3 Kinds of Economic Ignorance by Steven Horwitz

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Nothing gets me going more than overt economic ignorance.

I know I’m not alone. Consider the justified roasting that Bernie Sanders got on social media for wondering why student loans come with interest rates of 6 or 8 or 10 percent while a mortgage can be taken out for only 3 percent. (The answer, of course, is that a mortgage has collateral in the form of a house, so it is a lower-risk loan to the lender than a student loan, which has no collateral and therefore requires a higher interest rate to cover the higher risk.)

When it comes to economic ignorance, libertarians are quick to repeat Murray Rothbard’s famous observation on the subject:

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

Economic ignorance comes in different forms, and some types of economic ignorance are less excusable than others. But the most important implication of Rothbard’s point is that the worst sort of economic ignorance is ignorance about your economic ignorance. There are varying degrees of blameworthiness for not knowing certain things about economics, but what is always unacceptable is not to recognize that you may not know enough to be speaking with authority, nor to understand the limits of economic knowledge.

Let’s explore three different types of economic ignorance before we return to the pervasive problem of not knowing what you don’t know.

1. What Isn’t Debated

Let’s start with the least excusable type of economic ignorance: not knowing agreed-upon theories or results in economics. There may not be a lot of these, but there are more than nonspecialists sometimes believe. Bernie Sanders’s inability to understand why uncollateralized loans have higher interest rates would fall into this category, as this is an agreed-upon claim in financial economics. Donald Trump’s bashing of free trade (and Sanders’s, too) would be another example, as the idea that free trade benefits the trading countries on the whole and over time is another strongly agreed-upon result in economics.

Trump and Sanders, and plenty of others, who make claims about economics, but who remain ignorant of basic teachings such as these, should be seen as highly blameworthy for that ignorance. But the deeper failing of many who make such errors is that they are ignorant of their ignorance. Often, they don’t even know that there are agreed-upon results in economics of which they are unaware.

2. Interpreting the Data

A second type of economic ignorance that is, in my view, less blameworthy is ignorance of economic data. As Rothbard observed, economics is a specialized discipline, and nonspecialists can’t be expected to know all the relevant theories and facts. There are a lot of economic data out there to be searched through, and often those data require careful statistical interpretation to be easily applied to questions of public policy. Economic data sources also requiretheoretical interpretation. Data do not speak for themselves — they must be integrated into a story of cause and effect through the framework of economic theory.

That said, in the world of the Internet, a lot of basic economic data are available and not that hard to find. The problem is that many people believe that certain empirical facts are true and don’t see the need to verify them by actually checking the data. For example, Bernie Sanders recently claimed that Americans are routinely working 50- and 60-hour workweeks. No doubt some Americans are, but the long-term direction of the average workweek is down, with the current average being about 34 hours per week. Longer lives and fewer working years between school and retirement have also meant a reduction in lifetime working hours and an increase in leisure time for the average American. These data are easily available at a variety of websites.

The problem of statistical interpretation can be seen with data on economic inequality, where people wrongly take static snapshots of the shares of national income held by the rich and poor to be evidence of the decline of the poor’s standard of living or their ability to move up and out of poverty.

People who wish to opine on such matters can, again, be forgiven for not knowing all the data in a specialized discipline, but if they choose to engage with the topic, they should be aware of their own limitations, including their ability to interpret the data they are discussing.

3. Different Schools of Thought

The third type of economic ignorance, and the least blameworthy, is ignorance of the multiple perspectives within the discipline of economics. There are multiple schools of thought in economics, and many empirical questions and historical facts have a variety of explanations. So a movie like The Big Short that clearly suggests that the financial crisis and Great Recession were caused by a lack of regulation might be persuasive to people who have never heard an alternative explanation that blames the combination of Federal Reserve policy and misguided government intervention in the housing market for the problems. One can make similar points about the Great Depression and the difference between Hayekian and Keynesian explanations of business cycles more generally.

These issues involving schools of thought are excellent examples of Rothbard’s point about the specialized nature of economics and what the nonspecialist can and cannot be expected to know. It is, in fact, unrealistic to expect nonexperts to know all of the arguments by the various schools of thought.

Combining Ignorance and Arrogance

What is missing from all of these types of economic ignorance — and what is often missing from knowledgeable economists themselves — is what we might call “epistemic humility,” or a willingness to admit how little we know. Noneconomists are often unable to recognize how little they know about economics, and economists are often unable to admit how little they know about the economy.

Real economic “expertise” is not just mastery of theories and facts. It is a deeper understanding of the variety of interpretations of those theories and facts and humility in the face of our limits in applying that knowledge in attempting to manage an economy. The smartest economists are the ones who know the limits of economic expertise.

Commentators with opinions on economic matters, whether presidential candidates or Facebook friends, could, at the very least, indicate that they may have biases or blind spots that lead to uses of data or interpretive frameworks with which experts might disagree.

The worst type of economic ignorance is the type of ignorance that is the worst in all fields: being ignorant of your own ignorance.

Steven HorwitzSteven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions.

He is a member of the FEE Faculty Network.

Ssshh! Nobody Tell the Government about UberEATS by Jared Meyer

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UberEATS is delicious. You pull up the Uber app, choose among three to five menu options (usually between $8 and $12), and your meal is delivered within 10 minutes. Payment is through Uber, and there is no delivery fee. Service is rapidly expanding, and slow-to-catch-up regulators have yet to devise a way to stymie its growth.

In stark contrast to UberEATS and other on-demand food delivery services, burdensome restrictions on another way to get lunch — street vendors — are common across the nation.

Chicago does not allow food trucks to operate within 200 feet of any brick-and-mortar eatery. Miami only allows roaming vendors, as they are prohibited from staying in one place any longer than it takes to make a sale. Los Angeles completely bans sidewalk vending. New York City has an arbitrary cap of 3,100 on year-round food vendor permits, creating a costly secondary market that puts this line of work out of reach for average New Yorkers as the supply of city approvals fails to meet vendor demand.

Though street vending has always been a staple of American cities, its regulations are receiving more attention because the quality and number of food trucks has increased dramatically over the past few years. Even famed world traveler and chef Anthony Bourdain plans to open a market of 100 food vendors in New York City in 2017. To provide some data on this trend, a recent Institute for Justice report shows who street vendors are and how they contribute to the economy of the 50 largest U.S. cities.

The main reasons why city street vendors (78 percent of whom sell food) face opposition is that more dining options means increased competition for brick-and-mortar restaurants. Most office workers are accustomed to seeing long lines of people waiting to order at food trucks outside of their buildings. Indeed, 43 percent of street vendors operate in business districts, where other dining options are not as prevalent and are more expensive, due to high rental prices.

