Saw this one facebook:

This has great potential.

 

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In one of the most outlandish economic screeds we’re likely to see for some time, Obama buddy and former SEIU President Andy Stern has declared his love for Chinese style economic planning, and wishes for the same in America:

I was part of a U.S.-China dialogue—a trip organized by the China-United States Exchange Foundation and the Center for American Progress—with high-ranking Chinese government officials, both past and present. For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China’s 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development.

Some Americans are drawing lessons from this. Last month, the China Daily quoted Orville Schell, who directs the Center on U.S.-China Relations at the Asia Society, as saying: “I think we have come to realize the ability to plan is exactly what is missing in America.” The article also noted that Robert Engle, who won a Nobel Prize in 2003 for economics, has said that while China is making five-year plans for the next generation, Americans are planning only for the next election.

American needs more 5 year plans! This sounds so familiar…

For those of us who love this country and believe America has every asset it needs to remain the No. 1 economic engine of the world, it is troubling that we have no plan—and substitute a demonization of government and worship of the free market at a historical moment that requires a rethinking of both those beliefs.

America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history. Our great country, which sparked and wants to lead this global revolution, needs a forward looking, long-term economic plan.

This is pure, unadulterated bullshit, to put it nicely. It’s hard to know where to begin. Perhaps the most obvious is his rosy view of the Chinese economy, which while improving, is still pretty bad. Pointing to their growth rate, for instance, doesn’t tell us much, as they have considerably more room to grow.

Even his contention that China will surpass the US as the largest economy by 2025 (a reasonable estimate, I think) is misleading. They have 3 times the population that we do, so matching us in economic output means they are still only one-third as productive. What’s noteworthy, however, is how utterly poor so much of China remains today. For all their growth, they still have 128 million people living on less than $1 a day. That kind of poverty is all but unheard of in the US. As Dan Mitchell points out, the overall Chinese standard of living is simply a lot lower than it is here. Their per capita GDP is not even 25% that of the US. Why on Earth would we want to mimic them, as opposed to Singapore, which has both a freer market and higher per capita GDP than the US?

Contra Stern, the US does not employ a “free-market fundamentalist economic model.” There are economically freer nations, and according to the Heritage Index of Economic Freedom, we are becoming less and less economically free over time. In other words, we are already in the process of transitioning to the more centralized economy desired by Stern. It is that very shift which is holding us down.

But the fundamental flaw in his argument is Stern’s call for more planning. He favorably summarized Robert Engle as saying “that while China is making five-year plans for the next generation, Americans are planning only for the next election.” This is patently false, and confuses planning for central planning.

Planning is all around us. Businesses plan for future products, innovations, investments and expansions. Workers plan for climbing the ladder, providing for their families, and retirement. We have plans by the plenty, but Stern hardly notices. He doesn’t care about all these plans, but wants only one – by government.

What is the basis for his belief in the superiority of a single government plan over the aggregate plans of free people? There is no evidence for this belief that I can find. In every instance where one has been pitted against the other, the single plan as failed miserably. The information transmitted by individual transactions, through prices and countless other signals, is too vast to ever be captured, much less understood, by any single entity. In short, the planning of a benevolent economic dictatorship of the sort desired by Stern is no match for the planning of a truly free market.

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A storm has erupted following 60 Minutes coverage of Peter Scheizer’s new book, Throw Them All Out, which highlights, among many other things, instances of “insider trading” by members of Congress. Following the report, many have called on Spencer Bachus (R-AL), Chairman of the House Financial Services Committee, along with other politicians implicated by the book, like former Speaker Nancy Pelosi and current Speaker John Boehner, to resign.

In the past, I have argued that insider trading ought not be a crime, as it brings to the market information that might otherwise remain hidden. Imagine if we were able to learn of Enron’s dishonest bookkeeping much sooner, for instance, if some insider had been legally allowed to capitalize on the fact that they knew the company was lying. Economically, it really makes no sense to criminalize the practice. But politics adds a new dimension.

