Dear China: Thank You for Manipulating Your Currency by Mark J. Perry

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fRom a Wall Street Journal article earlier this week “U.S. Eyes New Tactic to Press China“:

The White House is exploring a new tactic to discourage China from undervaluing its currency to boost exports, part of an evolving Trump administration strategy to challenge the practices of the U.S.’s largest trading partner while stepping back from direct confrontation.

Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, said people briefed on or involved in formulating the policy. U.S. companies would then be in a position to bring antisubsidy actions themselves to the U.S. Commerce Department against China or other countries.

Don Boudreaux responds on Cafe Hayek “The Bizarro World of Mercantilism” (my emphasis):

To the extent that currency manipulation is real and works as advertised, it makes the exports of countries that practice it artificially inexpensive for foreigners to buy. That is, currency manipulation transfers wealth from the citizens of countries that practice it to the citizens of countries fortunate enough to buy the manipulators’ subsidized exports.

And yet it is the governments whose citizens are on the receiving end of these transfers who fussily try to prevent these transfers, while the governments whose citizens are taxed to fund the transfers stubbornly carry on with them. So with the Trump administration threatening to stop Beijing’s alleged currency manipulation, and Beijing resisting, it’s as if the Trump administration believes itself to be charged with the responsibility of protecting the welfare of the Chinese people at the expense of American citizens, while the government in Beijing plays the role of benefactor of the American people at the expense of Chinese citizens.

Mercantilist myths about trade truly do incite governments to do the darndest things!

To that, Don adds:

Nearly every tenet of mercantilism is backwards. Those who fall for this sham mistake benefits for costs and costs for benefits; they interpret wealth destruction as wealth creation and wealth creation as wealth destruction. If they were a school of mathematics, mercantilists would insist that 2 + 2 = -4, 100 x 20 = 5, and 2 < 1.

MP: I would add that those who fall for the mercantilist sham also mistakenly interpret the destruction of jobs as job creation. This is a very important point that Don makes — Trump’s mercantilism and protectionism aren’t just misguided and maybe slightly off-base and erroneous, they are actually completely wrong, upside-down and backwards.

And to Don’s assessment of currency manipulation, I’ll add some updated comments below based on my 2011 article in The American “Why We Should Thank the Chinese Currency Manipulators“:

The “manipulation” of China’s currency is actually to the distinct economic advantage of millions of American consumers and thousands of U.S. businesses buying products made in China, and benefits the U.S. economy overall. Let me explain:

In the best of all possible worlds for the United States, China would use its labor, capital and resources to manufacture consumer goods like clothing, footwear, furniture, electronics, toys and appliances and send $250 billion worth of those products to U.S. consumers for free every year as a gift or as a form of foreign aid to the American people. In addition, the Chinese would produce and send to America another $250 billion worth of capital goods, raw materials, parts, industrial supplies and materials, automotive parts, machinery, and natural resources at no charge, as a gift to American manufacturers and other businesses every year. (Note: That’s roughly the dollar amount of goods the U.S. purchased from China last year.)Can there really be any argument that such an arrangement, where America would receive $500 billion worth of free goods every year from China, would be to the indisputable economic advantage of the United States? Unfortunately, that extreme form of Chinese generosity is not realistic, so here’s a possible second-best outcome:

Instead of sending us $500 billion worth of goods annually for free, China offers an attractive alternative. It agrees to send us $625 billion worth of consumer and industrial goods every year, but agrees to sell us those manufactured goods at a substantial 20% discount for only $500 billion. In that case, the amount of foreign aid will be less than the $500 billion in the first example, but will still be significant—a $125 billion gift every year from the Chinese people to the American people.

How will China generate this $125 billion in annual foreign aid to the United States? One way is to keep its currency undervalued to bring about the 20% discount on its products coming to America. Which then raises the question: If China is willing to undervalue its currency, and in the process provide approximately $125 billion of foreign aid annually to American consumers and businesses, what’s the problem? Why should we complain?

And that is my main point: that the “manipulation” of China’s currency is actually to the distinct advantage of millions of American consumers (especially low-income Americans) and U.S. businesses buying products and inputs made in China. Those two groups certainly aren’t complaining about low-priced Chinese products, and in fact would be made worse off if China were forced to revalue its currency and in the process make its products more expensive for Americans.

So when you hear China’s alleged currency manipulation discussed in the media and by Donald Trump, keep the following in mind:

  1. China’s currency manipulation is a form of foreign aid, and to the direct advantage of millions of U.S. consumers, especially low-income groups, and to the direct advantage of thousands of American companies buying inputs from China.
  2. Forcing China to revalue its currency would benefit some American manufacturers competing with China, but would significantly harm those American consumers and businesses currently buying undervalued imports. On net, there would be more harm to American consumers than benefits to American manufacturers, which would reduce our overall standard of living.
  3. Like other forms of mercantilism and protectionism, forcing or pressuring China to appreciate its currency would favor certain domestic producers over millions of consumers and import-buying companies, but would make the U.S. worse off, not better off.
  4. Finally, instead of complaining, we should be thankful for China’s foreign aid to Americans through an undervalued yuan and overvalued dollar, and for the undervalued goods that collectively save American consumers and companies billions of dollars every year.

Bottom Line: If you wouldn’t object to China sending products to the United States for free, then on what basis would you object to currency “manipulation” that allows you and millions of fellow Americans to purchase undervalued Chinese imports at a huge discount? To complain about China’s low prices from currency manipulation would be like complaining that Walmart’s “Everyday Low Prices” are a form of “price manipulation,” even though those “manipulated” prices save Americans billions of dollars annually. Pressuring China to stop its alleged currency manipulation would be to force it to raise prices on everything we buy from them, and somehow thinking that those higher prices make us better off. That would be like forcing Walmart to stop “Everyday Low Prices” and instead charge “Everyday High Prices” and then thinking that American consumers are somehow better off.

In the upside-down “bizarro world of mercantilism” here’s how Trump’s new trade policy will apparently work: China and some other countries allegedly keep their currencies undervalued to the distinct advantage of Americans, who are enriched and made better off by low prices, and to the distinct disadvantage of the Chinese people and other foreigners, who are impoverished and made worse off. To retaliate against that “unfair” outcome, Donald Trump proposes to enact protectionist, mercantilist trade policies to correct that “unfairness.” But those mercantilist policies are actually guaranteed to impoverish America and make Americans worse off. So the faulty “logic” of trade retaliation is: If China and other countries impoverish their people with currency manipulation, we’ll retaliate by impoverishing our people with protectionism. “Fairness” might be achieved by this mercantilist-driven trade policy, but only in the sense that the people of all affected countries are made equally worse off.

Mercantilism isn’t only bizarre, it’s a guaranteed formula for economic ruin. And that’s why it was discredited by the mid-18th century when it was “eclipsed by the theory of comparative advantage and the associated benefits of free trade developed by David Ricardo,” according to the Princeton Encyclopedia of the World Economy. And that’s why “Britain abandoned mercantilism and its associated trade restrictions in the 1840s” and was no longer taken seriously by economists. Unfortunately, in the world of modern U.S. politics, the sham of mercantilism is still being taken seriously by politicians almost 200 years after it was discredited.

Republished from AEI.

Mark J. Perry

Mark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

VIDEO: Universal Basic Income is Even Worse than Welfare by Bryan Caplan

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Libertarians have a standard set of fundamental criticisms of the welfare state.