Some restaurant owners who choose to fight this change try to convince city government to place additional restrictions on street vendors. However, embracing mobile vending would be a smart move for restaurants who are struggling to stay competitive.

Not only do street vending and on-demand food services present opportunities for restaurants to reach more customers, they also provide ways to cut back on costs. Due to a combination of zoning laws, food service building requirements, limits on franchising, and labor regulations, brick-and-mortar restaurants face an uphill battle against their mobile, slim-staffed competitors.

Street vendors are not currently contractors for larger restaurants — 94 percent of vendors own their business and the structure they use to sell goods. Though most vendors do not have any employees, the 39 percent that do employ an average of 2.3 full-time workers and 2.7 part-time workers. This light staff lowers costs, especially when the venue is mobile and customers seem to be willing to spend half of their lunch breaks waiting in line.

Restrictions on vendors harm low-income individuals, both those who want to work and those who want to eat. The average year-round, full-time vendor earns just $18,000 a year working around 60 hours a week. Street vending also offers opportunities for modest earnings and upward mobility for those with low levels of education. Nearly 3 in 10 vendors do not have a high school degree (compared with 18 percent of all workers in large U.S. cities). In a time where the unemployment rate for those without a high school degree remains at 6.9 percent and labor force participation is just 45.7 percent, additional work options are sorely needed.

Veterans make up a disproportionate level of street vendors. Whereas veterans are 6 percent of the workforce in large U.S. cities, 10 percent of vendors are veterans. And a third of street vendor veterans are disabled — double the rate of non-vendor veterans.

In addition to employment opportunities, street vending offers a chance at upward mobility. District Taco in the Washington, D.C. Metro Area started as a simple $25,000 hot dog cart in 2009, but the business is in the process of opening its ninth brick-and-mortar restaurant. The chain, started by immigrant entrepreneur Osiris Hoil, now employs over 300 local workers.

One positive sign is that the licensing burden for street vendors does not seem to be too onerous. The Institute for Justice found that 72 percent of vendors were able to open by securing the appropriate permit. The other 28 percent needed to complete an average of 5 months of training to open their shops.

Even though there is some justification to require a course in sanitation for certain food vendors, it should be noted that an evaluation of 260,000 food safety inspection reports in seven cities found that food vendors did as well or better in terms of compliance than did brick-and-mortar restaurants. They certainly outperform Chipotle. In an age where it takes an average of 12 months to get government certification to trim trees, 14 months to be allowed to work as a door repair contractor, and 18 months to become a government-certified security alarm instructor, the requirements street vendors face seem to be lighter than the licensing burdens for other occupations.

As the IJ report concluded, “For cities looking to expand economic opportunities, facilitate job growth and realize greater tax revenue, welcoming street vendors is a low-cost and potentially high-reward option.”

Hungry consumers are fortunate that entrepreneurs are always able to find ways to outmaneuver regulators and provide lunch through innovations such as UberEATS.

This post first appeared at CapX.

Jared MeyerJared Meyer

Jared Meyer is a fellow at the Manhattan Institute for Policy Research.

What Are Your Odds of Making It to the 1%? by Chelsea German

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Your odds of “making it to the top” might be better than you think, although it’s tough to stay on top once you get there.

According to research from Cornell University, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives. Over 11 percent of Americans will be counted among the top 1 percent of income-earners (i.e., people making at minimum $332,000) for at least one year.

How is this possible? Simple: the rate of turnover in these groups is extremely high.

Just how high? Some 94 percent of Americans who reach “top 1 percent” income status will enjoy it for only a single year. Approximately 99 percent will lose their “top 1 percent” status within a decade.

Now consider the top 400 U.S. income-earners — a far more exclusive club than the top 1 percent. Between 1992 and 2013, 72 percent of the top 400 retained that title for no more than a year. Over 97 percent retained it for no more than a decade.

HumanProgress.org advisory board member Mark Perry put it well in his recent blog post on this subject:

Whenever we hear commentary about the top or bottom income quintiles, or the top or bottom X% of Americans by income (or the Top 400 taxpayers), a common assumption is that those are static, closed, private clubs with very little dynamic turnover. …

But economic reality is very different — people move up and down the income quintiles and percentile groups throughout their careers and lives.

What if we look at economic mobility in terms of accumulated wealth, instead of just annual income (as the latter tends to fluctuate more)?

The Forbes 400 lists the wealthiest Americans by total estimated net worth, regardless of their income during any given year. Over 71 percent of Forbes 400 listees — and their heirs — lost their top 400 status between 1982 and 2014.

So, the next time you find yourself discussing the very richest Americans, whether by wealth or income, keep in mind the extraordinarily high rate of turnover among them.

And even if you never become one of the 11.1 percent of Americans who fleetingly find themselves in the “top 1 percent” of US income-earners, you’re still quite possibly part of the global top 1 percent.

Cross-posted from HumanProgress.org.

Chelsea German

Chelsea German

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

Why do we have an Oil Glut?

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The world is awash in oil and gas. Amazing.  Less than two decades ago in 1998, the predictions were by this time in 2016 oil production would be past its peak. In fact the gloom and doom experts were called Oil Peakists. Note this from Science magazine back in 1998:

From Science magazine’s “The Next Oil Crisis Looms Large—and Perhaps Close,” Aug. 21, 1998:

This spring . . . the Paris-based International Energy Agency (IEA) of the Organization for Economic Cooperation and Development (OECD) reported for the first time that the peak of world oil production is in sight. Even taking into account the best efforts of the explorationists and the discovery of new fields in frontier areas like the Caspian Sea . . . sometime between 2010 and 2020 the gush of oil from wells around the world will peak at 80 million barrels per day, then begin a steady, inevitable decline, the report says.

However, technology, especially here in the U.S., relegated that prediction to the proverbial dust bin of history. With the private developments of  revolutionary shale fracking and horizontal drilling technology, vast new energy resources were opened up in places like North Dakota, Ohio, Pennsylvania and even in the older Permian field in West Texas. The U.S. is now pumping 9 million barrels of oil a day, and trillions of cubic yards of gas. We are no longer dependent on importing Middle East oil. In fact much of the oil that we import comes from our neighbors Canada and Mexico.

In the wake of lifting sanctions against nuclear Iran, oil is beginning to flow again to the European Union from Tehran which says it could add another 500,000 barrels in production this year.  U.S. oil is also flowing to Europe now that the 43 year old ban on oil exports was lifted and signed in law late in 2015. The first shipment of sweet crude drawn from the Eagle Ford Shale field in South Texas left the port of Corpus Christi, Texas on New Year’s eve and landed at the port of Marseilles on Friday. Another shipment out of Houston made it to Rotterdam on Thursday. A third one out of Houston is on its way to Marseilles. The oil is the equivalent of the so-called Saudi light or sweet crude which doesn’t require as much refining producing profit margins for the refiners.

