Monday, 7 March 2016

Stephen Darori ..... Some Remarks On: Free Trade and Prosperity versus Donald Trumps Pr...

Stephen Darori ..... Some Remarks On: Free Trade and Prosperity versus Donald Trumps Pr...: The political circus of the 2016 presidential election has revived and reinvigorated popular belief in age-old protectionist fallacies....

Free Trade and Prosperity versus Donald Trumps Protectionist Fallacies

The political circus of the 2016 presidential election has revived and reinvigorated popular belief in age-old protectionist fallacies. Currently both Donald Trump and Bernie Sanders, are both in favor of expanding protectionist trade policy, with both of them arguing that free trade “destroys” jobs and hurts domestic workers and producers by exposing them to foreign competition. Both candidates espouse an utterly misguided zero-sum view of economics, in which one side to an exchange wins only when the other side loses. Both men are, of course, completely wrong.
Free Trade Does Not Destroy Jobs
It is true that greater competition between domestic and foreign workers can lead to a decline in wage rates and possibly unemployment in some sectors of the economy. But this is only a short-term effect. Free competition between foreign and domestic producers also naturally leads to lower prices for the goods and services which can now be freely imported from abroad. So, while nominal wage rates are pushed down in some sectors, real wage rates rise overall for everyone in the economy because of the decline in prices.
Thanks to free trade consumers spend less money on certain goods and services and this allows them to spend more money on others, which leads to rising demand and thus profits in the sectors providing the latter, and consequently leads also to more investment by entrepreneurs. This higher rate of investment naturally leads to the creation of more jobs in these sectors and thus offsets any original rise in unemployment that might have occurred.
Alternatively, the consumers may choose to save the extra disposable income that was freed up by the decline in prices. This rise in the savings rate will lead to a decline in interest rates, which makes profitable certain long-term capital-intensive projects which were not profitable beforehand. Seizing the opportunity presented by this increase in savings, entrepreneurs will start borrowing and investing in those long-term capital intensive projects, which on its own already creates more jobs, but it also leads to a rise in demand for capital goods, which raises profits in the capital goods industries and consequently leads to more investment and job openings in those sectors.
Free Trade Is Win-Win
Free trade not only doesn’t “destroy” jobs, but it also promotes specialization between nations, which improves the efficiency and productivity of workers, and leads to a rise in living standards for all. Trade is not some kind of a zero-sum game in which if one side wins, the other has to lose.
When two countries such as the United States and China, for example, trade freely with one another, their citizens are incentivized to specialize in those lines of production in which they have a comparative advantage. Due to the difference in factors of production endowments it is best for different countries to specialize in producing those types of goods and services which they can produce most efficiently in comparative terms. A higher level of specialization, through the effect of economies of scale, makes production more cost-efficient.
By specializing in a certain line of production and then exchanging the goods and services produced for those that others are specialized in producing, the people of a given country can substantially raise their living standards because the gains in productivity are naturally followed by an increasing supply of goods and services and thus rising real incomes. This way free trade allows for the flourishing of what can be called an “international” division of labor. Just like a greater degree of division of labor can lead to big gains in productivity and thus real incomes on an intra-national(i.e., internal for a given country) level it can also do so on an international level.
Protectionism Makes You Poor
When international trade is restricted, for example, by protectionist legislation which places tariffs on certain imports, this process of specialization is hindered and thus the gains in productive efficiency are diminished. By artificially raising the price of imports, tariffs allow otherwise uncompetitive and inefficient domestic businesses to remain in operation. Consumers are forced to pay higher prices for the goods the importation of which is penalized by tariffs, and this effectively constitutes a redistribution of resources from the consumers to the domestic producers.
More importantly, protectionism hinders the process of specialization described in the previous section and thus prevents living standards from rising in the long-term, or worse — it can even lead to their decline. By propping up the profits of comparatively inefficient domestic producers and keeping in business, tariffs prevent the labor shift from those inefficient sectors, to more comparatively efficient ones. Consequently, because this prevents a higher degree of specialization from taking place, or even reverses it, the benefits that specialization leads to cannot be obtained. Productivity does not increase (or at least not to the same degree as it could) and thus real incomes do not rise.
Contrary to the popular political rhetoric nowadays, free trade does not “destroy jobs.” It can only lead to a shift of resources (labor, capital, and other factors) from one comparatively inefficient sector or group of sectors in the domestic economy to another more comparatively efficient one. This process of specialization in the comparatively advantageous lines of production not only does not destroy jobs, but it also enables big gains in efficiency and productivity to take place, which leads to a rise in real incomes. This is how, far from somehow hurting the domestic workers, free trade actually does the opposite — it makes them richer. It is, in fact, protectionism which makes us all poorer, workers included, by artificially propping up inefficient businesses, leading to a misallocation of resources and a decline in standards of living for us all.

