Quote of the Day: Milton and Rose Friedman

As the DC city council considers raising the minimum wage to help raise the standard of living of the working class people in DC to punish the low skill workers in DC and reward the unions, it is helpful to revisit the impact of wages raised by legislative fiat on those who need jobs the most to develop marketable skills.

Another set of government measures enforcing wage rates are minimum wage laws. These laws are defended as a way to help low-income people. In fact, they hurt low-income people. The source of pressure for them is demonstrated by the people who testify before Congress in favor of a higher minimum wage. They are not representatives of the poor people. They are mostly representatives of organized labor, of the AFL-CIO and other labor organizations. No member of their unions works for a wage anywhere close to the legal minimum. Despite all the rhetoric about helping the poor, they favor an ever higher minimum wage as a way to protect the members of their unions from competition.

The minimum wage law requires employers to discriminate against persons with low skills. No one describes it that way, but that is in fact what it is. Take a poorly educated teenager with little skill whose services are worth, say, only $2.00 an hour. He or she might be eager to work for that wage in order to acquire greater skills that would permit a better job. The law says that such a person may be hired only if the employer is willing to pay him or her (in 1979) $2.90 an hour. Unless an employer is willing to add 90 cents in charity to the $2.00 that the person’s services are worth, the teenager will not be employed. It has always been a mystery to us why a young person is better off unemployed from a job that would pay $2.90 an hour than employed at a job that does pay $2.00 an hour.

The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws.

~ Milton and Rose Friedman, Free to Choose

Quote of the Day: George Orwell

"Political language is designed to make lies sound truthful and murder respectable, and to give the appearance of solidarity to pure wind."

~ George Orwell

Quote of the Day: The Grouch

Politicians never accuse themselves of 'greed' for wanting other people's money to give to their constituents and cronies, but they have no problem accusing you of 'greed' for wanting to keep what you've earned through the fruits of your labor.

~ The Grouch

Quote of the Day: C.S. Lewis

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.

~ C.S. Lewis

Quote of the Day: Cicero

Do not blame Caesar, blame the people of Rome who have so enthusiastically acclaimed and adored him and rejoiced in their loss of freedom and danced in his path and given him triumphal processions. Blame the people who hail him when he speaks in the Forum of the new wonderful good society which shall now be Rome’s, interpreted to mean more money, more ease, more security, and more living fatly at the expense of the industrious.

~ Cicero

Quote of the Day: Barry Ritholtz

1. ETFs are eating everything.

The revenge of John Bogle continues apace. As investors figure out that they are not good at stock-picking or managing trades, they have also learned that most professionals are not much better. Paying high mutual fund expenses to a manager who underperforms a benchmark makes little sense. This realization has led to the rise of inexpensive exchange-traded funds and indices.

This “ETFication” has obvious advantages: low costs, transparency, one-click decision-making. ETFs are accessible through the stock market for easier execution, with no minimum investment required. Even bond giant Pimco recognized this trend and created an ETF version of Bill Gross’s flagship vehicle, the Total Return Fund. Pimco actually charged more for the ETF than its mutual fund to prevent an exodus of investors from the world’s largest bond fund. This will eventually shift.

~ Barry Ritholtz, from 10 trends to watch in finance for 2013

Quote of the Day: Pravda

For years, the Elites of the West have cranked up the myth of Man Made Global Warming as a means first and foremost to control the lives and behaviors of their populations. Knowing full well that their produce in China and sell in the West model and its consiquent spiral downward in wages and thus standards of living, was unsustainable, the elites moved to use this new "science" to guilt trip and scare monger their populations into smaller and more conservatives forms of living. In other words, they coasted them into the poverty that the greed and treason of those said same elites was already creating in their native lands.

What better way to staunch protests at worsening economic and life conditions than to make it feel like an honourable job/duty of the people to save "Gia". At the same time, they used this "science" as a new pagan religion to further push out the Christianity they hate and despise and most of all, fear? Gia worship, the earth "mother", has been pushed in popular culture oozing out of the West for a better part of the past 1.5 decades. This is a religion replete with an army of priests, called Government Grant Scientists.

