The new Pope talks like a socialist. Let’s see him put the church’s money where his mouth is.

Conservatives have argued forever that free market capitalism is the greatest anti-poverty program.

It’s refreshing to hear Bono express this idea.

Of course, because human being are not equally talented or ambitious, the engine of capitalism creates wealth gaps, something progressives abhor. Obama tops that list.

I wish that Mitt Romney could have been a better explainer. Just one teachable moment like this below could have done wonders.

Deroy Murdock

Democrats convened in Charlotte, NC, will double down on their claim that Bain Capital is really the Bain crime family. They will accuse Republican nominee Mitt Romney and Bain’s other “greedy” co-founders of stealing their winnings, evading taxes and lighting cigars with $100 bills on their yachts.

But Bain’s private-equity executives have enriched dozens of organizations and millions of individuals in the Democratic base — including some who scream most loudly for President Obama’s re-election.

Government-worker pension funds are the chief beneficiaries of Bain’s economic stewardship. New York-based Preqin uses public documents, news accounts and Freedom of Information requests to track private-equity holdings. Since 2000, Preqin reports, the following funds have entrusted some $1.56 billion to Bain:

* Illinois Municipal Retirement Fund ($2.2 million)

* Indiana Public Retirement System ($39.3 million)

* Iowa Public Employees’ Retirement System ($177.1 million)

* The Los Angeles Fire and Police Pension System ($19.5 million)

* Maryland State Retirement and Pension System ($117.5 million)

* Public Employees’ Retirement System of Nevada ($20.3 million)

* State Teachers Retirement System of Ohio ($767.3 million)

* Pennsylvania State Employees’ Retirement System ($231.5 million)

* Employees’ Retirement System of Rhode Island ($25 million)

* San Diego County Employees Retirement Association ($23.5 million)

* Teacher Retirement System of Texas ($122.5 million)

* Tennessee Consolidated Retirement System ($15 million)

These funds aggregate the savings of millions of unionized teachers, social workers, public-health personnel and first responders. Many would be startled to learn that their nest eggs are incubated by the company that Romney launched and the financiers he hired.

Leading universities have also profited from Bain’s expertise. According to Infrastructure Investor, Bain Capital Ventures Fund I (launched in 2001) managed wealth for “endowments and foundations such as Columbia, Princeton and Yale universities.”

According to BuyOuts magazine and S&P Capital IQ, Bain’s other college clients have included Cornell, Emory, the Massachusetts Institute of Technology, Notre Dame and the University of Pittsburgh. Preqin reports that the following schools have placed at least $424.6 million with Bain Capital between 1998 and 2008:

* Purdue University ($15.9 million)

* University of California ($225.7 million)

* University of Michigan ($130 million)

* University of Virginia ($20 million)

* University of Washington ($33 million)

Major, center-left foundations and cultural establishments also have seen their prospects brighten, thanks to Bain Capital. According to the aforementioned sources, such Bain clients have included the Charles Stewart Mott Foundation, the Doris Duke Foundation, the Metropolitan Museum of Art, the Ford Foundation, the Heinz Endowments and the Oprah Winfrey Foundation.

Why on Earth would government-union leaders, university presidents and foundation chiefs let Bain oversee their precious assets?

“The scrutiny generated by a heated election year matters less than the performance the portfolio generates to the fund,” California State Teachers’ Retirement System spokesman Ricardo Duran said in the Aug. 12 Boston Globe. CalSTRS has pumped some $1.25 billion into Bain.

Since 1988, Duran says, private-equity companies like Bain have outperformed every other asset class to which CalSTRS has allocated the cash of its 856,360 largely unionized members.

Is Bain really a gang of corporate buccaneers who plunder their ill-gotten gains by outsourcing, euthanizing feeble portfolio companies and giving cancer to the spouses of those whom they fired? If so, union bosses, government retirees, liberal foundations and elite universities thrive on the wages of Bain’s economic Darwinism.

If, however, these institutions relish the yields that Bain Capital generates by supporting start-ups and rescuing distressed companies, 80 percent of which have prospered, then this money is honest — and Team Obama isn’t.

NeoNeoCon on the Palestinian reaction to Romney.

…Yes, of course; it’s all the Israelis’ fault. Everybody knows how well the Arab/Muslim inhabitants of Palestine (they didn’t call themselves Palestinians at the time) were doing before* the increase in Jewish emigration to the area beginning in the latter part of the 19th century and continuing on into the 20th. Everyone knows about the thriving Arab economies in lands that are not “occupied” by Jews, and that even if it weren’t for their oil they’d still be the economic miracle stories of the world.

And of course everybody knows that the Palestinians are coveted residents of the various Arab countries that have vied for their presence for many decades because of their economic prowess in whatever country they happen to enter. Jordan and Lebanon in particular have been happy to welcome the Palestinians, whom they consider quite an asset, and those countries have been eager to have even more of them back, but so far the Palestinians have cruelly refused to listen to their blandishments.

And have you noticed how “culture” has now become synonymous with “race,” so that speaking negatively of a culture—even if what is said is true (or perhaps especially if what is said is true)—becomes defined as racist, as though whatever a culture might be is embedded in the genes of its people?

Now I understand that diplomacy requires that a leader not always say what he/she really thinks, or even close to it. But at this point, diplomacy has been an utter failure with the Palestinians, who tend to look on any concessions as evidence of a weakness that can be exploited. But despite this history, and despite the fact that the other Arab/Muslim countries of the Middle East hate, fear, and use them, the Palestinians remain the darlings of the left in the west, which believes their tender sensibilities must always be assuaged…

…about Obama’s claim that:

“If you’ve got a business — you didn’t build that.  Somebody else made that happen.”

Oprah started with nothing and became a billionaire through hard work and smarts. Does she agree with The One? Doubtful.

Obama’s comments have provoked plenty of outrage from the right. Radio host Dennis Prager was on the verge of losing his temper just talking about it yesterday.

