Economic Freedom and Liberty Matter

Bubble Economics 101

2009-11-06T10:41:00.000-08:00

Seemingly Washington does not believe one government-induced housing bubble this decade was enough; President Obama, approved overwhelmingly by the Senate, signed into law a $24 billion economic "stimulus" bill extending the first-time home buyers credit, and unemployment benefits.

More economic fallacies to prop up past failed government market interventions.

How exactly do our politicians believe that further subsidization of home purchases will ease the [necessary] correction in our economy? Government's attempt to continue and prop up home prices will only prolong the housing mess.

When asset bubbles pop, prices must, as a corollary of a free market (which is certainly questionable whether the U.S. still has one), adjust to their pre-bubble levels. Home prices are not deflating as some sort of unknown phenomena, rather home prices are adjusting to their market-clearing levels (or at least as close to it as possible).

With statements such as the following, our politicians continue to prove just how willfully ignorant they are when it comes to market economics. "The credit will allow more people to purchase a home in my district", states Rep. Shelley Berkley of Nevada.

Rep. Berkley may be correct, in the short-run; however, inflated prices, as a result of government intervention into the economy, are precisely what had initially prevented many first-time home buyers from entering the housing market. Moreover, why must taxpayers of the entire union support home purchases in Rep. Berkley's district.

Further intervention into the housing market will again artificially make housing less affordable, and further hurt our economy - as these measures prevent necessary economic correction.

Homes are a consumer good, and the price of this good (homes) is subject to the market forces of supply and demand. Ironically, the government intervention that lead to the first housing bubble of this decade, in part the very reason for the lagging economy, was supposedly a way to make homes more "affordable". The result was exactly the opposite, for many first-time home buyers.

Buffett's Biggest Investment; Corporate Welfare

2009-11-06T08:20:00.000-08:00

Don't be confused by Warren Buffett's latest and biggest investment acquisition, via investment vehicle Berkshire Hathaway, of Burlington Northern Santa Fe.

The railroad acquisition by Berkshire Hathaway should not be mistaken as a sign of economic growth or consolidation, as mergers and acquisitions typically indicate. Rather, the investment move by Buffett, a fellow Obamanomic, government interventionist supporter, is a tactic to position himself to reap rewards from government largesse -- similar to Berkshire's large investment in Goldman Sachs, circa 2008.

Look for near-future government subsidization of the railroads (part of the so-called infrastructure spending stimulus) to justify (and serve as payback) Warren Buffett's investment move.

Why the Fed Loves the Current Stock Market (bubble) Rally: The Early 90's All Over Again?

2009-10-21T13:45:00.000-07:00

If you are currently paying even a small amount of attention in regards to the U.S. stock market and dollar index , you might be wondering three things. 1) why isn't inflation becoming noticeably rampant given the amount of monetization of government debt and "printing" of new money by the Federal Reserve - little overall upward movement in the consumer price index (CPI), 2) how anyone, let alone "experts" in the field of economics, can be suggesting that a falling dollar is a good thing for the aggregate U.S. economy (and stability), and 3) if the dollar is falling as drastically as it is why is there a stock market rally?

Dr. Mark Thornton shows here how in many cases easy money (the Fed's manipulation of interest rates) first leads to asset bubbles, such as real estate or the stock market, before ending in an inflated bust. Moreover, the inflationary result of the easy money is what generally leads to the bust - a necessary rising of interest rates.

Money that is tied up in an asset bubble initially prevents monetary inflation from being revealed as price inflation as measured by the Consumer Price Index. However, if the monetary pumping is used to purchase assets like stocks, bonds, or real estate then the inflation is revealed in the price of those assets, which will rise even though the underlying earnings of the assets has not improved (emphasis added).

We appear to be witnessing a new asset bubble in the making, this time (again) in the stock market. Much like in the early 90's when interest rates were manipulated lower by the Fed, the ensuing result was the stock market tech bubble -- ending in 2000. And as soon as more investors enter the picture, and more profits are taken off of the table and placed in the consumer markets we are likely to begin experiencing that expected inflation. The question du jour then is, is the Fed continuing to keep interest rates artificially low in attempts to first pay back some friends on Wall Street?

Positively Unstimulating: Make-Work Programs

2009-10-16T11:43:00.000-07:00

The AP reported today on stimulus watch, citing "stimulus boon" for several of the south and southwest states. While fully understanding that the stimulus bill has already passed (largely for political posturing purposes), I feel it still necessary in exposing the flaws of make-work economic stimulus programs. I am additionally aware of the daunting, and in some respects almost seemingly futile task before me given the high regard for conventional wisdom's bias toward make-work economic recovery programs. In fact, of the many economic fallacies that have been torn down over and over again by many prominent free-market economist, the make-work fallacy appears to be one of immortality. So, for the sake of brevity, I will merely touch on a couple errors inherent in make-work economic stimulus programs.

The Fallacy of Make-Work Recovery

The underlying premise of the make-work economic recovery notion is that the aggregate economy will be made better off as long as people have some sort of "work" to do. The basis for this notion is that as long as money is circulating an economy will grow and prosper. However, where this concept is clearly mistaken is in the idea that meaningless work, or rather unproductive employment, is mutually beneficial.

On the contrary, largely the end result from make-work stimulus is wasteful consumption of resources without any addition to the economies capital stock. In other words, there exist zero capital productivity when a man is employed to, for example, tear up a road just to put it back together. Scarce resources have been misallocated, and thus wasted. The aggregate economy does not benefit from this man's labor, nor even from his income - given that his daily pay is merely an unwilling redistribution from one (potential productive) sector of the economy to another.

Bryan Caplan, in The Myth of the Rational Voter, takes on in detail the bias of make-work. Additionally, Mr. Caplan clarifies how saving labor is beneficial to the aggregate economy, versus unproductive toil. "For an individual to prosper he only needs to have a job. But society can only prosper if individuals do a job, if they create goods and services that someone wants."

The author's in the AP story clearly, although not their intention, show the absurdity of make-work in Colorado. "On paper, Colorado posted the largest increase of any state, more than 4,700 jobs, largely thanks to a contract to set up a call center to field questions about a change to digital cable. But the jobs were spread across multiple states, underscoring one of the many hiccups in the data. Like most contracting jobs, these were temporary, and most are already over."

Costs vs. Benefits

Even granting that make-work programs are of minimal, short-term success toward local economic recovery (when successful, make-work is very short-lived and its impacts not very far reaching), the plan should still be subject to a cost benefit analysis in order to assure sound economic sense. Cost benefit analysis works well in determining a plan of action, when faced with limited resources and potentially high opportunity costs (the basis of what Mises termed the "praxeology" axiom).

The problem with cost benefit analysis and government, however, is governments are not subject to the profit loss system, and thus opportunity costs. Therefore, when government makes a plan to implement make-work programs, the cost-to-benefits become significantly diminished.

