Microeconomics and Macroeconomics

Posted by PITHOCRATES - September 10th, 2012

Economics 101

Keynesians cannot connect their Macroeconomic Policies to the Microeconomic World

Economics can be confusing.  As there are actually two genres of economics.  There’s microeconomics.  The kind of stuff most people are familiar with.  And is more common sense.  This is more of the family budget variety.  And small business budget.  Where if costs go up (gasoline, commodities, food, insurance, etc.) families and businesses make cuts elsewhere in their budget.  When revenue falls (a decline in sales revenue or a husband/wife loses their job) people cut back on expenses.  They cancel the family vacation.  Or cancel Christmas bonuses.  Straight forward stuff of living within your means.

Then there’s macroeconomics.  The big economic picture.  This is the stuff about the national economy.  GDP, inflation, recession, taxes, etc.  Things that are more abstract.  Unfamiliar.  And often defy common sense.  Where living beyond your means is not only accepted.  But it’s national policy.  And when some policies fail repeatedly those in government keep trying those same policies expecting a different outcome eventually.  Such as using Keynesian economic policies (stimulus packages, deficit spending, printing money, etc.) to get an economy out of recession that never quite works.  And then the supporters of those policies always say the same thing.  Their policies only failed because they didn’t spend enough money to make them work.

Keynesian economics focuses on macroeconomics.  And cannot connect their macro policies to the micro world.  There is a large gap between the two.  Which is why Keynesians fail.  Because they look at the macro picture to try and effect change in the micro world.  To get businesses to create jobs.  To hire people.  And to reduce unemployment.  But the politicians executing Keynesian policy don’t understand things in the micro world.  Or anything about running a business.  All they understand, or all they care to try to understand, are the Keynesian basics.  That focus on the demand side of economics.  While ignoring everything on the supply side.

When the Economy goes into Recession the Fed Expands the Money Supply to Lower Interest Rates

Keynesians have a few fundamental beliefs.  And one of the big ones is the relationship between interest rates and GDP.  In fact, it’s the center of their world.  High interest rates discourage people from borrowing money.  When people don’t borrow money they don’t build things (like factories).  And if they don’t build things they won’t create jobs and hire people.  So the higher the interest rates the lower the economic output of the nation (GDP).

Low interest rates, on the other hand, encourage people to borrow money.  So they can build things and create jobs.  The lower the interest rates the more people will borrow.  And the greater the economic output of the nation will be.  This was the driving factor that caused the Great Recession.  The central bank (the Fed) kept interest rates so low for so long that people bought a lot of houses.  A lot of expensive houses.  The demand for housing was so great that buyers bid up prices.  Because at low interest rates there was no limit to how much house you could buy.  All this building and buying of houses, though, oversupplied the market with houses.  As home builders rushed in to fill that demand.  They built so many houses that there were just so many houses available to buy that buyers had a lot of choice.  Making it a buyers’ market.  So much so that people had to slash their asking price to sell their house.  Which popped the great housing bubble.

The Fed lowers interest rates by increasing the money supply.  They create new money and inject it into the economy.  By giving it to bankers.  Banks have more money to lend.  So more people can borrow money.  This is what lowers interest rates.  Things that are less scarce cost less.  More money to borrow means it’s less scarce.  And the price to borrow it (i.e., the interest rate) falls.  If the Fed wants to increase interest rates they pull money out of the economy.  Which makes it a little harder to borrow money.  Because more people are trying to borrow the limited amount of funds available to borrow.  And this is the basics of monetary policy.  Whenever the country enters a recession and unemployment rises the Fed expands the money supply to encourage businesses to borrow money to expand their businesses and create jobs that will lower unemployment.

Keynesian Economic Policies hurt the Higher Stages of Production where we Create Real Economic Activity

If low interest rates create greater economic activity why in the world would the Fed ever want to raise interest rates?  Because of the dark side of printing money.  Inflation.  Increasing the money supply gives people more money.  And when they have more money they try to buy what everyone else is buying.  As the money supply grows greater than the amount of economic output there is more money trying to buy fewer goods and services.  Which raises prices.  Just like those low interest rates did in the housing market.  The fear is that if this goes on too long there will be an economic crash.  Just like after the housing bubble burst.  From boom to bust.  Higher prices reduce consumer spending.  Because people can’t buy as much when prices are high.  As consumers stop spending businesses stop selling.  Faced with overcapacity in a period of falling demand they start cutting costs.  Laying off people.  People without jobs can buy even less at high prices.  And so on as the economy settles into recession.  This is why central bankers raise interest rates.  Because those good times are temporary.  And the longer they let it go on the more painful the economic correction will be.

