Germany Continues Nazi School Policy

While Germany is overly hysterical in distancing itself from its Nazi past in some aspect-using Nazi means of suppression to jail the kooks who denies the Holocaust or those who raises their right arm in a certain way just so that they after having imititated the Nazi policy of free speech supression can regard themselves as anti-Nazi, they unfortunately have decided to keep some Nazi policies. Like the ban on home schooling instituted by Adolf Hitler in 1938 because he wanted to make sure everyone was indocrinated with the government's propaganda-a sentiment the current German government seem to share. Now the European Court of Justice have decided they will not intervene against Germany's Nazi school laws.

On the Fiasco of Feminist Initiative

Nima Sanandaji have an interesting article on LRC on the fiasco of extreme feminist Feminist Initiative-a group which I wrote about here.

This may seem nitpicky, especially since I often have typos like that in my texts, but I can't help to point out that Sanandaji did have a typo in his article, writing that "queer-feminist professor Tiina Rosenberg scared away fellow feminist Ebba Witt Brattström from the party by remarking that men who sleep with women are to be regarded as traitors to their gender."

That should of course be women who sleep with men that according to Rosenberg's alleged (Rosenberg denied having said that, saying she don't even believe in the existence of men and women) statement was traitors.

Ytterligare skäl att välkomna borgerlig valseger

Jag står visserligen fast vid min relativt (jämfört med de flesta andra liberala debattörer i Sverige) pessimistiska syn på hur mycket positivt den borgerliga regeringen kommer att åstadkomma. Men å andra sidan kan den borgerliga valsegern i många fall vara bra inte för att de borgerliga kommer att förändra till det bättre, utan för att de förhindrar negativa saker planerat av den rödgröna röran. Här ser vi nu hur Reinfeldt säger att det inte blir något av den kvoteringslag för börsbolagsstyrelser som den rödgröna röran planerat.

Riksbank Sells Gold-Again

Last year I reported how the Swedish Riksbank sold of 10 tonnes of gold (320,000 ounces) at a value of $133 million.

But as the price of gold have since risen 45%, from $416 to $600 per ounce, this means that these 10 tonnes they sold are now worth $192 million. By contrast, the bond yield the Riksbank received on the bonds they bought with the proceeds from the gold sale was less than 5%.

Now the morons at the Riksbank want to repeat the mistake, and again sell 10 tonnes of gold.

While this is not likely to quite as lousy deal as the last time since they're now getting a lot better price than the last time, the Riksbank is again showing a unwarranted faith in the inflation-"fighting" credentials of other central banks. With bond yields being as low as they are, government bonds remain a lousy investment choice. I therefore predict that this will be a bad deal for the Riksbank, although again probably not quite as bad as the last time.

One can moreover note that this move will contribute (albeit only marginally) to pushing down bond yields and the gold price, both of which seemingly indicates lower inflationary expectations from financial markets, something which is good for the Riksbank's fellow central bankers.

The Economist Agrees With Me That the Yen is the Most Undervalued Currency

A few weeks ago, I argued that the Japanese yen is the most undervalued currency. Now The Economist have published an article where they agree with that assessment.

The Economist makes similar points as I do, and also adds that the real trade weighted exchange rate of the yen is at its lowest since 1982.

They offer a somewhat different explanation of the yen weakness, arguing that it is not the interest rate differential but citing Stephen Jen of Morgan Stanley,rather the flow of money going into dollar, pound and euro assets from Asian central banks and oil producer's governments. But that begs the question of why these governments choose not to invest in yen assets, and the reason for that is of course the low yields of those assets.

Swedish Election to Discourage South Koreans From Welfare State?

Interesting story in Dagens Nyheter (in Swedish) about how the conservative opposition in South Korea are using the centre-right victory in Sweden to argue against the current centre-left government's expansion of the welfare state in South Korea. Until recently, South Korea barely had a welfare state and government spending relative to GDP is still second lowest in the OECD, after Mexico. But the current leftist government are apparently moving South Korea in a socialist direction, despite the strong economic growth South Korea have enjoyed in the last 50 years with its low tax and low government spending policies.

Now the conservative opposition apparently argue that since the Swedes rejected the welfare state, why should South Korea try to adopt the welfare state?

Actually, it is somewhat misleading (unfortunately) to say that the centre-right represent a rejection of welfare statism since it occurred after Reinfeldt moved his Moderate Party to the centre. At most, one can say it represent a rejection of the excesses planned by the Social Democrats and their Green and Communist allies. But if it will lead South Koreans away from implementing welfare statism, then it is just another reason to think that the centre-right victory was after all a good thing.

Swedish Monetary Expansion Accelerates Further

Euro-zone money supply growth rose again to 8.2%, after having fallen from 8.5% to 7.8% the previous month.

But Euro-zone monetary conditions are still fairly sound compared to Sweden, where year over year money supply growth accelerated further, to a multi year high of 13.7%. This again illustrates that there is a far stronger cyclical element in growth in Sweden than in other countries and that the Riksbank will need to raise interest rates faster than elsewhere.

Here We Go Again

Again the media is uncritically lauding the World Economic Forum's "Global Competitiveness Report" who appears to be as useless as last year's version.

I won't bother repeating my criticism of it and refers instead what I wrote last year about it (see here and here), but really, it amazes me how anyone can take seriously a report that claims that China, you know the country whose economy grows at double-digit rates and whose exporters kicks every other country's export industries' asses, as being only 54th (!) most competitive, supposedly far less competitive than infamous economic laggards like Germany, Italy and Japan.

Vänsterextremist blir TV4-reporter

Här försvann just TV4:s trovärdighet helt (I den mån de nu hade någon). Den före detta miljöpartistiske riksdagsmannen Gustav Fridolin ska bli reporter på TV4.Väl värt att notera att Fridolin inte heller är vilken miljöpartist som helst. Fridolin är medlem av SAC, vars ungdomsförbund SUF ingår i nätverket av så kallade "autonoma" vänsterextrema våldsorganisationer, tillsammans med bl.a. AFA och Osynliga partiet. Fridolin har också personligen deltagit vid diverse manifestationer som den "autonoma" rörelsen anordnat.

Fridolin försöker vifta bort betydelsen av sina vänsterextrema kopplingar genom att säga att det finns många andra journalister med stark politisk profil. Ja, men problemet är ju att nästan alla dessa tillhör vänsterkanten (bland annat då Jan Guillou och Göran Rosenberg som av TV4 valdes att leda partiledarutfrågningarna) och att nu lägga till en vänsterextremist är knappast lämpligt.

How Do They Know They Won't Become Traitors?

Sergey Morozov, the governor of the Ulyanovsk region of Russia, have urged people to go home and do...well, you know what in the bedroom, so that 9 months later they will "Give birth to a patriot", as his campaign is called.

People in Ulyanovsk who give birth to children on June 12 2007, somewhat less than 9 months from now, will receive "a range of incentives from a fridge or washing machine to a four-wheel-drive vehicle, depending on how many children the couple already has".