As the AP story reports, "Until more money is spent and more data come in, it is impossible to accurately calculate how much the government is spending per job". Knowing that in the long-run make-work programs result in abject failure toward creating real economic growth, I am confident in betting that the minimal benefits experienced in the short-run are significantly dwarfed by the true costs in both the short and long-term. Again, these short-term make-work projects are consuming resources, but not creating or adding back to the aggregate economies capital stock.

An Alternate Recovery Proposal

The exact cause of the business cycle (Federal Reserve's monetary policy) aside, economic recoveries typically begin with small business expansion. Economic expansion occurs after the economy has hit its trough in the business cycle. However, in order for expansion to soundly begin, government must clear out of the way for innovation and real productivity to take hold. Most importantly, moreover, is for government to discontinue all forms of interventionist policies and dramatically reduce spending and taxes. In other words, government must get out of the way of natural market recovery. This includes the wasting of resources via failed, unproductive make-work programs.

Less from Moore: A Love Affair with Misunderstanding

2009-10-14T10:48:00.000-07:00

In the video link here, Moore concedes that what we have, and where the problems derive, is not a true capitalist social system. However, after his rather brief concession, Moore follows up with the typical line of envy and supposed injustices. These rally cries serve as a prelude to the actual content of his film.

Moreover, Moore maintains a completely (in my opinion) inaccurate understanding for true capitalism. In a capitalist system, via consumer sovereignty, market actors do vote with their dollars. So why the clamor for making "capitalism" more "democratic"? Rather, what he and America should be calling for is allowing capitalism to work freely from government interventionism.

The overall premise echoed again and again by capitalist turncoats such as Moore is merely envy and implications to create an environment of "equality of outcome" over "equality of opportunity" - more socialism. In the end Moore regurgitates FDR's call for a bill of rights for 'free stuff.

Shame on Moore for misrepresenting the facts. Maybe if we actually implemented unhampered free-market capitalism all the ills of Mr. Moore's film would become miseries of the past.

Actions Speak Louder than Words: The Obama Show on Wall Street (Act II)

2009-09-16T15:20:00.000-07:00

When our president espouses free markets and trade during a speech to Wall Street, I have to question his sincerity. Anyone who is favorable to economic freedom, such as myself, should find it difficult to accept words alone when Obama begins to advocate free markets and free trade. The latter, more specifically, was stated as trade under "conditions" as a necessary path to continue "free trade".

At best, Obama has a completely different view of the free market as do pro free-marketers express, and at worst his comments are nothing more than buzzwords insincerely thrown about in an attempt to deceive those who oppose his policies. In either case, the evidence contradicts the spoken words.

The specific statement made to Wall Street, and main street, was that the president is clearly now and always has been a promoter of the free market. Recent actions taken by the White House and previous pronouncements by the president himself indisputably negate such a proclamation. When judging a person's sincerity you must look at their actions, not just their words.

Over the past 12 month period, although most all of these anti-market sentiments go back much farther, Obama has called for and or enacted the following anti-market programs / measures; Government stimulus, equitable redistribution (via tax laws and government programs), higher corporate taxes, rewarding firms who keeps jobs in America (anti-globalization / protectionism), increased union powers, bailouts, cap and trade legislation, and government-run health care. Moreover, on January 8th of this year, Obama stated, "Only government can break the vicious cycles that are crippling our economy". While the list of contradicting anti-market sentiments does not necessarily stop there, this should be sufficient evidence that our president is not sincere in claiming adherence to free market principals. In fact, each of the above programs and claims are the antithesis to a freely functioning market.

Mixed economies are hardly stationary, that is often moving either toward or away from central planning. And, planning under the guise of market mechanisms does not constitute a free market. As Mises eloquently stated, "If people speak of "planning" they mean, of course, central planning, which means one plan made by the government -- one plan that prevents planning by anyone except government". Free markets, of course, work under the mechanism of everyone planning toward meeting their own desired goals through freedom of mutual exchange.

The idea of government interference as a "solution" to economic problems leads, in every country, to conditions which, at the least, are very unsatisfactory and often quite chaotic. If the government does not stop in time, it will bring on socialism - Ludwig von Mises, Economic Policy; Thoughts for Today and Tomorrow.

After mentioning a proclivity toward free markets, the president went on to state that in order to encourage and continue "free trade" we must strictly adhere to current trade agreements. The only agreement necessary in a freely globalized economy, or bilateral free trade, is the commitment to allow the free movement of goods and services across borders - that is in addition to upholding laws that protect private property.

Again, we seem to have either a disconnect in the understanding of free trade versus "managed trade", or simply another instance of insincerity. Further evidence for the latter is the recent passing of a 35% tariff on imported Chinese tires. As stated by IBD editorials earlier this week, "This protectionist move, meant to please a single labor union, takes a big bite out of our global trade credibility, making us look like a country that can't compete in global markets".

The imposition of tariffs by governments both interferes with free markets and free trade. We eliminate means of consumer choices by limiting freedom of voluntary exchange. Moreover, actions by our government such as this have the effect of supporting the public's otiose "anti-foreign bias" toward trade imports.

At the end of the day, after the show is over, we seem to be only left with one option. We must accept that, at least for now, we have been deceived, and the only compromise made in Washington will be our economic freedom. Tomorrow is likely not to bring us any closer to freedom from intervention, but rather closer to central planning.

Regulation Mysticism: The Obama Show on Wall Street (Act I)

2009-09-15T16:24:00.000-07:00

One thing is for certain, the current administration does not fail in providing ample theatrical events. Monday's speech on Wall Street was again a success in providing some of the same "entertainment", along with being complete with errors and fallacious notions regarding the laws of economics that we have come to expect from the Obama administration. Much like the speech last week to Congress on the health care issue, this week we witnessed much theater but little substance.

Three acts of insincerity that stood out specifically, to me, in Obama's speech were the president's constant calls for "common sense regulations", portrayal of free-market advocacy, and his statements on free trade. I will cover regulation here, and will touch on the other two topics in a separate piece.

The pronouncement of regulation and reform seem to be never ending. However, what type of regulation, how past regulation created the current economic mess, and at what cost we are willing to tolerate for new regulations is constantly lacking in clarity. Moreover, financial market regulation in the context provided by the White House is at best a euphemism for government control, and at worst a government-sponsored, non-market path toward special privileges.

My proclivities in the science of economics are aligned with the Austrian School's explanation that the laws of economics are a priori, thus these laws cannot be changed from day to day or year to year - nor from one administration to another.

Government imposed regulations do not change the way in which rational people respond toward economic incentives. Rather, poorly designed government-created incentives lead to new avenues of risk, uncertainty and market distortions. IBD editorials on Tuesday, in an article titled Lessons Unlearned, stated in simple terms how foolishly inaccurate the premise of calls for "reregulation" in the financial markets is at preventing another market meltdown. "Bad government, not Wall Street, caused the crisis - not a popular sentiment, but true nevertheless".

