Tag: policy

GameStop: Please Stop the Nonsense

The recent surge in the stock price of GameStop has all the usual suspects commenting on “The Greater Meaning of it All”.  As usual, very few of these recently minted experts know what they are talking about. Among the more mindless analyses being tossed about is a populist “narrative” that claims that Everyman has risen up to squeeze short selling Wall Street hedge funds. These hedge funds, it is alleged, have been stealing from the common man in a rigged game for years. 

Among those making variations of this charge are: Ted Cruz, Alexandria Ocasio-Cortez (AOC), Elizabeth Warren and Bob Frank. That these four are in rough agreement ought to be the first sign that something is seriously amiss. Consider for a moment the backgrounds of those who are busy defending Everyman against wicked elites. For instance Ted Cruz is a product of Princeton (BA in public policy 1992) and Harvard Law (magna cum laude 1995). Elizabeth Warren worked as a Law Professor both at the University of Pennsylvania and at Harvard Law School before becoming a Senator from Massachusetts. Hardly downtrodden. 

AOC, who does not have the same pedigree, made a point of noting that the “solution” to the non-problem of GameStop is to tax the rich. Her reasoning being that taxing the rich is pretty much the solution every problem, real and imagined. Then there is the commentary of Robert Frank, a journalist at CNBC. His contention is that the Reddit inspired run up in GameStop is “calling attention to” the vast inequality of stock ownership in the United States. It has to be seen to be believed.

The interesting thing is that Frank has spent an awful lot of time writing books and columns about the horrors of inequality of outcomes, but apparently sees no relationship between savings, investment, risk-taking and financial reward. 

Frank seems to be bothered by the fact that the upper 1% owns the lion’s share of financial assets. Well of course they do. That same 1% is the cohort that is an important source for risk-taking, innovation, investment and, not to put too fine a point on it, bearing an outsized share of the tax burden. The upper 1%, for instance, pays about 45% of all income taxes. 

The population up and down the (ever changing) income scale makes choices about how to allocate its funds between consumption now, investment and deferred consumption. Nobody needs Bob Frank shouting audibles from the sidelines. 

But let’s look a little further. Why would anyone who has the slightest clue of how the stock market works lament the fact that most retail investors are not involved in the GameStop fiasco? The undeniable fact is that a bunch of amateurs bought the stock not because it is a fundamentally good investment; they bought it because they thought they would profit from an old fashioned short squeeze. And a small minority will profit. But the vast majority of retail traders are now in the process of getting their clocks cleaned. And rightly so. They are in way over their heads.  

As of this writing, GameStop is down 113 points or 50% from yesterday’s close, after yesterday’s 40% drop. All of which means that the stock market is doing what it’s supposed to do. 

Despite all the anguished cries from the ignorati, the stock market is not broken. It is doing exactly what it is supposed to do. In the process it is separating fools from their cash. That is hardly a novel occurrence. 

JFB

Joe Biden’s “American Recovery Plan”

“Drink coffee and do stupid things even faster” — Sign in a coffee shop. 

Apropos the sign, an avalanche of stupidity is coming our way.  Just 5 days away from his inauguration, President-elect Joe Biden has outlined the first part of his “American Recovery Plan”. It is virtually indistinguishable from the progressive wish list Nancy Pelosi has been going on about for the last 20 years or so. The only difference is that now progressives actually have a shot of getting what they have always wished for. 

Consider just some of the proposals being put forward in the spectacularly misnamed American Recovery plan. To begin with, the price tag for this monstrosity is $1.9 trillion. That comes right after the $900 billion relief package Congress passed just last month. Not to mention the $2.2 trillion CARES act Congress passed in March of 2020. And this is only phase 1 of the Biden proposal. He promises more, fully backed by Bernie Sanders as the upcoming chair of the Senate Budget Committee. 

If Congress approves the Biden phase 1 package it would amount to $5 trillion in additional spending thus far for Covid and Covid marketed relief efforts. That spending is over and above the normal appropriations for running the government, all passed in a 10 month period. And it’s all done with borrowed money.

So let’s look at some specific proposals. Among other things that have absolutely nothing to do with Covid, Biden plans to increase the minimum wage to $15 an hour. If enacted, this is guaranteed to make things worse for the people who are the supposed beneficiaries. 

The unemployment rate is highest for people with low incomes and relatively little formal training. Plenty of these people work in the hospitality industry, specifically restaurants, which are among the hardest hit by the pandemic. Recent survey data suggest that about 110,000 restaurants, about 17% of the total, have closed their doors permanently because of Covid. 

The Biden solution is to raise the cost of labor for an industry in free fall. Very clever. Not only that, the restaurants that survive will simply switch their compensation systems to a European style one in which customer costs associated with tipping are built into menu prices (service compris) and tips are eliminated. The effect will be lost jobs and reduced employee compensation for those who keep their jobs.  Oh, and the survivors’ tax bills will rise because, let’s face it, virtually nobody reports all their tips to the IRS. 

