Monday, July 16, 2018

Trump Tax Increase

Take that look of worry
I'm an ordinary man
They don't tell me nothing
So I find out what I can
--Phil Collins

Current economic strength is being associated with the so-called 'Trump tax cuts.' But there is also a pending 'Trump tax increase' in the form of tariffs.

A tariff is a tax on imports. US consumers will shoulder this tax by paying higher prices for goods and services.

The net effect remains to be seen. Depending on the intensity and nature of tariffs imposed, Americans could wind up with a net tax increase.

What is certain is that tariffs tariffs will reduce the economic benefit afforded by decreased income tax payments.

Sunday, July 15, 2018

Committee on Public Information

I want to know
What you're thinking
There are some things you can't hide
--Information Society

Nazi Germany's Ministry of Public Enlightenment and Propaganda headed by Joseph Goebbels is often held as the benchmark of state sponsored information production and manipulation. However, it is a good bet that Goebbels learned much from a previous propaganda machine commissioned by the US government during WWI.

In April, 1917, President Woodrow Wilson signed Executive Order 2594. The order established the Committee on Public Information (CPI) to be headed by journalist and politician George Creel. Because America was deeply divided over the prospect of going to war in Europe, an engagement that Wilson was seeking, the CPI was created to influence public opinion and to create 'enthusiasm' for the war effort.

The CPI engaged in multimedia campaigns to disseminate patriotic information and info about how citizens could contribute to the war effort. Millions of posters, pamphlets, newspaper releases, films, and magazine advertisements were created. The CPI also trained 75,000 volunteers to deliver short patriotic speeches in theaters, churches, town halls, et al. These people became known as the 'Four Minute Men.'


The CPI also worked with government agencies such as the post office to censor what was viewed as seditious anti-war counter propaganda. It sought to pressure people into supporting the war effort and expose those who resisted. For instance, the CPI worked with local newspapers to publish names of people and families who bought war bonds and participated in rationing programs. Lists of those who did not engage in such programs were also published. Patriotic organizations such as the National Security League used these lists to strong arm holdouts into supporting the war effort.

State-sponsored speech is never free speech because resources to fund it are taken under conditions of force. Moreover, state speech crowds out speech that is legitimately free. And, as demonstrated by the Committee on Public Information, entities that act as agencies of state information are prone to engage in more overt acts of suppression as well.

Saturday, July 14, 2018

Opt Out Wish

"You can have my college money, and my Social Security checks."
--Wyatt Donnelly (Weird Science)

Another report finding that Americans would be better off keeping their payroll tax contributions currently going to Social Security and saving for retirement themselves.

Other studies indicate that many Americans do not expect Social Security to still be around when they retire. However, many of these same people want to keep the system going because they have been forced to pay into Social Security in the past and they hope to get out what they put in.

It is likely, of course, that these people will actually receive far more than they put in, thereby bankrupting the system.

Personally, if there was an opportunity to opt out of the Social Security system by letting the Feds keep all of my past 'contributions', then I would do it in a heartbeat.

Friday, July 13, 2018

Confidence Game

Chuck Scarett: How you feelin' today?
Joe Scheffer: Confident. Very confident.
--Joe Somebody

Pundits are claiming that current high measured levels of consumer confidence are good for the economy and, by extension, stocks. What does the historical evidence suggest?


At least when it comes to its relationship with GDP growth, consumer confidence seems to be a lagging indicator or perhaps even a contrarian indicator.

Thursday, July 12, 2018

Tariffs Are Inflationary

Hundred dollar car note
Two hundred rent
I get a check on Friday
But it's already spent
--Huey Lewis & The News

Several factors have kept measured price inflation, as manipulated as it is, at bay even though central banks have been on a decades-long money printing campaign. Much of the new money has been confined to the financial system which, while predictably driving financial security prices higher, has had limited effect on consumer prices to this point.

Technological advancements, particularly those related to info tech, have positively affected productivity. Higher productivity drives prices lower over time.

Greater global trade has also tempered domestic prices. When producers from various countries around the world trade with each other, then the gains from specialization, including price lowering efficiency improvements, are distributed widely. Trading with efficient producers located in China and elsewhere has permitted the US to, in effect, import lower prices.


As measured price inflation continues to perk up, rest assured that more attention will be paid to the negative effects of tariffs and other trade barriers currently being considered under the auspices of 'fair trade' and 'protecting jobs' in the US. Less trade with producers elsewhere is inherently inflationary as gains from specialization are lost in the name of becoming more self-sufficient.

The less we trade with others, the more we pay for goods and services at home.

Wednesday, July 11, 2018

Immigration and the Trustee State

Let me in
Immigration man
Can I cross the line and pray
I can stay another day
--Crosby & Nash

Several interesting points on the immigration issue made here by Hans-Hermann Hoppe. Leftists generally advocate unrestricted, 'free' immigration as a right. But on what grounds should there be such a right?

No one has a legitimate right to move onto someone else's property unless invited. If all places are already owned, then migration is by invitation only. Unrestricted immigration only holds for virgin land and the open frontier--of which little exists today.

Leftists sometimes counter that occupation of global real estate often took place through previous acts of force rather than through voluntary exchange. While certainly true, aggressive acts of previous generations do not give migrants license to tread uninvited on someone else's ground today.

Another common counter is that so-called 'public property' under the control of local, state, or federal government is akin to open frontier and thus available to migrants for open, unrestricted access. But this assertion is false as well. Just because government has illegitimately expropriated property from others does not mean that government property is unowned and available to all. Because it has been funded by tax payments, the payers of these taxes are the rightful owners of public property.

Hoppe is obviously correct. His conclusion suggests that the proper role of the State under such circumstances is one of trustee of tax-payer funded property. What should the shape of immigration look like if the State properly executed its trustee role like the manager of jointly owned community property funded by a housing association or gated community?

The answer in principle is straightforward. The trustee's guideline regarding immigration would be the 'full cost' principle. The immigrant (or inviting resident) should pay the full cost of the immigrant's use of public goods and services. The cost of community property funded by taxpayers should not rise due to the presence of immigrants. On the contrary, the presence of immigrants should ideally yield residents a profit--perhaps in the form of lower tax burdens or higher property values.

Under conditions of high immigration pressure, then the trustee's role is to secure the border to control admission to ensure that the full cost principle will be upheld.

This is not what the State generally does, of course. Rather than enforcing a full cost principle that keeps residents whole or makes them richer, the State subsidizes immigration, thereby making taxpaying residents poorer.

