Song Dynasty China was a model of intellectual advance, that might well have started the Industrial Revolution half a millennium early. After a destabilizing century of foreign Mongol rule, China’s next dynasty, the Ming, was thoroughly intellectually retrograde, closing China off from the world, imposing a rigid Confucian orthodoxy and shutting out ideas that questioned it. The result by 1700 was a China that, however rich, was open to conquest by the West. The parallels with today’s Europe are clear, and the result for Europe may be similar. Continue reading →

Free trade economists are very fond of quoting David Ricardo’s (1772-1823) principle of Comparative Advantage, first expounded in his “On the Principles of Political Economy and Taxation” in 1817. Ricardo was one of our greatest economists, but his principle of Comparative Advantage, like much of modern mathematical economics, rested on shaky assumptions and thus had flaws even when it was first propounded (as Ricardo himself admitted). Ricardo’s principle of comparative advantage still gives its proponents status among economists and think tanks, but today, like most luxury beliefs, it immiserates ordinary people. Continue reading →

President Trump’s announcement last week that the fee for H1B visa applicants would rise to $100,000 should be welcomed. The much-abused and abusive temporary worker H1B, H2A, and H2B visa programs, greatly expanded by the late unlamented President George H.W. Bush, have been artificially wrecking the living standards of ordinary Americans for decades. This is not an accident; the programs are gifts to powerful corporatist lobbies who wish to subsidize their profits through massive inflows of cheap foreign labor. This is just the most egregious of the anti-market subsidies that have held back the U.S. economy and living standards for nearly a century and must be abolished. Continue reading →

The collapse of Tricolor, a $1bn subprime private credit lender making loans to those without Social Security numbers, is a rather small canary in a very large coal mine: the $3 trillion private credit industry. That industry has been fueled by “funny money” credit availability and represents a poisoning of the existing global credit system, seeking to increase yield by making loans of yet lower credit quality. It is the blackest impending hole in a world economy that has a lot of black holes and is heading for an inevitable debt deflation. Continue reading →

President Trump will give former New York Mayor Rudy Giuliani the Presidential Medal of Freedom, a more than well-deserved honor for Giuliani’s 1994-2002 tenure as the best Mayor of New York in history. However, the Medal of Freedom is not all that distinguished; there have been 674 recipients since its inauguration in 1963, there is no title that goes with it and it dies with the recipient, leaving nothing to his heirs. It would be much better to reverse one of the cardinal errors of the Founding Fathers and institute a hereditary peerage, an honors system that would be perpetual, flowing to the recipients’ descendants when there were any. The potential economic and social benefits of such a system are considerable. Continue reading →

President Trump’s firing of Federal Reserve Governor Lisa Cook has caused anguished squawking about the loss of Fed independence. Yet experience since 1998 has shown that Bank of England independence has produced worse outcomes than before, and the world’s independent central banks’ overall performance has been thoroughly third-rate. Central bank independence without firm policy guidelines is an invitation to crazed professors like Ben Bernanke to invent new monetary policies that bear no relation to reality. Political control is essential, allowing voters at least some say in central bank decisions; a Gold Standard or equivalent discipline would work even better. Continue reading →

President Trump’s decision to take a 10% share stake in Intel (Nasdaq:INTC) as part of the deal for the Biden administration’s excessive handouts to a failing company was arguably a good one. However, the original CHIPS Act was economically damaging while suggestions by NEC Chairman Kevin Hassett and Commerce Secretary Howard Lutnick that there might be more such purchases were economically dangerous. Since the beginning of the Industrial Revolution, government has proved a lousy investor, a poor industrial decisionmaker and a menace to innovation as regulator. The barriers against such activity in free-market economic theory should generally be bolstered, not ignored. Continue reading →

It is a long-standing view of the Left, for which there is a depressingly large amount of evidence, that the tide of History heads in only one direction — towards an authoritarian socialism that might as well be Communism. Less than three years ago I believed that in Latin America at least, authoritarian socialism had gone so far that it could well entrench itself with a kind of Comecon trading autarky. However, the triumph in Argentina and last week’s Bolivian Presidential election, in which the candidate of the ruling Socialists won only 3% of the vote, have made me reconsider: Is it possible, can it be the case, that in Latin America at least, History’s inexorable tide might begin to flow backwards? Continue reading →

When looking at industrialization in Austria-Hungary, I was struck by how little its governments used the superb “Austrian School” cadre of economists its universities were then producing – surely results could have been better than the sluggish bureaucratized industrialization the country actually achieved. Yet other societies, notably 18th and early 19th Century Britain, used their available economic skills much better, while in later years modern societies have damaged themselves by relying on the wrong economists (Maynard Keynes and Thomas Piketty being the obvious examples), or have sent better ones to the Gulag (Nikolai Kondratiev). There must be a structural way of doing better! Continue reading →

President Trump’s firing of the Bureau of Labor Statistics chief Erika McEntarfer attracted much criticism, as government statistical agencies are claimed to be impartial. Such claims of impartiality should always be regarded with deep suspicion, as they generally conceal a noxious political agenda. When you look at the BLS’s statistical methods, its agenda becomes apparent. Ever since the Boskin Commission report of 1996, the BLS has reported consumer prices using “hedonic pricing,” a highly opaque methodology that biases reported inflation sharply downwards. That falsification inflates reported growth and living standards, thereby giving us a falsely optimistic view of economic reality. Ms. McEntarfer may be blameless individually, but the BLS and its sister agency the Bureau of Economic Analysis have for decades needed to be taken apart and rebuilt using sound economic principles. Continue reading →