According to Obama's speech, deregulation of the past is specifically what had caused irresponsible behavior and excess. Aside from a congressional act in 1999 that allowed bank holding companies / institutions to provide and own non-banking financial services (a repeal of the Glass-Stegal Act of 1933), the deregulation of the financial markets is largely a myth.

The largest contributing factors of the financial mess beginning in late 2007, starting in the housing sector via risky packaged loan derivatives and Fed's easy money policy from 2003 to 2004, were the new incentives created and championed by our government. Specifically, the congressional calls for "housing for everyone".

A sharp Boom and bust in the housing markets would be expected to affect the financial markets, as falling house prices led to delinquencies and foreclosures. Those effects were amplified by several complicating factors, including the use of subprime mortgages, especially the adjustable-rate variety, which led to excessive risk taking. In the United States such risk taking was encouraged by government programs designed to promote home ownership, a worthwhile goal but overdone in retrospect,
explains John B. Taylor in Getting Off Track.

Enter laws of economics. People respond to incentives, and when government changes or makes new regulations pertaining to our financial sector, such as encouraging housing for everyone via prodding Freddie and Fannie to take on a larger portion (pouring in loads of money for loans) of the secondary mortgage market and the Fed's role in making money extremely cheap, what you end up with are new incentives not a lessening of risky behavior.

Obama's comment about "common sense regulation" implies risky behavior and excess can be regulated out of existence, and this is where he is both misleading and inaccurate.

In order to prevent moral hazard (externalized risk), we must eliminate bailouts, implied government backing and sponsorship, special favors to coveted financial institutions (by the Fed and Treasury), end the notion of "too big to fail", and reinstate the rule of being responsible for your own actions --- upholding laws that respect and protect private property (including the fruits of one's labor). In other words, allow necessary failures, a much necessary part of capitalism as are profits, to take place to ensure optimal allocation of resources and speedier correctional periods.

Regulation should not and does not imply good behavior or efficient markets, just as "ought does not imply can". This is false, and recent history proves it. Therefore, it is a foolish statement to suggest that new regulation will prevent, if not eliminate future economic distress - of any level or scope, even when the proposed new regulations are professed as "common sense".

De-stimulating the desire to work

2009-02-14T08:14:00.000-08:00

The stimulus bill will include large appropriations to the welfare state; just what we need to create jobs, eh government. The editors over a Nationalreview.com posted a pretty good article on this atrocity.

I think that when dealing with economics it is very important that we not forget, and re-learn if necessary, the most basic laws of microeconomics and human action. The two economic laws that I believe to be most self-evident are that people respond to incentives and decisions are made at the margins. Government enjoys distorting both of these economic laws, via minimum wage laws and welfare.

Expanding the welfare state is the antithesis of creating jobs. Why should we give an incentive (or increase that incentive) to not work, when we are supposedly attempting to create jobs? If you can only make $300 (although temporarily as income will likely increase as a result of hard work) working but pocket $350 not working, it's not hard to figure which decision will be made. This is also why the unemployment numbers are often skewed. If adding more people to the government dole is creating jobs, then I guess this will be a success.

2009, A Return to 1932 Economic Policy?

2009-01-13T16:28:00.000-08:00

I do not normally post a blog that is simply the writing of another author; however, the following article is, in my opinion, an excellent parallel between some of the economic situations that lead up to the FDR election win in 1932 (and after) and Obama's election win in 2008 (and what is predictably to come). This article is also a much better comparison than I had made previously - America cannot afford another 1932.

Daily Article by Llewellyn H. Rockwell, Jr. This article can be found at Mises.org.

How This Happened
For years, many of us puzzled about how something so stupid and destructive as the New Deal could have happened. The stock market crashed because it was overinflated. That's nothing new. History is filled with credit bubbles that pop. Resources are reallocated to reflect economic reality and we move on.

The New Deal was different. It actually began under Hoover, who initiated new spending programs, jobs programs, and tried to inflate the money supply and bail out the banks. He was blasted by FDR for his big government policies, and FDR won the election. Once in power, FDR went nuts, instituting a program of central planning that combined features of the Soviet and Fascist models.
It was one idiotic program after another. They tried to raise wages when they should have fallen. They tried to save banks that should have collapsed. They destroyed resources when they were most needed. They encouraged spending when people should have been saving. They smashed the dollar at a time when it needed to be shored up. They cartelized business when competition was most necessary.

What were the results? Economic growth went nowhere between 1933 and 1939, with real gross domestic product per adult still 27 percent below trend at the end. Per capita GDP was lower in 1939 than in 1929. Unemployment was at 17.2 percent in 1939. This was actually higher than it was in 1931. This is despite 100 percent increases in monetary expansion. Taxes had tripled. Employing people became ever more expensive due to unions and national income guarantees. Every time the economy would bottom out and genuine recovery would begin, policy would knock it back down again. Other seeming upturns were entirely artificial: make-work instead of real work, for example. Regimentation was everywhere so that business couldn't compete, farmers were destroying livestock and crops on command, and dissidents were being ferreted out through police-state tactics......(complete article)

If Deflation is the Enemy than Reflation (Inflation) cannot be the Hero

2009-01-11T14:29:00.000-08:00

The following is a quick highlight of the differences between deflation and inflation as outlined in the essay, Deflation & Liberty, by Jorg Guido Hulsmann.

First, let’s start with the basic notion that both deflation and inflation are “monetary phenomena”, and occur as a result of central banking (the Federal Reserve) monetary policy.

Inflation or inflationary policy is the vast increase in the quantity of paper money over the increase in production. Thus, as a result of this increase in paper money over production prices will rise (i.e. reduce the purchasing power of existing paper money). However, this rise in prices does not occur all at once nor does the reduction in purchasing power impact all of the citizenry at the same time. Herein lies the inequality (that government claims to be a defender of); those who receive the new money first, before prices in general have risen, benefit from the inflationary policy. Inflation is a redistributive governmental practice.

The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens…….inflation puts a brake on social mobility

Deflation, no less, is merely the opposite, where the supply of money “disappears” and prices drastically fall as a result. In the case of deflation, much like with inflation, there are also winners and losers as the final outcome. However, the fear of deflation seems to be based on a fallacy, which is the disappearance of money will lead to the disappearance of “physical structure” and wealth (wealth equals previously produced capital goods not yet consumed). This fallacy seems to have been placated by the producers of money and policy (the policy of deficit financing).

But our tools, our machines, the streets, the cars and trucks, our crops and our food supplies – all this is still in place. And thus we can go on producing, and even producing profitably, because profit does not depend on the level of money prices at which we sell, but on the difference between the prices at which we sell and the prices at which we buy. In a deflation, both sets of prices drop, and as a consequence for-profit production can go on.

Therefore, if inflationary policy (i.e. easy credit) leads to the boom in the business cycle, which inevitably must come to correction as a result of exuberant misallocation of resources, then the deflation that occurs during a market correction only serves to speed up the correction process much like inflation speeds up the (illusory in this case) market expansion. “…Rothbard’s analysis of deflation, which demonstrated in particular the beneficial role that deflation can have in speeding up the readjustment of productive structure after a financial crisis.”

