Jan 07

Today’s News 7th January 2019

  • 'Fat Cat Friday' – FTSE 100 CEOs Have Already Out-Earned The Average Worker For 2019

    Friday marked the so-called ‘Fat Cat Friday’ in the UK – the day on which the average FTSE CEO earns the annual wage of the average full-time worker.

    As Statista’s Martin Armstrong notes, according to the latest calculations by the High Pay Centre and the Chartered Institute of Personnel and Development, at 1pm on Friday, after 29 hours of work, this figure was reached.

    As Statista’s infographic shows, the median earnings of a FTSE 100 CEO were £3.9 million in 2017…

    Infographic: How long FTSE 100 CEOs take to outearn the average worker | Statista

    You will find more infographics at Statista

    This compares to £29,574 for the typical employee in the country last year.

    Last year, it took the CEOs two hours longer to reach this milestone.

  • New Studies Show Pundits Are Wrong About Russian Social-Media Involvement In US Politics

    Authored by Aaron Mate via The Nation,

    Far from being a sophisticated propaganda campaign, it was small, amateurish, and mostly unrelated to the 2016 election…

    The release of two Senate-commissioned reports has sparked a new round of panic about Russia manipulating a vulnerable American public on social media. Headlines warn that Russian trolls have tried to suppress the African-American vote, promote Green Party candidate Jill Stein, recruit “assets,” and “sow discord” or “hack the 2016 election” via sex-toy ads and Pokémon Go. “The studies,” writes David Ignatius of The Washington Post, “describe a sophisticated, multilevel Russian effort to use every available tool of our open society to create resentment, mistrust and social disorder,” demonstrating that the Russians, “thanks to the Internet…seem to be perfecting these dark arts.” According to Michelle Goldberg of The New York Times, “it looks increasingly as though” Russian disinformation “changed the direction of American history” in the narrowly decided 2016 election, when “Russian trolling easily could have made the difference.”

    The reports, from the University of Oxford’s Computational Propaganda Research Project and the firm New Knowledge, do provide the most thorough look at Russian social-media activity to date. With an abundance of data, charts, graphs, and tables, coupled with extensive qualitative analysis, the authors scrutinize the output of the Internet Research Agency (IRA) the Russian clickbait firm indicted by special counsel Robert Muellerin February 2018. On every significant metric, it is difficult to square the data with the dramatic conclusions that have been drawn.

    • 2016 Election Content: The most glaring data point is how minimally Russian social-media activity pertained to the 2016 campaign. The New Knowledge report acknowledges that evaluating IRA content “purely based on whether it definitively swung the election is too narrow a focus,” as the “explicitly political content was a small percentage.” To be exact, just “11% of the total content” attributed to the IRA and 33 percent of user engagement with it “was related to the election.” The IRA’s posts “were minimally about the candidates,” with “roughly 6% of tweets, 18% of Instagram posts, and 7% of Facebook posts” having “mentioned Trump or Clinton by name.”

    • Scale: The researchers claim that “the scale of [the Russian] operation was unprecedented,” but they base that conclusion on dubious figures. They repeat the widespread claim that Russian posts “reached 126 million people on Facebook,” which is in fact a spin on Facebook’s own guess. “Our best estimate,” Facebook’s Colin Stretch testified to Congress in October 2017, “is that approximately 126 million people may have been served one of these [IRA] stories at some time during the two year period” between 2015 and 2017. According to Stretch, posts generated by suspected Russian accounts showing up in Facebook’s News Feed amounted to “approximately 1 out of 23,000 pieces of content.”

    • Spending: Also hurting the case that the Russians reached a large number of Americans is that they spent such a microscopic amount of money to do it. Oxford puts the IRA’s Facebook spending between 2015 and 2017 at just $73,711. As was previously known, about $46,000 was spent on Russian-linked Facebook ads before the 2016 election. That amounts to about 0.05 percent of the $81 million spent on Facebook ads by the Clinton and Trump campaigns combined. A recent disclosure by Google that Russian-linked accounts spent $4,700 on platforms in 2016 only underscores how minuscule that spending was. The researchers also claim that the IRA’s “manipulation of American political discourse had a budget that exceeded $25 million USD.” But that number is based on a widely repeated error that mistakes the IRA’s spending on US-related activities for its parent project’s overall global budget, including domestic social-media activity in Russia.

