Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Free Market

What Are the Real Costs if the Federal Minimum Wage Is Increased?

This article was published by The McAlvany Intelligence Advisor on Wednesday, July 10, 2019: 

Having never learned, or conveniently forgotten, the “law of unintended consequences,” House Democrats are poised to pass their Raise the Wage Act next week. If passed into law, it would more than double the present federal minimum wage of $7.25 an hour to $15 an hour. It would be staged in, reaching $15 by 2024.

It’s because those workers (and Democrat voters, it is assumed) “deserve” it. Rep. Steny Hoyer (D-Md.) said that, “Americans who work hard deserve to afford a middle-class life and deserve opportunities to get ahead and help their children get ahead.” The first fallacy immediately appears: What if they don’t? What if their work isn’t worth paying them $15 an hour? Democrat answer: Give it to them anyway.

House Democrats were doubtless overjoyed upon learning that the Congressional Budget Office (CBO) came to their rescue, reporting that mandating that employers pay their people at least $15 an hour, starting in 2024, would boost the pay of an estimated 17 million workers and “could” also raise the pay of 10 million more workers already earning close to $15 an hour. It would also, said the CBO, lift 1.3 million workers above the poverty level.

Ignored were the other costs, including,

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CBO Counts Cost of Raising Minimum Wage to $15

This article appeared online at TheNewAmerican.com on Tuesday, July 9, 2019:  

Just a week before the Democrat-controlled House of Representatives is due to vote on its Raise the Wage Act, the non-partisan Congressional Budget Office (CBO) calculated its possible impact on the economy. The bill, if enacted into law (highly unlikely), would gradually raise the minimum wage in the country from its present level of $7.25 an hour to $15 an hour by 2024.

The CBO concluded that, “For most low-wage workers, earnings and family income would increase, which would lift some families out of poverty [for a single person, that level is $1,040 a month; for a family of four, it’s $2,145 a month]. But other low-wage workers would become jobless, and their family income would fall — in some cases, below the poverty level.”

The CBO did its calculations, and drew its conclusions, based on three different scenarios:

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The Fed’s Impossible Task: Steering the U.S. Economy by Looking Through Its Rear-view Mirror

This article was published by The McAlvany Intelligence Advisor on Monday, July 8, 2019: 

Libertarian scholar Murray Rothbard was notoriously opposed to any sort of government control over the individual, especially by central banks and central bankers. In his book, What Has Government Done to our Money?, published in 1963, he wrote:

Money … is the nerve center of the economic system. If, therefore, the state is able to gain unquestioned control over the unit of all accounts, the state will then be in a position to dominate the entire economic system, and the whole society.

The fatal flaw is this: the hubris inherent in thinking that any gaggle of economists gathered around a table – no matter how well-educated and regarded as experts, and no matter how exotic and sophisticated their formulas and algorithms designed to track and follow the economy – can do better than the economy does all by itself. These economists believe that Adam’s Smith’s “invisible hand” is inferior to their own.

A perfect example just presented itself

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Another Record for U.S. Crude Oil Production: 12 Million Barrels Per Day in April!

This article appeared online at TheNewAmerican.com on Monday, July 1, 2019: 

Two recent reports confirmed the preeminence of the United States in its production of crude oil and its related derivative, natural gas. Earlier this month British Petroleum (BP) released its “Statistical Review of World Energy” for 2019 in which it reported that the United States extended its lead as the world’s top oil producer to a record 15.3 million bpd (barrels per day): 11 million bpd of crude and 4.3 million bpd of natural gas liquids (NGL) in April.

BP added that the United States led all global oil producers by increasing its production by more than two million bpd in 2018, 98 percent of the total new global production.

Friday’s report from the U.S. Energy Information Agency (EIA) overshadowed that from BP, noting that

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U.S. Enjoying Its New Role as World’s Largest Energy Producer

This article was published by The McAlvany Intelligence Advisor on Monday, July 1, 2019:

There’s an old saying in sales and marketing: “There aren’t too many problems that can’t be solved by sufficient production.” Donald Trump is learning that it also applies to production of crude oil and natural gas. Sufficient production solves many problems.

For one, he delivered a clear and distinct message to Middle East oil producers when he pulled his punch last week and canceled a military response to the shooting down of a U.S. drone surveilling the Strait of Hormuz:

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The Fed’s Irrelevance Is a Beautiful Thing

This article was published by the McAlvany Intelligence Advisor on Wednesday, June 12, 2019:

When President Trump tweeted “The United States has VERY LOW INFLATION, a beautiful thing!” on Tuesday morning, he was referring to the latest PPI numbers from the Labor Department. For May, its Producer Price Index came in at a benign and nearly invisible 0.1%. Year over year the PPI was just 1.8 percent, down from 3.1 percent last summer.