So, why do we have this glut? 

The world’s economies are not growing as fast or rather slowing down, especially in the big consumer of raw materials and energy, China.  China’s economy and trade is impacting on those exporters of commodities like oil, gas,  copper, aluminum  and  iron ore like Australia,  Brazil, Canada,  Russia, Venezuela  and African countries. Where China was growing at a purported 10 percent plus, annually, the evidence is it has fallen to less than a third of that towering inflated level. We have come to realize those growth estimates were based on questionable figures  prepared by the Chinese government.  Some economic experts suggest the annual growth in GDP may be less than three percent.  So with that news came the sudden plummeting in the world trading markets for commodities, especially oil.

There is  also the great geo-resource political game in the Middle East going on between Saudi Arabia and Iran, and let’s not forget Russia.  Saudi Arabia as the keystone in the OPEC oil Cartel is not listening to the complaints of the other members of the group at meetings in Vienna demanding that it reduce domestic production. It is pumping oil and still making money, because it costs less than $5 a barrel. This despite a yawning budget deficit of $98 billion. The Saudis have an estimated $600 billion in hard currency reserves, which provides a cushion to ride out the geo-political storm. They are using the oil weapon to beat back competitors including Iran across the Persian Gulf, Russia which  has military in Syria supporting the Assad regime, and  the newly resurgent producer, the US.   Russia, as Shoshana Bryen of the Washington, D.C.-based Jewish Policy Center pointed out in a recent interview, mispriced its budget at $119 a barrel of oil, then redid the numbers at $87 dollars only to see it plummet to less than $30 at one point.

So what is the impact here in the U.S.?

When was your last trip to fill up your car at the gas station?  Here on the Gulf Coast in the U.S., regular unleaded gas is currently selling for less than $1.80 a gallon.  That means savings to consumers who appear to be putting away the difference awaiting a return to a more confident economy.   Diesel that at one point was priced at nearly $1 dollar a gallon above gasoline has shrunk to less than ten cents a gallon differential. That means that the cost for moving shipments via long haul truckers has gotten cheaper. It means that jet fuel cost is less reflected in the huge profits being declared by the major airlines. Some of that may be due to the lagging airline ticket surcharges that remain in place.  However, the drop in oil production is also impacting the profit margins of rail carriers who minted money from train loads of combustible leaving the Bakken formation in North Dakota. The drop in oil prices occasioned by the glut also means that the cost of petro chemical feed stocks is enhancing profit margins for plastics,.

Remember, the discussion about lifting the 43 year old oil export ban?

One of the by-products of that was the convergent pricing of U.S. crude has converged with world pricing.  If you went onto the COMDEX oil trading floor in lower Manhattan, you would see traders vying for futures contracts in West Texas Intermediate (WTI) versus Brent-the so-called North Sea crude oil benchmark. The lifting of the oil export ban in the U.S. virtually eliminated the difference making Brent the world standard.  As of Friday, January 22, 2016 WTI was $32.19 per barrel for March 2016 deliveries, a 9.0 % jump, and Brent priced out of the London ICE was $32.18. Heavier grades like Canadian Tar sands or Venezuelan heavy sulfur crude require more refining to produce various products. These grades actually sell at discounts from those benchmarks by as much as five dollars.

Can we expect the oil glut to last? Hardly. The current excess supply will work itself off and oil futures will gradually begin to rise again. That will bring rigs on stream here in the U.S. to start producing again, it may cause Iran to produce more than the declared 500,000 barrels  annually and the Saudis would just be minting more billions to add to its hard currency reserves. However, by mid century those fabled Saudi sweet crude reserves may likely begin to tail off. Energy, whether oil or gas will reflect the cyclical demands of the world economies.  The U.S. stands in pretty good shape to weather the current volatility in trading markets; thanks to technology, entrepreneurial prowess and the lifting of the oil export embargo. Don’t panic and consider investing in contrarian values in the equity and debt markets. That is what the long term value investors do. They buy when values are relatively cheap compared to long term returns.

EDITORS NOTE: This column originally appeared in the New English Review. An earlier version was published in the Newsletter of the Lisa Benson Show National Security Task Force Newsletter, January 23, 2016.

MIT: Incandescents Now More Efficient than LEDs by Jeffrey A. Tucker

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Researchers at the MIT are publicizing that they have fixed the incandescent light-bulb with a brilliant improvement. They have wrapped the interior filament in a crystal glass that both bounces light and contains heat. It recycles energy in a way that addresses the main complaint against Edison’s bulb: It burns far too much energy for the light that it produces.

Why is this interesting? About a decade ago, governments around the world developed a fetish for banning incandescents (through an efficiency rule) and replacing them with expensive LED technology and florescent bulbs. It happened in Europe first but eventually came to the United States. The last American factory to produce them closed in 2010, and they are ever harder to find in even the big-box hardware stores. (As with all such bans, there are exceptions for elites who desire specialty bulbs.)

The change has been seriously annoying for many consumers. It has even given rise to hoarding and gray markets (in Germany, such bulbs were repackaged as “heat balls”). It has produced something of a political backlash, too.

On a personal note, my own dear mother replaced all her incandescents with fluorescents several years ago. I was sitting in her house feeling vaguely irritated by the searing lights in the room — cold and dreary — and had to turn them off. Sitting in the dimly lit room, my thought was: this is what the government has done to us. A great invention from the dawn of modernity is being driven out of use. Do I have to bring my own candles next holiday season?

Why should governments be in the position of deciding what technologies can and cannot be used, as if consumers are too stupid to make such decisions for themselves? Who is to decide what is efficient, and what the proper trade off should be between the energy expended and the light produced?

Maybe some people don’t mind the “inefficiency” of incandescent bulbs relative to the warm and wonderful light they produce. Entrepreneurs need to be able to discern and serve their needs.

The bans have given rise to a vast debate about which bulb is best and what kind of light technology governments should and should not permit. But these are really the wrong questions. The real issue should be: Why should governments be in the business of picking right and wrong technologies at all?

As the MIT innovation in lighting suggests, there are possibilities yet undiscovered that regulators have not thought of. If you write detailed regulations about existing technologies, you are forestalling the possibilities that scientists and entrepreneurs will discover new ways of doing things in the future.

A vast regulatory apparatus on cell phone technology in 1990 could never have imagined something like a modern cellphone. Regulations on digital commerce in 2000 might have stopped the rise of peer-to-peer services like Uber. Indeed, one of the reasons that the digital world is so innovative is precisely because the regulators haven’t yet caught up with the pace of innovation.

Regulations on technology freeze the status quo in place and make it permanent. How, for example, will regulations respond to the news that a new and improved form of incandescent bulb is possible? Early tests show it to be more efficient than the replacements which the regulations favor. Will there be a new vote, a rewrite of the law, a governing body that evaluates new lightbulbs, the same way we approach prescription drugs? None of this can possibly match the efficiency of a market process of trial and error, of experimentation, rejection, and adoption.

