The Roaring Twenties brought Electrical Power and Broadcast Radio into our Homes
We take music for granted today. We can listen to pretty much anything we want to. At any time. In any place. In the home. In the car. At the gym. It’s nice. You can listen to some of the most beautiful music at your convenience and leisure. It wasn’t always like this, though. During the time Edvard Grieg composed his masterpieces few could listen to them. Unless you attended a live performance. Which weren’t that readily available. Unless you lived in a big city. Where a symphony orchestra could include some of his music in a performance. But you had to listen to what they played. And what they played was the only music you were familiar with. Unless you had a friend with a piano. Who could read sheet music. And was a concert-level pianist. Again, something not that common.
But today you can click on a computer link and listen to almost any obscure piece of music there is. From Grieg’s beautiful Bådnlåt (At the Cradle), lyric piece for piano, Op. 68/5. To something really esoteric like Sparks’ As I Sit Down To Play The Organ At The Notre Dame Cathedral. You can listen to them. You can buy them. Download them to a portable MP3 player. And take them anywhere. Just imagine trying to do this in 1899. Going to the lake. And wanting to listen to Grieg’s new lyric piece for piano. Opus 68. Number 5. At the Cradle. Unless you took a piano and a concert-level pianist with you that just wasn’t going to happen. But this all changed. Beginning around the dawn of the 20th century.
Nikola Tesla had recently won his war with Thomas Edison. His AC power replaced Edison’s DC power as the standard. And in the 1920s we were electrifying the country. We began to generate and transmit AC power across the land. To businesses. And to homes. Where we could plug in the new electrical appliances coming to market. We were working on another new technology during this time. Something that could plug in at home to the new electrical power. The radio. This technology had something to do with electromagnetic fields and waves. Transmitted between antennas. One on a transmitter. And one on a receiver. As long as the transmitter and the receiver were tuned to the same frequency. The first use of this new technology was in the form of a wireless telegraph. Which few people had in their homes. These were more useful to communicate with others who were not connected by telegraph lines. Like ships at sea. Where we sent Morse code (those dots and dashes that spelled words). Which worked well. As long as all the ships didn’t tried to communicate at the same time on the same frequency. But transmitting speech or music was a different manner. Because everyone talks more or less in the same band of frequencies. And notes played on one violin tend to play at the same frequency on another violin. So if some radio transmitters broadcasted different concerts at the same time you wouldn’t hear a nice concert on your radio. You’d hear a cacophony of noise. To get an idea what that would sound like open up three or four browser windows on your computer. And play a different song on YouTube in each. What you hear will not be music. But noise.
In the Eighties we traded our Phonograph Needles for Laser Beams in our CD Players
Of course, this didn’t stop the development of commercial broadcast radio. For we tune radio transmitters and radio receivers to the same resonant frequency. The transmitter transmitting at one frequency all of the time. While the radio receiver could tune in to different frequencies to listen to different radio broadcasts. When you turned the radio tuning dial you changed what resonant frequency your receiver ‘listened’ to. Which was basically a filter to block all frequencies but the tuned frequency from entering your radio. We call that frequency the carrier signal. Typically just a plain old sinusoidal wave form at a one frequency that we imprint the information of the speech or music on. The transmitter takes the music waveform and modulates it on the carrier signal. Then broadcasts the signal on the broadcast antenna. The receiver then captures this signal on its antenna. And demodulates it. Pulling the musical imprint from the carrier signal. And restoring it to its original condition. Which the radio than amplifies and sends to a speaker. I left some steps out of the process. But you get the gist. The key to successful broadcast radio was the ability to transform the source signal (speech or music) into another signal. One that we could transmit and receive. And transform back into the source signal.
The Roaring Twenties was a Neil Armstrong moment on earth. It was one giant leap for mankind. For it was in this decade that the modern world began. Thanks to Nikola Tesla and his AC power. Which allowed us the ability to plug in radios in our homes. And power the great radio transmitters to get the signal to our houses. Tesla, incidentally, created radio technology, too. Well, Tesla, and Guglielmo Marconi. (Patent disputes flared between these two greats about who was first.) Great technological advancement. Created during a time of limited government and low taxes. That unleashed an explosive amount of creativity and invention. The Eighties was another such decade.
The Eighties launched the digital age. The world of bits and bytes. 1s and 0s. Digital watches. Clocks. Calculators. PCs. And, of course, our music. For the Eighties gave us the compact disc. The CD. Music that didn’t wear out like our vinyl records. And didn’t pop or hiss with age. Because a CD player didn’t have a phonograph needle. That rode the groves on our vinyl records. It had something far more futuristic. A laser beam. That reads information encoded into the CD. Information encoded onto a reflective layer through a series of pits. During playback the laser either reflects or doesn’t reflect. This information is than processed into a series of 1s and 0s. Then converted into the analog waveform of the source material. And becomes music again.