    • Sophistication: Another reason to question the operation’s sophistication can be found by simply looking at its offerings. The IRA’s most shared pre-election Facebook post was a cartoon of a gun-wielding Yosemite Sam. Over on Instagram, the best-received image urged users to give it a “Like” if they believe in Jesus. The top IRA post on Facebook before the election to mention Hillary Clinton was a conspiratorial screed about voter fraud. It’s telling that those who are so certain Russian social-media posts affected the 2016 election never cite the posts that they think actually helped achieve that end. The actual content of those posts might explain why.

    • Covert or Clickbait Operation? Far from exposing a sophisticated propaganda campaign, the reports provide more evidence that the Russians were actually engaging in clickbait capitalism: targeting unique demographics like African Americans or evangelicals in a bid to attract large audiences for commercial purposes. Reporters who have profiled the IRA have commonly described it as “a social media marketing campaign.” Mueller’s indictment of the IRA disclosed that it sold “promotions and advertisements” on its pages that generally sold in the $25-$50 range. “This strategy,” Oxford observes, “is not an invention for politics and foreign intrigue, it is consistent with techniques used in digital marketing.” New Knowledge notes that the IRA even sold merchandise that “perhaps provided the IRA with a source of revenue,” hawking goods such as T-shirts, “LGBT-positive sex toys and many variants of triptych and 5-panel artwork featuring traditionally conservative, patriotic themes.”

    • “Asset Development”: Lest one wonder how promoting sex toys might factor into a sophisticated influence campaign, the New Knowledge report claims that exploiting “sexual behavior” was a key component of the IRA’s “expansive” “human asset recruitment strategy” in the United States. “Recruiting an asset by exploiting a personal vulnerability,” the report explains, “is a timeless espionage practice.” The first example of this timeless espionage practice is of an ad featuring Jesusconsoling a dejected young man by telling him: “Struggling with the addiction to masturbation? Reach out to me and we will beat it together.” It is unknown if this particular tactic brought any assets into the fold. But New Knowledge reports that there was “some success with several of these human-activation attempts.” That is correct: The IRA’s online trolls apparently succeeded in sparking protests in 2016, like several in Florida where “it’s unclear if anyone attended”; “no people showed up to at least one,” and “ragtag groups” showed up at others, including one where video footage captured a crowd of eight people. The most successful effort appears to have been in Houston, where Russian trolls allegedly organized dueling rallies pitting a dozen white supremacists against several dozen counter-protesters outside an Islamic center.

    Based on all of this data, we can draw this picture of Russian social-media activity: It was mostly unrelated to the 2016 election; microscopic in reach, engagement, and spending; and juvenile or absurd in its content. This leads to the inescapable conclusion, as the New Knowledge study acknowledges, that “the operation’s focus on elections was merely a small subset” of its activity. They qualify that “accurate” narrative by saying it “misses nuance and deserves more contextualization.” Alternatively, perhaps it deserves some minimal reflection that a juvenile social-media operation with such a small focus on elections is being widely portrayed as a seismic threat that may well have decided the 2016 contest.

    Doing so leads us to conclusions that have nothing to do with Russian social-media activity, nor with the voters supposedly influenced by it. Take the widespread speculation that Russian social-media posts may have suppressed the black vote. That a Russian troll farm sought to deceive black audiences and other targeted demographics on social media is certainly contemptible. But in criticizing that effort there’s no reason to assume it was successful—and yet that’s exactly what the pundits did. “When you consider the narrow margins by which [Donald Trump] won [Michigan and Wisconsin], and poor minority turnout there, these Russian voter suppression efforts may have been decisive,” former Obama adviser David Axelrod commented. “Black voter turnout declined in 2016 for the first time in 20 years in a presidential election,” The New York Times conspicuously notes, “but it is impossible to determine whether that was the result of the Russian campaign.”

    That it is even considered possible that the Russian campaign impacted the black vote displays a rather stunning paternalism and condescension. Would Axelrod, Times reporters, or any of the others floating a similarscenario accept a suggestion that their own votes might be susceptible to silly social-media posts mostly unrelated to the election? If not, what does that tell us about their attitudes toward the people that they presume could be so vulnerable?

    Entertaining the possibility that Russian social-media posts impacted the election outcome requires more than just a contemptuous view of average voters. It also requires the abandonment of elementary standards of logic, probability, and arithmetic. We now have corroboration of this judgment from an unlikely source. Just days after the New Knowledge report was released, The New York Times reported that the company had carried out “a secret experiment” in the 2017 Alabama Senate race. According to an internal document, New Knowledge used “many of the [Russian] tactics now understood to have influenced the 2016 elections,” going so far as to stage an “elaborate ‘false flag’ operation” that promoted the idea that the Republican candidate, Roy Moore, was backed by Russian bots. The fallout from the operation has led Facebook to suspend the accounts of five people, including New Knowledge CEO Jonathon Morgan.