Yet I haven’t see anyone challenge Obama’s notion that successful business people need to “give something back.” You’d think earning a profit is shameful.

Besides the taxes they pay — the ones that paved the roads, built the bridges etc.– succeeding in business is, by itself, giving back.

To succeed in business (unless you’re a crony capitalist, Obama’s favorite kind) you do good by making a profit. You provide a product or a service that customers willingly pay for. The things that make our lives more comfortable, secure, healthier and pleasurable come from companies making profits.

And let’s not forget that profit making companies create jobs that actually increase the nation’s wealth, as opposed to government jobs that spend the nation’s wealth.

I share Prager’s intense anger at Obama. His ideas are poison. He’s a cheap political hustler willing to sow division to gain votes. Anyone who fails to see that is a hopeless romantic and a sap.

See how free market capitalism works.

Click the graph to see it full size.

From Carpe Diem

Much ado about nothing.

Elizabeth Warren, who has railed against predatory banks and heartless foreclosures, took part in about a dozen Oklahoma real estate deals that netted her and her family hefty profits through maneuvers such as “flipping” properties, records show.

A Herald review has found that the Democratic U.S. Senate candidate rapidly bought and sold homes herself, loaned money at high interest rates to relatives and purchased foreclosed properties at bargain prices.

Land records from Warren’s native Oklahoma City show the Harvard professor was active in the often topsy-turvy real estate market in the 1990s, including:

• Purchasing a foreclosed home at 2725 West Wilshire Boulevard from the U.S. Department of Housing and Urban Development for $61,000 in June 1993, then selling it in December 1994 for $95,000 — a 56 percent mark-up in just 18 months.

Was the housing market rising at the time?

Did she do major upgrades to the house that increased its value and improved the neighborhood?

So what if she made a profit?

Steve Chapman at Reason:

Progress can often be defined as the stuff that happens while humanity is preoccupied with everything that is going wrong. On the surface, the first decade of the 21st century looks like an ugly parade of terrorism, war and economic convulsion. But in one important sense it stands as possibly the greatest decade in human history. And that’s no accident.

Among the most vicious enemies of human welfare is poverty. In a world plagued with limited resources, bad governments and unsound economic policies, it often appears to be an inescapable scourge. Most people paid no attention in 2000 when the United Nations proclaimed the goal of halving the number of earth’s inhabitants living in extreme poverty by 2015, compared to 1990.

But way ahead of schedule, the target has already been hit. For the first time since it began tracking, says a new World Bank report, “the data indicate a decline in both the poverty rate and the number of poor in all six regions of the developing world.”

In 1981, 70 percent of those in the developing world subsisted on the equivalent of less than $2 a day, and 42 percent had to manage with less than $1 a day. Today, 43 percent are below $2 a day and 14 percent below $1.

“Poverty reduction of this magnitude is unparalleled in history: Never before have so many people been lifted out of poverty over such a brief period of time,” write Brookings Institution researchers Laurence Chandy and Geoffrey Gertz.

Just as important as the extent of the improvement is the location: everywhere. In the past there has been improvement in a few countries or a continent. Not this time.

China has continued the rapid upward climb it began three decades ago. India, long a laggard, has shaken off its torpor. Latin America has made sharp inroads against poverty. “For the first time since 1981,” says the World Bank, “we have seen less than half the population of sub-Saharan Africa living below $1.25 a day.”

The start of most global trends is hard to pinpoint. This one, however, had its big bang in the early 1970s, in Chile. After a socialist government brought on economic chaos, the military seized power in a bloody coup and soon embarked on a program of drastic reform — privatizing state enterprises, fighting inflation, opening up foreign trade and investment and unshackling markets.

It was the formula offered by economists associated with the University of Chicago, notably Milton Friedman, and it turned Chile into a rare Latin American success. In time, it also facilitated a return to democracy. Chile was proof that freeing markets and curbing state control could generate broad-based prosperity, which socialist policies could only promise.

If that experiment weren’t sufficient, it got another try on a much bigger scale when China’s Deng Xiaoping abandoned the disastrous policies of Mao Zedong and veered onto the capitalist road. The result was an economic miracle yielding growth rates that averaged 10 percent per year.

The formula was too effective to be ignored. Over the past two decades, poorer nations have dismantled command-and-control methods and given markets greater latitude. Economic growth, not redistribution, has been the surest cure for poverty, and economic freedom has been the key that unlocked the riddle of economic growth.

Over the past 30 years, notes the libertarian Cato Institute in the latest edition of its “Economic Freedom of the World,” the average country’s economic freedom score has risen from 5.53 (on a 10 scale) to 6.64 — a significant improvement that has paid off in higher growth and earnings. The evidence indicates a reliable pattern: the freer the economy the faster the growth.

“Nations in the top quartile of economic freedom had an average per-capita GDP of $31,501 in 2009, compared to $4,545 for those nations in the bottom quartile,” says Cato. The rate of extreme poverty is 2.7 percent in the top quartile and 41 percent in the bottom one.

Among many people a generation ago — and among a few today — free markets and private property were seen as the cause of poverty. But the number of adherents has dwindled in the face of repeated refutation.

The latest cover story in The Economist magazine is: “Cuba hurtles toward capitalism.” Cuba! Even communists eventually have to make peace with reality.

Progressives claim that poor people are fat because they lack access to healthful food.

“Food desert” is what they call places where supermarkets are scarce. (Given that supermarket chains go where the profits are, you might suspect lack of demand plays a role.)

So you’d think that a new supermarket would be welcomed in LA. But no, the special interests — labor unions and the stores under their thumb — think otherwise.

Four weeks after Wal-Mart announced plans to open a grocery store in Chinatown, Los Angeles City Council members have proposed a law that would block an array of chain businesses from opening in the neighborhood.

