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On her last day as Chairman, Janet Yellen allowed CBS News reporter Rita Braver to follow her around saying goodbye and reminiscing. It was February 1, 2018, by every mainstream account a good time to be sailing off into the sunset. Federal Reserve officials like Yellen had been waiting a very long time for everything to pay off. Last February, more than any other time over the last decade, they finally believed they had done it.

Yellen was obviously disappointed at not being re-appointed following her one term. She thought it a matter of politics, having been a lifelong Democrat. Jay Powell was a Republican and well-liked among influential people within the Republican President’s orbit.

On the merits, her track record, the outgoing Chairman was less restrained than usual. Ms. Yellen positively gushed about the economy under her tested eye. “I believe that since I've become Chair, several million jobs have been created, [something] on the order of ten million.” Ten point two, to be exact.

No one ever asks, is ten million good? It sounds good, which is why these numbers are so frequently deployed. One thing we know for sure, it wasn’t Ben Bernanke’s record during his first term. From February 2006 through January 2010, the US economy lost more than 5.6 million jobs. Yet, he was given a second chance.

“Jason, I want to have a baby.” Those were the words of Bloomberg reporter Yeganeh (Yegi) Rezaian to her husband Jason Rezaian (“So do I” in response), Tehran bureau chief for the Washington Post, after their July 2014 arrest in Iran on false charges of espionage. Both had been in solitary confinement, their “reward” after weeks alone was 4 minutes together, and although they’d decided before their arrest that kids weren’t in their future, something about the horrors of captivity had separately brought each to the opposite conclusion.

The above exchange between husband and wife happens on p. 79 of Jason Rezaian’s gripping new memoir, Prisoner: My 544 Days In An Iranian Prison. Ostensibly about Rezaian’s long ordeal in Iranian captivity, the book is so much more. It was depressing, inspiring, informative and insightful at the same time, and I’ll be quoting it for a very long time in various pieces of economic commentary.

Rezaian is the son of a now deceased, but very successful Iranian immigrant father (Taghi Rezaian, owner of a prominent Persian rug business, would happily tell people “I’m Iranian by birth and I’m American by choice, and I’m proud of both”), and an American mother. His northern California upbringing might read as odd to some readers mainly because it was so normal. At the same time, readers who grew up in California will understand the expressed normalcy in that the state is truly a melting pot of kids from all manner of ethnic backgrounds. So when Rezaian writes that “I can’t recall a single instance of anything even resembling discriminatory treatment from classmates or teachers,” it makes perfect sense. Though the family was proud of its Iranian heritage (Taghi’s generosity toward newly arrived relatives from Iran was endless, even when business wasn’t good), and celebrated it, Rezaian jokingly recalls that “We were different from many of the other kids in that we weren’t Jewish and had just one set of parents.” When U.S. media would run video of “fuming Iranians burning American flags,” Rezaian remembers his “mild-mannered and fun-loving aunts and cousins” cursing the television while remarking “’That is not who we are.’”

That Rezaian’s family was and is rather assimilated into U.S. life, and very pro-America, is similarly not a surprise. In southern California, where I grew up, Iranian immigrants are many, and once again assimilated. All this brings to mind Thomas Erdbrink’s (Erdbrink is bureau chief for the New York Times in Tehran, and like Rezaian, is married to an Iranian) excellent documentary, Our Man In Tehran. Modern media perhaps have some of us believing Iranians are uniformly hotheaded as they burn American flags while shouting “Death to America,” but Erdbrink’s documentary revealed something quite different. Though their leadership may be nuts, and repressive, and in many instances anti-American, not all the people are. They love the United States, they want to live here, plus they even transact in U.S. dollars that are much more acceptable as a medium of exchange than frequently devalued rials.

The fact that the sixth-largest coal company in the United States is in bankruptcy demonstrates that King Coal has been de-throned not because of environmental regulations, but because it is simply less efficient. This is a case of the market rendering its judgment, not the regulator.

