Monday, September 26, 2016

Sunday, September 25, 2016

Thursday, September 22, 2016

Wednesday, September 21, 2016

Full Text of September 2016 FOMC Statement

Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and growth of economic activity has picked up from the modest pace seen in the first half of this year. Although the unemployment rate is little changed in recent months, job gains have been solid, on average. Household spending has been growing strongly but business fixed investment has remained soft. Inflation has continued to run below the Committee’s 2% longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2% inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2%, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, each of whom preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4%.

Monday, September 19, 2016

Wednesday, September 14, 2016


Trump Campiagn release:

Today Donald J. Trump Will Unveil An Innovative Plan To Bring Federal Policies In Line With The Needs Of Today’s Working Parents

NEW YORK, NY – Today Mr. Trump will proposes an innovative plan to bring federal tax policies in line with the needs of today's families. His plan is not for the wealthy, but rather provides the biggest benefit to working- and middle-class families. This plan is needed because child care expenses are one of the largest expenses in many families, complicating a family's decision on how to care for young children. The Trump reforms will allow a family to make the choice of whether a parent should work outside the home or not without bias from the tax code. Having employed and empowered thousands of women at every level throughout his entire career, Donald Trump understands the needs of the modern workforce.

Proposals Contained In Mr. Trump Child Care Plan

PROPOSAL: The Trump plan will rewrite the tax code to allow working parents to deduct from their income taxes child care expenses for up to four children and elderly dependents.

The deduction is available for taxpayers who take the standard deduction as well as itemize deductions, and will be capped at the average cost of care for the state of residence. Individuals earning more than $250,000 (or $500,000 if filing jointly) will not be eligible for the deduction. For a family earning $70,000 per year in the 12 percent tax bracket with $7,000 in child care expenses, the deduction would reduce taxes by $840 per year.
The plan will offer child care spending rebates to lower-income taxpayers through the existing Earned Income Tax Credit (EITC). This could mean almost $1,200 per year per eligible family.
Mr. Trump's plan will ensure stay-at-home parents will receive the same tax deduction as working parents, offering compensation for the job they're already doing, and allowing them to choose the child care scenario that's in their best interest.

PROPOSAL: The Trump plan would create new Dependent Care Savings Accounts (DCSAs) so that families can set aside extra money to foster their children's development and offset elder care for their parents or adult dependents. These new accounts are available to everyone, and allow both tax-deductible contributions and tax-free appreciation year-to-year-unlike current law Dependent Care Flexible Spending Accounts (FSAs), which are available only if it is offered by an employer and does not allow balances to accumulate.

When established for a minor, funds from a DCSA can be applied to traditional child care, after-school enrichment programs and school tuition-contributing to school choice. To help lower-income parents, the government will match half of the first $1,000 deposited per year.
When established for an elderly dependent, a DCSA can cover a variety of services, including in-home nursing and long-term care.

PROPOSAL: Mr. Trump's plan will provide regulatory reform to promote new family-based and community-based solutions, and also add incentives for employers to provide child care at the workplace. The ability to set aside funds will be particularly helpful to women, low-income workers and minorities, who are statistically more likely to reduce time working outside the home in order to provide unpaid care.

PROPOSAL: The Trump plan will guarantee six weeks of paid maternity leave by amending the existing unemployment insurance (UI) that companies are required to carry. The benefit would apply only when employers don't offer paid maternity leave, and would be paid for by offsetting reductions in the program so that taxes are not raised. This enhancement will triple the average paid leave received by new mothers.

Frequently Asked Questions About The Trump Child Care Plan

Q: How Will The Plan Be Paid For?

The child care plan is part of the comprehensive tax, trade, energy and regulation reform plan proposed by Donald Trump at the Detroit Economic Club. More details about his tax plan will be discussed later this week at the New York Economic Club. The child care plan itself can more than be offset by additional growth. About two-thirds of the entire Trump tax reform program will offset by the increases in economic activity that accompany pro-growth tax reform, better trade deals, regulatory and immigration reform, and unleashing American energy. The remaining one-third will be offset by minor changes in the current trajectory of spending for federal agency operations, excluding Defense, Veterans, Social Security and Medicare.

Q: Will The Benefits Already Provided For Child Care Expenses, Like The Dependent Care Flexible Spending Account And Child Tax Credit, Be Eliminated Under The Trump Plan?

No, the benefits provided by the Trump child care plan are in addition to the benefits available under current law. Current programs do not serve the large numbers of families that would benefit from the Trump plan, but if a family finds that it benefits more from existing programs, they would still be available. The only restriction would be that the same child care spending cannot be used for multiple benefits programs—no double-dipping.

Q: Will Same-Sex Couples Receive The Benefits?

The benefits would be available in the same way that the IRS currently recognizes same-sex couples: if the marriage is recognized under state law, then it is recognized under federal law.

Q: Will The Maternity Leave Policy Cause Employers To View Women As Less Desirable Employees Because Of Paid Leave?

No. The cost to an employer of hiring should not be affected by this fully-offset policy, so the employer should not view hiring women as adding to their costs of Unemployment Insurance. Further, employers in a competitive marketplace should not eliminate existing maternity care benefits to instead take advantage of the UI system. The UI benefit would only equal what would be paid to a laid-off employee, which is much less than a workers’ regular paycheck. This should prevent abuse while providing a safety net for the sake of the health of mother and child.

