Where Keynes and the Keynesians get it wrong
I learnt my economics from a school that respected Keynes. They were quite clear that Keynes had become an excuse for willy-nilly government spending but still accepted that Keynes was right in how to cure a deflation or a recession. Spending up big during a recession was good but not during more prosperous times. Politicians of course want to spend up big at all times.
There is a long article here that sets out in detail why Keynes was wrong altogether. He should not be followed even during a recession. I am going to be so bold as to try to explain why in just a few paragraphs. If I seem to be missing something please go to the long article that I have mentioned.
Keynes was a Leftist and his thinking was typically Leftist and wrong. Leftists think only in big aggregates like race, class, Kulaks and sex. Considering the individual seems to be beyond them.
And Keynes did exactly that. Instead of looking at the complexities of a modern industrial economy he looked at one of the biggest aggregates of all: Aggregate demand. So to him recessions and depressions were not explained by the myriad details actually at work in an economy at the time. He saw recessions as glaringly simple: A recession was a deficiency in aggregate demand. And that was easy to fix: Let the government spend up big and thus increase aggregate demand.
But if it matters at all, aggregate demand is a symptom not the problem itself. You have to look at what in detail has damaged economic activity. You have to go into that boring nitty gritty activity of looking for the source of the problem or problems.
And you will very often find that the problem is some sort of government meddling. The great crash of 2008, for instance, was the result of huge Federal interference in the housing market. Banks were virtually forbidden from lending carefully. Checking whether a person would likely be able to afford his mortgage payments was "racist". And housing is a BIG sector of the economy so when the inevitable crisis resulting from many loans in default arrived, the crash and losses were very big indeed.
So the cure for a depression will often be a REDUCTION of government activity, not an increase in it. Keynes got it exactly wrong.
And Keynes also overlooked that recessions have a function. If there are businesses that are no longer prospering, a recession will normally send them broke. And the resources (manpower, real estate etc) freed up by that collapse will become available for use by startups who can use them more productively: Schumpeter's "creative destruction". And if such a reallocation of resources is allowed to run its course without interference it will normally be short-lived. Business will pickup again within as little as a year.
So Keynes was wrong at the most basic level. Recessions are not a problem at all. They are a normal, natural and desirable process of reallocating resources more efficiently. They are a healing episode wherein senile businesses are put out to grass while new businesses take over. They do give pain in some quarters but there is no gain without pain
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Dems''Fake Border Crisis' Turns Out to Be Real
Detention centers are overrun and people are dying while trying to cross the border.
House Speaker Nancy Pelosi dismissed the “fake crisis at the border.” Senate Minority Leader Charles Schumer called it “a crisis that does not exist.” House Majority Leader Steny Hoyer said, “There is no crisis at the border.”
Byron York highlights those and many other Democrats (and a few Republicans) utterly denying the crisis at our southern border. But many of those same people are now decrying that crisis, particularly so they can blame President Donald Trump, who just happens to be the only one trying to stop the crisis.
Kevin Williamson explains the foundation of it all: “The problem of illegal immigration is itself the result of massive administrative failure in the United States. By systematically failing — and refusing — to enforce our own immigration laws, we have created the international equivalent of what the tort lawyers call an ‘attractive nuisance.’ There are jobs, homes, support, and (in spite of the law) benefits to be had in the United States, with relatively little prospect of serious consequences for those who are caught. If you are a poor Guatemalan without much in the way of economic and social prospects, illegal immigration to the United States is a perfectly rational choice. Guatemala has its own deficiencies, to be sure, but the situation here is Washington’s creation, not Guatemala City’s.”
With that, we come to the latest news on the immigration front.
First, Trump has named Mark Morgan, Barack Obama’s former Border Patrol chief, acting commissioner of Customs and Border Protection after its current acting commissioner, John Sanders, announced his resignation effective July 5. Morgan had just taken over at U.S. Immigration and Customs Enforcement (ICE) earlier this month. Here’s how The Washington Post “reports” the move:
A week after beginning his reelection campaign with promises of mass deportations, President Trump sent the agencies responsible for immigration enforcement deeper into disarray on Tuesday, replacing his interim border chief with a figure he plucked from cable news punditry last month.
You know where the Post mentions that Morgan was Obama’s guy? The 25th paragraph.
In any case, Trump’s move does come amid continued bad Leftmedia publicity for his border policies, particularly regarding detention of illegal border crossers. Perhaps his strategy with personnel changes is to keep moving the lightning rod.