Westmoreland Coal, which owns 19 mines in six states and Canada, has found it necessary to seek to cut retiree health insurance and pensions in the face of a $1.4 billion debt. The collapse of the faltering company, which employs 3,000 people, would further the steady decades-long decline of the coal industry and its workforce. Westmoreland is among several coal companies that have in the past two years filed for bankruptcy protection, or continue to struggle as natural gas and renewable energy sources have increasingly become more economical.

Many have tried to blame tougher environmental regulations embraced by the Obama Administration for the collapse of coal. But coal consumption has been declining in the United States for 40 years.

A report in December by the Energy Information Administration found that Americans are consuming less coal than at any time since the late 1970s. The EIA report also stated that 2018 saw the second-largest number of coal-fired plants shutting down.

Ossie Dahl’s retirement didn’t go as planned.

The 64-year old hospital exec had just completed a 40-year career at White Plains hospital in New York.

Moments after finishing a speech at his retirement party, he collapsed and died.

***

U.S. federal debt added up to $908 billion in 1980, but today, nearly 40 years later, the number comes in around $22 trillion. And then as the perpetually alarmed regularly remind us (in The Hill yesterday, economist Bert Ely warned readers in yet another column that "our day of fiscal reckoning nears"....) the previous number doesn’t come close to tallying the gargantuan sums the federal government owes when unfunded future liabilities are factored in.

That the amount owed by U.S. taxpayers has soared in modern times would, in a static world, correlate with a huge increase in borrowing costs for the U.S. Treasury. Wouldn’t it?

Except that the world isn't static, and borrowing costs haven’t risen. While the yield on 10-Year U.S. Treasuries was 10.8 percent in 1980, as of today the yield has declined to 2.668%. Yes, you read that right, amid soaring federal debt the cost of government borrowing has plummeted.

The deepest markets in the world are sending a fairly explicit signal that Treasury will have little problem paying back what it owes. Markets are constantly pricing the known, and it’s apparent that what has some thinking America is the next Greece doesn’t scare those with actual skin in the game. Stated simply, the U.S. Treasury doesn’t have a borrowing problem.

In describing a major driver of public-sector growth in his classic 1981 book, The Economy In Mind, Warren Brookes made the basic point that when it comes to government bureaucracies, “what counts are not measureable results but rosters of employees.” While private businesses are properly rewarded for doing the most with the least, in the governmental sphere prestige springs from head count.

Which brings us to all the hysteria among the liberty minded about Amazon’s now aborted deal to develop a large corporate campus in Long Island City, New York. Lefties of the socialist variety (you know their names, so they won’t get more publicity here) were unsurprisingly frothing at the mouth at the $3 billion worth of tax abatements lavished on Amazon, but where it gets interesting is that the socialists found themselves allied with many libertarians on the matter.

Paraphrasing a popular free thinker, Amazon’s deal with Long Island City “is all that’s wrong with the way the U.S. economy operates nowadays.” It seems the graduated income tax, endless regulations, trade wars, a floating dollar that Treasury periodically devalues, and a near $4 trillion annual federal budget (to name but a few things that sap economic progress) are somewhat small relative to supposed “cronyism.” Apparently the much bigger problem with the U.S. economy is deals like the one Amazon struck. Really? So what's paralyzingly wrong with the U.S. is that corporations are exponentially more mobile today such that they can spark bidding wars among politicians to see who can offer them the biggest tax breaks? If so, as in if our biggest issue is that politicians see fit to compete for corporations with tax incentives, then it’s no wonder Americans are the economic envy of the world.

Seemingly ignored by the many liberty types looking down on Amazon (one sneered at the Seattle giant's HQ2 search as a "'Dance, monkey' competition") is that it did what it was supposed to do. While most of its limited government critics preach from campus and/or the editorial room, Amazon has shareholders to consider. This matters because corporations as taxpaying entities are a fiction. Corporate taxes are paid by shareholders, so one would think libertarians would cheer Amazon’s efforts to limit the double taxation of what are always and everywhere individual earnings. 

Farmers have been complaining about the difficulty of finding people to pick fruits and vegetables. The problem has seeped to the cash register, where consumers face escalating costs. The problem may soon be solved - by robots.