Donald J. Trump’s Plan Is More Complete Than Hillary Clinton’s Plan

Point One: Hillary Clinton does not have a plan to provide relief to most Americans faced with high child care costs. She claims she wants to cap a family’s child care expense at 10 percent of income, but provides no details. The Trump plan would provide relief to every working- and middle-income earner who has child care expenses. For example, the Trump plan would reduce taxes by $840 per year a family for earning $70,000 per year in the 12 percent tax bracket with $7,000 in child care expenses; Hillary Clinton’s plan would provide no relief to this family.

Point Two: Hillary Clinton prefers institutional child care that does not meet the needs of workers in rural areas or who have schedules that require working on a night shift or on call. The Trump plan would give states the flexibility to establish standards that fit the needs of state residents without compromising quality.

Point Three: Hillary Clinton would force businesses to pay for 12 weeks of fully-paid family leave at their expense. The Trump plan proposes 6 weeks of partial pay through the existing Unemployment Insurance system, fully paid for within the program.


Thank you. I want to applaud my daughter, Ivanka, for her work and leadership on the issues facing working moms in our country. She has been deeply invested in this since long before the campaign began, and I am so grateful for her work and efforts on this proposal which I will be outlining today.

I want to also take a moment to recognize Congresswoman Cathy McMorris Rodgers, Chairwoman of the House Republican Conference and a mother of three small children, who has been such a leader on these issues.

We are also joined tonight by some amazing members of Congress in our audience: Congresswoman Blackburn, Lummis, Black, and Ellmers.

Our campaign is about ideas. We’re about solutions. I’ve travelled all over the country in recent weeks offering detailed plans to make life better for you and your family.

I’ve outlined detailed proposals for providing school choice, reforming our tax and regulatory code, lifting restrictions on American energy, rebuilding our military, changing our foreign policy, fixing our immigration policy, and keeping our country safe.

Right now, our politicians have locked our country into endless fights about small and petty things. I’m asking the nation to lift our sights, and to imagine what we can accomplish if we work together, trust each other, and put the needs of our own citizens first.

We must break our ties with the failed and bitter politics of the past and pursue a future where every American is honored and respected.

We have to reject the arrogance of Washington D.C. that looks down on everyday hardworking people. Too often those who have power have disdain for the views, beliefs and attitudes of those who don’t have political power.

Those in leadership must put themselves in the shoes of the laid-off factory worker, the family worried about security, or the mom struggling to afford childcare.

That means we need working mothers to be fairly compensated for their work, and to have access to affordable, quality child care for their kids.

We want higher pay, better wages, and a growing economy for everyone.

These solutions must update laws passed more than half a century ago when most women were still not in the labor force. Today, nearly 2 in 3 mothers with young children have jobs.

For many families in our country, childcare is now the single largest expense – even more than housing.

Yet, very little meaningful policy work has been done in this area – and my opponent has no childcare plan.

Many Americans are just one crisis away from disaster – a sick kid, a lost job, a damaged home. There is no financial security.

But that will all change under our pro-family, pro-child, pro-worker plans I am outlining tonight. Before going any further, I want everyone watching on TV right now to go to to read

the full plan.

The first part of my childcare plan allows every parent or family in America – including adoptive parents and foster parent guardians – to deduct their childcare expenses from their income taxes.

They will be able to fully deduct the average cost of child care for their state, from birth through the age of 13.

Because of the way the benefit is capped and structured, our plan will bring relief to working and middle class families.

The deduction also applies to elder care, capped at a $5,000-dollar deduction per year.

Importantly, our policy also supports mothers who choose to stay at home, and honors and recognizes their incredible contributions

to their families and to our society. Families with a stay-at-home parent will be able to fully deduct the average cost of child care from their taxes.

For low-income individuals who have no net income tax liability, we will offer an expanded Earned Income Tax Credit (EITC) in the form of a childcare rebate. Working parents can get an expanded EITC benefit that equals up to half of their total payroll tax – a major relief for low-income parents. This translates to as much as an extra $1,200 dollars in EITC benefits for working families.

Next, our plan allows every parent in America to open up a Dependent Care Savings Account. Families can contribute up to $2,000 dollars a year to these accounts completely tax-free. Crucially, unlike the flexible spending accounts that exist today, these accounts will be available to all Americans – you won’t have to depend on your employer to provide them.

Immediate family and employers can also contribute to a dependent account, each of which is designated for a specific child, including an unborn child.

The money that is put into these accounts can also be spent not only on child care, but also child enrichment activities. Additionally, the funds in these accounts do not expire at the end of the year – they don’t revert to employers or to the Treasury. Instead, the funds rollover – so while only $2,000 dollars can be contributed each year, unspent sums can accumulate and create substantial savings.

These savings can then be used by parents to help give their kids school choice, and will thus contribute to the school choice reforms

I outlined last week.

The funds will remain in the account until the age of 18. Whatever still remains at that time can be used to help offset the costs of higher education.

For low-income individuals, the federal government will provide matching funds – if parents contribute $1,000 dollars, the federal government will provide a $500 dollars match. To help low-income families reach these targets and save money, we will put a box on federal income tax forms allowing these parents to have their Earned Income Tax Credit funds directly deposited into their Dependent Care Savings Accounts.

These Dependent Care Savings Accounts can also be set-up

to provide care for elderly dependents.

Our plan also includes much needed regulatory reform to incentivize private sector solutions. The new funds offered by our plan will create a new market for innovative childcare solutions.

But to make sure these solutions are available, especially in low-income and rural communities, we must reduce regulations that favor large institutional care facilities. We will allow the states to make the decisions that are right for them.

In this era of the sharing economy, we want parents to be able to access lower-cost, competitive and innovative solutions at the click of a button – including services like nanny-sharing. Our plan would also cover care provided by relatives and grandparents.