In short, the true crux of deflation is that it does not hide the redistribution going hand in hand with changes in the quantity of money…..Both deflation and inflation are, from the point of view we have so far espoused, zero-sum games. But inflation is a secret rip-off and thus the perfect vehicle for the exploitation of a population through its (false) elites, whereas deflation means open redistribution through bankruptcy according to the law.

So, is deflation really so bad for the aggregate economy or harmful only for those who have benefited from inflationary policy? Which, inflation or deflation, is more in-tuned with liberty?

If we tie this up with our comparative analysis of free and compulsory production of money and money substitutes, we come to the conclusion that deflation is not a mere redistribution game that benefits some individuals and groups at the expense of other individuals and groups. Rather, deflation appears as a great harbinger of liberty. It stops inflation and destroys the institutions that produce inflation. It abolishes the advantages that inflation-based debt finance enjoys, at the margin, over savings-based equity finance.

Energy Efficiency is Market Efficiency

2009-01-11T09:53:00.000-08:00

While I am not a fan of Time magazine, for reasons I do not know I receive Time magazine at my home – so I read it most of the time. The January 12th edition’s front page leads the reader to a story about energy efficiency, by Michael Grunwald. The beginning of this article is pretty much, in my opinion, an accurate perspective of the differences between energy efficiency and conservation. Energy efficiency is ideal when the cost to benefits reveal positive alignment with free market forces (prices).

However, were Grunwald goes wrong is his implicit disregard for market forces and how the free market is the best approach to bringing about efficiency (of all productive capacities). Specifically, Grunwald writes: “History has shown that when the government mandates efficiency, the market figures out how to achieve it.” The processes of government mandates already reduce the possibility of market efficiency. That is these mandates distort market prices, which market prices are the best way to decide whether a given action is worthwhile.

“The efficiency of a given machine is defined as the ratio between the usable work that comes out of the machine to the energy that went in. But, again, no machine can be made to be perfectly efficient.” (Energy: The Master Resource) Additionally, Grunwald calls for innovation and incentives to spur energy efficiency. Again, markets are what spur innovation to deal with solving the problems that people face. Government mandates fail to fully optimize the productive abilities of free people.

Moreover, while Grunwald does mention the destructive outcomes of subsidizing inefficient energy alternatives he fails to mention why government involvement in the market creates impractical incentives for impractical solutions. Government mandates simply create a market for pressure groups that simply absorb and misuse large amount of economic resources.

“Mandates provide a big stick, but money is still the best carrot, and Obama has suggested that he wants to spend lots of it to promote efficiency.” writes Grunwald. The spending of large sums of money by the government only takes away from the private market’s ability to be productive – thus innovate to achieve efficiency as a result of market incentives.

The free market is still the best way to evaluate the most efficient ways to use our scarce resources in the most productive capacity. Furthermore, if we are to become more efficient in the way we produce and use energy resources, look to the free market to innovate (here are examples by Chris Brown and Murray Rothbard) not the government. A good book to read that is educational on the subject of markets, efficiency, and energy, in my opinion, is Energy: The Master Resource. “Market incentives lead people to balance these trade-offs to make the best use of available resources”.

An Opportunity for Change

2009-01-04T08:44:00.000-08:00

The current economic situation presents a great opportunity for yielding a very positive outcome --- a resurgence of economic freedom. While much of the current economic and political agendas are merely more of the same, that is a Marxist and Keynesian approach to solve an economic collapse - no less brought on by much of the same government intervention - there does exist a real opportunity for pushing forward free-market ideas. We can either choose to adapt to ways that provide the best paths for equality and prosperity or instead opt for political rhetoric dressed in failed socialistic ideas.

I will certainly admit that my view is of pure optimism - given the current political environment, however, I feel very confident in suggesting that economic times such as the current is ideal for teaching the truth about economic freedom and its correlation to liberty for all. Just as the bust in business cycles serves to rid the market of malinvestments, now is the time to reverse the tide of economic thought and policy and move in the direction of economic freedom.

As economics remains the topic Du Jour more attention is paid by the masses. With the ongoing talk and clamor, ad nauseum, regarding more bailouts, market failures, recessions, inflation, deflation, socialism, nationalism, protectionism, energy independence, car czars, government interventionism, government debt, and so on – the U.S citizenry now appears poised for truth. During robust times, however, many seem to turn a blind eye to the very principals and economic foundation that has allowed so many to obtain such a high standard of living. Herein lays the great opportunity to ameliorate the understanding by the masses; we must persevere to ensure the connection between economic freedom and liberty is fully comprehended.

While these very truths, prevalent in securing equality and prosperity, have been used before as weapons in the battle of ideas, again more than ever need echoing. Equality of opportunity over equality of outcome; rights to private property and voluntary exchange; free markets and trade; the elimination of government intervention into markets; the removal of pressure groups and government means for confiscation of private wealth (i.e. inflationary policy); and the installation of laissez faire capitalism.

As Ayn Rand had so well stated: “Is there any hope for the future of this country? Yes, there is. This country has one asset left: the matchless productive ability of its people. If, and to the extent that, this ability is liberated, we might still have a chance to avoid collapse. We cannot expect to reach the ideal overnight, but we must at least reveal its name. We must reveal to this country the secret which all those posturing intellectuals of any political denomination, who clamor for openness and truth, are trying so hard to cover up: that the name of that miraculous productive system is Capitalism.”

Art of Influence

2008-12-25T15:07:00.000-08:00

The first painting, of Che Guevara, is a piece done by Gerard Malanga (1968). The second piece was created by Shepard Fairey (2008) (more can be found at flickr).

If you briefly look up, for example on Wikipedia or Google, images such as the above you get similar explanations - that is influencing art and iconic images. What is exactly the rationale for this form of influence; Subjective imagery over objective reality? How is it that those who retain these fanciful ideas for a normative society become such iconic cultural figures?

The intent here is not a direct comparison of character exhibited by these two persons, but rather a comparison of heroic images exhibited by artists who emphasize radical ideology over objective reality and history (that is the history of failed societies based on Marxist philosophy). Certainly the idolation of Obama is premature, to say the least. With that said, do emotional hopes cause some to look past objective reality while hoping for new results from previously failed, fallacious ideas?

Win...Government's....Money!

2008-12-14T12:38:00.000-08:00

Mr. Ben Stein has certainly been making his rounds within the news and radio circuit as of late. I must first admit, however, a bit of unfamiliarity toward Mr. Stein's economic proclivities. Therefore, I cannot say as to whether I should be surprised or not to hear that his latest economic speak has been pro Fed monetary pumping - extreme inflationary policy.

Ben Stein feels that the U.S. government finds itself in a situation where the only move to make is to "prime-the-pump". He advocates to start, immediately, without any reserve, printing masses of money before the U.S. economy begins to feel the effects from what he (and others) believes a current period of deflation. What's so bad about deflation, anyway? Mr. Stein additionally claims that we currently have no reason to fear, as a result of monetary pumping, hyperinflation.

