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A under contract sign on a home previously for sale in Vienna, Va. (Photo: Reuters)

A under contract sign on a home previously for sale in Vienna, Va. (Photo: Reuters)

The National Association of Realtors (NAR) said existing home sales in October rose 2.0% to a seasonally adjusted annual rate of 5.48 million, the strongest pace since earlier this summer. Existing home sales activity–which are completed transactions that include single-family homes, townhomes, condominiums and co-ops,–picked up for the second straight month in October.

All four major regions saw increases and, after last month’s increase, sales are at their strongest pace since June (5.51 million). But they still remain 0.9% below a year ago largely due to supply shortages leading to fewer closings on an annual basis for the second straight month.

“Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home,” Lawrence Yun, NAR chief economist said. “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”

The median price for existing homes for all housing types in October was $247,000, up 5.5% from October 2016 when it was $234,100. October’s price increase marks the 68th straight month of year-over-year gains.

“The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida,” Mr. Yun added. “However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”

Total housing inventory at the end of October fell 3.2% to 1.80 million and is now 10.4% lower than a year ago (2.01 million). Inventory has fallen year-over-year for 29 consecutive months and unsold inventory is at a 3.9-month supply at the current sales pace, down from 4.4 months a year ago.

Properties typically stayed on the market for 34 days in October, which is unchanged from last month and down from 41 days a year ago. Forty-seven percent (47%) of homes sold in October were on the market for less than a month.

Existing home sales in October rose 2.0%

SUV parts are fabricated in the stamping facility at the General Motors Assembly Plant on June 9, 2015. (Photo: Reuters)

SUV parts are fabricated in the stamping facility at the General Motors Assembly Plant on June 9, 2015. (Photo: Reuters)

The Chicago Fed National Activity Index (CFNAI) rose to +0.65 in October, an expansion high that is significantly stronger than the forecast and average. The consensus forecast called for a +0.20 reading and ranged from +0.05 to +0.25.

The 3-month average is also near a high, increasing to +0.28 in October from +0.01 in September. One of the four broad categories of indicators that make up the index increased from September, but three of the four categories made positive contributions to the index in October.

Industrial production also rebounded significantly from the impact of the hurricanes in August.

Read Full Report: cfnai-november 2017-pdf

The Chicago Fed National Activity Index (CFNAI) rose

North Korean leader Kim Jong Un salutes during a visit to the Ministry of the People's Armed Forces on the occasion of the new year, in this undated photo released by North Korea's Korean Central News Agency (KCNA) on January 10, 2016. (Photo: Reuters)

North Korean leader Kim Jong Un salutes during a visit to the Ministry of the People’s Armed Forces on the occasion of the new year, in this undated photo released by North Korea’s Korean Central News Agency (KCNA) on January 10, 2016. (Photo: Reuters)

It’s time to continue our series on the 100th anniversary of Russia’s Bolshevik revolution, which unleashed a century of brutal, deadly, and oppressive communism.

But at least it’s a series that sort of has a happy ending. The Soviet Union collapsed and China is now only nominally communist.

Though there are a few holdouts. Cuba is still suffering from communist tyranny, for instance, and there are socialist hellholes like Venezuela that could descend into full-blown Marxist tyranny.

Speaking of tyranny, North Korea wins the prize for practicing the purest remaining form of communism. But that’s not a prize worth winning. Unless the goal is horrific poverty and suffering.

It’s such a horrible system that even Bernie Sanders has never said anything favorable about it.

We’re going to focus today on that unfortunate country.

Let’s start with a stomach-churning story from the BBC about the joy of communist life.

A North Korean soldier who was shot while fleeing across the border has an extremely high level of parasites in his intestines, his doctors say. The defector crossed the demilitarised zone on Monday, but was shot several times by North Korean border guards. Doctors say the patient is stable – but “an enormous number” of worms in his body are contaminating his wounds and making his situation worse. His condition is thought to give a rare insight into life in North Korea.

And he’s not an exception.

“North Korea is a very poor country and like any other poor country it has serious health problems,” Prof Andrei Lankov of Kookmin University in Seoul told the BBC. “North Korea does not have the resources to have a modern medical system,” he says. “Its doctors are relatively poorly trained and have to work with primitive equipment.” In 2015 South Korean researchers studied the health records of North Korean defectors who had visited a hospital in Cheonan between 2006 and 2014. They found that they showed higher rates of chronic hepatitis B, chronic hepatitis C, tuberculosis and parasite infections, compared to South Koreans. …”I don’t know what is happening in North Korea, but I found many parasites when examining other defectors,” Professor Seong Min of Dankook University Medical School was quoted by the Korea Biomedical Review as saying. …Parasites, especially worms, are thought to be widespread in North Korea.