Our plan includes incentives for more employers to offer on-site childcare as well. This can often be a good solution for many working parents, and can save them up to 30 minutes of commute time. Currently, only 7% of employers provide these services. Our plan will expand tax deductions for employers, allow companies to pool resources to provide shared childcare services, and remove needless requirements that have prevented employers from using the credit.

Finally, our plan offers a crucial safety net for working mothers whose employers do not provide paid maternity leave. This solution will receive strong bipartisan support, and will be completely self-financing. By recapturing fraud and improper payments in the unemployment insurance program, we can provide 6 weeks of paid-maternity leave to any mother with a newborn child whose employer does not provide the benefit. This maternity leave will be paid straight out of the unemployment insurance fund and, again, this safety net will be completely paid-for through savings within the program.

There are more reforms and solutions in our childcare plan, and you can review them all on the website.

On Thursday, I will outline my full economic plan, which is completely paid for through economic growth and proposed federal budget savings. Together, our tax, trade, regulatory, and energy policies will add trillions in new deficit-lowering growth.

These are the kinds of solutions I want to bring to the White House as your President. It’s time to free ourselves from the baskets that politicians try to put us in, and instead to work together – not as Republicans or Democrats – but as Americans, to achieve real, positive results for the American people.

While my opponent slanders you as deplorable and irredeemable, I call you, hard-working American Patriots who love your country, love

your families, and want a better future for all Americans.

It’s time to end the rule of special interests, and to begin the rule of the American people.

It's time to stop fighting over the smallest words, and to start dreaming about the great adventures that lie ahead.

It is time to Believe In America.

Together, We Will Make Our Country Strong Again.

We Will Make Our Country Prosperous Again.

And Will Make Our Country Great Again For Everyone.


A Trump Campaign accompanying fact sheet is here,

Sunday, September 11, 2016

Statement from Hillary Clinton's Physician, Dr. Lisa R. Bardack, Following Hillary "Medical Episode" 9-11-16

Secretary Clinton has been experiencing a cough related to allergies. On Friday, during follow up evaluation of her prolonged cough, she was diagnosed with pneumonia,She was put on antibiotics, and advised to rest and modify her schedule. While at this morning’s event, she became overheated and dehydrated. I have just examined her and she is now re-hydrated and recovering nicely.

Thursday, September 8, 2016

From the The Chicago Council on Global Affairs for Monday 09/12/16

Lael Brainard, Member, Board of Governors, Federal Reserve System. In conversation with Michael H. Moskow, Vice Chair and Distinguished Fellow, Global Economy.

In the last decade, US interest rates were increased once – and still hover near zero. Recent statements by senior Federal Reserve officials suggest that the case for raising rates has strengthened, yet economic indicators still paint a complex picture. In advance of the next rate-setting meeting this September, what is the economic outlook for the United States, and what are the monetary policy implications? Live Strem here at 12:20 p.m. CT:


Tuesday, September 6, 2016

Monday, September 5, 2016

Mercantilism: A Lesson for Our Times?

By Murray Rothbard

Mercantilism has had a "good press" in recent decades, in contrast to 19th-century opinion. In the days of Adam Smith and the classical economists, mercantilism was properly regarded as a blend of economic fallacy and state creation of special privilege. But in our century, the general view of mercantilism has changed drastically.
Keynesians hail mercantilists as prefiguring their own economic insights; Marxists, constitutionally unable to distinguish between free enterprise and special privilege, hail mercantilism as a "progressive" step in the historical development of capitalism; socialists and interventionists salute mercantilism as anticipating modern state building and central planning.
Mercantilism, which reached its height in the Europe of the 17th and 18th centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held that exports should be encouraged by the government and imports discouraged. Economically, this seems to be a tissue of fallacy; for what is the point of exports if not to purchase imports, and what is the point of piling up monetary bullion if the bullion is not used to purchase goods?
But mercantilism cannot be viewed satisfactorily as merely an exercise in economic theory. The mercantilist writers, indeed, did not consider themselves economic theorists, but practical men of affairs who argued and pamphleteered for specific economic policies, generally for policies which would subsidize activities or companies in which those writers were interested. Thus, a policy of favoring exports and penalizing imports had two important practical effects: it subsidized merchants and manufacturers engaged in the export trade, and it threw up a wall of privilege around inefficient manufacturers who formerly had to compete with foreign rivals. At the same time, the network of regulation and its enforcement built up the state bureaucracy as well as national and imperial power.
The famous English Navigation Acts, which played a leading role in provoking the American Revolution, are an excellent example of the structure and purpose of mercantilist regulation. The network of restriction greatly penalized Dutch and other European shippers, as well as American shipping and manufacturing, for the benefit of English merchants and manufacturers, whose competition was either outlawed or severely taxed and crippled. The use of the state to cripple or prohibit one's competition is, in effect, the grant by the state of monopolistic privilege; and such was the effect for Englishmen engaged in the colonial trade.
A further consequence was the increase of tax revenue to build up the power and wealth of the English government, as well as the multiplying of the royal bureaucracy needed to administer and enforce the regulations and tax decrees. Thus, the English government, and certain English merchants and manufacturers, benefited from these mercantilist laws, while the losers included foreign merchants, American merchants and manufacturers, and, above all, the consumers of all lands, including England itself. The consumers lost, not only because of the specific distortions and restrictions on production of the various decrees, but also from the hampering of the international division of labor imposed by all the regulations.

