The Krugmanian Platonic universe

Krugman’s Slice of Labor

by Theodore Dalrymple

One would hesitate, for the most obvious of reasons, to dispute astrophysics with a Nobel Prize-winning astrophysicist, but the case is quite otherwise with a Nobel prize-winning economist. This at the very least suggests a difference in the intellectual difficulty, rigor, or foundation of the two sciences. Common sense will not get you very far with black holes or antimatter, but in economics common sense is a necessary if not a sufficient quality in him who would think about it.

I therefore read with interest an article entitled “The Punishment Cure,” published on 9 December in the New York Times by the Nobel Prize-winning economist, Paul Krugman. It seemed to me entirely lacking in common sense, and to disregard considerations obvious to any intelligent person over the age of 15 or 16. In this I might, of course, be mistaken.

Let me begin by pointing out the author’s facile resort to abuse as if it were argument. In respect of a proposal to reduce the period during which the unemployed in America may claim unemployment benefits, Mr Krugman refers to the Republican’s ‘desire to punish the unemployed’ [my emphasis].

I have little doubt that there are some among Republicans who viscerally hate the poor and wish to visit suffering upon them in order to relieve their own feelings, just as there are some among the Democrats who see in the unemployed a permanent constituency for themselves. But in fact there is a legitimate debate to be had about how to reduce unemployment in a modern economy without at the same time introducing unsustainable costs or deformations into it. If it were easy, everyone would have done it by now.

Mr Krugman takes the Republicans to task for believing that if unemployment benefits were more limited, more of the unemployed would find work from the sheer necessity to do so. This, he says, is fallacy. He writes:

Ask yourself how, exactly, ending unemployment benefits would create more jobs. It’s true that some of the currently unemployed, finding themselves even more desperate than before, might snatch away jobs from those who already have them.

Now this passage seems to me to indicate that the model of an economy in the author’s mind is that of a static zero-sum game, in which one man’s job is another man’s unemployment and vice versa: the view of an economy that fueled the two disastrous totalitarianisms of the Twentieth Century, communism and Nazism. Furthermore (and very oddly for any economist, let alone one who won the Nobel Prize), Mr Krugman lives in a world without prices, for he says:

The point is that employment in today’s American economy is limited by demand, not supply. Demand and supply, then, live in some kind of Krugmanian Platonic universe, completely divorced from price.

It’s obvious that price is not the only determinant of demand. If I don’t like caviar, then halving of its price will not encourage me to go out and buy some. Whatever the price of alcohol, I shall never become an alcoholic. Reducing or stopping unemployment benefits will not affect neurosurgeons very much because most unemployed people are not neurosurgeons and can never be turned into such. Something more than mere availability for work is required of neurosurgeons.

If the price of labor, however, had nothing important to do with the number of jobs, how would Mr Krugman explain the outsourcing of jobs to countries such as China and India? It is not for reasons of climate that jobs once done in America or Europe have migrated to the other end of the earth. But in fact there are many conceivable jobs that the unemployed could perform in Europe and America if the price of their labor made it worthwhile for people to hire them to do those jobs. Forcing the wages of the unemployed down to that level might not be the right thing to do because there are many other things to be considered, but if unemployment is an evil independent of remuneration (which, within limits, it is), then reducing the incomes of the unemployed might not merely be what Mr Krugman calls ‘a perfect marriage of callousness… with bad economics.’

Read more at :

http://www.libertylawsite.org/2013/12/16/krugmans-slice-of-labor/

The Right to Our Own language

For $100K, You Would At Least Think That College Grads Could Write

By George Leef

Suppose you sent your daughter to a music camp—an expensive camp lasting months. She had said that she wanted to learn the violin, so you bought her a nice one and sent her off to camp.

Upon her return, you ask how the camp was and she replies, “Great! We studied lots of stuff about music and the violin.” Then you ask her to play something.

