The Clash of Economic Ideas

Τhe expansion of government’s role in the economy certainly did not begin with Keynes

By Lawrence H. White

At England’s stately University of Cambridge in fall 1905, a clever postgraduate mathematics student named John Maynard Keynes began his first and only course in economics. He would spend eight weeks studying under the renowned Professor Alfred Marshall. During the summer Keynes had read the then-current (third) edition of Marshall’s Principles of Economics, a synthesis of classical and new doctrines that was the leading economics textbook in the English-speaking world. Marshall was soon impressed with Keynes’s talent in economics. So was Keynes himself. “I think I am rather good at it,” he confided to an intimate friend, adding, “It is so easy and fascinating to master the principle of these things.” A week later he wrote: “Marshall is continually pestering me to turn professional Economist.”

Confusing society with the State, and altruism with collectivism

Socialism’s Prescient Critics

By Philip Vander Elst

There is a good case to be made that the birth and spread of totalitarian socialism defines the twentieth century more than anything else. That is not what most schoolchildren are taught or what most people in the West believe, but it is a justifiable conclusion. Not only was totalitarian socialism directly responsible for provoking the bloodiest war in history; it has also been the biggest single cause of internal repression and mass murder in modern times.

According to The Black Book of Communism (1999), at least 94 million people were slaughtered by communist regimes during the twentieth century. This is a truly colossal figure, yet that’s the lowest estimate. Professor R. J. Rummel, in his landmark study, Death by Government (1996), puts the death toll from communism at over 105 million—and his detailed calculations do not include the human cost of communism in most of Eastern Europe or in Third World countries like Cuba and Mozambique. Even so, his figure is double the total number of casualties (military and civilian) killed on all sides during World War II.

The Enarque-in-Chief Strikes Again

Hollande Government Raises Taxes

By Pater Tenebrarum

France's public debt amounts to over € 1.8 trillion, or about € 63,000 per household. At 89% of GDP and growing, it is a far cry from the Maastricht treaty limits.

In order to pay for the trick to artificially lower the country's embarrassingly high institutional unemployment (unemployment is at 10.1% and growing, and that's according to official statistics) by letting the government hire people no-one needs, Hollande has put in place one his other election promises – or rather, election threats. On Wednesday last week, he raised taxes, aiming to bring an additional € 7.2 billion into the government's coffers.

As Reuters reports:

Hiding behind government handouts

Not so melancholic about destroying the planet

By Philip Cross

It was widely noted that the films screened at the recent Cannes film festival were a tad pessimistic about the future of mankind. Over half of the 22 official films dealt with some form of systemic collapse, mixed with a heavy dose of vengeance, clearly the psychological hangover from the 2008 financial crash. Since artists supposedly are well attuned to emerging trends in society, this bodes ill for the world’s ability to cope with its lingering economic turmoil. Of course, most artists don’t know diddly about economics, as reflected in the exalted status they extend to the proverbial “starving artist.” Try selling the ideal of a “starving economist” to my chosen profession.

Much of this artistic pessimism derives from the film Melancholia by Danish filmmaker Lars von Trier, a legend in the industry despite (or because of) never being a commercial success in North America. He laid out the apocalyptic anti-business vision that other filmmakers are now following.

Healthcare and Obamacare Explained

The Illusion of government omnipotence  

Fractional Reserves, Legal Tender, and Central Banking

Keeping our eyes on the ball

By Steven Horwitz

If you ever want to see a furious discussion break out among libertarians influenced by Austrian economics, just start talking about money and banking. Despite their agreement on so many things, they often have a variety of views on the ideal banking system and how to best understand terms like “inflation” and “deflation.” The debate over the morality and efficacy of fractional reserve banking is one of the most divisive issues. I have addressed that topic in an earlier column, but here I want to tie it into some broader issues that enter into this debate.