In government, a ban is a ban, something to be enforced, not tweaked according to new discoveries and approaches.

Herein we see the problems with all attempts by government to tightly manage any technology. Bitcoin is a great example. As soon as the price began to rise and the crypto sector began to appear viable, government agencies got in the business of regulating them as if the sector was already taking a shape that would last forever. And because technology and industry are always on the move, there is never a rational time to intervene with the proclamation “this is how it shall always be.”

Regulatory interventions stop the progress of history by disabling the limitless possibilities of the human imagination.

By the time regulators get around to rethinking the incandescent, the industry will probably have moved on to something new and even better, something no one can imagine could exist today.

Jeffrey A. TuckerJeffrey A. Tucker

Jeffrey Tucker is Director of Digital Development at FEE, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.  Follow on Twitter and Like on Facebook.

A Postscript to Congressman Linder’s Article on the FAIR Tax by Karen Walby, Ph.D

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In a recent FAIRtax Friday article by John Linder, he commented that “If we had been under the FAIRtax in 2012, 10 percent of all corporations in America would have collected 89 percent of all the taxes on goods.  These are big corporations with totally computerized ordering and sales systems. It would be difficult for them to help you cheat even if they were inclined to do so.”

I thought you would like to view the data behind that statement since it is key to appreciating how the FAIRtax will improve compliance and reduce tax evasion.

The IRS has a Corporation Statistics Program which produces estimates of the various line items on the U.S. Corporation Income Tax Return (Forms 1120 and 1120-S).  The data presented below are based on a sample of the actual returns of all active corporations for the 2012 tax year.

The IRS classifies corporation tax returns by the size of business receipts.  In the table below we have consolidated the data for both C and S corporations* that are in the Wholesale and Retail Trade industry.  Since the FAIRtax does not tax sales to businesses, it must be noted that the IRS does not report data separately for retailers and wholesalers. This is not surprising since there are many wholesalers who also sell at retail:  many building supply and hardware stores sell both to construction subcontractors as well as to “do-it-yourselfers.”  However, these data should still be representative of the percentage of retail sales done by large businesses.

The table shows the number of corporate tax returns and the business receipts (sales) for each business size category.

There are 5.2 million corporations engaging the Wholesale and Retail Trade industry with combined sales of $14.6 trillion.  Ten percent are corporations with greater than $2.5 million in annual sales.  These Top Ten percent account for sales of $12.9 trillion.  That’s 89% of total sales in the Wholesale and Retail Trade industry.  Clearly the large corporations dominate the Wholesale and Retail Trade industry.  These corporations are going to accurately report their sales and the sales taxes collected on them.

Graph
We also want to note that there was a typo in Linder’s same article.  Thanks to the reader who pointed it out.  [We do read your comments.]  The article referred to a “74,000-word code.”  That should have read “74,000-page code.”  That number includes all the IRS code, regulations, and IRS rulings.  But the typo begged the question:  Just how many words are there in the tax code?  TEN MILLION.

The Tax Foundation recently calculated the number of words in the income tax code and regulations (excluding legal rulings) to be more than 10 million.  The King James Version of the Bible has only 783,137.  And in contemporary literature, the very popular seven volume series of Harry Potter novels amounts to only 1,084,170 words.   It is no wonder that the code is incomprehensible, even to tax experts.  It takes no less than wizardry to understand it!

ABOUT KAREN WALBY, PH.D.

Karen Walby, Ph.D., is the Director of Research Americans For Fair Taxation

No, the Rest of the World Doesn’t Use ‘Single Payer’ by Eli Lehrer

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There’s plenty of reason for free marketers to be skeptical of proposals, like the ones emanating from Democratic presidential candidate Bernie Sanders and hinted at by Republican Donald Trump, that would create a single-payer healthcare coverage system in the United States.

But, if only because these proposals have resonance with the public, they’re certainly worth debating. A rational debate depends on getting the facts straight and there’s one fact that both left and right often get wrong: “single payer” healthcare of the sort Bernie Sanders proposes isn’t universal in the developed world and the US system isn’t particularly free-market by the standards of peer nations.

Although definitions vary slightly, a single payer healthcare system is one where a single entity — a government-run insurance plan — pays all bills for a variety of medical care, and private payment for these same services is more-or-less banned.

Among the G-7 countries, only one nation, Canada, actually maintains such a system. One other, Italy, has a pretty similar system but allows much more private payment, and, because of the low standards of public hospitals, nearly everyone who can afford private insurance carries it.

Japan maintains a government-run healthcare plan, but it has so many gaps that most families find a need to carry private insurance to cover things like cancer-treatment related costs the public system excludes.

Germany, like the United States, has an employer-state hybrid system with heavy regulation of insurance companies.

France has a “dominant payer” system, where one quasi-governmental entity (CNAMTS) pays many bills, but about 90 percent of the population maintains private coverage as well, and most people pay something out of pocket each year.

The United Kingdom, finally, directly administers almost all medical personnel and facilities through a single governmental entity in each of the home countries. This is a “single provider” system.

Except in the United Kingdom, furthermore, there are significant numbers of people in all of these countries who report problems paying for needed medical care. This percentage is higher in the United States and Germany, intermediate in France, and lower in Canada. The UK only achieves its apparently enviable results because of long waiting lists for many procedures and health care rationing systems that are pretty close to the fictional “death panels” some conservatives claimed were part of Obamacare.

The American system as it exists isn’t unusually free market either. The German, French, and Japanese systems — where consumers much more frequently shop around for insurance plans they like rather than having the government or an employer chose — offer more consumer choices than most Americans enjoy. Even though taxpayers pick up a very large portion of the bills, the French practice of publically providing the prices of medical procedures makes that system feel a lot more like a free market than anything most Americans see day-to-day.

There are lots of valid criticisms of the United States’ healthcare system. The difficulty the poor or uninsured sometimes have in getting needed medical care is one of them. Some problems of the US health care system stem from lifestyle and cultural factors that organization and payment mechanisms can’t impact. But the lack of a single-payer system in the United States isn’t unusual in the slightest nor is the system we have particularly free-market.

Any debate should start by acknowledging both of those facts.

Eli LehrerEli Lehrer

Eli Lehrer is president and co-founder of the R Street Institute, a free-market think tank.

What Trump and Sanders Said about Oil Prices 4 Years Ago by Daniel Bier

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Remember when complaining about the price of gas was all the rage? The public discourse was awash in pseudo-psychology, hand-wringing about “peak oil,” and an array of conspiracy theories to explain why oil cost so much.

