Words of wisdom from Milton Friedman

 

Milton Friedman, an American statistician and economist, was the 20th century's leading advocate of free markets. He received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. 

With George Stigler, Friedman was among the intellectual leaders of the Chicago school of economics, a neoclassical school of economic thought that rejected Keynesianism in favor of monetarism, later shifting their focus to new classical macroeconomics. He believed that the free market, not the state, should determine the best way to achieve stability and prosperity.

Economist warns: the bicycle is the slow death of the planet

According to the General Director of Euro Exim Bank, the bicycle is the slow death of the planet.  

The noted economist got other economists thinking when he said, "A cyclist is a disaster for the country's economy: he does not buy cars and does not borrow money to buy. 

"He does not pay for insurance policies. He does not buy fuel, does not pay for the necessary maintenance and repairs. He does not use paid parking.

 

"He does not cause serious accidents. He does not require multi-lane highways. He does not get fat. Healthy people are neither needed nor useful for the economy. [Cyclists] don't buy medicine. They do not go to hospitals or doctors. Nothing is added to the country's GDP (gross domestic product). 

"On the contrary, every new McDonald's restaurant creates at least 30 jobs: 10 cardiologists, 10 dentists, 10 dietary experts and nutritionists, and obviously, people who work at the restaurant itself." 

So choose carefully: bicycles or McDonald's? It's worth thinking about!

Afterthought: Walking is even worse. Pedestrians don't even buy bicycles. 

Thanks to Agent 6, who, to the best of our knowledge, has never been seen riding a bicycle.

Footnote: Did you notice the name of the manufacturer of this fine penny-farthing bicycle. Here all this time I thought Popes were elected by the princes of the Church... for better or (in the case of the incumbent) worse.

Recession? What recession?

At school, I studied "Polisciandec" (Political Science and Economics). Political science was interesting. Economics, not so much. They don't call it "the dismal science" for nothing! Q. Why does God allow economists to live? A. To make astrologers look good by comparison! 

My point (and I do have one) is that political science and economics are inextricably intertwined. You can't do one without the other. Bad policies inevitably have bad economic consequences. This is a lesson which President Brandon and Prime Minister McBlackface seem not to have learned. Maybe they weren't in class that day. I commend to them, and to you, dear reader, The Forgotten Man: A New History of the Great Depression, by Amity Shlaes, HarperCollins 2007.

Our so-called leaders (and you) don't need to read the whole book. The introduction will do. It includes a quote from an 1883 essay called "The Forgotten Man", by William Graham Sumner, an American social scientist and classical liberal. To wit: 

As soon as A observes something, which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine...what C shall do for X, or in the better case, what A, B, and C shall do for X.... 

I call [C] the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of.... He works, he votes, generally he prays -- but he always pays.... 

There is nothing wrong (Ms Shlaes speaking now) with A and B helping X. What was wrong was the law, and the indenturing of C to the cause. Whereas C had been Sumner's forgotten man, [Roosevelt's] New Deal made X the forgotten man -- the poor man, the old man, labor, or any other recipient of government help. 

Roosevelt's work on behalf of his version of the forgotten man generated a new tradition. To justify giving to one forgotten man, the administration found, it had to make a scapegoat of another. Businessmen and businesses were the targets.... 

[During the Great Depression] C [became] the American who was not thought of. He was the Depression-era man who was not part of any political constituency and therefore lived the negatives of the period. 

He was the man who paid for the big projects, who got make-work instead of real work. He was the man who waited for economic growth that did not come.

As an editorialist in Indiana wrote in 1936, "Who is the 'forgotten man' in Muncie? I know him as intimately as I know my own undershirt. He is the fellow that is trying to get along without public relief and has been attempting the same thing since the depression that cracked down on him."

Roosevelt systematized interest-group politics...to include many constituencies.... [He] ministered to those groups, and was rewarded with votes. It can be argued that [he] created the modern entitlement challenge that so bedevils both parties.

[Roosevelt adopted] Keynesianism, named after John Maynard Keynes, [which] emphasized consumers, who were also voters. The theory gave license for perpetual experimentation. [It] also emphasized government spending. Yet focusing on consumers meant that Washington neglected the producer. Focusing on the fun of experiments neglected the question of whether unceasing experimentation might frighten business into terrified inaction.

Admiring the short-term action of spending drew attention away from its longer-term limits -- economies often go into recession when the spending disappears. 

Thus endeth the lesson. If you understand and agree with Ms Shlaes' analysis, you might bring it to the attention of your Congressperson or Member of Parliament. Chances are they won't "geddit", or, even if they do, won't dare -- if they are Democrats or Liberals -- to challenge their political masters. But when they finally admit that our economy is in recession, you'll be able to say "I told you so."

One thing Still-President Trump got absolutely right

There are many Americans [but surely not 50%! Ed.] who absolutely refuse to give Still-President Trump credit for a single thing that he did or tried to do to Make America Great Again. If he walked across the pool at his Florida estate they'd say he doesn't know how to swim! It's a pity that more Americans, especially the anti-Trumpers, didn't read The Expendables, by Jeff Rubin (PenguinRandomHouse 2020).

