Sleepless in Midland

Economic boom coming

When WWII ended thousands of men came home and went to work. Some started companies, some went to school, and some got good jobs.

As this coronavirus shutdown ends, we are likely to see the same thing as people go back to work.

Mark Cuban was on Charles Payne's TV show on FBN answering viewer questions. And in one response Cuban said now was the best time ever to start a company. Cuban is a very successful entrepreneur, and his advice is worth listening to.

However, government could get in the way. Currently, there are a lot of people making more money from the Cares Act than they were while working. And common sense tells them to stay off the job until the gravy train stops.

But eventually we'll have a great economy again. Buckle up and prepare for liftoff.

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1:10 PM 5/23/2020

If China wanted to ruin the American economy they hit on the right strategy

Few rational observers can ignore what China did. Regardless of how the virus developed and got released, what China did afterward certainly was war like. Redstate.com has a quote from Peter Navarro from a TV appearance that sums it up nicely. To wit:

We know that patient zero in China was about mid-November. It was in Wuhan. We know that ground zero had the P-4 weapons lab, where the virus likely came from. For the next two months, we know that China hid the virus from the world behind the shield of the World Health Organization.

And, as they did that, they sent gleaming passenger jets from China, not into the rest of China from Wuhan, but to places like New York and Milan, seeding the world with what would become a pandemic.

As they did that, we also know, Maria, from their own customs data that they vacuumed up virtually all of the world’s personal protective equipment, including over two billion masks.

And we also know that, today, what China is doing, sitting on that stockpile of what we call PPE, is, they are selling it at profiteering prices to some. And, to other countries, they are actually putting pressure on those countries to deny the virus came from China or to talk about Taiwan or to do other things.

So, that’s it in a nutshell. And what that means for us here is, this morning, Americans won’t go to church because of the China virus. Sons and daughters of America won’t be taking their mothers to brunch. Tomorrow, 33 million Americans won’t be going to work, and millions of children in America will be home climbing the walls, instead of learning, reading, writing, and arithmetic.

So, that’s the China problem that we face. President Trump built the most powerful and beautiful economy in the world in three years.

The Chinese Communist Party took it down in 60 days.

Source: White House Trade Advisor Peter Navarro Points out How Frighteningly Fast Communist China Took Down Our Economy.

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2:54 PM 5/11/2020

Daniel Henninger's prescient analogy to the roaring 20s

In early January our quote of the week was from Daniel Henninger's piece in which he told us what happened in the roaring 20s and how the time period had an eerie similarity to the present.

There were tariffs (Smoot Hawley), there was a booming economy, and there was a stock market boom. Then came a crash followed by the Great Depression compounded by government mistakes.

Flash forward and notice the similarity: booming economy, tariffs, and record setting stock market rallies. And then we experience a stock market crash and an economy in the dumps. The blame can be placed on the Coronavirus pandemic. But the similarity is eerie.

In this case government is concerned about both the disease and the economy. There are sharp minds at work battling the pandemic, and hopefully, it is close to a peak. And maybe this time the government is a great bit wiser when it comes to the economy.

As the old saying goes, "Those who don't know history are doomed to repeat it."

Previously on these pages: Quote of the week -- Daniel Henninger on the roaring '20s.
Henninger's original piece: Will the ’20s Roar Again?

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2:10 PM 4/11/2020

A massive viral outbreak strikes the U.S. -- Spontaneous Hoarder Syndrome

There's a highly contagious condition spreading like wildfire. Store shelves are laid bare from rapidly spreading Spontaneous Hoarder Syndrome.

Crowds like the one at the Midland, Texas, Sam's Club Saturday morning were reminiscent of coastline city stores when hurricanes circulate off shore. People are stocking up, that's for sure.

This outbreak results from anticipation of a hermit like existence due to a quarantine for the duration of the Coronavirus scare.

Never mind that the closest reported case of Coronavirus is 300 miles away. The hoarding syndrome is contagious. And more people have caught it than will catch likely catch Covid-19.

Meanwhile, there were 51 cases of Covid-19 reported in Texas as of Noon Central, 3/14/20. Source: COVID-19 (new coronavirus).

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2:35 PM 3/14/2020

Quote of the week -- Daniel Henninger on the roaring '20s

Daniel Henninger makes some interesting parallels while comparing the 1920s with the 2020s in Will the ’20s Roar Again?. He notes that the tax rate in 1920 was 77%. However, tax cuts in 1921, 1924, and 1926 brought the top rate down to 25% which fueled a booming economy. Likewise, Trump's tax cuts fueled a booming economy.

