Open Inquiry

May 20, 2013

The Political Suicide

By Don Kirk in Politics, Prosperity vs. Poverty

David Crane in Bloomberg today argues for Jerry Brown, California’s governor, to work to repeal Proposition 13, the hugely popular initiative that limited increases in real estate taxes to 1% on pre-Prop properties. The map above shows the scale of the vote for Prop 13, something Jerry Brown is well aware of since he opposed Prop 13 as the Golden State’s governor back in 1978. The approving vote was a tidal wave, and it is hard to believe Governor Brown will try to swim against this tide a second time in his long career.

A house does not generate revenue, but a farm does. The farm house is a working business which can tap a revenue stream to pay property taxes; the residential home cannot. When inflation (government-created) in the 1970′s sent property values and taxes skyrocketing, people saw their annual tax bills increase beyond their mortgage payments, effectively impoverishing many homeowners. Prop 13 was the taxpayer’s revolt against government-inflation generating increased government-revenues at the expense of the family home. Mr. Crane, economic advisor to former Governor Schwarzenegger, wants this taxpayer revolt reversed, and bravely volunteers Governor Brown to lead the charge against Prop 13.

Mr. Brown has been down this anti-taxpayer road before, and he still has the scars. He is much too bright a politician to make the same mistake twice.

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May 15, 2013

All That Is Golden Does Not Glitter

By Don Kirk in Economics

For the second time this half-year, the price of gold today dropped below $1,400 an ounce. Gold prices have increased each of the past four years, but early 2013 looks as if the ride is at the crest and now is falling.

There are plenty of theories about why gold prices are down in 2013, with the dramatic surge in U.S. domestic oil production from fracking being the top reason. With Europe in recession and U.S. oil production up, look for gold to keep falling during the second half of 2013.

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May 14, 2013

Waller asks Why

By Don Kirk in Ethics, Philosophy of Freedom, Philosophy of Human Rights

Bruce Waller has an interesting question about free will and moral responsibility. He asks, why not mix the two concepts instead of treating them as one and the same? Sounds pluralistic to me, and I’m all for the pluralism freedom gives us.

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May 8, 2013

Sex Has Nothing To Do With Economics

By Don Kirk in Conservatism, Economics, Keynesian Myth-Math, Left-Liberalism

In the “kerfuffle” over linking John Maynard Keynes’s sexuality with his famous focus on short-term fiscal policies, Bruce Bartlett has a piece in The New York Times. In Mr. Bartlett’s view, the kerfuffle misses what is more important: Keynes’s recommended stimulus of aggregate demand by government spending is needed now more than ever, because the stagnant American economy is in Keynes’s “liquidity trap.”

Although Keynes is identified with the political Left, there have been a large number of Keynesians–such as Mr. Bartlett–who are from the political Right. Three of the top six Keynesian presidents were Republicans, and they would be vociferous in denying that they support Fabian socialism. Yet Keynesianism is the intellectual force behind Fabian socialism’s incremental attempt to institute socialism without a violent socialist revolution (found on page 375 of Keynes’s General Theory).

It does not matter what Keynes’s sexuality was, and it does not matter whether the call for fiscal stimulus comes from a socialist or a capitalist. What matters is that the RETURN on the taxpayer’s money in the stimulus is greater than the cost. There is no example of the dollar benefit from the many Keynesian stimuli attempted over the past decades being in excess of the dollar cost. Therefore, Keynesian fiscal stimuli are identified as “death spiral” economics, where every dollar spent on stimulus returns less than a dollar to the taxpayer.

Keynes’s Fabian socialism ‘toilet-flushes’ an economy, completely counter to its intent to stimulate an economy. Taxpayers receiving back only 95, 90, 80 cents back on every tax dollar spent in fiscal stimulus means the taxpayer is steadily going Keynesian broke.

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May 5, 2013

When is a Building in Syria actually in Iran?

By Don Kirk in Foreign Affairs, Theofascism

From CNN, the picture of a building in Syria allegedly destroyed by the Israeli Air Force earlier this week. Syria accuses Israel; Israel has no comment. Syria claimed earlier this year that Israel attacked this same building, so either what was re-built by Syria had to be destroyed or the Israelis simply returned to finish the job.

Or, as a third possibility, Syria moved armaments destined for Hezbollah in Lebanon back into the previously destroyed building, thinking they would be ‘safe’ from a repeat attack. What does all this matter?

Iran has its presidential elections in a month, and the Guardian Council vets all candidates next week. Hezbollah is centered in Tehran. The shattered building is in Syria, but it is theofascist Iran which is the object of the Israeli lesson.

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May 2, 2013

Absurd New Zealand

By Don Kirk in Philosophy of Freedom

According to First News from New Zealand, the government has banned dozens of names that parents wanted to give their children, including any name associated with royalty such as ‘King’ or ‘Princess.’ So, why not call the child ‘Rex,’ or just call the child whatever you want while not listing a banned name on the birth certificate?

Better yet, get the government in New Zealand to become familiar with the philosophy of freedom. Perhaps then it will understand why it looks so ridiculous in dictating what names parents cannot give their children.

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April 30, 2013

Two Perspectives But Same Conclusion

By Don Kirk in Economics, Keynesian Myth-Math

Social-Left and conservative-Right economists are embroiled over a major research paper out of Harvard which found that economic growth was negative for major countries with larger amounts of debt. Using numbers not available to the original authors and correcting for a slight Excel error (very slight!), these are charts of the comparative results.