This discussion is prompted by Larry White’s testimony on the history and practice of fractional reserve banking before Rep. Ron Paul’s subcommittee on monetary policy in late June. White’s testimony is a concise yet thorough discussion of why fractional reserve banking came to be and why it is not at the root of monetary problems. As he points out, “[A] fractional-reserve banking system is not unstable when the banking system is free of hobbling legal restrictions and free of privileges.” U.S. history illustrates this point.

Third World America

Class War Gets Violent In Chicago

By Janet Tavakoli

On the Fourth of July, comedian Chris Rock tweeted: "Happy white peoples independence day the slaves weren't free but I'm sure they enjoyed fireworks." Chris Rock disowns the holiday with tongue-in-cheek.

Well right back at you Mr. Rock. My continental European ancestors weren't in the USA when colonists won their independence from England. My grandparents didn't even speak English when they arrived in the U.S., but according to this tweet, their whiteness took ownership of Independence Day from African Americans. Is there nothing those poor European immigrants didn't ruin for real Americans?

No Laughing Matter

But in Chicago, there are more reasons for tears than laughter. Unemployment is high in many poor African American communities, and crime rates are horrific. One can barely call them communities. For too many, parenting skills are woefully inadequate. Innocent young children out in late night and early morning hours with a parent nearby have been shot. The leading cause of death of young black men is lead poisoning. Jobs are scarce. Decent people are afraid of gangs in their so-called communities. While most of the negative results have fallen on the black community, as I've stated in earlier years, it's not a race war, it's a class war.

How Government Distorts Labor Markets

Malinvestment in Human Capital

By Robert P. Murphy

In a recent post at the ThinkMarkets blog, Freeman author Gerald P. O’Driscoll cited Union Pacific Railroad’s labor woes as an example of the mismatch between the skills workers possess and the skills potential employers are seeking. O’Driscoll argues that there has been an unsustainable boom in “human capital” characterized by massive malinvestments, just as Austrian economists typically claim for physical capital goods. This perspective is a useful antidote to the Keynesian analysis of our current slump and leads to radically different policy recommendations.

O’Driscoll based his post on a Wall Street Journal report that referred to “survey results showing that 83 percent of manufacturers reported a moderate or severe shortage of skilled production workers. . . . Wages for skilled labor are rising, in some cases at double-digit rates.”

The Short List

Elia Kazan Reconsidered

By Bruce Edward Walker

The short list of best American film directors will forever include Elia Kazan, whose cinematic efforts include many good films, several great ones, and a couple of immense quality that have fallen through the cracks due to poor timing, comparison to his other landmark accomplishments, or perhaps critical negligence. Identified by none other than Stanley Kubrick as “without question, the best director we have in America,” Kazan rebounded from the public relations disaster of testifying as a friendly witness before the House Committee on Un-American Activities in 1952, where he gave up the names of eight former associates with whom he shared Communist Party affiliations nearly 20 years earlier. Whatever his regrets and explanations, they were never sufficient to assuage the left’s anger, and many used his testimony as a cause célèbre, choosing to sit on their hands rather than applaud when Martin Scorsese and Robert De Niro presented him with a Lifetime Achievement Academy Award in 1998.

By 1952 Kazan’s film resume already boasted early noirs (Boomerang!, 1947;Panic in the Streets, 1950); his auspicious Hollywood debut, A Tree Grows in Brooklyn (1945); an Irish-American bildungsroman; Pinky (1949), a film about racial relations; and an Academy Award for Best Director for 1947’sGentleman’s Agreement, which dealt with the prevalence of anti-Semitism. Another film, Sea of Grass (1947), was his only misfire of the period—featuring Katherine Hepburn and Spencer Tracy in what is certainly their only unwatchable onscreen collaboration.

Europe's new fascists

Europe on the verge of a nervous breakdown

All across the continent, economies are in a tailspin as the numbers of young, jobless men swell. Are we on the brink of repeating the catastrophe of the 1930s?

