Category: zerohedge

Authored by Brandon Smith via Alt-Market.us,

I rarely write about Hollywood or the film industry, primarily because there is a vast array of analysts and YouTubers in the alternative media that discuss the bizarre behaviors and trespasses of Tinsel Town on a daily basis. They usually have it covered. That said, every once in a while I find that events in Hollywood reflect a much more pervasive dynamic in our culture and that the bigger picture needs to be addressed.

I also want to be clear that when I talk about “Hollywood” I am not only referring to the place; I’m referring to the entire corporate empire. I’m including Netflix and other streaming companies that may not work completely out of LA. They are all funded and run by the same people anyway.

Hollywood and the corporate cabal behind it have long sought to be the center of America’s cultural universe. In other words, they are seeking to pervert the natural dynamic so that life imitates art instead of art imitating life. And, if they control all the art then they control people’s perceptions of life.

The concept of “Manufacturing Consent”, posited by people like Noam Chomsky, plays a role here, but I think it goes far beyond that. Rather, Hollywood seeks to not only manufacture consent from the public, but also to manufacture the public’s relationship to reality. They don’t just want us to keep our heads down and begrudgingly accept their ideological zealotry; they want us to believe that their way is and always was the ONLY way.

What I see in the film industry and in the corporate world in general today is complete and unfettered propaganda. We have moved beyond the phase of subversively hidden manipulations to a new stage in which the propaganda has become blatant and aggressive. Almost every new movie and television series, not to mention most commercials, are rife with leftist distortions. You will be hard pressed to find any content these days that does not push ideas like:

1) Endless feminist platitudes.

2) Mentions of patriarchy and “white privilege”.

3) Ridiculous exaggerations of racism in America (as if nothing has changed since the days of Jim Crow).

4) Oppression of women, rape culture, etc. as if all the tenets of first and second wave feminism have not already been accomplished. Depicting oppression of women where none actually exists.

5) Women consistently portrayed as overtly masculine with traits and abilities that defy their biology.

6) Men consistently portrayed as weak and feminine.

7) Masculinity, strength, competition and merit portrayed as destructive, “toxic” and outdated.

8) Common positive feminine traits (nurturing, child rearing, home making) portrayed as obsolete or oppressive.

9) Forced and unrealistic diversity, which misrepresents the actual statistical racial make-up of the US population and other Western nations.

10) Saturation of gay and Trans representation – A tiny percentage of the population is made to appear as if it is a vast movement that inhabits every person’s daily experience.

11) Older generations cast as confused and ignorant, or removed from film and television completely.

12) Younger people portrayed as wise leaders “cleaning up the messes” of older generations, somehow blessed with extensive knowledge and experience by mere virtue of their youth.

13) History erased and rewritten to reflect modern leftist ideals.

I could go on and on, but I think you get the idea. “Representation” in itself is not a bad thing, but when it becomes a weapon used to twist fundamental truths for political gain, then it is a problem. None of the concepts listed above are an accurate reflection of the real human world. Instead, they seek to make the outliers into the mainstream, and they seek to take normal human biological and psychological standards and portray them as aberrant and wrong.

Yes, there are cases where Hollywood is dabbling in fantasy and science fiction and this could be used to rationalize some of their odd depictions. That’s not what I am talking about here. I am talking about force feeding the public an obvious agenda across the full spectrum of storytelling. These are not just movies. These are not just TV shows. This is not just storytelling; this is brainwashing.

Hollywood is not in the business of making art. They are not even in the business of making money anymore. Rather, they are in the business of indoctrination. Yes, it is a “conspiracy”. Not a conspiracy theory, but conspiracy reality.

Their job is to make the public believe that leftist ideals (or in some cases globalist ideals) are the prevailing ideals. If you see the same lies everyday in every manufactured depiction of life, you might start to think that your more rational, traditional and grounded views are in the minority. You might begin to self censor for fear of being ridiculed. You might even join the other side just to avoid being attacked.

In order to maintain control over the propaganda machine a very important factor is ensuring that the faces on the screen are never allowed to deviate from the party line. Your puppet and pet celebrities need to be kept under lock and key.

Like most people, I recently watched Ben Shapiro’s interview with Gina Carano and it basically confirmed everything I already knew about Hollywood (my brief stint as a screenwriter 20 years ago exposed me to the underlying sell-out culture and I was repulsed by it).

What was striking though was the extent to which the Hollywood corporate elites seek to rape the minds of their employees and force them to submit to the cult. It wasn’t that Carano was fired for posting a historical fact on Twitter, it was everything that happened before that.

We see corporate diversity training such as Coca Cola’s “Be less white” seminars and we are disturbed by the cultism and manipulation. But listen to Carano’s story and you’ll realize that Hollywood is far ahead in their exploitation of social justice controls.

Carano mentions that as soon as she began speaking her mind from a conservative position, Disney and Lucasfilm began to bombard her with representatives, publishing agents, etc. whose mission was to convince her to stay silent or apologize publicly for her personal statements. They even tried to force her to endure a mass admonition in front of 40 trans people because she refused to post her “pronouns” to her Twitter page.