  1. Forced charity is unjust. Individuals have a moral right to decide if and when they want to help others.
  2. Forced charity is unnecessary. In a free market, voluntary donations are enough to provide for the truly poor.
  3. Forced charity gives recipients bad incentives. If the government takes care of you, you’re less likely to take care of yourself by work and saving.
  4. The cost of forced charity is high and growing rapidly, leading to a future of exorbitant taxes or financial crisis.

Taken together, I think these criticisms justify the radical libertarian view that the welfare state should be abolished. But this is an extremely unpopular view, so it’s natural for libertarians to consider more moderate reforms like the Universal Basic Income. And when you’re considering moderate reforms, the right question to ask isn’t: “Is it ideal?” but “Is it better than the status quo?”

My claim: The Universal Basic Income is indeed worse than the status quo. In fact, all the fundamental criticisms of the welfare state apply with even greater force.

  1. Some forced charity is more unjust than other forced charity. Forcing people to help others who can’t help themselves – like kids from poor families or the severely disabled – is at least defensible. Forcing people to help everyone is not. And for all its faults, at least the status quo makes some effort to target people who can’t help themselves. The whole idea of the Universal Basic Income, in contrast, is of course, to give money to everyone whether they need it or not. Of course, the UBI formula normally reduces the net payment as income rises; but if a perfectly able-bodied person chooses never to work, the UBI gravy train never stops.
  2. The UBI is an extremely wasteful form of forced charity. Helping the small minority of people who can’t help themselves doesn’t cost much. Giving an unconditional grant to every citizen wastes an enormous amount of money. If you were running a private charity, it would never even occur to you to “help everyone,” because it’s such a frivolous use of scarce charitable resources. Instead, you’d target spending to do the most good. And unlike the UBI, the status quo makes some effort to so target its resources.
  3. Overall, the UBI probably gives even worse incentives than the status quo. Defenders of the UBI correctly point out that it might improve incentives for people who are already on welfare. Under the status quo, earning another $1 of legal income can easily reduce your welfare by a $1, implying a marginal tax rate of 100%. But under the status quo, vast populations are ineligible for most programs. Such as? You guys! If you’re an able-bodied adult, aged 18-64, who doesn’t have custody of any minor children, the current system doesn’t give you much. Switching to a UBI would expand the familiar perverse effects of the welfare state to the entire population – including you. And if taxes rise to pay for the UBI, the population-wide disincentives are even worse.
  4. A politically acceptable UBI would be insanely expensive. Libertarian economist and UBI advocate Ed Dolan has a detailed, fiscally viable plan to provide a UBI of $4452 per person per year. But every non-libertarian I’ve queried thinks it should be at least $10,000 per person per year. Even with a one-third flat tax, that implies that a family of four would have to make $120,000 a year before it paid $1 of taxes. This is pie in the sky.

But doesn’t the UBI give people their freedom? In some socialist sense, sure. But libertarianism isn’t about the freedom to be coercively supported by strangers. It’s about the freedom to be left alone by strangers.

If abolition of the welfare state is extremely unlikely and the UBI is worse than the status quo, does this mean libertarians should accept the welfare state as it is? Not at all. There’s a straightforward moderate path to a freer world: AUSTERITY. Cut benefits. Restrict eligibility. Remind the world of the great Forgotten Man: the taxpayer. We probably can’t convince the majority to end the welfare state. But “Welfare should be limited to genuinely poor people who can’t help themselves” has broad appeal – and unlike the UBI, it’s a clear step in the libertarian direction.

Reprinted from Library of Economics and Liberty.

Complete video of ISFLC’s UBI debate:

Bryan Caplan

Bryan Caplan

Bryan Caplan is a professor of economics at George Mason University, research fellow at the Mercatus Center, adjunct scholar at the Cato Institute, and blogger for EconLog. He is a member of the FEE Faculty Network.

Breitbart: Refugees cost taxpayers BILLIONS each year

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While bringing refugees to the US from certain parts of the world poses a security risk for America, often forgotten is the huge cost to US taxpayers (federal, state and local) of placing them in communities already loaded with poor people, a practice the mayor of Springfield, Mass. recently pointed out.

domenic-sarno

Democrat Domemic Sarno, Mayor Springfield, Massachusetts.

And, before the refugee industry starts shouting about the fact that some refugees ultimately pay taxes, in reality very few even reach the income threshhold to pay taxes and many who make small amounts of income can actually file to get money back from the government through earned income tax credits while not ever having paid in anything.

The Democrat mayor of Springfield, Mass recently said that the U.S. Refugee Admissions Program concentrates “poverty on top of poverty!”

Here is Michael Patrick Leahy at Breitbart in an article entitled: ‘Refugees Will Cost Taxpayers an Estimated $4.1 Billion in FY 2017’ says:

American taxpayers will spend more than $4.1 billion in the 2017 budget to support the 519,018 refugees who have been resettled by the federal government in the United States since October 2009, according to a cost estimate by Breitbart News.

To put that very large number in context, $4.1 billion can buy 10,677 new homes for $384,000 each, which is the average price of a new home sold in the United States in December 2016. Or it could buy 170,124 new autos for $24,100 each, which is the manufacturer’s suggested retail price for a 2017 Chevrolet Malibu.

Even if the Trump administration were to entirely shut down the flow of refugees into the United States in FY 2018 and beyond, the refugees who have already arrived in the country will cost at least another $3.5 billion in 2018, and about $2 billion to $3 billion annually thereafter until FY 2022 and beyond.

Here is one of several useful charts prepared by Leahy. This summarizes the COST PER REFUGEE:

screenshot-323

For more fun with numbers, continue reading here.

Where is Congress?

Donald Trump can cut the numbers arriving in the US while he is in office and can tinker with the regulations, but unless Congress grows a spine and reforms this out-of-control federal program, in 4 or 8 years we will go back to a wide open spigot! There is a limit to what can be done with a phone and a pen as Obama learned the hard way.

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Problem Solved: Asylum seekers streaming into Quebec to escape Trump order

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The Canadian Border Security Agency says Quebec is now the flashpoint for “asylum seekers” or double refugees who first entered the U.S. as refugees and are now fleeing there and trying to sneak into Canada over fears that President Donald Trump will have them deported.

The asylum seekers are graciously accepting the warm welcome from Canadian Prime Minister Justin Trudeau, who responded to Trump’s ban by saying they were welcome to Canada.

Trudeau has not paid attention to the fateful, historic mistake Angela Merkel made in her once-enthusiastic welcome of refugees into Germany, which turned out to be disastrous for Germany and for her politically.

“Illegal Refugees Now Streaming Across Quebec-New York Border”, by David Krayden, Daily Caller, February 14, 2017:

Despite all the media reports of refugees illegally entering Canada from the U.S. at remote Manitoba crossings, more are actually getting through along the Quebec-New York border — and it can be just as cold as the temperatures reported along the prairies that have sometimes induced frostbite.

The Canadian Border Security Agency says Quebec is now the flashpoint for “asylum seekers” or double refugees who first entered the U.S. as refugees and are now fleeing there and trying to sneak into Canada over fears that President Donald Trump will have them deported.

The numbers speak for themselves, with 42 asylum claimants showing up at the Quebec border last weekend alone and 452 for January — a 230 percent increase from the year before.

RCMP spokesman Cpl Camille Habel told CBC News that he attributes the popularity of the Quebec border to its relative closeness to major U.S. cities like New York and Washington, D.C. and the fact that international airports are nearby.

