When one hears someone say “communism is a great concept, a wonderful idea on paper, etc,” you know right away one is dealing with a political novice. For someone to make such a ludicrous statement in light of insurmountable evidence is either ignorant or is willing to suspend reality to entertain their own thinking, which is in essence, liberalism.

Communism runs counter to everything we know about human nature. Humans cannot reach their fulfillment while existing under arbitrary restraints. Communism is indeed a concept; a concept of shared misery. Liberals only fluff up the language and call it shared sacrifice. Either way, it brings man down to a lowly state of existence by force of a badly flawed human idea and, if removed, humans will do what comes naturally. That is produce, trade, think freely, and continuously challenge their environment where innovation and abundance comes naturally.

To say communism is a great idea on paper is like an engineer who designed a bridge except once the bridge was constructed it collapsed under its own weight. The engineer would certainly not say his design was right on paper. He would have to concede that his idea was flawed from the start, both on paper and in application.

The great flaw of communism was identified in the earliest days of the communists heyday. Back in 1920, Ludwig von Mises, argued that communism calls for the abolishment of free markets and because of this, central planners would effectively be flying blind during planning production. “Every step that takes us away from private ownership of the means of production and from the use of money also takes us away from rational economics.”

(more…)

One hopes that the dictator of North Korea suffered greatly before he died. After all, his totalitarian and communist (pardon the redundancy) policies caused untold death and misery.

But let’s try to learn an economics lesson. In a previous post, I compared  long-term growth in Hong Kong and Argentina to show the difference between capitalism and cronyism.

But for a much more dramatic comparison, look at the difference between North Korea and South Korea.

Hmmm…, I wonder if we can conclude that markets are better than statism? I bet even Harry Reid can guess the answer.

And if you like these types of comparisons, here’s a post showing how Singapore has caught up with the United States. And here’s another comparing what’s happened in the past 30 years in Chile, Argentina, and Venezuela.

(more…)

In an exclusive interview with the Heritage Foundation, Senate Minority Leader Mitch McConnell (R-Ky.) had strong words for President Obama:

Occupy Wall Street recently came to south-central Pennsylvania by way of Occupy Harrisburg. Occupy Harrisburg began its occupation of the Capitol at 12:01 a.m. on October 15, 2011 and ran through the day. Various media outlets reported that the group would extend its occupation through October 16, 2011, although they would legally be required to move from the Capitol. This report offers a brief reference list of how local media covered Occupy Harrisburg and then provides my firsthand account of what happened along with analysis of the event.

How Local Media Covered Occupy Harrisburg:

Various south-central Pennsylvania media outlets reported on Occupy Harrisburg. Some of the stories are written by the local media outlets and others are AP feeds. I did not do an exhaustive search to see if the media outlets that ran AP feeds did stories of their own. Also, I did not check every single local media outlet, although I tried to choose some of the major ones. I’m linking to some of them so that the reader can compare and contrast how these media outlets reported on Occupy Harrisburg with how my report on it is.

The Patriot-News: Harrisburg, PA:

• October 5: “Occupy Harrisburg holds first organizational meeting, allied with Occupy Wall Street movement”
• October 15: “Occupy Harrisburg comes to Pennsylvania Capitol”
• October 16: “Occupy Harrisburg plans to continue protests against ‘Wall Street greed’ at Capitol”

(more…)

The folks from the Koch Institute put together a great video a couple of months ago looking at why some nations are rich and others are poor.

That video looked at the relationship between economic freedom and various indices that measure quality of life. Not surprisingly, free markets and small government lead to better results.

Now they have a new video that looks at recent developments in the United States. Unfortunately, you will learn that the U.S. is slipping in the wrong direction.

The entire video is superb, but there are two things that merit special praise, one because of intellectual honesty and the other because of intellectual effectiveness.

1. The refreshingly honest aspect of the video is its non-partisan tone. It explains, in a neutral fashion, that Bush undermined prosperity by making government bigger and that Obama is undermining prosperity by increasing the burden of government.

2. The most important and effective argument in the video, at least from my perspective, is that it shows clearly that a larger government necessarily comes at the expense of the productive sector of the economy. Pay extra-close attention around the 2:00 mark.

It’s also worth pointing out that there are several policies that impact on economic performance. The Koch Institute video focuses primarily on the key issues of fiscal policy and regulation, but trade, monetary policy, property rights, and rule of law are examples of other policies that also are very important.

(more…)

We have some good news and bad news on jobs.