A temporary ordinance sought by Councilman Ed Reyes would prohibit building permits from being issued for new “formula retail” stores — those that have standardized facades, color schemes, decor, employee uniforms and merchandise.

Wal-Mart is seeking to open a 33,000-square-foot market and pharmacy in a vacant ground-floor commercial space at Cesar Chavez and Grand avenues. But the plan has come under fire from labor and advocacy groups that oppose the company’s wage scale, benefit plans and nonunion workforce.

Wal-Mart can save the average family 25% on their grocery bill, a free market anti-poverty program that functions without taxation or coercion.

Big government and big labor see that as the enemy.

As Obama, Pelosi and Reid flail around trying to create jobs, wasting billions of taxpayer money, the private economy shows how it’s done.

Russell Gold in the WSJ

The staccato of nail guns echoes across a cavernous building here as workers piece together manufactured houses with easy-to-clean linoleum floors and rugged interiors for muddy oil-field workers.

There is no oil and gas production in Idaho, but that doesn’t mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes of Idaho, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated “Dakota” model for shipment 1,000 miles east to the Bakken oil field in North Dakota.

Were it not for the new demand for oil-field housing, factory manager Jeff Chrisman says he would be handing out furloughs, not overtime. Instead, “We’ve been able to bring back people that we hated losing a couple of years ago,” he says.

Without spending a government dime or even having government cooperation. (Obama tried to take credit for this in the SOTU.)

An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.

The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin. Manufacturing plants are returning to the U.S. to take advantage of cheap natural gas, spurring major investments in petrochemical and steel production in the Gulf Coast and Midwest.

Landowners in huge swaths of the country where shale is found are raking in money for leasing their mineral rights. Consumers throughout the U.S. are paying lower bills for heating and electricity because of cheap natural gas. Even the U.S. balance of payments with other countries is improving because of the new energy economy.

“This is probably the biggest stimulus we have going,” says Michael Lynch, president of Strategic Energy & Economic Research, a consultant based in Amherst, Mass. Some $145 billion will be spent drilling and completing U.S. wells this year, up from $13 billion in 2000, estimates Spears & Associates Inc., an oil-field market research firm.

Larry Kudlow:

There’s a very troubled company out there called U.S. Government Inc. It’s teetering on the edge of bankruptcy. And it badly needs to be taken over and turned around. It probably even needs the services of a good private-equity firm, with plenty of experience and a reasonably good track record in downsizing, modernizing, shrinking staff and making substantial changes in management. Yes, layoffs will be a necessary part of the restructuring.

A quick look at the income statement of this troubled firm tells the story. Just in the past year (FY 2011), the firm spent $3.7 trillion, but took in only $2.2 trillion in sales revenues. Hence its deficit came to $1.5 trillion.

Just in the first three months of the new year (FY 2012), the firm’s troubles continued. Outlays for all purposes came in at $874 billion, but income was only $554 billion. So the shortfall was $320 billion. No hope of a self-imposed turnaround here. Indeed, both the senior management and the board of directors show no signs of making major changes to their business strategy.

Hope for future profits? That’s out of the question. The firms only chance of survival is a takeover.

Great, let’s hire a community organizer/academic with no business experience and an anti-capitalist chip on his shoulder to take on the job.

Worldwide employment for U.S. Government Inc. is estimated to be over 2 million, a completely unmanageable number for a venture like this. Total compensation for this company is roughly twice the level of its private-sector counterparts. And its retirement and health-insurance benefits are so large in relation to contributions paid that its benefit plans are careening toward insolvency.

In fact, the total debt of this firm now equals its total income — an unsustainable position that suggests to many observers that future financing needs will not be met.

The product line of this troubled firm has been rejected over and over by growing segments of its customer base. And its product pricing (taxes) is not even remotely competitive. Even worse, heavily unionized work rules and regulations are so onerous that the prospects for even reasonable productivity and efficiency are long gone.

Its credit rating? That’s been marked down, with more downgrades expected in the future.

The very troubled U.S. Government Inc. had long been either number one or in the top (more…)

Jeb Bush

In freedom lies the risk of failure. But in statism lies the certainty of stagnation.

Congressman Paul Ryan recently coined a smart phrase to describe the core concept of economic freedom: “The right to rise.”

Think about it. We talk about the right to free speech, the right to bear arms, the right to assembly. The right to rise doesn’t seem like something we should have to protect.

But we do. We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.

That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or nothing. People understand this. Freedom of speech, for example, means that we put up with a lot of verbal and visual garbage in order to make sure that individuals have the right to say what needs to be said, even when it is inconvenient or unpopular. We forgive the sacrifices of free speech because we value its blessings.

But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself.

Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and (more…)

Gary Wolfram,William Simon Professor of Economics and Public Policy Hillsdale College

Whenever I watch media coverage of another Occupy Wall Street event I am reminded of an exchange between Jewish protesters in the 1979 Monte Python movie Life of Brian. One of the protesters asks another what the Romans have brought to the area and the conversation goes like this:

Question: All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?
Answer: Brought peace?
Response: Oh, peace – shut up!

The point is that the Roman institutions brought a good deal to the area that was being overlooked by the protesters. The Wall Street protesters, in their hatred of capitalism, overlook things including the fact that over the last 100 years capitalism has reduced poverty more and increased life expectancy more than in the 100,000 years prior.

Every semester I ask my students: “What would you rather be? King of England in 1263 or you?” Turns out, students would rather be themselves. They enjoy using their iPhone, indoor plumbing, central heating, refrigerators and electric lighting. All of these things are available to the average person in America today and none of them were available to the aristocracy when the West operated under the feudal system.

How is it that for thousands of years mankind made very little progress in increasing the standard of living and yet today half of the goods and services you use in the next week did not exist when I was born? It wasn’t that there was some change in the DNA such that we got smarter. The Greeks knew how to make a steam engine 3,000 years ago and never made one. The difference is in how we organize our economic system. The advent of market capitalism in the mid 18th century made all of the difference.

