The year 2019 was a great year for the American Institute for
Economic Research; in the broader America, it was a volatile one for
ideas, a great one for economic growth, and as divisive a time
politically as one can imagine: certainly the most estranging of my near
50 years. With the end of the Mueller investigation, the start of an
impeachment process, an approaching election, and ideological
battlefronts opening in nearly every social milieu, there was never a
shortage of issues to analyze over the past twelve months.
From among those I wrote about, I chose the following as the ten most
notable of 2019. There is a central theme: the problem of government
that knows no limits to its power, a government that imagines itself
identical to the people over which it rules. Which is to say: fascist
ideology.
The Pseudoscience of Leadership
The demand for “a leader”, despite more than enough evidence of the
insidious nature of figureheads, is an irrevocable feature of
pre-election banter, and has resurfaced as Democratic candidates claw
and slither over one another to seize the party nomination. Considering
the pseudoscientific nature of the concept of leadership — assuming as
it does enough manifestations to make the term meaningless (in addition
to falling under a plethora of inconsistent/contradictory definitions)
and largely existing to craft narratives — it is at best a delusory and
more often malefic feature of political figures. You may need a leader; I
do not.
Presidential Harassment is a Public Good
The President’s unusual propensity to talk tough (sometimes issuing monarchical decrees) while simultaneously whining about being challenged also
caught my attention. In a year where virtually every amenity of daily
life was reclassified as a public good, the institution that is
represented by intense scrutiny of the Chief Executive, “Presidential
harassment”, is the one most freighted with moral imperative. How will
we know when government officials are sufficiently surveilled by the
public? When the rewards are small enough, and the headaches large
enough, that no one wants to run for office. The din of chief executive
grousing suggests a good start in that direction.
Reasons to Oppose a Tax on Trading
While not a new proposal, age-old schemes regarding punishing “Wall
Street” (a vacuous and wholly dishonest classification, in light of the
vast range of size and business activities among modern financial firms)
for mostly imagined crimes has resurfaced. With heaps and gobs of
political plans being put forth — and nary a single budget hawk to be
found within 100 miles of Washington D.C. — inevitable questions about
affordability have risen, and the suggestion of a tax on financial
transactions is back. In a spirit of reductio ad absurdum I show how
such a tax could similarly be imposed upon (or shared by) Hollywood,
with the added bonus of (a) not impacting the critical liquidity of
financial markets, and (b) allowing many of the people and organizations
most supportive of revolutionary change to finance it themselves.
Surely a tax of $79,000 per second per new film (and/or $18,350 per word
for scripts; in either or both cases, up to a total or $266 billion
annually) isn’t too high a price for the actors, writers, producers and
directors to create the world so many of them regularly invoke.
The Dollar, Not Crypto, is a National Security Issue
Crypto prices declined notably in 2019, and the long-term viability
of many coins and tokens, not least of which Bitcoin, were increasingly
called into question. Nevertheless, both the President and the Secretary
of the Treasury took aim at them this year, calling the crypto sector
as a whole a “national security issue.” In light of the long-term
decline in the value of the US dollar (prominently displayed just inside
the entrance of the offices of the American Institute for Economic
Research) and growing international calls to diversify away from a
single reserve currency, Mnuchin and Trump’s pronouncements ring starkly
out-of-touch. International (and individual) efforts to diversify away from the US dollar mounted in intensity throughout 2019.
How to Recognize the Fascistic Turn
The growing sickness of the most radical fringe of the Democratic
Party was, to me, laid bare during a broadcast of 60 Minutes in early
2019: in it, the inimitable New York Representative Alexandria
Ocasio-Cortez (“AOC”) was asked about her frequent factual errors,
misstatements, and rhetorical clumsiness. By responding that moral
rightness is more important than truth or accuracy — a certifiably
candid moment for her — the connective tissue binding all mass movements
which seek power at any cost was exposed. Make no mistake: just under
the skin of every Antifa window breaker is a goose stepping Brown Shirt,
and every hypernationalist advocating that the U.S. turn the Middle
East into a parking lot scarcely conceals a bearded Haymarket
bomb-thrower.
