopting populist positions. Policies that were once considered the right-wing status quo are being questioned and assailed, particularly when it comes to capitalism and markets.
Fox News personality Tucker Carlson is often on the front lines of this iconoclasm, with his regular diatribes against unfettered capitalism and financial elites. His voice is that of a growing traditionalist movement that has begun to vocalize their idealistic challenges to basic capitalist principles. These traditionalists want a larger role for religion in the public square. Unfortunately, they want the state to help facilitate this, and in seeking government’s help, they’re shooting themselves in the foot.
Recently, a great many traditionalists were up in arms over North Dakota’s repeal of its blue laws, which prohibited retail businesses from operating before noon on Sundays. Blue laws were once in place across the country and increasingly have been rolled back. Usually they take the form of bans on alcohol and retail sales, hunting, and certain other recreations.
In response to North Dakota’s repeal, Father Dominic Bouck, a Catholic priest in Bismarck, argued in First Things that the move will hurt the poor and even make the siren song of socialism more palatable to the tired and restless masses.
Without blue laws, Bouck contends that many workers “conscripted into hourly wage jobs” will be denied the ability to attend mass and enjoy holidays with their families. In Bouck’s words, “the legal protection of Sunday rest helps the individual worker and preserves the family from the arms race that is our consumer society.” He also cautions that the decline of blue laws has helped facilitate the rise of our hyper-consumerist culture and the tendency to view man as “the sum of his production and consumption.”
Bouck is onto something here. However, blue laws aren’t going to address his concerns.
Rest from work is crucial, and a person’s worth doesn’t stem from his ability to be a cog in the retail machine. This lack of regularized rest has doubtless contributed to the current increases in anxiety and depression. In 1843 Magazine, psychoanalyst Josh Cohen notes that “anxieties about burnout seem to be everywhere these days.” Coupled with this problem is a lack of togetherness and fellowship. Whereas Sundays have traditionally provided opportunities for families and friends to spend time together, Cigna reports that there’s currently an epidemic of loneliness in the United States.
There can be no doubt that most people would benefit from taking Sundays slowly and spending time with their friends, family, and God. However, reinstating blue laws won’t solve the problem. It’s completely off-base to attribute the dramatic decline in American churchgoing to the lack of legal prohibitions on Sunday work. According to Gallup, weekly religious attendance has been going down since the 1950s.
Ask a young person why he didn’t go to church last Sunday, and I doubt he’ll offer a work shift as the reason. More likely, you’ll hear that church isn’t relevant to his life.
As sociologist Robert Nisbet noted in his classic work The Quest for Community, the relevance of a social institution depends on its maintaining a function and fulfilling the needs of its members. As the centralized state has usurped more and more of the traditional functions of important mediating institutions such as the church and family, the relevance of those institutions has waned. Relying on the same state to rejuvenate church attendance would only further religion down the path of irrelevance and decay.
In his essay “The Balance of Power in Society,” sociologist Frank Tannenbaum discussed the importance of maintaining a balance in society between the various institutions that comprise it: the family, the church, the state, and the market. According to Tannenbaum, these institutions are frequently in conflict and constantly trying to encroach upon the territory of the others. This push and pull is natural, Tannenbaum says, and even healthy when it results in societal balance. Unfortunately, when one institution gains too much power, the result is usually chaos and disorder.
There’s no doubt that our society is woefully out of balance. Family and church are deprioritized in favor of the market and job concerns, and all three are dominated by the powerful centralized state. Many in our Western world see their primary value in their jobs to the neglect of other aspects of their lives. It’s this imbalance that traditionalists are getting at with their call for more blue laws. But legislation is a poor method of restoring balance and order to society because it fails to address the underlying issue: the values that motivate people’s actions.
In the long run, consumers determine the shape of the market, a concept known as consumer-sovereignty. As I’ve argued previously, it’s inaccurate to say that markets are responsible for the decay of community and family. Markets are merely a mirror of people’s values. Employers can’t actually force or “conscript” others into working for them, Father Bouck’s hyperbole notwithstanding. Although man must eat “by the sweat of his brow,” that does not mean he must let the world determine in what manner he will sweat. Employers only have as much power as their employees give them. It may be uncomfortable and inconvenient to resist, but no one is forced to worship mammon.
Blue laws are merely an attempt to make the already very low barriers to church attendance even lower—to match the low value people ascribe to it. That isn’t going to fix anything. Early Christians were martyred and fed to the Roman lions because they valued their beliefs even more than their lives, much like the merchant seeking the pearl of great price. Have contemporary Christians really fallen so far that they’re unable to organize their economic lives so they too can worship?