The good news is that an AFP news story says the unemployment rate has dropped to 3.2 percent.

The bad news (from the U.S. perspective) is that the article was about Hong Kong, which continues to enjoy strong economic growth while America stagnates.

One reason for the divergence is found in the just-released 2011 edition of Economic Freedom of the World, published by Canada’s Fraser Institute in cooperation with groups like the Cato Institute.

Covering data through 2009, the new edition of EFW shows that Hong Kong retains its status as the world’s freest economy. On the other hand, the same report provides damning evidence of the negative impact of the Bush-Obama policies of bigger government and more intervention.

Here’s a relevant passage from the Executive Summary.

The world’s largest economy, the United States, has suffered one of the largest declines in economic freedom over the last 10 years, pushing it into tenth place. Much of this decline is a result of higher government spending and borrowing and lower scores for the legal structure and property rights components. Over the longer term, the summary chain-linked ratings of Venezuela, Zimbabwe, United States, and Malaysia fell by eight-tenths of a point or more between 1990 and 2009, causing their rankings to slip.

This chart (click to enlarge), taken directly from the book, shows how the United States has been of the world’s five-worst performers over the past decade, putting America in a very unfortunate category.

And here’s a chart I created (click to enlarge) showing how the United States has declined relative to other nations. Simply stated, America is on the verge of falling out of the top 10, after being the 3rd-freest economy in the world at the end of the Clinton Administration.

(more…)

The chairwoman of the Democratic National Committee, Debbie Wasserman Schultz, made a surprise appearance at the Iowa Straw Poll earlier August 13th. During a short interview, she claimed “common ground” with several Republican presidential candidates, including Mitt Romney, on renewable energy subsidies. Much to the chagrin of economic conservatives, her claim appears substantiated.

Parked horizontally on the grounds of the Iowa Straw Poll throughout the weekend was a blade from a wind turbine. Prominently displayed on the turbine blade were the corporate logos of GE and TPI Composites. These two companies partner together to develop subsidized wind farms throughout Iowa. Representatives of this partnership provided magic markers to straw poll attendees and to politicians. People could then indicate support of the projects by signing the turbine blade. In addition, politicians were provided a speaking area to verbally express their support of renewable energy subsidies in front of the blade.

Both Mitt Romney and Debbie Wasserman Schultz (D-FL), amongst other politicians, attached their signatures to the declaration of support for wind energy subsidies. Considering Mitt Romney’s portrayal of himself as a businessperson with an economic vision starkly opposed to President Obama’s, his apparent support for renewable energy subsidies for TPI Composites may give conservatives pause. Unbeknownst to most Republican primary voters, several other prominent Democrats strongly support corporate welfare for TPI Composites. In fact, President Obama mentioned stimulus funds provided to TPI Composites in a speech last year. Another Massachusetts politician, stalwart Leftist Barney Frank, recently proudly announced the placement of a TPI plant in Fall River, MA—a plant supported with a $250,000 grant from the government.

The apparent endorsement by several Republican presidential candidates of this particular corporate welfare recipient will likely raise questions with conservative primary voters.

(more…)

In 1879, Thomas Edison developed the incandescent light bulb with a small carbonized filament and a vacuum inside a globe.

An electric lighting system was born—as convenient, safe and economical of a choice for consumers in his day as it would be for the next 100 years, and now beyond that thanks to a vote in the House of Representatives today.

“A provision in the Energy Independence and Security Act of 2007 that requires traditional incandescent light bulbs to be 30 percent more energy efficient beginning in 2012,” failed in the House of Representatives earlier this week.  With 233 members of Congress voting in favor, 193 against and one voting present, the Better Use of Light Bulbs (BULB) Act failed to pass under the necessary suspended rules requiring a two-thirds majority.

However, this morning an amendment offered by Rep. Michael Burgess (R-TX) defunding the Energy Department’s new energy-efficient standards easily passed by a voice vote.

Consumers now might not be met with a 2012 deadline before incandescent light bulbs completely disappear from store shelves altogether.

Citizens and some members of Congress are up in arms over this government intervention telling consumers what light bulbs can and cannot be used in a home.  The Energy Act of 2007 did not outrightly ban incandescent light bulbs, but by requiring a 30 percent increase in energy efficiency, the bulbs effectively go away.

This begs the question, was government intervention into the light bulb industry necessary?

(more…)

It’s hard to imagine how we would get through life without necessities like bacon and duct tape. But have you ever thought about how the free market gives you so much for so little?