Beyond the kerfuffle over “concentration camps” at detention facilities, the latest bad publicity is the horrific photo of the Salvadoran father and toddler daughter who drowned trying to cross the Rio Grande. “This photo of a dead father and daughter shows the true nature of Trump’s immigration policy,” reads the headline at Vox. No it doesn’t. Why was this Salvadoran man and his family allowed to get through Mexico and then escape a holding facility? Poor enforcement there, for one thing, but also because Democrats invited a border invasion.
Don’t believe us? Take Elizabeth Warren’s word for it. She backs the proposal of fellow Democrat presidential candidate Julian Castro to repeal the federal law criminalizing illegal border crossing. “We should not be criminalizing mamas and babies trying to flee violence at home or trying to build a better future,” Warren says. Well, they’re dying on the way here trying to follow her advice, all while leftists are standing on the caskets of the dead to politically attack Trump.
Meanwhile, before tonight’s presidential debate, several candidates attempted to gain access to detention facilities for political photo ops — like the pathetically embarrassing one staged by Alexandria Ocasio-Cortez.
What happened to this father and daughter shouldn’t happen to anyone. The question is what are government officials going to do to stop it? The Trump administration, despite being utterly overwhelmed with illegal crossings and managing detention centers well over capacity, wants to close the border to such crossings. Democrats want to fling wide the gates.
As for legislation, the House passed a $4.5 million emergency border bill Tuesday, but it includes so many mandates to provide free stuff for border crossers while lacking key enforcement provisions that Trump has threatened a veto. To be clear, there should be money allocated for true humanitarian relief, and detained migrants should be treated humanely. But a U.S. detention center is not the Ritz-Carlton, and people who cross the border illegally have no “right” to be here.
This humanitarian crisis is largely the result of Democrats, who advertise “free” stuff and sanctuary policies if only migrants can reach American soil. That’s a cynical ploy for votes and it’s having serious and deadly consequences.
SOURCE
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SCOTUS Deserves Praise for Reversing Itself on Takings Clause Injustice
Our constitutional system assumes that federal courts serve to remedy an injustice created by officials in the legislative and executive branches. Unfortunately, federal courts, even the Supreme Court, sometimes are responsible for creating an injustice.
Thirty years ago, the Supreme Court did that for property owners in Regional Planning Commission v. Hamilton Bank of Johnson City. On Friday, in Knick v. Township of Scott, the court ended that injustice by overruling Williamson County by a 5-4 vote.
For more than 30 years, people with claims under the Fifth Amendment’s takings clause have been told, “Get in the back of the bus. You are not allowed to go to federal court to seek relief for a claim that a state official has taken your property without just compensation.”
A reasonable person might say, “Huh? How can that be? Everyone else can go to federal court to sue the state over a constitutional violation. People can sue in federal court for a First Amendment free speech clause violation, a Fourth Amendment search and seizure violation, and so forth. Even a prisoner convicted of murder can sue the state for an Eighth Amendment cruel and unusual punishments clause violation. Why not me?”
Those are fair questions. The answer is that the Williamson County decision—a ruling only a lawyer could love—was responsible for that outrage.
Before I discuss that case—and its offspring, San Remo Hotel, L.P. v. City and County of San Francisco—let me mention three settled background principles.
First, the Fifth Amendment’s takings clause expressly prohibits federal and state governments from taking someone’s private property without providing “just compensation.”
Second, overly burdensome state regulations can amount to a “taking” of private property if those rules deny someone the opportunity to make use of, or make a profit from, his land without guaranteeing him “just compensation.”
Third, federal law—the Civil Rights Act of 1871—expressly guarantees everyone a right to sue for relief for a state or local federal constitutional violation.
Together, these three well-established principles should permit someone to claim that a state or local statute, ordinance, or regulation, or the action of an executive official, has the effect of taking his land, which would then entitle him to some type of relief for the harm he has suffered.
This may seem simple, but few legal issues can’t be mucked up by judges, even those on the Supreme Court.
In Williamson County, the Supreme Court concluded that a person has not stated a takings clause violation until he proves that the state will not compensate him for his losses, and he cannot know the answer to that question until the state courts have rejected his takings clause claim.
