Thursday, September 12, 2019

The example of Zimbabwe refutes both Keynes and the monetarists

Where are the Zimbabweans? According to Financial Times reporter Joseph Cotterill, millions can be found in neighboring South Africa, along with other more economically vibrant locales. Cotterill notes that the Zimbabwean “diaspora” is the result of “decades of turmoil” within the formerly prosperous country.

That more and more Zimbabweans exit their country in order to work rates discussion in consideration of how all too many economists and politicians think of economic growth. According to those with a Keynesian orientation, it’s consumption that powers growth. Others, of the monetarist persuasion, believe that growth in so-called “money supply” is what keeps the economy moving. Neither religion acknowledges that both consumption and money aren’t instigators of growth as much as they’re a consequence of it.

If consumption and soaring money supply were certain growth ingredients, prosperity would be simple. Politicians could demand that the citizenry consume more, and to enable the buying, they would instruct a central monetary authority to boost money in circulation. Of course to anyone with a pulse, such a scenario would fail with blinding speed. Most of us intuitively know that our ability to consume is a function of our ability to produce. To pretend otherwise is the equivalent of assuming the only difference between Lake Forest and Cabrini Green is that government-engineered money supply increases in the former enable greater consumption than takes place in the latter. No, money supply is abundant in Lake Forest, and so is consumption, precisely because the residents of Lake Forest are rather productive. Zimbabwe instructs on the matter.

Zimbabweans are able to consume more and more thanks to production of Zimbabweans not working in Zimbabwe. This is an important distinction to make. Paul Krugman argues endlessly for increased government spending to boost economic growth, but does so without acknowledging that the growth already occurred. Governments can only spend insofar as economic growth showers them with revenues to spend. Production first, then the spending.

To Keynesians like Krugman, the answer is always more outlays from politicians. If there’s consumption, prosperity will ensue. Zimbabwe is a reminder of how unrealistic such a belief is. No doubt Zimbabweans are able to consume wealth to a greater degree than they produce wealth, but this ability to buy in greater amounts isn’t thanks to magic; rather it’s a consequence of the productivity of Zimbabweans toiling outside of the country. To be clear, there’s no such thing as consuming. Behind every act of consumption, whether it’s government enabled or enabled through remittances, is an act of production first.

Readers might consider the above the next time they witness some economist or politician on TV talking about boosting the economy through more government spending. They're confused, or they’re lying. They can do no such thing. The consumption they aim to generate through government largesse is only possible insofar as private actors produced the wealth first. Government spending can’t stimulate growth as much as government can arrogate to itself the right to allocate wealth already created; usually at the expense of entrepreneurs and businesses. Never forget that entrepreneurs compete with consumers (private individuals, along with governments that confiscate wealth in order to shift consumption to others) for always limited resources.

Considering money, it too has no use absent production. Money can’t be eaten, or slept with; instead money is just an agreement about value among producers, along with those empowered to consume as producers do thanks to shifts of money. In Zimbabwe’s case, money has use there to a high degree because of production that doesn’t take place there. As Florence Ncube explained it to Cotterill, there “is no food that side," as in little food produced in Zimbabwe. Groceries are purchased in South Africa, and then sent to Zimbabwe. Money supply can be found in Zimbabwe not because some central bank decreed it, but once again because of production that didn't place in Zimbabwe. Money earned outside of Zimbabwe, and goods and services produced outside of the country, give money a purpose in Zimbabwe.  Production first, then money supply. Monetarists, like Keynesians, get the drivers of economic growth backwards.

Readers might remember this the next time some wise pundit or economist in a developed country laments impossibilities like “money shortages” or “insufficient money supply” in countries they don’t live in. The reality is that money, like consumption, is a consequence of production. Where there’s production there will always be abundant money to facilitate exchange of it, and where there’s little production is where money will always be scarce. Politicians and central bankers can’t alter economic reality through magic despite what we’re told.

Bringing it back to Zimbabwe, it has neither a problem of insufficient demand nor insufficient money supply as the twin ideologies that are Keynesianism and Monetarism would contend. What really ails Zimbabwe is a lack of production; the latter increasingly being made up for by enterprising Zimbabweans living and working outside their home country.



The Equation That Explains Evil

Our age loves scientific equations. Here's one you weren't taught at college but which affects you as much as the law of gravity:

GI - W = E
Good Intentions (GI) minus Wisdom (W) leads to Evil (E).