Other goodies in the package include checks for $1,400 to round it up to $2,000. Schumer and Pelosi  have indicated that they are enthusiastically on board.  What this is supposed to accomplish beyond the buying of votes is left unspecified. And of course, this is to be financed, by more borrowing, because we are assured “there is plenty of money available”.

Another $350 billion or so is slated for “emergency” relief for state and local government finances. Translated into English, this means that the states that manage their finances well will be required to bail out predominantly blue state public pension plans that are underfunded to the point where in some cases, like Illinois, they are approaching insolvency. And not to put too fine a point on it, the sorry state of pension finance has nothing whatsoever to do with Covid. Bailing them out will just put off the day of reckoning until it gets  worse. 

Another $170 billion will be forked out “so that schools can re-open”. But of course, the schools didn’t need to close and stay closed in the first place. This is just a gift to the politically powerful teachers unions who have argued for closing the schools and keeping them closed. 

Private schools have opened independent of the state. And not just the elite ones. The K- 12 Catholic schools in Massachusetts opened successfully and have had almost no Covid infections. In other places, relatively affluent parents (like here in Fairfax County) have hired private tutors to run learning pods for groups of children. 

Needless to say, the teachers unions have opposed these efforts while fighting to keep the schools shut down for in-person learning. This is in spite of the fact that already the data clearly show a catastrophic fall-off in the academic performance of disadvantaged children. Let’s face it, the public schools are run for the benefit of the staff, not the kids. That’s why the kids are being sacrificed.

As more details of the Biden plan seep out, it will become clear to all with eyes to see that the Biden trajectory is simply Obama redux on steroids (or perhaps coffee).  It will be all about centralization, command and control. The crushing hand of the state will weigh in on every decision. Fantasies aside; there is nothing moderate about it. 

JFB

Joe Biden–Man of Science

Joe Biden, who during the campaign repeatedly insisted that he relied on “the science” in formulating policy proposals has just tossed science overboard. According to the Washington Post, a spokesman for the President-elect said that the incoming administration “…will release nearly every available dose of vaccine in the United States after Biden takes office Jan. 20 to get supplies quickly out to the states.”

The result of this policy change is to change the vaccination regimen so that the second shot—the booster shot—will be given 84 days after the first shot rather than the 21 to 28 days for which the vaccines were scientifically tested. 

When Britain first proposed a three-month wait for the booster shot, scientists in the U.S., Europe and the World Health Organization were, in the words of the Washington Post, “dubious”. Earlier this week the FDA said such a move would be premature and “not rooted solidly in the evidence”.  Moreover, the testing done so far suggests the efficacy of getting only 1 shot of the vaccine slips from 95% down to only 52%—a staggering fall. 

But it allows Joe Biden to look like he is doing something, which of course, is the point of the exercise. 

The proposed policy change is liable to do far more harm than good. The current policy is to put the most vulnerable and front line medical personnel first for the 2 shot regimen.  The new policy will leave the most vulnerable more exposed to a fatal infection than they would have been otherwise, without necessarily doing anything to reduce the spread f the disease. 

To the extent that more people have limited protection, but the most vulnerable have less, there is a greater likelihood that the most vulnerable will suffer more fatalities. But it doesn’t end there. Providing a broader range of the population with limited protection will in all likelihood protect people who don’t need it at the expense of people who do. Not only that, delaying the second shot, gives the virus more time to adapt. This increases the time that the virus has to adapt to the new (and weaker) vaccine and develop resistance to it. 

The likely end result will be to (1) increase the fatality of the disease with older, more vulnerable populations, while (2) having little to no effect on the rest of the population and (3) delaying the onset of herd immunity.

But it will show that Joe Biden is doing something. 

There actually is something that can be done about the slow rate of vaccine take-up. The first thing to do is to understand the problem, which is a logistics problem, not a supply problem. The most difficult part of any complex distribution network is the “last mile”. A bureaucratic command-and-control system implemented by government is the last way a complex distribution system should be engineered. 

The obvious way to handle the problem is to go to people who are experts at this. They live in the private sector at places like Amazon, Walmart, CVS and the like. Having financed the development of the vaccines, which was a good idea, government should contract with the private sector to handle distribution. That would solve the problem, or at least improve distribution efficiency. 

Unfortunately, it is also something that progressive control freaks are unlikely to do. 

JFB

Reason TV on Judge Amy Coney Barrett

As the leftist hysteria continues to mount on Donald Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court, it may be a good idea to take a look a the libertarian perspective. Here below is a short video from Reason TV that provides such a look.

