Today’s crop of central planners and big spending politicians could learn a thing or two about economics from Henry Hazlitt’s classic bestseller, Economics in One Lesson, published in 1946. Common sense doesn’t have an expiration date.
“There is no more persistent and influential faith in the world today than faith in government spending,” Hazlitt wrote. “Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to ‘insufficient private purchasing power.’ The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the ‘deficiency.’”
With “public works” viewed primarily as a means of “providing employment,” explained Hazlitt, an endless array of projects will be “invented” by the government. The “usefulness” of the final product or the likeliness of success of a project, whether it’s a bridge to nowhere or a bankrupt solar panel company, “inevitably becomes a subordinate consideration.”
President Obama is venturing to charm American voters this week during an East Coast bus tour that will intersect parts of North Carolina and Virginia. Beginning Monday, the three-day junket will traverse through suburbs, rural towns, and several cities, as the trip spans two key electoral states that could prove essential for Obama’s 2012 campaign pursuits. In considering the tour’s seemingly strategic route and voter-targeted audiences, observers contend that the East Coast excursion is clearly an attempt to resurrect the President’s waning support support in two southern states that Republicans controlled before the 2008 election.
The tour’s supposed objective is for the President to promote job creation measures by urging voters to pressure Congress to pass a series of job-creation bills. But Obama’s jobs package has yet to win congressional approval, as Senate Republicans blocked the proposal last week, requesting separate votes on specific provisions in the bill over the next few weeks.
In a seemingly direct ploy for political gain, the President accused Senate Republicans on Monday of voting against putting teachers back to work and ignoring the employment needs of military veterans. Further, he derided a Republican jobs proposal which seeks to eliminate ObamaCare and abolish financial and environmental regulations that hinder American businesses from creating jobs. The GOP package calls for "dirtier air, dirtier water and less people with health insurance," Obama declared.
With all the talk of budget cuts in Washington, the average American could be forgiven for thinking that federal spending is, in fact, being reduced. Certainly the chattering classes are pushing the notion hard, arguing that the dawning age of austerity is responsible for the nation’s slow-to-nonexistent economic recovery.
John Merline begs to differ. Writing for Investor’s Business Daily, Merline remarks that “so far, there haven’t been any spending cuts at all.” “In the first nine months of this year,” he explains, “federal spending was $120 billion higher than in the same period in 2010, the [Treasury] data show. That’s an increase of almost 5%. And deficits during this time were $23.5 billion higher.”
How can this be when politicians of both parties are constantly trumpeting their efforts to expunge excessive expenses?
As is frequently the case, the folks inside the Beltway have a different edition of Webster’s than the rest of us. Whereas to the average American a spending cut means reducing the amount spent from one year to the next, to the average Washingtonian it means reducing the planned increase in year-over-year spending. Thus, if a program’s budget was slated to grow by six percent but actually increased by just three percent, it is said to have suffered a 50-percent cut — which is how a five-percent rise in federal outlays translates into “slashing” the budget.
Representative Ron Paul (R-Texas) unveiled a balanced budget proposal, Plan to Restore America, October 17 that would cut nearly $1 trillion — $981 billion — from the President's budget proposal in the single fiscal year of 2013 and eliminate the annual deficits completely two years later.
No other presidential candidate has revealed a balanced budget in any number of years, including the incumbent President Barack Obama. And no sitting congressman or senator has proposed a budget plan that would balance the budget in less than 30 years other than Congressman Paul's son, Kentucky Senator Rand Paul (whose proposal would balance the budget within five years).
Okay, you can lift your lower jaw off the floor. I haven’t joined the dark side: My problem isn’t economic but lexical. I do hate capitalism — the term.
As you know, in the eyes of many, “capitalism” has become both a four-letter word and the target of such. For example, New York Magazine questioned a group of Wall Street protesters on October 2 and found that 37 percent believed capitalism was “inherently immoral.” If you find this unremarkable for Woodstock-meets-Wall Street rabble, consider a 2009 Rasmussen poll showing that “only 53% of American adults believe capitalism is better than socialism.” Yes, our schools have done their job magnificently. Unfortunately, it’s a job that doesn’t exactly align with the interests of America.
Yet the problem isn’t entirely substance — it’s also style. Proving that there really is something in a word, another 2009 Rasmussen poll found that “just 35% of American voters believe that a free market economy is the same as a capitalist economy.” What this indicates is that if Americans were asked if a “free market’ were better than socialism, more than 53 percent would say yes. Clearly, “capitalism” needs a good marketing team and a rebranding.
Of course, it isn’t surprising that the word would be an albatross around the neck of what it describes. It was popularized by a good marketing team — one comprising sworn enemies of the Natural Economy.
Apple consumers began lining up Friday morning for a chance to purchase the technology giant’s latest innovation, the iPhone 4S. While the device closely resembles the iPhone 4, which Apple released last year, it features many intriguing specifics, and Apple reported that its sales topped four million units over the weekend in the United States, Canada, France, Germany, Japan, and the United Kingdom. Last year more than 1.7 million units of the iPhone 4 were sold in its first weekend.