We need not just rely on historical data. Look at cross-section evidence. I try another experiment with my students. I tell them they are about to be born and they can choose whatever country in the world they would like to be born in. The only caveat is they will be the poorest person in that country. Every student picks a country that is primarily organized in a market capitalist system. No one picks a centrally planned state. No one says, “I want to be the poorest person in North Korea, Cuba, or Zimbabwe,” countries which are at the bottom of the Heritage Foundation’s Index of Economic Freedom.

What does it mean to be poor in our capitalist society that the Occupy Wall Street crowd so hates? Robert Rector of the Heritage Foundation has several studies of those classified as poor by the U.S. Census Bureau. He found that 80 percent of poor persons in the United States in 2010 had air conditioning, nearly three quarters of them had a car or truck, nearly two-thirds had satellite or cable television, half had a personal computer and more than two-thirds had at least two rooms per person.

Contrast this with what it means to be poor in Mumbai, India, a country that is moving rapidly towards market capitalism but was burdened for decades with a socialist system. A recent story in The Economist described Dharavi, a slum in Mumbai, where for many families half of the family members must sleep on their sides in order for the entire family to squeeze into its living space.

The Occupy Wall Street movement has shown a lack of understanding of how the market capitalist system works. They appear to think that the cell phones they use, food they eat, hotels they stay in, cars they drive, gasoline that powers the cars they drive and all the myriad goods and services they consume every day would be there under a different system, perhaps in more abundance.

But there is no evidence this could be or ever has been the case. The reason is that only market capitalism solves the two major problems that face any economy-how to provide an incentive to innovate and how to solve the problem of decentralized information. The reason there is so much innovation in a market system compared to socialism or other forms of central planning is that profit provides the incentive for innovators to take the risk needed to come up with new products.

My mother never once complained that we did not have access to the latest Soviet washing machine. We never desired a new Soviet car. The socialist system relies on what Adam Smith referred to as the benevolent butcher and while there will undoubtedly be benevolent butchers out there, clearly a system that provides monetary rewards for innovators is much more dynamic and successful. The profit that the Occupy Wall Street protesters decry is the reason the world has access to clean water and anti-viral drugs.

The other major problem that must be solved by any economic system is how to deal with the fact that information is so decentralized. There is no way for a central planner to know how many hot dogs 300 million Americans are going to want at every moment in time. A central planner cannot know the relative value of resources in the production of various goods and services. Market capitalism solves that problem through the price system. If there are too few hot dogs, the price of hot dogs will rise and more hot dogs will be produced. If too many hot dogs are produced, the price of hot dogs will fall and fewer will be produced.

Market capitalism is the key to the wealth of the masses. As Ludwig von Mises wrote in his 1920 book, Socialism, only market capitalism can make the poor wealthy. Nobel Laureate Friedrich Hayek in his famous 1945 paper, The Use of Knowledge in Society, showed that only the price system in capitalism can create the spontaneous order that ensures that goods will be allocated in a way that ensures consumers determine the use of resources. The Occupy Wall Street movement would make best use of its time and energy in protesting the encroachment of the centrally planned state that led to the disaster of the Soviet Union, fascist Germany, and dictatorial North Korea.

The company “goes green” for business and ethical reasons, and drags Chinese suppliers along with it. (Grain of salt: Schell is an activist journalist and former dean of the UC Berkeley School of Journalism.)

Orville Schell in the Atlantic

…Stepping into the building’s vast, windowless interior, I have the sense of entering an oversize Fabergé egg. But instead of refined scenes of aristocratic czarist life, I encounter thousands of middle-class Chinese engaging in the newest, and already the most inalienable, right in this erstwhile “People’s Republic”: shopping. This is the Shijingshan Shanmuhui, a Sam’s Club, one of the 352 stores that Walmart now operates in 130 Chinese cities.

Just inside the doorway, a scrum of salespeople hawk everything from roasted sweet potatoes to fitness-club memberships and massage chairs. Throngs of energetic customers push overflowing carts (fitted with data screens touting the latest bargains) making that familiar sound of wobbling rubber wheels on concrete. Indeed, its familiarity makes me feel I’ve been astrally projected back to Walmart’s natal place—Bentonville, Arkansas, which the current president and CEO, Michael Duke, recently referred to as the “Lighthouse of the Ozarks.”

But the young Chinese women workers in green aprons and sanitary masks make it undeniable that we’re a long way from the Ozarks. They call out their wares in Mandarin, proffering samples of soya-bean milk, date juice, and lychee jelly. Around them are mountainous piles of fresh pig intestines; pillow-size bags of dried fungus, seaweed, and mushrooms; packages of desiccated deer tendons (still attached to hooves!); inky-black dehydrated sea slugs; glistening octopuses on nests of chopped ice; and tanks of gulping fish, dazed frogs and turtles, and hyperactive shrimp.

Although Walmart’s $7.5 billion in Chinese sales receipts account for only 2 percent of the company’s annual revenues, its sales in China have risen substantially over the past decade. Sales in the United States, by contrast, have been shrinking. And as China’s retail market—the world’s fastest-growing—expands by 18 percent a year, Walmart’s executives smell the intoxicating scent of more growth to come. Equally important, if not more so, some 20,000 Chinese suppliers, or “partners,” reportedly provide Walmart with about 70 percent of the nearly $420 billion worth of goods that it sells globally each year. (Because of the complexity of the global supply chain, the percentage from China is hard to calculate.) China has become so crucial to Walmart’s supply chain that in 2002, the retail giant moved its global sourcing headquarters across the border from Hong Kong to Shenzhen, in southern China.

