Vox Popoli

Meredith Levinson writes what is quite possibly the most ridiculous column I have read in the last year, which in this age of Monetarists and Keynesians attempting to get their heads around the ongoing financial crisis, is really rather remarkable:

I’m tired of career experts advising job seekers to “play it safe” online by not posting any photos, opinions or information on blogs and social networking websites that a potential employer might find remotely off-putting. I understand where these career counselors are coming from: They’re in the business of dispensing advice that will help people land jobs. Recommending that people “play it safe” is as anodyne as it gets.

But instead of cautioning job seekers to censor their behavior and the information and pictures they post online, we job seekers and defenders of civil liberties should tell employers to stop snooping and stop judging our behavior outside of work. What we do, say and believe in our personal lives in most cases has no bearing on our ability to do a job, barring criminal behavior, of course.

This is utterly stupid, and I say that as someone who has been repeatedly warned by other authors that I will never be published by publishers such as Tor due to my personal opinions published on the Internet. But why shouldn’t Tor publish whoever they want? If they want to publish only fiction written by fat feminists and the aging drones that cater to them, that’s their call. It was interesting when, within minutes of my starting a high-profile consulting project last year, a few employees at the company began emailing the management to complain about my political views. That backfired a bit, ironically, because it turns out that in difficult times, amazingly few executives are interested in continuing to pay employees who are more concerned about trying to enforce their personal ideological prejudices than they are about the survival of the company.

It is not only an employer’s right to search online for information about their prospective employees, it is their duty! The fact that Ms Levinson doesn’t like the idea that any pictures she might post of herself exposing her breasts at Mardi Gras or taking part in an interspecies erotica festival in Tijuana could inhibit her future employment possibilities is totally irrelevant. The employee has the right to choose for whom he wishes to work, and the employer has the right to choose whomever he wishes to employ, selected by whatever metric he elects to choose.

But give the woman some credit. At least she had just enough sense to avoid calling for Congress to pass a law prohibiting employers from accessing Google.

The collapse of the Eurofascist dream would be a very good thing indeed:

Economic crisis threatens the idea of one Europe
The leaders of the European Union gathered Sunday in Brussels for an emergency summit meeting designed to tamp down the centrifugal forces unleashed by the global economic crisis that threaten to spin the bloc – and its single currency – apart.

Score one for the socionomists, who have been saying for years that globalization and European unification are merely artifacts of the economic boom. No wonder the globalists are so desperate to revive the corpse of their debt-inflation boom. There may be opportunities for the ongoing economic crises to further their campaign of One Bureaucracy to rule them all, but the crises have also quite clearly upset the notion of an easy, gentle decline into global fascism.

Simon Heffer of the Telegraph is of like mind:

The truth is that Europe has never had so dire a crisis since the Treaty of Rome was signed in 1957. Sauve qui peut is the watchword. President Sarkozy has entered a familiarly Gaullist phase, ignoring EU competition policy and pushing through a €6 billion support for the French car industry; other manufacturers, notably in eastern Europe, have protested to no avail. Mr Sarkozy’s assertion that he is not a protectionist is purely rhetorical. When a German minister says that “now is not the time” to let workers from the EU’s former eastern bloc countries have full immigration rights in Germany, he is saying the same thing. Gordon Brown may not be able to ensure British jobs for British workers, but the Germans are determined to keep their jobs for German ones.

This bending of the rules – or rather this wholesale disregard of them – is the surest sign of a currency, and quite possibly an empire, in terminal decline.

I find it very difficult to imagine that the Eurofascists are going to find any utility in forcing a second Irish vote on the European ConstitutionLisbon Treaty. In the current environment, one would expect the Irish to vote even more vociferously against surrendering to the bureaucrats in Brussels. And I, for one, would be delighted to see a return to the lira, as the Euro has made la dolce vita significantly more expensive. 80 percent of Greeks want to return to the drachma, and I don’t think that Italian sentiment is far south of that.