Defectors have helped inform us about the horrors of that nation. Here are some blurbs from a Washington Post story.

When Kim Jong Un became the leader of North Korea almost six years ago, many North Koreans thought that their lives were going to improve. …But the “Great Successor,” as he is called by the regime, has turned out to be every bit as brutal as his father and grandfather before him. …The Washington Post talked with more than 25 North Koreans from different walks of life who lived in Kim Jong Un’s North Korea and managed to escape from it. …in talking about their personal experiences, including torture and the culture of surveillance, they recounted the hardships of daily life under Kim Jong Un’s regime. They paint a picture of a once-communist state that has all but broken down, its state-directed economy at a standstill. …In theory, North Korea is a bastion of socialism, a country where the state provides everything, including housing, health care, education and jobs. In reality, the state economy barely operates anymore. People work in factories and fields, but there is little for them to do, and they are paid almost nothing. …Bribery and corruption have become endemic… Those working only in official jobs, whether they be on a state-owned ostrich farm or in a government ministry in Pyongyang, earn only a few dollars a month and get little in the way of rations.

But it’s not just poverty and deprivation. There’s also Orwellian spying.

North Korea operates as a vast surveillance state, with a menacing state security department called the Bowibu as its backbone. Its agents are everywhere and operate with impunity. The regime also operates a kind of neighborhood watch system. Every district in every town or city is broken up into neighborhood groups of 30 or 40 households, each with a leader who is responsible for coordinating grass-roots surveillance and encouraging people to snitch.

And the government isn’t spying simply to take people’s money, an odious tactic in some western nations.

The North Korean government is spying to see who should be killed or imprisoned.

Both of those options are terrible since the concentration camps are particularly horrific.

Escapees from North Korea’s gruesome political prisons have recounted brutal treatment over the years, including medieval torture with shackles and fire and being forced to undergo abortions by the crudest methods. …severe beatings and certain kinds of torture — including being forced to remain in stress positions for crippling lengths of time — are commonplace throughout North Korea’s detention systems, as are public executions. …Starvation is often part of the punishment, even for children. [A] 16-year-old lost 13 pounds in prison, weighing only 88 pounds when she emerged. …It is this web of prisons and concentration camps, coupled with the threat of execution, that stops people from speaking up. There is no organized dissent in North Korea, no political opposition.

The only good news, so to speak, is that the article explains that a black market economy has emerged.

And that’s better than nothing, as Richard Mason explains in a column for the Foundation for Economic Education.

From the state’s formation in 1948 up until the end of the 20th century, things were (relatively) unchanging; all industries were seized by the government and nationalized, with basic necessities such as food, clothing, and fuel all being provided by the state. This all changed following the fall of communism and the ‘Arduous March’ famine of the 1990’s. With the state no longer able to feed its people, a new system stepped in to take over. Black markets began to appear all over the country, where the distribution system’s failure hit especially hard, and effectively fed thousands of North Koreans. …Initially, these markets consisted of disorganized traders meeting in fields, facing seizure from police if they did not come up with a bribe. Today, the jangmadang practice has led to fully-fledged markets, complete with stalls selling street food, smuggled electronics, ingredients, and clothes; certain markets allegedly grew to encompass upwards of a thousand stalls. …the markets remain a crucial element of survival for many North Koreans, with some reports estimating that around 5 million (around a fifth of the overall population) are “directly or indirectly dependent on the markets”. …The regime has flip-flopped between giving official sanction to certain vendors (so long as they pay the state for the privilege) and imposing harsh restrictions.

In addition to saving lives, these black markets may be sowing the seeds of future liberalization.

…the rising prevalence of jangmadangs across the country has not only provided an effective alternative to the failed state distribution system, but is changing the attitudes of North Koreans as well. Since many now rely on the market for their dinner, rather than the state, old loyalties to the regime are slowly breaking down. Furthermore, increased smuggling into the country from China brings with it more outside media, such as American and South Korean movies and music. This means that more and more North Koreans have access to information not produced by the regime, allowing them a glimpse into the outside world.

Let’s hope exposure to the real world will help North Koreans eventually obtain freedom. Or at least a lesser form of oppression.

As part of my series on the 100th anniversary of communist brutality, I mocked the dupes and fellow travelers who pimped for totalitarianism, including a few economists, I’m ashamed to admit.

But if there’s a special place in hell for communist apologists, it will be occupied by the disgusting people who laud North Korea’s supposed success in fighting obesity when in reality people have starved to death in that wretched land.