Various groups have fought back. This is including Russian hackers, who published a huge database of UK government, scientific and university emails depicting the fixing of data to sell Global Warming, er Climate Change (as if it never changed on its own). And while taking hit after hit, the beast, like Al Quida, will not die. As a matter of fact, the beast is on a steady come back, as it is quite useful during the down times recession. The US alone spends $7 billion each year on warming "studies", which is, in truth, nothing but a huge money laundering operation, as no real science is conducted and vapid alarmist reports the only product generated.

Amongst the newest claims of pending disasters, is a cry that icepacks are now melting at three times the rate of the 1990s, even though there has not been any significant warming in the past 20 years. Greenland's icepack melt off, has been linked to volcanic activity under the ice, heating it. Must be the magmamen and their SUVs. These facts, however, do not faze the Gia crowd and their Elite/Governmental backers. The fact that a super storm hit the NE US is also being played as evidence of GW. Thank God that before GW no such things ever happened. How are they to explain that Russia and Eastern Europe are projected to have the coldest winter in 20 years? Oh, but I doubt my Western readers are even aware of that.

Now, with their economies in a spiral of debt laden, non-manufacturing recession (if not out and out depression), the Elites, who sense they are loosing their grip or toe hold on key economic regions outside their home regions, are once again calling out their inquisitors of Global Warming and sending them towards the developing world.

~ Stanislav Mishin, from Global warming, the tool of the West

Grouch: Global warming has never been about science and the potential impact of rising temperatures, if it were actually true. It has been about economic justice and wealth redistribution, and nothing else.

Quote of the Day: Scott Grannis

Debt becomes problematic when the money borrowed is put to unproductive use, because that leaves the borrower without the resources to repay the loan, and that will eventually disappoint the lender. Most of the money that Uncle Sam has borrowed in recent years has not been put to productive use, and that is a big problem, because the economy has not grown sufficiently to pay back the debt. The federal government has borrowed trillions of dollars in order to 1) send out checks to individuals who are retired, unemployed, disabled, and/or earning less than some arbitrary amount; 2) pay salaries to millions of bureaucrats, 3) subsidize bloated state and local governments, and 4) subsidize corporations engaged in activities (e.g., wind farms, ethanol production) that would otherwise be unprofitable. The money was essentially wasted, since it wasn’t used to create new sources of revenues with which to service the debt in the future.

The burden of our debt binge is already upon us because we have borrowed trillions of dollars to support consumption, rather than new investment. What matters in the future is how productively we spend the proceeds of future bond sales, not how we pay off the bonds we’ve already sold. We can make progress on the margin if we can reduce federal spending relative to the size of the economy, since that in turn will reduce the amount of the economy’s resources we waste. Allowing the private sector to increasingly decide how to spend the fruits of its labors will likely improve the overall productivity and strength of the economy, because the private sector is most likely smarter about how it spends its own money. We’ve got to get the government out of the way if we are to move forward.

~ Scott Grannis, from Debt musings and misconceptions

Quote of the Day: Pravda

These days, there are few few things to admire about the socialist, bankrupt and culturally degenerating USA, but at least so far, one thing remains: the right to bare arms and use deadly force to defend one’s self and possessions.

This will probably come as a total shock to most of my Western readers, but at one point, Russia was one of the most heavily armed societies on earth. This was, of course, when we were free under the Tsar. Weapons, from swords and spears to pistols, rifles and shotguns were everywhere, common items. People carried them concealed, they carried them holstered. Fighting knives were a prominent part of many traditional attires and those little tubes criss crossing on the costumes of Cossacks and various Caucasian peoples? Well those are bullet holders for rifles.

Various armies, such as the Poles, during the Смута (Times of Troubles), or Napoleon, or the Germans even as the Tsarist state collapsed under the weight of WW1 and Wall Street monies, found that holding Russian lands was much much harder than taking them and taking was no easy walk in the park but a blood bath all its own. In holding, one faced an extremely well armed and aggressive population Hell bent on exterminating or driving out the aggressor.

This well armed population was what allowed the various White factions to rise up, no matter how disorganized politically and militarily they were in 1918 and wage a savage civil war against the Reds. It should be noted that many of these armies were armed peasants, villagers, farmers and merchants, protecting their own. If it had not been for Washington’s clandestine support of and for the Reds, history would have gone quite differently.

