Tag: socialism

Supply, Demand, and Economic Cycles

Before engaging in political debate, it’s good to have a knowledge base built up to help your arguments.  It is also helpful to challenge your presuppositions and make sure that you have a good foundation from which to build your positions.  One of the issues that throws off both sides of the aisle is a basic lack of understanding when it comes to economic cycles.  For example, without a good understanding of cycles someone would look at the Clinton economy and Bush economy and think that Bush had bad economic policy while Clinton had good economic policy.  That is a simplistic understanding if you don’t factor in the cycles that played into their success and the difficulties they overcame.

To understand economic cycles, let’s start with a brief discussion of supply, demand, and equilibrium.  Equilibrium is the price at which those who sell and those who buy come to agreement to the point where every product produced is sold and every buyer is satisfied.  As you can imagine, equilibrium is more theoretical than practical.  Whenever the market is not at equilibrium, there is a vacuum that drives economic decisions to produce more, seek alternatives, etc.  For example, if you have five people buying and four bananas for sale, the price of bananas will go up until only the people who want the bananas enough to pay more will buy them.

In a free market society, producers will produce what consumers want and need at a price they are willing to pay.  While the market finds it’s way towards this ideal, there is a vacuum between equilibrium price and surplus on one side or shortage on the other.

Economic growth and retraction occurs in this vacuum.  When there is an oversupply, producers will cut back production to stabilize the price and bring it up.  When there is a shortage, producers will find ways to produce more to take advantage of higher prices, which will drive the price down.  This means economic growth or retraction.  On the flip side, when prices are too high buyers will seek alternatives.  When prices are too low, buyers will increase consumption.  These also lead to economic growth, enrichment, and opportunity.  When a pricey product is replaced by a better or lower cost product, this leads to the enrichment of the innovator and losses by those who previously had control over the market.  This idea of self correction was the idea behind Adam Smith’s invisible hand.

Forces exterior to the free market can also have an effect.  For example, if the government lowers taxes, that puts more money in the pocket of consumers and shifts the demand curve.  That means they can buy more because they can afford higher prices.  Equilibrium price goes up and producers produce more.  When the government takes money out of the economy, the opposite happens.  If there is a discovery of new sources of a product or commodity, for example the innovation of the shale industry, the supply curve shifts and prices go down.

Economic cycles happen as the vacuum in the supply and demand system flips from prices being too high to prices being too low, or when we go from shortages to surpluses in the market.  We saw this with the housing market in 2006.  Supply could not keep up with demand, so prices of real estate went up.  There were winners, those who sold high, and losers, those who had to buy less house for their money.  Then in 2008 we saw a reversal of fortunes.  The winners were those picking up foreclosures and cheap houses off an oversupplied market, while the losers were those stuck in a house they couldn’t afford in the first place.

John Maynard Keynes believed the government could play a role in efficiently managing economic cycles.  For example, he understood that deficit spending by the government artificially grew the economy.  Higher taxes and less spending would slow down an overheating economy and soften the blow of a future crash.  When Clinton left office, we were heading for a severe market correction caused by the tech bubble crash and 9/11.  Bush, a Keynesian, cut taxes and increased spending to turn the economy around.

Some take it too far.  Obama believed he could eliminate economic cycles through massive government stimulus and regulation.  His theory actually worked.  For nearly 8 years the natural economic cycle was suppressed.  Unfortunately this was while we were due a recovery.  Once Trump cut taxes and lifted thousands of burdensome regulations, the economy resumed it’s normal cycle by overcoming years of repressed growth.

Socialists, the most extreme of which are the Communists, believed that government could effectively control equilibrium prices by controlling supply.  As a most egregious example, Communism determined exactly what a person needed and attempted to provide it.  Unfortunately the government could not provide what it did not have, and without a free economic cycle there was no impetus outside of government force to cause people to produce.  Eventually as resources run out and incentives are withheld, Communist systems beyond the tiniest scales will collapse.