The Eighties gave us the Digital Age which led to the Internet and Music on Demand
This process is similar to the process of broadcast radio. Not in any technological way. But by changing a source signal into something else. And then converting it back again. In the case of the CD we sample an analog signal (i.e., an audio recording). By taking ‘snapshots’ of it at regular intervals. Then convert these snapshots into a digital format. And then transfer this digital information to the reflective layer on a CD. Those 1s and 0s. When we play it back the laser reads these 1s and 0s. Then converts these digital snapshots back into the original audio signal. Sort of like modulating and demodulating a signal. Only instead of modulating we’re converting from analog to digital. Then vice versa.
The quality of the digital format depends on how much information each snapshot contains. And the interval we sample them at. Larger chunks of information taken in short intervals contain a lot more information. And improve the quality of the sound. But it will also take up a lot of space on those CDs. Limiting the number of songs we can encode on them. Which lead to compression. And MP3s. Which worked on the premise that there’s a lot of music in music. But we don’t necessarily hear all of that music. Some sounds mask out other sounds. Certain frequencies we barely hear. So while the CDs tried to reproduce the music as faithfully as possible, we learned that we could discard some of the information in the music without reducing the quality of the music much. This saved a lot of space on CDs and portable MP3 players. Allowed faster downloads on the Internet. And live streaming.
The Roaring Twenties changed our world. Modernized it. And gave us many things. Including broadcast radio. And music in our homes we never had before. And the Eighties also changed our world. Further modernizing it. Giving us the digital age. That led to the Internet. And music on demand like we never had before. Where we can listen to anything. No matter how obscure. It’s now all available at our fingertips. To listen online. Or to buy and download to a portable device. From Grieg to Sparks. And everything in between.
Tags: 1920s, AC power, analog, analog waveform, antenna, At the Cradle, broadcast, broadcast radio, carrier signal, CD, commercial broadcast radio, compact disc, compression, demodulate, digital, digital age, download, Edvard Grieg, Eighties, electrical power, encoded, frequency, Grieg, Internet, laser beam, live streaming, modulate, MP3, MP3 player, music, Nikola Tesla, radio, radio receiver, radio transmitter, receiver, reflective layer, resonant frequency, Roaring Twenties, Sparks, transmitter, vinyl records, waveform, wireless, YouTube
The Twenties saw one of the Greatest Explosions in Economic Growth in History despite being on a Gold Standard
There is a duality in economics. There is Keynesian economics. And the Austrian School. The Keynesians believe in central banking. Forcing interest rates below market rates. Purposely creating a permanent but ‘manageable’ inflation rate. And other government interventions into markets. The Austrians believe in a strong currency. Even bringing back the gold standard. Letting the markets set interest rates. Are against purposely creating inflation. And oppose government intervention into markets. So these two schools are sort of the Yin and Yang of economics. The dark and the light. The wrong and the right. The Keynesian and the Austrian.
So it’s not surprising to see periods of history where these two schools bump up against each other. As we transition from good economic times to bad economic times. And vice versa. When politicians change policies for political reasons. Or when politicians change policies for economic reasons. When the Keynesians are out of power and want to get back into power. Or the Keynesians are in power, have destroyed the economy and the electorate wants to throw them out. Starting shortly after World War I. When John Maynard Keynes’ ideas came to light. Economic policies that used smart people and an active, benevolent government. Exactly what Woodward Wilson and his progressives were looking for. Who wanted to quantify human behavior and improve it. With an activist and scientific government. To bless the United States with their brilliance again now that the war was over. And return to the new enlightened way. Helping people everywhere to be better citizens. And fixing all the ‘faults’ of free market capitalism.
But the progressives lost the 1920 election. The voters favoring Warren Harding’s message to return to normalcy. And rejecting the progressives and their new scientific ways of government. They wanted jobs. And that’s what Harding gave them. By cutting taxes. Thanks to the advice of his brilliant treasury secretary. Andrew Mellon. And getting out of the way of businesses. When he died Calvin Coolidge continued his policies. And the Twenties roared. It was one of the greatest explosions in economic growth in history. Where credit was plentiful. Despite being on a gold standard. As the United States electrified. And modernized. Electric power. Telephones. Radio. Electric appliances. Movies. Even on the farm. Where mechanization provided bountiful harvests and inexpensive food. The Roaring Twenties were great times for consumers. The average American. Thanks to minimal governmental interference into the free market. And capitalism. But, alas, that wouldn’t last.
