Category Archives: political economy

The New York Times Misunderstands

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Again.  This time the paper is hyperventilating over the coming end of the world order as we know it because the UK and the US are reaffirming our special relationship through the mechanism, as the NYT‘s headline has it, of British Alignment With Trump….

Great Britain’s relationship with the US spells doom because, as seen through the lens of the NYT‘s TDS, Great Britain’s dependency on Europe will be upset, and the European Union is key to world stability.  For instance:

Mr Trump offered to reward Britain’s exit from the European Union with a speedy trade deal. But this risks encouraging more exits from the bloc and possibly its disintegration. The resulting turmoil on the Continent, which includes several top British trading partners, could risk harming Britain’s economy far more than an American trade deal would help.

There are two major (not sole) reasons the Brits chose to go out from the EU.  One is the ability to cut its own trade deals without the bureaucrats of the EU ruling body looking over their shoulder and telling them no, they can’t do that.  The other is the ability to control their own borders and deciding for themselves who should be allowed to come in without the bureaucrats of the EU ruling body….

The paper’s plaint also operates from the false premise that the EU should remain together unchanged.  The nations of the EU are too disparate in social, political, economic philosophies; it’s an inherently unstable arrangement.  Too, those several top British trading partners, which are not limited to France and Germany, will benefit from being able to cut their own trade deals, should they decide to go out from the EU, too.

Beyond that, British security will be greater for the closer alignment with us that’s becoming possible than it is and would be with an EU as timid toward Russia as it is and wants to be.

“Stock Market Gained $2T in Wealth Since Trump Elected”

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That’s the headline on a Fox News insider report of Club For Growth founder Stephen Moore’s claim about one outcome of President Donald Trump’s election.  It’s certainly true that the market has run up hard since the election (although it’s had other periods of sharp gains, too, that are unrelated to elections).  Moore also was quoted as saying,

This could be the start of a big bull market rally[.]

There are a couple of things about this, one bigger than the other.  The lesser thing is that the stock market has been in a bull run for most of the year.

The bigger thing, though, is the misconception of “wealth” in the stock market.  The stock market has gained value, not wealth.  Wealth is what someone can spend on necessities and froo-froo, actual goods and services; stock shares aren’t those.  To turn that (gain in) value into actual wealth, all those higher priced shares would have to be sold for real dollars—and if everyone did that roughly simultaneously, most of that value gain would disappear in the selling.

Funding Sanctuary Cities

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White House Chief of Staff Reince Priebus on Federal funds—your tax money—for “sanctuary” cities:

[I]f you defy the laws of this country, you shouldn’t receive federal tax payer dollars from the people of this country…in some cases, you have folks that have committed crimes…and in every other jurisdiction, they say “OK, you’ve committed a crime. You now have to leave the country.”

What the man said.

Bigotry from Ignorance

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The Owners of Strata Plan LMS 4025* owns a building in City of Vancouver, British Columbia, that houses among other businesses a restaurant that went out of business.  Mengfa International, which owns a small restaurant chain known as Moby Dick’s, wants to open a Moby Dick’s restaurant in that space, but the strata won’t allow it.

It insisted “that the word ‘Dick’ in Moby Dick was an offensive term[.]”

Mengfa demurred (and is suing the strata):

It says that the Moby Dick name and logo are “not offensive to the public, given its literary significance and fame.”

Which would be obvious to anyone with an actual education.  It’s just as obvious to anyone outside a particular building in the City that Dick is a common nickname for those named Richard.  As it is, the strata’s claim, aside from interfering with legitimate business, is a deep insult to the intelligence of anyone with any sort of education.  Or possessed of actual experience of the world, even just that part of it immediately outside the bubble formed from a shell of brick and mortar.

Illiterati like the members of the building council that runs this strata illustrate the bigotry that flows from the ignorance that too many modern education systems create when they put feel-good esteem froo-froo ahead of actual education and performance accountability for students.

Call me Ishmael, indeed.

*A strata, according to the Courthouse News Service site is a Canadian legal entity that

may be created to divide a building or buildings or land into “separate components that are individually owned and common components owned by all of the owners.”

The building of LMS 4025 is run by a building council.

Trump, Boudreaux, and Trade

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Don Boudreaux, at Cafe Hayek, recently took issue with President-Elect Donald Trump on the question of trade.  While there’s much about which to argue with Trump about his potential trade policies, here I must take issue with Boudreaux.  Boudreaux argued that a Trump remark in a PBS interview about the EU beating [his emphasis] the US in trade demonstrates Trump’s ignorance of trade matters.

I suggest that Boudreaux has demonstrated his lack of understanding of what Trump believes it means to be beaten in trade.  Boudreaux based his argument on a free market environment in which I have bags of peanuts, you have pears, the two of us agree on an exchange, and thus

If I accept, then we trade.  You gain; I gain.  We both gain.  No one “beat” the other.

Of course.  There’s no reason to believe Trump doesn’t understand that; he’s too successful a businessman.

Boudreaux then threw in a complication: Jones, who’s now nearby with his own supply of bags of peanuts.  You are then able to do a better (in some sense) deal with me to get more of my peanuts for the same number of your pears or to get the same number of my peanuts for fewer of your pears.

[B]oth you and I gain.  No one gets “beat.”  Each of us, to use Trumpian language, is “a winner.”

Again, of course.  We’re both still better off than had we not done the deal; competition just changed the degree of “better off.”  Again, there’s no reason to believe Trump doesn’t understand that; he’s too successful a businessman.

But this isn’t the sort of thing Trump is talking about when he decries existing trade deals (not trade, and not multi-party trade).

Here’s another scenario that Boudreaux omitted from his vignettes.  You and I have our supplies of peanuts and pears for trade, and Jones has his peanut supply to trade, just as before.  This time, though, Jones offers his peanuts below his cost of getting them.  Further, he does this, not because he’s offering a temporary loss leader to introduce himself to a new customer or to a new market, but because he has a Sugar Momma who’ll make good his losses for as long as it suits her and for her own reasons.  Now you do your deal with Jones, or you divide your custom between Jones and me, for many fewer pears or for many more peanuts than would be the case without this nonmarket intervention.  Instead, the terms are driven by Jones’ artificially low, subsidized price.

You and I both are beaten in this arrangement.  I lose immediately because I don’t get the price for my peanuts I might have gotten in a fair negotiation; the price I am able to get—if I can trade at all—is governed by Jones’ subsidized price.  You lose later because after you’ve become accustomed to those low prices, something changes in Jones’ environment (perhaps his Sugar Momma no longer can afford her subsidizing Jones), his price suddenly rises, and you must deal with that price shock to your trading.

Given Trump’s repeated (if under-reported) emphasis on fair trade deals, good trade deals, this would seem to be what Trump means by being beaten by the EU, by China, etc.

It’s puzzling that Boudreaux doesn’t understand that. He’s too good an economist.