A Muslim fanatic walked into Sydney café, pulled out a gun and took the customers and staff hostage. Two of the hostages were killed, one while heroically tackling the terrorist, and several wounded. The reaction of the terrorist-sympathising left was to go into protection mode for Muslims. The insufferable Age was able to produce a so-called report on the terrorist without mentioning the relevant fact that he is a Muslim. It did, however, call him a “self-described cleric”.
Now an Age reader would have to determine whether this cleric was a catholic, a Presbyterian, a Buddhist, a Sikh priest or maybe even one of those dastardly fanatical Quakers. Not only that, they would also assume that he was not a real cleric. What the Age did not report is that Manny Conditsis, who was the terrorist’s lawyer, definitely stated that his client “was a cleric in Iran… and that’s been established”. Terrific. A fanatical Iranian cleric was allowed into the country and now two Australians are dead. Only political correctness can explain this insanity. Continue reading Muslim terrorism, the left and the Sydney killings: What is to be done?
My Keynesian critic asserts that the “cut in nominal wages which was one of the reasons we got deflation…” This is nonsense. The deflation was triggered when the London funds started restricting credit in order to build up their reserves. The result was a massive contraction from March 1929 to September 1931 that saw M1 drop by 27.2 per cent and demand deposits by a whopping 33 per cent. This should not even have to be said but the cuts in nominal wages were in response to the deflation and in no way contributed to it. Moreover, it is ludicrous to even suggest that a fall in nominal wages could under any circumstances be deflationary. A deflation is a strictly monetary phenomenon1.
He is right, however, in stating that the appalling increase in the unemployment rate was largely due to the increase in real wages. However, his assertion that as other countries got inflation immediately after they devalued then the devaluation of the Australian pound in January 1931 must also have been followed by inflation is flat out wrong2. A picture, as they say, is worth a thousand words. Although Australia devalued in January 1931 chart 1 shows that retail prices continued their fall from 1929 and did not start rising again until 1934, three years from the devaluation. Continue reading Australia and the Great Depression: recovery was not driven by real wage cuts, devaluation or consumption
I had several emails from greenies arguing that curbing CO2 emissions is good economics “because it will lead to more investment and this would mean more growth and jobs.” This is one of the nuttiest arguments for cutting CO2 emissions that the greens used in their war on cheap energy and it reveals a staggering ignorance of economics. Nevertheless, the “usual suspects” have mindlessly promoted it, one of them being Anatole Kaletsky, an economics writer for the Reuters and The International Herald Tribune and one of the crudest Keynesians in the media today. And that is really saying something.
I referred to Kaletsky in particular because these emails reminded me of an outrageous article he wrote for Rupert Murdoch’s Australian1 in which he seriously argued that severely restricting CO2 emissions would stimulate economic growth and employment because it would, and this comment is a real beauty, “have the effect on the world economy comparable to a large-scale war”. This is truly Orwellian: war and destruction bring prosperity, peace brings stagnation. Continue reading War, destruction and Keynesian madness
The view that “inflation is not only desirable in its own right. It’s the absolute foundation of sustained growth in the economy and of living standards”1 is the generally accepted one among the economic commentariat. We have basically two positions here: The first one is the nonsensical belief that a ‘modest’ rate of inflation is necessary to promote spending and investment. Therefore, without this rate of inflation prices would continually fall which in turn would curb spending and investment and so depress economic activity. (This argument is also used to promote the idea of a stable price level). But it is absurd to assume that any rate of inflation can fuel economic growth, unless one believes in the ‘beneficial effects’ of “forced saving”, which some people do.
