The 'inevitability' of planning

The movement for planning owes its present strength largely to the fact that, while planning is in the main still an ambition, it unites almost all the single-minded idealists, all the men and women who have devoted their lives to a single task. The hopes they place in planning, however, are not the result of a comprehensive view of society, but rather of a very limited view, and often the result of a great exaggeration of the importance of the ends they place foremost.

..says Hayek, in Chapter 4 in his great classic, The Road to Serfdom. And how true!

Health experts want the State to "plan" cigarettes out of society of law-abiding citizens. Architects want cities demolished and rebuilt after their drawings (Icelandic example). Farmers demand State protection and subsidies to protect their current way of life and keep harsh competition away. Economists preach the need for powerful State central banks and data gathering institutions so they can play with interest rates (the price of money) and see how the real life reacts compared to sophisticated computer models.

The list is endless. Everywhere, "experts" and "specialists" in various studies talk about the need for some great State plan on their favorite subject, with themselves in control (of course). The inevitable result: A central command economy of some sort. Is that what we want?

Market Prices Versus “Make It So”

The free market is not an ideology or a creed or something we’re supposed to take on faith, it’s a measurement. It’s a bathroom scale. I may hate what I see when I step on the bathroom scale, but I can’t pass a law saying I weigh 160 pounds. Authoritarian governments think they can pass that law—a law to change the measurement of things.

Quote taken from here (which took it from here). And how true it is!

Liberty, Freedom or just plain Tolerance?

Says Hayek in Road to Serfdom (page 14):

"Freedom" and "liberty" are now words so worn with use and abuse that one must hesitate to employ them to express the ideals for which they stood during that period [the Renaissance]. Tolerance is, perhaps, the only word which still preserves the full meaning of the principle which during the whole of this period was in the ascendant and which only in recent times has again been in decline, to disapper completely with the rise of the totalitarian state.

Perhaps something to keep in mind in todays political climate where "freedom" has begun to mean "slavery" and vice versa? Tolerance for the free activities of men is on huge decline. Everywhere, some planner has an idea on how to "revise" the free actions of humans, to obtain some socialist ends (e.g. equal distribution of wealth or equal access of all to the property of few).

Why both fascism and socialism lead to tyranny

Many socialists consider their ideals to be somewhat "just" or "fair", and that they have nothing in common with the terrors of Nazism of Fascism. But there is a strong resemblance. Hayek explains:

"Planning", therefore, is wanted by all those who demand that "production for use" be subsituted for production for profit. But such planning is no less indispensable if the distribution of incomes is to be regulated in a way which to us appears to be the opposite of just. Whether we should wish that more of the good things of this world should go to some racial élite, the Nordic men, or the members of a party or an aristocracy, the methods which we shall have to employ are the same as those which could ensure an equalitarian distribution.

...says Hayek in his Road to Serfdom (pages 34-35 in this edition).

Stimulators vs. Austerians

In a commentary about a month ago, I described how the economic world seemed to be drifting into two opposing camps: the Washington-based "Stimulators," who insist that more government debt is the best means to end the financial crisis, and the Berlin- and London-based "Austerians," who argue that debt is the crisis itself. If recent economic data and currency movements can be considered votes of confidence, then the Stimulators should be sweating. Moreover, these recent signals should provide economic analysts and investors with a road map for the future.

...says Peter Schiff. Something to remember when one "camp" spirals down to an inflationary depression, and the other one maintains and perhaps a little more.

Libertarian suckers?

Says Rothbard in A Stragedy for the Right:

The left-liberal vision, then, of good conservatives is as follows: first, left-liberals, in power, make a Great Leap Forward toward collectivism; then, when, in the course of the political cycle, four or eight years later, conservatives come to power, they of course are horrified at the very idea of repealing anything; they simply slow down the rate of growth of statism, consolidating the previous gains of the Left, and providing a bit of R&R for the next liberal Great Leap Forward. And if you think about it, you will see that this is precisely what every Republican administration has done since the New Deal. Conservatives have readily played the desired Santa Claus role in the liberal vision of history.

I would like to ask: How long are we going to keep being suckers? How long will we keep playing our appointed roles in the scenario of the Left? When are we going to stop playing their game, and start throwing over the table?

Good question! Are libertarians just suckers when it comes to stragedy?

A favorite Rothbard-quote of mine:

If libertarians refuse to hold aloft the banner of the pure principle, of the ultimate goal, who will? The answer is no one, hence another major source of defection from the ranks in recent years has been the erroneous path of opportunism.