Reason TV on Judge Amy Coney Barrett

Judge Amy Coney Barrett

The Party of Science is about to make yet another spectacular display of its rampant anti-intellectualism as it gears up to contest the nomination of Judge Amy Coney Barrett to the Supreme Court. Among other things, we are told that Judge Barrett should be denied a seat on the nation’s highest Court because she has 7 kids, 2 of whom are non-white adoptees from Haiti. Trans racial adoption is supposedly evidence of racism. Then again, for progressives, everything is evidence of racism of one sort or another. 

One Democratic operative went so far as to insinuate (without evidence as CNN loves to report about Donald Trump) that Judge Barrett and her husband may have illegally spirited the 2 children in question out of Haiti. Dana Houle, a Democratic operative, recently tweeted that “[He]… would love to know which adoption agency Amy Coney Barrett and her husband used…Some adoptions for Haiti were legit. Many were sketchy as hell. And if the press learned they were unethical and maybe illegal adoptions, would they report it? Or not bc it involves her children.” 

Needless to say the airwaves haven’t been full of progressive objections to this sleazy innuendo. 

We have also been treated to attacks on Judge Barrett as being emblematic of the submissive women in Margaret Atwood’s dystopian novel the Handmaid’s Tale. This despite the fact that she graduated #1 in her class at Notre Dame Law school, served as executive editor of the Notre Dame Law Review, served as a clerk for Justice Antonin Scalia, served as a tenured Professor at Notre Dame Law school where she was awarded the Distinguished Professor of the Year 3 times, and despite the quality of her academic publications as well as her signed opinions as a federal appeals Court judge on the 7th circuit. 

Judge Barrett’s long publication record will be used —misused actually—to distort her positions on legal and political questions. Then again it is important to understand that truth is of little importance to Judge Barrett’s progressive opposition. Their goal is to make the confirmation vote as costly as possible for Republicans. Their chosen tactic will be to smear the Judge and her family with personal attacks on her religious beliefs and her policy preferences, and then imply that the Judge will use her position on the Court to impose those beliefs on the nation. 

The irony in this is obvious. It is progressive justices who have done precisely that, arguing that the Constitution is a “living breathing” document; apparently believing it is a document only capable of breathing progressive doctrine. And here it is worth considering what Judge Barrett has actually said and written.

For example, when during her 2017 confirmation she was queried about if and when it would be proper for a judge to impose her personal beliefs when applying the law, this is how she responded. (See The Washington Post).

“Never. It’s never appropriate for a judge to impose that judge’s personal convictions, whether they derive from faith or anywhere else on the law.” 

This is where the rubber meets the road. Progressives and Democrats are united in their opposition to Judge Barrett precisely because she actually believes and acts in a way that progressives only pretend to. The proof is in the campaign against her. Progressives argue that she “will take your health care away”, that she will “restrict abortion rights”, that she has had the effrontery to write that 2nd amendment rights are not second class rights, and that she will not show sufficient deference to a bureaucracy dominated by progressives. 

These are all complaints about preferred policy outcomes; they are not legal arguments. Courts are not supposed to be super legislatures. Ruling on the law as written is what judging is supposed to be about. In a democracy changing the law requires gathering the votes to do so. The more important the change, the larger the required margin. That requires using powers of persuasion to develop a legislative consensus.  

That is why Amy Coney Barrett is such a threat to the control freaks who call themselves progressives. By adhering to the law as written, she respects the structure of the U.S. government as it was founded, with its checks and balances designed to allow a functioning democratic government while protecting individual people’s “unalienable rights” from the majority’s passions of the day. 

She should be confirmed without delay. 

JFB

Competing Nightmares

We live in a strange political times. One of the strangest things of all is that winning candidates get elected because of who they are not. Donald Trump got elected in 2016 because he was not Hillary Clinton. If Joe Biden gets elected in 2020 it will be because he is not Donald Trump. If Donald Trump manages to get re-elected it won’t be because of his sterling personality. It will be because Biden’s habit of playing footsie with his party’s increasingly assertive radicals is a bridge too far. Or because his obvious problems with cognitive decline have become too obvious to ignore for suburban voters who decide he is not worth the risk. The devil you know and all that. 

Consider the theme that Michelle Obama rolled out on the first night of the convention: Empathy. Joe Biden is empathetic; he is one of us; he knows what you are going through and he is here to help. As a matter of electoral strategy this is probably a pretty smart move, especially when it’s part of a larger bait-and-switch effort. After all, it’s a lot easier getting people who like you to vote for you. Especially when you consider that President Trump, during his tenure, has displayed about as much likability, decency and empathy as say, Ted Bundy. (Apologies to Ted.)

