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

Tag Archives: Invisible Hand

Blowing Up the Globalists’ Plans

This article was published by the McAlvany Intelligence Advisor on Monday, February 13, 2017:

Logo of United Nations Refugee Agency.Version ...

Logo of United Nations Refugee Agency.

The Royal Institute of International Affairs (RIIA) grew out of failure. Known alternatively as Chatham House, it was conceived during the Paris Peace Conference of 1919 (also called the Versailles Peace Conference). It was decided that, once the so-called “peace” terms were put in place to punish Germany and its allies after the War to end all wars, various insiders decided a one-world government was needed to keep such a catastrophe from occurring in the future. It birthed the

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Realtors in Vancouver Moving to Seattle Along with Investors

This article was published by The McAlvany Intelligence Advisor on Friday, February 10, 2017:  

Vancouver on a rainy day

Vancouver on a rainy day

The collapse of the real estate market in Vancouver, BC, is forcing realtors there to “double-license” in Seattle (where home prices are half what they are in Vancouver) in order to stay in business. Some of them are representing sellers with property in Vancouver who are simultaneously buying in Seattle. The ripple effect in Vancouver is impacting builders and construction workers as well as those in related service industries.

Back in August, the tune was much different: home prices had increased by 50 percent over the previous three years thanks to foreign investors wanting property in Vancouver. “It’s a bubble!” was the cry and so do-gooder politicians in the local government decided to erect a tariff: starting on August 1 the “foreign buyer transfer tax” of 15 percent would be imposed on any foreign buyer of real estate in the city.

Within six weeks the high end of the market was off by 20 percent, and realtors were scrambling, builders were pulling back, and workers were being laid off.

The parallel with Trump’s plans to build a wall along the country’s southern border through tariffs of 35 percent is uncanny, with the results likely to be the same as Vancouver’s. Fred Floss, the chairman of the economics department at SUNY Buffalo State, says that imposing a tariff on Mexico will have a similar slowing effect in the United States. Because the US mainly imports auto parts and small engines from Mexico, “anything that has a small engine in it will start to cost more … the scary thing is that a lot of those motors go into things Americans make. So if all of a sudden it gets to be more expensive to make goods in the United States, then we’re going to start to see layoffs because our goods aren’t going to sell.” He added: “In other words, [Americans are] going to pay the cost of the wall” both directly and indirectly.

The ripple effect in Vancouver is just beginning to be felt as the slowdown starts to impact support jobs related to the real estate industry. Homeowners who have enjoyed seeing their paper profits escalate are now facing the new reality: their homes aren’t worth what they were as recently as last summer, and those who took advantage of low rates either to buy new or obtain a home equity loan are increasingly finding themselves underwater and unable to find a buyer to bail them out.

International trade unhampered by tariffs benefits consumers and sellers alike. Every trade results in each party being better off economically. Competition drives the prices of goods and services down, allowing purchasers to enjoy a higher standard of living. Those profiting from making the products consumers want, whether they be small motors, cell phones or automobiles, will be encouraged to expand their production, hiring new workers who then are able to increase their own purchasing power. Ad infinitim.

Adam Smith was right:

Every individual necessarily labors to render the annual revenue of the society as great as he can….

 

He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention…. (emphasis added)

 

By pursuing his own interests, he frequently promotes that of the society more effectually than when he really intends to promote it.

And then Smith adds his warning for Mr. Trump:

I have never known much good done by those who affected to trade for the public good.

Meddling always has its unintended consequences. Is Mr. Trump aware of what’s going on in Vancouver?


Sources:

The Wall Street Journal: For Chinese Home Buyers, Seattle Is the New Vancouver

Seattlepi.com:  Vancouver smacks Chinese with real estate tax, but will they head south?

Background on US tariffs

WGRZ.com: How the Trump Tariff Proposal may Impact your Budget

Investopedia:  The Basics Of Tariffs And Trade Barriers

Adam Smith’s “invisible hand” quote

Is Vancouver Tax on Foreign Investors a Lesson for Trump?

This article appeared online at TheNewAmerican.com on Thursday, February 9, 2017:

View on Vancouver on October 1, 2005

Vancouver, B.C.

The impact of the 15-percent “foreign buyer transfer tax” — a real estate tax that is only applied on foreigners, not Canadians — levied by Vancouver, a West Coast city in the Canadian province of British Columbia, was felt almost immediately: Real estate prices began falling, realtor listings took longer to sell as buyers disappeared, and, consequently, revenues anticipated from instituting the tax aren’t likely to meet expectations.

