Cool rain and the dismal science

IT’S BEEN RAINING a lot recently, and that’s cooled things down nicely. Even though it’s raining, I still head downtown most afternoons to sit at a sidewalk table with a nice café americano negro and my trusty Kindle.

It’s a good way to live.

My current book, and I’m just about finished with it, is Henry Hazlitt’s Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics. It came recommended by young Ben Shapiro, a brilliant, conservative guy in spite of his not being a fan of President Trump.

Ain’t nobody perfect in this troubled world.

They don’t call economics the dismal science for no reason. Trying to get a good grip on the subject is a dismal undertaking, especially for someone like me who grapples with simple arithmetic.  But Hazlitt makes it pretty easy.

The book was first published in the late 1940s and updated in the late 1970s, but it’s quite relevant today because some things don’t change.

Hazlitt simplified things for me, and I’m going to make it even simpler for you:

A free market, unfettered by government meddling, works best 98 percent of the time. That’s the core message. But there’s more.

If government meddles in the free market, it should do this: 1. Look not at the immediate, desired effect of a policy, but at its long-term effects. 2. Look not just at the people a policy is designed to benefit, but at everyone it affects.

It’s quite common that a policy will help one group of people while doing harm to other, larger groups of people. And it’s common for a policy to right a perceived wrong today while creating greater wrongs over the long haul.

Hazlitt points out that most laymen do not take this into consideration when favoring something, and even professional economists can fail to take into account the long-term effects.

Speaking of professional economists, I cannot resist mentioning Paul Krugman’s prediction the stock market would tank if Trump became president. Of course, it did quite the opposite. One must chuckle.

On to the Irony Department, Starbucks, about as vocally leftist an outfit as you’ll find, is closing 150 stores in the United States due to minimum-wage increases and government regulations, putting scads of SJW employees out of work.

Nailed by their beloved socialism.

Minimum-wage increases is one of the things Hazlitt touches on at length as being an example of short-term vision. Government steps in to help “poor people,” but fails to realize the broader effects of a high minimum wage.

The higher salaries is money that comes from somewhere else. It is not pulled out of thin air. Starbucks sees that now. One must chuckle even more.

Hazlitt’s book is just 220 pages. I recommend it to you.

Obviously, it was not raining in the above video, which was taken a year ago, but it was raining in the video below, which was taken four years ago. Rain looks the same from one year to the next.

 

25 thoughts on “Cool rain and the dismal science

    1. Ricardo: The accordion player is Arturo Solis, a very talented artist who also plays music, often for money. Hard to make a living with just art.

      In that same video, sitting at one of the tables, is a woman who shifts about a good bit arranging her shawl or something. That is Robyn. Incredibly, she was a bartender in one of my favorite dives in the French Quarter of New Orleans over 40 years ago. She owns a home here and lives in it part-time. That we both ended up here on the mountaintop, totally independently, is amazing, I think.

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    1. Ricardo: I cannot take much credit for picking it. More like it picked me. I moved south with virtually no plan.

      But, to touch on the main topic today, Mexico’s government, for the most part, stays out of your business. I like that very much.

      Liked by 1 person

  1. Starbucks needs to close stores. They not only have free-standing stores but, more often, in strip centers. And all the copycat coffee shops. The American population should be caffeined up to the max.

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    1. I am not a fan of Starbucks for various reasons, and in the past year I’ve seen three new shops open, one being right here in my little town. I am not sure why people continue to pay exorbitant prices for calorie-laden, dessert-like coffee drinks Starbucks has created. Maybe their new plan is to set up shop where folks don’t have other coffee shop options. I boycotted them a few years back.

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      1. Leisa: Our of curiosity, I asked Starbucks via their Facebook page if the open-door policy (i.e. no purchase required to sit all day, using the john) applied to Starbucks in Mexico. Turns out that it does. I patronize Starbucks down here, mostly in Mexico City, when no other option is nearby.

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        1. Ha, ha, that’s funny … sit all day and use of their john. I’ve always found their place of businesses to be unclean, especially the bathrooms. But if push came to shove and I had no other options I’d go in, but not buy. I guess that’s not a true boycott then, ha, ha.

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  2. I took some economics classes back in my college days. I didn’t find them particularly enlightening. Conventional economics suffers from some wildly improbable basic assumptions (people are rational actors, markets are perfectly competitive, unemployment is a conscious decision to trade income for leisure, etc. etc.)

    There are some good insights to be had from studying economics. On the other hand, considering long-term effects not just short term is obviously good advice, but it’s not an insight that requires a deep study of economics to arrive at.

    What really opened my mind to economics and economic policy was understanding money — what it is, where it comes from, and how it works in the economy. A decade or so ago, we had a financial crisis, which led to the worst recession in 80 years. It caught conventional economists by surprise. There were some economists who saw it coming; they were the ones who understood money. (Most economists have been taught that money is a veil that obscures the real workings of the economy, which is production and consumption of real goods and services, and that behind the veil even a modern economy is a sophisticated barter system. As a result, they pay almost no attention to money.)

