La citation du jour

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."

-Cicero, 55 BC

L'illétrisme économique et Wal Mart

Via le blogue de David Descôteaux:

VENDREDI 9 JUILLET 2010

Wal-Mart isn't the villain here

(Published in Metro)

A sticky Saturday in my backyard. The kids are gushing sweat like two BP wells.

“Ok. I’ll go to Wal-Mart and buy a swimming pool.” Across the fence, my neighbour Stephanie is sunbathing. She jumps up. “Wal-Mart? They get their stuff from workers paid $1 an hour in foreign countries while people here are losing their jobs!”

Here we go again …

Stephanie was probably at the G20 summit throwing stones at police last week. She has good intentions, but a poor understanding of economics.

“Stephanie,” I say. “You focus on one visible aspect of free trade, and ignore other crucial effects.

“Suppose Ben gets a bicycle from Jerome for $100. Suddenly, Canada opens up to international trade. Ben can now buy an Indian bicycle for $20. Four things happen:

1- Ben is $80 richer. With this money, he can stimulate jobs in other Canadian businesses.

2- Jerome is $100 poorer — at most. He can try to match his competitor’s price, or leave the bicycle business. For now, he goes out into the street and screams anti-free trade slogans.

3- Julia, an Ontarian unable to afford a $100 bike, can now get one for $20.

4- Baijk, an Indian, earns a living working in a bicycle factory.

Of the four effects, only the second is bad for Canadians. And it’s more than outweighed by the other three.

Stephanie doesn’t budge: “You economists just look at numbers. What about poor Jerome?

“We could compensate him. For example, we could take $50 of Ben’s new wealth and give it to Jerome. When the pie gets bigger, everyone can get a bigger slice.

“But, in India, a factory with no minimum wage exploits Baijk while polluting the environment!”

“True. But nobody forces Baijk to work in that factory. He chose to work there because his other options — prostituting himself or scavenging scrap metal from mountains of trash — are worse to him. The hard truth is: The only way Baijk can earn a better wage is if more multinationals like Wal-Mart compete to ‘exploit’ him.

"And remember: 100 years ago, Canadians had neither minimum wage nor environmental standards. We were poor and couldn’t afford such luxuries. Arguing against free trade on this ground denies poor countries the same development path we followed.”

Stephanie has heard enough. She picks up her Naomi Klein book, and resumes sunbathing. Economics is senseless and boring, she says.

I know. Now let’s go get that swimming pool.

La citation du jour

Messianic leaders are a myth and meant to control you and stop you from personal action and independent thought. Thinking a new leader will change the world just gives you an excuse to be lazy.
-Mike Krieger

L'Illinois, au bord de la faillite, octroie une hausse de salaire de 14% à 40 000 fonctionnaires

Via le blogue de Mike Shedlock, Global Economic Analysis:

Shared Sacrifice Illinois Style - 40,000 Union Workers Get 14% Pay Raises, Governor Quinn Gives Raises Averaging 11.4% to 35 Staff Members

by noreply@blogger.com (Michael Shedlock)

I am in favor of the concept of shared sacrifice. Unfortunately, Illinois stretches the boundary as to the meaning of the term.

For example, please note Illinois Governor Pat Quinn Gave Raises Averaging 11.4% to 35 Staff Members.

Illinois Gov. Pat Quinn has handed out raises -- some of more than 20 percent -- to his staff while proclaiming a message of "shared sacrifice" and planning spending cuts of $1.4 billion because the state is awash in debt.

The Democrat has given 43 salary increases averaging 11.4 percent to 35 staffers in the past 15 months, according to an Associated Press analysis of records obtained under the Freedom of Information Act.

They include a $24,000-a-year bump for the man promoted to shepherd the state through the fiscal storm. Budget Director David Vaught got a 20 percent raise to bring his pay to $144,000 in October when he moved to his new position from Quinn's staff, where he was a senior adviser.

Lawmakers, whom Quinn has asked to raise income taxes and borrow billions to meet its obligations for employee pensions reacted with skepticism and anger.

"It's insulting," said Rep. Jack Franks, a Woodstock Democrat who voted "no" on Quinn's proposal to borrow $3.7 billion for the pension payment that the House OK'd but Senate has not.

"It shows how out of touch he is with the real world, where businesses are freezing salaries and in some cases laying people off," Franks said.