Observers said the tax was levied to protect the local real estate market from becoming “overheated” thanks to increasing demand from foreign investors. “Remember the Great Recession” became the mantra. What goes up must come down, etc. Indeed, prices have increased by nearly 50 percent over just the last three years, driving the median cost of a home in Vancouver to $1.5 million.

Members of the city council imposed the 15-percent tariff on August 1, and by the end of September investment in the high end of the market had already dropped

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First, Big Taxi. Next, Big Box Stores. Now, Big Car Dealers.

This article was published by The McAlvany Intelligence Advisor on Wednesday, January 25, 2017:

English: Tesla Motors opened its showroom in M...

A Tesla “Gallery” storefront

An unfettered free market has but one goal in mind: to serve a customer – the guy with the money in his pocket – better. It’s driven by the profit-motive: better service means more customers bringing more money to the improviser who has figured out how to do it profitably. Adam Smith said it much more elegantly:

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SAVs are Raising Existential Questions for Car Companies

This article was first published at The McAlvany Intelligence Advisor on Friday, May 22, 2015:

SAVs are “shared autonomous vehicles” – driverless, robotic automobiles – and they are already raising serious questions that GM and Ford are just starting to address. Questions like: what business are we in today? What business will we be in tomorrow? Twenty-five years from now? Will we be in the car business or the transportation business? What does that mean? What do we do now so we’re still around and profitable then?

GM spokesman Jim Cain put the SAV revolution in the best possible light:

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How the Free Market’s “Invisible Hand” Works

Description unavailable

(Photo credit: • Brusselssprout_in_Manhattan • Eliane •)

Rather than write a new New Year’s column, Donald Boudreaux recycled one of his from 2005. Here it is:

Happy New Year!

This winter morning I bought a bouquet of wildflowers from the supermarket. Its price was $5.99. The flowers are fresh, beautiful, fragrant – and from Ecuador.

Ponder this fact.

For a mere one hour and eight minutes of work, a minimum-wage worker in the United States can acquire a bouquet of fresh flowers grown in South America. In other words, for 68 minutes of working in the U.S., a minimum wage worker can

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The Astonishing Hubris of Government Planners

Donald J. Boudreaux: Inconceivable Complexity

Attempts to centrally plan economies, or even to intervene in major ways into market economies, are very much like humans’ attempts to fly by dressing like birds and flapping fake wings: utterly futile, and potentially calamitous, because the most that can be observed of any successful economy are a handful of large details (assembly lines, retail outlets, money).

Consciously calling into existence steel factories, wheat farms, supermarkets, currency, and other apparently obvious keys to economic success, and then trying to get these things all to work together to achieve economic takeoff, is akin to a man strapping sheets of fake feathers to his arms and legs and trying to fly.

The effort simply won’t work, even if it appears to the untrained eye as if it should.

Edward Frost ornithopter

Edward Frost ornithopter (Photo credit: Wikipedia)

What a wonderful insight into how the free market works, from one of my favorite economists: Donald Boudreaux. It’s an expansion of “what’s seen hides what’s unseen” which cause government bureaucrats and politicians to think they understand things which are impossible to understand.

He says that the free market economy is indescribably complex, and then he attempts to describe it:

A market economy is indescribably vast and complex—its success depends on so many intricate, changing details all somehow being made to work smoothly together that the “facts” that are essential to its thriving cannot be catalogued with anywhere near the completeness that can be achieved by a 21st-century scientist studying and cataloging the “facts” that enable sparrows to fly.

A sparrow is complex compared, say, to a limestone rock. Compared to the modern market economy, however, a sparrow is extremely simple.

What isn’t seen, and can’t be seen, is the motive force of individual decisions on the part of each participant in the market – consumers and producers – that creates this living, breathing thing we call the market. It’s the organizing force behind the scenes that allows each actor to have a role.

And it’s this motive force – the invisible hand (HT: Adam Smith) – that politicians and bureaucrats (i.e., EPA, etc.) think they not only understand, but can control and direct. This is the ultimate hubris:

Too many people, including politicians, continue to believe that because they can observe a handful of bulky facts about the economy, they can thereby know enough to intervene into that economy in ways that will improve its operation.

That belief, though, is hubris. It’s very much like believing that you’ll fly if you simply strap on a pair of wings and commence to flapping madly.

Rising Oil Production in Alberta: More Evidence Disproving Hubbert’s Peak

English: Alberta, Canada Français : Alberta, C...

