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Making Piketty Irrelevant

Marco Rubio Speech On Innovation At Uber's DC Offices

From Cafe Hayek, Uber vs Piketty by Don Boudreaux:

Thomas Piketty famously argues that owners of capital grab ever-larger shares of wealth, and that the single best ‘solution’ to this alleged problem is a global tax on wealth and high rates of income taxation.  Problems galore fill Piketty’s book – including his failure to recognize that market-driven innovation and competition are incessantly creating new capital while reducing or even destroying the value of older capital, all in ways that move new flesh-and-blood people into the central ranks of the ‘capitalists’ while moving others onto the periphery of those ranks.  (Twelve years ago Mark Zuckerberg, the son of a dentist, was no one’s idea of a capitalist.  He’s now worth close to $40 billion.)

Ashley had a brilliant insight, which I share here with her kind permission: Uber(and other ‘sharing economy’ innovations, such as Airbnb) allow ordinary people to turn their consumption goods into capital goods.

HKO

Capital is increasingly a human resource, rather than a material possession.  This simple truth makes Piketty’s thesis irrelevant.

 

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Another Word for Planned Capitalism

fascism

from Soda Head, Economic Fascism by Thomas DiLorenzo

When people hear the word “fascism” they naturally think of its ugly racism and anti-Semitism as practiced by the totalitarian regimes of Mussolini and Hitler. But there was also an economic policy component of fascism, known in Europe during the 1920s and ’30s as “corporatism,” that was an essential ingredient of economic totalitarianism as practiced by Mussolini and Hitler. So-called corporatism was adopted in Italy and Germany during the 1930s and was held up as a “model” by quite a few intellectuals and policy makers in the United States and Europe. A version of economic fascism was in fact adopted in the United States in the 1930s and survives to this day. In the United States these policies were not called “fascism” but “planned capitalism.” The word fascism may no longer be politically acceptable, but its synonym “industrial policy” is as popular as ever.

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Political Money Laundering

moneylaundering

from Kevin Williamson at National Review, The Minimum Wage Con:

The worst kind of welfare state is the welfare state that is ashamed of itself and therefore feels obliged to pretend to be something it isn’t. Instead of forthrightly taxing individuals and businesses and converting that revenue to welfare benefits in an honest and transparent way, covert welfare statists usually attempt to disguise welfare payments as wages. Artificial wage increases imposed by law perform the same function as ordinary welfare benefits — transferring income from politically disfavored groups to politically favored groups — but the revenue doesn’t show up on the government ledger as taxes and the outlays don’t show up as spending. Everybody in government gets the opportunity to engage in a little delicious moral preening about how they’re doing the right thing for the hardworking people of wherever while maintaining fiscal discipline, as if the underlying facts of the policy — “Patron X shall give Client Y at least Z amount of money” — weren’t fundamentally identical to those in a transparent welfare state.

Which is to say, laws mandating wages and benefits beyond market prices are political money laundering for unpopular welfare payments. They work brilliantly: Americans have a generally low opinion of welfare programs, but large majorities of us — including majorities of Republicans — support raising the minimum wage.
In the U.S. context, what this means is that the left hand of government spends its time adding to the cost of employing Americans with wage and benefits mandates while the right hand of government spends its time trying to enact legislation that will prevent these higher costs from having their natural effect, e.g. by restricting trade with those perfidious low-wage foreigners in Germany and Sweden, or by bribing and bullying companies into knuckling under to political demands. This produces a labyrinthine network of mandates, penalties, and subsidies that is so complex as to be incomprehensible to anybody without the time and resources to make a careful study of the matter, which in effect renders the architecture of this secondary welfare state invisible to the typical voter.

Read more at: http://www.nationalreview.com/article/421716/minimum-wage-political-con-kevin-d-williamson

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Poverty and Consumer Choices

from Bernie Sanders’s Dark Age Economics by Kevin Williamson in The National Review

excerpts:

Dollars are just a method of keeping count, and mandating higher wages for work that has not changed at all is, in the long run, like measuring yourself in centimeters instead of inches in order to make yourself taller, or tracking your weight in kilograms instead of pounds as a means of losing weight. The gentlemen in Washington seem to genuinely believe that if they measure their penises in picas they’ll all be Jonah Falcon — in reality, their interns won’t notice any difference. Bernie

Sanders, the Brooklyn socialist who represents Vermont in the Senate, generated a great deal of mirth on Tuesday when he wondered aloud how it is that a society with 23 kinds of deodorant and 18 kinds of sneakers has hungry children. Setting aside the fact that we must have hundreds of kinds of deodorant and thousands of choices of sneakers, Senator Sanders here communicates a double falsehood: The first falsehood is that the proliferation of choices in consumer goods is correlated with poverty, among children or anybody else, which is flatly at odds with practically all modern human experience. The reality is precisely the opposite: Poverty is worst where consumers have the fewest choices, e.g., in North Korea, the old Soviet Union, the socialist paradise that is modern Venezuela, etc. The second falsehood is that choice in consumer goods represents the loss of resources that might have gone to some other end — that if we had only one kind of sneaker, then there would be more food available for hungry children.

Read more at: http://www.nationalreview.com/article/418926/bernie-sanderss-dark-age-economics-kevin-d-williamson

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We Didn’t Start the Fire

Marco Rubio Speech On Innovation At Uber's DC Offices

Glenn Harland Reynolds wrtites Politicos put past before progress in The USA Today:

excerpts:

Cynical or not, these statements accurately describe why economic progress is so much harder today than it once was.  But why is it so much harder?  And why are so many politicians coming out against innovative new services such as Uber or Airbnb?  The answer, I think, is simple: Those new services offer insufficient opportunities for graft.  The old services they compete with — hotels or taxi companies — offer politicians a better deal, even if the deal they offer for consumers often isn’t as good.  And politicians back the companies because — and be clear about this — politicians don’t care about you, they care about using their positions to accumulate money, power and prestige.

Just imagine that you’re a big-city mayor.  If taxi medallions — granting the right to run a taxi to a limited number of people — sell for six figures, the people who own them are heavily invested.  They’ll offer lots in the way of money, political support and votes to a politician who will protect their investment from competition. Thus, even though services like Uber (which requires no medallions) are cheaper and offer service in poor neighborhoods where taxis won’t go, for a politician, it’s a no-brainer: Support your supporters. The result is a host of regulations and taxes designed to protect old businesses from new competition.

HKO

The Uberization of America is a potent force against progressivism, and will cost them the support of the millennials.  Politicians do not sell solutions: they sell problems they create so you will give them political power to save you.  Be sure that the guy you praise for putting out the fire is not the one who started it.