Ed. says that maybe the book didn't make a big splash in the Excited States of America because Jeff Rubin is a Canadian, and Americans just don't listen to Canadians. But Mr Rubin is not your typical Canuck milquetoast liberal. He is a world-leading expert on trade and energy, and former chief economist and chief strategist at Canadian Imperial Bank of Commerce World Markets, and recently served as a senior fellow at the Centre for International Governance Innovation. 

So Mr Rubin knows a thing or three about economics, and about the adverse effects of globalism and globalization, as promoted by George Soros and all the other Volvo liberals behind the campaign to turf President Trump out of office. They think globalism is wonderful, and why wouldn't they... it made them rich! But Jeff Rubin begs to differ.

The subtitle of The Expendables says it all. It reads: How the middle class got screwed by globalization. Our Agent 17, a member of said middle class, complained to me years ago (BT) that "China is eating our lunch." He was right. And the liberals made that happen! 

Through the World Trade Organization and trade deals like NAFTA and the Trans-Pacific Partnership -- all endorsed and promoted by the Prez and Mr and Mrs Clinton -- tariffs were lowered to the point of being non-existent, and millions of well-paying manufacturing jobs were off-shored to places like Mexico ("that great sucking sound"), Vietnam, Bangladesh and, of course, China.

What happened? The owners of multinational corporations like Amazon, Microsoft, Facebook, Apple, Walmart, etc etc, got rich beyond the dreams of avarice, while the American (and Canadian and OECD) middle class actually shrank. 

But, the liberals say, the poor people -- below middle class -- became better off. Not true, says Mr Rubin. More people than ever are working in McJobs and the gig economy, rather than steady well-paying jobs in industry. And because wages have been stagnant while profits grow, their standard of living has actually declined, as witness the growing numbers of those "experiencing homelessness" -- living in cars and RVs even in supposedly prosperous areas like Silicon Valley.  

What Donald Trump did right, but gets little or no credit for, was to put the brakes on globalization, by getting the US of A out of rotten trade deals like NAFTA and the Obama-sponsored TPP. He also lowered taxes to encourage the multinationals to bring their manufacturing plants back to America, while at the same time raising tariffs to make it less profitable to import cheap manufactured goods from countries which are America's enemies.

Is it any wonder that the business interests for whom Sleepy Joe Biden fronts wanted to put Mr Trump out of office? The President was throwing a monkey-wrench into the machinery of  globalization. He was upsetting the plan of  Soros & Co. to make America second-rate, economically as well as politically. He was trying to Make America Great Again! 

In closing let me quote one short passage from The Expendables. 

History warns us that when monopolistic control falls into the hands of the few (who make massive fortunes as a result), someone is getting scrwed.

Some commentators have suggested that the CEOs of today's tech giants -- Apple's Tim Cook, Facebook's Mark Zuckerberg and Amazon's Jeff Bezos, to name a few -- are the robber barons of our age. Their modern-day uniform of jeans and T-shirts may not scream "money" the way the three-piece suits and top hats of Rockefeller and his cohort did, but their enormous wealth dwarfs the riches of their nineteenth-century predecessors....

All of these CEOs are good at what they do. And what they do best is manipulate public governance in ways that the early twentieth-century global oil industry could only dream of. In the United States, where most of them are based, they have supported the establishment wing of the Democratic Party -- the same wing that was in power for eight years under President Obama [and Vice-President Biden. Walt] 

They've been outspoken on climate change, racial tolerance, gender equity, and all of the other hot button issues of American liberalism. But at the same time, the efforts to prove their liberal bona fides have helped protect this group from something they care far more deeply about: government regulation of the monopolies that have made them all multibillionaires.

"Gee, Walt," I hear some of you say, "Why didn't you tell us this before we voted?" Unfortunately I didn't start reading The Expendables until yesterday. But it's not like others weren't warning that the good works of the Trump presidency would be undone by the Democrats, once the likes of Kamala Harris, Bernie Sanders and the Squad get their hands on the levers of power.

Old Joe Biden himself promised that he would take care of the Obama administration's unfinished business, reverse the tax cuts, put America back in the Paris Accord and other globalist institutions, and generally turn back the clock to 2008. If you weren't paying attention and voted for him, you're about to learn, the hard way, why changing leaders and policies in the middle of an economic crisis was a baaaaad idea.

VIDEO: Trudeau's Canada "a disaster", sez "Shark Tank"'s O'Leary

Apologies to our American readers (the majority, on any given day) for posting so much on Canadian politics. But hey, Canuckistan's federal election is less than two months away (15 months for the US election), and I would hate to see those dear frost-backed people make the same mistake twice!

Since the Canadian establishment -- the mainstream parties and lamestream media -- are doing their utmost to silence the anti-establishment voices of Maxime Bernier and the People's Party of Canada, I think it's important to provide a channel for them and other voices to express contrary opinions. Here we have a short(ish) video of a Kitco News interview with Kevin O'Leary, star of Shark Tank. Mr O'Leary is a Canadian by birth and still spends much of his time in the Great No-longer-white North.

In this interview he voices his dismay at the mess the Canadian economy is in, thanks to the ineptitude (or worse) of the Liberal government of Just In Trudeau. He says that Canada's future hinges on putting someone, anyone in office instead of Mr Socks. "The country is a disaster," says Mr O'Leary, noting that another four years of the same leadership would cut the growth rate to zero. Anybody else would be better than M Trudeau, he says, predicting that he (Trudeau) will be gone come October 22nd. Let's hope so!