Then the Smoot Hawley tariffs helped put the world economy in a spin. So currently we have Trump's tariffs. And it's easy to try to make a comparison. But, it may not be so bad as Trump is already reducing those tariffs.

This is a long introduction to the quote of the week, which is Henninger's final paragraph:

If there is one valid correspondence with the first Roaring ’20s, it is that the earlier decade produced a wave of new thinking about everything. We are overdue today for another wave of creative thought—about politics, culture, education and morality. This time, hold the roaring.

Yeah, bring on that new thinking.

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3:18 PM 1/3/2020

The economy in Blue districts differs from Red districts

An interesting piece at WSJ.com tells us this: Democrats and Republicans Aren’t Just Divided. They Live in Different Worlds. That article is behind a paywall, but a summary can be found at Red and Blue Economies.

After comparing Democrat House Districts with Republican House Districts, the conclusion sums it up this way:

America’s political polarization is almost complete. Its two main political parties increasingly represent two different economies. And they barely overlap. Democrats can be found in educated cities and suburbs where professional jobs are plentiful. Republicans live in working-class and rural communities, home to agriculture and low-skill manufacturing. Another way to look at it: Democrats are dominant among high-producing districts, while Republicans now represent more of those with the least economic activity.

Meanwhile, thehill.com says it's not all bad news for Republicans. See Trump's economic advantage within the Democratic base. There we are told that Trump's advantage is that his policies have helped create new jobs and brought people back into the workforce. Excerpt:

If Trump’s enhanced economy is already likely to be an important consideration for the general electorate, imagine what its magnification could mean in groups on which Democrats rely so much. In America’s zero-sum two-party system, it would not take large swings in such key groups to yield big political impacts — and even with Democrats winning large 2016 margins within them, they still lost the presidency.

Finally, Democrats risk further compounding Trump’s economic advantage by nominating a candidate who either professes, or is perceived, to espouse a fundamental break from America’s historically free-market economic system. Not only would Democrats have to fight on comparisons of unfavorable economic performance, but a divergent philosophy as well.

I can picture Donald Trump telling Liz Warren, "It's the economy, stupid."

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2:49 PM 9/20/2019

Mexican president decides to improve economy -- What took him so long?

Some years ago a friend who was sympathetic to illegal immigration remarked sarcastically that Americans who opposed illegal immigration would get their comeuppance when Mexico's economy lured American citizens there to get work. My response was that a better economy in Mexico was in everyone's best interest.

It might be hard to get a good economy in a socialist environment that's infused with criminal narco-gangs. But it's worth a try, and it's long overdue.

And what do you know? Obrador is actually trying to make that happen, at least in the Northern part of Mexico. From Reuters: Mexican president decrees tax cuts for U.S. border region:

MEXICO CITY (Reuters) - Mexico’s new leftist President Andres Manuel Lopez Obrador on Monday decreed tax cuts for northern states that he says will help power economic growth and deter migration to the United States.

An executive order in the government’s official gazette granted lower rates for both value-added and income taxes in more than 40 municipalities bordering the United States, an area that has become a flashpoint over U.S. President Donald Trump’s policies to deter immigrants, including building a wall.

Lopez Obrador’s tax cuts could reduce government tax income during 2019, when he will implement a budget that seeks to use spending cuts to help fund new social welfare and infrastructure projects.

At an event in Monterrey in the northern state of Nuevo Leon on Saturday, Lopez Obrador said the minimum wage in the northern strip of municipalities would rise to 177 pesos ($9.00), nearly double the national level, starting Jan. 1, and that fuel prices would be set on a par with U.S. prices.

“This is a very important project to boost investment and job creation,” Lopez Obrador told business leaders.

The decree seeks to give an edge to northern Mexican businesses, which compete with U.S.-based companies across the border.

It's in everyone's best interest that the Mexican economy could improve to the point that its citizens don't believe that have to escape the regime in order to prosper.

See also Jason Hopkins' article Mexican president fighting illegal immigration to US by cutting taxes, improving economy of own country. Alternate link: Mexican President Fighting Illegal Immigration To US By Lowering Taxes.

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3:01 PM 1/1/2019

Mark J. Perry explains why socialism is doomed to fail

The brilliant economist Mark Perry dissects socialism in a four part series. Anyone who thinks socialism is right for the U.S., or any other nation, should read it.

See Part I: ‘Why Socialism Failed: A 2018 Update,’ Part I.

