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Are We in a Bubble?

February 16, 2021/in Economy, Education, Politics /by Neland Nobel

All this money printing threatens to eventually create a sugar high in equities. We aren’t there yet, but markets are floating on a sea of new money. In fact, it’s more like a tsunami! Inflation hedges (real estate, commodities, materials companies) will do well. Traditional fixed income (long-term bonds) is at risk. The return of inflation because of misguided policy choices is a very real threat to the long-term health of the US economy.

Brian S. Wesbury – Chief Economist, First Trust

There are increasing concerns that a number of financial markets are entering what some are calling a financial bubble. But a bubble itself has a number of developmental phases before it bursts either of its own accord or is pricked by some outside event. Knowing exactly where you are in such a cycle is difficult to know.

Some are even starting to call the current situation, the “everything bubble.” This is because multiple markets are beginning to display bubble-like characteristics in roughly the same time frame. This includes stocks, bonds, housing (homes and apartments not commercial), cryptocurrencies, and some select commodities.

To shed some light on this subject, we review a recent book on the subject: Boom and Bust, A Global History of Financial Bubbles by William Quinn and John D. Turner, Cambridge University Press, 2020.

Written by two Professors from the University of Belfast, it won Best Book of the Year from the Financial Times.

The book surveys some of the better known, and some not so well known, financial bubbles from the past in an attempt to develop common elements among them. If these common elements can be isolated, then we might be able to identify when a bubble is in progress.

Sadly, most bubbles tend to be identified after the fact, far too late to help those unfortunate individuals caught up in them.

It is also true that both financial journalists and investors throw the term “bubble” around without much precision.

Is a bubble simply an asset class that appreciates rapidly, extends far beyond its underlying fundamentals, and then comes crashing down?

Why are some bubbles isolated and others not? Why do some bubbles do little harm to the economy when they burst, while others create such economic trauma the whole economy goes into recession or depression? Why are some bubbles localized, while others can become international and actually damage the world economy? Why do some bubbles do so much damage that political and social disintegration occurs, leading to revolution?

These are all good questions, and after reading the book the reader walks away with at least some partial answers.

The authors start with the framework that, we should view things as arson investigators do when engaged in their work. What does it take for a fire to start and run out of control? It takes oxygen, fuel, and a heat source or spark. If one of the elements is missing, you can’t really have a fire. And if you have a fire, the removal of one side of the triangle stops the fire.

Likewise, to have a financial bubble, you need three sides of a triangle of excessive money and credit creation, widespread speculation, and increased marketability. And, like a fire, the best way to stop a bubble, is to remove one or more of the triangle sides from the equation.

Historically, they note that the worst bubbles, the ones that really do severe economic, social and political damage are usually started by the government. This is often because the government has excessive debt and is trying to find ways of dealing with that heavy burden.

Some bubbles have to do with new technology that is emerging, which destabilizes things for a while but usually does not cause more than localized harm. That actually can be helpful.

Sometimes, technological revolutions are mixed up with government caused bubbles, and both destabilizing factors are taking place at the same time.

Getting back to the bubble triangle, the fuel for a bubble is money and credit. This is usually where the government plays a leading role. This is often caused by excessive government debt, loose regulation of the banking system, excessive money creation, and ultra-low interest rates. All of these factors spread credit abuse throughout the system with both the public and private sectors overindulging in credit.

In financial terms, it allows the use of excessive leverage or the use of small amounts of money down and the rest borrowed. This allows small amounts of money to control much more in the way of investments, which is of great benefit on the way up and a recipe for disaster on the way down.

The current era would certainly seem to qualify in terms of this side of the triangle. Never in the history of financial markets have we had interest rates so low, for so long.

The next side of the triangle is marketability. This is basically the ease of finding a buyer and a seller and having an organized market with prices and financial vehicles that allow for widespread public participation. For example, Beanie Babies may have been a mania, but there was no organized market between buyers and sellers. You could buy, but not really sell.

Financial innovation in new financial products is usually observed in a bubble that allows vast new numbers of people to participate in highly liquid markets. Recent inventions of stock futures, futures on individual stocks, exchange-traded funds (ETFs), reverse ETFs, leveraged ETFs, mortgaged back securities that could be sliced and diced into small pieces and sold all over the world, options, to today’s SPACs or Special Purpose Acquisition Companies all would qualify as financial innovation that permitted increased marketability.

The current era would certainly seem to qualify as we have multiple new concepts and vehicles in addition to the entrance of new inexperienced traders using no commission platforms like Robinhood. There is no filter between the keyboard and trading execution, and the whole world is wired together jabbering about investments.

The final leg of the triangle that must be present is speculation.

In a sense, all investments are speculative because the outcome is not perfectly known. But speculation in the sense they use the word is the purchase of sale of investments primarily not to hold for a stream of income but to quickly sell for a capital gain. What is important is attractive price momentum, the underlying value of the company or the commodity is of little import. What is important is that the thing has momentum, you can jump on, and quickly jump off, making quick easy money. It is not investing really, but closer to gambling.

Thinking shifts from being a shareholder who intends to own a company for a number of years, to a trader chasing price movement.

In the speculative phase, they note “large numbers of novices become speculators, many of whom trade purely on momentum.”

The migration of novices usually is triggered by greed, low-interest rates that create a zeal for any kind of return, and celebrity endorsement where speculative leaders become folk heroes in the financial press.

The press comes in for withering criticism by the authors. One thing that comes through rather loudly, is that fake news is as old as the news business. In addition, you can sell newspapers and advertising air time by growing your audience. You do this by joining in the bubble rather than spreading caution. Financial television, Twitter, Reddit, and message boards are all ways the crowd can organize and move with the synchrony of a school of fish.

The migration of new investors is also intimately connected to the human desire to fit in, to conform. Humans, despite our rational nature, are herd animals. Why do people all wear torn jeans at the same time, pierce their faces, or tattoo their bodies? Why did all hippies look alike, all the while they professed their “individualism”? There are trends in fashion and trends in thinking.

On February 13, 2021 The Wall Street Journal had a fascinating article about the “messiahs of momentum.” These are folks like Mark Cuban, Snoop Dog, Elon Musk, and the like. Value investors like Warren Buffet have gone the way of the dodo bird. What kind of a Twitter following does he have?

But as the saying goes, when everyone is thinking the same thing, no one is thinking. We noted in a previous article, we seem to be reaching a stage in market sentiment, when the dominant view is hyper-bullish. That historically has not been a good sign.

So, it would seem, the speculative leg of the bubble triangle is being satisfied as well. Thus, with all three satisfied, we likely are in a bubble, but it is hard to know how far along we are in the process. Things looked pretty dicey in 1997 when Greenspan made his “irrational exuberance” remarks, yet the party continued for about three more years.

The problem is, big money can be made in the final phases of market mania and money managers can ill afford to underperform, lest they are quickly fired by greedy clients. The whole thing continues to gain momentum and creates self-reinforcing feedback loops.

Moreover, no one knows exactly how extreme things can get. And no one really knows, what possible events could occur which suddenly reveals the rotten underpinnings of a credit bubble.

However, it would appear we have the fuel, loose money and credit, and a government that has gone fiscally insane. We have expanded marketability, with many new products and venues to permit public speculation. And, we have massive speculative participation and an attitude shift by both the general public and institutions.

Timing remains difficult, but at least we can understand the environment in which we are investing.

Usually, a good sign that you are nearing the end is the market adopts a “new era” or “new paradigm” point of view. Old valuation measures are discarded as are standards of financial probity. Financial extremes are rationalized away because “this time it is different.”

Each cycle is different to a degree, and that makes historic comparisons difficult. What the authors have done is establish a framework that seems common to all financial bubbles.

Besides the importance of this discussion to investors, it should also be of importance to policymakers. One of the points the authors make is that financial bubbles are coming much more frequently, roughly every six years. This has never happened before. The US for example, basically went from 1929 to 1973-74, without a financial crisis.

Now they come every six years? Not only that, most recent bubbles were blown by the government, usually to favor certain groups, like the housing crisis, which was a bipartisan effort to expand homeownership to minorities.

Instead of the Keynesian notion of government acting as a counterbalance to the excesses of the private sectors, the private sector and government are co-joined in their own respective excesses. So, where is the counterbalance? In the past, it might have been the “bond vigilantes” or the foreign exchange markets. But today, the government through the Treasury and the FED put such a giant thumb on the scale, these corrective mechanisms seem slow or unable to work.

To this observer, the next financial crisis looks like a big one. The debt situation is extreme in most sectors, it appears international in nature, hostility to capitalism is on the rise and the social and political fabric of the nation is shredding. Such a divided government can prove to be a paralyzed government.

Government tools of liquidity injections and low rates are already being employed just to maintain prosperity and have already reached historic extremes. What happens in the next financial war when the government has already fired all the ammunition? The very policy prescriptions used to mitigate the prior crisis are in fact the cause of the present.

Coming on the heels of the disaster of lockdown and a severely divided nation, faith in institutions and the government are at all-time lows.

This would not be a good time to have a financial crisis.

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Neland D. Nobel is Editor-at-Large of The Prickly Pear and retired after 45 years in financial services and financial planning.

Biden KILLS pipelines at home but promotes them for Taliban terrorists

February 15, 2021/in DrRichSwier.com, Economy, Elections, News, Politics /by Pamela Geller

This tells you everything about the ongoing coup against America from within.

Biden kills pipelines at home but promotes them for the Taliban

By Michael Rubin | Washington Examiner | February 08, 2021:

On his first day in office, President Biden canceled permits for the Keystone XL pipeline. Environmentalists and anti-fossil fuel activists should not have applauded his move.

After all, Canada will not stop extracting oil from the tar sands of northern Alberta. Instead, it will simply export oil over existing pipelines or to the Pacific Ocean, where the damage from a potential spill would be harder to address. Biden’s cancellation cost jobs and pushes Canada toward greater economic cooperation with China. It also shakes confidence in U.S. business. Who would invest in the country if any future administration can simply renege on deals with the stroke of a pen? Especially, that is, when the investments involved here reach into the billions of dollars?

Biden’s move was both political theater and an indulgence of his liberal base. But his hypocrisy was stunning even for a politician who has spent a half-century in Washington. Consider that while the Biden administration is killing a pipeline from which the public could benefit, Biden is promoting a pipeline to enrich both one of the world’s worst dictatorships and a group responsible for thousands of U.S. deaths.

The government has apparently brokered a meeting between the Turkmenistan government and the Taliban for a trans-Afghanistan pipeline to bring Turkmen gas across Afghanistan and Pakistan to India. If this scheme sounds familiar, it should: It was the same deal that now-Special Envoy Zalmay Khalilzad sought to make with the Taliban in the years before the Sept. 11 terror attacks when he was a consultant for the Unocal Corporation.

