False, invalid, hidden economic assumptions

A major problem with the reporting on the economy is the non-reporting of faulty or invalid or hidden assumptions in the economic analysis.
Here are some examples of that.

2012

2012-03-Atlantic-OBrien-the-hyperinflation-hype-why-the-us-can-never-be-weimar

The Hyperinflation Hype:
Why the U.S. Can Never Be Weimar
By Matthew O'Brien
The Atlantic, March 2012

U.S. government finances might look Zimbabwe-esque,
but a look back at some of history's worst hyperinflation episodes show why
goldbugs' fears are completely unfounded now.

...

How are the United States’
historic budget deficits, money-printing and depressed economy
any different from the country’s that have experienced hyper-inflation?
The three-part answer is:
(1) we don’t have any problems selling our debt;
(2) we aren’t actually printing money; and
(3) the United States is a highly productive economy
that is nothing like bombed-out Budapest.

Let me unpack these one by one.

---

Right now getting the markets to buy our debt isn’t the problem.
Getting enough debt for the markets to buy is the problem.
Investors are so crazy to load up on Treasuries that
they’re actually paying us to borrow, taking inflation into account.
But while we’re currently getting free money from investors,
Hungary circa 1945 was getting no money.
It was an investment pariah.
If Hungary wanted to rebuild its economy,
its only recourse was the printing press.

[Practically the first thing an amateur investor hears from the experts
is some variant on the following statement:
“Past Performance is No Guarantee of Future Results”.
Unable to respect that advice,
the “experts” who advised us during the 2000-2008 housing bubble,
including Fed Chairman Allan Greenspan,
gave no warning that it could end,
that what goes up in the economy must come down,
that trees don’t grow to the sky,
or any number of folk aphorisms that would have bred
a healthy degree of skepticism about the boom
(in particular, that home buyers would keep pouring their money into housing)
continuing forever.
In a similar fashion, the assumption is made here that
the investors who are buying Treasuries
will not find a better investment to make in the future.
I will assert: That assumption is surely wrong.]

---

Second, the United States isn’t really printing money.
At least not like post-war Hungary.
Quantitative easing is usually described as “money-printing”
but it’s not really.
QE involves the Fed buying longer-term bonds from banks.
It simply swaps one asset for another --
in this case, cash for longer-term bonds.
Unlike Hungary, the Fed isn’t directly paying the Treasury’s bills.
This is a hugely important distinction.

Whatever money the Fed “prints” is stuck in the banks.
That money isn’t inflationary as long as the banks don’t lend it out.
What if the banks do start lending at a faster clip?
The Fed can still effectively pay the banks not lend by, for example,
raising the interest on excess reserves
or require the banks to set aside more money.
It would be shocking for the Fed not to pursue one of these options.

[“The United States isn’t really printing money.”
Oh yeah?
According to Bryan R. Lawrence,
the Federal Reserve bought 60 percent of Treasurys issued last year.
Just where did the Fed get the money to buy those Treasurys?
They created it out of thin air, what the author just described as "printing money."
They did not load it to banks, as he describes.
They gave it to the government, and all they got in return was Treasury notes.
This is what is called "monetizing the debt",
a concept he did not bring to the attention of his readers.
How the "elite" media deceives!]

---

Third,
the most important difference between us and post-war Hungary or Weimar
is that
our roads haven’t been razed to the ground
and half the country isn’t striking.
It’s very difficult to have hyperinflation
when you still have a functioning economy.
Almost all examples of hyperinflation result from
huge economic shocks that devastate an economy so much that
leaders think printing money is the only solution to growth.
As bad as the Great Recession has been,
our GDP is already back to and above its all-time pre-recession high.
As bad as unemployment is,
more than 80 percent of the labor force is working.
In Zimbabwe,
80 percent of the population was unemployed.