Understandable move, given how dire Russia's population crisis is, but nitpicky as I sometimes am, I can't help wondering how they know these babies will really become patriots when they become adults? Will the parents be forced to give back the stuff if they become traitors?

Ytterligare skäl att vara besviken

Många svenska liberaler röstade i detta val på centern eftersom det partiet föreföll som det mest liberala efter att centern (föreföll det) gått i liberal riktning medan moderaterna gått åt mitten. Nu efter valet finns det dock allt större skäl att ifrågasätta visdomen i detta val. Först kom Maud Olofssons utspel om könskvotering av regeringen, och nu detta: centern säger nej till att slopa pressstödet (något som M och Fp krävt) och vill till och med göra det ännu mer "generöst". Och Reinfeldt som ju är så angelägen om att bevara fasaden av enighet kommer helt klart att låta centern få sin vilja igenom i denna fråga.

Jag förutspådde ju redan i fredags att fler skäl skäl till besvikelser skulle komma, och redan 3 dagar senare kom det. Räkna med mååånga fler under de närmaste 4 åren.

Another Example of What's Wrong With Supply-Siders

A TCS daily article thinking that concern over a budget deficit that have reached 10% of GDP is "deficit fetish". 10% of GDP is the equivalent of America having an annual $1.3 trillion deficit.

While I agree that raising taxes is not a good solution, not recognicing that a deficit of that size is a big problem indicates severe defiencies in your economic understanding.

His later suggestion that it is possible to get out of a 10% of GDP budget deficit merely by growth is also extremely out of touch with reality. Euro or not-Hungary needs to significantly reduce government spending.

The supply-side love of deficits is, together with their love of inflation the biggest problem with supply-side economics.

Flow of Funds Report Show U.S. Imbalances Worse Than Ever

New blog post at the Mises blog.

More Election Observations

The list over votes going to "other parties" is in:

Not surprisingly, the nationalist anti-immigration party Sverigedemokraterna ( the Sweden Democrats) got the most votes, 162463 or 2.93%, more than doubling their 2002 result of 1.44%. Especially since they by getting over the 2.5% threshold for government financial support are far financially stronger than before, it seems nearly inevitable that they will make it all the way by 2010, and get over the 4% threshold for receiving seats in the Swedish parliament. The only way to stop this would be to take effective measures to improve integration, such as liberalizing the labor market and lowering taxation of labor to improve immigrant job opportunities and to crack down more effictively on immigrant gangs. As the basis of their support is the failed integration policies of the Social Democrats, this could be the one thing that could prevent them from getting over the 4% threshold in 2010. But I seriously doubt that the new centre-right government will dare do take measures radical enough to significantly improve integration. They will then only have themselves to blame when the Sweden Democrats likely enter the Swedish parliament in 2010.

Feminist Initative became the second biggest party outside of the parliament with 37954 votes or 0.68% of the total. But this was still a lot less than one could have expected given the positive media attention they received and given the fact that their de facto (FI are so radically egalitarian that they don't even have a formal leader, but everyone knows that Schyman is in practice leader) leader, Gudrun Schyman is still fairly popular and well-known among left-wing voters.

The moderately free market June List came in fifth with 26072 or 0.47% of the total votes. Their mistake was to focus on the issue of stopping the EU constitution, even though that have been dead ever since last year's referendums in France and Holland and even though there already exist parties in the Swedish parliament who wants to stop it.

The one pure libertarian party, Klassiskt Liberala Partiet, made a disastrous election with only 202 votes, or 0.004%. Their problem was first of all that none of their leaders were particularly well-known even within libertarian groups, and secondly that most libertarians seemed more focused on getting rid of the Social Democrats than on supporting the most principled party, especially since the Centre Party had a fairly radical free market advocate in Fredrik Federlay. Moreover, most libertarians who refused to support the centre-right parties seems to have chosen not to vote at all. As most libertarians are likely to be disappointed with the new centre-right government, the KLP is likely to be able to get far more votes in 2010, particularly if they can get more well-known leaders.

Because disappointed they will be, mark my words. I see within the Swedish libertarian blogosphere that all too many seem to regard this election as a dramatic turn for the better. Johnny Munkhammar in particular seems greatly over-optimistic about the extent of increased freedom the new government will bring. Others such as Johan Norberg, have already started to be disappointed as Maud Olofsson, the leader of the centre-right party that appeared most libertarian, the Centre Party and which Norberg therefore voted for, have demanded a strict gender quota for the new government. Fredrik Reinfeldt, being the unprincipled "flip-flopper" that he is, will no doubt cave in to that sexist demand.

At best, the new government will only mean a slight increase in freedom. Reinfeldt will not dare go any further lest he offend the centrist voters that voted him into office. So, expect libertarians to continue to be disappointed. For freedom to be advanced in Sweden, we must intensify our efforts to spread the message of freedom. If popular sentiment moves in a libertarian direction, then government policy will also move. And with a pure power politician like Fredrik Reinfeldt in power, this will be more true than ever, as Reinfeldt will always adapt his views to the views of the median voter. If free market advocates manage to change public opinion in a free market direction, then Reinfeldt will automatically change his views.

Hungarians Riot Over Lying Social Democrats

Yesterday I began to have computer problems and I am also busy with an assignment that I must finish tomorrow so I couldn't post anything, and I won't be able to post anything today except for this. But stay tuned for more posts after that, including more comments about the Swedish election, including a full analysis of the economic implications of the new government and I will also discuss the implications of yesterday's Flow of Funds report for the American economy.

Meanwhile, I can't resist commenting on the recent riots in Hungary that was sparked by the fact that a Social Democrat was caught admitting that he lied about the economy. It's a good thing Swedes don't react in the same way when our Social Democrats lie about the economy. Otherwise, we'd have nearly constant unrest, given how they repeatedly lie about Sweden having the highest growth rate, the lowest unemployment rate, the highest employment rate and the strongest public finances in Europe and that income inequality is falling, none of which is even close to being true. Instead, as we all know, most Swedes chose to vote against them.

About the Swedish Election

So now it is basically clear that the Swedish centre-right coalition won the election, with the preliminary margin of 48.1 to 46.2%. The only thing that could possibly prevent that is if the "far right" anti-immigration party Sweden Democrats gets over the 4% threshold for winning seats in the Swedish parliament (Their votes have in the first count been put in the "other parties"-category), but while they clearly have gained strongly from their 2002 result of 1.44%, it seems unlikely that they got as much as 4% out of the 5.7% going to "other parties", as that group also includes several parties each likely to have gotten several tens of a percent, such as the EU-skeptical June List, ultra-feminist Feminist Initiative, senior citizen advocacy party SPI and anti-intellectual property single-issue party Pirate Party.