More moderate Socialist systems such as Liberalism rely on marginal incentive by only seeking to control certain aspects of the economy.  However, even in these modules of the economy, the loss of incentive to produce or value of the product is devastating.  For example, in the education system Liberalism creates artificial demand.  They do this by hiding the true cost of education from the consumer.  As a result, the increase in demand produces a higher price point.  The higher price point draws more suppliers into the market, but there is no economic impetus to produce a superior good.  As a result, we have high cost education with a reduction in quality.

Every economic decision should be considered in light of how it affects the supply and demand dynamic.  For example, allowing bankruptcy for student loans sounds great on paper.  But when you do that, it means there will be an artificial increase in demand.  The artificial increase causes the price of student loans, or the interest rate, to go up.  Government control over interest rates causes suppliers to be artificially repressed which also puts pressure on prices to go up.  When the government runs out of suppliers for a regulated product like student loans, the government must become the supplier in order to maintain the product.  But government can’t just print student loan dollars without devaluing the dollar and crashing the economy.  Someone has to pay.  Now suddenly bankruptcy on student loans means taxpayers are being forced to subsidize a product regardless of demand.  Consumers no longer have the freedom to choose whether or not to buy student loans; they are compelled to through taxes.

Libertarians tend to hold to Adam Smith’s view of the economy.  Give consumers choice and liberty, and the economy will correct itself.  If the government doesn’t build roads, consumers will demand roads and suppliers will build them.  Bridges to nowhere won’t exist because there will be no demand for them.  Those who cannot afford roads will invent alternatives.

Republicans and some of the most moderate Democrats hold to Keynesian economic models.  Republicans tend to see tax cuts as the way to spur economic growth, while leaving the consumer with freedom to buy what they demand.  Democrats look to spending increases to spur the economy.  Stimulus and government programs inject dollars into the economy.  The consumer buys what the government compels them to, such as healthcare, failed solar companies, and someone’s old “clunker” car.

In the extreme of Marxism, the government under the false guise of representing the “people”, seizes the means of production and controls supply and price regardless of consumer demand.  In these models, most recently touted by Democratic Socialists, the government gives you what the government believes you need.  Much like a slave, you receive food, shelter, government approved education, and government guaranteed income.  And like a slave, you are required by the government to do your duty to the people by working, buying and supplying as the government sees fit. Those who do not fit within the system are eliminated from the system because there is no other way.  This is why every Communist regime devolves into intense human rights abuse, and often genocide.  In lesser extremes we see penalty taxes for refusing to buy and vilification of those who have untaxed means.

Every political question of economics should be viewed through the lens of supply and demand, and the validation of good policy should take into account where we sit in an economic cycle.  Generally, the freer the market, the faster the growth, retraction, recovery cycle will go.  But in the end, the most important thing is economic liberty for the consumer and the supplier.  Liberty for the consumer creates an efficient market where people can choose to buy what they want and need.  Liberty for the producer allows them to freely produce what consumers desire or create new products for lower prices that exceed consumer expectations.  This is what creates wealth and consumer satisfaction throughout an entire economic system.

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Politifact bias check: Democrats and Nazis

Politifact has ruled on Don Jr’s claim that the Democrat platform was similar to the Nazi platform of 1930.  Their ruling?  Pants on fire.  How could it be anything else?  Politifact is frequently biased towards the Left.  In this case the result is no different and we give them an 80% bias rating in their analysis.  Let’s examine it.

First, for reference, here is our fact check of Donald Trump, Jr’s claim.  Unlike Politifact who skimmed the Nazi platform, we went point by point and showed the similarities.  Politifact started by restating Don’s claim incorrectly, then pointing out all the ways he was correct, and finally by splitting hairs and using technicalities to get to their rating.

