Economists From The United States

"It was Mill who popularized the idea of raising taxes on landowners only after first compensating them, thus buying the right to tax them. It was a selective scruple: neither Mill nor anyone, to my knowledge, ever proposed compensating workers, consumers, or the owners of capital before taxing them. It was something of a red herring, because it assured that net revenues would be about zero. It simply gave debaters something to chew on while precluding meaningful action."

"Mr. Wharton's views are not stated, but might be inferred from the Wharton estate's holding of 100,000 acres in New Jersey, lying between Philadelphia and Atlantic City. This land supported towns and industries in the 18th century, but under the Whartons went out of use"

"Ladies and gentlemen, in a few days we're going to go to the polls. And when you step into the polls you're going to have a very basic choice. If you want a liberal government, in favor of gay marriages and gun control and locking up state lands, then the Democrats have a candidate for you. If on the other hand you want a governor who is pro-family, opposed to gun control and in favor of opening up our state lands for recreation and hunting and mining and fishing and logging, someone who will reform CSED, someone who will impose a conservative agenda on the state, and swing the pendulum away from the liberals and back to the conservatives. Then I'd appreciate your support. Thank you very much."

"People often criticize government schools in the United States for teaching little and doing it in boring ways, yet many advocate increasing the amount of time that children are in school. This reminds me of the old joke about two people complaining about the food at a restaurant. ‘The food tastes awful,’ says one. The other replies, ‘And the portions are so small.’ Given the amount of oppression and simple boredom that goes on in government schools today, thank goodness the portions are so small."

"West points out that early in the nineteenth century, the British government was quite upset about the number of working-class people who were reading political literature. The government, writes West, took ‘fiscal and legal action against the spread of newspapers, especially those critical of government.’"

"The history of economic growth is the history of people making more with less and shifting into new jobs that were unheard of in the previous generation."

"Most people understand the right to property better in practice than in theory. This was vividly illustrated by economist Gordon Tullock in a class he taught at the University of Virginia in the late 1960s. An undergraduate student in his class said that there was no such thing as property rights;…. So Gordon grabbed the student’s wallet. The student asked him to give it back, figuring presumably, that his simple request would get him his wallet back. But Tullock refused, saying that if there was no such thing as property rights, how could he, the student, own this wallet that he claimed as his."

"It is not always easy to define property rights. What is striking, though, is how often government legislation and court rulings have prevented the common law system from handling pollution problems even when common law seemed to be working well toward resolving them."

"Early in the twentieth century, the railroad business was highly unionized. Just as in South Africa, employers often wanted to hire black people. But unions run by white people excluded blacks from membership and often committed acts of violence against black workers who tried to get such jobs."

"Milton Friedman and I had our differences about foreign policy. I tried, in vain, to persuade him to be against the first Gulf war. Even there, though, he publicly supported, in an interview with the San Francisco Chronicle, my economic argument against the war. He stated, ‘Henderson’s analysis is correct. There is no justification for intervention on grounds of oil.’"

"One thing we know from centuries of history is that if the government has revenue to spend, it will spend it."

"Why did all these people—Lady Godiva, the barons of England, William Tell, the Founding Fathers of the United States, and Henry David Thoreau—oppose taxes? Because they understood that taxation is, in essence, legalized theft. When a government taxes you, it takes something you own without your consent. That’s exactly what a thief does. The main difference is that the thief is breaking the law, whereas the government is (usually) taking your money legally."

"There are two main differences between Ponzi’s original scam and the Social Security system. The first difference is that Social Security is run by the government and, whatever its constitutionality and its questionable ethics, is legal. The second difference follows from the first: Whereas Ponzi had to rely on suckers, the government can and does use force."

"The bottom line is that in a free market, any employer who discriminates on grounds that have nothing to do with productivity will pay a cost for doing so. The economic system that removes the props from racism is free markets."

"The worst discrimination against black people in the United States was the introduction of slavery. Short of murder and torture, slavery is the greatest possible violation of people’s rights. It is essentially legalized kidnapping."

"British author Thomas Carlyle called economics ‘the dismal science’ because the free-market economists around him were strongly opposed to slavery."

"Health care costs so darn much because we pay so darn little for it… So we have almost no incentive to care about how much it cost… Most of what we spend on health care is other people’s money. We never spend other people’s money as carefully as we spend our own."

"Many people at various points on the political spectrum have claimed that the U.S. thirst for oil is so great that, unless we change our habits (the left emphasizes conservation, and the right emphasizes drilling in the Arctic wildlife refuge and elsewhere), the U.S. government will find itself drawn into wars to maintain access. This thinking shows a fundamental misunderstanding of how energy markets work. There is no good case for going to war over oil."