The hottest spot hopefully will be reserved for the World Health Organization bureaucrat who got the ball rolling a few years ago. The Wall Street Journal explains.

World Health Organization Director-General Margaret Chan has returned from Pyongyang with wonderful news. The Democratic People’s Republic of Korea is making great strides in health care… Thanks to on-the-spot guidance from Dear Leader Kim Jong Il, North Korean doctors…have even conquered the decadent West’s problem of obesity! …Ms. Chan’s surreal statements last Friday, as reported by several wire services, really did include praise for North Korean health care and the lack of obesity. “They have something which most other developing countries would envy,” the global health administrator gushed.

The editorial points out that the WHO and UN have a long track record of covering up for communist health failure.

…this is nothing new for the WHO. In the 1970s, the United Nations agency promoted Mao Zedong’s vision of “barefoot doctors” to serve the rural poor—even as China’s health-care system was collapsing, along with the rest of society, under the strain of the Cultural Revolution. Today the WHO has become a cheerleader for Cuban health care. As long as a totalitarian state gives plenty of poorly trained people the title of doctor, fudges its health statistics and takes visiting officials on tours of Potemkin hospitals, the U.N. seems happy to give its seal of approval.

I’m surprised the WHO hasn’t been celebrating weight loss in Venezuela, another nation where people go hungry because of the failure of socialism.

Being an Olympic medalist and aspiring politician must not be a good combination. Here are some excerpts from a searing column in the Washington Examiner.

Famine can do wonders for your figure. Are you struggling to shed those stubborn final pounds? Food shortages, vitamin deprivation, and government rationing will help you get over the wall. You may die from it, but the weight loss will make you look fabulousAt least, that’s the takeaway from a Sky News interview this week featuring double Olympic gold medalist James Cracknell, a member of the Conservative Party who has aspirations of becoming a member of the U.K. Parliament. “If you think of the two countries in the world that got a handle on obesity, what do you think they are? Which two countries?” Cracknell asked. …”North Korea and Cuba. They’re quite controlling on behavioral change, so there is a place where it has to be worked..,” One host interjected with some fairly important background information, “Yeah, but people are starving in North Korea, aren’t they? You know, they’re not obese because they haven’t got any food.” …Cosmopolitan said basically the same thing a few years ago when it praised the “Cuban diet.”

Wow, if a potential Tory politicians says something this morally blind, the crazy leftism of Jeremy Corbyn no longer seems so out of place. Heck, they both think the suffering in Cuba should be celebrated.

Let’s close on a very grim note. The communist dictator of North Korea now has nuclear weapons.

I hope that he’s not sufficiently suicidal to use those weapons, but it’s unclear whether he’s crazy or simply brutal.

Though even if he’s “only” brutal, maybe he would launch a warhead if his hold on power was threatened by internal rebellion.

If which case, the final outcome of such a decision would be a country that is unlit at night because it’s been obliterated rather than because it has a Stone Age economy (see postscript).

P.S. That’s such an unpleasant thought that I feel compelled to add some good news. First, it is possible for North Korea to prosper if it does peacefully transition to capitalism. Second, we can at least laugh at communism, even though that seems morbid given the death and suffering it has caused.

Exceeding the misery in Venezuela, North Korea

Japanese Prime Minister Shinzo Abe walks to his seat at a luncheon with President Donald Trump and South Korean President Moon Jae-in at the Palace Hotel during the United Nations General Assembly, Thursday, Sept. 21, 2017, in New York. From left, Vice President Mike Pence, Abe, Trump, and Secretary of State Rex Tillerson. (Photo: AP Photo)

Japanese Prime Minister Shinzo Abe walks to his seat at a luncheon with President Donald Trump and South Korean President Moon Jae-in at the Palace Hotel during the United Nations General Assembly, Thursday, Sept. 21, 2017, in New York. From left, Vice President Mike Pence, Abe, Trump, and Secretary of State Rex Tillerson. (Photo: AP Photo)

President Donald Trump announced Monday he designated North Korea a state sponsor of terrorism, something he said “should have happened a long time ago.” The announcement came during a Cabinet meeting at the White House only days after returning from his historic 13-day trip to Asia, which opens up the “murderous” leftwing communist regime to more sanctions.

“We will be instituting a very critical step,” President Trump said. “Today, the U.S. is designating North Korea as a state sponsor of terrorism. This should have happened a long time ago—should have happened years ago.”

On the president’s order, North Korea will return to the list of designated state sponsors of terrorism at the State Department for the first time since its removal by George W. Bush in 2008. Secretary of State Rex Tillerson first suggested the idea of re-designating North Korea as a state sponsor of terror in April.