Monday, 29 February 2016

Stephen Darori ..... Some Remarks On: Government interference in the Economy.... some co...

Stephen Darori ..... Some Remarks On: Government interference in the Economy.... some co...: Although the causes of economic crises reoccurring throughout US history and often spreading worldwide can’t be proven using empirical mea...

Government interference in the Economy.... some concepts

Although the causes of economic crises reoccurring throughout US history and often spreading worldwide can’t be proven using empirical means, oppressive government regulations favoring special interests in relevant industries have preceded every crisis.

Typically, cronyism involves support of politicians in exchange for regulations denying others the freedom to compete with the moneyed interests (e.g., monopolies). Less competition leads to higher costs and lower quality. It reduces economic growth, jobs, wages, innovation, and productivity. Attempts to control economic growth through government spending and/or manipulating interest rates (e.g., stimulate growth with low rates) generally leads to more severe crises.

None of these things are recent phenomena, but can be found again and again throughout American history.


Mercantilism, also called "commercialism,” is a system in which a country attempts to amass wealth through trade with other countries, exporting more than it imports and increasing stores of gold and precious metals.

After the Revolutionary War, when the agrarian economy was beginning to industrialize, politicians pursued British-style mercantilism, including colonialism, against natives and regulations blocking competition in banking and manufacturing. Financial panics and depressions resulted under a national bank in 1792 and from 1819–21 and state-regulated banks from 1837–43 and 1857–59.

The Civil War was a dispute between Republicans representing manufacturers in the North that blocked free trade with import tariffs against Europe, and Democrats representing agricultural plantations in the South that refused to replace slavery with mechanization using the North’s high-cost goods.


Monopolization is the creation, often with the assistance of political interests, of market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.

The “Gilded Age of Capitalism” shifted the economy from agriculture to industry led by “robber barons” who lobbied mostly Republicans. The government helped create railroad monopolies with low-interest loans, land grants, and special frontier privileges. The railroads formed a conglomerate that monopolized much of the rest of the economy by favoring large over small customers (e.g., Rockefeller’s Standard Oil over farmers), large suppliers (e.g., Carnegie Steel), and big banks (e.g., J.P. Morgan).

Both railroads and banking (with both national and state banks) were implicated in the severe financial panics from 1873–78 and 1893–97, occurring during the Long Depression of 1873–96, and another panic in 1901. Banking regulation led to the panic in 1907.

During the Progressive Era, the US used regulation to form many of today’s monopolies. From 1906 to 1910, Republicans led efforts to create state-regulated electricity and natural gas utility monopolies, and the Seven Sisters oil and physician oligopolies. In 1913, Democrats sanctioned the telephone monopoly and founded the Federal Reserve banking monopoly (i.e., which regulates the banks). After World War I, the Fed raised interest rates which led to the depression of 1920–21, which bankrupted many companies and led to manufacturing oligopolies, including in the automotive industry.

Thanks to these new frontiers in a regulated economy, by the 1920s, only 200 corporations controlled over half of all US industry and the richest 1 percent of the population owned 40 percent of the nation's wealth. As in recent times, the Fed responded by providing easy credit at low interest rates, which led to increased consumer and business debt, uneconomic and risky investments, and inflated assets, including stock prices (further increasing wealth disparity). After the Fed tried to raise interest rates, the result was the Great Stock Market Crash of 1929.


