It's Elementary, Watson: Chuck Your Copy of The Week

I had to wait in a doctor's office this afternoon during my wife's visit.  I opened a magazine called The Week.  I hadn't read any legacy media publication in eight months.  The Week selects articles from other legacy media, claiming to offer "the best" of the week. I was surprised at how bad The Week's material is.  It is not just dumb and lacking in perspective. The ideological tenor is shrill.  The writers are so badly educated that they cannot develop coherent arguments.  Republicans, in The Week's opinion, are ignorant fools who do not believe the obvious scientific proof of global warming. Of course, that proof is not discussed. Nor do the editors seem to know what the scientific evidence is. They read that it exists in The New York Times and anyone who disagrees with The Times is, in their view, foolish.  In short, it is The Week's editors who are fools.

They certainly think they know what science is.  In their opinion there is a consensus of opinion, developed by The New York Times, and anyone who disagrees with the consensus opposes science. They are unfamiliar with elementary concepts such as falsifiability.  More so, The Week does not provide news.  Because the editors lack the education to grasp what drives current events, they are incapable of discussing current events coherently.  The information they offer is a tale told by an idiot.

The Week reminds me of Sherlock Holmes.  Recall Holmes's remarks in A Study in Scarlet and elsewhere that one should avoid mental clutter in order to do one's job efficiently.  My recollection is that he also says somewhere that he does not know that the earth revolves around the sun and that he intends to forget the fact as soon as possible.  The legacy media makes me feel like Holmes. The information it provides is meaningless; the incoherent chatter of owls and cuckoos, asses, apes and dogs.

I attended the Kingston-Rhinebeck Tea Party last night. About 30 people were present. The discussions were lively. I spoke to the group about organizing letter writing and publicity campaigns.  Many people are interested in taking part. The founder, Tom Santopietro, mentioned that the teachers' unions in New York have over 400,000 members (disclosure: I am a member of the New York State Union of Teachers, NYSUT).  The Tea Party has its work cut out.  But a gradual organization can begin to form a meaningful resistance to the government-Wall Street nexus.  I am being optimistic, of course.

I got a gift certificate to Applebee's and my wife and I had dinner there tonight. The waitress was from Albuquerque and she told us that houses in Taos, one of my favorite places, cost about $180,000 and condos cost somewhat less.  The question occurs to me, why bother with New York?  I don't have an answer other than that my job is here and I spent ten years rehabbing my beautiful home.  Other than that, New Mexico seems like a good option.

Howard S. Katz, RIP

My old friend and former business associate, Howard S. Katz, has died according to Kitco.com and Zionist Gold Report (h/t Glenda McGee).  Zionist Gold Report cites an obituary in the Nashua Telegraph.

>According to an obituary in New Hampshire’s daily newspaper, Nashua Telegraph, Howard S. Katz, a long-time commentator on Kitco.com passed away on Dec. 23, 2010 at the age of 72. Howard was a financial analyst and editor-in-chief of The One-Handed Economist and the former Gold Bug Newsletters. He was born in Providence, and had lived in New Hampshire for 10 years.

>His biography on Kitco.com states that he was one of the early gold bugs of the late ‘60s and ‘70s, turning bullish on gold in 1965. He turned increasingly skeptical about gold as it mounted its final rise in 1979, and he called the top after the close on Jan. 21, 1980 (with gold at $825.50/oz.). Howard was also the head of the Committee to Establish the Gold Standard and worked with Congressman Ron Paul for the passage of the American eagle gold coin bill of 1986.

>He published several newsletters; The Speculator (1964- 1972), The Gold Bug (1973-1986) and The One- handed Economist (1996-present). He is also the author of three published books on money: The Paper Aristocracy (1976), The Warmongers (1979) and Honest Money – Now! (1979).

 

In the late 1970s, before I moved to California to attend the UCLA Graduate School of Management, I was the treasurer of Katz's Committee to Establish the Gold Standard.  At the time Howard lived in a small apartment on Fourth Avenue in lower Manhattan.  I worked with him on his congressional campaign bid in Manhattan (I may have been  his only staff member).  I was learning to drive at the time, and Howard gave me a few tips.  Although he came in near last in the race he spread the pro-gold message.  Ronald Reagan was elected a year or two later.  The end of the late 1970s' high inflation, as Howard liked  to emphasize, was the product of the Carter administration, not the Reagan administration. President Carter had appointed Paul Volcker, who adopted monetarist Fed policies.  Volcker's policies popped the Keynesian stagflation of the 1970s that followed upon Richard M. NIxon's pronouncement that “we are all Keynesians now”; the out-of-control public sector unionism in New York and elsewhere; and the monetary policy-induced inflation of the late 1960s and 1970s. But, as Howard also frequently emphasized, Reagan renewed the inflationary pattern through the Keynesian supply sider argument.