“Today the U.S. is designating North Korea as a state sponsor of terrorism. In addition to threatening the world by nuclear devastation, North Korea has repeatedly supported acts of international terrorism including assassinations on foreign soil,” President Trump said, citing the murder of American college student Otto Warmbier, who was imprisoned and killed in North Korea this year. “This designation will impose further sanctions and penalties on North Korea and related persons.”

North Korea, which has long-violated the agreement they made with Bush, will join Iran, Syria and Sudan.

President Trump also said that the designation supports a “maximum-pressure campaign” on the “murderous regime,” stating the sanctions would be imposed over a two-week period and would constitute the “highest level of sanctions” on North Korea.

The Trump Administration has ratcheted up the pressure on Pyongyang in response to their continued development of a intercontinental ballistic missile (ICBM) and nuclear program. The strategy has increased tensions, but also resulted in significantly victories.

The United Nations (U.N.) Security Council under the direction of the U.S. voted to impose strict sanctions on North Korea that will cost the rogue regime roughly $1 billion in exports. Resolution 2371 passed unanimously in August. Chinese banks received instructions the following month telling them to halt business with North Korea and strictly implement the U.S.-led sanctions.

President Trump also followed up the sanctions with an executive order targeting nations who trade with North Korea, calling it a “powerful” new tool aimed at isolating and de-nuclearizing the regime.

President Donald Trump announced Monday he designated

Sen. Jeff Flake, R-Ariz., on Capitol Hill in Washington on March 9, 2016. (Photo: AP)

Sen. Jeff Flake, R-Ariz., on Capitol Hill in Washington on March 9, 2016. (Photo: AP)

Fox News likes to exempt themselves from the “mainstream media” label. Under the direction of the late Roger Ailes and longtime executive Bill Shine, the Fox News Channel built a brand portraying themselves as the only Big Media cable television outlet who understands Middle America.

That brand suffered badly during the 2016 Republican primary, as Republican voters and key viewer graphics saw the network repeatedly attempting to run interference first for Jeb! and later for Marco Rubio. They may give President Donald Trump the fairest coverage, but in the era of complete media hysteria that doesn’t say much.

The bar is low.

With the advent of “fake news” hysteria, Fox News has tried to exempt themselves from that label, too. But even they are capable of cranking out fake news.

Exhibit A: President Trump’s feud with Jeff Flake, the one-term senator from Arizona who won’t stand for reelection because he didn’t have the courage to face voters whom he clearly sees as backward and ignorant.

On Saturday night, Senator Flake told a Republican mayor that “if we become the party of Roy Moore and Donald Trump, we are toast.” Within minutes, Big Media began publishing one story after another citing his remarks. President Trump responded hours later on Sunday in a tweet.

“Sen. Jeff Flake(y), who is unelectable in the Great State of Arizona (quit race, anemic polls) was caught (purposely) on ‘mike’ saying bad things about your favorite President,” he wrote. “He’ll be a NO on tax cuts because his political career anyway is ‘toast.'”

Let’s look at the headline on Fox News.

Headline on FoxNews.com in response to President Trump responding to Senator Jeff Flake, R-Ariz., who has been rejected by the voters of his state.(Photo: Screenshot)

Headline on FoxNews.com in response to President Trump responding to Senator Jeff Flake, R-Ariz., who has been rejected by the voters of his state.(Photo: Screenshot)

That headline is fake news and leaves a reader-at-a-glance with the impression the president was picking a fight. It’s meant to perpetuate a Big Media narrative that is more than a little unfair to President Trump. Whether you hear about the attack that invited his response in the media or not, he is and always has been a counterpuncher.

Fox debunks their own headline in the opening paragraph of their own story.

President Donald Trump slammed back at Sen. Jeff Flake in a tweet Sunday night, calling him “unelectable” and referring to his political career as “toast” days after the Republican senator was caught criticizing the president.

So, who started the feud? Right. Folks, that’s fake news, too.

There’s also no mention of the fact that Flake was the original NeverTrumper or that he wrote a book allegedly about conservatism to trash the president. Senator Flake has long-been auditioning for a job on CNN or MSNBC in anticipation of his defeat, which is what this “hot mic” moment really was. To suggest otherwise is not only false but also an insult to the intelligence of your viewers and readers.

Fox News debunked their own misleading headline

Japanese Prime Minister Shinzo Abe shakes hands with U.S. President Donald Trump during the bilateral meeting at the G20 leaders summit in Hamburg, Germany July 8, 2017. (Photo: Reuters)

Japanese Prime Minister Shinzo Abe shakes hands with U.S. President Donald Trump during the bilateral meeting at the G20 leaders summit in Hamburg, Germany July 8, 2017. (Photo: Reuters)

I’m currently in Tokyo for an Innovation Summit. Perhaps because I once referred to Japan as a basket case, I’ve been asked to speak about policies that are needed to boost the nation’s competitiveness.

