It shouldn’t surprise anyone.  Public watchdog groups have been pointing this out for years.  I pointed it out when I ran for Comptroller in 2005.  I even saw Mayor Bloomberg mention it – once.  Public pension costs are probably the single most impotant item creating the structural deficits in New York’s state and local governments.  The simplest analysis showed it many years ago.  But our polticians are so grossly and criminally irresponsible that they’ve continued to pile up more and more costs even as late as last year.

This article in the NY Times online illustrates the problem – as if this is news.

“It’s alarming, eye-popping and unthinkable,” said Stephen J. Acquario, executive director of the New York State Association of Counties. “To manage that liability in the face of this deep decline in government revenues is going to be a challenge,” he said. “Where is this money going to come from?”

Where will the money come from?  Taxpayers – are you listening for the huge sucking sound?

Now – who’s up for government health insurance?

Those of us who are fans of Austrian Economics knew it all along.  George McGovern apparently learned it too late.  Barak Obama and his economic advisers seem clueless still.  Government intervention in the economy nearly always does more harm than good.  An online article  ,  How the Stimulus Discourages Hiring , in that bastion of free market economics – the New York Times –  suggests that more people are learning – some the hard way.

In the article Jay Goltz points out that stimulus initiatives put more financial burden on employers at exactly the time they can afford them least – when they are in trouble and laying people off.  He suggests that this means small businesses will be slower to create new jobs.  That’s precisely what Austrian Economics predicts.  If you prevent the economy from adjusting,  the pain will be prolonged.  

Goltz opens the article with a reference to an article by -of all people – Geroge McGovern – who after a lifetime of “public service” decided to try his hand at small business.   Here is a quote from that article

I’m for protecting the health and well-being of both workers and consumers. I’m for a clean environment and economic justice. But I’m convinced we can pursue those worthy goals and still cut down vastly on the incredible paperwork, the complicated tax forms, the number of minute regulations, and the seemingly endless reporting requirements that afflict American business.

McGovern comments that he wished he had more small business experience before becoming a legislator.   Did he mean perhaps knowing something about actually creating value before making the laws that created many of those problems? 

Can someone tell me if Barack Obama ever held a real job or ran any sort of economic activity where he would learn anything at all about creating economic value?

NYC Congressional Delegation in Minority in Opposing Federal Reserve Audit

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Senate coup restores sweet gridlock to Albany

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George Orwell once noted that at any given moment there is a general tacit agreement not to discuss some large and uncomfortable fact, and the sad fact is there’s such an agreement out and about concerning a gold standard versus a paper standard. Trust me, believing in a gold standard makes me the lunatic on the trade floor.

In a recent episode of The American Conservative, Philip Delves Broughton gives a good example of this ongoing trend. In Banking on Beijing, he speaks of his opinion regarding China’s economic situation, specifically their central bank’s rather poorly diversified investing acumen, given form in their sitting on all those US dollars, I forget the number, I’ve been drinking, but it’s definitely way over $1 trillion.

Mr. Broughton (Mr. Delves Broughton?) correctly notes that “China’s huge dollar reserves are merely a symptom of an economic fix of its own making”, as China is a country, like the US, blessed with a currency backed by paper and they were creating gobs of it to keep the value of their currency artificially low compared to the US dollar, not an easy thing to do with Greenspan and then Bernanke creating US dollars like mad little hamsters.

Mr. Broughton notes that while for a time it seemed to work, it was a “Ponzi scheme” and again I agree with him. Yet, he fails to give the same compliment towards what His Country Tis Of Thee’s central bank was doing – the exact same thing. If China’s policy of creating money like mad to keep it artificially low, to create inflation per the Federal Reserve’s slogan, is a “Ponzi scheme”, what about Bernanke & Friends?

Under a gold standard, China couldn’t have been able to screw itself into the ground because you must use something, gold, as money under a gold standard, something that is not counterfeitable.

And China wouldn’t have had to create gobs of its own money under a gold standard anyway, because if the Federal Reserve had been under a gold standard, too (and adhered to it honestly) there wouldn’t have been an orgy of reckless consumer madness in the first place to give them all those US dollars.

But the thought of anything but a paper standard doesn’t exist anymore. The intellectual debate over our monetary system does not even include it. It is not even respectable, people laugh at it off the cuff. Mr. Broughton is of that mind, asking “and realistically, where else is China going to go?” So paper it is.

Ending the article with “had China pursued a different strategy over the years” Mr. Broughton goes on to list his preferred options, not one of which included stopping the political elite from counterfeiting, to put the world currencies back under gold, to put shackles on all the counterfeiting.

Whether or not being on a gold standard will bring an end to booms and busts and cheating is doubtful – history says no – but history says the same thing about paper.

So what gives gold the gold, so to speak, what puts her first in my mind?

Economic justice.

Counterfeiting is a crime for a reason – it’s flat out stealing. It makes life harder for all of us to allow stealing. So if we are going to see life’s booms and busts and greed and human flaws anyway, at the very least we can be honest as possible about it.

C.J. Maloney blogs on Mises about Obama’s surprisingly interventionist foreign policy.  Maloney will also speak at the Manhattan Libertarian Party’s chapter meeting on June 8.  The meeting is open to the public and all are welcome. Details here.