You weren't taught this rule at college because the modern university believes only science has rules. "Rules of life" is another term for wisdom, and there is no wisdom -- or even pursuit of wisdom -- at our universities.

Life has rules just like the natural sciences do. Examples include:

Ingratitude makes happiness impossible.

Corrupt people think everyone else is as corrupt as they are.

Human nature is not basically good.

Feelings are far less important than actions.

Most men need a woman to mature.

Most women need a man to mature.

The list is long. And the more life rules people know and live by the better people they'll be -- the better the world will be.

There is a reason Jordan Peterson's book "12 Rules for Life" has sold millions of copies, mostly to young people. It is the same reason PragerU has a billion views a year, mostly among people under 35. Many young people are sensing they have been cheated by the adults that have taught them, for example, to pursue self-esteem rather than self-control -- a "rule" guaranteed to lead to moral and professional failure.

But one rule almost no one was taught, that explains most organized evil and the left in particular, from the Bolsheviks to Mao to Castro to Chavez to your everyday leftist in New York or Iowa: Good intentions without wisdom leads to evil.

Communism, the greatest mass murder ideology in history, was for almost all its rank-and-file supporters rooted in their desire to do good. (This was rarely true for its leaders, whose greatest desire was power.)

The many millions of people all over the world who supported communism did not think they were supporting unprecedented levels of mass murder and torture or an equally unprecedented deprivation of the most fundamental human rights of a substantial percentage of humanity. They thought they were moral, building a beautiful future for humanity -- eliminating inequality, enabling people to work as hard or as little as they wanted, providing their fellow citizens "free" education and "free" health care. They were convinced that the moral arc of history was bending in their direction and that they were good because their motives were good.

That's why leftists have such moral contempt for those who differ with them. Because those on the left are so good, only bad human beings could possibly oppose them. That is the position of virtually every editor and columnist at The New York Times.

The problem with communists and with leftists who don't consider themselves communists is not that none of them mean well. It's that they lack wisdom. There are wise and foolish liberals, wise and foolish conservatives; but all leftists are fools. Every one of the Democrats running for president is a fool.

This is not, however, a description of their totality as a human being. Fools may be personally kind and generous, may be loyal friends and devoted spouses, and of course, they may be well-intentioned. But in terms of making the world worse, there is little difference between a well-meaning fool and an evil human being. Tens of millions of well-intentioned Westerners supported Stalin. The Westerners who supplied Stalin the secrets to the atom bomb were not motivated by evil. They were simply fools. But few evil people did as much to hurt the world as they did.

They are fools partly because they believe good intentions are all that matter. Therefore, they never ask perhaps the most important moral question one can ask: What will happen if my policy is enacted? Leftist supporters of communism never asked.

Democrats who push the country-bankrupting Green New Deal provide a contemporary example. They not only deny the economy and society-crushing consequences of the Green New Deal, they deny any price will be paid. Every home, office, hospital, school and business will be forced to stop using fossil fuels, yet only good will come from that. Giving that amount of coercive power to the state is of no consequence to leftists. In their make-believe world, no one will suffer. On the contrary, America will become richer, and millions of jobs will be created while we destroy our economy. Poor Africans trying to electrify their countries will be told not to -- yet they, too, will somehow become rich using only wind and sun.

If the Green New Deal is enacted, the American economy will tank -- and with it, much of the rest of the world. Tyrannies like China and Iran will be emboldened, as will dictatorships like Russia.

On every issue in which the left differs from conservatives (and often from liberals), they are fools. They push for a Palestinian state although even Israelis on the left know this would mean a Hamas-Hezbollah state on the Israeli border. But they know they mean well.

They routinely label the beacon of freedom on Earth racist, misogynistic, homophobic, imperialistic, genocidal; cheapen the label "Nazi"; promote all-black dorms and graduations; promote preteen boys' performing drag shows; tell young women career is more important to happiness than marriage; believe a country can remain a distinct nation with open borders; condemn parents who try to reassure their 3-year-old son that he is a boy; and ruin the university, the arts, late-night comedy, pro football and religion.

But they mean well.



Border Apprehensions Plummet Thanks to Trump Deal with Mexico

Back in June, many on the left pooh-poohed Trump's deal with Mexico to avoid tariffs in exchange for stronger efforts by Mexico to curb the flow of immigrants through their country into the United States. While the positive impact of that deal became apparent almost immediately, we now have a much clearer picture of the impact of the deal Trump struck with Mexico, as border apprehensions have plummeted the past three months.

