Power & Market

August Building Permits Drop for First Time in Eight Years

09/21/2018Ryan McMaken

Building permits for private housing units in the US dropped by 5.5 percent in August, which was the largest drop recorded in more than two years. The last time housing permit activity dropped by a larger amount was during June of 2016 when permits fell by 12.3 percent.

The trend in all permits (seasonally adjusted):


The decline was driven by a drop in multifamily permits. In fact, single-family permit growth didn't drop below zero at all — although single-family permits grew at the weakest rate (2.1 percent) recorded since May of 2014.

The trend in single-family permits (seasonally adjusted):


The general trend here, since early 2017, is one of stalling growth rates in permit activity.

If you're like me, though, you're not a huge fan of seasonally-adjusted numbers. So let's look at the non-adjusted permit totals.

Given that permit activity does tend to be highly seasonal, it's helpful to compare this past August with other Augusts. So, if we look at each month of August since 2005, we find that August 2018 was the first August in eight years during which permit activity (for all units) actually turned negative when compared to the previous August. August 2018's permit activity was down 5.9 percent, year over year.

Total permits reported for August of each year:


As with the seasonally-adjusted data, the decline was driven largely by a drop in multifamily permits. Looking at permits for building with 5 or more units, we find that permit activity in August 2018 was down 21 percent from the previous August. To find a larger drop in August, we have to go back to 2009.

Multifamily permits reported for August of each year:


Meanwhile, single-family permits were up by 1.6 percent in the non-adjusted data, comparing August 2017 to August 2018. This was the smallest August increase in single-family permits in four years. Nevertheless, it was an increase.

In short, we're seeing a similar trend in the August non-adjusted data that we see in the adjusted data: single-family permits are more or less flat, and growing at a weak rate.

Unlike single-family permits, though, multifamily permits aren't growing at all, and in August, they dropped off by the largest amount seen since the last recession.

Why Might Permit Activity Be Dropping?

Given that permits tend to be an indicator of future building activity, these numbers suggest that builder confidence is slipping. This could be due to at least two factors. One factor is likely rising mortgage rates . In August, the average 30-year fixed rate was the highest it has been since 2011. That's likely to put downward pressure on demand for both single-family homes and condos in multifamily buildings.

Secondly, thanks to the Trump tariffs, the cost of both lumber and steel has risen, driving up construction costs. This means builders won't be able to deliver units at a prices that are likely to attract as many buyers as might have been the case without the tariffs.

On the other hand, it's possible that the weakness in the August numbers are a fluke and and that permit activity will bounce back. If both construction and borrowing costs continue to go up, though, sustaining demand will require greater growth in incomes.

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An Armed Pregnant Woman Defended Herself, Now She Faces 24 Years in Jail

09/20/2018Tho Bishop

Last December, Krissy Noble (then going by her maiden name Tran) shot and killed a man who broke into her apartment and attacked her. She was 11 weeks pregnant at the time.

As ABC News described the incident:

[When her attacker was] inside, the man tackled her and began trying to cover her mouth with his hand, which she thought smelled of chemicals, the report states. He then started hitting her in the face with his fist.

After she was able to break free, Noble grabbed a pistol off the coffee table and shot the man three times before running to her neighbor's apartment and telling her to call 911, according to the report.

Noble told police that "she feared not only for her safety but for the safety of her baby, and felt that she had no other option in this situation, according to the report.

Authorities have ruled that Noble’s use of force was justified, however she now faces 24 years in jail for her actions. Why? She previously pled guilty to a felony marijuana charge.

As she told ABC 13:

"Right now I'm looking at the max, 24 years, that's my baby's life. I mean, I'm going to miss 24 years of my child... I won't even, I won't even know my child, I'll miss out on everything.”

The tragedy of Nobles’s story has several layers.

The first is that a marijuana possession is a felony charge in the state of Arkansas. It’s worth noting that there is nothing particularly unusual about Noble’s case: her and several friends were found with an ounce of marijuana and drug paraphernalia during a routine traffic stop. Since no one claimed ownership, all faced criminal charges. Facing jail time, Noble accepted a plea deal that gave her a suspended sentence and barred her from possessing a fire arm.

