The economics of Christmas is...

Christmas is a joyous and festive time, and the economics of Christmas shouldn't spoil the fun. At the same time, however, we shouldn't harbor any illusions about Christmastime consumption providing a "boost" to the economy or anything like that. Consumption reduces the stock of goods available for use in future production. While there is certainly nothing wrong with this, it is important to remember that stories of Holiday spending-induced economic growth may be misleading. (#)

Myths seem to be the rule rather than the exception when is comes to "common knowledge". Why is that?

Myth: Corn Ethanol is Great

John Stossel is an excellent myth-buster.

Can you blame EVERYTHING on global warming?

The answer seems to be: YES! (Thanks.)

Environmentalism is surely the Socialism of the 21st century, so be aware of it!

Who could have guessed?

"Embarassingly, it also appears that the somewhat unsual recent melting of Greenland ice may have been due to naughty old Mother Nature, not evil capitalist man." (#)

To blame everything on the evil free capitalism is perhaps a nice religion, but not always the correct approach!

The State adds nothing

I am always amazed that people consider the State to be the "provider" of something, for example: Health care, roads, courts, police protection, education.

Some even say that if the State wasn't there to "provide", then that which the State "provides" would not be provided at all!

This is wrong. The State is not a mystical being that has magical powers and without it, its generous gifts would be completely absent. Roads, doctors and teachers are not dependent upon the extitence of government bureaucrats. There is still food in Russia despite the collapse of the Soviet Union and its enormous food-program.

What the States does is that it collects money from people in need of roads, doctors and teachers, and uses it on its monopoly-system of "provision" of roads, hospitals and schools. Instead of individuals runnings services and building roads, the State does. No magic, no mystery. Just monopoly protected by law.

Who throws most money away?

Tag debatten om ulandsbistand. Anti-amerikanske aktivister og intellektuelle ynder at påpege, at verdens rigeste land "kun" giver 0,22 procent af bruttonationalindkomsten i ulandsbistand sammenlignet med tæt på 1 procent for de skandinaviske lande og omkring en halv procent i Frankrig og Storbritannien. Men disse tal dækker udelukkende over ulandsbistand fra det offentlige. Amerikanske borgere giver markant større frivillige bidrag til ulandene end borgere i andre lande gør. Ifølge tænketanken Hudson Institute bruger USA faktisk 0,98 procent af bruttonationalindkomsten på ulandshjælp, hvis man regner de private bidrag med. Forskellen er, at i USA tager borgerne selv initiativ til at gøre noget, mens europæerne sætter deres lid til staten. (#)

The answer is not Scandinavians or Europeans, but Americans. That is nice to know next time a self-absorbed Danish person tries to promote himself on false pretenses.

USA vs. Nordic countries - who wins?

Do you know someone who is constantly saying that the Nordic countries are "better" than USA? Do you lack good arguments against that position? Then I have your solution! This report is it. Read it!

"...Scandinavians are the poorest people in Western Europe once income is adjusted for taxes and the cost of living."
"If nations are being judged on the prosperity of their poorest citizens, then Nordic nations certainly are equal to the United States."
"...strong economic growth is better than income redistribution if the goal is to help the least fortunate in society."

Sicko? Not in the US!

Far from being perfect (rather, far from being free), the health care system in USA has many advantages - especially when compared to the national health care systems found in most counties in the West. Let the numbers speak a little:

In fact, Americans played a key role in 80 percent of the most important medical advances of the last 30 years. Eighteen of the last 25 winners of the Nobel Prize in Medicine either are U.S. citizens or work here. (#)

But what about the poor who can't afford health insurance? A classic question and answered in the same way for every poor in every market: Let the rich pay full price for the best treatment, thereby pumping money into innovation and technology, that eventually will filter down the price-ladder and become "standard practice" for the poor. This applies for glasses, food, clothes, microwave ovens and cars. It simply - applies! Not fast enough, you say? Much faster than any tax-funded centralized 5-year plan the State has to offer, and you know it!

Water for life? Why not!