Khalilzad’s scheme was bad policy two decades ago, and it is even worse now.

Put aside environmental arguments and consider profit. Freedom House’s latest Freedom in the World report ranks Turkmenistan as among the world’s worst offenders, below even North Korea in terms of freedom and civil liberties. To promote the export of Turkmen gas is to entrench its regime even further. Part of the deal is then paying the Taliban protection money or transit fees for the pipeline transiting Afghan territory. Not only would this undermine the elected Afghanistan government even further, but it would also reward the Taliban for insurgency to the tune of tens of millions of dollars each month. Who needs Russian bounties on U.S. soldiers when the State Department has crafted a scheme to reward the Taliban beyond their wildest dreams?

One issue here is Khalilzad’s penchant for using diplomacy as a stepping stone to cut side deals. But the other issue is U.S. strategic interests. Perhaps a misunderstanding of the Taliban agenda was an excuse 20 years ago. It should not be one now. If the Biden administration says no to pipeline jobs in the Midwest, it should not then turn around and help enrich the Taliban to ship Turkmen gas to the Indian Ocean. It is time for Secretary of State Antony Blinken to call his envoy, end this hypocrisy, and to stop coddling some of the world’s most anti-American movements.

EDITORS NOTE: This Geller Report column is republished with permission. ©All rights reserved. Quick note: Tech giants are snuffing us out. You know this. Facebook, Twitter, Google et al have shadowbanned, suspended and in some cases deleted us from your news feeds. They are disappearing us. But we are here. Subscribe to Geller Report newsletter here— it’s free and it’s critical NOW more than ever.

Dollar’s Purchasing Power Drops to Record Low Despite Aggressive “Hedonic Quality Adjustments”

February 15, 2021/in Economy /by Wolf Richter

Spiking prices for new and used vehicles under the microscope.

The “Purchasing Power of the Consumer Dollar” – part of the Bureau of Labor Statistics’ Consumer Price Index data released today – is the politically incorrect mirror image of inflation in consumer prices, as measured by the Consumer Price Index (CPI). By wanting to increase consumer price inflation, the Fed in effect wants to decrease the purchasing power of the consumer dollar, to where consumers have to pay more for the same thing. Thereby it wants to decrease the purchasing power of labor paid in those dollars.

And that purchasing power of the dollar in January dropped by 1.5% year-over-year to another record low:

Note how the purchasing power of the dollar recovered for a few months during the Financial Crisis when consumers could actually buy a little more with the fruits of their labor. The Fed considered this condition a horror show.

Inflation in durable goods, non-durable goods, and services.

The overall CPI for urban consumers, the politically correct way of expressing the decline in the purchasing power of the dollar, rose 1.4% in January, compared to a year earlier.

Each product that is in the basket of consumer goods tracked by the CPI has its own specific CPI. And all these products fall into three categories: durable goods (black line), nondurable goods (green line), and services (red line), with services accounting for 60% of the overall CPI. Here they are, with discussions below:

The CPI for services (red line) – everything from rent to airfares – increased mostly between 2% and 3% year-over-year for the last decade, but dropped during the Pandemic as demand for services such as hotels, flights, and cruises collapsed. For example, in January, year-over-year, the CPI for……

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Continue reading this article published February 10, 2021 at Wolf Street.

VIDEO: Biden’s proposed gas tax will destroy trucking industry

February 14, 2021/in DrRichSwier.com, Economy, Politics, Taxes, Waste, Fraud and Abuse /by Dr. Rich Swier

A trucking company owner said the Biden administration’s plan to hike fuel tax could destroy the industry. One America America News Network’s Caitlin Sinclair has more.

New Walgreens CEO Pushes Company Further Left in The Pursuit of “Equality”

February 13, 2021/in Culture Wars, DrRichSwier.com, Economy, News, Politics /by 2ndvote .com

Roz Brewer, the former Chief Operating Officer of Starbucks, has just been named CEO of Walgreens. It’s a big step up in the world, but unfortunately, Brewer’s biases threaten to push the company even further left in the pursuit of “equality” — which, practically speaking, means support of violent activist groups like Black Lives Matter (BLM) and over-emphasis on forced racial and gender diversity in the corporate sphere.

A Starbucks letter in support of BLM, which Brewer and other executives signed last summer, reveals a troubling bias towards the leftist narrative. “Together, we’re saying: Black Lives Matter and it’s going to take ALL of us, working together, to affect [sic] change,” the letter read. It went on to detail some of the ways in which people might effect change, sticking to ambiguous talking points such as “joining local peaceful protests” without acknowledging that many of BLM and its affiliates’ protests have proven violent and have hurt black people more than they have helped.

Brewer has also chosen to focus on perceived challenges as a black corporate leader instead of inspiring other black Americans to aspire to become leaders. In her view, as reported by CNBC, misunderstandings are evidence of larger racial and gender biases in the workplace. “You get mistaken as someone who could actually not have that top job,” Brewer said. “Sometimes you’re mistaken for kitchen help. Sometimes people assume you’re in the wrong place, and all I can think in the back of my head is, ‘No, you’re in the wrong place’.”

Even before Brewer became Walgreens’ CEO, the company was far from neutral. Our 2ndVote ranking system puts Walgreens at a low of 1.50 on a scale of 1.00 – 5.00, revealing their support for leftist organizations and causes such as abortion and gun control. Rather than spending money with Walgreens, you can use your 2ndVote dollars to shop at CVS (3.72). They offer comparable services and products while remaining neutral in the culture wars. Until and unless Brewer changes her company’s policies, 2ndVote supporters should spend their money with competitors like CVS. For now, get in touch with Walgreens and let them know what changes you’d like to see. Remind corporate America that they depend on economics, not on furthering leftist agendas or taking part in violent social activism.

Mob Mixes Business with Pressure

February 13, 2021/in Culture Wars, Economy, Liberty, Politics /by Tony Perkins

They used to call it “retail therapy.” But for conservatives, there’s nothing therapeutic about walking the aisles of stores that want to shut down your speech, cancel your bank accounts, or send cents on every dollar to Marxist groups who despise America. In an age when conservatives can’t turn on the TV, send their kids to school, check their Facebook feeds, or watch sports without being reminded about the wokeness of corporate extremists, it’s no wonder they’re fed up. And fed up — Gallup warns — is exactly what they are.

It used to be “cool and countercultural” to be liberal in corporate America, Dave Seminara pointed out. “Today, the Left is the establishment — and conservatives are [the] new counterculture that quietly seethes as companies we patronize inundate us with… virtue signaling.” Most people don’t expect or even want corporate America to embrace conservatives causes, the WSJ’s editorial board agrees. But it would certainly be nice if these CEOs didn’t “aggressively antagonize the very Americans it has long relied on to protect it from government control.”

After being canceled, threatened, and shamed, it’s no wonder the majority of Republicans are disgusted at the betrayal of a business community it has historically championed. In its latest survey, the GOP’s satisfaction with the “size and influence of major corporations” took a nosedive, plummeting a whopping 26 points from 2020 to a new record low: 31 percent. The relationship between the two longtime allies has soured — and fast.

Justin Danhof, general counsel for the National Center for Public Policy and Research, has been tracking this political drift for the last 10 years, and his only surprise is that it took this long for conservatives to wake up and realize that corporate America is in the tank for the political Left. “When it comes to cultural conservatives, religious conservatives, corporations are on the opposite side of every issue that you hold dear,” he warned on “Washington Watch.” “Many of them fund Planned Parenthood. Many of them oppose your religious freedom — and not just vocally — but in the courts legally fighting against [it].”

Most Americans had no idea how bad it was until last year when Black Lives Matter was burning our cities to the ground, and how did Amazon and Pepsi respond? By sending the organization huge checks. But it wasn’t just the money that bothered conservatives, it was the moralizing. “That’s what a lot of Americans found so unpalatable — that… these godless, soulless corporations like Disney and Apple are trying to dictate morality here in the United States by saying that this is a white supremacist nation, that our institutions are founded on white supremacy, that we all must bend our knees to Black Lives Matter.” Then, in the same breath, these same CEOs turn around and do business with communist China. Suddenly, they don’t care about racial justice. They don’t mind that slave laborers from nearby concentration camps are stitching together their Nikes. It’s a culture of corruption, Justin shook his head, and it’s oozing hypocrisy.

If there is good news, Justin agrees, it’s that consumers are finally seeing corporate America for what it is…..

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To continue reading click here and go to The Family Research Council.

Watch 13:46 minute video of Justin Danhof discussing Growing Dissatisfaction with Major Corporations with Tony Perkins.

Wind Turbines Don’t Even Last 20 Years

February 11, 2021/in Economy, Environment, News, Politics /by Isaac Orr

Editors Note: As some at the Arizona Corporation Commission want to take us down the “green” rat hole of subsidies and expensive electricity, we need to learn what has happened in other states, in this case, Minnesota.

According to the National Renewable Energy Laboratory (NREL), wind turbines are supposed to have a useful lifetime of 20 years, but real-life evidence shows that wind turbines don’t even last this long before they are torn down and repowered so wind companies can soak up more of your tax dollars. This is why Xcel Energy is spending $750 million on repowering wind projects built between 2008 and 2015.

It’s All About the Subsidies, Baby!

Thanks to a subsidy that has been “temporary” since 1992, wind turbines receive a federal tax credit of $24 for every megawatt-hour (MWh) generated. The most recent extension of these “temporary” tax credits locks in wind developments at 60 percent of the original subsidy, or $18 per MWh, according to the U.S. Energy Information Administration.

Wind turbines don’t receive this tax subsidy for their entire lives, however. The subsidy expires after the first ten years of a project’s life. Unsurprisingly, a report from Lawrence Berkeley National Labs shows the average age of repowered turbines was 11 years, meaning electric companies are spending millions of dollars to help themselves to more of your tax dollars and increase electricity prices at the same time.

The shorter lifetime of wind turbines may help pad Xcel Energy’s government-guaranteed profits, but this is bad news for ratepayers because it means electricity generated from wind turbines is much more expensive than advertised.

How Shorter Lifespans Affect the Levelized Cost of Energy

The cost of generating electricity is often expressed using a metric called the Levelized Cost of Energy (LCOE), which attempts to figure out the cost of each energy source per unit of electricity generated. In simpler terms, it is like comparing the cost of driving different cars for each mile driven, taking things into account like up-front cost, gas mileage, and the cost of fuel. The more miles you drive, the lower the cost per mile.

If wind turbines are only operating for half of their original, useful lifetimes, it means they are generating fewer units of electricity, which makes the LCOE of wind much higher than advertised. We can see this in action in the example below. For this example, I use Region 3 MISW assumptions for capital costs and fixed operational and maintenance costs from Table 3 of the 2021 Assumptions to the Annual Energy Outlook.