More inspiration in The Case for Radical Idealism - an article I strongly recommend for the libertarian who wonders why he isn't being heard.

(Monetary) tragedy of the commons

In our monetary system, property rights in money are not adequately defined or defended, giving rise to inflationary credit expansion. Our fiat fractional-reserve banking system produces a tragedy of the commons, leading to an overexploitation of resources. A typical example of a tragedy of the commons is overfishing in the ocean. As fish swarms are not the property of anyone, the costs of fishing are externalized on all other fishers. If I do not fish as many fishes as fast as I possibly can, my competitor will fish them. Similarly, the property rights in bank deposits are not clearly defined. Banks have the incentive to expand credit and externalize the costs onto society.

Exactly!

The Not So Wild, Wild West

In conclusion, it appears in the absence of formal government, that the Western frontier was not as wild as legend would have us believe. The market did provide protection and arbitration agencies that functioned very effectively, either as a complete replacement for formal government or as a supplement to that government.

says here. Surprising?

The Forgotten Depression of 1920

Do you think government is doing to little to fight the recession/depression? Do you wish for "more stimulus" and "government spending" to revive the economy? Do you think that the Great Depression was won with deficit spending and government programs (such as World War II)?

Think again. Here is the real lesson to be learnt from the history of booms and busts during the Century of Central Banking - the forgotten depression of 1920, where government was shrunken, deflation was allowed to correct the malinvestments of World War I, and the free market was allowed to restore economic order on its own pace (which is pretty fast I might add!).

The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction." By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.

So what are we waiting for? Let the free market clean up the mess we are in. The sooner, the better! Or, so says sound economic theory and history in one screaming voice.

So how about some interference?

There are those who say: The free market is not to be left unbound or without regulation and interference. It needs to be "regulated" or "adjusted" to some or this political agenda.

Fair enough. Free individuals and their companies need, apparently, a third party (or fourth or fifth, etc.) to push them in this or that direction for the benefit of something else than freedom, such as consumers, competition, environment, ethic standards, etc. Or so I hear.

But has anyone tried to compare the free market to nature? Nature is a finely tuned mechanism of preys and predators. There are those who are eaten, and those who eat. If those who are eaten are too many, then they eat too much vegetation, starve and die in huge numbers. If those who eat the grass-biters become too many, they will also starve. They will eat too much, kill off their prey, and starve.

In short, a finely tuned mechanism which always seeks a balance, but will never reach it for long. That's nature.

So how about the free market? Those who preach endless interference of the free market are almost without exception those who preach endless laizzes faire when it comes to nature. One system of natural law is to be left alone, but another to be heavily regulated by a huge, all-knowing central government.

Do I smell a lack of coherent thinking?

Taxman - The Beatles animated music video

The Beatles got the point!

Intellectuals and the Death of Capitalism

Intellectuals and the Death of Capitalism

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Destroy all computers!

I have a proposal: Lets destroy all computers of the world! Why? Because this would create an enourmos amount of "jobs", where instead of a single computer hacking away trillions of numbers to find a solution, millions of persons would do the same, using pocket calculators and pieces of paper. Right?

No, wrong. Destroying computers will not create jobs. It will destroy the productivity of all those who work with computers, and by doing so diminishing their value as employees, so that their wages would have to come down (to almost zero).

Today, there are strong voices for "protecting" industries by subsidizing them. Agriculture is a prime example. Farmers are paid by the taxpayer and not the consumer so that their livelihood is not "jeopordized" by competetion from farmers in countries where farming actually pays off. In Iceland, the state pays farmers to grow sheep for a market of 300,000 people because this "protects" the domestic agriculture from sheep growers who work in much better climate. Computers are being destroyed in Iceland in the name of job-protection, so to speak.

What if one day someone would discover the "replicator", a machine which can create food and recycle matter with no effort? Then we would not need a single farmer to grow food. Farmers would go out of business and find other jobs, which actually fulfil consumer demand. Would the European Union allow this device?

Some random thoughts

Ambition of central planners
I must admit, that despite being a libertarian, then I cannot help it but to admire those who preach big government with a great, central authority over almost every aspect of every individuals' life. I cannot imagine a more ambitions program than the program of central planning over society, be it via law and regulation, or direct force and coercion. A project doomed to fail, whether judged from reason or experience, but an ambitious one indeed!

The two groups of individuals
For me, people more or less divide into two groups (with a big gray area in between): Those who want the central government to thrive, and those who want individuals to thrive. What benefits one cause, damages the other. Its as simple as that.