Footnote submitted by Agent 6 (PBUH): The car in front of me had a bumper sticker on it, which said: "Pray for Justin Trudeau: Psalm 109:8"
When I got home I opened my Bible (KJV) to the scripture and as I read, I started laughing. Psalm 109:8 says "Let his days be few; and let another take his office."

Why the Dow and S&P keep rising and Canadian markets suck

Canadian readers who play the stock markets are painfully aware that their portfolios of Canuck stocks are not keeping up with inflation, whereas investments in Donald Trump's America keep going up and up. Before the bell this morning, the Dow stood at 26,430.57 while the TSX languished at 15,854.05, in spite of the frenzy for cannabis stocks and the generally good economic numbers coming out of the Great No-longer-white North.

Why is this? George Athanassakos, a professor of finance and the Ben Graham Chair in Value Investing at the University of Western Ontario's Richard Ivey School of Business, has the answer. He calls it "the Trudeau effect". According to Prof. Athanassakos, statistics measuring employment, production and the like paint a picture of the economy as it is. Today's picture may be rosy enough, he says, but investors are thinking about tomorrow and the next day, trying to predict whether things will get better or worse. And when they look at the policies and actions of Just In Trudeau's Liberal government, they are not encouraged, so they don't pile into an "iffy" market.

The professor's thesis is nicely summed up in "The 'Trudeau Effect' dragging down Canada's stock markets just got much, much worse", published in Canada's Financial Post today. It's so good that I'm going to repost the whole thing, hoping that the Post and the prof won't mind. [We don't make any money from WWW -- not one red cent! Ed.] Here `tis. The emphasis is mine.

A few months ago I wrote in these pages about the “Trudeau effect,” my term for the serious underperformance of the Canadian stock market vis-à-vis the American markets since the election of the federal Liberal government under Justin Trudeau.

The differential market performance has become even more pronounced since I wrote that article, especially in the last three months. Over the last two years, as of the end of September 2018, State Street’s SPDR S&P 500 ETF Trust (ticker: SPY), which is designed to track the S&P 500, outperformed its Canadian equivalent, the iShares S&P TSX 60 Index ETF (ticker: XIU) by about 11.5 per cent on an annual basis. But from July to September 2018, we have seen the U.S. market index outperform the Canadian stock index by a whopping 28.8 per cent annualized.

One might ask: Why look at the stock market and not the performance of the economy? Indeed, Canada’s economic performance is one of the best in the G7 while the stock market has been a laggard. So what is a better gauge of successful management of the economy and the country? Should economic performance not be highly correlated with the stock market?”

In reality, the stock market discounts the future not the current economic performance. And Canada’s future looks less than clear under the stewardship of this Liberal government.

Trudeau and his ministers have made it clear they want corporations to become benevolent organizations that put workers before shareholders. They favour taxing corporations and the rich, and adding regulatory impediments and red tape to corporate activity. They are big supporters of income redistribution as opposed to making the pie bigger for everyone. They want to regulate the economy and nudge corporations to submit to the Liberal government’s social views and economic philosophy.

Their policies take away economic entrepreneurship and wealth creation and replace it with handouts to every significant lobby and activist group. The Liberal government increasingly seems not to understand how people get jobs and how they get by, and how heavily favouring environmental issues stirred up by activists over economic concerns takes jobs away.

There’s an old saying that if you’re not a communist at the age of 20 you haven’t got a heart and if you’re still a communist at the age of 40, you haven’t got a brain. Canada today seems to be run by politicians in their 40s behaving like they’re in their 20s. Focusing only on the environment or on social engineering at the expense of working families is elitist. And Canadians are getting the sense that they are governed by a bunch of idealistic and dogmatic college students convinced they will save the world.

The Liberals have crossed swords with powerful countries. They have antagonized the United States, Russia, China, India and Saudi Arabia, just to mention a few. But a small country like Canada has to co-operate with powerful countries, not sit and judge them disapprovingly from some moral high horse. And progress takes time. Improvements to society and the world happen incrementally, not instantaneously.

When a democratically elected majority government ends up following policies driven by activists, it is neglecting its larger mission and mandate and that will eventually hurt the economy. This is what the stock market is anticipating.

Footnote: The photo of Mr Socks making cow eyes at George Soros did not appear in the Post!

Adam Smith says POTUS is wrong on tariffs and trade

Who dares to take issue with President Trump's desire to raise tariffs on steel, aluminum and a wide range of goods America imports from its friends and allies, and thus provoke a trade war? Adam Smith, that's who!

Mr Smith was a Scottish economist, philosopher and author as well as a moral philosopher, a pioneer of political economy and a key figure during the Scottish Enlightenment era. He is best known for two classic works: An Inquiry into the Nature and Causes of the Wealth of Nations (1776) and The Theory of Moral Sentiments (1759). The former, usually abbreviated to The Wealth of Nations, is considered his magnum opus and the first modern work of economics.

Adam Smith was a classical liberal -- the good kind -- and a firm believer in free trade. In The Wealth of Nations, he argues for three foundations of modern economics, viz.:

1. pursuit of self-interest - It's OK to look out for Number One
2. division of labour - It's folly to have everyone build his own house when different people can be employed to dig the foundation, do the framing and put the roof on
3. freedom of trade - I give you something you want, and I get something I want, which goes back to the first principle. 