This is often referred to as a “struggle session” in communist circles, a crucible used to berate and destroy people who dare step out of line . It is also used to strike fear in the hearts of anyone else who might be thinking about voicing independent views.

Struggle sessions were the primary tactic employed during the Cultural Revolution in China as a means to pacify the citizenry and erase all ideas that opposed Marxism. The film ‘Red Violin’, produced in 1998, is one of the only films I have seen that accurately depicts the ravages of the communist social sterilization:

This is what happens when big business or government align with the leftist cult. SJWs would have no power at all if it were not for the backing of corporations and government institutions.

You want to know why so many celebrities these days seem desperate to virtue signal online all the time? It might not be because they agree with the leftists. They may just be trying to keep their jobs and avoid being suffocated by a weaponized mob. What the interview with Gina Carono really revealed to me was the extent to which Hollywood corporations are involved in that mob.

Companies like Disney aren’t following the mob’s lead – Instead, they are USING the mob as a tool. They are LEADING the social justice cult, the cult is not leading them, as many wrongly assume.

After finishing the Carano interview I could not stop thinking about a show from the 1960’s called ‘The Prisoner’ starring Patrick McGoohan. It portrays a man who works for the government and abruptly quits, only to be kidnapped by a nefarious unknown organization and transported to a place called “The Village”. The Village is a sprawling complex made to look like a happy seaside vacation town on the surface, but underneath it is a vast surveillance grid.

All the people that live there are trapped, watched constantly and the group that runs The Village uses elaborate mind games to break the prisoners down. The Village operates by turning prisoners into informants and guards; its goal often has nothing to do with making people talk. Instead, the goal is to get prisoners to submit, to get them to love the village and become a part of it. The Village is not a prison, The Village is an experiment, a microcosm of what the elite want for the entire world.

Hollywood IS The Village.

The way Carano was essentially stalked by her own employers and prodded with struggle sessions and mind games, the way that Hollywood operates behind the scenes, is exactly what leftists and corporate elites intend for the rest of us. It is already happening to some extent. How often have we heard conservatives labeled as “insurrectionists, terrorists and racists” in the past year alone? How many conservatives have been censored by Big Tech platforms? How many have lost their jobs because of their opinions, or simply making factual statements?

The social justice cult and the corporations that control them want the world to be Hollywood. They want that environment of oppression and fear to become the standard. They want everyone to be afraid to speak, or to disagree, or to step away from the agenda in any way. Everyone must play their part to perpetuate the fantasy world. Everyone must battle to appear virtuous and pure for the mob. Everyone is an actor, pretending they love their new totalitarian collective.

There is a huge weakness to this strategy, though…

All of it depends on people’s aversion to loss. If you are afraid to lose something, then that something can be used to control you. Carano was not afraid to lose and so she could not be controlled, and I commend her for that. The example she has set for others is far more valuable than any work that she might have done by submitting to the Hollywood Cheka. If only the majority of people would do the same, our civilization could change for the better overnight.

All tyranny is an illusion predicated on fear within the minds of the enslaved. So, do not fear.

*  *  *

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The US Army appears to be developing a laser weapon that is a “million times stronger” than anything ever used before – instead of concentrating a beam of light to destroy a target, the new weapon will fire short pulses, sort of like laser beam weapons from science-fiction movies, according to New Scientist.

The Tactical Ultrashort Pulsed Laser (UPSL) for Army Platforms will be designed to fire pulse-like bursts for a brief 200 femtoseconds or one quadrillionth of a second. The laser, firing bullet-like pulses of light would be enough to vaporize a drone, cruise missile, mortar, and or any other threat in its vicinity. UPSL can also function as an electromagnetic pulse (EMP) weapon. 

“The sheer amount of intensity in a terawatt pulse laser is able to cause a non-linear effect in the air resulting in a self-focusing filament,” according to the Small Business Innovation Research (or SBIR) posting titled Tactical Ultrashort Pulsed Laser for Army Platforms. 

Laser weapons are beneficial when combating enemy drones and missiles. The cost per round depends on the amount of energy available, which is far cheaper than launching costly interceptor missiles. 

A UPSL prototype model could be ready by 2022. Under the Trump administration, funding dramatically increased for laser weapon development. Multiple types of continuous-wave laser weapons have been fielded in the past couple of years. 

We’ve outlined some of those laser systems that have been fielded, including the high-energy laser (HEL) weapon with various energy output levels measured in kilowatts

The Navy is expected to install the High Energy Laser and Integrated Optical-dazzler (HELIOS) with surveillance sensors aboard an unspecified Arleigh Burke-class Flight IIA destroyer in the early 2020s.

The Air Force has mentioned a roadmap to laser weapons for this decade. It plans to mount lasers on stealth jets. 

Instead of continuous-wave lasers already in deployment among various services, the Army is preparing to test laser, firing bullet-like pulses as early as 2022.