Adam Smith's Refutation

Mercantilism, then, was not simply an embodiment of theoretical fallacies; for the laws were only fallacies if we look at them from the point of view of the consumer, or of each individual in society. They are not fallacious if we realize that their aim was to confer special privilege and subsidy on favored groups; since subsidy and privilege can only be conferred by government at the expense of the remainder of its citizens, the fact that the bulk of the consumers lost in the process should occasion little surprise.1
Contrary to general opinion, the classical economists were not content merely to refute the fallacious economics of such mercantilist theories as bullionism or protectionism; they also were perfectly aware of the drive for special privilege that propelled the "mercantile system." Thus, Adam Smith pointed to the fact that linen yarn could be imported into England duty free, whereas heavy import duties were levied on finished woven linen. The reason, as seen by Smith, was that the numerous English yarn spinners did not constitute a strong pressure group, whereas the master weavers were able to pressure the government to impose high duties on their product, while making sure that their raw material could be bought at as low a price as possible. He concluded that the
motive of all these regulations, is to extend our own manufactures, not by their own improvement, but by the depression of those of all our neighbors, and by putting an end, as much as possible, to the troublesome competition of such odious and disagreeable rivals.
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.… But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
In the restraints upon the importation of all foreign commodities which can come into competition with those of our own growth, or manufacture, the interest of the home-consumer is evidently sacrificed to that of the producer. It is altogether for the benefit of the latter, that the former is obliged to pay that enhancement of price which this monopoly almost always occasions.
It is altogether for the benefit of the producer that bounties are granted upon the exportation of some of his productions. The home-consumer is obliged to pay, first, the tax which is necessary for paying the bounty, and secondly, the still greater tax which necessarily arises from enhancement of the price of the commodity in the home market.2

Before Keynes

Mercantilism was not only a policy of intricate government regulations; it was also a pre-Keynesian policy of inflation, of lowering interest rates artificially, and of increasing "effective demand" by heavy government spending and sponsorship of measures to increase the quantity of money. Like the Keynesians, the mercantilists thundered against "hoarding," and urged the rapid circulation of money throughout the economy; furthermore, they habitually pointed to an alleged "scarcity of money" as the cause of depressed trade or unemployment.3 Thus, in a prefiguration of the Keynesian "multiplier," William Potter, one of the first advocates of paper money in the Western world (1650), wrote:
The greater quantity … of money … the more commodity they sell, that is, the greater is their trade. For whatsoever is taken amongst men … though it were ten times more than now it is, yet if it be one way or other laid out by each man, as fast as he receives it … it doth occasion a quickness in the revolution of commodity from hand to hand … much more than proportional to such increase of money.4
And the German mercantilist F.W. von Schrötter wrote of the importance of money changing hands, for one person's spending is another's income; as money "pass[es] from one hand to another … the more useful it is to the country, for … the sustenance of so many people is multiplied," and employment increased. Thrift, according to von Schrötter, causes unemployment, since saving withdraws money from circulation. And John Cary wrote that if everyone spent more, everyone would obtain larger incomes, and "might then live more plentifully."5
Historians have had an unfortunate tendency to depict the mercantilists as inflationists and therefore as champions of the poor debtors, while the classical economists have been considered hardhearted apologists for the status quo and the established order. The truth was almost precisely the reverse. In the first place, inflation did not benefit the poor; wages habitually lagged behind the rise in prices during inflations, especially behind agricultural prices.
Furthermore, the "debtors" were generally not the poor but large merchants and quasi-feudal landlords, and it was the landlords who benefited triply from inflation: from the habitually steep increases in food prices, from the lower interest rates and the lower purchasing power of money in their role as debtors, and from the particularly large increases in land values caused by the fall in interest rates. In fact, the English government and Parliament was heavily landlord dominated, and it is no coincidence that one of the main arguments of the mercantilist writers for inflation was that it would greatly raise the value of land.

Exploitation of Workers

Far from being true friends of laborers, the mercantilists were frankly interested in exploiting their labor to the utmost; full employment was urged as a means of maximizing such exploitation.
Thus, the mercantilist William Petyt wrote frankly of labor as "capital material … raw and undigested … committed into the hands of supreme authority, in whose prudence and disposition it is to improve, manage, and fashion it to more or less advantage."6 Professor Furniss comments that
it is characteristic of these writers that they should be so readily disposed to trust in the wisdom of the civil power to "improve, manage, and fashion" the economic "raw material" of the nation. Bred of this confidence in statecraft, proposals were multiplied for exploiting the labor of the people as the chief source of national wealth, urging upon the rulers of the nation diverse schemes for directing and creating employment.7
The mercantilists' attitude toward labor and full employment is also indicated by their dislike of holidays, by which the "nation" was deprived of certain amounts of labor; the desire of the individual worker for leisure was never considered worthy of note.

Compulsory Employment

The mercantilist writers realized frankly that corollary to a guarantee of full employment is coerced labor for those who don't wish to work or to work in the employment desired by the guarantors. One writer summed up the typical view: "it is absolutely necessary that employment should be provided for persons of every age that are able and willing to work, and the idle and refractory should be sent to the house of correction, there to be detained and constantly kept to labor." Henry Fielding wrote that "the constitution of a society in this country having a claim on all its members, has a right to insist on the labor of the poor as the only service they can render." And George Berkeley asked rhetorically "whether temporary servitude would not be the best cure for idleness and beggary?… Whether sturdy beggars may not be seized and made slaves to the public for a certain term of years?"8
William Temple proposed a scheme to send the children of laborers, from the age of four on, to public workhouses, where they would be kept "fully employed" for at least twelve hours a day, "for by these means we hope that the rising generation will be habituated to constant employment." And another writer expressed his amazement that parents tended to balk at these programs:
Parents … from whom to take for time the idle, mischievous, least useful and most burdensome part of their family to bring them up without any care or expense to themselves in habits of industry and decency is a very great relief; are very much adverse to sending their children … from what cause, it is difficult to tell.9
Perhaps the most misleading legend about the classical economists is that they were apologists for the status quo; on the contrary, they were "radical" libertarian opponents of the established Tory mercantilist order of big government, restrictionism, and special privilege. Thus, Professor Fetter writes that during the first half of the 19th century, the
Quarterly Review and Blackwood's Edinburgh Magazine, staunch supporters of the established order, and opponents of change in virtually all fields, had no sympathy with political economy or with laissez-faire, and were constantly urging maintenance of tariffs, expenditures by government, and suspension of the gold standard in order to stimulate demand and increase employment. On the other hand the Westminster's [journal of the classical liberals] support of the gold standard and free trade, and its opposition to any attempt to stimulate the economy by positive government action, came not from believers in authority or from defenders of the dominant social force behind authority, but from the most articulate intellectual radicals of the time and the severest critics of the established order.10