Trump should have been referring to the quiescent Fed, which is in a state of confusion. By this time, according to standard interventionist (Keynesian) theory, a 10-year-old economic expansion should be exhibiting signs of inflationary pressures. Instead, real price increases are approaching low levels not seen in years.

The Fed chair Jerome Powell has repeatedly stated that his “target” is 2.0 percent inflation. His reasoning?

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Trump: “Very Low Inflation, a Beautiful Thing!”

This article appeared online at TheNewAmerican.com on Tuesday, June 11, 2019: 

Upon reading the latest report from the Bureau of Labor Statistics (BLS) about its Producer Price Index (PPI), President Trump tweeted: “The United States has VERY LOW INFLATION, a beautiful thing.”

What’s beautiful is that, in the month of May, wholesale prices — the prices paid by firms buying products and services from other businesses — scarcely increased: just 0.1 percent. Even better the year-over-year PPI slowed from 3.1 percent last summer to just 1.8 percent today.

The New York Federal Reserve bank reported on Monday that the outlook for future inflation looks rosy as well. Consumers polled by the central bank see lower inflation over the next one to three years. This matches the inflation numbers coming from the Fed’s preferred inflation measure, the PCE (Personal Consumption Expenditures) index.

This puts the lie

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The Resurrection of Ford’s Bronco Illustrates How Capitalism Works

This article was published by The McAlvany Intelligence Advisor on Wednesday, May 22, 2019: 

Ford’s announcement of its resurrected Bronco for 2020 shows pictures of steep technical trails heading off into the woods while calling it a “no-compromise midsize 4×4 utility for the thrill seekers who want freedom and off-road functionality, with the space and versatility of an SUV. It’s capable of conquering everything from your daily commute to gravel roads and boulders.” (See Sources below)

This is how capitalism works.

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Angst Over Ford Cutting 7,000 Jobs Isn’t Warranted

This article appeared online at TheNewAmerican.com on Tuesday, May 21, 2019: 

Excessive angst over Ford’s announcement that it was cutting 10 percent of its workforce led CNBC to revise its initial coverage: “This article was updated [corrected] to reflect that Ford is cutting about 10% of its white-collar employees, not 10 percent of its total global workforce.”

CNBC didn’t complete its correction. Ford has 200,000 employees worldwide, with 70,000 of them being salaried, the rest hourly. The cuts apply only to the white-collar positions, and most of them are overseas. Only 2,300 of them apply to employees in the United States, and 1,500 of them accepted buyouts last year. That leaves just 800 to be laid off this year, each of them with severance packages. That’s four-tenths of one percent, CNBC, not 10 percent.

To put Ford’s announcement in perspective, let’s remember

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Where Is the Luddite Movement in Light of the Robotic Revolution?

This article was published by The McAlvany Intelligence Advisor on Wednesday, May 15, 2019: 

In 1779, Ned Ludd, an apprentice hand weaver, smashed two stocking frames because of his fear that the improved machinery would put him out of a job. The resistance to automation began in Nottingham, England, and became widespread in the early 1800s. Over time, its attractiveness waned thanks both to government intervention and the awareness that lowering the cost of textiles through automation benefited everyone wearing clothes.

Ned would be astonished at the automation taking place in the U.S. today. Amazon is quietly installing machines called CartonWraps and SmartPacs in its never-ending quest to serve its customers more quickly at lower cost. In busy warehouses serving Seattle, Frankfurt, Milan, Amsterdam, and Manchester, the company is taking the tiring work employees were doing – each spending up to 10 hours a day taking products and building shipping boxes to fit them for shipping – and giving it to robots.

The robots work four times faster than humans

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Robotics Revolution Rolls On: Amazon Now Using Robots to Pack Shipping Boxes

This article appeared online at TheNewAmerican.com on Tuesday, May 14, 2019: 

Amazon is quietly installing machines called CartonWraps and SmartPacs in its never-ending quest to serve its customers more quickly at lower cost. In busy warehouses serving Seattle, Frankfurt, Milan, Amsterdam, and Manchester, the company is taking the tiring work employees were doing — each spending up to 10 hours a day taking products and building shipping boxes to fit them for shipping — and giving it to robots.

The robots work four times faster than humans

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Jobless Claims at 50-year Low, but Raising Minimum Wage Would Stop That

This article appeared online at TheNewAmerican.com on Friday, April 12, 2019: 

Following its monthly poll of economists, the Wall Street Journal reported on Thursday that many respondents believed “even a small boost to [the] federal minimum wage [currently $7.25 an hour] would cause some job loss.” And if the mandated wage was increased to $15 an hour, as some are demanding, job losses would be greater.