Lasers, hypersonics, fifth-generation fighters, and autonomous war machines are some of the new technologies already entering some modern battlefields. 

Bank of America’s equity strategist Haim Israel recently told clients that the next frontier between major superpowers could outer space. 

Via HumanEvents.com,

Biden has made it clear that his number one mission as president is to undo everything the Trump administration accomplished over the last four years. 

His newest cancellation simply does not make sense. 

Biden’s administration recently cancelled Operation Talon, a Trump administration program aimed at removing convicted sex offenders living in the United States illegally.

Though the program seems to be something everyone should support, it clearly isn’t. Why would anyone want sex offenders to remain in the country? 

South Carolina Attorney General Alan Wilson joined a coalition of 18 state attorneys general to urge Biden to reverse the cancellation, according to ABC 4 News. 

“We’re working hard to fight human trafficking and sex crimes in South Carolina and allowing convicted sex offenders who are here illegally to remain in our country makes absolutely no sense,” Wilson said.

“These trafficking and sex crimes are repugnant to human decency generally and to children specifically,” he added. 

The letter, directed to Joe Biden, the Department of Homeland Security Secretary Alejandro Mayorkas and Acting Director of ICE Tae Johnson, pointed out the problems with this cancellation. The attorneys general argued that canceling Operation Talon could encourage sexual predators to attack. 

“The United States’ population of illegal immigrants includes disturbingly large numbers of criminals with prior convictions for sexual crimes,” the letter reads.

“According to data collected by Syracuse University’s Transactional Records Access Clearinghouse, during the period from October 2014 to May 2018 ICE arrested 19,572 illegal aliens with criminal convictions for whom the most serious prior conviction was a conviction for a sex-related offense.” 

“Meanwhile, an increasing number of illegal aliens are entering the United States after having been previously convicted of sexual offenses,” it continues.

“The cancellation of [Operation Talon] effectively broadcasts to the world that the United States is now a sanctuary jurisdiction for sexual predators. This message creates a perverse incentive for foreign sexual predators to seek to enter the United States illegally and assault more victims, both in the process of unlawful migration and after they arrive. It will also broadcast the message to other criminal aliens who have committed other offenses that any kind of robust enforcement against them is unlikely.” 

The letter begs perhaps the most important question:

“If the United States will not remove even convicted sex offenders, whom will it remove?” 

In addition to South Carolina, the state attorneys general that signed on to the letter include: Alabama, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Missouri, Mississippi, Montana, Nebraska, Oklahoma, South Dakota, Texas, Utah, and West Virginia. 

Look out, Google and Facebook.

Maryland is now set to become the first state in the nation to tax online ads. It’s a trend, that if it catches on (and we predict it will), could likely sweep through the nation as money-hungry spend-o-crats look for more ways to finance their respective Green New Deals, government subsidized sex changes and racial equality seminars. 

The state’s House of Delegates and Senate both voted to override a veto of a bill from last year that would place a tax on online ads, according to NPR. The tax would apply to companies like Facebook and Google and will range from 2.5% to 10% per ad, depending on the value of the company selling the ad. 

It’s expected to net the state $250 million per year, which the state then says it will use to fund an overhaul of public education that is expected to cost $4 billion. 

Those advocating for the tax say that it is simply Maryland’s tax code trying to catch up to where the economy has wound up. Gov. Larry Hogan has said it would raise operating costs for businesses, who would then pass the costs on to the state and customers. Hogan has been fighting for the state to uphold his veto of the tax. 

Doug Mayer, spokesman for Marylanders For Tax Fairness, a coalition of businesses created to fight the tax, said on Friday: “In Senate President Bill Ferguson’s short tenure as a leader, he has managed to do what no other Senate President has ever done — raise taxes and costs on Marylanders in the middle of a worldwide pandemic. There is no doubt what took place today was a historic event, but not in the way President Ferguson hoped. This tax increase was historically shortsighted, foolish, and harmful to countless small businesses and employees, and Marylanders will remember it that way.”

Ferguson pulled the solution for these criticisms directly out of the Democratic playbook last week: more regulation. He introduced “emergency legislation last week to prohibit Big Tech from simply passing along the costs of the new tax to local businesses,” NPR wrote. 

The new tax is likely going to result in lawsuits, Maryland Attorney General Brian Frosh said last year. And the tax isn’t just being considered in Maryland. Washington D.C. has also passed, and then repealed, a similar tax and more states are considering it, the report notes.

Baltimore bookstore owner Benn Ray concluded: “Beyond their infiltration into our daily lives, these big digital firms are further exploiting us by failing to pay taxes on this advertising, grabbing and monetizing our data without just compensation. This legislation is about fairness, making sure those who reap enormous profits in our state help support public services here. It’s also about developing a tax code that keeps up with a changing economy. It’s about ensuring we recognize the value of our personal data – at least as much as corporations do. And it’s about ensuring that Marylanders — and not just large, global corporations – reap the benefits of the landmark economic changes happening around us.”