The world has seen three agricultural revolutions: 10,000 years ago, when stationary farms replaced hunting-and-gathering societies. In the 18th century, when European agriculture shifted from the techniques of the past to embrace new methodologies like crop rotation and livestock utilization. And in the mid-20th century, when the Green Revolution increased yields, saving perhaps a billion people from starvation.

Now, we are entering a fourth - driven by robotics. The robot revolution is coming none too soon, as farmers find it increasingly difficult to hire affordable labor during the harvest season.

It is hard to find people who will undertake farm work. In the United States, a rising minimum wage and a dwindling birth rate in Mexico have reduced the potential supply of farm workers - forcing many growers to let fruit rot in the fields. In the U.K, the fall of the value of sterling in the wake of Brexit has made it increasingly difficult to recruit overseas workers.

Cryptocurrency and FinTech companies have been longing to establish themselves as a mainstream investment. Luckily (so far), the government has yet to pass any legislation that has worked against the organic growth of this newer segment of the financial sector. This may change shortly, however, as Rep. Warren Davidson (R-OH) recently announced a plan to introduce legislation that would regulate cryptocurrencies and Initial Coin Offerings (ICO). Despite the resolve of legislative bodies to regulate these new digital assets, there are two major obstacles that must be addressed before an efficient legislation can be put in place. The first obstacle is the creation of a regulatory framework that works across all levels of government. The second, and perhaps more challenging obstacle, is to monitor the usage of cryptocurrencies for illegal activity.

Before going into the challenges of regulating cryptocurrencies, it is important to understand what cryptocurrencies are and how they work. A cryptocurrency is defined as a digital asset that can be used as a payment method to purchase goods and services. To keep track of transactions, cryptocurrencies use a technology known as the blockchain. A blockchain works as a distributed ledger in a peer-to-peer network where crypto transactions are recorded and validated. This means cryptocurrency transactions are decentralized and do not need a financial institution such as a bank, as the middleman. Both cryptocurrencies and the blockchain are protected by strong cryptographic algorithms.

Before 2016, cryptocurrency and blockchain technology were at the fringe of the investment world. It was only after Bitcoin, the most popular and widely used cryptocurrency, reached a high-value of almost $20,000 per unit that digital currencies started making headlines in mainstream news outlets.

It created a gold-rush fever among investors and speculators hoping to find the next exciting monetary concept. While Bitcoin prices crashed throughout 2018, there is still interest among investors in cryptocurrencies and the technology behind it. However, the conflicting guidelines among government institutions and the lack of security for investors makes it somewhat unattractive as an investment vehicle.

I am rereading "The Affluent Society" with pleasure and profit.

Written by Harvard economist John Kenneth Galbraith and published in 1958, "The Affluent Society" survives as one of the most influential books of the last half of the 20th century. Galbraith foretold that private prosperity would lead to a larger public sector. But this has also left problems that linger today.

Galbraith — who died in 2006 — was rare among economists in that he had a distinctive writing style that was, at once, authoritative (even when he was later proved wrong), arrogant and charming. Humanity, he argued, was at an historic inflection point. For centuries, "poverty was the all-pervasive fact of the world." People constantly contended with "hunger, sickness and cold." Even after good harvests, everyone knew that famine "would strike again."

An Affluent Society

There are a great many lessons to be learned from the Amazon decision to pull out of New York City, such as the need for jurisdictions to think about what they are really getting from roving companies in return for opening the vault to them. One lesson that shouldn’t be ignored is the fact that no one has come up with a way of getting a free lunch. The left should give up their hope that by abstaining from tax concessions government can grab a trove of invisible money. Centrists and conservatives should give up on the idea that foregone tax revenue carries no costs.

Under the deal that Amazon walked away from last week, the company would have received a subsidy of about $3 billion from Albany and City Hall, mostly in the form of tax abatements. In return, Amazon would bring 25,000 jobs to Queens - or about $120,000 per job, paid over a period of about 25 years. Both supporters and opponents of the deal claimed benefits that were in fact illusory. Rather than a two-sided debate, this is a double-sided illusion. Both sides are imagining gains that can be conjured by following different yellow brick roads. In reality, it is like the debate over whether we were hearing Yanny or Laurel. Both sides are deluded, each in its own way.

