San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Tuesday, September 27, 2016

Plenty Of Economic Ignorance On Display Last Night

Like most of you I tuned into the panel discussion featuring the two people who want to be the next King or Queen of the Socialist Democracy of Amerika last night.  After watching the festivities I stick by my prediction, made well over a year ago, that Hillary will be the first Queen of the Amerikan Empire.  But that is not the point of today's post.  The first section of the panel discussion was dedicated to giving each of the candidates the opportunity to show just how little they understand about economics.  They both did a fine job of broadcasting their total ignorance about economic truth.  I was furiously writing down notes as they brought forth one stupid assertion after another.  Today I want to bring you a small sample of the economic understanding of the two people who earnestly desire to run the Amerikan Empire.  I believe they are eminently suited to be our rulers as neither one of them has a clue about how the world really operates.
Hillary began the parade of ignorance when she said, "If you helped create those profits you should share in them...." in reference to an argument she was making in favor of a new federal law she would like to see that would mandate profit seeking businesses share some of their profits with their employees.  Hillary's stance is a smart one from the political perspective.  There are far more employees than there are profit seeking entrepreneurs.  She will be likely to gather many more votes by pandering to employees than she ever would by pandering to employers.  She has the added advantage of the presence of sinful envy in the hearts of all the reprobates who populate this sinful land who are likely to vote for her.  Appealing to their desire to take something from someone who is richer than themselves is always a successful way to build a following of ardent supporters.
Is Hillary's idea for a new federal law a sound one?  Hardly.  Hillary has no conception of ownership.  I might be willing to go along with her preposterous plan if she crafted the law to also include the necessity for the employees to share in the realized losses of a profit seeking corporation.  If the employees, who have taken no risks and put none of their money into the venture, are to share in the profits if they are realized, then they should also share in the losses if they are realized.  If a company goes bankrupt, its employees should as well.  That is only fair.  I wonder if Hillary would agree with my proposal?
Furthermore, if employees are expected to share in the profits of successful companies simply because they sold their labor services to the company at some point along the way, why should every single person who had anything to do with the company also not have a moral claim on some of those profits?  If employees should receive a profit sharing distribution, so should the bankers who loaned the company money, so should the bond holders who purchased the corporate bonds, so should the hot dog vendor who sold the CEO a hot dog on the street outside the corporate offices, and so should the consumers who made the profits possible by purchasing the finished products of the company.  But let's not stop there.  All government regulators involved in the business of the company should also be entitled to a share of the corporate profits.  Career bureaucrats at OSHA each have a claim upon them.  So should the cops who patrolled the streets anywhere the products were produced  or sold.  By the time we are done putting together the list of people who have a moral claim to the profits of a profit seeking business each of those beneficiaries will be in line to receive a penny or two as his share.
Donald offered up a bit of economic wisdom when he later said that "we need to stop our jobs from being stolen from us."  The assertion was made in the context of his war upon free trade.  Donald, as I believe everyone knows, wants to engage in a trade war with every country on the face of the earth.  He sees trade as an act of war, with winners and losers, and he wants to make sure that Amerikan businesses are always the winners.  To make sure that Amerikan businesses are always the winners he wants to slap huge tariffs on all goods produced by Amerikan companies that utilize foreign labor in the production of those goods.  Donald, of course, is doing nothing more than attempting to buy the votes of laborers who have lost their jobs to cheaper, more efficient and superior laborers who happen to live outside the confines of the SDA.  His jingoistic chant that Amerikans are good and stinkin foreigners are good for nothing rings true in the ears of the deplorables who populate this country.  It is good politics even if it is horrible economics. 
I don't know if Donald is aware of this but no foreign country has ever "stolen" a job from a company operating within the SDA.  Profit seeking businesses, in a never ending quest to serve and satisfy the demands of the sovereign consumers, compete against one another for the business of those consumers.  To compete effectively, and thus make the consumers happy, they have to find the cheapest price for their raw materials and labor.  Companies hire laborers who domicile in countries outside the SDA because they can provide the same or better labor services for a lower price than what can be found domestically.  Donald needs to explain why that is immoral.  I understand why lazy, bloated, inefficient and politically privileged Amerikan workers don't like that truth but it does not change the fact that it is the truth.  It also does not change the fact that outsourcing labor is not an immoral activity and no foreign country has ever stolen an Amerikan job.
Hillary followed up Donald's ridiculous comment with a doozy of her own.  Speaking about the career politicians who preceded the Obama administration and in reference to Donald's proposed tax plan she said, "The Great Recession was in a large part caused by the politicians who slashed taxes for the benefit of the rich."  Now I have heard a lot of stupid explanations for what brought about the economic conditions which have come to be known as the Great Recession but I have never heard that it was caused by Republicans who "slashed taxes" for the rich. Hillary did not follow up her outrageous assertion with any form of economic argument.  She made no attempt to explain how cutting taxes harms the economy and she certainly made no attempt to explain how King George's tax policies created the Great Recession.
I have posted on the causes for the Great Recession many times in this blog.  If you want to read those posts type "Great Recession" into the search bar and see what comes up.  Needless to say, the Great Recession was not caused by tax cuts.  A tax, despite what Hillary believes, always impedes economic growth.  Cutting taxes, regardless of which ones and regardless of how much, always encourages economic growth.  It is impossible for a tax cut to be unhealthy for the economy.  The only thing that is harmed by a tax cut is government spending and, by implication, those people who are on the government dole.  Hillary knows this.  She knows that people on the government dole will vote for her if she can give them a moral legitimacy for their parasitical actions.  Blaming the Great Recession on a tax cut is that sort of legitimacy.
I conclude with a statement from Donald about the stock market.  He said, "We are in a bubble right now.  The only thing that looks good is the stock market but when they raise interest rates the whole thing will come crashing down."  Donald is making numerous economic assertions in this statement and all of them are wrong.  First, the stock market is not "in a bubble."  His belief that the mere fact that various stock market indices are hitting all time highs indicates the presence of a speculative bubble is ridiculous and unfounded.  Stock markets operating within growing economies will constantly be setting record highs.  That says nothing about the relative amount of speculation that is taking place. In addition, Donald's belief that stocks will crash when interest rates rise is also unfounded.  Go here for my blog post on that ignorant belief.
The current Fed policy of keeping interest rates at zero is not impacting the stock market.  The primary harm being inflicted to the economy of the SDA by interest rates hovering near zero is felt by bond holders and investors in other fixed income instruments.  Talk to retirees who were planning on living on the interest from their investments and find out just how difficult life is for them thanks to the Fed.  On the other hand, the primary arena in which irrational exuberance is taking place is in the mortgage market.  Mortgage companies are making hay while the Fed stupidly and harmfully keeps interest rates at artificially low levels.  People are buying homes they cannot afford because interest rates are unrealistically low.  When interest rates rise it will not be the holders of stocks who will be hurt.  It will be the holders of bonds and adjustable rate mortgages.
Both Hillary and Donald displayed breathtaking levels of economic ignorance last night.  I believe that suits them well.  I believe it also qualifies either one of them to be the next King or Queen of the Socialist Democracy.  I can rest easy in the fact that regardless of which one wins the next election, the person selected by the sovereign majority of this sinful land will be qualified to lead the Amerikan Empire to its imminent demise. 

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