Wednesday, April 30, 2014

Is the Pope a heretic?

Francis has recently tweeted:  "Inequality is the root of social evil".

But the Bible says love of silver (money -- "philarguria" in the original Greek) is the root of all evil (1 Tim. 6:10).

Wanting equality seems to me to be an obsession with wealth  -- exactly what Paul counselled Timothy against.


Did Francis get something else wrong?


The latest nostrum from France

Thomas Piketty, a 42-year-old economist from French academe has written a hot new book: Capital in the Twenty-First Century. The U.S. edition has been published by Harvard University Press and, remarkably, is leading the best seller list; the first time that a Harvard book has done so. A recent review describes Piketty as the man “who exposed capitalism’s fatal flaw.”

So what is this flaw? Supposedly under capitalism the rich get steadily richer in relation to everyone else; inequality gets worse and worse. It is all baked into the cake, unavoidable.

To support this, Piketty offers some dubious and unsupported financial logic, but also what he calls “a spectacular graph” of historical data. What does the graph actually show?

The amount of U.S. income controlled by the top 10 percent of earners starts at about 40 percent in 1910, rises to about 50 percent before the Crash of 1929, falls thereafter, returns to about 40 percent in 1995, and thereafter again rises to about 50 percent before falling somewhat after the Crash of 2008.

Let’s think about what this really means. Relative income of the top 10 percent did not rise inexorably over this period. Instead it peaked at two times: just before the great crashes of 1929 and 2008. In other words, inequality rose during the great economic bubble eras and fell thereafter.

And what caused and characterized these bubble eras? They were principally caused by the U.S. Federal Reserve and other central banks creating far too much new money and debt. They were characterized by an explosion of crony capitalism as some rich people exploited all the new money, both on Wall Street and through connections with the government in Washington.

We can learn a great deal about crony capitalism by studying the period between the end of WWI and the Great Depression and also the last 20 years, but we won’t learn much about capitalism. Crony capitalism is the opposite of capitalism. It is a perversion of markets, not the result of free prices and free markets.

One can see why the White House likes Piketty. He supports their narrative that government is the cure for inequality when in reality government has been the principal cause of growing inequality.

The White House and IMF also love Piketty’s proposal, not only for high income taxes, but also for substantial wealth taxes. The IMF in particular has been beating a drum for wealth taxes as a way to restore government finances around the world and also reduce economic inequality.

Expect to hear more and more about wealth taxes. Expect to hear that they will be a “one time” event that won’t be repeated, but that will actually help economic growth by reducing economic inequality.

This is all complete nonsense. Economic growth is produced when a society saves money and invests the savings wisely. It is not quantity of investment that matters most, but quality. Government is capable neither of saving nor investing, much less investing wisely.

Nor should anyone imagine that a wealth tax program would be a “one time” event. No tax is ever a one time event. Once established, it would not only persist; it would steadily grow over the years.

Piketty should also ask himself a question. What will happen when investors have to liquidate their stocks, bonds, real estate, or other assets in order to pay the wealth tax? How will markets absorb all the selling? Who will be the buyers? And how will it help economic growth for markets and asset values to collapse under the selling pressure?

In 1936, a dense, difficult-to-read academic book appeared that seemed to tell politicians they could do exactly what they wanted to do. This was Keynes’s General Theory. Piketty’s book serves the same purpose in 2014, and serves the same short-sighted, destructive policies.

If the Obama White House, the IMF, and people like Piketty would just let the economy alone, it could recover. As it is, they keep inventing new ways to destroy it.



The Internet and Liberty

We believe that the Internet is perhaps the greatest vehicle for disseminating the ideas of Liberty ever made available to mankind. Perhaps we're biased, being an Internet publication, but we don't think we're overstating things. That's why Internet governance and regulation is so critical.

The Federal Communications Commission (FCC) is for the third time taking aim at imposing what are known as "net neutrality" rules, which say that all Internet traffic should be treated equally. The DC Circuit Court of Appeals threw out the last round of regulations in January, saying the FCC had no authority to implement such regulations. In this latest round, to stay in line with the court's ruling, FCC Chairman Tom Wheeler is reportedly taking a different tack, rejecting the notion that regulators should redefine Internet Service Providers (ISPs) as "common carriers," which then would subject them to FCC regulation.

And, reportedly, the unreleased new proposal isn't pure net neutrality. One unnamed FCC official explained, "Broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers. In all instances, broadband providers would need to act in a commercially reasonable manner subject to review on a case-by-case basis." So an ISP such as Comcast can charge a content provider such as Netflix more money for used bandwidth just as the two companies recently agreed.

Wheeler dismisses criticism, however, calling reports that the agency is "gutting the Open Internet rule" "flat out wrong." He maintained, "[B]ehavior that harms consumers or competition will not be permitted." However, Reason magazine's Peter Suderman looks at previous and seemingly continuing policy and says, "[T]he end result was that there was no real rule at all, just a vague sense that the Internet should be open which the FCC would enforce at its discretion. In other words, the FCC would pronounce itself the arbiter of what was and wasn't reasonable, and then make determinations on a case-by-case basis. ... What's allowed and what's not won't depend on rules so much as the regulatory agency's whims." That's a scary thought.

In other Internet news, the administration has been working toward turning over control of the Internet Corporation for Assigned Names and Numbers (ICANN), the primary domain authority, to the UN in 2015. ICANN is a U.S.-government-chartered nonprofit corporation established in 1998, and it manages the Internet's domain name system (DNS). DNS is what causes typing "" into your browser to bring up our website.