2012-08-21-WP-Plumer-great-hyperinflation-episodes-in-history

Great hyperinflation episodes in history — and what they tell us about the Fed
By Brad Plumer
Washington Post, 2012-08-21

[Here the Washington Post blogger
repeats the summary paragraph from the work above:]

Back in March [2012], The Atlantic’s Matthew O’Brien
offered a more detailed explanation of
why the United States isn’t likely to suffer the same fate as the Weimar Republic
or any other country on the list [of countries that have suffered from hyperinflation] above.
Here’s the short version:
“How are the United States’
historic budget deficits, money-printing and depressed economy
any different from the country’s that have experienced hyper-inflation?
The three-part answer is:
(1) we don’t have any problems selling our debt;
(2) we aren’t actually printing money; and
(3) the United States is a highly productive economy
that is nothing like bombed-out Budapest.”

The lies of PC

2011-10-04-Sowell-obesity-caused-by-poverty-lie

The 'hunger' hoax perpetuates dependency
By: Thomas Sowell
Washington Examiner Op-Ed, 2011-10-04

The political Left has turned obesity among low-income individuals
into an argument that low-income people cannot afford nutritious food,
and so have to resort to burgers and fries, pizzas and the like,
which are more fattening and less healthful.
[I need to interpolate something here.
Pizza, in its basic configuration, just a bread dough without much grease or oil
dressed with a healthy tomato topping,
is actually quite healthy.
Further, topping it with lots of veggies only adds to its healthiness.
It only becomes unhealthy when the toppings are heavy on greasy meats,
or when the bread dough is saturated with oils or fats.
I think a better common fast food to have knocked would have been fried chicken,
which is certainly popular among some elements of our society
and is, in most fast food versions, high in unhealthy fats.
I know at my favorite pizzeria they produce a very healthy product.]
But this attempt to salvage something from the “hunger in America” hoax
collapses like a house of cards
when you stop and think about it.
Burgers, pizzas and the like cost more than
food that you can buy at a store and cook yourself.
If you can afford junk food, you can certainly afford healthier food.
A Sept. 25 article in the New York Times by Mark Bittman showed that
you can cook a meal for four at half the cost of a meal from a burger restaurant.

2011-10-07-Harbaugh-obesity-and-poverty

For some years I have been wanting to add a personal observation
to the “poverty causes obesity” lie spread by elements of the PC
(who I suspect are especially all those hyper-PC, and often obese themselves, women).

Some years ago I was quite poor,
and needed to save as much money as possible on food.
It was not hard.
The local supermarket sold sacks of dried peas,
and the package contained a recipe for how to make soup from those peas.
A delicious vegetable soup could be produced with minimal cost and expense,
starting with the dried peas and adding carrots, celery, onions, and potatoes,
all of which are quite inexpensive.
To complement the soup it was easy to make delicious home-made French bread,
which only required water, flour, yeast, and salt.
What could be healthier?
A delicious meal of vegetable soup and freshly-baked French bread
could be made for very little cost,
and with absolutely no fat and very few calories.
To enrich the meal a little,
one could buy butter or margarine to spread on the bread.

So when those fat-cat advocates for the poor get off on
how it takes a lot of money to eat a healthy diet,
I can only add that to the many lies of the PC community.


By the way, a variation on the “poverty causes obesity” lie is that
“it takes an education to learn how to eat healthy.”
Yeah, right.
A third-grade education should suffice
for any sane, responsible person possessed with will-power.

The Directorate of Lies

Professor Anthony Pagden published a book review in the March/April 2010 National Interest.
Here is an excerpt from Professor Pagden’s review,
with my comments interspersed in this font and color,
and some emphasis added to the original text:

---

Modern genetics has demonstrated conclusively that
no such thing as race exists.
Thanks to the mapping of the human genome,
we now know that each person
shares 99.99 percent of his or her genetic material with everyone else.
[So?
We all know that people have differences in a number of ways,
whether their genetic pattern is 99.99 or 99.999999999 percent identical.
Whatever the extent of the genetic difference is,
that significant consequences follow from that difference
seems unarguable.
So why did Professor Pagden bring up the extent of the genetic similarity?
It seems like a distractor or red herring.]
Similarly, skin color and physiognomy are now no longer regarded as
the most obvious ways of classifying peoples by the scientific community.
[What is obvious is a subjective decision.
Further, even if you accept what Professor Pagden just asserted,
how would that prove that “no such thing as race exists”?]
There are more significant indicators of human difference,
and these tell quite another story
than the one narrated through the Greco-Roman model.
[Again, “significance” is a highly context-sensitive concept.
Significant in what context?
And again, even if you accept what Professor Pagden just asserted,
how would that prove that “no such thing as race exists”?]