Authored by Donald Boudreaux via The American Institute for Economic Research,

Over the past two weeks I’ve received emails urging me to tamp down my criticism of restrictions imposed in the name of fighting Covid-19. Most of the correspondents are polite, sincere, and even warm. Each, however, is convinced that I underestimate the threat that Covid poses to humanity. Each correspondent hopes that I come to take this threat much more seriously.

What follows here is part of my response to each of these correspondents. This essay isn’t meant to change their minds but, instead, to better explain why I hold the position that I do toward Covid, as well as toward the public’s and governments’ responses to Covid. For the record, I understand that different individuals have different risk preferences. I genuinely respect these differences.

I understand also that different individuals even have different perceptions of reality. As with the understanding of reality achieved by blindfolded persons each touching a different part of the elephant, reality isn’t revealed to everyone in the same way. Yet I’m sufficiently old-fashioned to believe that there is an objective reality, and that it’s the duty of everyone who comments publicly on that reality to do his or her best to understand it as well as possible, despite the inaccessibility of perfect understanding.

I believe also that, while the range of legitimate differences in this understanding is wide, this range isn’t unlimited. Some understandings are so detached from reality as to be illegitimate – as in, not to be taken seriously. It is for each reader to judge for himself or herself if my understanding of reality, as I express it here (and elsewhere), falls within or outside of the legitimate range.

Below is a list of some of the facts, as I understand them, about Covid-19, as well as about the reaction to this disease. Although some of these facts are more firmly established than are others, I believe that each of the facts detailed below is legitimate, and that my interpretations of them are plausible.

Further, I believe that my understanding justifies my relative lack of anxiety about Covid’s likely impact on me personally and about its impact on humanity. And I believe that the facts as I understand them warrant my description of the media’s, the public’s, and governments’ reactions to Covid as being hysterically excessive.

The Overestimated Dangers of Covid and Underestimated Dangers of Lockdowns

• Covid-19 is disproportionately lethal to the very old and ill, and heavily so. In the United States as of February 17th, 2021, nearly a third (31.8%) of “All Deaths Involving Covid-19” – as defined and reported by the CDC – were of persons 85 years old and older. Nearly 60 percent (59.6%) of these deaths were of persons 75 years of age and older. More than 81 percent (81.3%) were of people 65 years of age and older. Despite media-trumpeted exceptions, serious suffering from Covid-19 is largely an experience for very old people.

• Although Covid-19 is indeed unusually dangerous to very old people, it’s still not close to being a death warrant. The infection fatality rate for 85-year-olds is estimated to be 15 percent; for 75-year-olds it’s estimated to be 4.6 percent. For 65-year-olds, Covid’s infection fatality rate is estimated to be 1.4 percent. For 55-year-olds it’s estimated to be 0.4 percent.

• Covid’s overall lethality compared to that of the seasonal flu is no more than 10 times greater. (Some estimates have Covid’s lethality, compared to that of the flu, to be as low as 3.5 times greater.) Of course, because Covid’s lethality undeniably rises significantly with age, for the elderly Covid is far more than 10 times as deadly than is the flu, and for young people Covid is much less than ten times as deadly. (Keep in mind that the numbers in this and the previous two paragraphs come chiefly from before any vaccines were administered.)

• In the Spring of 2020, hospitals in the U.S. had a financial incentive to inflate their Covid numbers. As reported on April 24, 2020, by USA Today, “The coronavirus relief legislation created a 20% premium, or add-on, for COVID-19 Medicare patients.” Covid inflation occurred outside of the U.S. as well. In Toronto, for example, officials admit that they are inflating the Covid death count: Here’s Toronto Public Health: “Individuals who have died with COVID-19, but not as a result of COVID-19 are included in the case counts for COVID-19 deaths in Toronto.” (I encourage you to read the whole Twitter thread.)

• Lockdowns themselves have negative health consequences. How could they not, even if the only such effect arises because of people’s increased difficulty of visiting physicians for non-Covid-related illnesses and injuries? But there is evidence that negative health consequences of lockdowns extend beyond those that arise from delayed or foregone medical treatments.

• There is credible evidence that lockdowns do not significantly reduce people’s exposure to the coronavirus.

• Lockdowns have negative personal and social consequences. Avoiding contact with family and friends, even during holidays. Inability to fraternize at your favorite gym, coffee shop, bar, or restaurant. Restrictions on travel. Even if you believe that these costs are worth paying, you cannot deny that these costs are serious.

• Lockdowns have a severe negative impact on economic activity. How could they not, given that people are prevented from going to work and from engaging in much ordinary commercial activity? There’s debate about how much of the decline in economic activity is caused by voluntary action and how much is caused by the forcible lockdowns. Even in light of the likelihood that people’s fear of Covid is further stoked by the very fact that governments’ resort to the dramatic action of locking us down, evidence exists that a great deal of economic damage was caused by the lockdowns themselves.

