Patterico's Pontifications

11/18/2016

Steve Bannon Abandons Fiscal Responsibility for Pork; Austrian Economics Says Why He and Trump Are Wrong

Filed under: General — Patterico @ 11:32 pm



A couple of days ago I read with interest this 2014 talk by Steve Bannon, Trump’s right-hand man. And I found myself agreeing with much of what he had to say — in particular this:

Now, with that, we are strong capitalists. And we believe in the benefits of capitalism. And, particularly, the harder-nosed the capitalism, the better. However, like I said, there’s two strands of capitalism that we’re quite concerned about.

One is crony capitalism, or what we call state-controlled capitalism, and that’s the big thing the tea party is fighting in the United States, and really the tea party’s biggest fight is not with the left, because we’re not there yet. The biggest fight the tea party has today is just like UKIP. UKIP’s biggest fight is with the Conservative Party.

The tea party in the United States’ biggest fight is with the the Republican establishment, which is really a collection of crony capitalists that feel that they have a different set of rules of how they’re going to comport themselves and how they’re going to run things. And, quite frankly, it’s the reason that the United States’ financial situation is so dire, particularly our balance sheet. We have virtually a hundred trillion dollars of unfunded liabilities. That is all because you’ve had this kind of crony capitalism in Washington, DC. The rise of Breitbart is directly tied to being the voice of that center-right opposition. And, quite frankly, we’re winning many, many victories.

That was then. This is now. In an interview with the Hollywood Reporter published Friday, it became clear that, to his shame, Bannon had changed his tune utterly when it comes to fiscal responsibility:

“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”

Susan Wright mentioned this interview in this post, and quoted the language above. She focused on Bannon’s bizarre statement that the 1930s were “exciting” — a mockable statement that she criticized admirably. I have a different focus here. I think this passage is worth quoting again in light of Bannon’s previous acknowledgement of the state of our balance sheet.

I could simply note the blatant contradictions here — and the casual discarding of any semblance of fiscal responsibility. I could do that, dust off my hands, and walk away . . . patting myself on the back for a post well done.

Yes, I could do that. But I won’t stop there. You’re going to get more. In fact, you’re going to get:

A RANT ON AUSTRIAN ECONOMICS AND THE BOOM-BUST CYCLE: Bannon’s more recent statements show a staggering and disappointing ignorance of the theory of the boom-bust cycle, as explained by Austrian economists Friedrich Hayek and Ludwig von Mises.

The Austrian theory of the business cycle was explained by Hayek (whom you may know as the author of The Road to Serfdom), and his teacher Mises (perhaps the pre-eminent scholar in the field of Austrian economics, or as I call it, “economics”). I have discussed the concept at greater length here, but here’s the “too long; didn’t read” version:

Interest rates, which are prices for credit, should not be set by central planners — much like prices of goods should not be set by central planners.

The End.

Here is the slightly more detailed explanation — though not as detailed as my previous post:

Businessmen look to the price of credit (i.e. interest rates) as a signal that tells them when it’s best to engage in long-term capital expansion. When the natural rate of interest is low, businesses naturally decide that’s a good time to take scarce resources and allocate them to long-term projects. During such periods, consumers are saving — which releases real resources for the long-term capital expansion that businesses desire.

All this works in beautiful harmony in an economy where interest rates emerge on the market.

Similarly, when the natural rate of interest is high, businessmen forego capital expansion and serve more immediate consumer needs. This matches consumer behavior, because consumers are saving less and spending more.

Again, the beauty of the market in action.

But when central banks manipulate interest rates (as the Federal Reserve does through its open market operations and other policies), this affects the price of credit — and thus distorts the price signal as it applies to credit. Business decide that’s a good time to build up capital, based on the low rate of interest — but it may be a bad time to do that. Due to central bank manipulation of the price of credit, businesses think consumers are saving, freeing up real resources for their large capital expansion. But in reality, consumers are doing nothing of the sort. Consequently, there is a shortage of real resources to devote to the capital expansion. Businesses scramble to compete for the shrinking pool of resources, bidding up prices and causing a “boom.”

And then, as capital expansion proves to be more expensive than anticipated, businesses run into problems. Many fail. Recession or even depression hits, and we get: the “bust.”

This entire boom-bust cycle is driven by the false signals of low interest rates, which mislead businesses into engaging in long-term investments when they are least appropriate.

And the problem is worst in government, which doesn’t respond to market forces anyway. Government taxes citizens — by which I mean to say it seizes money from citizens at gunpoint — and then it spends the money it grabbed. There’s no market involved in any of that. It’s economic “expansion” by fiat. (Sound familiar?)

So when someone like Bannon says “hey, with these low interest rates, it’s a great time to expand!” . . . well, that just shows a blatant ignorance of the work of Hayek and Mises. It’s a policy that is designed to exacerbate the boom, which will inevitably lead to the bust.