This is why Keynesian stimulus spending fails to pull economies out of recession.  Because Keynesians focus only on the demand curve.  Consumption.  Consumer spending.  Not supply.  They ignore all that economic activity in the higher stages of productions.  That activity that precedes retail consumer sales.  The wholesale stage (the stage above retail).  The manufacturing stage (above the wholesale stage).  And the furthest out in time, the raw commodities stage (above the manufacturing stage).  As economic activity slows inventories build up.  Creating a bulge in the middle of the stages of production.  So manufacturing cuts back.  And because they do raw commodities cut back.  These are the first to suffer in an economic downturn.  And they are the last to recover.  Because of all that inventory in the pipeline.  When Keynesians get more money into consumers’ pockets they will increase their consumer spending.  For awhile.  Until that extra money is gone.  Which provided an economic boost at the retail level.  And a little at the wholesale level as they drew down those inventories.  But it did little at the higher stages of production.  Above inventories.  Manufacturing and raw material extraction.  Who don’t expand their production or hire new workers.  Because they know this economic activity is temporary.  And because they know all that new money will eventually create inflation.  Which will increase prices.  Throughout the stages of production.

The Keynesian approach focuses on the macro.  By playing with monetary policy.  Policies that ultimately hurt the higher stages of production.  At the micro level.  Where we create real economic activity.  If they’re not hiring then no amount of stimulus spending at the retail level will get them to hire.  Because giving the same amount of workers (i.e., consumers) more money to chase the same amount of goods and services only causes higher prices in the long run.  And it’s the long run that raw commodities and manufacturing look at.  They are not going to invest to expand their businesses unless they expect improving economic conditions in the long run.  All the way up the stages of production to where they are.  When new economic activity reaches them then they will expand and hire people.  And when they do they will add a lot of new consumers with real wages to go out and spend at the retail level.

One of the most efficient ways to achieve this is with tax cuts.  Because cuts in tax rates shape economic activity in the long run.  Across the board.  Unlike stimulus spending.  Which is short term.  And very selective.  Some benefit.  Typically political cronies.  But most see no benefit.  Just higher prices.  And continued unemployment.  Which is why Keynesian policies fail to pull economies out of recessions.  Because politicians use them for political purposes.  Not economic purposes.

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The Invisible Hand

Posted by PITHOCRATES - April 16th, 2012

Economics 101

A Command Economy Reduces the Overall Economic Output because those Managing the Economy don’t Understand It

Command economy?  Or free market capitalism?  Which works better?  Well, let’s find out with a little experiment.  Let’s go back in time.  Say ancient Mesopotamia.  Just after they developed mass farming.  And produced some of the first food surpluses.  Allowing the rise of a middle class of artisans.  Now let’s look at what could have been the first two of these artisans.  A potter.  And a winemaker.  Who probably weren’t the first two artisans.  But will suffice for our little experiment.

The winemaker needs some pottery vessels to store and sell his wine in.  And the potter enjoys drinking wine.  They each have something the other wants.  And because we’re so far back in time there is no money yet.  We’re still only bartering at this time.  Trading the goods we make with each other.  But in our experiment the high priest of the civilization is also the economic planner.  This priest communicates to the civilization’s gods.  And guides the civilization in pleasing their gods.  Which he is very good at.  For he knows all of the old teachings and rituals.  But he doesn’t know a thing about pottery or winemaking.  But he looks at an empty pottery vessel and a pottery vessel full of wine and sees that the vessel volume equals the volume of wine.  And deems the price of one pottery vessel is the amount of wine one pottery vessel holds.