Part II: ‘Why Socialism Failed: A 2018 Update,’ Part II.

Part III: ‘Why Socialism Failed: A 2018 Update,’ Part III.

Part IV: ‘Why Socialism Failed: A 2018 Update,’ Part IV.

And finally, the full version in PDF: Why Socialism Failed: A 2018 Update.

Meanwhile, Mr. Perry responded to some critics in this post.

Unfortunately, given that adherents to socialism seem drawn to the free stuff they'll get, Mr. Perry's article is likely TLDR for most of them. But here's a snippet that may be a teaser but might provide provide some incentive to read the whole thing.

A centrally planned economy without market prices or profits, where most of the property is owned or controlled by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!

(snip)

However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity, it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available, while socialist economies like Venezuela destroy wealth and leave its citizens impoverished, malnourished, sick and desperate.

The strength of market-based capitalism can be attributed to an incentive structure based upon the three Ps: (1) Prices determined by market forces, (2) a Profit-and-Loss system of accounting, and (3) Private Property Rights. The failure of socialism in countries like Venezuela can be traced directly to its neglect of these three incentive-enhancing features.

Anyway, happy Labor Day!

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1:08 PM 9/3/2018

Alan Blinder tries to explain economics to the masses

There was an item on the op-ed page of the Wall Street Journal recently by Alan Blinder titled A Brief Introduction to Trade Economics. Alternate link.

There he describes trade surpluses and deficits using the homespun analogy that's been around a while and sounds very reasonable. An individual gives a store money for groceries, and a personal trade deficit results.  But that's not a bad thing. I first heard the analogy in an interview with Rand Paul, but who knows where it originated.

But then he gets to the the principle of comparative advantage, i.e., each country does best when it produces and sells the things that country is better at than other countries. So far so good.  Read his article to see his explanation of it.

But the things the U.S. produces best are technology and military weaponry. The weaponry is a special area and any trade deserves special scrutiny. As to technology, once it gets in the hands of a foreign entity such as China, they've got it, and there's no getting it back. And there's always the potential for wars, and any country expecting to defend itself shouldn't give up raw materials it might need.

But economists are focused on tariffs. Ideally, each country could trade with another with no tariffs. But currently, it's very one sided. It appears Trump would go along with eliminating tariffs if our trading partners did too. And if that doesn't happen, Trump wants to retaliate with tariffs on imported products and wait for the other side to blink. That may or may not happen. But it might be at least worth a try.

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10:15 AM 7/18/2018

Howard Schultz actually has some good ideas for the economy

It was strange hearing those words from a Democrat. Starbucks CEO Howard Schultz was on CNBC the other day answering questions, and he actually sounded quite good. He said what the nation needed was 4% economic growth and entitlement reform to counter the huge government debt.

Entitlement reform. As if on cue, reporters told us this: Medicare, Social Security running out of money faster than expected.

The last president to propose major entitlement reform was George W. Bush, and Democrats pounded it into the ground. Could Schultz bring them around? We've seen Democrats spin on a dime when their leaders change positions. So it's entirely possible.

But there are are obstacles in his own party. See, for example, Democrats Must Reject Howard Schultz and His Radical Centrist Ideology, complete with unflattering photo.

The two big walls that would he needs to scale are these. One is the trend toward socialism which is seemingly gaining ground. The other is the powerful Democrat party machine. Regarding that one, Donald Trump was able to overpower the Republican party machine, so maybe Schultz could do the same on his side of the political spectrum.

Anyway, hearing a Democrat talk like that was refreshing. And wouldn't it be amusing to see a Democrat run to the right of Trump?

Meanwhile, there have been some serious suggestions by Republicans on Social Security reform. Chief among them are raising the retirement age, lowering payments to high-income Americans, and changing the way cost of living increases are calculated. Let's hope Congress doesn't let this potential crisis fall into their regular pattern of waiting until the last minute before acting.

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10:34 AM 6/6/2018

Tariff's are not always a bad thing

Ben Stein was on the Fox Business Network the other day getting a reminder of the scene in "Ferris Bueller's Day Off" in which his character attempted to lecture students about how the Smoot-Hawley Tariff Act worsened the great depression. So wouldn't the same theory apply today with President Trump's tariff threats?

Not quite. Watch his response in this Youtube video.

In summary, the cold war may be over, but there is real danger of conflict. In certain categories we do need to protect our own industries. Steel and aluminum are vital materials to the United States. And we shouldn't cede them to countries that could be enemies. Furthermore, the cost to American consumers won't be that much. Listen to it at the link above.