Role of government, anybody?
Most people vote, or have an opinion on who should be voted, and who should not be. Depending on the choice of vote, most of us tend to categorize ourselves according to some party lines, willingly or not. For example, lets say I could vote in the USA, and voted for Republicans. Many would then call me a Republican, and hence assume I am for the war in Iraq, against homosexual marriages, for fiscal discipline in government finances, Christian, and so on. So those who vote Republican who started out voting because of one but not all of the issues will probably tend to agree with the other ones, and converge towards the "one and only" Republican party line.

But what if people did not know what the options were before going to the polls? That before voting, everyone had to draw up an independent picture of what he or she thinks the role of government, and its politicians, should be. How many of Obama votes would have then found themselves compatible with Obamas rhetoric when walking into the poll booth? Or John McCain's? Or Al Gore's? Because all of these gentlemen have preached to some extent, and then practiced in great extent, the consumption of the entire society by the State.

It seems that few people have actually sat down and thought for themselves what the government should do, and what it should refrain from doing. Does the State monopolize money because most people want to, or because no-one can think outside the box, or remember a 100 years back when no such entity as the Federal Reserve Fund existed?

I guess not

Debtors and creditors of the world

This is a very interesting website:

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

It basically shows who are the debtors and creditors of the world. Now the creditors who have been supplying the USA with debt, used for consumption, will stop their lending, and spend on their own economies. More on this here (Peter Schiff is a genius).

The US dollar is the new toilet paper, aligning itself with the Zimbabwe dollar. The German style "careful" monetary policy of the European Central Bank will, despite the socialism of European politics, make Europe rise above the USA by many multiples as an economy.

Socialist swallowing of truth

Capitalism has been as unmistakable a success as socialism has been a failure. Here is the part that's hard to swallow. It has been the Friedmans, Hayeks, and von Miseses who have maintained that capitalism would flourish and that socialism would develop incurable ailments. All three have regarded capitalism as the 'natural' system of free men; all have maintained that left to its own devices capitalism would achieve material growth more successfully than any other system. From [my samplings] I draw the following discomforting generalization: The farther to the right one looks, the more prescient has been the historical foresight; the farther to the left, the less so.

More here. Yes, its probably difficult to swallow ones own words, but great men acknowledge their failures, and earn my respect by doing so.

Skattmann (Icelandic)

In 1989, Icelanders had a Leftist government. Now, after the collapse of the international financial system, more and more Icelanders are beginning to long for another one. This video should deter at least some of them, I hope.

Who was right and who was wrong?

Peter Schiff is probably the hardest working preacher of sound economics in todays media. So what does he have to say about the future of the dollar? Look no further: http://www.youtube.com/watch?v=S8HRRQ6JkCw

Air pollution - the libertarian remedy

The remedy against air pollution is therefore crystal clear, and it has nothing to do with multibillion-dollar palliative government programs at the expense of the taxpayers which do not even meet the real issue. The remedy is simply for the courts to return to their function of defending person and property rights against invasion, and therefore to enjoin anyone from injecting pollutants into the air.

Quote taken from For A New Liberty - The Libertarian Manifesto, Chapter 13. The greens and leftists have NO solutions to the problems of pollution. Libertarians, on the other hand, do.

Solution suggestion: Do nothing!

When it was realized that many paper bank notes were just that, their values began to collapse, many to zero (the same amount of gold you could get for it), and the money supply contracted at a ferocious rate. From the fall of 1818 to the beginning of 1819, demand liabilities at the central bank fell from $22 million to $12 million (Dupre 2006, p. 272) and the total money supply fell about 28% (Rothbard 2007, p. 89).

Insolvent banks and overextended debtors alike collapsed, while prices, no longer pumped up by the bubble, raced downward to their equilibrium. As the money supply cleansed itself of the bad apples, time and effort had to be paid so that the flow of funds could adjust back to their best uses, following prices as their guideposts. It was a massive, countrywide downturn, and introduced a slowly industrializing America to a new experience — mass unemployment.

Compared to now however, the state and federal politicians did basically nothing to "help" the economy recover from the Panic of 1819, yet by 1821 the economy had begun to get back on its feet, which must seem a stunning outcome to anyone burdened with a degree in economics.

The quote above is taken from this article about the recession in USA in 1819. The political policy measures taken in this recession compared to the "action filled" recessions of 1929 and today's recession give a very strong indication of what politicians should do today to get us out of the recession: Nothing.

Well, repeal some laws, e.g. tender laws, but basically whatever it takes to fiddle as little as possible with the economy. A lesson that points the way forward? Yes. Lesson learned? No.