The main reason why the Social Democrats lost was that they were in denial about the reality of mass unemployment in Sweden,mostly spending their time trying to hide away the unemployed into other statistical categories, like early retiress, people on sick leave and in "labor market political activities", while doing nothing to create jobs. With the result being that private sector employment is now lower than in 1950, and overall employment lower than 20 years ago, even as the population has expanded. Indeed, not only have they been doing nothing to create jobs, they have in fact done almost everything they can to discourage private sector employment, through sky-high taxation of labor, high union-imposed minimum wages and various regulatory burdens on businesses hiring people.

They certainly deserved to lose for that reason, and for a few other reasons as well. However, the trouble is that the centre-right parties who won the election didn't deserve to win.

They won by moving so far to the centre, that most of their modest tax cuts will be financed, not by spending cuts, but by other tax increases. And the new prime minister Fredrik Reinfeldt "flip-flopped" on the issues even more than John Kerry and generally showed a complete contempt for anything resembling principles.

Still, this result probably means a very marginal improvement in economic freedom in Sweden. Swedish free-market advocates now need to focus on pressuring the new government in to reducing the size and scope of government (the above linked BBC News story is unfortunately wrong when they claim the new government plans to reduce government sector employment, they have in fact said they will increase it), so that the result won't turn out the same as in America and Germany, where "right-wing" politicians George W. Bush and Angela Merkel have done the opposite

Halvösterrikisk debattartikel

Intressant. Svenska Dagbladet publicerar debattartikel med en närmast "österrikisk" karaktär där man varnar för de negativa bieffekterna av den höga penningmängdstillväxt som Riksbankens lågräntepolitik ledit till.

Jag har ju på denna blogg och i min mises.org artikel om Sverige upprepade gånger fört fram samma synpunkt och försökt få det publicerat just på SvD brännpunkt, men det har tyvärr i stort sett ignorerats. Det är ju förstås bra att det nu äntligen uppmärksammats i en ledande tidning.

J.K. Rowling Challenges Stupid Airport Rules

J.K. Rowling challenges the stupid new "airport security rules" that will prevent no terrorist attack while negatively disrupting the lives of billions of passengers.

She prevailed because she is so famous. Unfortunately, those of us who aren't famous, are a lot less likely to be able to get a pass from the restrictions on us created by some moronic and incompetent airport officials.

Ehud Olmert to Increase Welfare Spending

Not only did Israeli prime minister Ehud Olmert prove to be a incompetent war leader, but according to Morgan Stanley's latest analysis of the Israeli economy, he now also seems intent on reversing some of the successful free market reforms that Binyamin Netanyahu implemented during his time as Finance Minister. The reason is that his centre-left government worry about increased poverty in Israel.

Morgan Stanley reiteras much the same analysis that I did a while ago, namely that poverty in Israel is mainly concentrated to 2 groups: Arabs and ultra-Orthodox Jews, and that their poverty is largely the result of their own lifestyle choices, which is to say they have a lot more children than Israel's secular Jewish population. This means that their poverty is self-chosen and that they have really no right to demand that secular Jews should compensate them for this. But since Arabs and ultra-Orthodx Jews vote for parties- the distinctly Arab and ultra-Orthodox parties as well as the left-wing Labor and Meretz parties- that demand increased welfare spending, this is what could happen anyway, especially since many secular Jews feel a misguided willingness to agree to these demands and also support Labor and Meretz.

Morgan Stanley also notes that welfare spending have been counterproductive in solving the fundamental causes of poverty and that Netanyahu's reforms have had positive results in the form of higher growth and falling unemployment and that these new policies risk reversing some of these positive results.

Estonian Economic Growth Upwardly Revised

Estonia have for some time been what one might call "Europe's Hong Kong", which is to say a free market role model. Like Hong Kong, Estonia have had relatively limited government spending, a relatively low flat tax, unilateral free trade (until EU entry in May 2004 forced it to adopt EU tariffs and quotas) and a currency board (albeit based on the euro, instead of the U.S. dollar as in the case of Hong Kong).

Not coincidentally, it have also had very strong economic growth. In my article last year on the issue of trade deficits, I wrote based on then existing statistics that economic growth in Estonia was 6.5% for the previous 5 years. Now the numbers are even more impressive. And that is not just because preliminary second quarter numbers show a full 12% growth rate. But also because GDP growth in the preceding 5 years have been upwardly revised with 3.3%, or 0.7% per year, which would imply that growth was 7.2% instead of the 6.5% I wrote then. In addition, the level of GDP in the base year of 2000 was upwardly revised by 2.7%.

More good news is that while no breakdown of how the revisions have affected various expenditure categories seem to be available, but they indicate that virtually all of it is in the private sector (of course, since it is the government that is doing the spending, they should know fairly quickly how high it is and so it should be unaffected by revisions) , this means that the relative burden of government in Estonia should be downwardly revised. Moreover, since nominal GDP was upwardly revised slightly less than real GDP (4.9% versus 6%), this means that price inflation was downwardly revised.

Är det verkligen det bästa SVT kan komma med?

SVT sände igår kväll en granskning av Göran Persson. Jag zappade mellan den och utfrågningen av Ohly på TV4 och var dessutom distraherad av andra sysslor så jag missade större delen av den. Men att döma av det lilla jag såg och den sammanfattning som finns på SVT:s hemsida tycks det hela ha fokuserats på att Persson bygger sig en herrgård, samt att de lagt till att Persson har fel när han påstår att inkomstskillnaderna minskat.

Det senare var ju iofs en välkommen rättning av ytterligare en av Perssons serie av lögner, men det är alltså bara en av lögnerna de brydde sig om att rätta, och det råkar ju för övrigt dessutom enligt mitt tycke vara en av de minst viktiga.

Men det som var huvudfokus i programmet, att han bygger sig en herrgård är ju en ganska dum kritik, ett utslag av den avundsjuke- och missunsamhetsmentalitet som tycärr är alltför utbredd i Sverige. Visst kan man med fog tycka att Persson får skylla sig själv med tanke på att han ju företräder en rörelse som står för de värderingarna och visst kan man med fog tycka att han inte gjort sig förtjänt av de pengar han och hans fru köpt det hela med.

Men då budskapet i programmet ju tycks ha varit att värderingen är rätt och att problemet är förekomsten av folk som bor i herrgårdar, inte att Persson gjort fel när han i andra sammanhang förespråkat avundsjukeretorik eller att anledningen till att han inte förtjänat pengarna inte är att han inte förtjänat inneha posten för att han företräder en dålig politik. Även om en vänsterledare kritiserades var det ändå ett program som förespråkade vänstervärderingar.

Som sagt, jag tycker egentligen inte synd om Persson eftersom han är en hycklare som inte förtjänar sin höga status och därmed inte heller de saker som kommer med den, som herrgården (Dock ser jag absolut ingen anledning att störa mig på att han använt denna oförtjänade inkomst på just herrgården än på någon annan form av konsumtion). Men att SVT i sin så kallade skarpa granskning inte kan komma med något bättre än att rätta blott ett av hans sakfel och klandra honom för att han inte följer vänstervärderingar är synnerligen beklämmande.