That Noble would face a felony from such an incident speaks to the absurdity of the continued war on drugs. It may also explain why 66 of Arkansas’s 75 counties see unusually high opioid prescriptions.

The second is how over criminalization leads to a dangerous loss of basic individual rights. In the case of Noble, the gun used to defend herself was owned by her husband, who serves is the Arkansas National Guard. In the eyes of the Arkansas “Justice” system, Noble being caught with marijuana last December meant she had no right to use her husband’s firearm to defend herself from a brutal attacker. The law would leave her a defenseless victim.

Luckily there does seem to be momentum towards restoring gun ownership rights to non-violent offenders that have been caught up in America’s justice system. Legislators at both the state and federal level have relevant pushed bills in recent years, while federal courts have also found some that blanket bans for all felons are unconstitutional.   

Unfortunately for Noble, this precedent won’t apply to her case as she was still under her five year suspended sentence.

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American Immigration Policy and the Holocaust: There Is No Equivalance

08/07/2018Ryan McMaken

One would think this doesn't need to be said, but apparently it is: there's a difference between deporting foreign nationals, and murdering people en masse.

Having already thrown Godwin's law out the window by insisting that Donald Trump is "literally Hitler" the American left has now moved on to blithely comparing the detention of accused non-government-approved immigrants to Nazi death camps.

It's perfectly possible to oppose the detention policies without comparing them to the Holocaust, of course. Multiple Jewish organizations, for instance, such as this one , oppose the deportation policies, but point out the irresponsible nature of comparing them to Nazi death camps:

If somebody compared something I did to the Nazis, I hope in outrage I would jump right to the heart of Nazism: “The Nazis’ aim was to harness all the power of the state to industrial-scale murder and the destruction of an entire race. Unless you are actually talking about genocide, it’s demagoguery to compare any policy with which you disagree to Nazism.”

Having long ago gone off the deep end with All Things Trump, however, the sort of people who make these comparisons actually seem to think this is appropriate. But, as Bret Easton Ellis — who's not exactly a rightwing stooge — recently pointed out, the constant comparisons to Nazism has become insufferable:

These last few weeks really were a flipping point for me, with the depression over the Supreme Court and the way the detention centers were being spun by the liberal media. It’s obviously a game. Here’s Rachel Maddow crying on TV, and pictures of Trump detention centers. My stepfather, who is a Polish Jew, had his entire family wiped out when he was an infant. Throwing around words like Nazi, Gestapo and comparisons to Weimar Germany is like, “Really guys? You’re going there?” I’ve had enough.

Now we hear about a theater company in Los Angeles that's producing an updated version of the Diary of Anne Frank in which the family is hiding from American immigration agents instead of Nazis.

This position is basically the equivalent to saying that having your entire family worked to death or starved to death or gassed to death in a Nazi "labor" camp is the same thing as temporary detention and deportation. Moreover, keep in mind that the deportees are not stateless. They are foreign nationals who retain their citizenship in their home countries. Were they stateless, they would have additional legal protections under the US legal system. Victims of the Holocaust, of course, were either stateless — having had their citizenship abolished by the German state — or they were prisoners of an invading state. They weren't allowed to return to their home countries. Not even in theory.

The actual "living" conditions within the camps themselves was in no way comparable to those in American immigration detention centers today. Even when the Nazis weren't actively trying to kill people, they created conditions that led to countless deaths through disease. One example of course, is the typhus epidemic that likely killed Anne Frank.

And that last statement is an important reminder: Anne Frank died in custody of the German state — along with about 95 percent of her fellow Holocaust victims from the Netherlands.

Comparing that to modern American immigration policy strains all credibility to the point of being darkly laughable.

Moreover, current immigration policy in the US isn't even comparable to previous outrages in this country. For instance, one could point to the spate of lynchings and other killings that occurred in 1915 in the wake of the so-called Plan de San Diego in which elements in the Mexican government had attempted to incite a "race war" in the US using disgruntled Mexican-Americans. The plan to attack Anglos was small and failed, but was comparable to what we might call "terrorism" today. Around 20 Anglo Texans died in the attacks.