Ronald Reagan won in a Landslide based on an Economic Platform that was Austrian to the Core
It was the mechanization of the farm that began the process that lead to the Great Depression. The average American benefited greatly from those low food prices. But not the farmers who went into debt to mechanize their farms. And when those European World War I soldiers traded their rifles for plows the American farmers lost some valuable export markets. Farmers were struggling with low prices. And heavy debt. Some defaulted on their debt. Causing bank failures in the farming regions. Which soon spread throughout the banking system. And when president Hoover came to office he was going to help the farmers. For Hoover, though a Republican, was a progressive. He brought back activist government. He interfered with the free market. To fix these problems. Price supports for farmers to import tariffs. Raising costs for businesses. And prices for consumers. Then the Smoot-Hawley Tariff launched an all out trade war. Crashing the economy. And giving us the Great Depression.
The 1930s was a lost decade. FDR’s New Deal policies increased the size of government. And their reach into the free market. Which prolonged the Great Depression. But nothing they tried worked. Despite trying their progressive brilliance for some ten years. It took World War II to pull the United States out of the Depression. When the government at last allowed businesses to pursue profits again. And got out of their way. This surge in economic activity continued after the war and through the Fifties. And into the Sixties. With none other than JFK cutting taxes in a very Austrian way. Yes, Kennedy was an adherent to the Austrian school. But LBJ wasn’t. And when he took over things changed. The progressives were back. Calling themselves liberals now. And instead of the New Deal they gave us the Great Society. Which grew the government even larger than the New Deal did. And the Great Society spent the money. Along with putting a man on the moon and the Vietnam War, government spending exploded. The Keynesians were hitting their prime. For once they could do all of the great things they always said they could. And in the process fix a ‘broken’ free market system. Finally having brilliant people in all the right places in government. Making brilliant policies to help people live better lives.
And then came the Seventies. The government was spending so much that they turned to the printing presses. Because they could. Thanks to central banking. Even if it was hamstrung by gold. You see, at that time the dollar was convertible into gold. And with the Americans printing so much money and depreciating the dollar countries holding U.S. dollars said, “Screw that.” And converted their dollars into gold. That great sucking sound they heard in the Seventies was the sound of U.S. gold reserves getting sucked out of the country. Well, even though the Keynesians hated gold they didn’t want to see all their gold reserves disappearing. So Nixon did something very Keynesian. And decoupled the dollar from gold. Freeing the government at last to spend as irresponsibly as the Keynesians wanted. And spend they did. Turning the printing presses on high. Depreciating the dollar ever more and causing double digit inflation. Worse, all that Keynesian spending did nothing for the economy. There was high unemployment as well as inflation. An unusual phenomenon as you typically had one or the other. Not both. But this was stagflation. A Keynesian phenomenon. And you measured how bad it was by adding the unemployment rate to the inflation rate. Giving you the misery index. And the misery was pretty high during the Keynesian Seventies. It was so miserable that they joked about it on Saturday Night Live. With Dan Aykroyd impersonating Jimmy Carter. Joking about high nice it would be to own a $400 suit. And how nice it was just to make a phone call to get the printing presses to print more money. The people thought Aykroyd’s Carter was funny. But they didn’t care for the real one all that much. And made him a one term president. As Ronald Reagan won in a landslide. Based on an economic platform that was Austrian to the core. Including a promise to return responsibility to government spending by reinstating a gold standard. (Which was a political ‘bridge too far’.)
The Electorate paying Federal Income Taxes fell from 80% when Reagan was in Office to about 50% by 2009
The Eighties were so prosperous that the Keynesians, liberals and progressives derisively call them the decade of greed. They tried everything within their power to rewrite history. Calling the exploding economic activity ‘trickle down’ economics. But the figures don’t lie. Despite the liars figuring. The inflation rate fell. Interest rates fell. The unemployment rate fell. And despite the cuts in tax rates the government was never richer. Tax revenue collected under the reduced rates nearly doubled. But there was little cutting in government spending. Flush with all that cash they kept spending. In part to rebuild the military to win the Cold War. Which Reagan won. But all the social spending continued, too. Which led to some record deficits. Not the trillion dollar deficits of the Obama administration. But large nevertheless. Which provided the meme to explain away the prosperity of the Eighties. “But at what cost?” being the common refrain. They talk about the deficits. But very conveniently leave out that part of how tax revenues doubled at the reduced tax rates.