"Our oil supply is secure, not because our government threatens to use force against those who would make it insecure, but because the world’s oil suppliers want to make money."

"I noted that one reason we buy so much health care is that the price to us is artificially low; if we paid the full price for health care, we would make better life-style decisions on exercise, smoking, and foods and would need less health care."

"The efficacy regulations on drugs, economists have found in countless studies, have delayed the introduction of new drugs by years and added hundreds of millions of dollars to the cost of developing a typical new drug."

"Throughout history, governments have generally been much less tolerant of racial difference than private employers have been. This is because the government officials who discriminate incur no cost for doing so, as long as discrimination is politically acceptable…"

"Unfortunately, not content to enforce its monopoly power over what new drugs get produced, the FDA also seeks to limit doctor’s uses of legal drugs for uses not specified on the label."

"The government’s monopoly is what has allowed it to produce so bad a product for so long."

"Barbara Walters asked Ronald Reagan, what do you think about the Soviet Union and how much of a threat they are to us and to our freedom. And he said, ‘They’re a threat, but the biggest threat to our freedom is our own governments.’ And I agree with him. It’s governments at every level in the United States right now and in most of the world that are assaulting freedom daily."

"The IMF leadership, and almost all of the 189 member countries — including U.S. allies such as Germany and Canada — are ready to allocate the aid that Congress is considering. The reason it hasn’t already been approved at the IMF is that the U.S. Treasury has said no, and the U.S. — alone — has a veto at the IMF on this matter. .. [I]t’s not at all clear why the Treasury is blocking this desperately needed aid. … Nor is there any reason that it should be a partisan issue … Of course the Congress has a lot on its plate, and is having trouble passing further relief that millions of Americans need to pay their bills and for many, even have enough to eat. But all indications are that Congress will pass major spending bills before the end of the year, including funding to avoid a government shutdown. It would take almost no effort to include the House or Senate bill that would unblock Treasury’s hold on the IMF funding… ” (10/1)."

"If you had the opportunity to save a million people from preventable death, would you do it? … This is not merely a rhetorical question, but one that members of the Congress will have to answer in the present. … Right now, legislation has already passed the House of Representatives that would do just that. And it was included in the newly released COVID relief bill that is being negotiated between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin. It would require the Treasury Department, which represents our government at the International Monetary Fund (IMF), to support a multi-trillion dollar relief package from the Fund. These funds are not loans and therefore will not have to be repaid. They have no conditions attached to them. And they do not cost the U.S. government anything at all — not now, and not at any time in the future."

"Why do Trump & co. have crippling sanctions on Iran, making sure that many more people die from coronovirus than otherwise would? Its collective punishment, this piece from Human Rights Watch shows what monsters Trump and Pompeo and gang are..."

"Economic sanctions, as the U.S. is applying against Iran, Cuba, Venezuela, and other countries, cause immense harm... there is no doubt that Iran's capacity to respond to the novel coronavirus has been hampered by the Trump administration's economic sanctions, and the death toll is likely much higher than it would have been as a result... There can... be no question that the sanctions have affected Iran's ability to contain the outbreak leading in turn to more infections, and possibly to the virus' spread beyond Iran's borders... If the U.S. government is going to assist other countries, let alone provide some kind of leadership role during this global crisis, the first thing it should do is 'cause no harm, "Economic sanctions, as the U.S. is applying against Iran, Cuba, Venezuela, and other countries, cause immense harm."

"All this [in Ecuador] is taking place under a government – elected in 2017 on a platform of continuity – that seeks to reverse a prior decade of political reforms. These reforms were, by measures of economic and social indicators, successful. Poverty was reduced by 38% and extreme poverty by 47%; public investment – including hospitals, schools, roads, and electricity – more than doubled as a percent of the economy. But the prior government was a leftwing government that was more independent of the US (by, for example, closing down the US military base there). One can imagine what this looks like, as the Trump administration now gains enormous power in Ecuador... Lenín Moreno, has aligned himself with Trump’s foreign and economic policy... his government is persecuting his presidential predecessor, Rafael Correa, with false charges filed last year that even Interpol won’t honor with an international warrant.... Since Washington controls IMF decision-making for this hemisphere, the Trump administration and the fund are implicated in the political repression as well as the broader attempt to reconvert Ecuador into the kind of economy and politics that Trump and Pompeo would like to see, but most Ecuadorians clearly did not vote for."

"Social security should really be a prominent issue in this presidential campaign. Despite the fact that about one-sixth of Americans get a check from social security – and millions more, including poor children, are helped immensely by it – the nation’s largest anti-poverty program remains vastly misunderstood by most of the country."

