Are Corporations Really in Control?

Free Enterprise in Three Minutes with Ray Keating – Episode #173: Are Corporations Really in Control? – Ray Keating explains why the assumptions that large corporations control government and the market are detached from economic reality.

NEW BOOK: “The Weekly Economist” Helps Readers to Think More Like an Economist

 Ray Keating’s New Book Offers Quick Reads on Wide-Ranging Topics and Questions Related to the Economy and Business

If you don’t have a degree in economics, how do you figure out what actually makes economic sense and what doesn’t? Ray Keating, a leading economist on small business and entrepreneurship, offers help with a new book titled The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.

 

Whether via CNBC, CNN, FOX, websites, or other outlets, many assertions regarding the economy and economic policy are presented that leave people wondering what’s accurate and what’s not. That’s especially the case when declarations by one talking head are conflicted by the next one. The Weekly Economist offers quick reads on topics essential to thinking clearly on economics, or applying sound economic principles to hot topics.

 

Ray Keating notes, “Yes, economics and thinking more like an economist matter. It is my hope that individuals, by taking just a few minutes for a quick read each week, can clarify their thinking on economics, and thereby, improve their own lives, and the lives of family, friends, colleagues, neighbors, as well as people across the nation and around the world."

 

Beyond a general readership interested in the economy, The Weekly Economist is ideal for the classroom, boardroom and workplace.

 

The Weekly Economist complements Ray Keating’s Free Trade Rocks: 10 Points on International Trade Everyone Should Know, which is an excellent economics introduction to the often controversial topic of free trade.

 

Paperbacks, hardcovers and the Kindle edition of The Weekly Economist are available at Amazon.com, and signed books at www.RayKeatingOnline.com. 

 

Review copies, and author interviews and appearances are available upon request. 

 

Praise for Ray Keating’s work…

 

“Keating is at his best when tackling the issue that introduced him to the world of conservative thought: the benefits of the free market.”  - Kirkus Reviews

 

“Keating is no sour-puss conservative... Keating’s pro-growth agenda of dramatic supply-side tax and regulatory cuts, school choice, and much smaller government stands as New York’s only chance at rebirth.”  - Steve Forbes

 

Ray Keating's "take on the economy is unabashedly supply-side, offering a clear understanding that risk taking and entrepreneurship are the engines of economic growth.” - Jack Kemp

 

“Keating manages to bring this seemingly dull subject to accessible life with real-world examples often torn straight from recent headlines, along with a comprehensive and (mostly) impartial view on the topic.” – Self-Publishing Review on Free Trade Rocks!

 

“A common-sense explanation of why politicians and bureaucrats shouldn't throw sand in the gears of global trade.” - Dan Mitchell, Chairman, Center for Freedom and Prosperity, on Free Trade Rocks!

PRESS CLUB C Podcast with Ray Keating – Episode #12: Gaining Insights on Becoming an Entrepreneur from Chris Ullman

If you’re thinking about diving into the entrepreneurial waters, you need to listen to the conversation Ray has with Chris Ullman. Based on his own experience as an entrepreneur and his expertise in advising business executives, Chris offers great insights on a wide array of topics central to becoming and working as an entrepreneur. And by the way, Chris makes clear that entrepreneurship is not limited by age, as he hung out his own shingle at the age of 55. Tune in now!

Free Enterprise in Three Minutes: Tune In for Quick Answers to Big Questions

Free Enterprise in Three Minutes is a podcast meant to provide three-minute (give or take a few seconds) answers to important questions about free enterprise, the economy, business and related issues. 
Listen at http://www.buzzsprout.com/155969 or at iTunes at https://itunes.apple.com/us/podcast/free-enterprise-in-three-minutes-podcast-with-ray-keating/id1349576104

Trump’s Huge Recession

by Ray Keating

Way back in 1970, the late Nobel Prize-winning economist Milton Friedman wrote, “I have been impressed time and again by the schizophrenic character of many businessmen. They are capable of being extremely farsighted and clearheaded in matters that are internal to their businesses. They are incredibly shortsighted and muddleheaded in matters that are outside their business but affect the possible survival of business in general.”

This phenomenon has only spread over the past 45-plus years. We now are constantly berated by corporate executives and high-profile investors saying things about the economy and public policy that make absolutely no economic sense. These leaders in business turn out to be economic illiterates.

Unfortunately, one of these economic illiterate businessmen just happens to be leading the race for the Republican presidential nomination in 2016. Of course, I speak of businessman and reality TV star Donald Trump.