Republished with permission of the author
Life in a startup is fast paced, varied and fun. But it is also a constant and chaotic struggle, a juggling of disparate issues that need attention and decisions to be made at a moment’s notice. There are employees who need directions, tensions that threaten to erupt into personal conflicts, the bank that keeps calling about refinancing the loan, the supplier who suddenly needs the blueprints earlier to be able to deliver on time, and, at the same time, an endless stream of prioritizations that need to be right.
How are entrepreneurs to make order of this chaos? They face a seemingly endless stream of decisions that need to be made.
There is, of course, no simple solution. But there is a way of thinking about all decisions in a startup that can help entrepreneurs quickly figure out what matters more and what matters less: focus on the forest, not the trees.
What I mean by that is not simply to take a holistic approach to decision-making, but to consider the startup’s position in the economy overall. In other words, what a business actually does in the market economy and what function entrepreneurs serve. Sound cryptic? It really isn’t.
Read the full article at Entrepreneur.
Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez unveiled sweeping new legislation on Thursday that would impose a federal cap of 15% on credit-card interest rates.
The bill would also allow state governments to set interest-rate ceilings even lower than the federal mandate.
Naturally, Sanders and Ocasio-Cortez are framing the bill as something designed to help "ordinary people." But in reality, the legislation will only act as to reduce access to credit for low-income and other high-risk borrowers.
Credit card companies don't attach high interest rates to credit cards because they are mean and cruel. Credit cards with especially high interest are that way because the borrowers have been determined to be an especially high credit risk. Credit card companies want people to borrow money from them, so if they can make loans at lower rates, they will, in order to undercut the competition. But these companies also must make sure they're likely to cover their costs. Thus, the high interest rate exists to ensure the lender can make consumer loans while still accounting for the high risk of default by borrowers based on a risk profile.
Given that interest rates are similar to a "price of money," if Sanders and Ocasio-Cortez manage to slap a new limit on credit card interest rates, they will be essentially imposing a price ceiling on credit cards.
And price ceilings are sure to lead to shortages.
That is, they'll lead to shortages in consumer credit for high risk borrowers — many of whom will be low-income borrowers.
If lenders cannot price their product in a way that allows them to recover costs, they'll simply stop providing that service. Rather than face lower interest rates on credit cards — as Sanders and Ocasio-Cortez imagine will happen — high-risk borrowers are more likely to not be able to borrow using credit cards at all. Given that default rates are generally higher for low-income borrowers, the cost of collecting payments is higher. Lending to high-risk groups then is only possible if the price of those loans is higher. Without the higher price, the service will go away.
Cutting Poor People Off — "For Their Own Good"
On the other hand, maybe this is exactly what Sanders and Ocasio-Cortez want. One way to claim to have "done something" about high levels of debt is to simply cut off potential borrowers from credit.
After all, there is an implicit paternalism in efforts to place roadblocks between low-income/high-risk consumers and the products those consumers may wish to purchase. In the minds of a government planner, the solution to the problem of people borrowing "too much" money is to pass a law preventing them from doing so.
This, of course, is inherently unfair to those people who are — for now — in the high risk category, but who do pay their bills most of the time. (They might simply be in their category because they are young and have never established much of a credit history.) Moreover, many people who missed payment in the past may now be much more reliable and less prone to default. As people who fit a certain high-risk profile at first, they're likely to face high rates. One of the best ways these people can build good credit, though, is to first gain access to credit at high interest rates. Over time, they will increasingly gain more access to credit on better terms. Should these people then be punished and cut off from credit because they can't qualify for more moderate interest rates right away? The effect of the Sanders and Ocasio-Cortez legislation would be to do exactly that.
Meanwhile, lenders who offer loans to high-risk groups are themselves being blamed for the proliferation of credit card debt among American consumers of all types.
In his essay on payday lending — an issue very similar to that of high-interest credit cards — Tom Lehman analyzes the accuracy of these sorts of claims:
[T]he allegation that payday lending "causes" chronic or habitual borrowing may ignore the old adage that "correlation does not equal causation." As indicated above, it is a well-known fact that payday loans appeal to a clientele that face numerous financial difficulties (many of them self-induced), quite independent of the payday lending industry itself. Most of these households have failed to establish good credit, have poor credit histories, are not known for their timely bill-paying habits, frequently bounce checks, frequently change jobs, and may relocate often. In short, they are the type of people who are going to be frequently short of cash and who will borrow "chronically" when given the opportunity. Because payday lending institutions provide them with this opportunity to borrow when other institutions will not does not mean that payday lenders cause this behavior. They simply provide an opportunity for this behavior to be exhibited more often than otherwise.