Meanwhile, Tim Carney points out that while the grand view that the theory that free trade "improves the welfare of all nations involved in the trading" is likely true, it ignores the hardship inflicted on those involved in the industries that shut down. For many of the individuals affected, there's no recovery. He made the case in Free-traders oversimplify their case against tariffs, to no-one's benefit.

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1:50 PM 3/3/2018

Thank Obama for the economic upturn? Heck, Obama would have transformed us into a S-Hole country

Democrats say the darnedest things.

I was thinking about this while behind the wheel. Lucky I didn't crash.  Some Obama fan on the radio was saying that the current economic upturn is all Obama's doing. It's as if Obama had fed the economy a time-release pill with results to appear in the future. But actually, it was a sleeping pill with Obamacare, hyper regulators, and wasteful spending as the main ingredients.

The driver of the economy is enthusiasm. Someone has to decide to spend money. And Donald Trump has made people think it's OK to spend. So more power to him.

The downside will be inflation. The FED has been pretty good at keeping it under control. But we'll have to keep an eye on that.

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4:03 PM 1/30/2018

Economists contending that immigration boosts the economy conveniently omit illegals

The concept that immigration is good for a nation's economy is dogma among economists. It's hard to argue with the notion that skilled, hard working people immigrating into the U.S. would ultimately help the economy grow. But to get that result one would have to ignore the illegal immigrants.

It would be nice to have an immigration policy that only allowed in those people who could actually contribute to the economy. But there has been no such policy for years. However, there have been millions of illegal immigrants.

So it's interesting to see the results of a study on the cost of illegals to taxpayers. See The Fiscal Burden of Illegal Immigration on United States Taxpayers.

Introduction
A continually growing population of illegal aliens, along with the federal government’s ineffective efforts to secure our borders, present significant national security and public safety threats to the United States. They also have a severely negative impact on the nation’s taxpayers at the local, state, and national levels. Illegal immigration costs Americans billions of dollars each year. Illegal aliens are net consumers of taxpayer-funded services and the limited taxes paid by some segments of the illegal alien population are, in no way, significant enough to offset the growing financial burdens imposed on U.S. taxpayers by massive numbers of uninvited guests. This study examines the fiscal impact of illegal aliens as reflected in both federal and state budgets. ...

They calculated that during the period under study the income tax revenue from them was $18,968,857,700 which when subtracted from the total national cost of $134,863,455,364 yielded a net loss of $116 billion.

Read the article for the detailed breakdown. But the conclusion has to be that economists claiming the economic value of immigration have to ignore the illegals.

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1:00 PM 9/27/2017

In defense of price gouging

The only alleged price gouging I've seen was back during the gasoline shortage in the 70s in Houston. There were long lines at all the stations, except one. One gasoline station owner raised the price of a gallon of gasoline to a price that at the time was way in excess of the pre-shortage price. Then the MSM discovered him. And the TV and print media rained holy hell down on him.

He was portrayed a some kinda robber baron, and he caved in short order. However, he was merely a provider of a product to those who were willing and able to pay extra for it in exchange for their not having to fight the crowds at the other stations. Think of first class air travel compared to the cheap seats.

Fast forward to today, when some are making claims against alleged price gougers in Houston. The Texas Attorney General helpfully explains that price gouging is illegal. It shouldn't be.

The brilliant Thomas Sowell explains why in his article from 2004, 'Price gouging' in Florida. Excerpt:

What do prices do? They not only allow sellers to recover their costs, they force buyers to restrict how much they demand. More generally, prices cause goods and the resources that produce goods to flow in one direction through the economy rather than in a different direction.

How do "price gouging" and laws against it fit into this?

When either supply or demand changes, prices change. When the law prevents this, as with Florida's anti-price-gouging laws, that reduces the flow of resources to where they would be most in demand. At the same time, price control reduces the need for the consumer to limit his demands on existing goods and resources.

In other words, with price controls, the first people to get there buy up all the available supplies. And there's little incentive for the retailer to restock.

Finally, for those who think only the government can come to the rescue, see Mark J. Perry's excellent piece, Private sector to the rescue in Texas: Never underestimate the power of the private sector to rise up to any challenge, in which he relates how dozens of companies have come forth with people and supplies to help flood victims. It's a must read.

universal basic income -- not such a bad idea if it really means extinguishing all other subsidies

Mark Zukerberg is the latest prominent person to advocate for it.