The budget Quinn signed last week for the fiscal year that began July 1 would borrow money and delay bill payments, along with cutting about $1.4 billion in spending. Quinn may have to come up with another $3.7 billion for pensions if legislators continue to deny him permission to borrow the money.

Sen. Michael Noland, an Elgin Democrat who opposes the pension borrowing plan despite heavy lobbying, said there might be circumstances where a raise is warranted for someone taking on significant new duties. But he encouraged the governor to follow his own call for shared sacrifice and "hold the line."

Employees "might be having to accept a little more responsibility, but generally speaking, the state of Illinois is not in a position to be issuing raises at this point," Noland said.

Along with cuts in the governor's office, Jentz said the budget office cut spending by 17 percent last year. Quinn's proposed spending plan had a 10 percent increase in the budget office this year, documents show.

"We have fewer people doing more, and that's what the public wants," Quinn said.

40,000 Illinois State Workers To Get 14% Payraises

While pondering the massive sacrifices taken by Quinn's staff, please consider 40,000 Illinois State Workers To Get 14% Pay Raises

More than 40,000 unionized state workers got a pay raise last Thursday, bringing to 7 percent the amount they're gotten since last year. These same state employees are in line for another 7 percent by next July 1, all at a cost of a half-billion tax dollars a year.

It's more than the virtually bankrupt state can afford, and some Republican lawmakers say the raises need to be rolled back.

"I'm outraged," said State Senate Minority Leader Christine Radogno. "It's very difficult to buy this rhetoric that, 'We need to borrow, we need increased revenue,' when these kind of poor management decisions are going on."

AFSCME said it's outrageous that Republicans like Radogno have "done nothing to help solve the state's financial problems." The union argues that the state needs to raise taxes.

For his part, Governor Quinn said the 14 percent pay raise deal was cut by then-Governor Rod Blagojevich in 2008. Quinn did persuade the AFSCME union last year to postpone 2 percent of the pay raise until 2011, the first time AFSCME had ever consented to even a temporary deferment of a pay raise.

No doubt AFSCME considers deferring 2% of a 14% pay raise is one hell of a sacrifice. I consider it a farce.

Bayer and his union can go to hell. If you disagree, simply vote Democratic in the upcoming election because the Democrats in general will bow down to the union, raise your taxes, and hand out raises to unions like always. It will not matter one bit that Illinois is broke and taxpayers cannot afford it.

Mike "Mish" Shedlock

Compter les cadavres des victimes du Communisme au 20e siècle

...nous amène au chiffre impressionnant de 149 millions de personnes, dans cet article datant de 2006.

Il est à noter que les victimes de guerre ne sont pas incluses dans ces statistiques...

10 exemples historiques d'illétrisme économique

Via mises.org:

Ten Economic Blunders from History

Mises Daily: Wednesday, July 07, 2010 by John S. Chamberlain

Take cover when you hear a political leader talking about economic affairs. You can bet a bad decision is incoming. Luckily for the leaders, their meddling usually has a slow, erosive effect on the economy. Every so often, however, the great ones manage to land a real whopper that takes them down along with their whole country. Here are ten examples from history.

1. Charge Too Much and You Die

In the year 301, the Roman emperor Diocletian issued the Edictum De Pretiis Rerum Venalium, i.e., the Edict on Prices of Foodstuffs, which rebalanced the coinage system and set maximums on wages and the prices of many types of goods, especially food. The penalty for selling above the stipulated prices was death. Copies of the edict were inscribed on stone monuments all over the empire. Here's a tip for future dictators: never inscribe your blunders on stone unless you want people to laugh at you for the rest of eternity. The edict was a disaster. Sellers withdrew their goods, unwilling to sell at the fixed prices or even risk being falsely accused of selling beyond the maximum and thus be subject to execution. Workers responded to the wage edicts by vanishing or sitting around doing nothing. Eventually the edict was ignored and became a subject of derision and mockery which permanently lowered the prestige and authority of the empire.

2. Shearing the English Wolf

You know you are doing something wrong when your enemies become folk heroes like Robin Hood. Common sense is to tax the weak and give money to the strong, but after his failure in forestry policy King John of England decided to try the reverse. He relieved the knights of the realm from their military service requirements, but then ordered them to pay instead a hefty "scutage" (shield) tax. Soon, there were 10,000 Robin Hoods trying to kill him and going about it in an organized fashion. Signing the humiliating Magna Carta in 1215 bought him some time, but by the next year he was living on the lamb. After his folly-won treasure was washed away in a mistimed river crossing, he went crazy and died soon after.