    The Times discloses that the project had a budget of $100,000, but adds that it “was likely too small to have a significant effect on the race.” A Democratic operative concurs, telling the Times that “it was impossible that a $100,000 operation had an impact.”

    The Alabama Senate race cost $51 million. If it was impossible for a $100,000 New Knowledge operation to affect a 2017 state election, then how could a comparable – perhaps even less expensive – Russian operation possibly impact a $2.4 billion US presidential election in 2016?

    On top of straining credulity, fixating on barely detectable and trivial social-media content also downplays myriad serious issues. As the journalist Ari Berman has tirelessly pointed out, the 2016 election was “the first presidential contest in 50 years without the full protections of the [Voting Rights Act],” one that was conducted amid “the greatest rollback of voting rights since the act was passed” in 1965. Rather than ruminating over whether they were duped by Russian clickbait, reporters who have actually spoken to black Midwest voters have found that political disillusionment amid stagnant wages, high inequality, and pervasive police brutality led many to stay home.

    And that leads us to perhaps a key reason why elites in particular are so fixated on the purported threat of Russian meddling: It deflects attention from their own failures, and the failings of the system that grants them status as elites. During the campaign, corporate media outlets handed Donald Trump billions of dollars worth of air time because, in the words of the now ousted CBS exec Les Moonves: “It may not be good for America, but it’s damn good for CBS…. The money’s rolling in and this is fun.” Not wanting to interrupt the fun, these outlets have every incentive to breathlessly cover Russiagate and amplify comparisons of stolen Democratic Party e-mails and Russian social-media posts to Pearl Harbor, 9/11, Kristallnacht, and “cruise missiles.”

    Having lost the presidential election to a reality-TV host, the Democratic Party leadership is arguably the most incentivized to capitalize on the Russia panic. They continue to oblige. Like clockwork, former Clinton campaign manager Robby Mook seized on the new Senate studies to warnthat “Russian operatives will try to divide Democrats again in the 2020 primary, making activists unwitting accomplices.” By “unwitting accomplices,” Mook is presumably referring to the progressive Democrats who have protested the DNC leadership’s collusion with the Clinton campaign and bias against Bernie Sanders in the 2016 primary. Mook is following a now familiar Democratic playbook: blaming Russia for the consequences of the party elite’s own actions. When an uproar arose over Trump campaign data firm Cambridge Analytica in early 2018, Hillary Clinton was quoted posing what she dubbed the “real question”: “How did the Russians know how to target their messages so precisely to undecided voters in Wisconsin, or Michigan, or Pennsylvania?”

    In fact, the Russians spent a grand total of $3,102 in these three states, with the majority of that paltry sum not even during the general election but during the primaries, and the majority of the ads were not even about candidates but about social issues. The total number of times ads were targeted at Wisconsin (54), Michigan (36), Pennsylvania (25) combined is less than the 152 times that ads were targeted at the blue state of New York. Wisconsin and Michigan also happen to be two states that Clinton infamously, and perilously, avoided visiting in the campaign’s final months.

    The utility of Russia-baiting goes far beyond absolving elites of responsibility for their own failures. Hacked documents have recently revealed that a UK-government charity has waged a global propaganda operation in the name of “countering Russian disinformation.” The project, known as the Integrity Initiative, is run by military intelligence officials with funding from the British Foreign Office and other government sources, including the US State Department and NATO. It works closely with “clusters” of sympathetic journalists and academics across the West, and has already been outed for waging a social-media campaign against Labour leader Jeremy Corbyn. The group’s Twitter account promoted articles that painted Corbyn as a “useful idiot” in support of “the Kremlin cause”; criticized his communications director, Seumas Milne, for his alleged “work with the Kremlin agenda”; and said, “It’s time for the Corbyn left to confront its Putin problem.”

    The Corbyn camp is far from the only progressive force to be targeted with this smear tactic. That it is revealed to be part of a Western government–backed operation is yet another reason to consider the fixation with Russian social-media activity in a new light. There is no indication that the disinformation spread by employees of a St. Petersburg troll farm has had a discernible impact on the US electorate. The barrage of claims to the contrary is but one element of an infinitely larger chorus from failed political elites, sketchy private firms, shadowy intelligence officials, and credulous media outlets that inculcates the Western public with fears of a Kremlin “sowing discord.” Given how divorced the prevailing alarm is from the actual facts—and the influence of those fueling it—we might ask ourselves whose disinformation is most worthy of concern.