The latest report from the Calgary Herald (Alberta, Canada) was nothing but good news: The steadily declining production of light oil from 2002 to late 2010 has reversed itself completely and is now not only proving the power and principles of a free market but “will change the way we think about oil, with many weighty consequences…” says blogger Peter Tertzakian. The graph he provided here shows Alberta’s production declining by about 16,000 barrels per day (B/d) every year since 2002, dropping to just over 300,000 B/d in late 2010. Now, thanks to new capital, new technology, and new enthusiasm, production is close to 400,000 B/d. It also “could heighten the blood pressure of a few peak oil theorists,” said Tertzakian.

He refers to the theory first offered by M. King Hubbert in 1956 that claimed that oil production in the United States would reach its peak between 1965 and 1970 and begin to decline thereafter. It was based upon the assumption that the amount of oil reserves is fixed and that it is analogous, according to peak theory supporter Colin Campbell, to a glass of beer: “The glass starts full and ends empty, and the faster you drink it, the quicker it’s gone.”

From that theory, Hubbert then claimed that this would drastically alter life in the United States, predicting chaos, war, starvation, economic decline and possibly even the extinction of mankind.

As Daniel Yergin (Pulitzer Prize-winner for his book The Prize: The Epic Quest for Oil, Money and Power) noted in the Wall Street Journal, this prediction of the “end of the world as we know it” was one of many such predictions, each one of which never came true. “Hubbert’s Peak” moved from the 1970s to 2005 and then to 2011, and is now expected sometime before the year 2020. But it’s all based on one primary faulty assumption: that the

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Free Market Thinking Inside the Van

Chinese dragon in a dragon-dance

Inside the Lucky Dragon van sitting by the curb at the Chinese consulate in New York is a couch, a folding chair, two Mac laptop computers and a printer running off the cigarette lighter/DC connector. On the side of the van is the name: Lucky Dragon Mobile Visa Consultants. They are serving 25 to 50 people every working day of the week.

When Adam Humphreys, a free-lance artist and member of a local band, tried to obtain the required visa for his trip to China, he found that the form he had downloaded from the embassy’s website was the wrong one. After standing in line only to find that his efforts to complete the form were in vain, Humphreys walked three-and-a-half blocks to a Burger King which had a wireless connection to download and complete the proper form, and then return to stand in line once again.

At the Burger King’s Internet café, Humphreys had a BFO (blinding flash of the obvious): every one of the computers at the café was logged onto the embassy’s website to access the proper form. Smelling an opportunity, Humphreys called his band buddy Steven Nelson and together they rented the van and started a business. 

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Thanksgiving Redux: Of Turkeys and Pencils

Thanksgiving Dinner Turkey Drumstick Leg On Pa...

Jeff Jacoby listed some of the reasons he was thankful on Thanksgiving Day in 2003, including the feast on the table, the company of his family and loved ones, the good fortunes enjoyed during the year, the privilege of being an American. But what about such common things taken for granted, like airline schedules, and movie theaters, and recipes in the paper—and the turkey?

He wrote, “Isn’t there something wondrous—something almost inexplicable—in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers?” The magnificent choreography of the free market, including the poultry farmers, the food distributors, the truckers, the architects who built the hatchery, the technicians who keep it running, the people prepping the turkey—from slaughter to defeathering to inspecting to wrapping to transporting to pricing to displaying—all of this coming together voluntarily by the mystery of the free market. All of this, he said,

had to be precisely timed so that when you showed up to buy a fresh Thanksgiving turkey there would be one—or more likely a few dozen—waiting. The level of coordination that was required to pull it off is mind-boggling.

But what is even more mind-boggling is this: no one coordinated it.

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Roubini v. Rockwell on the Gold Standard

Nouriel Roubini, Turkish economist, professor ...

Image via Wikipedia

New York University economics professor Nouriel Roubini made a name for himself back in 2005 by predicting the Great Recession long before others did. Fortune magazine wrote “In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy.” The New York Times said he predicted “homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt.” In September, 2006 Roubini warned that “the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession.”

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Free Markets, Deregulation, and Blame

Quarterly Journal of Austrian Economics

Image via Wikipedia

Free markets, in the full sense of the phrase, exist only in the minds and imaginations of free-market economists from the Austrian School, such as Ludwig von Mises and Murray Rothbard.

The classic definition is simply a market without intervention or regulation by government. In truth, commerce in any developed country is always controlled to some extent by government. A free market requires the right to own property, which means that the wages, earnings, profits, and gains obtained by providing products and services to others belongs to the individual generating them. The assumption is that an individual with this kind of freedom would only make an exchange that gained him a benefit.

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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