…Just as Mao’s revolution elaborated an all-encompassing code of conduct and ideology, “Walmart culture,” known in Chinese as Woerma wenhua, became a set of principles that, in the words of one employee quoted in Derek J. Davies’s insightful article on “corporate cadres” in the forthcoming book Walmart in China, “are not simply rules for a style of work, but are kind of ‘a way of life.’” This notion of an all-embracing culture has created a shared contradiction: while neither organizational structure is comfortable with dissent, they both value, and depend on, innovation. Leaders are left to confront the same question: How, in such a tightly controlled and closely monitored organizational structure, can they encourage the kind of independent, creative spirit that is essential to surviving and maintaining a competitive advantage?

In that respect, if China wants to keep developing its hybrid form of authoritarian capitalism, its leaders could do worse than to learn from Walmart, a corporate entity larger in scope and logistical complexity than any other in human history: Its 9,700 stores in 28 countries, supplied by a network of more than 100,000 sources in 60 countries, are staffed by some 2.1 million employees serving 200 million customers a week. Compare Walmart’s annual revenue with the GDP of sovereign nations, and it ranks in the top quartile. In many ways, the company is like a country. Its CEO, when abroad, is treated almost like a visiting head of state. Senior executives in charge of overseas operations function like diplomats, signing agreements with governments and businesses and managing the company’s interests. The various national arms of the Walmart Foundation operate almost like a government foreign-aid program. Even Walmart’s stores, arrayed around the world, seem almost as representative of America as our consulates and embassies.

Exhibit #234,765,958 in why the government should not try to play investment banker or venture capitalist.

Evergreen Solar Inc., the Massachusetts clean-energy company that received millions in state subsidies from the Patrick administration for an ill-fated Bay State factory, has filed for bankruptcy, listing $485.6 million in debt.

Evergreen, which closed its taxpayer-supported Devens factory in March and cut 800 jobs, has been trying to rework its debt for months. The cash-strapped company announced today has sought a reorganization in U.S. Bankruptcy Court in Delaware and reached a deal with certain note holders to restructure its debt and auction off assets.

The Massachusetts Republican Party called the Patrick administration’s $58 million financial aid package, which supported Evergreen’s $450 million factory, a “waste” of money.

Obama yammers about “green jobs” as the way out of recession, but this green company moved its jobs to China.

NYT:

…Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.

PopSci

Shopping on the go just got easier in South Korea. A new virtual store developed by Euro grocery giant Tesco for its line of South Korean Home Plus supermarkets lets customers browse store shelves for the products they want just as if they were in a physical store. But they’re not. They’re on a subway platform.

The virtual store has been a huge success among the 10,000 or so customers who have taken advantage of the service, which allows busy workaday South Koreans engaged in their daily commutes to optimize their time by shopping while they wait for the train. Tesco has simply plastered the walls of a subway station with visual recreations of grocery aisles. Each item has a QR code emblazoned on it. Snap that code with the Home Plus smartphone app, and it goes straight into the virtual shopping cart.

Customers can then check out via their smartphones as they step onto their morning trains. The groceries are delivered to their homes that evening at a specified time, saving office drones the added hassle of braving a crowded supermarket during the late-day rush.

Alas, many in Communist North Korea still starve.

The left’s villains du jeur, the Koch brothers, get called evil.

Warning: you may want to smash your screen.

Harold Ford Jr, former Democrat congressman from Tennessee, writes in the WSJ:

…In the year since the Deepwater Horizon spill, the Obama administration has put in place what is effectively a permanent moratorium on deep water drilling. It stretched out the approval process for some Gulf-region drilling permits to more than nine months, lengths that former President Bill Clinton has called “ridiculous.”

Then there’s tax policy. Why, when gas prices are climbing, would any elected official call for new taxes on energy? And characterizing legitimate tax credits as “subsidies” or “loopholes” only distracts from substantive treatment of these issues. Lawmakers misrepresent the facts when they call the manufacturing deduction known as Section 199—passed by Congress in 2004 to spur domestic job growth—a “subsidy” for oil and gas firms. The truth is that all U.S. manufacturers, from software producers to filmmakers and coffee roasters, are eligible for this deduction.

We won’t achieve energy security by restricting our own companies from drilling or singling them out for punitive taxes. We’re talking about an industry that provides millions of jobs and, for the foreseeable future, the power for our economic growth.

So our focus right now has to be to find ways to encourage domestic energy supplies, even while we encourage new sources of energy. President Obama is right that this isn’t a long-term solution. But we can’t lose sight of what the country needs today.

Ford goes on to say we need to review all energy policies in order to streamline the process, and to encourage more students to study the  hard sciences necessary to develop future energy sources.

Meanwhile, some exciting and innovative work is going on in North Dakota. As this New Yorker abstract notes.

…drilling for oil in North Dakota. North Dakota is booming. Its unemployment rate is the lowest in the country, 3.7 per cent, and so many people have moved there for jobs that last year local officials declared a housing crisis. The new workers have been drawn by the Williston Basin, in the western part of the state, which holds the largest accumulation of oil identified in North America since 1968. About a hundred new oil wells are blasted into the ground each month. One day a few months ago, half a dozen workers prepared to send enough explosives underground to dismantle an armored tank. The engineer in charge of the well, Russell Rankin, works for Brigham Exploration, in Austin, Texas, one of some hundred and fifty oil companies that have entered the basin since 2006. The rock is the Bakken formation, a layer of the basin that geologists believe holds a twenty-five-thousand-square-mile sea of oil. The head of the state’s department of mineral resources recently estimated that the region could contain eleven billion barrels of oil that can be obtained using current technology. That assessment has doubled since a 2008 U.S. Geological Survey study.

Scott Hodge at the Tax Foundation

During my recent testimony before the Senate Budget Committee (found here), I cited an OECD statistic that the U.S. has the most progressive income tax system among industrialized nations.[1] This prompted one Senator to point out that if the richest 10% of taxpayers earn the most of any OECD country, shouldn’t it make sense that they bear the largest tax burden of any country?