And conservatives are vehemently opposed to it, because after all, our nation was built on personal responsibility. They have a point. But we're on the verge of socialism anyway with that "safety net" propping up a lot of able bodied citizens already.

The beauty of the basic minimum guaranteed income as it's been proposed by Charles Murray and others it that extinguishes all over subsidies. That would include welfare, social security, SSI, food stamps, and all other forms of subsidies. Overall, they say it will be cheaper.

If it were to be implemented as they propose, it probably would be cheaper. But all those stuck cows will be screaming like stuck pigs. Under the guise of opposition to socialism, those beneficiaries of government largess will stop it from ever happening. Too bad.

As much power to influence as Mark Zukerberg has with the Facebook mind control tool, it's doubtful he could change attitudes enough to get this one through. Heck, Congress is so set in the status quo that it can't even adopt something as beneficial to the people as tax reform.

Meanwhile, as conservative argue it goes too far. Progressives argue that it doesn't go far enough and should also ensure a guaranteed job. Now we're talking real socialism.

Guaranteed basic income -- the concept grips the imagination and won't let go

WSJ.com has a review of a took titled "Basic Income." Hyperlink here: Cash Handouts for Everyone. That link is behind a paywall, but another discussion on the book topic can be found at WaPo here: How to ensure everyone a guaranteed basic income.

We talked about it at this blog almost a year ago in Charles Murray makes the case for a universal basic income.

The concept sounds simple: The government gives everyone a modest income -- just enough to pay for minimum existence. There will be some for whom that will be enough so long as they don't have to work. Others will work at jobs or their own businesses to better their lives. By eliminating all other forms of welfare and government payments the overall cost to taxpayers will be lower.

Would it work as predicted? It's an intriguing concept, especially the part that eliminates welfare and subsidies. While most Americans are probably curious, they/we are not likely to want to uproot the economic system in the U.S. for such a grand experiment. What we need is some country to do it first and offer some proof that a guaranteed basic income would accomplish all those lofty goals.

Addendum: It's interesting, although not surprising, that so many of the tech billionaires -- those geniuses whose inventions are probably responsible for the loss of more American jobs than were lost to the factories in China -- are in favor of it.

Hillary repeats trickle down fiction

It was at about the 27 minute mark in debate #1 that she began. By minute 28 Clinton was blaming the 2008-2009 recession on this thing progressives call "trickle down." By that she means that her opponent only wants to help the rich, and maybe a tiny bit will trickle down to the poor folks.

"Trickle down" is supposed to be a pejorative, and progressives have been using it off and on for over a century. It's a fiction invented to convince voters that a politician wants to help the little guy and hurt the big guy. We all would like to help the little guy. That particular trait is built into the American character. But it takes a certain type of person to want to hurt the big guy, i.e., the rich. Unfortunately, that trait is common to a lot of Americans, too. And politicians tap into that. They try to turn it into a good trait by combining the two. Sneaky.

Back to the point. Thomas Sowell mansplains how progressives have it exactly backwards in Trickle Down Theory and Tax Cuts for the Rich. Here's a key part:

The very idea that profits “trickle down” to workers depicts the economic sequence of events in the opposite order from that in the real world. Workers must first be hired, and commitments made to pay them, before there is any output produced to sell for a profit, and independently of whether that output subsequently sells for a profit or at a loss. With many investments, whether they lead to a profit or a loss can often be determined only years later, and workers have to be paid in the meantime, rather than waiting for profits to “trickle down” to them. The real effect of tax rate reductions is to make the future prospects of profit look more favorable, leading to more current investments that generate more current economic activity and more jobs.

Too bad they can't figure out that making it easier for people to make money will benefit everyone. The risk takers will be rewarded for their courage and skill. (For heaven's sake, Mark Cuban -- Shark Tank star, billionaire, and current Clinton favorite Trump hater -- should know that.) And the little guy will have more income opportunities. He may even want to become an entrepreneur himself. Hey, call Mark Cuban.

Mark J. Perry celebrates Milton Friedman's 104th birthday with some great quotes

My favorite living economist celebrates my favorite dead economist. Go to Happy 104th birthday, Milton Friedman to share the festivities and see some great quotes.

Samples:

1. There is nothing as permanent as a temporary government program. ...
4. Sloppy writing reflects sloppy thinking. ...
7. Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property. ...

These are just a few teasers. See the whole list to more fully appreciate his genius of articulating brilliant concepts in concise, understandable sentences.