The Wealth of Nations is a huge book -- huge in its impact on political thought and, unfortunately, huge in size -- over 900 pages even in an abridged edition. Everyone who fancies himself [or herself! Ed.] a thinker refers to Adam Smith, but few actually quote him because few have read this literally magnum opus. P.J. O'Rourke has done so, or skimmed through it at least, and has produced a remarkably slim "Best of Adam Smith" book called On the Wealth of Nations (Douglas & McIntyre, 2007), from which I've drawn this passage (from Book 4 of the original work). The words of Adam Smith, himself, are shown in italics.

Smith disdained trade retaliation: "Those workmen...who suffered by our neighbours' prohibition will not be benefited by ours. On the contrary, they and almost all the other classes of our citizens will thereby be obliged to pay dearer than before for certain goods."

And Smith gave the lie to claims that tariffs protect working stiffs: "To lay a new tax upon them...and because they already pay too dear for the necessaries of life, to make them likewise pay too dear for the greater part of other commodities, is certainly a most absurd way of making amends."

As for all our money going overseas, Smith had shown in book 2 of Wealth why this doesn't harm an economy: "we must not imagine that it is sent abroad for nothing." And Smith was referring to gold bullion. Gold always has some value.... The American money that the Chinese are getting is fiat currency that could turn into wastepaper at any time.

By holding dollars and dollar-denominated securities, China is buying our debt. Smith had declared, "A man must be perfectly crazy who...does not employ all the stock which he commands, whether it be his own or borrowed." If Americans think they're using all the capital they can get their hands on "in the way that they judge most advantageous to themselves," they'd be crazy not to be in debt.

As I pointed out in "MAGA to MAAA - Walt explains President Trump's 'trade war' strategy", WWW 1/6/18, Making America Great Again doesn't necessarily involve Making America Alone Again. Reverting to the protectionism of a hundred years ago will almost certainly be counter-productive. If POTUS persists in making war on America's allies (no matter how irritating their leaders may be), it will not end well. Lifetime pct .986.

VIDEO: "Debt Bomb" : Dominic Frisby explains the global financial crisis

Dominic Frisby is a good name for a stand-up comedian (I guess), but an unlikely name for someone who wishes to be taken seriously as a "fiancial bod" (whatever that is) and "voice of many things". A quick look at his website shows that "many things" includes geopolitics and economics in general, and in particular the debt trap with which the banks enslave individuals and nations alike.

Dominic Frisby thus has joined the ranks of those who, like Walt's buddy Ron McPherson, creator of "Facilitism", believe it's high time the world's financial "system" was reformed, or scrapped altogether!

Thanks to Agent 6 for making us aware of Mr. Frisby, and providing the link to this short but powerful argument that the system has to be changed, if we are to avoid worldwide financial ruin.



Further reading (and viewing) on WWW:
"Book review: 'A Better World for All'"
"VIDEO: Enslaved by our banks: 12-year-old Canuck explains"

$1,000,000,000,000 down the African drain

In case you missed it [As if you could, with all the negative stories in the lamestream media! Ed.], Ugandan President Yoweveri Museveni yesterday signed into law a statute criminalizing homosexual behaviour in his small African country. Click here to see a short report and video clip from BBC News. Fudge-packing and other gay things can now get you up to life in a Ugandan jail -- not a pleasant prospect.

What does this have to do with the headline above? Well... in response to the Ugandans' refusal to bend over for political correctness and the LGBT agenda, Prez B. Hussein Obama (who does a lot of bending in that direction) announced that the Excited States of America would "review" its programme of foreign aid to Uganda.

So what?! Well... in Walt's humble opinion [!!! Ed.], cutting off aid to Uganda and the rest of Africa would be doing the Dark Continent a huge favour! Before you accuse me of being callous, uncaring and racist, let me point out that the same opinion has been voiced -- very eloquently too -- by William Easterly in The White Man's Burden (Penguin, 2007) and Dambisa Moyo in Dead Aid (Farrar, Straus & Giroux, 2009). Walt recommends both books highly.

Both Dr. Easterly and Dr. Moyo are economists. Both have worked for the World Bank, one of the chief dispensers of "development aid", which is one of the three types of foreign aid extended by the West to the Rest (as Dr. Easterly puts it). In the last half-century, over a trillion US dollars in aid has been doled out to Africa. That's US$1,000,000,000,000 -- a thousand billion or a million million bucks, dear taxpayers, of your money and mine.

What do we have to show for it? Are the countries of Africa better off today than they were in the bad old colonial days, 50+ years ago? Errr, no. So say both of the esteemed doctors. Dr. Moyo tells us that her best friend, a Zambian who was educated and working in America, returned home to find "that her country continues to flounder in a seemingly never-ending cycle of corruption, disease, poverty and aid-dependency."

Why so? Dr. Moyo explains. "Aid has failed to deliver the promise of...poverty reduction.... [Instead] it perpetuates the cycle of poverty and derails sustainable economic growth."