“Well, we didn’t play much and I still don’t know how to tune my instrument. But it was still a terrific experience!”

You would probably think that a music camp ought to concentrate on essentials first—tuning, scales, simple pieces—before moving on to music theory, music history, conducting technique, and so on.

For many American students, college is like that music camp. They take lots of courses and study lots of stuff (or at least seem to), but don’t even learn how to use the English language well. You might think that would be a top priority, but actually it’s not a priority at all.

A recent CNBC article, “Why Johnny can’t write, and why employers are mad” puts a spotlight on this remarkable omission. Companies are trying to fill many job openings but find that hard, even with lots of un- and under-employed college graduates looking for work. “Often,” writes author Kelley Holland, ”the mismatch results from applicants’ inadequate communication skills. In survey after survey, employers are complaining about job candidates’ inability to speak and write clearly.”

She quotes Brandeis University professor William Ellet, who says that the neglect of writing starts early in school and often continues straight through college: “Nobody takes responsibility for writing instruction.”

From personal experience, I can attest that he’s correct. Many students enter college with amazingly poor writing ability, owing to the fact that no one paid much attention to their writing while they were in their K-12 years. Once I had a student come to my office with her test in hand, a test on which she had scored very poorly on all three of the essay questions. “But I never had to write essay answers before,” she complained. Throughout her previous years of schooling, she had taken almost nothing but true-false and multiple-choice tests.

French Industrial Output Drops Unexpectedly, As Usual.

France Finance Minister in Complete Denial

By Mike "Mish" Shedlock

I am in a near-constant state of amusement regarding what economists and analysts expect vs. what happens. A perfect example came up today.

MarketWatch reports French Industrial Output Drops Unexpectedly. 

 French industrial output dropped unexpectedly in October for the second month in a row, data from national statistics bureau Insee showed Tuesday, providing a further indication of a weak start to the final quarter of 2013 in the euro zone.

Industrial production in the currency bloc's second largest economy fell 0.3% in October from September, when it also fell 0.3%, Insee said. Analysts polled by Dow Jones Newswires had expected a 0.2% rise in October.

The October decline confirms a steady shrinking of output in industry. Over the three months through October, industrial production was 0.6% below the previous three months, Insee said.

The disappointment comes after separate data showed Monday that German industrial production dropped 1.2% in October from the previous month.

Why Was This Unexpected?
This decline should have been completely expected. I can give you three reasons.

1.  On December 2, the Markit France Manufacturing PMI final data showed "France PMI sinks to five month low as output and new orders fall at sharper rates".

2.  On December 4, the Markit France Services PMI final data showed "French service sector slips back into contraction in November".

3.  On December 4, the Markit Eurozone Composite PMI final data showed "Eurozone growth slows further as France and Italy suffer renewed contractions".

If you are looking for a 4th bonus reason, please pencil in "Francois Hollande" and all the socialist ministers in his government.

‘You Must Be Sodomized’

You can't make this thing up

By Jonah Goldberg

Now, at first I thought this was a hoax. But it appears it isn’t. Apparently a fellow writing into a Jihadi chat show wants to do “martyrdom operations.” The sheikh he talked to says they’ve got a great new technique to blow up infidels. We hide explosives up your butt. There’s just one hitch. You’ve got to be repeatedly sodomized in order to be able to accommodate the explosive. So, the questioner wants to know if it is permissible for him to be regularly rogered, if doing so makes his posterior more amenable to hiding explosives. The fellow on camera, Shiite cleric Abdallah Al-Khilaf, says that even though sodomy is forbidden if it is necessary for jihad, well, then it is required. Because jihad is the highest obligation.

Now, what I find hilarious here is that it never occurs to anyone that there might be some kind of technological work-around short of repeated sodomy. You know, maybe there’s a device or a technique, something that is a little less unpleasant, inconvenient or forbidden than straight-up buggery? Nope. Gotta go with the sodomy. The Saturday Night Live skit writes itself.

