Shlae and Gilder

Talent hits a target no one else can hit; genius hits a target no one else can see.--Arthur Schopenhauer


 Nice weekend. We went to "Angel has Fallen" last night with the McGraws. Totally predictable story where hundreds die from gunfire, explosions and implausibility. Really fun.

There has been no warming in the United States since at least 2005, according to updated data from the National Oceanic and Atmospheric Administration (NOAA). What these new data show is that in the contiguous 48 states there has been a statistically insignificant amount of warming over the past 14.5 years. The trend line shows that US temperatures have increased by about 0.6º F per decade, or roughly 0.06º per year. It’s worth noting as well that US temperatures have been below average for most of the past year. 

 
CNN reports that the Trump White House has drafted an executive order that “could put the Federal Communications Commission in charge of shaping how Facebook, Twitter, and other large tech companies curate what appears on their websites,” according to sources. Specifically, the draft order attempts to limit Section 230 of the Communications Decency Act, a part of the Telecommunications Act of 1996, that gives internet companies broad immunity from lawsuits over third-party content. Do we really want a group of political appointees getting more involved in regulating internet speech?

On this day in 1666, the Great Fire of London broke out in the house of King Charles II’s baker on Pudding Lane near London Bridge. It soon spread to Thames Street, where warehouses filled with combustibles and a strong easterly wind transformed the blaze into an inferno. When the Great Fire finally was extinguished on September 6, more than four-fifths of London was destroyed. Only 16 people were known to have died.
                                         Shlae and Gilder

Shlae has a generally accepted--if not popularized--thesis that the New Deal did nothing to help the economy and plenty to stifle it. But there is an argument that war--particularly WWII--is a stimulus for economies and specifically rescued the U.S. economy in the 1940s. It is the classic Keynesian approach: Increase government spending at times of decline. The counter argument is that spending on war is "The Broken Window Fallacy," you are wasting money and effort to no purpose, building things designed to blow up, and removing productive members of society to the battlefield or the grave. In my lifetime, war has always been associated with a downturn as money and debt is diverted to the production of materials of war at the expense of those products that improve lives. More, the reputation of war's success, like Rome's, is really the result of looting, not production. The Russians stole most of eastern Germany at the end of the war, an advantage, certainly, but nothing more than the success of the pirate. A classic example of this is the Eastern European invasion by Rome where they stole enough silver to finance their domestic and foreign adventures for twenty-five years.

This is from Gilder, an avowed (and arrogant) free marketer with his prospective on the war's end:

“After World War II, when ten million demobilized servicemen returned to an economy that had to be converted from a garrison state to civilian needs, economists steeled themselves for a renewed depression.  A sweeping Republican victory in the Congressional election of 1946, however, brought an end to the wartime government-planning regime [overregulation].  Dropping from 42 percent of GDP to 14 percent, government spending plummeted by a total of 61 percent between 1945 and 1947.  One hundred fifty thousand government regulators were laid off, along with perhaps a million other civilian employees of government.  The War Production Board, the War Labor Board, and the Office of Price Administration were dismantled [deregulation].”

“Every Keynesian economist confidently predicted doom.  Sounding exactly like his future student Paul Krugman, who would beg Obama for trillions in additional ‘stimulus’ spending, Paul Samuelson in 1945 prophesied ‘the greatest period of unemployment and dislocation any economy has ever faced.’  Arnold Kling of the Cato Institute has observed that ‘as a percentage of GDP the decrease in government purchases was larger than would result from the total elimination of government today.’  As Paul Krugman points out, nominal GDP, as measured by economists, did drop a record 20.6 percent in 1946 when government spending plummeted."

“But a drop in government spending after a war does not depress creativity; it unleashes it.  Judging the public sector contribution by its cost is the great error of Keynesian economics….the Great Depression, which had continued through the war disguised by price controls and necessary defense spending, at last came to an end.  Economic growth surged by 10 percent over two years and the civilian labor force expanded by seven million workers….[T]he private sector…launch[ed] a ten-year boom despite self-defeating tax rates on investors as high as 91 percent.  The Republican Congress compensated for the high rates by introducing joint returns, effectively cutting taxes in half for intact families.  Corporate taxes dropped drastically, and the tax burden, measured by government spending, fell more dramatically than at any other time in American history.  Low inflation and privatization led to a resurgence of large manufacturing corporations...