Howard had been a member of the Free Libertarian Party in Manhattan prior to my joining it in 1977.   A few years ago Howard gave me his unpublished manuscript Wolf in Sheep's Clothing that I have yet to review. I had reviewed a draft of his revised "Paper Aristocracy" which I do not believe was re-published.  Paper Aristocracy is out of print but sometimes used copies are available at Amazon.com.

I recall clearly his visiting Congressman Ron Paul in the late 1970s  to discuss gold issues with him.  Hence,  Katz has influenced Paul's pro-hard money ideas today.  Katz unquestionably has influenced national debate on monetary policy and renewed public concern about the Federal Reserve Bank. 

Before any one else in post World War II America, Katz emphasized the Jacksonian insight that the central bank is a redistribution mechanism from poor to rich.  Hence, the Keynesian claim that the Fed helps labor and small business is pap.  He claimed that economists and advocates of progressivism fall into two categories: the smart dissemblers who are manipulating the system to their and Wall Street's advantage, such as Alan Greenspan, and the vast majority of useful idiots, economists who actually believe the Keynesian theory.

Howard made similar points about the Fabian socialism of people like Sidney and Beatrice Webb, namely, that their socialist ideologies were a "wolf in sheep's clothing."  He argued that there are two categories of advocates of destructive socialist policies: those who actually believe them, the majority of useful idiots, and those who understand their vicious implications and use them to gain power.

I lost contact with Howard when I attended UCLA in 1979.  In 2004 or so in the face of impending gold price increases I spent several weeks attempting to renew contact and tracked him down in Nashua.  At the time, he published his newsletter, the One Handed Economist, via Xeroxing.  I suggested that he start a small website, which we did after a year or two of deliberation.  He asked a different friend to run his website about two years ago. Also, he changed the name to "the Gold Speculator."

Howard had a tremendous effect on many libertarians' and gold advocates’ thinking.  He will be sorely missed.

Globalization and Human Resource Management

I am teaching an online human resource management class this month.  One of our first day's discussion boards was about globalization and human resource management.  I sent the class the following e-mail to cap off the class discussion on globalization and human resource management:

>The class is more balanced with respect to globalization than my classes last semester.  Globalization gets bad press but I am for it, although not in the way it is done.  The theory of comparative advantage that David Ricardo first expressed in the early 19th century shows why trade works.  Each country has relative strengths and weaknesses. If each country does what it is relatively good at (not necessarily better at than other countries, just what it is relatively productive at compared to its other opportunities) then the world will produce more and the greater productivity can be exchanged globally, making each country better off.  Tariffs and other trade restrictions thus prevent possible gains from trade.

The worst examples of tariffs were during the 1840s in Britain and Ireland and in the 1930s in Russia. In both instances there were mass starvation, first of the Irish during the Potato Famine and second of the Ukrainian kulaks under Stalin's socialism.  These two instances of trade restrictions amounted to mass murders, the first of  one million deaths and the second of I believe about 10 million deaths. Thus is the promise of tariffs, trade restrictions, economic autarky (whereby everything is manufactured at home) and government intervention.

While such extremes are unlikely here, at least in the near future, there are other repercussions to trade restrictions.  For instance, trade restrictions preceded the Second World War.  The Smoot-Hawley Tariffs, the most extreme in American history, were passed in 1930 at the outset of the Great Depression. It is difficult to prove that World War II and the Great Depression were entirely caused by the Smoot Hawley tariffs. But it is astonishing the labor movement now advocates similar kinds of tariffs.

The Great Depression was far worse than any that preceded it and there was much less government intervention in the economy until within 20 years of the Great Depression.  Hence, the Smoot Hawley tariffs and the increased regulations of the 1890-1920 Progressive era and the New Deal along with the establishment of the Federal Reserve Bank in 1913 all may be part of the reason for the Great Depression of the 1930s.

Astonishingly, Americans under George W. Bush and Barack H. Obama have opted for policies that are similar to the policies that were adopted preceding the Great Depression: expansion of the money supply, more regulation, higher tariffs. Have fun, guys. My career is drawing to a close. You are the ones who will be hurt by economic insanity.

One of the chief policies that the Federal Reserve Bank and the US government have emphasized is ever increasing foreign indebtedness.  Numerous foreign countries have been holding large shares of treasury bonds. This has the effect of propping up the dollar.