By RICHARD J EVANS

A spectre is haunting Europe: the spectre of unemployment. At the latest count, there were almost 25 million people in the member states of the European Union without a job, an increase of two million on the same point in the previous year. This is well over 10 per cent of the workforce, and in some countries the situation is much worse. At the top of the list is Spain, with 25 per cent unemployed, followed by Greece, with nearly 23 per cent. Particularly hard-hit are the young. In Greece and Spain more than half the workforce below the age of 25 is without a job. The youth unemployment rate across the EU is running at 22 per cent. And there are no signs of the upward trend being reversed.

Politics and the Symptoms of a Sick Culture

Culture is more important than politics

By Jonah Goldberg

The late Senator Daniel Patrick Moynihan famously remarked, “The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.”

I’ve always liked that quote, but I think it misleads. That two plus two equals four is not a conservative truth or a liberal truth. It’s simply the truth. (Moynihan himself recognized this when he even more famously said that people are entitled to their own opinions but not their own facts.)

Regardless, it’s true that culture is more important than politics. You could impose Sweden’s laws on the Middle East tomorrow, but you’d be well-advised not to hold your breath waiting for the Saudis to turn into the Swedes of the Arabian Peninsula.

But it’s also true that politics — specifically, government — can change cultures. It can be loud and bloody work, as with the abolition of slavery. Or the change can be more subtle. Twenty years ago, it was simply uncool to put on your seat belt. Now, everyone seems to do it reflexively. The law changed the culture, for the better.

The Man Who Rescued the German Economy

"Reform yourselves, and ye will grow out of your debt."

The last Social Democrat chancellor talks about how he cut   taxes and reformed labor markets—and how it cost him his job.

 By RAYMOND ZHONG

'Reform yourselves, and ye will grow out of your debt." So goes Germany's unwritten mantra for the European crisis. Chancellor Angela Merkel is urging Greece, Spain, Italy and the rest to shape up their economies and pay down their obligations—and withholding German money until they do.

The Berlin road to economic righteousness is no mere sermonizing. Germany itself has gone down it and grown stronger. Gerhard Schröder, a Social Democrat, was German chancellor from 1998 to 2005, and during his second term his government lowered taxes, revamped unemployment benefits and streamlined labor laws. Mr. Schröder's shakedown of the welfare state—dubbed Agenda 2010 when it was launched in 2003—has been credited with insulating Germany against the debt mess that would later befall Southern Europe.

The Euro Crash Refuses To Go On Vacation

Disaster under the mantel of solidarity

By Wolf Richter   

Finnish Finance Minister Jutta Urpilainen set the scene for the long European summer break when she declared that Finland was a dedicated member of the Eurozone, eager to solve the crisis, but “not at any price”; it wouldn’t agree to take on “collective responsibility for debts and risks of other countries” via a banking union. And if push came to shove: 

“We are prepared for all scenarios, including abandoning the Euro.”

A spokesperson had to do some furious backpedalling: Finland wasn’t planning to abandon the euro; such assertions were “simply wrong,” her words had been misinterpreted. Nevertheless, this was the first time ever that a government official of a triple-A rated Eurozone country publically admitted that they were making contingency plans for ditching the euro—and worse, that there was a desire to do so under certain conditions.

The road to hell, I mean the road to the euro, was paved with good intentions—and signposted with lots of warnings that at the time were ignored, downplayed, or ridiculed. But one by one, they turned out to be correct. The warnings continue, along with efforts to sweep them under the rug which is more difficult now as the dimensions of the debacle have become apparent for all to see.

Structural Pliancy

Back to the basics

Don't be fooled—it's flexible at the top

By Gonzalo Lira

A lot of people—and I am one of them—claim that personal and business freedoms are being eroded as never before. They show as evidence the roll-back of civil liberties, the over-regulation of business, the insistence on “compliance” by the various security agencies of every little rule, no matter how trivial—in short, the over-regulation of American life. 

They are right: The U.S. government is guilty of over-regulating individuals and businesses—egregiously so. 

On the other hand, a lot of other people—and I am one of them too—claim that certain persons and corporations act lawlessly as never before. They show as evidence the abuses of power of those in leadership—be it business, government, the military, or the intelligence/security aparatus—and they insist that something has to be done about it, some regulations have to be imposed. 