And when they want to take your money through taxation (or the money of your children through borrowing), and spend it on projects that the market cannot justify . . . that’s even worse.

And when they have made comments in the past about “the United States’ financial situation” being “so dire” — referencing in particular our almost “hundred trillion dollars of unfunded liabilities” . . . well. They can claim ignorance of business cycle theory — but they can’t rely on a claim ignorance of the fiscal problem we face.

Not their own ignorance, that is. But maybe they’re relying on the ignorance of the population at large.

You can do better. It’s time to learn about real economics, and resist this awful change that is coming. Stand up for the free market. As the car heads towards the cliff, help me grab that wheel and steer it before it’s too late.

I’ll have more to say about how to educate yourself in coming days, at the Constitutional Vanguard.

We have nothing less at stake than our financial future . . . and, more importantly, that of our children.

Old Rules: Wrong To Tie Hillary Clinton To Her Husband’s Bad Behavior. New Rules: Perfectly Fine To Tie Melania Trump To Her Husband’s Rhetoric

Filed under: General — Dana @ 7:45 pm



[guest post by Dana]

As you know, a number of Christian bakeries, bridal shops and wedding venue providers have found themselves named as defendants in lawsuits accusing them of discrimination for declining to be involved in gay weddings and exercising their religious rights. Some businesses ended up closing their doors. The Left has shrieked about this for years, and accused those who choose to live their faith and religious freedoms as being bigoted, narrow-minded, discriminatory, intolerant, biased, and even, bizarrely, “mentally raping” gay couples. And it didn’t matter that the business owners had no problem serving gays in any other way and that it was just weddings they declined to be involved with.

But when it is the Left actually being “intolerant,” it’s a “righteous cause”: High-end fashion designer Sophie Theallet has dressed Michelle Obama during her 8 years as First Lady. The vast exposure of her designs, worn by one of the world’s most recognizable and popular women, has put Theallet on the map, both artistically and financially. How could it not? Today, Theallet penned a letter announcing that she would not be dressing the next First Lady, Melania Trump. Why? Because of her husband:

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As one who celebrates and strives for diversity, individual freedom, and respect for all lifestyles, I will not participate in dressing or associating in any way with the next First Lady. The rhetoric of racism, sexism, and xenophobia unleashed by her husband’s presidential campaign are incompatible with the shared values we live by.

What’s amusing here is Theallet’s rank hypocrisy. You don’t want to dress Melania Trump? That’s fine. Don’t dress her, you’re not obligated. But at the same, you aren’t allowed to tie her to her husband’s rhetoric and use it as your excuse, because that goes completely against the rules that the Democrats repeatedly hammered into us during the campaign whenever the subject of Bill Clinton’s abuse of women came up. Recall the declarations: Hillary Clinton is not responsible for Bill Clinton’s bad behavior, and it’s sexist, misogynistic, discriminatory, and really dirty pool to try to tie her to it. Apparently, as is always the case, the rules only work one way. And it’s Democrats that get to decide which way they go. Hence we have a very successful designer and businesswoman who has obviously benefited greatly from Michelle Obama’s support, changing the rules. Convenience should never be underestimated.

With that, it’s worth taking a minute to look back at what the rules were just a very short while ago…

“[Hillary Clinton] is her own person”:

First of all, Clinton is not her husband. She has her own beliefs and ideologies. She’s already set herself apart from Bill while serving as a senator and secretary of state, as well as promoting a criminal justice plan that would reverse the 42nd president’s 1994 crime bill. Even if Bill does have a “penchant for sexism,” that doesn’t mean that Clinton should be penalized for it. Should every man in her life also be monitored for sexist behavior so that Trump can point out exactly how many men she knows who degrade women?

Nancy Pelosi made the distinction:

MITCHELL: But on this issue of sexism and the issue of Bill Clinton’s past, is that fair game and –

PELOSI: It would be if he were running for president, but he isn’t. Hillary Clinton is running for president.

[T]hat’s what this election should be about, not about what Bill Clinton did two decades ago.

Millennial women were able to separate Hillary Clinton’s candidacy from Bill Clinton’s actions as well:

As 30-year-old publicist Eva Zimmerman, put it: “I consider Hillary Clinton as a politician independent of her husband, Bill Clinton. Just as I would never associate Bernie Sanders as a politician with his wife, Jane Sanders, I would never associate a politician as a politician with their spouse.”

For Demkiewicz, co-founder of women’s lifestyle magazine The Riveter, Bill’s affairs and the allegations against him have no bearing on “what I know about her leadership, experience in politics, and plans for the future of our government.”