If a wind facility operates for 11 years instead of 20 years, the cost of electricity from the facility increases by $14.01, from $37.57 per MWh to $51.58 per MWh. This represents a 37 percent increase in the cost of wind energy, and it means that new wind is far more expensive than continuing to operate Minnesota’s existing coal, nuclear, and natural gas facilities.

Conclusions

The wind industry is kept afloat by infusions of your money. These infusions come in the form of higher taxes to pay for federal subsidies and the higher electricity prices you pay each month. The fact that Xcel Energy is repowering wind facilities that are less than 10 years old is all the evidence you need to conclude that wind turbines are not the future of energy. Instead of squandering more money on the wind, we should be looking to keep our existing power plants open as long as possible while looking toward a future powered by nuclear, hydro, and carbon capture resources.

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This article first appeared on February 10, 2021 at The Center of the American Experiment.

Can American democracy survive Big Tech?

February 10, 2021/in Culture Wars, DrRichSwier.com, Economy, Politics, Waste, Fraud and Abuse /by MercatorNet - Navigating Modern Complexities

Roars of outrage can’t be heard unless Big Tech approves of the roar.

Two articles I came across recently raise the question in the headline of today’s column. One is by a journalist named Allum Bokhari, who gave a speech last November at Hillsdale College, one of the very small number of U. S. colleges that does not accept Federal grants, loans, or other funding. The other is by Robert D. Kaplan, a geopolitics specialist at the Foreign Policy Research Institute. Both gentlemen are deeply concerned that social media, as it now works, constitute an existential threat to American small-d democratic government.

Kaplan is concerned that social media may create conditions in which the “fragile, perhaps even ephemeral” experiment called American democracy cannot survive. His studies of nation-states range widely over time and geography. The old USSR, he points out, was not defeated from without by nuclear or conventional warfare. Rather, it was destroyed by internal weaknesses and a crisis of purpose that led to its disintegration. Regarding the present rivalry between the US and China, he sees social media playing radically different roles in the two countries.

In China, the authoritarian government ensures that everything on social media reinforces the “blood-and-soil nationalism” of the dominant Han cultural matrix. Traces of dissent are ruthlessly stamped out, and ethnic minorities such as Tibetans and Uighurs are suppressed and even locked up in concentration camps. There is basically one political story available in China, and social media reinforce it.

In the US, on the other hand, Big Tech effectively control social media, and recent events emphasize the subtle but increasingly effective control they exert. The dominant vision embraced by those who inhabit the upper reaches of corporate and cultural America is a transnational one which, when it looks at American history at all, sees a story of exploitation and shame, exemplified by the New York Times‘s “1619 Project” that attempted to show that the founders based America on slavery, not on anything noble.

Even worse, the economics of social media have come to embrace the divide-and-conquer principle that feeding different kinds of people what they most want to hear means cutting up the citizenry into “racial, gender, political, or sexual” identity groups that are often pitted against each other, to the great loss of the basic unity that any nation needs to survive.

Allum Bokhari brings his experience with Breitbart News to the table. While I am no fan of Breitbart News, the old principle of free speech (much abused lately) says that every voice deserves to be heard, if not believed. And he brings some indisputable facts to the table that are worth considering.

Unlike the early days of the Internet when no single social-media platform was dominant and everybody had more or less equal access to everybody else’s website, today’s Internet is a creature of the Google-Facebook-Amazon complex of corporate control. And control is the right word. The velvet glove of free apps and fun-looking websites conceals an iron hand of manipulation that is so subtle and complex, powered by advanced AI software, that the vast majority of users have little or no idea that they are being manipulated. But they are.

Cadres of software engineers spend countless hours devising complex algorithms to change behavior, not only to the benefit of advertisers on Big Tech’s media, but for other reasons as well. One quote that Bokhari reports from a source he interviewed at Facebook says it all: “We have thousands of people on the platform who have gone from far right to center in the past year, so we can build a model from those people and try to make everyone else on the right follow the same path.”

If this isn’t manipulation, I don’t know what is.

In recent months, the manipulation and control has come above ground for everyone to see. Bokhari cites the actions of Facebook, Twitter, and other Big Tech firms in de-platforming President Trump, and of Amazon and Apple in kicking the upstart social-media platform Parler off their equipment (or in the case of Apple, off the privately owned phones of millions of users).

One can argue about the motivations for such actions. But the bare fact of the actions remain: privately owned companies, largely unhindered and in fact protected by government regulation from lawsuits that private individuals can be subject to (that is what Section 230 of the Communications Decency Act does), unilaterally censored an entire social-media network regardless of who or what was on it, and also censored the sitting President of the United States.

For those who can remember the old days of only three television networks, the only analogous action I can imagine would be if the President decided to make a speech one day, and in the middle of his words spoken to the “pool” camera that all three networks were taking their video feed from, executives decided to pull the switch and return to their regular programming of the Beverly Hillbillies or whatever. Nothing like that ever happened, but if it had, the roars of outrage from common citizens of every political viewpoint would have been deafening.

Today, roars—or anything else—can’t be heard unless Big Tech approves of the roar. The dominant progressive political views of the transnational cultural elite who are in charge are squeezing out the wide spectrum of views that, no matter how annoying some of the extremes are, turn out to be vital to the survival of democracy.

To those who deplore disagreement and debate, I would say this: disagreement and debate are features of democracy, not bugs. Cut them off and you are left with a softer form of what China has: a homogenized, uniform, expert-driven technocracy that maintains the form of democracy, perhaps, but denies its power. If this nation, which has endured for 245 years, is to preserve government “of the people, by the people, for the people,” the malignant effects of social media and corporate control must be dealt with. And soon, before it is too late.

This article has been republished with permission from the Engineering Ethics blog.

COLUMN BY

Karl D. Stephan

Karl D. Stephan received the B. S. in Engineering from the California Institute of Technology in 1976. Following a year of graduate study at Cornell, he received the Master of Engineering degree in 1977… More by Karl D. Stephan

Inflation Pressures Heat Up Even in Services

February 8, 2021/in Economy, News /by Wolf Richter

There is still the theme that some of it is just temporary.

Big parts of the services sector – such as restaurants, entertainment, lodging, and travel – have been hit hard during this crisis. Other parts of the services industries – such as real estate, services related to eCommerce, transportation services, video games, streaming services, etc. – have boomed. And other segments in services have muddled through. Services account for nearly 70% of the economy. Despite the decline in overall demand for services, inflation pressures are heating up – both in terms of prices paid by service firms, and the prices they charge their customers, according to two measures for these price pressures in January.

Across the US service sector, “cost burdens soared once again, with the rate of input price inflation the fastest since the survey began in 2009, according to the IHS Markit U.S. Services PMI this morning. “And the rate of increase has now accelerated for three successive months,” it said.

“Firms largely passed on higher costs to clients through a marked rise in charges,” it said, meaning that the resistance to higher prices appears to have faded, and companies get away with raising prices without losing customers.

“Service providers recorded a steep increase in selling prices during January,” it said amid “strong client demand and a spike in input prices.”

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This article first appeared on Wolfstreet.com on February 3, 2021.

Lockdowns Have Depleted Capital in All Forms

February 8, 2021/in Economy, Education, Healthcare, Liberty, News /by Jeffrey Tucker

When lockdowns first happened, my initial thought was geeky, and only later did I begin to realize the implications for human rights and liberties.

My thought was: this is going to be devastating for future capital investment. The basis of my fear was the knowledge that in almost all poor countries, property rights are insecure, particularly for capital goods. These are goods that are produced to make other goods (the “produced means of production,” in the classic formulation by Eugen von Böhm-Bawerk). Their existence and protection is a key to prosperity. They enable more complex economic structures – the extended order, in F.A. Hayek’s phrase. It’s the basis of hiring and investment, and the foundation of wealth production.

In the normal course of economic life, capital structures are constantly adapting to changed conditions. Changes in available technology, consumer demand, labor pools, and other conditions require entrepreneurs to stay constantly on the move. They need the freedom to act based on the expectation that their decisions matter within a market framework in which there is a test for success or failure. Without this ability, writes Ludwig Lachmann, “a civilized economy could not survive at all.”

When governments attack capital by making it less secure, denying its own volition over how it is deployed, or it comes to be depleted through some other shock like a natural disaster, capital cannot do the work of creating wealth. This is a major reason for poverty. Start a business, make some money, employ some people, and a powerful person or agency comes along and steals it all. People get demoralized and give up. Society can’t progress under such conditions. Take it far enough and people end up living hand to mouth.

Lockdowns seem focused on expenditures and consumption but fundamentally they attack capital. The restaurant, the theater, the stadium, the school, the means of transport, all are forced into idleness. They cannot return a profit to the owners. It’s a form of theft. All that you have done to save and work and invest is voided.

That investors and entrepreneurs would lose faith in the rule of law – and thereby the security of their rights – was my main worry about lockdowns. Before lockdowns, life was functioning normally for so very long, decades and decades. Restaurants and hotels stayed up, operating according to their owners’ wishes. People could make plans and invest across state and national boundaries, never thinking that they could be prevented from traveling. A new theater could open and rent out space for concerts or other performances. A band could form and travel here and there and arrange bookings. Large conferences could be put on in cities all over the country, and there was nary a thought of the possibility that some politician would just decide to shut it down.

Starting March 8, 2020, all that changed. The mayor of Austin, Texas, shut down South by Southwest, forcibly canceling 100,000 contracts for flights, hotels, and conference participation. It seemed unbelievable to me at the time. Surely there would be a flurry of lawsuits and the courts would intervene to call the mayor’s actions despotic. The lesson would be learned and such a thing would not happen again in America for a very long time, if ever. We do have a Fifth Amendment that rules out such “takings” without due process, and as a general principle we believe in the right to run enterprises.

To my shock, this was just the beginning. Travel ceased. Schools shut down. Businesses were forcibly closed and events we had taken for granted just weeks before were deemed illegal. The churches were padlocked. Courts closed. You know the rest. By March 16, the buzzing, happy, progressing world of enterprise and creativity was shut down by governments. The politicians locked us down. People were panicked too but once rationality struggled to make a return, the law stood in the way of normalcy.

All of this amounts to an attack on economic networks and capital infrastructure. Investment plunged during the great suppression. These days, private investment in the United States is back to 2018 levels but I wonder about the long-term economic effects. Do we expect “snap lockdowns” in the future such as that experienced by Perth, Australia, last week? A writer for the Washington Post thinks they are just fantastic:

It may seem strange to act so aggressively for a single case, but we Australians complied. There were no complaints of infringing on freedoms. No marches against masks. My city of Perth came to a standstill. The roads were quiet, and our beaches were deserted. A trip to the supermarket for essential groceries saw everyone wearing a mask — for the first time. Other states restricted travel of West Australians, desperate to keep the virus out.