Progressives Vs Humans 1-0

What price clean air?

By George F. Will

The federal government is a bull that has found yet another china shop, this time in Arizona. It seems determined to inflict, for angelic motives and progressive goals, economic damage on this state. And economic and social damage on Native Americans, who over the years have experienced quite enough of that at Washington’s hands.

The gain from this pain? The most frequently cited study says “research to date . . . is inconclusive as to whether” there would be “any perceptible improvement in visibility at the Grand Canyon and other areas of concern.” The Environmental Protection Agency says that the Navajo Generating Station (NGS) is “near” 11 national parks, several of which are 175 miles distant.

The NGS on Navajo land in northern Arizona burns coal from the Kayenta Mine, which is co-owned by the Navajo and Hopi nations. The EPA is pondering whether all three units of the NGS should be required to install the “best available” emission-control technologies, perhaps costing more than $1.1 billion. More than 80 percent of the power plant’s employees are Navajo, many of whom speak Navajo to help preserve the nation’s culture. In 2007, the percentage of the Navajo Nation’s population living in poverty was 36.8.

But the Navajos, the plant and the mine that powers it may be sacrificed to this dubious environmental crusade. The new technology would reduce nitrate aerosols. They, however, are responsible for just 4 percent of what is called “light extinction” over the Grand Canyon.

Cold Turkey

Krugman Redistribution or Ponzi Scheme

by Chidem Kurdas

A nice thing about Paul Krugman, he does not mince his words. Thus his new book, End This Depression Now!, repeats as boldly as possible the central point he’s repeatedly made in hisNew York Times columns and blogs for years. Namely, governments have to spend a lot more. They have to run gigantic deficits, much more than they’re doing now. His penchant for going straight for the jugular means that the full implications of the scheme he advocates are crystal clear.

What he’s pushing is in fact an arbitrary redistribution of income and wealth. The plan is not just to suck in people’s savings but to cause the debt to disappear, as many have suspected all along. This is a scheme that would make any con man green with envy. It is as if Bernard Madoff were able to go puff! and make his customers’ claims evaporate into air, with no adverse consequence for him.

Krugman is witty, attacking “austerian” arguments for government austerity. Mario Rizzo and others have presented the “Austrian” or Hayekian reply to  the Keynesian deficit spending case made by Krugman and Brad DeLong, for instance.

Pon Zi

Meet China's new leader

By Raul Ilargi Meijer

Well, attention for the reality behind China's growth picture is finally heating up, and I would say that's definitely a good thing. It will allow everyone to take a second look and wonder what is real and what is not. It will also allow countries like Australia and New Zealand to rethink their all-out economic dependency on China. Not to mention Mongolia; Michelle Yun had this for Bloomberg:

Mongolia Mining Bets China Will Double Coal Imports

Mongolia Mining Corp. is betting there’s enough demand from China to support the construction of an $800 million railway that will double export capacity to the nation that counts Mongolia as its biggest coal supplier.

Expanding transportation links between the adjacent countries "will improve the position of Mongolia as the leading coking coal supplier to China," Battsengel Gotov, chief executive officer of MMC, as the company is known, told reporters in the Mongolian capital of Ulan Bator.

The Dark Side of Envy

Game Theory and Oskar Morgenstern

By DR. RICHARD M. EBELING 

Economist Oskar Morgenstern is best known as the co-developer, with mathematician John von Neumann, of game theory. Game theory emerged out of curiosities about the logic and strategies of games such as chess, where each player must take into consideration the plans and possible moves of an opponent if he is to have any success in winning the game. It culminated in the 1944 publication of Morgenstern and von Neumann’s book, The Theory of Games and Economic Behavior.

It has been applied to the planning of military strategy, as well as for attempting to design or anticipate competitive moves by rivals in the marketplace. Its most famous construction is what is called “the prisoner’s dilemma,” in which two suspected criminals are offered, separately, a lower sentence if one of them confesses and “rats out” the other first. Neither could be convicted if both of them kept their mouth shut, but since neither one can be sure that the other won’t take the deal, they both end up confessing.