There was much ado about corporate “greed” (the cause of all life’s problems), hissing about “speculators,” nationalist chest-thumping about OPEC, self-proclaimed experts warning that Earth was out of oil, and many inarticulate suspicions about George Bush and Barack Obama.

Economists were pretty sure that the price of oil was related to supply and demand, but what did they know? One cantankerous socialist knew the truth:

Pump prices spiked 5% in the past month… Crude oil prices stood at $108 on Friday, up from only double digits at the beginning of the month. …

What’s the cause? Forget what you may have read about the laws of supply and demand. Oil and gas prices have almost nothing to do with economic fundamentals.

Fortunately, when he wrote that in 2012, Sen. Bernie Sanders was ahead of the game, having never read anything about supply and demand at all. Unencumbered by basic economics, he was able to see that Big Oil “gouging” and Wall Street “speculators” were to blame.

Remarkably, right around the time of the fracking revolution, the price of oil and gas started tumbling. I guess Wall Street’s heart grew three sizes that day.

But Sanders didn’t have the only theory. One super smart billionaire figured out that Saudi Arabia was the real problem:

Look at what’s going on with your gasoline prices. They’re going to go to $5, $6, $7 and we don’t have anybody in Washington that calls OPEC and says, “Fellas, it’s time. It’s over. You’re not going to do it anymore.”

When Donald Trump diagnosed this problem in 2011, his solution wasn’t just to “call Saudi Arabia” and tell them “you’re not going to raise that f***ing price!” No, he had a practical measure: seize Iraq’s oil fields. “To the victor belong the spoils. You go in. You win the war and you take it.”

It’s worth remembering this mass hysteria, although the situation today is somewhat different. The price of oil is below $30 a barrel. The International Energy Agency has warned that the world is now “drowning” in oil.

This week, the price for a particularly low-quality type of oil briefly dipped to negative fifty cents a barrel. That is, producers actually had to pay the refinery to take their oil. Has greed been abolished from the land? Maybe. But there’s also a sensible explanation: the high-sulfur oil is expensive to transport and refine, but the producers still had to get rid of it somehow.

But just a few years ago, it would have been almost unthinkable for refineries to actively discourage oil production. At $140 a barrel, almost any kind of oil is worth refining. And here’s the upshot: it was precisely those high prices that prompted the massive investment in production, exploration, and innovation that led to fracking, the shale revolution, and today’s tumbling prices. It was greedy, profit-seeking oil companies who drove the price of oil down over 80% from its peak in 2008.

It’s important to grasp these lessons now, because at some point, the price of oil — or some other commodity — will rise again, and we will be greeted by the same parade of doomsayers, conspiracy theorists, and would-be regulators that we endured for the last decade.

They’re not gone, they’re not even hiding — they’re leading the race for president.

Bonus economics of gas story: On Monday, local news in Michigan reported that a bidding war between a couple of gas stations briefly resulted in prices below 50 cents a gallon. To understand just how weird this is, the wholesale price of gasoline is about $1.

Is this another sign of irrational generosity sweeping the petroleum industry? No. Gasoline is retailed at razor thin margins; gas is typically about 70% of a station’s revenue, but only 30% of its profit. Gas stations actually make most of their money selling food, cigarettes, and bottled water inside.

Occasionally, gasoline is used as a loss leader: stations will sell gas for cheap (even at a loss) to bring people to the pump, where they can then make more money selling high-margin items like bottled drinks and tobacco.

Daniel BierDaniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

Anti-BDS Bill Unanimously Passes Florida Senate

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The Florida  State Senate in Tallahassee yesterday unanimously passed on Third Reading an anti-BDS bill SB 38 on “scrutinized companies” directed at companies boycotting Israeli companies.  See the Florida Senate Legislation Tracker for the tally of those State Senators who cast the unanimous vote. The ‘scrutinized companies” Florida legislation would:

Require the State Board of Administration to identify all companies that are boycotting Israel or are engaged in a boycott of Israel in which the public fund owns direct or indirect holdings by a specified date; requiring the public fund to create and maintain the Scrutinized Companies that Boycott Israel List that names all such companies; prohibiting a state agency or local governmental entity from contracting for goods and services that exceed a specified amount if the company has been placed on the Scrutinized Companies that Boycott Israel List.

The legislation is modeled on one that passed in South Carolina, last session in Columbia, spearheaded by State Rep. Alan Clemmons. It has the support of the Israel Allies Foundation in Washington, which is seeking to see it adopted in other jurisdictions across the US. A companion bill, in the Florida House HR 527 passed its first stop, the House Government Operations Subcommittee on Wednesday, January 20, 2015.  The Florida anti-BDS legislation has the support of the Florida Christian Families Coalition.

Listeners to the weekly Lisa Benson Show that airs Sunday on KKNT 960 The Patriot out of Phoenix heard South Carolina Rep. Clemmons discuss the model legislation during an interview on December 6, 2015. LISTEN to the podcast here.

The AP had this report on the progress of the Florida anti-BDS legislation, “Boycott of companies that boycott Israel sought in Florida:”

TALLAHASSEE, Fla. (AP) — Florida wouldn’t be able to invest in companies that boycott Israel under a bill unanimously passed by the state Senate.

The Senate passed a bill Thursday that would force the State Board of Administration to identify companies that boycott Israel and then notify them they are on a “scrutinized companies” list. The board is responsible for managing the state’s retirement fund.

If the companies continue to boycott Israel, the board would not be allowed to invest in those companies.

It would also place limits on state agencies from contracting with companies on the list.

A similar House bill has two more committee stops before it’s ready for a floor vote.

RELATED ARTICLE: Israel and Florida: A Strong and Growing Economic Partnership

EDITORS NOTE: This column originally appeared in the New English Review.

Islamic State Operating In Fort Walton Beach, Florida

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Last weekend I was invited to Fort Walton Beach, Florida to give a presentation on Islamic terrorist events not only throughout the world, but also in the military community of Fort Walton.  It has always been my policy that I will not say anything negative about anyone or any organization unless I have first hand evidence to support my claim.

On 8 Jan 2016, I went to the Islamic Da’wah Center of Fort Walton Beach, 6 Hollywood Blvd SW, Fort Walton Beach, FL 32548.  Keep in mind the term Da’wah means to spread the ideology of Islam.  In essence it is missionary work.  My friends in Fort Walton and the surrounding area are surrounded by ISIS  [Islamic State] members/supporters who are living, working, and spreading the very same ideology as ISIS advocates in Syria and around the world.

ISIS would be proud of the Imam of the Fort Walton Beach mosque.  Worshippers are provided numerous booklets, manuals, brochures, DVD’s and 500 plus page books promoting an Islamic caliphate worldwide and under Shariah law.  The books go into detail about physical Jihad being conducted throughout the world.  The Imam gave me a few pieces of material for me to better understand ‘Pure Islam’.  Much of the material was published in Saudi Arabia and Pakistan.  Again, ISIS would feel very comfortable praying in this mosque with an Imam who thinks as they do.