Well, the potter is quite happy with this price.  Because he is skilled.  And can dig up some clay.  Throw it on the potter’s wheel and knock out vessel after vessel.  Glaze them and fire them in the kiln.  Even working by himself he can achieve some economies of scale.  By repeating this process every day.  Something the winemaker isn’t quite able to.  For he makes wine by the batch.  Because each step in the process takes a lot of time.  Maintaining his grape vines.  Then picking the grapes.  Carrying them back to his winery.  Putting them into his winepress.  Squeezing the juice out of the grapes.  Putting the grape juice in large vats to ferment.  Monitoring the process.  When he determines the process is complete he fills the small pottery vessels with wine.  When it was finally ready for ‘sale’ and consumption.  Considering all the work it took him to make one vessel of wine the winemaker was not at all happy with the price the high priest set.  And instead builds his own potter’s wheel and kiln to make his own vessels.  Greatly increasing his workload.  And reducing his winemaking output.  While the potter loses a potentially large customer.  Thus reducing the amount pottery he makes.  Reducing overall economic output in the command economy.

The Invisible Hand makes sure we use our Limited Resources Efficiently to Make the Things People want Most

In this command economy the civilization suffered a deadweight loss.  Economic resources went unused.  They could have created more economic benefits with the available resources.  They could have made more pottery.  And made more wine.  Perhaps even creating some jobs to help with the economic output of efficiently using the available resources.  But they didn’t.  Because of the fixed prices economic resources went unused.  Thus creating a market equilibrium lower than where it could be.  Hence the deadweight loss.  Now let’s look at the same example with only one difference.  The high priest does NOT set prices.

In a barter economy people agree to trade the goods they make.  And now the potter and the winemaker are free to determine what they think is a fair trade.  That is, they set the price of pottery in wine.  And the price they agree on is one they find mutually acceptable.  Where the potter agrees to trade an amount of his pottery for an amount of wine.  And the winemaker agrees to trade an amount of his wine for an amount of pottery.  Everyone wins.  For the potter gets an amount of wine he values more than the pottery he traded for the wine.  The winemaker gets an amount of pottery he values more than the wine he traded for the pottery.  And the civilization wins because at this mutually agreed upon price both the potter and the winemaker increase their production.  Providing the civilization with more of their goods.  The potter and the winemaker may even hire people to help them produce more goods to meet this higher demand.  Thus increasing the level of happiness in the civilization.  By increasing the amount of economic activity.  Moving the market equilibrium to a higher level of economic output.  And thus reducing the deadweight loss.  By using the available resources in the most efficient manner.  As determined by these mutually agreed upon prices.

This is the Invisible Hand in action.  An economic concept put forth by Scottish economist Adam Smith (1723-1790) in his The Wealth of Nations (1776).  In a competitive market place where traders set the price for their economic trade (not a command economy) two things happen.  First, resources flow to where we demand them most.  That is, to the buyers willing to pay the highest price.  Second, because of the competitive market place only those companies that sell at the low prices the market demands stay in business.  Which means that they have to use those resources as efficiently as possible.  Especially when they’re paying the highest prices for them.  And all of this happens because of the Invisible Hand. 

History has Proven that no Government Bureaucrat can do a Better Job than the Invisible Hand

Those who favor a command economy (or more government intervention into market forces) say the economy is too complex for us to leave it to its own devices.  That without a smart government bureaucrat managing this complex thing we cannot reach a market equilibrium that maximizes economic output.  Whereas Adam Smith says it is because the economy is so complex that no one is smart enough to manage it.  Just as a high priest doesn’t understand pottery or winemaking a smart government bureaucrat cannot hope to understand all the intricacies of a complex economy.  Nor can they ever hope to understand what millions upon millions of consumers want to buy most.  But the beautiful thing is we don’t have to.

The multitudes make individual decisions just like our potter and winemaker.  Where everyone is looking to maximize their own value.  And when they agree on a mutual acceptable price all parties in the trade win.  While making sure our resources flow to where they are demanded most.  And that we use these valuable and limited resources most efficiently.  Thus maximizing overall happiness in our country.  Reducing deadweight losses to a minimum.  And obtaining a market equilibrium that maximizes economic activity.  All of which happens with no one in charge.  As if an Invisible Hand guides us in the market place to make all the right decisions to maximize this economic output.  And our happiness.

So which is better?  Command economy or free market capitalism.  Well, if you’re being honest you have to choose Adam Smith’s Invisible Hand and free market capitalism.  For history has proven that no government bureaucrat can do a better job than the Invisible Hand.  Not the Soviets.  Not the Chinese Communist (under Chairman Mao).  Not the Cubans.  Not the North Koreans.  Even the Americans failed when their government actively intervened in the private economy.  Something that President Jimmy ‘one-term’ Carter knows only too well.  So based on our hypothetical Mesopotamian example, and history in general, free market capitalism is, and always has been, and always will be, better than a command economy.