Ytterligare ett skäl, tillsammans med minst hundrafemtielva andra att avskaffa SVT, eller åtminstonde finansieringen av den via den skatt som benämns med eufemismen "TV-licens".

Chinese Trade Surplus Soars

Well, I hate to say "See, I told you so"....no, that's not really true. In fact I love saying that!:-)

Anyway, though, the point is that exactly 2 months ago, I wrote that the Chinese trade surplus were likely to increase further as a result of the credit restrictions put in place by the Chinese government. This would reduce investment demand and therefore also imports, while doing nothing to reduce exports.

And so now we read that the August trade surplus hit a new monthly high, at a full $18.8 billion. And look now for the trade surplus to continue to be a lot higher than the same month last year.

The only way the Chinese will be able to reduce one imbalance , excess investments in some sectors, without aggravating another imbalance, the excess current account surplus, is of course to allow the yuan to appreciate a much faster rate than so far. While the pace of yuan appreciation have in fact picked up slightly during the latest month, at 0.5% per month it is still far too slow.

Reinfeldt oväntat stark

I gårdagens duell mellan Persson och Reinfeldt gjorde Reinfeldt ett oväntat starkt intryck-även om detta säger mer om hur låga mina förväntningar var på honom (normalt sett blir jag mer negativ till honom varje gång jag ser/hör hans , nu blev jag mer positiv) än på hans prestation i absoluta termer.

Han gjorde ju förstås en del missar. Som när han förblev svarslös efter det att Persson upprepade gånger pressade honom om att han ville införa en "extra pensionärsskatt", något som säkert gav många tittare intrycket att han ville höja skatten för pensionärerna. I själva verket handlar det ju om att de vill ha en riktad skattesänkning mot just löntagare. Det var synnerligen märkligt att Reinfeldt lät Perss on få dessa gratispoäng.

Och när Reinfeldt sa att de i utanförskapet inget annat hellre vill än att få jobb så gjorde han det ju svårbegripligt varför man skulle behöva sänka ersättningsnivåerna. Han kunde ju ha påpekat att all forskning visar (surprise, surprise) att jobbsökaraktiviteterna och villigheten att ta jobb med något sämre villkor än vad man tänkt sig ökar när ersättningsnivåerna sänks.

Annars gjorde han ganska bra ifrån sig. När det kom en snyfthistoria om en 36-årig (!) förtidspensionerad kvinna som klagade på att hon hade för lite pengar över, då påpekade han det faktum att om man kan ta hand om barn då kan man faktiskt också arbeta. Detta må den där 36-åringen ha upplevt som oförskämt, men det är ju något som jag tror de flesta tittare också inser. Här kunde han dock ha lagt till att det där med att ta hand om ett barn är att ha ett jobb och sagt att hon ju i själva verket nu arbetade i barnomsorgen, men att socialdemokraterna på grund av sin feministiska motvilja mot hemmamammor betalar dem sämre än de i kommunala dagis.

Reinfeldt gjorde också bra ifrån sig när han pressade Persson över den statistik som visade att fattigdomen är utbredd i Sverige, "trots" att Socialdemokraterna styrt i 65 av de senaste 74 åren, inklusive samtliga av de 12 senaste åren. Han pressade också honom bra när han påpekade hur Persson gjort upp med Peter Eriksson om att fortsätta höja elskatterna trots det utbredda missnöje som finns med höga elpriser.

Han framstod också som den vettigaste när han hade en klar lösning för den tittare som påpekade att hon och hennes man hade ett pressat schema och att det skulle klaras lättare om det blev billigare att anlita det i hemmet, till skillnad från Persson som bara fnyste och och sa att det inte skulle bli tal om att förbättra tittarens situation så länge det var en socialdemokratisk regering. Dock borde Reinfeldt här ha rättat Persson när Persson påstod att avdrag för hushållsnära tjänster skulle innebära en "subvention", vilket ju bara är trams. Trots avdraget skulle ju staten ändå få in skatteintäkter netto från tjänsten, vilket gör att det är helt fel att tala om det som subvention. Dessutom, som Expressen påpekade, borde Reinfeldt ha skjutit in sig på hur sossarna för byggarbetare infört en liknande "subvention".

Reinfeldt kunde alltså ha gjort betydligt bättre ifrån sig, men han var ändå klart bättre än väntat då han trots allt netto argumenterade ur ett svagt frihetlig synvinkel och då han för det mesta ändå var starkare än Persson.

Useless Economic Forecasters

Nouriel Rouibini answers the argument against his view that the U.S. is going to have a recession in 2007, namely that the owerwhelming majority of other economic forecasters says otherwise: he points out that in March 2001, when the previous recession had already started, no less than 95% of all economic forecasters said there would be no recession!

So, agree or disagree with Rouibini in this specific case, but the fact that consensus estimate is for no recession is certainly not a valid argument for disagreeing with him.

He also links to this IMF paper that shows that almost all private sector forecasters are useless in predicting recessions. Of the 60 recession episodes in the surveyed countries only two (Russia and Ukraine in 1996)were predicted in April the previous year, and only 3 of 60 were predicted by October the previous year. In both April and October the previous year, 60 out of 60 forecasts were too optimistic (i.e. even the 2-3 analysts who predicted a recession thought it would be milder than it turned out to be).

As for predictions of U.S. recessions more specifically, none of the post-war recessions were predicted by Wall Street consensus forecasters even by the time the recession had already started, showing that the consensus forecast at the onset of the 2001 recession that there would be no recession were no one-time error.

Over the years that I have followed economic forecasts I've noticed the pattern that consensus forecasts are virtually always for next years growth to be what is believed to be the long-term structural growth rate, meaning that during strong economic booms, they nearly always forecast too low growth, whereas during economic slowdowns and recession they predict far too high growth.

These errors are particularly interesting given how these economists generally adhere to the Friedmamite "positive economics" view that the descriptive realism of theories is irrelevant, and that the only thing that matters is the ability to predict things. Well, it seems that the use of descriptively unrealistic assumptions have done all those highly paid Wall Street forecaster no good in terms of predictive ability. They are still not any better than economists with realistic assumptions or even dart-throwing monkeys with regard to predictions.

As the paper notes: there are two main hypothesis as to why forecasters are so useless when it comes to predicting recessions: 1. They have insufficient information 2. Most are employed by banks and brokerage firms, and as recessions are bad for business, bearish forecasts are also bad for business and so forecasters are deliberately predicting too strong economic outcomes to fool customers.

To test this one would have too look on to what extent the inability of Wall Street forecasters to predict recessions is related to their forecast errors reflect a reluctance to predict deviations from the trend (which would support hypothesis number 1) and to what extent their forecast errors are biased in a bullish way. The paper provides no data to enable us to make any certain conclusions with that respect, and I have found no other study of this subject elsewhere. My hunch is that it is probably in fact a combination of the two. In my experience there is a bullish bias in economic forecasts, but as the fact that forecasters also fail to forecast temporary growth accelerations illustrate, it also reflects a inability to forecast deviations from the trend.

Temporary Anomaly or End of a Trend?