The ads for New York Lottery’s Take Five game claim the odds of winning are 1 in 9. But the odds of winning even the smallest cash prize are actually 1 in 109. Today I filed a formal complaint with the Federal Trade Commission about the New York Lottery’s deceptive advertising practices and wrote all about it in my latest column for the Examiner.

Scroll to the end of the article to see how you can file your own complaint with the FTC against the New York Lottery.

In my latest dispatch for the Examiner, I follow up on my earlier column about the conflict of interest between the Federal Reserve and the banks it regulates. On Thursday, Federal Reserve Bank of New York chairman Stephen Friedman resigned amid questions about his ongoing role as a director and major shareholder of bank holding company Goldman Sachs.

Read all about it here.

My left-liberal (as opposed to classical liberal) friends tell me to shut up when I harp on how Government can’t do anything right.  They tell me it’s a worn out cliche.  It’s a cliche for a reason.  It’s true.  Think about it. I’ll bet you can’t name a single thing that the government gets right.  And by “right” I mean it does it as well or better than the alternative – which is of course free human beings making their own decisions ( a sneaky way of saying “free markets”).   Go ahead – name one. I’m waiting…..

Remember it wasn’t so long ago that Congress preferenced Ethanol and caused a net increase in fossil fuel usage and disruptions in food markets.  Surprise! They did it again.  Here’s a post on the always informative  DownSizeDC.org  that points out unintended negative consequences of Congress meddling in energy markets via tax preferences. 

Prior to Congress deciding it could use tax policy to re-engineer America’s energy use from on-high, the paper industry had been 70% fueled by something called black liquor, a natural by-product of the paper making process. In other words, the paper industry was inherently energy efficient, until Congress got involved.
 
The Energy Policy Act of 2005 authorized a 50-cent per gallon tax credit for mixing gasoline or diesel with an alternative fuel. To get the credit, paper companies began to mix diesel with their black liquor. In other words . . .

• The government is paying the paper industry to use a less efficient, environmentally-destructive fuel!

The cost of this scam could reach $8 billion this year. [Source: The Nation]

Even the New York Times reports conclusive evidence.  Of course The Times doesn’t see it as evidence of Government incompetence.   The Times  acquired it’s new office space by getting government to take it by force from small businesses via eminent domain.   I’m not surprised they are reluctant to bite the hand that feeds them. Cozy arrangement.

Check out this Times post with comments by Doug Tatum, co-founder and chairman emeritus of Tatum, an Atlanta-based consulting and executive search firm that specializes in helping growing companies with finance issues.

 Entrepreneurs have a limited amount of bandwidth, and they have to quit wasting their time chasing the impossible. They need to think about how they can change their business model to become profitable. That’s where the capital to grow will come from

Finance growth with profits?  What?  That’s so pre-Obama.   That would mean something like cutting taxes would be better for the economy than massive stimulus packages.   But of course few in Government have ever turned a profit in the free market so they wouldn’t know about that.   Bam has of course made millions from his book sales. But profiting on his Presidential campaign isn’t really that close to a free market activity in today’s two flavors of one party system.   Also cutting taxes would mean that regular working people and entrepreneurs would make the decisions about where the money got spent and that would mean Government can’t determine the winners and the losers.   Quaint notion.

Tatum continues:

Banks have become cautious about what they have on their balance sheets. They still don’t know what their portfolios are worth. That means they’re waiting for the next shoe to drop, which could be the commercial markets. I talked to the C.E.O. of a community bank who told me that they have the regulators telling them when and where they can lend money. So while you might have politicians saying, ’Lend, lend, lend,’ the regulators are holding the banks back.

Banks becoming cautious and refusing to lend when Congress tells them to?  Didn’t Congress tell them to lend to sub-prime home buyers and sell the paper to Fannie Mae?  How did that work out for them?  But it’s OK because the banks aren’t THAT stupid – well not any more.  They can ignore Congress because the regulators make them.  So Congress can continue to pander and not worry that the banks will actually take their disastrous advice – again.

It’s amazing to me that people can continue to cling to the idea that Government decisions can ever outperform free market decisions.  But most people don’t know much economic history or economic principles.   And the history and principles they do know are fed to them by the Government propaganda machine – organizations like the New York Times.

The truth is out there for anyone who wants to learn it.   If you don’t know – here are two great places to start :  www.Mises.org  and www.independent.org  .

In today’s dispatch for the Examiner, I report on the latest buffoonery from the NYC Council, a registry for purchasers of hydrochloric acid:

Big Brother will be keeping tabs on who buys etching acid, thanks to a new law introduced by Council Member Peter Vallone Jr. and passed by the New York City Council on Wednesday. Under the new law, stores will be required to record the purchaser’s name and address, the amount of acid purchased, and the date.

Although hydrochloric acid has many legitimate uses – including glass and metal etching, household cleaning and building construction – it attracted Vallone’s attention because it often used by vandals to to etch subway windows and bus shelters. Vallone has made anti-graffiti grandstanding his special niche in the nanny state. The son of the former City Council speaker previously authored legislation banning anyone under 21 from possession wide-tip markers, spray paint or etching acid. When that law was thrown out after a lawsuit by designer Mark Ecko, Vallone drafted a revision that would ban the art tools’ possession by anyone under age 25.

Read the rest here.