What Donald Trump, Jr said: He didn’t say the Democrat platform was Hitler.  He didn’t say they were identical.  In fact, the points he made are really what Politifact should be looking into.  People keep calling the Republicans Nazis and saying that Trump only won because of Nazi support.  What quoted was this:

“You see the Nazi platform from the early 1930s … look at it compared to the DNC (Democratic Party) platform of today, you’re saying, ‘Man, those things are awfully similar’ to a point where it’s actually scary. It’s the exact opposite of what you’ve been told.”

What he also said was “I’ve been out hearing the left talking about all these things, fascism, Nazism on the right, and when you look at the actual history of how these things evolved, and when you actually look at that platform versus the platform of the modern left, you say wait a minute, those two are really heavily aligned and, frankly, contrary to the right.”

Here’s the actual interview.  Politifact links to it, but it’s worth watching because the context of his statement is that the Left are the ones out there calling Republicans Nazis, and it’s simply not what lines up with the facts.

Politifact then goes on to ironically quote an academic historian who says Democrats have absolutely nothing in common with the Nazi party.  This is at the top of the article, not halfway down where they admit there were many similarities.  But then they make their first huge error.

Politifact argues that Hitler did not run on the Nazi platform and that the platform was a compromise, not what Hitler wanted.  But he didn’t say the Democrats were Hitler.  He said their platform was like the early Nazi platform.  At this point Politifact is no longer factchecking what Donald Trump, Jr actually said.  They are now factchecking a caricature they have created based on their misunderstanding.

“Some points sound similar”

Here’s the funny part of the Politifact article.  They name six points in the Nazi platform that are, just as Donald Trump, Jr said, similar to the DNC platform.  We found more, but Politifact is charitable to the DNC.  In fact, they go on to say they feel that ending war profiteering, nationalizing certain corporations, ending land speculation, and oppression of media that is contrary to the state are not goals of the DNC.  But even if we leave Bernie Sanders and Alexandria Ocasio-Cortez out of this, these were high priorities of the Obama administration.

In fact, many of the new regulations after the 2008 crash were to prevent land speculation, Obama nationalized portions of the auto industry, and Democrats have spent the last 60 years fighting against war profiteering. Dinesh D’Souza who made the film Don Jr went to see was pardoned by the Trump administration after Obama threw him in jail for a slap on the wrist campaign finance crime.

In Politifact’s summation, they admit that there are similarities.  They try to say that of the six similarities they will admit to, they are also in the Republican platform.  Although, according to their article only half of those six are similar to Republican platform points.  Then rather than ruling half true, partly true, or even mostly untrue, they slap a pants on fire rating.  We believe Donald Trump, Jr’s claim deserves a half true rating at the bare minimum.  When you throw in the diversity of DNC candidates who will affect future platforms, including rising star Ocasio-Cortez, this claim would be mostly true if it weren’t for the technicality that this next year’s platform hasn’t been written yet.

8/9/18: Socialism falters, Chris Collins in trouble

Some Democrats are cheering the fall of Democratic Socialism.  In Tuesday’s primary, the candidates endorsed and supported by Bernie Sanders and Alexandria Ocasio-Cortez dropped like flies.  Democrat voters went for the more middle of the left side of the road liberals who don’t openly talk about doubling taxes.  But while Democrats #walkaway from their energetic rising stars, that still leaves them with a November election platform of raising taxes and obstructing Trump.  We’ll see if that ends up being a winning combination.  The candidates on the left with the most success were ones backed by none other than Hillary Clinton.

Down goes Socialism, establishment Democrat party is back on top

Republican Chris Collins is in trouble for insider trading.  The New York representative called family members after the failure of a new drug being developed by a company where he served on the board.  The insider trading saved his son and others about $768,000 in losses.  Collins has vowed to fight.  Congress had passed strong anti-insider trading laws in 2012, but those were walked back the following year and quietly repealed by Obama.