That is far from obviously reasonable. If the state has not already paid the property owner, and if there is no state law equivalent of a workers’ compensation system—that is, if a property owner cannot just file a claim and receive payment—there should be no doubt that the state will not pay him. Requiring him to ask the state courts to tell him the obvious is just a waste of time.
The one saving grace of the Williamson County decision is that it appeared to give the landowner the opportunity to return to federal court once the state courts told him the government would not compensate him.
Rather than cutting him off at the knees, Williamson County seemed merely to order the landowner to wade out to knee-level before returning to federal court.
But that’s not how it worked out.
This brings us to the Supreme Court decision 20 years later in San Remo Hotel, L.P. v. City and County of San Francisco. There, the court held that a person whose just compensation claim is rejected by the state courts cannot relitigate that issue. Why? Because the state court decision is final and cannot be relitigated in federal court.
The average person would find it shocking to see a lawyer try to persuade a court to adopt such an obvious catch-22, but the Supreme Court bought the argument and this injustice was allowed to stand for over 30 years.
Rose Mary Knick owns land in Pennsylvania on which a graveyard might contain the ancestors of her neighbors.
In 2012, the township passed an ordinance saying that cemeteries must be open and accessible to the pubic during daytime. The township later told Knick that she was in violation of the ordinance. She sued to have the township’s actions declared a “taking,” but ultimately lost because of Williamson County.
On Friday, the Supreme Court finally owned up to the mistake it made in the Williamson County decision.
Writing for the majority, Chief Justice John Roberts reasoned that, “Contrary to Williamson County, a property owner has a claim for a violation of the takings clause as soon as a government takes his property for public use without paying for it.” The text of the takings clause makes that obvious.
The clause reads: “[N]or shall private property be taken for public use, without just compensation.” It does not say: “[N]or shall private property be taken for public use, without an available procedure that will result in compensation.”
The rationale underlying the takings clause, the court reasoned, also demanded that result. Once the state has taken someone’s property, the owner enjoys “an irrevocable” federal constitutional “right to just compensation,” regardless of whatever procedures the state might adopt to pay him.
As Roberts quite colorfully put it, “A bank robber might give the loot back, but he still robbed the bank.”
After finding its decision in Williamson County to be wrong in a variety of ways, the court decided that stare decisis—or respect for precedent—principles did not prevent overruling it.
“Williamson County was not just wrong,” the court concluded. Its “reasoning was exceptionally ill-founded” and inconsistent with the court’s earlier takings clause cases.
The Williamson County “state-litigation requirements has been a rule in search of a justification for over 30 years.” Stare decisis considerations also count for less when remedial decisions are at stake, because they “do not ‘serve as a guide to lawful behavior.’”
Justice Elena Kagan, joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor, dissented. She concluded that Williamson County was correctly decided and that, in any event, stare decisis principles militated against overruling it.
The Knick majority deserves kudos for its action. For more than 80 years the Supreme Court has relegated property rights claims, as the court noted in that case, “to the status of a poor relation.”
Members of the intellectual class have long deemed property rights too plebian to be worthy of their interest or robust legal protection, notwithstanding the fact that only a strong, legally protected system of property rights enables the academy to be both condescending and employed because of the contributions made by people who own property.
Property rights, they contend, must be gradually withered in the same way that a slowly dripping stream of water will erode the strongest boulder onto which it falls.
Were it not for public interest organizations, such as the Pacific Legal Foundation, which represents people such as Knick for free, state officials would, through litigation, wear out all but the wealthiest property owners.
After all, the Knick case was captioned “Rose Mary Knick v. Township of Scott,” not “Bill Gates, Mark Zuckerberg, Larry Page, or Sergey Brin v. Township of Scott.” Any one of them could buy a county or state that sought to take their land. People like Knick cannot even defend their own land in court.
Finally, the court properly decided that stare decisis considerations did not justify leaving in place the “preclusion trap” set by Williamson County and sprung by San Remo.
I have harshly criticized the court’s decision in Williamson County because its ill-considered ruling jeopardized the property rights of average people.
It is always difficult to admit that one made a mistake, particularly a big one, and the Supreme Court consists of nine people, so it is difficult for them to confess that they flubbed one. That the court did so in Knick is praiseworthy.
Courts expect people to “fess up” when they go astray. Just ask any offender facing sentencing. It is only reasonable to expect the same response from a judge who makes a mistake.
Five members of the Supreme Court did just that Friday. We owe them our thanks for doing what they expect everyone else to do in the same circumstances.
SOURCE
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