Southey Favors Nationalization

In contrast, let us consider the Quarterly Review, a high Tory journal which always "assumed that the unreformed Parliament, the dominance of a landed aristocracy … the supremacy of the established church, discrimination of some sort against Dissenter, Catholic, and Jew, and the keeping of the lower classes in their place were the foundations of a stable society." Their leading writer on economic problems, the poet Robert Southey, repeatedly urged government expenditure as a stimulant to economic activity and attacked England's resumption of specie payments (return to the gold standard) after the Napoleonic Wars.
"Inflation did not benefit the poor; wages habitually lagged behind the rise in prices during inflations, especially behind agricultural prices."
Indeed, Southey proclaimed that an increase in taxes or in the public debt was never a cause for alarm, since they "give a spur to the national industry, and call forth national energies." And, in 1816, Southey advocated a large public works program for relief of unemployment and depression.11
The Quarterly Review's desire for stringent government control and even ownership of the railroads was at least frankly linked with its hatred of the benefits that railroads were bringing to the mass of the British population. Thus, where the classical liberals hailed the advent of railroads as bringing cheaper transportation and as thereby increasing the mobility of labor, the Quarterly's John Croker denounced railroads as "rendering travel too cheap and easy — unsettling the habits of the poor, and tempting them to improvident migration."12
The arch-Tory, William Robinson, who often denounced his fellow Tories for compromising even slightly on such principles as high tariffs and no political rights for Catholics, wrote many pre-Keynesian articles, advocating inflation to stimulate production and employment, and denouncing the hard-money effects of the gold standard. And the Tory Sir Archibald Alison, inveterate advocate of inflation, who even ascribed the fall of the Roman Empire to a shortage of money, frankly admitted that it was the "agricultural class" that had suffered from the lack of inflation since resumption of the gold standard.13

Controls Under Elizabeth

A few case studies will illustrate the nature of mercantilism, the reasons for mercantilist decrees, and some of the consequences that they brought to the economy.
One important part of mercantilist policy was wage controls. In the 14th century, the Black Death killed one-third of the laboring population of England, and naturally brought sharp advances in wage rates. Wage controls came in as wage ceilings, in desperate attempts by the ruling classes to coerce wage rates below their market rates. And since the vast bulk of employed laborers were agricultural workers, this was clearly legislation for the benefit of the feudal landlords and to the detriment of the workers.

Textiles vs. Agriculture

The result was a persistent shortage of agricultural and other unskilled laborers for centuries, a shortage mitigated by the fact that the English government did not try to enforce the laws very rigorously. When Queen Elizabeth tried to enforce the wage controls strictly, the agricultural labor shortage was aggravated, and the landlords found their statutory privileges defeated by the more subtle laws of the market. Consequently, Elizabeth passed, in 1563, the famous Statute of Artificers, imposing comprehensive labor control.
Attempting to circumvent the shortage caused by previous interventions, the statute installed forced labor on the land. It provided that
  1. whoever had worked on the land until the age of 12 be compelled to remain there and not leave for work at any other trade;
  2. all craftsmen, servants, and apprentices who had no great reputation in their fields be forced to harvest wheat; and
  3. unemployed persons were compelled to work as agricultural laborers.
In addition, the statute prohibited any worker from quitting his job unless he had a license proving that he had already been hired by another employer. And, furthermore, justices of the peace were ordered to set maximum wage rates, geared to changes in the cost of living.
"Where the classical liberals hailed the advent of railroads as bringing cheaper transportation and as thereby increasing the mobility of labor, the Quarterly's John Croker denounced railroads as 'rendering travel too cheap and easy.'"
The statute also acted to restrict the growth of the woolen textile industry; this benefited two groups: the landlords, who would no longer lose laborers to industry and suffer the pressure of paying higher wage rates, and the textile industry itself, which received the privilege of keeping out the competition of new firms or new craftsmen.
The coerced immobility of labor, however, led to suffering for all workers, including textile craftsmen; and to remedy the latter, Queen Elizabeth imposed a minimum wage law for textile craftsmen, thundering all the while that the wicked clothing manufacturers were responsible for the craftsmen's plight. Fortunately, textile employers and workers persisted in agreeing on terms of employment below the artificially set wage rate, and heavy textile unemployment did not yet arise.