Well, as time passed the Keynesians got back into government. In the late Nineties as they kept interest rates low again to stimulate the economy. Creating the dot-com bubble. And the early 2000s recession. George W. Bush cut taxes. Brought the economy out of recession. But then the Keynesians went back to playing with those interest rates. Kept them artificially low. Creating a great housing bubble. And the Subprime Mortgage Crisis.
Keynesian economics have failed throughout the last century of trying. And taxpayers clearly saw this along the way. Voting for Austrian policies every time economic policy mattered. Especially after another failure of Keynesian policy. Every time their policies failed, though, the Keynesians had an excuse. Supply shocks. Liquidity traps. Something. It was always something that caused their policies to fail. But it was never the policies themselves. Despite Mellon, Harding, Coolidge, Kennedy and Reagan proving otherwise. So they had to try something else. And they did. Class warfare. They transferred the tax burden to the wealthier. Reduced the number of people paying federal income taxes. And gave ever more generous government benefits. This took the failed ideology out of the equation. Making it easier to win elections. For when Reagan was in office more than 80% of the electorate were taxpayers. And Austrian economics won at the polls. The Nineties ended with only about 65% of the electorate paying federal income taxes. By 2009 that number shrunk to about only half of the electorate. Which gave the tax and spend Keynesians an edge over responsible-governing Austrians. Because people who don’t pay income taxes will vote for policies to increase taxes on those who do. Not because of concern over economic policy. But just to get free stuff. Something Keynesians learned well. When at first you fail just buy votes. And then you can continue your failed policies to your heart’s content.
Tags: activist government, Austrian school, Austrians, bank, banking, banking system, capitalism, Carter, central banking, class warfare, Coolidge, cutting taxes, debt, deficits, economic policies, farmers, FDR, federal income taxes, food prices, free market, free-market capitalism, gold standard, government benefits, government intervention, government intervention into markets, government spending, Great Depression, Great Society, Harding, Hoover, inflation, interest rates, JFK, jobs, Kennedy, Keynesian, Keynesian economics, Keynesians, LBJ, liberals, markets, Mellon, misery index, New Deal, prices, Progressives, Reagan, Roaring Twenties, Ronald Reagan, scientific government, stagflation, tax cuts, tax rates, unemployment
Because of the Unpredictable Human Element in all Economic Exchanges the Austrian School is more Laissez-Faire
Name some of the great inventions economists gave us. The computer? The Internet? The cell phone? The car? The jumbo jet? Television? Air conditioning? The automatic dishwasher? No. Amazingly, economists did not invent any of these brilliant inventions. And economists didn’t predict any of these inventions. Not a one. Despite how brilliant they are. Well, brilliant by their standard. In their particular field. For economists really aren’t that smart. Their ‘expertise’ is in the realm of the social sciences. The faux sciences where people try to quantify the unquantifiable. Using mathematical equations to explain and predict human behavior. Which is what economists do. Especially Keynesian economists. Who think they are smarter than people. And markets.
But there is a school of economic thought that doesn’t believe we can quantify human activity. The Austrian school. Where Austrian economics began. In Vienna. Where the great Austrian economists gathered. Carl Menger. Ludwig von Mises. And Friedrich Hayek. To name a few. Who understood that economics is the sum total of millions of people making individual human decisions. Human being key. And why we can’t reduce economics down to a set of mathematical equations. Because you can’t quantify human behavior. Contrary to what the Keynesians believe. Which is why these two schools are at odds with each other. With people even donning the personas of Keynes and Hayek to engage in economic debate.
Keynesian economics is more mainstream than the Austrian school. Because it calls for the government to interfere with market forces. To manipulate them. To make markets produce different results from those they would have if left alone. Something governments love to do. Especially if it calls for taxing and spending. Which Keynesian economics highly encourage. To fix market ‘failures’. And recessions. By contrast, because of the unpredictable human element in all economic exchanges, the Austrian school is more laissez-faire. They believe more in the separation of the government from things economic. Economic exchanges are best left to the invisible hand. What Adam Smith called the sum total of the millions of human decisions made by millions of people. Who are maximizing their own economic well being. And when we do we maximize the economic well being of the economy as a whole. For the Austrian economist does not believe he or she is smarter than people. Or markets. Which is why an economist never gave us any brilliant invention. Nor did their equations predict any inventor inventing a great invention. And why economists have day jobs. For if they were as brilliant and prophetic as they claim to be they could see into the future and know which stocks to buy to get rich so they could give up their day jobs. When they’re able to do that we should start listening to them. But not before.