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The Eurozone Contagion Spawned in Spain, Greece and Italy has Infected French Banks

Posted by PITHOCRATES - December 11th, 2011

Week in Review

Here is how a contagion spreads (see Moody’s downgrades top three French banks posted 12/9/2011 on UPI).

Credit rating agency Moody’s Investors Service lowered credit scores for three of the largest banks in France Friday…

The rating service said it was concerned the conditions in Spain, Greece and Italy could deteriorate further, which would mean the French banks would suffer deeper losses on the government bonds they hold.

The whole point of the Eurozone is to replicate the massive free trade economy of the United States.  And it’s been somewhat successful.  The economy of the united states of Europe has matched and even exceeded the economic output of the United States.  But some of the member states cheated to get into the common currency.  The Euro.  By lying about their true debt levels.  And their deficits.  These states are now in trouble.  The costs of their welfare states grow.  Which requires more government borrowing.  And these continuous and growing deficits add to that massive debt.

There comes a point when people doubt whether these states will be able to repay their debt.  And that’s what private investors are now thinking.  So they’re not buying anymore of their debt.  Unless they make it worth their while.  With very high interest rates.  Which increases the cost to service the debt.  In fact their borrowing costs have grown so great that they have to borrow money to pay the interest on the money they borrow.

Of course, this makes it even more doubtful that these countries will be able to repay this debt.  Which scares away more private investors.  Despite those high interest rates.  And threatens the solvency of these countries.  And the common currency itself.  The Euro.  And if the Euro goes so does the Eurozone.  Including the economic powerhouse of the united states of Europe with it.

So other countries of the Eurozone step in and buy these worthless bonds.  To try and save the Euro.  And their own economies.  Now the financial problems of Greece, Spain and Italy are now everyone’s financial problems.  Because of those worthless bonds sitting on the balance sheets of healthier banks.  Which are not quite so healthy anymore.  Because of their exposure to this contagion.

It’s a dangerous game they play.  To save the Eurozone they have to infect themselves with the contagion.  And hope that they are financially immune enough to live through this sickness.  But they are teetering on the brink with their own massive debt.  Their own massive welfare states growing their deficits.  Which will be a problem.  For they refuse to take the same medicine Greece, Spain and Italy are refusing to take.  Austerity.  So the chances are pretty good that they will fall to the contagion, too.  As it continues to spread and infect everyone in the Eurozone.  Until there will be no Eurozone.  Or a united states of Europe.

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Free Labor

Posted by PITHOCRATES - December 5th, 2011

Economics 101

Unlike Slaves Paid-Laborers Worked, Went Home and Fed & Housed their Own Families

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  Religion and the Rule of Law allowed great gatherings of people to live and work together in urban settings.  Free trade let us maximize this economic output and elevated our standard of living.  And to sustain this economic growth we needed something else.  Free labor.

Slavery as an economic model has serious defects.  For one the labor is not free.  People are restrained against their will.  And only work to minimize their pain and suffering.  They do not think or innovate.  Their human capital is wasted.  Because no one voluntarily thinks and innovates to make a better life for others.  Especially if it  won’t improve their own life.  A slave, then, has little incentive to think or innovate.  Their incentive is to follow orders.  Because that was the proven way to minimize their pain and suffering.

Buying human beings is also less efficient than renting them.  Not everyone in a slave family was in their working prime.  The elderly couldn’t work the fields anymore.  Neither could the infant children.  But they all needed room and board.  Unlike a paid laborer.  Who you paid only for the hours they worked.  You didn’t feed or house them.  They worked and went home.  And fed and housed their own families. This is why George Washington wanted to sell his slaves and replace them with paid laborers.  To increase his profits.  But he found people were only interested in buying slaves in their working prime.  He could sell some.  But not all of them.  Which meant breaking up slave families.  Something he couldn’t do.  So he kept his slaves.  Settled for lower profits.  And kept the slave families together.