Fingerprints link Europeans, black Africans and East Asians
together in one group;
Mongolians and Australian Aborigines in another.
Cerumen (earwax) is of two types—
wet and sticky, controlled by a recessive gene.
This connects most Europeans and most Africans (who have the sticky variety),
but distinguishes both from most Asians,
while body-hair types link Europeans to Australian Aborigines
and to the Ainu people of northern Japan.
And as for blood:
the A/B/O system (in any case now thought to be rather primitive)
links the English to the Icelanders to the Sami to the Melanesians.
It also seems that
greater blood variations occur within human populations
than between them.

[There certainly are a number of genetically determined or influenced characteristics
which are independent of race.
Sex or gender is the most obvious one
(although scientific professionals might argue, too obvious.)
Height is not totally determined by ones genes, but is affected by them.
Height is also not totally determined by race,
as we see height variations in all races.
(There may be difference in average height between racial groups.
This is affected by difference in diet, so may not be genetically determined.)

In any case, the indisputable fact that
race does not determine all of one’s characteristics
clearly does not imply that
race determines none of one’s characteristics.]

There is also, of course,
no evidence linking any of these things to behavior—or intelligence.


[It seems to me that
Professor Pagden has totally failed to substantiate
the sweeping generalization of his opening sentence.
Can any fair-minded person disagree?

Here are some counter-examples to the claim:

While fingerprints, earwax, and body-hair type may be independent of
the customary and evident racial characteristics,
at least some other characteristics have been linked to
specific genes which are indeed identified with race.
Consider, for example, the Nicholas Wade New York Times article
“East Asian Physical Traits Linked to 35,000-Year-Old Mutation”,
which begins with the paragraph

Gaining a deep insight into human evolution,
researchers have identified
a mutation in a critical human gene
as the source of
several distinctive traits that make
East Asians different from other races.

The article continues with

A Chinese member of the team, Sijia Wang,
then tested people in China and discovered that they, too,
had more numerous sweat glands, evidently another effect of the gene.

Another surprise was that the engineered mice had less breast tissue,
meaning that EDAR could be the reason that
East Asian women have generally smaller breasts.

East Asians have distinctively shaped teeth for which
their version of EDAR is probably responsible.

The researchers cited in the article are at the Broad Institute,
which certainly qualifies as a scientific institute.

Demonstrably, anyone who says "race does not exist"
or "race is merely a cultural construct"
is either a liar or an ignoramus.
It is hard for me to understand how university professors
can get away with deceiving their students and the general public.
PC is indeed a culture of lies and deceit
for the benefit of certain groups.

Also, even predating Pagden's misguided article,
there had been numerous articles in the scientific literature
asserting racial differences in the pattern of disease,
differences which do not seem to be correlated with
environment or level and quality of care.

Even the black community seems to acknowledge that
there are genetically-determined racial differences.
For example, Google "Gabby Douglas hair".
I never have heard a white person being told his or hair was "nappy."
While many people no doubt regard that as an insignificant difference,
still it is a genetically-determined racial difference
recognized within the black community.]

---

(Back to comments by the author of this blog, in the normal type font.)
But enough about Professor Pagden’s argument, or lack thereof.
Another pseudo-argument from
those who argue that “there is no such thing as race”
is that
we are all a mixture of races, no one is racially pure,
so why bother to categorize by race?
(Or some variant on that argument.)
Of course, if that argument were true,
than how is it that
some people are favored by affirmative action on racial grounds
while others are not?
It seems that beneficiaries of affirmative action like to have it both ways:
When they worry about being characterized by race,
they argue that race does not exist,
or is only a figment of racist’s imagination.
But then, quick like a bunny, when they can use race to their advantage
(I deserve special treatment on account of my race),
they rush to be classified as one of the favored group.
Frankly, that methodology seems sick to me, wanting to have it both ways.
(I wonder what would happen to whites on college campuses who point that out.)