The addition of political power potentially changes the equation. As an example, if a politician can call a hearing on an issue, stirring up market angst, he can not only capitalize on it with his foreknowledge, but he can then call additional hearings just to create more angst on which he can capitalize. In other words, it potentially impacts the political process itself. The concern here is not misguided economic fairness, but rather the sanctity of the democratic process.

That politicians benefit financially from their political knowledge is not a new idea - we already knew that they consistently out perform average investors. And indeed, there may be some informational benefit and market efficiency reasons for allowing them to continue to do so. But it’s incredibly ironic that while there is a much stronger argument for curtailing the practice amongst politicians than among average market participants, politicians remain the only class immune from insider trading laws. It would make much more sense to constrain politicians, whether it be Congressional rule or legislation, and free the private individuals than our current approach of the other way around.

Ultimately, however, politicians have to answer  to their constituents. Regardless of the legality of their actions, the voters will ultimately decide. The more important issue from where I sit, and one which I think is being largely ignored in coverage of this story, is the degree to which politicians are involved in all manner of economic minutia in the first place. If they constrained their activities to those with Constitutional authority, there would be far less opportunity for financial mischief in the first place.

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Yesterday evening, Heritage spotted a conspicuous entry in the day’s publication of the Federal Register, defining a new tax on Christmas trees, which would fund a Christmas Tree Promotion Board. The story quickly blew up and went viral, and now the Administration is delaying implementation of the proposal.

The left has been quick to point out that the fee is welcomed by the industry, which wants the Christmas Tree Promotion Board to help reverse the downward trend in Christmas Tree sales versus their fake counterparts. They’ve tried creating a board in the past, it seems, but they kept falling apart as members were unable to overcome the free-rider problem, where none wanted to pay to benefit all. So in stepped government.

What’s wrong with this picture? It isn’t really the tax, which the government has falsely tried to claim is not actually a tax, which is both minuscule, amounting to 0.3% assuming an average tree price of  $40.00, and welcome by the industry. The problem is the fact that government is once again picking industry winners and losers.

Consider this description of the rule from OIRA (emphasis mine):

The Christmas Tree Promotion, Research, and Information Order would be implemented under the Commodity Promotion, Research, and Information Act of 1996. The purpose of the new program would be to increase the demand of Christmas Trees in the United States. The proposed new program will assist the fresh Christmas tree industry to: develop and finance an effective and coordinated program to strengthen the position of industry; and maintain, develop, and expand existing markets for fresh Christmas trees. Over the past 15 years, the sales of fresh Christmas trees has decreased from 37 million to 33 million trees. The decline in sales closely reflects the increase in sales of artificial trees. It is the hope of the fresh Christmas tree industry that a research and promotion program will help create a well coordinated national campaign to increase the demand of fresh Christmas trees. The industry has tried voluntary marketing campaigns only to watch them fade when contributors feel they are carrying the weight of the entire industry.

The purpose of the government program is to increase demand of Christmas Trees. Demand for Christmas Trees has declined because of rising demand for artificial trees. Presumably, then, increasing demand for Christmas Trees will require reducing demand for artificial trees. That’s great for the Christmas Tree industry, but not so great for the artificial tree industry.

Why is the government siding with one over the other?

This is a classic case of special interest politics, where government acts in the interest of one particlar interest at the expense of another. The targeted industry is often forced to respond by increasing lobbying and other government related activities of their own. The collective result is a drain of resources away from productive use and toward rent-seeking.

If people are increasingly abandoning real Christmas Trees for their artificial counter-parts – which don’t make a mess, require no watering, and can be reused year after year – it’s likely because consumers are increasingly judging the latter to be a superior product.  The government should not take it upon itself to try and change their minds, nor assist a competing industry in doing so.

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This great video from the Cato Institute explains the economics behind antidumping rules, and how they raise prices for consumers and cost American jobs:

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Sounds nonsensical, but that’s exactly the message one is forced to take when this latest #Occupy stunt is added to their other proclamations:

Occupy DC,” an offshoot of the Occupy Wall Street movement, swarmed Union Station Thursday night to protest a speech by Wal-Mart Chairman Rob Walton at an event hosted by the non-profit advocacy group Conservation International. Union Station is Washington, D.C.’s train terminal, located just blocks from the Capitol.