Let’s start by looking at those who oppose the deal. They seem to believe that by rescinding it they have suddenly happened upon a stash of money, as though they found $3 billion under the couch cushion - miracle money that can now be spent on hospitals, schools and decaying subway lines.

Reality alert: The state and city would in fact not be offering Amazon cash. The two levels of government would instead be extending revenue abatements. Rather than handing over a direct grant, governments would simply forgive some taxes that otherwise wouldn’t be owed to them by anyone. The end of the Amazon deal does not free up a horde of cash for the state and local governments, because they have no extra cash to free up.

ST. LOUIS – “Puritanism,” said H.L. Mencken, is “the haunting fear that someone, somewhere, may be happy.”

In this historic river city, the unanimously socialist Board of Aldermen is driven by a haunting fear that someone, somewhere, may be operating an innovative business that has not been regulated or taxed into extinction.

When I was born here in 1955, the city was densely populated. About 850,000 people were crowded into a tight urban space. Today the population within the same city limits is estimated below 300,000. The everyday scenes of my joyous childhood in north St. Louis have become post-apocalyptic moonscapes.

The wholesome attractions of more space and greenery and newer houses in the suburbs, as well as the destructive racism of “white flight,” were among the early reasons for the exodus from the city – an independent jurisdiction not belonging to any county -- into outlying St. Louis County during the late 1950s and 1960s. An entirely suburban enclave, St. Louis County from 1950 to 2000 grew from 400,000 to more than 1,000,000. Since the turn of the 21st century, the population of St. Louis County actually has shrunk and is now about 950,000.

Silicon Valley is awash with Saudi money. The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, has pumped billions of dollars into U.S. startups in recent years, part of an economic diversification strategy spearheaded by Crown Prince Mohammed bin Salman. But reports of recent turmoil at the fund, coupled with the reputational fallout over the murder of Saudi journalist Jamal Khashoggi by Saudi agents, could jeopardize what’s become a comfortable funding stream for Silicon Valley.

Top western executives are leaving the PIF, according to a report from late December—sometimes leaving behind pay packages of $1 million and guaranteed bonuses. Several officials left within 18 months of beginning their tenure, while one, a former head of strategy, lasted just weeks.

Underpinning this wave of desertion is Mohammed bin Salman’s micromanagement of the investment vehicle, according to the report. Officials who have left privately concede that the young royal’s domination of the fund’s strategy was a driving factor, noting that his personal interests in headline-making venture capitals deals came at the cost of marginalizing other portfolios within the fund.

The PIF is central to Saudi Arabia’s economic reform program: it’s a key player in Vision 2030, the crown prince’s ambitious plan to wean the kingdom off hydrocarbons. A 2017 Saudi government document laying out the PIF’s contribution to Vision 2030 describes the fund as “the engine behind economic diversity” in the kingdom. In addition to increasing its assets under management, the PIF is also tasked with leading Saudi Arabia’s expansion into new sectors, such as entertainment or domestictourism, in the process creating much-needed jobs for Saudi nationals to lessen the kingdom’s 12.8% unemployment rate. Between 2018-2020, the fund seeks to boost assets under management to $400 billion from roughly $220 billion; allocate 20% of its assets in new sectors, targeting that these new sector assets will directly contribute $8 billion to Saudi GDP; and boost its share of assets in international investments from 5% to 25%.

It almost rises to the level of a paradox. Whenever things go wrong, you can be sure officials will be quick to blame speculators. At the end of last October, for example, the People’s Bank of China began a series of stepped up bill auctions. The country’s currency, CNY, had been plummeting against the dollar for most of the year. In an attempt to stop the bleeding, a falling currency is no stimulus, the central bank aimed to drain liquidity out of Hong Kong.

These were cash management bills being issued quite purposefully in China’s offshore RMB market (CNH). By soaking up excess liquidity, offering a decent return on short-term risk-free, this would make it harder for speculators to borrow RMB with which to short CNH. That’s the theory, anyway.