3. Paper Money Is Amazing

The fifth Khan of Persia was named "Gaykhatu," which means "amazing" in Mongolian. After recklessly squandering the money left by his predecessors he was in no position to cope with a massive rinderpest epidemic that began devastating his subjects' livestock in 1294. Amazing came up with an amazing solution to his financial problems: paper money. Invented by his boss, Kublai Khan, back in China the idea of paper money was a godsend. He would print up certificates just like the Chinese ones, decree death for anyone who refused them, and all his problems would be solved. Amazing! Unfortunately for Amazing he did not fuss too much with technical details like convertibility and capital controls, which Kublai Khan had agonized over, and the result was the total failure of the project. Economic chaos ensued. Amazing was deposed and put to death the next year.

4. I'll Buy Every Sword You've Got

In the Muromachi period (1336 to 1573), Ming dynasty Mandarins in China adopted a policy of buying and importing swords from the Japanese with the goal of depriving the troublesome "barbarians" occupying those islands of their weapons. The gleeful reaction of the Japanese was along the lines of Jay Leno's Doritos commercial: buy all you like; we'll make more.

5. No Smuggling Allowed

Price controls are stupid anytime, but it takes true idiocy to apply them in the middle of a siege. In 1584 forces controlled by Alexander Farnese, the duke of Parma, were besieging Holland's grandest city, Antwerp, in the Dutch War of Independence. At first the siege was ineffectual because the duke's lines were porous and Antwerp could be supplied by sea, but the duke was in luck because the city decided to blockade itself voluntarily. The magistrates of the city declared a maximum on the price of grain. The smugglers who had been running the blockade up to that point became considerably less enthusiastic about making food deliveries after that. Facing starvation, the city surrendered the next year.

6. The Gold Factory of Venice

In 1590 the Republic of Venice was in decline. Nineteen years earlier it had gloriously fended off the Ottoman Turks by a tremendous victory at the Battle of Lepanto, but had nevertheless lost Cyprus, the republic's greatest possession. In 1585 the newly elected doge had thrown silver coins instead of the traditional gold at his ascension. Weighed down by taxes, imposts, tariffs, duties, tithes, assessments and fees, the economy had seen better days. From out of this gloom a new hope unexpectedly appeared. A long-lost Venetian named Marco Bragadini, currently resident in nearby Lombardy, had discovered how to make gold. The republic had to act fast, though, because the duke of Mantua was trying to lay his hands on this valuable goose. A cohort of soldiers was sent forthwith and Bragadini was securely delivered into the city in triumph by three galleys. Rigorous scientific tests were ordered by the senate to verify the power of the "anima d'oro," which Bragadini alone possessed. The alchemist filled a crucible with quicksilver, added a pinch of his secret powder and set it to fire. Soon the quicksilver turned to gold; it was all true. The price of alchemist capes and retorts skyrocketed. Signor Bragadini coolly informed the senate he could produce six million ducats or whatever they would require. For himself he wanted nothing but to be the humble servant of his country. Naturally, the senate put all the resources of Venice at his disposal. Nobles flocked to Bragadini by the dozen, imploring him to cut them in on his business. The months wore on, but the production of the new gold factory was disappointingly meager. Apparently there were limits to the speed with which the gold could be manufactured. Sensing a mounting impatience with his operations Bragadini absconded to Munich where Duke William the Pious was wooing him. Unfortunately for the maestro, in the meantime Pope Sixtus had died and been replaced with the sanctimonious Pope Gregory XIV who considered the alchemist and his two dogs to be the devil's spawn and sent orders for their execution — with which William complied. The senate of Venice decided to pretend the whole thing never happened.

7. How to Deal with Hoarders

As the famine-fueled French Revolution careened out of control in 1793, a radical clique called the "Committee of Public Safety" headed by Maximilien Robespierre took power. The committee resolved to solve the food problem by enacting the "General Maximum," a set of policies fixing the maximum price of bread and other common goods. When those measures failed to increase the supply of food, they sent soldiers into the countryside to forcibly seize grain from the evil farmers who were "hoarding" it. Robespierre and the committee went to the guillotine the next year.