The plan to turn over control has been in the works since the 1990s. But The Wall Street Journal's L. Gordon Crovitz writes, "Less than a month after announcing its plan to abandon U.S. protection of the open Internet in 2015, the White House has stepped back from the abyss. Following objections by Bill Clinton, a warning letter from 35 Republican senators, and critical congressional hearings, the administration now says the change won't happen for years, if ever." (We'd note that Clinton didn't much like the Internet when it was helping his political opponents.) The administration may extend the contract for U.S. control for another four years.

Republicans want to know how it serves U.S. interests to cede control or whether control could be regained once given away. The problem is that U.S. credibility has been damaged by the NSA's revealed activities, and other nations already want to exert more control over the Internet.

Maintaining U.S. control over a free and open Internet is important, but this particular method isn't the only one, or even the most critical, for doing so. Russia and China already don't need to have any say in regards to ICANN in order to create Great Firewalls and digital Iron Curtains. The Internet cannot be centrally controlled -- that's the point.



What really gets my goat in the discussion of profits

Deborah Orr discusses why the breast cancer treatment she had was just fine but why a more expensive one that might save the lives of other women wouldn't be. And while my description of her argument might sound cruel and her argument itself might sound cruel she is in fact correct. Resources are limited and a cost benefit analysis has to be applied as to where and upon what they should be expended. However, there's one little point she makes that really gripes my goat:

"But Roche seems pretty good at recouping them. It made a profit of 11.4bn Swiss francs (£7.7bn) last year. As its chairman, Franz B Humer, said in his 2013 letter to shareholders: "In a challenging, increasingly cost-sensitive environment, our focus on targeted medicines and diagnostic tests has allowed us to expand our strong market position and to significantly improve net income. In light of our strong performance, the board of directors is proposing – for the 27th consecutive year – an increase in dividend."

It's worth bearing in mind, reading this, that a 2012 report called The Research and Development Cost of a New Medicine reckoned that, on average, only about 10% of the overall cost of developing a new drug is taken up by research and development. Much more is spent on attracting and servicing investors. Quite a bit is spent on PR.

It's that "attracting and servicing investors" part that so annoys. For this is exactly the same cost benefit analysis leading to the efficient deployment of resources that Ms. Orr is so praising. Hoffman La Roche employs some 80,000 people around the world and  has, if I've read their accounts correctly, some 40 billion Swiss francs in capital to back up their work. And we do need some system to try and decide how much of the accumulated wealth of the species is tied up in trying to create cancer drugs to save the lives of Ms. Orr and other unfortunates who lose that crap shoot with their health.

Please note that while we do have a mixed capitalist/market based system doing that allocation for us here the problem doesn't go away if we try to move to some other system. Perhaps worker based socialism where that 40 billion has to come from the pockets of the workers who work in the company, perhaps some planned system whereby taxes are raised to provide that capital.

But however it's done we still need the cost benefit analysis to tell us that we're allocating that capital optimally. And we still need to pay the price too: by devoting 40 billion to the treatment of breast cancer we're not allowing it to be used to create vaccines, or for people to consume now, or on beer, or space rockets.

In fact, simply and purely the fact that capital is scarce means that we both have to calculate how best to use it and also pay the price for withholding it from other uses, whether we have a capitalist/free market economy or not.



The Ten Commandments Of Liberalism

John Hawkins

1) It doesn't matter whether you're yelling at someone who never knew you existed five minutes ago, lying about a conservative because you don't agree with him or even throwing a brick through a store window, you are always the poor, oppressed victim.

2) By default, liberals can't be racist, sexist, or homophobic by virtue of being liberal. In other words, if a socialist like Hitler were around today, not only would he deny he is anti-Semitic, he'd be calling OTHER PEOPLE anti-Semitic.

3) The only bad, wrong and immoral thing you can do is being judgmental enough to label an activity bad, wrong, or immoral. That makes you sound like Rick Santorum and even if you turn out to be right about a lot of things over the long term, is it worth it if you sound like Rick Santorum?

4) Women, blacks, Hispanics, Muslims, gays, Jews, Asians -- pretty much everyone but straight white males -- are weak, hapless, sad victims who are barely capable of tying their own shoes without a liberal writing a government policy that does it for them.

5) There is no such thing as the failure of a liberal policy; there are only well meaning left-wingers doing wonderful things. If they don't turn out as expected, there must be evil, awful conservative Republicans causing it somehow -- probably George W. Bush or alternately, if he's busy planning new wars, Dick Cheney, Rush Limbaugh, Ted Cruz or Sarah Palin.

6) Liberalism is a jealous god and it will not tolerate anything, especially Christianity, being put before it. If Jesus wants to be a significant part of your life, He better call for gay marriage and a carbon tax first.

7) It's better to bankrupt a city like Detroit, cause the deaths of millions in Africa by banning DDT, or destroy the American health care system with Obamacare than to be called "mean" for choosing policies based on whether they work or not.

8) Not only should you go ahead and covet your neighbor's possessions, you should encourage other people to do it, too. Then, you should call for the government to take their possessions and redistribute them. After they get done, there may not be much of anything left, but then you'll all be equally poor and miserable and there's a lot to be said for that.

9) Disagreeing with a black Democrat? Racist. Opposing Affirmative Action? Racist. Think we pay out too much in welfare and food stamps? Racist. Don't like the IRS? Racist. Republican? Racist. Wait, what are we talking about? Racist!

10) Money is no object -- taxpayer money, of course, not your own. Your money, you want to keep. But, when other people's money is on the line, it's worth spending any amount, no matter how large, to achieve any good, no matter how small.


There is a  new  lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc


For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated) and Coral reef compendium. (Updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten.

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