Dr. Easterly takes up the same theme at considerably greater length. The White Man's Burden is replete with the charts, graphs and tables so beloved of economists, which suffer from being over-simplified to print in black and white, but the statistics are there. And both authors reach the same conclusion, that all this well-intentioned "aid" has been largely wasted.

Dead Aid suggests five possible reasons for the discrepancy between the promise and the result. One possibility -- and it's significant that Dr. Moyo says this -- is "the largely unspoken and insidious view that the problem with Africa is Africans -- that culturally, mentally and physically, Africans are innately different. That, somehow, deeply embedded in their psyche is an inability to embrace development and improve their own lot in life without foreign guidance and help."

Dr. Easterly wouldn't touch that one, and neither will Walt.

Part of the "problem with Africans" -- that's me speaking, now -- is the corruption which is endemic to every single African country with the possible exception of Botswana. Dr. Moyo returns us to our point of beginning. "In Uganda, for example, aid-fuelled corruption in the 1990s was thought to be so rampant that only 20 cents of every US dollar of government spending on education reached the targeted local primary school."

Quoting now from Niall Ferguson's foreword to Dead Aid, "Despite the widespread Western belief that 'the rich should help the poor, and the form of this help should be aid', the reality is that aid has helped make the poor poorer, and growth slower. In Moyo's startling words: 'Aid has been, and continues to be, an unmitigated political, economic and humanitarian disaster..."

Both Dr. Moyo and Dr. Easterly offer alternative sources of funding for the economic and humanitarian help Africa so badly needs. Dr. Easterly's remedy requires the people he describes as "Searchers" -- those in need of help and those looking for a practical way to help -- to find their own solutions, rather than holding out the begging bowl yet another time.

Walt suggests this paraphrase of a much-used cliché: don't give them a fishing rod; make them go and find one! And before you can do that, you have to stop giving them fish!

Further reading on WWW: "Jeffrey Sachs and the great Ugandan donkey fiasco".

Rex Winship explains what Jimmy Carter couldn't -- how to fix America

Working is a musical with a book by Stephen Schwartz and Nina Faso, based on Studs Terkel's book Working: People Talk About What They Do All Day and How They Feel About What They Do (1974), which has interviews with people from different regions and occupations. One of the lesser characters in the musical also appears in The Great Divide, highly recommended here a couple of days ago.

When I first read about the musical, I began to worry that Rex Winship might be a fictional character, a figment of Studs Terkel's imagination. But no, he's real -- a character from recent American history.

So accurate and so powerful were his observations on the state of the nation (as transcribed by Mr. Terkel) that his remarks are being read and discussed by students looking for a fix for what ails America. Check out the posts on Andrew's US History Lounge (by Andrew Sloan) and Maddie's US History Lounge (by Maddie Greenberg).

Andrew says, "Rex Winship used the pattern of money and markets to predict future society and economy. I planned on reading about trading [Mr. Winship was a successful dealer in futures], but all I can think about is his foresight.

"The prediction that really resonates and truly amazed me was when he declared that there would be tremendous debt in the nation’s future because everybody would become consumers rather than savers. That exact situation is presenting a great problem for the nation’s economy. I am in awe of these predictions and truly do not understand how he could have had such great foresight."

See now, Rex Winship had it all figured out, way back in the 70s and 80s! And he knew what needed to be done to counteract the downhill trends that he saw in those days, something apparently eluded Jimmy Carter, who (as Walt pointed out yesterday) still hasn't got it figured out. I chose this Rex Winship quote from The Great Divide:

"If we lowered the taxes and cut down on government spending, the business sector will explode. The first thing I'd cut would be the military spending. Blowing up bombs...doesn't help the economy.

"I wouldn't cut welfare payments. When you give money to somebody on welfare, she spends it to buy food and clothing. Jobs are created.... I would always give poor people money because they spend it."

Right on, Rex! It all seems to simple, and yet the bloody fools in Washington are yammering about increasing the debt limit, cutting welfare, keeping the "stimulus" going, and all the other magic which everyone seems to think it's up to the government to perform.

The government, and only the government can solve America's economic problem. Who do they think put the USA into the mess in the first place?! Ron Paul is right. I wouldn't be surprised if Mr. Paul read Rex Winship!

Black guy sees disaster ahead for US if Obama wins

The "Black guy" Walt refers to is Conrad Black, the ex-con who was formerly Lord Black of Cross Harbour, and founder of the Daily Tubby, [National Post, surely. Ed.] for which newspaper he continues to write a column.

His ex-lordship is a keen observer of Canadian politics, and of American politics even more so. Today he has a dire prediction regarding the upcoming presidential election. Its title: "Canada's front row seat for the American disaster". It's virtually impossible to precis Mr. Black, so Walt has selected three excerpts to give you the flavour and gist of his argument.

It is notorious that most Canadians are to some degree anti-American, though most are also appreciators of America, and this makes the present election in the United States, unfathomably banal though the campaign has been so far, a matter of legitimate comfort to most Canadians....

In an astounding demonstration of national fecklessness, a failed president is running slightly ahead in the polls of a challenger who has a real CV, unlike recent presidents, but who is so politically oafish and plastic, he makes Elmer Fudd seem charismatic....

Either Romney lucks through and numerate sanity starts to return to American public life, or the most self-destructively incompetent regime since James Buchanan brought on the Civil War, will come back and stoke up a truly spectacular inferno that will purify America in a mighty economic Jonestown.