Low Interest Rates cause Malinvestment and Speculation which puts Banks in Danger of Financial Collapse
Keynesian economics really took off with central banking. And fractional reserve banking. Monetary tools to control the money supply. That in the Keynesian world was supposed to end business cycles and recessions as we knew them. The Austrian school argues that using these monetary tools only distorts the business cycle. And makes recessions worse. Here’s how it works. The central bank lowers interest rates by increasing the money supply (via open market transactions, lowering reserve requirements in fractional reserve banking or by printing money). Lower interest rates encourage people to borrow money to buy houses, cars, kitchen appliances, home theater systems, etc. This new economic activity encourages businesses to hire new workers to meet the new demand. Ergo, recession over. Simple math, right? Only there’s a bit of a problem. Some of our worst recessions have come during the era of Keynesian economics. Including the worst recession of all time. The Great Depression. Which proves the Austrian point that the use of Keynesian policies to end recessions only makes recessions worse. (Economists debate the causes of the Great Depression to this day. Understanding the causes is not the point here. The point is that it happened. When recessions were supposed to be a thing of the past when using Keynesian policies.)
The problem is that these are not real economic expansions. They’re artificial ones. Created by cheap credit. Which the central bank creates by forcing interest rates below actual market interest rates. Which causes a whole host of problems. In particular corrupting the banking system. Banks offer interest rates to encourage people to save their money for future use (like retirement) instead of spending it in the here and now. This is where savings (or investment capital) come from. Banks pay depositors interest on their deposits. And then loan out this money to others who need investment capital to start businesses. To expand businesses. To buy businesses. Whatever. They borrow money to invest so they can expand economic activity. And make more profits.
But investment capital from savings is different from investment capital from an expansion of the money supply. Because businesses will act as if the trend has shifted from consumption (spending now) to investment (spending later). So they borrow to expand operations. All because of the false signal of the artificially low interest rates. They borrow money. Over-invest. And make bad investments. Even speculate. What Austrians call malinvestments. But there was no shift from consumption to investment. Savings haven’t increased. In fact, with all those new loans on the books the banks see a shift in the other direction. Because they have loaned out more money while the savings rate of their depositors did not change. Which produced on their books a reduction in the net savings rate. Leaving them more dangerously leveraged than before the credit expansion. Also, those lower interest rates also decrease the interest rate on savings accounts. Discouraging people from saving their money. Which further reduces the savings rate of depositors. Finally, those lower interest rates reduce the income stream on their loans. Leaving them even more dangerously leveraged. Putting them at risk of financial collapse should many of their loans go bad.
Keynesian Economics is more about Power whereas the Austrian School is more about Economics
These artificially low interest rates fuel malinvestment and speculation. Cheap credit has everyone, flush with borrowed funds, bidding up prices (real estate, construction, machinery, raw material, etc.). This alters the natural order of things. The automatic pricing mechanism of the free market. And reallocates resources to these higher prices. Away from where the market would have otherwise directed them. Creating great shortages and high prices in some areas. And great surpluses of stuff no one wants to buy at any price in other areas. Sort of like those Soviet stores full of stuff no one wanted to buy while people stood in lines for hours to buy toilet paper and soap. (But not quite that bad.) Then comes the day when all those investments don’t produce any returns. Which leaves these businesses, investors and speculators with a lot of debt with no income stream to pay for it. They drove up prices. Created great asset bubbles. Overbuilt their capacity. Bought assets at such high prices that they’ll never realize a gain from them. They know what’s coming next. And in some darkened office someone pours a glass of scotch and murmurs, “My God, what have we done?”
The central bank may try to delay this day of reckoning. By keeping interest rates low. But that only allows asset bubbles to get bigger. Making the inevitable correction more painful. But eventually the central bank has to step in and raise interest rates. Because all of that ‘bidding up of prices’ finally makes its way down to the consumer level. And sparks off some nasty inflation. So rates go up. Credit becomes more expensive. Often leaving businesses and speculators to try and refinance bad debt at higher rates. Debt that has no income stream to pay for it. Either forcing business to cut costs elsewhere. Or file bankruptcy. Which ripples through the banking system. Causing a lot of those highly leveraged banks to fail with them. Thus making the resulting recession far more painful and more long-lasting than necessary. Thanks to Keynesian economics. At least, according to the Austrian school. And much of the last century of history.
The Austrian school believes the market should determine interest rates. Not central bankers. They’re not big fans of fractional reserve banking, either. Which only empowers central bankers to cause all of their mischief. Which is why Keynesians don’t like Austrians. Because Keynesians, and politicians, like that power. For they believe that they are smarter than the people making economic exchanges. Smarter than the market. And they just love having control over all of that money. Which comes in pretty handy when playing politics. Which is ultimately the goal of Keynesian economics. Whereas the Austrian school is more about economics.
