Tilting at windmills: Claims that China is corning market in green energy production

It is said that China & other economies gained over $11 billion in “clean-energy” investments & that 2 million jobs in the alternative energy sector are being “lost” to China,

But these alarming claims overlook the fact that most of the funds are government subsidies paid to alternative energy projects that are both inefficient & unreliable.

Without subsidies & mandates, most of these “investments” would go away. As such, it is fatuous to assert that America is losing millions of jobs to China.

For their part, China’s leaders echo the “green” message to soak up the vast funds that foolish Western governments provide.

In the end, the villains are not in Beijing. The real perpetrators of waste are politicians closer to home!

Startling conclusions of winners of 2010 Nobel Prize in Economics!

Hey, I ‘m not making this up! The 2010 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (aka, Nobel Prize in Economics) was awarded for realizing that the real world, wait for this, is imperfect!

My heartfelt thanks go out to Peter Diamond (MIT), Dale Mortensen (Northwestern University) & Christopher Pissarides (LSE) for pointing this out.

They are credited with creating mathematical models to provide a framework for studying the job search process & for contributing to market analysis that includes “search frictions”.

This may seem strange to mere mortals since there is no great intellectual insight in pointing out that imperfect knowledge & the frictions arising from it can be observed in the real world.

One of the riveting conclusions drawn from their models is that “more generous unemployment benefits give rise to higher unemployment and longer search times,” Ordinary mortals do not need a PhD to understand that more generous benefits decrease the urgency of seeking a job.

An upshot of being startled by the imperfections of reality for these Nobelists is that they see it as evidence of “market failure” that can & perhaps must be remedied by government interventions.

Yet their enthusiasm for expansive role of the State in the economy is naïve in overlooking the imperfections of government failure as outlined in the Public Choice literature.

In the end, it comes down to a inability to understand that market participants readily react to such frictions. It is not that markets do not work perfectly due to search costs in labor markets it is that they work because there are imperfections.

As it is, the existence of imperfections gives dynamism to markets by inspiring entrepreneurs & resource owners to innovate to exploit opportunities of mispriced assets or commodities. As such, order arises out of the messy chaos of frictions & market imperfections when incentives emerging from property rights, prices & profit or losses inspire adjustments to coordinate behavior.

Congratulations to the Nobel Prize winners. Maybe with the cash prize they receive they will have time to look around so they can understand how the real world of markets actually works.

Is Obama fighting an ideological war against business?

President Barack Obama asked Congress to end tax credits and deferrals that “reward” some US companies with overseas subsidiaries that encourage them to create jobs in other countries.

He further said that tax revenues should be given to companies that create new businesses & jobs in the US reveals an ideological view of the relationship between government & the private sector.

First, profit-making companies that are viable in a system of voluntary exchange do not require any assistance from governments. Those that require subsidies are always a drain on other sectors & do not merit support.

Second, it is more likely that high taxes (& excessive regulations) rather than tax breaks “send jobs overseas”. But no individual can claim a property right to a job, per se, & no country can claim that jobs belong in one geographic area or another.

In all events, neither governments nor fellow citizens should have a say in what is done with privately-owned resources. Likewise, neither governments nor fellow citizens should be able to stop a brilliant scientist born or trained in the US from migrating elsewhere.

As such, capital owners must be free to decide where & how they invest.

Forcing US multinationals to pay higher taxes will create an unnecessary competitive disadvantage & may induce some to move offshore altogether or sell out to foreign buyers.

President Obama is either an ideologue or a grasping politicians seeking to take more money away from productive people. Either way, this is no way to lead an economy into a robust recovery!

Were men but angels….

“If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; & in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.”
~James Madison, The Federalist No. 51~