Hyperinflation or not, where is the concern for the negative impacts all inflationary measures have on the American citizens (of course this impact has been felt throughout much of the world at one time or another under one leader or another)? We should certainly not want to increase prices - this being an outcome of printing too much money - for those who are already finding it more difficult to get by in hard economic times. Additionally, inflation is the worst kind of tax, and its effects carry with it an unequal impact on the citizenry - hurting those in the lowest income bracket the most, that is those who receive the new money last.

More Broken Windows

2008-12-14T11:37:00.000-08:00

More economic plans on the horizon but will the impacts create net benefits?

Aside from the central planning tendencies implicit in the desires of the forthcoming administration, it appears that much of the thought process for their economic recovery has been built upon a fallacy. President-elect Obama's regurgitated notion that government "make-work" programs will steer the economy in the right direction is simply more "broken window fallacy".

In Frederic Bastiat's essay, That Which is Seen and That Which is Unseen, written in 1850, he describes the event of a shopkeeper who has his window broken by a little boy. It was perceived by the town people that the boy, as a result of putting a window glazier to work, created a net benefit for the town. The unseen, as Bastiat describes, is the loss of income by the shopkeeper that could have been spent on something else - possible more productive. The town, as a result, did not receive a net benefit from the broken window. Henry Hazlitt also greatly expounded upon this concept in his book, Economics in One Lesson.

The following government economic plan, as part of the American energy resolution scheme, represents a "broken window" fallacy:

“[W]e will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.” (link)

The first problem with this economic plan is that spending more government money cannot possibly save, in net benefits, American taxpayer dollars. If the government would like to help us, those in charge will need to cut total spending and taxes (e.g. corporate tax, income tax, dividend tax) to spur private productivity. It would seem evident that if we reduce the size of government the American taxpayer will spend less in housing those employed by government.

The second problem, and congruent with the first, is the idea that "make-work" programs can spur economic growth. Again, we cannot achieve net benefits as a result of any government reallocation of resources. Increasing employment in one sector of the economy, at the expense of another - possibly more productive sector, is merely a transfer.

Where’s the Precaution?

2008-11-23T10:41:00.000-08:00

While I am not necessarily a defender of the precautionary principle, I am discouraged at the disregard for its use in green economic schemes. After a quick Google search of the precautionary principle, the most prominent search results pertain to human activity and environmental health (Wingspread statement being the most dominate search result). The Wingspread statement reads:

While we realize that human activities may involve hazards, people must proceed more carefully than has been the case in recent history. Corporations, government entities, organizations, communities, scientists and other individuals must adopt a precautionary approach to all human endeavors. (link)

Where is the precautionary principle in government’s cap-and-trade schemes? We, at the present, have zero conclusive evidence that mankind is causing global warming (see here and here), but we do have conclusive economic evidence that environmentalist’s policies (i.e. cap-and-trade) will do severe harm to our economy while providing only minuscule, if any, benefits for the planet (see here and here). The decoy has been reveled. Anthropogenic global warming is merely a socialist agenda to take over the economy. Capitalism and freedom of choice are the environmentalist's preventive aim and government control is their principal.

The Perfect Liquidation Analogy; Garage Sales

2008-11-23T08:40:00.000-08:00

Looking around my community lately you will easily notice one commonality that is on the rise, garage sales. Church yard sales, neighborhood garage sales, garage sale signs on almost every medium at every intersection; there exist almost a race to pool everyone's junk together and sell to the first bidder. This, of course, represents human action as a strategy to rid ourselves of what we perceive as less valuable property in exchange for something perceived as more valuable (money).

My perception, at the moment, is that while the economy is shaky and experiencing a necessary correction of past malinvestments, much of the consumer fear and uncertainty is a result of the mainstream media's scare tactics and upcoming political uncertainty. Of course, much of the media's dwelling on poor consumer outlook is based on the notion of Keynesian economics - consumer spending lift's us out of economic downturns.

The analogy present is that these neighborhood garage sales represent a liquidation process not much different than that which occurs during a correction period in the business and financial sector. Moreover, the present garage sale scenario is empirical evidence of two economic principals; (1) man's propensity and (2) consumerism does not spur long-term real economic growth.

In order for a liquidation process to be successful there must be a buyer present who is willing to exchange his money for what he perceives as a better deal. This is man's propensity. People are inclined to transfer one commodity for another, as long as there is perceived value on both sides of the exchange. Therefore, the garage sale provides an example of a situation where there are those of whom are still looking to exchange their money for a product and those of whom are in need of liquidating non-productive assets. The problem, however, that presents itself is that the liquidator is looking to rid his unnecessary assets for money and the consumer is looking for a deal on something that he could probable otherwise live without. The aggregate economy, as a result of this exchange, has not been made better off.

What is necessary for the aggregate economy to benefit is real capital accumulation - investment and productivity (shown here).

The overall connection here between the garage sales and liquidation processes undertaking by business ventures and or the financial sector is that investment and productivity are what spur long-term economic growth - capital accumulation. As a result of bust cycles, market corrections are necessary to rid malinvestments that occurred during the boom. Consumer spending does not attribute to long-term growth, which is why government's attempt to increase consumer spending (i.e. economic stimulus packages and public work programs) will fail every time.

Change; Yes we can? More like, probably not.

2008-11-15T14:07:00.000-08:00

While there exist better ways, one certain (as now empirically evident) way to fool the masses is to speak in non-specific, subjective language. Now that the election is over and the change mantra has lulled many into a false state of security, let us examine, what should be, the self-evident meaning behind “change”.

Everyone wants change of some sort or to change something, in fact through a reflective process this is typically how each one of us goes about progressing our lives. But the problem here is that the word change has zero intrinsic value; change standing by itself, without a quantifier, cannot be broadly measured -- much like marginal utility. Change is not synonymous with good, nor is it necessarily a pejorative. The word change has zero objective meaning. And, being that objectivity is the true nature of reality should lead one to understand that what we will mostly like get is “change” only in the subjective nature of politics. Thus, only time will provide the objective measure as to whether change has occurred and whether or not it was forward-moving.

Although it is still very early to tell, many of the recent implications and nominations by the Obama transition team appears to be altering the “yes we can” into a probably not. For starters, the nominations for staff and cabinet positions seem to be an attempt to replicate the Clinton years (a la Rahm Emanuel and John Podesta); see here. Secondly, much of Obama’s forthcoming agenda is merely more of the same. The same being that much of his ideas are previous failures; New Deal and Great Society. Lastly, and also inclusive with the second, is the idea that The Great Healer can solve our economic situation. Well, again recent evidence should signal to us all that there will be more of the same. See here.

