Make-Work Programs and the MIC

The military industrial complex in general, and Lockheed Martin in particular, now have a replacement vehicle for the famous Hummer. It is called the Joint Light Tactical Vehicle and is billed as a breakthrough in fighting in those insurgencies in other countries that the U.S. seems to always be involved in. The Empire will be bringing this vehicle to the latest invasions, brutal occupations and other attacks on innocent women and children throughout the world.

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This “light” vehicle weighs seven tons and costs nearly a half million dollars a copy. It is advertised to have better bomb blast protection than the Hummer it replaces and should allow the evil Empire to chase its prey with even less worries about getting its mercenaries and soldiers killed or maimed. They will build this monstrosity by the thousands and Lockheed Martin and all its subcontractors will make billions in profits. And don’t forget the jobs. Thousands upon thousands of jobs for the civilians who help Uncle Sam kill brown people worldwide. As a side benefit, the Department of Defense (the war department) will have far more of the Hummers to donate to local police forces nationwide to use against the people as this new vehicle makes the Hummer obsolete. Yes, the people paying for all this will be the target of the program also. Karma, my friend, Karma.

Jobs. As most of my readers know, the military-industrial complex sells these multi-billion dollar weapons systems as jobs programs. They put subcontracting parts of these programs in as many states as they can to guarantee support by the congress representatives of these districts and states.

If the central government was not staffed almost one hundred percent by economic illiterates they would understand that this massive intervention into the market does not make jobs but rather it destroys jobs. But even the Keynesian fools in the central government should realize that if make-work jobs is what you want then there are much easier ways to provide these “jobs”. If nothing else the central government could issue everyone a shovel and pay them to dig holes and then fill them back in. Think of the many new shovel factories that would be built! And all those high paid shovel-soldiers working night and day to meet the five year plan.

The central government has long been enamored of the Keynesian gospel that only a strong government with high deficit spending could keep a market economy running. But why do these idiots have to spend their stolen loot (tax money) on war machines? Hell, lets make children’s toys instead; at least that would produce something useful and not kill anyone in the process.

The real answer to our economic woes is to remove all anti-competitive laws, regulations, taxes, and fees from the marketplace. A real free-market, not the fascist facsimile that we have now, would bring prosperity and harmony to the society. Prosperity? Yes, it was the classically liberal laissez-fair free markets that built the wealth of the west in the first place. It worked even though there was never a totally free market. It is time to let the people and their ingenuity re-build the society and stop killing people as a jobs program.

Because mankind’s wants can never be satisfied, there is always work to be done. We live in a universe of wants and needs always exceeding what is available to satisfy those wants and needs. Not only is there always work to be done, there is always productive work to be done. We don’t need “make-work” jobs programs. There should be no mass unemployment nor should there be “jobs programs”. Indeed, there should always be a shortage of available human labor.

Then why is mass unemployment such a problem? If there is always work to be done then why do we see high unemployment rates decade after decade? It is because the central government intervenes in the market at every point. We have child labor laws preventing teenagers the right to work. We have minimum wage laws that prevent the least qualified from finding any work that they can do. We have laws, rules, regulations, fees, barriers to entry, and all manner of other anti-jobs legislation to keep the economy from preforming its function freely. We have, as anyone can see, a centrally planned economy. And like the U.S.S.R. we have a poorly preforming economy that leaves millions and millions of men and women without the hope of a decent job.

It is time to try a real jobs program. Dismantle the central government piece by piece and watch the economy take off.

The fallacy of Keynesianism and Mercantilism

The always informative and entertaining Dr. Gary North wrote about mercantilism, Keynesianism, and China some time ago. In that post he told us:

Keynesianism is an economic philosophy based on the idea that the free market requires intervention from the civil government in order to maintain justice and efficiency. The free market is both inefficient and unfair to the common man, Keynesianism teaches.

So does mercantilism.

Keynesianism is almost universally believed today. Therefore, mercantilism is almost universally believed. This connection is not intuitive, but it is nonetheless true. What the economics textbooks do not say, because they are written mostly by Keynesians, is that Keynesianism is mercantilism with equations.

The textbooks are officially anti-mercantilistic. There is a reason for this. Mercantilism is officially wrong, because it is undeniably old. Textbooks promote that which is new: “The latest is the greatest.” Mercantilism was believed from 1650 to 1750. It is therefore outmoded.

Yet it is in fact the dominant economic philosophy today. But it operates under cover. The cover is called “managed trade.” It is sometimes called “fair trade.” The high priests of mercantilism baptize the new convert in the name of free trade, but then they catechize him in terms of modified mercantilism. Modern mercantilism is “free trade with modifications for justice’s sake.” “Justice” is defined operationally as “protecting a politically favored voting bloc.”

Keep your eye on the modifications. Here is where the sleight-of-hand operates. Here is where slick-talking fellows from the best economics departments separate the rubes from their money.

The British Empire of old was a mercantilist country and they believed at that time that a nation grows wealthy by exporting more than it imports and so Britain used its military might to enforce that concept on its colonies. The original mercantilism was widely believed. Adam Smith and David Hume both refuted that fallacy and so has the entire Austrian School of Economics.