Since George W. Bush, who in contrast to Congressman Ron Paul is anything but freedom-loving, came into office, the burden of the federal government in America have steadily risen. From 18.5% of GDP in fiscal year 2001 (Clinton's last budget) to probably (neither the final GDP or budget numbers are available yet) about 20.5% in fiscal year 2006 if current trends are maintained. And these numbers actually underestimate the degree of government expansion since lower interest rates have held down interest costs and since America have been at a cyclical peak (the burden of government tends to be countercyclical, all other things being equal).

At first, the spending boom was reflected in the Clinton surplus being turned into a larger and larger budget deficit. But for the last two years, the budget deficit have actually declined somewhat. The reason for that is a surge in tax revenues, which increased 14.6% in nominal terms in fiscal 2005 and which have continued to consistently increase more than 10% on a year to year basis every month during fiscal 2006. Until now, that is.

For according to the Congressional Budget Office preliminary report for the federal budget in August 2006 (final report from the Treasury Department is due next week, but the CBO's preliminary reports are usually basically correct, give or take a few billions of dollars), federal revenues actually declined even in nominal terms in August 2006 compared to August 2005.

To be sure, there were two special factors that temporarily distorted the year over year growth rate downwards. First, a correction of a previous accounting error regarding last year's revenues and secondly, the fact that August 2006 had one fewer Monday (the biggest withholding day) compared to August 2005. However, even adjusted for these special factors, revenue growth were much slower than in previous months.

At this point, it is premature to draw any final. definite conclusions about how to interpret this dramatic reduction in revenue growth. It could very well prove to be just a temporary anomaly. But it could also prove to be the end of the trend of surging tax revenues.

If so, it would be ominous for the fiscal health of the U.S. federal government. That is because spending growth have not slowed, and if revenue growth then slows significantly or even stagnates or declines, the federal deficit would once again surge, which would create big problems.

How Government Solution Fails

Congressman Ron Paul, who is something as rare as a pro-freedom politician, have a great article on LRC about how government interventions both in domestic policy and foreign policy have tended to fail.

Paradox & Perssons lögner

Kom just tänka på en sak. Varje gång jag lyssnar på de borgerliga partiledarna, som Reinfeldt, Leijonborg och Göran Hägglund då blir jag allt mindre positiv till tanken på en borgerlig regering.

Men varje gång jag lyssnar på Göran Persson eller någon av hans ministrar, för att då inte tala om hans kommunistiska och miljöpartistiska partners, då blir jag mer positiv till en borgerlig regering.

Detta avspeglar dels att båda huvudalternativen i svensk politik är dåliga och dels att de borgerliga i jakten på mittenväljare gör sitt bästa för att framstå som så socialistiska som möjligt medans Göran Persson gör sitt bästa för att få de borgerliga att framstå som så antisocialistiska som möjligt.

Apropå Göran Persson förresten så finns här en lång lista på hur Persson systematiskt ljuger (visst, han kan i teorin helt enkelt vara felinformerad, men det förefaller som en mindre trolig förklaring med tanke på hur många högavlönade byråkrater finansdepartementet har som torde hålla reda på sånt) TV-tittarna och radiolyssnarna rätt upp i ansiktet om statistik i sina mediaframträdanden. Något som faktiskt i grunden är minst lika allvarligt som det där med att Lars Leijonborg i måndags ljög om vad han visste att Johan Jakobsson visste innan förra söndagen.

Jag har som sagt inget förtroende eller sympati för de borgerliga partiledarna men nog skulle jag njuta om någon av dem vid någon av de kvarvarande debatterna de skulle förnedra Persson genom att läsa upp listan på hans lögner. Det skulle för övrigt också i praktiken innebära att de skulle vinna debatten, så det ligger ju i deras intresse också.

Göran Persson för fondsocialistisk styrning av näringslivet

Göran Persson vill enligt Dagens Industri se att de statliga pensionsfonderna används för att förhindra finansmannen Christer Gardells försök att få makten över Volvo och sedan sälja ut vissa enheter.

Oroväckande, för det tyder på att socialdemokratin kanske ändå inte frigjort sig från sina fondsocialistiska impulser.

Det är beklämmande, men inte förvånande, att sedan Reinfeldt instämmer i kritiken av Gardell och inte direkt fördömer Perssons tal om att använda fondsocialistiska medel för att styra näringslivet.

Vad Persson och Reinfeldt bortser ifrån är att enda sättet för Gardell att tjäna pengar på utförsäljning av vissa delar av Volvokoncernen är genom att få bättre betalt för dem än vad de skulle ge Volvo iframtiden. Och enda sättet köparen kan få råd med det är genom att se till så att de skapar bättre värde än vad de kan i Volvokoncernen. Dvs genom att se till så att det skapar mer ekonomiskt värde (aka höjer den ekonomiska tillväxten).

Men det är klart, nog är "finanshajar" en tacksam måltavla i en valrörelse. Valrörelser brukar ju vara tider då förnuftet försvinner och hetsen mot friheten accelererar. Förhoppningsvis glöms det hela så fort valet är över. Men om det inte gör det (och Persson vinner) då är det oroande.

Sweden in The Economist

The Economist have a fairly good article about Sweden in its latest issue. Although it is of course not fully as good as a certain recent mises.org article on the same subject.

Leijonborg är antiliberal

Igår frågades då Lars Leijonborg ut som sista av partiledarna. Fokus var så klart till en början på den där spionskandalen där Leijonborg gjorde ett ganska bra jobb utifrån sin dåliga situation att förklara minimera skadorna.

Vad som däremot gav mig mer dåliga vibbar var när de övergick till sakpolitiken. Precis som vid tidigare utfrågningar av t.ex. Persson och Reinfeldt så attackerades han från ett vänsterperspektiv. Varför vill du inte öka utgifterna mer där och där gick frågorna medans han aldrig blev ifrågasatt för att inte vilja sänka utgifterna tillräckligt eller sänka skatterna tillräckligt. Mats Knutsson gör sitt bästa för att få det att framstå som att förkortningen SVT står för Socialistiska Vänster Televisionen.

Än mer störande var Leijonborgs svar. Han attackerade religösa friskolor på den närmast skrattretande basisen att en muslimsk friskola kan komma att säga till sina elever att "kristendomen är fel". Detta är ju i praktiken vad de kommunala skolorna gör, där man istället lanserar det socialdemokratiska samhällssystemet (som ju Fp entusiastiskt är för) som paradiset.

Han beklagade också att han blivit tvungen att kompromissa genom att gå med på vissa begränsningar i bidragssystemen, samtidigt som han återupprepade mantra om hur man måste våga ställa krav osv. Han sa att folkpartiet var jättesnällt, men att man är snällast om man ställer krav samtidigt som man öser ut offentliga utgifter.