The answer can be found in the OECD table below. This table shows the share of taxes paid by the richest 10 percent of households, the share of all market income earned by that group, and the ratio of what that 10 percent of households pays in taxes versus what they earn as a share of the nation’s income.

The first column shows that the top 10 percent of households in the U.S. pays 45.1 percent of all income taxes (both personal income and payroll taxes combined) in the country.  Italy is the only other country in which the top 10 percent of households pays more than 40 percent of the income tax burden (42.2%). Meanwhile, the average tax burden for the top decile of households in OECD countries is 31.6 percent…

Table 4.5. Alternative measures of progressivity of taxes in selected OECD countries, mid-2000s
	B. Percentage share of richest decile
	1. Share of taxes of richest decile	2. Share of market income of richest decile	3. Ratio of shares for richest decile (1/2)
Australia	36.8	28.6	1.29
Austria	28.5	26.1	1.10
Belgium	25.4	27.1	0.94
Canada	35.8	29.3	1.22
Czech Republic	34.3	29.4	1.17
Denmark	26.2	25.7	1.02
Finland	32.3	26.9	1.20
France	28.0	25.5	1.10
Germany	31.2	29.2	1.07
Iceland	21.6	24.0	0.90
Ireland	39.1	30.9	1.26
Italy	42.2	35.8	1.18
Japan	28.5	28.1	1.01
Korea	27.4	23.4	1.17
Luxembourg	30.3	26.4	1.15
Netherlands	35.2	27.5	1.28
New Zealand	35.9	30.3	1.19
Norway	27.4	28.9	0.95
Poland	28.3	33.9	0.84
Slovak Republic	32.0	28.0	1.14
Sweden	26.7	26.6	1.00
Switzerland	20.9	23.5	0.89
United Kingdom	38.6	32.3	1.20
United States	45.1	33.5	1.35
OECD-24	31.6	28.4	1.11
Source: Computations based on OECD income distribution questionnaire.

According to liberals, that is.

Thomas Sowell:

Why are so many people who are opposed to development nevertheless in favor of “redevelopment”?

The short answer is that development involves decisions made in the market by large numbers of people in the general population, in their own personal interests, while redevelopment involves taking decisions out of the hands of the population at large and putting the power to make those decisions in the hands of elites.

Developers who build housing to sell to the public are the focus of many denunciations by elites in places like coastal California. But developers would not even exist if there were not vastly larger numbers of people ready to buy or rent what they build.

All these people who make the developers’ work economically viable vanish into thin air in political rhetoric that is focused on the developer and his “greed.”

The people who are against development dare not come right out and say in plain English that they want other people’s desires squashed by the government, so that the desires of the small, self-congratulatory elites can prevail, while housing prices skyrocket because of the restricting on building.

If development is considered to be so bad, why is redevelopment considered to be good, by many of the same people?

Redevelopment imposes the supposedly superior wisdom and virtue of an elite on the rest of us. That is its ideological appeal to self-congratulatory elites.

Its political appeal is more mundane. By bulldozing low-income neighborhoods and replacing them with upscale malls and condos, local political leaders get more tax money into their coffers, offering more opportunities for them to do things that enhance their chances of being reelected…

Walter Russell Mead:

…At the risk of forfeiting any remaining elite cred I may have, let me confess: I love Walmart.  For years, every time I traveled outside New York, I descended on Walmart stores across the country.  Everything in those stores is significantly cheaper than in the hoity-toity New York department stores that want me to pay $9 and up for a “designer” undershirt.  For the price of a pair of socks in New York I can get three pairs at the average Walmart.

But now that I’m living like a normal American — driving to the mall in a car rather than walking to the store down the block — my personal relationship with Walmart is deeper, richer, more meaningful than ever.  I don’t have to limit myself to what I can carry in a shopping bag; I can fill the trunk and the back seat of the car with my loot.  As I pushed my enormous shopping cart through the grocery aisles last night, I felt like an immigrant from the Soviet Union: so many choices, such convenience, such friendly staff, such low prices!  Milk that costs $2.50 in the glamorous borough of Queens costs $1.16 chez the Mart.   Soup, bread, cereal: all are 40% to 50% cheaper out here.

As I drove my load of goodies home, I started to feel a surge of Green Guilt: the Great Wastrel staggers home in his gas-guzzling automobile stuffed with Big Box Retail productions — the enemy of everything sustainable. Shouldn’t I be riding a bio-degradable bicycle to the farmer’s market to pick up locally produced heirloom beets and carry them home in my reusable organic burlap shopping sack?

Actually, no.  Walmart and its Big Box friends are making the world a greener, more sustainable place.  This isn’t because of any PR stunts or corporate green initiatives they may have going; it’s because they are relentlessly focused on profit and efficiency.  It is their cutthroat capitalism not their sense of corporate citizenship that will save us — if anything can.

Walmart is helping to save the planet because it’s tough and realistic and focused like a laser on the bottom line.  Giving customers what they want at low prices has made Walmart an irresistible force in the market.  Every sock factory in China, every flatware manufacturer in Bangladesh wants to crack the Walmart market.  Some purchasers buy by the crate and the carton; Walmart buys in the millions and billions…

Iran’s president Ahmadinejad on Tuesday predicted the defeat of capitalism and blamed global big business for the suffering of millions, but Germany’s chancellor said market economies were key to lifting the world’s least developed countries out of poverty.

The clash of visions at the U.N. anti-poverty summit drew a line under the stark differences on easing the misery of the one billion people living on less than $1.25 a day.

Who organizes such idiot fests?

More than 140 presidents, prime ministers and kings are attending the three-day summit which started Monday to assess and spur on achievement of U.N. targets set by world leaders in 2000. The plan called for an intensive global campaign to ease poverty, disease and inequalities between rich and poor by 2015.

Ease inequality? That will happen when someone perfects a perpetual motion machine.