  • Starbucks Under Attack In China

    One Chinese company is going down a road of massive losses in a seemingly megalomaniac attempt to operate more stores in China than market top dog Starbucks by the end of 2019.

    Beijing startup Luckin Coffee only officially launched in January of 2018 but, as Statista’s Katharina Buchholz reports, has already managed to open approximately 2,000 stores across the country. The Chinese growth objective of 600 new stores per year of their competitor seems tame in comparison – even though it entails opening a new location every 15 hours.

    The attack on the Chinese market that is important to Starbuck’s bottom-line is a calculated one. Luckin even threatened to sue Starbucks for monopolistic behavior as part of a PR stunt. China – traditionally a nation of tea drinkers – is currently the country with the most Starbucks stores in the world after the U.S.

    By the end of 2019, Starbucks would run 4,121 stores in China if they reach their goal. Luckin hopes to be operating at approximately 4,500 locations by that time.

    Infographic: Chinese startup aims to overtake Starbucks | Statista

    You will find more infographics at Statista

    This extreme growth strategy comes with a price tag – the company was running at a supposed loss of US$ 123 million in 2018. The company, whose products are currently about 20 percent cheaper than Starbucks, reportedly does not have a profitability objective yet and is bankrolled by Chinese and Singaporean investors.

    Despite the losses, Luckin is hugely popular with consumers. Not only are they cheaper than their competitor but they also cater to a consumer base that loves mobile payments and delivery options. Many Luckin locations do not sell over-the-counter but take delivery orders over an app only. The company operates without cash via pay-on-your-phone schemes popular in China. Customers pre-order items on their phone before arriving at the store.
     

  • The Fed, China, And The Markets

    Authored by Chetan Ahya, Morgan Stanley global head of economics

    Amid market volatility and continued downside surprises in global growth, investors are focusing on the Fed and China. Regarding the Fed, the issue is whether and when it could signal potential changes in balance sheet normalisation (as it has on the policy rate path). On China, the question is when growth could stabilise. We think policy-makers will take the actions necessary to manage their countries’ respective growth trajectories. We believe that China’s growth will bottom in 1Q19, while the Fed has begun to signal some flexibility on its balance sheet policy, if there is a material deterioration in the growth outlook.

    The Fed has altered its policy trajectory on rates, but not yet on the balance sheet. Despite robust trailing consumption growth and strong labour market dynamics, the US economy is unlikely to remain immune to slowing global growth. In addition, the recent tightening in financial conditions has affected capex intentions, and we expect the impact of fiscal stimulus on growth to fade in 2019. Recognising this slower growth environment, the Fed has signalled its flexibility on the policy rate path. However, the Fed has not yet given a clear signal on when the balance sheet reduction would end.

    The normalisation process has not been as smooth as assumed. The Fed had anticipated that once it announced the path of balance sheet normalisation, markets would discount that “passive and predictable” pathway and that the process would be akin to “watching paint dry”.

    However, we see the challenge as follows:

    (1) Even though the Fed communicated the pace of the unwind well ahead of its start, uncertainty remains as regards the final, optimal size of the Fed’s balance sheet. Moreover, we believe investors are concerned that the Fed has remained on a set course, even though the US and global growth outlook has weakened.

    (2) The normalisation process also appears to have had a greater-than-expected impact on asset and financial markets via the portfolio balance channel. In his remarks on Friday, Chair Powell indicated that he does not believe that the balance sheet normalisation process “is an important part of the story of the market turbulence that began in the fourth quarter last year”. However, as my colleague Vishwanath Tirupattur noted in this publication a few weeks back, shrinking the Fed’s balance sheet has produced cracks in various asset and credit markets. Indeed, US high yield credit spreads are at their widest in 30 months, and financial conditions are the tightest in 17 months.

    We think that sustained tightening of financial conditions can be the trigger for change. New York Fed President Williams indicated in December that the FOMC could be open to altering the path of balance sheet reduction if the outlook were to deteriorate considerably. Chair Powell also acknowledged this possibility in his remarks on Friday. If financial conditions continue to tighten, we believe the Fed could (a) acknowledge the impact of balance sheet reduction (via the portfolio balance channel) on broader financial conditions and (b) hint at an early end to the process. (We expect the minutes of the previous FOMC meeting, to be released on January 9, to reveal that not all FOMC participants agree that the runoff has proceeded smoothly). Policy-makers have ample opportunity to further calibrate their response: Chair Powell and Vice-Chair Clarida are slated to appear this week.

    Growth in China has decelerated over the course of 2H18, persistently surprising on the downside in recent months. While policy-makers have responded by stepping up the pace of easing efforts, investors remain concerned that these measures are not enough to stabilise growth.