The baby bust -- it was bound to happen with easy abortions

More people, more households, more dogs, but fewer children. This is a scary phenomenon to demographers. It means that if the population is increasing, it isn't because of babies being born. Joel Kotkin tells us about it in The Meaning of the Baby Bust. Other high income countries have experienced this, and now it's happening in the U.S. How will that affect us? Here's Kotkin:

Shifts in child bearing will profoundly affect our geography, politics and economic future. Children, after all, define our future society, and provide the primary motivation for parents and grandparents. Without a strong familial structure, we will be facing a rather grim future, as an expanding older population grows ever more dependent on a shrinking base of young working-age people. Demographer Sami Karam notes that the 1980s Reagan boom benefited from demographics of that period, with a rising proportion of working people to retirees. With trends headed the opposite way, he suggests, no such expansion may even be possible today.

The recession is probably the greatest factor causing this baby bust. And easy abortions certainly must contribute to it. But look at this. Birth Control Leads to More Births, Economists Find:

Talk about your unintended consequences. A new working paper by two Notre Dame University economists, Kasey Buckles and Daniel Hungerman, issued by the National Bureau of Economic Research, found that making condoms available in high schools, rather than preventing teen pregnancy, serves instead to promote it.

I've always thought that one of the most thankless jobs a person could do was try to prevent young people from having sex. That it's not working was entirely predictable.

P.S. Open borders would reverse the trend in no time flat, although finding a place in the economy for all newcomers would be a challenge.

Reminder to Alan Greenspan -- Black Monday 1987 would have been a good time to buy stocks

Former Federal Reserve Chairman Alan Greenspan is quoted at CNBC thusly:

"This is the worst period, I recall since I've been in public service. There's nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away."

We do remember Black Monday. There was a lot of panic in the air, and many stock owners dumped their shares as fast as they could, if they could even reach their brokers. But history taught us that it was technical in nature, and while stocks were ready for a correction, the crash was way overdone.

But you know what? For every share of stock sold that day there was a buyer. As the saying goes, buy stocks when there's blood in the streets. And those buyers did OK for themselves.

So Alan, we welcome your advice. But the comparison with Black Monday seems a bit misplaced if you are trying to warn investors about something. And regarding Brexit, if it portends a freer marketplace then that has to be better ultimately than a command and control economy.

Charles Murray makes the case for a universal basic income

Free money! What's not to like about that? It's a wonder Bernie Sanders isn't promising that.

Not everyone likes the idea, though. A referendum was just defeated by voters in Switzerland which would have given every citizen a basic income paid from the government treasury. Most of us thought that was probably the best outcome. However, Charles Murray has a different take on the universal basic income (UBI) that's worth a look.

He contends "that a UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society." See A Guaranteed Income for Every American.

However, it will work only if replaces all other payment systems and the agencies that manage them. And there's where it starts to make sense. Here's Murray:

The UBI is to be financed by getting rid of Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare. As of 2014, the annual cost of a UBI would have been about $200 billion cheaper than the current system. By 2020, it would be nearly a trillion dollars cheaper.

Read the whole thing for the numbers and the upper individual income limit where it would partially phase out. He acknowledges that the UBI might make bums of some people. But, he says, we've got plenty of those already. The question would be whether we would have more of them.

In that regard, the survey cited here isn't encouraging:

"The millennial workforce is predominantly 'checked out,' not putting energy or passion into their jobs. They are indifferent about work and show up just to put in their hours," said the survey of the 73-million strong group.

In any event, Murray always makes a good point. And we would do well not to ignore him however unlikely the ideas are to get implemented.

Banks make money selling cash

I bought a roll of quarters at a local grocery store service window yesterday. And there was a $0.20 fee added to the face value of the quarters. The reason explained to me was that that's what the bank charged them, and I was merely reimbursing them for the fee they paid.

In other words, banks charge more than face value for money.

So for anyone who suspected that banks never miss an opportunity to make money, you're right. Banks sell currency for a profit.

Price of marijuana goes down after legalization -- is anyone surprised?

"Unexpectedly," is the word popularized on blogs to categorize an item that surprises no one but the msm. Perhaps it applies here.

The article is in the WaPo titled So, something interesting happens to weed after it’s legal.

I hate to give away the ending, but the "interesting" thing is that the price goes down. But to be fair, the author makes it sound as though he is not the one who is surprised, leading one to believe it was the headline writer with the mouth agape and wide open eyes.

Excerpt:

After a transitory rise in the first few months, which Davenport attributes to supply shortages as the system came on line, both retail prices and wholesale prices have plummeted. Davenport said that prices “are now steadily falling at about 2 percent per month. If that trend holds, prices may fall 25 percent each year going forward.”

