Thursday, August 20, 2015

Fast moving bad news builds prosperity

Free markets automatically create and transmit negative information, while socialism hides it

Nassim Nicholas Taleb recently tweeted: "The free-market system lets you notice the flaws and hides its benefits. All other systems hide the flaws and show the benefits.”

This drew a response: "The most valuable property of the price mechanism is as a reliable mechanism for delivering bad news." These two statements explain a lot about why socialist systems fail pretty much everywhere but get pretty good press, while capitalism has delivered truly astounding results but is constantly besieged by detractors.

It is simple really: When the "Great Leader" builds a new stadium, everyone sees the construction. Nobody sees the more worthwhile projects that didn’t get done instead because the capital was diverted, through taxation, from less visible but possibly more worthwhile ventures — a thousand tailor shops, bakeries or physician offices.

At the same time, markets deliver the bad news whether you want to hear it or not, but delivering the bad news is not a sign of failure, it is a characteristic of systems that work. When you stub your toe, the neurons in between your foot and your head don’t try to figure out ways not to send the news to your brain. If they did, you’d trip a lot more often. Likewise, in a market, bad decisions show up pretty rapidly: Build a car that nobody wants, and you’re stuck with a bunch of expensive unsold cars; invest in new technologies that don’t work, and you lose a lot of money and have nothing to show for it. These painful consequences mean that people are pretty careful in their investments, at least so long as they’re investing their own money.

Bureaucrats in government do  the opposite, trying to keep their bosses from discovering their mistakes.

Likewise, the pricing system tells people things that they can’t know directly. In a command economy, where bureaucrats set production targets, if someone uses more pig iron than expected, there’s a shortage. In a market, prices for pig iron go up, which sends two signals: To pig iron producers, the signal is produce more pig iron. To pig iron consumers, the signal is don’t use more pig iron than you have to. Both ways, the prices tell people things that they need to know, without any direct communication required. This is why market economies do better than command economies, as historical examples ranging from the old Soviet Union to today’s Venezuela demonstrate over and over again.

Why is there so much support for government controls? What’s wrong with markets? In short: insufficient opportunities for graft.

In a command economy, the bureaucrats who set production quotas and allocate supplies have a lot of power. So do their political bosses. When supplies get short, people wheedle (i.e., bribe) them to get more. The market can’t be wheedled.

And, of course, intellectuals, as Whole Foods co-CEO John Mackey observes, "have always disdained commerce.”

Why?  As Mackey says,  “It’s sort of where people stand in the social hierarchy, and if you live in a more business-oriented society, like the United States has been, then you have these business people, (whom the intellectuals) don’t judge to be very intelligent or well-educated, having lots of money, and they begin to buy political power with it, and they rise in the social hierarchy.

Whereas the really intelligent people, the intellectuals, are less important. And I don’t think they like that. And I think that’s one of the main reasons why the intellectuals have usually disdained commerce. They haven’t seen it, the dynamic, creative force, because they measure themselves against these people, and they think they’re superior, and yet in the social hierarchy they’re not seen as more important. And I think that drives them crazy.”

As Megan McArdle has observed, journalists particularly suffer from this problem: “Everyone you write about makes more than you. Most of the people you know make more than you. ... Your house is small, your furniture is shabby and you can't even really afford to shop at Whole Foods. Yet you're at the top of your field, working for one of the world's top media outlets. This can't be so.” Suddenly, systems that reward people through political influence look better.

Markets make people better off, but they don’t provide sufficient opportunities for politicians to extract bribes and intellectuals to feel better about themselves. This explains why they’re unpopular with politicians and intellectuals. The real question is why anyone else listens to the self-interested claims of politicians and intellectuals. Maybe because the subject of what works and what doesn't in economics is mostly written by journalists?



Trump's Immigration Plan Is Exactly Why He's So Appealing

Trump is economically unsophisticated but his errors are unlikely to do much harm -- JR

As news broke over the weekend of yet another illegal alien accused of a triple homicide in Florida, the overwhelming sense for conservatives is that something has to be done about illegal immigration. While most Republican presidential candidates appear equivocal on the issue, as do Republican congressional “leaders,” Donald Trump is clear on his objections, and that resonates with a lot of Americans.

Trump has been the go-to candidate on the issue since his June 16 announcement speech, when he opined, “When Mexico sends its people, they’re not sending their best; they’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems with [them]. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.”

Trump has now released the details of his plan, and it’s a master stroke to answer voter frustration.

He begins with three solid principles, the first of which is a direct quote from Ronald Reagan.

* A nation without borders is not a nation. There must be a wall across the southern border.

* A nation without laws is not a nation. Laws passed in accordance with our Constitutional system of government must be enforced.

* A nation that does not serve its own citizens is not a nation. Any immigration plan must improve jobs, wages and security for all Americans.

That such principles are so controversial is a mark of how dire our predicament really is, and the weakness of other GOP candidates in espousing them has left an opening for Trump.

Those principles are followed by several planks. “Make Mexico pay for the wall” is the first. How would he accomplish that? Increase the fees for legal immigration, which seems counterintuitive.

“Mexico must pay for the wall and, until they do, the United States will, among other things: impound all remittance payments derived from illegal wages; increase fees on all temporary visas issued to Mexican CEOs and diplomats (and if necessary cancel them); increase fees on all border crossing cards — of which we issue about 1 million to Mexican nationals each year (a major source of visa overstays); increase fees on all NAFTA worker visas from Mexico (another major source of overstays); and increase fees at ports of entry to the United States from Mexico [Tariffs and foreign aid cuts are also options].”

