According to Robert Spencer of David Horowitz's Freedom Center, Senator Tom Cotton is requesting that the IRS investigate the tax-exempt status of the Southern Poverty Law Center. As a former contributor who was scammed into supporting them, I wholeheartedly support his request. As I have previously blogged, the SPLC is a racketeering organization that has engaged in partisan advocacy and extortion. The petition can be signed here. Spencer's email follows:
Mitchell, the Southern Poverty Law Center (SPLC) has made its mission to blacklist and bankrupt conservatives like you and me.
All the while, they're raking in millions that they're storing in offshore accounts, paying no taxes, and protected by outdated laws that make it impossible for patriots like you and me to defend ourselves.
And finally, an elected official is doing something about it.
Rep. Tom Cotton formally addressed the IRS commissioner, urging him to investigate the Southern Poverty Law Center's tax-exempt status...
...and I'm calling on the Freedom Center's very best supporters to join me in thanking him with this Note of Support.
The truth is, this is one of the most important fights to the future of our country -- and no one knows that better than I do.
When big tech and big finance came after me last summer, completely shutting down my online fundraising, they used the SPLC's target on my back to justify their bans.
And I went months not being able to raise a single penny.
That's why I hope you'll sign this Note of Support to Rep Tom Cotton right away for leading the fight against SPLC.
Wednesday, April 3, 2019
Tuesday, April 2, 2019
Universal Basic Income
I had assigned five potential readings for extra credit: Atlas Shrugged, Economics in One Lesson, Capitalism and Freedom, The Anticapitalistic Mentality, and "The Use of Knowledge in Society." One of my students sent me a video of an interview about the idea of universal basic income. Many of the points the interviewee makes are fallacies discussed in the readings, especially Economics in One Lesson and Capitalism and Freedom. I hence sent the following email to my three online classes:
One of your classmates showed me a video about universal basic income. This is one of the ideas invented by Milton Friedman in Capitalism and Freedom. However, the proposal made today involves a sharp expansion of welfare benefits, which Friedman would have opposed were he alive today. The issues in the video are among the current issues that overlap with several of the extra credit readings I have made available, so I thought I'd send my response to you. If you're not interested, skip this email as this material is not relevant to the exam.
The student wrote this:
Hi Professor,
I saw this a few weeks ago. What do you think about UBI?
https://youtu.be/cTsEzmFamZ8
My response is as follows:
Andrew Yang's fallacious claim that technology destroys jobs is hundreds of years old. It goes back to 17th century England. Some of the Luddites in the 19th century destroyed textile machinery as a form of protest. Eleanor Roosevelt made similar claims in the 1940s. The claim that technology destroys jobs has always been false. This is something discussed in Economics in One Lesson, which I recommend to you to understand why Yang misunderstands the implications of technology. Market-based technology increases wealth. Hence, there is demand for new kinds of jobs as increased wealth finds new markets and new outlets.
However, this isn't working well today because today's technology and investments are not market based; they are created by government fiat and monetary expansion. That is, the Fed and the banking system expand the money supply; the expanded money supply reduces interest rates to nearly zero; then, the banking system makes the artificially created money available to powerful borrowers at low or zero rates. The low rates create bad investment or malinvestment in projects that would not exist under free market conditions. The bad investment initially stimulates employment, but over time it substitutes capital for labor. The reason is that low interest rates reduce the cost of capital to a greater degree than they reduce the cost of labor.
The manufacturing jobs that have left the country have disappeared neither purely because of technology nor purely because of low overseas wages. When capital leaves a country, its currency falls, and further overseas investment is curtailed because the currency becomes weak. For the past 40 years, plant relocations have been subsidized by low or zero interest rates that the Federal Reserve bank creates artificially coupled with the reserve currency status of the dollar. Because countries around the world hold dollars, the dollar does not decline, so firms borrow at artificially low interest rates to relocate plants, but the dollar does not fall because it is held by firms and central banks around the world.
If capital costs are minimal or zero, then there is minimal or zero cost to substitute capital for labor. Hence, capital investment in plant relocation has cost firms little, and plant relocation has exceeded the market level. The same is true of investment in technology. Because interest rates are low, it is cheaper for firms to borrow to invest in technology and replace labor with technology. Today, technology is nearly costless because interest rates are nearly zero. As a result, the economy has become distorted in favor of capital investment. To correct all this will be hard, but to distort it further by creating more money and inducing men to stop working so that they have free time to create militias is insane. The end result will escalate the decline of the economy because of misallocation of resources --the subject of the novel Atlas Shrugged.