“Bigger cities on each side can mean more people trying to cross here.”

The “refugees” are deliberately crossing illegally so they can bypass the Safe Third Country Agreement, which is supposed to prevent people seeking asylum from choosing more than one “safe” destination when the flee their country of origin. The U.S. and Canada are both considered safe under this international legislation. But, paradoxically, the act only applies at legal border crossings; so double refugees are crossing illegally in order avoid their official refugee status from being questioned.

But the agreement only holds at official border crossings, so people crossing illegally into Canada are able to apply for asylum here, even if they arrived in the U.S. first.

Julie Lessard, who specializes in business immigration law, told the CBC that the current illegal flow of refugee claimants that is spreading across the longest undefended border in the world is fast becoming the status quo….

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Illegal Immigration Drives Income Inequality

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Applying some common sense to the immigration debate offers an immense amount of clarity. And it reveals errors at both ends of the argument: Immigration is a powerful engine for economic growth, but wrong immigration can be a recipe for low wages and the bottom end of the scale, high governmental costs and high wages at the top end of the scale.

And there is wrong immigration. We’ve been practicing it for decades and are reaping the results.

The unstated policy of the past 30 years or so has been to have a de facto open border with Mexico that allows somewhere between 11 million and 20 million illegal immigrants — one of many problems is that we just don’t know — to be here and work, live and enjoy the benefits of this country.

But they are allowed to come illegally with a wink and a nod because politicians have opposed enforcing U.S. immigration laws. Yes, we have some fencing and a Border Patrol and we do stop some and send them back — about 250,000 annually. But they come right back again and eventually get through. And apparently we miss most the first time. The proof that the de facto policy is open borders is the 11-20 million people that are here illegally.

In the rest of the picture, we have legal immigration that takes many years and is an arduous and expensive journey. But because we are controlling it, we are getting immigrants that as a batch are capable of not only improving their own lives, but those of other Americans.

In 2014, 29 percent of the 36.7 million immigrants ages 25 and older had a bachelor’s degree or higher, compared to 30 percent of native-born adults. While that lines up nicely with the existing American population, the bottom end still does not: 30 percent of immigrants lacked a high school diploma or GED certificate compared to 10 percent of native-born Americans.

What this overall picture shows is that we allow — legally and illegally — millions of low-end workers into the country, and that has enormous consequences for low-income Americans.

Compassion for whom?

Often the defense of keeping quasi open borders is that we are a “compassionate” nation. Well yes, that is indisputable by practically every definition of charity at home and around the world.

But in the case of immigration, compassionate for whom? While letting millions of poor, unskilled, illiterate immigrants in our country may be showing compassion toward them, it is demonstrably not showing compassion toward tens of millions of poor Americans.

Consider: Millions of uneducated, unskilled and illiterate immigrants from south of the border come to America seeking a better life — or for many, just income to send money back “home.” The economics is undeniable: Their very presence depresses the low end of wages. They not only take millions of entry-level jobs, but also keep all those wages low or even lower them.

So the jobs “Americans won’t do” theoretically, are actually only jobs Americans won’t do at the prevailing wages. Without all those immigrants — legal or illegal, but most are illegal — low end wages would rise. Perhaps a lot. They would have to for supply to meet demand. It’s basic economics and the effect trickles up to middle class incomes.

How much? It’s hard to say, but George Borjas, Professor of Economics and Social Policy at the Harvard Kennedy School of Government, writes in Politico:

“Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent.”

This explains the flattening or declining of wages in real terms of lower skilled American workers with the huge influx of unskilled workers, and it is a minor tragedy that so few understand the reality.

But this also explains a big social bogeyman in American politics: income inequality.

A surprising source of income inequality

In a recent fascinating EconTalk podcast, Russ Roberts interviewed Borjas, himself an immigrant and leading expert in the economics of immigration, and Borjas laid out a fascinating case.

First off, immigration has historically increased capital, even with those who bring nothing to the country. They work for companies who provide goods, a percentage of them start and build successful companies, and overall the economy grows and capital is produced. This dynamic, along with a fairly free market capitalism and rule of law, explains the dramatic economic engine that the United States developed into after the Civil War.

If immigration demographics of skill level roughly mirror the makeup of the United States, then the net impact on the country is economic growth and capital growth, without much relative change in distribution between low, middle and upper incomes. Roughly, it’s a win-win-win.

However, if the immigration demographics do not mirror the country, there will be income distribution impacts. In the United States in recent decades we have seen immigration heavily weighted toward the low income end, depressing wages as explained above.

But it also has a converse impact.

Because capital has been expanded with the immigration, the value of people’s skills at the high end of the scale has gone up. This is because there are relatively fewer of these people to provide their services in an environment of both increased demand for them and increased capital due to immigration that is not mirroring the country’s current demographics.

There may be other policies that drive income inequality in a trade-off for another benefit, but there can be little doubt that the millions of illegal immigrants at the low end not only depress low-end wages but drive up high-end wages and create income inequality.

No public policies can alter the laws of economics. They are immutable. But public policies can alter the laws of immigration, which can positively impact the economics and the people in the economy.

That’s a debate worth having.

EDITORS NOTE: This column originally appeared in The Revolutionary Act.

Communist Party USA: Eager to Work with the Democratic Party to Advance Communist Goals

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Upon its inception in 1919, the CPUSA was inextricably linked to the Soviet Communist International (Comintern), which was controlled by Moscow leadership and possessed “uncontested authority” over all international parties. When it was founded, the Party had approximately 50,000 members.

By the 1920s, the CPUSA’s membership had dwindled to approximately 15,000 because the Comintern forced it to adopt an ultra-revolutionary stance and give up attempts at “coalition building.” The Great Depression presented the Party with an opportunity to recruit and build its membership. Thus the CPUSA used hard times as a propaganda tool to assail the failure of capitalism, targeting particularly the liberal policies of the early FDR administration while successfully infiltrating government agencies, notably the Agricultural Adjustment Administration.

In 1935, with the rise of Nazism, the Comintern changed its policy and adopted the Popular Front tactic, which allowed the CPUSA to pose as the anti-fascist defenders of American liberalism. As Earl Bowder, the leader of the CPUSA from 1935 to 1945, declared, “Communism is Twentieth-Century Americanism.” This new tactic increased the Party’s membership to nearly 100,000 people — its high point — , and it simultaneously allowed the Party to infiltrate a whole host of liberal institutions and use them as front groups. The CPUSA worked especially on becoming a presence within the powerful labor federation, the Congress of Industrial Organizations (which would later merge with the American Federation of Labor, to become the AFL-CIO).

In 1939, the Nazi-Soviet pact brought an end to the CPUSA’s anti-fascist pose. Soon after, the Party returned to its prior aggressive denunciations of mainstream American politics — a move that eventually brought about a collapse in membership, especially when the Party reversed course once again with Hitler’s invasion of the USSR.

After World War II ended, Soviet hostility to the West surfaced once more. In 1944, U.S. Army cryptanalysts broke the code to the KGB’s communications, and by 1948 the Venona project had identified hundreds of espionage operatives in the United States. Although the Roosevelt administration had dismissed Republican assertions that Communists had infiltrated the New Deal, by the late 1940s the Truman administration began to treat the internal Communist threat as a very serious matter.