UPDATE – It’s increasingly clear that the financial crises are unlikely to improve the European public’s opinion of the European Union: “My friend Hjörtur in Reykjavík sends me a couple of opinion polls, suggesting that there is now a majority against even applying for EU membership. Four months ago, at the height of the financial crisis, 80 per cent of Icelanders were for joining the EU and the euro. Now, that number has halved.”

“These aren’t the advanced skills they’re going to need. They’re going to need the more practical skills, like how to build a shelter from abandoned cars, or learn how to find drinking water by collecting the morning dew in human skulls…. A kid is not going to be able to kill a six-long irradiated beetle by pressing a few buttons. He’s going to have to go in there with an axe and hack, and hack, and hack!”

Fortunately, all the time I’ve been spending on the Wii of late means that I feel quite confident that if the global depression does turn the world into a post-apocalyptic environment, I will be able to drive circles around any mutated lizards, oversized apes, or children in turbo-charged baby strollers.

This is just the beginning. STRATFOR is the first to pick up on what will soon become a continent-wide theme, and no multiculti mantras or bureaucratic Eurobabble are going to dispel it.

STRATFOR can forecast with some certainty that as the economic recession worsens, tensions between native populations and immigrants in Europe will come to the forefront of what is likely to be a restive summer. This is by no means a novel or modern phenomenon. Europe’s geography and the concept of the modern nation-state both lead to a certain logic of violence against minorities that may have been tempered by the taboo of the Holocaust immediately after World War II but is now coming out in the open. Anti-immigrant sentiment is no longer just for fringe right-wing youth groups; it forms the ideological underpinning and electoral platform of some of the most successful parties in some of Europe’s most advanced economies (Switzerland and Austria being cases in point).

Xenophobia and anti-immigrant sentiment is obviously not exclusive to Europe. The United States, Australia, Japan, United Arab Emirates, Russia, Kuwait and others all deal with social unrest caused by immigration and manifestations of xenophobia. Europe, though, does have a particularly long and storied tradition of anti-immigrant social unrest, and unlike the East Asian countries, for example, already has immigrants in large numbers within its territories….

Because European ethnic and cultural identities are so entrenched by geography, however, these migrants who are at some point necessary for economic development eventually come up against established identities that at best tolerate them during times of plenty, but turn on them as soon as resources become scarce. For example, neither migrant community just mentioned above exists in any significant numbers now. The bottom line is that foreigners — and often their descendants — are not trusted because they do not belong to one’s own group, the idea being that they cannot be relied upon to place the interests of the host society and culture before their own self-interests or that of their own homeland, culture or religion. Unlike states built through immigration, such as the United States, Australia and Canada, European ethnic identities are today firmly established in the minds of the population.

As I have repeatedly written, I expect forced expulsions of social undesirables to take place in a number of European countries, probably beginning with the Scandinavian nations. The prospect for the worst violence is France, followed closely by the UK, although the Italians have already begun resorting to it. Regarding Italy, if the Mafia and the Camorra are clever enough to align themselves with this popular sentiment, it could easily become another Sicilian Vespers, with the EU, the Romanians, and the Africans representing the French.

The Irish Times has a tongue-in-cheek parody that is based on a false premise, but isn’t actually unsound from a macroeconomic perspective:

Does the woman in your life really need a job? Admittedly, this is not a fashionable question. From Iceland to Australia, men are blamed for causing the credit crunch, while a more feminine approach to finance is proposed as the solution.

Of course there will always be a place in the world of business for exceptional women. Women also have an important role to play in jobs that are too demeaning for men, like teaching. But the general employment of women is another matter. Indeed, working women almost certainly caused the credit crunch by bringing a second income into the average household, pushing property prices up to unsustainable levels. Whether working women actually caused the credit crunch is now a moot point. The point is that removing women from the workforce would mitigate its effects….

It would be ludicrous to suggest that women should be sacked purely to give men their jobs. In many cases, their jobs should be abolished as well. Women are twice as likely as men to work in the public sector. They account for two-thirds of the Civil Service and three- quarters of all public employees.