8. A Hobo's Dream, An Empire's End

In 1880, railroad technology was advancing rapidly, and the Russians received several private petitions for a concession in the Far East. To the paranoid patricians of Moscow, it was not enough to merely deny these foreign schemers; they needed to build their own railroad to the east to keep them out. Under the leadership of His Royal Paranoidness, Czar Alexander III, the Russian state began taking out massive foreign loans and constructing the 5,000-mile Trans-Siberian Railway, the largest civil-works project since the Great Pyramid of Giza. Alexander (and his empire) would later die from injuries sustained in a railroad accident. By the time the corruption-ridden boondoggle was completed in 1904, Alexander's son, Nicholas II, was technically bankrupt. Wars and revolts started to plague the empire. Instead of carrying trade goods, the new railway was carrying political prisoners and supplies for soldiers. When Russia rolled over its debts in 1907, it was obvious to the large banking houses that the empire was financially doomed and only small investors could be found to subscribe the new loans. Even with these loans suspended, Russia's economy was so weak that it would not survive the coming war. Nicholas was executed July 16, 1918.

9. It Takes a Village to Build a Famine

The 1984 crop failure in Ethiopia presented a fresh set of problems for the Marxist junta called the "Derg" that controlled the government. The nationalization programs and price controls they had been experimenting with for years seemed less effective than ever. Obviously the remnants of capitalism were still infecting the economy, so they took vigorous measures such as outlawing grain trading. Oddly enough, that did not stop the famine. The chairman, Mengistu Haile Mariam, inspired by the brilliant agricultural successes of Secretary Stalin in the 1930s thereupon sponsored a whole new idea dubbed "villagization." Under this plan the scattered rural inhabitants of Ethiopia would be gathered together in modernized villages with all the latest civic infrastructure. As might be expected, not all the beneficiaries of this plan realized what utopias these villages would be so they had to be driven there at gunpoint for their own good. Unfortunately, the expected increases in agricultural production never materialized and millions starved. The country descended into a permanent state of civil war, which only ended in 1990 after the Soviet Union stopped supplying the Derg. Mengistu fled to Zimbabwe where he has become an important advisor to that nation's rulers.

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10. Rubles: Now You See Them, Now You Don't

On January 22, 1991, Mikhail Gorbachev, the president of the Soviet Union, decreed that all existing 50- and 100-ruble banknotes were no longer legal tender and that they could be exchanged for new notes for three days only and only in small quantities. This had the effect of instantly deleting large portions of the savings and accumulated capital of private citizens. He followed up this genius move on January 26, by ordering that the police had the authority to search any place of business and to demand the records of any business at any time. The union's economic problems accelerated into a death spiral. Gorbachev resigned on December 25, and on the next day the Supreme Soviet dissolved itself and the Union of Soviet Socialist Republics.

John S. Chamberlain lives in Natick, Massachusetts, and works as a software engineer specializing in earth science and artificial intelligence. He has an A.B. in politics from Princeton University and an M.S. in computer science from Northeastern University. See John S. Chamberlain's article archives.

Les démocrates cèdent sous la pression de Pelosi, vont à l'encontre de leurs supposés principes en augmentant le budget militaire en Afghanistan

Via Global Economic Analysis (Mike Shedlock):

Friday, July 02, 2010

House Holds Nose, Passes War Funding Bill after Pressure from Pelosi; Why the Afghan War is Lost

I did not vote for President Obama, I wrote in Ron Paul.

Nonetheless, the two things I was confident President Obama would do right were reduce military spending and get us out of Guantanamo Bay Cuba.

I was wrong on both counts. Worse yet, the President appears to be as much a warmonger as Bush although admittedly he did not start any wars.

The one thing that bothers me most is how the Democratic sheep go along with anything Obama wants, even if it is against their core beliefs.

Here is a stunning example to prove that charge. Please considerHouse-OK'd war funding bill faces Senate trouble.

Despite pessimism that the war in Afghanistan is turning out to be a quagmire, Democrats controlling the House muscled through a plan Thursday to finance President Barack Obama's troop surge, but only after sweetening the measure with last-ditch moves to salvage their faltering jobs agenda.