But the backlash was immense. In response, the Texas Rangers and local informal militias engaged in “a systematic manhunt” that made few efforts to target the actual perpetrators of the killings, but was geared more toward executing a campaign of terror against Mexican-Americans. Observers at the time estimated that the number of those killed numbered anywhere from 150 to 1,500 people, although the consensus today appears to come in around 300.

Benjamin Herber Johnson, in his book Revolution in Texas recounts some of the details from the time:

By early fall, the signs of the vigilantism were inescapable. It was not just that Tejanos [i.e., Mexican-Americans] knew of friends and relatives who were dealt summary justice and could speculate about the changes of meeting such a fate themselves. The violence directed at them had clear public manifestations in the piles of bodies left to rot in public. ..

Yet those who yearned to bury their loved ones were often too afraid to do so. The Rangers and vigilantes targeted relative of alleged bandits, and so to bury a friend or relative was to court death…

The ongoing sights were enough to convince any Tejano that there was no refuge in South Texas. In mid-September, for example, someone traveling from San Benito to Edinburg might have seen what a New York reporter witness “The bodies of three of the twenty or more Mexicans that were locked up overnight in the small frame jail at San Benito were found lying beside the road two miles east of the town this afternoon. All three of them were shot in the back.”

Tejanos also knew that their persecutors made deliberate efforts to terrorize those whom they did not kill outright … Others also recalled burnings. Interviewed by his grandson nearly sixty years later, Francisco Sandoval emphasized that the Rangers killed people simply for the pleasure of it, adding that “they burnt them, they burnt them alive…”

After awhile [sic] the sheer number of lynchings may have inured residents, especially Anglos; terror and fear had become part of daily life.

The anti-Mexican-American reprisals didn't stop in 1915. They continued sporadically for years afterward, as noted in 2015 in the New York Times:

On Jan. 28, 1918, a band of Texas Rangers and ranchers arrived in the village of Porvenir in Presidio County, Tex. Mexican outlaws had recently attacked a nearby ranch, and the posse presumed that the locals were acting as spies and informants for Mexican raiders on the other side of the border. The group rounded up nearly two dozen men, searched their houses, and marched 15 of them to a rock bluff near the village and executed them. The Porvenir massacre, as it has become known, was the climactic event in what Mexican-Americans remember as the Hora de Sangre (Hour of Blood). It led, the following year, to an investigation by the Texas Legislature and reform of the Rangers.

The acts had real repercussions for Mexican-Americans at the time.

Many Mexican-Americans in the region relocated to other states to escape the Texas Rangers, and some returned to Mexico. My own grandparents, being Mexican-Americans themselves, relocated to California from El Paso in part to escape the legal and political environment in Texas at the time. According to my grandmother, her brother Benito denounced the "gringos" and moved back to Mexico where he opened a hotel.

Unfortunately, that generation has long since passed on, but it's unlikely that even they, who themselves were acquainted with true ethno-nationalist bigotry, would ever allow themselves to make the sorts of over-the-top assertions now made by anti-Trump activists. In fact, the Nazi comparisons seem to be primarily the domain of highly educated non-Hispanic whites who feel the need to virtue signal by comparing every injustice to Nazi mass murder. 

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A Modest Proposal from Dr. Walter Block

07/27/2018Walter Block

If you're reading this, you should be supporting the Mises Institute every month!

I recently taught at the Mises University. This weekly experience is the highlight of my entire professional year, as it has been for lo these many decades. (When I started, I was an enfant terrible; now, I’m an old duffer. I don’t know what happened. Time goes by fast whey you’re having fun).  It is an honor to work with my colleagues on the academic staff. The students, as always, were superb. Presumably, in the next few years, more than just a few of them will become MU professors, as are about half of the present faculty ex students of MU.

Thanks go out to Lew Rockwell, Jeff  Deist, Joe Salerno, Pat Barnett and some dozen other members of the Mises Institute staff. Lew started off the entire institution, Jeff is the president of the MI, Joe put together the entire MU program, and Pat is the excellent administrator of the operation.