The subsequent two days didn’t bring a rush of cases that we feared; instead, for the first two days of lockdown, no new cases of covid-19 were detected. Residents of other countries might think this was overkill; in truth, that’s how a proper pandemic response should look.

Under the conditions, how is planning possible? You have dinner reservations, a party planned, a wedding with contracts, a business meeting, a concert, a delivery scheduled, or anything at all, and everything can be closed for an indefinite period of time. This could happen any time day or night, all on the authority of government officials and all because of a positive PCR test. Australia is widely celebrated as a success but is it a success when any state within Australia can fall to totalitarian control at the drop of a hat, in a country that has locked its citizens within its borders and locked visitors out, thus smashing the whole of the tourist industry?

Do we really want to live in this world? And also a relevant question: what does this do to the ability to plan and invest in the future? There is the thing called “time preference” which refers to the willingness of individuals to put off current consumption for the future. A low time preference is essential for building a progressing economy and social order and it is contingent on a stable and predictable regime that doesn’t randomly invade people’s rights. When arbitrary power comes along to pillage people’s property, inhibit their freedom of movement, and restrict their associations, the effect is to make planning for the future less possible and hence disincentivize it. In effect, you encourage people to live for the moment rather than planning for the future. Hope is replaced by nihilism.

Lockdowns also attacked other forms of capital: professional, educational, and social. About one-third of workers in America started working from home. For many, the word working should be in quotes. Life changed dramatically. Forget the commutes, the traffic, the office environment, the waits for the elevator, the lunch hour, the after-hours cocktails with friends. Instead, work became about laptops, houseshoes, all-day snacks, afternoon drinking, and binging Netflix in the background. Laziness became too easy.

Maybe this was viable for a few weeks. But after several months, it became obvious that people’s personal capital was under attack. Some people could continue to receive a paycheck while staring at a screen while others have to hustle, go to work, cut the meat and stock the shelves, check out the customers, slog around the hospital, paint the houses and do the yardwork, serve people where dining was allowed, and so on. Still, others were forcibly put out of work (movie theaters, the arts, conference venues, and so on). Whether you could deploy your labors to your benefit depended entirely on the exigencies of the planning elites.

All this terrible disruption has shattered people’s confidence in the system and rattled people’s sense of their own value. Lockdowns have taken their toll on our confidence in the law and our optimism that we live in a world in which our persons and property are safe from invasion by political elites.

A very practical example of a form of investment concerns the decision to have children. Kids have been locked out of their schools for a year, depleting educational capital. One million mothers have left the workforce to care for kids, depleting professional capital. Three-quarters of families have said they feel intense stress. Early on after the lockdowns began, people were predicting a new baby boom.

Not so much anymore. Now there is growing wonder whether people will decide not to have children because of the burden, the lack of educational security, the possibility that this whole nightmare could happen again and leave parents with impossible circumstances yet again. Then there is the deeper question of whether we really want to bring children into a world in which they could be so brutalized as they were in 2020. Perhaps this accounts for why births in Italy alone plunged 22% since lockdowns.

The same fear is expressed by many capitalists. Why open a restaurant if it can be shut down? Why build a hotel if travel restrictions can leave it empty for months and even years? If you don’t have confidence in a stable legal regime for the future, what can one say about whether investing in anything physical or that depends on customers coming and going is really a good idea? Do we really want to open a factory that can be closed at any time by decree?

Outside of a major war, it is hard to recall a time when government policies have so seriously roiled business practices, economic structures, and personal lives as much as lockdowns have, not only in the US but all over the world. The consequences will be felt for many years in the future.

What we need today more than anything is a guarantee, an ironclad guarantee from our leaders that nothing like this can ever happen again. To make that promise credible we also need a flurry of frank admissions that they made terrible mistakes this time, detailing what they were, and give us proof that there are legal means to stop the next guy in that office from locking people down yet again. We need the rule of law to once again protect essential rights. If we do not get that, we will continue to see people lose hope and confidence in the future, and that could have a devastating long-term effect on prosperity and social peace.

*****

This article was first published on February 6, 2021 at AIER, American Institute for Economic Research and is reproduced with permission.

‘Terrible Idea’ with ‘Dismal Track Record’: Top Economists Blast Elizabeth Warren’s Latest Proposal

February 7, 2021/in Economy, Education, News, Politics /by Brad Palumbo

Economists interviewed by FEE warn that Senator Warren’s new proposal would backfire horribly.

Senator Elizabeth Warren made a “wealth tax” on net worth one of the defining proposals of her unsuccessful 2020 presidential campaign. Now, the staunch progressive is using her new perch on the Senate Finance Committee to introduce a wealth tax at long last.

Warren’s wealth tax would affect families with assets of $50 million and greater, Fox Business reports. It would start at a 2 percent annual tax, but add an additional 3 or 6 percent levy on those with assets totaling $1 billion and more.

Other progressive lawmakers like Senator Bernie Sanders have long supported similar proposals, and it is projected that Warren’s wealth tax would apply to roughly 75,000 American families.

At first glance, average Americans might understandably think this tax only marginally hurts the wealthy, not anyone else, and shrug their shoulders. But top economists exclusively interviewed by FEE warn that this proposal is deeply misguided and counterproductive.

For one, taxing something discourages it, economists said, the same way cigarette or carbon taxes are designed to discourage smoking and CO2 emissions.

“There will be less of whatever is taxed,” Texas Public Policy Foundation chief economist Vance Ginn explained, calling a wealth tax a “terrible” idea. “Taxing wealth is just another flawed redistribution approach masked as good tax policy as it will destroy wealth creation and the incentives to save and invest, which are fundamental to human flourishing.”

Of course, voters might imagine a levy only being applied to the vast wealth billionaires have tucked away, hoarded and not being utilized for societal gain. Cato Institute economist Chris Edwards told me that’s not how wealth works.

“Proponents of wealth taxes seem to think that the wealth of rich folks is gold bars hidden under their beds,” Edwards said. “In fact, looking at billionaires, only 2 percent of their wealth is accounted for by their personal assets such as homes, yachts, and airplanes. The vast majority of their wealth is in productive business assets that generate output for the economy. So the wealth at the top represents active investment that generates jobs and incomes for all of us.”

“Why punish and penalize investment with a wealth tax?” he asked. “It’s much better for the rest of us if the rich invest their wealth into business growth rather than to consume it. A wealth tax would encourage consumption, which would be counterproductive for the economy.”

Ginn, a former White House economic advisor, concurred.

“Less [wealth] would be available throughout the financial system to fund business loans, mortgages, and other loans that generally support new jobs, wage gains, and lower prices,” he said. “Those who will likely feel the brunt of the cost of this tax the most are the non-wealthy.”

A wealth tax “might make for a great political slogan,” the Heritage Foundation’s Joel Griffith added, “but it actually incentivizes the well-off to spend more of their resources now on consumption, instead of investing those resources in ways that will help grow and strengthen the economy and create jobs down the road.”

In fact, wealth taxes have failed across the world where they’ve been tried.

“Warren’s proposal has a dismal track record in other countries that have attempted wealth taxation,” Senior Research Fellow at the American Institute for Economic Research and economic historian Phil Magness warned. “It simply encourages the wealthy to relocate abroad, taking their businesses with them.”

Economists say that’s why the global trend has not been passing wealth taxes, but repealing them. Edwards pointed out that in 1990, 12 European countries had wealth taxes. Now? Just three still do.

“Even most of the leftist welfare states in Europe have repealed their wealth taxes because of the complex administration, the negative impacts on growth, and the encouragement of avoidance and evasion,” Cato’s Edwards concurred.

With the economy still struggling to rebound from COVID-19 and crushing government lockdowns, the timing for such a proposal couldn’t be worse, some warned.

“Wealth taxation would only exacerbate [ongoing economic turmoil] by creating an overtly hostile business climate and hampering economic recovery, which translates into persistent unemployment for those already reeling from the punitive effects of lockdowns on the job market,” Magness concluded.

The most ironic part of all? Warren’s wealth tax isn’t even an effective way of raising revenue to fund government programs, the economists said.

“On the unlikely chance that Warren’s proposal survived a constitutional challenge,” Magness said, noting the tax’s likely unconstitutionality, “we may reasonably expect to see a similar outcome to what several European countries experienced under their own wealth tax experiments in the last few decades: an exodus of wealthy residents who often take their assets and businesses with them, resulting in a revenue stream that consistently falls short of projections.”

“The wealth tax won’t come close to paying for the promises of the progressive agenda,” Griffith added. “Even the more than $4 trillion in capital over 10 years estimated to be confiscated under one version of the plan covers less than ten percent of the estimated costs of a variety of the big-government proposals of the 2020 presidential campaign.”

Elizabeth Warren’s wealth tax might play well with the progressive base and successfully tap into rising populist sentiment. But economists know it’s a severely misguided proposal rife with unintended consequences that would hurt all Americans—not just the wealthy.

*****

This article first appeared at FEE, Foundation for Economic Education on February 4, 2021 and is reproduced with permission.

Why Chick-fil-A Is so Much More Efficient (and Friendlier) Than Government

February 4, 2021/1 Comment/in Culture Wars, DrRichSwier.com, Economy, Politics, Regulation /by Foundation for Economic Education (FEE)

There’s a simple reasons operations like Chick-fil-A can operate with an efficiency bureaucracies will never be able to match.

When Will Haynie had a traffic problem, he knew just who to call.

It started with a computer glitch on a busy Friday at the COVID-19 vaccination center at Seacoast Church. Health officials told the Mount Pleasant, South Carolina, mayor that traffic was a mess and wait-times for the vaccine had reached more than an hour.

So Haynie called in the cavalry: Chick-fil-A Manager Jerry Walkowiak.

“When you need help, call the pros,” Haynie said. “I called him [Walkowiak] on my way over and he actually got there before I did.”

Standing beneath an umbrella in a cold rain, Walkowiak quickly began directing drivers using the Chick-fil-A blueprint, approaching drivers in line, ensuring they had their paperwork ready to go, and then directing them to a spot where they could wait to receive their vaccine.

Soon wait times were down to just 15 minutes, Fox 11 Los Angeles reports.

“All those issues got fixed as things progressed,” Haynie later tweeted. “[Chick-fil-A] to the rescue!”

Chic Fil A manager Jerry Walkowiak donating his professional drive thru experience to help our vaccination program in Mt Pleasant today. When you need help, call the pros. pic.twitter.com/63RvcVR8KJ

— Will Haynie (@willhaynie) January 22, 2021

Despite Vaccines, Thousands of Americans Are Dying Each Day

The COVID-19 vaccine has arrived, but the pandemic is far from over. More than 4,000 Americans are dying with the virus each day, according to official statistics.

Part of the problem stems from the clumsy rollout of vaccines by public officials. Distribution has been slow and marred by mass dumping of vaccines—inoculations that could be saving lives—because of bureaucratic dysfunction and rigid guidelines.