In 1948, Whittaker Chambers and Elizabeth Bentley, both former Communists, testified before the House Committee on Un-American Activities that Communists had operated in the Roosevelt administration — especially Alger Hiss, who had served as a top official in the State Department. In January 1950, Hiss was convicted. A year later, on March 6, 1951, Julius and Ethel Rosenberg, members of the CPUSA and militant Stalinists, were put on trial for espionage and were executed two years later in 1953.  Generations of radicals perceived them as martyrs for the cause and, to this day, many still protest their guilt, even though evidence continues to prove that they engaged in a conspiracy to steal the atomic secrets of the United Stated and deliver them to the USSR.

Joseph McCarthy, United States Senator from Wisconsin from 1947 to 1957, became the most famous and aggressive politician to take up the anti-Communism banner. In 1950, although the purge of the CPUSA from American politics was well underway, McCarthy used anti-Communist sentiment to gain power. Claiming that he was in possession of a list of Communists in the State Department and later in the Truman administration and the U.S. Army, McCarthy propelled himself into the national limelight. His influence was to be short-lived, however; in 1954 he was censured by the Senate for abusing his legislative power. Rather than weeding out Communists in government, McCarthy’s methods became a boon to the radical Left. By evoking the specter of open-ended witch-hunts, he gave the Communist Left a banner around which to regroup.

As the Cold War developed and Congressional legislation targeted its revolutionary activities, the CPUSA had to retreat underground.  In 1956, Nikita Khrushchev’s “secret speech” — denouncing the crimes of Josef Stalin and the Soviet invasion of Hungary — further depleted the CPUSA’s membership, which fell to 3,000.  In 1959, Gus Hall became the leader of a marginalized CPUSA that was a diminished shell of what it had been a generation earlier.

Although the CPUSA’s support of the Soviet invasions of Prague and Afghanistan continued to brand the Party as part of the Old Left, it began to see some increased membership in the 1970s. Some previous Party members now felt it safe to rejoin the organization, and a small number of 1960s radicals also joined the Party.

From its inception, the CPUSA had put resources into recruiting African Americans into ranks. While this effort never yielded many members and collapsed with the advent of the Civil Rights movement in the late 1950s, Herbert Aptheker, a long-time member and founder of the American Institute for Marxist Studies, and Angela Davis now attempted to incorporate racial radicalism into the Party.

While its goal has always been the development of a national Communist Party, in 1984 the CPUSA began to give indirect support to the Democrat Party as the only alternative to the conservatism of the Reagan era. In 1987 Mikhail Gorbachev introduced Perestroika to the Soviet Union, leading eventually to the near disintegration of the CPUSA. In 1992 Herbert Apthetker and Angela Davis split away from the Party to found the Committees of Correspondence for Democracy and Socialism.

In 2008 the CPUSA built what it termed “a labor and people’s alliance” to support Barack Obama’s presidential bid. On January 31, 2009, Sam Webb, the current leader of the CPUSA, gave a speech celebrating that “a friend of labor and its allies sits in the White House.” He described President Obama’s inauguration as a sign that “an era of progressive change is within reach, no longer an idle dream.” According to Webb, the new administration was already considering “a new model of governance” that “would challenge corporate power, profits and prerogatives.”

In October 2010, CPUSA national executive vice-chair Jarvis Tyner spoke in Detroit on the need to for “left and progressive”-minded Americans to vote for Democrats in the upcoming midterm election.

On November 3, 2010 — the day after mid-term elections in which Democrats lost 6 Senate seats, more than 60 House seats, and 7 governorships — CPUSA Labor Commission chairman Scott Marshall emphasized that his organization had worked collaboratively on political campaigns with AFL-CIO president Richard Trumka. SaidMarshall:

“The continuing independence of the labor movement was heightened tremendously by the election, and in very specific ways, not just in general. Not only did the campaigning take place from union hall[s],… but this time, as Trumka told us when he was in Chicago, they began the nuts and bolts [of] building independent labor campaign organizations in five key cities around the country.”

Also on November 3, 2010, the CPUSA praised the Obama administration for having “accomplished many things.” Moreover, the Party:

  • complained that prior to the previous day’s elections, a “corporate-Republican alliance depended on lies, fear, and hatred to spread its message”;
  • praised labor unions for having worked to raise “class consciousness”; and
  • asserted that a key CPUSA priority for the immediate future would be “to deepen and expand class-consciousness.”

Late in 2010, CPUSA member C.J. Atkins called for his comrades to drop their “communist” label, so that they could work more effectively inside the Democratic Party. Soon thereafter, Joe Sims, co-editor of the CPUSA publication Peoples World, acknowledged not only that collaboration with the the Democrats “will be an area of engagement for those wanting to make a difference,” but also that communists might someday be able to “capture” the Democratic Party entirely. Sims warned, however, against dissolving the CPUSA entirely into the Democratic Party. Rather, he advised his organization to remain a separate entity, working both inside and outside the Democratic Party as circumstances required.

On December 5, 2010, the CPUSA held an awards ceremony in Connecticut, where it honored, among others, John Olsen, head of the Connecticut AFL-CIO.

CPUSA’s modus operandi is to delegitimize and smear American society by depicting it as deeply and irremediably infested with racism, sexism, homophobia, and all manner of injustice. Click here, for instance, for an explanation of how the organization in 2014 used its flagship publication, People’s World, to foment racial strife in Ferguson, Missouri, in the aftermath of a white police officer’s fatal shooting of a black suspect.

In January 2015, CPUSA National Committee chairman John Bachtell published an essay in People’s World stating that American Communists were eager to work with the Democratic Party in order to advance communist goals. He wrote, for instance:

“[L]abor and other key social forces are not about to leave the Democratic Party anytime soon. They still see Democrats as the most realistic electoral vehicle to advance their agenda, especially in the national battle against the extreme right. Their main goal at this time is changing DP policies and approaches away from influences of the Wall Street wing and the more conservative elements…. First, we are part of building the broadest anti-ultra right alliance possible…. This necessarily means working with the Democratic Party. Second, our objective is not to build the Democratic Party. At this stage we are about building the broad people’s movement led by labor that utilizes the vehicle of the Democratic Party to advance its agenda. We are about building the movements around the issues roiling wide sections of people that can help shape election contours and debates…. [W]e are for building movements in the electoral arena and see engagement in the electoral arena and democratic governance as a vital means to further build movements.”

CPUSA is a member organization of the United for Peace and Justice anti-war coalition. The group also has strong ties to China, Cuba, and other nations hostile to the United States.

The Economic Costs to Taxpayers of Refugee Resettlement

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I told you recently that the Office of Refugee Resettlement had published its 2015 Annual Report to Congress (a year late, but much better than when it was three years late earlier in RRW’s history).

If any of you citizen investigators want a winter research project, study the whole document and see what other information you can find. (Look back at some previous reports too, see here).

Below are some charts from the report (beginning on page 16) that are very instructive. And, remember readers they survey refugees and often don’t hear back from them, so I expect the numbers could even be worse then they are here (from “responding household,” those willing to talk)—and here they are bad!

By the way, when the Leftist Open Borders gang publishes economic studies that claim that refugees bring economic boom times to struggling communities, they surely don’t factor in the cost of welfare use by refugees (or the education costs, or the criminal justice system costs). LOL!, maybe they figure federal welfare dollars (grown on trees in Washington) flowing to certain communities are income to the community.

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Let’s take SNAP for example (that is food stamps).  Note that 92.5% of refugees who arrived in 2015 went on food stamps, but of those admitted in 2011, 60% are still on food stamps 5 years later!