That sounds like an easy topic since I can simply explain that free markets and small government are the universal recipe for growth and prosperity.

But then I figured I should be more focused and look at some of Japan’s specific challenges. So I began to ponder whether I should talk about Japan’s high debt levels. Or perhaps the country’s repeated (and failed) attempts to stimulate the economy with Keynesianism. And Japan’s demographic crisis is also a very important issue.

But since I only have 20 minutes (not even counting Q&A), I don’t really have time for a detailed examination on any of those topics. So I was still uncertain of how best to illustrate the need for pro-market reforms.

My job suddenly got a lot easier, though, because Eduardo Porter of the New York Times wrote a column today that includes a graph very effectively illustrating why Japan is in trouble. Simply stated, the country is on a very bad trajectory of ever-higher taxes.

To elaborate, Japan used to have a relatively modest tax burden, as least compared to other industrialized nations. But then, thanks in part to the enactment of a value-added tax, the aggregate tax burden began to climb. It has jumped from about 18 percent of economic output in 1965 to about 32 percent of gross domestic product in 2015.

Even the French didn’t raise taxes that dramatically!

By the way, I feel compelled to digress and point out that Mr. Porter’s column was not designed to warn about rising taxes in Japan. Instead, he was whining about non-rising taxes in the United States. I’m not joking.

American tax policy must stand as one of the great mysteries of the global political economy. In 1969…federal, state and local governments in the United States raised about the same in taxes, as a share of the economy, as the government of the average industrialized country: 26.6 percent of gross domestic product, against 27 percent among the nations in the Organization for Economic Cooperation and Development. Nearly 50 years later, the tax picture has changed little in the United States. By 2015, …the figure was 26.4 percent of G.D.P. But across the market democracies of the O.E.C.D., the share had climbed by an average of more than seven percentage points. …Americans are paying dearly as a result, as their comparatively small government has proved incapable of providing an adequate safety net…there is no credible evidence that countries with higher tax rates necessarily grow less.

Americans are “paying dearly”? Are we “paying dearly” because our living standards are so much higher? Are we “paying dearly” because our growth rates are higher and Europe is failing to converge? Are we “paying dearly” because America’s poorest states are rich compared to European countries.

Now that I got that off my chest, let’s get back to our discussion about Japan.

Looking at the data from Economic Freedom of the World, Japan ranked among the world’s 10-freest economies as recently as 1990. Today, it ranks #39. That is a very unfortunate development, though I should point out that the nation’s relative decline isn’t solely because of misguided fiscal policy.

I’ll close by noting that even the good news from Japan isn’t that good. Yes, the government did slight lower its corporate tax rate so it no longer has the highest burden among developed nations. But having the second-highest corporate tax rate is hardly something to cheer about.

Japan had a relatively modest tax burden

Pedestrians walk past the International Monetary Fund (IMF) headquarters’ complex in Washington Sunday, May 2, 2010. (Photo: AP)

Pedestrians walk past the International Monetary Fund (IMF) headquarters’ complex in Washington Sunday, May 2, 2010. (Photo: AP)

Inequality is now a major dividing line in the world of public policy. Supporters of limited government think it’s not a big issue and instead focus on the policies that are most likely to generate growth. Simply stated, they tend not to care if some people get richer faster than other people get richer, assuming, of course, that income is honestly earned and not the result of cronyism.

Folks on the left, by contrast, think inequality is inherently bad. It’s almost as if they think that the economy is a fixed pie and that a big slice for the “rich” necessarily means smaller slices for the rest of us. They favor lots of redistribution via punitive taxes and an expansive welfare state.

When talking to such people, my first priority is getting them to understand that it’s possible for an economy to grow and for all income groups to benefit. I explain how even small differences in long-run growth make a big difference over just a few decades and that it is very misguided to impose policies that will discourage growth by penalizing the rich and discouraging the poor.

I sometimes wonder how vigorously to present my argument. Is it actually true, as Margaret hatcher and Churchill argued, that leftists are willing to hurt poor people if that’s what is necessary to hurt rich people by a greater amount?

Seems implausible, so when I recently noticed this amusing humor on Reddit‘s libertarian page, I was not going to share it. After all, it presumes that our friends on the left genuinely would prefer equal levels of poverty rather than unequal levels of prosperity.

But, after reading a new study from the International Monetary Fund (IMF), I’m wondering if I’m underestimating the left’s fixation with inequality and the amount of economic damage they’re willing to inflict to achiever greater equality of outcomes.