Tags: asset bubbles, Austrian economics, Austrian school, Austrian school of economics, bad debt, banking, banking system, business cycle, businesses, central banking, cheap credit, consumption, credit, debt, depositors, deposits, economic activity, economic exchanges, Economics, economists, fractional reserve banking, free market, Great Depression, Hayek, human behavior, income stream, inflation, interest rates, investment, investment capital, Keynes, Keynesian, Keynesian economists, loan, malinvestment, market forces, market interest rates, mathematical equations, monetary tools, money supply, predict human behavior, prices, quantify, recessions, savings, savings accounts, savings rate, speculation, unquantifiable, workers
Week in Review
Iran is enriching uranium like there is no tomorrow. Putting them on a fast-track to build a nuclear weapon. Which they, of course, deny (see Iran rapidly expanding nuclear production, says UN by the AP posted 2/24/2012 on The Independent).
Iran has rapidly ramped up production of higher-grade enriched uranium over the last four months, the UN nuclear agency says in a confidential report…
Iran insists it is not interested in nuclear weapons and says all of its activities are meant either to generate energy or to be used for research.
For someone who doesn’t want nuclear weapons Iran is doing everything necessary to make them. So is an energy-rich nation that literally has oil to burn just looking to build nuclear plants to generate electricity? Or could it be that they want to incinerate Israel? Well, they have said they would like to incinerate Israel. So you be the judge.
Tags: enriching uranium, Iran, Israel, nuclear weapon, uranium
Week in Review
The United States followed the United Kingdom into the Industrial Revolution. And emerged the greatest superpower on the planet. We did well following her lead. Emulating her capitalistic ways. But we can stop now. For we don’t need to follow her to where she is now. Although we’re pretty darn close to that place already (see Osborne: UK has run out of money by Rowena Mason posted 2/26/2012 on The Telegraph).
“The British Government has run out of money because all the money was spent in the good years,” the Chancellor said. “The money and the investment and the jobs need to come from the private sector…”
The Chancellor’s tough words were echoed by Liberal Democrat Jeremy Browne, the foreign minister, who warned that Britain faced “accelerated decline” without measures to tackle its debt and increase competitiveness…
Mr Browne writes that reform of pensions, welfare and defence is essential to stop the departments “collapsing under the weight of their own debt”. “Just because the spending was sometimes on worthy causes does not in itself mean it was affordable,” he says…
Amid warnings that Britain urgently needed to adopt a more pro-business outlook, senior Conservatives have urged the Government to get rid of the 50 pence top rate of tax.
Figures from the Treasury last week suggested the policy was not raising the expected amount of revenue and was threatening to drive leading business people and entrepreneurs away from Britain. Dr Liam Fox, the former Conservative Defence Secretary, yesterday argued for the top tax rate to be scrapped, but added that cutting taxes on employment was even more important.
“I would have thought the priority was getting the costs of employers down and therefore I would rather have seen any reductions in taxation on employers’ taxation rather than personal taxation,” he told the BBC’s Sunday Politics show.
Oh Britannia, what has become of you? And why in the world are we still following you?
Money, investment and jobs must come from the private sector? Why that’s a novel idea. One Britain had a century or more ago. And one the United States had, too. Before the welfare state made these two great nations less great.
Everyone knows that too much debt is a bad thing. It’s no secret. Bad things happen to people who can’t pay their bills. And as it turns out, worse things can happen when a government can’t pay its bills. Just ask the Greek government. Who are dealing with riots in their streets.
The private sector created jobs long before governments ever did. We need to remember this. And we solve economic problems in the private sector. Where there is a high price for failure. Thanks to capitalism. And profits. Alien concepts to governments. Which is why the greatest debt crises are always in the government. Not in the private sector. Something else we would do well to remember.
Tags: Britain, British Government, debt, investment, jobs, money, pensions, private sector, taxation, UK, United Kingdom, welfare
Week in Review
Be thankful you don’t have any Greek bonds. If you do you have nothing to be thankful about (see Greece submits its debt cut offer posted 2/24/2012 on BBC News).
Under the proposed debt swap, banks and other private creditors are being asked to take a 53.5% loss on their Greek bonds.