We cannot possibly correct our economy with a simplistic mention of change here, or a suggestion of change there. What we need is exactly the opposite of this “change”. We need to move back toward economic freedom (this requires going all the way back to Silent Cal and before, aside some exceptions). We need to separate politics from our economy. We need to also come to recognize when we are being fooled by sophistry. If the following is not an indicator that many simply swallowed-up the idea of change (in political party) just for the sake of change, then a better example I cannot provide; “Exit polls showed that 62 percent of the electorate said the economy was the most important issue”. More bailouts, more moral hazard, more economic stimulus packages, more socialization, more subsidies; Yes we can!

Again, while it is too early to measure exactly what we get, the implications of more of the same are what’s on the table. "But once the legislator is elected and freed from his campaign promises, oh, then his language changes! The nation returns to passivity, to inertia, to nothingness, and the legislator takes on the character of omnipotence. His the invention, his the direction, his the impulsion, his the organization. Mankind has nothing to do but to let things be done to it; the hour of despotism has arrived." Frederic Bastiat's, The Law

Globalize and Prosper

2008-10-19T09:46:00.001-07:00

The following is an essay I wrote as an entry to a writing contest held by Foundation for Economic Education. While the essay itself may not have been of winning caliber, the content and principals laid out by those before me is of the true importance; Free market economics and free trade.

Globalize and Prosper: Cooperative Exchange, the Occurrence Necessary for the Division of Labor

Expanding the extent of the market gives way to a greater magnitude for occurrence of exchange and thus is the incentive necessary to drive the division of labor. Civilized societies cooperate through specialization which is precisely what Adam Smith had explained as being the “greatest improvement in productive powers of labour”. This improvement, undoubtedly, is attributed to the division of labor; however, it is the cooperation on a large scale that creates increasing productivity as a result from the necessity to exchange. We produce in order to consume.

While we are often inclined to be self-reliant (Ayau, Not a Zero-Sum Game), the incentive to specialize is derived directly from the increasing benefits of cooperative exchange. This incentive we have come to recognize and even welcome as a necessary trade-off in a market economy. In isolation our needs are fulfilled only in limitation to our own abilities whereas in association more needs are met and, in turn creating more products to be simultaneously produced – thus further labor to be divided. This process of exchange and the degree of cooperation is why the effects of the division of labor are only as great as the extent of the market (Smith, The Wealth of Nations).

The Market

A market economy is anywhere and everywhere productive surpluses are brought together for voluntary exchange. It is precisely the market that facilitates a society’s on going cooperation. Additionally, since it is the process of exchange that gives purpose to the division of labor, a market must maintain a significant amount of cooperation to support an increasing level of divided tasks.

There exists little if any incentive for both cooperation and specialization within the smallest of communities as the productive surplus will have a limited value among a smaller, less diverse (taste and demand) population. In order for exchange in the market to occur we must produce a market of differencing goods and services, therefore creating a vast diversity of productive value. This is how the market, through cooperation, serves as the mechanism to induce the desire to specialize (Rothbard, Man, Economy, & State). Small markets yield smaller division of labor potential.

“Producing lots of output is not productive unless it ends up in the hands of those who value it. So the advantage of specialization can be realized only to the degree that people can cooperate, with each specializing in the production of something that others want in order to be able to acquire what he wants from the specialized production of others.” (Lee, Specialization and Wealth).

Through the process of specialized cooperation it is “praxeological”, from the incentives all market actors become responsive to, that we are composed to trade with multiple peoples, societies, etc. in order to meet our own needs and varying levels of satisfaction. Expanding the limitations of the market additionally creates more readily available products than otherwise would have existed in isolation, a result from our desire to improve the processes and products in which we choose to specialize in.

This cooperative exchange is what makes up the market. And while each market maintains its own value of exchange from the number of cooperative entities and available resources, it has become evident, empirically, that combining or thus allowing for market expansion that we will in turn create a far greater abundance of specialization, tasks specialist, and mutual benefits as a derivative from the yielding technological improvements. As the market grows and voluntary exchange ensues, so does the division of labor become progressive, and even in many instances becomes aggressive (“creative destruction”). The division of labor, as Smith explained in The Wealth of Nations, is the prerequisite for innovative methods and technological advancements.

Furthermore, through our ingenuity and improvements in communication we have thus expanded the allowance for cooperative exchange. Therefore, this continuing movement forward in productive ability appears to be inevitable that the international division of labor becomes the end result. “In myriad ways, specialization fosters continuous innovation in time-saving methods and better utilization of resources.” (Ayau, Not a Zero-Sum Game).

Globalization of the Free Market

“Globalization is the process of bringing the entire world into the system of division of labor and thus into the system of social cooperation, of which the division of labor is essence.” (Reisman, Globalization: The Long-Run Big Picture).

Market globalization, in both process and theory, occurs just the same as does any market confined within a single region. Although, a global market sustains a much greater ability to create significant cooperation and wealth as a result of the entire world’s producers and population working in tandem, than compared with such a single region separated from the rest of the world (Reisman, Globalization: The Long-Run Big Picture). For example, within the states of America each state has available their own resources, both naturally occurring and those attributed from the ability of the given population, whether in greater scarcity or relative abundance; however, cooperating as a whole, the U.S. is much more productive and efficient with her resources then if each state was to produce in isolation. The Framers of the Constitution recognized free trade among the states as being a necessary part of our economic system, which is why it was mandated in Article I, Section 9 of the Constitution (Batemarco, Why Managed Trade Is Not Free Trade).Through the law of association, all resources within each given region are thus most efficiently allocated and the market as a whole is made that much better off
compared with the alternative, each state cooperating and producing in isolation.

In conjunction with increasing the amount of cooperation within a market economy, international division of labor offers additional compelling motives. A global market decreases the opportunity cost through specialization in productive outputs. Thus, when the opportunity cost is lowered the focus of human efforts and resource allocation is optimized. The cost of production is lowered and the shared benefits are elevated.

Additionally, some production can only efficiently exist in certain regions due to access to naturally available resources, thus further illustrating the benefits made available through comparative costs. The nations who possess a greater abundance of a given resources and can, in turn, produce an output at a lesser comparative costs should be more inclined to do so and trade for other productive outputs that they so desire.

On a global perspective, it is not simply the additional amount of cooperation, although this adds significantly to the level of value-oriented exchange which is a necessity for the division of labor, that yields far greater productivity and incentive but rather the considerable lowering of cost across the board. This lowering of costs is an affect of comparative cost. In a competitive trade environment, each participating nation will find within their best interest to focus their available capital on the production of goods and services in which there are most efficient at - maintain a comparative advantage.

Country A will thus specialize in producing products W and X for which they maintain a comparative advantage in, and Country B will thus specialize in producing Y and Z. These two nations will then trade their available surpluses for one another, all the while doing so in the most cost efficient way possible. The process of comparative advantage is thus increased as a result of a global market – a win-win outcome from international division of labor. Of course, in the real world most nations maintain a varying number of productive sectors in which they maintain a relative comparative cost in, thus, again, a result of allowing specialization to focus capital in new areas of expertise.