The Slave-Economy in the New World was a Step Backward toward Old World Aristocracy

Not everyone was as kind as Washington.  Some people had no problem breaking up families.  Or abusing their slaves.  But they all had to exercise restraint.  Because a maimed or a dead slave couldn’t work.  A problem for slave owners because they bought their slaves.  Often borrowing money for the purchase.  So it was costly to replace them.  As well as to train them.  One skilled in picking cotton may not readily take to harvesting and drying tobacco.  Whereas you could simply advertise for a hired hand who was skilled in harvesting and drying tobacco if you used free labor.

Free labor added to the economy.  Because they had earnings for economic exchange.  Slaves didn’t.  The slave owner provided their room and board.  So they were not only enslaved they were also dependent on others for everything free laborers bought with their earnings.  Economic exchanges in a slave economy, then, were limited to the wealthy landowners.  Making it a system much like European feudalism or Russian serfdom.  Only instead of peasants or serfs there were slaves.  Who were less free.  And even poorer.

Thus the slave-economy in the New World was a step backward toward Old World aristocracy.  (And a little beyond it.)  Where there were a few rich and a lot of poor.  Agricultural reform came with the help of the Black Death.  When the balance of power tipped from the landed aristocracy to the much thinned out labor force.  Who could then demand wages and better conditions.  And then came capitalism.  For those new wage-earners had money for economic exchanges.  Which they made.  Thus producing a prosperous middle class.  Which took root in the New World.  At least, in the parts of the New World that used free labor.

Our Capacity to Think is the Key to Unlocking our Human Capital, Economic Growth and the Quality of Life

The great problem of slavery (other than the moral one) is that it excluded a great part of the population from the economy.  Slavery excluded millions of people from making economic exchanges.  And millions who might have thought and created didn’t.  Their human capital was wasted.  Setting economic development back.  As well as the quality of life.

In a modern capitalistic economy there must be no slavery.  Or dependency.  Because those enslaved or dependent do not create.  Or innovate.  They just exist.  And do not maximize the gift of being human.  Our capacity to think.  Which is the key to unlocking our human capital.  Economic growth.  And the quality of life.

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Free Trade

Posted by PITHOCRATES - November 28th, 2011

Economics 101

When People can Buy and Sell as they Please without Outside Interference we call it Free Trade

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  Religion and the Rule of Law allowed great gatherings of people to live and work together in urban settings.  Thus unleashing human capital.  And creating a great diversity in economic output.  Because all these people with spare time could create new things.  That other people discovered.  And wanted.

The Rule of Law gave us property rights.  And it’s because of property rights that people take chances.  Then.  And now.  To create things.  Invest their labor and capital.  Because they own what they create.  And are free to trade these products of their own labor and capital.  Freely.  With whom they want to.  At the value of exchange they agree to.  Encouraging others to do the same.  So they, too, can enjoy the products of their own labor and capital.

When people can buy and sell as they please without outside interference we call it free trade.  Outside interference can include many things.  But mostly it means government interfering with market forces.  Such as taxing things differently.  Placing tariffs or quotas on imported goods.  Subsidies to certain domestic manufacturers.  Etc.  All things that complicate the exchange of goods and services.  Because you have to consider all of these other things in addition to the goods and services you wish to exchange.  Complicating the economic exchange.  Making it more costly.  Less free.  And simply less of it.

The Overregulation of a Free Market Creates a Black Market

The less free and more complicated trade gets something happens.  The overregulation of a free market creates a secondary market.  A black market.  Where economic exchanges occur free from government interference.   The black market then becomes the free market alternative to the overregulated ‘government’ market.

The former Soviet Union is a good example.  Government bureaucrats completely controlled the market.  They set the prices.  And allocated the resources.  Poorly, I might add.  And the result?  Stores full of items no one wanted to buy.  Long lines at stores selling the basic necessities of life (such as soap and toilet paper).  Where people waited to buy their allotted quota because there was so little available to sell.  And a thriving black market where you could buy the latest in Western fashion and electronics.  Which proved very handy in bribing government bureaucrats.  Because even they wanted what the Westerners traded freely.

Another good example are cigarettes.  Stores across certain state lines do very well selling cigarettes.  For these stores can sell cigarettes at steep discounts compared to those on the other side of the border.  Why?  Cigarette taxes.  And some cities and states really pile them on.  Making some people spend more money on gas as well as risking trouble with the law to get these more affordable cigarettes.  Often buying them in bulk.  And then smuggling them back home.