Misinformation and Misunderstanding are Rampant

• I never recall the media giving running accounts of deaths from seasonal flu, from auto accidents, from heart disease, or from any other major sources of death. But the media do give such accounts of Covid. The false impression is thus created that the dangers posed by Covid differ categorically from the dangers posed by other of life’s serious risks. I find it incredible to suppose that such out-of-context and biased reporting does not give the general public a terribly distorted and outsized impression of Covid’s dangers – an impression that is then reinforced by people communicating with each other.

• Panic itself is contagious. As Gustave Le Bon observed in 1895, “Ideas, sentiments, emotions, and beliefs possess in crowds a contagious power as intense as that of microbes.” Social media and other sources of 24/7/365 contact with hordes of strangers is a new phenomenon, one that seems to me to have created an unprecedentedly large crowd through which panic spreads.

Panic, in turn, corrupts human decision-making abilities. This corruption is worsened by the echo-chamber feedback within the crowd. Combine these two realities with a third – namely, the difficulty the typical person experiences in expressing disagreement with a dominant narrative – and the overwhelming acceptance of the official fear-ladened account of Covid is unsurprising. But this overwhelming acceptance does not imply its own validity.

• I have encountered in major media outlets too many egregiously misleading accounts about Covid – see, for example, here and here – for me not to severely discount what the media (and government officials) ‘report’ about Covid.

• Decades of following media reports on, and politicians’ statements about, economic reality long ago convinced me that the proportion of misinformation to information is appallingly high. Because I know that most people in the media and in government are pathetically uninformed about economic reality – because I know that these people are largely innumerate and, in many cases, intellectually lazy – because I know that pundits and politicians often ignore facts and explanations that don’t fit their priors – I have every reason to doubt the reports on the numbers, to question the explanations, and to reject the spins that are issued by the media and by politicians.

Justification for my skepticism of the popular narrative about Covid is only enhanced by the resulting panic. Aware that the public is in a state of panic, pundits and politicians who are prone to play fast and loose with the truth in normal times feel even less constrained to speak carefully and accurately during times of panic.

• The reaction to the Great Barrington Declaration alone proves the gross carelessness of too many mainstream voices. This carelessness puts me on yet higher alert against the popular perception of Covid.

For example, Paul Krugman attacked the Declaration with an ad hominem. This Nobel-laureate thinker asserted that the Declaration should be dismissed because of the organization that brought together the three acclaimed scientists who wrote it. That organization, of course, is AIER which – Krugman bizarrely thinks this fact is relevant – is said by Krugman to be “linked to the Charles Koch Institute.” (Not that it matters, but this ‘fact’ is not close – not remotely close – to what Krugman’s wording implies.)

Nor, by the way, does the Great Barrington Declaration advocate a strategy of “let it rip.” But you’d never know this fact by reading many ‘descriptions’ of it. (Googling “Great Barrington Declaration” and “let it rip” – with each of the two terms in quotation marks – pulled up on February 21, 2021, 34,200 results.)

Covid Derangement Syndrome

I could list many other reasons for why I’m convinced that humanity’s fear of Covid-19 springs from profound misinformation about this disease. I could also expand my list of reasons why I believe the public’s precautions are grossly disproportionate to this disease’s actual dangers, and for why I regard the lockdowns, mask mandates, quarantine ‘hotels,’ and other restrictions to be tyranny that is wholly unjustified by the facts. But already I’ve overtaxed readers’ patience.

One doesn’t have to have Covid in order to have a life that’s meaningful and to suffer a death that’s mournful. Yet most of the public, media, and governments have reacted to Covid as if the only deaths that matter are Covid deaths – as if the only lives that matter are the lives of people with Covid – as if the only risk that matters and, hence, the only risk worth reducing is the risk of suffering from Covid. 

This lack of proportion – this sudden ignorance that our lives are inescapably filled with many different risks that must be traded off against each other – this treatment of Covid deaths as being categorically worse than are non-Covid deaths – all combined with a blind faith that politicians and bureaucrats will use vast powers wisely, prudently, and effectively – is what I call “Covid Derangement Syndrome.” 

I believe this syndrome to be real and deserving of a name that grabs attention. Such attention-grabbing is warranted, because I further believe that this syndrome poses a dangerous risk to humanity that dwarfs the risk posed by SARS-CoV-2.

It’s no secret by now that the rise of automation and robots is projected to displace millions of jobs in the coming years. Many low-skilled jobs will be wiped out because of robots, sending technological unemployment, the loss of jobs caused by technological change, through the roof. 

The latest installment of technological change leading to short-term job loss could soon be seen in the fruit harvesting industry. 

Israeli company, Tevel Aerobotics Technologies, has developed a flying autonomous robot (FAR) that works day and night to pick fruit. Artificial intelligence embedded within the FAR determines the ripest fruit to pick through sensors and computer vision. 

“The FAR robot can work 24 hours a day and picks only ripe fruit. It uses AI perception algorithms to locate the trees and vision algorithms to detect the fruit among the foliage and classify its size and ripeness. After choosing the right fruit, the robot then works out the best way to approach the fruit and remain stable as its picking arm grasps the fruit,” said Inceptive Mind. 