Some thoughts:

• Iran has vast oil reserves, yet is so incompetently run it must import gasoline.
• China lifted 300,000,000 people out of poverty since 1987 when it adopted a market economy
• Cuba is desperately broke and is trying to create some wealth by allowing a modicum of free enterprise on the island prison.

Some common sense came from Angela Merkel:

German Chancellor Angela Merkel, the world’s fourth-largest economic power, took an opposite tack, likely speaking for the rest of the capitalist world.

Obama excepted.

Stressing that “the primary responsibility for development lies with the governments of the developing countries,” she said the key to economic prosperity was good governance and a flourishing capitalist economy.

“The countries themselves must promote the development of a market economy…for without self-sustaining economic growth developing countries will find the road out of poverty and hunger too steep to travel,” Merkel said.

The German leader said international assistance can’t substitute for domestic resources, warned that “development aid cannot continue indefinitely” and declared that “support for good governance is as important as aid itself.”

In short, grow up and quit bitching. This didn’t go over well with the libs.

Oxfam, one of the world’s most respect aid organizations, slammed Merkel’s address. Spokeswoman Emma Seery said more had been expected from the Germans, who “failed to explain how they will meet their promises of aid to poor countries, and sidestepped their responsibility to make aid work by laying this at the door of the poorest countries.”

Professor Bainbridge:

WSJ via TasProf:

Wealthy businessmen often feel obligated to “give back.” Who says they’ve taken anything?

Bill Gates and Warren Buffett announced this month that 40 of America’s richest people have agreed to sign a “Giving Pledge” to donate at least half of their wealth to charity. With a collective net worth said to total $230 billion, that promise translates to at least $115 billion.

It’s an impressive number. Yet some—including Messrs. Gates and Buffett—say it isn’t enough. Perhaps it’s actually too much: the wealthy may help humanity more as businessmen and women than as philanthropists.

What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett’s investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process. …

Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to “give back” to society. But “giving back” implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven’t taken from society, but rather enriched us in ways that were previously unimaginable. …

While businesses may do more for the public good than they’re given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill? To the contrary, the literature on philanthropy is riddled with examples of failure, including examples where philanthropic efforts have actually left intended beneficiaries worse off. …

I do not mean to belittle philanthropy. I represent a foundation and believe it can accomplish a great deal of good if it achieves its donor’s objective, which is to free individuals to pursue their ambitions without the burden of intrusive government. My point is simply that there is nothing inherently better or nobler about using one’s resources for charitable purposes than for any number of other ones. If anything, the marketplace does a better job of channeling resources toward where they are most valued, and of punishing failure. Companies shut down all the time. How many philanthropies close because of poor performance? …

Let’s hope the philanthropy of those who do sign the Giving Pledge achieves great things. But let’s not fool ourselves into thinking that businessmen are likely to achieve more by giving their money away than they have by making it in the first place.

LA Daily News

Battling back against the tough economic times, thousands of union members swarmed outside Los Angeles City Hall on Friday, calling on city leaders and politicians to save jobs, create more work and stop outsourcing.

“Today is a national call for good jobs now,” said Maria Elena Durazo, executive secretary-treasurer of the Los Angeles County Federation of Labor.

“It starts in L.A., but it’s going to make its way all across the United States of America.”

You betcha, hon’.

Except the wave is  against government unions with their greed, self interest, inflated salaries and pensions, and lack of accountability.

Why, to listen to you, we private citizens owe it to you to tax ourselves to create plumb jobs for your gang. Public servants? Hardy har har.

…Kenneth Hermosillo, a 42-year-old sheet metal worker from Torrance who has been unable to find work for a year and a half.

“We’ve got to get building going back,” Hermosillo said. “Once we get building going, people start working, taxes get paid, people start eating out. It’s the whole trickle-down theory.”

Nice to hear a presumed Democrat cite trickle down economics, but he’s got the theory wrong.

Government spends money taxed from those who produce wealth. Government does not create wealth. The trickle starts with the private sector.

How to get the private sector generating wealth and jobs?

Bush did it with tax cuts that put more money into the private economy.  Democrat policy is the opposite.

These union folks are barking up the wrong tree.

One final dig: can’t you folks make up your own signs and slogans?

The NYT is deeply, deeply puzzled.

Why is unemployment so high?

The whodunit has flummoxed economists in both parties for a year. In 2009, as the new Obama administration grappled with the financial crisis, joblessness rose nearly two points beyond customary recession forecasts.

Part of the uncertainty concerns why. More consequential now, as the administration and Congress determine what to do, is whether the unemployment spike reflects a short-term or permanent shift in demand for workers.

“The stakes are enormous,” said Alan S. Blinder, a Princeton economist who advised President Bill Clinton, because the answers are “going to dictate the pace at which jobs come back.”

And that, in turn, may dictate whether Democrats keep control of Congress or surrender at least one chamber to Republicans. So long as the job market remains weak, even substantial achievements like the passage of new financial regulations won’t alleviate voter discontent with the party in power.

In the days of unfettered capitalism, we dammed rivers, belched soot into the air and leveled  forests without a thought. We were rambunctious clods.

Then ecology took hold, the notion that all natural things are interconnected in a system, one we barely understand and which we could spoil via ignorant exploitation. Today we respect nature and its intricate ways (not enough to please Gaia types to be sure.)

What we need now is an new ecology, one that respects the delicate business ecosystem.

America is a rich nation because of that wealth generating ecosystem. It is more delicate than nature. The history of the world is rife with examples of once-great nations brought low. And of nations that never advance.  In recent times, Zimbabwe went from a rich nation to a beggar nation because of human error.

Democrats intellectually understand the importance of business enterprise, but in their gut, they harbor distrust of anything that turns a profit. This colors everything they do.

In one year alone, the Democrats have rushed through two massive laws — Obamacare and the financial regulations — that impact businesses in untold ways. Literally untold because these massive tomes still leave much to the discretion of newly minted bureaucrats who will write and enforce hundreds of new regulations.

