Economic Lessons from American History by John Steele Gordon

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Experiences from bank runs during the Great De...

Experiences from bank runs during the Great Depression led to the introduction of deposit insurance in the US. (Photo credit: Wikipedia)

John Gordon gives great insight into the historical implications of what our government is doing to destroy our standing in the world.

Excerpt:  Today we live in a world far beyond the imagination of those who were alive in 1607. The poorest family in America today enjoys a standard of living that would have been considered opulent 400 years ago. And for most of this time it was the United States that was leading the world into the future, politically and economically.

This astonishing economic transformation provides rich lessons in examples of what to do and not do. Let me suggest five.

1. Governments Are Terrible Investors

2. Politicians Have Self-Interest Too

3. Immigration is a Good Thing

4. Good Ideas Spread, Bad Ones Don’t ( I selected this snippet as a sample of the history surrounding one of my favorite causes, tort reform.) 

Thomas Jefferson the first person in history to advocate a system of decimal coinage, and the United States the first country to adopt one. This was a very good idea, and, as good ideas always do, it quickly spread. Today every country on earth has a decimal currency system.

But if Jefferson’s decimal coinage concept was a good idea that quickly spread around the world, another idea that developed here at that time was lousy: the so-called American Rule, whereby each side in a civil legal case pays its own court costs regardless of outcome. This was different from the English system where the loser has to pay the court costs of both sides.

The American Rule came about as what might be called a deadbeat’s relief act. The Treaty of Paris (which ended the American Revolution) stipulated that British creditors could sue in American courts in order to collect debts owed them by people who were now American citizens. To make it less likely that they would do so, state legislatures passed the American Rule. With the British merchant stuck paying his own court costs, he had little incentive to go to court unless the debt was considerable.

The American Rule was a relatively minor anomaly in our legal system until the mid-20th century. But since then, as lawyers’ ethics changed and they became much more active in seeking cases, the American Rule has proved an engine of litigation. For every malpractice case filed in 1960, for instance, 300 are filed today. In practice, the American Rule has become an open invitation, frequently accepted, to legal extortion: “Pay us $25,000 to go away or spend $250,000 to defend yourself successfully in court. Your choice.”

Trial lawyers defend the American Rule fiercely. They also make more political contributions, mostly to Democrats, than any other set of donors except labor unions. One of their main arguments for the status quo is that the vast number of lawsuits from which they profit so handsomely force doctors, manufacturers, and others to be more careful than they otherwise might be. Private lawsuits, these lawyers maintain, police the public marketplace by going after bad guys so the government doesn’t have to—a curious assertion, given that policing the marketplace has long been considered a quintessential function of government.

The reason for this is that when policing has been in private hands, self-interest and the public interest inevitably conflicted. The private armies of the Middle Ages all too often turned into bands of brigands or rebels.

5. Markets Hate Uncertainty

Usually, when there has been a steep decline in economic activity, recovery is equally steep. The valley is V-shaped. That is what happened in 1920, when there had been a severe post-war depression and then a strong recovery. So why was the recovery so slow in the 1930s? One reason, according to an increasing number of economic historians, is that Franklin Roosevelt had a bad habit of changing his mind. While highly intelligent, he was no student of economics and seldom read books as an adult. So much of his program was, essentially, seat-of-his-pants policy. First there was the National Recovery Administration, which amounted to a vast cartelization of the American economy. When the Supreme Court threw it out—by a unanimous vote—FDR moved on to other remedies, including big tax increases on the rich.

But markets, which can function even in disaster with ruthless efficiency, hate uncertainty. When uncertainty regarding the future is high, they tend to tread water. As a result, there was what is known as a “strike of capital.” While corporations often had large cash balances—General Motors made a profit in every year of the Great Depression—and banks had money to lend, there was little investment and few loans made. Both the banks and the corporations were too uncertain about what the government was going to do next.

That is precisely what is happening today. Banks and corporations have plenty of money. Apple alone is sitting on about $100 billion worth of corporate cash. And yet the recovery from the crash of 2008 has been tepid at best. The valley is U-shaped. Undoubtedly a big reason for that is the enormous uncertainty that has plagued the country since 2008. Will health care—one-sixth of the American economy—be taken over by the folks who run the post office? Will the Bush tax cuts be ended or continued? Will the corporate income tax go up or down? Will manufacturing get a special tax deal? Will so-called millionaires—who, when you listen carefully to what liberal politicians are saying, can earn as little as $200,000 a year—be forced suddenly to pay “their fair share”?

Who knows? So firms and banks are postponing investment decisions until the future is clearer. Perhaps the clearing will happen on November 6.