As is so typical of politicians, the answer offered by this new legislation is to limit the options available to the most at-risk populations.
A better approach is to allow freedom for both borrowers and lenders, to treat borrowers like adults, and to not assume they are incapable of managing their own money.
Unmentioned in Assange arrest coverage — the US government after 9/11 dropped an Iron Curtain around itself. Wikileaks exposed US government crimes no one else would touch.
Julian Assange is charged with "conspiracy to commit computer intrusion." What about all the politicians and military officials who conspired to deceive Americans about the Iraq war?
The Assange arrest proves that no government critic "is above the law." But governments remain free to secretly trample the law as they please. Assange was labeled "our property" by same nitwit U.S. senator from West Virginia who wailed in 2016 that "due process is killing us."
Britain's foreign secretary whoops that Assange's arrest shows "no one is above the law." Except for the governments whose crimes Wikileaks and Assange helped expose.
The cheering by some of the US media on the Assange arrest vivifies how journalists no longer understand how government coverups destroy democracy.
Here's my USA Today piece from last November when reports surfaced of Assange’s indictment.
Formatted from @JimBovard on Twitter.
The timing of Jerome Powell’s appearance on “60 Minutes,” along with Janet Yellen and Ben Bernanke, is curious. Scott Pelley asked no penetrating questions, so nothing was learned. Fed Chairs aren’t known to hit the interview circuit. Bernanke appeared during the crisis to reassure the nation that the central bank can and will fix anything and everything.
Donald Trump (aka "Individual 1") tweeted in January:
The economy is doing great. More people working in U.S.A. today than at any time in our HISTORY. Media barely covers! @foxandfriends— Donald J. Trump (@realDonaldTrump) January 24, 2019
The folks at GNS Economics, in their Q-Review 1/2019 report, contend, contrary to the president, “the global economic recovery since 2009 has not been real. It has been achieved with massive debt and monetary stimulus, which has created an economy where normal rules of the market economy do not apply.”
The emphasis of the GNS report is the economy’s fragility. The economy “is unable to stand on its own without ongoing massive debt and monetary stimulus.”
Powell and the ECB’s Draghi recent U-turns back to monetary stimulus support this notion. If central banks exist for anything it’s to keep commercial banks in business. Forget about full employment and a strong currency, the Fed’s job is to keep the banks open. And, when rates were normalizing or heading upward last year, what was it doing to U.S. bank balance sheets?
Wolf Richter at WolfStreet.com provides the highlights from the FDIC’s Quarterly report, and mentions a doozy of a detail—”US Banks Report $251 billion of ‘Unrealized Losses’ on Securities Investments in 2018, the Most Since 2008: FDIC”
These are “paper losses” so far and, as Richter explains, don’t impact bank bottom lines. Richter writes,
“Unrealized losses” are losses on securities that dropped in value but that the banks have not yet sold. In other words, they’re “paper losses.” Every quarter in 2018 brought steep unrealized losses: Q1: $55 billion; Q2: $66 billion; Q3: $84 billion; and Q4: $46 billion.
When interest rates go up, bond prices fall. Everything will be oakey-dokey if banks can hold the securities until maturity and are repaid in full. However,
if banks are forced to sell those bonds during a liquidity crunch, as happened during the Financial Crisis, the “unrealized losses” become real losses.
Richter points out that America’s banks hold nearly half a trillion in US Treasuries. That’s quite a concentration of debt extended to a borrower that on its books is $22 trillion in debt. Off balance sheet liabilities are multiples of that amount and the country’s budget deficit is running over a trillion a year. Government debt can never be repaid, only refinanced. This is referred to as Ponzi finance.
Mr. Wolf concludes,
So, it’s still a good time to be a bank – especially since $251 billion “paper losses” don’t need to be included in net income. But loan-loss provisions are starting to indicate that the credit cycle has turned, and that banks are preparing little by little for the next phase in the cycle.
The next phase may turn those paper losses into real ones. Powell’s TV appearance and sudden change of policy signals the turn is near.
A nationwide system of gun registration could be a step toward national gun confiscation. However, antigun bureaucrats need not go that far to use the expanded background check system to abuse the rights of gun owners. Gun owners could find themselves subject to surveillance and even harassment, such as more intensive screening by the Transportation Security Administration, because they own “too many” firearms.