"Bolivia has descended into a nightmare of political repression and racist state violence since the democratically elected government of Evo Morales was overthrown by the military on 10 November last year. That month was the second-deadliest in terms of civilian deaths caused by state forces since Bolivia became a democracy nearly 40 years ago... Morales' government was able to reduce poverty by 42% and extreme poverty by 60%... The November coup was led by a white and mestizo elite with a history of racism, seeking to revert state power to the people who had monopolised it before Morales’ election in 2005. The racist nature of the state violence... all of the victims of the two biggest massacres committed by state forces after the coup were indigenous."

"The American right has always hated social security, from its origin in the New Deal of the 1930s. Social security is based on an ethic of solidarity: we are all in this together, so it is in our collective and individual interest to pay into a social insurance fund when we are young, healthy and working, and draw upon it when we need it. This does not fit well with the rightwing narrative of society as a collection of atomized, self-interested individuals. In the 90s... many liberals began to accept, and even promote, the arithmetically false, rightwing talking points that social security was going broke. The verbal and accounting tricks were swallowed by much of the media and proved effective... Hardly anyone, outside of those of us who looked at the numbers, seemed to notice that this is just one side of the balance sheet. The other side shows that productivity and wages also grow, and hence it takes fewer workers per retiree to finance any given level of benefits. That’s one reason why, for example, the ratio of workers to retirees fell from 8.6 in 1955 to 3.3 in 1999 and nobody missed a social security check. And people accepted that payroll taxes increased, because their wages increased vastly more. The “granny-bashers”, as we affectionately called them, created a phony intergenerational war out of something that was very much a war waged by the rich against all generations"

"What has received even less attention is the role of the Organization of American States (OAS) (with headquarters in Washington, D.C.) in the destruction of Bolivia’s democracy last November. The wheels of justice grind much too slowly in the aftermath of US-backed coups. And the Trump administration’s support has been overt: the White House promoted the “fraud” narrative, and its Orwellian statement following the coup praised it: “Morales’s departure preserves democracy and paves the way for the Bolivian people to have their voices heard.” According to the Los Angeles Times: “Carlos Trujillo, the US ambassador to the OAS, had steered the group’s election-monitoring team to report widespread fraud and pushed the Trump administration to support the ouster of Morales.”"

"All of this is illegal under numerous treaties that the U.S. has signed, including the charter of the United Nations, the charter of the Organization of American States, and other international law and conventions. To legitimize this brutality, which has likely already killed thousands of Venezuelans by reducing access to life-saving goods and services, the Trump administration has presented the sanctions as a consensus of the “international community”—similar to what George W. Bush did when he put together a “coalition of the willing” of 48 countries to support his disastrous 2003 invasion of Iraq."

"The Trump administration is repeating the collective punishment strategy in Venezuela with a crippling financial embargo since August 2017 and, since January, a trade embargo. The financial embargo has prevented any measures that the government might use to get rid of hyperinflation or bring about an economic recovery, while knocking out billions of dollars of oil production. The trade embargo is projected to cut off about 60 percent of the country’s remaining meager foreign exchange earnings, which are needed to buy medicine, food, medical supplies, and other goods essential to many Venezuelans’ survival."

"Seeking to foment a military coup, a popular rebellion, or civil war, the Trump administration has made it clear that the punishment will continue until the current government is ousted. “Maduro must go,” said U.S. Vice President Mike Pence yet again in early March."

"Consider a recent IMF loan. In March, Ecuador signed an agreement to borrow $4.2bn from the IMF over three years, provided that the government would adhere to a certain economic program spelled out in the arrangement... The program calls for an enormous tightening of the country’s national budget – about 6% of GDP over the next three years. (For comparison, imagine tightening the US federal budget by $1.4 trillion, through some combination of cutting spending and raising taxes). In Ecuador, this will include firing tens of thousands of public sector employees, raising taxes that fall disproportionately on poor people, and making cuts to public investment."

"The cast of characters supporting this regime-change effort, whether in Washington or among some of its closest allies, should underline what is already obvious: The United States’ attempt to oust Maduro has nothing to do with democracy or human rights."

"The vast majority of India’s poor rely on daily for sustenance. With the current lockdown and its likely extension, millions of daily labourers and their families can no longer earn the money they need to survive. In this unprecedented situation, the Indian state must respond swiftly to prevent widespread acute hunger. [...] The health and economic threats posed by the pandemic are unprecedented: India must capitalise upon its preparedness to address food insecurity and prioritise food distribution to protect the health and welfare of its most vulnerable citizens."

"The vast majority of India’s poor rely on daily for sustenance. With the current lockdown and its likely extension, millions of daily labourers and their families can no longer earn the money they need to survive. In this unprecedented situation, the Indian state must respond swiftly to prevent widespread acute hunger. [...] The health and economic threats posed by the pandemic are unprecedented: India must capitalise upon its preparedness to address food insecurity and prioritise food distribution to protect the health and welfare of its most vulnerable citizens."

