The Bear’s Lair: Too much entrepreneurship?

I have been away this week, as my dear mother passed away and I have been in Britain for her funeral. Here, therefore is a classic column, from April 24, 2006, that has survived the test of time quite well, I think.

Entrepreneurship is popularly held to be the principal reason for the success of the U.S. economy, when contrasted with the failures of “Old Europe.” Yet if, as discussed here last week, U.S. productivity is increasing no faster than that in Europe, some seeds of doubt must be sown. Is there such a thing as too much entrepreneurship? Continue reading

The Bear’s Lair: China’s size may not make it dominant

For sheer Silicon Valley silliness, the FT article “China is leaving Donald Trump’s America behind” by Sequoia Capital boss Michael Moritz will take some beating. It is inaccurate and politically unbalanced about the United States, but even more so about China. It also misjudges China’s present position, its actual policies and its future prospects. China’s share of global GDP could double from what it is now, but without good management it would still be geopolitically puny. Continue reading

The Bear’s Lair: Cryptos are sounder than today’s currencies

Crypto-currencies are an entirely imaginary form of money, dreamed up by pimply nerds in basements. Or so it seemed. Yet examine the algorithms behind some of the better crypto-currencies, and look in contrast at the monetary policies that have devastated the last decade. You will recognize two things. First, fiat money is fiat money, whether or not it has a government stamp on it. And second, the best crypto-currencies, considered as a store of value, are much more solidly designed than the world’s major conventional currencies. The long-term implications of this for our economy are troubling, to say the least. Continue reading

The Bear’s Lair: Jackson Hole 2017 was a barmy ideas factory

The Federal Reserve Bank of Kansas City is a relatively solid, well-run institution and its President Esther George is among the most sensible members of the Federal Open Market Committee when she is permitted to attend it (her next triennial year of service is 2019). It is thus surprising and regrettable that its annual Jackson Hole conference has become a factory for bad ideas second only to the annual Davos Gabfest. This year it surpassed all barminess records, with the usual monetary madness of recent years joined by regulatory madness and fiscal madness. Surely the Kansas City Fed can find better things to do than sponsor this nonsense! Continue reading

The Bear’s Lair: The politicization of Big Business

The collapse of President Trump’s business advisory councils had little to do with Trump’s policies, or even his presentation. After all the business leaders had joined the councils after he became President, so knew what they were getting into. Traditionally, businesses have been careful to maintain a political neutrality, so their opposition to President Trump appears surprising. Yet in reality, 22 years of funny money have corrupted businesses as they have economic life in general, and in an age of crony capitalism, the media friendly activist left is where you can expect to find CEOs. Continue reading

The Bear’s Lair: Productive economies require participation

Many of Maynard Keynes’ dreams were destructive to civilization. The euthanasia of the rentier, which central bankers worldwide are still trying to achieve, has hopelessly corrupted the capital allocation process and brought productivity growth to a halt. But perhaps his most destructive vision was that of a universally leisured society, in which only a few worked and the great majority drew an income from the efforts of innumerable machines. It is a vision that has not gone away in Silicon Valley and it will end human civilization. Continue reading

The Bear’s Lair: Finally, an immigration proposal that makes sense

Ever since Senator Edward Kennedy’s 1965 immigration legislation, both Republican and Democrat efforts to reform immigration policy have been marked by sentimentality and bad faith with American workers. This column pointed this out in January 2004, when President George W. Bush’s proposed reform promised to immiserate further workers who had already gained nothing from the preceding 30 years. Now after two further failed attempts to make the problem worse in 2007 and 2013, we have a bill from Senators Cotton (R.-AR) and Purdue (R.-GA), the RAISE Bill, that could improve the position. It deserves our wholehearted support. Continue reading

The Bear’s Lair: Use tax system to rein in CEO pay

Depending on the method of calculation used, the average Chief Executive Officer makes some 300 times the remuneration of the average worker. That multiple is up from 26 to 1 in 1978. Yet CEO performance has deteriorated, if we measure the economy in terms of productivity and so forth. It is thus clear that most of the rise in CEO pay is undesirable; it is however not at all clear how to reverse it. Continue reading

The Bear’s Lair: Anyone but Gary Cohn for Fed Chairman!

Nearly twelve years ago, on October 24, 2005, this column reviewed the potential runners for Fed Chairman and came to the conclusion that the worst possible choice would be Ben Bernanke. Needless to say, President George W. Bush appointed Bernanke the following week. Since Donald Trump bids fair to be a considerably better President than Bush, I have some hopes that this column may not be a perfect negative indicator this time round. So, Mr. President, there are good choices and bad choices for the next Fed Chairman, but above all, avoid your National Economic Council Director Gary Cohn. Continue reading

The Bear’s Lair: The incredible shrinking man

Since I am away this week, I am republishing a “classic,” in this case a review of Robert Skidelsky’s third volume of his Life of Keynes. The review was written and published by UPI in March 2002; it therefore takes no account of the frightening renaissance in Keynes’ reputation since the 2008 crisis.

In reading “Fighting for Freedom” the third volume of Robert Skidelsky’s biography of John Maynard Keynes (Viking, 2001, $34.95), I was struck by how much of Keynes’ economic thinking has since been discarded by mainstream economists. Truly, in terms of his remaining intellectual footprint, to borrow the title of the cult 50’s sci-fi movie, he is becoming an Incredible Shrinking Man. Continue reading