Viewing entries tagged
capitalism

FTSE 100: The Wrong Measurement

Many economic "experts" are fixating on FTSE 100 as the primary indicator of the UK's economy. When the FTSE 100 is down, they panic. When it rebounds, they rejoice.

The fact is: they are looking in the wrong place. The FTSE 100 measures the hundred wealthiest companies - not the 100 most innovative ones. The new, innovative, largely undiscovered small startups will be the drivers of growth in the UK's new, innovative economy. Those businesses are not part of the FTSE 100; most are not publicly traded at all. They are small startups that will be the next large job creators.

The majority of new jobs in America come from small businesses. The same is true in the UK, and will become increasingly true as the UK's economy moves away from large crony capitalists and towards entrepreneurial startups. New jobs in the UK will come from innovative small businesses, not from businesses that have the ability to get special favors from EU regulators.

Some economists have suggested that the FTSE 250, which looks at the 250 wealthiest companies, is a better measure. It might be, but not by much. The companies that will make the UK's new, independent economy great might show up in the FTSE 10,000 (if it existed). But in reality, most of those companies are not even publicly traded.

Some of the FTSE 100 companies are not even UK companies, and are headquartered elsewhere in Europe. Some of the fluctuations in their stock prices simply reflect the fact that without the UK, the lazier economies in Europe will lose one of their biggest crutches. In other words, if their stock prices fall, that doesn't necessarily show a lack of faith in the UK; they show a lack of faith the socialist economies in the rest of Europe. Investors realize that without the UK shouldering a huge portion of the burden (1/6th of the EU economy), the EU won't last.

A government bailout or similar "stimulus" will certainly help the FTSE 100 companies - at the expense of the innovative entrepreneurs who could actually build the economy. It amounts to replacing EU special privileges for large businesses with UK special privileges for large businesses. It creates unsustainable, bailout-based jobs, instead of meaningful, lasting, productive jobs. That's a lateral move at best.

Instead, the UK should reject crony capitalism, eliminate regulations on small entrepreneurs, and reduce the taxes that stifle innovative small businesses. That means more innovation, better products and services, and more real jobs.

If the UK can disentangle itself from the EU crony capitalism and UK crony capitalism, and move towards a capitalist and innovative economy, it will soon see a massive resurgence in jobs and economic growth. This will be true economic growth, without crony capitalist strings attached.

In Liberty

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Good Riddance Goldman Sachs

Goldman Sachs has threatened to leave London after the UK leaves the EU. That's like cancer threatening to leave your body.

Goldman Sachs is the co-creator of the 2008 American recession, and the primary creator of the Wall Street Bailout, in which hundreds of billions of dollars were stolen from producers and given to financial parasites. They then contributed to the Greek financial collapse.

There are some companies that you just don't want around. Halliburton, Monsanto, and Goldman Sachs are at the top of the list. These companies are rich, but their wealth comes from cronyism and corruption, not from the creation of value.

They are the worst of the crony capitalists. They produce nothing of value, but instead manipulate government into making them rich at the expense of hard working producers.

No country needs companies who get rich off of government sanctioned theft instead of productivity. Imagine how much better off America would have been if companies like Goldman Sachs had not turned a minor housing surplus into a massive financial catastrophe.

As Britain transition from a cronyist, EU economy into an innovative, independent one, it will need great innovators and producers. It will not need reckless financial parasites. It will not need the company whose largest financial success in its history was getting bailed out for its staggering incompetence.

The only possible downside of Goldman leaving London: they might bring more of their people to America. While jobs are usually good, it's never great to have parasitic, crony capitalist, corporate welfare queens around. Maybe we can ask Trump to build a wall to keep them out.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Positive Market Readjustment

In a couple hours, you may see the British pound and stock exchanges massively fall. Here's why that's good:

1. For the last several years, investors have been strategically investing in crony capitalists. They have been investing in whichever companies had most political influence to get special favors from EU regulators.

2. With Britain out of the EU, that no longer makes sense. Special favors from EU regulators don't matter as much now in Britain.

3. Investors' first step is to pull money out of stock in those crony capitalist companies. Those corrupt companies just aren't as valuable any more. When investors leave crony capitalists companies, stock prices will obviously fall, and the demand for the pound sterling will also fall.

4. Their next step is to find innovative, productive companies to invest in. It will take several weeks or months to figure out who those companies are. Few investors have been looking, since it didn't matter. In the EU, innovation doesn't matter as much as political influence. But in Britain, innovation will be king.

5. Once investors figure out which new, innovative companies to invest in, demand for British stock and currency will increase again.

As long as Britain can stay competitive by lowering taxes and regulation, its economy will grow. They've thrown off the yoke of the EU. If they can throw off the yoke of their own socialism, they will succeed.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Free Trade

Free trade with a bunch of obligations and restrictions attached to it isn't free trade. It's trade with a bunch of obligations and restrictions.

Free trade simply means eliminating tariffs, trade quotas, and the like. A country can simply eliminate its own tariffs, and that presents a major step forward. That country can enjoy cheaper access to the tools of production, and thus become more productive.

As a simple example, Brazil and Argentina could eliminate their self destructive taxes on computers, and immediately allow their productivity to increase as more people have access to modern computers.

If you encourage other countries to also eliminate their tariffs, that helps free trade even more. But beware! Once you get into negotiations, you often end up adding a bunch of government wastefulness and burdensome obligations. Big corporations and big unions will demand special favors in exchange for supporting lower tariffs. Usually, those special favors end up costing almost exactly as much as the savings from lower tariffs. As an example, look at TPP.

The EU isn't free trade. With the EU, access to lower tariffs comes with major obligations and restrictions. There are the direct costs of the EU fees. There are the nearly guaranteed costs of bailouts (given that at least some of Europe's socialist economies are collapsing.) There are the welfare costs of having to support basically anyone who comes to your country.

There are the lost free trade opportunities with other countries. As part of the EU, Britain could not set up free trade agreements with other countries (e.g. the US). Free trade agreements had to be with the entire EU, or with no one at all.

Any divorce can be a little messy at first. But if you were married to 27 deadbeats, who felt that they had the right to barely work, retire at 40, and spend all of your money on their laziness...dropping that dead weight would help you out. And even if one of those 27 deadbeats (Germany) actually worked, you could still divorce the group and start a new relationship with any one of them individually.

Even better: you can now set up new relationships. You've learned not to share a bank account with people who lie about their finances and debts (Greece). You've seen that other people can get the same benefits without the burdens (Switzerland). You realized that the most successful people (U.S., China, Japan) weren't a part of your 28 person expensive marriage.

Britain is now free to pursue better opportunities. It no longer has the massive obligations of carrying around EU socialist deadbeats.

It may still fail. After all, Britain has its own wasteful welfare socialism to eliminate. But it will now succeed based on whether it embraces free market capitalism or welfare socialism, not based on whether other nations embrace free market capitalism or welfare socialism.

In Liberty,
Arvin Vohra
Vice Chair
Libertarian National Committee