Nationalization, or nationalisation, is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. The opposites of nationalization are privatization, municipalization and demutualization. Industries that are usually subject to nationalization include transport, communications, energy, banking and natural resources.

During the 1930s, the crash led to the Great Depression, the worst financial crisis in US history, and then spread from the world’s largest economy globally, albeit with less severity abroad. Democrats, led by President Roosevelt (FDR) and supported by bankers, agriculture, oil, and labor, tried to redistribute wealth by limiting competition through government takeovers, including trucking, airline, and housing industries, and restricting the supply of food and oil. This led to continued global depression and World War II, which was financed with debt.

Finally, the post-war boom or “Golden Age of Capitalism” saw a dismantling of wartime regulations and growing opportunities especially in manufacturing (like China today). During global rebuilding, the US became the world’s economic leader with about 4 percent annual growth, even with increasing interest rates, decreasing debt, and high taxes. Although wealth disparity was historically low, Democrats increased regulation of necessities, leading to today’s high costs.

FDR had taken money from taxpayers to subsidize home loans at low interest rates including guarantees from the Federal Housing Administration (FHA) since 1934, and securitization by the Fannie Mae secondary mortgage monopoly since 1938 (and Democrats added Freddie Mac to form a duopoly in 1970). After the war, the subsidies led to unsustainable demand for more expensive and larger homes, urban sprawl, and a shortage of affordable housing.

FDR had also taken money from taxpayers to subsidize favored farm crops, which discouraged alternative crops. After 1946, Democrats increased subsidies leading to inflated prices for farmland. Since 1973, the US has subsidized food overproduction leading to dumped exports that retard agricultural and economic development in the developing world and uneconomical bio-fuels protected by tariffs against Brazilian ethanol (until 2012). FDR had led support for the nationalization of oil industries (e.g., Mexico), and military spending to defend dictators in oil-rich countries (e.g., Saudi Arabia).

In 1965, Democrats led nationalization of about half of health care purchasing through Medicare and Medicaid. These programs, and later Obamacare, subsidized increased demand while the supply of doctors and hospitals has been restricted. The resulting health care crisis led to skyrocketing costs nearly triple those of other developed countries.


Peudo -Deregulation is the limited but not complete reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

The dreaded stagflation of the 1970s is considered tied for the second worst financial crisis in US history. The Fed responded to inflation by raising interest rates, leading to the Great Recession of the early 1980s, which led to the Savings and Loan Crisis, and spread as the Latin American Debt Crisis. Since then, the Fed has been lowering rates overall.

Meanwhile, politicians claimed to be trying to increase cost efficiency through privatization of public industries, and foster competition through partial deregulation of private industries. Worldwide, politicians allowed the monopolists to write the rules, including preferential bargain sales to cronies, which led to even nastier deregulated monopolies.

Deregulation was limited mainly to common carrier industries, including airlines in 1978, trucking in 1980, telecommunications in 1996, and electricity and natural gas utilities during the 1990s, and also banking in 1999. For example, states allowed utilities to design rigged trading schemes, gain preferential access to transport lines, and sell assets to affiliates for pennies on the dollar. Deregulation declined after manipulations led to the California Energy Crisis of 2000.


Corporatism, also known as corporativism, is the sociopolitical organization of a society by major interest groups, or corporate groups, such as agricultural, business, ethnic, labour, military, patronage, or scientific affiliations, on the basis of common interests.

After the energy crises and bursting of the internet bubble in 2000, big business Republicans and big government Democrats practiced corporatism. The US House Budget Committee explains: “In too many areas of the economy — especially energy, housing, finance, and health care — free enterprise has given way to government control in partnership with a few large or politically well-connected companies.”

In 2003, regulations led to increased ethanol production from corn, but after that led to the 2007–08 Food Crisis, growth was stopped by mandates that the fuel be made from expensive-to-process cellulose.