It’s simply not true that women caused or even exacerbated the credit crunch, (except, of course, for Blythe Masters, the woman who invented the credit default swap), but it’s true that getting rid of three-quarters of the jobs in the public sector would be economically desirable. But the only direct effects from that the entry of middle-class women into the workforce, (lower class women representing about a third of the female population always worked), are lower average wages and reduced productivity. While there were certainly a wide variety of social effects that have had an impact on the economy, such as an increase in the divorce rate leading to an increased demand for housing, they are derivative effects that usually involve one or more additional factors.

Our favorite Nobel Prize-winning neokeyn avoids looking in the mirror:

The sickening feeling of drift — the sense that policymakers are refusing to face hard facts, and are dithering while the world economy burns — just keeps getting stronger.

The amusing thing is that by Krugman’s latest reckoning – it’s the dirty little yellow people’s fault – there’s nothing that the US authorities can really do anyhow, except convince Asian governments to spend money on… something besides the US Treasuries that the US authorities are currently begging them to buy. This makes absolutely no sense, of course, nor does it have much, if anything, to do with Krugman’s previous theories of the crisis, but then, what can an economist do when his economic model is broken. Again.

It’s worth noting in passing that the Age of Irrational Exuberance is officially over. The S&P 500 closed at 700.82 yesterday, well below the 744.38 that inspired Alan Greenspan’s famously feeble admonition of December 5, 1996.

It’s not prophecy when the outcome is completely obvious:

The Federal Reserve’s low interest rate policy is a big mistake; it is not a panacea. Artificially low interest rates are achieved by inflating the money supply. Low interest rates penalize the thrifty and those who save are cheated. It promotes consumption and borrowing over savings and investing. Manipulating interest rates is an immoral act. It’s economically destructive.

The policy of artificially low interest rates caused our problems and therefore cannot be the solution. The market rate of interest is crucial information for the smooth operation of the economy. A central bank setting interest rates is price fixing and is a form of central economic planning. Price fixing is a tool of socialists and destroys production. Central bankers, politicians, and bureaucrats can’t know what the proper rate should be. They lack the knowledge and are deceived by their own aggrandizement.

This isn’t ideology, Ron Paul is merely telling his fellow congressmen what the facts of life are. The stimulus packagerecovery plan won’t work. It can’t work. It’s dependent upon a deeply flawed economic model.

As long as my masculinity is again being called into question, I suppose it’s as good a time as any to answer a few of the regulars who emailed to ask about what’s been going on in the workout front, particularly about an injury I’d mentioned a while ago. I don’t know if it was age getting the better of me or if it was just my propensity to overtrain, but something deep inside my shoulder had been bothering me for a long time, so I finally listened to Spacebunny and kept my bench under 165 for about a year.

The rest seems to have helped quite a bit; today was my second heavy lift in over a year and the shoulder held up fine without even a twinge of discomfort. It felt great and everything except the very last rep at 270 went up easily. I suspect it will take a while for me to get back where I was, but I seem to have retained a bit more strength than I’d dared to hope. I also have a workout partner 3x per week who is one of those fill-out-the-card types and his mania for always going to the gym at the same time has probably been a good thing too. Partly due to the shoulder injury, which ironically only affected my chest workouts, I’ve been on a shoulder kick for a while now. Here’s what we did today:

Bench
135 12x (warmup)
225 10x
240 8x
255 6x
270 4x (Only got 3. Still too nervous to force any reps)
215 12x

Shoulder press – seated dumbell
50-55-60-65 for 10x-8x-6x-4x

Shoulder press – standing military
45-65-75-85 for 10x-8x-6x-4x

Dips
10-12-12

Shoulder flies
30-25-20 for 10x-10x-10x

Seated curls
Cappucino for 1x

Paul Krugman is really getting desperate. It’s amazing to see him waving his arms and pointing the finger of blame for a crisis that he didn’t foresee and doesn’t understand just about anywhere but where it rightfully belongs:

How did this global debt crisis happen? Why is it so widespread? The answer, I’d suggest, can be found in a speech Ben Bernanke, the Federal Reserve chairman, gave four years ago. At the time, Mr. Bernanke was trying to be reassuring. But what he said then nonetheless foreshadowed the bust to come. The speech, titled “The Global Saving Glut and the U.S. Current Account Deficit,” offered a novel explanation for the rapid rise of the U.S. trade deficit in the early 21st century. The causes, argued Mr. Bernanke, lay not in America but in Asia.