Att ställa krav för att få bidrag är ju förvisso nödvändigt för att begränsa skadeverkningarna på ekonomin, men det är långt ifrån oproblematiskt att staten ställer krav och därmed styr när man ju först tagit dessa pengar i de jättehöga skatter som Leijonborg är ointresserad av att sänka och sedan strikt villkorar hur medborgarna ska göra för att få tillbaka dessa. Detta innebär ju att styra människor och dess vardag, något som ett liberalt parti borde vara emot. Men folkpartiet är ju trots att de ibland kallar sig liberaler helt uppenbarligen ett antiliberalt parti.

Pretty Funny

Walter Williams writes about discrimination. Overall it is a fairly good article, especially since it has really funny segments, like this one:

"When I married Mrs. Williams, I discriminated against other women. Even though I occasionally think about equal opportunity, Mrs. Williams demands continued discrimination."

China and India Lifts African Food Exports

Interesting story about how booming world trade could help relieve poverty not only in China and India but also in Africa. Indeed, it is increased demand for food from China and India that is driving much of the food export boom in Africa. If only the West could do away with its destructive food subsidies and tariffs, this would enable food exports to boom a lot more. That would create a reduction in poverty in Africa that unlike the one provided by foreign aid would be sustainable and also beneficial to us.

Munkhammar's European Dawn: A Powerful Indictment of Euro-Socialism

I just finished reading Johnny Munkhammar's book on the European welfare state, European Dawn-After the Social Model . While , as we shall see, there were parts of the book which could have been improved further, it is nevertheless the most powerful indictment of the Euro-socialist welfare state that I have read so far.

Although there are several books which better argue for sound economic principles, European Dawn does a better job than any other book I've read in applying these principles to modern Europe and using them to analyze the abundance of interesting statistics the book presents.

The book discusses the economic crisis that most of Western Europe faces . Western Europe have for years lost ground to most other parts of the world, including America, East Asia and Eastern Europe. Meanwhile, mass unemployment have become a seemingly permanent reality.

Munkhammar shows that this is clearly the result of first, the weakening incentives for productive activities created by high taxes and government hand-outs using both theoretical arguments and empirical studies. Also contributing to Europe's weak growth are over-regulated labor and product markets.

Here a distinction can be made. Labor market regulations and high taxes and government hand-outs weaken growth mainly (but not exclusively) by reducing employment levels and increasing unemployment (including various forms of hidden unemployment, like government financed early retirement)whereas product market regulations mainly lower growth by reducing productivity growth.

Munkhammar ties the problem of increasing unemployment among people in the working age population with the demographic trend of increasing number of old people which is expected to be provided for by the state. Further aggravating this problem is that the fewer number of young people are entering the work force later and later, as more and more are studying at university for a longer and longer time. All of this means that the dependency ratio for workers are steadily rising.

This problem is often discussed in the public debate, and Munkhammar shows in this book better than most people how the only way to solve this problem is to improve incentives for work, both among young, middle-aged and old people.

One really great thing about this book is how it in addition to the widely discussed problem of insufficent employment also deals with the all too often ignored problems created by government financing of certain services, like health care and education.

In this context, Munkhammar discusses the implications of what is known as Baumol's cost disease. That is, the fact that while productivity is rapidly rising in certain sectors, particularly manufacturing other sectors are because of the nature of theirb sector unable to improve productivity. For example, while it takes fewer and fewer workers to produce a car, nurses changes bandages no faster now than in the 1960s.

But if the relatively higher productivity in manufacturing where to result in higher wages there, no one would want to work in the sectors where productivity is rising. Because of this, wages must increase at more or less the same rate in both sectors. Nor can the higher productivity result in permanently higher profitability in those sectors for similar reasons, that is since that would attract investment capital that would eventually restore equilibrium and bring down returns on investment to the same level as in sectors with stagnating productivity.

Instead, the result will be that the prices of manufactured products must fall compared to prices in those service sectors where productivity is stagnating. That in turn implies that sectors with stagnating productivity will, ironically, increase its share of the economy.

And since government funded sectors like health care, education and care for the elderly are sectors with stagnating productivity, whereas manufacturing is private, this implies that the burden of the private sector in providing for the government sector will steadily rise, further aggravating the previously discussed problem of the increased burden of providing for those who do not work.

The fact that services like health care and education is publicly funded creates special problem since unlike in other services with stagnating productivity, it implies higher taxes . Because tax increases, particularly from today's elevated Western European levels, there is a limit to how much it can be raised. A limit which for many taxes (particularly corporate income taxes) is steadily lowered as increased tax competition lowers the so-called Laffer point (the point where further tax rate increases weakens the tax base so much that actual tax revenues will in fact fall).

The solution is instead to increase the degree of private financing, whether through direct user fees or private insurances and with regards to the poor some element of private charity. This have the advantage of reducing demand for the public services and thus in itself limit costs and unlike tax increases it do not harm other sectors.

Munkhammar also emphasizes that higher productivity growth, while being good for other reasons, cannot help solve this problem. The reason for this is the previously mentioned fact that higher private sector pay will only help bid up government sector pay. He notes however that higher private sector employment growth can help solve this problem since this will raise tax revenues at any given tax rate without bidding up government sector pay.

To this it could be added a point not mentioned by Munkhammar, that the high tax society have hit particularly hard on the private service sector compared to private goods production. This is for two reasons. First because goods production is more capital intensive and since capital is more lightly taxed the total taxation of services is higher. And secondly, and perhaps even more importantly, it is usually a lot easier to substitute legal private service production with "black market" activities or to do it yourself. You can't produce a car by yourself, but you can cut your own hair with a hair cutting machine and you can clean your own house instead of hiring someone else to do it.

This disproportionate negative effect on private service sector activity is particularly relevant given the fact that they too often also have stagnating productivity and could thus be particularly helpful in lessening the burden of financing for government services.

Munkhammar also makes many other interesting points. He for example points to how "welfare" is a word which have been hijacked and stolen by socialists, just like the word "liberal" have similarly been taken over by socialists. "Welfare" originally meant "well being" but has now been twisted into essentially meaning government spending outside the "night watch man" (police, legal system, military) part of the state. Munkhammar makes numerous examples as to how welfare in its original meaning would be better provided for by the private sector.

Also, in the section on labor market regulations he makes the interesting point that while laws limiting the ability of employers to fire employees may reduce the risk for those who already have a job of losing it, they will make unemployment a lot more dreadful prospect because these laws will make employers a lot more reluctant to hire them again.

The one disagreement I have with Munkhammar is his optimistic view that as society becomes more heterogenous, the support for the welfare state will decrease. This according to Munkhammar is because people are more inclined to feel solidarity with people of their own ethnic group, and in a ethnically heterogenous society, people will thus not support the welfare state. As "empirical evidence" for this is offered how America with a more limited welfare state have been more diverse than for example Sweden or Denmark.

