As we stand on the verge of state-licensed newspapers, a dreadful prophecy is being fulfilled

As soon as the State has taken its bent to authority and philanthropy, and laid the least touch on private property, the days of the independent journal are numbered

By Allan Massie

When do you think this passage was written and – a more difficult question – by whom?

“We are all becoming Socialists without knowing it … A little while ago and we were all for Liberty … This is over; laissez-faire declines in favour; our legislation grows authoritative, grows philanthropical, bristles with new duties and new penalties, and casts a spawn of inspectors, who now begin, note-book in hand, to darken the face of England. It may be right or wrong, we are not trying that; but one thing it is beyond doubt: it is Socialism in action, and the strange thing is that we scarcely know it…”

Now I have cut a few phrases which might have given the game away – a mention of a certain “Mr Hyndman and his horn-blowing supporters”, for instance. Nevertheless it’s probable that the elegance of the prose, and the use of the word “authoritative” rather than “authoritarian”, will have suggested to you that it wasn’t written yesterday. In fact, as you may have guessed, the essay from which I have abstracted these sentences was published towards the end of the 19th century. It is entitled “The Day After To-morrow”, and that day, that tomorrow, are long behind us. Yet there are things in the essay which are confoundedly up to date.

Socialism, the author points out, will be imposed, or brought about, by Acts of Parliament. “Well,” he writes, “we all know what Parliament is, and we are all ashamed of it … Decay appears to have seized on the organ of popular government in every land; and this just at the moment when we begin to bring to it, as to an oracle of justice, the whole skein of our private affairs to be unravelled, and ask it, like a new Messiah, to take upon itself the part that should be played by our own virtues. For that, in few words, is the case. We cannot trust ourselves to behave with decency; we cannot trust our consciences; and the remedy proposed is to elect a round number of our neighbours, pretty much at random, and say to these: ‘Be ye our conscience; make laws so wise , and continue from year to year to administer them so wisely, that they shall save us from ourselves, and make us righteous and happy, world without end. Amen.' And who can look twice at the British Parliament and then seriously bring it to such a task?"

Economic complexity pays

As always, brains and skills beat natural endowments, and may even produce the better governance to make good use of them

By Martin Hutchinson 
John Authers, writing in the Financial Times on October 28, suggests societies succeed, not because of their resources but because of their knowledge and the economic complexity to which it leads. MIT's Atlas of Economic Complexity reinforces this thesis, producing visually very attractive graphics of such matters as a country's exports, showing where its economic strengths truly lie. 

Although like all "single cause" theories this is over-simplified, I think this is in essence right; it has a number of interesting implications for international investment and governance. 

There is not one factor that enables a country to become rich, there are three: resources, governance and knowledge/complexity. As is well known, resources alone are normally not enough; the world is full of examples of the "resource curse" in which resource-rich countries fail to develop properly and become state-dominated kleptocracies. 

The problem here is the state. If the resources are truly bountiful and the state fairly small, development may occur anyway. The Gulf States are a good example of this; by developing world-class educational institutions with the resource bounty and by avoiding massive welfare schemes in the early stages, those countries have developed a substantial educated middle class that is able to produce a genuinely wealthy country. Dubai is not a chimaera as a business center; it is able to compete with Singapore as an entrepot because the oil money from the region was used to develop non-oil businesses. 

UN Carbon Regime Would Devastate Humanity

Although it has become clear that the climate emperor has no clothes, the agenda behind it marches on

by  Alex Newman

If the United Nations and fellow climate alarmists get their way on restricting carbon dioxide, the poor will soon be getting poorer — much, much poorer — especially in places such as Africa, Latin America, and large swaths of Asia. It is hardly an exaggeration to suggest that millions could die of starvation, cold, and more. Despite bogus promises of abundant, government-mandated “green” energy (think Solyndra), Europeans, Americans, Japanese, and others who live in developed countries will suffer greatly, too. The devastation will be particularly severe among the least well-off.