Who is the forgotten man? Who are they, such that without their support, the entire institution would fall to the ground? Have never been able to be started up in the first place? I’ll give you just one guess. Yes, it is the donors of course. I must take my hat off to them, for without these generous people, there, literally, would be no Mises Institute.

We had about 200 students at this year’s MU. Most of them are at the stages of their careers where all they have is brilliance and enthusiasm. Neither undergraduate students, nor those in graduate school have much money to donate to the MI.  I had occasion during that week, nevertheless, to ask each of them to contribute $5 on an annual basis (until they have more money) to the Mises Institute (by the way, I myself donate a bit more than that). Why did I make this plea? It is not really that the $1000 that would be raised in that manner if all attendees complied with my request would spell the difference between success and failure. Yes, every $1000 helps, and I would be grateful to anyone who can afford to donate that amount, or more. No, the reason I asked all students to contribute this relative small amount of money was quite different.

It was this. Wealthy people will be more likely to contribute funds to the MI, and more heavily so, if this institution has many donors. They do not like to be the only ones financially supporting an organization such as the MI. Moreover, the more people who contribute to the MI this $5 per year I am asking for, the smaller is the average donation. That, too, encourages potential large donors to contribute in the first place, and in greater amounts.

I am now extending my plea from the some 200 students who attended MU 2018, to all those who are reading these words. Please donate $5 to the MI (I’d lower this to $1 per year, but, thanks to the fed, that doesn’t amount to two cents, so to speak). If all readers of LewRockwell.com did so, it would not, to be fully honest, help all that much, directly. But it would be of immense aid indirectly, in encourage larger donations.

So, poverty stricken students and other impecunious folk, please reach deep down into your pockets, and cough up that $5. You can do so at this easy to reach link: mises.org/giving/now.

I will be the BFF of everyone who complies with this request of mine.

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A Cup of Coffee in Venezuela Now Costs 1 Million Bolivars

Two years ago it was 450 bolivars.

Inflation over the past 3 months has been 482,000%, on an annual basis.

bolivar coffee.png Source: Bloomberg Cafe Con Leche Index

For more, see "How Socialism Ruined Venezuela" by Rafael Acevedo and Luis B. Cirocco:

So, what are the results of socialism in Venezuela? Well, we have experienced hyperinflation. We have people eating garbage, schools that do not teach, hospitals that do not heal, long and humiliating lines to buy flour, bread, and basic medicines. We endure the militarization of practically every aspect of life.

The cost of living has skyrocketed in recent years.

Let’s look at the cost of goods in services in terms of a salary earned by a full college professor. In the 1980s, our “full professor” needed to pay almost 15 minutes of his salary to buy one kilogram of beef. Today, in July 2017, our full professor needs to pay the equivalent of 18 hours to buy the same amount of beef. During the 1980s, our full professor needed to pay almost one year’s salary for a new sedan. Today, he must pay the equivalent of 25 years of his salary. In the 1980s, a full professor with his monthly salary could buy 17 basic baskets of essential goods. Today, he can buy just one-quarter of a basic

And what about the value of our money? Well, in March 2007, the largest denomination of paper money in Venezuela was the 100 bolivar bill. With it, you could buy 28 US dollars, 288 eggs, or 56 kilograms of rice. Today, you can buy .01 dollars, 0.2 eggs, and 0.08 kilograms of rice. In July 2017, you need five 100-bolivar bills to buy just one egg.

RELATED: "Hyperinflation Has Venezuelan Merchants Weighing Cash, and Now It's Breaking Their Scales" by Tho Bishop

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Apoplithorismosphobia translated into Polish

07/06/2018Mark Thornton

My paper "Apophorismosphobia" has been translated into Polish by the Mises Institute of Poland.

Here is the original.




