The 2020 US Presidential election

The enduring victory is with the Trump voters. It disappointed me that Trump did not win a second term. However, there is much to be pleased about the outcome for those of us who prefer freer markets and smaller Government. The election proved that there is no left wing majority vote in America. It was a relatively tiny number of votes by which Biden succeeded. There was no blue wave, no sweeping green new deal, no momentum, no feeling of a new direction, no change in the Senate numbers. This is not a new beginning as the changing of control of the White House usually signals. For evidence, see the internal infighting that has already broken out with ferocity within the Democrat party. They too know this was not a victory. Biden is to begin his Presidency in the weakest state that any presidency has ever started.

It is worth noting that Trump is challenging the election tally in some states and I expect he won’t give in easily. There is enough suspicion and doubt over the results to make the challenge interesting. How exactly did so many ballot papers get discovered in the middle of the night almost all of which had voted for Biden? In any event, there is enough public awareness about the potential fraud that electorate voting methods will have to be cleaned up and tightened for future elections. Another win for the Trump voters.

This election was not all about removing Trump. It was about the confirmation of the 2016 result. It was about Trump showing the way for the Republican party to capture votes – give the people a genuine alternative approach. Drain the swamp was a message that resonated. For decades, the Republican and Democrat parties looked like each other. Under Obama, that changed as he started dragging the Democrats left and it would have accelerated under a significant Biden victory. The voters put a stop to that. Ever increasing taxes, regulations, wealth redistribution, porous borders, constraints on personal liberties and critical race theory are not as popular as the extremists in the Democratic party thought. Get woke, go broke. The Democrats have just found out what a number of virtue signalling corporations discovered recently.

The socialist state is not coming to America yet. The significance of Donald Trump to American politics, and indeed to centre right parties around the world if they care to take note, will become better understood over time. He may not yet be gone, but his legacy has already begun.

Modern Monetary Theory part 3 – underutilized resources

Continuing this critique of Modern Monetary Theory, I now come to the standard explanation of the MMTers as to why inflation will not break out when the Government prints money – they refer to the excess capacity in the economy. According to the theory, if an economy is suffering unemployment, then there is not enough demand to fully use the resources. Printing money is a costless way to increase demand, get the unemployed into work and increase wealth. Inflation will be a risk only if there is no excess capacity, no underutilized resources in the economy.

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Modern Monetary Theory Part 2: inflationary experience

In Part 1 of my criticism of Modern Monetary Theory, I explained currency debasement was a fundamental part of it. In this Part 2, I will explain why the whataboutery that is used by the MMTers can be dismissed.

Whataboutery. A useful noun. It is frequently heard coming from MMTers when a critic of MMT says printing money will lead to inflation – but what about Japan? they say. Over the last 25 years, Japan’s money supply has more than doubled. Yet inflation has not broken out much at all. See?

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Modern Monetary Theory part 1: currency debasement

MMT advocates currency debasement. Proof of this is given by the MMT proponents (the ‘MMTers’) themselves by their proposing the use of taxation to then control inflation.

That is the very first point about MMT that should be grasped. Currency debasement occurs by ‘printing money’. The MMTers say that the Government monopoly on the currency issue means it can print money to finance its own expenditure. Then tax can be used to control inflation.

You may have seen this written as the breakthrough idea – that Governments actually are not bound by the need to finance expenditure via borrowing and/or taxation. The deficit doesn’t matter, they say. This is meant to be the whole new (hence ‘modern’ nomenclature) understanding. I hate to pour cold water on the naming of the theory, but currency debasement is not new or modern. It is as old as currency itself. From shaving off the outer thin layer of the coinage in Roman times to melt down the silver while the coin retained its face value, to printing counterfeit bank notes, to quantitative easing – currency debasement has been a problem ever since day 1.

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Renewable energy – a futile decades long experiment with other peoples’ money

Reliable energy generation from renewable sources (solar, wind and hydro) has proven unattainable. Despite decades of trying, decades of subsidizing renewable energy projects using other peoples’ money, they can never work. Australia has one of the world’s largest supplies of cheap reliable proven energy: coal. Yet Government action is actively killing the coal industry to give a leg up to renewable projects. It may well end up killing the coal industry and smashing the standard of living of Australians. But we can say with certainty, that reliable energy cannot be generated by solar, wind or hydro facilities.

The serious situation of the Three Gorges Dam

In case things were not bad enough already in China, there is a serious situation rapidly turning into the risk of a catastrophe with the Three Gorges Dam. In brief, its structural integrity appears to be compromised. Combined with very high rainfall in the catchment area of the Yangtze River, the Dam is buckling and the authorities are releasing as much water as is possible to take the pressure off. But it might not be enough. Should the dam fail, it would cause a catastrophe in China.

The first impact would be humanitarian. Millions of people live and work downstream of the dam. Casualties would be large in number. The second impact would be local economic wipe out. The third would be international economic consequences. The fourth impact would be political reprisal. This is not looking good.

COVID-19, the economics teacher

COVID-19 is both a virus and a teacher. The virus bit, you know about. The teaching angle is the subject of this post.

We earn a living only by serving somebody else. Everyone in a market economy has a boss, from Company directors to the newly hired casual in the basement, from the small business owner to the freelancer. To do their job, they must organise inputs in some way to deliver outputs to the satisfaction of the end user. COVID-19 restrictions have disrupted those inputs, the production process and sales, drastically so in some cases. It makes not a jot of difference to the principle at stake whether you are the CEO of the world’s largest corporation, or just starting out in the basement on a casual contract. All that varies is the complexity of the process to be restored.

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COVID-19 update

The total number of people that die in any one year across the whole world is currently around 56 million. Of those, around 28 million were over age 70.

The current total number of deaths due to COVID-19 is 56,000 globally. Of those, the proportion aged over 70 appears to be very high, at least 80% based on what scant data is available.

The global workforce is almost entirely aged less than 70 years. Thus COVID-19 has killed around 11,200 people of potential workforce age. In any typical year, the number of deaths globally of potential workers is 28 m. Thus the increase in workforce deaths, so far, is 0.04%.

Source: ourworldindata.org