Moscow fell, for example, not from a lack of weapons to defend it, but from the lieing guile of the Reds. Ten thousand Reds took Moscow and were opposed only by some few hundreds of officer cadets and their instructors. Even then the battle was fierce and losses high. However, in the city alone, at that time, lived over 30,000 military officers (both active and retired), all with their own issued weapons and ammunition, plus tens of thousands of other citizens who were armed. The Soviets promised to leave them all alone if they did not intervene. They did not and for that were asked afterwards to come register themselves and their weapons: where they were promptly shot.

Of course being savages, murderers and liars does not mean being stupid and the Reds learned from their Civil War experience. One of the first things they did was to disarm the population. From that point, mass repression, mass arrests, mass deportations, mass murder, mass starvation were all a safe game for the powers that were. The worst they had to fear was a pitchfork in the guts or a knife in the back or the occasional hunting rifle. Not much for soldiers…

~ Stanislav Mishin, from Americans never give up your guns

Quote of the Day: Thomas Sowell

When I was growing up, an older member of the family used to say, "What you don't know would make a big book." Now that I am an older member of the family, I would say to anyone, "What you don't know would fill more books than the Encyclopedia Britannica." At least half of our society's troubles come from know-it-alls, in a world where nobody knows even 10 percent of all.

Some people seem to think that, if life is not fair, then the answer is to turn more of the nation’s resources over to politicians — who will, of course, then spend these resources in ways that increase the politicians’ chances of getting reelected.

......

If you don't want to have a gun in your home or in your school, that's your choice. But don't be such a damn fool as to advertise to the whole world that you are in "a gun-free environment" where you are a helpless target for any homicidal fiend who is armed. Is it worth a human life to be a politically correct moral exhibitionist?

The more I study the history of intellectuals, the more they seem like a wrecking crew, dismantling civilization bit by bit -- replacing what works with what sounds good.

Some people are wondering what takes so long for the negotiations about the "fiscal cliff." Maybe both sides are waiting for supplies. Democrats may be waiting for more cans to kick down the road. Republicans may be waiting for more white flags to hold up in surrender.

......

Everybody is talking about how we are going to pay for the huge national debt, but nobody seems to be talking about the runaway spending which created that record-breaking debt. In other words, the big spenders get political benefits from handing out goodies, while those who resist giving them more money to spend will be blamed for sending the country off the “fiscal cliff.”

~ Thomas Sowell, from On Christmas, Liberals Are By No Means Liberal

Quote of the Day: George Will

It is enough to make you want to hop in your Fisker and drive off a fiscal cliff.

You should know Fisker because you have helped to finance the Anaheim, Calif., company that makes — well, has made a few — electric cars. Its only model, the Karma — really; Obama administration green investments are beyond satire — costs $110,000. Your subsidy helped Justin Bieber, the fabulously rich Canadian teenager (he sings), buy one. No one ever said saving the planet one electric car at a time would be easy.

The Wall Street Journal reports that despite Fisker’s $192 million in Energy Department loans, the Karma “has been hobbled by recalls and quality problems” and the company has sacked half its employees. But perhaps Fisker’s biggest problem is that its source of batteries, A123 Systems, has gone bankrupt in spite of its $249 million Energy Department grant. The administration that in the fiscal cliff drama is demanding control of much more of the nation’s wealth is the author of many Solyndra-style debacles.

~ George Will

Grouch: Comrades, this cannot be true. Mr. Will surely knows our central planners have great and glorious visions of the future that will lead us to economic nirvana if we only give them a greater percentage of our money. His kind of wit is not appreciated at the highest levels of the politburo. We just may have to gift him a Fisker and let him suffer the consequences.

Quote of the Day: Adam Carolla

Well, first off, we should stop saying, "tax the rich," and say, "tax the successful." Because I'm not rich, I'm successful. And rich is easy to tax because that's just the guy who inherited daddy's money, whose dad was the Monopoly man and he lives up on the hill.

I'm successful, you're successful because we worked our tails off. And it's harder to take money away from people that work very hard for it.

And it's very easy to say, "Tax the rich." But, really, it should be "Tax the successful."

~ Adam Carolla

Grouch: Couldn't have said it better myself.