While there are no reports of vaccine dumping in South Carolina, some public officials have expressed frustration with delays in the rollout. News reports say that as of Sunday, South Carolina had received 542,750 total vaccines, 277,258 of which had been administered.

To be sure, delivering and administering hundreds of thousands of vaccines takes time. But that’s all the more reason why unnecessary delays—like the one briefly experienced at Seacoast Church on Friday—should be avoided at all costs.

Chick-fil-A’s Legendary Drive-Thru Efficiency

Chick-fil-A is the third largest fast food chain in the US, bringing in $11.3 billion in sales in 2019 at more than 2,600 locations. One of the reasons for its meteoric rise is its legendary drive-thru efficiency.

Chick-fil-A is known for insanely long lines, especially during peak hours. According to Buzzfeed News, on average, a Chick-fil-A drive-thru serves 95 cars between noon and 1 p.m. alone, far more than its competitors, and more than 60 percent of the chain’s revenues come via the drive-thru window.

So many people marvel at Chick-fil-A’s drive-thru mastery that it came as a shock to many to learn the chain’s drive-thru times are actually longer than its competitors. This revelation, which was reported by news outlets with little context, didn’t sit well with Chick-fil-A fans.

But as QSR magazine (who conducted the survey) points out, there’s more to the story than long wait times.

Put simply, [Chick-fil-A’s] speed of service is much longer because its drive-thru lanes are busier than every other competitor—and it’s not even close. A full 77 percent of its drive-thru experiences had three or more cars in line, according to the study, while 35.5 percent had six or more cars in line.

For context, McDonald’s claimed the second-busiest drive thru, and only 41.8 percent of its drive thrus had three or more cars and 9.1 percent had six or more.

Essentially, drive-thru times are a bit longer because of the enormous volume Chick-fil-A serves at the drive-thru.

The reality is people hate waiting in lines, and Chick-fil-A fans are no exception. But Chick-fil-A has managed to make waits relatively short—322 seconds, on average, about a minute longer than the fast food average—despite its insanely long lines.

This speed and efficiency—Chick-fil-A also earns top marks in order accuracy—is the reason surveys show Chick-fil-A ranks number one in customer satisfaction among fast-food chains.

Chick-fil-A is only able to pull this off because of the efficiency Walkowiak showed at the vaccine center. And that efficiency is no accident.

Chick-fil-A has no fewer than three “Innovation Centers” where the chain tests restaurant layouts to maximize efficiency for various operations. Buzzfeed reporter Venessa Wong describes how on one January afternoon, at the Atlanta-based chain’s newest innovation center, workers tested a new drive-thru design at a mock restaurant.

“The main question at hand: How narrow could the drive-thru lanes get to save space?” Wong writes. “There is also the lingering but essential question of how to move cars through more quickly, to shorten those epic lines.”

The solution, or one of them, was to have teams of servers (up to six people) walking among cars drive-thru lanes taking orders and running payments via tablet. This allows Chick-fil-A to get customers in and out quickly despite lines that at times look, frankly, daunting.

Long line at the Chick-Fil-A Drive-thru on Winchester. pic.twitter.com/WZln0dDf

— melissa moon (@MMoon_WREG3) August 1, 2012

But the effort to serve customers and make their experience enjoyable and swift has paid off.

Customers love Chick-fil-A and its stellar service, and the chain continues to see impressive growth in revenue and franchises.

The Incentives of Markets

Compare the miraculous efficiency of Chick-fil-A to, say, your local DMV.

On my last visit, I waited in line 10 minutes before I was able to talk to someone. When I got to the window, I was given a number and told to take a seat. “It might be a while.”

Forty-five minutes later, a woman tested my eyes, snapped my picture, and asked me to sign some paperwork. The entire process took two minutes, but I was there for an hour. And the truth was, I was relieved! It could have taken longer, or I could have dealt with an unpleasant person.

The woman who took my picture was not exactly warm, but at least she wasn’t rude or curt. And in my experience, this often is not the case when dealing with bureaucrats and bureaucracy. In fact, it’s something we almost expect.

There’s a reason the unhelpful or snippy bureaucrat has been depicted ad infinitum in both film and literature. The theme of the nightmares of bureaucracy has been explored by numerous thinkers—most notably, perhaps, by the great Franz Kafka—but my personal favorite depiction comes in the 2015 Wachowskis film Jupiter Ascending, starring Mila Kunis, Sean Bean, and Channing Tatum.

While the space opera was a bit of a disappointment overall, the scene depicting the horror of dealing with an interplanetary bureaucracy (see below) is nothing short of hilarious. And part of the reason it’s so funny is because it’s something nearly all of us have experienced at one time or another.

Think about it for a moment. Why is your service at Chick-fil-A, Home Depot, or the local Toyota dealer so different from your visit to the DMV or the Post Office? It’s not because nice people go into customer service and ornery or unhelpful people go into bureaucracy.

The answer comes down to a single word: incentives. The absence of market forces means there is really no compelling incentive for the DMV to improve efficiency (or smile when you come through the door). As I pointed out earlier, we’ve pretty much come to expect bureaucracies to be slow and cold.

For Chick-fil-A, however, there is a clear incentive. Chick-fil-A wants customers to be happy because they want their business, which means serving them the very best they can. Indeed, the word customer service tells us something about the relationship between buyer and seller. The seller exists to serve customers.

Now, we’ve all had less than satisfactory experiences with businesses as well as bureaucracy, but the inherent dynamics of the systems themselves are unmistakable. Businesses want people to be happy and are incentivized to make them so. No such incentive exists in bureaucracy, which is why we walk on eggshells when going through TSA security checkpoints or walk up to the counter at the DMV.

The “customer” in these situations has very little power. We know it and, more importantly, they know it. This is why the economist Ludwig von Mises found descriptive terms for modem captains of industry—“chocolate king” or a “cotton king” or “automobile king”—as inherently misleading.

“Their use of such terminology implies that they see practically no difference between the modern heads of industry and those feudal kings, dukes or lords of earlier days,” Mises wrote. “But the difference is in fact very great, for a chocolate king does not rule at all, he serves.”

Mises correctly observed that these “kings” do not in fact reign over conquered territory. They exist to serve us.

“The chocolate king—or the steel king or the automobile king or any other king of modern industry—depends on the industry he operates and on the customers he serves,” Mises continued. “This ‘king’ must stay in the good graces of his subjects, the consumers; he loses his ‘kingdom’ as soon as he is no longer in a position to give his customers better service and provide it at lower cost than others with whom he must compete.”

With government “services,” on the other hand, we the “customers” are the ones who often must grovel like subjects to win the good graces of a bureaucrat if we want to make our flight, renew our driver’s license, or (in some systems) get the medical care we need.

It’s this dynamic that explains why our experiences at Chick-fil-A are so much better than those trips to the DMV. And the incentives baked into markets—to make customer experience enjoyable and satisfactory—also explain why operations like Chick-fil-A can operate with an efficiency bureaucracies will never be able to match.

Some might be tempted to believe we could improve, say, vaccine distribution if only bureaucracies had more resources, if they partnered with private industry, or if they were led by people like Jerry Walkowiak.

But that’s the wrong lesson.

The lesson is that vaccine distribution should be removed from the hands of bureaucrats altogether, and placed in the metaphorical hands of markets. Only then will we see these life-saving doses quickly and efficiently administered.

COLUMN BY

Jon Miltimore

Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

Companies Are Preparing to Cut Jobs and Automate if Biden Gets $15 Minimum Wage Hike, Reporting Shows

February 4, 2021/in Culture Wars, DrRichSwier.com, Economy, Elections, News, Politics, Regulation /by Foundation for Economic Education (FEE)

Let’s hope that Joe Biden’s minimum wage fantasies never become law—or workers will pay the price for his economic naiveté.

Nobel laureate Milton Friedman once said that “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” When it comes to the $15 minimum wage hike supported by Joe Biden and many of his fellow Democrats, it’s becoming increasingly clear that the results will be ugly.

New reporting reveals that Chief Financial Officers at top American companies are “considering raising prices, cutting workers’ hours and investing in automation to offset a potential rise in labor costs.”

CFOs are gearing up to raise prices, reduce workers’ hours and ramp up technology investments as they face the possibility of higher labor costs under a Biden administration, @markgmaurer reports for @CFOJournal @WSJ. https://t.co/t6Kscf5lu6

— CFO Journal (@CFOJournal) November 12, 2020

“Companies including Chipotle Mexican Grill Inc., Potbelly Corp. and Texas Roadhouse Inc. are already doing the math to assess what a higher federal minimum wage could mean for their operations and cost base,” the Wall Street Journal reports.

“Some executives fear that increases to the federal pay floor would drive up wages across income classes, hurting profits and forcing businesses to find savings to offset higher spending on labor,” the paper continues.

First and foremost, we can expect businesses to respond to artificially-high wage mandates by cutting jobs and reducing employee hours.

Why?

Well, labor is a product like any other. If the cost of soda was artificially mandated at $10 per can by the government, the simple fact is that consumers would buy less of it. When employers are legally forced to pay more for labor than it is worth in the market, they naturally and inevitably do the same.

“By the simplest and most basic economics, a price artificially raised tends to cause more to be supplied and less to be demanded than when prices are left to be determined by supply and demand in a free market,” famed economist Thomas Sowell wrote in Basic Economics. “The result is a surplus, whether the price that is set artificially high is that of farm produce or labor.”

“Unfortunately, the real minimum wage is always zero,” Sowell concluded. “And that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage.”

The government may determine and decree a “living wage” under a minimum wage law, but unless the worker actually finds an employer willing to pay him that much, he will remain unemployed with a hypothetical right.

— Thomas Sowell (@ThomasSowell) July 12, 2019

Ample evidence confirms these theoretical predictions.

For example, the nonpartisan Congressional Budget Office projects that enacting a $15 minimum wage nationwide would destroy from 1.3 to 3.7 million jobs. Similarly, analysis from the Employment Policies Institute concludes that a federal $15 minimum wage would kill 2 million jobs.

These studies aren’t outliers. A research review by the Cato Institute concluded, “The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment.”

So, it’s fair to assume that the warnings CFOs are offering about potential slashes in employment can be extrapolated beyond their specific companies. Proponents of a $15 minimum wage might intend to help workers, but they will inevitably and invariably put millions of them out of work altogether if their efforts are successful.

Meanwhile, other companies told the Journal they would pass the costs onto consumers by hiking prices. (Is that a win for the working class?)

And in an another twist, some companies said they would seek additional opportunities to invest in automation and eliminate their demand for labor altogether in lieu of paying mandated wages that far exceed a worker’s value.

“Pool Corp., a distributor of swimming pool supplies, plans to ramp up investments in technology to offset the potential rise in labor costs,” the Journal reports. “The company would look to reduce manual processes such as product orders and certain warehouse operations.”