Jeremy Bentham was, I believe, the first economist to outline the forced saving doctrine (the process of using inflation to restrict consumption in order to raise the rate of capital accumulation) which he called “Forced Frugality”2. Thomas Malthus, a contemporary, pointed out the dangers and injustice of “forced savings”3. Henry Thornton damned the process as an “injustice”4. John Stuart Mill described the process as one of “forced accumulation” and condemned it with the statement that accumulating capital by this means “is no palliation of its iniquity”5. Continue reading The idea that inflation can drive economic growth exposed as rubbish by economic history
Matilda published a hit job on Professor Spurr written by Wendy Bacon and Chris Graham. Motivated by ideological-driven spite this pair based their piece on private emails by Professor Spurr that had been illegally obtained. This behaviour would not surprise anyone with knowledge of Wendy Bacon’s lack of ethics. Like all dogmatic leftists she thinks ethical behaviour is for the shmucks, meaning those who disagree with her unthinking leftism.
Wendy Bacon refers to herself as an “investigative journalist who is also a political activist”. That this is an oxymoron never occurred to her. She was a leftwing activist, and still is, not a real journalist. And like all of these phony journalists she was prepared to lie and cheat to advance a leftwing agenda. This paragon of virtue publically admitted (The Australian 24 January 1999) that Jim McClelland confessed to her and others that Lionel Murphy, Labor Party hero and High Court Judge, had been corrupt. Not only that, McClelland, who had been a prominent member of the Labor Party, also confessed to perjuring himself at Murphy’s trial thus securing Murphy’s acquittal. Now let us try to comprehend the full import of what Wendy Bacon did. Continue reading Wendy Bacon, Professor Spurr and media corruption
In January 2007 Malcolm Turnbull, the man who would be prime minister, was appointed Environment Minister. He immediately supported the destructive policy of a 20 per cent renewable target for 2020. Needless to say, he was a fervent supporter of an equally destructive carbon tax. In his arrogance he saw fit to attack consumer choice by forcing Australians to buy expensive compact fluorescent lights in order to satisfy his sense of moral and intellectual superiority and statist mentality. To put it bluntly: Turnbull is an ignorant, egotistical and destructive man. Continue reading Economics, natural resources, economic growth and Malcolm Turnbull’s ignorance and conceit
A reader directed me to an article in The Atlantic that purported to explain Why Economics Is Dead Wrong About How We Make Choices. Being aware of the anti-market prejudices of so-called journalists I expected the worse: my expectations were not confounded. Derek Thompson, the author of this little masterpiece, tells his readers that “[t]he old economic theory of consumers says that ‘people should relish choice’.” Bulldust. Economics has never said any such thing. The extent to which individuals should or should not “relish choice” is a matter for them to decide. Having displayed his ignorance of classical economic thought he then approvingly quoted Daniel McFadden who states: Continue reading To argue that consumers are not rational is to argue for more state control
Now for some light entertainment. A number of leftists absolutely adore Ross Gittins (economics editor of the Sydney Morning Herald and an economic columnist for The Age). While these leftists rhapsodise over Mr Gittins’ unparalleled grasp of economics I find myself less than impressed with his opinions.
So how good is Gittins? On reflection, that should read: Just how bad is Gittins? Last July he revealed his deep understanding of economics in an article in which he basically agreed with certain so-called economists that there is no direct link with the minimum wage and the unemployment rate of marginal labour1. (Minimum wage rises don’t lift unemployment, analysts agree, Sydney Morning Herald, 12 July 2014). However, this post is not about Gittins’ failure to understand what is happening in the field of economics with respect to the minimum wage but his history of sloppy economic reasoning, of which the aforementioned article is one of his most recent examples. Continue reading Economic growth, the minimum wage and sloppy economic thinking
I’ve been out of sorts for some days. Hopefully I shall be posting again on Monday.
Nottrampis made comments about my post on wages and the fallacy behind union bargaining. My thesis, as he called it, is an economic law. To wit: if you price the services of any good above its market clearing price you will get a surplus. And that also goes for labour. The Great Depression testifies to that fact.
Arindrajit Dube is one of the 5 so-called economists that Nottrampis referred to. Now if Dube’s ‘analysis’ were right then there would be no youth unemployment in America. Yet when he published his study in 2010 youth unemployment had averaged about 18 per cent for the year. It is now 2014 and he is still peddling his snake-oil even though youth unemployment is still being reported at crisis levels. Continue reading The minimum wage, economics and dishonest studies