Quote of the Day: Nicholas Kristof

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

Some young people here don’t join the military (a traditional escape route for poor, rural Americans) because it’s easier to rely on food stamps and disability payments.

Antipoverty programs also discourage marriage: In a means-tested program like S.S.I., a woman raising a child may receive a bigger check if she refrains from marrying that hard-working guy she likes. Yet marriage is one of the best forces to blunt poverty. In married couple households only one child in 10 grows up in poverty, while almost half do in single-mother households.

Most wrenching of all are the parents who think it’s best if a child stays illiterate, because then the family may be able to claim a disability check each month.

~ Nicholas Kristof, from Profiting From a Child’s Illiteracy

Grouch: The three laws of social programs all too often apply to those receiving Government benefits under the best of intentions:

1. The Law of Imperfect Selection. Any objective rule that defines eligibility for a social transfer program will irrationally exclude some persons and all efforts to correct that exclusion will expand that program well beyond the original problem area.
2. The Law of Unintended Rewards. Any social transfer increases the net value of being in the condition that prompted the transfer (i.e., what you subsidize you get more of).
3. The Law of Net Harm. The less likely it is that the unwanted behavior will change voluntarily, the more likely it is that a program to induce change will cause net harm.

Quote of the Day: Mark P. Mills

Apple went public in December 1980. And there followed the longest run of economic growth in modern history, spanning five presidencies from Reagan through Clinton. Apple grew to become the world’s largest market cap company and a tech icon.

According to today’s techno-pessimists (Tyler Cowen, Niall Ferguson and Jean Gimpel are cited in the article), nothing like that can happen again because technology and America have plateaued. Such naysayers, who flourish like mushrooms in the depths of economic recessions, have been wrong in every one of the 19 economic downturns we have experienced since 1912. And they’re wrong again.

The techno-pessimists are innovation Malthusians cut from the same cloth as the resource Malthusians. Every time reality proves them wrong following each crisis, they say a variant of the same thing: I may have been wrong before, but I’m right this time.

Technological innovation is pivotal to whether the American economy will experience prosperity growth again. In a world with a growing population but a tepidly expanding economic pie, we see shrunken expectations and a reversion to fighting over how to get one’s “fair share.” People lose faith that the pie will ever grow again; in essence, they lose faith in the future itself. Certainly there’s limited optimism today about technology’s future and what that might mean for the economy, jobs, debt, taxation, and fairness.

When it comes to predicting the future—especially of technology—with all due respect, one does not turn to historians or economists. We are poised to enter a new era that will come from the convergence of three technological transformations that have already happened: Big Data, the Wireless Wired World, and Computational Manufacturing (3D printing).

The emerging grand transformations—Big Data, Wireless Broadband, Computational Manufacturing—are all an integrated part of the next great cycle of the information economy. Returning to Drucker, the evidence that this transformation has already happened is visible in Census data. The share of our economy devoted to moving bits—ideas and information—is already much bigger than the share associated with moving people and stuff.

Not only does the United States have the world’s most sophisticated and reliable (and low-cost) electric grid that is a vital infrastructure to fuel the information industries, but the United States also leads in the development of each of the core technological transformations. All things considered, there is every reason to be optimistic about our future.

You can’t predict what company will be the next Apple—though investors try. But you can predict there will be another Apple-like company. And there will emerge an entirely new family of companies—and jobs, and growth—arising from the transformational technology changes already happening.

~ Mark P. Mills, from The Next Great Growth Cycle

Quote of the Day: P. J. O'Rourke

America’s retreat from visible, tangible manifestations of superiority doesn’t hurt just our pride, our economy, and our place in the Guinness Book of World Records. It’s also a bad advertising campaign. America has one great product to sell, individual liberty. It’s attractive, useful, healthy, and the fate of the world depends upon it.

We are the most important and maybe the only country that fully embodies the sanctity, dignity, independence, and responsibility of each and every person. “American” is not a nationality, an ethnicity, or a culture; it’s a fact of human freedom. Our country was not created and is not governed by a ruling class or even by majority rule. America is individuals exercising their right to do what they think is best with due respect (to the extent human nature allows) for the right of all other Americans to do likewise. This is not an ideology or a system. This is a blessing.