The results of the survey were published a day before the Department of Labor released its report on initial unemployment claims for the prior week: Those claims were “196,000, a decrease of 8,000 from the previous week … [and] the lowest level for initial claims since October 4, 1969 when [they were] 193,000.”

In addition, the four-week moving average of initial jobless claims fell to 207,000, “the lowest level for this average since December 6, 1969.”

Translation:

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Socialist Misery Deepens in Formerly Prosperous Venezuela

This article appeared online at TheNewAmerican.com on Tuesday, April 2, 2019: 

When Venezuela’s Marxist dictator Nicolas Maduro addressed his citizens on Sunday, he told them that their electric power would be rationed: “I have approved a 30-day plan to regulate the output.” He called the plan “a load management regime.”

Unfortunately, owing to the rolling power outages that have plagued Venezuela over the last month, most of those citizens, if they had television, weren’t able to view his speech because their power was out.

That is the end point of socialism: When government interferes, products and services formerly provided by the free market become limited. Prices go up and price controls follow. The price controls further limit supply, and the final step is rationing what’s left.

Maduro admitted to two failures in that short sentence: His government is unable to provide for his people; and those shortages are likely to last for a long time. The unspoken message being delivered is that socialism, no matter what it might be called, always ends in tyranny, misery, and death.

Venezuela’s power industry was nationalized in 2007 under the socialist administration of Maduro’s predecessor and mentor, Marxist Hugo Chavez. The ideology of socialism, termed Chavismo, continued under Maduro following Chavez’s death in 2013. Consequently, those professionals running the energy grid were removed and replaced with political appointees as rewards for their loyalty to the socialist regime. Since then some 25,000 technicians skilled in running the power industry have left the country, leaving the incompetent in charge.

As Maduro’s economy spiraled downward, funds for maintenance dried up. In early March a grassfire burned some trunk lines feeding power from the country’s Guri dam, causing turbines generating power to fail. This plunged the populace into darkness for days. On March 25, another outage led to more misery, and more socialist intervention in the form of rationing the remaining electricity that the power plant is able to produce.

The impacts are predictable, and widely known:

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U.S. Shale Revolution Continues: Shale Oil Production to Set Record in March, Says EIA

This article appeared online at TheNewAmerican.com on Wednesday, February 20, 2019: 

The report from the U.S. Energy Information Administration (EIA) on Tuesday merely confirmed what the agency predicted just a week earlier: The shale revolution in the United States will not only keep prices of oil and gas low into the foreseeable future, it will make the U.S. a net exporter of energy within 18 months.

The agency expects shale oil production from the seven major shale formations in the country to set a record in March at 8.4 million barrels per day (bpd). This will push total U.S. crude oil production to nearly 12 million bpd, ahead of both Saudi Arabia and Russia.

Bank of America predicts that

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Messages From Maduro’s Military Posturing

This article appeared online at TheNewAmerican.com on Monday, January 28, 2019:  

The hosting of a parade of Russian military hardware in Caracas on Sunday by Venezuela’s President Nicolas Maduro delivered at least three messages: 1) I am in charge here; 2) With the help of my Russian, Chinese, and Cuban friends, that is; and 3) No tyranny remains in power very long unless it is maintained by force or the threat of force.

The show was enhanced with tank rounds being fired into a nearby hillside and by Maduro exclaiming, “Nobody respects the weak, cowards [or] traitors. In this world what’s respected is the brave, the courageous [and] power.” It was further enhanced with video of soldiers kneeling before the dictator and Maduro bellowing “Are you coup plotters?” and their response: “No!”

These messages were delivered after the defection of Colonel Jose Luis Silva, Maduro’s Washington attaché for the last five years. He told Reuters on Saturday that “the top brass of the military and the executive branch are holding the armed forces hostage. There are many, many, who are unhappy.”

And then he addressed them directly:

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VW Expanding its Chattanooga Plant Again, Investing a Billion Dollars and Creating Jobs

This article appeared online at TheNewAmerican.com on Wednesday, January, 16, 2019:  

Following the announcement that Volkswagen America was going to be expanding its Chattanooga plant to build electric vehicles (EVs), President Trump was delighted. He tweeted: “Congratulations to Chattanooga and Tennessee on a job well done. A big win.”