Earth’s would-be rulers, however, do not seem to care. The radical UN plan to fight “climate change,” as outlined by the global body amid the implosion of its man-made global-warming theory, would dramatically curtail available energy supplies. If adopted, nobody disputes the fact that the scheme would grant unprecedented powers over people, businesses, and governments to planetary bureaucrats. The multi-trillion-dollar ploy would also wreak havoc on the global economy — virtually every human activity, including breathing, releases carbon dioxide.

On top of that, experts say the plan would have virtually no effect on the climate. Indeed, all of the UN climate models have already been thoroughly debunked as global warming, in defiance of hysterical predictions, stopped over a decade and a half ago (see companion article on page 25). But the agenda was never really to stop “global cooling,” “global warming,” or even “climate change,” so it is hardly surprising to learn that the UN is nowhere near ready to give up on its vision of complete planetary dominance.

The “Budget” to “Save” the World

With its latest report, the UN Intergovernmental Panel on Climate Change (IPCC) formally called for national rulers to help foist what it calls a “carbon budget” on humanity — rationing CO₂ emissions in a supposed effort to stop potential future temperature increases. The global body’s “solution” to the alleged anthropogenic (man-made) global-warming problem, however, can be summarized neatly without any mention of “climate” or “carbon”: More power and money for governments and international bureaucrats; less freedom and prosperity for humanity as a whole.

Following the course of ancient Rome

The U.S. is coasting on the fumes of past greatness, following the Roman road to ruins

By victor davis hanson

By A.D. 200, the Roman republic was a distant memory. Few citizens of the global Roman Empire even knew of their illustrious ancestors such as Scipio or Cicero. Millions no longer spoke Latin. Italian emperors were rare. There were no national elections.

Yet Rome endured as a global power for three more centuries. What held it together?

A stubborn common popular culture and the prosperity of Mediterranean-wide standardization kept things going. The Egyptian, the Numidian, the Iberian and the Greek assumed that everything from Roman clay lamps and glass to good roads and plentiful grain were available to millions throughout the Mediterranean.

As long as the sea was free of pirates, thieves cleared from the roads, and merchants allowed to profit, few cared whether the lawless Caracalla or the unhinged Elagabalus was emperor in distant Rome.

Something likewise both depressing and encouraging is happening to the United States. Few Americans seem to worry that our leaders have lied to or misled Congress and the American people without consequences.

Most young people cannot distinguish the First Amendment from the Fourth Amendment — and do not worry that they cannot. Washington, Jefferson and Lincoln are mere names of grammar schools but otherwise unidentifiable to most.

Separatism is thought to bring dividends. In California, universities conduct separate graduation ceremonies predicated on race — sometimes difficult given the increasingly mixed ancestry of Americans.

As in Rome, there is a vast disconnect between elites and the common people. Almost half of Americans receive some sort of public assistance, and half pay no federal income tax. About one-seventh of Americans are on food stamps.

Yet housing prices in elite enclaves — Manhattan, Cambridge, Santa Monica, Palo Alto — are soaring. The wealthy like to cocoon themselves in Roman-like villas, safe from the real-life ramifications of their own utopian ideology.

Keynes’s Ghost Continues To Haunt Economics

The Keynesian promise of prosperity springing from massive government spending is attractive to politicians, economists, and public intellectuals

by William L. Anderson

When the U.S. economy dipped into an inflationary recession in 1969, Murray N. Rothbard in his introduction to the Second Edition of America’s Great Depression wrote that the Keynesian paradigm could not explain that phenomenon, but Austrian economics could explain what was happening. If Rothbard was correct — and he was — then one might believe Keynesian “economics” should have been deep-sixed permanently, given it could not explain what everyone saw happening.

Likewise, during the turbulent 1970s and 1980, the bouts of inflationary recessions grew worse and even die-hard political liberals such as ABC News’ economics correspondence, Dan Cordtz, bemoaned the fact that the “rules of economics” no longer seemed to apply. Those so-called rules were not laws of economics at all, but rather were dogma first given by John Maynard Keynes in his infamous work, The General Theory of Employment, Interest, and Money.

Joyous economists such as Arthur Laffer, who espoused a form of what he and others called “Supply Side Economics,” declared that Keynesian “economics” was discredited, perhaps for good. The advent of three more inflationary recessions, including the current downturn, should have resulted in the permanent death of Keynesianism, but, alas, it seems that the Keynesian paradigm is more influential than ever.