Extrapolations like that are seldom precise prediction tools, but the point remains: Remove prohibition and the price goes down.

Capitalism is in trouble -- young people don't like it, don't know what it is

Add this to the complaints that schools aren't teaching the kids things that will help them become productive citizens. Apparently, they aren't learning the distinctions among economic systems. That's a pretty big failure if we are ending up with young people who instinctively reject capitalism and accept socialism without knowing what either is.

See A majority of millennials now reject capitalism, poll shows. Excerpt:

The Harvard University survey, which polled young adults between ages 18 and 29, found that 51 percent of respondents do not support capitalism. Just 42 percent said they support it.

It isn't clear that the young people in the poll would prefer some alternative system, though. Just 33 percent said they supported socialism. The survey had a margin of error of 2.4 percentage points.

They needn't look any farther than Venezuela to see how disastrous socialism is to the people who have to suffer the consequences. Our local newspaper carries AP articles from time to time about conditions in Venezuela, but try as they might, they can't seem to reach millennials who until recently got their news from the Daily Show. However now that Jon Stewart has left the show, one wonders where they get their news -- social media?

In any event, they want something better from the economy than what they are promised with headlines like this: How the state of the economy is literally killing people.

But ultimately, as Larry Kudlow likes to say, "Free market capitalism is the best path to prosperity."

P.S. Apparently Millennials don't like being called Millennials. Nicknames have been assigned to each generation since the forties. If they're trying to shed theirs, maybe they'll have better luck than the previous generations had.

Most Dems say they prefer socialism, when it's described in a certain way

There's a big disconnect. Many of our fellow Americans say they prefer socialism for our country. But what they don't realize is that the people who would attempt to run the country under such a system aren't smart enough to do it. That's not an attack on anyone's intelligence, it's simply an obvious fact. There are plenty of examples where it was proven to be true. Look at the various federal government agencies and try to find one you would use as a model for how the economy would be run.

How about the Department of Veterans Affairs? It has all the earmarks of a socialist environment, specifically, government run, worker rewards unrelated to accomplishment, under-served clients, and corruption aplenty.

Anyway, back to the point. Rick Moran writes this: Poll: Majority of Dems say socialism has a 'positive impact' on society, and he quotes from Politico:

The two competing economic theories were described to respondents by the pollster. Socialism was defined as a system for those who believe “corporations have too much control and that the capitalist system is set up to favor the rich and powerful,” and that “the only way to police corporations and protect the citizens is for the government to take a larger role in managing the economy to make sure that every individual has equal access to basic necessities and public goods, even if that means that some people have to transfer their wealth to others."

What a distorted view. Little wonder so many people said they favored socialism -- it's all about fairness and equality. Mr. Moran wisely favors Webster's dictionary over Bloomberg/Des Moines Register for definitions.

Advantage of free trade demonstrated by shrinking protectionism to extreme

Just about every time I visit Mark J. Perry's website I come away much more enlightened. It happened again with his article titled The ‘logic’ of protectionism leads to an absurd conclusion: complete self-sufficiency at the individual level where he updated a hypothetical situation written years ago by Walter Block.

Start with the wish for protection of American industrial workers. The jobs they had have gone to China, other Asian countries, or Mexico. If that's the whole story then protectionist tariffs might be justified. But the fallacy is exposed when the principle is shrunk to fit a smaller scale. For example, suppose one state applied tariffs to imports from other states for the same reason. Shrink it further, and one city does it to other cities. Keep shrinking to the neighborhood level, then to the individual level.

The fallacy is obvious. Each of us cannot manufacturer everything we need to survive much less what we want in order to enjoy life as we know it. Read the whole thing.

Question answered: why are those 90 million Americans not working?

It was a question many of us have wanted to ask when we kept hearing about those 90 million Americans not working and not counted in the work force. We've also heard that the number of people drawing disability payments has jumped, so the obvious conclusion was that many of them managed to convince an adjudicator that they were disabled, whether they really were or not.

The answer appears in a Washingtonexaminer.com article titled Where people leaving the labor force are going.

Turns out that the number of ill and disabled was about 6.5 million in 2014 which is only a million more than in 2004. Those number are similar to the number of students with 6.4 million in 2014 compared with 5.0 million in 2004.

But the big jump was in the number of retired individuals with 15.4 million in 2014 compared with 13.9 million in 2004. The old folks are getting out of the way for the young'uns. Unfortunately, even with those departures too often there aren't enough jobs for the youngsters.