ECON 101 tells us that when behavior is subsidized, more of it should be expected. As they flock to countries where their behavior is subsidized, immigrants increasingly stress economic systems toward the point of collapse. Hoppe speculates that this result is precisely the goal of some groups, including the cultural Marxists.

Tuesday, July 10, 2018

Oath to Nothing

"When a man takes an oath, he's holding his own self in his own hands like water, and if he opens his fingers then, he needn't hope to find himself again."
--Sir Thomas More (A Man For All Seasons)

If the supreme law of the land, the Constitution, is subject to myriad interpretations, then it is not law at all. Instead, it becomes a tool of discretionary rule, a tool of positivism.

Acting with pure pretense, people swear an oath to uphold and protect the Constitution, and then subsequently excuse seemingly illegal behavior by claiming, "Well, that is how I interpret the Constitution."

It is an oath to nothing.

To be effective, law must have only one meaning. That meaning must be durable. And that must be understood and acknowledged upfront by those interpreting the law in advance.

Monday, July 9, 2018

Runoff to Turn Off?

Relax said the night man
We are programmed to receive
You can check out any time you like
But you can never leave
--Eagles

When the Fed began unwinding its $4 trillion bond book last year, these pages observed that it would take years to get strip those assets from its balance sheet at its meager monthly sales rate. Now there is chatter that the Fed may back off on its 'runoff' program or perhaps cease it altogether.

The Fed knows what the market knows.

The only way that this stock market party has a chance of continuing is if central banks keep their extraordinary stimulus in the system. If they remove the punch bowl even one little bit, then the party's over.

position in SPX

Sunday, July 8, 2018

Ideas by Force

So glad we've almost made it
So sad they had to fade it
Everybody wants to rule the world
--Tears for Fears

In a free society, there is a market for ideas. Those wishing to 'sell' their ideas to others must persuade others to 'buy' them.


In a statist society, there is no market for ideas. Instead, ideas are forced on others using the strong arm of government.

If ideas must be implemented by coercion, then how good can they be?

Saturday, July 7, 2018

Judge Made Law

Sir Thomas More: You threaten like a dockside bully.
Cromwell: How should I threaten?
Sir Thomas More: Like a minster of justice. With justice.
Cromwell: Oh, justice is what you're threatened with.
Sir Thomas More: Then I am not threatened.
--A Man For All Seasons

Since the 1960s, modern progressivism has increasingly relied on the courts to issue orders on policies that could not pass muster in the legislative branch. The result has been judge-made law, with Roe v. Wade serving as poster child for the movement.

As President Trump prepares to nominate a new justice for the Supreme Court, hysteria is building on the left. If the new judge is not sympathetic to legislating progressive matters from the bench, then the aggregate ideological makeup of the new court could close off the judiciary as a policy tool.

The progressive era of judge-made law could be over.

Friday, July 6, 2018

All That Matters

Drawn into the stream
Of undefined illusion
Those diamond dreams
They can't disguise the truth
--Level 42

Markets understand this relationship.


The thinking goes like this: Until worldwide QE dies, buy stocks.

This is all that matters.

position in SPX

Thursday, July 5, 2018

Consent and Contract

"Should the American colonies government themselves independently? I believe that they can, and they should."
--Benjamin Martin (The Patriot)

Judge Nap notes that one of the radical ideas underpinning the Declaration of Independence is that no government is valid if it does not enjoy consent of the governed. This concept was unheard of in 1776. No prior ruler claimed consent of the governed as a basis for legitimacy. Instead, as in England, rulers were often promoted as devine and perfect. Governments served at the pleasure of the king--which inevitably meant shaking down the king's 'subjects' to support the throne's pleasures.

But, as the judge asks, what does 'consent of the governed' mean? Do you consent to a particular government by the act of voting in a democratic election? What if the government is run by someone who you voted against? Do you consent to a government that enacts policies that you disagree with? Can a person avoid government by not giving consent?

Consent implies a contract--a contract between those who govern and those who are governed. Valid contracts require explicit, voluntary approval of those involved--either thru direct participation in hammering out and agreeing to the contract's terms or by indirect involvement thru agents explicitly designated by the contract's principals.

But those conditions are rarely in place between governments and the governed. Most policies enacted by governments have not been legitimately contracted--implying that the governments themselves are illegitimate.

Does this mean that 'consent of the governed' is an impossible dream? How is it possible to retain a government from one generation to the next under conditions of valid contract?

It seems to me that the only practical way that people can legitimately be governed on an ongoing basis is if the terms of the contract are so basic and obvious that no one would reasonably disagree with them. No theft. No fraud. No slavery. No murder.

Stated differently, no aggression.

Living in accordance with a higher, natural law is what our founding ancestors envisioned all would be willing to consent to.

Wednesday, July 4, 2018

Mayhew's Discourse and Higher Law

"So, here's to the men who did what was considered wrong, in order to do what they knew was right...what they KNEW was right."
--Benjamin Franklin Gates (National Treasure)

Jonathan Mayhew was a Congregationalist minister in colonial Boston. He was an outspoken classical liberal who routinely integrated political views into his sermons. In 1750, he delivered a sermon titled A Discourse Concerning Unlimited Submission and Non-Resistance to the Higher Powers. The sermon was widely published in both colonial America and in England.


Mayhew's sermon vigorously espoused American rights. Colonists had a right to liberty, he argued, and a duty to resist and "throw off" (a term later borrowed by Jefferson) tyrannical government.

His argument was grounded in the idea that there was a Higher Law that superseded government law. Higher Law was similar to ancient Common Law. Common Law had evolved from two universal principles: 1) do what you agreed to to do, and 2) do not encroach on other people or their property.

The first principle is the basis of contract law. The second principle is the basis of essential prohibitions against theft, rape, murder, etc.

Mayhew's Higher Law argument resonated with colonial America because many colonists and their ancestors came to America to escape tyranny that had been trampling their Common Law, or natural, rights.

John Adams was among those who felt that the first shot of the American Revolution was not fired at Lexington in 1775, but by Jonathan Mayhew twenty five years prior in his Discourse.

The revolutionaries were doing what Mayhew argued was natural, justified, and predictable. They were enforcing Higher Law.

Tuesday, July 3, 2018

Vetting Judges

"I trust I make myself obscure."
--Sir Thomas More (A Man for All Seasons)

One way to vet candidates for Supreme Court decisions is to interview them. Ask them what they think about various issues. This is what goes on in Congress once candidates are nominated by the president.

Much of this is a waste of time. Beyond the theatrical nature of these hearings, the spoken word itself is imprecise. People often say one thing and do another.