It has also been used to explain the logic of cooperative behavior in the marketplace of exchange. In his 1984 book, The Evolution of Cooperation, for example, Robert Axelrod, explained that when people participate in or anticipate multiple trading opportunities with others, there emerge incentives to neither cheat nor deceive. Game theory experiments showed that most people implicitly operate in terms of a psychology of “tit-for tat.” That is, each trader will be honest and reliable in his dealings as long as his trading partner acts the same way. If “Sam” cheats or is in any way dishonest, then “Bob” will “retaliate” in kind. But if “Sam” learns his lesson and starts acting honestly again, then “Bob” will reciprocate, and mutually beneficial and honest trade will be restored.

Discovering risk, value and return on investment

Stockton, Calif. and All the Cities to Follow

Government promises to public employees have created "zero-risk" Wonderlands protected from the market forces of risk and consequence. These islands of privilege are snapping back to join the real economy.

by Charles Hugh Smith

Every government entity that reckoned it was moated from the market economy will be snapped back to "discover" risk and consequence. Let's lay out the dynamic:

1. Every government can only spend what its economy generates in surplus. 

2. Every government transfers risk and consequence from itself, its employees and its favored vested interests to the citizenry and taxpayers. 

3. Every government collects and distributes the surplus of its private sector to its employees, favored constituencies and vested interests. 

4. Since the government (State) promises guaranteed salaries, benefits and entitlements to its employees and favored constituencies, these individuals believe they are living in a risk-free Wonderland that is completely protected from the market economy. 

5. Risk cannot be repealed or eliminated, it can only be masked or transferred to others. 

6. The Federal government and the Federal Reserve have pursued a policy of inflating serial speculative credit-based bubbles. 

7. These bubbles inflated assets, profits and taxes, creating the illusion that blow-off speculative tops were "the new normal." 

A Shattered Society

Liberalism, Right and Left, has made lonely serfs of us all 

By PHILLIP BLOND

We live in a society of decreasing circles. More and more of us know fewer and fewer of us. We live alone and eat by ourselves, often with a TV or computer rather than a human being for company. If we do marry, the time an average relationship lasts decreases with each passing year.

In the Anglo-Saxon world, we abandon our old and increasingly care badly for our young. Our grandparents can recall a vivid life in which aunts and uncles, nephews and nieces wove together the social fabric of a stable, mutual society. Nearly half of all children are born out of wedlock. Many grow up without a father, some without any loving parent at all. The young people emerging from this background, denied any real education in public and private virtues, are easily seduced by glamorous dreams that promise consumption they cannot afford. Untouched by ideals of love and fidelity, they operate free of commitment, discipline, and responsibility. These unreformed teenage idioms become adult habits and ruin lives by creating people unable to bond or relate.

For men, especially those at the bottom of the social scale who are increasingly losing out in education and career advancement, an emasculated life at the margins of society awaits. For successful young women, having a degree is fast becoming an indicator of a childless future. No one would choose this outcome nor wish it upon anyone else, not least because it drains the energy from domestic life and compounds the terrifying fate of getting old alone. Everywhere we look, the ties that bind are loosening, and the foundations of a secure and joyful existence are being undermined.

Euro Crisis from Long Perspective

Free trade and markets matter much more than the euro

by Chidem Kurdas

The European crisis, in progress for years and still showing no sign of resolution, is largely the result of elite hubris. To create the euro and ram it down the throats of populations that, left to their druthers, would have stayed with their old currencies—this was a massive, top-down social engineering project.

There is no end to the harm done by the mindset that Hayek called constructivist rationalism—the delusion that smart aleck  bureaucrats and politicians can redesign societies from scratch like engineers constructing a machine from a blueprint. The lure of social engineering to government elites is such that even the dramatic collapse of communism has not been enough to drive home the Hayekian lesson of humility.