“There are never enough hands available to pick fruit at the right time and the right cost. Fruit is left to rot in the orchard or sold at a fraction of its peak value, while farmers lose billions of dollars each year,” the company’s website said.

Below, FAR robots pick ripe apples instead of humans. 

The automated system provides farmers with real-time updates on harvesting progress, time completion, quantity picked, and overall costs. At the end of Tevel’s promotion video, it says, “this is our future.” 

Expanding more on the “future” as described by Tevel, one where robots will displace low-skilled workers, a “great transformation” is underway where upwards of 20 million jobs could be lost due to robots by 2030. 

Submitted by Joseph Carson, former chief economist at AllianceBernstein

Recently, I shared my concerns about price mismeasurement for owner-occupied housing with a senior official who works in the Division of Consumer Prices at the Bureau of Labor Statistics (BLS). The senior official agreed with me, “That, in theory, treatment of owner-occupied housing in a CPI measure sounds easy, but in practice, it is not.” Here’s a summary of the main points of the conversation.

First, the senior official noted the International Labor Organization (ILO) manual of Consumer Prices states: The treatment of owner-occupied housing in consumer price indices (CPIs) is arguably the most difficult issue faced by CPI compilers.

I used to share that view, but no longer. The most challenging problem in price measurement is the pervasiveness of item replacements. It isn’t easy to get a continuous price series when products have a short shelf-life. Technology products create a problem for price measurement as the characteristics of items change frequently. The stock of housing does not change much from year to year, so it’s not an issue.

Moreover, the quality of house price statistics has dramatically improved in the past few decades. Repeat sales series adjusted for the time between sales provides government statisticians with price information that was not available in the past. In the early 1980s, BLS cited poor data quality on house prices as one reason to change the measurement of owner housing costs. Nowadays, there is better data on prices for owner housing than there is for rents.

Second, according to ILO, “Depending on the proportion of the reference population that are owner-occupiers, the alternative conceptual treatments can have a significant impact on the CPI, affecting both weights and, at least, short-term measures of price change.”

But the hard evidence shows that alternative measures have had a significant short-term and long-term influence on reported inflation.

In 1999, BLS adopted an alternative measure for owner-occupied housing. Due to an inadequate sample of homes for rent, BLS decided to use rent data to gauge the owner-occupied housing implicit rents. Before the change, the rate of inflation for owner-occupied rent ran consistently above rent inflation. But after the change, that pattern flipped. Since 1999, the inflation rate for rent for primary residences has always run above what BLS estimated for owner-occupied housing.

That pattern of rents runs counter to market fundamentals. During periods of economic expansion, the vacancy rate for owner-occupied housing is falling, while the rental market’s vacancy rate often moves in the opposite direction. Shrinking supply with rising prices for homes should yield a rent-inflation rate for owner-occupied housing that is much faster than the rent for a primary residence.

BLS data shows that the cumulative increase in rents for a primary residence is 20% greater than that of owners-occupied over the past two decades. It would seem improbable that based on market fundamentals alone, the owner’s rent rate would run below that of primary rents.

The weight of owner-occupied housing accounts is substantial, accounting for approximately 30% of the core CPI. And given its vast scale, the continuous understatement of rent-inflation for owner-occupied housing has created the false impression that cyclical inflation is “flat”. But in reality, it’s not.

Third, the senior official stated that it is not “impossible” to measure owner-occupied implicit rents from rental markets. I said it is.

The two markets are separate. Research has shown that location is an essential factor for housing price, and it makes sense it would also influence rents. Owner housing is of a much higher quality than renter housing. Over 80% of owner homes are detached single-family versus less than 30% for rentals, and owner-occupied homes are much larger in scale. Five states, including two of the largest rental markets (New York and California), have rent control or rent stabilization policies. Trying to match the inflation rate from a partial-regulated rent market with one that is not regulated creates the potential for large-scale price mismeasurement.

Janet Norwood, the legendary BLS Commissioner, stated, “The goal of a government statistical agency must be to produce data that are objective, relevant, accurate, and timely.” BLS measure of owners’ housing costs fails all four.

Goldman Sachs expects the exodus from cities to weigh on shelter inflation. Goldman’s Jan Hatzius told clients that it could take years for urban vacancies to normalize. 

Hatzius’ note, titled “Inflation Signal, Healthcare Noise (Hill),” had some excellent commentary on the urban exodus, aligning with our thoughts from last July when we said city dwellers fleeing metro areas could last for the next 18-24 months. 

Here’s what he told clients:

We expect a waning drag from urban flight on shelter inflation by next year. However, we don’t expect upward pressure from this channel (relative to the pre-crisis period), because we believe it is the level of rental vacancies that is the primary determinant of shelter inflation. 

We also expect at least some of the suburban relocation to prove permanent. The advent of work from home and the fact that second homes represent less than a third of 2020 home sales growth suggest it could take several years for urban vacancy rates to normalize—even with the relatively quick return to full employment that we forecast. 