An Overly Regulated Market alters our Economic Decision Making, Resulting in Less Economic Activity

A free market lets us come together freely to buy and sell what we choose.  An overly regulated market alters our economic decision making.  Due to higher prices.  And regulatory costs.  A minimal amount may not affect our purchasing decisions.  Whereas an excessive amount pushes some outside the law.  Into the black market.  Back to a free market.  Which is what we all want.  To freely buy and sell what we choose.

The net effect on the economy?  The less free the market is the less economic activity there is.  Either due to higher prices.  Or higher regulatory costs.  Both of which leave us with less to spend on other economic exchanges.  And less motivation to commit labor and capital to create new things to trade.

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Revising Language and History to Help the Agenda

Posted by PITHOCRATES - September 20th, 2010

Barack and Big Brother

“Have you heard, brother, about the summer of recovery?”

“No, brother.  Heard what?”

“Millions of jobs were saved.”

“Doubleplusgood, brother.  Doubleplusgood indeed.”

For inner-party members, perhaps.  For us regular party members, though, not a whole lot has changed.  But we don’t complain.  We continue to drink our Victory Gin and praise Big Brother.  Because we don’t want to be summoned to the Ministry of Love and feel the wrath of the state.  Or be audited by the IRS.

Of course, the proles, the masses, get to indulge in their pornography, drugs, music, prostitution, alcohol, cigarettes and other crimethink.  Anything to quell the unruly masses.  The lucky bastards.  Well, the ones not sent to joycamps, at least.  A few privations will always trump forced labor in my book.

The purpose of Newspeak in Oceania is twofold.  First it provides a political correct language to communicate in.  And, second, this simplified language simplifies the people so they’re little more than automatons of the state.  Makes it easier for the state to lie.  To twist the meaning of words.  To change their meaning.  And to change history. 

Unemployment is higher today than it was during the Bush administration.  But we’re not going to return to the failed policies of the past.  Things are better today and moving in the right direction.  Loyal party members believe this.  They know this.  This is blackwhite.  To believe in things that contradict.  The bad economy of today is better than the good economy of the Bush administration.  Despite what the numbers say.  Or until the numbers can be revised to agree with the new truth.  This is the power of Newspeak.

War is Peace

In the past it took a constant state of war to consume the economic output so everyone had less. Everyone was equal (other than inner-party members who were more equal than others).  Everyone was poor.  Lived in fear.  And sacrificed.  For the common enemy.  Today, we don’t need constant war.  We have the welfare state.  The war on poverty.  Which consumes the economic output.  And makes us dependent on the state.  Where we live in fear of losing our benefits.  And shared sacrifice leaves everyone with less.  For the common good.  Except, of course, the inner-party members.

Freedom is Slavery

Imagine a world where you never have to worry or think about where to work, finding healthcare, what to wear, where to live, what movies to watch, what music to listen to, what books to read, what cable news program to watch, what websites to visit or what to do with your spare time (because you won’t have any).  This is true freedom.  Freedom from choice.  You will never have to think again.  Or provide for yourself.  Because to be a slave is to be truly free.

Ignorance is Truth

What you don’t know can’t hurt you.  Obedience to the state is easy when you don’t question what they tell you.  When everything you hear is the truth.  And it is if you don’t know any better.  The era of Reagan is over.  Trickledown economics doesn’t work.  And if you don’t look at the numbers and see the robust economic health of the Reagan years, it is easy to accept the lie.  If you don’t know the truth then you accept what they tell you as the truth.  And you become good party members.

Newspeak Today

This word play doesn’t only exist in George Orwell’s classic book 1984 or in totalitarian regimes.  It exists wherever states want to revise history.  To alter your perception.  The way you think.  To bring you more into the party fold.  The latest is the revision of ‘global warming’ to ‘global climate disruption’ as noted in White House: Global Warming Out, ‘Global Climate Disruption’ In on the FOX News website.  To try and rescue a favored liberal cause from ridicule and charges of junk science it receives today.  Past examples of Newspeak include the following revisions: ‘terrorism’ to ‘man-caused disaster’; ‘war on terror’ to ‘overseas contingency operation’; and now that the Left wants to extend the Bush tax cuts, these have been revised from ‘tax cuts for the rich’ to ‘middle-class tax cuts’.

For further study on revisionism and abuses of state power, you can read 1984, watch the movie or follow the Obama administration.

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