Strong stuff. American voters, don't say you weren't warned!

"You have two cows..." (for Canucks)

Further to yesterday's update of the old "You have two cows" study of economic systems, Agent 3 has filled in the blank for Canada.

You have two cows. Vous avez deux vaches. You pay HST on the cows, your milking machine, their feed and the water they drink. You sell government-inspected milk in government-inspected containers by the government-mandated litre, and you charge HST on the milk.

You spend hours every week completing government information forms, tax returns and applications for assistance. When your tax assessment comes, you are obliged to sell one of the cows to pay your accountant and what's owing on the taxes.

You go broke and apply for welfare. You are refused because you still have one cow. You starve to death. So does the cow.

"You have two cows..." (latest version)

Ron McPherson, the father of Facilitism, has passed along an updated version of "You have two cows", a tongue-in-cheek explanation of various economic "systems" which has been floating around the internet for years. Here's the latest take on how modern economics works (?) in different parts of the world.

SOCIALISM: You have 2 cows. You give one to your neighbour.

COMMUNISM: You have 2 cows. The State takes both and gives you some milk.

FASCISM: You have 2 cows. The State takes both and sells you some milk.

NAZISM: You have 2 cows. The State takes both and shoots you.

BUREAUCRACY: You have 2 cows. The State takes both, shoots one, milks the other, and then throws the milk away.

TRADITIONAL CAPITALISM: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.

ROYAL BANK OF SCOTLAND (VENTURE) CAPITALISM: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the USA, leaving you with nine cows. No balance sheet provided with the release. The public then buys your bull.

AN AMERICAN CORPORATION: You have two cows. You sell one, and force the other to produce the milk of four cows. Later, you hire a consultant to analyse why the cow has dropped dead.

A GREEK CORPORATION: You have two cows. You borrow lots of euros to build barns, milking sheds, hay stores, feed sheds, dairies, cold stores, abattoir, cheese unit and packing sheds. You still only have two cows.

A FRENCH CORPORATION: You have two cows. You go on strike, organise a riot, and block the roads, because you want three cows.

AN ITALIAN CORPORATION: You have two cows, but you don't know where they are.You decide to have lunch.

A SWISS CORPORATION: You have 5000 cows. None of them belong to you.You charge the owners for storing them.

A CHINESE CORPORATION: You have two cows. You have 300 people milking them. You claim that you have full employment, and high bovine productivity. You arrest the newsman who reported the real situation.

AN INDIAN CORPORATION: You have two cows.You worship them.

A BRITISH CORPORATION: You have two cows. Both are mad.

AN IRAQI CORPORATION: Everyone thinks you have lots of cows.You tell them that you have none. No-one believes you, so they bomb the crap out of you and invade your country. You still have no cows, but at least you are now a Democracy.

AN AUSTRALIAN CORPORATION: You have two cows. Business seems pretty good. You close the office and go for a few beers to celebrate.

FACILITISM: You have two cows. You, the cows, and everyone else is contented.

Well, he would say that, wouldn't he? Seriously, facilitism is a fascinating -- if utopian -- concept. If you'd like to learn more about how it would work (!), buy Ron's book, Freedom's Dawning. Click here and tell him Walt sent you.

More topless Ukrainian protesters - Walt has video!

"Topless driving ban protest rocks Kiev" is a perennial leader on our "page views" stats board. So Walt knows many of our readers will appreciate this video.


These Ukrainian cuties bared all in the caues of social equality. They were detained yesterday at Davos, Switzerland, while trying to break into the fat cats summit. The poor people of the world should be grateful to have such fine upstanding young ladies calling attention to their... errr... well...

Video from the Daily Telegraph, which used to be a pretty staid, Tory paper.

Where did the dollar go?

I've never been much good at managing money. [If you were, we wouldn't have to accept advertising on this blog! Ed.] But most of the time I can keep track of how much I owe to whom. So I'm thoroughly annoyed not to be able to solve the following puzzle, passed along through my old Zimbo friend CZ.

You saw a shirt in a shop on sale for $97. Being January, you naturally did not have money, so you borrowed $50 from your mom, and another $50 from your dad, making a total of $100. You bought the shirt for $97 and got $3 change. [Would that be in three bills or just one? Ed.]

From the change, you repaid your mom $1 and your dad $1, and you kept $1 for yourself. Now you owe your mom $49 and your dad $49. So...$49 plus another $49 equals $98, right? Which, added to the other $1 you pocketed, makes a total of $99. So where did the missing buck go?

Answers to Walt by e-mail please. The person who submits the first correct solution will be recommended by Walt to President O'Bama (if he gets re-elected) for Secretary of the Treasury in the new administration.

Book review: advice for the coming depression, from a survivor

James Henry Gray (d. 12 November 1998) was a Canadian journalist, historian and author. Born in rural Manitoba in 1906, he moved to Winnipeg with his parents at age 5. At 16, he dropped out of school and went to work as a messenger boy at the Winnipeg Grain Exchange. Over the next eight years, he worked as an office clerk, bookkeeper, statistician and grain trader.

