Wednesday, August 20, 2014

The e-cigarette: A potential target for politicians?

For decades, the government has played a game with smokers: Urged them to quit since their smoking-related diseases are a burden on the government subsidized health care system, but kept cigarettes around and extremely taxed in order to obtain revenues from them. Smokers are indeed a dying race, but they remain resilient although most of their civil freedoms disappear as soon as they light the cigarette.
It is a difficult task to estimate how much money has been spent on getting smokers to quit their addictive habit. Most of the methods used are completely decoupled from reality. Smokers should quit because they die too young – so what? Aren't the nearly-bankrupt pension systems in most countries in a dying need to get rid of some of our elders? Smokers should quit because they carry around toxic chemical that kill asthma-patients and children. Well, so do cars, many toys, the windmill-factories, the paint used to make protester-signs for Greenpeace-rallies, and so on. Smokers should quit because they are wasting their money. So is the taxpayer. Should he quit paying taxes?
Smokers remain resilient and for good reasons. First of all, nicotine is hard to kick. Second of all, smokers usually have a lot of little daily routines built around the cigarette: The first coffee cup in the morning, the break at work, the getaway from a hectic household, the relaxing effect when watching television, the holding of something in ones restless fingers, etc. The government has not seen this, but the free market did. Hence the invention of the electronic cigarette, or the e-cigarette.
The e-cigarette is usually a two-part device: A battery and a container for a liquid. The container stores the liquid and a small burner inside it heats it up so that a damp is created, and this can be inhaled. The liquid can be mixed with nicotine. The smoker can then get his “fix”. The damp contains traces of different chemicals, but in such small concentrations that the man standing next to the smoker can usually not smell anything. Compared to the cigarette, the e-cigarette is next to harmless for the user. Compared to car exhaustion, it’s probably completely harmless.
The free market invented the e-cigarette and its popularity is on the rise. Smokers find a lot of the benefits of the cigarette in the e-cigarette (e.g. something to hold in the hand, the feeling of smoke/damp coming out of the mouth, and the nicotine of course). If a smoker wants to kick his habit, he can do so by gradually decreasing the nicotine concentration in his liquid. Thus, the e-cigarette cab assist smokers to quit, although others just want to go on smoking, but without the health risks of the burnt and tar-polluted tobacco leaf and cigarette paper.
Non-smokers feel nothing. They see damp and can perhaps catch some traces of the aromas in their nostrils, but only if they stand close to the smoker and smell on purpose. Do we again have a harmony between the smokers and non-smokers?
The governments of the world have for most part not gotten around to legislate against the e-cigarette. This means that the insanely high tobacco taxes have not reached the e-cigarette yet. Smokers can thus save a lot of money. But whatever isn't legal is often de facto illegal. The black or gray market  bridges the gap in many countries. In Denmark, for example, the nicotine-blended juice is not exactly legal, but widely sold, especially on the internet, and the police seem to do little about it. In Holland, everything is available in the nearest tobacco store.
But where there is harmony and peace there is also a potential for politicians to disrupt everything and make their mark. In many countries, politicians are preparing to step in. They can’t sanction anything which resembles smoke, and see all the tax money from cigarette sales potentially evaporate (forcing them to consider such taxes and a sugar-tax and fat-tax instead to make up for the lost revenue of smoking). In their crusade they can rely on such organizations as The American Heart Association to provide a “scientific” basis for a bigger government with more rules and regulations.
The epoch of the e-cigarette will likely be short-lived. In the meanwhile, I intend to smoke with such a device. If the legislation steps in, restricts access, imposes high taxes and bans some of the nicer variants of the technology, I’ll at least have had a short period of improved health and personal finance. Time will tell what I’ll do after that.


Poverty: A choice

Why are some countries rich and others poor? I'll make a proclamation: Poverty of countries is their own choice. It is a choice between the power of the state and the richness of the people. Poverty is a selected situation, selected above economic freedom on purpose.

Lets think about the following: Denmark and Hong Kong are countries with very little natural resources. They need to buy from others to have something to sell to still others. Denmark buys steel and coal to produce stuff to sell. Hong Kong has more or less nothing other than manpower. These countries are among the richest the world, and in terms of economic freedom also among the freest.

Zimbabwe and South-Africa brim with natural resources and vast, fertile lands. They are poor and will remain so until the power elite release their grip. Their supporters need to drop their ambition for equality and opt for economic freedom instead.