Asia? Why Asia? Well, Ben Shalom is happy to invent plenty of reasons that sound plausible to the economically ignorant, but he didn’t mention the most important one: the Federal Reserve can’t reasonably be held responsible for anything that happened in Asia. So, it’s not the fault of the monetary authorities that we were told by Milton Friedman and the Chicago Boyz are all-powerful, nor the politicians of both parties who have been spending money like a call girl who finds herself in possession of a CEO’s corporate card. It’s all because of those damned enigmatic yellow people!

In the mid-1990s, he pointed out, the emerging economies of Asia had been major importers of capital, borrowing abroad to finance their development. But after the Asian financial crisis of 1997-98 (which seemed like a big deal at the time but looks trivial compared with what’s happening now), these countries began protecting themselves by amassing huge war chests of foreign assets, in effect exporting capital to the rest of the world…. The result was a world awash in cheap money, looking for somewhere to go.

If you want to know where the global crisis came from, then, think of it this way: we’re looking at the revenge of the glut. And the saving glut is still out there. In fact, it’s bigger than ever, now that suddenly impoverished consumers have rediscovered the virtues of thrift and the worldwide property boom, which provided an outlet for all those excess savings, has turned into a worldwide bust. One way to look at the international situation right now is that we’re suffering from a global paradox of thrift: around the world, desired saving exceeds the amount businesses are willing to invest. And the result is a global slump that leaves everyone worse off.

I’m going to have to look into the details in order to decisively explode what Krugman is saying here, but I’m extremely confident that the amount of SAVINGS in the emerging economies of Asia since 1998 don’t come anywhere close to the amount of DEBT created by the Federal and multiplied 40x to 60x by its member banks over that same period. How can “foreign assets held by foreign governments” be so blithely equated with private savings? Krugman appears to be a man with a Keynesian hammer, wildly flailing about at a flock of dive-bombing crows that his fevered imagination tells him are flying nails.

It’s madness. Total unadulterated madness. Do you really wonder, with desperate lunatics like these at the forefront of the effort to defy economic gravity, I am so supremely confident that they will not succeed where their predecessors failed?

Vox Day interviewed Thomas Woods, the New York Times best-selling author of Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, on February 25th.

Congratulations on Meltdown hitting the bestseller lists. Being the first to get this book out so soon after the September crash tends to indicate that you anticipated it. You’re an Austrian economist, so did you find that Austrian theory helped you put the crises in context?

The book is in itself an Austrian analysis from start to finish. For anyone who doesn’t know, the Austrian School of Economics is a free market school of economics that includes luminaries such as Ludwig von Mises and Friedrich von Hayek, the latter of whom won the Nobel Prize in 1974. I would say the bulk of the economists who saw the crisis coming were Austrians. There is no economic school of thought of which a higher proportion of economists were warning that the housing market was indeed experiencing a bubble, that it was going to burst, and that the rate of home price increases was unsustainable. That was an Austrian warning. So, I wrote the book because I could not stand listening to the conventional wisdom, day in and day out, telling me that this was all the fault of the free market so now we need the geniuses in Washington to fix everything for us. That is just an obscenity. It’s not even remotely close to what happened, and I assumed there would be a great many books coming out on the crisis that would misdiagnose the problem and give us solutions that are worse than the problem itself, where the cure would be worse than the disease. So, I wanted to take Austrian tools and tell the story first, be the first one out of the gates telling the story, before the avalanche of bad advice comes.

Some of the inevitable Keynesian books should be howlers. Especially Paul Krugman’s.

Well, Krugman has a book out that purports to be up-to-date and address the current situation, but it’s just a rehash of his old columns with a present-sounding title. It’s just a gimmick. Meltdown is actually about current events and was written as these events were taking place.

Yeah, I have the 1999 edition of The Return of Depression Economics. I wonder if he took out the part where he declares that a global depression is unlikely in the future. Now, when you say that the government created the housing bubble, are you also including the Federal Reserve?

