Monday, August 20, 2018

Rick Kelo asks has Capitalism ended Starvation?

Richard Kelo

The biggest killer in all of human history has been hunger.  Nature is inherently scarce and very stingy with her resources.  Rick Kelo points out that only through peaceful trade with our fellow man have people advanced to the point where obesity, not starvation, is the main killer.

"When populations began to rise in 16th century England, and that change in the supply/demand curve pushed food prices up.  Prices reached the point it became profitable for farmers to invest in agricultural technology to get more out of their harvest.  That increased availability in food encouraged more population growth and so on," explains Rick Kelo.

Richard Kelo is a Chicago tax recruiter by day, but in his spare time also maintains a prominent position in the forefront of certain economic debates.  Well read in economic history, and himself educated on both topics at West Point, Rick is quick to point out that only by cooperating have people overcome the scarcity of the natural world.

"If any of us wandered off a trail in the park our stomachs would tell us after just a few hours in the woods just how scarce food is," Rick Kelo notes.  The way mankind overcame this scarcity was by using markets - peaceful trade - to guide production decisions.

"To finish the case of England," Rick Kelo continues, "That increased productivity eventually brought down prices, which encouraged farmers to spend more and more money investing in ways to make farms more productive.  That higher volume production allowed the farmer to break even from lower prices... lower prices meant everybody else had extra money left over to buy "stuff" with.  And so on it went as man got even more and more efficient."

Thus the story of how the economic incentives that naturally exist in the free market inspired mankind to overcome the cruelty of nature to the point that starvation... the leading cause of death in all of human history... has been wiped out in capitalist societies.

Monday, July 23, 2018

Rick Kelo crushes Keynes on Interest Rates

Rick Kelo

No economist garnered more fame in the 20th Century than John Maynard Keynes, the father of government stimulus spending, bail-outs, and a whole school of thought known as Keynesian Economics.  However, says Rick Kelo, the core thesis of Keynes' position is simple nonsense if examined.

"Keynes was avidly against saving & in favor of rabid consumption.  So if we consider people saving instead of spending, which Keynes called hoarding, this point is an incredibly central to his policy recommendations.  In 'General Theory' Keynes makes the case that in a recession we have this depressed interest rate, increased money supply, and therefore the incentive exists to increase cash positions or 'hoard,'" Rick Kelo continues, "Because the citizenry have this propensity to hoard, then Keynes claims government must overcome this "recessionary gap" through stimulus spending of its own to make up for the lack of consumption due to recessionary conditions making an incentive to increase cash balances."

What is really going on when interest rates are low?  This question still puzzles most economists but Rick Kelo gives us a straight-forward look in plain English:
When the Central Bank sets interest rates artificially low it makes it cheaper to borrow since loans and credit cards now have lower interest rates.  It also makes the alternative, saving, less attractive because savings accounts now pay less interest. 
Richard Kelo notes.  The actual economic incentive of a low interest rate creates the precise opposite effect Keynes claimed.

Tuesday, June 19, 2018

Rick Kelo examines Hoarding in Economics

The famous Austrian economist Murray Rothbard once wrote that:

 Money is only useful for exchange value, true, but it is not only useful at the actual moment of exchange. This truth has been often overlooked. Money is just as useful when lying "idle" in somebody's cash balance, even in a miser's "hoard." 
 Unspent money is sometimes called idle cash balances, or "hoarding."  Rick Kelo follows closely in Rothbard's tradition of Austrian economics, but decided to explain the economics of hoarding in a mainstream & much more Keynesian context.

Rick Kelo notes that hoarding is taken from the Theory of Liquidity Preference, which originated in Chapter 13 of Keynes' "General Theory."  Keynesians allege that when people "hoard" money it causes the interest rate to go down.

In his article, "On Economic Progress: Hoarding!" Rick Kelo describes it this way:

"If the market thinks the current interest rate is “low,” then it is bearish on bonds… meaning a “low” interest rate today is bad for bonds in the future (the term "bonds" is used broadly by Keynes to mean all less liquid assets so stocks and other time deposits in the money market).  This is important because when you think about buying an investment your future expectations determine whether you buy that bond or keep your funds in cash.  So when people are “bearish” on bonds they hold onto cash and there’s more money available in the money supply"
~ Rick Kelo
Sometimes the demand for money is drawn like this:

If the Federal Reserve prints more money, or the money supply increases by $200MM in this graph, then we see that the interest rate declines.