Republican control of the White House and the Senate does not mean our gun rights are safe. Republicans have a long history of supporting gun control. After the 1999 Columbine shooting, many Republicans, including many who campaigned as being pro-Second Amendment, eagerly cooperated with then-President Bill Clinton on gun control. Some supposedly pro-gun Republicans also tried to pass “compromise” gun control legislation after the Sandy Hook shooting.
Neoconservative Senator Marco Rubio has introduced legislation that uses tax dollars to bribe states to adopt red flag laws. Red flag laws allow government to violate an individual’s Second Amendment rights based on nothing more than a report that the individual could become violent. Red flag laws can allow an individual’s guns to be taken away without due process simply because an estranged spouse, angry neighbor, or disgruntled coworker tells police the individual threatened him or otherwise made him feel unsafe.
President Trump has joined Rubio in wanting the government to, in Trump’s words, “take the guns first, go through due process second.” During his confirmation hearing, President Trump’s new Attorney General William Barr expressed support for red flag laws. California Senator and leading gun control advocate Dianne Feinstein has expressed interest in working with Barr to deprive gun owners of due process. It would not be surprising to see left-wing authoritarians like Feinstein work with right-wing authoritarians like Barr and Rubio on “compromise” legislation containing both a national red flag law and expanded background checks.
My years in Congress taught me that few politicians can be counted on to protect our liberties. Most politicians must be pressured to stand up for freedom by informed and involved pro-liberty citizens That is why those of us who understand the benefits of liberty must remain vigilant against any attempt to erode respect for our rights, especially the right to defend ourselves against private crime and public tyranny.
Another Boeing 737 crashed Sunday in Ethiopia, killing all 157 aboard. This is the second crash of the new Boeing model Max 8 since October. Investigators have only begun sorting out this tragedy but some experts suggest that the plane’s automated safety software may have prevented the pilot from preventing the fatal plunge.
If software and sensors designed to prevent crashes actually increased the risk of catastrophe, then the Boeing accidents are another reminder that safety policies can have unintended fatal consequences.
Unfortunately, policymakers routinely ignore the unforeseen costs of well-intended safety efforts. For instance, the Transportation Security Administration, seeking to make air travel perfectly safe from terrorists in the months after 9/11, spawned airport checkpoint regimes that are so intrusive that many Americans choose to drive instead. A Cornell University study estimated that TSA’s heavy-handed policies helped boost traffic fatalities by at least 1,200 additional deaths.
A Business Week analysis noted, “To make flying as dangerous as using a car, a four-plane disaster on the scale of 9/11 would have to occur every month, according to an analysis published in the American Scientist.…People switching from air to road transportation in the aftermath of the 9/11 attacks led to an increase of 242 driving fatalities per month — which means that a lot more people died on the roads as an indirect result of 9/11 than died from being on the planes that terrible day.”
It's widely agreed that we need more entrepreneurship for economic growth and a higher standard of living. But more is not always better.
In fact, there can be too much of a good thing, in entrepreneurship as in so many other things. The reason is that economic growth comes from successful entrepreneurship that is also productive. And not all entrepreneurs who earn profits contribute to economic growth if they have unproductive -- or, worse, destructive -- effects on the economy.
Unfortunately, many entrepreneurs fail to consider what it is that they're contributing to the economy, and for that reason don’t always end up being productive. Sure, you don’t have to be productive to make money. And to the degree that "success" is a matter of getting big figures at the end of your P&L statement and being "in the black," you can succeed as an entrepreneur without contributing much to the economy or society.
Read the full article at Entrepreneur.
In addition to being a libertarian in political philosophy, I am also a member of the Austrian school of economics.
Austrian economics has nothing to do with the economy of that European country. It is so named because its founding fathers all emanated from that part of the world. They include such European scholars as Carl Menger, Eugen von Bohm-Bawerk, Ludwig von Mises, Friedrich A. Hayek (Nobel Prize winner in the dismal science in 1974) and Joseph Schumpeter. Murray N. Rothbard and Israel Kirzner are the most high profile American Austrians. In like manner, the Chicago School of economics does not at all focus on the commercial well-being of that particular city. Rather, this perspective too takes its name from the fact that its progenitors were all in some way associated with the University of Chicago. Luminaries include Aaron Director, Henry Simons, Milton Friedman, George Stigler, Gary Becker and Ronald Coase.