As David Ricardo outlined in his explanation for the law of association, the case for international division of labor is made best when nations are allowed to specialize in what they can do best – that is producing products in which their comparative cost is lowest and trading with other nations who maintain a comparative cost in other valuable productive outputs. It is within this movement of the international division of labor that we are all made better off.

Of course, a necessary framework of laws must be present for the division of labor to transform into international cooperation. This framework of laws is the respect for contractual agreements and rights to private property. The respect for contractual agreements and private property is the cornerstone for mutual exchange. Additionally, a currency exchange market is needed to allow for each nation, during trade, to effectively allow for price mechanism to dictate the value of productive outputs. Albeit a bit more complicated than the simplistic mention here, it is important that these factors exists in an international market economy as without them international cooperation would not take place. “The only function of money is, ultimately, to facilitate the division of labor”. (Ayau, Not a Zero-Sum Game).

Government Facilitation of the Market

A global free market is the catalyst for the international division of labor. However, a free market must be free from outside coercion and facilitation. Market actors should be free to cooperate and exchange with others as they see fit; their knowledge to speculate in rapidly changing market environments and the incentives made available as a result of their self-interest serve as their guiding motive. Adam Smith had described this affect as the market’s “invisible hand”.

The unintended consequence from both producers and consumers acting freely in a market economy is that everyone is made better off. This outcome occurs from the motivation to trade. Free trade stimulates competition, lowers prices and efficiently directs the flow of capital resources. Government facilitation of the market, on the other hand almost always results in an unintended consequence of making the majority worse off for the betterment of only a few. The reason being is that government officials are likely to be influenced by special interest groups lobbying for special treatment to help protect their industries. The Smoot-Hawley tariff passed by the U.S. government in 1930 is a primary example of a destructive protectionist policy. The protection, of course is either the complete elimination of foreign competition or the implementation of policies to make competitor cost unattractive to local consumers. The end result being the same; consumers are made worse off and failing industries are artificially kept alive.

Market regulations, tariffs, quotas, and anti-dumping laws all serve one common purpose – to restrict international free trade. National governments, as witnessed even in recent history, tend to prefer to decide which producers and manufactures they should keep operating within their boarders at all cost. To do so, of course, means that these industries must be protected from global competition. Thus, governments cannot facilitate globalization when their policies serve the interest of the protectionist.

These restrictive policies on international trade also result in negative impacts that hamper the local economy. Government involvement in a market economy, as a result from their interventionism, removes the market mechanisms (price) necessary to foster efficient allocation of resources. Thus, governments are inefficient and create waste. Additionally, market economies are primed on the basis of a profit loss system. And since governments do not own the factors of production and capital resources in a free market, when they attempt to take facilitate these processes the outcome is always disastrous. That is, government actors are neither responsive to market signals nor responsible for the costs from their failures.

Conclusion

International division of labor will bring with it the greatest available level of productivity and standard of living; however, this magnificent cooperation will not be possibly without the precondition of economic freedom and the rights to private property. When nations around the globe complete the necessary transition from government control of the market to a laissez faire market approach, only then will we bear witness to the “greatest improvement in productive powers of labour” on a global stage.

Additionally, it is not just the cooperation for exchange but also for production that leads us to globalization. For we must, through the most efficient methods possible, employ all the available resources – man and commodity – for the utmost productive ends. Thus, leading to the wealth of nations, the incentive to produce in quantity for other’s consumption is the quintessential reason we trade. “The main cause of prosperity, Smith argued, was increasing the division of labor” (www.econlib.org). And, only through government facilitation of the market shall the extent of this market be limited, artificially and unnecessarily, from what otherwise will occur under free-market conditions.

Reference

Ayau, M. F. (2007). Not a Zero-Sum Game, The Paradox of Exchange.

Batemarco, R. (1997). Why Managed Trade Is Not Free Trade, The Freeman: Ideas on
Liberty – August 1997, http://www.fee.org/.

Lee, D. R. (1998). Specialization and Wealth, The Freeman: Ideas on Liberty – August
1998, http://www.fee.org/.

Reisman, G. (2006). Globalization: The Long-Run Big Picture, http://www.mises.org/.

Rothbard, M. (1962). Man, Economy, & State, Chapter 3: Exchange and the Division of
Labor, http://www.mises.org/.

Smith, A. (2003). The Wealth of Nations. Biography of Adam Smith (1723-1790). The Concise Encyclopedia of Economics, http://www.econlib.org/.

Economic Freedom VS. Protectionism

2008-10-19T09:21:00.000-07:00

We often hear that free trade policies bring with it negative consequences for American jobs. In fact, Barrack Obama recently continued the myth that "not all free trade is good trade". And, why not? It is true that in some instances Americans will face increased competition when trade barriers are relaxed, however, the negatives consequences are merely short-term. The long-term benefits outweigh the short-term negative impacts - market specific job losses - by a very wide margin. A prime example is that when the majority of Americans are enabled to purchase products at a much cheaper costs, more of their earnings are available for the purchase of other products and services. Thus, making a win win outcome for the global economy.

Furthermore, Obama declares a presidential platform for enhancing education to compete with global economies. Why do we need to compete globally if, at the same time, their objective is to protect less efficient jobs and continue the misallocation of resources? I do, however, believe that Obama has part of this equation correct; education. We should start right away promoting education in free markets and the principals laid out by the classical economist (i.e. Ricardo and Smith).

Let us not continue the myths and fallacies of protectionism. Let us not continue the misalloaction of resources through government subsidies and job assistance programs that only continue the reduction of economic freedom and make us all worse off. "Trade creates wealth - and trade also conserves scarce resources. The unintended consequences of policies designed to obstruct trade exacerbate the problems they are intended to solve."

We hurt the entire nation when our leaders stifle free trade and competition.

America Cannot Afford Another 1932

2008-10-12T10:25:00.000-07:00

I have certainly not had the time to read or follow all commentary surrounding the presidential debates, however, from what I have read and followed I am surprised that I have not seen or heard more concern about the comment made by Senator Joe Biden during the VP debate. Senator Biden, more than once, mentioned that this election will be the most important since 1932. Now why would that be?

This mention by Biden as this year’s election being the most important since 1932 leads me to believe that there are one or two specific tactics in play here – although more likely a combination of the two.

The first of the two tactics in play here is that more government intervention is the answer to a struggling economy. Is Senator Biden suggesting that he and a President Obama will usher in more government programs similar to the FDR era that will “save America”? Programs like Fannie Mae, WPA (Work Projects Administration), Social Security System, and other dependency inducing Welfare programs; does America really need more of this?

Quite the contrary to Senator Biden and Obama’s position, these programs only distort the situation and make matters much worse in the long-run. As a few authors here have explained (Rothbard’s America's Great Depression, Amity Shlaes’ The Forgotten Man: A New History of the Great Depression, Robert Higgs’ Crisis and Leviathan) that these very “solutions” are only a means to an end that results in greater government control and power. Myth of the Solution

The current economic situation is not too much different. We don’t need government interventionism to solve the supposed free market failures. The free market has not been allowed to fully operate since Cool Cal. The current problems are a result of what Mises referred to as government interventionism leading to still further government interventionism. More government is not the solution; let’s try more free market mechanisms.