Here’s a video that should be mandatory viewing in Washington. Too bad politicians didn’t watch it before imposing government-run healthcare.

And since we’re contemplating the big-picture issue of whether markets are better than statism, here’s some very sobering polling data from EurActiv.

A recent survey has found deep pessimism among European Commission staff on a wide range of issues, including the course of European integration over the past decade and the likelihood of success of the EU’s strategy for economic growth. Some 63% partially or totally agreed that “the European model has entered into a lasting crisis”.

This is remarkable.

(more…)

Swedish economist Johan Norberg is the host of the new documentary Free or Equal, which retraces and updates the 1980 classic Free to Choose, featuring Milton and Rose Friedman. Like the Friedmans, Norberg travels the globe to look at the conditions under which prosperity and freedom flourish – and under what conditions they wither and die. Made by the same producer who created Free to Choose, Free or Equal will be appearing on PBS in 2011. For more information, a clip of the new documentary and the entire Free to Choose series, go here.

Norberg is the author of numerous books, including In Defense of Global Capitalism (2002) and Fiscal Fiasco (2009), a look at how the U.S. government’s policies contributed to and have exacerbated the length and intensity of the Great Recession.

Reason’s Nick Gillespie sat down with Norberg to discuss how the changes in the world since the Friedmans’ earlier documentary effect their basic argument that individual economic freedom is a building block for a prosperous and open society. Overall, says Norberg, the Friedmans’ basic insights hold true and some of the places they celebrated – such as Hong Kong, then under British protection and now part of the People’s Republic of China – are still flourishing. But in countries and regions that continue to constrain economic and political liberties, reports Norberg, fear and privation still dominate.

(more…)

Our current administration and swarms of socialists for decades before it have repeated the dogma that the rich get rich on the backs of the poor.  This fallacy deserves no place in genuine political discourse.  In fact, the opposite will be true given the policies that come from such a premise – all of society will get poor on the backs of the ‘rich’ chained by government.

First off, if a rich person can only get rich by bilking the poor person, this implies that there is a finite amount of wealth in an economy.  This defies all logic.  There is an infinite amount of wealth because there are an infinite amount of ideas that can be converted into goods and services, the competition of which increases quality, decreases cost and spreads the wealth to all of society.  The imagination of the entrepreneur is boundless, and the transformation of ideas to tangible wealth can only be constrained by taxes, regulations and the economic uncertainty generated by a political class responding to constituents who seek to use the law to benefit themselves at the cost of others.

Taking a step back, when those like Barack Obama speak about the “rich,” they never define who these heartless souls are.  The term ‘rich’ as regards tax policy is a misnomer.  It is the highest earners that are the rich; it is the highest earners in society that provide the disproportionate amount of wealth that the government forcibly takes and redistributes.  This is not a static class.  People can move from high income brackets to low income brackets at any time in a free economy.  Only in a socialist economy do the rich stay rich and the poor stay poor at the whim of the political class, whereas in the free economy it is determined by how much society values one’s services.

Which brings us to the fact that when Obama and his comrades speak of the ‘rich’ in derisive terms, there is never any discussion of how the high earner becomes the high earner.

(more…)

Fascinating profile of Charles and David Koch in The Weekly Standard:

A few years ago Richard Fink told Charles and David [Koch] to prepare for the worst. The brothers were raising their political profile, Fink said, and that would come at a cost. There would be a lot of name-calling. Their opponents would impugn their beliefs, characters, and business. Charles understood what Fink was talking about. “I believed that when we were considered effective we would be attacked,” he said. Before Obama’s election, those who were aware of the Kochs’ political activities tended to assume they were tilting at Austrian windmills. The Kochs had an exotic philosophy, but few took them very seriously.

Not anymore. During the fight over health care and cap and trade in 2009 and 2010, liberals went looking for baddies against whom to mobilize public opinion. The Kochs’ wealth and political involvement made them an obvious choice. Reflecting on the ferocity of the onslaught that ensued, Charles told me, “I didn’t anticipate the hatred, the advocacy of violence.” He must not have been paying attention.

(more…)

All of my life I wanted to be an astronaut. I starting working in the Miami Planetarium at age 13; studied aeronautics and engineering and propulsion systems, and was stopped only by a 20/25 left eye during an exam for the US Air Force Academy. But space exploration has always been my primary passion.