Interesting too is the figure for housing assistance. Newly arriving refugees get very little, but after they have been here for awhile (see 2011) they find the housing assistance.

Also, note that as they are here longer, more refugees find SSI (for aged, blind, disabled or poor people generally).

Are you listening ‘welcoming’ communities?

“General assistance” is described as ‘benefits’ provided by state and local governments (taxpayers!).

Take special note of the 23% who used that state and local aid.

Aren’t we told REPEATEDLY that refugees do not cost state and local taxpayers anything! (And, this figure likely does not include the cost of educating the children).

There is graph on page 18 worth looking at which shows the same numbers in a different way.

Then here on page 19 we see a comparison between various ethnic groups and their use of welfare.

Although we are admonished by ORR to not compare statistics by country of origin, I ask, then why bother reporting this data yourself since it begs comparison?

Welfare use was highest for refugees arriving from predominantly Muslim countries in 2015—Iraq and Somalia—as shown in this table from page 19.  See that they sure knew how to suck up the state and local “general assistance” as well.

(If you are wondering, the Bhutanese are mostly Hindu, the Burmese mostly Christian, but we are admitting Rohingya Muslims from Burma now, Cubans of course are mostly Christians, Iraqis mostly Muslim, and Somalis all Muslim).

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This post is filed in our ‘where to find information’ category and in our ‘refugee statistics’ archive.

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Here comes the truth! Do-gooder refugee agencies fear job losses—theirs!

Suggestion for President Trump: Save up to $45 billion by cutting International Rescue Committee funding

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Everyday I start my day at around 5 a.m. with CNN.  I recommend that you all consider doing that (not necessarily at that hour!) because it is so informative to see how they spin the news each and every day. Kind of fires me up to get to work!

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David Miliband (left) and George Soros.

In 2013, Miliband awarded George Soros the IRC’s Freedom Award (this is not a joke, or fake news!).

This morning CNN showed a clip of the International Rescue Committee’s CEO David Miliband whining (in his snooty British accent!) about Trump’s EO on refugees.  I tried to find the clip just now, but couldn’t.  But it doesn’t matter.

This is what you need to know (especially you lazy reporters who never mention that the refugee contractors, including the IRC, are largely taxpayer funded while you pretend their intentions are pure as the driven snow!).

The IRC is one of the nine major federally funded refugee contractors.

David Miliband is a British national who came over from the UK a few years back to run the International Rescue Committee which places refugees in a couple dozen US cities. He was a former Foreign Secretary and is the brother of ‘Red’ Ed.

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The International Rescue Committee had an annual income stream of $688,920,920 for the year ending September 2015 according to ‘Charity Navigator.’ 

66.5% of that income came from you—the U.S. taxpayer!

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Miliband is paid annual compensation of $591,846! What the h*** does he do for that kind of money? Doing well by doing good, but is he?

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And, here is where the IRC is placing refugees in America (screenshot from their website):

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Think about it! A rich British elitist is changing American cities and we taxpayers pay him to do it!So my suggestion to the President is to begin balancing the US budget by cutting off the supposed humanitarians, especially the foreign ones being paid handsome salaries out of the US Treasury! Let them raise PRIVATE money from those who want refugees seeded throughout America. Heck, the US taxpayer could save almost a half a billion bucks annually by pulling them off the federal teat!

We have a lot more on Miliband (Hillary had a crush on him, he likes her smile), click here for more.

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How U.S. Charities Fund Terror — Some with your tax dollars

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Oxfam Uses Absurd Metrics and Gets Absurd Results by Chelsea Follett

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Every year, Oxfam releases a report meant to shock the public about the extent of income and wealth inequality. This year’s report claims that the eight richest people on Earth have as much wealth as the bottom half of the world’s population (3.6 out of 7.2 billion people). That’s certainly shocking. It’s also profoundly misleading.

As others have pointed out, Oxfam reached that number with a questionable methodology, which also led them to several other absurd conclusions. According to their own graphs, more poor people live in North America and Europe than China (see the far left of the chart below). How can that be, given that traditional poverty measures show the opposite?

Oxfam isn’t using a traditional poverty measure (such as the number of people with a purchasing-power-adjusted income of less than, say, $2 per day). Instead, they focus on something called “net wealth.” This is the sum of an individual’s wealth minus any debts.

Of course, many people in rich countries carry debt due to university loans or a home mortgage, yet also enjoy high incomes and an enviable standard of living.

Here are some illustrations of just how absurd it is to use net wealth as a measure of poverty.

Consider this. Oxfam claims a penniless, starving man in rural Asia or Sub-Saharan Africa is far richer than an American university graduate with student debt but a high-paying office job, a $2,000 laptop and a penchant for drinking $8 designer coffees.

Let that sink in.

(I must credit Cato’s Adam Bates for that example).

Here is another example, courtesy of Johan Norberg. He points out that his daughter, a child with only about twenty dollars in her piggy bank, is richer than 2 billion people by Oxfam’s logic. If that were true, then the solution would surely not be to take away the humble savings of his daughter and redistribute them among those 2 billion souls, but rather to generate more total wealth, “enlarging the pie” so to speak.

That’s the core problem with obsessing over “inequality.” If the goal is to further human wellbeing, then instead of decreasing inequality through redistribution, we should focus on decreasing poverty by creating ever more wealth. Happily, thanks to the wealth-creating power of market exchange, we’re doing just that. The trend lines all show that poverty (by any reasonable measure) is in retreat.

Republished from the Cato Institute.

Chelsea Follett

Chelsea Follett

Chelsea Follet works at the Cato Institute as a Researcher and Managing Editor of HumanProgress.org.

Trump’s ‘Honeymoon’ Non-Existent, as Alt-Left ‘Radicals’ Rally by David Horowitz

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Donald Trump’s presidency has been marked by protests from campaign season to win, robbing him of the normal seven or so months incoming leaders of the high office are afforded in order to get their cabinet picks in place and acclimate themselves to the business of governing.

Alt-Left protesters.

That’s according to David Horowitz, who penned an insightful piece in Breitbart.

Donald Trump’s campaign and rise to the White House have been marked by protests and opposition rallies, and he’s being robbed of the time normally afforded incoming presidents to acclimate to the White House because the far-left refuses to take a break.

It opened:

“According to Gallup, the average presidential honeymoon lasts seven months. This is a window when the losing party declares a partisan peace, allows the incoming president to pick his cabinet and launch the agenda his victory mandates. Presidential honeymoons are not only a venerable American tradition they are one of democracy’s pillars. For generations they have been ceremonial supports for the peaceful transition of power, and the peaceful resolution of partisan conflicts.

“Not this election year. There will be no honeymoon. This year even before Trump arrives in the Oval Office, the opposition cry has been Resist! Block! Reject! It is not just anti-American radicals like Michael Moore, who has indeed called for “100 days of resistance” to the Trump presidency, but by the leadership of the Democratic Party which has vowed to fight Trump’s appointments, has attacked the election result as an expression of popular racism, attempted to discredit the Electoral College by falsely calling it a legacy of slavery, and even accused Trump of being a Russian agent, a pawn in the chess game of its dictator Vladimir Putin. It is a sad day for America when the world’s oldest political party, whose name proclaims it a partisan of democracy, comes out in force as a saboteur of that same system.”

The blame can be found in the far-left shift of the Democratic Party.