Chris Collins hit for insider trading making his seat a target in November

Speaking of the midterms, Democrats are in trouble in the Senate.  But to take the House, they believe there are only 15 competitive races they have to win.  Of the 23 seats Dems need to retake the House for the first time since 2010, they believe they have 8 in the bag already.  Democrats are not running on much, except for independence from other Democrats and hatred for Trump.  In fact, it’s almost hard to tell who 2018 Democrat candidates despise more, Nancy Pelosi or Donald Trump.  The American people meanwhile have to decide if they believe them.  Democrats have worked in lock step to obstruct any sort of government movement, so it is kind of weird for them to pretend to be independent now when an election rolls around.  The great economy and success of Trump’s agenda doesn’t help either.

Democrats confident in their strategy of having no agenda and opposing themselves

What’s next for straw banning Socialists?

One of the California Socialists who voted to ban drinking straws is now apologizing for his comments about what will come next.  Jason Dominguez apologized for putting together a “string of words” that seemed to indicate that they want to “regulate every aspect of people’s lives”.  What was the unfortunate and easily misunderstood string of words?  When explaining the ban on drinking straws, Dominguez said “Unfortunately, common sense is just not common. We have to regulate every aspect of people’s lives.”

I don’t know.  That seems really straight forward to me.  I mean, I’m not sure how he could have accidentally strung those words together.  Ken Oplinger of the Santa Barbara Chamber of Commerce defended Dominguez saying he probably didn’t mean what he said and was simply being “politically dumb”.  Dominguez excused his remarks, saying “A few weeks ago I made a string of words in a rhetorical fashion about regulation and they were not taken as rhetorical and that’s my fault so I want to apologize.”

I suppose it was difficult to understand that he didn’t really mean what he said about regulating people’s lives since he had just voted to ban drinking straws.

California politician apologizes for stating his agenda aloud

Need to Know 7/30/18

How much will Democratic Socialism cost?  How about triple what our government costs now.  Over the weekend I mentioned how Ocasio-Cortez wants to raise taxes by $4 trillion to have an eco-friendly liberal economy.  Government guaranteed jobs comes in at another $543 billion.  A new study is saying universal healthcare through Bernie Sanders’ Medicare for All plan would cost another $3.2 trillion per year.  That’s makes for an annual budget of $12 trillion per year to cover the Democratic Socialist agenda.  The current budget is $4 trillion and we have annual deficits of about a half a trillion.  Extrapolating that out, we’d not just have to increase taxes 3x.  We’d also have to cover another 1.5 trillion dollar deficit.

How would you like to pay three times the taxes you are paying now and still have our government crushed with debt?

Study: Medicare for all completely unaffordable

President Trump is calling for a government shut down if Democrats continue to obstruct immigration reform.  But you need to remember how this works.  If a Republican Congress puts together a spending bill that Democrats obstruct, then it’s a Republican shutdown.  If a Republican President refuses to sign a bill that doesn’t take care of problems like immigration, then it’s a Republican shut down.  If Democrats can’t get enough votes to pass their agenda because Republicans are obstructing, then it’s a Republican shut down.  If Democrats control both houses and the Presidency, but can’t get their agenda passed, it’s a Republican shut down.  Basically, it’s always the fault of the Republicans.

Trump says fix it or shut it down

Trump’s tariffs have created odd bedfellows.  Democrats, who up until Trump did it supported protective tariffs, are now 100% anti-tariff.  Not really, but whatever it takes to win elections.  Meanwhile, the hated Koch brothers have signaled they will work with Democrats who oppose tariffs and support them.  So you have a Republican President who supports tariffs, Democrats who suddenly oppose them, and Libertarians who are going to put up money to elect Democrats who are anti-libertarian on everything but tariffs.  What a weird world we live in.  I wonder who Democrats hate more, Trump or the Kochs?