In my chapter on the subject, I show there are a half-dozen contributing factors, and some of them are clearly government factors. For example, Fannie Mae and Freddy Mac, which were quasi-public, quasi-private agencies whose exact status was not altogether clear to people. But it was more or less taken for granted that they would be bailed out by taxpayers if it should come to that and they did get special privileges such as tax and regulatory breaks not available to anyone else in the housing market. All of this added up to the incentive to take greater risks than a truly free market actor would take. There’s been a lot of talk among conservatives about the Community Reinvestment Act, which was a Carter-era law that required banks to make loans against their best interests so as not to be sued for so-called discrimination. On the Left, there’s been a lot of frustration that this act has been targeted [for helping cause the housing bubble]. They argue that since it dates back to Carter and the late 70s, how can it be blamed for this bubble 30 years later. The answer is that the act didn’t really have enforcement teeth until the mid-1990s under Clinton. It’s not like we’re just desperately looking around to blame the most irrelevant thing.

There are other factors too. But as for the Fed, although it’s technically true that it is not a government agency, at the same time, I think it would be wrong to argue that it’s a purely private thing. Again, we’re dealing with a weird amalgam of public and private. The Fed was created by an act of Congress, its board is appointed by the U.S. government, and it enjoys monopoly privileges that are granted to it by the U.S. government. So, it’s not a purely government agency but it’s dramatically different than any free market actor and would not have spontaneously come into existence under a free market system. If it could have, Congress would not have needed to create it.

How long do you expect the current contraction to run and how big do you expect the decline to be in terms of GDP?

I know this will sound like a cop-out, but I don’t put much stock in economic forecasting. It would be one thing if we had we a genuinely free market with no government involvement at all. Then you might be able to make some kind of ballpark estimates. But I have no idea what the Federal government is going to try! It’s at least within the realm of possibility that the general public could become so angry that the Federal government changes course, tries something different, or stop continuing to attack the economy with a 2×4. But I think it’s more likely that they’ll keep trying unprecedented things and that makes it very, very hard to predict how long this will go on. I think the more they do that, the longer it will go on. It spoke volumes when the Treasury Secretary said the other day that they are trying a lot of unprecedented things and that they hope these things work. Because normally, Washington officials like to portray themselves as the great saviors of Mankind, that there’s nothing they can’t do. For them to say they hope these things will work means they don’t know what they’re doing, and that doesn’t fill me with confidence.

So as not to avoid the question altogether, I think it is at least possible that we could have a stagnation as long as Japan’s, which was well over a decade. Japan still had a little bit of anemic growth, but they also had a substantial pool of domestic savings to draw from and we don’t. As some of my friends have said, we should be so lucky as to experience what happened to Japan. And, of course, the U.S. government is following very closely all the policy prescriptions that were so disastrous for Japan. In terms of GDP, I am critical of GDP as a metric to measure the economy, and I explain this in Meltdown. The stimulus package could very well have a noticeable effect on GDP because all that government spending will be added to the sum total of goods and services. It could very well lead to an uptick of GDP or at least mask the true situation by making the downturn look less severe. If the government spends $100 on a $20 item, that increases the GDP by $100, so I think these figures mislead us, as they did in the 1940s. They’ve misled generations of historians and economists into thinking the economy was booming during WWII, while the same set of statistics would force you to conclude that in 1946, the US had a terrible depression. But as I show in the book, neither of these statements are true, and more scholars are finally figuring out that the alleged prosperity of the war years is really just an artifact of the statistical measures used, every one of which is completely unreliable. There was no depression in 1946.

What are some of the other myths about the Great Depression?