Tuesday, May 15, 2018

Rick Kelo discusses Castes in Capitalist Economies

Famed economist and philosopher Ludwig von Mises once noted that:
Every adult is free to fashion his life according to his own plans. He is not forced to live according to the plan of a planning authority enforcing its unique plan by the police.  ... Everybody is free to join the ranks of the three progressive classes (entrepreneurs, savers & technologists) of a capitalist society. These classes are not closed castes. Membership in them is not a privilege conferred on the individual by a higher authority or inherited from one's ancestors.
 Ludwig von Mises, "The Anti-Capitalist Mentality"

"People sometimes forget that upward social mobility never existed in human history until the adoption of capitalist economic systems," says Rick Kelo.

Certainly it is the case that upward mobility exists in capitalist societies.  Steve Jobs, the founder of Apple, was the son of Syrian immigrants.  Rick Kelo notes that most of us can trace our own story like that if we only stop to put it in that perspective.  Which generation of your family was the first to attend college?  The first to own a sports car or some other prized luxury item?

The problem becomes that we often forget just how generous living in a capitalist economy is.  Politicians campaign for office by promising to "do" and "fix" things.  These promises inveritably lead to more government programs, which reduce the amount of economic output left for the private sector.

Rick Kelo

Monday, April 2, 2018

Rick Kelo Discusses The 20th Centuries Greatest Famines

The last century saw almost a hundred million people starve to death.  To Rick Kelo though there's a very noticeable common theme that runs through those mass starvations.

Causes of the Soviet famine of 1932–33:
"The government's forced collectivization of agriculture, a part of the Soviet Union's first five-year plan, forced grain procurement and political repression in the countryside were the main reasons for the famine."
Causes of Great Chinese Famine / Great Leap Forward:
Chief changes in the lives of rural Chinese included the incremental introduction of mandatory agricultural collectivization.
"It is very easy for us to forget the lessons we learned just in the last century," says Rick Kelo.  Socialism was the central theme that ran through the worst starvations, including in India, which was Socialist for much of the 20th century and also ranked near the top of the World Hunger Index for most of those years.
Richard Kelo

Sunday, March 11, 2018

Rick Kelo Considers Whether Rights Come from a Government

Does a government grant you rights?  If there was no government would you still have a right to freedom of religion, or free speech?  This topic has become very important as politicians justify their ever-expanding programs by claiming they are "rights."

The "right to health care" and "right to birth control" have been a few recent examples.  The argument is that possessing those things is necessary to life (it isn't), and therefore the State ought to ensure that everyone has access to them.

Rick Kelo, an economist, social thinker, and alumni of the US Military Academy at West Point, looked at this question through the Classic Liberal lens and found that if the claim government determines rights is untrue, then every argument a politician uses for justifying a new program because it is a "right" must also be untrue.

"Rights are Human Constructs, you don't find them in the State of Nature.  Man had no rights until the government gave them to him," argue critics.

When asked how he responds to that claim Rick Kelo answered,"What political body gave the Neanderthal the right to defend his cave?  When two young children are playing with sticks they found on the ground and one takes the other's stick what political body gave the first one the right to reply, 'HEY!  That's MINE!'"

Kelo points out that humans are born with certain fundamental rights because every person makes their own moral choices.  They possess what philosophers call "Moral Agency."  As a moral agent we each independently understand that we possess certain rights and we also project our understanding onto every other person we meet and understand they possess the same rights.
Rick A Kelo

Wednesday, February 21, 2018

Rick Kelo - All Civil Rights are Ultimately Economic Rights

As a pacifist and prominent Classic Liberal social thinker Rick Kelo is very concerned with human rights and acts by the State that limit human freedom.

Richard Kelo points out a connection often overlooked.  To see the connection first p pick any civil right... maybe free speech?  What does it mean when we say you have free speech?   That means you have free speech in a place where you have an economic ownership interest.  You can say whatever you want in your house, or in a lecture hall that you rent, but you can't barge into someone else's house with a picket sign though because you don't have free speech there.

Rick Kelo
Consider the example of the person who shouts "FIRE!" in the crowded theater.  The reason you can't shout "FIRE!" in a theater when there's no fire is because you're violating property rights - an economic right as Rick Kelo rightly points out.  You're defrauding the theater owner of his revenue & the patrons of the show they purchased.  Freedom of religion follows the same, as do the rest.  For that matter try and figure out how there can be freedom of press when an individual is forbidden by Socialist decree from owning the press.

This applies broadly to overall economic systems just as it does individual examples.  If a government eliminates economic civil rights, like ownership of the means of production, this is why we see the people end up with no social civil rights either.  Workers in every Socialist state are powerless because all civil rights are ultimately economic rights.