But this is in fact not based on the issue of homogenity versus diversity, but on America's more anti-statist, individualist traditions compared to Europe. And there are countless counterexamples which could be offered. Japan and South Korea are among the world's most homogenous societies , yet Japan's welfare state are no more extensive than America's and South Korea have in fact a much less extensive welfare state than America. Meanwhile, two examples of quite bloated welfare states include Belgium and Israel, two highly diverse countries. Belgium's Flemish and Walloon inhabitants certainly identify themselves as different ethnic groups. And the example of Israel is perhaps even more telling as Israel have a bloated welfare state despite having a large (20% of the population) Arab population and despite the well known mutually hostile feelings between Jews and Arabs in Israel and despite the fact that Arabs recieve a lot more in transfer payments and government services than what they pay in taxes(Despite the frequent accusations of Israel being "a racist state", Arab citizens of Israel have full access to the Israeli welfare state).

The reason why the empirical evidence contradict this hypothesis is because it is based on the faulty premise that support for the welfare state is somehow based on "solidarity". While this is what socialists often claim in their official propaganda, I have sufficent personal experience with socialist relatives and friends to know that they do not support the welfare state because they want to give away their money to the poor, but because they want to receive money taken from the rich. While there are a few socialist idealists who wishes to share their wealth (Warren Buffet is a good example of that), they are a small minority and they are at any rate usually just as willing to give to foreigners. The welfare state is not based on the desire to give but on the desire to take.

The reason why government payments to families with children is a lot more accepted than government payments to immigrants, despite the fact that the former cost a lot more is simply because the vast majority of people expect that they themselves will be on the receiving end of subsidies to families with children sometime, whereas they will obviously not be on the receiving end of payments to immigrants.

While the emergency of immigrants who are net receivers of money from the state may lessen somewhat support for the welfare state among the native born, this will be compensated by the support for the welfare state from the immigrants themselves.

I am also generally a bit less optimistic than Munkhammar that the European social model is doomed. In part because I do not share his view that increased ethnic diversity will lower support for the welfare state, but also because the strong popular support for the welfare state will make politicians more inclined to resort to ad hoc solutions that do not mean a significant lowering of the burden of government.

Sweden's centre-right opposition is a perfect example of this, as they pledge they will not make any significant spending cuts (and indeed increase spending on some areas, such as government services and foreign aid) and that most of the tax cuts they offer will be financed by other tax increases. These ad hoc solutions , such as the lowering of payroll taxes in a few targeted service sectors are designed to deal with the above mentioned problem of the greater impact of taxation on the service sector.
But these ad hoc solutions, apart from creating other distortions will of course mean that the social model is preserved.

While the economic pressures discussed above is likely to mean that a few modest free market reforms and ad hoc solutions will be put into place, the basic social model is unlikely to disappear until we either suffer a really serious economic downturn (which however could also result in a move to even more collectivist solutions) or advocates of liberty are better at reaching out and changing the general mentality of a significant number of people. While Munkhammar's book is again not perfect, it is still the best book so far published on the issue of Euro-socialism and for that reason one which could contribute to the needed change in mentality.

"If You're Not a Criminal, You've Got Nothing to Fear"

As you may know, for the last few years, most countries have slowly moved towards increased surveillance of its citizens, with the official reason being "the war on terror" or fighting drug trafficking or whatever. Britain have arguably been worst,but this have happened to some extent just about everywhere in the Western world. That have made those of us who distrust government somewhat uneasy, but we have always been dismissed using the argument "If you're not a Criminal,you've got nothing to fear". Here in Sweden, the Social Democratic Party -along with the Liberal Party- and Justice Minister Thomas Bodström have been the most enthusiastic supporters of this trend.

It is in this context that the revelation that a leading member (Press secretary Per Jodenius according to Dagens Nyheter) of the Liberal Party Youth Group in Sweden have somehow managed to illegally enter the internal database of the Social Democrats and then -the Social Democrats claim, but this is not yet proven- passed on the information to the Liberal Party leadership who have then used the info to for example time various announcements in some issues at the same date as the Social Democrats almost appears as a form of poetic justice.

Don't get me wrong. I certainly think the act of breaking into someone's computer or database without their permission is very wrong (I sure would be very angry if someone did it to me) and anyone who does it should be punished.

But, if it were really true, as the Social Democrats and other advocates of increased surveillance says, that if you're not a criminal then you've got nothing to fear from it, then why should the Social Democrats be upset now over this incident? Since, as far as we can tell, they didn't do anything illegal, what do they have to fear?

The truth is that there are a lot of things about which aren't illegal, but which we nevertheless don't want other people to know about. It could be say -as in this case- the internal strategy of a corporation or a party or some other organization, it could be that we are seeing someone we don't want other acquintances to know we're seeing, it could be that we're reading something we don't want others to know about etc. etc.

This case is a perfect example of this. While I do not really defend this act, I can't help to feel that it is a case of poetic justice given how the Social Democrats have always dismissed concerns about reduced privacy.

Reinfeldt svarslös pga principlöshet

Jag missade första halvan av SVT:s utfrågning av Reinfeldt, men den andra halvan innehöll tillräckligt mycket intressant. Mats Knutsson frågade Reinfeldt varför han inte ville öka biståndet mer än vad moderaterna nu föreslår, varpå Reinfeldt svarade att bistånd är bra men att han ville se till så att det uppföljdes bättre så att det användes effektivt. Men varför då inte köra med både bättre uppföljning och större ökning av biståndet, var ju den naturliga följdfrågan som Knutsson mycket riktigt kom med, något Reinfeldt inte hade något egentligt svar på utan han bara upprepade vad han tidigare sa.

När då Knutsson påpekade att Kd och Fp vill öka biståndet mycket mer så då sa Reinfeldt att det skulle bli en förhandlingsfråga och gav i princip direkt upp det moderata förslaget. Min gissning är att om det blir en borgerlig regering då är det Kd/Fp linjen som kommer att gälla.

Det Reinfeldt borde ha sagt, och det han skulle ha sagt om han haft ett uns av principer av sig och inte bara varit en makthungrig principlös flip-floppare, det är att om det nu är så bra att öka biståndet till 28 miljarder, varför inte öka det ännu mer, till typ 40 miljarder? Eller varför inte 50 miljarder? Eller 100 miljarder? Eller 280 miljarder?
Eller 1000 miljarder?

Trots allt lär ju svenskarna ändå förbli rikare än genomsnittsbarnet i Afrika även om man så skulle ge bort 1000 miljarder per år i bistånd. Alla argument som går att framföra för den påstådda omoralen i att begränsa biståndsbudgeten till 22 miljarder (som moderaterna föreslår) jämfört med 28 miljarder (som Fp och Kd föreslår) går också att använda till att säga att det är omoraliskt att begränsa till 28 miljarder jämfört med 40 miljarder, varför det är omoraliskt att begränsa till 40 miljarder jämfört med 50 miljarder, varför det är omoraliskt att begränsa till 50 miljarder jämfört med 280 miljarder, varför det är omoraliskt att begränsa till 280 miljarder jämfört med 1000 miljarder.