From Horowitz on Breitbart again:

“Nor is all this simply a fit of Democratic absent-mindedness. Instead, it is the culmination of a long developing shift in Democratic Party politics, a shift symbolized by the current favorite to become its next leader. Keith Ellison is a Muslim radical who spent his formative adult years as a vocal supporter of the anti-American, anti-Semitic racist Louis Farrakhan. Ellison reflects the power of the Bernie Sanders radicals in the Democratic Party who according to recent Gallup polls now represent its majority, even though they lost a rigged primary election which would have made him the party’s presidential nominee.

“The face of this new Democratic Party was revealed during a seminal moment in the second Clinton-Trump presidential debate. It came when Trump turned to the cameras and said, “Hillary has tremendous hatred in her heart.” He was referring to her now notorious statement that half of Trump’s supporters belonged in a “basket of deplorables,” which was followed by her iteration of those she had in mind: “The racist, sexist, homophobic, xenophobic, Islamophobic—you name it. And unfortunately there are people like that. And he has lifted them up.”

“What made this moment pivotal was that the slurs were not an idiosyncratic tic of the Democratic standard-bearer and leader of the party’s “moderate” wing. They were the logical expression of the identity politics that had become the party’s creed. If every political issue and conflict is reduced to a conflict of races, genders and ethnic origins this inevitably leads to the demonization of the opposition as racist, sexist … deplorable. It is this mentality that has swallowed the Democratic Party and caused it to view politics not as an art of compromise but as a war against the indecent and the irredeemable. There can be no more succinct summary of what the Democrats’ rejection of the traditional presidential honeymoon is about.”

So here comes Trump, with what radical leftists see as a revolutionary idea – to bring America back to the level of sane politicking, when even opposing views weren’t automatically filtered through the lens of racism, or gender wars, or the like.

Horowitz, once again:

“This why the attempt to reverse the election result, block Trump’s appointments and cripple his agendas will fail. Other Republicans faced with such extreme attacks on their appointments would have thrown many of them under the bus. But Trump himself has been the target of such attacks from the outset of his campaign. The reason he has been so attacked has been his readiness to confront head on what is called “political correctness” but what is in fact a party line demonizing anyone who challenges it as a racist, sexist, Islamophobic — deplorable.

“This is the revolution that Trump represents. It will succeed or fail on whether the American people are ready to reject the racial, gender and ethnic divisiveness that has become the policy of the Democratic Party; whether they are ready to restore the American social contract that regards individuals on their merits, regardless of race, color or creed. In short it will succeed or fail on whether they are ready to make America great again.”

RELATED ARTICLE: The president alone can conclude treaties and trade agreements, there is no role for Congress

EDITORS NOTE: This column originally appeared on The Geller Report.

Why Cheap Muslim Refugee Labor has Taken Over Meatpacking Jobs

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Editor:  We occasionally post comments or guest posts from readers that are so informative that we don’t want them lost where comments are normally posted.  This is from a reader answering my perennial question about how it came to be that good paying American jobs in the meatpacking industry have now become low paying jobs for immigrants and refugees.

Before you read what Deena has to say, check out a post I wrote in 2008 about how President Bill Clinton brought tens of thousands of mostly Muslim Bosnians in to the US to do meatpacking jobs in Iowa in the mid-1990s (with the help of Lavinia Limon who was Bill Clinton’s director of the Office of Refugee Resettlement). The business model allows BIG MEAT (or LOL! BIG YOGURT) to pay low wages which are then supplemented by welfare that you pay for!

The US State Department is acting as a head-hunter for big business, so forget about the humanitarian mumbo-jumbo they are trying to sell!

From Deena:

You asked if slaughterhouse work used to be a good job. It did; and, in fact, was heavily unionized until sometime in the late 80’s or early 90’s, I believe.

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Brazilian owned JBS (formerly Swift & Co).

It had its own union (Amalgamated Meat Cutters (AMC)) and the former president of the Iowa AFL-CIO back when I worked for the national AFL-CIO came out of this union. This work was among the best in pay and benefits in the US along with auto work because basically the entire industry was unionized; and like in the UAW, workers spent a lifetime in the trade.

This is a photo I took on my fact-finding mission in the heartland this past summer. Meat giant JBS (formerly Swift & Co) is a Brazilian owned company that encourages Somali refugee labor, and as such it is changing the demographic make-up of Greeley, Colorado.

It ended when the market was flooded by foreign workers – largely illegal. The decent paying companies – and most then fell into this category – were unable to compete with low-paid-unskilled-foreign-worker-filled companies which sprang up. The pay is now about 55% of what it was then. Forget benefits.

The union merged into what is now known as the United Food and Commercial Workers union (UFCW), which largely represents retail workers. The ‘meat cutters’ of today are more likely to cut and package large sections of pre-cut meat into individual packages for purchase by shoppers in local grocery stores like Kroger where I live.

The actual slaughterhouse industry has high turnover – some logging over 100% in a year. The work is hard on the body and dangerous, which is why the wages used to be reasonably high. I’m sure OSHA still requires the posting of health and safety rules but I doubt if most of the workers can even read them, let alone care about them.

Back when Bush was staging company raids, the first things a company would do after losing its illegal workers to a raid were to raise wages to attract legal workers to this hard, dirty work and to offer bonuses to workers who could bring in new workers, proving that this was work that US workers would do, just not for the wages and conditions that prevailed in the plants where illegal workers set the standards. [And where legal refugees are now hired at those low wages—ed]

Construction work has largely followed slaughterhouse work.

The AFL-CIO used to be against massive immigration because of what I just outlined: the law of supply and demand in which large numbers of workers who will work for low wages under bad conditions drive down wages for the remaining ones who stay and force those who can’t or won’t work for these wages out of the field. It changed after Sweeney-Trumka came in 1996, bringing several operatives from the Democratic Party.

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Senator Jeff Sessions (R-AL)

Recently the AFL-CIO has toed the Democratic Party’s line on immigration – more and faster – and has paid the price.

Their idea seems to be that they can organize these low wage workers, but it doesn’t work out that way. The union numbers keep decreasing. SEIU*** has enjoyed some success but they are organizing workers at low wages who can be easily replaced. If necessary, companies like WalMart simply subcontract out work like janitorial work to companies who will hire illegal workers on the cheap.

Construction companies hire subcontractors for wall boarding, painting, and roofing. Young men who would like a start in construction don’t get hired at these entry level jobs and so don’t make their way up the ladder.

The loss of such careers as meatpacking and construction to non-college educated men is a shame and a disaster.

In 2013, Senator Jeff Sessions called out Trumka and the meat packer lobbyists on the Gang of Eight bill, a bill to legalize more cheap laborers. This is why they hate him so much!

The MSM made much of women voting for Trump. I’d be willing to bet that many non-college educated women would be far happier for their husbands still to be able to get those better paying jobs so that they didn’t have to work full-time and could spend more time at home when the kids are small.

***See our post over the weekend where SEIU is attempting to organize Rohingya refugees.

For more comments worth noting and guest posts, click here.

Sessions photo!  please read this!

Senator Jeff Sessions has been a stalwart in fighting for American workers in the US Senate and tomorrow the Left will try to destroy him!

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Getting new housing in your town? Then you will get refugees!

Iran built on stolen property — Trump should take it back

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President-elect Donald Trump was right during the campaign to call the Iran nuclear agreement “the worst deal ever negotiated” by the United States government.

Not only did it reward a terrorist state with $100 billion of frozen oil revenues (some say, $150 billion), it dismantled an extensive armature of international sanctions that had cut Iran’s oil exports in half, banned it from the international financial system, and was beginning to threaten the regime with domestic unrest.