A better way to vet judicial candidates is to study their historical behavior. How have they acted on various issues in the past?
As Judge Nap reports, this is what Donald Trump is doing with candidates for the bench seat opened by President Kennedy's pending retirement. In what, according to Judge Nap, is a first for a president, Trump has outsourced the vetting of candidates to a trusted external group--in this case the Federalist Society. The society's lawyers have read every court opinion, brief, legal paper, et al authored by the candidates that they could get their hands on and are reporting their findings to the president.

Smart. Trump is probably drawing from his experience as a manager. He knows to emphasize what has been done instead of what has been said when evaluating job candidates.

Monday, July 2, 2018

Canaries in the Vault

Tell me what you've got on your mind
'Cause we're running out of time
--Fine Young Cannibals

The banks have been trading conspicuously heavy as of late. The bank index itself has been flirting with its support line in the 102-103 area for months.


If the 'strong economy' headlines were correct, then one would think this sector would be trading much better than it has been.

On the other hand, in a leveraged economy, a good rule of thumb is that the banking sector is one of the canaries in coal mine, er vault, should trouble begin to brew.

position in SPX

Sunday, July 1, 2018

Tariffs and Central Planning

Happiness
Is so hard to find
Hey baby
Tell me what is on your mind
--New Shooz

What Thomas Massie is saying here is that tariffs are a form of central planning. Whether the purpose is to protect local industry, to fix prices, or to establish production quotas, tariffs are imposed because government officials think they know better than markets.
Donald Trump may be pro-business, but that is not the same as being pro-market.

Saturday, June 30, 2018

Elmer's Excellent Economy

Forget about the worries on your mind
You can leave them all behind
--DeBarge

Former Fed chair Alan Greenspan tells Maria Bartiromo that he doesn't envision recession in the next couple of years. Not sure that should be comforting to the economy bulls. Elmer's track record on foreseeing recessions has not exactly been stellar--beginning with his poetic waxings just before the dot.com collapse.
Central bankers generally create economic havoc far better than they can forecast it.

Friday, June 29, 2018

Fake News Bias

Shake it up is all we know
Using the bodies up as we go
I'm waking up to fantasy
The shades all around aren't the colors we used to see
--Hall & Oats

The most interesting part of these results is the breakdown by party affiliation. More than 9 of 10 Republicans think the media commonly reports fake news while only about half of Democrats do. Independents split the difference.


These differences are predictable by theory. Bias, in this case slanted media, should be most apparent to those in out-groups and least visible to those in in-groups. Collectivist tendency should accentuate the difference.

Thursday, June 28, 2018

Kennedy to Retire

Jake Lo: What judge is going to believe that?
Agent Wesley: My judge.
--Rapid Fire

Yesterday, Supreme Court Justice Anthony Kennedy announced that he would retire. Kennedy has often played the role of swing or wildcard voter on high court rulings otherwise divided along predictable ideological lines given the makeup of the other eight supremes. Should his replacement carry more commitment to one of those competing ideologies, then the balance of justice, at least the current high court version, will tilt accordingly.

Because they currently hold enough executive and congressional power to get it done, many on the right are relishing at the spectre of such a rebalancing. Conversely, many on the left are cursing the process that permits a president that they did not support to nominate another judge who could move the court further from progressive sympathy.

The roles would be precisely reversed, of course, if the 2016 presidential election turned out differently.

The frenzy that Kennedy's announcement has already created is but a harbinger of the political theater that will take the stage as the nomination process for a replacement justice unfolds.

As the theater plays out, I will be remembering this. It is unlikely that our founding ancestors fought a bloody revolution to ultimately concentrate so much political power in the hands of nine (or really five) lawyers who are tenured for life.

Unfortunately, when positivism trumps the rule of law, the modern translation of the framer's original design should not be surprising.

Wednesday, June 27, 2018

Travel Ban Upheld

Judge McKay: Let's try and keep this from become a personal matter, please.
Ed Hucheson: Well, a newpaper's a very personal matter, sir. Ask the people who let us into their homes. 
Judge McKay: I've read The Day for more than 35 years. Before that, I sold it in the streets. However, here we're only concerned with the legal aspect of the sale and purchase of property.
--Deadline U.S.A.

In a 5-4 decision released yesterday, the Supreme Court upheld President Trump's 'travel ban' affecting several mostly Muslim countries. The ruling essentially reverses several lower court rulings opining that the ban unjustly discriminated on the basis of nationality and religion.

Those lower court opinions, and those among the four dissenting Supremes, are grounded in the argument that statements made by Trump, many of them during his presidential campaign, 'prove' that his motivations for the travel ban were bigoted and racist. However, it does not take a J.D. to sense that such an opinion rests on shaky legal footing.

After reading the Ninth Circuit opinion issued in early 2017, I wondered whether it was the court, not the president, that was overstepping bounds. The central legal issue is whether the president has the authority to issue such an executive order and whether the content of the order is consistent with the rule of law. As long as the order itself is valid, then the motivation behind it matters little.

Otherwise, what the dissenters in this case essentially argue is that the same executive order issued by a different president who used less inflammatory rhetoric would be ok.
As Judge Nap recounts, this is what the majority SCOTUS opinion concluded. It is the text of the order that must be construed from a legal standpoint. The political or rhetorical backdrop have little standing. Stated differently, what matters under the law is what's in the law, not the personalities behind it.

Although it has been suggested that this sets an important legal precedent for interpreting executive orders, it is difficult to see how other approaches would be more consistent with the rule of law.

Tuesday, June 26, 2018

Tariff Tirade

When I'm far from home
Don't call me on the phone
To tell me you're alone
--Billy Idol

Donald Trump unleashed a tweetstorm against Harley Davidson this morning after the company announced that it will move some operations to Thailand in lieu of the president's tariff plans. Of course, Trump did not complain last year when South Korea-based Samsung announced that it would build a $10 billion factory in Wisconsin in part to front run pending tariffs.


To make the theater even more amusing, progressives have suddenly become free market advocates. They are decrying tariffs as taxes that kill jobs. This is, of course, true. But it comes from the same group of people that has no problem levying other forms of taxes that kill jobs. And that has no problem interfering with markets in other ways (e.g., minimum wage laws) that similarly drive jobs elsewhere.

Trump's tariff tirade and the associated hypocrisy of others once again demonstrate human tendency to recognize the negative effects of market intervention in the politics of others but not in their own.