In this short article I will not spend hours and hours explaining why certain pieces of Islamic material are dangerous, but instead I will name some of the people, organizations, and manuals.  I request you research and read for yourselves why the materials are dangerous to you and your families.  Fiqh Us Sunnah, Riyadh Saliheen, Sahih Muslim, Abu Mawdudi, Ali Al Timmimi, Siraj Wahhaj, Zaid Shakir, and of course the national organization of the Muslim Brotherhood operating inside America which is CAIR.  CAIR leaders are Muslim Brotherhood and desire to overthrow the government of America and kill anyone who stands in their way.

I have written extensive articles on the various books mentioned.  Many are on my website.

The manuals at this mosque advocate:

  1. Sedition and treason against America
  2. Killing anyone who they determine to oppose their goals
  3. Child marriages
  4. Slavery
  5. Abuse and rape of girls and women

This is just a sampling. I will be submitting a significant incident report on my findings and it will be posted in the next few days.

I rate this mosque a 9 on a scale of 1 -10, with 10 being the highest threat level.

There is a very high likelihood that someone from this mosque will actually be engaged in physical Jihad against innocent people in the near future. Local authorities must monitor this mosque for activities equivalent to ISIS, shut the mosque down, prosecute the leaders for sedition and treason, and further investigate the members of the mosque.  The IRS approved non profit status must be removed.

Readers of this article are the one’s who can make this happen.  Put the pressure on your elected officials and senior law enforcement to stop ISIS from operating.  Request your Christian and Jewish leaders to put additional pressure on elected officials.

The most disturbing finding during my research at this mosque was that out of the 45 Muslim men attending prayers, at least 10 are active duty U.S. military members, and there were several U.S. government civilians attending.  There are tens of thousands of ISIS operating inside America and 100’s of thousands of their supporters.

If we can’t control their illegal activities how do we expect our government to control tens of thousands of more refugees?  The answer is they can’t.

I respectfully ask for your assistance for me to conduct firsthand research at hundreds of more mosques in America.  The results will be provided to you directly.

EDITORS NOTE: If you desire to help David fund this research please contact him at davegaubatz@gmail.com, or phone 276-229-1056, or donate through PayPal using ID pdgaubatz@yahoo.com . To reach Dave Gaubatz | davegaubatz@gmail.com | http://www.wearenotafraid.blogspot.com
davegaubatz@gmail.com.

Teens Who Use Marijuana at Risk of Schizophrenia

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In a pre-clinical study, researchers from Western University in Ontario, Canada, studied the effects of long-term exposure to THC in both adolescent and adult rats.

They found changes in behavior as well as in brain cells in the adolescent rats that were identical to those found in schizophrenia. These changes lasted into early adulthood long after the initial THC exposure.

The young rats were “socially withdrawn and demonstrated increased anxiety, cognitive disorganization, and abnormal levels of dopamine, all of which are features of schizophrenia,” according to the article. The same effects were not seen in the adult rats.

“With the current rise in cannabis use and the increase in THC content, it is critically important to highlight the risk factors associated with exposure to marijuana, particularly during adolescence,” the researchers warn.

Read Medical News Today story here. Read study abstract in the journal Cerebral Cortex here.

Government Caused the ‘Great Stagnation’ by Peter J. Boettke

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Tyler Cowen caused quite a stir with his e-book, The Great Stagnation. In properly assessing his work it is important to state explicitly what his argument actually is. Median real income has stagnated since 1980, and the reason is that the rate of technological advance has slowed. Moreover, the technological advances that have taken place with such rapidity in recent history have improved well-being, but not in ways that are easily measured in real income statistics.

Critics of Cowen more often than not miss the mark when they focus on the wild improvements in our real income due to quality improvements (e.g., cars that routinely go over 100,000 miles) and lower real prices (e.g., the amount of time required to acquire the inferior version of yesterday’s similar commodities).

Cowen does not deny this. Nor does Cowen deny that millions of people were made better off with the collapse of communism, the relative freeing of the economies in China and India, and the integration into the global economy of the peoples of Africa and Latin America. Readers of The Great Stagnation should be continually reminded that they are reading the author of In Praise of Commercial Culture and Creative Destruction. Cowen is a cultural optimist, a champion of the free trade in ideas, goods, services and all artifacts of mankind. But he is also an economic realist in the age of economic illusion.

What do I mean by the economics of illusion? Government policies since WWII have created an illusion that irresponsible fiscal policy, the manipulation of money and credit, and expansion of the regulation of the economy is consistent with rising standards of living. This was made possible because of the “low hanging” technological fruit that Cowen identifies as being plucked in the 19th and early 20th centuries in the US, and in spite of the policies government pursued.

An accumulated economic surplus was created by the age of innovation, which the age of economic illusion spent down. We are now coming to the end of that accumulated surplus and thus the full weight of government inefficiencies are starting to be felt throughout the economy. Our politicians promised too much, our government spends too much, in an apparent chase after the promises made, and our population has become too accustomed to both government guarantees and government largess.

Adam Smith long ago argued that the power of self-interest expressed in the market was so strong that it could overcome hundreds of impertinent restrictions that government puts in the way. But there is some tipping point at which that ability to overcome will be thwarted, and the power of the market will be overcome by the tyranny of politics. Milton Friedman used that language to talk about the 1970s; we would do well to resurrect that language to talk about today.

Cowen’s work is a subversive track in radical libertarianism because he identifies that government growth (both measured in terms of scale and scope) was possible only because of the rate of technological improvements made in the late 19th and early 20th century.

We realized the gains from trade (Smithian growth), we realized the gains from innovation (Schumpeterian growth), and we fought off (in the West, at least) totalitarian government (Stupidity). As long as Smithian growth and Schumpeterian growth outpace Stupidity, tomorrow’s trough will still be higher than today’s peak. It will appear that we can afford more Stupidity than we can actually can because the power of self-interest expressed through the market offsets its negative consequences.

But if and when Stupidity is allowed to outpace the Smithian gains from trade and the Schumpeterian gains from innovation, then we will first stagnate and then enter a period of economic backwardness — unless we curtail Stupidity, explore new trading opportunities, or discover new and better technologies.

In Cowen’s narrative, the rate of discovery had slowed, all the new trading opportunities had been exploited, and yet government continued to grow both in terms of scale and scope. And when he examines the 3 sectors in the US economy — government services, education, and health care — he finds little improvement since 1980 in the production and distribution of the services. In fact, there is evidence that performance has gotten worse over time, especially as government’s role in health care and education has expanded.