Jihadi: What if we make the bomb smaller?Sheikh: What? That’s crazy. Sodomy is the only way.Jihadi: Couldn’t I use replica of a male, well, you know. In private like . . .Sheikh: Shh!  Let’s not even discuss it.Jihadi: What if I’m willing to tolerate a lot of discomfort when it comes time for the martyrdom operation? I mean, it’s my choice. I am blowing myself up after all. What’s a little discomfort?Sheikh: You’re not hearing me. This is the way it has to be. Don’t you want to murder infidels?

The Dark Side of Human Equality

Everyone should suffer just as much as me!

By Theodore dalrymple

It has long been my opinion that all notions of human equality, other than that of formal equality before the law, are destructive of human intelligence and sensibility. My opinion was confirmed recently when I read an editorial in the Lancet, one of the two most important general medical journals in the world.

The title of the editorial was “Equity in Child Survival.” I could have written the editorial myself from the title alone, so utterly predictable was its drift:

Although Indonesia has reduced child mortality by 40% during the past decade, data from 2007 show that children in rural areas were almost 60% more likely to die than those living in urban ones, while those in the poorest 20% were more than twice as likely to die as those in the richest 20%, and girls were 20% more likely to die than boys.

Note here that even if inequality were the same as inequity, there is nothing in these figures to show that inequity had increased in Indonesia during the decade, or to show that it had not actually decreased; and if equity in this sense were an important goal in itself, it would matter little whether the health of the poorest improved, or the health of the richest deteriorated.

In a country the size and complexity of Indonesia, with hundreds of inhabited islands, some of them very remote, it is hardly surprising that there should be quite wide geographical variations in health, wealth and productivity. It is no more inequitable that there should be these variations than that the French should have so much better health than the Americans, or for that matter than the Bangladeshis.

When the Prince Flunks Diplomacy 101

What one expects of folks who trumpet their intelligence, and then demonstrate stupidity

by Angelo M. Codevilla

By its handling of China’s claim of a defense zone in international waters, Obama & co. violated diplomacy’s timeless fundamentals. First they loudly declared that America continues to regard the zone as international waters, and sent nuclear-capable B-52 bombers into the area to underline the point. Then they told US airline companies that the US government would not try to protect them in these international waters and advised them to submit to Chinese authority therein. Finally, when the Japanese government asked for US support for its own claims in the area,Vice President Biden told the Japanese to deal with China as best they can – much as the Administration had told US citizens. People who act this way should not be allowed near positions of power. They could not pass a basic exam in the field.

Teaching basic courses in international affairs, I often presented students with the following exam question: Country A claims some exclusive rights over waters theretofore regarded as international. What would you advise the executive of country B to do?” The student could earn a passing grade by answering along any of the following classic lines.

1. Customarily, a government responds only to events of which it chooses to “take note.” Country B is not obliged to respond at all. It can leave country A unsure of what it will have to deal with, and place on it the burden of deciding of whether or not to “take note” of non-compliance with its claim. Alternatively, if country B does comply with A’s claim, it can do so without commitment and without giving the appearance of having bent to a claim that it considers onerous.

2. B may choose to inform A quietly that it will not respect the claim and of the measures it is prepared to take to enforce what it considers its own rights. It can also inform its allies and its own citizens of those preparations. Quiet demurral saves A from having to react to a confrontation while leaving no doubt of the gravity of the confrontation, should it choose to enforce its claim. Perhaps A will decide quietly that the game is not worth the candle.

Two Choices to Deal With "Collective Theft"

The "Detroit Solution"

By Mike "Mish" Shedlock

Public union sap is once again oozing from the mouths of economic illiterates and union supporters who just don't understand reality.

Today's sap is brought to you courtesy of the Bloomberg article Pension Threats in Illinois, Detroit Rattle Government Workers. Here are a few sappy comments.

