Tag Archives: Ignorance

Commentary

How Obama’s opposition to free trade raises unemployment

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From Investors Business Daily.

Excerpt:

…the president said all the right things Wednesday about boosting exports, opening markets and getting Congress to approve free-trade deals with Colombia, South Korea and Panama.

[…]But as good as the speech sounded, it was no more than a reiteration of statements Obama has already made, always promising to get on it, soon. If he wants these treaties passed, he should submit the deals already negotiated and let Congress vote, up or down.

[…]Thirty-nine House Democrats and virtually all the Republicans have indicated their support, and a host of others intend to vote “yes,” though they won’t say so.

That’s why House Speaker Nancy Pelosi refuses to permit any vote on the Colombian pact, which was submitted to Congress two years ago. She doesn’t fear it’ll fail; she fears it’ll pass.

[…]Overall joblessness of 9.4% is bad enough. But among blacks, male unemployment is averaging 19.5%, and the 13.2% rate for Latinos is double what it had been most of the decade. Then there’s the 52% of young people who can’t find work.The U.S. Chamber of Commerce warns that if Congress fails to act on the three pending trade pacts, 585,000 U.S. jobs will be snatched away by rivals such as Canada. That would be a big chunk of the 3.5 million jobs Obama promised to create by year-end.

American businesses do better when they can pay less to buy the things they need to make their products from trading partners who have signed free trade deals signed with us. More efficiency means they can sell the products and services for less. That means that people buy more of those products. And then they hire more people.The number of jobs gained by improving the efficiency of businesses is higher than the union jobs saved by not signing the free trade deals. And who cares about unions anyway – unions make consumers and businesses pay too much! And they’re Democrats! So they’re crap on social issues and foreign policy anyway.

Among economists, being opposed to free trade is the equivalent of being opposed to a round Earth. But Democrats have to believe in protectionist nonsense – they are beholden to the unions that elected them who oppose choice and competition. Unions don’t want consumers to have a choice, and they don’t want to have to compete with anyone. They want to screw consumers into paying higher prices – and Obama has to cater to their delusions.

News

Which political party knows the least about economics?

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Story from the Wall Street Journal. (H/T Health Care BS via ECM)

Excerpt:

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents’ (all American adults) answers to eight survey questions about basic economics.

The first question was “Restrictions on housing development make housing less affordable.” The unenlighted answer for that one is “disagree”, since restrictions on development reduce the supply of available housing. Demand stays the same and so there is a shortage, and prices rise. D’uh!

Here are the others:

The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

And the results:

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

It’s true, the majority of Democrat voters are people who don’t work at all, or they “work” for government, or they “work” in education, or they hold picket signs while on strike, or they are in prison, or they are chasing ambulances, or they are Hollywood celebrities. No economics knowledge is required for any of that. Republicans work in private industry, and many of us own small businesses. So we actually have to work to earn money, because we have competitors to watch out for and consumers to please.

Remember this post: Who knows more about economics? Obama or people who run businesses?

News

US money supply contracting at Great Depression levels

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The most-read story today on the UK Telegraph. (H/T ECM)

Excerpt:

The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

The M3 figures – which include broad range of bank accounts and are tracked by British and European monetarists for warning signals about the direction of the US economy a year or so in advance – began shrinking last summer. The pace has since quickened.

The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6%. The assets of insitutional money market funds fell at a 37% rate, the sharpest drop ever.

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

What should we expect from a man who opposes capitalism? Well, we should expect to be poor. We should expect to be as poor as people were during the Great Depression.

I have an idea. Next time, let’s elect someone who is responsible enough to have his own credit card.