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Another 'State of Democracy' Report Ignores Real Cause of Plummeting Trust

07/02/2018James Bovard

Americans’ faith in democracy and politicians has plummeted in large part due to perennial violations of their rights by one federal alphabet agency after another, from the FBI, to the TSA, to the DEA, to the DHS, and to the IRS. Candidate Donald Trump periodically signaled that he would curb federal abuses but, as president, he has instead spurred new crackdowns on drug users, property owners, immigrants, trade, and other targets. 

The report, like many similar trumpet calls, urges increased civics education in public schools. But civics classes are an illusory solution because government has no incentive to educate people about the perils of political power. Besides, as a 1996 Washington Post survey concluded, “The more people know, the less confidence they had in government.” 

Americans are indeed losing faith in democracy but more cheerleading from the political ruling class will not reverse the trend. As long as presidents are permitted to routinely behave like dictators, citizens would be foolish to trust ballots to provide all the protection their rights and liberties need or deserve.  Americans should scoff at any democratic faith-building exercises that omit government under the law and the Constitution.

Read the full article at The Hill
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A Politically Weaponized FBI Is Nothing New, but Plenty Dangerous

06/13/2018James Bovard

The Justice Department Inspector General is expected to release on Thursday its report on alleged FBI misconduct during the 2016 presidential campaign. Trump supporters and opponents are already pre-spinning the report to vindicate or undercut the president. Unfortunately, the report will not consider fundamental question of whether the FBI’s vast power and secrecy is compatible with American democracy.

According to some Republicans, the FBI’s noble history was tainted by its apparent favoritism for presidential candidate Hillary Clinton. Democrats have gyrated over the past 18 months, first blaming the FBI for Clinton’s loss and then exalting the FBI (along with former FBI chief and Special Counsel Robert Mueller) as the best hope to save the nation.

In reality, the FBI has been politically weaponized for almost a century. The FBI was in the forefront of the notorious Red Scare raids of 1919 and 1920. Attorney General Mitchell Palmer reportedly hoped that arresting nearly 10,000 suspected radicals and immigrants would propel his presidential campaign. Federal Judge Anderson condemned Palmer’s crackdown for creating a “spy system” that “destroys trust and confidence and propagates hate.” He said, “A mob is a mob whether made up of government officials acting under instructions from the Department of Justice, or of criminals, loafers, and the vicious classes.”

After the Palmer raids debacle, the FBI turned its attention to U.S. senators, “breaking into their offices and homes, intercepting their mail, and tapping their telephones,” as Timothy Weiner noted in his 2012 book, “Enemies: The History of the FBI”. After the FBI’s political espionage was exposed, Attorney General Harlan Fiske Stone, warned in 1924, “A secret police system may become a menace to free government and free institutions because it carries with it the possibility of abuses of power which are not always quickly comprehended or understood.” Stone fired the FBI chief, creating an opening for J. Edgar Hoover, who would head the FBI for the next 48 years. Hoover pledged to cease the abuses but the outrages mushroomed.

In the 1948 presidential campaign, Hoover brazenly championed Republican candidate Thomas Dewey, leaking allegations that Truman was part of a corrupt Kansas City political machine. In 1952, Hoover sought to undermine Democratic presidential candidate Adlai Stevenson by spreading rumors that he was a closet homosexual.

Read the full article at The Hill
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Anthony Bourdain on Kitchen Hierarchy

06/08/2018Peter G. Klein

Before Kitchen Confidential made him a celebrity, Anthony Bourdain was a real chef, working upscale New York kitchens at places like the Supper Club and Sullivan’s. Bourdain’s style is not to everyone’s taste, but he knows how to manage a restaurant crew. A chef, after all, is not primarily an artist, but a manager, facing the same set of organizational challenges — delegation, incentives, monitoring — as any administrator.

I mention this because I recently stumbled upon an interview with Bourdain in the July 2002 Harvard Business Review. Despite several attempts by interviewer Gardiner Morse to get Bourdain to endorse creativity, spontaneity, and empowerment in the kitchen, Bourdain remains an unreconstructed devotee of Escoffier’s “brigade system,” a sort of culinary Taylorism in which each member of the cooking staff has a fixed place in the production chain, a very narrow job description, and an obligation to obey his chef de partie (section leader) and the head chef without question.