Monday, June 25, 2018

Four Falsehoods

Second time around
I'm still believing
The words that you said
--Naked Eyes

Lawrence Reed discusses falsehoods conveyed by the school system (particularly public schools) about four historical events/people:

1) That the Industrial Revolution ushered in a dark era and exploitation of the working class. Children in particular were hapless victims.

2) That Upton Sinclair's The Jungle was a historically accurate account of unscrupulous capitalism in the early 20th century that was 'solved' by subsequent government regulation.

3) That the Great Depression was eliminated by government intervention, particularly FDR's New Deal programs.

4) That Jesus was a socialist.

If you believe that any or all of the above or true, Reed suggests that you ask for a tuition refund. Of course, many students who have been so indoctrinated paid no tuition. Which nicely validates the  adage that you get what you pay for...

I would suggest that if you believe any or all of the above, then you are not engaging your capacity for critical thought. If you are pursing truth, then you would ask questions and find answers that would steer you away from the above falsehoods.

Sunday, June 24, 2018

Record Converts

Well I'm heavenly blessed and worldly wise
I'm a peeping tom techie with x-ray eyes
Things are going great
And they're only getting better
--Timbuk 3

Tech companies have been issuing convertible bonds at record rates. As indicated by the graph below, previous highs occurred in 2000 and 2007.


Implication: market demand for converts tends to be highest when stock prices are peaking.

position in SPX

Saturday, June 23, 2018

Borderline Thoughts

Stop driving me away
I just want to stay
There's something I just got to say
--Madonna

Interesting questions raised by Pat Buchanan and other about US immigration policy have me thinking once again about the role of borders in society and government's role in maintaining them. Searching these pages for previous missives on the subject, I was surprised by how often, and how long ago, this topic has been on my mind.

This post serves as a lander page of sorts for these previous thoughts that might serve as a useful reference point in the future.

Role of borders in society. Boundaries have been drawn since the early days of civilized society--suggesting a natural tendency of human beings to do so. Possible reasons for doing so include selfishness (inappropriately possessive), security, economic (e.g., facilitate trade), or social (preference for living with similar individuals).

Desirability for borders as a means for creating political competition and choice. The idea is that differing political systems operating in each bordered society compete with each other for citizens. People will leave societies with less desirable political systems in favor of the better ones. Some believe this should benefit liberty over time.

An interesting thought experiment related to the 'borders as political competition' idea above is to imagine that the geography of the continental US is split at the Mississippi River into two countries. One side houses people who believe in liberty. On the other side are those who believe in state-sponsored 'equality.' Over time, the prosperity realized by Liberty will attract people who have become impoverished in Equality. At some point, Equality will have to erect exit barriers to stem the outflow--or, of course, throw off its totalitarian state. On the other hand, Liberty's destiny will depend on the extent to which its citizens can limit the scope of its government.

That conclusion--i.e., the success of a society founded on the principles of liberty is dependent on limiting scope of government--has led to several posts (here, here, here, here) that essentially consider the 'open border' problem. The central conclusion is this. When property rights are well respected and not confiscated to fund welfare programs available to all, then open borders are preferred. Open borders create competition and mobilize labor seeking opportunity. Prosperity will increase. However, if property is being confiscated to fund welfare programs, then borders cannot be open. People seeking a free ride, as well as those ideologically opposed to the notion of liberty, will cross borders (and/or encourage others to cross borders) to consume resources that they did not earn. If borders are not secured, then the welfare state grows ever larger under such circumstances until it collapses under its own weight.

This leads to an issue that has sparked much public debate recently: the erection of physical barriers such as walls as deterrents to unwanted border crossing. One camp likes to argue that 'wall don't work.' Because people can climb, tunnel, fly over, go around them, wall don't keep people out. What this camp conveniently omits from its argument are the words 'all' and 'some.' While walls certainly don't keep all out, they certainly keep some out. We can be sure that most of the very same people who argue against building border walls have fences around their yards, security systems in their houses, and locks on their doors. Few of these people are naive enough to expect these security measures to keep out the most hardened and dedicated criminals. But they will slow some down and deter others. The more formidable the wall, the greater the deterrent to illegal border crossing.

That said, there is a very good case to be made for alternatives to walls. Reduce trade barriers. Barriers such as tariffs increase cost of doing business and motivate locals to cross borders in search of better opportunity. Existing laws that restrain illegal immigration could also be more fully enforced. Finally, reduce welfare state incentives that attract immigrants seeking to live off the production of others.

Most recently, these pages have considered how orchestrated efforts have magnified the border problem. Politically motivated groups are using children as pawns and a complicit media to capture emotional support for conditions that, as noted above, are certain to sink the system: porous borders in tandem with an inclusive welfare state.

Friday, June 22, 2018

Two Hundred Days Away

Close enough but not too far
Maybe you know where you are
Fighting fire with fire
--Talking Heads

How far away are major indexes from their respective 200 day moving averages? The COMP is farthest away, at about 9%:


The SPX is next at about 3%:


The Dow is closest to its 200 day. Already below its 50 day moving average, the DJI is only 1% from its 200 day.


How to interpret? In a trending market like we've had, moving below the 200 day moving average is one indicator of a technical breakdown. Viewed from this perspective, the Dow appears closest to breaking down and merits watching.

On the other hand, major reversals often begin with those groups that have been the object of the raciest speculation. The COMP has been that object and, as the relatively big distance between the index value and its 200 day moving average suggests, has thus far has shown little evidence of cracking.

Stated differently, the current COMP>SPX>DJI standing of the major indexes relative to their 200 day moving averages may need to reverse to DJI>SPX>COMP before we get a major trend reversal.

position in SPX

Thursday, June 21, 2018

Orchestration

Borderline
Feels like I'm going to lose my mind
You just keep on pushing my love
Over the borderline
--Madonna

The recent hysteria involving separation of children from adults (not necessarily parents) seeking to cross the southern border illegally demonstrates once again that few social events with political overtones are random. Rather, they are premeditated. Planned and often funded by groups with political agendas to elicit a sympathetic response from onlookers--particularly those who vote.

Stated differently, most sociopolitical events that grab headlines are not spontaneous, but orchestrated. A primary goal of orchestration is emotional capture.

A complicit media fans the flames. And kids commonly serve as political pawns.

Wednesday, June 20, 2018

GE Delisted

After my picture fades
And darkness has turned to gray
Watching through windows
You're wondering if I'm ok
--Cyndi Lauper

Yesterday S&P Dow Jones Indices announced that General Electric (GE) will be removed from the renowned Dow Jones Industrial Index. GE had been the last remaining member of the original list created by Charles Dow in 1896.