… and there it is: “several years for urban vacancy rates to normalize.” The hope and hype of urban revivals in a post-pandemic world could get squashed as suburbanization becomes more permanent – hybrid work for white-collar workers is pushing this trend into hyperdrive. 

Last month, in a note titled “Rental-Exodus Sparks Surge In Single-Family Housing Starts & Permits,” we continued to outline the supporting trends of booming starts and permits for single-family homes as folks sought shelter in suburbia. 

While the boom in the suburbs is still intact but could be experiencing some headwinds, especially with rising mortgage rates, housing recoveries in major metro areas will likely wane as housing supply tops demand.

Hatzius shows rents in suburban zip codes are experiencing upwards pressure due to the exodus. Meanwhile, downtown and high-density zip codes are seeing downward pressure. 

Because of the social-economic chaos last summer across major metro areas, violent crime surging, and hybrid work trends due to the pandemic, the shift to suburbia will become more permanent. It will take people some time to realize that the economy will never return to pre-COVID times – a lot of structural changes have already happened in a short period. 

Authored by PF Whalen via TheBlueStateConservative.com,

The periodic debate regarding raising the minimum wage has resurfaced once again, only this time the argument is connected to the larger discussion surrounding a sprawling, $1.9 trillion COVID relief bill; for some inexplicable reason. In the bill unveiled by House Democrats last Friday, if passed, the minimum wage would increase incrementally from the current $7.25 per hour to $9.50 per hour this year, and eventually escalate to $15 per hour by 2025. Prominent Democrats across the board have supported the idea, including President Joe Biden.

If we deep-dive the issue in trying to understand its full impact, we can learn a great deal about the pros and cons of increasing the minimum wage; particularly with the cons. But there are two pieces of information that are difficult to come by. How, specifically, did we arrive at the number of $15? And, based on the Democrats’ reluctance to acknowledge the negative impacts of a minimum wage increase, why don’t we just add a zero to the number and increase the minimum wage to $150 per hour?

Sen. Bernie Sanders (I-VT) was the first influential public figure to float the idea of a $15 minimum wage, having proposed the idea all the way back in 2015. Sanders’ plan pointed out his perceived benefits for those who are being paid the minimum wage. Beneficiaries would see an improved standard of living; the burden on taxpayers from food stamps and Medicaid would be reduced; and an increase in available income would spur economic growth. It sounds like a wonderful plan.

Sanders’ pitch also included the obligatory attacks on salaries for corporate CEOs (because, after all, socialism is the ideology envy), as well as the store everyone on the left loves to hate, Wal-Mart. But if we dissect the details of Sanders’ idea, there’s one critical piece of information missing: how did Sanders arrive at $15 per hour? Would a $14 per hour minimum wage be insufficient to reach those goals? Would a $16 per hour minimum wage be too much, for some reason?

The only conclusion we can draw from Sen. Sanders’ brainchild is that the number ‘fifteen’ was chosen because it’s a nice, round number. Choosing the target of a $15 minimum wage just sounds better than asking for a $13.85 minimum wage. It’s simpler and rolls off the tongue more easily, and is more likely to stick in folks’ heads. But such justification is a lousy way to go about deciding public policy.

Therefore, if the objective is to improve people’s lives, which is a noble endeavor regardless of which party you belong to, why not choose another round number? Why not make it higher, say $20 per hour? Or $50? Or $150? Those are nice round numbers as well, are they not?

Just think of how much those workers would improve their standard of living making $150 per hour. If the burden on taxpayers would be lessened with a $15 minimum wage, imagine how much it would decrease if we multiplied it by ten. And if economic growth would jump with a bump to $15, what’s stopping us from making it $150 so we can see an economic boom? The issue, of course, is that there are substantial negative consequences to increasing the minimum wage; though if we only listened to the leftist Democrats we would think there are no downsides.

The far-left Center for American Progress is fully onboard with a minimum wage increase, contending that such an increase will “boost communities and the national economy and also reduce federal spending.” According to Rosemary Boeglin, one of Biden’s spokeswomen, “ raising the minimum wage reduces poverty and has positive economic benefits for workers, their families, their communities, and local businesses.” And President Biden’s Treasury Secretary Nominee Janet Yellen claims that the increase would have a “minimal” impact on job loss.

The question, therefore, remains: why are they only looking to raise the wage to $15? Why not double or triple it? Or increase it by a full order of magnitude? The answer is obvious… because increasing the minimum wage nationally will cause extensive damage to small businesses, to taxpayers, and to the very individuals the effort is intended to help; minimum wage workers.

According to the non-partisan Congressional Budget Office, approximately 900,000 Americans would be lifted out of poverty with the wage hike; which is good news. But 1.4 million jobs would be lost in the process. More people would see their wages totally eliminated than those that would see a wage increase. The National Restaurant Association is urging Congress to sit tight on the minimum wage, explaining the measure would “cut jobs, decrease hours, increase menu prices, and close down [restaurants] altogether in some cases.” Increasing the minimum wage would be devastating to small businesses, particularly restaurants.