In effect, the Dem Cong are the modern equivalent of the cloddish capitalists. They tamper, in ways big and small, with the delicate wealth-creating enterprise that we all take for granted. The goose that lays the golden egg is indeed mortal, as we may soon witness to our lasting regret.

David Brooks.

The larger conflict began with the end of the cold war. That ideological dispute settled the argument over whether capitalism was the best economic system. But it did not settle the argument over whether democratic capitalism was the best political-social-economic system. Instead, it left the world divided into two general camps.

On the one side are those who believe in democratic capitalism — ranging from the United States to Denmark to Japan. People in this camp generally believe that businesses are there to create wealth and raise living standards while governments are there to regulate when necessary and enforce a level playing field. Both government officials like President Obama and the private sector workers like the BP executives fall neatly into this camp.

Not so fast with Obama. Do GM and Chrysler ring a bell?

Truth be told, Obama and his arrogant cohort think they could run everything better — banks, the health care sector, pharmaceutical industry and on and on.

On the other side are those that reject democratic capitalism, believing it leads to chaos, bubbles, exploitations and crashes. Instead, they embrace state capitalism. People in this camp run Russia, China, Saudi Arabia, Iran, Venezuela and many other countries.

Many scholars have begun to analyze state capitalism. One of the clearest and most comprehensive treatments is “The End of the Free Market” by Ian Bremmer.

Bremmer points out that under state capitalism, authoritarian governments use markets “to create wealth that can be directed as political officials see fit.” The ultimate motive, he continues, “is not economic (maximizing growth) but political (maximizing the state’s power and the leadership’s chances of survival).” Under state capitalism, market enterprises exist to earn money to finance the ruling class.

The contrast is clearest in the energy sector. In the democratic capitalist world we have oil companies, like Exxon Mobil, BP and Royal Dutch Shell, that make money for shareholders.

In the state capitalist world there are government-run enterprises like Gazprom, Petrobras, Saudi Aramco, Petronas, Petróleos de Venezuela, China National Petroleum Corporation and the National Iranian Oil Company. These companies create wealth for the political cliques, and they, in turn, have the power of the state behind them.

These companies (except China) are exploiting their own national resources, which makes their examples irrelevant.

How well do state-run enterprises excel in innovation? Creating entirely new businesses and products? In tapping the entrepreneurial potential in human beings?

Years hence the biggest story of our times won’t be oil spills or deep recessions, it will be the creation of the Internet — the greatest example of unregulated, free spirited untethered innovation.

Popular Science:

This sound-amplifying scope, our 2009 Best of What’s New Grand Award winner, teams up with heart murmur-detecting software that can signal heart abnormalities or leaky valves. By allowing your everyday doc to better find murmurs, this scope could save $9.4 billion a year in unnecessary echocardiogram tests and cardiologist fees.

Check them all out here.

Jonah Goldberg:

…Bolivian president Evo Morales was interviewed by Al Jazeera television while in Copenhagen. “The principal obstacle to combating climate change is capitalism,” he explained. “Until we put an end to capitalism, it will continue to be a big obstacle for life and humanity.”

Zimbabwean dictator Robert Mugabe proclaimed in a speech: “When these capitalist gods of carbon burp and belch their dangerous emissions, it’s we, the lesser mortals of the developing sphere, who gasp and sink and eventually die.”

Right. That is, unless Mugabe kills them first.

The big name in the anti-capitalism club was, of course, Hugo Chávez, the Venezuelan national-socialist strongman. In a typical stem-winder, he belched: “Capitalism is a destructive model that is eradicating life, that threatens to put a definitive end to the human species.”

I don’t know how to say “chutzpah” in Spanish, but you’ve got to hand it to the leader of the world’s No. 5 supplier of oil for bemoaning the system that keeps his regime afloat by buying his product.

Now, I know that nice, moderate progressive types are rolling their eyes at my cynical effort to associate their noble activism with support for socialism and thugs. Fair enough. Let us concede that many, perhaps even most, proponents of draconian restrictions on carbon emissions have no sympathy for socialist dictators and do not want to chuck capitalism in the dustbin of history. But surely it should trouble these responsible greens that they’re in bed with a Star Wars cantina of villains and monsters.

Also, if environmentalists want to avoid the “watermelon” charge (“green on the outside, red on the inside”), maybe the delegates and activists in the audience shouldn’t have given Chávez such a loud and boisterous round of applause? Perhaps the folks who gave him a standing ovation didn’t help either? (more…)

Benjamin Powell:

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

In 1620 Plymouth Plantation was founded with a system of communal property rights. Food and supplies were held in common and then distributed based on equality and need as determined by Plantation officials. People received the same rations whether or not they contributed to producing the food, and residents were forbidden from producing their own food. Governor William Bradford, in his 1647 history, Of Plymouth Plantation, wrote that this system was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort. The problem was that young men, that were most able and fit for labour, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense. Because of the poor incentives, little food was produced.

Faced with potential starvation in the spring of 1623, the colony decided to implement a new economic system. Every family was assigned a private parcel of land. They could then keep all they grew for themselves, but now they alone were responsible for feeding themselves. While not a complete private property system, the move away from communal ownership had dramatic results.

This change, Bradford wrote, had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. Giving people economic incentives changed their behavior. Once the new system of property rights was in place, the women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability.

Once the Pilgrims in the Plymouth Plantation abandoned their communal economic system and adopted one with greater individual property rights, they never again faced the starvation and food shortages of the first three years. It was only after allowing greater property rights that they could feast without worrying that famine was just around the corner.

We are direct beneficiaries of the economics lesson the pilgrims learned in 1623. Today we have a much better developed and well-defined set of property rights. Our economic system offers incentives for us—in the form of prices and profits—to coordinate our individual behavior for the mutual benefit of all; even those we may not personally know.