Comrade Chief Manufacturing Officer
Mercifully, the CNN Democratic debates are done, and the American people will no longer be subjected to three hours of boredom – not for another month, anyway. But if we might torture you just one more time, it is important to point out one part of the circus act that went largely unnoticed: Rep. Tim Ryan’s (D-OH) proposal to establish a new top bureaucrat in the US government.
The congressman stated during the sideshow, as well as in proposed legislation this past spring, that the US government needs a Chief Manufacturing Officer. This position, according to the man who is unlikely to win the nomination, would entail setting production goals and advocating for manufacturing workers – whatever that means.
But while this concept will not turn his campaign around and make him the frontrunner, it is still a concerning idea that another prominent Democrat might consider adopting.
When you think of governments outlining output objectives, you cannot help but be reminded of failed socialist states of the 20th century. Forsooth, these governments and their central committees would routinely put forward five-year plans, announcing manufacturing directives and laying out mandates to achieve these goals. They attempted to dismiss market signals and proceed with plans by the smartest men in the room. If the proletariat failed to make these dreams become a reality, then they would be sent to Siberia or forced to watch Elvis Presley films.
The US manufacturing sector is already strong; rumors of its death have been greatly exaggerated. The industry may not be what it was during the peak of Leave It to Beaver or The Honeymooners, but the sector has been producing in immense numbers, employing tens of thousands of Americans, and specializing in advanced and innovative goods and services. Then, the trade war happened.
Rep. Ryan did the public a service by listing what the Democratic Party stands for in 2020 – decriminalizing unauthorized border crossings, eliminating private health insurance for union members, and offering free health care to illegal immigrants. But that might be the only positive contribution he will make this election cycle.
The last thing the country needs is another bureaucrat trying to centrally plan a $2.38 trillion industry.
Do You Have the Time … Preference?
Joe Weisenthal, the co-anchor of Bloomberg TV’s What’d You Miss? and executive director of news for Bloomberg Digital, attempted to defend subzero interest rates by calling them “the norm” because you’re “paying people to store and preserve your stuff.” He believes positive rates are a “weird deviation.” This philosophy appears to be shared by Pimco, an investment management firm, too.
This conclusion had some pushback, including from cryptocurrency analyst Fernando Ulrich. Ulrich argued that time preference is never negative: “Don’t confuse paying for a service with time preference. The same good in the present is always more valuable than in the future. A future good will always be discounted in the present.”
Weisenthal responded with a haircut analogy:
“This is so silly. If your hair is getting too long, which would you rather have: two haircuts today or a haircut today and another one a month from now?”
Did the Business Insider executive editor own Ulrich? Not quite.
First, it is important to note that time preference is determined by a person’s value scale – an individual’s choice in a situation ranked by his or her subjective priority. So, someone’s main urgency for today might be a haircut, but it will not be for two haircuts.
Second, the impetus of interest rate determination is based on the individual’s time preferences, according to the teachings of Austrian theorists Carl Menger and Ludwig von Mises. Ultimately, people will place a higher value on present-day goods compared to future ones, meaning that present-day items are valued at a premium to future products. For example, you would never choose 90 cents next year over a buck today.
Third, the equilibrium real interest rate – the ratio of the value given to want-satisfaction now as opposed to periods of the future – is always positive and, thus, can never be negative.
Race, once again, has dominated the news cycle. All of the major cable news networks, presidential candidates, and pundits are declaring President Donald Trump a racist because he condemned white supremacy, bigotry, and racism. One network went as far as claiming he wants to “exterminate” Latinos and that flying the flag at half-mast until August 8 is code for tipping his hat to the neo-Nazis.
While racism is a real thing in society, there is another genuine trend: Racial hoaxes. These are cases of people claiming to be victims of racism. Yet, when their accusations are scrutinized, they sometimes turn out to be fraudulent.
The two most well-known instances so far this year were those of Jussie Smollett and Erica Thomas. The former said Trump supporters tossed a noose around his neck in the middle of the night in freezing temperatures in Chicago. The latter involved the Democratic state representative alleging she was told to “go back where you came from” because she had more items than the express line permitted.
There are more holes in Smollett’s story than the gangsters during the St. Valentine’s Day Massacre. Thomas backtracked her comments in just 48 hours. Suffice it to say, many of the major stories of racist confrontations that make it to national news tend to be bogus.
This is what happens when the supply of racism cannot keep up with the demand.
Oftentimes, the underground economy will spring into action if brands fail to churn out supply to meet enormous demand volumes. Sometimes, however, the supply is counterfeit. This was ubiquitous during prohibition when gangsters would manufacture alcohol in their bathtubs. Or, in The Third Man, Harry Lime would produce penicillin that was partly made from water. Mafias, terrorists, and other groups participating in illicit activities often produce and exchange counterfeit dollars.
Right now, there is ostensibly a huge demand for racism, primarily from the left and the mainstream media. The opportunists are taking advantage of this need, making up stories to prove how much racism there is in America today. This is not to say that the nation does not house a single prejudiced person. Are there racists? Yes. Just as is the case with US dollars or Louis Vuitton purses, some are genuine and others are fake.
Nothing Is What It Seems
A new bureaucrat will surely save America! Subzero interest rates are the real natural rate of interest and will spur tremendous economic growth! Racism is more prevalent today than at any other time in America’s history! These are the visions of anointed fairy tales spewed as fact on a regular basis. To paraphrase Woody Allen in Annie Hall, the media don’t throw their garbage away, they turn it into television shows.