    The degree and nature of easing has been different in this cycle. Policy-makers in China have made a concerted effort to maintain financial stability. While they have eased in reaction to rising external uncertainties, maintaining the objective of controlling financial stability risks has kept them from moving too aggressively. What’s more, easing measures have aimed at encouraging private sector spending, but weak private sector sentiment (dampened further by trade tensions) has prevented spending from picking up.

    We expect China’s growth to bottom in 1Q19. Past easing measures have not yet stabilised growth. We think policy-makers are focused on the growth outcome and will calibrate their response as necessary. Indeed, they have recently taken a different tack, front-loading the issuance of a temporary quota of local government bonds before the annual budgets are finalised (by March). We expect further monetary and fiscal easing to lift broad credit growth to 12.5% from 10.6% currently (the latest move being the 100bp cut in RRR), and the cumulative fiscal easing could result in a 1.5pp of GDP increase in the augmented fiscal deficit.  Moreover, there has been some progress reported in bilateral trade negotiations, lowering the chances of escalation beyond March 1. Both of these factors will help investor sentiment and the growth trajectory.

    Watch for a shift from the Fed and stabilisation in China. We think the Fed could signal its flexibility around the balance sheet normalisation process in the coming weeks and China’s growth will stabilise in 2Q19. However, until we get an all clear on both fronts, the risk is that the macro backdrop for markets could remain challenging.

  • US-Backed Syrian Militants Carry Out Rare Surface-to-Surface Missile Test

    What do US forces in Syria do when the Commander-in-Chief orders a “full” and “immediate” draw down of troops from the country? They conduct a rare surface-to-surface missile test with their “rebel” partners on the ground of course.

    Still frame from the missile test video hosted on a Syrian opposition social media account. 

    An exclusive report from Middle East news site Al Masdar finds the following based on a video of the missile test uploaded to opposition social media on June 3rd, though it’s unknown precisely when the test was carried out:

    The U.S.-backed rebel forces carried out a rare missile test in the Al-Tanf region of southeastern Homs province recently.

    U.S.-backed “Revolutionary Commandos” reportedly conducted this missile test in the Al-Tanf Zone that is located along the Iraqi border.

    Below is the short video of the rebel group carrying out the missile test in conjunction with American forces:

    Despite U.S. President Donald Trump’s announcement regarding the withdrawal of American troops from Syria, the Al-Tanf region of Homs governate still remains under the control of their armed forces and their rebel allies.

    The Syrian government has demanded that the U.S. forces withdraw from the Al-Tanf region; however, they have refused to concede this part of the country to Damascus.

    * * *

    Last month a top Russian military official slammed the United States for “illegally occupying” a massive zone in southwest Syria surrounding the American garrison of al-Tanf, effectively protecting some 6,000 armed militants that Russia has designated terrorists. 

    The Head of Russia’s National Defense Control Center, Colonel-General Mikhail Mizintsev, called the US-occupied area “the last stronghold of evil” which continues to fester with militants “on the territory of the independent state”.

    He identified a 55 km zone surrounding the base in a desert region along the Syrian-Iraq border, which American special forces and US-backed FSA groups have held since 2016 after taking the key crossing from ISIS. 

    Though little of the fate of the American presence at al-Tanf has been discussed related to President Trump’s recent announced complete US exit from Syria, it is presumed that the base will be abandoned to local FSA proxies, as well as potentially ISIS cells known to be in the area. 

    The truly rare surface-to-surface missile test documented in the US-backed Revolutionary Commandos’ video released this week suggests the possibility the Americans plan to leave some of these advanced weapons systems behind in a warning to Russia and Damascus. 

  • Ocasio-Cortez, Scalise Tweet-Storm Over Lunacy Of Left's "Green New Deal" Socialism

    Authored by Thomas DiLorenzo via LewRockwell.com,

    Upon taking control of the U.S. House of Representatives the first thing America’s Marxist Party did was to propose a Soviet-style, communistic destruction of American capitalism labeled a “Green New Deal.”  The Party chose as its spokesperson for this totalitarian venture a young woman named Sandy Ocasio who grew up in one of the wealthiest enclaves in America, Westchester County, New York, but who decided to lie about this to get into politics by calling herself “Alex from the Bronx.” 

    Sandy sounds like a poorly-educated-but-well-indoctrinated young communist with a ninth-grade mentality. 