Bev Johns, a retired 67-year-old retired special-education teacher, sat before Illinois lawmakers and asked why they hated teachers. “You are punishing people who devoted their lives to educating children,” Johns told a committee in Springfield on Dec. 3. “You are harming individuals who have educated children, worked long hours, paid for materials out of their pocket and often fed and clothed children.” 

Randi Weingarten, the president of the American Federation of Teachers, which represents 1.5 million workers, told reporters in Washington yesterday. “The unraveling of that social contract is an unraveling of democracy.” 

Charles Craver, a labor law professor at George Washington University in Washington in a telephone interview, whines “I can’t remember any period when I think workers are so threatened.” 

William Jones, a labor historian at the University of Wisconsin-Madison offers the sappiest sap of them all. "How will municipalities recruit teachers, firefighters and trash collectors if the pensions aren’t secure?"

Spare me the Sap
I am sick of watching taxes go up year in and year out so that overpaid, underworked, public union workers can get taxpayer sponsored pensions and pay well beyond what private industry gets.

That sounds harsh. And it is. But it's also reality.

Reality

1.      Cities are broke

2.    Taxpayers are broke

3.    Public union workers don't care to understand the above two points

As I said before, I sympathize. I do. And I also offered a simple solution.
Before unions drive cities into bankruptcy and states into default on pension obligations, The unions ought to get together with city and state officials and work out a plan. And the plan I have in mind would protect the benefits of the majority of union workers.

No, America Doesn’t Have Too Many Banks

But it does have far too many pundits who have absolutely no clue what they're talking about

By Sean Davis

“America has 6,891 banks,” Slate blogger and certified financial non-expert Matthew Yglesias writes in his Moneybox column. “And that’s too many.”

Why is that? According to Yglesias, it’s because small banks are poorly managed, unregulated, and can’t compete. It’s an interesting argument, to the extent that 2+2=7 is an interesting argument, but Yglesias fails to support a single assertion with a verifiable fact or source citation. Not one. Of the seven assertions made in the first two paragraphs (spanning a whole five sentences), not one has a supporting citation.

It’s no wonder, as the very first assertion made by Yglesias — that there have been no new bank charters in the U.S. in “quite a few years” — isn’t even true, as a simple FDIC search reveals that 

four new banks have been chartered so far in 2013. But don’t let that dissuade you from the notion that Yglesias is an expert on financial regulation.

The complete lack of citations almost leads one to wonder whether the school Yglesias attended as a child banned “Show and Tell” in favor of “Tell, Don’t Show.” Oh, you got a pony for Christmas but don’t have any pictures? You’d totally introduce us to your supermodel girlfriend if she weren’t on a photo shoot in Fiji? Cool. His simple citation of the number of banks in the U.S. isn’t even backed up with a link to a source document (e.g., his figure includes the 5,937 commercial institutions and 954 savings institutions in the U.S., but excludes the 6,620 credit unions throughout the country).

But let’s look at each of his arguments about the utter uselessness and moral depravity of small community banks to see how they measure up.

First, Yglesias argues that small banks are poorly managed. How does he prove this? He starts by suggesting that the best and brightest go to Wall Street, while the “less-bright” and “not-as-good guys” end up working for small banks in cities that aren’t Manhattan. Then he assumes that they must suck at their jobs. Or as the underpants gnomes from South Park might put it: “Phase 1: Assume that only stupid people work for small banks. Phase 3: Assume bank failures.”

Now, a better writer whose abilities qualified him to work for a major publication like the Wall Street Journal (remember, the smartest people all go to work for Wall Street firms) might have gone with the alliterative and far less awkward “dumbest and dimmest” to contrast with the clichéd  ”best and brightest.” Yglesias is not that writer. And we’ll ignore for the moment what Yglesias’ little dig about where the truly smart people end up says about his career as a blogger for Slate, or as Jeff Bezos likes to call it, “The Center For Kids Who Can’t Write Good And Who Wanna Be Less Not-As-Good At Other Stuff Too.”