“[Automation is] the most significant investment that we can make…when it comes to lowering the impact of potentially higher labor costs down the road,” Pool Corp CFO Mark Joslin said.

All of this is bad, bad news for workers. You know, the group that a $15 minimum wage is supposed to help.

So, let’s hope that Joe Biden’s minimum wage fantasies never become law—or workers will pay the price for his naiveté.

COLUMN BY

Brad Polumbo

Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Opinion Editor at the Foundation for Economic Education.

RELATED PODCAST: “Wage”ing War

VIDEO: NY Young Republicans Re-Occupy Wall Street: Let the People Trade!

February 4, 2021/1 Comment/in DrRichSwier.com, Economy, Politics, Regulation /by Pamela Geller

“We shouldn’t have one rule for rich hedge funds in Manhattan and a different set of rules for every other American.” – Ted Cruz

January 31. 2021. Noon. A small crowd braved the bitter cold in Zuccotti Park, scene of the once infamous Occupy Wall Street encampment of 2011 (2011 Flickr Link).

Today the NYC Young Republican Club was out to RE-Occupy Zuccotti, demanding that The People be allowed to trade.

The group is co-opting the Occupy name to push populist policies in light of the GameStop short selling fiasco.

“Wall Street hedge fund hypocrites, “corporate oligarchs” are “screwing the little people”. One more assault on our economy as the world according to Biden and the CCP communists continues to spiral.” [NY Post]

This whole mess with #WallStreet is about to make people on BOTH the Left and Right realize we have found the new class of “robber barons”—hedge fund managers.

The main speaker of the event was Curtis Sliwa, leader of the Guardian Angels and candidate for Mayor of New York.

Sliwa challenged the crowd with, “They screwed the little people once, let’s get these hedge-fund monsters before they get us.”

He also called-out the hypocritical Wall Street bankers who took billions of dollars in tax-funded bailouts in 2008, only to now cry foul.

Just before the presser began, this fellow started shouting at the crowd – particularly about the CCP. (very short video)

According to the Young Republicans, Sunday’s protest wasn’t about political affiliations — they dubbed it a non-partisan event.

“There’s two standards, Wax said in a speech to protesters, “There’s rules for thee, not for me. You got these big hedge-fund guys who are trying to short companies into the ground, and then they got called on their bluff by a bunch of anonymous day traders on Reddit.”

Gavin Wax video –

“They want us to bail them out, they want Janet Yellen to make phone calls for them, they want to shut down trading. Are you kidding me? These schmucks in Wall Street or Greenwich can do whatever the hell they want to do with no repercussions.” Jan 31 Gavin Wax at @NYYRC rally

He then introduced, Viswanag B. Burra – Vice President New York Young Republican Club [ video ]

A published statement, from their President, Gavin Wax (@GavinWax)

“Fellow patriots,

We look forward to seeing you tomorrow, Sunday, January 31, at 12:00 pm as we gather in Zuccotti Park to RE-OCCUPY WALL STREET.

Over the past few days, we have seen how corporate oligarchs who work in connection with key members of the Biden administration have corrupted the integrity of our financial markets in a blatant manner by directing retail brokerages to freeze trading for small investors while institutional investors operate unimpeded.

As rumors percolate that the SEC may attempt to unwind trades in certain companies conducted over the past few days, our protest to LET THE PEOPLE TRADE becomes ever more critical.

And remember: unlike the original “Occupiers,” we will assemble peaceably and in accordance with civilized standards of decorum. No shitting in the streets.”

Reports from NY Post and Breitbart:

[Breitbart]

“Members of the New York Young Republicans staged a “Re-Occupy Wall Street” demonstration Sunday over the financial sector’s manipulation of GameStop stock after a Reddit group launched a buying surge.

GameStop, a mall retailer of video games and electronic accessories, saw shares soar more than 1,700 percent this week when amateur day traders bought massive amounts of the stock to protest Wall Street short-sellers who were banking on GameStop’s failure.

It was co-ordinated. There needs to be repercussions,” Wax said of the institutions’ efforts to shut down amateur trading.

The Reddit page WallStreetBets initially organized the mass buy.

As the stock skyrocketed and hedge funds lost billions of dollars, trading apps tried to block additional sales of the stock. One of the apps, RobinHood, faces a class-action lawsuit.”

[NY Post] [NY Post 2]

“Dozens of members of the New York Young Republicans Club jumped on the anti-Wall Street bandwagon Sunday, gathering in Manhattan’s Zuccotti Park to blast the hedge-fund managers targeting GameStop.

The “Re-Occupy Wall Street” protesters ripped the big-money investors as “despicable” for moving to stop last week’s “little guy” Reddit-fueled run on the video-game-seller’s stock to shore it up after the money men bet on it tanking.

“There’s some blatant corruption going on in the buildings around us and in Greenwich, [Ct.], wherever hell they are,” Gavin Wax, the group’s president, told about 50 protesters.”

The Robinhood Earthquake

February 2, 2021/in Economy, News /by Bruce Bialosky

We don’t have enough things on our plates. We needed this. We have a Congress trying to impeach a president who is no longer president. We have a new president trying to set a world record for executive orders. We have people calling everybody either racists or white supremacists. Oh and then there is the pandemic. The good news is we have vaccines. The bad news is many of our state governments are too inept to get the vaccines into the arms of our citizens. Then along comes this story out of nowhere that rocks our stock markets and will certainly redefine our markets going forward.

Let’s go back to the beginning. Robinhood is a securities firm that was formed in 2013 and became active in March of 2015. Its purpose was to redefine the ability to invest in the stock market without charging for trades. In 1971, Charles Schwab redefined acquisitions in the stock market by becoming a discount brokerage house. Slimmed-down services with substantially lower fees. Forty-plus years later, two guys decided to redefine access to the markets.

Their no-fee platform was immediately attractive to millennials. They were used to no fee platforms like Facebook and Twitter. The difference was those platforms were not really providing a service. What they offered really had not existed before. Robinhood was competing with not just Charles Schwab, but the long-established houses such as Merrill Lynch.

It appealed to millennials who think they can learn something from the internet and become experts overnight. Ask a doctor about their millennial patients who come into them having self-diagnosed. “Don’t let my medical degree get in the way of your internet search” thought many an experienced doctor. Robinhood became a great success with an estimated 13 million account holders. There is just one thing here and I will state this as genteelly as possible: How stupid do you have to be to believe this service was being offered for free without some kind of catch?

Robinhood was in the business of making money. They had three defined revenue streams. Earnings on the float of the accounts they had which in itself is questionable. Second, interest on any margin accounts on which they might make loans. Third, they sold the trading information of the accounts they had to the hedge fund people who funded this startup. If I knew that was from all appearances their major revenue stream I would never open an account. I never did. This third stream of revenue is highly questionable and should have been disclosed and not in small print. In big bold print.

What the hedge fund guys never expected was the Frankenstein they created would turn on them. And turn on them it did.

Hedge fund guys sometimes invest differently than we do. We put our money in a brokerage account whether it be with the Robinhood model, the Schwab model, or the Merrill Lynch model, with the idea that we will buy a stock or bond, and because of good management the value of that stock will go up and thus our portfolio will go up.

Hedge fund guys don’t always do that. They frequently bet on a stock going down. A company failing in our economy. That happens. Remember Woolworth’s and Blockbuster. The COVID pandemic really helped some companies and some others were really hurt or at least their business model was exposed to being outdated.

The hedge fund guys (and others) use a process called short selling. They position themselves to make money as a stock goes down. This has gone on for a long time and has provided some constructive elements to the markets. The real problem I see here is that quite often these people take positions and then go pump the market to go down through either release of information or going on a business channel casting negativity on the stock or the market to drive down the stock and clean up. These people should be forced to disclose their positions in the stocks before they offer their opinions so that people will take their so-called advice with a grain of salt.

It is clear not all of Robinhood’s 13 million holders of accounts are stupid. Either through leaks or other methods, they found out that some hedge funds were shorting some stocks in a big way. One, for example, GameStop (others were Blackberry, AMC, and Bed Bath & Beyond) was shorted so much the shorts were 140% of the number of shares of the company. That would be crazy in itself. But if the stock started going up the short sellers would not be able to acquire enough shares to meet their contracts and the price they would pay would mean they would lose money. The higher the stock went the more money they would lose. It is called a short squeeze.

The people who figured this out disseminated the news on Reddit and people took their own money to buy the stocks and make money on the squeeze. They made a lot of money on the squeeze as companies had to buy stock as it was going up to cover their short positions. Some of these people will lose money if the stock starts to go down, but that is the risk they assumed.

Where the real problem came in is when Robinhood stopped trading on certain stocks –particularly GameStop. Robinhood said their account holders can sell their stock, but not buy any. This was a completely out of order position for Robinhood to take. There is speculation that the hedge fund owners of Robinhood ordered them to do that. Whether true or not the position was taken by Robinhood forced the stock down because there were only sellers and not buyers.

For your edification, Robinhood has a 36-page small print agreement you need to sign before opening an account. Buried in that agreement is a statement that says “I understand Robinhood may at any time, in its sole discretion and without prior notice to ME, prohibit or restrict my ability to trade securities.” That is fair, but it did not say it would prohibit it on one side – selling not buying. That is an irrational position to take.

My personal opinion is the hedge fund managers decided they would rather crash Robinhood than continue the losses on their short positions. Even if that is not true, anyone who maintains an account at Robinhood after they pulled that stunt of cutting off buying must have their head examined.

The Leftists don’t need to step in here and make new governmental rules or as some have proposed to use this episode to impose a stock trading tax which is a Bernie Sanders knucklehead idea. The small guys will have learned their lesson. Free services are worth exactly what you are paying for them – nothing. The media should make sure that anyone using their platforms disclose their positions — including the short sell positions — before they start spewing their supposed wisdom.

In this case, David put a major hurt on Goliath. Some Davids will make a lot of money and some will have lost some money. But not nearly as much as the Goliaths and the Goliaths will have to be a little more cautious in the future in taking negative positions. The market will work itself out.

This article first appeared in Flash Report on January 31, 2021 and is hereby reproduced with permission by the author.

How the Kennedys Radically Changed America

February 2, 2021/in Culture Wars, Economy, National Security, News, Politics /by Bruce Bialosky

The Kennedys have for the past 60 years been one of the most idolized families in America. Joseph Kennedy converted his ill-gotten gains from bootlegging into a legal fortune. He then unleashed his sons into the political world. This is when his son John changed America in one way and then his younger brother Teddy in another way. We are still paying the price for both today.

President John Kennedy won his election by slightly more than 100,000 votes nationally. The election was particularly close in Illinois. With the help of Chicago Mayor Richard Daley who delivered for Kennedy with heavy turnout by union membership. That may have been a harbinger for what happened once Kennedy became president.

