President Trump’s threat to remove Harvard’s ability to take international students is appropriate. The university has admitted far too many dozy offspring of the Chinese Politburo and has allowed intellectual standards to collapse into a morass of woke incoherence. The first sign of sharp decline, as far back as 2006, was the university’s firing of its then President, former Treasury Secretary Larry Summers, for offenses against wokery. The quickest and least painful way for Harvard to recover its intellectual rigor would be to hire him back forthwith – he’s only 70 – with a free rein to discipline its recalcitrant faculty and slash its bloated and useless administration. Continue reading →

In research for my forthcoming book on global industrialization, I have been examining recently the career of the Japanese business titan Eiichi Shibusawa (1840-1931). Shibusawa, still something of a national hero in Japan, was effective head of the Dai-Ichi Bank from its founding in 1873 until 1917. More important, having while working for the Ministry of Finance introduced the concept of broadly held public companies to Japan, he was then involved as a private equity investor in the founding of nearly 500 of them. A superb networker, he both invested his own money and brought together resources and management for each new company, focusing always as his Confucian ethic demanded on the long-term interests of both the company and Japan. His approach, while difficult to pull off, would greatly improve the private equity business today. Continue reading →

President Trump this week described the EU as “in many ways nastier than China.” The media responded with the usual shrieks of outrage, but he had a point. The EU bureaucracy has imposed a structure on Europe that is perpetually Socialist, deeply anti-democratic and utterly intolerant of dissent. Traditionally, the EU benefited from being democratic and having better civil liberties than China, but those benefits are rapidly being eroded. We should consider the possibility that Europe would be very much better without the EU superstructure. Continue reading →

President Trump recently threatened to remove Harvard University’s non-profit charitable status. That is an excellent idea. However, it should not be limited to Harvard, but extended to all charities, eliminating all their tax preferences. The Charity Industrial Complex, representing about 5.5% of GDP in nominal value, subtracts far more than that from our wealth for two reasons. First, like the government, its members determine their success by non-market metrics; hence consume more resources than they generate. Second, the Charity Industrial Complex has increasingly been used as a cover for subversive activities directly detrimental to the social, political and economic health of the nation and the world. Continue reading →

In our 2010 book “Alchemists of Loss” Kevin Dowd and I examined the record of Wall Street risk management leading up to the 2007-08 financial crisis and concluded that it was seriously lacking. The universal assumption of “Gaussianity” caused participants to lose sight of the possibilities of “fat tails” where the probability of bad outcomes is seriously understated and “long tails” where potential outcomes are far worse than the model shows. It is by no means clear that Wall Street has cleaned up its act (certainly, it has not employed us to help it do so)! It is, however, increasingly clear that the mis-assessment of risk spreads far beyond Wall Street. Continue reading →

The investment management business has suffered from investors moving their money to index funds, which have much lower fees and are purely mechanical in their investments. Also, much investor money has been diverted to private equity and hedge funds in the belief that those investments offer higher returns. The Efficient Market Hypothesis suggests that it is impossible to outperform the market, yet numerous professional investors substantially underperform it, which by the EMH ought to be equally impossible. Yet investment managers are not stupid; they are by and large among the most intelligent and well educated of mankind. I would suggest that the problem is structural: the act of managing money for somebody else, whether a client or a committee that can remove your job, produces incentives that are highly detrimental to good investment performance. Continue reading →

The U.S. Congress is currently debating the Budget for the year to September 30, 2026, where past mostly Biden-era profligacy has left a $2 trillion deficit. I want therefore to discuss what the final Budget should contain, focusing mainly on the tax provisions rather than the expenditure cuts, which should clearly be as Draconian as possible. There is much facile moaning about the end of U.S. economic hegemony; it can be restored, but only with a collection of provisions that close much of that $2 trillion hole. I will also discuss how much closure is needed. Continue reading →

President Trump’s announcement of sweeping tariffs sent the markets into a tailspin last week – as I forecast in January, the Biden stock market bubble is finally bursting, and about time too. The hysterical reaction from the left and the economic Whigs of globalization resembles that which faced Lord Liverpool when he introduced the Corn Laws in March 1815. Like the Corn Laws, Trump’s tariffs are sound policy, as I said two years ago when Trump first proposed them, although I would favor lower rather than higher tariffs, being a fan of the 1850s “Doughface” low-tariff, small-government approach to economics rather than the “Billion Dollar Congress” of the post-Lincoln Republicans that passed the 1890 McKinley Tariff. However Trump must stand firm as the record market bubble finally deflates and the economy de-financializes, to the great benefit of ordinary people. Continue reading →

Ever since the Bretton Woods exchange rate system ended in 1971, the world has used exchange rates between most currencies that float freely. After 54 years, we can surely say this has not worked; the dollar price of gold, the truest indicator of real inflation, is approaching 100 times its $35 Bretton Woods price. The theft of Russia’s currency reserves in 2022 also shows that the dollar is an international means of exchange that cannot be relied upon, being controlled by fallible politicians. Absent a vanishingly unlikely outbreak of discipline in the Fed and the world’s other central banks, a Gold Standard is the best viable alternative. Continue reading →

CDU chief Friedrich Merz’s economically suicidal net-zero constitutional change in the Bundestag and the recent spate of anti-capitalist legal judgements in Britain and the U.S. highlight the alarming rise in economic illiteracy not only in the legal profession, but among politicians, journalists and pundits in general. Big Government, regulation and above all the rise of the pernicious nonprofit and consultancy sectors have dangerously reduced the percentage of our masters who have ever had to meet a private sector payroll or understand what it requires to do so. Remedying this will take more than one short-term fix of Elon Musk. Continue reading →