Pettiness aside, does his argument have any merit?

Not even close. Compared to big banks (defined as those with more than a billion dollars in assets), small commercial banks (those with under $100 million in assets) have a higher ratio of equity-to-assets, a lower ratio of volatile liabilities-to-assets, a lower percentage of non-current loans and leases, and next to zero derivatives. As of September 30, 2013, derivatives totaled a mere 0.15 percent of the cumulative assets of small banks. But for the biggest banks, derivatives were nearly 2,000 times higher than their cumulative asset base (1,960.53 percent of assets, to be precise). In the words of Vice President Joe Biden, the difference between those derivative numbers is a big f—ing deal.

The Pope's Rhetoric

Ignorance is not always an excuse 

I see that the pope has decided to weigh in on economic issues:

“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.”

A few reactions:

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down. 

Rescuing the Bottom Billion From the Pope’s Peronist Economics

It is very easy when appalled by one’s fellow human beings to want impose virtue (or taste) upon them, but this is a temptation that should be resisted

by Theodore Dalrymple

It is not difficult both to dislike and to criticize consumerism. It is often as vacuous as it is unattractive. Last week, for example, my wife took me to something called an ‘outlet village,’ an expanse of shops built in faux Eighteenth Century style that sold designer products at allegedly low prices (though, wanting nothing in particular, they seemed high enough to me). There was actually a queue to obtain entry into Prada whose products are hardly those of first or primary necessity. However deep our economic crisis, this was no queue for rations in wartime; and though I am far from an egalitarian I felt uneasy that there were so many people wanting and even eager to pay hundreds or perhaps thousands for what seemed to me to be aesthetically cheap and vulgar gewgaws while so many people await their heating bill with extreme anxiety and trepidation.

If I am honest, however, what really appalled me about the ‘outlet village,’ which, incidentally, proclaimed itself a ‘community,’ was the appalling taste of the moneyed masses. Though they shopped all day for clothes – you couldn’t buy so much as a newspaper, let alone a book, in the ‘community’ – I didn’t see a single smartly dressed person among them, let alone an elegantly dressed one. On the contrary, they were to a man and woman attired in expensive slum- casual garments whose brands alone distinguished them from what the poor would wear. As consumers, then, they weren’t even very good at what they did, namely consume. They wore brand names as if they were medals awarded in the war to distinguish themselves as individuals from others in some way. If the justification for disparities in wealth is that the wealthy beautify the world, these people failed utterly to justify their prosperity. Purchasing power without power of discrimination is (at any rate for me) dispiriting to behold; but I am under no illusion that if income and assets were more equally distributed in society things would be any better from the aesthetic point of view, irrespective of the economic or social effects of redistribution.

Appalled or even disgusted as I was by what I thought was this vast outdoor exhibition of mass vacuity and spiritual emptiness, to say nothing of absence of taste, I kept enough control of my gut reaction not to suppose that it would be a very good guide to or motive for economic or social policy. It is very easy when appalled by one’s fellow human beings to want impose virtue (or taste) upon them, but this is a temptation that should be resisted. Deeper reflection is necessary; intemperance and impatience usually end in something worse than they were designed to amend.

(Un)Paving Our Way To The Future

Cutting Our Losses and Moving On

by James H. Kunstler

You can’t overstate the baleful effects for Americans of living in the tortured landscapes and townscapes we created for ourselves in the past century. This fiasco of cartoon suburbia, overgrown metroplexes, trashed small cities and abandoned small towns, and the gruesome connective tissue of roadways, commercial smarm, and free parking is the toxic medium of everyday life in this country. Its corrosive omnipresence induces a general failure of conscious awareness that it works implacably at every moment to diminish our lives. It is both the expression of our collapsed values and a self-reinforcing malady collapsing our values further. The worse it gets, the worse we become.