(As it happens, equality is not a function of income or geography. The richest 10% and poorest 10% will own a similar portion of the total product, no matter how large the total product is. Therefore, enlarging the total product is the only way to better the lot of the poorest.)

Brazil and China are the middle-of-the-road countries. You can do business there, and can have access to nearly unlimited resources of both people and those from nature within the boundaries of those countires. However, you can't feel secure about anything. And Brazil, to name an example, has such a jungle of taxes and regulations that a whole army of people is needed just to cut through.

Poverty is a choice. Poor countries are poor by choice. Think about it. I will.

Monday, February 17, 2014

The childish attitute of socialists (literally)

After I became a parent (roughly in the year 2009), I have begun to notice a lot of traits in children that can be found in the political debate among adults. Most of these are obvious, such as having no understanding of economics and expecting free stuff to rain from the heavens without any work at all (or minimal effort, such as behaving or being polite). This, of course, is understandable, and can actually be required of children. They are, after all, children, and should focus on building their social skills and grasping the basic stuff in life (such as sleep and food).

The more amazing part is the way many adults actually think like children. Some people, mostly socialists, believe we can live in a world without efforts and patience. They think we can "share the burden" by removing burden from everyone. This leads to total poverty of all. A better way to "share the burden" is to make everyone more productive, such as with capital investment (which requires savings, patience and private property).

It takes a lot of effort and work to train a sense of work ethics in children. They don't just "get it". They need to learn how to save for stuff they really want. They need to learn to work for the things they want. This is not easy for all children. Some are just spoiled and lazy and need a "kick in the ass", so to speak.

And so be it. Children are children. The more amazing part is that many grown-ups are still children in this respect.

Usually socialists.

Friday, November 29, 2013

Inflation is a policy

Inflation is a policy. And a policy can be changed. Therefore, there is no reason to give in to inflation. If one regards inflation as an evil, then one has to stop inflating. One has to balance the budget of the government. Of course, public opinion must support this; the intellectuals must help the people to understand. Given the support of public opinion, it is certainly possible for the people's elected representatives to abandon the policy of inflation.
.. says Ludwig von Mises in his Economic Policy: Thoughts for Today and Tomorrow (pp. 72-73). And there you have it! Do you hate to see your salary decrease in value, year by year, unless you get a substantial raise? Blame the government! Would you like to be able to buy just as much for your savings today and in 20 years, but you realise that you can't? Blame the government! Inflation is a policy. That's it. 

Monday, September 23, 2013

Natural economic laws

Once, during a speech which he was making at a statistical congress in Bern, [Vilfredo] Pareto spoke of 'natural economic laws,' whereupon [Gustav] Schmoller, who was present, said that there was no such thing. Pareto said nothing, but smiled and bowed. Afterward he asked Schmoller, through one of his neighbors, whether he was well acquainted with Bern. When Schmoller said yes, Pareto asked him again whether he knew of an inn where one could eat for nothing. The elegant Schmoller is supposed to have looked half pityingly and half disdainfully at the modestly dressed Pareto - although he was known to be well off - and to have answered that there were plenty of cheap restaurants, but that one had to pay something everywhere. At which Pareto said: 'So there are natural laws of political economy!'
From Rothbard's Austrian Perspective on the History of Economic Thought, Volume II (p. 459). And what a gold mine this book is! It almost makes one think that history teaches us nothing, that all the mistakes of the past are doomed to be repeated again and again, and every time this happens, something of the good of human thought is lost. One of the mistakes is to consider humans as mere robots, programmable and acting only according to the dictates of the State. This is a fallacy, and an old one. Humans have a "nature", something that you can try to stamp on, force or manipulate, but which you cannot change. The sooner we acknowledge this, the sooner we are on the highway to prosperity, peace and harmony of interest.

Tuesday, September 17, 2013

GDP and monetary pumping

In an age where "the GDP" is usually considered the all-important parameter to measure the "health" of an economy, the following should be kept in mind:
Remember that changes in GDP are a reflection of changes in monetary pumping: the more is pumped the greater the rate of growth of GDP. (#)
Therefore, it is sad to see robust and solid companies base their forecasts on forecasts on GDP. This is pure guess-work. An increase in GDP is more often than not harmful. A lowering GDP could even be a surer sign of an improving health of an ecomony, as monetary contraction is in many ways a cleaning process rather than the other way around.