Och svaret på varför man inte ska ge bort ännu mer är för det första inte finns något som visar att bistånd i sig tar länder ur fattigdom. Vi har i årtionden öst in enorma belopp i Afrika, men det har inte hjälpt ett dyft. Det enda som funkar är att vi öppnar för frihandel för att uppmuntra de produktiva aktiviteter som kan bedrivas där samt att vi lär ut sunda ekonomiska principer. Det är det som lyft hundratals miljoner i Kina ur fattigdom, och det är det enda som kan åstadkomma förbättring på andra håll också.

Och för det andra, biståndsbudgeten kommer från pengar som inte är (inte bör vara) politikernas, utan som rätteligen tillhör svenska skattebetalare. Det är helt orättfärdigt att be hårt arbetande svenskar offra sig för att politikerna ska kunna framstå som "goda världsförbättrare" genom att skapa projekt av tveksam nytta till förmån för okända människor i andra världsdelar. Om politikerna och andra biståndsanhängare vill ge bort sina egna pengar så får de väl göra det, men de ska inte tvinga andra att via statens beskattningsapparat göra det.

Why the Yen is the Most Undervalued Currency

Looking at old issues of The Economist, I can see that in early 2000, the Japanese yen was valued at about 105 to both the dollar and the euro. Now a dollar cost 117 yen and a euro cost 150 yen. Which is to say, the yen have lost lost more than 10% of its value versus the dollar and nearly 30% against the euro.

The fact that the yen have fallen more than 10% against the dollar is pretty amazing given the fact that during the same period the U.S. consumer price index have risen about 20% while the Japanese consumer price index have in fact fallen somewhat. And while price inflation have been somewhat lower in the Euro zone than in America, it have not been sufficently lower to prevent the real appreciation of the euro from being even greater than the dollar's.

As a result of this, Japan have been one of the few industrialized economies who have seen its current account surplus rise, despite the rising surpluses of China and the world's oil exporters. America by contrast have seen its already large deficit increase further, whereas the Euro zone have seen its previous surplus wiped out and turned into a deficit.

One would have actually expected Japan's surplus to fall, if not disappear completely given the extremely large budget deficit and the downward pressure on private savings created by an aging population and very low interest rates. But the sharp real depreciation of the yen have apparently more than offset these effects.

While a slight gradual real depreciation could perhaps have been expected given the structural downward pressure on land prices (and therefore by extension cost of living) created by Japan's shrinking and aging population, clearly the decline we have seen in recent years have been far, far greater than what could possibly be motivated by that structural factors.

The fact that the yen have depreciated in real terms far more than could have been expected from structural factors while the Japanese current account surplus have continued to rise even though one could have expected it to fall based on structural factors clearly show that the Japanese yen is the most undervalued currency around right now, together with the Swedish krona (I'll return to the Swedish krona in a later post).

Note however, that when I write that the yen is the most undervalued currency, that does not necessarily imply that it will be the currency which gains the most. Currencies can often deviate greatly from their fair value for a long period of time and undervalued currencies often get even more undervalued before they become less undervalued.

As long as the gap in interest rates remain or widen further, the yen could continue to be undervalued or even become even more undervalued. When interest rates differentials start to fall, the yen should start rising significantly, although likely not dramtically as the Bank of Japan is unlikely to tolerate that.

Våga göra vad?

Det är som sagt alltså valår igen och då är det självfallet också högsäsong för missvisande floskler. Och här är socialdemokraterna (alltså original-sossarna) värst-precis som tidigare.

I EU-parlamentsvalet 2004 minns jag de hade floskeln "Människan före marknaden". Man kan ju fråga sig vad de egentligen tror marknaden utgörs av, om inte just människor. Katter? Robotar? Rymdvarelser?

Och nu har de ett antal affischer med olika fåniga floskler med åtföljande text som alla slutar med att man säger sig vara emot "stora skattesänkningar" eftersom man säger sig vilja att "alla ska vara med".

Den floskel som jag reagerade mest på var "Trygga människor vågar". När sossar som ju hävdar att den tillväxtacceleration som skett det senaste året skett på grund av och inte trots de höga skatterna ska motivera exakt hur det kan vara så att bestraffning av välståndsskapande skulle kunna skapa mer sådant så brukar man hänvisa till det resonemang som finns på den affischen. Nämligen att om folk känner sig trygga de kommer de att våga göra mer vilket då skulle öka tillväxten.

Om man med "trygga människor vågar" försöker få fram att om risken för ett negativt utfall från en viss handling minskas eller elimineras då kommer folk bli mer benägna att utföra denna handling, då är det naturligtvis en helt korrekt observation.

Men detta är ju dock inget som kan på någotvis rättfärdiga påståendet att bidragssystemen ("socialförsäkringarna") skulle främja tillväxten. Tvärtom.

För det som driver på tillväxten det är ju som alla med elementära nationalekonomikunskaper vet, insatser av arbete och kapital samt entreprenörsskap för att koordinera dessa på optimalt sätt.

Exakt hur bidragssystemen skulle göra folk mindre ängsliga inför att våga arbeta, spara eller bli entreprenör är inte riktigt klart, då de ju på intet vis minskar riskerna med det . Man förlorar ju aldrig på att arbeta eller spara. Tvärtom, det bidragssystemen skyddar emot är ju mot de negativa konsekvenser som uppstår om man inte arbetar eller sparar och det bidragssystemen då gör är att öka folks benägenhet att avstå från att arbeta och/eller spara.

Det råder ju faktiskt en bred enighet om att en viktig anledning till det extremt höga sparandet i Kina är bristen på bidragssystem där, något som i sin tur drivit på tillväxten där.

De enda som potentiellt kan förlora på att utföra välståndsskapande handlingar är ju företagare/entreprenörer som ju satsar sina sparpengar och/eller lånade pengar och som riskerar att förlora dessa. Men ironiskt nog är ju dessa nästan de enda som i socialdemokratins Sverige inte får någon ersättning om saker skulle gå snett. De riskerar att förlora hela sin insats och att deras arbetsinsatser för företaget också ska bli obelönade, men de har inget som helst skyddsnät bortsett från det ytterst magra socialbidraget.

Det torde därför stå klart att bidragssystemen definitivt inte gynnar tillväxten och att den tillväxt som sker sker trots dessa och skulle ha varit högre utan dem.

Leftist Mike Whitney Once Again Presents Sound Monetary Analysis

Usually leftists are as confused on the issue of monetary economics as they are with regards to other aspects of economics. Their pro-inflationists stance probably stems from the illusion that rich people are like Disney cartoon duck Scrooge McDuck have all of their wealth in the form of cash or in bank accounts or bonds and that inflation thus makes the rich poorer.

Mike Whitney at leftist Counterpunch seem to realize that inflationist monetary policies in fact makes the rich richer as they usually have their wealth in fixed assets and stocks and as inflation usually raises product prices before wages, it redistributes from workers to capitalists. I have previously mentioned his unusually insightful writings, linking to this article where he indicts Alan Greenspan for creating the housing bubble which creates economic distortions and increases economic inequality.

Now he have a new article on the subject where he points to the trouble bursting of the Greenspan-inflated bubble will create.