I just finished reading a very interesting report about privatized water. A short quote from the (conclusion of the) Conclusion-section:

Market based solutions to poverty and development should not be ignored: water privatisation has helped millions of people in the developing world. We should not let ideology get in the way of it.

This should come as no surprise for the libertarian mind (ideology indeed!). Market prices will always find their way into either supply or demand. In the case of water, it usually effects the supply-side, leading to great un-met demand. And since its water we're talking about, this means diseases, death and miserable conditions of life. So how about directing the killing-force of Government away from water and give millions of people a hope for a better, cleaner and longer life? At market price, of course!

What is government?

"Government is basically parents for adults."
- Seinfeld, episode 4, series 5

Couldn't have said it better myself!

Why all these bad policies?

Here's one probable reason why:

The typical voter, to whose opinions politicians cater, is probably unable to earn a passing grade in basic economics. No wonder protectionism, price controls, and other foolish policies so often prevail.

The Myth of the Rational Voter: Why Democracies Choose Bad Policies is a ray of light on an otherwise hard-to-explain mindset of (typical) voters.

'Crimes' against the State are not immoral

Illegal or immoral? These two concepts should not be confused with each other. Law er merely a description of what is legal and what is not. Morals are a description of that which is morally defensible behavior or action, and what is not.

Lets give the word to Rothbard:

If the State, then, is a vast engine of institutionalized crime and aggression, the "organization of the political means" to wealth, then this means that the State is a criminal organization, and that therefore its moral status is radically different from any of the just property-owners that we have been discussing in this volume. And this means that the moral status of contracts with the State, promises to it and by it, differs radically as well. It means, for example, that no one is morally required to obey the State (except insofar as the State simply affirms the right of just private property against aggression). For, as a criminal organization with all of its income and assets derived from the crime of taxation, the State cannot possess any just property.

This means that it cannot be unjust or immoral to fail to pay taxes to the State, to appropriate the property of the State (which is in the hands of aggressors), to refuse to obey State orders, or to break contracts with the State (since it cannot be unjust to break contracts with criminals). Morally, from the point of view of proper political philosophy, "stealing" from the State, for example, is removing property from criminal hands, is, in a sense, "homesteading" property, except that instead of homesteading unused land, the person is removing property from the criminal sector of society — a positive good.

Of course this text cannot be understood correctly outside its full context, so I urge everyone to read the full context and understand it correctly!

The 'right' to secede

Free Tibet! is a common slogan heard today from sympathetic Westerners asking China to let Tibet become an independent State. Plans to "make" the Kosovo region an independent State are well underway, despite protests from the region's current ruler, Serbia, and Russia. Taiwan wants independence from China, and has supporters from all over the world for that cause.

But how about taking this development to its logical conclusion:

But more profoundly, would a laissez-fairist recognize the right of a region of a country to secede from that country? Is it legitimate for West Ruitania to secede from Ruritania? If not, why not? And if so, then how can there be a logical stopping-point to the secession? May not a small district secede, and then a city, and then a borough of that city, and then a block, and then finally a particular individual? Once admit any right of secession whatever, and there is no logical stopping-point short of the right of individual secession, which logically entails anarchism, since then individuals may secede and patronize their own defense agencies, and the State has crumbled.

So yes indeed - free Tibet, Kosovo and Taiwan! But please, be logically consistent and don't try to stop anyone or anything from seceding from anything, even though States are more often than not unhappy about losing their taxpayers and citizens into the hands of freedom and liberty.

Radical Libertarianism

The Case for Radical Idealism is a very inspiring article, of course written by Murray N. Rothbard.

Cleaving to principle means something more than holding high and not contradicting the ultimate libertarian ideal. It also means striving to achieve that ultimate goal as rapidly as is physically possible. In short, the libertarian must never advocate or prefer a gradual, as opposed to an immediate and rapid, approach to his goal. For by doing so, he under­cuts the overriding importance of his own goals and principles. And if he himself values his own goals so lightly, how highly will others value them?

