Category Archives: Economy

Ten things the government could do to help create jobs

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There’s been a lot in the press recently about the need to create jobs. Yet the only solutions offered seem to be things like cutting taxes or new spending on various government-sponsored job programs (Keynesianism). You would think it would obvious to most people by now that this doesn’t work — remember that $1 trillion “stimulus” from a few years ago? Did it help? Clearly not.

So if government spending doesn’t work, then what’s the answer? It’s basically the opposite of what the government has been doing. Rather than increasing regulations and creating more and more barriers — just get out of the frigging way!

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Example of conservative investing results in New Zealand

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Let’s look at what would have happened if you bought New Zealand dollars (using US dollars) 4 years ago, held them in a savings account in a bank, and sold them today. To keep the math easy, let’s assume you’re in a low tax bracket and don’t pay taxes (hey, that’s half the US now, right?).

mid-2007: Buy US$100 worth of NZ dollars. Exchange rate = 0.68 USD/NZD, so net = NZ$147.06
mid-2007 to mid-2008: Interest rate for savings account 7.4%, so NZ$157.94 at the end of the year
2008 to 2009: 7.2% –> NZ$169.31
2009 to 2010: 6.0% –> NZ$179.47
2010 to 2011: 5.0% –> NZ$188.45
mid-2011: Exchange NZ$188.45 back to USD. Current exchange rate = 0.81 USD/NZD, so net = US$152.64

That’s a 52% gain over 4 years, or 11% compounded annually. 19% of the gain came from a weakening USD vs. NZD alone.

For comparison, gold has about doubled in USD terms over the same period, but pure USD deposits are up only a few percent.

Should the US sell the gold in Fort Knox?

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There has been some talk recently about whether the US should sell the gold it has in Fort Knox, as a way of offsetting the budget deficit.

There are reasons to suspect that the gold in Fort Knox may not be there. GATA has shown evidence of a very active program of the government leasing gold to so-called “bullion banks,” as a way of generating a return on an otherwise stagnant asset. However, in spite of that, let’s assume for the moment that the gold either is there, or can be readily recovered.

Governments and central banks have a history of holding gold, for good reasons. In World War II, a number of countries that the US government did business with would not accept dollars in payment, nor would the US accept their currencies. Many war supplies could only be purchased with gold; it was a major medium of exchange during a period of shortages and substantial uncertainty. In that sense, it is a strategic asset.

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Socratic questions: social, economic, political or ethical

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I thought it might be interesting to put together a list of Socratic questions that highlight a contradiction in popular social, economic, political or ethical thinking, in such a way that it helps people think about complex issues.

Here are a few that I came up with. If you can think of any to add to the list, I would love to see them.

  1. Why do labor unions insist that their employers “share the wealth,” while they refuse to share in any of the losses?
  2. If education should be free, why do teachers and their unions demand (and receive) such high salaries?
  3. Why are the politicians who preach economic egalitarianism so strongly against a system with true political equality?
  4. Why are parents chastised for not spending enough time with their children, while also being forced to send their kids away to public schools all day?
  5. Since initiating force against another person is immoral, how can you justify legislating morality, since it requires force?
  6. If people making over $200,000/yr are considered rich and evil capitalists, why are the public and union employees who make that much considered “deserving”?
  7. Why does government expect us to obey the laws they pass, when they exempt themselves from many of them, and when they refuse to follow the Constitution?
  8. How can government protect my freedom by violating my rights?
  9. If more legislation is the answer, how much will be enough?
  10. If money (or the love of money) is evil, why do you use it?
  11. How many poor people have you ever worked for?
  12. Why do so many Black Americans embrace Christianity, a religion which was imposed by force on their slave ancestors?
  13. Why does getting elected to public office entitle elected officials to spend public tax money for their own personal holidays?
  14. If equal pay for equal work is a good thing, why isn’t it OK for someone not to be paid for doing nothing?

Out of control state occupational licensing

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According to a Feb 7 article in the Wall Street Journal, more than 1,100 occupations in the US now require state licensing; everything from florists to barbers to people giving massages. In 2008, an astounding 23% of US workers required state licensing and approval to perform their jobs, up from 5% in 1950.

The article points out that “licensing mostly serves as a form of protectionism, allowing veterans of the trade to box out competitors who might undercut them on price or offer new services.” It also quotes a labor professor from the Univ. of Minnesota, “Occupations prefer to be licensed because they can restrict competition and obtain higher wages,” and “If you go to any statehouse, you’ll see a line of occupations out the door wanting to be licensed.”

In other words, using the force of government to limit competition and keep prices artificially high – another flavor of the same problem that has corrupted labor unions and many industries.

I’d like to suggest two straightforward and principled ways to address the high unemployment rate: abolish all occupational licensing requirements, and eliminate the minimum wage. Not only would more people be employed, but prices for those of us who use such services would decline, and the overall quality would likely improve as service providers became more competitive.

Nine examples of Black Friday violence

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Re-posted from The Economic Collapse Blog:

9 Shocking Examples Of Black Friday Violence — Is This A Foretaste Of The Economic Riots We Can Expect When The Financial System Collapses?

It seems with each passing year the madness on Black Friday gets even worse. This year, there were reports of fights and rioting from coast to coast. It was estimated that over 180 million U.S. shoppers headed for the stores on Friday, and whenever you get that many people together there are going to be problems. But just how crazed ordinary Americans are getting over saving a little bit of money is deeply disturbing when you really start thinking about it. If people will go this wild just to save 40 percent on a television set, then what in the world are they going to do when they have been without food for a couple of days? If Americans will act like psychotic animals just to save 50 bucks, then what in the world will they do when they have lost everything and are desperate to survive?

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Americans, I have some bad news for you

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Reposted from Life After the Oil Crash:

Americans, I have some bad news for you:

You have the worst quality of life in the developed world — by a wide margin.

If you had any idea of how people really lived in Western Europe, Australia, New Zealand, Canada and many parts of Asia, you’d be rioting in the streets calling for a better life. In fact, the average Australian or Singaporean taxi driver has a much better standard of living than the typical American white-collar worker.

I know this because I am an American, and I escaped from the prison you call home.

I have lived all around the world, in wealthy countries and poor ones, and there is only one country I would never consider living in again: The United States of America. The mere thought of it fills me with dread.

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How bad is the Dow now, really?

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Every once in a while, I like to break the Dow index down and look at the 30 individual components. I just finished comparing it to where is was on Jun 1, 2008. A few facts:

1 company was dropped from the average (AIG). Its price has dropped 99%. It was replaced with Kraft Foods.

1 other company has dropped more than 90%: Citigroup.

3 companies have dropped between 80 and 90%: Alcoa, BofA and GM.
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