Drugstore chain Walgreens will replace GE on the list.

The managing firm stated that adding Walgreens will make the index "more representative of the consumer and health-care sectors of the US economy."


Let's not kid ourselves. GE is a diversified conglomerate that operates in sectors far more representative of the US economy than a drug store retailer. This is about GE's poor stock price performance as of late which has served as a drag on the index.

We're certainly not there yet, but we're closer to the time when I'd consider going long GE shares.

position in SPX

Tuesday, June 19, 2018

Ultimate Learning Disability

"Why don't you do yourself a favor and go back to your white-bread, suburban, cesspool land while you still have a chance?"
--Victor Duncan (The Principal)

There are those who refuse to learn because an instructor (defined as anyone who has something useful to teach) is not like the student in some demographic way. The instructor might have a different skin color, gender, country of origin, social status, income level, et al.

Although social identity theory suggests we might expect as much, this is a foolish form of discrimination. Choosing not to learn because the teacher is not 'like me' may be the ultimate learning disability.

Doing so compromises the quest for knowledge and truth.

Monday, June 18, 2018

Cooperation vs Coercion

Arthur: What is this punishment for? Answer me!
Ganis: He defied our master, Marius. Most of the food we grow is sent out by sea to be sold. He asked that we keep a little more for ourselves, that's all. My ass has been snappin' at the grass I'm so hungry!
--King Arthur

The two general choices for organizing economically are capitalism and socialism. In capitalism, property is privately held. Producers decide what to produce based on customer preferences. Society alleviates scarcity thru voluntary cooperation and exchange.

In socialism, property is held in state hands. Central planners decide what gets produced and who gets it. Society attempts to alleviate scarcity thru edict and violent coercion.


However, Mises long ago argued that, in reality, society does not choose between two economic systems for the long haul. This is because attempts to alleviate scarcity thru socialism inevitably fail. When peaceful exchange is crowded out in favor of forceful command, society inevitably disintegrates into chaos.

Sunday, June 17, 2018

Coney Island

The heat is on
On the street
Inside your head
On every beat
--Glenn Frey

On the southern most tip of Brooklyn a small peninsula juts west. For early explorers it was an intuitive place to set up camp as it sat at the opening of New York harbor. The Dutch called it Conyne Eylandt, meaning Rabbit Island. Subsequent English morphed it to Coney Island.

Its position on the water and sandy beaches made Coney Island a natural target for entrepreneurial development. By the mid-late 1800s, Coney was populated with hotels, amusement parks, and other resort structures.

Like magnets, Coney's beaches have attracted people on hot summer days. Circa 1924:


Circa 2016:


Years pass, but the need to beat the heat at Coney hasn't.

Saturday, June 16, 2018

Stocks and Jobs

Things are going great
And they're only getting better
--Timbuk 3

Stephanie Pomboy posts the relationship between the headline unemployment number and the SPX since 1990. At best, job numbers are coincident, perhaps even slightly lagging, indicators of stock market performance.


Stated differently, it seems unwise to regard recent record low unemployment numbers to be a harbinger of higher stock prices--particularly with stock indexes already near all time highs.

position in SPX

Friday, June 15, 2018

Insidious Tax

At night
When you turn off all the lights
There's no place that you can hide
Oh no
The rhythm is gonna get you
--Miami Sound Machine

In this era of purportedly 'tame' inflation, the purchasing power of the dollar has declined about 20% in the past decade. Imagine what happens when inflation heats up...


Because we usually don't notice it until long after we've been fleeced, inflation functions as an insidious tax.

Thursday, June 14, 2018

Flag Day

Gabriel Martin picks up tattered US flag off the ground.
Tired soldier: It's a lost cause.
Gabriel Martin folds up flag and puts it in his satchel.
--The Patriot

On this day in 1777, the Continental Congress adopted a national flag for the newly declared United States of America. The resolution stated that the US flag be "thirteen alternate stripes red and white" and that "the Union be thirteen stars. white in a blue field, representing a new Constellation."


The flag's design was subsequently modified as new states were added to the Union. In 1818, Congress enacted a law that locked in the 13 stripe portion of the design and permitted only the number of stars to change on the blue backdrop.

The first Flag Day was observed in 1877 on the 100th anniversary of congressional adoption. Afterwards, several states continued to celebrate Flag Day until it was declared a national day of observance in 1949.

Wednesday, June 13, 2018

Affiliation Bias

Director Nicholas Spikings: You were in the Olympics. You know about being a team player?
Agent Nina Chance: Sharpshooting isn't a team sport.
Director Nicholas Spikings: This is.
--Murder at 1600

Collectivists are, by definition, prone to elevate the wishes of the group over their own. This makes collectivists particularly vulnerable to biases that accompany group affiliation. These include:

In-group favoritism. Affinity for people who belong to the same group. Special treatment is given to in-group members that is not afforded to outsiders.

Out-group derogation. Those in out-groups are seen as threating and inferior. Outsiders become targets of discrimination and ridicule.

In-group influence. In-group members will be prone to shift their personal views toward those of the group.

In-group extremity. Extreme behavior that individuals would never condone by themselves is endorsed when they are members of a group.

Group uniqueness and superiority. Belief that the in-group possesses characteristics that are unique and superior to those of other groups.

The higher a person rates on the collectivist scale, the greater the tendency that this person will display these affiliation biases.

Tuesday, June 12, 2018

Our Largest Threat

Wasted
Sacrificed for the new nirvana
Night time sends the sun away
--Icicle Works

What is the largest threat facing the United States? It isn't external. Not China, North Korea, Russia, Iran, nor ISIS.

It is internal, grounded in our proclivity to live beyond our means. As this congressman observes, the largest threat facing the US is our national debt.

A country that can't keep its fiscal house in order is destined for the scrap heap of history.

Monday, June 11, 2018

Meeting North Korea

"There is a saying in Korea. Saying something a hundred times is not as good as living it once."
--Kang (Olympus Has Fallen)

The finest achievements of Barack Obama's presidency were the reopening of friendly talks with Iran and Cuba. Naturally, he caught (and still catches) grief from his detractors for doing so.

Now it is Donald Trump's turn. Trump has been working on a historic meeting with the president of North Korea--something that any proponent of peace and prosperity should support. Unfortunately, but all too predictably, many of those who cheered President Obama's diplomatic efforts are condemning Trump's.

As Ron Paul observes, just as trading is always better than sanctioning, so is talking always better than threatening.

Any effort that gets adversaries together at a table for conversation should be encouraged.