Obama tried to set this bad nuclear deal in concrete by incorporating most of its measures into a United Nations Security Council Resolution.

This will make its undoing more complicated than some analysts imagine. It’s not just a piece of paper President Trump can rip up, as a group of American nuclear scientistsimply. The international sanctions regime Obama destroyed took years to build and cannot be reconstructed in a day.

But the incoming president and Congress have other options for ratcheting up pressure on the Iranian regime, options that can be enacted unilaterally.

A group of conservative leaders released a letter to House Foreign Affairs Committee chairman Ed Royce (R-Calif.) on Thursday, commending him for a resolution he introduced in the final days of the last Congress on the restitution of or compensation for property wrongly confiscated by the Islamic Republic of Iran.

“Totalitarian regimes historically have confiscated property from individuals whose sole ‘crime’ consisted of supporting the previous government,” the letter states.

“When the Islamic regime seized power in 1979, it followed in the footsteps of these earlier totalitarians.”

The letter, and spearheaded by the Foundation for Democracy in Iran, which I chair, recalled Congressional action against previous cases of unjust expropriation, most notably the Helms-Burton Act — also known as the Cuban Liberty and Democratic Solidarity Act of 1996 — which penalized foreign companies trafficking in property stolen from Cuban nationals.

“Pro-Castro advocates screamed that Helms-Burton would cause irrevocable harm to the United States with friends and allies around the world. Nothing of the sort occurred,” the letter states.

“We believe the time has come to envisage a similar measure for the victims of the Islamic Republic of Iran, many of whom have become United States citizens, whose properties were unjustly expropriated.”

Signatories to the letter include Colin A. Hanna, President of Let Freedom Ring; Admiral James “Ace” Lyons, Jr, former Pacific Fleet commander; Frank Gaffney, President and CEO of the Center for Security Policy; Judson Phillips, founder of Tea Party Nation; Amy Ridenour, Chairman of the National Center for Public Policy Research; Ellen Sauerbrey, former Assistant Secretary of State for Population, Refugees, and Migration; and myself.

The letter also won support and was signed by Iranian-American human rights advocates and journalists and by leaders of the American Middle East Coalition for Trump.

On July 7, 1979, the new Islamic state in Iran issued a decree seizing the assets of 51 supporters of the previous regime and their families. A few weeks later, a revolutionary Court issued a separate order confiscating the assets of another 209 individuals and their families.

According to court documents the claimants provided to me, the properties seized included major factories and industrial conglomerates, hotels, private residences, real estate, land, stock, and other holdings, which today are worth more than $100 billion.

In all, thousands of Iranians were directly robbed by the Islamic regime, and millions more were terrorized with the threat of confiscations.

Many of these individuals subsequently fled to America and became U.S. citizens. But few were American citizens at the time of the revolution, and thus have been unable to seek restitution through the Iran-U.S. Claims Tribunal in The Hague, or through U.S. courts.

Their assets were turned over to para-state foundations, known as “bonyads,” which are owned or controlled by the Supreme Leader or the Islamic Revolutionary Guards Corps (IRGC). Despite the extensive sanctions relief included in the bad Iran deal, the IRGC continues to be subject to United States government sanctions because it kills Americans in state-sponsored terror attacks around the world.

Ordinary Iranians understand that the ruling clerics have plundered their country. How else could a village cleric such as “Supreme Leader” Ali Khamenei personally own a commercial empire the U.S. Treasury has estimated to be worth more than $40 billion? A separate 2013 Reuters investigation found that the property confiscations on behalf of Iran’s clerical leadership were about $95 billion.

A Congressionally-enacted Iran Assets Recovery Plan would be a powerful weapon the ruling clerics in Iran could not ignore.

Not only would it bring justice to some of the many victims of the Islamic state in Iran, it would put the Iranian regime’s foreign partners on notice.

Traffic in stolen property at your peril. A regime founded on theft will end up bankrupt, in jail, or dead.

What’s Truly Remarkable about Bitcoin: It Exists by Jeffrey Tucker

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It was the second week of February 2013 when I first ventured a public opinion that Bitcoin is the real deal. The dollar exchange rate was at $25, on its way toward another run-up and crash that had been the pattern for two years.

I had just returned from a conference where some Bitcoiners surrounded me and force-fed me the information I needed to know. It would take another two months before I wrapped my brain around it enough to be able to write an article. But in these early days, it was enough publicly to dispense with incredulity to cause the ceiling to fall in.

To this day, I’ve never faced such a barrage of criticism. Derision, ridicule, outrage, disgust – I saw it on my feed, all of it very personal and hugely inflammatory. It was my first experience with what it is like to feel like that whole world is against you (an illusion social media specializes in creating).

And yet I completely understood why. I had been reviewing submissions on Bitcoin since 2009, and I had not been a believer either.

Money for Nothing?

How can you create money out of computer code? That struck me as absurd, a techno version of alchemy. Money had to grow out of commodities used in barter – this is what Carl Menger had proven. If Bitcoin had a value, it had to be an error, a result of clever marketing, like any Ponzi scheme. Like many observers at the time (and there weren’t that many), I had no idea about the underlying payment system (the Blockchain) or the complex history of fits and starts that led to its creation in 2008. I had read the original “white paper” but could hardly understand the language.

So, yes, I dismissed it.

Bitcoin Didn’t Care About My Theory

Groucho Marx once said: “Who you gonna believe, me or your own eyes?”

After having acquired Bitcoin and used it, I had to deal with something that became profoundly important in my own intellectual life. I had to recognize the reality of something my mind could not explain. I had been writing about money, its history and theory, since college. I thought I knew it all. Now this thing came along that blew up all my understanding. Who was I going to believe, myself or my own eyes?

I finally decided in favor of my eyes. The market had outwitted my expertise. This was a very humbling experience for me, and it taught me a lesson I hope never to forget. Never become so wrapped up in the certainty of your own opinions that you fail to look out the window and walk the streets to discover something that challenges what you think you know. It’s a Hayekian point but one that intellectuals are prone to ignore.

First Public Writing

As Bitcoin reaches the age of 7 and is again floating around an exchange rate of 1BTC to $1,000, I decided to look back at my first public writing on the topic (April 1, 2013), just to re-experience the lesson. And by the way, all credit to Max Borders (then the editor of FEE) and Lawrence Read (president of FEE) for daring to publish this piece, which defied all conventional wisdom. They were willing to take the risk on this piece, which was probably the first major article in the established free-market opinion world to say: this is real and it matters.

As I look back, I put the most important point up front:

Understanding Bitcoin requires that we understand the limits of our ability to imagine the future that the market can create for us.

Thirty years ago, for example, if someone had said that electronic text—digits flying through the air and landing in personalized inboxes owned by us all that we check at will at any time of the day or night—would eventually displace first-class mail, you might have said it was impossible.

After all, not even the Jetsons had email. Elroy brought notes home from his teacher on pieces of paper. Still, email has largely displaced first-class mail, just as texting, social networking, private messaging, and even digital vmail via voice-over-Internet are replacing the traditional telephone.

It turns out that the future is really hard to imagine, especially when entrepreneurs specialize in surprising us with innovations. The markets are always outsmarting even the most wild-eyed dreamers, and they are certainly smarter than the intellectual who keeps saying: such and such cannot happen.

It’s the same today. What if I suggested that digital money could eventually come to replace government paper money?