That said, Milton Friedman in Capitalism and Freedom, which I also recommend (along with Economics in One Lesson and Atlas Shrugged), is the one who created the idea of the negative income tax, which is what Yang is talking about. Friedman's idea was to simplify the myriad welfare programs by replacing welfare, Social Security, and all other programs and treating welfare as an extension of the income tax in one simple program. That would reduce bureaucracy costs. That is one of the chapters in Capitalism and Freedom. That is probably a good idea. However, an expansion of welfare is not a good idea because it will encourage people who would otherwise attempt to cope with the economy by finding jobs that may not be as good as would exist in a market setting to instead go on welfare. The result will be more disenfranchised Americans who live lives of hopeless welfare dependency--and more monetary expansion at a time when government is heavily in debt. Antfa will go on steroids.
The current federal debt level is 106% of gross domestic product, but that doesn't include unfunded Social Security liabilities, unpaid student loans, unfunded future Medicare and Medicaid liabilities, and unfunded future public sector pension costs . The actual indebtedness may be closer to 200% of GDP. Japan has sustained indebtedness at this level, but an expansion of welfare will push US indebtedness higher still. You will notice that recent graduates in Japan have suffered since the 1990s, and the same will happen to you.
According to a research paper by Kenneth Rogoff, when indebtedness exceeds 90% of the GDP it slows growth. An opposing, recent theory called the Modern Monetary Theory claims that government can expand the money supply indefinitely without consequences. The answer to this is that there is no evidence in history of this working, just as there is no evidence in history of socialism working. Because the dollar is a reserve currency, an aggressive monetary expansion to cover infinite indebtedness will potentially cause withdrawal of foreign central banks from the dollar. This may result in a dollar collapse, and the reverse of what Yang and other advocates hope for.
The economic fallacy that Andrew Yang is making in the video is that it is easy to see the jobs disrupted by technology , but it is difficult to see how demand will evolve because of additional wealth due to the technology. In 1875, if you had asked someone what the effects of the automobile's disruption of the horse-and-carriage market, the person would have said the same thing that Yang is saying. The problem with much of the technology now, such as social media, is that it is interest rate rather than market driven. The result is that many tech jobs are not value producing and should not exist. (The same can be said of professors' jobs, which would not exist without student loans, many of which will not be paid off.)
Hence, to help address Yang's fallacies, I suggest reading both Economics in One Lesson and Capitalism and Freedom as extra credit assignments. Atlas Shrugged paints a dramatic, dystopian picture of the direction in which economic fallacies, including this one, are taking us.
One of your classmates showed me a video about universal basic income. This is one of the ideas invented by Milton Friedman in Capitalism and Freedom. However, the proposal made today involves a sharp expansion of welfare benefits, which Friedman would have opposed were he alive today. The issues in the video are among the current issues that overlap with several of the extra credit readings I have made available, so I thought I'd send my response to you. If you're not interested, skip this email as this material is not relevant to the exam.
The student wrote this:
Hi Professor,
I saw this a few weeks ago. What do you think about UBI?
https://youtu.be/cTsEzmFamZ8
My response is as follows:
Andrew Yang's fallacious claim that technology destroys jobs is hundreds of years old. It goes back to 17th century England. Some of the Luddites in the 19th century destroyed textile machinery as a form of protest. Eleanor Roosevelt made similar claims in the 1940s. The claim that technology destroys jobs has always been false. This is something discussed in Economics in One Lesson, which I recommend to you to understand why Yang misunderstands the implications of technology. Market-based technology increases wealth. Hence, there is demand for new kinds of jobs as increased wealth finds new markets and new outlets.
However, this isn't working well today because today's technology and investments are not market based; they are created by government fiat and monetary expansion. That is, the Fed and the banking system expand the money supply; the expanded money supply reduces interest rates to nearly zero; then, the banking system makes the artificially created money available to powerful borrowers at low or zero rates. The low rates create bad investment or malinvestment in projects that would not exist under free market conditions. The bad investment initially stimulates employment, but over time it substitutes capital for labor. The reason is that low interest rates reduce the cost of capital to a greater degree than they reduce the cost of labor.
The manufacturing jobs that have left the country have disappeared neither purely because of technology nor purely because of low overseas wages. When capital leaves a country, its currency falls, and further overseas investment is curtailed because the currency becomes weak. For the past 40 years, plant relocations have been subsidized by low or zero interest rates that the Federal Reserve bank creates artificially coupled with the reserve currency status of the dollar. Because countries around the world hold dollars, the dollar does not decline, so firms borrow at artificially low interest rates to relocate plants, but the dollar does not fall because it is held by firms and central banks around the world.