    She proudly labels herself a “democratic socialist” but as Ludwig von Mises explained, there really is no difference between communism and socialism: they are both attacks on private property and economic freedom.
    She seems clueless about just about everything she talks about in public, whether it is the Constitution, especially the economy, the structure of government, history, etc.  This is the person the American Marxist Party has chosen as its front person in its proposal to destroy American capitalism, prosperity, and the American dream forever – and to give itself totalitarian control over virtually all aspects of American life.

    [ZH: In the short ’60 Minutes’ clip released on Friday, Ocasio-Cortez’s didn’t offer specifics of her ‘Green New Deal’ plan to phase out fossil fuels by 2030 in favor of more renewable energy and a reduction in greenhouse gases. But she referred back to past U.S. policies that set top marginal tax rates as high as 70 percent for ultra-wealthy Americans. The current top income tax rate is 37 percent.

    “Once you get to, like, the tippy tops — on your 10 millionth dollar — sometimes you see tax rates as high as 60 or 70 percent,” she said in the clip.

    That prompted Scalise, the second-ranked Republican in the House, to tweet mockingly on Saturday that Republicans “Let Americans keep more of their hard-earned money,” but that Democrats “Take away 70 percent of your income and give it to leftist fantasy programs.”

    https://platform.twitter.com/widgets.js

    Ocasio-Cortez fired back, “You’re the GOP Minority Whip. How do you not know how marginal rates work?”

    https://platform.twitter.com/widgets.js

    Early Sunday, Scalise responded on Twitter that he’d be “happy to continue the debate on the Floor of the People’s House.”

    https://platform.twitter.com/widgets.js

    But posting screenshots of some responses to Ocasio-Ortez’s earlier tweet such as “kick his cane,” he said, “it’s clearly not productive to engage here with some of your radical followers. #StayClassy.”]

    DiLorenzo continues…The first thing to understand about the proposed “Green New Deal” is that the first New Deal not only failed to end the Great Depression but made it more severe and longer-lasting. 

    Its only “success” was in creating endless patronage opportunities and levers of political bribery and extortion for the Democratic Party, opportunities that the Republican Party happily embraced whenever it could to expand its own power and wealth in the succeeding decades.  The proposed Green New Deal would do the same, only many orders of magnitude worse.

    Failure of the First New Deal

    At the outset of the Great Depression, 1929, the unemployment rate in America was 2.9% according to U.S. Dept. of Commerce statistics.  Unemployment reached its peak in 1933 at 24.9%.  There was a bit of a recovery as mal-investments were liquidated, but it only dropped the unemployment rate to 14.3% by 1939.  It rose to 19.0% in 1938 and was still 14.6% in 1940, on the eve of American entry into World War II.  Personal consumption expenditures were still lower in 1940 ($71.9 billion) than in 1929 ($78.9 billion).  All of this despite eight years of unprecedented New Deal “stimulus spending,” regulating, controlling, subsidizing, lending, inflating, price-controlling, and taxing.  The New Deal was an utter failure to the American people.  Economists Richard Vedder and Lowell Gallaway estimated in their book, Out of Work, that the unemployment rate was eight percentage points higher in 1940 than it otherwise would have been without New Deal minimum-wage and pro-union legislation alone.

    Nor did World War II end the Great Depression.  It ended high unemployment only because some 16 million men were sent overseas during the war.  Sending a man to die in a foxhole in Germany is not the same as that man going to work in his own country and returning home to have dinner with his family every evening, contrary to Keynesian folklore about how the war supposedly “ended the Great Depression.”  The average American family back at home was even worse off because of the massive diversion of resources from the consumer and business side of the economy to the government’s military infrastructure.  The production of new automobiles and other products was made illegal, food was rationed, and everyone sacrificed even more.

    The Great Depression did not really end until after the war was over and the army was demobilized, returning billions of dollars of resources to the private sector. Federal government expenditures fell from $98.4 billion in 1945 to $33 billion in 1948.  As a result, the year 1946 was the most prosperous year in all of American history in terms of the growth of the private components of GDP:  private consumption and investment spending increased by 30% in that one year; no other year has ever been remotely close to that growth rate. Keynesian economists predicted another Great Depression because of the two-thirds reduction in federal spending while the exact opposite happened.  That should have discredited Keynesianism forever, but the Washington establishment just ignored or lied about this fact, as it does to this very day.

    It took some seventy years, but the “mainstream” of the economics profession finally caught on to this truth, a truth that was recognized by Austrian School economists all along.  In an August 2004 article in the prestigious Journal of Political Economy by Harold Cole and Lee Ohanian entitled “New Deal Policies and the Persistence of the Great Depression” the authors concluded that “New Deal . . . policies did not lift the economy out of the Depression . . . the abandonment of these policies coincided with the strong economic recovery of the 1940s” (emphasis added).