Anyway, the charts accompanying the article make it all very clear.

From each according to his abilities, to each according to his needs -- the Obamacare scheme to bail out failing insurance companies

The first part of the title is Karl Marx's famous quote. It encompasses an economic principle that has crept into our own system ever so stealthily from the progressive income tax to Obamacare. Yes, Obamacare. See HHS: Bailing out Obamacare insurers an 'obligation' of the federal government and consider this [bold added]:

At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare's implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.

Isn't that communism? Boy. President Obama really meant it when he said he was going to fundamentally transform the United States. Whether the people have the wherewithal to counter this remains to be seen.

Bernie Sander's unrealistic dream of socialism for the U.S.

Bernie Sanders' wistful song about the socialism of Denmark sounds a little bit like someone dreaming of moving to a ski resort community after a vacation there. Life there most likely won't be what they thought.

In Bernie's case, he should consult with some experts on the subject. For his edification we've rounded up a few opinions from some very smart people.

James Arlandson asks: So What's Wrong with Socialism Anyway? Short answer: No one is smart enough or honest enough to be trusted with the authority to take property from some people and reward it to others.

Benjamin Katzeff Silberstein tells us this: Sorry Leftist Americans, Your Swedish Utopia Does Not Exist. Swedes have a high level of social trust, family values, a strong sense of work ethic, and social cohesion which goes back farther than the welfare state. These virtues don't seem to be so prevalent among American leftists which would make it difficult to achieve what Sweden has done. Furthermore, there's a trade off "between growth and prosperity on the one hand, and high taxes and social transfers on the other." It's either/or.

From Megan McArdle: U.S. Can't Import the Scandinavian Model. The U.S. system of economics, i.e., capitalism, rewards innovation. The Scandinavian countries rely on the resulting innovation to fuel their economies and feed their welfare state. It's a one way street.

Speaking of rewarding innovation, James Pethokoukis provides this insight: Study: No economy in the world rewards smart, skilled workers more than America’s. "I find particularly interesting the finding that (a) the return to skills is highest in America and lowest in Nordic-land, and (b) returns are higher in economies with more open, private-sector based labor markets."

Scott Sumner explains why progressives don't complain about the large trade deficit with Sweden in Race and progressivism, to wit:

Perhaps that's because when asked about their views on socialism, Sanders' supporters often point to the Nordic economies, even though these countries are actually highly capitalist economies with large welfare states. They didn't get rich with the sort of autarchic economic policies now fashionable on the American left. They relied on privatization, deregulation, free trade, large private multinational corporations and relatively low taxes on capital income.

Daniel W. Drezner has had enough. In Enough with the Scandinavians already he credits the theory that the cutthroat capitalism of the U.S., i.e., one which tolerates some, but now all, workers getting rich, generates the innovation that helps the entire world live better off and allows other countries the leeway to focus on income equality for their own citizens.

Finally, Kevin D. Williamson tells us that Bernie Sanders’s Denmark Comments Show He Doesn’t Even Understand His Own ‘Socialism’: "Never mind, for the moment, that neither of these batty old geezers has the foggiest idea of what’s going on in Denmark, or in the other Nordic countries. Denmark, like Sweden before it, has been engaged in a long campaign of reforming its famously generous welfare state. ... Denmark has been marching in the direction exactly opposite socialism for some time."

None of this matters, though. Today the Democrat party has calculated that it can buy votes with promises of free stuff. And their voters are being trained to support the candidate who promises the most.

Walter Williams -- Dems understand the law of supply and demand but suspend that understanding when it comes to the minimum wage

There is no law preventing a politician from lying to constituents. But what's depressing is that people who should know better believe them.

Walter Williams made an excellent point in Liberal Reasoning: Idiotic or Dishonest?. He points out several instances in which progressives -- he calls them "liberals" -- demonstrated that they understand that if you make some activity more expensive people will do less of it. Cigarettes taxes are a good example.

But when it comes to the minimum wage they suspend their belief. If they raise the cost of hiring someone, there will be less hiring. Here's Williams:

.You want less of something? Just raise its cost. ...

What the liberals believe — and want us to believe — is that though an increase in the cost of anything will cause people to use less of it, labor is exempt from the law of demand. That's like accepting the idea that the law of gravity influences the falling behavior of everything except nice people. One would have to be a lunatic to believe either proposition.

He asks in his title whether they are idiotic or dishonest. That's a fair question, but there's a third answer. The desire to feel good about themselves trumps logic.