The Great Stagnation is a condemnation of government growth over the 20th century. It was made possible only by the amazing technological progress of the late 19th and early 20th century. But as the rate of technological innovation slowed, the costs of government growth became more evident. The problem, however, is that so many have gotten used to the economics of illusion that they cannot stand the reality staring them in the face.

This is where we stand in our current debt ceiling debate. Government is too big, too bloated. Washington faces a spending problem, not a revenue problem. But too many within the economy depend on the government transfers to live and to work. Yet the economy is not growing at a rate that can afford the illusion. Where are we to go from here?

Cowen’s work makes us think seriously about that question. How can the economic realist confront the economics of illusion? And Cowen has presented the basic dilemma in a way that the central message of economic realism is not only available for libertarians to see (if they would just look, or listen carefully to his podcast at EconTalk), but for anyone who is willing to read and think critically about our current political and economic situation.

The Great Stagnation signals the end of the economics of illusion and — let’s hope — paves the way for a new age of economic realism.

This post first appeared at Coordination Problem.

Peter J. BoettkePeter J. Boettke

Peter Boettke is a Professor of Economics and Philosophy at George Mason University and director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center. He is a member of the FEE Faculty Network.

RELATED ARTICLE: 5 Reasons Why America Is Headed to a Budget Crisis

Detroit Public Schools: Beyond a State of Emergency

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Since 1999, the state has been “taking over” Detroit Public Schools. Since 2009, Detroit’s schools have been subject to a stream of emergency managers who move in for just under 18 months, do not answer to voters, and can basically do what they want without consequence.

The Detroit Public Schools state takeover is a dismal failure, as noted in this February 2015 Metro Timesarticle:

The district’s struggles can be traced to a skein of historic factors, beginning with the city’s long-declining population, a trend that started in the 1950s and continues today.

Another major factor was the approval of 1994’s Proposal A in a statewide referendum that radically changed the way Michigan finances education, shifting from a primary reliance on local property taxes to a “per pupil” foundation grant provided by the state.

The two factors — the continued loss of students and the state funding that comes with them (currently $7,296) — combined with a host of other problems to throw the district into a long downward spiral.

In an attempt to reverse that trend, the state has tried twice in the last two decades to address the crisis — not by addressing the underlying structural issues, but by usurping the elected board’s power.

The most recent Detroit Public Schools emergency manager, Darnell Earley, is chiefly responsible for water contamination in Flint, Michigan.

Detroit’s schools are in crisis, and being state-run has only exacerbated the problem.

In October 2015, Michigan Governor Rick Snyder announced a legislative package that would involve establishing a new Detroit school district while leaving the old district in place to pay off Detroit Public Schools’ crippling debt. The new, traditional school board would initially be appointed by the governor and mayor and would become an elected board by 2021. The new system would also be open enrollment.

In a January 14, 2016, Detroit Free Press article, lawmakers express concern over Snyder’s plan for Detroit public education:

The proposed legislation, which was introduced Thursday, would start with an appointed nine-member interim school board, with five of the members appointed by Gov. Rick Snyder and four by Detroit Mayor Mike Duggan. That board would hire a superintendent for the district. A nine-member school board — seven members from districts throughout the city and two from at-large — would be elected by Detroit voters in November and take over governing the district on Jan. 1, 2017.

That school board, however, would be more symbolic than substantive, said state Rep. Brian Banks, D-Detroit, because it would have no control over the hiring of a superintendent and would be subject to the same financial review commission that oversees the City of Detroit’s finances.

“It doesn’t go far enough to address our concerns. There should not be any appointed board for any length of time,” he said. “This is just going to be another form of an emergency manager.” …

Other concerns for Detroit lawmakers is the continuation of a form of the Education Achievement Authority, which will be run by a state-appointed CEO who will have authority over the bottom 5% of low-achieving schools in the state. The fact that a source hasn’t been identified to come up with the $515 million needed to pay off Detroit’s debt also is problematic, although a $250-million transfer from the state’s general fund has been included to establish the new district. …

Duggan didn’t support or reject the legislation.

“Coalition members and I, along with community stakeholders, the AFT (American Federation of Teachers) and the State Board of Education, are working closely with our Detroit legislators to have a single, unified position to eliminate the debt that is choking our schools; return control of DPS to a locally elected school board, and to create a Detroit Education Commission to establish a single standard of performance for all public schools in Detroit — district and charter,” he said in a statement referring to the Coalition for the Future of Detroit Schoolchildren. …

Part of the concern for Republicans are sick-outs by Detroit teachers protesting conditions in the schools.  Dozens of schools have closed over the last two weeks. …

[The lead sponsor of the bills, Sen. Goeff] Hansen said he expects hearings to be held on the two bills — SB 710 and 711 — within the next two weeks, with a goal of passing the legislation by April, when it is projected that DPS may run out of money.

As it stands, Detroit Public Schools are beyond deplorable.

In an effort to heighten national awareness about the Detroit Public Schools crisis, the American Federation of Teachers (AFT) produced the following four-minute tour of Spain Elementary School featuring counselor Lakia Wilson:

And Detroit teachers, parents, and other activists have been publicizing the terrible conditions of Detroit Public Schools, as well. The following images have been taken from the Detroitteach Twitter page. Note that the images below are from facilities that continue to house children and their teachers.

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Above: Toilets leaking into preschool classrooms.

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Above: Broken bathroom stall for young children.

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Above: Pictures from a classroom.

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Competent intervention into the Detroit Public Schools crisis should have happened years ago. Let’s hope Michigan lawmakers are able to do right by Detroit in 2016.

Marco Rubio’s Recent Climate Change of Heart ‘Disingenuous’

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ken fieldsNEW YORK, NY /PRNewswire-USNewswire/ — In response to Marco Rubio’s recent campaign event in New Hampshire where the candidate appears to have made a climate change of heart and has called for America to be “number one in wind, and number one in solar, and number one in biofuels, and number one in renewables, number one in energy efficiency. Let’s lead in all of these things,” independent presidential candidate Ken Fields (pictured right) responded by saying:

“For someone who has so vehemently opposed any acknowledgement of the scientific consensus backing the evidence of human-caused climate change due to our planet’s reliance on fossil fuels, Rubio’s change of heart seems disingenuous at best. He has voted against energy efficiency and clean energy tax incentives. It’s hard to believe him.”

When pressed for further comment, Fields stated, “The recent and continued volatility in global oil markets should be evidence enough that energy security is not simply a matter of having and exploiting our own fossil fuel resources, but rather being completely independent of fossil fuels altogether.”

Fields officially launched his campaign last week on January 8th, 2016. His platform revolves around his slogan, “Greatness Must Be Earned” and to do great things, he has advocated the transition to 100% renewable energy for the country over the next 20 years. His policy plan includes, but is not limited to, creating the public and private mechanisms to encourage and nurture the financial markets to participate, a tax holiday for repatriated corporate capital that is invested in renewables and a carbon tax and dividend plan.