The second tactic on display here is one that has been going on for quite some time as well. That is that economic problems are the fault of Republicans, and Democrats are the ones who solve economic failures. While George W. Bush is not escape from some fault in the current economic situation – similar to some of Hoover’s anti-competition policies – much of the blame can be placed on the progressive policies and corrupt behaviors of the Democrats (i.e. Fannie Mae, Freddie Mac, Community Reinvestment Act and it’s revisions in the mid 90’s, corrupt democratic congressional leaders who are in charge of the banking and finance committee, and ACORN).

What we need now is someone with the ability to point out the culprits and their policies which has allowed economic problems such as the current one to happen, and a reform of big government. Again, more government is not a solution it’s the very entity that is the problem. Let us try the free market and allow this prosperity inducing machine to again work for the American people.

We cannot afford more socialization of America!

Why Not an Achievement of Civilization Day?

2008-10-05T12:33:00.000-07:00

The following was written earlier this year, however, I decided to attach this as part of my new blog site.

Yet another Earth Day is upon us and it still seems that we are not yet able to fulfill the environmentalist agenda for saving the Earth in Peril. In reality we should see more reason to celebrate man’s creativity and intellectual evolution – that of which is empirically evident – instead of crack-pot schemes as a means for central control.

What is clear about any form of debate that is over is the environmentalist strong desire to curb civilization. Their statement to the world is simple - It’s time to give up and pack it in, mankind’s tireless efforts to make life better for all has been a farce all along, and rather a negative impact on us all.

What are we, as a civilization to, do that will one day benefit ourselves and the Earth? Is this idea even a potential reality or merely Utopian? Well, currently our air is cleaner, bodies of water are cleaner, people are living longer and healthier lives, more people have access to drinkable water and food, and much if not all of these improvements are a direct result of man’s ingenuity and prosperity. This result is not because man is destroying Mother Nature for his own benefit, but rather man is getting better at living – and a pretty good steward of the land when allowed to capitalize on private property.

What’s more, oftentimes those who claim that man is detrimental to the earth hold the view that evolution is the only answer for man’s mere existence. Well, if we were to hold true any claim of that of evolution, it seems the strongest evidence is man’s evolving intellect and abilities. How can these evolving characteristics be wrong if they are what has allowed us to thrive?
Furthermore, if advancing civilization is to be curbed, we most certainly will go back to the time when the environment was in much poorer condition, which stemmed from a poor standard of living – higher concentrations of waste and disease.

My suggestion is for promoting a civilization day or a day to recognize man’s achievement in technology. Why not designate a day each year to recognize that we are where we are today because of advancing human societies – and we are better for it. In the environment of Liberty, Private Property, and Prosperity is where life is well and land and nature are cherished. Besides, when did climate change become a war anyway? The Times describes our current situation as a War on Global Warming. Well, if it were even possible to be truly at war with Mother Nature, I know what weapon I want at my disposal, technology not environmentalism.

What to Choose

2008-10-05T12:25:00.000-07:00

Since I am fairly new to the blogesphere, I decided to post here the question I have asked myself and others. Why to even bother? It seems to me that this is why one - me included - would even bother posting their ideas for others to read and, at times, criticize.

When faced with the choice between learning the hard truths of economic thoughts and ideas and fighting for those truths vs. living willfully blind to the realities of liberty and freedom; what do you choose?

How the Progressives Thrive

2008-10-05T10:11:00.000-07:00

We are all certainly capable of being in a state of ignorance about one subject or another, at one time or another; however, it seems that the key phrase that separates the willing from those who just "get by" is - willful ignorance. This concept is a bit different and certainly seems more destructive than simply lacking proper knowledge for a given subject, while at the same time containing the desire to educate oneself at least enough to have an idea so as to not be easily fooled. Intellectual humility, or as characterized by Lao Tzu - "To know that you do not know is the best. To pretend to know when you do not know is a disease" - is a positive character trait. On the other hand, the mindset of an individual who does not take the necessary time to learn important aspects of life will find themselves making statements and agreeing with positions that they themselves really have no common sense in.

These individuals of a society, including myself at one time (although never a proclaimed democrat), appear to be the primary targets for the Democratic Party. Although, it maybe merely correlation and not causation. This concept has inspired me to use the term – demnorance (democrats + ignorance). Demnorants are individuals who have a high level of ignorance - willful ignorance - for the (important) world around them. They are often attracted to progressive positions. The reason, oftentimes, is that these progressive positions attack the hearts of individuals - that is citizens that otherwise maintain no better understanding. Thinking with one's heart in stead of one's brain is unfounded logical. You will find little to no logical reason in the heart, only emotional guidance - thinking with one's heart as opposed to one's mind, one can easily be mislead.

This statement, of course, is not to suggest that people should ignore their own hearts in fear that they will be mislead, but rather measuring what’s found in the heart against logical concepts – outside of love. We all certainly need love, but love is different from emotional, feel good propositions that subject the aggregate to one’s selfish whimsical ways – appealing to pity.
Additionally, not only do demnorants tend to think with their hearts more than their minds, they are also victim to the short-term mind set. Such propositions put forth by the progressives only deal with short-term issues. For example, economic policies that involve big government only seem to be concerned with short-term resolutions while completely ignoring the long-term consequences. Just like the economic positions that were put forth by John Maynard Keynes; progressives (Keynesians) believe that any temporary short fall in the economic cycle can only be solved by government intervention (free healthcare). Demnorants actually, from what I have witnessed, believe that government controlled healthcare will be provided FREE of charge to all of a nation's citizens. First off, as anyone quaintly knowledgeable in economics knows that "there ain't no such thing as free lunch" - someone of willful ignorance would not take the time to gain even an inkling of an understand for what such a concept means. Lastly, only a short-term, demnorant mind set could believe that health care cost could be resolved with government's involvement. Another example is individual savings versus government reliance.

I would, in fact take this one step further to suggest that the media make such doom and gloom statements only to push further the idea - to demnorants, or anyone paying attention - that additional government policies and programs need to be in place, immediately. Central control is the true desire of the progressive party and their ploy is to continue to mislead the demnorants in order to eventually accomplish their goal.

While it seems attractive and "thoughtful" to base rational from the heart, it's better to understand true concepts and causation. Ask a demnorant how they plan to survive during retirement, or for that matter whether or not they even think to plan that far out.

Government Can't Win: Open and Free Competition is the Soltuon

2008-10-05T09:11:00.000-07:00

Government cannot win in a competitive environment; government's only method for survival is to eliminate both competition (all free market forces) and any and all incentives for society to become compelled to compete (against one another and against state bureaucracies). Their preemptive tactics are to create - artificially - a need for dependency by the society on the state's illusory benevolence. Altruism over rational self-interest. As Milton Friedman stated; their goal is to transform self-interest an equality of opportunity into equality of outcome and altruism.