If capital costs are minimal or zero, then there is minimal or zero cost to substitute capital for labor. Hence, capital investment in plant relocation has cost firms little, and plant relocation has exceeded the market level. The same is true of investment in technology. Because interest rates are low, it is cheaper for firms to borrow to invest in technology and replace labor with technology. Today, technology is nearly costless because interest rates are nearly zero. As a result, the economy has become distorted in favor of capital investment. To correct all this will be hard, but to distort it further by creating more money and inducing men to stop working so that they have free time to create militias is insane. The end result will escalate the decline of the economy because of misallocation of resources --the subject of the novel Atlas Shrugged.
That said, Milton Friedman in Capitalism and Freedom, which I also recommend (along with Economics in One Lesson and Atlas Shrugged), is the one who created the idea of the negative income tax, which is what Yang is talking about. Friedman's idea was to simplify the myriad welfare programs by replacing welfare, Social Security, and all other programs and treating welfare as an extension of the income tax in one simple program. That would reduce bureaucracy costs. That is one of the chapters in Capitalism and Freedom. That is probably a good idea. However, an expansion of welfare is not a good idea because it will encourage people who would otherwise attempt to cope with the economy by finding jobs that may not be as good as would exist in a market setting to instead go on welfare. The result will be more disenfranchised Americans who live lives of hopeless welfare dependency--and more monetary expansion at a time when government is heavily in debt. Antfa will go on steroids.
The current federal debt level is 106% of gross domestic product, but that doesn't include unfunded Social Security liabilities, unpaid student loans, unfunded future Medicare and Medicaid liabilities, and unfunded future public sector pension costs . The actual indebtedness may be closer to 200% of GDP. Japan has sustained indebtedness at this level, but an expansion of welfare will push US indebtedness higher still. You will notice that recent graduates in Japan have suffered since the 1990s, and the same will happen to you.
According to a research paper by Kenneth Rogoff, when indebtedness exceeds 90% of the GDP it slows growth. An opposing, recent theory called the Modern Monetary Theory claims that government can expand the money supply indefinitely without consequences. The answer to this is that there is no evidence in history of this working, just as there is no evidence in history of socialism working. Because the dollar is a reserve currency, an aggressive monetary expansion to cover infinite indebtedness will potentially cause withdrawal of foreign central banks from the dollar. This may result in a dollar collapse, and the reverse of what Yang and other advocates hope for.
The economic fallacy that Andrew Yang is making in the video is that it is easy to see the jobs disrupted by technology , but it is difficult to see how demand will evolve because of additional wealth due to the technology. In 1875, if you had asked someone what the effects of the automobile's disruption of the horse-and-carriage market, the person would have said the same thing that Yang is saying. The problem with much of the technology now, such as social media, is that it is interest rate rather than market driven. The result is that many tech jobs are not value producing and should not exist. (The same can be said of professors' jobs, which would not exist without student loans, many of which will not be paid off.)
Hence, to help address Yang's fallacies, I suggest reading both Economics in One Lesson and Capitalism and Freedom as extra credit assignments. Atlas Shrugged paints a dramatic, dystopian picture of the direction in which economic fallacies, including this one, are taking us.
Thursday, March 28, 2019
CBN Cites My Research; Southern Poverty Law Center Outed for Racketeering
CBN cites my research in connection with a case involving a politicized classroom at Towson University. I'm wondering how the president's recent executive order will affect blatant violations of Section 501(c)(3) such as this one. Sam Abrams recounts parallel violations by the administration of Sarah Lawrence College in a New York Times article last October. The college's blatant use of its assets for political advocacy should disqualify its tax exemption. We have yet to see a meaningful action along these lines. It may turn out that any college with a diversity office has run afoul of the tax code.
Also along related lines, in November 2016 the president of Brooklyn College, Michelle J. Anderson, quoted the Southern Poverty Law Center vis-a-vis on-campus activities of the David Horowitz Freedom Center. In my inimitable way, I wrote the president that the SPLC was as bigoted as any hate group. President Anderson is not alone in quoting the fake claims of the SPLC. They have been quoted in virtually every major media source. For example, I did a search on "Southern Poverty Law Center" in the New York Times digital archives through 2013 and found 2,222 hits. I suspect 100% of the references were positive or implied that the SPLC was a reliable source. As usual, the media has gotten things dead wrong.