Then, in 1930, he became a victim of what we now call the Great Depression. He tried his luck at a number of jobs and business ventures, failed every time, and was finally forced to go on relief, on which he lived for the next four years. During that time, he upgraded his education by reading library books on politics, religion and economics, with a view to becoming a freelance writer.

And a fine writer he became. Between 1966 and 1991 he wrote a dozen books about his experiences and the world he saw around him on Canada's prairies. His works of social history became so popular as to see him made a Member of the Order of Canada.

This week Walt blew the dust off James Gray's first book, The Winter Years (Macmillan, 1966). In it, he describes how it felt to be one of the thousands of unemployed and destitute in Winnipeg during the early 30s. He stood in line for relief vouchers to support his young family. And, with other men, he experienced "workfare" -- picking dandelions in city parks.

When he finally got work as a cub reporter for the Winnipeg Free Press, he was dramatically caught up in the general unrest and bewilderment, as indignant men sought answers from governments. Of course the governments had no answers, just as they have no answers to the same questions eighty years later.

Getting no answers and precious little help, men rioted in Winnipeg and Regina, and headed for Ottawa in freight cars. We see echos of that time and that frustration in today's "Occupy movements".

The Winter Years tells how ordinary people, and thus the country, survived -- not by dint of government intervention but by the courage and resourcefulness of the human spirit. Gray sums up his philosophy neatly in the last paragraph of the introduction.

The depression brought out more of the best than it did the worst in people; that people, if left alone, tend to work out their own problems for themselves; that expert advice, particularly in economic matters, is most useful when it is completely ignored....

The emphasis is mine. The Winter Years is well worth reading not as history but as prediction. I'd like to send a copy to our political bosses and economic czars. Perhaps they could avoid having to learn the same lessons one more painful time.

Other good books by James H. Gray include: Men Against the Desert (1967); Red Lights on the Prairies (1971); Booze – When Whisky Ruled the West (1972); and The Roar of the Twenties (1975).

How a government stimulus package works

It’s a cold day in the small town of Bugtussle and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.A traveller comes to town and lays a $100 bill on the hotel desk, saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the hotel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her services on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything. At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

No one produced anything. No one earned anything. However, the whole town is now out of debt and now looks to the future with a lot more optimism. That, ladies and gentlemen, is how a "stimulus package" works.

Thanks and a tip of the toque to Agent 6.

How to fix the economy - Part I

This is the beginning of my three-part adaptation of Stephen Leacock's thoughts on what ails the economy and how to put it right. Parts II and III will be found below.

On recent travels through this country, I could not help being struck by the situation of business. Passing through the factory towns and noticing that no smoke came from the tall chimneys and that the doors of the factories were shut, I was led to the conclusion that they were closed.

Observing that the streets of the industrial centres were everywhere filled with idle men, I gathered that they were unemployed. When I learned that the theatres were full to the doors every day and that the concert halls, beer gardens, grand opera and religious concerts were crowded to suffocation, I inferred that the country was suffering from an unparalleled depression.

This diagnosis turned out to be absolutely correct. It has been freely estimated that at the time I refer to, almost two million men and a like number of women were out of work. What with the lowering of dividends and the raising of taxes, the closing of factories, feeding the unemployed and trying to employ the unfed, things are in a bad way.

The underlying cause is plain enough. The economic distress that the world suffers now does not spring from what is happening in Europe or India or China. The danger of industrial collapse comes rather from what is happening in our country itself.

For generations, industry in America and Britain has flourished on individual effort called out by the prospect of individual gain. Every man acquired from his boyhood the idea that he must look after himself. Morally, physically and financially, that was the recognized way of getting on.

The desire to make a fortune was regarded as a laudable ambition, a proper stimulus to effort. The ugly word "profiteer" had not yet been coined. It was not politically incorrect to be a "capitalist". There was no income tax to turn a man's pockets inside out and take away his savings. The world was to the strong.

Under the stimulus of this, the wheels of industry hummed. Factories covered the land. National production grew to a colossal size and the whole outer world seemed laid under a tribute to the great industry.

As a system it was far from perfect. It contained in itself all kinds of gross injustices, demands that were too great, wages that were too small. In spite of the splendor of the foreground, poverty and destitution hovered behind the scenes. But such as it was, the system worked: and it was the only one that we knew.

Or turn to another aspect of this same principle of self-help. The way to acquire knowledge in the early days was to buy a tallow candle and read a book after one's day's work, as Benjamin Franklin read or Abraham Lincoln. And when the soul was stimulated to it, the aspiring youth must save money, put himself through college, live on nothing, think much, and in the course of this starvation and effort become a learned man, with somehow a peculiar moral fibre in him not easily reproduced today.

For today the candle is free and the college is subsidized by the state. The student has "union" like the capitalist's club, with a swimming pool and a drama league and a society coed at his elbow for which he buys American Beauty roses at twenty dollars a dozen.

Adapted from from My Discovery of England, by Stephen Leacock, 1922, Toronto, S.B. Gundy. Stephen Butler Leacock, FRSC (30 December 1869 – 28 March 1944) was a Canadian economist, writer and humorist. He lived and wrote before the rise of the nanny state and political correctness.

How to fix the economy - Part II

This is the second instalment of my three-part adaptation of Stephen Leacock's thoughts on what ails the economy and how to put it right. Part I will be found above, and the conclusion appears below.