    Nevertheless, the New Deal was a political power bonanza for FDR and his fellow Democrats.  According to a 1938 Official Report of the U.S. Senate Committee on Campaign Expenditures it was routine for the Roosevelt administration to demand that recipients of government make-work jobs, of which there were millions, register and vote as Democrats.  As Jim Couch and William Shughart wrote in The Political Economy of the New Deal, “The distribution of the billions of dollars appropriated by Congress to prime the economic pump was guided less by considerations of economic need than by the forces of ordinary politics.”  For example, the nation’s number one economic problem was the South, but since the South was solidly Democratic it received relatively little New Deal spending compared to other regions where FDR needed the votes.  And, “The states that gave Franklin Roosevelt larger percentages of the popular vote in 1932 were rewarded with significantly more federal aid than less-supportive constituencies.” 

    American socialists have always searched for deceptive euphemisms for socialism with which to disguise their totalitarian plans for the rest of us.  “Liberal,” “progressive,” “economic democracy,” “liberation theology,” “social justice,” and “industrial policy” are just a few examples.  “Green New Deal” is the latest manifestation of this political con game.

    What has been proposed is nothing less than the destruction of the fossil-fuel-based energy industries which have long been the lifeblood of capitalism.  All houses and businesses are to be “upgraded” in terms of their energy use by thousands, or tens of thousands, of government bureaucrats who would presumably go door to door to enforce the state’s energy-use mandates.  There are vague promises of replacing the entire power grid with “renewable energy sources” such as windmills and solar panels.  It all sounds very much like a middle-school paper assignment for an “environmental ethics” class.  I would not be surprised to learn that Sandy Ocasio took such a class and wrote such a paper in the Westchester County public schools.

    The entire U.S. economy would be “planned” by a fifteen-member congressional committee, Soviet style.  There is no acknowledgment at all of the failures of socialist planning everywhere else in the world; of the well-known economic reasons for these inherent failures; or of the fact that all the countries of the world that touted “planning” in the twentieth century have abandoned it, and for good reason.  It is a recipe for turning America into a Third World economic hellhole, in other words, to be completed “in ten years” according to the published plan.  Free-lunch economics pervades the plan, promising everyone a job and a “living wage” and of course, an end to economic inequality through ever more income redistribution schemes.  But not to worry, say the Marxist planners, it will all be paid for by the Fed, a new system of “government banks,” and higher taxes.  Simple.

  • Most Expensive Tuna Ever Sold Fetches $3.1 Million At Tokyo Auction

    As per the traditions of a popular Tokyo fish market, fishmongers every year gather to try and outbid one another for the first Bluefin Tuna of the year. This year, the catch fetched a record-breaking sum of $3.1 million, or 333.6 million yen.

    Kiyoshi Kimura, owner if the Sushizanmai chain, won the bidding for the the 278-kg fish which was caught off the coast of northern Japan’s Aomori prefecture – double the previous record sum from 2013, an auction that was also won by Kimura.

    Tuna

    Speaking to reporters after the annual auction, Kimura said the fish would be served at regular prices at a Sushizanmai outlet in Tsukiji on Saturday. He estimating that the fish would end up costing an average of more than $200 per serving, per Bloomberg.

    “The tuna looks so tasty and very fresh, but I think I did too much,” Kimura said.

    “I expected it would be between 30 million and 50 million yen, or 60 million yen at the highest, but it ended up 5 times more.”

    Saturday’s event was the first New Year auction for Tokyo’s new Toyosu market. Its predecessor, the famed Tsukiji fish market, closed last year to make room for temporary parking for the Tokyo 2020 Summer Olympics.

  • 'Trade War = War' – Some Confucian Calm, Please!

    Via EricMargolis.com,

    The United States and China look like two punch-drunk prizefighters squaring off for a major championship fight. They have no good reason to fight and every reason to cooperate now that both their stock markets have been in turmoil.

    Six hundred point market swings down and then up look like symptoms of economic nervous breakdown.

    Factions in both nations are beating the war drums, putting presidents Donald Trump and Xi Jinping under growing pressure to be more aggressive.

    Trump shoulders much of the blame for having started this unnecessary confrontation by imposing heavy duties on Chinese goods. The US president has turned the old maxim on its head that nations that trade heavily don’t go to war. The US and China, both huge trading partners, appear headed to military clashes, or even full scale war, if their governments don’t come to their senses soon.

    Trump was clearly trying to bully China into major trade concessions and better commercial behavior. He is right about this. I’ve done business in China for over 15 years and seen every kind of chicanery, fakery and double-dealing imaginable. China learned from the French that the First Commandment is ‘Thou Shalt Not Import.’