It’s not easy figuring out how Trump came to rise and stay atop the GOP field. But to a significant degree, the Trump train keeps chugging along due to the fuel of populism. Specifically, Trump has played on or ginned up people’s fears, in particular, irrational fears of foreigners. After all, Trump is the guy who is going to fix “bad trade deals,” apparently by imposing massive tariffs on products from nations with which we run trade deficits, like Mexico, China and Japan. Trump also plans to create a “deportation force” to move 11-12 million illegal immigrants out of the nation.

While this might be classic populist politics, it’s also classically wrongheaded populist economics. Trump misses simple economic facts.

For example, in the U.S., periods of higher economic growth usually coincide with shrinking trade surpluses or mounting trade deficits, while economic slowdowns and recessions coincide with declines in trade deficits. The U.S. trade deficit shrank dramatically during the 2007-2009 recession, declined during the slowdown and recession in 1990-91, and during the economic woes of 1979 to 1982, the trade deficit not only declined, but shifted to a surplus during two of those years. Indeed, the surest way to “cure” a trade deficit is with a recession.

For good measure, the last time the U.S. went down the path of protectionism, it did not turn out well, to say the least. As a result of protectionist tariff measures passed in 1921 and 1922, and, most egregiously, the Smoot-Hawley Tariff Act of 1930, trade declined. Most egregious, the Smoot-Hawley measure triggered the Great Depression. It took decades for trade to regain previous levels.

Make no mistake, free trade – that is, reducing governmental barriers and costs to trade – is a positive for economic growth; for increased opportunity for U.S. entrepreneurs, small businesses and workers; as well as for expanding choices and reducing costs for U.S. consumers.

And trade is increasingly important to the U.S. economy. From 2000 to 2015, for example, the growth in real U.S. exports equaled 22.5 percent of the growth in real GDP, and the expansion in real total trade (i.e., exports plus imports) came in at 41.6 percent of real GDP growth. Also, consider that in 1950, U.S. exports equaled 4.2 percent of GDP, and imports registered 4 percent, while in 2015, exports had jumped to 12.6 percent of GDP, and imports to 15.5 percent of the U.S. economy.

Donald Trump misses all of this, apparently.

As for immigration, few disagree that the current system, which allowed for 11-12 million people to be in the nation illegally, needs to be fixed. Indeed, respect for the rule of law demands immigration reform. At the same time, it must be recognized that most immigrants – both legal and illegal – come to this nation seeking a better life, and they contribute as workers, business owners and consumers. For good measure, immigrants also benefit the economy by overwhelmingly doing work that is complementary to the native born.

Given these economic realities, the Trump agenda of tariffs and deportation would inflict serious harm on the U.S. economy.

On trade, American Action Forum, a free enterprise group, has estimated that Trump’s plan for imposing significant tariffs on imports from China and Mexico would hit U.S. consumers with $250 billion in annual costs.

For good measure, the U.S. Chamber of Commerce has projected that the Trump tariffs on China and Mexico would bring about a significant recession: “The U.S. recession would set in within the first year under Trump’s proposed trade policies, which include a 35 percent tariff on imports from Mexico and a 45 percent tax on goods coming in from China. Over the next three years, the U.S. economy would shrink by 4.6 percent and the unemployment rate would nearly double to 9.5 percent.”

As for the Trump – as well as Senator Ted Cruz – deportation agenda, the story for the economy gets even worse. The American Action Forum offers the following points and estimates:

• To deport all illegal immigrants in the nation in two years, as Trump proposes, the federal taxpayer costs would be massive. These would include federal immigration apprehension personnel increasing from 4,844 positions to 90,582 positions; the number of immigration detention beds jumping from 34,000 to 348,831; immigration courts rising from 58 to 1,316; and the number of federal attorneys legally processing undocumented immigrants increasing from 1,430 to 32,445.

• As for the economic costs, they are even more frightening. AAF reports: “The result is a sudden and deep recession similar to what the United States recently experienced during the Great Recession. Let’s say that full immigration enforcement starts at the beginning of 2017 and the U.S. government successfully removes all undocumented immigrants by the end of 2018. At the end of 2018, the labor force would be 6.4 percent smaller than if the government had not removed those immigrants. Relative to CBO baseline projections, the labor force would decrease by 10.3 million workers. As a result, the labor force would fall to its lowest level since 2006. In addition, the labor force participation rate would fall from about 62.3 percent to 60.7 percent, the lowest level since the 1970s. The steep decline in the labor force would cause the economy to decline sharply. At the end of 2018, the economy would be 5.7 percent smaller than it would be if the government did not remove all undocumented immigrants. For purposes of comparison, note that the decline in real GDP during the Great Recession was quite similar – 6.3 percent. This suggests that real GDP would be about $1 trillion lower in 2018 than CBO’s baseline estimate, wiping out all economic growth that would have occurred during the previous three years.”