On March 19 Rich Lowry revealed in the New York Post that the SPLC has turned out to have been a racketeering organization that engaged in racial and gender discrimination internally and relied on fake commitment to political correctness to profit Morris Dees and his colleagues by using the threat of law suits and bad publicity as an extortion device. In effect, the Times and virtually all other Democratic Party-linked media were quoting the equivalent of Bernie Madoff or John Gotti on the subject of social justice--not once or twice, but thousands of times. Lowry writes of the SPLC:
It used the complicity or credulousness of the media in repeating its designations to punish its ideological enemies and engage in prodigious fundraising. It raised $50 million a year and built an endowment of more than $300 million.
Imagine a left-wing outfit with the same shoddy standards as Sen. Joe McCarthy but with a better business sense.
Clear-eyed, fair-minded people on the left have long recognized the SPLC as a fundraising tool masquerading as a civil rights group, but its absurd overreach has in recent years earned skeptical coverage from the likes of The Atlantic and PBS.
I'm increasingly wondering about the sources of the incompetence of the media. One question is whether the anti-trust laws ought to be reinvented to apply to both print and electronic media. Another is whether the indoctrination on offer in American colleges are key to understanding the journalistic failures of CNN, the New York Daily News, and Inside Higher Education.
Also along related lines, in November 2016 the president of Brooklyn College, Michelle J. Anderson, quoted the Southern Poverty Law Center vis-a-vis on-campus activities of the David Horowitz Freedom Center. In my inimitable way, I wrote the president that the SPLC was as bigoted as any hate group. President Anderson is not alone in quoting the fake claims of the SPLC. They have been quoted in virtually every major media source. For example, I did a search on "Southern Poverty Law Center" in the New York Times digital archives through 2013 and found 2,222 hits. I suspect 100% of the references were positive or implied that the SPLC was a reliable source. As usual, the media has gotten things dead wrong.
On March 19 Rich Lowry revealed in the New York Post that the SPLC has turned out to have been a racketeering organization that engaged in racial and gender discrimination internally and relied on fake commitment to political correctness to profit Morris Dees and his colleagues by using the threat of law suits and bad publicity as an extortion device. In effect, the Times and virtually all other Democratic Party-linked media were quoting the equivalent of Bernie Madoff or John Gotti on the subject of social justice--not once or twice, but thousands of times. Lowry writes of the SPLC:
It used the complicity or credulousness of the media in repeating its designations to punish its ideological enemies and engage in prodigious fundraising. It raised $50 million a year and built an endowment of more than $300 million.
Imagine a left-wing outfit with the same shoddy standards as Sen. Joe McCarthy but with a better business sense.
Clear-eyed, fair-minded people on the left have long recognized the SPLC as a fundraising tool masquerading as a civil rights group, but its absurd overreach has in recent years earned skeptical coverage from the likes of The Atlantic and PBS.
I'm increasingly wondering about the sources of the incompetence of the media. One question is whether the anti-trust laws ought to be reinvented to apply to both print and electronic media. Another is whether the indoctrination on offer in American colleges are key to understanding the journalistic failures of CNN, the New York Daily News, and Inside Higher Education.
Letter to Sarah Lawrence College President Cristle Collins Judd in Support of Prof. Samuel Abrams
Dear President Judd:
I attended Sarah Lawrence College for two years, from 1973 to 1975, and I am increasingly ashamed of my association with it. I read with dismay Professor Abrams’s op-ed in Minding the Campus. Abrams writes that students are afraid to say not only that they support a Republican or Libertarian candidate but also that they support a left-wing candidate like Hillary Clinton who is not as extreme a leftist as campus bullies would like.
I attended Sarah Lawrence College for two years, from 1973 to 1975, and I am increasingly ashamed of my association with it. I read with dismay Professor Abrams’s op-ed in Minding the Campus. Abrams writes that students are afraid to say not only that they support a Republican or Libertarian candidate but also that they support a left-wing candidate like Hillary Clinton who is not as extreme a leftist as campus bullies would like.
When Professor Abrams wrote in the Times that the college needs better balance, he and his family
received threats and suffered property damage from campus bigots who have been
encouraged by a faculty that has apparently lost its way and an administration that apparently likes to run afoul of Section 501(c)(3). My guess is that if a
basic history examination is to be given to the Orwellian-named “Diaspora
Coalition,” it would reveal that the majority do not know the basics of history. Professor Abrams
says that this coalition of bigots has intimidated and bullied those who support him.
I want to see such an examination given to the members of the Diaspora Coalition. The scores should be publicly posted. My null hypothesis is that they are badly educated half literates.
My question is this: Given that the college increasingly appears to be in
the indoctrinating-and-dumbing-down business, exactly why should I offer
financial support?
Sincerely,
Mitchell Langbert
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