Exhibit A is President Barack Obama who in 2009 shortly after taking office declared that America would “spend its way out” of the current recession.

Exhibit B has been Obama’s recent announcement that he would nominate Janet Yellen to head the Federal Reserve System. Yellen, not surprisingly, is a True Believing Keynesian.

Exhibit C is the ongoing popularity of Paul Krugman, who has done more than any other person in the world to promote Keynesianism and to demand it be applied, chapter and verse, to the world economy.

Exhibit D has been the continuing Keynesian policies of the Federal Reserve and the central bank of Japan.

Academic economists who hold to the “market test” view of economics should be puzzled. Here is a paradigm that claims there cannot be an inflationary recession, yet all of the recessions that have wracked the U.S. economy in recent decades have been inflationary. Furthermore, despite the spending of more than a trillion dollars in the name of the Keynesian “stimulus,” the economy continues to founder, as unemployment rates remain stubbornly high and millions of workers either have abandoned their search for work or work in part-time jobs just to keep food on the table.

Given the fact that both the George W. Bush and Barack Obama administrations (not to mention Congress) have followed the Keynesian playbook, the sorry results should be enough to discredit Keynesianism, this time for good. Either a theory explains and predicts phenomena or it does not, and it should be clear that Keynesian theory has failed.

Alas, the academic “market test” really does not embrace the actual success or failure of a theory. It seems that many academic economists do not wish to be bothered by what happens in the real world. The vaunted “market test” is not about actual results, but is about what many economists are willing to accept as what they wish to be true and what politicians believe is good for their own electoral purposes.

The assumption that comes with attempting to apply Eugene Fama’s “Perfect Market Hypothesis” to academic economics presupposes that economists are interested only in what actually occurs. Furthermore, the belief presumes that when presented with a set of facts, academic economists will give the same analysis and not be influenced by partisan politics.

Given the interpretations that economists such as Krugman, Alan Blinder, and others have made in the aftermath of the disastrous first week of “ObamaCare,” not to mention their shilling for the Obama administration itself, the latter is clearly untrue. Furthermore, we see there are “gains from trade,” as politicians tend to flock to those economists who can offer the proverbial “quick fix” to whatever ails the economy, as being seen as doing something confers more political benefits than doing the right thing, which is to curb the power, scope, and influence of state power.

Even Krugman admits that the appearance of expertise has fueled the Keynesian bandwagon:

In the 1930s you had a catastrophe, and if you were a public official or even just a layman looking for guidance and understanding, what did you get from institutionalists? Caricaturing, but only slightly, you got long, elliptical explanations that it all had deep historical roots and clearly there was no quick fix. Meanwhile, along came the Keynesians, who were model-oriented, and who basically said “Push this button” — increase G, and all will be well. And the experience of the wartime boom seemed to demonstrate that demand-side expansion did indeed work the way the Keynesians said it did.

In the past five years politicians have been pushing “button G” and all is not well. Yet, in this age of unrestrained government, the Keynesian promise of prosperity springing from massive government spending is attractive to politicians, economists, and public intellectuals. That it only makes things worse is irrelevant and beside the point. If the economy falters, politicians and academic economists blame capitalism, not Keynesianism, and they get away with it. 

Endgame for Pakistani Taliban

Afghanistan is a strange country

By M K Bhadrakumar

The killing of the chief of Pakistani Taliban Hakimullah Mehsud in a drone attack in North Waziristan on Friday becomes a definitive move on the Afghan chessboard. (Dawn). The United States is redeeming its pledge to Pakistan that it would help vanquish the irreconcilable elements within the (Pakistani) Taliban so that the peace process with the (Afghan) Taliban can go ahead. 

At the operational level, Friday’s drone strike suggests a high level of US-Pakistan intelligence coordination as well. I had written in my blog earlier this week that the turnaround in Pakistan’s official assessment of the collateral damage of drone attacks implied a political calibration that would mesh with the Afghan peace process. That is most certainly what is happening. 

