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The Appeal of the Apolcalypse

apewithskull

Kevin Williamson at National Review addresses the zero sum thinking in The New New Malthusians:

excerpt:

For well over a century after Malthus’s death, variations on his prophecy — that growing human populations would eventually overwhelm the world’s natural resources, resulting in famine and other unpleasantries — thrived. They are, in fact, the most popular genre of political writing. Apocalypticism is the great survivor of the world of ideas, mutating as necessary: Many popular modern libertarian figures, natural enemies of the Malthusian creed, make a good living promising that disaster lurks just around the corner, and that it can be best weathered with a large investment in gold coins or freeze-drying equipment for your bunker. A form of Austrian economics (often half-understood) “guarantees” this outcome in much the same way that Malthus’s calculations “guaranteed” mass starvation some years ago.

Malthusian thinking, like a member of the Clinton family, can survive practically any public-relations disaster. In 1980, there was a famous bet between Paul Ehrlich, Malthusian par excellence and author of The Population Bomb, and Julian Simon, a fellow at the Cato Institute, regarding the prices of a handful of widely used metals (chrome, copper, nickel, tin, and tungsten). Ehrlich believed that the Earth was running out of resources, and that scarcity would send the price of these metals higher, while Simon believed that human ingenuity and the creative power of capitalism would lead to abundance, and hence to lower prices for those benchmarks. Simon was right, Ehrlich was wrong. But there is almost no price to pay for being wrong if you are wrong in the service of that which is popular — see the case against free trade — and Ehrlich remains an important intellectual figure for progressives, especially for environmentalists.

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The Essence of Restraint

george_will

From National Affairs George Will writes The Limits of Majority Rule. :

an excerpt:

If the sole, or overriding, goal of the Constitution can be reduced to establishing democracy, and if the distilled essence of democracy is that majorities shall rule in whatever sphere of life where majorities wish to rule, then the Court is indeed a “deviant institution.” But such a reductionist understanding of American constitutionalism is passing strange. It is excessive to say, as often has been said, that the Constitution is “undemocratic” or “anti-democratic” or “anti-majoritarian.” It is not, however, too much to say that the Constitution regards majority rule as but one component of a system of liberty.

The principle of judicial restraint, distilled to its essence, frequently is the principle that an act of the government should be presumed constitutional and that the party disputing the act’s constitutionality bears the heavy burden of demonstrating the act’s unconstitutionality beyond a reasonable doubt. The contrary principle of judicial engagement is that the judiciary’s principal duty is the defense of liberty, and that the government, when challenged, bears the burden of demonstrating that its action is in conformity with the Constitution’s architecture, the purpose of which is to protect liberty. The federal government can dispatch this burden by demonstrating that its action is both necessary and proper for the exercise of an enumerated power. A state or local government can dispatch the burden by demonstrating that its act is within the constitutionally proscribed limits of its police power.

HKO

I highly recommend reading Will’s entire essay

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Making Elites Feel Better About Themselves

from Nikki Johnston-Huston at Huffington Post, The Culture of the Smug White Liberal:

unable to copy excerpts, but this is a classic, and I encourage you to link and read the whole thing

“The Truth is that Liberalism is about making elites feel better about themselves and their lives without requiring the underlying action of significantly improving the lives of African Americans.”

 

 

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The Volatility of Velocity

George Gilder

George Gilder

Milton Friedman’s basic theory was MV=PT. The supply of Money times its Velocity or turnover equals the Price level times the number of Transactions.  Milton assumed the Velocity was relatively fixed and that therefore the control of the supply of money was the basis for controlling inflation. Experience has proven that the velocity is no where close to fixed and has fluctuated widely, usually  in response to fiscal friction costs and consumer and investment concerns. The likely reason that prices have not inflated and that the recovery has been so week this cycle is that the velocity has remained low.

In 1976 Friedman suffered a crippling intellectual trauma that for the rest of his life seriously affected his thinking. The king of Sweden awarded him a Nobel Prize for economic science, specifically for his errors— his monetary theory and his permanent income hypothesis. In an intellectual lapse common among Nobel laureates, Friedman continued to defend these ideas long after their validity had collapsed empirically.

The one thing we know from empirical experience is that velocity is not constant. Not even close. Through most of the twenty-first century, velocity has fallen like a rock one year and soared like a rocket the next. The money multiplier— a velocity enabler measuring how much economic activity the Fed’s monetary base or “high-powered money” supports— swings between 3.1 and 12. Over the seven years following the 2007– 2008 financial crisis, the U.S. monetary base rose, as just noted, from $ 800 billion to $ 4 trillion, but velocity plummeted. In Japan velocity has been sinking for two decades after soaring wildly in the 1980s. In the United States, as Louis Gave of Hong Kong’s Gavekal economics asserts, “velocity is eminently volatile and impossible to forecast.” 7

Gilder, George. The Scandal of Money: Why Wall Street Recovers but the Economy Never Does (Kindle Locations 667-676). Regnery Publishing. Kindle Edition.

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Inventory Growth

From Barron’s Stephanie Pomboy: A Grim Outlook for the Economy, Stocks by Leslie Norton

What’s caused this growth in inventories?

It isn’t because companies ramped up production. Companies aren’t using cheap capital to increase production and capital expenditures, but are lavishing money on shareholders instead. They bought the lie that consumer spending would turn up any moment, and produced at the same pace. Now they find themselves with a monster inventory overhang. Inventory-to-sales ratios across a variety of industries—manufacturing, machinery, autos, wholesale—are at the highest level since 2009. In prior inventory liquidation cycles, nominal GDP growth is cut in half during the liquidation phase. As for profits, we’re starting with five negative quarters and we haven’t even begun the inventory liquidation cycle. So the second half will be a real eye-opener.