Here is a video called THE FREE FRONTIER. You’re seeing it at Big Government because you will not find a cleaner contrast between what the government spends and wastes and ends up with, versus the almost mind-boggling results the private sector can achieve at a fraction — in some cases 4-5% — of the cost that you and I pay every day in the form of taxes.

My hope is that this video will give you hope.

(more…)

The past is not always a prologue to the future. But looking at some of the big winners and losers of 2010 does provide some strong hints of a positive 2011.

The biggest winner last year was the Tea Party, which shellacked President Obama in the election. Mr. Obama becomes the biggest loser. And the economy and stock market will be the beneficiaries.

The elections were the first major step toward restoring free-market capitalism and rolling back big-government controls, planning, and spending. This is a money-politics issue. Stocks roared 20 percent during the second half of last year, as markets sniffed out the huge political change. Post-election, stocks also had a big move, finishing the year at better than two-year highs — going all the way back to pre-Lehman Brothers.

Sure, there were important economic factors involved. Europe didn’t fall apart. The dollar didn’t collapse. And better U.S. economic numbers started coming in. (Double-dip bears also were big losers last year.) But rising political confidence helped, too.

The emergence of Tea Party free-market populism — what I call Reaganomics 2.0 — is hugely bullish for stocks and the economy in 2011.

(more…)

Unemployment jumped to 9.8 percent in a very disappointing November jobs report. Nonfarm payrolls increased by only 39,000 and private jobs expanded by just 50,000. This is way below what the economy needs. Most discouraging, the smaller-business household employment number fell for the second time in a row, down 173,000 in November after a 330,000 drop in October. This is the nineteenth straight month with unemployment above 9 percent.

Now, after the severe financial panic of two years ago, it seems clear that too many tax and regulatory obstacles are blocking satisfactory job creation. And it also seems clear that a number of fresh new incentives will be necessary to spur the kind of prosperity that Americans desire. Following the deep recession, we need shock-therapy, pro-growth, tax-cut and deregulatory incentives.

Post-election, is the Washington war on business really over? Has the war on successful earners and investors truly ended? Is the class war against capital still being waged by the White House?

Will Obama bring senior business people into his inner circle? Are we going to get pro-growth tax reform for individuals and corporations? Are we truly going to limit government spending in order to reduce the onerous budget deficit? Is King Dollar currency stability on the table?

These are all key questions for the economy’s future and the murky unemployment outlook.

Perhaps the only saving grace from the poor jobs report is that it will spur a quick resolution to extend all the Bush tax cuts.

Democrats keep shilly-shallying with all these silly class-warfare amendments, like a $250,000 limit, or a $1 million limit. This has everything to do with left-wing redistributionist social policy and nothing to do with economic growth. The fact is, passing the bill to freeze the tax rates will help business confidence. Why don’t Democrats understand this?

But there’s more.

(more…)

About a month ago I had the chance to have lunch in Washington with my Trifecta friends, Steve Green and Scott Ott at BlogCon sponsored by Freedom Works. Scott told the story of his flight to DC, during which the person sitting next to him — a lifelong Democrat — struck up a conversation with Scott about conservatism. By the time the man got off the plane, he turned to Scott and said, “That makes a ton of sense.” Then he smiled and said, “My God, maybe I’m a Republican!”

That story really stayed with me. So here is the first of a new series of FIREWALL videos, called “What We Believe.” In them, I’ll do my very best to explain in as rational and non-antagonistic a method as possible, just what the fundamentals of modern Conservatism — especially Tea Party Conservatism — are all about.

Part one covers the two big items: small government, and free enterprise. In the future we’ll look at elitism, wealth creation, gun ownership, immigration, and more.

I know I don’t speak for everyone on these issues — no one speaks for everyone, not even those in the same camp — but I do hope to capture the core beliefs in a way that people who share these views can use to pass on to those people in their lives who don’t.

(more…)

President Obama has asked Congress for an additional $50 billion in “stimulus” money to finance infrastructure projects. The theory is that the additional spending will cause businesses to boost production to meet this demand. Producers will add jobs, triggering increases in consumer spending that will ripple through the economy and fuel a stronger overall recovery.

Unfortunately, however, such government pump-priming hasn’t worked in the past, and there’s no reason to believe it will work now.

Sure, consumer spending accounts for approximately 70 percent of America’s gross domestic product, and increases in consumer spending would provide the economy with an immediate boost. But a drop in consumer spending is not what ails the economy. In fact, as a percentage of GDP, consumer spending actually increased during the downturn, the Commerce Department’s Bureau of Economic Analysis reports—from approximately 69.2 percent of GDP in the fourth quarter (October-December) of 2007 to approximately 71 percent of GDP in the April-June quarter of 2009.