Protesters chanted, “We are the 99 percent” while letting balloons loose. Station security attempted to stop the balloons from reaching the train terminal’s iconic high ceiling.

…Two activists in the crowd told TheDC that they were volunteering their time to speak out against Conservation International’s connections to corporations.  According to Forbes, Walton’s net worth exceeds $21 billion.

Damn that Wal-Mart! How dare they create all those jobs, provide affordable goods and raise our standard of living. No one should ever associate with such cretins…we demand social justice!

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Dear Europe,

Banning the messenger won’t make your fiscal policies any less destructive.

Sincerely,

Sane people everywhere

EU mulls rating agency ban

The European Commission is considering a ban on rating agencies publishing their assessments of EU countries in difficulty, the Financial Times Deutschland reports.

The European Union’s commissioner for internal markets and services Michel Barnier has drawn up a draft proposal empowering the new European Securities and Markets Authority to “temporarily prohibit” agencies from publishing their analyses on a country’s solvency, the newspaper said on Thursday.

FT Deutschland said it obtained a copy of the confidential draft.

Barnier is concerned that the publication of a rating at an “inopportune moment” for a country when it is negotiating financial aid from the EU’s bailout fund or the International Monetary Fund could have “negative effects for that country’s financial stability and possible destabilising effects for the global economy.”

Bad policies and runaway government spending have negative effects for a country’s financial stability, not those who report it.

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It’s hard to express how many levels this story hits on:

Occupy Wall Street protesters said yesterday that packs of brazen crooks within their ranks have been robbing their fellow demonstrators blind, making off with pricey cameras, phones and laptops — and even a hefty bundle of donated cash and food.

“Stealing is our biggest problem at the moment,” said Nan Terrie, 18, a kitchen and legal-team volunteer from Fort Lauderdale.

Eighteen year-old legal volunteers are always comforting.

“I had my Mac stolen — that was like $5,500. Every night, something else is gone. Last night, our entire [kitchen] budget for the day was stolen, so the first thing I had to do was . . . get the message out to our supporters that we needed food!”

A $5,500 Mac?!? What idiot would bring a $5,500 computer to a freaking protest?

Crafty cat burglars sneaked into the makeshift kitchen at Zuccotti Park overnight and swiped as much as $2,500 in donated greenbacks from right under the noses of volunteers who’d fallen asleep after a long day whipping up meals for the hundreds of hungry protesters, the volunteers said.

“The worst thing is there’s people sleeping in the kitchen when they come, and they don’t even know about it! There are some really smart and sneaky thieves here,” Terrie said.

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Security volunteer Harry Wyman, 22, of Brooklyn was furious about the thievery — and vowed to get tough with the predatory perps.

“I’m not getting paid, but I’m not gonna stand for it. Why people got to come here and do stupid stuff? All it does is make people not wanna come here anymore,” Wyman fumed.

Wow, just wow. It’s too bad Wyman can’t see that he, the OWS crowd, and high-tax loving politicians are the bigger thieves, making businesses not want to come to the US economy anymore.

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It’s a Koch video, so it’s sure to piss of the left:

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Reid launches the nukes at Senate Republicans:

In a shocking development Thursday evening, Senate Majority Leader Harry Reid (D-Nev.) triggered a rarely used procedural option informally called the “nuclear option” to change the Senate rules.

Reid and 50 members of his caucus voted to change Senate rules unilaterally to prevent Republicans from forcing votes on uncomfortable amendments…

And what were these uncomfortable amendments, exactly? Oh, it was the jobs bill Obama has been petulantly demanding be passed right away:

McConnell had threatened … to force a vote on the original version of President Obama’s jobs package, which many Democrats don’t like because it would limit tax deductions for families earning over $250,000.

When will Obama declare, “pass this jobs bill, Mr. Reid”?

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