The natural response to excessive outsourcing ought to be a weakening dollar.  As firms move overseas demand for dollars declines. When the dollar declines demand for foreign goods also declines and firms move back.  But the US government and the Federal Reserve Bank have orchestrated a pattern where foreign countries hold our debt, keeping import prices low.  Thus, the two-party system, specifically including the Democrats under Obama and the Republicans under Bush, have pushed for policies that ensure that jobs leave the country.

Of course, given the huge indebtedness now to foreign countries, if those countries were to unilaterally sell off the US debt there would be a currency collapse here. The dollar would be worth pennies, much like the Papiermark in Weimar Germany in the early 1920s.

The effect of the twin policies of monetary expansion by the Federal Reserve Bank coupled with subsidization of the dollar by foreign central banks and governments has been a weakening of the manufacturing sector here and the comparable strengthening of the competitiveness in European and emerging market countries, for instance, the BRIC countries, Brazil, Russia, India and China. At the same time, consumers here are better off than they ought to be as merchandise is at low prices.  However, the inflation due to the Fed's monetary expansion can be seen in the rising property taxes and cost of services such as construction, government, health care and education.

Thus, it is inaccurate to view globalization and its implications as separate from monetary and Federal Reserve Bank policy. These issues are linked as well to human resource management.

Many students note that culture clash, complexity and the need to increase skill levels are coupled with slow job growth, outsourcing and increasing competition.  All of these factors coincide with monetary policies.

There will be no easy way out for the US.  The dollar will become weaker and consumers will be worse off before manufacturing will return here.

There were several interesting responses to this discussion board, one of which was R's:

"Some employees who have lost their jobs have either relocated, changed their career, returned to school, negotiated with their former employer for a part-time position, pay-cut, or have accepted a lower level job. In turn, this has often led to a decline in living standards.

"2. Many employees who had maintained their jobs, felt insecure and were under constant pressure at work. This led to chaos, over-achievement, competition to outperform colleagues and an obvious decrease in desire to help co-workers leading to decreases in efficiency and lower product quality. This marked a  withdrawal in loyalty toward the employer and the employer’s goals. The low morale and insecurity would also heighten the employee's interest in social insurances (health, social security, education…) as the fear of job loss intensified.

"3. On the other hand, the import of these goods manufactured offshore has created end-line positions at retail stores...This yields a boost to the nation’s economy and the acceptance of diversity and multiculturalism. It can also foster positive feelings towards others cultures and harvest communication and cross-cultur(al) exchange of ideas on an international, national and intra-company level. (Of course the reverse exists due to globalization as well, with Dunkin Donuts, Starbucks, Walmart, McDonald's etc…  opening worldwide.)"

All of these behavioral and economic outcomes are linked not only to globalization but also monetary policy.

The error virtually everyone who discusses this makes is to blame globalization for phenomena that would not occur without the Federal Reserve and other central banks' monetary policies that have pegged other world currencies to the dollar.  The dollar has been propped up, encouraging exodus of manufacturing jobs.  If the propping stops, consumer prices of imports will rise and job losses (and foreign trade deficits) will come to a halt.

These Guys Want to Run Health Care?

CNN reports that garbage pick up in the public sector-and-Wall Street dominated Big Apple has scarcely resumed.  Even legacy media like CNN can't help but observe that:

"This weekend, a city with some of the most tight garbage disposal regulations in the country, looked like a dumpster, with piles of garbage on streets and sidewalks."

Whatever the cause, a publicly run New York Santiation Department (NYSD) once again demonstrates that the public sector cannot do the job.  Pinni Bohm points out that  The Daily News's Juan Gonzalez blames Deputy Mayor Stephen Goldsmith, who is a privatization advocate.  But the NYSD is not privatized, so the Daily News once more illustrates the old proverb: take reason and sanity away from a blogger and you get the legacy media.  In order to blame privatization for the problems, first the NYSD would have had to have been privatized.  Gonzalez lacks the reason and sanity necessary to put the blame where it belongs:  on the incompetently run public sector which has sucked New York dry for 15 decades (yes, Juan, government bloat and incompetence in New York go back that far).

New York must make up its mind.  Either  (1) continue to pay 40% wage premiums to under-worked, unproductive and incompetent  public sector unions or (2) become competitive.  Privatization is a workable method of accomplishing (2).   But blaming privatization for the incompetence of a non-privatized public sector-run SD is, to put it plainly, BS.

Worse, there have been allegations that the NYSD's middle managers deliberately  told workers to shirk their duties.  These allegations have been made in The New York Post. But The News and Gonzalez choose to chant the excessively staffed NYSD's party line that all workers must be micro-managed or they cannot do their jobs.  Maybe it is Juan Gonzalez who needs additional management.