The lesson is this: If you are a libertarian, you want to abolish all State activities, including taxes and restrictions on liberty. If you are a libertarian, you want this to happen as fast as physically possible. "Gradual" changes are usually so gradual that the State will have found new projects for itself as soon at it gives up something. "Gradualism" is no way to reach the libertarian free society, and therefore not something the libertarian should adopt.

Should we lower the interest rate?

One of the big constant headaches of financial advisers is whether interest rates will be lowered or raised by the Federal Reserve Bank (or a related institute in any given country). If inflation is on the rise, the interest rate will be raised. If consumer spending is slow (and inflation is low), the interest rate will be lowered.

This of course is government manipulation of the market. Governments have monopolized their currencies and are in general not all to happy about "private money" such as the Liberty Dollar. Governments monopolize currencies because it gives them, in plain language, more money to spend. They back their currencies up with their power to tax. They encourage "loose" money (low interest rates) when the economy is lagging, and "tight" money when there is "too much" action in the economy.

But what does this has to do with our every day lives? Here's the reason why:

An increase in money supply resulting from loose monetary policy benefits the earlier receivers of money. With more money in their possession they have more resources at their disposal. As a result of the increase in the pool of resources of the earlier recipients of money, their cost of funding has fallen — this enables them to lower interest rates. Borrowers who previously had to pay a higher interest rate will find the lower interest rate more appealing, all other things being equal. In short, the lowering of interest rates will enable the lender to lend out a greater amount of money at his disposal.

As time goes by, loose monetary policy undermines real wealth formation — this is manifested by a general increase in prices of goods and services. Because of the erosion in real wealth formation, the cost of lending has increased (fewer ends can now be accommodated with fewer resources—leads to a higher marginal end). Borrowers discover that with a general increase in prices they require more money. All this puts upward pressure on interest rates.

Reverse sociology

They still exist, those who call themselves "communists" and "socialists". How to beat them - in a discussion - for good? At least argument for that they should shut up! Here's an idea.

First you ask the Socialist: "So you want to abolish private property?" This will be answered with a: "Yes. It is oppression and blah blah.."

Next is to ask: "Well, you are wearing some clothes and perhaps you have something to eat at home." The answer: "Yes, I have to own something in today's exploiting free-market society to keep up my strength to fight private property rights."

Then a question: "But in a society with no private property, you would still need to have clothes and food to eat. How will you keep your clothes on and swallow the food if it isn't your property, and yours to dispose of or use for your benefit?" The answer: "Society will provide all with sufficient clothing and food."

Then a question: "What if society will not be able to afford clothes and food for you and decides you are not worthy of such great gifts, perhaps because you offended the majority of the society?" The answer might become a clumsy, "they would never do that because Socialism will have transformed everybody into good persons", or the more realistic (and historically more accurate), "then so be it if I am to be killed with starvation and cold - I will obey the society and the majority of the people in a Socialistic society!"

This final answer will have proven than a person does not own one's body because society can, in not allowing any private property, take a person's live without direct physical aggression.

But since the Socialist is going for a social order which does not accept self-ownership, why in the hell is this person using his or her own body to express these opinions? Do the means justify the ends? Can an opponent of self-ownership, with good conscience, show up in an interview and use his or her body without asking "the society" for permission first?

I guess so. In the absence of reason and logic, no conscience can exist! However, without permission from "everyone", the Socialist should shut up! At least according to own logic!

How to win the war on the Left?

The following quote is a part of the second comment to this post on the Mises Institutes's blog:

The free-market advocates continually lose to the interventionists because the latter rely on a 'moral' position, namely that it is right to redistribute wealth. Until we compete with a different vision of what is right, they will continually win the war of ideas, which is primarily on the moral plane, and secondarily on the theory and facts of economics.

This comment should strike every libertarian-leaning mind in the very heart of his world-perspective. How is the public won? How can libertarians increase their ever diminishing influence in the public debate? Is the method really to leave logic and reason and attack the feelings and morals of the public? I would hate to see that happen!

How was the Soviet Union removed of its credibility?