Ouch. If you had your retirement savings invested in Greek bonds you won’t be able to retire as planned. Imagine that. Say you had saved $250,000 and put it into some of the safest investments out there. Government debt. Because unlike private corporations they have the power to tax. And will always be able to repay their debt. Until now, that is. Instead of getting your $250,000 back you’ll only get $116,750 back. That’s a worse hit than homeowners took during the subprime mortgage crisis. Even though their mortgages are underwater at least they have a chance of getting their lost value back. Not these Greek bond holders. Once this deal goes through they lose their money forever. And 53.5% is a lot to lose.
Will this solve their problems? Not unless they severely cut their government spending. And with Greeks in the streets rioting that will be easier said than done. Which means they will continue to spend. Run deficits. And borrow money. Putting them right back on the road they’re trying to get off. And just who is going to take a chance on buying Greek bonds when the current bondholders just lost 53.5% of their holdings? Here’s a clue. It won’t be as many who bought them before the 53.5% write-down.
This will not likely end the Eurozone debt crisis.
Tags: bailout, bondholders, Eurozone debt crisis, Greek, Greek bailout, Greek bailout agreement, Greek bonds
Week in Review
The feminists may have freed women from the hell of wedded bliss but this new empowerment and sexual liberty has led to an even worse hell. The hell of single motherhood (see Family Fact of the Week: Majority of Births to Women Under 30 Are to Single Moms by Rachel Sheffield posted 2/24/2012 on The Foundry).
Unwed childbearing has been on the rise for more than five decades, and today more than 40 percent of U.S. children are born to single women. A new study additionally reveals that the majority—53 percent—of births to women under 30 occur outside of marriage…
However, unwed childbearing isn’t the norm for all young women. In fact, for the college-educated it is still very uncommon. The majority of births are instead to women with a high school diploma or less…
The increasing rate of unwed childbearing, as well as the corresponding breakdown of marriage, in low- and middle-income America is creating a divided society split along the lines of marriage and education.
This wasn’t supposed to happen. Encouraging women to empower themselves with consequence-free sex wasn’t suppose to lead to consequences. And apparently the men who impregnated these women aren’t doing the honorable thing. Probably because doing the honorable thing was the last thing on their mind when they were enjoying a woman’s empowerment.
The feminists have freed women from men. Allowed them to be their own people. And encouraged them into a life very similar to that wedded bliss the feminists rescued them from. Only without a husband to help pay the bills and raise the children. I’m not sure how women are better off this way. Or their children.
Of course the societal split along the lines of marriage and education will have the feminists countering that they need to get into the high schools to teach these girls about family planning. Especially the ones that don’t go on to college. Give them more birth control. And easier access to abortion. Anything but marriage. Because that’s a kind of hell they would wish on no woman. Despite so many women wanting this life. At least, based on the television and movies they watch. Where a man and a woman end up married and live happily ever after. I mean, there’s a reason why they call romantic comedies ‘chic flics’. Because it’s the women who watch them. And want to live the fairy tale. To live happily ever after. Something the feminists have been working hard to prevent these last 5 decades or so.
Tags: consequences, education, empowerment, feminists, marriage, motherhood, sexual liberty, single motherhood, wedded bliss
Week in Review
Oil is not oil. There is Brent sweet crude. And West Texas Intermediate (WTI). We import the Brent. While a lot of the WTI comes from wells closer to home. The U.S. Canada. The Gulf of Mexico. And there is a correlation between gas prices and the type of crude (see Angry About High Gas Prices? Blame Shuttered Oil Refineries by Matthew Philips posted 5/24/2012 on Yahoo! Finance).
The U.S. refining industry is being split in two. On one hand are the older refineries, mostly on the East and Gulf Coasts, that are set up to handle only the higher quality Brent “sweet” crude—the stuff that comes from the Middle East and the North Sea. Brent is easier to refine, though it’s gotten considerably more expensive recently. (Certainly another reason for higher gas prices.)
Then there are the plants able to refine the heavier, dirtier West Texas Intermediate (WTI)—the stuff that comes from Canadian tar sands, the deep water of the Gulf of Mexico, and the newer outposts in North Dakota, which just passed Ecuador in oil production. These refineries tend to be clustered in the Midwest—places such as Oklahoma, Kansas, and outside Chicago. While the price of Brent crude has closed at over $120 a barrel in recent days, WTI is trading at closer to $106. That simple differential is the reason older refineries that can handle only Brent are hemorrhaging cash and shutting down, while refineries that can handle WTI are flourishing.
“The U.S. refining industry is undergoing a huge, regional transformation,” says Ben Brockwell, a director at Oil Price Information Services. “If you look at refinery utilization rates in the Midwest and Great Lakes areas, they’re running at close to 95 percent capacity, and on the East Coast it’s more like 60 percent,” he says.