The conclusion is the same. At around 90% of GDP, debt becomes a drag upon economic performance. The corrected data note the drag drops GDP to around 2% from the original report’s -1%, enabling social-Left economists to crow about the error and issue calls for more debt, while leaving conservative-Right economists arguing against more debt when it reaches 90% of GDP.

They both miss the point, don’t they. If the benefit from the debt (increased profit) is greater than the cost of the debt (the interest rate), then it does not matter how much debt one incurs so long as the growth in profit is sustainable. Similarly, if the cost is greater than the benefit, then it matters a great deal how much debt one has incurred, regardless of however small the amount might be, because the greater-cost-than-benefit debt is toilet-flushing the economy’s capital.

Bottom line: The 1.4T total ‘cost’ of the 2009 stimulus of 787 billions was greater than the ’benefit’ of approximately 900 billions (other research suggests less than 600 billions), so the huge 2009 stimulus actually became a drag upon the economy, the complete opposite of its intent. The U.S. is at now 105% debt to GDP and the debt load is steadily growing worse, putting us in the anemic gray bar of the graphs above.

It’s an old saw but very true: ‘One cannot borrow their way out of debt and one cannot spend their way into prosperity.’ Someone needs to re-tell the taxpayers and voters.

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April 29, 2013

Carmen, Carmen…

By Don Kirk in Free Markets Myth, Keynesian Myth-Math, Prosperity vs. Poverty, Socialism's "intellectual suicide"

Spanish unemployment. Past 25%, and still rising, after five years of both Leftist and Rightist governments promising they knew how to end the economic debacle. Well, they created the problem so one would think they know how to solve the problem, but if a country is going to base its economic policies according to ideology, then we shouldn’t be surprised when they fail.

Currently, yields on Spanish bonds trade at 4.16%. Debt is at 110% of GDP (more than the entire economy), which means the cost of the debt has to be financed out of annual economic growth.

Oops. Spanish GDP growth is 1.5%, on a good day and after drinking plenty of Spanada wine. So, 4.16 – 1.5 = -3.66. Conclusion? Spain is being toilet-flushed by more than 3% per year by ideological economics of Leftists and Rightists, both of which are utopian and laden with myths. Watch for Spanish youth to be migrating to Latin American economies to escape the toilet-flushing at home.

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April 25, 2013

Weber Redux

By Don Kirk in Economics, Prosperity vs. Poverty, Social Regress & Social Progress

According to this 15-year chart of Europe’s economy, Europe has now double-dipped into recession. Leftists blame ‘austerity’ cutbacks on government spending for the recession; conservatives blame rising taxes choking off private investment.

Recessions are caused by a collapse in bank lending. To find the true cause of an economic recession–and how to solve the decline–determine why banks are reluctant to lend. In Europe’s case, the banks are so badly broken that they have to borrow to stay afloat, instead of lending to grow their profits.

Scary whispers from Europe suggest that the banks in France are next to need bailouts. If France fails, the Euro fails. Perhaps the idea of two Euro currencies is best: one for the productive northern nations, and one for the southern insolvent nations. Or even better, one Euro for the thrifty nations with healthy banks, and all of the spendthrift, borrowing nations with broken banks each have their own currency.

More and more, as in Weber’s analysis, it looks like there is something about prosperity in Protestantism which is missing in Catholicism, and it looks like whatever is missing in Catholicism is an economic drag upon all of Europe. France, Spain, Italy, Portugal, and Ireland, by the way, are largely Catholic. Greece is Orthodox, a form of catholic.

So, a philosopher’s question is, How do the different religions affect bank lending?

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April 21, 2013

There was a Crooked Man…

By Don Kirk in Crony Capitalism Insidious Socialism, Democratic Capitalism/Democratic Socialism

Why is crony socialism always known as crony capitalism? When socialist elites and insiders profit personally from market institutions, why is this only called, ‘crony capitalism,’ and not ‘crony socialism’? Why are only capitalists “greedy,” when actually socialists are just as opportunistic and ‘greedy’?

Slovenia is a case in point. Formerly part of soviet Yugoslavia, Slovenia is the prosperous country which divides the impoverished formerly socialist nations of the soviet bloc from the wealthy Western nations to its north and west. What distinguishes Slovenia from other former soviet countries is that it had not dismantled its socialist institutions–such as the national banks–and turned them into competitive private institutions. Fully half of institutional Slovenia is state-owned, which means they are state-subsidized, and subsidy means taxpayers pay for unproductive and uncompetitive enterprises that would otherwise fail. Always, always, always, state-subsidized enterprises are repositories of either incompetent or corrupt privileged elites; insiders who pocket taxpayers’ monies in the name of ‘national pride’ or ‘socialist solidarity’ or ‘public investment.’

Slovenia’s banks are in trouble. No kidding. What a surprise. The government has already bailed them out once, and now it appears the first bailout did not come with reforms, so still another bailout is necessary. But so long as the banks are state-controlled enterprises, the taxpayers of Slovenia will find that bailing out their nationalized/socialized banks will never end. Too understandably, calls for privatizing the banks are bitterly opposed by large companies whose management benefits personally by banks being state-owned, instead of competitive.

Whether capitalist or socialist, monopolies are marked by rising costs and falling value, and Slovenia’s banks are no exception. So why are crooked socialist companies and corrupt socialist managers known as ‘greedy capitalists’?

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