"Our survey of historical bubbles makes clear that the bursting of bubbles has invariably been followed by severe disruptions in real economic activity. The fallout from asset-price bubbles has not been confined to speculators. Bubbles are particularly dangerous when they are associated with a credit boom and widespread increases in leverage both for consumers and for financial institutions."

"Fraud aside, we should have known better. We should have known that investments in transforming technologies have often proved unrewarding for investors. In the 1850s, the railroad was widely expected to greatly increase the efficiency of communications and commerce. It certainly did so, but it did not justify the prices of railroad stocks, which rose to enormous speculative heights before collapsing in August 1857. A century later, airlines and television manufacturers transformed our country, but most of the early investors lost their shirts. The key to investing is not how much an industry will affect society or even how much it will grow, but rather its ability to make and sustain profits. And history tells us that eventually all excessively exuberant markets succumb to the laws of gravity. The consistent losers in the market, from my personal experience, are those who are unable to resist being swept up in some kind of tulip-bulb craze. It is not hard, really, to make money in the market. As we shall see later, an investor who simply buys and holds a broad-based portfolio of stocks can make reasonably generous long-run returns. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges."

"Technology will ultimately greatly improve the intentional payments system. And there will always be advantages to holding an asset that is anonymous and transportable without a physical trace. But the lessons of history are immutable. Speculative bubbles will persist. But they ultimately lead most of their participants to financial ruin. Even real technology revolutions do not guarantee benefits for investors."

"There are, I believe, five factors that help explain why security analysts have such difficulty in predicting the future. These are (1) the influence of random events, (2) the production of dubious reported earnings through “creative” accounting procedures, (3) errors made by the analysts themselves, (4) the loss of the best analysts to the sales desk or to portfolio management, and (5) the conflicts of interest facing securities analysts at firms with large investment banking operations. Each factor deserves some discussion."

"The castle-in-the-air theory of investing concentrates on psychic values. John Maynard Keynes, a famous economist and successful investor, enunciated the theory most lucidly in 1936. It was his opinion that professional investors prefer to devote their energies not to estimating intrinsic values, but rather to analyzing how the crowd of investors is likely to behave in the future and how during periods of optimism they tend to build their hopes into castles in the air. The successful investor tries to beat the gun by estimating what investment situations are most susceptible to public castle-building and then buying before the crowd."

"This chapter’s review of the Internet and housing bubbles seems inconsistent with the view that our stock and real estate markets are rational and efficient. The lesson, however, is not that markets occasionally can be irrational and that we should therefore abandon the firm-foundation theory of the pricing of financial assets. Rather, the clear conclusion is that, in every case, the market did correct itself. The market eventually corrects any irrationality—albeit in its own slow, inexorable fashion. Anomalies can crop up, markets can get irrationally optimistic, and often they attract unwary investors. But, eventually, true value is recognized by the market, and this is the main lesson investors must heed. I am also persuaded by the wisdom of Benjamin Graham, author of Security Analysis, who wrote that in the final analysis the stock market is not a voting mechanism but a weighing mechanism. Valuation metrics have not changed. Eventually, every stock can only be worth the present value of its cash flow. In the final analysis, true value will win out."

"A random walk is one in which future steps or directions cannot be predicted on the basis of past history. When the term is applied to the stock market, it means that short-run changes in stock prices are unpredictable. Investment advisory services, earnings forecasts, and chart patterns are useless. On Wall Street, the term “random walk” is an obscenity. It is an epithet coined by the academic world and hurled insultingly at the professional soothsayers. Taken to its logical extreme, it means that a blindfolded monkey throwing darts at the stock listings could select a portfolio that would do as well as one selected by the experts."

"Investing requires work, make no mistake about it. Romantic novels are replete with tales of great family fortunes lost through neglect or lack of knowledge on how to care for money. Who can forget the sounds of the cherry orchard being cut down in Chekhov’s great play? Free enterprise, not the Marxist system, caused the downfall of the Ranevsky family: They had not worked to keep their money. Even if you trust all your funds to an investment adviser or to a mutual fund, you still have to know which adviser or which fund is most suitable to handle your money. Armed with the information contained in this book, you should find it a bit easier to make your investment decisions."

"Determining clear goals is a part of the investment process that too many people skip, with disastrous results. You must decide at the outset what degree of risk you are willing to assume and what kinds of investments are most suitable to your tax bracket. The securities markets are like a large restaurant with a variety of menu choices suitable for different tastes and needs. Just as there is no one food that is best for everyone, so there is no one investment that is best for all investors."