On the strength of the argument,
one might point out an analogous situation with respect to dogs.
Just because many dogs are of mixed breed (familiarly called “mutts”)
doesn’t mean that pure-bred dogs don’t exist.
Just ask the American Kennel Club about that.
With regard to people, I believe the situation is the same.
People come in a variety of racial purity levels,
from half and half to close to 100 percent pure
(examples: Bantu, Han Chinese.
I checked Wikipedia to see if I could find an analogous entry for, say, Aryans, but such, to Wikipedia,
is only an obsolete and probably dangerous concept.
To Wikipedia, the racial difference between, say, Barack Obama and Mitt Romney is a figment of your imagination!
What a crock!
The racial similarity between, say, the first 43 Presidents of the United States
and its difference relative to the leaders of the African nations
does not exist in PC-land?)

---

But so much for trying to debunk
the arguments made by the “race does not exist” people.
What are the arguments, if any,that race does really exist and is genetically determined?

When a white man and a white woman conceive,
the resulting child may vary in a number of ways,
but it will be recognizably white, not black, not Han Chinese.
Go to Iceland and see
how many black or Asian-resembling children are born to the Nordic people.
The same would be true for a trip
to where Bantu people or Han Chinese people are the population.

The Wikipedia article on race, as of 2012-12-19, contains the following as the contents of its first primary heading Complications and various definitions of the concept.
I have inserted a few comments in this font and color.

It is demonstrated that race has no biological or genetic basis:
gross morphological features which traditionally ha[ve] been defined as races (e.g. skin color)
are determined by non-significant and superficial genetic alleles
with no link to any characteristics,
such as intelligence, talent, athletic ability, etc.
[It seems to me that anyone who sees a photo of the finish line of any track and field race involving the top athletes in the world
would have a hard time denying the racial homogeneity of the world's fastest runners.
Explain that as a social construct!]
Race has been socially and legally constructed despite the lack of any scientific evidence for dividing humanity into racial baskets with any generalized genetic meaning.[11][12][13][14]

When people define and talk about a particular conception of race, they create a social reality through which social categorization is achieved.[15] In this sense, races are said to be social constructs.[16] These constructs develop within various legal, economic, and sociopolitical contexts, and may be the effect, rather than the cause, of major social situations.[17] While race is understood to be a social construct by many, most scholars agree that race has real material effects in the lives of people through institutionalized practices of preference and discrimination.

Socioeconomic factors, in combination with early but enduring views of race, have led to considerable suffering within disadvantaged racial groups.[18] Racial discrimination often coincides with racist mindsets, whereby the individuals and ideologies of one group come to perceive the members of an outgroup as both racially defined and morally inferior.[19] As a result, racial groups possessing relatively little power often find themselves excluded or oppressed, while hegemonic individuals and institutions are charged with holding racist attitudes.[20] Racism has led to many instances of tragedy, including slavery and genocide.[21]

In some countries Law enforcement utilizes race in profiling suspects. These uses of racial categories are frequently criticized for perpetuating an outmoded understanding of human biological variation, and promoting stereotypes. Because in some societies racial groupings correspond closely with patterns of social stratification, for social scientists studying social inequality, race can be a significant variable. As sociological factors, racial categories may in part reflect subjective attributions, self-identities, and social institutions.[22][23]

Scholars continue to debate the degrees to which racial categories are biologically warranted and socially constructed, as well as the extent to which the realities of race must be acknowledged in order for society to comprehend and address racism adequately.[24] Accordingly, the racial paradigms employed in different disciplines vary in their emphasis on biological reduction as contrasted with societal construction.

In the social sciences theoretical frameworks such as Racial formation theory and Critical race theory investigate implications of race as social construction by exploring how the images, ideas and assumptions of race are expressed in everyday life. A large body of scholarship has traced the relationships between the historical, social production of race in legal and criminal language and their effects on the policing and disproportionate incarceration of certain groups.

A key point to note is that much of this
is not really an argument that race does not exist,
but rather that, in the past, racial thinking has led to
results harmful to some groups, notably blacks and Jews.
No one can dispute that argument.
But is that really an argument to abandon the recognition of racial differences,
or rather the need to avoid what everyone can agree is and was wrong, genocide and slavery?