And men registered as Democrats didn’t think Hillary Clinton should be tied to her husband’s actions either:

“The personal stuff is irrelevant,” pronounces Brian Brown, a 56-year-old former professor and Democrat from Antrim, New Hampshire, who’s having coffee with a friend at Dunkin’ Donuts.

Democrat Richard Hoffman, 63, a retired chemist in Littleton, Colorado, thinks it’s unfair to lay anything on Hillary Clinton.

“If anything, she was the injured party,” he says.

Self-described progressive Rine Kasckow, a junior at the University of Wyoming, says it’s time to look forward, not back.

“Why do I care if a woman does or doesn’t leave her husband?” she asks. “It’s just a ridiculous notion.”

Finally, Think Progress cautioned that it would be really, really sexist to blame Hillary Clinton for Bill’s infidelities:

It’s a simple concept, but one that bears repeating. Bill Clinton is responsible for his own infidelities, not Hillary Clinton.

Suggesting that men’s actions reflect badly on women is a familiar sexist trope.

Look, I’m reasonably sure that Melania Trump has never grabbed some woman by the p****, and I’ve never heard this immigrant woman unleash any rhetoric of racism, sexism, and xenophobia. And yet, in typical, painfully obvious and exhausting fashion, the Left has determined that it’s okay to tie Melania Trump to her husband’s rhetoric when it was not okay to tie Hillary Clinton to her husband’s actions.

My hope is that Mrs. Trump takes this with an amused grace, and then trolls the masses again

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–Dana

Trump Settles Trump U. Lawsuit for $25 Million

Filed under: General — Patterico @ 5:28 pm



It’s the right thing to do, and also the exact opposite of what he said he would do.

It would have been a huge distraction and embarrassment for him. Trump U. was a con job. He is right to cut his losses.

Trump Claims Credit for Plant Staying in Kentucky . . . That Was Staying in Kentucky Anyway

Filed under: General — Patterico @ 10:30 am



The New York Times and multiple other outlets are reporting that Donald Trump’s tweets taking credit for a Ford plant staying in Kentucky were inaccurate. The plant was never leaving in the first place. New York Times:

President-elect Donald J. Trump claimed credit on Thursday night for persuading Ford to keep an automaking plant in Kentucky rather than moving it to Mexico. The only wrinkle: Ford was not actually planning to move the plant.

Mr. Trump wrote on Twitter shortly after 9 p.m. that Ford’s chairman, William Clay Ford Jr., had just told him that Ford “will be keeping the Lincoln plant in Kentucky — no Mexico.”

Minutes later, Mr. Trump wrote in a second post: “I worked hard with Bill Ford to keep the Lincoln plant in Kentucky. I owed it to the great State of Kentucky for their confidence in me!” Mr. Trump won 62.5 percent of the state’s popular vote in the presidential election.

Ford was planning to move a line of cars from Kentucky to Mexico, and increase production of a different line of cars. No jobs were ever going to be lost in Kentucky:

But Ford had not planned to close the Louisville factory. Instead, it had planned to expand production of another vehicle made in Louisville, the Ford Escape. And the change had not been expected to result in any job losses.

“Whatever happens in Louisville, it will not lose employment,” Jimmy Settles, a union official, told The Detroit Free Press. “They cannot make enough Escapes.”

Now, thanks to Mr. Trump, the plant will make fewer Escapes — and more MKCs.

Meanwhile, Ford is still moving forward with plans to move production of the Ford Focus to Mexico:

This week, Ford chief executive Mark Fields reiterated that it was moving forward with plans to shift production of the Ford Focus to Mexico from Michigan.

By the way, Jim Hoft at Gateway Pundit reported last night: TRUMP EFFECT: Ford Calls Donald Trump – Says Plant Will Not Move to Mexico, Will Remain in Kentucky:

Bill Ford, the Chairman of Ford Moters [sic], called Donald Trump tonight and said he will be keeing [sic] the Lincoln plant in Kentucky- Not Mexico.

There is no correction to the Gateway Pundit story, even though “Ford Moters” won’t be “keeing” the plant in Kentucky due to Trump.

Prediction: Gateway Pundit will pay no price for misleading readers, while some on the right will grumble that this blog reported true facts to correct Donald Trump’s false assertions.

None of this is the biggest deal in the world. Trump, no fan of attention to detail, probably just got confused. But Presidents need to be accurate to have credibility. (No, Obama wasn’t accurate, and Obama did not have credibility. Do you want Trump to have Obama’s credibility? Then don’t bring up Obama to defend Trump.)

But hey. If you prefer cheerleading to accuracy, there’s always Gateway Pundit.

[Cross-posted at RedState.]

AG Pick: Jeff Sessions

Filed under: General — Patterico @ 7:54 am



According to multiple sources.

Let slip the cries of racism!


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