Here are some introductory passages to explain the goal of the research.

…it is worth reemphasizing some lessons from the “old masters” in economics who addressed this topic a few decades ago—including Arthur M. Okun and Anthony B. Atkinson in the 1970s. Their lessons—on how to elicit people’s views on inequality and how to summarize societal welfare using a monetary indicator encompassing both average incomes and their distribution—remain relevant for fiscal policymakers today. …a satisfactory theory of welfare must recognize that welfare depends on both the size and the distribution of national income. …This primer seeks to encourage more widespread use by policymakers of the tools developed by welfare theory. …the primer provides an in-depth, step-by-step refresher on two specific tools chosen because of their simplicity and intuitive appeal: Okun’s “leaky bucket” and Atkinson’s “equally-distributed-equivalent income.”

Please note that the IMF explicitly is saying that it wants policymakers to change laws based on what’s in the study.

And, as you continue reading, it should become obvious that the bureaucrats are pushing a very radical agenda, not that we should be surprised given the IMF’s track record.

Here’s the bureaucracy’s take on Okun and his pro-redistribution agenda.

Okun (1975) proposed a thought experiment capable of eliciting people’s attitudes toward the trade -off between equality and efficiency: Okun asked the reader to consider five families: a richer one making $45,000 (in 1975) and four poorer ones making $5,000. Would the reader favor a scheme that taxed the rich family $4,000 and transferred the proceeds to the poorer families? In principle, each poorer family would receive $1,000. But what if 10 percent leaked out, with only $900 reaching the recipients? What would the maximum acceptable leak be? The leak represented not only the administrative costs of tax-and-transfer programs (and, one might add, potential losses due to corruption), but also the fact that such programs reduce the economic incentives to work. …Okun reported his own answers to the specific exercise he proposed (his personal preference was for a leakage of no more than 60 percent). ….Okun was willing to accept that a $4,000 tax on the rich household [would] translate, with a 60 percent leakage, into a $400 transfer to each of the four poor households.

The only good part about Okun’s equity-efficiency tradeoff is that he acknowledges that redistribution harms the economy. The disturbing part is that he was willing to accept 60 percent leakage in order to take money from some and give it to others.

It gets worse. When the IMF mixes Okun with Atkinson, that’s when things head in the wrong direction even faster. As I noted last month, Atkinson has a theory designed to justify big declines in national income if what’s left is distributed more equally. I’m not joking.

And that IMF wants to impose this crazy theory on the world.

Atkinson (1970) showed that under the assumptions above and having identified a coefficient of aversion to inequality, it becomes easy to summarize the well-being of all households in an economy with a single, intuitive measure: the equally-distributed-equivalent income (EDEI), i.e., the income that an external observer would consider just as desirable as the existing income distribution. …The percentage loss in mean income—compared with the initial situation—that an observer would find acceptable to have a perfectly equal distribution of incomes was introduced by Atkinson (1970) as a measure of inequality.

The study then purports to measure “aversion to inequality” in order to calculate equally-distributed-equivalent income (EDEI).

The greater the observers’ aversion to inequality, the lower the EDEI. Table (2) reports for a few alternative ε coefficients, for the example above.

Here’s a table from the study, which is based on a theoretical rich person with $45,000 and a theoretical poor person with $5,000 of income. A society that isn’t very worried about inequality (ε = 0.2) is willing to sacrifice about $4,000 on overall income to achieve the desired EDEI. But a nation fixated on equality of outcomes might be willing to sacrifice $32,000 (more than 60 percent of overall income!).

I’ve augmented the table with a few of the aggregate income losses in red.

In other words, nations that have a higher aversion to inequality are the ones that prefer lots of misery and deprivation so long as everyone suffers equally.

Another use of this data is that it allows the IMF to create dodgy data on income, sort of like what the Organization for Economic Cooperation and Development (OECD) does with poverty numbers.

It appears the bureaucrats want to use EDEI to claim that poorer nations have more income than richer nations.

…the ranking of countries based on the EDEI often differs significantly from that based on mean income alone. For instance, South Africa’s mean income is more than double that of the Kyrgyz Republic, and substantially above that of Albania. However, those countries’ lower inequality implies that their EDEI is significantly higher than South Africa’s. …Similarly, the United States’ mean income is considerably above that of the United Kingdom or Sweden. However, for an inequality aversion coefficient of ε=1.5, Sweden’s EDEI is above that of the United States, and for ε=2.0 also the United Kingdom’s EDEI is above that of the United States.

Here’s a table from the study and you can see how the United States becomes a comparatively poor nation (highlighted in red) when there’s an “aversion” to inequality.