American Twilight

The road to hell isn't paved at all, and the street lamps went out long ago

By MARK STEYN

This weekend, I am thousands of miles from home in a remote and isolated part of the world with erratic communications and lack of basic services. No, not Washington, D.C. Things aren't that primitive, thank God.

I'm in a rude Highland croft way up a far Scottish brae, enjoying the simple life by choice, rather than because the capital region of the global superpower is incapable of turning the lights back on within a week.

Which is by way of saying that news from the imperial metropolis has reached me in fits and starts.

The other morning it was the intriguing tidbit that Chief Justice John Roberts had written both the majority opinion in the ObamaCare decision and the dissent. He is literally his own worst enemy. He's apparently the Mike Myers of the Supreme Court, able to play both Austin Powers and Dr. Evil, although it has to be said that he seems rather more at home as the bumbling swinger.

Stones into Bread

The Keynesian Miracle

By Ludwig von Mises

The stock-in-trade of all Socialist authors is the idea that there is potential plenty and that the substitution of socialism for capitalism would make it possible to give to everybody “according to his needs.” Other authors want to bring about this paradise by a reform of the monetary and credit system. As they see it, all that is lacking is more money and credit. They consider that the rate of interest is a phenomenon artificially created by the man-made scarcity of the “means of payment.” In hundreds, even thousands, of books and pamphlets they passionately blame the “orthodox” economists for their reluctance to admit that inflationist and expansionist doctrines are sound. All evils, they repeat again and again, are caused by the erroneous teachings of the “dismal science” of economics and the “credit monopoly” of the bankers and usurers. To unchain money from the fetters of “restrictionism,” to create free money (Freigeld, in the terminology of Silvio Gesell) and to grant cheap or even gratuitous credit, is the main plank in their political platform.

American Medical Care: It's Terminal

The patient has expired

by Jim Karger

The final nail has been driven into the coffin of America's medical care system (note it's not healthcare because the system has nothing to do with health).

With the Supreme Court decision last week on ObamaCare, the US has taken its failed venture into socialized medicine, i.e., Medicare, and foisted it upon the general public, most of whom really believe they are going to get something for nothing.

It is as if the U.S. government doesn't understand that doubling down on a losing bet doesn't make it a winner. And let's not forget that Medicare, which came to America as part of Lyndon Johnson's "Great Society," has been a tragic, unmitigated failure.

US medical care is the most expensive care in the world. Some say that is because it is the best. Nonsense.

How does one pay for something he will never be able to afford?

The Socialization Of America Is Economically Impossible

by Brandon Smith

I understand the dream of the common socialist.  I was, after all, once a Democrat.  I understand the disparity created in our society by corporatism (not capitalism, though some foolish socialists see them as exactly the same).  I understand the drive and the desire to help other human beings, especially those in dire need, and the tendency to see government as the ultimate solution to all our problems.  That said, let’s be honest; government is in the end just a tool used by one group or another to implement a particular methodology or set of principles.  Unfortunately, what most socialists today don’t seem to understand is that no matter what strategies they devise, they will NEVER have control.  And, those they wish to help will be led to suffer, because the establishment does not care about them, or you.  The establishment does not think of what it can give, it thinks about what it can take.  Socialism, in the minds of the elites, is a con-game which allows them to quarry the favor of the serfs, and nothing more.

The Cacophony Of Markets

Middle Earth is in trouble

by Mark Grant

The Rhapsody of the Markets
Recently I was on CNBC and Steve Liesman, who I know personally and is a very thoughtful fellow, made the comment that I had called the events right but I had not gotten the market right. It was a fair remark as related to the stock market. My reply was that while I thought that he was correct about the stock market that I thought I had been correct about the bond market which was leading the way and that the stock markets would catch up. Since then I have given our conversation some more thought.

The Real-World Middle Class Tax Rate: 75%

If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate

By Charles Hugh Smith

For those Americans earning between $34,500 and $106,000, the real-world middle class tax burden in high-tax locales is 15% + 25% + 5% + 15% + 15% = 75%. Yes, 75%. Before you start listing the innumerable caveats and quibbles raised by any discussion of taxes, please hear me out first. Let's start by defining "taxes" as any fee that is mandated by law or legal necessity. In other words, taxes are what is not optional.