The Road to Serfdom…Via Credit Markets
The widening embrace of the concept of negative interest rates (real
or nominal) in the European Union is a story which has eluded most of
the mainstream media and even many financial news outlets, but which has
major and in some sense ominous implications. I recall, nearly twelve
years ago, arriving at my trading desk just after Lehman to find the
shortest term Treasury Bills yielding negatively: those, of course, were
extremely short-term securities issued by the most credit-worthy
sovereign issuer in the midst of the deepest economic crisis the world
had faced since the Great Depression. But issuing medium- to long-term
debt securities with negative yields turns economic calculation on its
head and, writ large, may lead to credit rationing by central banks and
ultimately an utter disconnect in the coordination of savings and
investment. It begs the question: is there any such thing as
unconventional monetary policy anymore, or have the floodgates given way
to policy abandon? Are we all, now, the experimental rats in the
economic mazes of central bankers; were we ever not?
There are Numbers, and There is Reality
The proliferation of data and statistics brings both benefits and
hazards. In 1963 Oskar Morgenstern cautioned economists and laymen alike
regarding the perils of financial and economic quantification, noting
that while the perception of exactitude is reinforced by econometrics,
problems of accuracy and precision in social sciences must at least be
as bad as in the exact sciences and are likely much worse. As I show
using recent research demonstrating widespread errors in baseball, and
note in the recent about-face in policy orientation by the Federal
Reserve, the infatuation with quantification in the social sciences is
unwarranted and may serve to promote even more indefensible
expectations.
While You Slept, Government Created Internal Passports
The introduction of what amount to internal passports — the Real ID
scheme — after many years of quiet political negotiation came so
quickly, so quietly, and with such tacit acceptance that I was taken
aback. Setting aside semantics, and while there are a few exceptions,
the short list of nations (present and historical) which the United States is joining
by requiring state-issued identification to travel internally is not a
proud one; certainly not one espousing the proudest traditions of
personal liberty. Yet Americans seem resigned to aggressive complacency
in the name of protection. (For good measure, I point out the flaws that
already exist within the Real ID program, and make a prediction I
deeply hope to be proven wrong on.)
Birth of the Deep State: A History
Virtually all of the ‘2019 in review’ articles I’ve seen so far make
no mention of the 35-day government shutdown, which although starting in
2018 ran throughout January of this year. In this article I highlight
and provide a context for what I believe is one of the most important
issues facing Americans today: the massive, tax-fed, unelected
bureaucracy that wields growing (and underappreciated) power as the
consciousness or “soul” of the American state. Rather than seeing a
dark, deep-seated conspiracy involving shadowy actors, I theorize that
the deep state is first and foremost a product of spontaneous order.
What Precisely is Wrong with Economic Inequality?
The growing obsession, both within the academy and as a focus of
political proposals, with economic inequality – inequality of wealth,
income, access, and by other measures – has been more than competently
tackled by several of my colleagues at AIER. Yet aside from the numerous
data errors and interpretive misrepresentations found within the most
popular works, a fundamental aspect of the egalitarian railing has
frequently gone unexamined: what does it matter? Assertions regarding
the alleged inevitability of social unrest, disruption, and upheaval
resulting from inequality are often made, yet there is essentially no
substantiation of such; and most such assertions would be unfalsifiable
anyway. One could be forgiven for interpreting the obsession with
inequality as less tied to improving standards of living than to some
confused and often angry fixation upon wealth.
With Presidential, Congressional, and Gubernatorial elections in
2020, a fascinating (and sometimes frightening) Democratic presidential
primary, and the U.S. economy growing while testing certain limits (full
employment, record stock index levels, and record budget deficits) –
there will be more than enough to cover and analyze in the coming year.
Happy New Year, and thank you for reading.
THIS ARTICLE ORIGINALLY POSTED HERE.