If that idea (and the generally unhelpful antagonism toward Mexico) isn’t quite satisfactory, his other points are appealing — tripling the number of ICE officers, nationwide e-verify, mandatory deportation of criminal aliens, detention instead of catch-and-release, cut off federal funds for sanctuary cities, penalizing visa overstays, and, perhaps most important, end birthright citizenship.

As we have noted before, any debate about immigration is useless unless it begins with a commitment to securing our borders first. Trump appears to be seriously, if imperfectly, addressing this need.

We have also argued that birthright citizenship is a gross misinterpretation of the 14th Amendment, and Trump is right to target it. Such a move will, of course, be litigated all the way to the Supreme Court, but it’s a worthy fight. [Congress can exclude SCOTUS from considering it]

In June, Trump said, “Give [illegal immigrants] a path [to citizenship]. You have to make it possible for them to succeed.” His plan now calls for allowing “the good ones” to come back once they’ve been deported. “I would get people out,” he said, “and I would have an expedited way of getting them back into the country so they can be legal.”

While Trump’s plan is solid on Rule of Law and heavy on enforcement, where he comes up short is emphasizing that Liberty is colorblind. It’s not a “white thing.” Minorities could be forgiven for thinking Trump’s plan translates more closely to, “We don’t want any Mexicans here.” That may resonate with some in the GOP base, but it’s not going to expand that base.

Because Liberty transcends all racial, ethnic, gender and class distinctions, it will appeal to all freedom-loving people when properly presented. That said, it’s going to be awfully hard for any other GOP candidate to trump The Donald’s plan in the eyes of primary voters. The question of why it’s taken the rest of them so long to even try to address the issue is a baffling one.



Democrats Panic in Response to Donald Trump’s Immigration Plan

The Democratic National Committee (DNC) is panicking in response to billionaire and 2016 GOP frontrunner Donald Trump’s immigration reform plan, which is designed to get Americans back to work instead of putting foreigners and special interests ahead of Americans as so many politicians do.

The DNC was so freaked out at Trump’s plan, they rushed out a statement from Pablo Manriquez—their “Director of Hispanic Media”—filled with grammatical errors. The statement, which is nothing more than typical Democratic Party talking points in favor of illegal aliens, accidentally doesn’t capitalize “Trump” in one instance and does the same thing when talking about “Democrats.”

“Trump has reignited the GOP’s longstanding obsession with mass deportation,” Manriquez said. “Like his fellow GOP candidates Jeb Bush, Scott Walker, Sen. Marco Rubio (R-FL)  and others, GOP front runner trump [sic] dismisses a full and equal pathway to citizenship for hardworking immigrants. The GOP should quit treating these families as second class citizens and join democrats [sic] who support immigrant families and want to keep them together.”

Trump’s immigration plan is something that used to be bipartisan. Even Senate Democratic leader Sen. Harry Reid (D-NV) back in the early 1990s, supported the major tenets of the plan—putting American workers first when it comes to immigration. Now the entire Democratic Party and most of the Republican Party has abandoned American workers in favor of special interests seeking cheap foreign labor and political interests seeking a different and more liberal voting base.

There are a handful of leaders left in Congress still fighting for Americans when it comes to immigration, though, and chief among them is Sen. Jeff Sessions (R-AL) the chairman of the Senate Judiciary Committee’s subcommittee on Immigration and the National Interest. Trump consulted Sessions while writing his immigration policy plan.



Missing Clinton emails magically found

State Department officials have uncovered 17,855 emails sent between a former Hillary Clinton spokesman and reporters that the agency long claimed did not exist.

The trove was among more than 80,000 emails belonging to Philippe Reines, a Clinton aide, that were discovered on his State Department account, officials said in court filings Aug. 13.

In response to a Freedom of Information Act request filed by Gawker Media in 2013, the State Department said it had no responsive records. Gawker was seeking official correspondence between Reines and reporters from 33 news outlets.

But State officials responded Thursday with the news that they had inexplicably found 81,159 emails on Reines' ".gov" email account despite asserting two years ago that none existed. Twenty-two percent, or 17,855, of the emails were likely related to Gawker's request.



Hildabeest dodging and weaving

While speaking with Fox News host Bill Hemmer on Wednesday, Rep. Trey Gowdy, chairman of the House Select Committee on Benghazi, accused former Secretary of State Hillary Clinton of purposefully trying “to control access to the public record” so as to evade facing justice.

“This was not about cooperation. And, Bill, frankly, it’s not about convenience,” Gowdy said. “It’s about control.”

Gowdy pointed to the way in which Clinton repeatedly refused “to turn over her server to a neutral, detached third party for independent forensic examination.”

Instead Clinton convinced the State Department to allow her to decide for herself which emails should be made public.

According to Clinton, she set up this “unusual email arrangement” (as Gowdy referred to it) for her “convenience,” in that she did not want anybody else reading her personal emails about yoga, bridesmaid dresses and whatever.

But why should anybody believe her, especially given that she lied in March when she said, “I did not email any classified material to anyone on my email.”

“She almost got away with it, but she didn’t,” Gowdy pointed out.  He added, “If she were interested in cooperation, she would not have done any of the things she has done to date.”

Clinton is a conniving liar who is trying to weasel her way out of trouble. She apparently believes, and always has, that Lady Justice should hold her to a different set of standards than everybody else

We’re sorry to break it to you, Madame Secretary, but if you did the crime, you will do the time, regardless of who you are and how hard you try to evade justice.



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