Enforcing Bad Laws

The programs of wage controls could not cause undue dislocations until they were stringently enforced, and this came to pass under King James I, the first Stuart king of England. Upon assuming the throne in 1603, James decided to enforce the Elizabethan control program with great stringency, including extremely heavy penalties against employers. Rigorous enforcement was imposed on minimum-wage controls for textile craftsmen, and on maximum-wage decrees for agricultural laborers and servants.
The consequences were the inevitable result of tampering with the laws of the market: chronic severe unemployment throughout the textile industry, coupled with a chronic severe shortage of agricultural labor. Misery and discontent spread throughout the land. Citizens were fined for paying their servants more than ceiling wages, and servants fined for accepting the pay.
James, and his son Charles I, decided to stem the tide of unemployment in textiles by compelling employers to remain in business even when they were losing money. But even though many employers were jailed for infractions, such Draconian measures could not keep the textile industry from depression, stagnation, and unemployment. Certainly the consequences of the policy of wage controls were one of the reasons for the overthrow of the Stuart tyranny in the mid-17th century.

Mercantilist Practices in Colonial Massachusetts

The young colony of Massachusetts engaged in a great many mercantilist ventures, with invariably unfortunate results. One attempt was a comprehensive program of wage and price controls, which had to be abandoned by the 1640s. Another was a series of subsidies to try to create industries in the colony before they were economically viable, and therefore before they would be created on the free market.
One example was iron manufacture. Early iron mines in America were small and located in coastal swamps ("bog iron"); and primarily manufactured, or "wrought," iron was made cheaply in local bloomeries, at an open hearth. The Massachusetts government decided, however, to force the creation of the more imposing — and far more expensive — indirect process of wrought iron manufacture at a blast furnace and forge. The Massachusetts legislature therefore decreed that any new iron mine must have a furnace and forge constructed near it within ten years of its discovery. Not content with this measure, the legislature in 1645 granted a new Company of Undertakers for an Iron Works in New England, a 21-year monopoly of all iron making in the colony. In addition, the legislature granted the company generous subsidies of timberland.
But despite these subsidies and privileges, as well as additional large grants of timberland from the town governments of Boston and Dorchester, the Company's venture failed dismally and almost immediately. The Company did its best to salvage its operations, but to no avail.
A few years later, John Winthrop, Jr., the main promoter of the older venture, induced the authorities of New Haven colony to subsidize an iron manufacture of his at Stony River. From the governments of New Haven colony and New Haven township, Winthrop was granted a whole host of special subsidies: land grants, payment of all costs of building the furnace, a dam on the river, and the transportation of fuel. One of Winthrop's partners in the venture was the deputy governor of the colony, Stephen Goodyear, who was thus able to use the power of government to grant himself substantial privileges. But again, economic law was not to be denied, and the ironworks proved to be another rapidly failing concern.

Debtors' Relief: A Scheme to Aid the Rich

One of the most vigorously held tenets of the dominant neo-Marxist historians of America has been the view that inflation and debtors' relief were always measures of the "lower classes," the poor farmer-debtors and sometimes urban workers, engaging in a Marxian class struggle against conservative merchant-creditors. But a glance at the origins of debtors' relief and paper money in America easily shows the fallacy of this approach; inflation and debtors' relief were mercantilist measures, pursued for familiar mercantilist ends.
"Even though many employers were jailed for infractions, such Draconian measures could not keep the textile industry from depression, stagnation, and unemployment."
Debtors' relief began in the colonies, in Massachusetts in 1640. Massachusetts had experienced a sharp economic crisis in 1640, and the debtors turned immediately to special privilege from the government. Obediently, the legislature of Massachusetts passed the first of a series of debtors' relief laws in October, including a minimum-appraisal law to force creditors to accept insolvent debtors' property at an arbitrarily inflated assessment, and a legal-tender provision to compel creditors to accept payment in an inflated, fixed rate in the monetary media of the day: corn, cattle, or fish.
Further privileges to debtors were passed in 1642 and 1644, the latter permitting a debtor to escape foreclosure simply by leaving the colony. The most drastic proposal went to the amazing length of providing that the Massachusetts government assume all private debts that could not be paid! This plan was passed by the upper house, but defeated in the house of deputies.
The fact that this astounding bill was passed by the upper house — the council of magistrates — is evidence enough that this was not a proto-Marxian eruption of poor debtors. For this council was the ruling group of the colony, consisting of the wealthiest merchants and landowners. If not for historical myths, it should occasion no surprise that the biggest debtors were the wealthiest men of the colony, and that in the mercantilist era a drive for special privilege should have had typically mercantilist aims. On the other hand, it is also instructive that the more democratic and popularly responsible lower house was the one far more resistant to the debt relief program.

Paper Money Inflation

Massachusetts has the dubious distinction of having promulgated the first governmental paper money in the history of the Western world — indeed, in the history of the entire world outside of China. The fateful issue was made in 1690, to pay for a plunder expedition against French Canada that had failed drastically.
But even before this, the leading men of the colony were busy proposing paper-money schemes. The Rev. John Woodbridge, greatly influenced by William Potter's proposals for an inflationary land bank, proposed one of his own, as did Governor John Winthrop, Jr., of Connecticut. Captain John Blackwell proposed a land bank in 1686, the notes of which would be legal tender in the colony, and such wealthy leaders of the colony as Joseph Dudley, William Stoughton, and Wait Winthrop were prominently associated with the plan.
The most famous of the inflationary land-bank schemes was the Massachusetts Land Bank of 1740, which has generally been limned in neo-Marxist terms as the creation of the mass of poor farmer-debtors over the opposition of wealthy merchant-creditors of Boston. In actuality, its founder, John Colman, was a prominent Boston merchant and real-estate speculator; and its other supporters had similar interest — as did the leading opponents, who were also Boston businessmen. The difference is that the advocates had generally been receivers of land grants from the Massachusetts government, and desired inflation to raise the value of their speculatively held land claims.14  Once again — a typically mercantilist project.
"The fact that this astounding bill was passed by the upper house — the council of magistrates — is evidence enough that this was not a proto-Marxian eruption of poor debtors. "