For further information on his policies and positions feel free to visit www.kenfields.net.

World economy is stopped?

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NFL Playoffs continue; Starbucks continue; the routine of life goes on, but beneath the surface of “normalcy” alarms are sounding.

For the first-time in known history, not one cargo ship is in transit in the North Atlantic between Europe and North America.  

Hundreds of ships are either anchored offshore or are in-port.  NOTHING is moving.  This is a quiet alarm that commerce, for all practical purposes, has stopped!  A close associate of seven years who resides overlooking the Bay of Panama (Pacific side) and with an unobstructed view of the entry locks to the canal writes: “Normally, as I look out of my home office windows, I see the skyscrapers of Costa del Este and to the left maybe 5-6 ships in the bay; in between the skyscrapers maybe 3 or more (another few are blocked by the buildings) and then to the right, several more ships; I am use to viewing 12 or more ships.

The ships have to wait in the bay as long as a day because they must take turns passing through the canal locks.  Today…only 3 ships.”  These two reports, no North Atlantic sea traffic, and no Europe to US West Coast traffic through the Panama Canal is a horrific economic sign that world-wide commerce has stopped.

5 Declaratory Signs – the U.S. and world economy are in trouble

1. U.S. RETAIL SALES COLLAPSE:

In post-industrial America, the economy depends on and is driven by consumerism, i.e., retail sales.

But those sales are tanking.

Bloomberg reports, Jan. 15, 2016, that after an anemic gain of 0.4% in November 2015, retail sales in December actually fell 0.1% — in spite of lower gas prices and the “holiday” Christmas buying frenzy on which retailers traditionally rely to lift them into the black.

For all of 2015, purchases climbed only 2.1%, making 2015 the weakest year since 2009, the trough of the Great Recession.

The retail sales collapse affects 6 of 13 major categories, including grocers (!) and the following:

  • 1% drop at general merchandise stores.
  • 1.1% drop in receipts at gasoline stations, from the drop in gas prices.
  • 0.9% drop in sales at clothing chains.
  • 0.2% drop in sales at electronics stores.

Analysts say the slowdown indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season.

2. MOST AMERICANS HAVE LESS THAN $1,000 IN SAVINGS:

That is only sensible, given the fact that most Americans — a whopping 62% — have less than $1,000 in their savings accounts, and 21% don’t even have a savings account, according to a new survey of more than 5,000 adults conducted last month by Google Consumer Survey for personal finance website GOBankingRates.com.

That means many Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (26%), borrowing from family and/or friends (16%) or using credit cards (12%). (Read more here)

3. U.S. INDUSTRIAL PRODUCTION COLLAPSE:

It is not just retail sales that are tanking. U.S. industrial production plunged 1.8% year-over-year (2014 to 2015), which is the fastest pace of collapse since May 2008 when the Great Recession began. Historically, a 1.8% year-over-year decline in industrial production has never not produced a recession. (Source)

4. HUNDREDS OF WAL-MARTS TO BE CLOSED:

The collapse of retail sales is also seen in retail giant Wal-Mart‘s decision to close hundreds of stores.

The AP reports, Jan. 15, 2016, that with 11,000 stores worldwide and a global workforce of 2.2 million, the world’s biggest retailer Wal-Mart is closing 269 stores, more than half of them (154) will be in the U.S., including 102 smallest-format stores called Wal-Mart Express, which were opened as a test in 2011.

Altogether, 16,000 Wal-Mart “associates” will be laid off, 10,000 of whom in the United States.

The closures will begin at the end of this month, January.

Wal-Mart has 4,500 stores in the U.S., with 1.4 million employees. The stores being shuttered account for less than 1% of Wal-Mart’s global revenue.

More than 95% of the U.S. stores set to be closed are within 10 miles of another Wal-Mart. The Arkansas-based company said it is working to ensure that workers are placed in nearby locations.

The announcement comes three months after Wal-Mart Stores Inc. CEO Doug McMillon told investors that the world’s largest retailer would review its fleet of stores with the goal of becoming more nimble in the face of increased competition from all fronts, including from online rival Amazon.com. McMillon said in a statement: “Actively managing our portfolio of assets is essential to maintaining a healthy business. Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future.”

ZeroHedge points out that Wal-Mart’s troubles began when “the world’s largest retailer bowed to pressure to raise wages for its lowest-paid employees…. In short order, it became apparent that the reverberations from the $1.5 billion endeavor would spell trouble for the company.” When the retail giant’s efforts to squeeze the supply chain failed to plug the gap, the company resorted to store closures, job cuts and reduced hours.

5. GLOBAL ECONOMY IN TROUBLE:

Even more frightening are signs that the economic slump is not just in the U.S., it is worldwide, as indicated by continued collapse of the Baltic Dry Index, which shows the global economy seems to be grinding to a halt. (Source)

The Baltic Dry Index is an assessment of the price of moving major raw materials by sea. As such the Index is an indicator of global trade because raw materials and most manufactured goods are transported by sea. A steep and continuing drop in the Index means goods aren’t being hauled by ships because factories aren’t buying and retailers aren’t stocking.

SuperStation95 (95.1-FM, New York, NY) reports on Jan. 8, 2015, that the North Atlantic appeared empty of cargo ships in-transit. The ships instead were anchored along the North American and European coasts, with few or none moving.

SuperStation95 explains:

Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped

The reason commerce has stopped is simple: People are not buying things.   When people do not buy things, retailers do not sell things, so they do not order more goods for stock.

When retailers do not order goods, manufacturers don’t make anything because there are no orders to fill.  When manufacturers do not make goods, they don’t order raw materials for manufacturing.

When there are no orders for raw materials, commodities sellers do not sell raw materials. When no raw materials are sold, there is no shipping by large cargo ships, (or railroads or tractor trailers) to move anything.

Put simply, the global economy is LITERALLY stopping.  Right now.  Today.

A snapshot taken by MarineTraffic.com and posted by ZeroHedge seemed to show a dearth of cargo ships in transit across the world.

Sorry for the bad news, folks, but it looks like we are heading toward very rough waters.

EDITORS NOTE: In the future when a report surfaces that world maritime shipping has stopped or decreased mentioned is a resource CLICK HERE to check on the veracity of the report. After navigating this site you will learn presently there are thousands of ships on the move. This resource even locates ships that are currently in the Panama Canal. To use this tool, simply bring up the map and use the sizing buttons at the right to zoom in or out, then manipulate the little hand by depressing the left side of your mouse to move to any place on the globe. It is best to reduce the size at first to see as much territory as possible and then zoom in on the region you choose. As stated…there are currently thousands of ships moving.