The problem is that all the empathy and flag waving doesn’t cover up the stark reality of the situation, which is that the Democratic Party is increasingly driven by its most radical members. Those members have graduated from being frustrated junior-high hall monitors to legislators. And they include Kamala Harris, the imaginary centrist whose voting record in the Senate is a bit to the left of Bernie Sanders. As a result the values of the party’s leadership and the party’s members are increasingly at odds. Consequently, the party has chosen to emphasize “moderation” in its messaging, but its policy preferences are actually those championed by its radicals. 

The truth is, if Biden is elected and the Democrats take the Senate and hold the House, the U.S. is in for a ride on the wild side. The Democratic Party has promised massive increases in taxing, spending and borrowing. They have promised to include in the Fed’s mandate a requirement for the central bank to seek racial equity. For those unfamiliar with the code, “equity” refers to equal outcomes, not equal opportunity. They have proposed lowering the age for Medicare eligibility from 65 to 60 even though the program is already insolvent.  The party seeks to increase payments and eligibility for Social Security by increasing taxes on “the rich”.

The Party has announced that it will seek to eliminate the Senate filibuster “if necessary”.  The Party has threatened to pack the Supreme Court and to eliminate the Electoral College. And don’t be surprised to see the party seek the imposition of a wealth tax. 

Yes, Joe Biden is not Donald Trump. And he is not a psychopath. But that hardly justifies the enthusiastic embrace of economic illiteracy. Which is an accurate description of the policy prescriptions of Joe Biden and the party of which he is nominally in charge.

JFB

Battleground

The phrase battleground state has taken on a whole new meaning. 

As reports from various urban battlefields come in, the picture of what is happening is becoming clear. Let’s summarize. (1) In a number of American cities protests turn into organized violence once nightfall arrives. The violence does not appear to come from protesters, but appears to come from organized groups intent on stoking and escalating violence.  (2) Federal law enforcement officers have been ordered to some areas by the Trump Administration with orders to protect federal property. It appears that at least some federal law enforcement officers  have engaged in conduct that is clearly illicit. That conduct includes but is not limited to detaining citizens, handcuffing them and then releasing them without any justification or charges. Further, the evidence strongly suggests that some of these detentions were conducted by federal officers without proper identification using unmarked vehicles. Moreover some of these detentions have taken place well beyond perimeters established for protecting federal property. (3) Local authorities have been unable or unwilling to contain the violence. 

For some perspective, it is worth taking a look at what is going on in some (but not all) cities. The You Tube video (below) taken in Portland is an example of the violence; but it is not necessarily generalizable to other cities. On the other hand it is worth noting that the national media has been reluctant to characterize this type of violent behavior as violent as … violent.

Protest in Portland Oregon

Further complicating matters is the legal situation.  The extent of federal authority to intervene  to establish order absent a request from local authorities is unclear. Certainly the federal government may use federal law enforcement to protect federal property. But that authority is  narrow. It seems reasonably clear that federal law enforcement lacks the authority to free-lance and expand its mission beyond the narrow one of protecting specific federal properties. It certainly does not empower law enforcement to go searching for alleged miscreants outside of narrow perimeters established to protect lives and federal property. 

It is also clear that local law enforcement is not enforcing state and local laws. And the reason for it is that they have been instructed not to do so by locally elected officials. In the U.S. system it is elected officials, not police who are charged with determining the extent to which the laws will be enforced. Moreover the police have no legal obligation to protect lives or property, which is to say they are not vulnerable to a civil lawsuit for a willful refusal to protect lives or property. This is further complicated by the legal doctrine of “qualified immunity” which makes it virtually impossible for police officers to be sued individually for their behavior, no matter how outrageous. 

Let’s also note that it is highly probable that the Trump Administration has escalated the situation simply for political advantage in the upcoming election. It is also the case that  Democratic office holders are fairly silent about the violence because (1) they see no need to comment while Trump is busy committing political suicide and (2) they see no profit in antagonizing the party’s left wing, which they need to prevail in November. 

So what is to be done?

The simple answer is that the remedy lies at the ballot box. Local officials are for the most part responsible for managing police and setting policy. They have the legal authority to determine the extent to which public resources will be deployed to enforce state and local laws. The line of both authority and accountability runs straight from the citizenry to the ballot box to elected officials. The same logic applies to federal elections. 

Citizens, who are sovereign, have a democratic choice to make. They can elect federal, state and local officials who promise to enforce the laws on the books to protect lives and property when they are threatened. Or they can elect officials who think it is more important to deploy public resources in other ways they deem to be more important. Citizens can also choose to elect local public officials who will take responsibility for the management of public agencies like police departments and education bureaucracies, or they can continue to vote for officials beholden to public sector unions. Citizens who don’t like the results can leave. 

Those are the harsh realities; but they are realities. To govern is to choose. Unless citizens hold elected officials accountable for conditions on the ground over which they have control, results will not change. We will simply have more of the same until the next explosion. That seems to be where we are headed. 

JFB