Keynes Wouldn't Learn

From just a brief excursion into mercantilist theory and practice, we may conclude that Lord Keynes might have come to regret his enthusiastic welcome to the mercantilists as his forbears. For they were his forbears indeed; and the precursors as well of the interventions, subsidies, regulations, grants of special privilege, and central planning of today. But in no way could they be considered as "progressives" or lovers of the common man; on the contrary, they were frank exponents of the Old Order of statism, hierarchy, landed oligarchy, and special privilege — that entire "Tory" regime against which laissez-faire liberalism and classical economics leveled their liberating "revolution" on behalf of the freedom and prosperity of all productive individuals in society, from the wealthiest to the humblest.
Perhaps the modern world will learn the lesson that the contemporary drive for a new mercantilism may be just as profoundly "reactionary," as profoundly opposed to the freedom and prosperity of the individual, as its pre-19th-century ancestor.
1."The laws and proclamations … were the product of conflicting interests of varying degrees of respectability. Each group, economic, social, or religious, pressed constantly for legislation in conformity with its special interest. The fiscal needs of the crown were always an important and generally a determining influence on the course of trade legislation. Diplomatic considerations also played their part in influencing legislation, as did the desire of the crown to award special privileges, con amore, to its favorites, or to sell them, or to be bribed into giving them, to the highest bidders.… The mercantilist literature, on the other hand, consisted in the main of writings by or on behalf of 'merchants' or businessmen … tracts which were partly or wholly, frankly or disguisedly, special pleas for special economic interests. Freedom for themselves, restrictions for others, such was the essence of the usual program of legislation of the mercantilist tracts of merchant authorship." Jacob Viner, Studies in the Theory of International Trade (New York: Harper and Bros., 1937), pp. 58–59.
2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 625.
3. See the laudatory "Note on Mercantilism" in chap. 23 of John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace, 1936).
4. Quoted in Viner, Studies in the Theory of International Trade, p. 38.
5. Quoted in Eli F. Heckscher, Mercantilism, 2nd ed. (New York: Macmillan, 1955), 2, pp. 208–9. Also see Edgar S. Furniss, The Position of the Laborer in a System of Nationalism (New York: Kelley and Millman, 1957), p. 41.
6. Quoted in ibid., p. 41.
7. Ibid.
8. See ibid., pp. 79–84.
9. Ibid., p. 115.
10. Frank W. Fetter, "Economic Articles in the Westminster Review and their Authors, 1824–51," Journal of Political Economy (December 1962): p. 572.
11. See Frank W. Fetter, "Economic Articles in the Quarterly Review and their Authors, 1809–52," Journal of Political Economy (February 1958): pp. 48–51.
12. Ibid., p. 62.
13. See Frank W. Fetter, "Economic Articles in Blackwood's Edinburgh Magazine, and their Authors, 1817–1853," Scottish Journal of Political Economy (June 1960): pp. 91–96.
14. See the illuminating study by Dr. George Athan Billias, "The Massachusetts Land Bankers of 1740," University of Maine Bulletin (April 1959).
The above originally appeared in The Freeman.

Sunday, September 4, 2016

WARNING – On-Line Article Regarding Warren Buffett, BREXIT and Anderson Cooper is a Fraud

August 15, 2016 06:08 PM Eastern Daylight Time
OMAHA, Neb.–(BUSINESS WIRE)–Berkshire Hathaway Inc. (NYSE: BRK.A; BRK.B) —

It has come to Berkshire’s attention that there is an article on-line concerning Warren Buffett and BREXIT with respect to a conversation that Mr. Buffett allegedly had with Anderson Cooper. The article is headlined as follows – “Warren Buffett Warns “BREXIT” Chaos is going to cost Millions of Americans Jobs.” For the record, Mr. Buffett has not spoken with Anderson Cooper for about five years and never about BREXIT.

The article among other fraudulent claims states that Mr. Buffett spoke with Mr. Cooper and indicated that Mr. Buffett was recommending something called “The Global Cash Code.” Allegedly, per the on-line article, Mr. Buffett indicated that Sandra Barnes, the party who allegedly created “The Global Cash Code,” has been teaching people how to successfully use “The Global Cash Code.” Prior to learning of this fraudulent article, Mr. Buffett has never spoken with or even heard of Sandra Barnes.