Long delayed, the approximately $80 billion bill was passed amid building pressure on Democrats to act before their weeklong Fourth of July break begins. But the Senate approved a significantly slimmer measure in May and it'll take additional weeks to reconcile the differences between the two battling chambers.

The crucial vote to advance the measure under unusually convoluted floor rules came on a 215-210 tally to bring up the nearly $60 billion Senate-passed measure for debate. Democrats added more than $20 billion for domestic programs late Thursday, including $10 billion in grants to school districts to avoid teacher layoffs, $5 billion for Pell Grants to low-income college students and $700 million to improve security along the U.S.-Mexico border.

House Republicans supportive of the Afghanistan effort voted against the measure, angered that Democrats were using the must-pass legislation to try to advance unrelated spending.

"The Democrat majority is treating this troop funding bill like a cash-cow for their election-year wish-list," said Rep. Jerry Lewis, R-Calif.

But top Democrats such as Obey and Speaker Nancy Pelosi, D-Calif., insisted on adding the domestic dollars, viewing the war funding bill as their last, best shot to resuscitate their faltering jobs agenda. The money was critical to winning support from Democrats frustrated over deepening Senate gridlock that has killed, among other ideas, $24 billion in aid to cash-starved states to help governors avoid tens of thousands of layoffs.

The GOP opposition required Democratic leaders such as Pelosi to round up votes from anti-war lawmakers.

"Every dollar we spend in Afghanistan, every life we waste there, is a waste," said Rep. Jerrold Nadler, D-N.Y., who backed the measure anyway in the crucial vote to bring it up for debate.

"An intelligent policy is not to try to remake a country that nobody since Genghis Khan has managed to conquer. What makes us think, what arrogance gives us the right to assume that we can succeed where the Moguls, the British, the Soviets failed?"

Rep. Jerrold Nadler, D-N.Y. makes a tremendous case for voting against the bill yet buckles under pressure from House Speaker Pelosi.

Does anyone have any sense of duty to vote how they feel is right as opposed to how they are instructed to vote.

The worst part of this mess is we are likely to get the worst of both worlds: more ridiculous Pell Grants, more absurd stimulus efforts, and foolishly wasting money attempting "to remake a country that nobody since Genghis Khan has managed to conquer."

Is it any wonder polls show the public is totally fed up with Congress?

Why the West Lost the Afghan War

Please consider Why West Lost Afghan War by Michael Scheuer, the author of ‘Imperial Hubris’ and former chief of the CIA’s Bin Laden Issue Station.

Recent events surrounding Afghanistan shouldn’t confuse anyone, as the reality of the situation still lies in one simple statement: The US-NATO coalition has lost a war its political leaders never meant, or knew how, to win.

After nine years, it is utterly impossible to restart Western policy in Afghanistan. Too many Afghans are dead; too many Afghans and non-Afghan Muslims have joined the Taliban-led insurgency; too much pro-Taliban money is pouring into Afghanistan from wealthy donors on the Arabian Peninsula and across the Muslim world; too much Western funding has been stolen and sent abroad by Karzai’s cronies; too much popular support for the war in the West has been squandered; too many U.S.-NATO troops are dead or maimed; too much has been done by the West to push Pakistan toward the abyss by demanding its military do Western dirty work; and too much time has been wasted on counterinsurgency theories and policies that avoid killing the enemy and his civilian supporters. The one thing the West ‘can start over completely’ is a revision of the plans for withdrawal that moves up the departure date.

The bottom line is that the United States and NATO stand defeated in Afghanistan. Under McChrystal, Petraeus, or Obama himself the counterinsurgency strategy now being flogged has been intellectually bankrupt from its inception.

The tragedy of this reality is that it would have taken no highly classified intelligence data or deeply penetrating brain power to predict its occurrence. A week’s reading at the local library about the occupations of Afghanistan by Alexander the Great, the British Empire and the Soviet Union shows each empire was sooner or later defeated and evicted—Alexander lasted longest because he built Greek colonies—by the most basic Afghan trait which has been transparently and overwhelmingly dominant since the 4th century B.C.: Afghans refuse to tolerate foreign occupation and rule.

We should declare the war won and get the hell out. Instead, even Democrats who fully understand how stupid this war is, are willing to vote for it after pressure from Pelosi. Is this insane or what?

Mike "Mish" Shedlock