Or turn if you will to the moral side. The older way of being good was by much prayer and much effort of one's own soul. Now it is done by a state-appointed board of censors. There is no need to fight sin by the power of the spirit. Let the board of censors do it. They together with three or four kinds of commissions are supposed to keep sinful actions, even sinful thoughts at arm's length, and to supply a first-class legislative guarantee of righteousness.

As a shortcut to morality and as a way of saving individual effort, our legislatures are turning out morality legislation by the bucketful. The legislature regulates our drink, it guards against the deadly cigarette, it regulates here and there the length of our skirts, it safeguards our amusements and in some states of the Union even proposes to save us from the teaching of the Darwinian Theory of Evolution.

The ancient prayer "Lead us not into temptation" is passing out of date. The way to temptation is declared closed by Act of Parliament and by amendment to the Constitution of the United States. Yet oddly enough the moral tone of the world fails to respond. The world is apparently more full of thugs, muggers, bandits, buggers, pornographers, spies and crooked policemen than it ever was. It almost seems that the slow, old-fashioned method of an effort of the individual soul may be needed still before the world is made good.

This vast new system, the system of leaning on the government, is spreading like a blight over America, and everywhere we suffer from it. Government, that in theory represents a union of effort and a saving of force, sprawls like an octopus over the land. It has become like a dead weight upon us.

Wherever it touches industry it cripples it. It runs railways and makes a heavy deficit. It builds ships and loses money on them. It operates the ships and loses more money. It piles up taxes to fill the vacuum and when it has killed employment, opens a bureau of unemployment and issues a report on the depression of industry.

The only way to restore prosperity is to give back again to the individual the opportunity to make money, to make lots of it, and when he has got it, to keep it. The raw assets of our globe are hardly touched. There are vast empty spaces still. The idea of our humanity sadly walking the streets of Buffalo or sitting mournfully fishing on the piers of the Mississippi, out of work, would be laughable if it were not for the pathos of it.

The world is out of work for the simple reason that the world has killed the goose that laid the golden eggs of industry. By taxation, by legislation, by popular sentiment all over the world, there has been a disparagement of the capitalist. And all over the world capital is frightened. It goes and hides itself in the form of an investment in a bond, a thing that is only a particular name for a debt, with no productive effort behind it and indicating only a dead weight of taxes. There capital sits like a bullfrog hidden behind water lilies, refusing to budge.

Hence the way to restore prosperity is not to multiply government departments and government expenditures, nor to appoint commissions and to pile up debts, but to start running again the machinery of bold productive effort.

Adapted from from My Discovery of England, by Stephen Leacock, 1922, Toronto, S.B. Gundy. Stephen Butler Leacock, FRSC (30 December 1869 – 28 March 1944) was a Canadian economist, writer and humorist. He lived and wrote before the rise of the nanny state and political correctness.

How to fix the economy - Part III

This is the conclusion of my three-part adaptation of Stephen Leacock's thoughts on what ails the economy and how to put it right. Parts I and II will be found above.

Take off all the excess profits taxes and the surtaxes on income and as much of the income tax itself as can be done by a wholesale dismissal of government employees and then give industry a mark to shoot at.

What is needed now is not the multiplication of government reports, but corporate industry, the formation of any kind of corporation that will call out private capital from its hiding places, offer employment to millions and start the wheels moving again.

The next thing to be done, then, is to fire the government officials and bring back the profiteer. As to which officials are to be fired first, it doesn't matter much. If the edge of the axe of dismissal seems too sharp, hit with the back of it.

As to the profiteer, bring him back. If the promoters of corporations presently earn huge fortunes for themselves, society is none the worse. In any case, humanity being what it is, they will hand back a vast part of what they have acquired in return for honorary degrees or bits of blue ribbon or whatever kind of glass bead fits the fancy of the retired millionaire.

Yes, bring back the profiteer -- the same person who not so long ago was called a Captain of Industry, an Empire Builder and a Nation Maker. It is the times that have changed, not the man. He is there still, just as greedy and rapacious as ever, but no greedier. And we have just the same social need of his greed as a motive power in industry than we ever had, indeed a worse need than before.

We need him not only in business but in the whole setting of life, or if not him personally, we need the eager, selfish but reliant spirit of the man who looks after himself and doesn't want to have a spoon-fed education and a government job alternating with a government dole, and a set of morals framed for him by a board of censors.

Show such a man a map of the world and ask him to pick out a few likely spots. The trained greed of the rascal will find them in a moment. Then write him out a concession for oil in central Asia or irrigation in the Australian Outback. The ink will hardly be dry on it before the capital will begin to flow in.

Wealth will come from all kinds of places whence the government could never coax it and where the tax-gatherer could never find it. Only promise that it is not going to be taxed out of existence and the stream of capital which is being dried up in the sands of government mismanagement will flow into the hands of private industry like a river of gold.

And incidentally, when the profiteer has finished his work, we can always put him back into the penitentiary if we like. But we need him just now.

Adapted from From My Discovery of England, by Stephen Leacock, 1922, Toronto, S.B. Gundy. Stephen Butler Leacock, FRSC (30 December 1869 – 28 March 1944) was a Canadian economist, writer and humorist. He lived and wrote before the rise of the nanny state and political correctness.