Berkshire Hathaway Inc.
Marc D. Hamburg, 402-346-1400

Saturday, September 3, 2016


“Thank you. That’s so nice. Thank you.
“Well, that’s so nice. And, Bishop Jackson, I want to thank you and Dr. Jackson and you have some voice, I have to say. Incredible. And some spirit, some spirit. Talent.
“Thank you. Well, I just wrote this the other day knowing I’d be here. And, I mean it from the heart and I’d like to just read it and I think you’ll understand it maybe better than I do in certain ways.
“For centuries, the African-American church has been the conscience of our country. So true. It’s from the pews and pulpits and Christian teachings of black churches all across this land that the Civil Rights movement lifted up its soul and lifted up the soul of our nation. It’s from these pews that our nation has been inspired toward a better moral character, a deeper concern for mankind, and spirit of charity and unity that binds us all together. And we’re bound together and I see that today. This has been an amazing day for me.
“The African-American faith community has been one of God’s greatest gifts to America and to its people. There is perhaps no action our leaders can take that would do more to heal our country and support our people than to provide a greater platform to the Black churches and church-goers. You do right everyday by your community and your families. You raise children in the Light of God; I will always support your church, always. And defend your right to worship . . . so important.
“I am here today to listen to your message and I hope that my presence here will also help your voice to reach new audiences in our country and many of these audiences desperately need your spirit and your thought. I can tell you that.
“Christian faith is not the past but the present and the future. Make it stronger. And we’ll open it up to great, great leaders like Pastor Jackson, Bishop Jackson, Dr. Jackson, and so many others. And so many others actually sitting here. Darrell Scott, who is phenomenal, who has been with me for so long. So long. Omrosea, who is a very nice person and I don’t want to say that. Because I’ll destroy her image by saying that. She’s actually a very, very fine person and pastor. And I want to thank all the folks and there is somebody that’s been very special to me, Dr. Ben Carson who’s been . . . Stand up, Ben. Come here, come here. Come here, Ben. This is a great man and great guy.
“So, as I prepare to campaign all across the nation, and in every community, I will have an opportunity to lay out my plans for economic change. Which will be so good for Detroit and so good for this community because we’re going to bring jobs back. I will have a chance . . . Thank you. We’re bringing them back. We’re taking them from Mexico and everywhere else because they’re gone.
“I will have a chance to discuss school choice. Its very important. And how to put every American on the ladder of success. A great education, a great job. But today, I just want to let you know that I am here to listen to you and I have been doing that. And we had a fantastic interview with Bishop Jackson. It was really an amazing interview. He is better than the people who do that professionally. I will tell you. It’s true. It’s true. It’s true. He’s better.
“And I didn’t really know what I was getting into. I didn’t know. Is this going to be nice? Is this going to be wild? He’s a great gentleman and a very smart guy. I just hope you don’t lose him to Hollywood. That’s the only problem. And especially, and especially Dr. Jackson, she may be gone. Hollywood is calling. Look at all those television cameras back there. Look at all the television cameras. I’m sorry to do that to you, Bishop. Because, it’s just one of those things, right?
“Our nation is too divided. We talk past each other, not to each other and those who seek office do not do enough to step into the community and learn what is going on. They don’t know. They have no clue. I’m here today to learn. So that we can together remedy injustice, in any form. And so that we can also remedy economics so that the African-American community can benefit economically through jobs and income and so many other different ways.
“Our political system has failed the people and works only to enrich itself. I want to reform that system so that it works for you, everyone in this room. I believe true reform can only come from outside the system. I really mean that. Being a businessman is much different than being a politician because I understand what is happening. And we are going outside the establishment.
“Becoming the nominee of the Party of Abraham Lincoln — a lot of people don’t realize that Abraham Lincoln, the great Abraham Lincoln was a Republican — has been the greatest honor of my life. It is on his legacy that I hope to build the future of the Party but more important the future of the country and the community.
“I believe that we need a Civil Rights agenda for our time. One that ensures the rights to a great education — so important — and the right to live in safety and in peace and to have a really, really great job. A good paying job and one that you love going to every morning. That can happen. We need to bring our companies back.
“It also means the right to have a government that protects our works and fights, really fights for our jobs. I want to help you build and rebuild Detroit. And we can do that especially with people like Bishop Jackson and Dr. Jackson. I mean that. It’s been an amazing experience. It’s been an amazing experience. Really.
“Nothing is more sad than when we sideline young black men with unfulfilled potential, tremendous potential. I met some people this morning that are incredible people and they’re looking for jobs. These are incredible people . . . young people. Our whole country loses out when we’re unable to harness the brilliance and the energy of these folks
“We’re one nation and when anyone hurts, we all hurt together. That is so true. So true.
“We’re all brothers and sisters and we’re all created by the same God. We must love each other and support each other and we are in this all together. All together.
“I fully understand that the African-American community has suffered from discrimination and that there are many wrongs that must still be made right and they will be right. I want America prosperous for everyone. I want to make this city the economic envy of the world and we can do that. We can do that again.
“Factories everywhere, new roads and bridges, new schools — especially schools — and new hope.
"I have been so greatly blessed, and in so many ways, with no greater blessing than my family. I’ve had a great family.
“Nothing would make me happier and more fulfilled than to use what I have learned in business and in traveling all over the world — I’ve sort of seen a lot — to bring the wealth and prosperity and opportunity to those who have not had these opportunities before. And that’s many, many people in Detroit.
“When I see wages falling, people out of work, I know the hardships this inflicts and I am determined to do something about it. I will do something about it. I do get things done, I will tell you. Some people have strengths, that’s one of my strengths, I get things done. I’m going to get things done for you.
“Please know this, for any who are hurting, things are going to turn around. Tomorrow will be better. Much better. The Pastor and I were talking about, riding up the street, how we see all those closed stores and people sitting down on the sidewalk, and no jobs, and no activity. We’ll get it turned around. We’ll get it turned around, Pastor. Believe me.
“We’re going to win again as a country and we’re going to win again for all of our people. I want to work with you to renew the bonds of trust between citizens and the bonds of faith that make our nation strong. America has been lifted out of many of its most difficult hours through the miracle of faith and through people like Bishop Jackson and Dr. Jackson. So important. People have no idea how important they are.
“Now, in these hard times for our country, let us turn again to our Christian heritage to lift up the soul of our nation. I am so deeply grateful to be here today and it is my prayer that the America of tomorrow — and I mean that — that the America of tomorrow will be one of unity, togetherness, and peace. And perhaps we can add the word prosperity. Ok? Prosperity.
“I’d like to conclude with a passage from 1 John, Chapter 4. You know it? See, most groups I speak to don’t know that. But we know it. If you want, we can say it together: ‘No one has ever seen God, but if we love one another, God lives in us and His love is made complete in us.’ And that is so true.
“Thank you very much. This has been such an honor. Thank you very much. Bishop, thank you sir. Thank you. Thank you. Thank you.”