Of course, the US is finally buying into the Pakistani allegation that it is a victim of cross-border terrorism masterminded from Afghan soil by foreign countries.  

What lies ahead? The high probability is that the reconciliation of the (Afghan) Taliban may gain traction. The US’ threat perception comes from the Al-Qaeda (with which elements of the Pakistani Taliban have links) while the thinking within the Obama administration in the recent years has been that the US can learn to live with the Taliban as they do not threaten US interests. 

Second, we may expect the US to be open to the idea of accommodating the Taliban in the Afghan power structure, especially in the southern and eastern regions of Afghanistan bordering Pakistan. Again, the western powers recognize that the Taliban are the only Afghan group with the capability to ’stabilize’ Afghanistan. 

Third, Pakistan can be expected to do all it can to persuade the Taliban leadership to reciprocate by acquiescing with the establishment of the American military bases in Afghanistan. Clearly, in the emergent calculus, a continued US military presence in Afghanistan would mean continued American dependence on Pakistan, which in turn would be beneficial for Pakistan in many ways. 

Having come so close to putting together the underpinnings if a viable post-2014 dispensation in Afghanistan, the US would now have to pay greater attention to the transition in Kabul in April. Clearly, the outcome of the presidential election in Afghanistan should be broadly acceptable to the Taliban as well. 

Suffice to say, it’s about time to take a closer look at the Rasul Sayyaf-Ismail Khan ticket in the April poll.This may sound strange, but then, Afghanistan is a strange country.  

I Confess: I’m a “Terrorist”

The ultimate terror in balancing the budget

by  Thomas R. Eddlem

Only in America are the ones who want to balance the budget and make raising the national debt limit unnecessary labeled “terrorists,” while those who want to raise the national credit card limit to infinity deemed reasonable. That’s the lesson of the October partial government shutdown and debt limit debate that the media have tried to teach us.

Count this “terrorist” among the learning-disabled on this lesson.

I say it’s all about the selling job. The media and most politicians trumpeted only one option as a metaphysical necessity throughout the debate: We must raise the debt ceiling. Nobody ever discussed the alternative, balancing the budget, which would have made raising the debt ceiling unnecessary.

Of course, as a “terrorist,” I could be wrong. The federal budget was balanced during the shutdown, as federal spending was cut by more than what the CBO projected annual deficit to be. And those spending cuts strangely didn’t move Obama’s debt limit deadline by even a single minute. Only a terrorist such as I would imply Obama cooked the books to hype that deadline.

But this is America. And in America we can rely on the fact that the terrorists always lose, just as reliably as Republican leaders always cave to the demands of Democrats. So, the debt limit will officially be infinity until February 7. We terrorists — the constitutionalist movement, Tea Party conservatives, and the Congressional Liberty Caucus — certainly lost. The only thing worse to a terrorist than not coming to a national debt limit deal is coming to a “clean” debt deal that simply enables more debt and a bigger reckoning later.

Can We Finally Retire Scientific Superstition?

Greenspan has learned too late but perhaps there is still time for the rest of us

by Donald Devine        

What an absolutely astounding admission former Fed boss Alan Greenspan makes about his new book The Map and The Territory: 

“Not a single major forecaster of note or institution caught it [the 2008 crash]. The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely. I was actually flabbergasted. It upended my view of how the world worked.”

That this epitome of Washington brilliance and establishment power really thought the little models could actually forecast the future takes one’s breath away! One could expect that such models would be used as rough guides to action and to keep naive investors calm but that he was surprised the models did not predict specific events is incredible, especially for someone who supposedly had believed in markets. He admits he just now realizes that irrational fears influence how people behave! But we are supposed to trust these guys with $3 trillion sitting in the Fed, telling us they have a way out because the models are scientific, right?

Nobel Laureate F.A. Hayek predicted that people in the future looking back would “discover that the most widely held ideas which dominated the twentieth century” like scientific planning “were all based on superstitions…an overestimation of what science has achieved.” Hayek noted more than a half century ago that there were more intercortical connections in one person’s mind in a few moments than there are atoms in the entire solar system. While the material world still largely remains a mystery to science, human behavior is a real black hole. With billions of people’s minds and untold interactions between them the total human complexity is overwhelming. No super-mind in some Federal Reserve or White House can comprehend this complexity, much less control it. The progressive pretension to understand what they cannot possibly know is the true source of today’s discontent.