I then marched through the reasons for my conversion to the cause. The main one was the realization that Bitcoin reproduced a key feature of money that no previous attempt at digital money had achieved: scarcity. The algorithm assigned property rights to the units in question. At that point, this was enough for me to see that it could become money. It would take another year before I discerned its intellectual origins, and another half-year before I could intelligently explain why Bitcoin gained value in the first place.

My first article concluded:

It’s possible that Bitcoin will flop. Maybe it is just the first generation. Maybe thousands of people will lose their shirts in this first go-round. But is the digitization of money coming? Absolutely. Will there always be skeptics out there? Absolutely. But in this case, they are not in charge. Markets will do what they do, building the future whether we approve or understand it fully or not. The future will not be stopped.

And Yet, the Price Doesn’t Matter

Like many observers, I became caught up in the exchange rate madness, thinking that a higher rate confirmed my embrace while a lower rate raised doubts. In my mind, I became a cheerleader for the Bitcoin boom and correctly predicted the first price break above $1,000 (December 2013) but failed to predict the bust that followed.

In retrospect, I should have stayed focussed on my main theme that started me off on this journey. The remarkable thing about Bitcoin is not its upward trajectory in valuation, the rate of its adoption, the pace which which it made its march to the mainstream. All that comes in time, and no one is in charge of the process or pace or direction of change. The main insight I had at the time is still the right one. What’s wonderful about Bitcoin is that it exists at all.

Money for the digital age, and without the state: the concept has been proven. That’s what matters. The technology is known. It works. It represents a path for reforming the world’s monetary and legal systems. It points to a bright future.

It is all the more wonderful to consider the glorious way in which Bitcoin has outsmarted the experts, including me. And this is precisely why I adore market forces so much. No one is in charge of them. No one can consistently outthink them. Markets keep us humble. They constantly remind us that even the most astute and prescient observer can be surprised, even shocked.

I like living in such a world, one where the future is not only unknown but unknowable. That will always be true, and this is also why no one will finally gain control of it.

That is the lesson that the astonishing experience with Bitcoin teaches us.

Jeffrey Tucker

Jeffrey Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

You Will Comply: The Regulatory Menace vs. America

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The regulatory hive centered in Washington, D.C., buzzes with a power and reach that even the Caesars never imagined. And they were considered gods.

Federal regulators can bankrupt companies, distort markets and shut down entire industries with their decrees — the rules that implement Congressional laws. They can also move or slow entire economies and prop up or undermine Presidents. Not good.

Here’s how it works.

Laws are often and by necessity general. The rule-writing and rule enforcement is where the power is. Regulators, lifelong employees with little accountability to the people, write the rules and enforce the rules. If you as a private citizen or a business person have the misfortune of running awry of the regulators, you have virtually no recourse.

They are all powerful. Like gods of an industry. And like all people, they are given to ideology, partisanship and self-interest.

So here is the dynamic: Ideological, partisan, all-powerful regulators write and enforce rules and are unaccountable to the people. This is why so many conservatives want deregulation, in addition to the job-creating economic boost.

Their power is really stunning. Because of that, we have the armies of lobbyists. People mistakenly think the lobbyists are only interested in persuading the politicians. Actually what they are looking for is language that will help their industry or hurt their competitors — when the regulators write the rules. They can also lobby — unofficially — the regulators themselves.

What we have seen in spurts with FDR and Nixon was a corrupting of certain federal regulators. But what we have seen in recent years is a wholesale corrupting of regulatory agencies along ideological and partisan lines. Here’s a few.

  • The U.S. Department of Justice selectively enforcing laws
  • The IRS in blocking the non-profit status of tea party and conservative organizations, thus eliminating their influence
  • The Environmental Protection Agency used on multiple levels to achieve political aims
  • The Department of Homeland Security body-patting grandma while allowing burka-covered Muslim women through in the name of multicultural correctness
  • The U.S. Immigration and Customs Enforcement Agency that refuses to enforce immigration laws and allows millions of people to come and live here illegally
  • The U.S. Department of Agriculture targeting of small farmers and closing down “undesirable” farmers and ranchers

Abuse by the EPA undermine Trump

And so now we come to this moment. The EPA regulators have changed the agency’s report on fracking in groundwater contamination to make it more difficult for future approvals.

In last year’s draft version, the EPA reported that there were no “widespread systematic impacts on drinking water.” That report said the number of contaminated sites was quite small compared to the number of fracking sites and concluded the impact to be minimal. Good for the fracking industry, jobs, energy costs and energy independence.

However, that did not make the anti-fracking environmentalists happy, and those conclusions are now gone from the final report that just came out — one month before the new president is sworn in. Now the same EPA — based on the same data — reports that there is not enough evidence to dismiss the water contamination threat and says more vaguely that fracking activities “can impact drinking water resources under some circumstances.”

This is regulatory abuse at its clearest, because it is supposedly relying on scientific evidence to tweak the wording. But what it does is empower regulators to deny permits, allow stronger legal challenges to fracking and, probably most specifically, undermines Trump’s stated desire to open up more fracking to create American jobs and energy independence.

Abuse by the Fed undermine Trump

The Federal Reserve manipulates interest rates to spur the economy or try to slow it. The supposedly politically independent organization has kept interest rates at record lows for almost the entire Obama presidency. Obviously the economy needed all the help it could get, and it still wasn’t enough.

But interestingly, right before Trump takes office the Fed is planning a rapid series of rate increases. Either the Fed leadership knows exactly which policies goose the economy (Trump’s, not Obama’s) or they are actively trying to undermine a Trump recovery.

We never know what is going on inside of the secretive Fed, but given that Fed Chairwoman Janet Yellin chaired Bill Clinton’s Council of Economic Advisors and was appointed to the Fed’s top seat by Obama, who appoints fellow ideologues, it seems likely that it is not suddenly a clear view of what is good for the economy. If that is right, then this is another abuse of one of the most powerful and unaccountable of regulators.

This will not be the end of the Regulatory State’s attempts to undermine Trump at every turn. We saw this regularly in the Bush Administration, particularly in the State Department.

Americans should not have to fear the federal government and whatever local regulators show up at the door. But many do. And virtually all businesses do. Now, Republican presidents also must deal with the menace.

This needs to stop. But that will be a Herculean task, requiring a commitment to substantially reducing the size and scope of the federal government through agency elimination and deep funding cuts.

90,000 Pages of Bureaucratic Hell

/in /by

There are records, and then there are records.

A month ago, I blogged that President Barack Obama’s Federal Register, the daily depository of rules and regulations, stood at 81,640 pages for 2016.

That topped the all-time record—also held by Obama—of 81,405 pages in 2010.

And it happened before Thanksgiving. Since November 17, the Federal Register has been setting a new record every day.

But this morning is special. Today standing at 91,642 pages, the Federal Register is 10,000 pages higher than the prior all-time record.

Ninety-thousand pages is heretofore unheard of. Up until this year, the 80,000 page mark was the shocker, and had been passed just three times (in 2010, 2011 and 2015).

The chart below shows the 15 highest Federal Register page counts. Of the 10 highest-ever counts, Obama holds seven.

For ideas on how to reform the federal regulatory state, see the relevant section of CEI’s Agenda for Congress and our recent Web Memo, “First Steps for the Trump Administration: Rein in the Regulatory State.”

Republished from AEI.

Clyde Wayne Crews

Clyde Wayne Crews

Wayne Crews is vice president for policy and director of technology studies at the Competitive Enterprise Institute.