Wednesday, August 07, 2013

The Art of Taxation

The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.
..said Jean-Baptise Colbert (1619-83), who, to quote Wikipedia, was "a French politician who served as the Minister of Finances of France from 1665 to 1683 under the rule of King Louis XIV". The quotation is from Murray N. Rothbard's The Austrian Perspective on the History of Economic Thought, Volume I (Economic Thought Before Adam Smith), page 246.
That being said, he was also an honest supporter of an all-embracing State, that could choke or support all forms of labour and industry as she liked.
I call him an honest Leftist. If only modern day leftists could state their attitudes as clearly as the power-crazy French politician (who receives undeserved praise in Wikipedia).

Sunday, July 14, 2013

Give me advice, and no more

Give me as much advice as you please, but constrain me to nothing. I decide upon my own proper risk and peril, and surely that is enough without the tyrannical intervention of law.
..says Bastiat (The Bastiat Collection, p. 982), and I agree.
By what right does the organizer of artificial systems venture to think, act, and choose, not only for himself, but for everyone else? for, after all, he belongs to the human race, and in that respect is fallible; and he is so much the more fallible in proportion as he pretends to extend the range of his science and his will.
..says Bastiat (The Bastiat Collection, pp. 970-971), and how true! Those who want to rule us all (either as tyrants of "representatives" in a democracy) should keep their good advice to themselves if they want to put it into law and enforce them via the force of the police or military.

Friday, July 12, 2013

The other side of welfare: Idleness

Were all our citizens to say, “We will club together to assist those who cannot work, or who cannot find employment,” we should fear to see developed to a dangerous extent man’s natural tendency to idleness; we should fear that the laborious would soon become the dupes of the slothful. Mutual assistance, then, implies mutual surveillance, without which the common fund would soon be exhausted. This reciprocal surveillance is for such association a necessary guarantee of existence—a security for each contributor that he shall not be made to play the part of dupe; and it constitutes besides the true morality of the institution. By this means, we see drunkenness and debauchery gradually disappear; for what right could that man have to assistance from the common fund who has brought disease and want of employment upon himself by his own vicious habits? It is this surveillance that re-establishes that responsibility the association might otherwise tend to enfeeble.
..says Basitat in his Economic Harmonies, Book II (pp. 842-843 in The Bastiat Collection), first published at around 1850. The remainder of this part of the book is a sign of remarkable foresight from a man who understood the nature of the State better than most.

Thursday, June 27, 2013

Patents hurt us

[B]ecause of generalized and ever extended patenting, pharmaceutical companies have grown accustomed to operate like monopolies. Monopolies innovate as little as possible and only when forced to; in general they rather spend time seeking rents via political protection while trying to sell at a high price their old refurbished products to the powerless consumers, via massive doses of advertising.
...say Michele Boldrin and David K. Levine in their book, Against Intellectual Monopoly (chapter 9). Their case is compelling as far as I can see, and it is against patents (for their own book as well as for drugs and other "intellectual property").

I intend to read their book, and also the monograph Against Intellectual Property by the libertarian Stephen Kinsella. In my mind, there can be no justified reason to hold ideas sealed behind a veil of "property rights" that the State has imposed in order to protect big business. Now I need to get familiar with all the arguments. Wish me luck?

Sunday, June 02, 2013

Why the State can get away with it

One of the crucial factors that permits governments to do the monstrous things they habitually do is the sense of legitimacy on the part of the stupefied public. The average citizen may not like — may even strongly object to — the policies and exactions of his government. But he has been imbued with the idea — carefully indoctrinated by centuries of governmental propaganda — that the government is his legitimate sovereign, and that it would be wicked or mad to refuse to obey its dictates. It is this sense of legitimacy that the State's intellectuals have fostered over the ages, aided and abetted by all the trappings of legitimacy: flags, rituals, ceremonies, awards, constitutions, etc.
...says Murray N. Rothbard in his For a New Liberty: The Libertarian Manifesto (chapter 12). And how true! The reason the State can do what it does, mostly without resistance no matter what, is because most of us consider the State to be a legitimate entity. A member of the mafia, extracting "protection fees" and "contributions" from the local shop keepers, is always frowned upon. The tax collector is not. The tax collector is a man with a "normal job" and someone working for "the society". But really he isn't. He is a member of the biggest mafia, and a mafia that can operate mostly without resistance. And this is our fault.