The most likely outcome of the Trump tariff and deportation agenda? A huge recession.

None of this should be surprising to anyone who understands the economics and history of both trade and immigration.

But maybe Trump has an excuse. After all, his business career seems to be best known for four high-profile business bankruptcies in a span of 18 years. Milton Friedman was bewildered by businessmen being “farsighted and clearheaded” in their own businesses but “shortsighted and muddleheaded” on matters outside their business. It can be argued that Trump is shortsighted and muddleheaded on matters both inside and outside his businesses.

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Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel winning Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…

Murderer’s Row: A Pastor Stephen Grant Novel

The River: A Pastor Stephen Grant Novel

An Advent for Religious Liberty: A Pastor Stephen Grant Novel

Root of All Evil? A Pastor Stephen Grant Novel

Warrior Monk: A Pastor Stephen Grant Novel

Throwback Thursday: Learning from a Classic Business Thinker

by Ray Keating

One of the best things about writing and researching in your career is that the learning never stops. This column, which originally ran in Long Island Business News in December 2014, serves up some insights learned from Peter Drucker on managing one’s career…

An anniversary snuck up on me the other day. It turns out that 2014 marked a quarter century of my writing on the economy, policy, business, and more.

That includes being a weekly newspaper columnist for the now-defunct “New York City Tribune,” then for “Newsday,” and for nearly seven years now with “Long Island Business News.” Toss in seven-plus years of teaching in the business school at Dowling College, serving as an economist in the policy world for nearly two-dozen years, and writing ten books, and I’ve been at this knowledge worker thing for a long time.

One of the best parts of these gigs is that the process of learning has never stopped. I always learn when I write. Also, teaching management classes provides assorted lessons or refreshers for my career. That occurred this semester as I turned to one of the classic business thinkers of the past 75 years – Peter Drucker.

Drucker, who died in 2005 at the age of 95, provided insights on management, in the broadest sense of the word, from the late 1930s into the twenty-first century. “BusinessWeek” once referred to him as “the man who invented management.”

Regarding his contributions, the website of the Peter Drucker Institute sums up: Drucker “predicted many of the major developments of the late 20th century, including privatization and decentralization, the rise of Japan to economic world power, the decisive importance of marketing and innovation, and the emergence of the information society with its necessity of lifelong learning. In the late 1950s, Drucker coined the term ‘knowledge worker,’ and he spent the rest of his life examining an age in which an unprecedented number of people use their brains more than their backs.”

I appreciated Drucker’s plain talk that innovation is just as much about hard work, persistence, analyzing opportunities and focus, as it is about inspiration and ingenuity. He wrote about “systematic innovation” and the “discipline of innovation.” Most people default to innovation being mysterious and ethereal. But innovation is grounded in the real world; after all, it is the act of bringing a new or improved product or process to the marketplace. Drucker summed up, “If diligence, persistence, and commitment are lacking, talent, ingenuity, and knowledge are of no avail.”

This semester, I introduced students and myself to Drucker’s Harvard Business Review article “Managing Oneself.” It’s a fascinating piece focused on managing, developing and preparing yourself in order to stay “engaged over a 50-year working life.” He offered a systematic process of assessing your own strengths, preferred working and learning styles, values compared to the firm’s values, and coming to understand how and where you can make the best contributions.

Interestingly, though, for both my much younger students and me, what seemed to hit home was Drucker’s discussion of preparing for and launching an eventual second or parallel career. He noted that most midlife crises are about boredom, as even those who are very good at their jobs still eventually might find a lack of learning, contribution or challenge, despite having another 20-25 years of work ahead.

The students were interested in Drucker’s advice to start preparing for a second career long before entering the second half of your career. I found it interesting that I already had undertaken this process when I started writing novels a few years ago. The students became interested in planning ahead, while I reflected on managing in the midst of the second/parallel career.

I’ve always taught students that your career will be more satisfying if you think of yourself as an entrepreneur, that you are your own small business. Drucker put it just a bit different: “In effect, managing oneself demands that each knowledge worker think and behave like a chief executive officer.” Thinking this way offers a different perspective on your career, whether you own a business or have one boss. As your own CEO or small business, you both have control and must work to make your customers (such as your boss) happy. That’s business, including managing yourself.

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Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel winning for Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…

Murderer’s Row: A Pastor Stephen Grant Novel

The River: A Pastor Stephen Grant Novel

An Advent for Religious Liberty: A Pastor Stephen Grant Novel

Root of All Evil? A Pastor Stephen Grant Novel

Warrior Monk: A Pastor Stephen Grant Novel