The release coincides with the end of Apple's era under founder Steve Jobs, who died this month after an eight-year battle with cancer. The iPhone 4S has received mostly positive reviews for its voice- recognition software, speedier processor, and improved camera. The device also provides Apple with fresh ammunition in its fight against Google Inc.'s Android software, which will appear on a host of new smart phones in the year-end holiday season.
Charlie Wolf, an analyst at Needham & Co. in New York, had predicted that it would "easily outpace any previous launch,” adding that it helps that the iPhone is available on the three largest U.S. carriers for the first time, which will bring in new buyers.
Depending on features, the iPhone 4S ranges in price from $199 to $399.
STOCKHOLM — As the growing “Occupy Wall Street” protests prepare to enter their second month after spreading across the United States, “solidarity” demonstrations were held over the weekend in hundreds of cities in dozens of countries around the world. South America, Europe, Asia, Australia, and Africa all had protests of varying sizes. Most of the demonstrations were supposedly targeting bankers, greed, capitalism, bailouts, governments, central banking, and a wide range of other perceived ills.
Some European capitals saw tens of thousands of people peacefully gather to express their anger over the assorted themes. Demonstrations in Spain, which have been ongoing for over five months, were reportedly among the largest.
While most of the protests were peaceful, some turned ugly. Rome, one of the worst-hit cities, saw hundreds of masked marauders causing chaos and destruction estimated in the millions of dollars. Dozens of police officers were also injured in clashes and street fights.
According to news reports, shop windows and statues were smashed, churches were covered in graffiti, police cars and the Interior Ministry were set ablaze, and terror reigned supreme. Violent battles between law enforcement and hordes of “Black Bloc” thugs — often using pipes, homemade explosives, knives, and other weapons — lasted for hours.
In a display of disregard for public opinion, leaders of the ruling Australian Labor Party (ALP) pushed through legislation in the lower house of parliament that will burden their nation with a whole new form of taxation: a carbon tax. Following the razor thin legislative ‘victory’ — a vote of 74 to 72 — opposition leader Tony Abbott of the Liberal Party (LP) gave a “pledge in blood” that his party would dismantle the new tax as soon as his party regains power.
According to an article for the Sydney Morning Herald, the massive legislation was pushed through the Australian parliament with an untimely rapidity reminiscent of President Obama’s effort to nationalize the American health care system. In the words of The Sydney Morning Herald:
Against last-minute efforts by the opposition to delay the passage of the bills and 11th-hour pleas for amendments by some business groups, the government passed its 18 pieces of legislation by a vote of 74 to 72 just before 10am. …
Opposition Leader Tony Abbott has vowed to repeal the legislation if he becomes prime minister, though the government has insisted he will not be able to manage that.
The bills were passed with help from crossbench MPs Rob Oakeshott, Tony Windsor and Andrew Wilkie, as well as Greens MP Adam Bandt.
On September 30, the Economic Cycle Research Institute announced that the U.S. economy officially entered a new recession. On the following Tuesday, October 4, the Standard and Poor’s 500 Index dropped to 1,074.77, the lowest level of the year.
Since then the index has rebounded to 1,224.58, or 14 percent. Reports of rising retail sales, buoyed by reports that retailers Macy’s and Kohl’s are boosting hiring, have led some to suggest that predictions of another recession are premature. The 85 economists surveyed by Bloomberg estimated that retail sales for September would rise 0.7 percent and instead they rose by 1.1 percent. And the August numbers were revised upward as well, causing Michael Moran, chief economist at Daiwa Capital Markets, to claim, “It looks like we’re going to be avoiding a recession [after all]. Even though consumers don’t feel good, there is job growth going on and that is fueling some pickup in spending.”
But then the Thomson Reuters/University of Michigan results came out on Friday, showing sentiments among those very same consumers dropping in early October to the lowest level in more than 30 years, and their expectations for the future falling to the lowest level since May of 1980.
The Occupy Wall Street movement is no stranger to controversy. The protests have drawn extremists and radicals of various stripes, from labor union members, to far-left Democrats, and members of various communist and socialist movements. As reported earlier by The New American, the movement has even been home to several high-profile anti-Semites, who, like their statist intellectual heroes Marx, Keynes, and Proudhon, blame their woes on perceived Jewish involvement in free-market capitalism. However, an analysis of the movement also reveals deep-seated connections between its Marxist members and radical Islamist groups, a classical example of the Islamo-Communist connection identified on many occasions as fueling the “Arab Spring” protests.
The organizers of the protests are the first to admit that they are directly inspired by the protests raging across the Arab world, which began last winter in Cairo, Egypt’s Tahrir Square, and are informed by the “revolutionary Arab Spring tactic to achieve our ends.” Protesters are told to “Stand, Walk, and Unite like Egyptians,” and are told to wait for their “Tahrir moment.” Just as the protests in Egypt and elsewhere across the Middle East are orchestrated by the collusion of various Leninist, Trotskyite, and socialist parties with the Muslim Brotherhood and al Qaeda, their American incarnation also involves the radical left collaborating with various Islamist subversives.