The number of books today rediscovering this truth is becoming a torrent. The Discovery Institute’s Stephen Meyer hit number seven on the New York Times bestseller list with his stunning new book, Darwin’s Doubt. The title reflects the fact that even Charles Darwin had one great doubt about his materialistic theory of human evolution, that natural selection by random mutation is the sole explanation of life on earth. Specifically, he questioned whether what was called the Cambrian Explosion of 500 million years ago could have occurred that recently (out of an estimate of only 3 billion total years of life on earth). How could higher life arise over such a short period of time, and where were the fossils demonstrating such a progression of forms?

The Good Guys Are Not Coming

No one is going to ride in and save you

by Paul Rosenberg
A lot of Americans know that the US government is out of control. Anyone who has cared enough to study the US Constitution even a little knows this. Still, very few of these people are taking any significant action, and largely because of one error: They are waiting for “the good guys” to show up and fix things.

Some think that certain groups of politicians will pull it together and fix things, or that one magnificent politician will ride in to fix things. Others think that certain members of the military will step in and slap the politicians back into line. And, I’m sure there are other variations.

There are several problems with this. I’ll start with the small issues:

1.     It doesn’t happen. A lot of good people have latched on to one grand possibility after another, waiting for a good guy to save the day, and it just doesn’t happen. Thousands of hours of reading, writing and waiting are burned with each new “great light” who comes along with a promise to run the system in the “right” way, and give us liberty and truth. (Or whatever.) Lots of decent folks grab on to one pleasant dream after another, only to end up right back where they started… but poorer in time, energy and finances.

2.   Hope is a scam. It’s a dream of someday, somehow, getting something for nothing. People who hope do not act – they wait for other people to act. Hope is a tool to neuter a natural opposition: they sit and hope, and never act against you. Even the biblical meaning of hope is something more like expectation (or sometimes waiting) than the modern use of hope.

3.   Petitioning an abuser for compassion. The “good guys” are considered to be a few people inside the abusive government. But if the good guys were really good, wouldn’t they have dissociated themselves with an abuser some time ago? By pleading for the good guys to rise up, people are asking one sub-group of the abusers to save them from the rest of the abusers. However, they all work for the same operation; they all get paid out of the same offices; according to the same rulebook. And if the good guys are so willing to turn against their employers, why would they have waited until now?

The Untouchables of the 21st Century

Why And How The Young Are Screwed

"Child of Texas migrant family who follow the cotton crop from Corpus Christi to the Panhandle."

By raul ilargi meijer

Last week I read a few lines in a Dutch newspaper article about pensions that immediately took me back to something I wrote in early May about youth unemployment - especially in southern Europe, where it's often 50% or more -. There is a common thread that links pensions to employment to stimulus measures: the younger generations invariably get the short end of the stick. Until they don't, of course, for they have one thing going for them. Age. Before they can play that ace, however, their parents seem intent on milking them for all they got. And I can’t help finding that curious, because it’s not at all what parents say they want for their children.

The Untouchables of the 21st Century

The numbers, let's focus on Europe for now, are certain to only get worse. How do we know? Easy as pie. It's a matter of political principle. All those unemployed young people are nobody's priority but their own. They simply don't have the political might yet to swing policy decisions in their favor. That is still with the generations of their parents and grandparents, who will vote against anyone trying to cut their wages and benefits.

Sure, the week after I wrote that, there was some mumbling from the likes of Angela Merkel and Spanish PM Rajoy to the extent that "something must be done", but nothing was, it was lip service only, and there are still exactly zero actual proposals to "do something".

People who are in power will do almost anything to hold on to it. That includes politicians, bankers, corporate executives. We can all identify those groups, and we love to rage against them. But political power in our societies is also defined by age. In that the young have very little of it, and the older have a death grip.

[..] ... until recently there was the prospect of going out and getting as much as, or more than, one's parents have (a better life for my children). That prospect is now gone. But people are slow to realize and accept that. They'd rather believe otherwise, and there are scores of politicians and media willing to keep that faith alive. After all, their own livelihoods depend on it.