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It should be obvious that a nation gets rich when its residents get rich. The Austrians tell us that the residents get rich by trading freely without governmental interference. Free trade and liberty is a wealth building combination. The Classical Liberals believed in the free market. The residents of a country increase their productivity when the government remains out of the picture and voluntary cooperation rules the day.

In an odd twist on the old fallacy, modern academic mercantilism in the western countries claim that a country grows rich by importing more than it exports. The utter craziness of the idea does not seem to bother the academics. This is the idea that one can borrow his way to riches. Governments love the idea that it should “borrow and grow rich” because that empowers the government to control the economy — bureaucrats and politicians love control.

Dr. North tells us that the mercantilism of China and the eastern nations is that old time mercantilism of “export and grow rich” which is certainly more logical than the “go deeply into debt and grow rich” idea of the current US politicians. The older mercantilism makes a lot more sense but is still far inferior to the free trade path that made the west wealthy in the first place.

The American public wants the older style mercantilism. They want protection from foreign imports and an export-based economy. The academic Keynesian mercantilists tell the political leaders that they should want more imports funded by debt. Politicians and bureaucrats in the West and in the East reject free market economics. Why? Because free market economics tells us we need a tiny government (or none at all) and that is not the message that a government worker or political leader wants to hear.  All bureaucrats want government’s control over people’s lives expanded and not reduced.

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Modern Keynesian economics is just a variant of the discredited mercantilism with charts, graphs, and mathematical equations. If you want to understand what governments should do, then study the results of the Austrian School of Economics and see that the Classical Liberals were on the right path.

Keynesianism: in its last days

The fall of the USSR:

The Soviet Union collapsed in December of 1991 and that was great news. The cold war was over! No more big spending on the military! (well, that is what was said then) Not only did the USSR go down but also the entire mythology of revolutionary violence as the method of social regeneration as well as Marxism as a respectable ideological system.

The Soviet Union was based on socialism and the irrational socialist economic calculation that Ludwig von Mises, in 1920, described in his article, “Economic Calculation in the Socialist Commonwealth.” He showed why socialist central planning can not work. The planning board can not rationally allocate capital according to its best use without the price feedbacks of the market. (an over simplification of the great man’s work but true) Mises’s argument was not taken seriously by the academic community because Socialism was so popular and after 15 years only one man even attempted to answer Mises. Mostly Mises was ignored — a sure sign that no one had an answer to his argument.

In the fullness of time it became clear that the Soviet economy was not the powerhouse that the academics had told us about for decades. Finally a socialist professor named Robert Heilbroner, author of the most popular textbook on the history of economic thought that has ever been written, wrote an article, “After Communism,” for the New Yorker (September 10, 1990) and admitted that throughout his entire career, he had always believed that Mises was wrong. He admitted: “Mises was right.” Paul Samuelson wrote the introductory textbook that sold more than any other in the history of college economics. And in 1989 as the USSR’s economy was collapsing  he wrote in his textbook that the Soviet Union’s central-planning system proves that central planning can work. Yet another example of the blindness of the academy to any evidence that goes against their world-view. Paul Samuelson was the first American to win a Nobel Prize in economics and was the creator of the “Keynesian synthesis”. He was the single most influential economist of the last century. He ignored all evidence that the Soviet System was failing and wrote in his textbook up to the very end that Soviet central planning was a viable economic model. Blindness!

Within days of the fall of the USSR, almost no academic was a Marxist any longer. The fad was over and they moved on to the fall-back position of Keynesianism. Paul Samuelson’s “Keynesian synthesis” has held sway ever since the fall of the Soviets. The Keynesians are in charge of the major academic institutions, are the main advisers in the federal government, write economic articles for the NYT and like media. The Keynesians are the dominate faction of the day.

The fall of the Keynesians:

The Keynesians are the overwhelmingly dominant faction within the Federal Reserve System. Their only major institutional opponents are the monetarists, and the monetarists are as committed to fiat money as the Keynesians are. Both schools of thought are dead set against a gold-coin standard. Both schools are in favor of continued government debasement of the currency and a gold standard would not be conducive to that goal.

The USA could not take advantage of the fall of the USSR because the US went with the Keynesians and the idea that endless deficit spending without any constraint would lead to the good life. But the country’s fiat-money economy is heading down the same road that killed off the Soviets. The  present value of the unfunded liabilities of the American welfare state now totals over $220 Trillion and may be increasing by 10 to 20 Trillion a year. The Keynesian USA is bankrupt. A crash is coming and you will not have to wait for long.

The welfare-warfare state will be dead. There will be no money to pay for it all, or rather, there will be plenty of money and it will all be worthless. The analysts with the best arguments are the economists from the Austrian School. Only the Austrians have made a systematic criticism of Keynesian theory and its policies for over 70 years. When it all goes down the tubes, the Austrians will be there to explain how the Keynesians, who were in charge the whole time, led us all to the coming unmitigated disaster.

The day is coming when the economist enablers of the total State will be shown as the charlatans that they are. Blessed be that day!