    Here’s the best explanation of the financial crisis and recession I’ve found. Amazingly, written before it happened: “The New Road to Serfdom” (Harper’s Magazine, October 2006).

    https://michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf

    And a more general critique of economic policy, from a monetary standpoint: “7 Deadly Innocent Frauds of Economic Policy.”

    http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

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    1. Creigh: Economics is a complex, often misunderstood, matter. I understand it a bit better after reading Hazlitt’s good book. That wealth and money are different things, for instance, something I had never thought much about. He was convincing in that government, with some rare exceptions, should not meddle in the free market. He’s singing my song with that. The government that meddles least is the best government. It applies in many aspects of life, not just economics.

      Thanks for the links which were, by the way, the reason your comment went to moderation. Links, especially more than one, do that automatically. In other words, I didn’t do it.

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      1. Money and wealth are not the same. That’s a good insight, and free markets are not particularly good at distinguishing between those things. That is a source of some of the pathologies that will emerge in an unregulated market.

        An important role of government is keeping markets competitive and free of fraud. Businesses often resent this deeply: the last thing a business wants is competition, and fraud–if you can get away with it–can be very good for the bottom line. (That’s why I claim to be pro-market, but not necessarily pro-business.)

        In a broader sense, a primary role of government is to shield citizens from undue power. Corporations are useful because they magnify the power of individuals, and enable people to accomplish things they could never do as individuals. That power can be used not only for people’s benefit, it can also be used for harm. Power corrupts; it’s always a good idea to be suspicious of power. People on the left may be naive about the power of government, but people on the right may be just as naive about the power of corporations.

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        1. Creigh: Well put. Corporations, by their very nature, are self-serving. Governments usually don’t set out, at least not out loud, to be self-serving, but they end up that way. All governments go bad in time. Every single, solitary one. The current U.S. government is a textbook case.

          We live in an imperfect world.

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  3. It amazes me that normal, decent people will vote for a party that is dedicated to their personal, political and financial destitution. Worse, they do it over and over, as if it is in their DNA.

    Over half the people in our nation pay no income tax. They say they do, but then they file and get it back. Some even get the earned income credit.

    Government says that they will do wonderful and great things if only we hand over our personal wealth and the earning of our children, grandchildren and great-grandchildren.

    Meanwhile, government employment is the only prosperous sector of our economy if you discount the drug trade.

    Somehow, we are held responsible for all of the poverty in the world. They say we must accept these so-called refugees. Maybe those people should have stayed in their own countries and fixed its problems rather than seek to take advantage of our social welfare system.

    Who is going to pay for all of these people and programs? The answer always seems to be “da rich.” Well, I am afraid we are plumb out of rich people. Yes, there is a lot of wealth in this world, but it all seems to be in the Middle East and Far East. Those folks are well beyond our taxing authority.

    Locally, the schoolteachers are wanting more money and better benefits. The local Democrat Party says that the new tax would only be on those making over $250,000 a year.

    Now who do you know that makes that kind of money? I don’t. And if they did, they are not about to stay here and be financially raped. No, they will head out to Nevada or Texas.

    If those schoolteachers want that kind of money, they should start teaching and forget about political indoctrination. Kids are no longer taught how to read and write longhand. Yes, my granddaughter cannot read the notes I write. And yet teachers think they deserve more money. Bullshit!

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    1. Señor Gill: Well stated, and bullshit indeed.

      Your comment was delayed because it got detoured into the trash file for some reason. I just found it. Sorry about that, though I did not do it.

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  4. While you might be able to force businesses to pay employees more than they want to, it’s impossible to get customers to pay more for coffee than they think it’s worth.

    That’s the rub, in one simple sentence.

    Saludos,

    Kim G
    Redding, CA
    Where the infernal summer season has started. Wish I were there.

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      1. Really, I don’t wish any harm to Starbucks. Though a little much on the SJW-ish side, SBUX has shown that you can run a profitable, market-oriented business while still providing good jobs and opportunities for relatively unskilled people. Really, we’d all be better off if there were more companies like Starbucks. However, I do think the gov’t should let the market determine salaries.

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        1. Kim: “… a little much on the SJW-ish side”? Surely, you jest. But quite right on minimum-wage laws, which should follow the word “minimum.” When it gets high, it leads to unemployment. There is no doubt about that. It’s a textbook example of policies that do not take all effects into consideration. It’s a feel-good law that does harm in the long run.

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  5. I am glad you are enjoying the Hazlitt. It was one of the books I read in high school that led me to conservatism. Hazlitt’s chapter on the folly of tariffs is a classic. I wish President Trump would take it to heart. It is on trade that President Trump and I part sides.

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