So far, CNY has regained its footing. Whether it stays that way is an open question. China has much bigger problems than Hong Kong currency opportunists. Falling CNH or CNY has almost nothing to do with them, and everything to do with worldwide monetary malfunction.

It’s easy to forget that the more basic the market, the less likely there are speculators involved in it at any capacity; at least of the sort that gains so much official disdain. Everyone who participates in a market speculates, so it’s impossible to create any legitimate distinction.

The entertainer Sting thinks that the shutdown of a GM plant threatens an historically great North American industrial city in the same way that the closure of shipbuilding facilities in Newcastle had impact on that city’s future. He’s right - the auto plant shutdown won’t halt the region’s economic growth and diversification any more than the end of the local shipbuilding industry permanently undermined Newcastle. Both cities are thriving - and will likely continue to for a long while.

Sting is today bringing to the long-time Canadian auto capital of Oshawa the Toronto production of The Last Ship, his musical about the economic turmoil that followed the collapse of Newcastle’s long-time shipbuilding industry when the former Police frontman was growing up.

GM announced in November it would mothball the Oshawa car plant and lay off almost all of its remaining 2600 employees. Sting has told the Canadian TV network CTV that the plot of The Last Ship mirrors what the people of Oshawa are going through as GM closes its assembly plant. In a sense, he is correct. Oshawa is going through a process similar to the one Newcastle has undergone - one of rebirth. The working class city about an hour east of Toronto has reinvented itself, engineering a transformation from a city that makes cars to one that provides services - notably post-secondary education and health care.

While GM’s plant closure will hit many in Oshawa hard, it most definitely does not spell the end of Oshawa’s economic growth. It isn’t even slowing it down. The city has already seen 20,000 direct GM jobs disappear since 1980 - almost 10 times as many as it will now lose due to the plant’s mothballing. Nevertheless, unemployment rates are down, job creation is up, and the city’s population is growing. The people of the city and region are by and large spending their time and energy performing jobs that are more productive and lucrative. Rather than engage in self-pity, the people of Oshawa have been engaged in self-transformation, shifting from an industrial centre to a centre of advanced services.

Valentine’s Day is the third biggest sales day for the U.S.’s $22 billion chocolate candy industry. Readers might think about that for a moment. It’s a boisterously positive statement about modern living standards.

While many might jokingly claim an inability to live without the wonderful delicacies that spring from the cacao tree, the reality is that they’re a luxury item. Chocolate is what we consume after we’ve theoretically met all manner of other needs like clothing, nutrition and shelter. In a very real sense, abundant chocolate consumption is a signal of how far we’ve come.

Lest readers forget, in the early part of the 20th century less than 1% of the world’s inhabitants could claim consistent access to food and other basic comforts. Chocolate of any kind was very much a rare treat, whereas nowadays Americans are so prosperous as to enjoy whole holidays dedicated to its consumption.

Thinking yet again about how desperate was life for most a little over a century ago, it’s exciting to contemplate how much humanity has progressed. Having more and more taken care of life’s necessities, we have the capacity to splurge.

The people of the English region that was most supportive of Brexit during the 2016 referendum are turning against the move - especially following an announcement by Nissan that it will forego a planned expansion of a local plant. Maybe it indicates that a nation is stepping back from the brink.

The Japanese automaker announced earlier this month that it was cancelling planned production of its X Trail model in North East England. Building the new model, along with the Qashqai, would have created roughly 1,000 new jobs. Instead, Nissan joined a long list of auto companies that have reduced production in England. Car production there slumped by over 9 percent last year. Continued uncertainty over Brexit also prompted car companies to shrink projected new investment by about 50 percent last year.

Support for Brexit in the North East has already declined from 58 percent at the time of the vote to 50 percent by last summer, and most people said they would support a fresh referendum on Brexit than oppose holding a vote, according to the YouGov survey. The polling was commissioned by the Peoples Vote campaign, which is calling for a new referendum.

It is not surprising that North East England would turn against Brexit. The People’s Vote has also published a detailed impact study on how Brexit would affect the region. The study found that the North East would lose 10 percent of economic output over the next decade under a “no-deal” Brexit scenario - meaning every man, woman and child in the region would be about £3000 a year worse off.

