The Bear’s Lair: Treaties do more damage than tariffs

Conventional wisdom holds that treaties represent countries getting together peacefully to advance humanity’s goals, while tariffs represent dog-eats-dog negative-sum competition that can provoke wars. Yet treaties, being complex and negotiated in secret, are mostly the work of rent-seeking bureaucrats, whereas the competition of tariffs provides international relations with valuable grit, preventing countries from conspiring together against ordinary people. As new treaties get sillier, it becomes clearer: they do far more damage, economic and to liberty, than do tariffs. Continue reading

The Bear’s Lair: Unicorn is a sub-species of Dinosaur

The failure of the WeWork IPO and the poor post-issue performance of Uber and Lyft have called into question the current Silicon Valley fashion for multi-billion-dollar capitalizations of “Unicorns” that make heavy losses and remain privately owned. Maybe throwing endless pools of money at unproven intellectually shaky concepts doesn’t work. When Unicorns go the way of the dinosaur, a healthier, more innovative start-up economy will emerge. Continue reading

The Bear’s Lair: The blessed world of low asset prices

After a decade of ultra-low interest rates, we have become used to ultra-high asset prices – in big city real estate, stocks, bonds, tech start-ups, art and collectibles, and pretty well everything else you can think of. It is too depressing to think of the damage that will be done by the inevitable bursting of this universal bubble. Let us rather look forward to say 2030, to a world of low asset prices and historically average interest rates, and remind ourselves of that world’s advantages. Continue reading

The Bear’s Lair: On October 15, Britain stops being a democracy

By a vote of 298 to 56 on September 4 and a second similar vote on September 9, the House of Commons voted to approve an election on October 15, yet because of a supermajority provision unknown to the British constitution, Parliament was not dissolved. A Parliament you cannot dissolve is no longer a democratic institution, any more than was the Rump Parliament after Pride’s Purge. On October 15, therefore, Britain will turn the clock back 370 years, into the world of Praise-God Barebone. It will then need a Cromwell, or better still a Restoration to return it to democracy and legitimate rule. Continue reading

The Bear’s Lair: Solve funny money problems with a leverage tax

We seem doomed to another round of monetary “stimulus” from the Fed and the European Central Bank, at a time when real interest rates are already substantially negative. This has caused crazy leverage all over the global economy, with such madness as Boeing (NYSE:BA) in a highly cyclical business, operating entirely without stockholders’ equity. Very well, if we can’t get the monetary madmen at the world’s central banks to raise interest rates to their proper level, let’s find a fiscal solution to the problem, which will also reduce the world’s yawning budget deficits. I propose a leverage tax. Continue reading

The Bear’s Lair: EU structure leads to one-party dictatorship

Former prime ministers Tony Blair and John Major, of opposite British political parties, have united in wishing to nullify the 2016 referendum on leaving the European Union. This well illustrates the unpleasant tendency for politicians to find commonality and unity in thwarting the wishes of their electorates. Within individual countries, the strength of this tendency towards a one-party system depends mostly on the electoral system. Within the European Union, however, its underlying structure leads to an invincible tendency towards one-party “politically correct” socialism. Lovers of freedom should thus reject the EU, as irredeemably opposed to it. Continue reading

The Bear’s Lair: Could Trump have stopped the Third Reich?

President Donald Trump has instituted an entirely new type of diplomacy with North Korean dictator Kim Jong-il, and it seems to have worked, at least in the short-term. By building a personal relationship with “bad guys” Trump has avoided the poisonous Bush-era chemistry whereby Western “Axis of Evil” insults drove them ever further into destructive behavior. One is forced to ask: would Trump’s methods have worked against other adversaries, in particular against the ultimate “bad guy” regime, the Third Reich? Continue reading

The Bear’s Lair: Business Roundtable amputates the Invisible Hand

The Business Roundtable last week produced a 400-page publication claiming that its members should no longer look first to profitability but should follow the interests of stakeholders as a whole, including employees and the environment. This is pabulum we are used to from the titans of Big Business, who are no longer truly capitalist in our distorted low-interest-rate economy. The problem is, that by downplaying the central tenet of capitalism, they may, like the acolytes of central planning, produce hugely sub-optimal economic results. Continue reading

The Bear’s Lair: Public charge principle could usefully operate globally

The Trump administration last week announced a substantial tightening of the “public charge” rules by which immigrants drawing welfare would be ineligible for permanent resident “green card” status. As Milton Friedman said: “It is just obvious you can’t have free immigration and a welfare state,” so this is good policy. However, it made me wonder: should, we apply the same principle on a global basis, and if so, how? Continue reading

The Bear’s Lair: Global Gosplans should be shut down

Kristalina Georgieva’s nomination as Managing Director of the International Monetary Fund is entirely appropriate. She is a Bulgarian communist by background, for 14 years until 1993 a Professor at the Karl Marx Higher Institute of Economics under that country’s communist government. The IMF itself and its sister institution the World Bank have since their foundation been anti-market forces of central planning. It is high time the Trump Administration and other believers in the free market acted to close down these clogs to the global economy. Continue reading