The citizens who do recognize their own discomfort in this geography of nowhere generally articulate it as a response to “ugliness.” This is only part of the story. The effects actually run much deeper. The aggressive and immersive ugliness of the built landscape is entropy made visible. It is composed of elements that move us in the direction of death, and the apprehension of this dynamic is what really makes people uncomfortable. It spreads a vacuum of lost meaning and purpose wherever it reaches. It is worse than nothing, worse than if it had never existed. As such, it qualifies under St. Augustine’s conception of “evil” in the sense that it represents antagonism to the forces of life.

We find ourselves now in a strange slough of history. Circumstances gathering in the home economics of mankind ought to inform us that we can’t keep living this way and need to make plans for living differently. But our sunk costs in this infrastructure for daily life with no future prevent us from making better choices. At least for the moment. In large part this is because the “development” of all this ghastly crap — the vinyl-and-strandboard housing subdivisions, the highway strips, malls, and “lifestyle centers,” the “Darth Vader” office parks, the infinity of asphalt pavements — became, for a while, our replacement for an economy of ecological sanity. The housing bubble was all about building more stuff with no future, and that is why the attempt to re-start it is evil.

Sooner rather than later we’ll have to make better choices. We’ll have to redesign the human habitat in America because our current environs will become uninhabitable. The means and modes for doing this are already understood. They do not require heroic “innovation” or great leaps of “new technology.” Mostly they require a decent respect for easily referenced history and a readjustment of our values in the general direction of promoting life over death. This means for accomplishing this will be the subject of Part II of this essay, but it is necessary to review a pathology report of the damage done.

Launching Nirvana

I have a new theory of history: things happen in human affairs because they seem like a good idea at the time. This helps explain events that otherwise defy understanding, for example the causes of the First World War. England, France, Russia, Germany, and Italy joined that war because it seemed like a good idea at the time, namely August of 1914. There hadn’t been a real good dust-up on the continent since Waterloo in 1814. Old grievances were stewing. Empires were both rising and falling, contracting and reaching out. The “players” seemed to go into the war thinking it would be a short,  redemptive, and rather glorious adventure, complete with cavalry charges and evenings in ballrooms. The “deciders” failed to take into account the effects of newly mechanized warfare. The result was the staggering industrial slaughter of the trenches. Poison gas attacks did not inspire picturesque heroism. And what started the whole thing? Ostensibly the assassination of an unpopular Hapsburg prince in Serbia. Was Franz Ferdinand an important figure? Not really. Was Austria a threat to France and England? It was in steep decline, a sclerotic empire held together with whipped cream and waltz music. Did Russia really care about little Serbia? Was Germany insane to attack on two fronts? Starting the fight seemed like a good idea at the time — and then, of course, the unintended consequences bit back like a mad dog from hell.

Is Germany Really a ‘Weight on the World’?

Martin Wolf Complains About Germany

By Pater Tenebrarum

Few writers produce erudite-sounding nonsense with such unwavering regularity as Martin Wolf, an establishment-approved scribbler for the Financial Times. When he is not screeching for more money printing, he is belly-aching about 'trade imbalances', which allegedly condemn the world to economic hell. The latest example is his article 'Germany is a Weight on the World'.

This was written after the misguided Mercantilists apparently still populating the US treasury department (after decades of US trade deficits that have somehow completely failed to matter all this time) decided to complain about Germany's allegedly unconscionable trade surplus.

So here we are, more than a century after the fallacies of Mercantilism have been disproved by a plethora of economists, and people still allege that there is something evil in trade that requires even more government intervention than there already is.

Wolf writes: 

“The criticisms that hurt are those one suspects might be fair. This might explain the outrage from Berlin last week over the criticism by the US Treasury of Germany’s huge and vaunted trade surplus. But the Treasury is to be commended for stating what Germany’s partners dare not: “Germany has maintained a large current account surplus throughout the euro area financial crisis.” This “hampered rebalancing” for other eurozone countries and created “a deflationary bias for the euro area, as well as for the world economy”. The International Monetary Fund has expressed similar worries.” 