Q: There’s been a trend in business to move away from hierarchies and empower workers, but you’ve embraced a very rigid staff structure and an old style of management with great success. Why do you think it works?

A: You’re defined by the job you do, not by whatever . . . predilections you have. . . . And to have any delusions that you’re better than anyone else, however true that might be as far as your technical skills are concerned, is not allowed. Your commitment is to the team effort. Everyone lives and dies by the same rules.

You have a tremendous amount of personal freedom in the kitchen. But there’s a trade-off. You give up other freedoms when you go into a kitchen because you’re becoming part of a very old, rigid, traditional society — it’s a secret society, a cult of pain. Absolute rules govern some aspects of your working life: obedience, focus, the way you maintain your work area, the pecking order, the consistency of the end product, arrival time.

This is a case where the advantages of hierarchy — the need for fast, coordinated decision-making, the ability to internalize externalities, the possession of “decisive knowledge” by the top decision-makers, and the like — appear to outweigh the high-powered incentives and Hayekian knowledge benefits of decentralization. Look for a future Foss-Klein paper (with Nils Stieglitz) discussing this tradeoff more systematically.

Originally published January 18th, 2008 on Organization and Markets
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America’s Incredible Shrinking Influence

05/29/2018Ron Paul

Just two weeks after President Trump pulled the US from the Iran nuclear agreement, his Secretary of State, Mike Pompeo, issued 12 demands to Iran that could never be satisfied. Pompeo knew his demands would be impossible to meet. They were designed that way. Just like Austria-Hungary’s ultimatum to Serbia in July, 1914, that led to the beginning of World War I. And just like the impossible demands made of Milosevic in 1999 and of Saddam Hussein in 1991 and 2003, and so many other times when Washington wanted war. These impossible demands are tools of war rather than steps toward peace.

Secretary Pompeo raged at Iran. The mainstream news media raged at Iran. Trump raged at Iran. But then a strange thing happened: nothing. The Iranians announced that they remained committed to diplomacy and would continue to uphold their end of the nuclear agreement if the Europeans and other partners were willing to do the same. Iranian and European officials then sought out contacts in defiance of Washington in hopes of preserving mutually-beneficial emerging commercial relations.

Washington responded to the European snub by threatening secondary sanctions on European companies that continued doing business with an Iran that had repeatedly been found in compliance with its end of the bargain. Any independent European relationship with Iran would be punished, Washington threatened. But then, again, very little happened.

Rather than jump on Washington’s bandwagon, German Chancellor Angela Merkel made two trips to Russia in May seeking closer ties and a way forward on Iran.

Russia and China were named as our prime enemies in the latest National Security Strategy for the United States, but both countries stand to benefit from the unilateral US withdrawal from the Iran deal. When the French oil company Total got spooked by Washington threats and pulled out of Iran, a Chinese firm eagerly took its place.

It seems the world has grown tired of neocon threats from Washington. Ironically the “communist” Chinese seem to understand better than the US that in capitalism you do not threaten your customers. While the US is threatening and sanctioning and forbidding economic relations, its adversaries overseas are busy reaping the benefits of America’s real isolationism.

If President Trump’s canceled meeting with North Korea’s Kim Jong-Un remains canceled, North and South Korea have shown that they will continue with their peacemaking efforts. As if Washington was no longer relevant.

I’ve often spoken of the unintended consequences of our aggressive foreign policy. For example, President Bush’s invasion of Iraq only helped Iran – our “enemy” – become more dominant in the Middle East. But it seems new consequences are emerging, and for the neocons they must be very unintended: for all of its bellicosity, threats, demands, sanctions, and even bombs, the rest of the world is increasingly simply ignoring the demands of Washington and getting on with its own business.

While I am slightly surprised at this development, as a libertarian and a non-interventionist I welcome the growing irrelevance of Washington’s interventionists. We have a far better philosophy and we must work hard to promote it so that it can finally be tried after neocon failure becomes obvious to everyone. This is our big opportunity!

Reprinted with permission.



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