Sunday, June 10, 2018

Temporary Housing

Kumiko: My home is here.
Daniel LaRusso: Home is where you hang your hat. 
--Karate Kid II

Today, Paul (2 Corinthians 4:13-5:1) reminds us that although growing old or being gravely ill seems to signify the end, it is not. As long as we persevere in seeking God and pursuing truth, we should "not lose heart" when our health declines.

This is because "even though our outer self is wasting away, our inner self is being renewed day by day. For this slight momentary affliction is preparing us for an eternal weight of glory beyond all measure."

Rather than worrying about our physical deterioration too much, Paul suggests that "we look not at what can be seen but at what cannot be seen, for what can be seen is temporary, but what cannot be seen is eternal."

We should rest assured "that if the earthly tent we live in is destroyed, we have a building from God, a house not made with hands, eternal in heaven."

Human bodies are but temporary dwellings for people's spirits. God challenges each of us to strengthen our spirits in the face of declining physical capability. If we do so, then our spirits will ultimately vacate our temporary housing and travel to permanent digs.

And, unlike our earthly dwellings, God's house is built to last.

Saturday, June 9, 2018

Discretionary Morality

Casey Ryback: I support women's lib. Don't you?
Jordan Tate: When it works in my favor.
--Under Seige

Interesting study by Uhlmann et al. (2009) demonstrating discretionary application of moral principles by politically motivated individuals. Their basic premise was that people will be more likely to employ moral principles when those principles are consistent with the preferred political narrative.

For example, the researchers hypothesized that progressives would be more prone to support the consequentialist outcome of the trolley problem when the victim to be sacrificed was white instead of black. Similarly, the researchers hypothesized that conservatives would be more prone to endorse the consequentialist outcome of collateral damage during wartime (e.g., accidental killing of innocent civilians) when the victims were Iraqis rather than Americans.

Five studies using 'what if' scenarios presented to college student and community respondents confirmed the hypotheses. The authors conclude that people appear to selectively draw from a 'moral toolbox' when those morals conveniently support a political argument.

These results are consistent with theoretical concepts of confirmation bias, selective reasoning, and cognitive dissonance.

Reference

Uhlmann, E.L., Pizarro, D.A., Tannenbaum, D. & Ditto, P.H. (2009). The motivated use of moral principles. Judgment and Decision Making, 4(6): 476-491.

Friday, June 8, 2018

FANGs on Summer Pay

I never will forget those nights
I wonder if it was a dream
Remember how you made me crazy
Remember how I made you scream
--Don Henley

During the dot.com run up the 'must have' stocks were known as the Four Horsemen. Owning Intel (INTC), Cisco (CSCO), Oracle (ORCL), and Microsoft (MSFT) were tickets to Easy Street.

This time around it's the FANGs. Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (GOOG) are supposed to promise riches.


To demonstrate, USA Today suggests that teens and college workers take half their summer job pay and roll it into the FANGs. It estimates that investing half of the average summer pay into these stocks over the past four years (about $6500 total) would have grown to nearly $20K today.

"Think about what you could do," the article beguiles, "with $20,000 in four years. Maybe buy a car or book a trip to Tahiti."

Whether its cab drivers buying dot.coms, bartenders buying houses, or teens buying FANGs, when media outlets capture (and promote) this degree of speculation, you know that we're late in the game.

position in SPX

Thursday, June 7, 2018

Discrimination in Markets

"You tell the trucking company that we have to service our customers. If they're not gonna help us, we're gonna find somebody who will."
--Brantley Foster (The Secret of My Success)

Some people argue that a producer should not be able to discriminate between customers. A baker, for example, should not be able to make a wedding cake for one couple while refusing to make a wedding cake for another couple. If a customer is refused service, then the strong arm of government should be applied to force the issue.

Proponents of this approach face several questions. Why isn't this situation akin to slavery? Slavery involves forcing individuals to produce output for others.

Furthermore, if it should be illegal for producers to discriminate between customers, then why shouldn't the opposite be true? Shouldn't customers be barred from discriminating between producers? If, for example, a buyer does not care for a seller's policy on making bathrooms available to the public, then why should that buyer be allowed to discriminate by boycotting that seller and/or taking business elsewhere?

The solution on both the buyer and seller sides is to remove government intervention from the equation and permit peaceful discrimination of all types. Indeed, markets operate on the basis of peaceful discrimination. Economic actors must prioritize, choose between alternatives, and cope with trade offs. This can only be done effectively through processes of discrimination.

If those processes of discrimination lead to bad decisions, then no government force is necessary to correct them. Poor discriminatory processes are sanctioned naturally by economic forces. A baker who refuses a customer loses business. A customer that boycotts a producer foregoes valuable products.

Because poor discrimination dents people's wallets, it causes people to think twice about perpetuating those unwise decisions. It also creates opportunity for entrepreneurs to better satisfy needs that have gone unmet in the past.

When not subject to violent intervention, discrimination in markets facilitates natural learning and improvement.

Wednesday, June 6, 2018

Let Them Decide

"Their prophet says 'submit.' Jesus says 'decide.'"
--Sybilla (Kingdom of Heaven)

Am constantly amazed at statist propensity to forcibly interfere in the decision-making of others. Rather than employing peaceful persuasion, statists prefer the strong arm of government to force the issue.

Set an example, persuade, teach. Yes.

Force. No.

Let them decide.

Tuesday, June 5, 2018

Vicious Cycles of Statism

This is the world we live in
And these are the hands we're given
Use them and let's start trying
To make it a place worth living in
--Genesis

Ron Paul sketches various vicious cycles of statism. They include:

Invade country-->destroy-->occupy
Redistribute wealth-->increase poverty
Failed govt program-->increase program funding
GOP wins-->grow govt-->Dems win-->grow govt
Print money-->wreck economy

And, of course:


How to break these vicious cycles? With liberty, of course.

Liberty spawn voluntary cooperation and exchange. Sound money. Peace.

Paul asserts that these vicious cycles "will continue to squeeze the life" from citizens until "the desire for liberty dominates. And not a moment sooner."

Monday, June 4, 2018

Consumer Discretionary vs Staples

We got to move those microwave ovens
Custom kitchen deliveries
We got to move these refrigerators
We got to move these color TVs
--Dire Straits

Sector-specific SPDRs for the consumer discretionary (XLY) and consumer staples (XLP) began trading in the late 1990s. XLY can be seen as a more aggressive market bet on economic strength while XLP is more conservative.


Currently the XLY:XLP ratio has never been higher. Since the beginning of the year, it has spiked into uncharted territory.