(emphasis added)

It took him just one paragraph to mention the tiresome deflation bogey again, but allow us to point out that all these 'worries' about 'Germany's surplus' implicitly and quite wrongly assume that countries are somehow equivalent to acting human beings. This is not the case.

If, say, an American spends $50,000 to buy a car from BMW, then what this trade tells tells us that an individual residing in the US valued a German-built BMW more than $50,000, while the managers of the company BMW valued the $50,000 more than the car they offered in exchange. Both parties to the exchange have gained, otherwise no trade would have taken place. Win-win!

But no, says Martin Wolf, wagging his finger, accompanied by a chorus of bureaucrats from the US treasury to the IMF, something evil has occurred! See, due to this misguided American individual buying a car that the misguided Germans have built so well that he prefers it not only over his $50,000 but also to cars built by others elsewhere, the US now has a $50,000 deficit with Germany! This is terrible! Someone must do something!

I Have Seen the Future, and it Is Idiocy

One cannot not exaggerate the degree to which official idiocy impinges on our lives

by Theodore Dalrymple

Yesterday morning, as I was sitting in the flat on Paris that I have rented for a time quietly finishing my latest book, Murderers I Have Known (and I have known quite a few), a furious row broke out in the street six floors below. I went out onto the terrace—the flat is on the building’s top floor—to see what was going on. There were several other equally curious people standing on their balconies on both sides of the street.

A little knot of young black men, with two or three girls among them, was having a furious row. It was obvious that they were in earnest, though goodness knows about what, as I could not make out any words. I was like a dog; I went by the tone of their voices. 

One of the young men struck another and he fell, his face covered in blood. The man who had struck him kicked him with full force and got down on him to punch him as hard as he could. He got in several very hard blows before some others hauled him off. If he had not been hauled off, I think he would have beaten him to death. I was very glad that neither of the two, the beater and the beaten, had a gun, for I am sure that in their heightened state of emotion, whatever it was about, one of them would have used a gun to kill. Of course, there will be those who say that if each of them had thought the other had a gun, they would not have fought in the first place.

It was strange to see cars crawl by this scene, the drivers obviously seeing what was going on but doing nothing about it. Some passersby passed by and others tried to intervene. More than one called the police. 

Oddly enough, once the man had been hauled off his prostrate associate (former friend? longtime enemy?), the group reformed and went up the street, still arguing furiously. A couple of shopkeepers came out to tell them to calm down, as the frightening fury was presumably bad for trade. 

This all continued for several minutes. The police never came. They probably had other things to do.

From Bismark to Schaeuble

The endgame of socialism and central planning is always the same

By Wolfgang Schaeuble’s own admission , Europe has an intractable problem.

“We need to be more successful in our fight against youth unemployment, otherwise we will lose the battle for Europe’s unity,” Schaeuble said.

If U.S. welfare standards were introduced in Europe, “we would have revolution, not tomorrow, but on the very same day,” Schaeuble told a conference in Paris.

Uh, Mr. Schaeuble? Welfare causes unemployment. Its voracious apetite for capital defunds productive enterprise. Its perverse incentive encourages sloth and discourages work. Skyrocketing budget deficits crowd out private borrowers, and force central banks to lower the rate of interest to keep the budget deficit from exploding.

And now you have reached the endgame. You cannot provide employment to the youth. And you will soon fail to be able to provide welfare. The endgame of socialism and central planning is always the same. 

Hollande Finds Solution to Spying

Tax All Data Leaving the EU!

The forever befuddled looking French president Hollande, the most unpopular French president on record, has just found yet another thing he can tax.

by Pater Tenebrarum

Here comes another one from the 'you couldn't make this up' department, courtesy of the “welfare state incarnate” (h/t Gaspard Koenig), France's president Francois Hollande (Martin Armstrong pointed us to this bit of news in a recent post of his). The German business news magazine 'Wirtschaftswoche' has a story entitled “France's Answer to the NSA: Taxes on Emails Sent Abroad”.