Thursday, May 02, 2013

The Welfare State vs. The Family

Today, the welfare state provides a great number of services that in former times have been provided by families (and which would, we may assume, still be provided to a large extent by families if the welfare state ceased to exist). Education of the young, care for the elderly and the sick, assistance in times of emergencies—all of these services are today effectively “outsourced” to the state. The families have been degraded into small production units that share utility bills, cars, refrigerators, and of course the tax bill. The tax-financed welfare state then provides them with education and care.
How true! This and more in the very well written and informative book, The Ethics of Money Production. My favorite: The families have been degraded into small production units that share utility bills, cars, refrigerators, and of course the tax bill.

Sunday, April 07, 2013

Labour is not wealth

 If men lived in diving-bells under water, and had to provide themselves with air by means of a pump, this would be a great source of employment. To throw obstacles in the way of such employment, as long as men were left in this condition, would be to inflict upon them a frightful injury. But if the Labor ceases because the necessity for its exertion no longer exists, because men are placed in a medium where air is introduced into their lungs without effort, then the loss of that Labor is not to be regretted, except in the eyes of men who obstinately persist in appreciating in Labor nothing but Labor in the abstract.
This is a simple point from Bastiat (Domination by Labor, from The Bastiat Collection, pp. 427-428). At the same time, it is both neglected and understated, even rejected.

We can keep it simple: Labour is not wealth. Wealth is stuff and services, bought with the fruits of labour. The less labour we need to finance the stuff and services we want or need, the better. Should all our needs fall from the sky and render labour unnecessary, we would become better off.

Friday, October 19, 2012

The Welfare State

Here are two short quotes from an excellent book, The Ethics of Money Production:
Today, the welfare state provides a great number of services that in former times have been provided by families (and which would, we may assume, still be provided to a large extent by families if the welfare state ceased to exist). Education of the young, care for the elderly and the sick, assistance in times of emergencies—all of these services are today effectively “outsourced” to the state. The families have been degraded into small production units that share utility bills, cars, refrigerators, and of course the tax bill. The tax-financed welfare state then provides them with education and care. (p. 189)
It is precisely because the welfare state is an inefficient economic arrangement that it must rely on taxes. If it had to compete with families on equal terms, it could not stay in business for any length of time. It has driven the family and private charities out of the “welfare market” because people are forced to pay for it anyway. They are forced to pay taxes, and they cannot prevent the government from floating ever-new loans, which absorb the capital that otherwise would be used for the production of different goods and services. (p. 190)
The book takes the reader through a wide range of subjects in economics and political philosophy, which is good. However, this does leave the reader asking many questions not covered by the book, since answering all of these would probably expand the book to a huge size. So I hope the author continues to write on e.g. ethics, and elaborate further on his many insights.

Sunday, June 17, 2012

Keynesian economics = socialism?

The so-called Keynesian economics are probably what we could call "mainstream" economics today. At some point this will have to change, since Keynesian economics are the economics of destruction. But how did they become so popular? Henry Hazlitt had a theory (on page 287 in his Failure of the 'New Economics'):

It is more instructive to inquire why Keynes put forward this extremely complicated and implausible theory. And here we may have to answer that, siding as he did with the immemorial  labor-union insistence that employment is not caused by excessive wage-rates, he had to come up with some theory as to what does cause it. And as he couldn't blame the labor-union leaders, what more natural (and politically convenient) than to blame the moneylenders, the creditors, the rich? Like Marxism, this is a class theory of the business cycle, a class theory of unemployment. As in Marxism, the capitalists become the scapegoats, with the sole difference that the chief villains are the moneylenders rather than the employers.
And that, I suspect, rather than any new discoveries of technical analysis, is the real secret of the tremendous vogue of the General Theory. It is the twentieth century's Das Kapital.
I find this very plausible. The Keynesian "system" is socialism in disguise, and socialists like disguises.