Does Environmentalism Cause Amnesia?

Climate-change alarmists warn us about coming food shortages. They said the same in 1968.

By BRET STEPHENS

Warming is becoming a major problem. "A change in our climate," writes one deservedly famous American naturalist, "is taking place very sensibly." Snowfall, he notes, has become "less frequent and less deep." Rivers that once "seldom failed to freeze over in the course of the winter, scarcely ever do so now."

And it's having an especially worrisome effect on the food supply: "This change has produced an unfortunate fluctuation between heat and cold, in the spring of the year, which is very fatal to fruits."

That isn't a leaked excerpt from the latest report of the U.N.'s Intergovernmental Panel on Climate Change, but it may as well be. Last week, Canadian journalist Donna Laframboise of the website No Frakking Consensus posted a draft of a forthcoming IPCC report on the alleged effects climate change will have on food production. The New York Times then splashed the news on its front page Saturday. It's another tale of warming woe:

"With or without adaptation," the report warns, "climate change will reduce median yields by 0 to 2% per decade for the rest of the century, as compared to a baseline without climate change. These projected impacts will occur in the context of rising crop demand, projected to increase by 14% per decade until 2050."

If this has a familiar ring, it's because it harks back to the neo-Malthusian forecasts of the 1960s and '70s, when we were supposed to believe that population growth would outstrip food production. This gave us such titles as "Famine 1975!", a 1967 best seller by the brothers William and Paul Paddock, along with Paul Ehrlich's vastly influential "The Population Bomb," a book that began with the words, "The battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now."

In case you're wondering what happened with that battle to feed humanity, the U.N.'s Food and Agriculture Organization has some useful figures on its website. In 1968, the year Mr. Ehrlich's book first appeared, Asia produced 46,321,114 tons of maize and 439,579,934 of cereals. By 2011, the respective figures had risen to 270,316,205, up 484%, and 1,289,633,254, up 193%.

It's the same story nearly everywhere else one looks. In Africa, maize production was up 247% between 1968 and 2011, while production of so-called primary vegetables has risen 319%; in South America, it's 308% and 199%. Meanwhile, the world's population rose to just under seven billion from about 3.7 billion, an increase of about 90%. It is predicted to rise by another 33% by 2050.

But what about the supposedly warming climate? According to the EPA, "average temperatures have risen more quickly since the late 1970s," with the contiguous 48 states warming "faster than the global rate." Yet U.S. food production over the same time has also risen by robust percentages even as the number of acres under cultivation has been steadily falling for decades.

Yellenomics – Or The Coming Tragedy of Errors

Keynesian Paradigm to Be Revived

Keynesian central planner Janet Yellen: believes the free market doesn't work and needs utterly clueless people like her to function 'better'.

by Pater Tenebrarum

We have come across a recent article at Bloomberg that discusses the philosophical roots of Janet Yellen's economics voodoo. This seems in many ways even more appalling than the Bernanke paradigm (which in turn is based on Bernanke's erroneous interpretation of what caused the Great Depression, which he obtained in essence from Milton Friedman).

Janet Yellen, so Bloomberg informs us, was a student of the Keynesian James Tobin at Yale, the economist whose main claim to fame these days is that a tax is named after him. Tobin, like other Keynesians, was an apologist for central economic planning, which made him eligible for the central bank-sponsored Nobel Prize in Economics. He was undoubtedly a man after the heart of the ruling class. It is therefore not a big surprise that one of his students gets to run the Federal Reserve, which is one of the main agencies, if not the main agency, by which the rule of money power and central economic planning are perpetuated. It should be noted that the inflationist who runs the central bank of Argentina, Mercedes Marco del Pont, was also trained in Yale. Marcos del Pont once asserted sotto voce in a speech that the enormous ongoing plunge in the purchasing power of the Argentine peso was not a result of her incessant massive money printing. Since she didn't deign to explain what actually causes it then (foreign speculators perhaps? Just guessing here…), it presumably is just a case of 'sh*t happens'. This just as a hint as to what can be expected from economists trained at Yale. 

From the Bloomberg article:

“When James Tobin joined President John F. Kennedy’s administration in 1961, the U.S. economy was struggling to recover from its third recession in seven years. As a member of Kennedy’s Council of Economic Advisers, the Yale University professor put his theoretical research on asset markets to work in fashioning a novel strategy — nicknamed Operation Twist — to reduce long-term interest rates. 

Now, more than half a century later, two of Tobin’s Ph.D. students — Janet Yellen, nominated to be the next chairman of the Federal Reserve, and Koichi Hamada, a special adviser to Japanese Prime Minister Shinzo Abe — are applying some of those same concepts in their efforts to boost their respective countries’ economies. 

Obama’s Catastrophic Victory

A parlay of poisonous P’s

By Peggy Noonan

Years ago John McPhee wrote a great book about Bill Bradley called “A Sense of Where You Are.” I keep thinking about that title. You have to know where you are in time and space, you have to know who you are and what you’re doing, you have to be able to locate the moment and reorient yourself within it.

Politically where are we right now, at this moment?

We have a huge piece of U.S. economic and social change that debuted a month ago as a program. The program dealt with something personal, even intimate: your health, the care of your body, the medicines you choose to take or procedures you get. It was hugely controversial from day one. It took all the political oxygen from the room. It failed to garner even one vote from the opposition when it was passed. It gave rise to a significant opposition movement, the town hall uprisings, which later produced the tea party. It caused unrest. In fact, it seemed not to answer a problem but cause it. I called ObamaCare, at the time of its passage, a catastrophic victory—one won at too great cost, with too much political bloodshed, and at the end what would you get? Barren terrain. A thing not worth fighting for.

So the program debuts and it’s a resounding, famous, fantastical flop. The first weeks of the news coverage are about how the websites don’t work, can you believe we paid for this, do you believe they had more than three years and produced this public joke of a program, this embarrassment?

But now it’s much more serious. No one’s thinking about the websites. They wish you were thinking about the websites! I bet America hopes the websites never work so they never have to enroll.

The problem now is not the delivery system of the program, it’s the program itself. Not the computer screen but what’s inside the program. This is something you can’t get the IT guy in to fix.

They said if you liked your insurance you could keep your insurance—but that’s not true. It was never true! They said if you liked your doctor you could keep your doctor—but that’s not true. It was never true! They said they would cover everyone who needed it, and instead people who had coverage are losing it—millions of them! They said they would make insurance less expensive—but it’s more expensive! Premium shock, deductible shock. They said don’t worry, your health information will be secure, but instead the whole setup looks like a hacker’s holiday. Bad guys are apparently already going for your private information.

The Problem with Pay-As-You-Go Social Programs: They're Ponzi Schemes

Ignoring the facts won't help us address the insolvency of pay-as-you-go social programs

By charles hugh smith

I was fortunate enough to be invited back on Max Keiser's Keiser Report for a wide-ranging discussion of Peak Retirement, currency wars and more. Since the topics Max raises are profound and not always that easy to summarize (if there is another media host who covers complex topics in such profusion and with such a diverse range of guests, he/she is unknown to me), I'm devoting the next few blog entries to offer context for the topics Max and I discussed.

Max's first question related to my entry on Peak Retirement (October 15, 2013) in which I showed that the ratio of full-time workers to Social Security beneficiaries has dropped to 2-to-1.

Why does this matter? It matters because our social programs arepay as you go, meaning that current workers pay current retirees' benefits. There is no "trust fund" and the proof is simple: now that Social Security is operating at a deficit, i.e. payroll tax revenues no longer cover benefits paid out, where does the U.S. Treasury get the money to pay the benefits not covered by tax revenues?

Social Security Ran $47.8B Deficit in FY 2012

It sells bonds, just like it does to fund any other deficit spending of the federal government. The Trust Fund is a politically useful fiction, period, end of story. The bonds in the bogus Trust Fund are non-negotiable, i.e. worthless. The Treasury funds Social Security deficits by selling Treasury bonds.