In other word, even though the United States has much higher living standards than European nations, the IMF is peddling dodgy numbers implying just the opposite.

But the real tragedy is that low-income people will be much more likely to remain poor with the policies that the IMF advocates.

A new study by the International Monetary Fund

The U.S. flag is displayed at Tesoro's Los Angeles oil refinery in Los Angeles, California. (Photo: Reuters)

The U.S. flag is displayed at Tesoro’s Los Angeles oil refinery in Los Angeles, California. (Photo: Reuters)

The Baker Hughes North American Rig Count is up 13 to 1,123 for the week ending November 17, as both the U.S. and Canada counts increased for the second time in 2 weeks. Overall, the North American Rig Count is now up 351 on the year, far more than the 772 rigs in commission at this time last year.

The U.S. rig count was up 8 rigs to 915 and up 327 rigs from the 588 last year. The Canadian count was up 5 rigs to 208 and up 24 from 184 last year.

For the U.S., rigs classified as drilling for oil was flat at 738, while rigs classified as gas were up 9 177. For Canada, oil rigs are up 1 to 109 and gas rigs are up 4 to 99.

Worth noting, Texas rigs were up 7 to 449 and Louisiana rigs were up 4 to 62. The Gulf of Mexico, which is a subset of the U.S. in the North American Rig Count, was up 3 to 21.

The Baker Hughes North American Rig Count

Vladimir Lenin rallies a huge crowd of supporters before storming the Winter Palace during the Bolshevik Revolution.

Vladimir Lenin rallies a huge crowd of supporters before storming the Winter Palace during the Bolshevik Revolution.

Over the past few weeks, I’ve written several columns about the 100th anniversary of communism. I’ve looked at that evil ideology’s death toll, and I’ve written about the knaves and fools who defended and promoted communism in the west — including, sad to say, some economists. And I’ve even shared some anti-communist humor to offset the dour material in the other columns.

Let’s continue that series today by looking at the very practical question of what happens when a nation breaks free from communist enslavement?

Professor James Gwartney and Hugo Montesinos from Florida State University analyzed the economic performance of former Soviet Bloc nations (they refer to them as formerly centrally planned – or FCP – countries) over the past 20 years.

The good news is that these countries have been growing, especially if they get decent scores from Economic Freedom of the World.

The economic record of the FCP countries during 1995-2015 was impressive. This was particularly true for the seven FCP countries that moved the most toward economic liberalization. The average growth of real per capita GDP of these seven countries exceeded 5 percent during 1995-2015. Real per capita GDP more than doubled in six of the seven countries during the two decades. …While the real GDP growth of the middle group was slower, it was still impressive. The population weighted annual real growth of per capita GDP of the middle group was 3.78 percent.

And to elaborate on the good news, growth rates in FCP nations has been faster than growth rates in rich countries.

But that’s to be expected. Convergence theory tells us that poorer places should grow faster than richer places (at least in the absence of unusual circumstances).

But government policy can be a wild card. As you can see from Table 14 of the report, Gwartney and Montesinos parsed the data and found that the FCP nations that adopted the most pro-market reforms have enjoyed the fastest growth rates, while growth rates were less impressive in the FCP countries with lesser amounts of economic liberalization (relative growth rates highlighted in red below).

The goal, of course, is for FCP nations to catch up with rich nations.

And there has been a decent amount of convergence.

…the relative income increases are impressive. The ratio of the mean per capita GDP of the most economically free group compared to the high-income economies more than doubled, soaring from 19.9 percent in 1995 to 40.6 percent in 2015. The parallel ratio for the middle group increased by approximately 50 percent from 36.9 percent in 1995 to 53.0 percent in 2015. Finally, the ratio for the bottom group increased from 13.0 percent in 1995 to 24.6 percent in 2015, an increase of 90 percent. The largest increases in relative income were registered by Georgia, Lithuania, Latvia, Armenia, Albania, Kazakhstan, Azerbaijan, and Bosnia and Herzegovina. The ratio for each of these countries more than doubled between 1995 and 2015. Note that five of these eight countries are in the group with the highest 2015 EFW ratings.

There’s country-specific data in Table 13 of the report.

And you can see, once again, that the nations with the most economic freedom and enjoying the fastest convergence rates. From the top group, I’ve highlighted both Georgia and the Baltic countries for their impressive results. And I also highlighted Poland and Slovakia from the second group because both countries have converged at a rapid pace thanks to some good policies.

Looking at the bottom group, it’s sad to see Ukraine doing so poorly, but that’s a predictable result given the near-total absence of economic freedom in that unfortunate country.