How about that? Economic reasons for the high price of gasoline. The cost of Brent sweet crude makes it impossible to sell in America at a profit. So the refineries are selling it overseas at prices that can keep them from operating at a loss. Or they’re shutting down refineries. To reduce the surplus of gas they can’t sell at a profit. Making the gas stations supplied by these refineries sell at record high gas prices. Whereas those stations supplied by the WTI refineries are able to sell gas at more affordable prices.
The lesson here? The amount of oil brought to market matters. The more the oil supplied the lower the price. And the lower the price of gasoline made from that oil. There’s not much we can do about the price of Brent sweet but there is something we can do about WTI. Drill more. Build more refinery capacity for it. And build more pipelines to move that precious cargo all over the United States. Creating lots and lots of jobs. And letting people enjoy hitting the highway again in cars they like that may also happen to be gas guzzlers. Which will also reduce the price at the pump. Because demand for gasoline will rise to sustain this economic buildup. Allowing prices to fall due to economies of scale.
And it’s all there for the taking. All we have to do is to take this future. Instead of the one we’re working on now where driving has become a four-letter word.
Tags: Brent, Brent sweet crude, Canada, crude, gas prices, gasoline, Gulf of Mexico, high price of gasoline, jobs, oil, pipelines, price at the pump, refineries, sweet crude, U.S., United States, West Texas Intermediate, WTI
Week in Review
A Republican congressman complains about the high price of gasoline. But because he’s a Republican AND drives a Hummer he gets little sympathy (see Florida congressman upset at Obama for $70 fill-up of his Hummer by Justin Hyde posted 2/23/2012 on Yahoo! Autos).
Saying gas costs too much based on your H3 — which sports an average fuel economy of 16 to 18 mpg — seems akin to arguing Americans have grown too fat at the drive-through window of a Carl Jr.’s. Yet West and other drivers can’t be blamed for the current run-up; it’s not American demand for gasoline causing its prices to rise, but rather demand from China, Latin America and worries over Iran’s actions near the Strait of Hormuz. Last year, fossil fuels were America’s biggest export — partly because of the economic recession and the shift toward vehicles that get 40 mpg instead of 16.
Sad, isn’t it? China and Latin America can enjoy life. But the country that made driving the great American past time can’t. Over there they’re buying gas and enjoying it. Over here we make people feel ashamed for doing something their parents loved to do. Packing the family into a big and safe vehicle. Hitting the open road. And seeing America.
Well, if it’s any consolation just think about this. While we scrunch into our commuter mobiles that can fit 2 adults almost comfortably the Chinese communists are now living the American dream in China. Enjoying the freedom and adventure gasoline gives you. Who knows, perhaps they’ll be buying recreational vehicles in their retirement. Spending their golden years seeing their country. Like we once did here. Visiting their family. And camping out at parks and campgrounds. Enjoying their retirement. Something few can do now thanks to the high price of gasoline.
There’s a lot the government can do to fix this. They can STOP doing everything that hinders the oil industry and stop equating gasoline to a drug addiction. Let the market set the prices. Let supply flow in to meet market demand. And let us drive what we want to drive.
Tags: American Dream, China, demand, fuel economy, gasoline, high price of gasoline, Latin America, price of gasoline, Republican, retirement
Week in Review
There’s been a lot of talk lately about women’s health, reproductive rights and, in general, the empowerment of women. The sexual revolution freed women from the hell of wedded bliss. Taught them to embrace their sexuality. And let them go out and have a little fun. And here’s one lady that embraces her sexuality. And is having a whole lot of fun (see Sexpresso: Wives ban their husbands from visiting Italian cafe where busty barmaid serves up drinks in skimpy outfits by Nick Pisa posted 2/25/2012 on Daily Mail).
After eight years running a bar, Laura Maggi suddenly found men beating a path to her door.
Not for the quality of her coffee and aperitifs, but because she had started appearing for work in highly revealing outfits.
And revealing they are. Now this isn’t what the feminists had in mind about empowering women. The exploitation of their sexuality for money. But in this case can we really call it exploitation when the one profiting from it is the one doing the exploiting? The wives of the husbands visiting her establishment are not happy about this at all. But when it comes down to it she’s just selling food and drinks. Like the waitresses at Hooters. Only Ms. Maggi is 34 years old. Not a teenager out of high school. And her dress code is voluntary and not a condition of employment.
An interesting story. And one of the few that will probably unite feminists and conservative Christians in their condemnation of her self-exploitation. Except the men, of course. Who I’m guessing will be less vocal in their condemnation.
Tags: condemnation, empowering women, exploitation, feminists, sexuality, women
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