Meanwhile, George W. Bush promoted home loans securitized through the Fannie and Freddie duopoly and the Fed’s big banks, while encouraging the Fed to lower interest rates, leading to a bubble in home ownership and prices. Soon after the Fed started raising rates, the bubble burst leading to the 2007–09 Subprime Mortgage Crisis, 2007–08 Financial Crisis (considered tied for the second worst financial crisis in US history), 2008–10 Automotive Crisis, and 2008–12 Global Recession.

In 2010, Dodd Frank gave politicians more oversight over the Fed’s big banks, increasing influence peddling, and risks of crises. The Fed has been loaning trillions of dollars at low interest rates to the big banks. Lower rates can encourage financial engineering, like mergers, which allow bankers and corporate executives to bleed profits from large corporations, who receive preferential tax treatment, especially abroad. Since 1998, the financial sector has spent over $6 billion lobbying Congress.

The Bank for International Settlements, or so-called “bank of central bankers,” warns another global debt crisis is coming, and the debt-trap is now even worse than before 2007. The US has led many nations to continue to lower interest rates and accumulating private and public debt. Now, a slowing economy could make the debt toxic and lead to a financial crisis that would be hastened as the Fed raises rates. The Bank warns: “It is unrealistic and dangerous to expect that monetary policy can cure all the global economy’s ills.”

Obamacare could allow bureaucracies to control patient treatments and prices, while lobbied by the industry. Since 1998, medical interests have spent over $6 billion lobbying Congress.

The Free Market Solution

In a free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy, and it typically entails support for highly competitive markets and private ownership of productive enterprises

Today, there is no party that favors true privatization or free markets. Republicans favor monopolization, while claiming support for free markets and blaming the Democrat’s high taxes and regulations for crises. Democrats favor nationalization, while blaming non-existent free markets for crises. Meanwhile, many Americans appear to be embracing the regulatory nationalism of crony capitalist Donald Trump or the democratic socialism of Bernie Sanders.The solution, however, is simply to take as much power as possible out of the control of corruptible politicians and their special interest supporters.

Friday, 12 February 2016

278 St Valentine Beheaded by Claudius leaving a, "From Your Valentine " note to the daughter of his jailer

On February 14around the year 278A.D., Valentine, a holy priest in Rome in the days of Emperor Claudius II, was executed.

Under the rule of Claudius the Cruel, Rome was involved in many unpopular and bloody campaigns. The emperor had to maintain a strong army, but was having a difficult time getting soldiers to join his military leagues. Claudius believed that Roman men were unwilling to join the army because of their strong attachment to their wives and families.

To get rid of the problem, Claudius banned all marriages and engagements in Rome. Valentine, realizing the injustice of the decree, defied Claudius and continued to perform marriages for young lovers in secret.

When Valentine’s actions were discovered, Claudius ordered that he be put to death. Valentine was arrested and dragged before the Prefect of Rome, who condemned him to be beaten to death with clubs and to have his head cut off. The sentence was carried out on February 14, on or about the year 270.

Legend also has it that while in jail, St. Valentine left a farewell note for the jailer’s daughter, who had become his friend, and signed it “From Your Valentine.”

For his great service, Valentine was named a saint after his death.

In truth, the exact origins and identity of St. Valentine are unclear. According to the Catholic Encyclopedia, “At least three different Saint Valentines, all of them martyrs, are mentioned in the early martyrologies under the date of 14 February.” One was a priest in Rome, the second one was a bishop of Interamna (now Terni, Italy) and the third St. Valentine was a martyr in the Roman province of Africa.

Legends vary on how the martyr’s name became connected with romance. The date of his death may have become mingled with the Feast of Lupercalia, a pagan festival of love. On these occasions, the names of young women were placed in a box, from which they were drawn by the men as chance directed. In 496 AD, Pope Gelasius decided to put an end to the Feast of Lupercalia, and he declared that February 14 be celebrated as St Valentine’s Day.

Gradually, February 14 became a date for exchanging love messages, poems and simple gifts such as flowers.

