Tag: economics

Lessons From Langan

The world’s smartest man responds to three comments:

Comment 1: “Stupidity is a more dangerous enemy of the good than malice.”

Response: No, malice is more dangerous because of the associated intentionality.

Stupidity does not imply malice, but malice implies stupidity. That’s because a stupid populace is irresistable to a malicious ruling class – it’s much easier to deceive and control – which is why the populace has been methodically “dumbed down” by “the elite” using their proprietary indoctrination mills (public schools and universities) along with immigration policy favoring fast-breeding low-IQ migrants and mass-media idiocy including miscegenation propaganda directed specifically at White people.

Comment 2: “Better to reduce everything to power instead of money.”

Response: They go together. Here’s the definitive equation:

money = power, i.e., capital = power. That’s because money, or capital, is just generic human utility, abstracted and distributed as coinage, paper, or digital data. Money and power both come down to utility, so the equation is a lock. Either you get the power by force and then use it to steal all the money, or you steal the money and use it to bribe and threaten your way to power. Either way, it comes out the same.

Comment 3: “Monopoly capitalism isn’t new, and it doesn’t have a monopoly on capitalism.”

Response: Well, actually, it does, via the global banking system. The global money monopoly has not always existed, and now that it does, things have changed. Big Monopoly Capitalists have what amounts to a worldwide monopoly on the most important commodity of all: money. Money is the master-commodity, the commodity of commodities, Try to make your own, and they’ll lock you up and swallow the key. By the crooked reckoning of the global banksters, everyone owes them. Everyone’s on the hook. Everyone has to do what they say.

Correct on all three counts.

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Transcending 18th-Century Chains

Dan Wang’s annual letter indicates that China is transcending the 18th Century conceptual framework that has resulted in the enslavement of the formerly Christian West to Satanic post-Christian torpor. While the West finds itself trapped in the outdated chains of self-serving Jewish interpretations of the Enlightenment philosophies, China is forging a more practical path forward by rejecting the most foundational assumptions of the failing neo-liberal world order.

An important factor in China’s reform program includes not only a willingness to reshape the strategic landscape—like promoting manufacturing over the internet—but also a discernment of which foreign trends to resist. These include excessive globalization and financialization. Beijing diagnosed the problems with financialization earlier than the US, where the problem is now endemic. The leadership is targeting a high level of manufacturing output, rejecting the notion of comparative advantage. That static model constructed by economists with the aim of seducing undergrads has leaked out of the lecture hall and morphed into a political justification for only watching as American communities of engineering practice dissolved. And Beijing today looks prescient for having kept out the US social media companies that continuously infuriate their home government.

It’s interesting, is it not, to see how three years after I appeared on CGNT’s Dialogue and explained some of the fundamental flaws of Ricardian free trade on Chinese state television, and pointed out how the USA literally could not lose a trade war against China, that the CPC has explicitly rejected the orthodox classical concept of comparative advantage. I’m not saying that the case I explicated was the reason for that rejection, but it wouldn’t be surprising to learn that it was a contributing element, however minor.

It’s also clear that China is very likely to dominate the global economy going forward, as the USA sinks into a morass of meaningless conversations about conversations, and technology designed to enforce a rigid monoculture of SJW-approved goodthink.

Beijing recognizes that internet platforms make not only a great deal of money, but also many social problems. Consider online tutoring. The Ministry of Education claims to have surveyed 700,000 parents before it declared that the sector can no longer make profit. What was the industry profiting from? In the government’s view, education companies have become adept at monetizing the status anxieties of parents: the Zhang family keeps feeling outspent by the Li family, and vice versa. In a similar theme, the leadership considers the peer-to-peer lending industry as well as Ant Financial to be sources of financial risks; and video games to be a source of social harm. These companies may be profitable, but entrepreneurial dynamism here is not a good thing.

Where does Beijing prefer dynamism? Science-based industries that serve strategic needs. Beijing, in other words, is trying to make semiconductors sexy again. One might reasonably question how dealing pain to users of chips (like consumer internet firms) might help the industry. I think that the focus should instead be on talent and capital allocation. If venture capitalists are mostly funding social networking companies, then they would be able to hire the best talent while denying them to chipmakers. That has arguably been the story in Silicon Valley over the last decade: Intel and Cisco were not quite able to compete for the best engineering talent with Facebook and Google. Beijing wants to change this calculation among domestic investors and students at Peking and Tsinghua.

Internet platforms aren’t the only industries under suspicion. Beijing is also falling out of love with finance. It looks unwilling to let the vagaries of the financial markets dictate the pace of technological investment, which in the US has favored the internet over chips. Beijing has regularly denounced the “disorderly expansion of capital,” and sometimes its “barbaric growth.” The attitude of business-school types is to arbitrage everything that can be arbitraged no matter whether it serves social goals. That was directly Chen Yun’s fear that opportunists care only about money. High profits therefore are not the right metric to assess online education, because the industry is preying on anxious parents while immiserating their children.

Beijing’s attitude marks a difference with capitalism as it’s practiced in the US. Over the last two decades, the major American growth stories have been Silicon Valley (consumer internet and software) on one coast and Wall Street (financialization) on the other. For good measure, I’ll throw in a rejection of capitalism as it is practiced in the UK as well. My line last year triggered so many Brits that I’ll use it again: “With its emphasis on manufacturing, (China) cannot be like the UK, which is so successful in the sounding-clever industries—television, journalism, finance, and universities—while seeing a falling share of R&D intensity and a global loss of standing among its largest firms.”

As Michael Hudson has repeatedly demonstrated, financialization is fatal for both an economy and a society. It is fundamentally parasitical; it does not fertilize the growth of healthy productive companies, but rather, preys ruthlessly upon them and prevents them from growing to maturity.

The fact that the Chinese have consciously rejected the false promises of financialization and free trade is potentially one of the most important historic developments of the past 100 years.

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So About That, Scott….

I wonder if Vox Day is an economist or more of a writer of science fiction? Yeah, he’s an artist…. Two people who are trained economists would probably analyze things similarly, meaning they would do it correctly. They would know what to compare and what not to compare, but an artist, an artist is just going to be like, I’m pretty sure I’m totally right.

– Scott Adams
Darkstream 804

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Uninvestable or Uninfestable?

Somehow, I don’t think the CPC strategists are overly concerned about the global financial community’s sudden addition of China to the uninvestable zone that includes Russia and Iran:

Investors may want to think twice about putting their money to work in China, contends DoubleLine founder Jeffrey Gundlach.

“China is uninvestible, in my opinion, at this point,” the bond king told Yahoo Finance in an interview at his California estate. “I’ve never invested in China long or short. Why is that? I don’t trust the data. I don’t trust the relationship between the United States and China anymore. I think that investments in China could be confiscated. I think there’s a risk of that.”

The ongoing crackdown on the operations of big Chinese internet companies such as Didi by the government has rocked investors in the space. The clamping down on the country’s biggest tech names has now led to a tightening of listing requirements by the Chinese government

The Chinese have long understood the corollary to the Golden Rule: the only way to prevent those with the gold from making the rules is to refuse to accept it.

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CIPS+SPFS

The alternative financial system linking the Chinese and Russian economies takes shape:

In 2015, approximately 90% of trade between Russia and China was settled in dollars, and by 2020, dollar-denominated trade between the two Eurasian giants had almost reduced by half, with only 46% of trade in dollars. Russia has also been leading the way in cutting the share of US dollars in its foreign reserves. The mechanisms for de-dollarizing China-Russia trade are also used to end the use of the greenback with third parties – with advancements being seen in places such as Latin America, Turkey, Iran, India, etc. The US has been pumping out dollars to the entire world for decades, and at some point, the tide will change as the sea of dollars return home with increasingly diminished value.

Financial transactions
The SWIFT system for financial transactions between banks worldwide was previously the only system for international payments. This central role for SWIFT began to erode when the US used it as a political weapon. The Americans first expelled Iran and North Korea, and in 2014, Washington began threatening to expel Russia from the system as well. Over the past few weeks, the threat of using SWIFT as a weapon against Russia has intensified.

China has responded by creating CIPS and Russia developed SPFS, both being alternatives to SWIFT. Even several other European countries have banded together with an alternative to SWIFT to curb Washington’s extra-territorial jurisdiction and thus continue trading with Iran. A new China-Russia financial architecture should integrate CIPS and SPFS, and make them more available to third parties. If the US expels Russia, then the decoupling from SWIFT would intensify further.