No need to check your calendar. It is actually not April Fool's Day. As the article informs us: 

“France has the solution to intensive surveillance by US secret services: President Hollande plans to introduce a tax on data that are transferred abroad. Paris apparently regards this as the most effective method to end the spying.”

France wants to push through a tax on data transfers from the EU. Moreover, the EU is supposed to alter tax regulations for internet companies until spring 2014. These have to be taxed more heavily in the EU, France demands. The tax revenues are supposed to be distributed among EU member states.

The French minister of innovation Mrs. Fleur Pellerin has submitted the respective proposals to her ministerial colleagues in the EU according to a report by Tax News.”

The tax proposed by France is supposed to be gathered every time data are transferred via the internet from the EU to other parts of the world. It won't matter if data are transferred within the same company or to another company outside of the EU. The documents don't say how high this tax is supposed to be.

Due to current complicated tax rules, companies like Google or Amazon barely pay any taxes in most EU countries, in spite of making profits in the hundreds of millions there. Google pay its taxes in Ireland, where corporate taxes are relatively low.

NSA, CIA and FBI so far pay no taxes at all. Paris hopes that this measure will sap the notoriously tightfisted Americans' enthusiasm for spying.” 

The 'minister of innovation'? Admittedly, this is certainly an innovation in terms of finding new ways to milk the tax cows. However, one wonders how exactly is a tax on EU data transfers going to “sap the NSA's enthusiasm for spying”? Does Mr. Hollande think the NSA is going to apply for a tax number in Brussels?

Proposing this nonsense to the socialist brigade in Brussels is of course a good tactical move on Hollande's part – he hopes the greed of the other statists will allow him to introduce new taxes without running what's left of France's competitiveness completely into the ground, at least not compared to other  EU member countries. No doubt their mouths are already watering at the prospect of turning the tax screws by another notch. We have discussed the topic of tax loopholes previously, pointing out how important they actually are in 'allowing capitalism to breathe' as Ludwig von Mises put it. For readers not familiar with that particular post or the reasoning presented in it, here is the link: “The EU and Loopholes”.

Anyway, it sounds almost as though Mr. Hollande has now gone quite officially insane. The effort to keep control over data leaving the EU and then determining who exactly will have to be taxed for them is going to cost more than such a tax can ever raise, unless it is set at an astronomical level. This sounds a bit like the ugly sister of the financial transactions tax (and we didn't think it was even possible for that one to actually have an ugly sister).

The report at Wirtschaftswoche concludes by noting: 

“With the internet tax, France apparently wants to extend its policy of massive taxes on everyone and everything to the entire EU. This model has already failed in France itself though.” 

However, as we point out in our next article, Mr. Hollande's outrage over NSA spying is nothing but political theater anyway. It is part of an emerging pattern of governments trying to extend their control over the internet. The idea of taxing data transfers fits right in. 

Your Tax Money At Work

Lines Of Code In Healthcare.Gov

SOURCES

1.      Google Chrome - https://www.ohloh.net/p/chrome

2.    Linux Kernel - https://www.ohloh.net/p/linux

3.    Windows XP - https://www.facebook.com/windows/posts/155741344475532

4.    Facebook.com (likely larger, does not include several backend components) - http://www.quora.com/Facebook-Engineering/How-many-lines-of-code-is-Facebook

5.     OSX 10.4 - http://www.engadget.com/2006/08/07/live-from-wwdc-2006-steve-jobs-keynote/

6.    Debian 5/packages - http://debian-counting.libresoft.es/lenny/index.php?menu=Statistics

7.     Healthcare.gov - http://www.nytimes.com/2013/10/21/us/insurance-site-seen-needing-weeks-to-fix.html?pagewanted=2&_r=0