1929 The St. Valentine’s Day Massacre

George “Bugs” Moran was a career criminal who ran the North Side gang in Chicago during the bootlegging era of the 1920s. He fought bitterly with “Scarface” Al Capone for control of smuggling and trafficking operations in the Windy City. Throughout the 1920s, both survived several attempted murders. On one notorious occasion, Moran and his associates drove six cars past a hotel in Cicero, Illionis, where Capone and his associates were having lunch and showered the building with more than 1,000 bullets.
A $50,000 bounty on Capone’s head was the final straw for the gangster. He ordered that Moran’s gang be destroyed. On February 14, a delivery of bootleg whiskey was expected at Moran’s headquarters. But Moran was late and happened to see police officers entering his establishment. Moran waited outside, thinking that his gunmen inside were being arrested in a raid. However, the disguised assassins were actually killing the seven men inside.
The murdered men included Moran’s best killers, Frank and Pete Gusenberg. Reportedly Frank was still alive when real officers appeared on the scene. When asked who had shot him, the mortally wounded Gusenberg kept his code of silence, responding, “No one, nobody shot me.”
The St. Valentine’s Day Massacre actually proved to be the last confrontation for both Capone and Moran. Capone was jailed in 1931 and Moran lost so many important men that he could no longer control his territory. On the seventh anniversary of the massacre, Jack McGurn, one of the Valentine’s Day hit men,was killed him in a crowded bowling alley with a burst of machine-gun fire.
McGurn’s killer remains unidentified, but was likely Moran, though hewas never charged with the murder. Moran was relegated to small-time robberies until he was sent to jail in 1946. He died in Leavenworth Federal Prison in 1957 of lung cancer.

Ahavat Zion and Abraham Mapu

Displaying Displaying Dry Bones, Kirschen, Israel, holiday, Valentines Day, love,

Abraham Mapu (1808 in Vilijampolė, Kaunas – 1867 in Königsberg, Prussia) was a Lithuanian Jewish novelist in Hebrew of the Haskalah ("enlightenment") movement. His novels later served as a basis for the Zionist movement.

As a child, Mapu studied in a cheder where his father served as a teacher. He married in 1825.

For many years he was an impoverished, itinerant schoolmaster. Mapu gained financial security when he was appointed teacher in a government school for Jewish children. He worked as a teacher in various towns and cities, joined the Haskalah movement, and studied German, French and Russian. He also studied Latin from a translation of the Bible to that language, given him by his local rabbi.

He returned in 1848 to Kaunas and self-published his first historical novel, Ahavat Zion. This is considered the first Hebrew novel. He began work on it in 1830 but completed it only in 1853. Unable to fully subsist on his book sales, he relied on the support of his brother, Matisyahu. In 1867 he moved to Königsberg due to illness, published his last book, Amon Pedagogue (Amon means something like Mentor), and died there.

Mapu is considered the first Hebrew novelist. Influenced by French Romanticism, he wrote intricately plotted stories about life in ancient Israel, which he contrasted favorably with 19th-century Jewish life. His style is fresh and poetic, almost Biblical in its simple grandeur.

The romantic-nationalistic ideas in his novels later inspired David Ben-Gurion and others and served as the basis for the implementation of these ideas in the Zionist movement that later led to the establishment of the state of Israel. The American Hebrew poet, Gabriel Preil, references Mapu in one of his works, and focuses on the two writers' native Lithuania.