    The Japanese are no better. I recall Japanese health authorities telling my pharma firm that all our tablets had to be triangular shaped to make them nearly impossible to swallow.

    Theft of technology is indeed rampant, as Trump asserts. But has he looked into CIA and NSA’s techno spying recently? They ransacked the Soviet Union during its last dying days. Much of our postwar missile technology was developed by German scientists spirited off to the USA. After the Sputnik launch in 1957, I recall seeing a German cartoon showing a Soviet and US satellite in orbit next to one another. One whispers to the other, ‘Now that we’re alone, let’s speak German!’

    Meanwhile, US warships are patrolling the South China Sea and playing chicken with Chinese naval units and aircraft. It’s only a matter of time before a dangerous incident occurs that could spark a real shooting war. The Trump White House has been encouraging India to challenge China at sea and in the high Himalayas.

    Beijing has pulled the rug out from under Apple sales in China, causing a near panic on the US stock market. In his quest for power and glory, Trump may have fatally wounded US financial markets. Apple was the shining example of fruitful cooperation between the US and China.

    Trump’s confrontation with China was aimed at winning him votes in the US Farm and Bible belts. It’s ironic that over 80% of Trump backers who profess themselves evangelical Christians are cheering on his military adventure against China and, for that matter, North Korea. ‘Turn the Other Cheek’ got lost on the road to Iowa.

    China’s ruler, Xi Jinping, has gotten sufficiently annoyed with Trump to rekindle his nation’s strident claims to ‘renegade province’ Taiwan. In past years, the mighty US Seventh Fleet would have turned any Chinese invasion fleet into chow mein. US Naval officers used to claim they would make a Chinese amphibious invasion of Taiwan into ‘a million-man swim.’ Today, China has the technology, manpower and naval power to invade Taiwan, should it so choose.

    While lacking the military proficiency of the US Navy, China’s new fighters, drones, anti-ship missiles and fleet submarines already pose a serious challenge to the US 7th Fleet. It would be foolish to underestimate China’s striking power.

    In the midst of all these tensions, the US chose to get Canada to arrest the daughter of China’s leading high tech firm, Meng Wanzhou, on charges of trading with Iran. Trump appeared unaware of plans to arrest Meng as she was transiting Vancouver airport. There is a very strong suspicion that the rabid hawks in the White House, John Bolton and Mike Pompeo, hatched this incident to keep the US and China in confrontation.

    During the Bush administration, Bolton pulled off a similar machination to thwart a peace deal between North Korea and the US. Now the Chinese are humiliated and furious at Washington for the arrest of Mrs Meng, and the Canadians, who had no business getting involved in this fracas over Iran, are left holding the bag. Pathetic.

  • Petition Calls To Rename Fifth Avenue In Front Of Trump Tower: "President Barack H. Obama Avenue"

    Almost 17,000 people have signed a petition in New York City to rename the street in front of Trump Tower after former Barack Hussein Obama II.

     A MoveOn petition is gaining traction over the weekend would rename the stretch of Fifth Avenue between 56th and 57th streets to be “President Barack H. Obama Avenue.”

    The petition would force President Trump to change the address of his Trump Tower building, where Donald Trump 2020 presidential campaign will be headquartered on the 15th floor, said The Hill. 

    As of Sunday afternoon, the petition had approximately 16,878 signatures, a 390% jump in signatures since Friday morning. 

    “We request the New York City Mayor and City Council do the same by renaming a block of Fifth Avenue after the former president who saved our nation from the Great Recession, achieved too many other accomplishments to list, and whose two terms in office were completely scandal-free,” the petition states.

    A stretch of highway in  Los Angeles was recently renamed after the former commander in chief.

    “The City of Los Angeles recently honored former President Barack Obama by renaming a stretch of the 134 Freeway near Downtown LA in his honor,” the petition notes.

    For the roadway to be renamed, the New York City Council would have to approve the bill and Mayor Bill de Blasio would have to sign off on it.

    Last month, the council voted to name a city street after the hip-hop group Wu-Tang Clan.

    According to NPR News, the council voted 48-0 during its last meeting of 2018 to co-name the street and several more after the group and other notable musicians, such as Notorious B.I.G. (born Christopher Wallace), Woody Guthrie and poet Audre Lorde.

    The move to rename the street in front of Trump Tower seems very far-fetched, but with the council on a tear renaming streets after legendary hip-hop stars, it would not shock us if Trump Tower one day is sitting on “President Barack H. Obama Avenue.”

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