(Social Security reports "interest earned" on the phony non-negotiable bonds, but where does the U.S. Treasury get the money to pay the interest? It sells T-Bills, adding to the national debt. No matter how you slice it, the programs' deficits are funded by selling debt, i.e. T-Bills, just like all federal deficit spending.)

I bobbled my response to Max's question, so he helpfully stepped in and explained that social programs like Social Security and Medicare are paid by payroll taxes, not income or other taxes. Employers and employees both pay 7.65% of earned income/wages to fund these two monster programs--a total payroll tax of 15.3%. (12.4% is for Social Security and 2.9% is for Medicare.)

Those who receive no earned income (self-employment earnings, wages, salaries, tips, etc.) and only receive unearned income (dividends, capital gains, rents, etc.) pay no Social Security/Medicare payroll taxes. That's one reason why unearned income is so sweet: it avoids the 15.3% payroll tax right off the top.

(Those of us who are self-employed pay the entire 15.3%.)

Why Don’t More People Want a Job?

Share of Americans over age 16 who say they don’t want a job, up to 34.3% from about 30% two decades ago

by John Doe

Americans aren’t just leaving the labor force — those who have left it are drifting further away.

Economists studying the labor market have traditionally focused on two types of people: those who have jobs (the employed) and those who are trying to find them (the unemployed). Together, those groups make up what is known as the “labor force.”

As close observers of the economy already know, the labor force has been shrinking as a share of the population, a trend that began in the early 2000s, accelerated in the recession and has continued during the weak recovery. The so-called “participation rate” — the share of the population that’s working or looking for work — now stands near a three-decade low.

Such measures, however, treat all those out of the labor force as a single group, lumping together retiring Baby Boomers and stay-at-home moms with laid-off factory workers. The Labor Department publishes estimates of “discouraged workers” — those who have given up looking because they can’t find a job — but it uses a narrow definition. Someone who decides to take care of the kids rather than keep looking for work might not count as discouraged — even if the person wants a job and plans to look for one in the future.

But in a new paper, economists Regis Barnichon and Andrew Figura divide up those out of the labor force using a simpler standard: whether or not the person says they want a job. And they uncover an interesting previously unnoticed trend: As a share of all those “not in the labor force,” the number of people who want a job has been generally declining since the early 1980s. Three decades ago, more than 10% wanted a job; on the eve of the latest recession, the share dipped below 6%.

Moreover, Messrs. Barnichon and Figura found, the decline in people who want a job wasn’t driven by people entering the labor force. It was driven by people switching from wanting a job to not wanting one. Long before the recession, in other words, Americans were drifting away from the labor force.

The recession changed the picture: The surge in layoffs and plunge in hiring left millions of Americans who wanted jobs on the sidelines. But even so, the share of those not in the labor force who wanted jobs peaked at around 7.5%, far below its 1980s level.

U.S. Oil Output to Double Every Three Years

Unless “They” Get Their Way

by  Bob Adelmann

If the increase in U.S. oil output continues to increase by 25 percent every year, as it did from September 2012 to September 2013, total U.S. output would double every three years. It’s a simple case of mathematics, compound interest, and the Rule of 72. The main people working to keep that from happening are Josh Fox and his friends.

According to the latest report from the Department of Energy, the U.S. oil industry produced an average of 7.8 million barrels of oil every day during September, the highest monthly output since May 1989, more than 24 years ago. Doing some math of his own, economist Mark Perry estimated that at this rate, U.S. crude oil production will hit 10 million barrels a day early in the year 2015 — a level not seen since November 1970. 

Josh Fox and his friends have other ideas, however. As the co-producer of the film Gasland in 2010 and Gasland II earlier this summer, Fox joined forces with Debra Winger, Pete Seeger, and California environmentalist Mark Jacobson to bring the anti-fracking message to millions of uninformed Americans. Fox had some help from HBO, aided and abetted by Robert Redford’s Sundance Festival, which awarded Fox’s first effort its “Jury Prize.”

Fox’s lies about fracking may just do him in before he does much more damage. Investigative journalists have had a field day in pointing out the falsehoods abundantly displayed in his original film Gasland, starting from the very first scene. Fox is sitting at his kitchen table, holding something that looks like a serious proposal, saying: