Intel and labor mobility

Two points concerning labor mobility.

  •  Intel will lay off 11% of its global workforce, up to 12,000 employees, a painful downsizing aimed at accelerating its shift away from the waning PC market to one more focused on cloud computing and connected devices. In an email to employees, CEO Brian Krzanich said that after the restructuring, “I am confident that we’ll emerge as a more productive company with broader reach and sharper execution.” Intel CFO Stacy Smith said that half the workforce reduction, 6,000 people, will be accomplished by the end of this year.
  • Intel Corporation has filed 6147 labor condition applications for H1B visa and 4238 labor certifications for green card from fiscal year 2013 to 2015. Intel was ranked 14 among all visa sponsors. Please note that 602 LCA for H1B Visa and 689 LC for green card have been denied or withdrawn during the same period. Intel had filed 8065 LCA and 3423 LC from fiscal year 2001 to 2010

Interesting how those numbers are so similar, is it not? It would be informative to know how many of the 12,000 are in the USA.


Steve Keen educates a Nobel laureate

The inability to account for debt and the total failure to understand the relationship between banks and loan creation are two of the reason mainstream economics is so hapless with regards to producing functional models. The world’s most important economist explains that his professional colleagues are simply ignoring one of capitalism’s most pressing problems:

I like Joe Stiglitz, both professionally and personally. His Globalization and its Discontents was virtually the only work by a Nobel Laureate economist that I cited favourably in my Debunking Economics, because he had the courage to challenge the professional orthodoxy on the “Washington Consensus”. Far more than most in the economics mainstream—like Ken Rogoff for example—Joe is capable of thinking outside its box.

But Joe’s latest public contribution—“The Great Malaise Continues” on Project Syndicate—simply echoes the mainstream on a crucial point that explains why the US economy is at stall speed, which the mainstream simply doesn’t get.

Joe correctly notes that “the world faces a deficiency of aggregate demand”, and attributes this to both “growing inequality and a mindless wave of fiscal austerity”, neither of which I dispute. But then he adds that part of the problem is that “our banks … are not fit to fulfill their purpose” because “they have failed in their essential function of intermediation”:

    Between long-term savers (for example, sovereign wealth funds and those saving for retirement) and long-term investment in infrastructure stands our short-sighted and dysfunctional financial sector…

    Former US Federal Reserve Board Chairman Ben Bernanke once said that the world is suffering from a “savings glut.” That might have been the case had the best use of the world’s savings been investing in shoddy homes in the Nevada desert. But in the real world, there is a shortage of funds; even projects with high social returns often can’t get financing.

I’m the last one to defend banks, but here Joe is quite wrong: the banks have very good reasons not to “fulfill their purpose” today, because that purpose is not what Joe thinks it is. Banks don’t “intermediate loans”, they “originate loans”, and they have every reason not to originate right now.

In effect, Joe is complaining that banks aren’t doing what economics textbooks say they should do. But those textbooks are profoundly wrong about the actual functioning of banks, and until the economics profession gets its head around this and why it matters, then the economy will be stuck in the Great Malaise that Joe is hoping to lift us out of.

The argument that banks merely intermediate between savers and investors leads the mainstream to a manifestly false conclusion: that the level of private debt today is too low, because too little private debt is being created right now. In reality, the level of private debt is way too high, and that’s why so little lending is occurring.

I don’t agree with Keen on everything, but he is the most important, most revolutionary economist in the world today. And he is dead-on with regards to both the problem of private debt as well as the way in which banks originate, not only loans, but credit money itself.


Interview with The Right Stuff

The Death Panel are joined by special guest Vox Day.Topics include free trade vs. protectionism, The Dissolution of the US, Trump.

    0:00 Intro- Vox Interview
    1:30 Free Trade/Protectionism
    44:45 The US Breakup
    1:25:00 Sad Puppies/Rabid Puppies
    1:47:25 The SJW List

I was impressed with how well these guys know their economics. It was also interesting to see how they clearly understood the difference between the various European nationalisms and white nationalism.


Another strike against free trade

You may note that among my four points against free trade, I note that free trade is incompatible with democracy and national sovereignty. One argument I failed to note in this regard is the way in which free trade permits extortion by holding the national economy hostage:

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.

Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.

Dr. Miller mentioned that he couldn’t think of any way that foreigners buying up American assets could be a bad thing. But, once more, we have an object lesson in letting reason be silent when experience gainsays its conclusions. Free trade not only imperils democracy, but also endangers the rule of law.

Notice again that free trade theory fails due to the limited imaginations of its advocates and their inability to even conceive of potential problems that are actually occurring in the real world.

But speaking of Dr. Miller, I emailed him to broach the possibility of a second debate addressing a topic that more than a few readers observed we failed to discuss, namely, whether free trade necessarily requires the free movement of people or not. He agreed at once, although we both need to do a bit of research before we’re prepared to debate it. When we’re ready, I’ll let you know and we’ll hold another open Brainstorm event.


Notes on the free trade debate

First, Dr. Miller has graciously provided the audio of our debate at Future Strategist, which, among other things, once more demonstrates the astuteness of my decision to avoid pursuing a career in radio or anything that involves speaking in public. It’s as if the more clearly I am able to think through these complicated issues, the harder I find verbally articulating the path through them. At this point, I have to expect that if I ever come to correctly grok the fullness of all the myriad pros and cons of free trade, my verbal explanations will be reduced to seemingly nonsensical word bursts.

move… you know… war… people… um, mask of credit!

Second, since I didn’t have any reason to fully cite a few of the more interesting quotes I’d found, (for, as Spacebunny observes, a very particular definition of interesting) I thought some of you might find reading them to be illuminating. Since Dr. Miller didn’t put much effort into distinguishing between free trade in goods and free trade in labor, there wasn’t any point in doing more than mentioning these statements in passing. But many free traders do attempt to make the distinction, which is why I believe they are worth noting.


Milton Friedman, “What is America” lecture at Stanford:

There is no doubt that free and open immigration is the right policy in a libertarian state, but in a welfare state it is a different story: the supply of immigrants will become infinite. Your proposal that someone only be able to come for employment is a good one but it would not solve the problem completely. The real hitch is in denying social benefits to the immigrants who are here. Look, for example, at the obvious, immediate, practical example of illegal Mexican immigration. Now, that Mexican immigration, over the border, is a good thing. It’s a good thing for the illegal immigrants. It’s a good thing for the United States. It’s a good thing for the citizens of the country. But, it’s only good so long as it’s illegal.

Ludwig von Mises, Liberalism, Chapter 8. Freedom of Movement

The natural conditions of production and, concomitantly, the productivity of labor are more favorable, and, as a consequence, wage rates are higher, in the United States than in vast areas of Europe. In the absence of immigration barriers, European workers would emigrate to the United States in great numbers to look for jobs. The American immigration laws make this exceptionally difficult. Thus, the wages of labor in the United States are kept above the height that they would reach if there were full freedom of migration, whereas in Europe they are depressed below this height. On the one hand, the American worker gains; on the other hand, the European worker loses.

However, it would be a mistake to consider the consequences of immigration barriers exclusively from the point of view of their immediate effect on wages. They go further. As a result of the relative oversupply of labor in areas with comparatively unfavorable conditions of production, and the relative shortage of labor in areas in which the conditions of production are comparatively favorable, production is further expanded in the former and more restricted in the latter than would be the case if there were full freedom of migration. Thus, the effects of restricting this freedom are just the same as those of a protective tariff. In one part of the world comparatively favorable opportunities for production are not utilized, while in another part of the world less favorable opportunities for production are being exploited. Looked at from the standpoint of humanity, the result is a lowering of the productivity of human labor, a reduction in the supply of goods at the disposal of mankind. Attempts to justify on economic grounds the policy of restricting immigration are therefore doomed from the outset. There cannot be the slightest doubt that migration barriers diminish the productivity of human labor. 

Gary North, “Tariffs as Welfare-State Economics”, Mises Institute

The ethics and economics of restricted trade surely apply to the person who wants to trade on the other side of the invisible line known as a national border. If the arguments for restricted trade apply to the American economy, then surely they apply to the other nation’s economy. Logic and ethics do not change just because we cross an invisible judicial line.Any time a government sends out a man with a badge and a gun to restrict trade, this is an act of war. Nobody should favor a restriction on other people’s trade unless the results of that trade are comparable to the results of trade during wartime.

What I find interesting about these defenders of the free movement of people, or if you prefer, free trade in labor and services, is that although the greatest among them, Ludwig von Mises, clearly recognized the potential flaw in his pro-free trade position, he not only uncharacteristically chose to wave it away, but to the extent he considered it at all, he reached what is now obviously a completely wrong conclusion.

This issue is of the most momentous significance for the future of the world. Indeed, the fate of civilization depends on its satisfactory resolution. It is clear that no solution of the problem of immigration is possible if one adheres to the ideal of the interventionist state, which meddles in every field of human activity, or to that of the socialist state. Only the adoption of the liberal program could make the problem of immigration, which today seems insoluble, completely disappear. In an Australia governed according to liberal principles, what difficulties could arise from the fact that in some parts of the continent Japanese and in other parts Englishmen were in the majority?

To continue from my observation in last night’s debate, this is a 20th century defense of an 18th century argument that sounds utterly insane in the face of 21st century realities. Consider the application of this argument to current events:

In a Sweden governed according to liberal principles, what difficulties could arise from the fact that in some parts of the country Syrians and in other parts Swedes were in the majority?

What difficulties indeed?  Anyhow, it has become increasingly apparent to me that the lack of concern about national sovereignty shown by free traders is akin to that demonstrated by libertarians, and reflects a fundamental conflation of the concept of “the nation” with the concept of “the state”. They simply don’t understand that their positions are logically self-refuting in addition to being empirically false.

UPDATE: The paper I mentioned, Trade Wars, Trade Negotiations and Applied Game Theory, by Glenn W. Harrison and E. E. Rutström, can be found here


The Free Trade debate

At 7 PM Eastern, the free trade debate between Dr. James
Miller, PhD, JD, and Associate Professor of Economics at Smith College, and Vox Day, Supreme Dark Lord of the Evil Legion of Evil, will begin.

There are 250 seats left, and you can register for the free event here

This is an open thread for those watching the debate to discuss it as it is happening. Please be polite to Dr. Miller regardless of whether you agree with him or think well of his arguments or not. As for me, well, feel free to identify any holes in the arguments I present… if you can.

UPDATE: Great turnout for such an esoteric matter. 278 people showed up over the course of the event. We held a show of hands before and after the debate. The numbers aren’t even because there were 170 people at the beginning and 215 at the end.

FREE TRADE PRO: 35 to 24
FREE TRADE ANTI: 80 to 110
NEUTRAL: 55 to 50

While Dr. Miller graciously conceded the actual debate, I think he nevertheless won the evening with his AI bombshell. It was spectacular.


Brainstorm debate: Free Trade

As I mentioned, tonight at 7 PM Eastern I’ll be debating Dr. James Miller, Associate Professor of Economics at Smith College, on the topic of free trade. Dr. Miller has a PhD from the University of Chicago and is the author of Game Theory at Work and Singularity Rising: Surviving and Thriving in a Smarter, Richer, and More Dangerous World.

There are 440 seats left, so if you’re interested and you plan to attend, you can register for the free event here

This promises to be interesting. PhD from THE monetarist school vs BS from a econ department of Keynesians and socialists. Game Theorist vs Game Designer. Academic vs gamer.

The folks on Twitter don’t appear to like my chances of success. The worst odds that have been given against me are 68-1. On the other hand, Nate refuses to throw in the towel: Speaking as someone who’s actually debated you. I’m going to say the poor bastard has no idea what he’s in for.

So, whose chances do you like better? Looking at it objectively, I’d have to say that if I can somehow manage to win this one in a convincing fashion, I’m probably smarter than I think I am. There is only one way to find out.


Challenge accepted

A professor of economics with a PhD from the ultimate monetarist school throws down a gauntlet, albeit in a considerably more civil manner than I’ve come to expect from my critics:

I’ve recently started a podcast called Future Strategist and I would love to interview you by Skype audio.  We could discuss political correctness and debate free trade.  While I do not support open borders for people, I do support free trade in goods and while I doubt I could get you to change your opinion I hopefully wouldn’t underwhelm you as have other economists.

James Miller
Associate Professor of Economics, Smith College
Phd University of Chicago

I have accepted Dr. Miller’s challenge to debate free trade. More details to come.

By the way, he’s the author of Game Theory at Work, so he’s obviously a smart guy. We’re going to do one podcast discussion of political correctness first – he obviously won his 2003 tenure battle – and then we’ll do the debate, Game Theorist vs Game Designer.

UPDATE: Dr. Miller and I have decided to simply do the free trade debate, and we’ll do it at the Brainstorm on Wednesday. Invitations have already gone out to the Brainstorm members. Once all the members interested have taken their seats, I’ll open the remaining ones up to everyone else on a first-come, first-serve basis.

This is the sort of thing that Brainstorm makes possible, so if you want to be a part of it, consider signing up for an annual membership.


On being underwhelmed by economists

One of the things I’ve learned about the internet is that it has a way of stripping the intellectual glamor from those one had reason to respect for one reason or another. I discovered that Thomas Sowell was rather less bright than I’d believed when I had a direct personal encounter with him over Michelle Malkin and Pearl Harbor. And it was disappointing to learn that Thomas Woods is considerably more conventional, and considerably less serious, as an economist than I’d imagined him to be.

Supreme Dark Lord @voxday
Free trade advocates don’t realize
they’re supporting a failed theory that never applied to modern
economies or technology in the 1st place.

Bent Nail Retweeted Supreme Dark Lord@ThomasEWoods  free trade failed Tom…just like the non-aggression principle .only works if all comply.

Supreme Dark Lord ‏@voxday
No, it doesn’t work at all. Free trade is totally incompatible with having a nation.

Tom Woods ‏@ThomasEWoods
No, that’s completely wrong. Why not block out the sun? It’s not playing fair, giving all that light for free!

Tom Woods ‏@ThomasEWoods
“Having a nation” = “forcing people to pay higher taxes to the sociopaths who oppress them.” Got it.
Supreme Dark Lord @voxday
I mean literally having a nation at all. With true free trade, HALF of Americans under 35 will have to emigrate.

Tom Woods ‏@ThomasEWoods
Especially the US lightbulb industry, which deserves to suck at the proverbial teat forever. Nationhood demands it

Woods is a good Austrian, in the economics sense, but he’s obviously in over his head here. I am entirely confident that he has literally never considered the obvious consequences of free trade from a labor mobility standpoint, despite the fact that labor mobility is a necessary component of free trade from theoretical, logical, and empirical standpoints.

In fact, with a very few number of exceptions, such as Gary North, who rejects the core concepts of “nations” and “borders”, I daresay that fewer Austrian economists understand that their free trade dogma is absolutely antithetical to the survival of Western civilization than libertarians grasped that their open borders policy was self-refuting twenty years ago.

I find it amusing because the conversation usually goes like this:

FREE TRADER: Free trade is good! Just look at how domestic free trade has benefited the US economy!

VOX DAY: Very well. Now look at US labor mobility rates.

FT: (stricken look) Um, labor mobility isn’t necessarily part of free trade.

VD: Yes, it is. But more importantly, it is observably part of the US economy.

FT: (wide-eyed horror, crash, reboot) Why not block out the sun? Japan! 1970s automakers! Ricardo! Smoot-Hawley!

They literally have no comeback for this argument, because most of them are unwilling to openly declare themselves anti-American globalists who don’t believe in nations, let alone national sovereignty, let alone the US Constitution. And that is the only rational response that remains to them if they are going to retain the free trade dogma.

I have yet to hear a single free trader even TRY to respond to my point that if the international economy was opened up to free trade to the extent that the domestic economy is, US labor mobility indicates that nearly half of all Americans would be forced to emigrate by the time they turn 35.

Free trade. Nations. Pick one.


Cheap at the price

Critics complain Trump’s deportation plan would cost $500 billion:

Presidential candidate Donald Trump’s plan to deport all undocumented immigrants would cost between $400 billion and $600 billion and take at least 20 years to implement, according to a report from the American Action Forum.

The report estimates that there are currently 11.3 million undocumented immigrants currently living in the United States. To deport them, these individuals would have to be apprehended, detained, legally processed, and transported back to the country they originated from.

In order to do this in two years like Trump has proposed, the report estimates that there would need to be 90,582 federal immigration apprehension employees, 348,831 immigration detention beds, 1,316 immigration courts, 32,445 federal attorneys to process undocumented immigrants, and a minimum of 17,296 chartered flights and 30,701 chartered bus trips.

“If the federal government were to remove all undocumented immigrants in only two years, it would require a massive expansion of the federal government’s immigration enforcement personnel and infrastructure,” states the report.

The report says that if the federal government began enforcing mass deportation, about 20 percent of undocumented immigrants would begin to leave voluntarily which would leave about 9 million illegal aliens in the country. Currently, U.S. Immigration and Customs Enforcement only has the capacity to remove 400,000 undocumented immigrants in one year.

“That means if ICE were to operate at its current maximum capacity, it would take over 20 years to remove 9.04 million undocumented immigrants,” states the report. “To remove those 9.04 million immigrants in two years, ICE would have to remove 4.52 million immigrants per year. That is 11.3 times larger than ICE’s current maximum capacity.”

I can solve those problems easily. The answer is private enterprise. The AAF estimate claims a cost of $55,555 per individual deported. So, the cost can be cut to less than $100 billion by simply offering a $10,000 bounty on every illegal immigrant delivered to a station on the Mexican border. Assume that it costs $5k to do a quick identity check to confirm their status and transport them home.

That means the USA would be saving nearly $250 billion per year based on the $346 billion per year that illegal aliens cost as estimated by the National Research Council. Trump is not only right to call for deportations, but America can’t afford NOT to round them up and repatriate them.