In 1958, Mayor Robert Wagner made New York City the first significant government to legalize public employee unions. The state of Wisconsin followed in 1959. The real floodgate happened when, on January 17, 1962, JFK signed an executive order allowing for unionization of federal employees. Since that time, 75% of the states have legalized collective bargaining for public employees. In 2009, public employees surpassed the private sector in the number of members they have in unions.

Along with this union membership came the fact that many governments make it near impossible to fire employees, no matter their actions. You cannot find out about the results of complaints against employees. What’s worse is in many governments the unions (which provide huge campaign donations to elected officials) have negotiated excessive and unsustainable pension and health benefits. Public employees in many areas make far greater compensation than the residents who pay the taxes in those areas. This has manifested itself in the need for revenues generated by ridiculous fees, parking ticket costs and prohibitive traffic fines. The dispute over additional COVID funding is largely about funding the excessive cost of public union employees who maintained their positions during the pandemic while others suffered.

The granddaddy of tax limitations once again was challenged in California. The challenge to 1978’s famous Proposition 13 that limited increases in the state’s property taxes and started a national revolution against soaring taxes failed. It was arguably the most important issue on the ballot in California as interest in the presidential election garnered less action because of the skewed registration for Democrats in California.

Who funded the opposition to this proposition? Principally building owners. They were branded as “wealthy people” or “rich” corporations. Who should have funded the opposition? Every one of us. Every office building lease has a clause that allows for the pass through to the tenants of these significant tax increases. The building owners will pay next to nothing.

Who was the principal funding source in favor? You guessed it – public employee unions. The funds would have gone in their pockets. The estimated annual tax increase was $8-12 billion. This is the biggest symbol of the fact our so-called “public servants” are at war with our bank accounts. They want your money in their bank accounts.

This is what John F. Kennedy brought to America – a war between our citizens and our employees and we can’t even fire them.

Let’s now look at what Senator Ted Kennedy did to radically alter another part of America.

In 1962, Edward Kennedy won election to fill the seat that his brother, the President, once held. Though he was a rookie senator, his brothers were president and attorney general respectively of the country. By 1965, Senator Kennedy had tragically lost his older brother but gained the chairmanship of the Senate Immigration subcommittee. Though not an author of the 1965 Immigration Bill, Kennedy and his AG brother worked hard to pass a bill which they pitched as something their deceased sibling would have wanted.

The promised law — while restructuring the origin of our immigrants – would supposedly keep control over the number of legal immigrants entering the country. Yet in the first 30 years of the law, the number of immigrants increased by three-fold compared to the previous 30 years. That amounts to 18 million people. Just last year 843,000 people became American citizens.

More importantly, it changed the basis of deciding who would enter the country. Family reunification became the centerpiece of our immigration law. The law established eight criteria for selection. Four of the top five criteria were family related with #3 being professionals and scientists along with artists of exceptional ability.

Thus, not only did a flood of new immigrants come into the country, but they were also not of our choosing. The newly minted U.S. citizen or permanent resident alien did. These newcomers needn’t have skills nor be able to support themselves. Once here and gaining citizenship or permanent resident alien status, they could then bring in their relatives creating a string of family members stemming from the entrance of one person.

This law has been in place for 55 years with little chance of major alteration. We do have certain programs allowing for skills-based entrance, but still the most significant number of immigrants are decided by the immigrants themselves. We now have 47 million immigrants here legally and we have very little say on capping this amount each year. This isn’t about race or heritage. This is about deciding who becomes part of our country. Senator Kennedy told us back in 1965 this would not happen.

That in no way means most legal immigrants do not add to our country. Rather it is to say there sure are a lot – the most in our history. We don’t get to say whether they must have skills or are self-supporting. We are lied to that they don’t receive government benefits. Maybe they did not 55 years ago, but they now receive multiple forms of government paid resources.

The interesting part of this is the two populations have begun to cross over. Nothing like moving half-way across the world to go to work for the government. Immigrants used to come here to start and build businesses. Now many go to work for the government.

When a tax auditor contacts me, I often cannot understand the person because of a heavy accent. My clients are in jeopardy If I cannot clearly understand the auditor. This makes no sense except in the world of certain people who think this somehow benefits Americans.

We hear about the great sacrifices the Kennedys made for this country. Many generations later they still don’t appear to have a need for a real job so they continue to run for public office.

The most significant legacy of these Kennedy brothers are these major alterations to our way of life. No one wants to focus on the ramifications of what they have done. After all, they are Kennedys.

*****

Bruce Bialosky is a nationally known columnist. He was appointed by President Bush to the U.S. Holocaust Commission and is the Founder of the Republican Jewish Coalition of California. This article first appeared on November 22. 2020 in Flash Report and is reproduced by permission of the author. Comments can be directed to Bruce@Bialosky.biz.

The Insecurity in Social Security

February 1, 2021/in Economy, Healthcare, News, Politics /by Ken Veit

One of the few things where there is widespread agreement is about the fact that Social Security and Medicare are going broke unless something is done to stem the financial drain as the retirement rolls swell. Choices are raising taxes or cutting benefits. Neither alternative is palatable politically, so the problem is put off for another day.

The reasons for the financial problems are legion: the huge drop in the birth rate; too generous increases in benefits; the elderly living much longer; etc. A big problem is that the return on the Trust Fund assets is pathetically low due to historically low-interest rates.

Let’s take a look at that last point.

Programs in the social safety net are not “insurance”. They are essentially Ponzi schemes. Because that name is so incendiary and so associated with criminal activity, Bernie Madoff, etc., I need to explain.

An insurance program spreads risks among a group of insureds. It is financially on a “pay now-receive benefits later basis”. It is the role of actuaries to determine what level of premium is needed to support the benefits for all members of the group. The insuring company maintains reserves so that cash flows are adequate over the time the arrangement is in effect.

Social Security and Medicare are not set up on that basis. There are government actuaries involved, of course, but the group is open-ended, the terms keep changing, and the time horizon is infinite (although 75 years is commonly assumed for calculation purposes). That does not mean this sort of arrangement is essentially unsound. It is just different than under a true insurance program.

A Ponzi scheme is one where benefits are paid out to early joiners, enrollment is open-ended, and the benefits paid to the early participants are paid for by the contributions of later joiners. There is no buildup of a reserve.

The reason to call Social Security and Medicare Ponzi schemes is that there is no buildup of reserves as there is under an insurance plan. We are told that there are reserves in the so-called Trust Funds, but the contributions we make are not placed in those Trust Funds. The Government spends the money for its other expenses. What goes into the Trust Funds are promises to pay cash to beneficiaries in the future. It does not take a financial genius to understand that there is a fundamental difference between cash in hand and a promise to pay. Of course, we believe that the Government is trustworthy, and in fact, there is every intention to pay benefits as they come due.

However, and this is the vital part, in order to pay, you have to have the cash to do so. Since our cash is already spent, the money has to be raised elsewhere, presumably via higher taxes. In a criminal Ponzi scheme, the operators must constantly seek new participants whose contributions can be used to satisfy the existing participants. At some point, this becomes impossible; the whole enterprise collapses; investors lose their money, and people go to jail.

The Government escapes by having the option to just print the money, inevitably leading to money losing its value. However, it is the same sort of deception. The Trust Funds are rapidly reaching the situation where the money going out exceeds money coming in. In a few years, there will be a crisis, something very drastic (and painful) will have to be done. The only question is who will be hurt: beneficiaries, taxpayers, or both. Either beneficiaries will get less or taxpayers will pay more.

This did not need to happen. If our contributions had been invested in real assets instead of promises, there would be adequate reserves and no looming crisis. Why wasn’t this done? The short answer is that FDR did not trust Wall Street to manage such huge funds. Things like mutual funds and ETF’s did not take off until after WWII.

In his State of the Union message 20 years ago, Bill Clinton proposed investing part of the Trust Funds in the Stock Market. He was laughed at and dropped the idea. Why?

There are three legitimate arguments against the idea.

The risk is too great. Stocks fluctuate wildly. It would be morally wrong to gamble with our retirement security.
Politicians would screw it up. Such a huge concentration of financial assets would be an irresistible magnet for politicians who might find “better uses” for the money (i.e., projects that would enhance their power and re-election chances).
It is impractical because it is too late. We can’t take the current Trust Funds and invest the money in stocks because there is no money, just promises (which is what the beautifully engraved government bonds actually are – just I.O.U.’s). Those billions upon billions of dollars of bonds would have to be sold in order to turn them into investible cash. Who would buy them?

Let’s go over each of those arguments.

In the 20 years since Clinton’s proposal, we have experienced the wild volatility arising from the 9/11 attacks, the bursting of the Dot.com Bubble, the financial crisis and Great Recession, and the Covid crisis. Despite that, money invested at the time of Clinton’s proposal would have earned an average annual return of over 7%, and more if a program of dollar-cost averaging had been adopted.

Furthermore, unless you believe the U.S. is going to collapse totally someday, who is better able to weather the short-term fluctuations of the markets than a government fund? Many countries, from Singapore to Saudi Arabia have benefited from introducing what is known as “Sovereign Wealth Funds” (SWF’s) to partially fund their government programs. Stock Markets exist to provide businesses with capital to grow. Our government keeps throwing money at programs that are supposed to stimulate growth but rarely do. There is no reason to single out one approach as morally wrong simply because you don’t like Capitalism.

There is always the concern that eventually the Government “would own everything”. This is an error born of ignorance of the small size of even the large amounts needed to fund our safety net programs in relation to the immense size of the financial markets. The Trust Fund money could be invested in special ETFs consisting of non-voting stock in say the 5000 largest companies. That would broadly spread the risk and prevent politicians from trying to dictate how management should run their companies. Of course, politicians could still try to inject their political preferences into the functioning of the economy, but they could not use the shares in the Trust Funds as a political tool.

If we were starting from scratch, implementing such a SWF for the purpose of funding the social safety net programs would be easy. However, we have already reached the point where net cash inflows (taxes collected minus benefits paid) are shrinking or have turned negative. We could, of course, liquidate the government bonds (the promises) held in the Trust Funds. But this would not be simple. Who would buy them? The Government is already choking on the vast quantity of debt it has to sell to fund its current budget shortfalls and various stimulus packages. Most of the present deficit is funded by selling debt to the Fed. Why not some more? It has the benefit of getting the truth out that the vast quantity of money owed by the United States is out of control. The fact that we owe the money to ourselves (i.e., the Trust Funds) adds elements of a 3-Card Monte game to the Ponzi scheme, where we disguise what we are doing as we shuffle financial instruments from one hand to another. Better we know the truth.

What other arguments can be raised against a SWF? Some will say it could destabilize markets because we would see huge sums of money flowing in and out. This is disingenuous. Markets today handle enormous shifts of investments in and out of multi-billion-dollar funds with hardly a ripple.