Development banks
The US-led IMF, World Bank and Asian Development Bank are renowned instruments of US economic statecraft. The launch of the Chinese-led Asian Infrastructure Investment Bank (AIIB) in 2015 became a watershed moment in the global financial architecture, as all the major allies of the US (except Japan) signed up in defiance of American warnings. The New Development Bank, formerly referred to as the BRICS Development Bank, was a further step towards decoupling from the US-led development banks. The Eurasian Development Bank and future SCO Development Bank are more nails in the coffin of US-controlled development banks.

Synergy effects
China and Russia have also developed their own rating agencies and replaced the dominant position of Visa and Mastercard in their respective countries. This new financial architecture is complemented with an energy partnership and a technological partnership as neither China nor Russia wants to be reliant on American high-tech industries as they move into the fourth industrial revolution.

For those who live outside the USA, it will be wise to find a bank that is utilizing both systems, which will limit one’s exposure to either deplatforming or a collapse of the self-styled “rules-based order” that is, in fact, neither rules-based nor orderly.

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The Supply-Chain Crisis

Well, that’s not going to help:

Waco, Texas-based Central Freight Lines has notified drivers, employees and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years, the company’s president told FreightWaves on Saturday.

“It’s just horrible,” said CFL President Bruce Kalem.

A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue operating, despite exploring all available options to keep its doors open.

Kalem agreed.

“Years of operating losses and struggles for many years sapped our liquidity and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make money on this closing, nobody.”

Central Freight will cease picking up new shipments effective Monday and expects to deliver substantially all freight in its system by Dec. 20, according to a company statement.

Denninger sees this as an early sign of deleveraging-based contraction of the money supply.

The simple man (or simple family) has decent reserves, no debt beyond a modest mortgage, paid-for vehicles and thus, while they won’t like a disruption of income or tough times, will be ok.

Nearly all of the so-called “betters” running around screwing you with this or that are the precise opposite.

Indeed, that “virtue signaling” is expensive. Those solar panels? They’re a lease, basically. That Tesla? It has a note on it. That nice, expensive house? It has both the original note and probably a HELOC too. That fabulous nearly-new boat? Anyone care to bet what the odds are the bank actually owns it?

Every one of these levered things has serious and unavoidable cost associated with it. So long as everything is fine in your world that’s ok, or so you think. It all pencils out; you can meet the cash flow requirements and in a low interest-rate environment those look reasonable and safe.

You’re wrong.

If you’re not in debt, you’ll be fine. If you’ve got cash, there will be bargains available. But if you’re leveraged, you can’t control when the loans will be called.

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We’re Not Locked Out, You’re Locked Out

As I anticipated on a recent Darkstream, China and Russia are collaborating to provide the world with an alternative payment infrastructure that will compete, most likely favorably, with SWIFT and the US dollar.

Russia and China will develop shared financial structures to enable them to deepen economic ties in a way that foreign states will be unable to influence, the Kremlin has announced following talks between the countries’ leaders. The move appears to be a response to a series of warnings that Western nations could push to disconnect Russia from the Brussels-based SWIFT financial system as a form of sanctions.

The payment platform underpins the vast majority of international transactions. During the talks on Wednesday, Russian President Vladimir Putin and his Chinese counterpart Xi Jinping called for increasing the share of national currencies in mutual settlements and expanding cooperation to provide Russian and Chinese investors with access to stock markets, said Yuri Ushakov, Putin’s foreign policy advisor.

Ushakov said “particular attention was paid to the need to intensify efforts to form an independent financial infrastructure to service trade operations between Russia and China.”

“We mean creating an infrastructure that cannot be influenced by third countries,” the Kremlin aide added.

Ahead of the video summit, Kremlin Press Secretary Dmitry Peskov hinted that economic discussions were likely to be on the agenda for the two heads of state.

Both Russia and China are said to be increasingly looking to move away from using the US dollar as the main currency of international trade, instead using their own denominations to underpin the booming volume of Moscow-Beijing trade.

It’s probably not a bad time to get an Alipay account, if you don’t have one already.

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The Exception Proves the Nobel

The bankrupt state of modern economics is revealed by the most recent pseudo-Nobel prize award:

This year’s Laureates – David Card, Joshua Angrist and Guido Imbens – have shown that natural experiments can be used to answer central questions for society, such as how minimum wages and immigration affect the labour market. …

Another important issue is how the labour market is affected by immigration. To answer this question, we need to know what would have happened if there had not been any immigration. Because immigrants are likely to settle in regions with a growing labour market, simply comparing regions with and without many migrants is not enough to establish a causal relationship. A unique event in the history of the US gave rise to a natural experiment, which David Card used to investigate how immigration affects the labour market. In April 1980, Fidel Castro unexpectedly allowed all Cubans who wished to leave the country to do so. Between May and September, 125,000 Cubans emigrated to the US. Many of them settled in Miami, which entailed an increase in the Miami labour force of around seven per cent. To examine how this huge influx of workers affected the labour market in Miami, David Card compared the wage and employment trends in Miami with the evolution of wages and employment in four comparison cities.

Despite the enormous increase in labour supply, Card found no negative effects for Miami residents with low levels of education. Wages did not fall and unemployment did not increase relative to the other cities. This study generated large amounts of new empirical work, and we now have a better understanding of the effects of immigration.

After all, who ever heard of Miami’s economy in 1980-1984 being in any way different than in the four comparison cities? Surely, the only economic difference among the five cities was Miami’s labor supply shock. Nobody with a Ph.D. in economics has ever noticed that there was a demand shock in Miami in 1980-84.

The economics profession would like to remind everybody that one annoying unmentionable — who has been pointing out for a decade and a half that in 1980 there was a simultaneous demand shock in Miami known as History’s Most Flagrant Cocaine Boom that invalidated Card’s celebrated “natural experiment” by boosting demand in Miami for labor (whether construction workers, maitre d’s, escorts, ethically challenged bankers, drug mules, Jeb Bush, kingpins, or henchmen) — that Scarface, Miami Vice, Cocaine Cowboys, and Narcos were not published in peer-reviewed journals, so, as far as we are concerned, they don’t exist: ergo, nyaah-nyaah-nu-nyaah-nyaah, we economists have our fingers stuck in our ears so we can’t hear you!

The study was utterly idiotic, as it purported to prove that there was no decline in labor prices due to a massive increase in the labor supply, which it did through the application of the Ricardian Vice and ignoring the simultaneous increase in the demand for labor that was fueled by the cocaine industry.

But that’s what passes for the best of mainstream economics today.

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Migration is BAD for the Economy

The statistics from Denmark conclusively prove it:

The net cost of non-western immigration to Denmark, after tax contributions have been deducted, has been revealed to be nearly $5 billion a year.

Yes, really.

The Danish Ministry of Finance revealed in its annual report that the cost amounted to DKK 31 billion ($4.8 billion) in 2018, a figure that leader of the opposition Danish People’s Party, Kristian Thulesen Dahl described as “astronomical.”

“The figure is based on state spending for public services related to immigration and welfare benefits received by immigrants and included state expenditures on healthcare, child care, education, and culture,” reports Sputnik.

“By contrast, tax contributions were deducted from the total.”

Apparently, diversity isn’t a strength, it’s actually a huge drain on public resources.

The lie that “immigration is good for the economy”, and its big brother “immigration is necessary for the economy” was always a complete deception. The truth is that some immigration is beneficial to a society, but most of it is detrimental, even when it is beneficial to the economy. This is because it usually represents a permanent transfer of wealth from the native population to the parasitical newcomers.

All those Boomers who hate communism and wax eloquent and teary-eyed over immigrants should reflect upon the fact that immigration is, quite literally, demographic communism.

And quality matters far more than quantity. Mexicans create Mexico wherever they go in sufficient numbers, just as Scandinavians bring along their competence and naive cucketry wherever they settle. This is no secret to anyone, but it is a truth that has been ruthlessly obscured by relentless lies.

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Independence is Not Imperialism

The ignorant Chi-Com haters, whose perspective on China is literally 43 years out of date and who stubbornly project their own imperialism on the world’s largest nation, have now managed to completely misunderstand Xi Jinping’s policy of pursuing economic independence:

The Financial Times reported that the head of the U.S. business lobbying agency in China warned that as the Chinese Communist Party (CCP) tightens its control of COVID-19, Western executives are withdrawing from the world’s largest consumer market.

Today, as the rest of the world has reopened, American business leaders, including Mr. Ker Gibbs and Alan Beebe, Presidents of the American Chambers of Commerce in Shanghai and Beijing, are warning the CCP that the evacuation of foreigners from China may accelerate.

The British Financial Times also cites a recent survey of 338 American Chamber of Commerce members in Shanghai. The survey shows that more than 70% of companies have difficulty in attracting and retaining foreign talent. “Restrictions related to travel visas,” have become the main issue.

China’s strict entry quarantine policies include the abolition of tax incentives enjoyed by foreigners for decades; the rising cost of living in Chinese cities. Power shortages, power cuts, and increases in electricity prices, along with the CCP’s relentless surveillance, are also essential factors in driving foreign executives to return to their home countries.

China is still conducting a policy of “Zero COVID-19”. Anxious foreigners, uncertain of how long they would be locked up in their houses, quickly fled.

TFI Global points out that the flight of investors from China is due to the strict blockade by COVID-19, government surveillance, and a series of repressive economic policies implemented by the authorities.

Since last November, China has launched an all-out attack against businesses, companies, and entrepreneurs. The technology industry, education and training, private schools, and most private companies are “harvested” by the government. In the face of such anti-trade measures, investors will inevitably flee from China to escape the dictatorship.

Foreigners flee China, the separation is almost complete?, 3 November 2021

This has very little, if anything, to do with “Covid-19”. That’s merely a code word for the international financial regime, in both China and the West. And the self-deportation of foreigners is a feature, not a bug. Literally every nation in the West, beginning with America, would benefit greatly from the same behavior on the part of the foreign peoples who have invaded them. How anyone can look at the ongoing collapse of the USA due to its evil policies of mass immigration, free trade, and free speech and conclude that the failing state provides a functional model worthy of imitation, much less an ideal model that morally requires installation by force, completely mystifies me.

China is voluntarily choosing the fate that was imposed upon Russia by angry neocon imperialists who wished to punish the Putin regime for expelling its elite servants who were financializing and parasitizing the Russian economy. China is doing so because it has seen the way in which the Russian people and the Russian economy have greatly benefited from being expelled from the evil and vampiric neo-liberal world order, which in any event is in the process of collapsing. Hence all the “Great Reset” talk, which is the financial elite’s attempt to succeed itself in the aftermath of their own failure.

Unlike the Boomer-tier China critics, I have read the writings of Lee Kuan Yew, Xi Jinping, and Wang Huning. They are not only far more intelligent than their critics, they are great and admirable men who have taken on incredibly challenging burdens on behalf of their people that bear an almost unfathomable degree of difficulty. Xi and Wang may fail, like Donald Trump, or they may succeed, like Vladimir Putin. But the entire world should wish them well in their endeavors.

China does not seek world dominance any more than Russia does. That is pure projection on the part of people who not only want to rule the world, but believe it is their Satan-given right to do so. When you read stories of Chinese hunger for global domination in the media, consider the fucking source! Both Russia and China simply seek to be powerful enough to rule themselves and keep the evil globalists at bay; both countries have already suffered at their hands and both countries already possess sufficient military power to invade and occupy their neighbors more easily than the USA invaded and occupied Iraq.

What China is doing is exactly what Americans should be doing as a nation, but can’t because they have been the victims of the largest invasion in world history, and because they are demoralized, denationalized, and subjected. And it should be obvious to even the most slow-witted right now that the USA is currently on a path that will, if it is not abandoned, lead to the same horrors that both China and Russia endured in the 20th century.

UPDATE: China experts recognize that China is beginning to utilize its increasingly formidable economic power in pursuit of its geostrategic ends.

Beijing is using legislative power to punish supporters of “Taiwan independence” (again, deliberately undefined) with travel bans and prosecutions. Some people might argue back, “Well, just don’t go to China”- but it’s not as simple as that. On a business and organizational level, this is a move with huge ramifications. If you have a business, you could lose access to the huge Chinese market and never has that been more relevant in Taiwan, whose largest economic and trading partner is China. Both geography and commerce talk.

In addition, China has extradition treaties with 59 countries. While the majority of those are outside the West, this creates a legal reach stretching beyond China’s borders. Certain countries near China are willing to comply with this kind of request due to their own mutual interests in anti-separatism and unrest. Consider, for example, how Hong Kong activist Joshua Wong was banned from both Thailand and Malaysia. This means that vocal supporters of Taiwan who end up blacklisted should not assume they are safe just because they do not have a stake in China or Hong Kong, or wish to go there. Beijing is using long-arm jurisdiction.

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