So the conventional wisdom—that a sharp decline in consumer spending caused the economy’s downturn—is wrong.

What did cause the downturn? The answer is: a sharp decline in private investment.

In fact, the ups and downs of the business cycle are always driven by investment spending, not by consumption spending.

(more…)

This past week I gave a speech to a group of investors. The organizer of the event e-mailed me the night before, asking that I please try to be optimistic. Well, that’s my usual habitat. But optimism has been hard for me this year. Our muddle-through economy and lackluster stock market, challenged by so many taxing, spending, and regulating problems coming out of Washington, are the reasons why.

In fact, until recently, I’ve been advising people to take profits in the stock market, rather than buy-and-hold. You should keep your money before the Obama IRS takes it from you.

But following the tea-party primary victories in Delaware, New York, and New Hampshire this week, I’m once again getting energized.

Free-market capitalism is on the comeback trail. That’s one of the key tea-party messages. And make no mistake about it: The free-market power of the tea-party political revolt is totally bullish for stocks and the economy.

In short, this is a revolution.

(more…)

In the six days that followed the attacks on September 11^th, the New York Stock Exchange was closed for the first and longest time ever since the Great Depression and World War I.  The markets would reopen on September 17^th, but to quite a rocky start.  During the immediate aftermath of the attacks, the heartbeat of our nation’s economy stopped, suspended in time.  And a forgotten class of Wall Street workers faced the difficult decision of whether or not to return to work. Those who did would return to a completely different world, one that had already changed them forever.  And today, nine years later, many of them are still there.  In a polarized political environment where the bad behavior of a few has unfairly demonized all of Wall Street’s workers, their contributions to our post-9/11 recovery have been largely ignored.  But had these workers made the choice back in 2001 never to return again, what might have happened?  This is one story, out of many, of the courage, determination and dignity of an entire class of forgotten patriots who stood by their country in the aftermath of September 11^th, 2001 when it would have been so easy to simply walk away.

Nine years ago, my brother Will was working for a Wall Street brokerage firm just steps away from what is now known as Ground Zero.  His office building overlooked Trinity Church on one side and the World Trade Center on the other.  Just on the other side of the river, near his home in Hoboken, NJ, he boarded the PATH train every day, bound for the bustling station at the World Trade Center.  Like so many others, he went to work on September 11^th thinking that day would be just like any other.

Just before 8:46 am as Will was settling into his day with his co-workers, a loud, screeching sound of shearing metal boomed just outside their building.  He looked up at the trading desk manager, and both were stunned.  Will thought it might be a high rise construction accident; the desk manager suspected an explosion.

(more…)

On August 24, I posted some data and analysis on yield curves for high-grade corporate bonds since the beginning of 2008, seeking to determine whether changes in these curves are consistent with the hypothesis that the current economic crisis has given rise to regime uncertainty. If it has done so, the yield curves should display increased spreads between the period immediately before the financial panic in the latter part of 2008 and the period since mid-2009, when the extraordinary volatility of the bond markets had ceased.

A reader of this post, Chris Lemens, commented: “I would imagine that, if the yield curves for both private and federal bonds moved similarly, that would mainly tell us about inflationary expectations, not regime uncertainty. (Well, inflation is a kind of regime uncertainty, but you know what I mean.)”

Here, I respond to Lemens’s comment, which raises an important issue, inasmuch as economists commonly interpret a steepening of the yield curve as indicative of increased inflationary expectations and nothing else.

First, one should appreciate, as Lemens does, that changes in expectations about future inflation may themselves reflect changes in regime uncertainty. If, for example, bond traders came to expect a transformation of government policies that would entail a substantial further attenuation of private property rights, they would also be likely to expect that in the future the rulers who preside over the new economic (dis)order will find themselves in serious economic trouble. (Economies without fairly firm private property rights do not work well.) Perhaps the most time-honored of all government actions to escape from such difficulties is the issuance of more and more new money, to be used sooner or later to pay the government’s bills; and the virtually inevitable consequence of such large-scale monetary effusion is a rising rate of general price inflation for newly produced goods and services, along with a diminished rate of real economic growth, perhaps even economic contraction.

So, increased regime uncertainty may give rise to increased inflationary expectations.

(more…)