If we include all taxes, the real-world tax rate is much higher than the "official" income tax rate. These "other taxes" vary from nation to nation. France, for example, has a "television tax." It is mandatory, and since virtually every household has a TV this operates as a universal tax. The argument that this is "optional" is specious.

The Morality of Choice

Choice itself is really an extension of the moral basis for capitalism

by James E. Miller

Picture yourself walking into a department store to purchase some laundry detergent.  As you approach the aisle stocked full of brightly-labeled containers, you come face to face with a crucial decision.  Which detergent do you choose?  Do you go with the tried-and-trusted brand?  Do you save money with the generic variety?  What’s on sale?  What about the high-efficiency kind?

The choice between something as inexpensive as laundry detergent seems trivial in a modern economy marked by mass production and the division of labor.  But the large selection of goods that consumers are faced with today is an incredible betterment relative to the past thousand years of human existence.  Indeed, the lives of even the most impoverished in Western economies far surpasses that of kings centuries ago.

Germany’s economy is only king in the blind valley of the Eurozone

Like most other ‘mature social democracies’ Germany is slowly but surely going broke

by DETLEV SCHLICHTER

In the present debate on the Euro crisis, Germany is frequently portrayed as a model of economic strength, a beacon of fiscal prudence and a proponent of structural reform. Her resources seem endless and her government debt an indisputable ‘safe-haven’. If only Germany shared her strength and resources more generously, the Euro debt crisis could be solved. But this is an optical illusion. Sooner or later, markets will wake up to the reality of the country’s fundamental weaknesses and grave challenges.

Over the 13 full calendar years of the life of the Euro, Germany accumulated an additional €900 billion in public debt. The overall debt load rose from €1,200 billion in early 1999 to €2,100 billion at the end of 2011, or from 61 per cent to 81 per cent of GDP. Remember that it was Germany that pushed through the Maastricht criteria, among them a debt-to-GDP ratio of no more than 60 per cent. Germany met this benchmark – barely – in only 3 of 13 years and presently has little chance to get there ever again. Only for 4 of those 13 years did Germany’s deficit stay within the Maastricht Treaty’s recommended limit of 1 percent, and on 7 occasions it exceeded the ‘maximum’ of 3 percent.

Is Marxism Coming Back?

More and more people may come to blame markets and freedom for the problems of corporatism and statism

by John Aziz

It is true that as the financial and economic crises roll on, as more and more disasters accumulate, as more people are thrown into unemployment and suffering that more and more of us will question the fundamentals of our economic system. It is inevitable that many will be drawn to some of the criticisms of capitalism, including Marxism.

The Guardian today published a salutary overview of this revival:

In his introduction to a new edition of The Communist Manifesto, Professor Eric Hobsbawm suggests that Marx was right to argue that the “contradictions of a market system based on no other nexus between man and man than naked self-interest, than callous ‘cash payment’, a system of exploitation and of ‘endless accumulation’ can never be overcome: that at some point in a series of transformations and restructurings the development of this essentially destabilising system will lead to a state of affairs that can no longer be described as capitalism”.

John Roberts Makes His Career Move

For John Roberts, it is Palm Sunday

by Patrick J. Buchanan

Out of relief and gratitude for his having saved Obamacare, he is being compared to John Marshall and Oliver Wendell Holmes.

Liberal commentators are burbling that his act of statesmanship has shown us the way to the sunny uplands of a new consensus. If only Republicans will follow Roberts’ bold and brave example, and agree to new revenues, the dark days of partisan acrimony and tea party intransigence could be behind us.

Yet imagine if Justice Stephen Breyer had crossed over from the liberal bench to join Antonin Scalia, Sam Alito, Clarence Thomas and Anthony Kennedy in striking down Obamacare. Those hailing John Roberts for his independence would be giving Breyer a public caning for desertion of principle.