The question of how to spread out the message of Liberty always haunts me. Most people just want to go to work, earn their pay and use it to improve their lives and do well by their family and friends. Not so many read economics and political theory. That is why the Left has gained too much ground. The Left understands that sound logic and reason and good economic theory is simply not interesting to the general public. That is why they use ever-shifting moral and emotional arguments - arguments of State intervention and soaking of "the rich" to benefit "the poor", which in the end only soaks everyone and keeps the poor poor!

It took a 50 year battle of intellectual persuasion to convince the leaders of the Soviet Union to reduce the stranglehold of the State. It took a little shorter time to start that process in China. Are libertarians wasting their energy by focusing on sound logic and reason, and by using a very slow-working instrument of economics and political theory? Should they reduce to the emotional simplifications of the Left?

I wonder, and I worry that this is the case.

History repeats itself - again!

Icelanders recently copied some Irish and Swedish laws which ban smoking in "public" places (private property open to the "public" for business activities). The arguments are well-known: Smoking is bad for your health, no-one should be able to work in a health-damaging environment (by choice or not), and the "public health" has to be protected (by the State) - probably because the State monopolizes the health care system.

The following quote is illustrating for the "discussion" about smoking-bans in "public" places:

And arguments that private property would be unjustly confiscated were also brushed aside with the contention that property injurious to the health, morals, and safety of the people had always been subject to confiscation without compensation. (#)

The interesting thing about this description of the attitude in the public debate is, I think, not that it sounds familiar. This quote has nothing to do with the smoking-ban discussion today. It is a description of the debate in the United States during the years before the prohibition - the public outlawing of alcohol which lasted from 1920 to 1933.

So what we have here is history repeating itself. Instead of a free market for free individuals we have laws that ban certain non-violent activities, sends them to the black market and at the same time makes sure that the paternal Left gets a good night sleep, "knowing" that the vices of men have been banned with the threat of punishment from the State.

I think everyone knows why the prohibition was ended in America. I hope everyone realized that history has a huge tendency to repeat itself, because people have a huge tendency to forget the effects of State-violence on free-minded individuals.

A new name on my reading-list?

When I see a piece of text like this, I cannot help but to add to my bookmarks-list in my browser:

McKitrick has effectively laid down the gauntlet for both skeptics and alarmists by offering them a public policy proposal they both should be able to endorse, since both are convinced it will go their way. Only those of us who have independent moral and practical reasons for opposing any form of tax or subsidy whatsoever should have a good reason for not accepting the challenge.

My new bookmark? ClimateAudit.org An article to be read in my nearest future? Call their tax My favorite non-personal blog? The Mises Institute's one It's blog post behind this post? The T3 Tax: Laying Down the Gauntlet

Is Democracy a friend or a foe?

The introduction to the Cato Institute´s latest Policy Analysis - "The Myth of the Rational Voter: Why Democracies Choose Bad Policies" - includes the following words:

Economic policy is the primary activity of the modern state. And if there is one thing that the public deeply misunderstands, it is economics. People do not grasp the "invisible hand" of the market, with its ability to harmonize private greed and the public interest. I call this anti-market bias. They underestimate the benefits of interaction with foreigners. I call this anti-foreign bias. They equate prosperity not with production, but with employment. I call this make-work bias. Finally, they are overly prone to think that economic conditions are bad and getting worse. I call this pessimistic bias.

I must say this is a good start, and I will have read the whole analysis soon.

But why this criticism of the holy grail, Democracy? Isn't there a "consensus" among all free people to hail democracy as the final solution to wars, suffering and poverty? Isn't democracy the solution to the problems of corruption and State oppression? Perhaps not.

I am a little surprised that the Cato Institute releases an open criticism of democracy. I am used to such criticism from the camp of Anti-Statists, for example the Mises Institute, especially Hans-Hermann Hoppe's Democracy: The God That Failed. Democracy is in many ways not any "better" or "worse" than any other statist tool to use the State to favor some at the expense of another. It is better than many tools because it includes the public to some extent to its own oppression, but worse in the way it makes people believe that someone else is doing all the paying and doing.

Cato's analysis will soon enough be read by me. Perhaps others who read this will do the same.