I continue to sense that, on a relative basis, many consumer staple stocks (e.g., PG) constitute the best value in the market. On a relative basis...

no positions

Sunday, June 3, 2018

Who Has Benefited?

Papers in the roadside 
Tell of suffering and greed
Fear today
Forgot tomorrow
--Duran Duran

Charlie Bilello observes that since the Affordable Care Act was enacted in 2010, average family health care premiums are up over 200%. Meanwhile, big health insurance stocks, such as United Health Care, are up over 700%.
Who precisely has benefited from this 'affordable' law?

no positions?

Saturday, June 2, 2018

Easy Money and Jobs

Why in the world would anybody put chains on me?
I've paid my dues to make it
Everybody wants me to be what they want me to be
I'm not happy when I try to fake it
--Commodores

Like his predecessors, President Trump is not shy about taking credit for positive economic news reported on his administration's watch. Yesterday's job report was no exception.
Yet any reasoned mind merely looking at the data must question what is truly different under the Trump administration when it comes to jobs. After all, the record low unemployment number reported yesterday marks the continuation of a downtrend that commenced early in the Obama administration:


When viewed in this manner, even the widely touted Trump tax cuts haven't changed the trend in unemployment. The trend has clearly been down for nine years with little change in the rate of decline (as reflected by the slope).

What policy has been consistent across these two administrations? Ultra easy monetary policy. Easy money in the form of cheap credit, quantitative easing (QE), and like-minded programs were initiated during the credit crisis under Fed chair Ben Bernanke and perpetuated by his predecessor Janet Yellen. It remains to be seen precisely how new Fed head Jerome Powell will uphold this approach but early indications are that he is no different from previous chairs.

How does easy money policy influence jobs? Cheap credit drives businesses to invest more today than they would otherwise, and consumers to spend more today than they would otherwise. Stated differently, artificially low credit pushes spending from the future into the present. The increased economic activity serves to improve employment in the near term.

Unfortunately, the artificially driven boom inevitably leads to a bust. Projects that never should have seen the light of day do not pay off. Shutting them down pushes people who found jobs during the upswing to head to the unemployment line once again. Moreover, less economic resources (read: savings) are available in the future that can be applied toward capital projects since they have been consumed in the present. This prolongs economic malaise during the depression.

Although the timing of the bust is difficult to predict, the outcome is as predictable as night following day. And, given the degree of money, credit, and debt created during this most recent interventionary cycle, a large, deep period of darkness almost certainly awaits.

The other thing that is completely predictable is that, if the darkness happens to commence during his watch, then Donald Trump, once again following his predecessors, will assume no responsibility for the bust.

Friday, June 1, 2018

Strong Jobs, Recessionary Monetary Policy

They think they're so cute 
When they got you in that condition
Well I think
It's a total disgrace
--John Mellancamp

Another strong jobs report puts the headline unemployment number at 3.8%--lowest since 1969.


This puts the number of consecutive months with job growth at 92--by far the longest streak in history.


Yet, despite these historically positive job numbers, the Fed Funds Rate remains at recessionary levels. The negative real interest rate situation is something that is usually associated with only the worst economic conditions.

When will people start questioning what is going on here? With such historic job numbers, why are policymakers maintaining recessionary monetary policy?

Thursday, May 31, 2018

Rally in Treasuries

When it gets too much
I need to feel your touch
--Bryan Adams

Treasuries staged a huge rally on Tuesday that knocked 10 yr yields down a couple of boxes. Although some of those gains were given back yesterday, prices are advancing again this am.


The proximate cause of the rally was renewed trouble in Europe, particularly in Italy, that motivated an old fashioned 'flight to quality' trade.

It is also likely that shorts who piled into bearish bond bets near the lows were caught off-sides.

And then carried off the field on stretchers...

no positions

Wednesday, May 30, 2018

Not Just Morally Superior

No more running down the wrong road
Dancing to a different drum
Can't you see what's going on
Deep inside your heart?
--Michael McDonald

In this screed against socialism, Prof Williams observes that capitalism is the morally superior system. Capitalism is based on volunteerism. It requires cooperation and peaceful exchange.

Socialism is authoritarian. It requires force to implement and maintain. People must cede liberty and property to the will of the State.

But capitalism is not just superior on moral grounds. Morality can be debated. As Mises observed, capitalism is also superior to socialism on scientific, utilitarian grounds.

It creates the most wealth per unit of effort, thereby making it the best way to advance prosperity for all.

Even if you don't have a moral bone in your body, a reasoning mind must conclude that capitalism moves society ahead while socialism restrains progress.

Tuesday, May 29, 2018

Volunteerism vs Authoritarianism

And in your dream of darkness
I came shining like the sun
Waiting for the laughter
But the laughter never comes
--Firefall

In this insightful interview, Ron Paul offers that he generally steers clear of labels for political groups such as conservatives, liberals, and libertarians because their imprecise meaning. He likes to think of social philosophies as falling into one of two groups, however.

Volunteerism is belief that life should be done on voluntary terms. People are free to do what they want as long as they reject aggression.

Authoritarianism is belief that it is possible for some person or group to know what is best for others. Some people are idiots and can't be responsible for themselves. Thus, it is the charge of people who 'know better' to force others, using the strong arm of government, to comply with their wishes.

Oddly, authoritarians act aggressively on others for what they feel is the others' own good.

Monday, May 28, 2018

Freemen Fighting for Liberty?

Years have passed and I keep thinking
What a fool I've been
I look back into the past and 
Think of way back then
I know that I lost everything I thought that I could win
I guess I should have listened to my friends
--Mike Curb Congregation

On Memorial Day, we remember those who fell in action in various conflicts that the United States has been a part of. What we don't remember is that many of those conflicts were not fought by individuals who were exercising their free will to defend liberty, as Washington reminded troops in 1776.


Many conflicts fought since the Revolution featured conscription. US troops were forced to fight against their will. In such cases, soldiers who were drafted did not 'give their lives for their country.' Their country took their lives.

Still other wars were fought in an offensive posture. Rather than defending the blessings of liberty, the nature of military action is often aggressive toward foreign lands. Battlefield conscience sometimes tells combatants that they are dying for the wrong reason.

Sadly, soldiers who have fallen in conflicts consistent with the conditions Washington elaborates above constitute a minority fraction of the total casualty list that we seek to commemorate today.

Sunday, May 27, 2018

Life Time

Another night in any town
You can hear the thunder of their cry
Ahead of their time
They wonder why
--Journey

When we are young, we feel that we'll live forever. Time seems abundant, not precious. We pay less attention to what we do with it since it seems, literally, that we have all the time in the world.

