A Really Good Article from Robert Barro

Here, Robert J. Barro explains why it's important to cut tax rates, not raise them right now.  One could pray that BHO's economists will read it, but one wouldn't want to hold one's breath.

TANSTAAFL, As Always

More health care for all at lower cost?  That's what BHO and crew said.  Of course, that's impossible, and the chickens are already coming home to roost.  Check it out here.

I'm thinking that all the folks who read this blog knew what was coming when BHO and crew passed ObamaCare.  Maybe enough of us will figure it out in time and join the New Blood Party for the November elections.

What of Jobs?

Here, Gerald F. Seib writes about jobs --- or more to the point, about the lack of  "enough" jobs in America.  His article is interesting, and it offers useful data about America's current and recently past unemployment rates.

Seib offers pseudo explanations of high unemployment rates now and recently from the mouths of several economists.  Of course, as usual, none of the "experts" seem to be singing from the same hymnal.  Once again the Dismal Science disappoints.

What none of the economists cited in Seib's article mention or speak of is that the natural state of humans is not to have a job. Notice that I did not say that the natural state of humans is not to work.

A job is working for someone else, following the directions of someone else, instead of working for one's self according to one's own direction to create valuable goods and services to exchange with others, which is the true source of income.

A job requires that individuals sacrifice autonomy, liberty, and self direction.  But to hear politicians of all stripes talk about it, jobs are just what we need, and we need more of them.  Of course we do; politicians like an obedient herd.

Here's a question.  What would each of us do if we found ourselves inhabiting the proverbial tropical island by ourselves?  We would work.  We would produce goods and services for ourselves.  We would not expect a job to appear for our taking.

Seib notes in his article,

"The American economy hasn't been a very robust jobs-producer for quite a while. That's the broader question that needs to be discussed, even as we work on the immediate problem." 

Indeed.  The immediate problem is a high and rising unemployment rate. The longer we keep looking to Washington to do something about the immediate problem, the longer the problem will continue.

Government does not and cannot create or even stimulate production of valuable goods and services.  Individual people do that.  But government can and does create moral hazard by its incessant claim that it is somehow responsible for creating jobs for the economy.  What utter nonsense.

If you would really like to know more about why the unemployment rate is so high just now and in the recent past, read Robert Barro's explanation here. On the other hand, if you are one of the unemployed, your time would be better spent by doing something about your joblessness yourself.  Take charge.  Produce valuable goods or services yourself, and exchange them for the goods and services of someone else.

That statement will doubtless sound cold and unsympathetic to lots of folks.  But blaming someone else for one's own lack of production of valuable goods or services really won't help. Worse still is looking to BHO and crew, or any other set of politicians to help the "economy" produce more jobs.

The Will to Civil Obedience

Thanks to the Ludwig Von Mises Institute, I offer here an analysis of the amazing civil obedience we offer to whoever is in authority, whether they be tyrant or benevolent benefactor.

I have remarked in this space on more than one occasion that there seems to be something in humans that likes a king.  The Milgram Experiment described here offers some hypotheses about how and why.

The Milgram Experiment provides stunning evidence that the lot of humans seems not to be liberty and moral behavior.  Instead, we are evidently all too willing to behave immorally at the behest of authority.  How very sad.

What Is Moral Hazard?

Just in case you have been wondering what "moral hazard" is, since the term has been in the financial news in abundance lately, here's a great explanation of the concept from Thomas Sowell.

And just in case you don't know who Thomas Sowell is, you can and should read just about everything he has ever written, and everything he will write in the future.  Dr. Sowell is an economist, and his perspectives are always enriching, and I might add, quite correct.  I have never met Dr. Sowell, which is my loss.

Social Security Bait and Switch

I've sometimes noted in this space that BHO is either not too bright, or he lies.  Here is yet more evidence that prompts me to make such an observation.

Any social security plan that isn't based on sound actuarial calculations is a Ponzi scheme.  They put Bernie Madhoff in jail for that, but evidently, a giant Ponzi scheme is just fine for politicians.

We Have Been Down This Road Before

I love the sort of article you will find here.  Evidently, we need constant reminders that we have indeed been down this road before.

When we were doing the last presidential election, I noted to many friends that BHO pretty much had no experience doing much of anything.  Those friends always said, "not important; he will surround himself with people who do."  Yeh, right.  I guess those "surrounding folks" don't know much more economic history than BHO does.  We have been down this road before.

Is the Housing Market to Blame for Our Continuing Recession?

In a word, no.  In a recent post, I discussed the real reasons for our continuing recession.  Yesterday's dismal report of the drop in sales of existing homes leads many to believe that "its the housing market, stupid."

But the WSJ article here explains why that really just isn't the case.  All the liberal rags and other mainstream media  that point toward the housing market are using a simple diversionary tactic.  It's the government, stupid, not the housing market.

The housing market will recover precisely when the federal government gets out of the business of fostering massive uncertainty.  Governments cause recessions; housing markets don't.  This is all old ground, of course.  You can read more about it here, and here and here if you haven't already.

Why Do We Continue To Languish in the Great Recession?

Here, George Melloan provides an excellent explanation of our enduring recession and elevated unemployment numbers. Mr. Melloan notes,

"In the late 1970s, the last time Americans suffered from manic interventionism from Washington, we had 'stagflation,' a combination of minimal economic growth and double-digit inflation. It wasn't pretty." 

Simply stated, it takes intrusive government to create and sustain a recession.  That's because only an intrusive government (and its sidekick the Fed) can create sufficient uncertainty to cause large numbers of businesses and households to make poor economic decisions all at the same time.  Recessions don't just happen, and they aren't caused by any sort of naturally occurring economic phenomenon.  Since I've explained this proposition at length here, here, and here) no need to write it all again.

The economic recovery will begin and be sustained when and only when businesses and households can see a believable economic future.  Neither businesses nor households can see that future right now.  All they can see is BHO and crew on their relentless march toward ever bigger-government socialism and red ink for the foreseeable and imaginable future.

Please vote carefully in November 2010.  We've got the wrong bus driver (to borrow a favorite metaphor), and he'll be around at least until January 2013.  But we can slow him down in November 2010.  Join the NPB.  Read all about the New Blood Party here.

More Borrowing What Hasn't Yet Been Produced

Here, the WSJ chronicles the massive federal spending explosion since BHO and company took office. And just in case you were wondering, all that spending by the U.S. Treasury will likely come from new money created by the Fed, not from taxes or from the savings of households who choose to buy U.S. Treasury bonds with their saving.

But spending financed with new money is an attempt to borrow what has not yet been produced. As I've noted on more than one occasion, (here, for example) you can't borrow what hasn't yet been produced. Attempting to do so results in an economic mirage.  The latest example was the housing bubble that led to the great recession we are still trying to escape.

The growing red ink generated by BHO and his Democrat controlled Congress will not result in greater production of real goods and services.  And without greater production of real stuff, the unemployment numbers will continue to languish.

BHO's economists know what's going on.  But most of them continue spouting the party line.  All but Christy Romer, BHO's former Chair of the Council of Economic Advisers bailed.  I always knew she is a smart lady.