Read full article here.

Unintended consequences – CFL bulbs cause skin damage

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A compact fluorescent lamp for general or home use

A compact fluorescent lamp for general or home use (Photo credit: Wikipedia)

Another example of our government not knowing what they are doing other than exerting control over the citizenry. They have forced the manufacture of light bulbs offshore to China, doing away with thousands of jobs here in the U.S., and, in doing so, have created a health hazard. Another example of why we should trust them with our health system. lol 

Excerpt: Based on the research, scientists concluded that CFL light bulbs can be harmful to healthy skin cells. 

“Our study revealed that the response of healthy skin cells to UV emitted from CFL bulbs is consistent with damage from ultraviolet radiation,” said lead researcher Miriam Rafailovich, Professor of Materials Science and Engineering at Stony Brook University, in New York, in a statement. “Skin cell damage was further enhanced when low dosages of TiO2 nanoparticles were introduced to the skin cells prior to exposure.” 

According to Rafailovich, with or without TiO2 (a chemical found in sunblock), incandescent bulbs of the same light intensity had zero effects on healthy skin. 

The scientists found that cracks in the CFL bulbs phosphor coatings yielded significant levels of UVC and UVA in all of the bulbs — purchased in different locations across two counties — they examined. 

With high levels of ultraviolet radiation present, the researchers delved into how the exposure affected the skin. According to the findings, skin damage from exposure to CFLs was consistent with harm caused by ultraviolet radiation. 

Read the full Daily Caller article here.

Crossroads knocks Obama in coal states with new radio ad

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A conservative super-PAC will spend $175,000 on radio ads to knock President Obama on coal regulations in Ohio, Pennsylvania and West Virginia.

The ad by American Crossroads, a Republican-aligned group founded by Karl Rove, uses clips from a news interview with Cecil Roberts, the president of the United Mine Workers of America, disparaging the Environmental Protection Agency (EPA).

Read full article here.

The Shocking Truth About Unemployment In America

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unemployment

unemployment (Photo credit: Sean MacEntee)

If the MSM started reporting rather than promoting Obama, maybe the general population would be informed and be better able to make rational decisions about the future of our country. Anyone paying attention knows that the government statistics are rigged, but the uninformed “Jaywalkers” have very little in the way of facts to mar their adoration of “The One”. This country is in deep trouble, and 4 more years with “The One” will seal it’s fate. The Socialistic direction Obama is taking us in and the already insurmountable debt that he is creating, will doom us to being a second rate nation going the way of the PIIGS, Portugal, Ireland, Italy, Greece and Spain.

Excerpt: The mainstream media is not telling you the truth about unemployment in the United States. The percentage of working age Americans that are employed is not increasing. In March 2010, 58.5 percent of all working age Americans had a job. In March 2012, 58.5 percent of all working age Americans had a job. So if the employment rate is exactly the same as it was two years ago, then how in the world can the Obama administration claim that things have gotten significantly better since then? According to the Bureau of Labor Statistics, the official unemployment rate in the United States was 9.8 percent in March 2010 and it declined to 8.2 percent in March 2012. So how is this possible if the percentage of working age Americans that have jobs hasn’t moved? Well, what they do is they claim that there are millions upon millions of Americans that have “left the labor force”. In other words, they claim that there are millions upon millions of unemployed Americans that don’t want jobs anymore. Of course that is a total farce, but the mainstream media and most Americans are buying it. They actually believe that the unemployment rate is going down. But the truth is that the unemployment crisis in America has not subsided. In fact, we are pretty much exactly where we were two years ago, and things are about to get a whole lot worse.

If you want to know the shocking truth about unemployment in America, all you need to do is to look at one chart. The chart posted below shows the change in the employment-population ratio over the past few years. What the employment-population ratio measures is the percentage of working age Americans that actually have jobs. As you can see, it fell dramatically during 2008 and 2009, and since then it has been hovering between 58 and 59 percent…

So there has been no employment recovery, and this is very odd because the employment-population ratio always bounces back after a recession.

The chart posted below shows how the employment-population ratio has changed since the late 1940s. The shaded areas represent recessions. Please take note that after every single recession (other than the current one) the employment-population ratio has always bounced back substantially.

During the most recent recession, the employment-population ratio fell farther than it had during any other recession in the post-World War II era.

If these were normal economic times, it would have been reasonable to expect a huge surge in hiring by now.

But we have not seen that.

Instead, the employment rate in the United States has been remarkably flat for more than two years.

So Barack Obama should not even begin to say anything at all about a “recovery” until the employment rate at least breaks the 59 percent barrier.

Read full report here.