As we age, we become increasingly aware that not only is time a scarce resource, but it is the ultimate scarce resource. Our time here is not infinite. In fact, it is not certain how much time we have left. Our time could end today.

The older we get, the greater the innuendo of time's scarcity.

God is talking to us. He is reminding us that life is His greatest gift. Don't squander it because you don't know how much you have left.

He is also telling us that it is never too late to begin making the most of our life time.

Saturday, May 26, 2018

Negative Correlation?

And as I try to make my way
To the ordinary world
I will try to survive
--Duran Duran

Common wisdom is that stocks and bonds are negatively correlated. When stocks go down, bonds go up, and vice versa.



Long term charts paint a different picture. Negative correlations have occurred over short time periods. Over the past 2-3 decades, however, stocks and bonds have gone up together.

The unheard of corollary is that they can go down together too.

position in SPX

Friday, May 25, 2018

Unproductive Solar

Little darling
It's been a long, cold, lonely winter
Little darling
It feels like years since it's been here
--The Beatles

Proponents of solar energy tout the fact that the sector has generated lots of 'good' jobs. In 2016 employment the number of solar energy workers was estimated to be 373,807, compared to 362,118 workers in natural gas and 160,119 in coal.

But just how 'good' are solar jobs? One measure of 'goodness' is productivity, in this case defined as the amount of output (in megawatt hrs of electric power) that a worker produces. In 2016 solar workers generated 36.75 million megawatt hrs of electric power. At the same time, coal workers made 1.24 billion megawatt hrs of electricity while natural gas workers produced 1.38 billion megawatts hrs.

Clearly, both coal and nat gas workers were more productive in 2016, generating output in the billions of megawatt hrs with less workers than the solar sector employed to make output in the millions.

How much more productive were coal and nat gas workers? The productivity comparison in megawatt hrs/worker is:

coal: 7744
nat gas: 3811
solar: 98

In 2016, coal workers were 77 times more productive than solar workers, while nat gas workers were 38 times more productive than their solar counterparts.

On strictly a productivity basis, it is not clear that solar jobs are in fact 'good.' Workers in coal and nat gas appear to be far more productive than solar sector workers.

Solar proponents would surely counter that current productivity comparisons don't tell the whole story. But it is difficult to see how the 'the rest of the story' can adequately bridge the productivity chasm.

Society prospers when people are engaged in high productivity work. Unless the relatively productivity of the solar sector improves significantly (and in a hurry), then economic forces will begin prying scarce resources away from solar toward more productive uses.

Thursday, May 24, 2018

Bonds vs CDs

You're emotion
Running cold running warm
The young just getting older
--Dio

Article considers whether fixed income investors are better off with CDs rather than bonds. As shown below, CD yields are surprisingly close to bonds of similar duration.


Bonds have generally been favored for their liquidity and their capital appreciation potential if interest rates fall. On the other hand, bond investors are exposed if interest rates rise (as many have learned recently). Bonds also carry risk of principal fluctuation and defaults.

CDs are FDIC insured. And interest rate exposure can be hedged by 'laddering' CDs of various duration as discussed in the article.

For my money (literally), CDs are my preferred vehicle for fixed income purposes.

position in CDs

Wednesday, May 23, 2018

No Aggression, No Exceptions

Everywhere I hear the sound of marching, charging feet, boy
'Cause summer's here and the time is right for fighting in the street, boy
--The Rolling Stones

Ron Paul notes that liberty rests on one simple principle. No person or group of people may act aggressively against the person or property of someone else.

If society permits exceptions to that rule, then people with criminal intentions will flock to those exceptions in order to gain cover for their violent acts.


It is easy to construe that modern societies construct government to provide such cover. There are several reasons why government is attractive in this regard. Being a large institution endowed with powers of force, government offers scale economies for expropriating property that smaller criminal organizations cannot match.

Government also offers opportunity for criminally-minded principals to contract with strong armed government agents to do the dirty work. This arrangement affords a certain degree of causal ambiguity for perps. Casual observers can have trouble determining just who's behind the violence. The strong armed agents are often far more visible than principals who fund the crime.

Finally, government provides a means for rationalizing away violent behavior. Because most individuals do not view themselves as violent individuals, the cognitive dissonance problem that arises when people seek to aggress on others requires the concoction of an intermediary that is doing good things with a sort of 'benevolent force.' Thus, government acts in the name of social justice, equality, national security, et al in manners marketed as non-aggressive. Cognitive dissonance problem solved.

Being the popular exception to the non aggression principle, government has, predictably, wrought levels of death and destruction that smaller bands of criminals can only imagine.

Compromising the non-aggression principle is not possible. No aggression, no exceptions.

Tuesday, May 22, 2018

'Decrease the Likelihood' Gun Control

It's 2 AM
The fear is gone
I'm sitting here waiting
The gun still warm
--Golden Earring

Radio host and former congressman Joe Walsh observes that laws won't stop motivated criminals from doing evil.
Although Walsh claims that leftists don't understand this reality, most leftists would probably disagree. Instead, many counter with the argument that laws, in this case laws restricting gun ownership, while not eliminating crime, would decrease the likelihood that a bad guy or would-be bad guy would obtain a firearm to commit a crime.

There is some validity to this line of reasoning. After all, when we lock our home or car doors, only the most naive would expect that doing so would stop hardened thieves. Instead, we would more realistically expect to deter less capable thieves who possess neither the skill, patience, or time to circumvent the lock.

But if leftists take this tack then they must be prepared for the corollary. If restricting gun ownership decreases the likelihood of would-be criminals obtaining guns, then doesn't it also reduce the likelihood of good people obtaining guns in order to capably defend themselves against those motivated criminals who ignore the law? Why is decreasing the likelihood of a would-be criminal getting a gun more preferable to reducing the likelihood that a would-be victim has a gun to defend against crime?

'Decrease the likelihood' gun control advocates must also account for the dynamics that subsequently unfold. If gun ownership is restricted, then is gun augmented crime also likely to decrease? There may be fewer marginal criminals with guns, but there would be fewer law abiding people with guns as well. To motivated criminals, hasn't the potential victim pool vastly increased? Why should we expect less crime rather than more crime as a result?

Moreover, black markets for guns will surely form to fill demand that has been forcibly restrained by law. Do increases in black markets typically lead to more or less violence? If the answer is more, then why should we expect differently this time?

The 'decrease the likelihood' gun control argument faces a difficult road toward truth.