The obvious moral of the story is that nations will grow faster and generate more prosperity if they follow the recipe of free markets and limited government.

So let’s take a look at that recipe by examining how FCP nations have performed when looking at the various ingredients. More specifically, Economic Freedom of the World looks at five major policy areas: fiscal, trade, money, regulation, and legal.

And it’s that final category (which measures factors such as property rights, the rule of law, and government corruption) where these countries have not done a good job.

…the FCP countries…have a major shortcoming: their legal systems are weak and little progress has been made in this area. Given their historic background, this is not surprising. Under socialism, legal systems are designed to serve the interests of the government. Judges, lawyers, and other judicial officials are trained and rewarded for serving governmental interests. Protection of the rights of individuals and private businesses and organizations is unimportant under socialism.

Here’s some fascinating data from Table 17, which shows how scores for the five major categories have changed over time in both FCP nations and countries from Western Europe. You’ll see that FCP countries have liberalized policy and closed the gap in Area 3 (money), Area 4 (trade), and Area 5 (regulation). And you’ll also see how the FCP nations do a better job in Area 1 (fiscal), which I’ve highlighted in red. But the most startling – and depressing – result in the absence of progress in Area 2 (legal), which is also highlighted in red.

These results, for all intents and purposes, are a much more detailed version of an article I wrote for the Alliance of Conservatives and Reformers in Europe earlier this year.

Unfortunately, even though we have the same diagnosis, we don’t really have an easy solution. In this final excerpt, the authors explain that it’s not that easy to change the culture of a nation’s political class.

It is a major challenge to convert a socialist legal system into one that enforces contracts in an unbiased manner, protects property rights, permits markets to direct economic activity, and operates under rule of law principles. …Economists have provided policy-makers with step by step directions about how to achieve monetary and price stability, liberalized trade regimes, and adopt tax structures more consistent with growth and prosperity. …But, a recipe for developing a sound legal system is largely absent. We know what a sound legal system looks like, but we have failed to explain how it can be achieved.

I don’t even thank socialism deserves the full blame, though it deserves the blame for many bad things. There are many nations in many regions of the world that get very bad scores because of inadequate rule of law and weak property rights. But I fully agree that it’s not easy to fix.

But I’ll close with a very upbeat observation that all of the FCP nations are better off because the Soviet Union collapsed and communism is fading from the world. Liberal socialism may not be good for an economy, but it’s paradise compared to Marxist socialism.

A hundred years after the Bolshevik Revolution,

Florida Democratic Party Chairman Stephen Bittel, left, and Oscar Braynon, right, the Senate Democratic leader.

Florida Democratic Party Chairman Stephen Bittel, left, and Oscar Braynon, right, the Senate Democratic leader.

TALLAHASSEE, Fla. (PPD) — Stephen Bittel, the Florida Democrat Party chairman, resigned Friday following a report citing anonymous allegations of sexual misconduct. The decision came shortly after four of his party’s candidates for governor said he should step down.

The Florida Democratic Party posted on brief statement on Twitter by Bittel, who had held the position since January. His tenure had been plagued by plummeting fundraising numbers and trailing voter registration figures, though district-wide elections have given them signs of hope.

“When my personal situation becomes distracting to our core mission of electing Democrats and making Florida better, it is time for me to step aside,” Bittel said. “I apologize for all who have felt uncomfortable during my tenure at the Democratic Party.”

Tallahassee Mayor Andrew Gillum, former Miami Beach Mayor Philip Levine, former U.S. Rep. Gwen Graham and businessman Chris King all called on Bittel to resign in response to a report that appeared in Politico. It quoted anonymous women, thought the allegations did not include groping or assaulting them.

“No one should have to work in an uncomfortable environment. Bittel’s behavior and the atmosphere he has created is unacceptable,” Rep. Graham, who personally called him after the report to urge him to resign, said in a statement released by her campaign.

The women said Bittel leered at them, make uncomfortable remarks about their bodies or breasts, and exhibit other “creepy” inappropriate behavior. He also had a breast-shaped stress ball in his office.

His resignation comes as the party tries to regain control of the governor’s office for the first time since 1999, not to mention elected cabinet positions. Democratic U.S. Sen. Bill Nelson is seeking a fourth term and is rumored to face a very successful Republican Governor Rick Scott.

Last month, Democratic state Sen. Jeff Clemens resigned after a report that he had an extra-marital affair with a lobbyist. Republican state Sen. Jack Latvala, who is running for governor, is being investigated by the Senate over anonymous allegations of harassment and groping, though he has vehemently denied the allegations.

Stephen Bittel, the Florida Democrat Party chairman,

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