Sunday (10/22/2017) Czech anti-EU anti-immigration parties win

British exit from the European Union (“Brexit”) initiated over a year ago is now acknowledged as having been the harbinger of a tsunami of national-patriotic rebellions against the over-centralizing European Union (EU).

Donald Trump as a presidential candidate hailed Brexit, much to the delight of its U.K. supporters and possible help to his own campaign.

Czech anti-EU anti-immigration parties

Czech anti-EU anti-immigration parties were the flat-out winners in the elections held yesterday for the Chamber of Deputies, the Czech Republic’s lower house. The final results for the 200-member Chamber are:

• 1st, billionaire centrist and populist Andrej Babis’s ANO party, with 29.64% of the votes, giving it 78 deputies. Babis ran on an anti-EU, anti-immigrant, anti-Euro currency platform;
• 2nd, the Civic Democratic Party (ODS), a conservative classical-liberal party, 11.32%, 25 deputies;
• 3rd, the anti-establishment Pirate party, 10.79%, 22 deputies;
• 4th, the Freedom and Direct Democracy (SPD) party, radically anti-EU, anti-immigration, 10.64%, 22 deputies;
• 5th, Party of Bohemia and Moravia, 7.76%, 15 deputies, communist and anti-NATO;
• 6th, the Social Democrats, 7.27%, 15 deputies, center-left;
• 7th, the Christian Democratic Union / Czech People’s Party, 5.80%, 10 deputies, centrist-conservative;
• 8th, Top 09, 5.31%, center-right;
• 9th, Mayor’s Movement (STAN), 5.18%, centrist.

Reuters seems to have been surprised at the strong showing made by the radically anti-EU Freedom and Direct Democracy Party.

Although Andrej Babis, leader of the winning ANO party, said he would not bring the Freedom and Direct Democracy Party into the party coalition he will need to govern, he warned the EU that it needed to ‘reflect on Brexit.’

Austrian legislative election

The Czech election follows by a week an Austrian legislative election won by the People’s Party (OVP), led by the 31-year-old Sebastian Kurz. He also ran on a platform criticizing the EU for its attempt to force hundreds of thousands of Muslim refugees onto EU member states that don’t want them. Kurz will be Europe’s youngest leader.

The Austrian legislature has 193 seats, so that 92 members are necessary for a majority coalition. Although final results won’t be in until mid-week when all the absentee ballots have been counted, the results as of press time are:

• 1st, Sebastian Kurz’s People’s Party (OVP), 31.6%, centrist, EU-skeptical, anti-immigrant;
• 2nd, Social Democrats, 27.1%, center-left;
• 3rd, Freedom Party (FPO), 25.9%, radically anti-EU, anti-immigration;
• 4th, NEOS, 5.3%;
• 5th, PILZ, 4.4%.

Unlike the Czech Republic, Austria’s winner, Sebastian Kurz, has not ruled out bringing the Freedom Party (FPO) into the coalition government he intends to form.

Kurz is exceptionally intelligent, as is apparent from his sophisticated handling of an interview he gave with a biased team of interviewers from the German leftist weekly, Der Spiegel.

Nevertheless, upset EU officials have been trying to browbeat Kurz into shunning the FPO, according to the U.K.’s Express here and here.

The EU is also upset about the regional independence movement in Catalonia, where a major pro-independence demonstration was held yesterday.

 

 

The Obama Administration’s Uranium One scandal

What started out as another corruption scandal involving former President Bill Clinton and former Secretary of State Hillary Clinton has now become the Obama Administration’s Uranium One scandal. This is turning out to be the real story of Russian collusion — not of the Trump campaign. Special Counsel Mueller and Deputy Attorney General Rosenstein are also implicated in the scandal, former assistant U.S. attorney Andrew McCarthy explains in detail.

The problem with Trump’s Federal Reserve chair short list

The President has reportedly whittled down his choice — expected to be announced soon — for the next Federal Reserve chair. So, what’s the problem with Trump’s Federal Reserve chair short list?

Two candidates are presently Fed governors, including the present chair Janet Yellen. Both are low-interest advocates and both backed the Fed’s unprecedented purchase of four trillion dollars of mortgage backed securities. In better days, central banks held gold as reserves, not mortgage paper.

The two present governors — Jerome Powell and Yellen — have also supported the Fed’s policy of paying banks interest for reserves held with the Fed. The safe earnings thus guaranteed by the government serves to discourage banks from making loans to the private sector. Those loans could have fostered new business formation and economic growth. Additionally, the Fed’s policy of maintaining low interest rates punishes retirees and middle-class savers many of whom, unable to earn a decent return on savings, are forced into risky alternate investments.

We don’t believe that President Trump should pick either Powell or Yellen as the next Fed chair.

A third choice, Kevin Warsh, served as a Federal Reserve governor from 2006 to 2011. He “has expressed deep reservations about the Fed’s asset-purchase programs, known as quantitative easing” and how it has pushed businesses “to move money into financial assets or to buy back shares, boosting risk-taking in financial markets,” the Wall Street Journal reports. That’s true.

But Warsh also suggests “lowering the Fed’s inflation target to a band between 1% and 2%.” That’s a mistake. Markets, not the Fed, should set interest rates. Setting inflation targets is a bad idea if technology brings about lower product prices but the Fed then tries to counter the price decreases by inflating to reach its inflation target.Warsh is a modest improvement over Powell or Yellen but less than ideal.

That brings us to the fourth choice, Stanford economist John Taylor. He’s the author of the Taylor rule, which is a form of inflation targeting intended to foster price stability. It has the advantage of reducing Fed discretion, which has a bad track record. But the criticism just levied at Warsh also applies to Taylor. Seeking price stability is a bad idea if prices are naturally falling due to productivity improvements (“good deflation”); it’s also bad if intended to counter a one-off supply shock like the 1973 oil embargo.

None of the proposed candidates, in short, are advocates of a monetary policy that strives, “not to achieve any particular values of interest rates, employment, or inflation, but simply to maintain a steady growth rate of overall nominal spending.” See also here.

New York Mayor de Blasio’s insanely bad idea

Economics can be hard. For an easier but head-shaking read, let’s turn to New York Mayor de Blasio’s insanely bad idea:

Imagine a citywide policy that could reduce the incomes of the poor, worsen traffic congestion, make living in a city more expensive and less convenient, and fine small businesses. It would be a remarkable achievement, putting the limited power of urban governance to maximum bad effect.

Well, congratulations to New York City Mayor Bill de Blasio on hitting the stupid-policy quadfecta with his announcement on Thursday of a crackdown on electronic bicycles, or e-bikes.

The rest of the story is here.

Short items

State Department

American Greatness complains of how “How the State Department is Undermining Trump’s Agenda” because Secretary of State Tillerson has appointed to important posts Obama holdovers and individuals who opposed Trump during the primary.

Well, lots of good people opposed Trump in the primary but are now willingly on board with most of his agenda. Nowhere does the American Greatness article, amidst much hand-wringing, explain what Trump’s foreign policy actually is and how the indicted individuals oppose it. Maybe there is a policy and maybe the named individuals do oppose it, but it would be nice to have some specifics.

Reading online vs the printed page

Reading printed matter has been declining relative to reading online, especially among young people. Does the medium matter in terms of how much is learned? Apparently it does, depending on length of material, depth of knowledge sought, and whether the reader is aware of different pacing requirements for the two media.

Bach and Casals

The late cello master Pablo Casals plays Bach in this archival video. Bear with the French-language introduction: Casals and Bach .

Click here to view yesterday’s issue of Founders Broadsheet.