Perhaps the best argument against a nationwide increase to the minimum wage is the country’s disparities in costs of living (COL) by state. America is a big country, and what makes sense in Oregon doesn’t always make sense in Tennessee.

On average, the state with the highest COL is Hawaii with a COL rating of 196.3, which is more than double that of Mississippi’s 84.8 rating. It’s more than twice as expensive to live in Hawaii as it is to live in Mississippi, so how does it make sense to apply the same national minimum wage? The answer is: it doesn’t. Government is not the solution to all of our problems, and that statement is especially true when it comes to the federal government. A minimum wage increase applied equally across all fifty states will result in an increase in wages for some, but a total elimination of wages for even more.

Labor is a commodity, and commodities are subject to the law of supply and demand. As the supply of labor (workers available) is decreased, the prices or demand for that labor (wages to be paid) is increased. That equation varies by industry, which means it varies by skill set. For example, making sandwiches at the local delicatessen is a low-skill job. There are plenty of people who can perform it, so the supply of labor is very high and the wages are low. Welding machinery to be used at a local factory is a high-skill job. There are not a lot of people who can perform it, so the supply of labor is very low and the wages are high.

Therefore, if someone working at a small town deli is looking to increase their income, they may want to consider improving their skill set by entering a trade school to learn how to become a welder. And if government is intent on improving people’s lives, perhaps they should consider helping that sandwich-maker gain access to that trade school instead of trying to artificially inflate the demand for his or her sandwich-making skills.

No one aspires to work for the minimum wage, except perhaps for a teenager looking to land their first job. For those who are working such a job because of a limited skill set, the key is for them to improve their skills and thereby make themselves more marketable. The solution to lifting people out of poverty is not for the government to intervene by applying a one-size-fits-all minimum wage across fifty, widely varying states. Help those Americans make themselves more marketable by improving their ability to provide value to prospective employers. And help those employers increase their demand for such laborers by giving them a robust economy in which to conduct business.

While vehemently rejecting widespread reports from the US and Western allies as well as various Europe-based human rights groups of a systematic campaign to ethnically cleanse Uighur Muslims, China is now “welcoming” a United Nations team to come and investigate the allegations.

Chinese Foreign Minister Wang Yi addressed the UN Human Rights Council in Geneva at the start of this week via video call. Calling the allegations “slanderous attacks” he later at a news conference touted that “China has sent invitations to the high commissioner of the UN for human rights about a trip to China and Xinjiang.”

“The two sides have maintained close communication on this matter,” Wang added. He had told the UN human rights session on Monday that “basic facts show that there has never been so-called genocide, forced labor or religious oppression in Xinjiang.”

It follows the US formally designating it as such during the tail end of the Trump administration, something which Biden has signaled is up for review. There’s long been widespread allegations of on million Uighurs forcibly detained in either labor or ‘reeducation’ camps under Communist authorities. 

Wang said he’s issued a personal invitation to UN rights chief Michelle Bachelet, after the UN team has long sought access to Xinjiang, where most of the detention camps are said to be. But much like the recent WHO trip to investigate the origins of coronavirus, such an endeavor is likely only to end in further accusations of a highly ‘stage managed’ and choreographed max obfuscation PR exercise.

“The door to Xinjiang is always open. People from many countries who have visited Xinjiang have learned the facts and the truth on the ground. China also welcomes the High Commissioner for Human Rights to visit Xinjiang,” Wang said in reference to Bachelet.

Wang’s defense before the UN body centered on “Xinjiang-related issues” ultimately being about “countering terrorism and separatism”, touting further that there’s been zero terror attacks in the region for almost the last half-decade. He also claimed the Uighur population has actually grown, not decreased as would be expected if there were an ongoing “genocide”.

🇨🇳 China at the UN Human Rights Council: “There’s no genocide, forced labor, or oppression in Xinjiang.”

FACT-CHECK: China herded 1 million Uighur Muslims into “reeducation” & labor camps, destroyed mosques, forcibly sterilized Uighur women. pic.twitter.com/jsIj767oz0

— UN Watch (@UNWatch) February 24, 2021

Meanwhile on Tuesday Canada’s parliament unanimously passed a non-binding motion on the heels of the prior controversial US designation, calling China’s policy toward Xinjiang and its ethnic minorities “genocide”. Canada is also seeking to boycott the 2022 Beijing Winter Olympics over the issue, something which UK’s Johnson has said his country won’t jump on board with (i.e.: London does not plan to boycott the Olympics). “Genocide is clearly defined in international law which cannot be pinned to China,” China’s embassy in Canada shot back in reaction to what it called a “disgraceful” vote.

The vote was 266-0 in favor of the motion, however PM Trudeau and his cabinet abstained – yet it’s likely the further damage to trade relations is already “done” in Beijing’s eyes on the mere symbolism of the vote.