We’re hearing almost every single one of them repeated. We’re hearing myths that no reputable historian, regardless of his political allegiances, would repeat. I cannot believe there are still people who believe that Herbert Hoover was a supporter of the free market who just sat back and allowed the depression to unfold before his eyes. That’s just flatly false. There’s no support for that whatsoever. All throughout the 1920s, as Commerce Secretary, h
e was calling for all kinds of interventions into the economy. In another of my books, I compile a number of his statements, including when he called the laissez-faire model a thing of the past and how everyone supported some kind of managed economy with public-private partnerships. That was the way he spoke, that was the way he acted, and in Meltdown I give some examples of the things he did. Another big myth is the idea that FDR lifted the country out of the Great Depression. A third myth would be that the depression was caused by the free market and the lesson that should be learned from that is that we can’t allow that again. In fact, we now have the same Federal Reserve activity and expansion of the money supply that leads to the Austrian boom-bust cycle.

The equity boom ended in 2000. The housing boom ended in 2005. Which sector do you expect to recover first?

I really don’t know. Maybe a better economist than I am might know that. Unfortunately, the collapse in housing affects practically everything, and not just because of all the securitized mortgage debts that are held by so many investors and institutions, but also because of everything that goes into a house. The appliances, the raw materials, the building supplies, and the trucking and shipping services required to move those things across the country; all those things are affected. So, I honestly don’t know, but here’s my suspicion: Retail outlets that cater to basic consumer needs will do relatively well. Starbucks will suffer. No one wants to pay five bucks for a cup of coffee anymore. But a more no-frills type of outfit will tend to do better. Full-service hair salons will suffer more than a chain like Great Clips. If you’re supplying something that people need, in a no-frills, no-luxury manner, then you might come out relatively okay here. Anybody who is producing a product that relies on an unending stream of consumer credit is going to be disproportionately hurt. Those sectors whose business models take those things into account should be relatively healthy. I know that may seem obvious, but perhaps some people don’t see that.

It’s conventional wisdom that the Smoot-Hawley tariff contributed greatly to the Great Depression, but how does that make sense given that imports were only 5.1 percent of the US economy and the balance of trade’s contribution to GDP was a negative 1.1 percent in 1929?

I don’t think it did play a big role. I think those who think of themselves as free market economists have exaggerated the importance of Smoot-Hawley. It didn’t help; anything that shrinks the extent of the division of labor is going to have an impoverishing effect, so it didn’t help. Part of the reason so much emphasis has been placed on Smoot-Hawley is that there are some free market economists who are operating without the benefit of Austrian trade cycle theory. At the same time, they know they don’t want to blame the free market but they don’t have a coherent explanation for what happened. So, they flounder around, looking for this or that form of government intervention to explain why this downturn occurred. For example, I was very much an admirer of the late Jude Wanniski, who had a lot of important things to say on a lot of important matters, but his view of the depression was that it was taxes and tariffs that caused it. I think because he was not an Austrian, he had no other explanation so he had to revert to blaming the Smoot-Hawley tariff. But I think you’re right, it alone couldn’t possibly have account for the depths of what people witnessed.

International free trade is an Austrian hallmark, but how is comparative advantage which, as Ricardo demonstrated, has the benefit of raising the overall level of global wealth, desirable for the very small subset of the global population which lives in the United States, especially since there will be a significant amount of economic harm meted out to the even smaller subset of the US population that will lose their jobs to global competition?

I’m afraid I’m going to give an unsatisfactory answer here, because this is something I want to think through at greater length. You’re right, the developing countries have a lot farther to go in terms of material well-being, and they stand, in effect, to gain the most by their contacts with the West. Whereas we’re at a relatively high level of economic development; how much higher can these interactions with these countries make us go? Now, I know people speak almost contemptuously about inexpensive consumer goods coming from China, and there is something funny going on with exchange rate there, but still, China can produce an awful lot of goods very inexpensively. Because Americans can now acquire a lot of these necessary goods inexpensively, it means they now have the financial wherewithal to purchase additional goods they couldn’t have purchased otherwise. I don’t know what these additional goods are going to turn out to be, but somebody is going to produce them. In other words, by increasing Americans’ purchasing power, they open up the prospect of more employment and more lines of production. We get a lot of whining and moaning from the textile industry, but I happen to think it’s a good thing that poor people can get inexpensive clothing for their kids and they also have money left over for food. I have this feeling that I’m not really getting to the heart of your question, but that’s how I normally think about the mutual benefit that comes about as a result of international trade.