Immigration officials apprehended just over 64,000 migrants at the southern border in August – a dramatic drop that the Trump administration is presenting as a sign its diplomatic engagement with Mexico and other countries is having positive effects on the ground.

The 64,006 migrants apprehended or deemed inadmissible represents a 22 percent drop from July, when 82,055 were apprehended, and a 56 percent drop from the peak of the crisis in May, when more than 144,000 migrants were caught or deemed inadmissible. While the numbers typically drop in the summer, the plummet is steeper than typical seasonal declines.

Meanwhile, the number of caravans has also dropped. In May, 48 caravans of migrants were recorded coming to the U.S. In August, the tally was six. Border Patrol now has fewer than 5,000 migrants in custody, down from 19,000 at the peak in the spring.

The numbers are still technically at crisis levels, but nevertheless, the trend is clear and proves that Trump's policies are working. “That international effort is making an impact. Mexican operational interdiction is certainly [the] highlight of that effort, but the shared responsibility we’re seeing in the region, governments stepping up and saying we also own this,” said Homeland Security Secretary Kevin McAleenan on Monday while on Fox News. Another senior administration official said that "the tariff threat with Mexico changed the dynamic significantly with our partners."

Trump announced in May that he intended to impose tariffs on Mexico if it did not help the U.S. combat the migration crisis. Trump ultimately suspended the tariffs days before after a deal was reached that included Mexico taking “unprecedented steps” to boost enforcement, including deploying its National Guard, while the MPP, known informally as the “Remain in Mexico” policy, was expanded.

Mexico has now been giving those migrants a permit to remain, work authorizations and social security and providing free transportation to anyone who wants to return to their home countries.

A senior administration official pointed to engagement with countries in Central America and agreements made with Honduras, Guatemala and El Salvador on issues such as human smuggling – the main countries sending migrants to the U.S. The official said that Honduras has so far more than doubled its border force after the U.S. requested they triple it.

A long-term solution to the problem of illegal immigration must still come from Congress, which seems unlikely as long as Democrats control the House. Thankfully Trump is doing something to solve the problem.



Who's benefiting from Trump's economy? Minorities and the poor 

The Washington Post reports, “For the first time, most new hires of prime working age (25 to 54) are people of color, according to a Washington Post analysis of data the Labor Department began collecting in the 1970s. Minority hires overtook white hires last year.” If, as the Leftmedia loudly insists, President Donald Trump is a racist only interested in promoting white nationalism, he’s evidently doing a terrible job of it. In fact, under Trump’s leadership, black unemployment has hit record lows. And it’s not just blacks; minorities in general are enjoying record employment levels, as are white Americans.

Meanwhile, as the economy under Trump has surged, the number of Americans on food stamps has dropped by over six million since January 2017. The Daily Caller notes, “In February 2017, the first month after Trump took office, 42,297,791 persons were participating in the Supplemental Nutrition Assistance Program. As of June 2019, 36,029,506 persons were participating in the program.”

Yet during Barack Obama’s long “recovery,” the number of able-bodied adults on food stamps doubled, from 1.9 million to 3.9 million. One of the main factors for this increase can be tied to Obama’s waiving of the 1996 Welfare Reform Act’s work requirements. While Obama increased the number of Americans who depended on the federal government (and, by extension, the Democrat Party), Trump’s actions have reversed this trend and now fewer Americans find themselves on the government dole.



Roughly 6.2 million people have dropped off food stamps since President Donald Trump’s first month in office

Data from the USDA shows 6,268,285 individuals have left the food stamp program since Trump took office.

In February 2017, the first month after Trump took office, 42,297,791 persons were participating in the Supplemental Nutrition Assistance Program. As of June 2019, 36,029,506 persons were participating in the program.

Similarly, 20,937,903 households were participating in the program in February of 2017 – a number which slimmed down to 18,230,968 by June 2019 revealing that 2,706,935 households dropped out of the food stamps program since Trump took office.

Under the Obama administration as part of a 2009 stimulus package, states were allowed to waive work requirements for food stamps and the number of childless adults on food stamps doubled.

The number of able-bodied adults on food stamps doubled from 1.9 million in 2008 to 3.9 million in 2010 when Obama signed his stimulus bill and suspended a rule under the 1996 Welfare Reform Law that regulated how long able-bodied adults without dependents could collect food stamps.




For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCHPOLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated), A Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

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