Abraham Mapu's Novels
Ayit Tzavua (1858) (Hypocrite Eagle)
Ahavat Zion (1853) (Amnon, Prince and Peasant as translated by F. Jaffe in 1887)
Ashmat Shomron (1865) (Guilt of Samaria)

The Complete Ahavat Zionnovel is available On Line
אברהם מאפו


אוֹהֵב ה' שַעֲרֵי צִיוֹן
(תהילים פ"ז, ב')
תּוֹכוֹ רָצוּף אַהֲבָה מִבְּנוֹת יְרוּשָׁלָיִם
(שיר השירים ג', י')
איש היה בירושלים בימי אָחָז מלך יהודה ושמו יוֹרָם בן אֲבִיעֶזֶר, אלוף ביהודה ושר אלף, ויהי לו שדות וכרמים בכרמל ובשרון ועדרי צאן ובקר בבית לחם יהודה; ויהי לו כסף וזהב, היכלי שן וכל שכיות החמדה,  ושתי נשים היו לו, שם האחת חַגִית בת עִירָא, ושם השנית נַעֲמָה. ויאהב יורם את נעמה מאד, כי יפת תואר היא. ותקנא בה חגית צרתה ותכעיסנה, כי לחגית היו שני בנים ולנעמה לא היה ולד. אך נעמה היתה נעימה בתארה ובמעלליה, ויעש לה יורם בית לבד, למען לא תצור אותה חגית צרתה.ועָכָן היה בן-משק בית חורם, ויתן יורם לו את חֶלְאָה, שפחת חגית הכנענית, לאשה. ואוהב דבֵק מאח היה ליורם ושמו יְדִידְיָה הנדיב, מגזע מלכי יהודה, ושר הרכוש אשר למלך, איש חמודות, רך בשנים , עשיר ומגן לבני הנביאים לִמודי ה', כי אהב נועם לקחם ויט למשל אזנו, ויתמכם בנדבת ידו, על כן קראו שמו ידידיה הנדיב. ויתנוססו יורם וידידיה כאבני-נזר בדור תהפוכות, דור אחז, כי נאמנה רוח שניהם עם אל ועם קדושיו, ויתהלכו בין למודי ה', אשר תעודת בן אמוץ צרורה אתם ותורת ה' חתומה בם.
ומַתָן השופט, בן יוֹזָבָד העריץ, התחבר ליורם ויהי איש-עצתו, ויתַמֵם עם יורם באהבה מגולה ועברתו שמר בלבו,  מיום קחת יורם את חגית אהובתו לאשה. וזה הדבר אשר לא נשמר יורם ממנו ויחשבהו לאוהב לו: כי יוזבד העריץ, אבי מתן, היה איש-חמסים, רודף בצע מעשקות, אשר עשה עושר ולא במשפט, ויבלע חיל-זרים, והעשוקים לא יכלו להוציא את החמס מיד עושקם כח, כי היה יוזבד איש-זרוע ונשוא-פנים, וידכא בשער אנשי ריבו. ועירא אבי חגית היה גם הוא איש ריבו ובעל משפטו, כי התעשק עם יוזבד על אודות חלקת שדה דשנה ושמנה, אשר השיג העריץ גבולה. וכאשר צרר יוזבד את עירא, כן אהב מתן, בן העושק, את חגית בת העשוק. ויוזבד זקן מאד בעת ההיא, וחגית היתה אז בנעוריה בית עירא אביה.
ויאמר מתן לחגית: "יקרבו ימי אבל אבי והשיבותי לאביך את חלקת שדהו וגם כל חלקת האדמה אשר אצל גבולה, רק הטי לי חסד נעוריך, כי יורש אחד אני לאבי ונחלתי רבה מאד".
אך חגית עגבה על יורם האלוף בעת ההיא, ותתן תקוה בלב מתן, כי כן היתה לה מצות עירא אביה, ולבה בל עמה, כי ליורם היתה תשוקתה, ולו יעד אותה אביה בסתר. ויוזבד העריץ מת לשמחת לב מתן בנו ולשמחת כל העשוקים, וינסו דבר אל מתן, והנה לבו כלב אביו.
ואמר מתן אל עירא אבי חגית: "הנה אבי בעל משפטך מת, ועתה קחה-נא את חלקת שדך, וכל השדות אשר אצל גבולה אנכי נותן לך שלומים למספר שני התבואות, אשר אסף אבי משדך. ואם מצאתי חן בעינך , הואל-נא והרבה עלי מוהר ומתן ותנה לי את חגית בתך, אשר אהבתי, לאשה".