Others resent the possibility that organizations such as Goldman Sachs would stand to make “unconscionable amounts” from a program designed to help the poor and elderly. That is a political question. Advisory and transaction fees can be constrained by law in the case of SWF investments. Wall Street should be compensated for services provided. Only political will is needed to keep them from reaping windfall profits.

As a Conservative, I often find myself opposed to Progressive programs that are worthy but are misguided because we simply can’t afford them. If the Government was allowed to invest some of the vast amounts of money they throw at well-intentioned programs, we might reduce some of the tension between those who have “demands” and those who resent paying. A SWF invests in the belief in one’s own country and it helps to make dreams come true. Perhaps it is time to put aside political posturing and try to find a way to capitalize on our strength as a nation instead of finding reasons to just continue with programs that inevitably disappoint.

Ken Veit is a retired actuary.

Bed Bath and Beyond…Reason

February 1, 2021/in Culture Wars, Economy, Politics /by Neland Nobel

Recently, it was announced that a number of retail stores, among them Bed Bath and Beyond, and Kohl’s, will be dropping the My Pillow line of bed and bath products. The reason these stores cited is the Democrat Party Line that the riot at the Capitol was an “insurrection”, and that Trump and supporters like the CEO of My Pillow, Mike Lindell, were responsible for it.

To them, rhetoric equals the commission of a crime. However, they do not apply the same standard to Colin Kaepernick, Antifa, Black Lives Matter, the Pussy March, and numerous Democrats inciting violence, including the Vice President. The burning and looting of Kenosha, Minneapolis, Seattle, Portland, and yes, even Scottsdale, Arizona seems to escape their scrutiny. Were they awake at all last summer and fall? They had no comment on the murder and mayhem in numerous cities or the destruction of monuments.

Apparently, questioning the integrity of election results is a firing offense. One cannot question election results although an actual violation of election law is OK by them.

It is hard to see the logic and consistency in their approach to these matters. It seems entirely arbitrary.

An even more flagrant example is this: Officials of both political parties, including President Biden, have acknowledged the slave labor conditions in China and the genocide against Muslim ethnic minorities.

But, according to the moral bright lights of Bed Bath and Beyond, it is better to deal with murderous dictators that harvest the organs of their political opposition and commit genocide than stain their Progressive reputations by buying pillows made in Minnesota by a Conservative White Christian.

If you have ever visited either of these stores, you would be amazed by all the goods made in China. Do they know which goods are produced in concentration camps? Do they even inquire?

Now, these companies can choose with whom they deal, and will pay whatever costs are incurred if contracts have been violated. But as a business proposition, it seems strange that you would deliberately go out of your way to piss off roughly half the people in the U.S.

At least the NBA can do this and fall back on their numerous Chinese fans, but it hard to see Bed Bath and Beyond, offsetting the clients they will lose with new Chinese Communist shoppers. As a business decision, it seems just plain stupid. It in some locales, their decision has actually resulted in protests, hardly great publicity.

The public does not have to shop at these stores and we suggest anyone right of center to never darken their doors again. There are lots of other stores you can deal with. For example, Costco publicly stated, they would honor their contract with My Pillow and My Pillow itself has a very active online and media presence.

So, it is unlikely these two retail outlets will really hurt My Pillow. In fact, My Pillow has warned the public to expect delays in shipping because of overwhelming orders. Thus, it is empty “virtue signaling”, although one can ask, what is the virtue in dealing with a Communist dictatorship that is committing genocide?

We suspect these companies are calculating that since Conservatives don’t politicize everything as they do, you will wince, but continue to deal with them.

If they are correct in this calculation, then Conservatives need to look in the mirror and understand they may well be enabling this corporate idiocy. The more you take this abuse, the more they will give it to you. In reality, you are being an enabler of this hateful corporate behavior.

Make it a point to “poke the woke”. That is to say, do NOT deal with these companies in the future. If this is the game they want to play, we have the right and a duty to strike back. But this needs to go beyond pillows. Don’t buy anything from these two stores.

If you have recently purchased something from them, return it promptly and tell the store manager you will not do business with a store that bans the output of American workers from Minnesota but instead stuffs the store with goods made with slave labor from China.

Emergency Orders Are Being Abused

January 30, 2021/in Economy, Healthcare, Liberty, Politics /by Arizona Free Enterprise Club

How often do you experience an emergency? Monthly? Weekly? Every day? More than likely, it’s pretty uncommon—as it should be.

Maybe someone should tell the government. Because it seems like every time you read the news, some government official is declaring a new “state of emergency.” But these declarations stopped looking like real emergencies long ago. And this past year in the midst of COVID-19, it’s gotten out of control. This is especially true in cities and counties across Arizona, where officials are using emergency orders to beat up on local citizens.

Using COVID to grab more power

One year ago, words like “masks,” “lockdowns,” and “social distancing” weren’t a part of our regular vocabulary. But then COVID hit the United States, and local officials seized the opportunity to enact closures and mandates that did little to address the pandemic.

Flagstaff Mayor Coral Evans was among the first to make a power grab, limiting dining at restaurants and closing most gathering places.

And in March, then Gilbert Mayor Jenn Daniels rushed to close park playgrounds and sport courts without a single case of the virus in town. Just a few months later, she followed that up with a mask mandate. This was at the same time Maricopa County, of which Gilbert is a part, issued its own mask mandate.

Meanwhile Scottsdale residents have likely been experiencing mask-mandate whiplash. They had to deal with a mask mandate in June that was rescinded in September and then reinstated this January, one day after Mayor David Ortega was sworn into office.

And then there’s Pima County. In December, officials there announced a daily COVID curfew from 10 p.m until 5 a.m. Because apparently the virus only comes out at night? Thankfully, a Superior Court judge issued a temporary restraining order halting enforcement of the curfew earlier this month. But it didn’t take long before Pima County filed an appeal.

And while COVID is an issue that may warrant some action (which should NOT include crushing small business or trampling on our rights), did you know that some cities in our state are starting to use these powers to declare “climate emergencies”?

Emergency orders for the climate

Let’s start with Flagstaff, who as we mentioned earlier, leapt at the opportunity to use emergency orders after COVID hit. But officials didn’t stop there. In June, the Flagstaff City Council actually declared a climate emergency as well. And right now, they are using this radical declaration to impose a slew of extreme Green New Deal mandates that will destroy businesses, cost taxpayers a fortune, and likely violate state law. You can read all about their plans right here.

Maybe these officials should stop and read state law. After all, several years ago Arizona passed Proposition 207, which protects property owners from any land use law by cities that devalue their property. Passing ordinances that put a bunch of mandates on property owners without their consent, even under a so-called “climate emergency,” is a violation of this law.

And that brings us back to Tucson, which of course is within Pima County. This January, Tucson Mayor Regina Romero and the city council followed Flagstaff’s lead, declaring a “climate emergency.” And now they are proceeding with a plan to make Tucson carbon neutral within the next decade.

But does any of this sound like a real emergency?

It’s time for the legislature to act

These emergency orders have gotten out of control in our state. Too many government officials are abusing their powers. And in the process, they are crushing local citizens, destroying small businesses, and pushing the Green New Deal.

But that’s not what emergency orders are for. Emergency orders should be used for real emergencies. That’s why this level of government overreach needs to stop.

Now, it’s time for the legislature to act and put an end to these types of emergency declarations. Otherwise, local citizens will be paying the price for years to come.

*****
This article from the Arizona Free Enterprise Club was originally published on January 28, 2021 and is republished with permission.

Biden’s climate order HALTING drilling on federal lands KILLS 58K jobs

January 30, 2021/in Culture Wars, DrRichSwier.com, Economy, Energy, Environment, Labor & Unions, News, Politics, Waste, Fraud and Abuse /by Pamela Geller

The Biden Administration’s assault on the energy industry is moving at lightning speed. What a disaster. President Trump warned everyone that this would happen if Joe Biden was elected POTUS.
Beijing Biden administration is a wrecking ball to America. Period. Whoever voted for these destroyers is guilty of “insurrection.”

Biden’s climate order halting drilling on federal lands will kill 58K jobs, oil group warns

By Fox News, January 28, 2021
Kathleen Sgamma, president of the Western Energy Alliance, argued on Thursday that President Biden’s order to halt drilling on federal lands will kill 58,700 jobs in eight states in the West, “where over 97% of the federal production is found.”
Sgamma made the argument on “Fox & Friends” the morning after Biden announced his executive order which the president said, “directs the secretary of the interior to stop issuing new oil and gas leases on public lands and offshore waters.”
“We are going to start properly manage lands and waterways in ways that allow us to protect, preserve the full value that they provide for us for future generations,” President Biden added.
On Wednesday Western Energy Alliance, which represents 200 oil and natural gas companies, filed a lawsuit challenging Biden’s executive order banning oil and natural gas leasing on federal public lands, according to a news release.
The release cited the complaint which, “challenges Biden’s order as exceeding presidential authority and constituting a violation of the Mineral Leasing Act, National Environmental Policy Act, and the Federal Lands Policy and Management Act.”
Sgamma pointed to a study from the American Petroleum Industry, which she noted revealed “about 10.3 million people directly or indirectly derive their wages and income from the oil and natural gas industry.”
She noted that the impact of President Biden’s executive order to halt drilling on federal lands would be “felt the most” in the West, “where there is about 700 million acres of federal land,” stressing that she was referring to “working landscapes in the west that are owned and managed by the federal government.”
She noted that Yosemite National Park and Yellowstone National Park were excluded because they are “protected areas.”
Biden signed a total of 17 executive orders within minutes of entering the Oval Office for the first time on Wednesday. The orders reversed a number of Trump administration policies and covered areas Biden identified as his priorities on the campaign trail, including climate change.
In addition to temporarily suspending oil and gas permits on federal lands and waters, Biden halted the Keystone XL oil pipeline project in the series of orders aimed at tamping down the U.S. fossil fuel industry and combating climate change.
In remarks made by Biden on Wednesday before signing executive actions on tackling climate change, the president pointed to “a key plank” of his Build Back Better Recovery Plan, which he noted “is building a modern, resilient climate infrastructure and clean energy future that will create millions of good-paying union jobs.”
“This notion that killing oil and natural gas is suddenly going to create jobs elsewhere is just a false one,” Sgamma said.
“The energy we use in the United States, over 70% of it comes from oil and natural gas so people still need to drive their cars, they need to heat their homes, they need to turn on the switch and have reliable electricity 24/7,” she continued.

RELATED TWEET:

REPORT: Joe Biden’s Proposal to Raise National Minimum Wage to $15 Could ‘Kill 3.7 Million Jobs’ https://t.co/OLDjwlu6cj

— Sean Hannity (@seanhannity) January 30, 2021

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