Koch brothers to back Democrats over tariff spat

Alexandria Ocasio-Cortez Hall of Fame

The latest gaff by Alexandria Ocasio-Cortez kind of makes me wonder if she is a GOP operative secretly working to stop Bernie Sanders style socialism.  Ocasio-Cortez was recently in Kansas campaigning for Brent Welder, promising to “flip this seat red”.

This follows Ocasio-Cortez’s assertion that the only reason unemployment is so low is because everyone has two jobs.  Unemployment is actually measured by surveying the percentage of people who are currently seeking employment.  It has nothing to do with how many jobs each person has.

Ocasio-Cortez got famous for beating Joe Crowley in New York’s 14th district.  The district is so blue that if Crowley and Ocasio-Cortez both ran and split the liberal vote, one of them would still win.  But Ocasio-Cortez didn’t seem to take that into account when she attacked Crowley for trying to run a third party campaign because he had originally registered for multiple parties, and New York won’t allow him to remove his name from the ballot.  Crowley endorsed her and promised to support her, but Ocasio-Cortez lashed out in paranoia when she found out his name would still be on the ballot.

Perhaps what made her infamous though was her admission that she has no clue what she’s talking about when it comes to Israel.  Ocasio-Cortez fumbled through an interview where she tried to insinuate that Israel was blocking Palestinians from accessing their homes and actively occupying Palestine.  Eventually she gave up.  In a later interview, she promised that she would “get with activists” so she could learn more about the Israel/Palestine issue.

Not all Democrats are on the Ocasio-Cortez Socialist train.  Ocasio-Cortez herself supported lower taxes when she was a business owner, but her business failed shortly before she switched to Socialism and tried to get involved in politics for the first time.  At age 26, Ocasio-Cortez went to vote for the first time and discovered she had been purged from the New York voter rolls for 8 years of inactivity.  That was 2016.  She then joined the Bernie Sanders campaign and rose from non-voting millennial failed business owner to rising star of the DNC.  But not all Democrats are happy with her.

Florida representative Alcee Hastings has already shut down any prospects of her taking over the DNC.  “Meteors fizz out,” Hastings said. “what she will learn in this institution is that it’s glacial to begin with, and therefore no matter how far you rise, that’s just how far you will ultimately get your comeuppance.”

Perhaps her paranoia was justified.  One time relevant Democrat Joe Lieberman is telling Democrats to vote for Joe Crowley.  The party split between moderates and socialists is more defined than ever.  Who knows, maybe she’ll succeed in turning more districts “red”.

 

Need to Know 7/18/18

Democrats are claiming that Trump told Russia to hack the DNC.  What they are actually referring to was a campaign speech Trump gave after Hillary Clinton deleted 30,000 emails under subpoena from her illegal private server.  The FBI couldn’t find those incriminating emails, so Trump joked that he hoped the Russians could find them.  And that is the closest thing we have to Russian Collusion.

Trump asked Russia to find Clinton’s emails

David Love, writing for CNN, is suggesting that #walkaway is actually a ploy by the Russians to make people think that there is an exodus from the Democrat party by those disillusioned with the extreme turn the party has taken toward Socialism.  So when your friends use #walkaway, just know that means they are actually a Russian bot.

Russian bots are using #walkaway to try to wound Dems in the midterm

Trump is being accused of going soft on the Russians by not starting a war with Putin over the hackers.  But actually, it was the Obama administration who decided to back burner efforts to stop Russian hackers.  After US intel agencies had developed a plan to fight back against Russian hacker attacks, Susan Rice issued a stand down order.

Obama cyber chief confirms ‘stand down’ order against Russian cyberattacks in summer 2016

Ocasio-Cortez has screwed up on Israel again.  Despite holding a degree in international relations, the young Socialist candidate for New York’s 14th district has now bumbled through three different interviews on questions about Israel.  But take heart, she is going to be “speaking to activists” so they can finally tell her what to think about Israel.  I feel better already.

Ocasio-Cortez backpedals on two-state solution comments