Despite the average state salary in Cuba working out to $24/month, its people increasingly have opportunities to earn much greater sums. With property rights more and more recognized in concert with growing foreign tourism (including all-important American tourism), the people are able to rent out their houses and apartments to the well-heeled.

So while the people take home roughly $300/year in salary, This Is Cuba author David Ariosto notes that Cubans with house/apartment space to rent out earn an average of $2,700/year from the tourist trade. Imagine that for a moment! People long used to desperate poverty are now earning many multiples of their annual salary hosting people eager to see what was, and what will be. Notable here is that over half of the hosts (58%) are women, thus “empowering a new and emerging crop of female entrepreneurs,” according to Ariosto.

So what enabled this life-enhancing monetization of previously dormant wealth for desperately poor Cubans? Look no further than San Francisco, CA-based Airbnb. Cuba is proving a brilliant market for Airbnb’s business model. And while Forbes estimates the net worth of Airbnb’s three founders at $3.7 billion each, Cuba’s thousandaires are hardly angry. Thanks to the Airbnb portal connecting Cuba’s property owners to the rest of the world, its people are earning at levels they never imagined.

In consideration of what the billionaire founders of Airbnb have meant for Cuba’s people, shouldn’t we be cheering? Shouldn’t we be falling all over ourselves to hand the billionaires countless humanitarian awards for helping the formerly helpless? One would think so, unless of course one were New York Times columnist Farhad Manjoo. As he obnoxiously sees it, the technology industry “belches up a murder of new billionaires annually,” so he’s more and of the view that government must step in since, “At some level of extreme wealth, money inevitably corrupts.” Wow!

One of the great challenges of our time is to prevent Social Security and other programs for the elderly from taking over the national government. It may already be too late. Recently, the Congressional Budget Office reported that federal spending on the 65-plus population now amounts to 40% of non-interest outlays, up from 35% in 2005. By 2029, the CBO projects it to be 50%.

Here is how the CBO describes the outlook:

"Over the next decade, as members of the baby-boom generation age and life expectancy increases, the number of people age 65 or older is expected to continue to rise — by about one-third, from 16% of the population in 2018 to 20% in 2029. ... Federal spending for older people is anticipated to … (take) up a greater share of federal resources."

By the CBO's math, two-thirds of the projected growth in federal spending over the next decade, after adjustment for inflation, will stem from programs for the elderly — mostly Social Security and Medicare, but also long-term nursing home care under Medicaid and civil-service retirement.

A 21st-century take on Karl Marx and Friedrich Engels’ Communist Manifesto was introduced in the form of a nonbinding resolution introduced by Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Ed Markey (D-Mass.). The resolution effectively does nothing other than express the sense that Congress should pass a so-called “Green New Deal” whose wholly unattainable goals would almost certainly wreak havoc on the economy and drive the United States further into debt.

The term “insane” understates how bad the ideas presented in this resolution really are. Both the Green New Deal resolution and the FAQ document released with it read like something concocted in a drunken haze in a college dorm room. Although it’s certainly imaginative, it’s not remotely close to serious public policy. Perhaps that explains why Rep. Ocasio-Cortez removed the documents from her congressional website.

Although the resolution isn’t a serious public policy proposal, conservatives and libertarians do need to take it seriously. Why? Because this is how far to the left the Democratic Party has drifted. Although some wave the banner of “democratic socialism,” others who share socialist ideals avoid the label that Rep. Ocasio-Cortez claims by identifying as “progressives” who support green policies. When one peels back the initial layer of green, the same tired and failed ideas of socialism are there.

The resolution begins with basic findings. Rep. Ocasio-Cortez and Sen. Markey take the most recent report from the United Nations’ International Panel on Climate Change (IPCC) as though it was handed down from God to Moses on Mount Sinai on stone tablets. Although humans do contribute to climate change, many of the IPCC’s previous claims have been proven wrong. Remember, it was just 2007 when the IPCC warned that the world had only eight years to avoid the worst effects of climate change. The most recent report, released in October 2018, claims that we have 12 years to avoid the worst of climate change. When proven inaccurate, just move the goalposts.