Tuesday, May 15, 2012

Government is an antisocial institution


There is no longer a general public opinion that regards government as an antisocial institution based on coercion and unjust property acquisitions, to be opposed and ridiculed everywhere and at all times on principled grounds. No longer is it generally regarded as morally despicable to propagate or, even worse, to actively participate in the enforcement of acts of expropriation, and no longer is it the general opinion that one would not have any private dealings whatsoever with people who engaged in such activities. ...
The politician who actively supports a continuation of the ongoing system of non-contractual property taxation and regulation or who even demands its expansion is treated everywhere with respect, rather than contempt. The intellectual who justifies taxation and regulation receives recognition as a deep and profound thinker in the public eye, instead of being exposed as an intellectual fraud. The IRS agent is regarded as a man doing a job just as legitimate as yours and mine, and not as an outcast that no one wishes to have as a relative, friend, or neighbor.
... says Hans-Hermann Hoppe in his The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy (pp. 63-64). The "State problem" is a problem of attitude towards the State. The State cannot rule over the people unless people support its rule or consider it "inevitable" (which it's not). So if we want to reign in the State, we need to hate the State. So please do that.

Tuesday, April 03, 2012

Capitalism ends in the Garden of Eden

Thus, the only viable path toward economic growth is through savings and investment, governed as they are by time preference. Ultimately there is no way toward prosperity except through an increase in the per capita quota of invested capital. This is the only way to increase the marginal productivity of labor and only if this is done can future income rise in turn. With real incomes rising, the effective rate of time preference falls (without, however, ever reaching zero or even becoming negative), adding still further increased doses of investment, and setting in motion an upward spiraling process of economic development.
There is no reason to suppose that this process should come to a halt short of reaching the Garden of Eden where all scarcity has disappeared—unless people deliberately choose otherwise and begin to value additional leisure more highly than any further increase in real incomes. Nor is there any reason to suppose that the process of capitalist development would be anything but smooth and that the economy would flexibly adjust not only to all monetary changes but to all changes in the social rate of time preference as well. Of course, so long as the future is uncertain, there will be entrepreneurial errors, losses, and bankruptcies. But no systematic reason exists why this should cause more than temporary disruptions, or why these disruptions should exceed, or drastically fluctuate around, a “natural rate” of business failures.
...says Hans-Hermann Hoppe in The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy (p. 152). Notice especially the following words: "There is no reason to suppose that this process should come to a halt short of reaching the Garden of Eden where all scarcity has disappeared—unless people deliberately choose otherwise and begin to value additional leisure more highly than any further increase in real incomes."
And indeed, many rulers and socialists choose to completely ignore the results of economic analysis of government intervention. They choose power and their own special kind of "justice", rather than increased prosperity and elimination of scarcity.
No "unintended" consequences can be identified. The results of some planned interventionism are known beforehand.

Tuesday, March 27, 2012

Aid or capitalism?

No one contests that what makes hundreds of mil­lions in Asia and Africa destitute is that they cling to primitive methods of production and miss the benefits which the employ­ment of better tools and up-to-date technological designs could be­stow upon them. But there is only one means to relieve their distress—namely, the full adoption of laissez-faire capitalism.
... says Ludwig von Mises in The Anti-Capitalist Mentality (section 4). And how true! Since he wrote this (in 1956), Asia has increasingly coupled itself to the world market, and poverty is there on the run. Africa, however, still more or less clings to socialism, and remains poor despite massive foreign aid and relief. The problems of socialism (poverty, death) can only be relieved by the abolition of socialism.

Monday, March 12, 2012

Time to abolish the State?

The last few centuries were times when men tried to place constitutional and other limits on the State, only to find that such limits, as with all other attempts, have failed. Of all the numerous forms that governments have taken over the centuries, of all the concepts and institutions that have been tried, none has succeeded in keeping the State in check. The problem of the State is evidently as far from solution as ever. Perhaps new paths of inquiry must be explored, if the successful, final solution of the State question is ever to be attained.
... says Rothbard in Anatomy of the State. And he is right. Men have tried to reign in the State with all sorts of methods, but have proven unsuccessful. Perhaps it is time to consider abolishing it altogether? Or just embrace socialism. Many seem to have taken that path.

Wednesday, March 07, 2012

Worst crisis ever?

The 1920s bust was actually worse than the 2000 dot-com bust. In 1920 unemployment jumped from 4 percent to nearly 12 percent and GNP declined 17 percent; however

  1. there was no fiscal stimulus,
  2. the budget was cut nearly in half and the national debt was cut by one-third,
  3. tax rates were significantly decreased for all groups, and
  4. the Federal Reserve did next to nothing.

As a consequence, by 1922 unemployment was down to just under 7 percent and declined to 2.4 percent in 1923. (#)

There you have it. How does a politician fix a crisis? Answer: Do nothing (except cut the government budget and lower taxes).