The rest of the world would like to be so blessed. But the concept of individual liberty is harder to grasp than we Americans think. Those with little experience of liberty understand license and lawlessness better than they understand freedom. We want everyone on earth to have sanctity, dignity, independence, and responsibility. And we want everyone to want it for each other. We want this not because of our idealism but because of our selfish desire for a little more peace and plenty.

The world will never be good. People fight hard and cause a lot of trouble when commanded by their self-interest. But people fight viciously and cause ruin when commanded by the interests of others. Individual liberty is the best we can do. Try any other sociopolitical combination—collective liberty, individual oppression, communitarian despotism.

However, if we are going to promote the benefits of individual liberty, we have to show what free people can do. We need evidence to support the truths we hold to be self-evident. We have to advertise. Putting something double the size of the Burj Khalifa where the World Trade Towers once stood and building a Corvette that can top 300 mph would be a start.

~ P. J. O'Rourke, from Of Thee I Sigh: Baby Boomers Bust

Quote of the Day: The evil, evil Charles Koch

If your struggling car company wants a government bailout, you’ll probably have to build the government’s car – even if it’s a car very few people want to buy.

Repeatedly asking for government help undermines the foundations of society by destroying initiative and responsibility. It is also a fatal blow to efficiency and corrupts the political process.

When everyone gets something for nothing, soon no one will have anything, because no one will be producing anything.

~ Charles Koch, from Why We Fight for Economic Freedom

Grouch: I encourage readers to read the entire editorial just to see how diabolical this man truly is. This will help you understand why he's so hated by progressive thinkers in our society.

Quote of the Day: Thomas Sowell

Quote of the Day: Burton Malkiel

Look at 10-year Treasurys, which are now yielding—what?—1.39 percent and they seem to be going toward 1 percent. They’re down toward 1 percent in Germany and Holland and Japan. And for a retirement plan—not as a trader—thinking you're safe by including those as one of your long-term assets is crazy. They are going to prove to be very bad investments.

Let me just mention that the last time 10-year Treasurys yielded 1.4 percent in the United States was in 1946. We had a big debt—we had a debt-to-GDP ratio of 120 percent after World War II. To help finance the debt, we pegged interest rates at very low rates. This is what’s called financial repression. Interest rates were pegged until the early 1950s. They then rose only slowly. But people lost enormous amounts of money on bonds.

By 1980, we had a debt-to-GDP ratio of 30 percent. We solved the debt problem, but we solved it on the back of the bondholders. And I think that that’s exactly what’s going to happen in the United States and also in Europe. That’s why I’m very negative on bonds. We know equities aren't the greatest inflation hedge in the short run. But, in the long run, they are an inflation hedge. They do represent real assets. And I think equities are unusually attractive today. And, having said that, I will say that not only are multinationals attractive in the United States, but even though I'm pessimistic about European governments, a stock like Siemens—which is a sort of German General Electric—is a very attractive investment, particularly as the euro declines.

I’m generally bullish on equities, and bullish on equities in emerging markets because, again, valuations are very attractive. Before the crisis of 2008 emerging markets equities sold price-earnings multiples of 15 percentage points higher than price-earnings multiples in developed markets. And now they're 10 to 15 percentage points lower. So I think emerging markets are also extremely attractive.

~ Burton Malkiel, from Don’t Get Buried By Bonds

Quote of the Day: Bruce Bartlett

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional revenues because wealthier taxpayers could evade such taxes while the middle class--and its taxpaying capacity--were exterminated. Although the final demise of the Roman Empire in the West (its Eastern half continued on as the Byzantine Empire) was an event of great historical importance, for most Romans it was a relief.

~ Bruce Bartlett, from How Excessive Government Killed Ancient Rome

Quote of the Day: Frank Shostak

A fall in interest rates cannot grow the economy. All that it can produce is a misallocation of real savings. As a rule, an artificial lowering of interest rates (which is accompanied by the central bank’s monetary pumping — increasing commercial banks’ reserves) boosts the demand for lending; and this, as a rule, causes banks to expand credit "out of thin air."

~ Frank Shostak, from Yet Another Operation Twist

Grouch: Will Operation Twist succeed on the third try? Or are our economic problems deeper and more systemic than anything the Fed could ever manipulate our way out of? Are artificially low interest rates and current fiscal policy actually retarding a normal recovery?