It was a big win for the president, who invited the CEOs of VW, BMW, and other foreign car manufacturers to the White House in December to persuade them to invest more in the United States. At the same time VW made its announcement at the Detroit Auto Show on Monday, BMW management announced its own expansion plans of its production facilities in the United States. With VW’s financial commitment of $800 million for Tennessee and BMW’s financial commitment of $600 million added to the $340 million VW announced last March for its Chattanooga facility, those two automakers are investing almost $2 billion in their U.S. automobile manufacturing plants. Their expansion plans will require more than 2,000 additional workers, adding to the already robust manufacturing resurgence taking place in the United States.

That resurgence has added nearly 500,000 manufacturing jobs in just the last two years, the most in more than 20 years.

Following the announcement by VW’s CEO Herbert Diess, CEO of Volkswagen AG, his American counterpart, Scott Keogh, CEO of Volkswagen Group of America, added, “We could not be prouder to build the future of mobility here in the United States. We’re known as ‘the peoples’ car’ for a reason, and we plan to build EVs for millions, not millionaires.”

What Keogh didn’t say was that

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Maduro’s Second Six-Year Term Won’t Last Six Months

This article was published by the McAlvany Intelligence Advisor on Wednesday, January 16, 2019:

This writer is happy to declare that his prediction (see Sources below) about Maduro’s longevity appears to be dead wrong. Washington has just issued credible threats that it will turn off Maduro’s cash flow by prohibiting exports of crude from his state-owned PdVSA oil company to U.S. Gulf Coast refineries.

Last Friday, this writer thought that Maduro could not only remain as Venezuela’s dictator for another six-year term, but for as long as he wished. Now his tenure is likely to be measured in months.

An unnamed White House official told the Wall Street Journal on Monday that, “until now, we have been going around the edges. Now, it’s a new dynamic: we are no longer going to be tinkering around the edges.”

Earlier the Journal pointed out that

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Downloads of 3D-Printed Firearms Increase After Judge Tries to Stop Them

This article appeared online at TheNewAmerican.com on Wednesday, December 26, 2018: 

A federal judge’s ruling to limit the transfer of files allowing citizens to print their own guns using 3-D technology has resulted in exactly the opposite: The number of downloads of those files has exploded since his ruling in August.

It was Western Washington’s District Court Judge Robert Lasnik who ordered the settlement between the Justice Department and Cody Wilson’s company Defense Distributed to be suspended. He should have known better. He and other gun-grabbers such as New Jersey Governor Chris Murphy and Massachusetts Democrat Edward Markey are trying to play catch-up and instead are falling farther and farther behind.

It isn’t that gun grabbers haven’t tried.

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Latest NFIB Report Confirms Robust Health of U.S. Economy

This article appeared online at TheNewAmerican.com on Wednesday, November 14, 2018:  

Just when concerns over the future of the U.S. economy have reached fever pitch thanks to the recent volatility on Wall Street, along comes the National Federation of Independent Business (NFIB) to calm those concerns. Its October report, “Small Business Economic Trends”, was summed up thus:

Overall, small businesses continue to support the 3 percent plus growth of the economy and add significant numbers of new workers to the employment pool.

 

The percent of owners with one or more unfilled openings is at a 45 year record high level.

 

Employment is growing faster than the population (210,000 per month this year to date), so the gains in jobs are being “fueled” in part by increased labor force participation.

 

Consumer optimism is also running at near-record levels, supported by rising wages and plentiful job openings.

After reviewing the numbers in each category (from “plans to increase employment” to “earnings trends”), the authors of the study concluded: “Bottom line, the October report sets the stage for solid growth in the economy and in employment in the fourth quarter, while inflation and interest rates remain historically tame. Small businesses are moving the economy forward.”

Indeed they are. The NFIB boasts membership of 325,000 small business owners, reflective of the estimated 28 million small-to-medium-sized businesses in the United States with fewer than 500 employees. That’s compared to about 20,000 companies with 500 employees or more.

And they swing a big hammer.

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OPEC: Do “Whatever it Takes” to Balance Oil Market

This article appeared online at TheNewAmerican.com on Monday, November 12, 2018:

Following the emergency meeting attended over the weekend by members of the OPEC cartel and its non-members in Abu Dhabi, Saudi Arabia’s Energy Minister Khalid al-Falih said “We need to do whatever it takes to balance the oil market.” That goal is indicative of OPEC’s increasing nervousness that it is running out of options to counter increasing U.S. oil production. Last month, the EIA (Energy Information Administration) announced that the United States now leads the world in crude oil production, ahead of both Saudi Arabia and Russia.

For many years, the cartel was able to dictate oil policy and prices globally, bending the world oil markets to the cartel’s needs and purposes. Ten years ago,

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann