Thursday, December 18, 2008

How to treat a recession I

In my last article I argued that recessions are actually a good and desirable development and should be greeted whenever they occur. However, I admitted that recessions are connected with temporary hardships that ought to be overcome as quickly as possible.

Quite a number of people put their trust in government to accelerate the process. So I figured I better start a new series: a handbook for the aspiring central banker and bureaucrat to find out how to ruin an economy in transition, in other words, what NOT to do.

Today we shall start with a popular magic trick out of Mr. Keynes' cylinder: deficit spending.

The reasoning behind running up debt to become wealthy is the idea that recessions are not caused by far-reaching shifts in customer preference patterns, but by "uncertainty" and "confusion". If people can be manipulated to spend money faster than they would under true market conditions, this is seen as a success and the correction of a "market failure". Keynes doesn't want to wait until markets have adapted in the long run to what customers actually desire because "we're all dead in the long run".

Debts can be repaid in boom periods, Keynes assumes. That way, we get the best of both worlds: a stable economy and zero public debt.

However, Keynes doesn't answer the question of how to determine which public works program that we need to go into debt for will yield a sufficient profit so we can repay our obligations. Obviously, government doesn't follow the price mechanism - it would be unnecessary otherwise. That leaves political/ideological projects and socialized industries as areas to invest.

An example for an ideological project would be renewable energies. You can pump a lot of money into it without clearly defining your aim. Do you want long-lasting home generators for survivalist-minded folks in the outback, or high-performance cells with a relatively low shelf life for emergency use in factories and offices? Or do you intend to replace every non-renewable energy source in the country with wind parks and solar panels? You need to calculate your budget accordingly, and need a good reason why your specific purpose is more worthwhile than any other use (e.g., researching waterproof solar panels for diving purposes). It's a subsidy in any case, however, and yields no expected positive return. Otherwise, the market would do it.

Socialized industries include, but are not limited to, streets and police. One might wonder how building more streets or hiring more cops is going to boost profitable trade and commerce. As I explained above, there's just no way to determine and thus, no way to promise that debt incurred during a period of economic adjustment will ever be paid back.

And that's exactly what's been going on ever since. A lot more debt during recessions and a little less more debt during a boom. Interest needs to be paid for this debt in the future, this will drag down economic development since taxes need to be levied or money needs to be printed which will lead to inflation, a hidden tax, in order to repay it. Deficit spending is a vicious cycle.

In addition, government needs to borrow somewhere to finance its deficit spending. Even though credit markets have been extended ridiculously through fractional reserve banking and the Fed itself, there is still no unlimited amount of credit available. If government buys up all the credit, this drives up interest rates for private sector businesses in need. They may not get the loan they need and go bust. This is called "crowding out".

Anything more to say about it? Government deficit spending ignores your personal subjective value choices, sacrifices long-term, but stable business plans for short-term, debt-based ones and levies taxes on your children's future. In other words: hands off !

Monday, December 15, 2008

All hail the recession !

First, I'd like to apologize to my dear readers for being unproductive over such a long time span. Lack of inspiration, business in out-of-blog life and general tiredness kept me from writing.

Today, however, I feel like commenting on the craze of the day: claims that someone finally "get us out" of the coming recession.

It is a generally accepted view that recessions are bad. 'Something' ought to be done about them, we are told by all the concerned-looking pundits, otherwise we might face the full impact of the bust. And that is, supposedly, "bad" for "the economy".

That may be true in Bizarro World. On Earth, a recession indicates a reallocation of resources away from seemingly unproductive enterprises to those which actually satisfy customer demands. Various shifts in preference patterns may occur: market participants may either change their preferences for certain goods and services while remaining in the same time preference pattern, e.g. change their fondness for chewing gum to a liking for white bread, or alter their time preference altogether, e.g. stop buying video games and instead save for a house. As long as this happens in small doses, the impact of the reallocation is hardly recognizable. If, however, for some reason a large amount of market participants decide to switch from popular industry A to unpopular product B, markets need to restructure on a grand scale.

This, in turn, leads to temporary inconveniences such as unemployment, wage reductions, short-time work (or overtime) or business failures.

Think about it again: politicians, economists and pundits generally support fighting this process. How does that make any sense? It is not some bad voodoo that tends to haunt our world for an unknown reason from time to time, but simply markets reacting to future trends and expected modifications in supply and demand. So why would they want to stop it?

Of course, the argument "it's bad for the economy" holds some truth: it is bad for those entrerprises that are expected to undergo enormous changes or go bust due to production of goods or services that are not in demand (anymore). Nobody wants to leave a front row seat in the ride of life, but we have to decide at some point: Do we want an economy that produces goods and services according to market demand, or a museum economy which reflects demands and speculations of the past, but is unwilling and unable to adapt to our changing wishes and needs?

If you don't want to live in a museum, you'll be just as glad as me to see the recession unfold. Gas prices dropping, house prices dropping, commodity prices dropping in general, laggard companies like GM that have been more busy meddling with Michigan politics than producing neat cars for decades threatened to be finally gone for good, Ponzi schemers like Bernie Madoff going broke as well and, maybe of paramount importance, politicians that are too busy "fixing the economy" to think about going to war another time. I might be wrong with that one, but at least it's a reasonable hope.

Thus, as the headline said: all hail the recession !

Saturday, October 18, 2008

Wisdom of the Acorn

A few weeks ago, this YouTube channel, called "Wisdom of the Acorn", was brought to my attention. It has produced quite a few amusing cartoons since then. I recommend watching all of them.

You may need to turn up your speakers a lot, though, since audio configuration is still improvable.

Friday, October 17, 2008

Hollywood wants your vote

Every election cycle we're being bombarded with requests and encouragements to "do our civil duty", "let our voice be heard" or "make a change". We're talking, of course, about voting. And just as it happens to be, many of our favorite Hollywood stars have taken their time this year to inform us about the importance of playing the state game. Let's hear what they have to say:

"This is one of the biggest financial disasters in American history!" - "Why would you vote?"

Of course, they intend to be obviously ironic, but from a libertarian perspective, this is deadly serious. Voting out of the financial crisis won't work, no matter how flowery the promises. Politics in collusion with big banking and big business started the crisis, and politics in collusion with big banking and big business is ready to prolong it and bail out the unfortunate casualties of this financial war game. For more information on the details, see this by Roderick T. Long for a short overview and this by the Mises Institute for a really comprehensive understanding of what happened.

So, indeed - why would you vote if you really care about the economy?

"Because who cares about your children's eduation?" ... "Reading? Literacy? Really?"

Indeed, who among the ballot crooks cares about your children's education? What is government doing about literacy, except diverting funds inefficiently?

I'd really like to know where the idea originated that government should care for schooling. Government is just as apt to care for schooling than it is apt to handle indoor plumbing. Why would you entrust a bunch of tenured lawyers, carnival orators and general do-gooders with raising your children? What a strange idea in the light of facts.

"Who cares about global warming and the fact that our global ice caps are melting?"

Quite a lot of people. But as I pointed out in my last post, government is not able to "restore climate justice" because it has never existed. Every state of climate favors some at the expense of others. Furthermore, we cannot even exist without fueling this "injustice" since the need for breathing and other basic human activities contribute greenhouse gases to the climate equation.

What you can do is try to convince people why one state of climate might be more beneficial to them than another. But always keep in mind: you can be wrong. That's why you shouldn't employ government force to promote your world views.

"Who gives a shit about terrorism?"

I'd recommend a read on blowback and American military history to find out whether another "commander in chief" will "get us back on track", or rather not.

"The right to choose, the right to life, any right ..."

I wonder whether the excited woman stating this actually believes that I need to genuflect before government for my right to life, or my right to choose, or, indeed, any right.

If so, I'd recommend reading the Declaration of Independence to find out on what premises the American government ought to rest, and then a little pondering about the contradiction in forcefully expropriating citizens via taxation to "protect their rights and property".

"Who cares about the War on Drugs?"

Indeed, that should make you think whether you really want to vote: for 20 years now, heavily armed police troops have been kicking in doors of peaceful pot users to put them in filthy jails where they are likely to get raped by real criminals and often start a criminal career themselves, all on behalf of "morally conscious politicians", elected by the concerned people of this fine nation.

The War on Drugs - voting's finest brew.

"Who cares about Darfur?"

How often has governmental military interventionism in the absence of a previous aggression helped, and how often has it created bigger problems in the aftermath? Who says we need politicians to solve this?

"Nobody's listenin' to you, so you know what - fuck it."

That's actually a good statement.

"Don't vote unless you care about healthcare."

Governments have always played a key role in making treatment unaccessible for the needy so they could buy them with their control scheme later on.

If you care about healthcare, better avoid the ballot box.

"If you care about gun control ..."

Now this was to please your average liberal watcher, wasn't it?

"If you care about forcefully preventing people from buying means of self-defense, then VOTE !"

"Women's rights, civil rights ..."

... are individual rights or no rights at all, and thus violated by the very premise of government: taxation.

"Rising gas prices ..."

... are mostly rising due to an inflationary monetary policy and taxation. Even if this were not so, government could only cause production bottlenecks to occur because government doesn't produce oil.

I won't go on here, you get the picture. Famous people who have accommodated to the existing status quo, the all-powerful and all-regulating state, want you to join their happy ban-and-tax festivity so it can go on for quite another while. I don't assume bad intentions by any of them, but by luring people to the state apparatus, they're willingly supporting a system that gets more intolerable every day. Thus, take their ironic advice serious and "just don't vote".

Wednesday, October 15, 2008

A libertarian approach to climate change

This is a topic I've been pondering about for quite some time. Climate change, should it indeed be mainly caused by human emissions, challenges conventional libertarian doctrine and forces us to think in terms not directly related to life and property. Homesteading the atmosphere is hardly possible, and attributing "fair shares" would require a literal shutdown of privacy to be enforced, aside from the practical difficulties it bears.

So, what is to be done about climate change, granted that human emissions do have as much impact on it as is generally presumed?

First of all, to record a change, one must choose a starting point. Problems begin to arise here: which state of climate is to be considered the starting point that is to be maintained? If human emissions like carbon dioxide or methane are indeed a major driver behind climate change, then any point in the history of human civilization will show us a distorted, mutated state of climate. Even in a completely de-industrialized society of hunters and gatherers, emissions from human activities like breathing or stool will alter the world's climate. If the goal is to return to a state of climate completely untouched by human activity, then the only proper solution is to annihilate the human species. Any ethics that concerns itself with the arrangement of human affairs cannot support such a conclusion.

Thus, our first observation is that human activity alters the climate, no matter how sophisticated or simple the pursued lifestyle is. Any struggle against climate change must therefore limit itself to achieve gradual changes, no total abolition of human-caused distortion.

Which leads us to the question of justice. Every state of climate favors and disadvantages certain regions. One might guess that a warmer climate will defreeze certain areas around the poles, making them available for homesteading and productive use, while on the other hand causing some islands to be swallowed by the sea. Vice versa for a cooler climate, of course. As I've pointed out above, we need to determine a certain point in climate history that ought to be conserved as "good" or "fair", but in the presence of human activity, such a choice must be purely arbitrary.

Why, for example, should we aspire to conserve the climate of 1999 when in 2009 property distribution might already have adapted to new climate conditions? Wouldn't that victimize 2009 property owners for the benefit of 1999 property owners? Even if 2009 property owners benefitted at the expense of 1999 property owners in the first place, the same would also be true for 1999 POs compared to 1989 POs, 1989 POs compared to 1979 POs and so on. Again, any arrangement as to which state of climate ought to be preferred must be purely despotic.

Unfortunately, this distinction is never actually made when the issue of climate change is being discussed, at least I haven't noticed it. Part of the blame goes to environmentalist ideology which claims that more human activity, i.e. more human emissions and thus more climate change, means more harm. This is false. Changes in our global environment abet certain areas while at the same time victimizing others. Environmentalists attempt to find an "equilibrium" state of climate which grants the same amount of advantage to every party involved, and by doing so engage in the same Sisyphonian endeavor that has been plaguing economics since almost 200 years: the desire to centrally manage a volatile, highly complicated and spontaneous order, the commitment to do good by force. Has it ever really worked out?

Of course, this theory doesn't invalidate generally established rules on property and pollution. Neighborhood pollution is an avoidable nuisance and should be treated as such. Climate change is not avoidable and must therefore be subjected to more appropriate treatment.

Talking about treatment, there are ways to influence human emissions and thus, to an extent, maybe even climate change itself. Obviously, changing one's own living habits is the straightforward way to start, but discriminating carefully to promote "eco-friendly behavior" will also set incentives to pursue a more desirable lifestyle. Note that "more desirable" is a subjective choice, since, again, different states of climate bear different results concerning winners and losers.

One reason why we shouldn't leave it to government to discriminate is its inability to react to new discoveries. Take, for example, this "Dust to Dust" study on car energy consumption. As it turns out, hybrid cars consume a lot more energy than previously assumed due to costly production and recycling processes and comparably low durability, at least according to this source. On the other hand, small-size trucks appear on the eco-friendly end of the scale for their simple setup, fairly low repair rates and relatively high "life expectancy". Unsurprisingly, this discovery received little to no attention in the mainstream media. Some people tried to refute it, which is good. Struggle of ideas, thesis-antithesis-synthesis and so on. Government can't accomplish that; government says "so be it" and goes on to receive the money. Little room for innovation is granted.

While not regarding this as a final analysis of the topic, I would certainly urge governments to stop politicizing climate change. It is out of their reach, and every attempt to "preserve justice" by collecting more taxes or creating more regulations will only add to the existing arbitrariness.

More thoughts to come in the future, hopefully.

Tuesday, October 14, 2008

Paul Krugman's Nobel Prize

Knight_of_BAAWA on the Mises Institute forums has it right:
They should give the Nobel Prize in Biology to Kent Hovind.

Saturday, October 11, 2008

Discrimination III

Yes, it's discrimination weeks at Road to Rothbard's. Today's special menu will be this fallacious argument:
If we repeal affirmative action legislation, people will be left free to give in to their bad prejudices and we could witness a renaissance of segregation of black people in the South, or a reawakening of systematic discrimination against other minorities in other parts of the country/world. Affirmative action is a check and balance against such behavior and should thus remain intact.
As is the case with many "right on first sight" arguments, this one starts out with a correct premise, but employs too little thought in drawing conclusions.

Indeed, a repeal of anti-discrimination legislation would restore property owners' rights to invite and refuse anyone to/from their property, just as they see fit. Theoretically, this means that these property owners could give in to their bad habits and act stupidly in denying people access for silly reasons.

It is, however, a noteworthy fact that whenever discrimination against a certain group of people occured on a wide scale, there was legislation backing it. Be it Jim Crow laws directed against black people or the infamous Nuremberg Laws, among many other pieces of legislation, to expel Jews from German society, methodic discrimination, as it seems to me, exclusively happened with the help of the state apparatus.

Why is this so? Why wouldn't racists or anti-Semites just keep on raving about their enemy of choice, refuse to trade with them, and leave everything else as it is?

You see, with every further discriminating employer/property owner/customer, the cost of discriminating for a "non-discriminator" increases. Suppose there are 3 employers, you and two competitors. These competitors suddenly decide to lay off all Jews they employ. The pool of Jewish workers seeking employment suddenly increases which enables you to hire Jewish workers at a lower price than before. This will grant a Jewish applicant a possible advantage compared to a non-Jewish contender. Furthermore, among those laid-off workers there might just be a number of potentially indispensable talents nobody would fire in their right mind. These geniuses will be glad to work for someone who judges them according to their abilities, not their religion, and will thus give your enterprise a head start.

The same principle applies for housing, restaurants, liquor stores and everything else. Every practicing hater will only increase revenue for open-minded and tolerant folks, thereby willingly disadvantaging himself.

It should also be mentioned that not only will the discriminated minority avoid doing business with a discriminating businessman, but sympathizers of the disadvantaged group might decide to spend their money elsewhere as well. Depending on how apparent and how devoted somebody discriminates, this may cost the discriminating person a business, workplace or social reputation in no time.

Employing legislation to force one's own discriminatory views on everyone else socializes the cost of discriminating. If hiring Jews is banned, nobody may take advantage of an anti-Semite's behavior. Overall revenue is likely to decrease due to this policy, but it decreases for everyone equally and thus makes discriminating parties better off than they would be on a free market.

Affirmative action legislation, however, grants the moral high ground to people who shouldn't be in charge of it. A practicing anti-semite or racist may now say: "Look, force is used against me to prevent me from living my convictions. This is highly immoral. Compared to this, my racism/anti-Semitism/whateverism isn't much of a problem, is it?" Instead of effectively targeting haters by ostracizing them and refusing to support their businesses and endeavors, we allow them to play the role of martyrs. Nothing short of undermining our own efforts if you ask me.

In conclusion, we might say that government power is the origin of, not the solution to widespread discrimination. Free markets provide huge incentives not to discriminate according to race, religion, gender or other personal characteristics, and punish those who do. However, banning such discriminatory practices by law allows those with despicable attitudes to play the victim. That shouldn't be our objective at all.

Friday, October 3, 2008

Discrimination II

I attempted to demonstrate in my last post why the practice of discrimination is not the infathomable evil that it is often being portrayed as, and how one can combat unjustified discriminatory practices without employing government force. Today I'll address an "anti-discrimination argument" I've been hearing a good many times lately:
Sure, people may discriminate against others in their own houses or flats. But if you open a business, you tie yourself to the general public by offering a service that everyone might want to enjoy. You're accepting a certain liability to further the general welfare (since this is what a national economy should be about), and thus can't just discriminate randomly as you please.
I'm not trying to water down this argument by making it appear strange or foolish. I was surprised myself that people would sputter this plethora of non-sequiturs. But they did, in different varieties, so I'll gladly comment.

The first sentence is most certainly correct. Property owners have a right, and even a responsibility, to discriminate. If property owners didn't discriminate carefully as to who they grant access to their property or who they entrust with taking care of it, they would effectively promote morally hazardous behavior. Noisy, shameless, violent and reckless behavior would become more common as there would be no incentive to temper these bad aspects of human nature. Civilization relies to a certain extent on the practice of discrimination.

However, the dichotomy between private-private and private-public property is false and philosophically unsustainable. Either you own a piece of land and act as sovereign, or you don't. It's irrelevant if you design this property to be specifically yours or a place for others to congregate.

One reason why this confusion occurs might be the somewhat subtle way of contracting in social environments such as restaurants, bars etc. When a restaurant owner opens the door to his property for everyone to step in, he's not automatically granting everyone access. He's signaling his willingness to enter negotiations as to whether he wants to serve a requesting customer or not. These negotiations are resolved by the first impression of the potential guest to avoid embarassing conversation. It is next to impossible for a restaurant owner to know the curriculum vitae of all potential customers, so he needs to discriminate according to superficial factors. This discrimination is necessary for two reasons:

1) The desire of other customers to dine in a quiet and relaxing atmosphere.
2) The desire of restaurant owners to serve the least troubling customers. It's a big relief if you don't have to watch the behavior of your clients all the time and may instead focus on doing your work.

Obviously, discrimination practices vary according to the setup of the business. A bikers' bar might have different demands when it comes to customer selection than a noble lounge. Some places may not discriminate at all. The point here is that it's not necessarily bigotry or hate that drives discrimination, but plain and simple business reasons or worries about general customer satisfaction.

Secondly, "social service businesses" like restaurants are not giving out general permissions to use their facilities when they open their doors. They merely express a desire to enter contract negotiations. The style of these negotiations may not resemble its general perception, but it is a negotiation nevertheless. No tie to the general public made, except the wish to enter contract negotiations with them.

To further the general welfare is indeed your objective as a restaurant owner, but probably not in the meaning that's most often talked about. You're supposed to offer goods and services in a manner which pleases potential customers so much that they are willing to trade certain amounts of money for it, which in turn lets you gain a profit. By that, you're contributing a whole new niche or segment to the local economy which, should it be making a profit, represents an achievement people value and may thus be described as your "fair share" of the great collective whole. The means to achieve this goal may involve discrimination as we've pointed out above.

Discrimination in privately owned places is therefore legitimate, no matter whether these places are private houses or private hang-out-places.

Thursday, October 2, 2008


Certain words in the English language are picked from time to time to completely distort their original meaning and make a negative buzz word out of them. "Climate" is one example. A couple of years ago, talking about climate meant describing certain weather conditions. Today, climate is some kind of code word for heralding the impending doom. "Climate deniers" are those who'd prefer not to drink the kool-aid, to be cast away and scorned. "Climate policy" means laws regulating the weather. You know, laws regulating the economy and people's personal lives worked so well that you might just try to wisely guide "the climate" as well.

But I'm digressing. Another famous example of restructuring the meaning of a word is "discrimination". A discriminating tradesman would denote a hard to please market participant in earlier times, today you'd rather think of a hypocritical white evangelical racist bigot who refuses to sell to homosexuals.

Of course, "discrimination" may legitimately be used in that sense as well. What bugs me is the automatically negative reaction connected to this meaning of discrimination.

Shockingly enough, you discriminate all the time every day of your life. Reading this blog instead of others discriminates against them. Using the internet browsers you do discriminates against all the other browsers available. Buying at the grocery store with that cute little blonde working at the counter discriminates against all the other grocery stores that decided to hire less attractive personnel.

No big deal, you say? That's discrimination based on quality as opposed to discrimination based on hypocritical white evangelical racist bigot factors? But where's the difference? Some people eat with spoons made by their kids in crafting class even though these might obviously lack quality compared to spoons created by professionals. Here you have discrimination based solely on emotion, still nobody would consider banning such behavior.

Let's take another step forward: Isaac Goldbaum (don't we all love stereotypes?) just migrated from Israel to the US where he opens a little bakery. He needs an assistant to do minor tasks for him. The only applicant is a muslim. Unfortunately, Mr. Goldbaum's family has been killed by a muslim suicide bomber which makes Mr. Goldbaum decide to refuse the applicant and do it all by himself instead. Would anyone want to force poor Isaac to act otherwise?

And now we put the icing on the cake. Rick Redneck runs a shooting range. Due to his personal preferences concerning people, he's put a big sign on the perimeter that reads "Only white evangelical bigots allowed".

If you consider that to be obnoxious behavior of Mr. Redneck, you're probably right. Still, you lack philosophical ground arguing for a ban of such actions if you didn't mind browser discrimination, shop discrimination, emotional discrimination or discrimination due to personal history. You yourself might want to discriminate against Redneck's shooting range so he'll run out of funds in due time. But using government force against Rick to bar him from using his property according to his wishes would grant him the moral high ground. You don't want this to happen, do you?

Saturday, September 20, 2008

Free markets and morality II

Today I'll try to counter a somewhat tricky "ought to" argument that is sometimes yielded against free markets. It is often answered by pointing out its subjectivity ("you may consider that to be bad, not everyone does"), but I think there's a better approach to the topic. Anyway, our concern today is this:
Free markets create a dull kind of consumer culture. People lose their intellectual capacity and fall for cheap and quick pleasure. Thus, even if free markets were superior in producing goods, they are bad for humanity and its progress.
Prima facie, the assertion of the argument (free markets create a consumer culture) appears to be valid. After all, we see advertisement, consumption and shopping rushes all around us, and we're constantly being told that our system of trade constitutes a free market.

But free markets generally lack forced expropriation of wealth produced, also known as taxation, especially in the amount it is occuring today. Add to this an increasing insecurity as to when the next expropriation raise will happen and how big it will be.

There's also the state-caused danger of being victimized by a terrorist attack aimed at hurting a certain collective. Let me elaborate. Whenever you hear someone saying that he "hates the West" or "Western values" or whatever, for whatever reason, this includes you. You may never have met that person, nor desired to hurt the person in any way, but your government has or is at least considered to be a threat. Since you cannot withdraw your consent from being subject to your particular government, you'll be associated with it. So, especially in an age of Western imperialism and warfare, the danger of being hit for no other reason than living where you live increases. This sets no incentives for future-orientation either.

Public schooling is hindering the development of farsightedness and forward planning as well. As I pointed out in my last entry, public schools create peculiar kinds of habitats which resemble prisons to a certain extent and which teach students how to be popular and how to worry about short-term goals like the next exam, but rarely about growing up and taking responsibility. You'll notice the difference in self-reliance when comparing a homeschooler and a public school inmate of about the same age.

These three factors are, in my humble opinion, the biggest contributors to a high time preference or present-orientation: great levels of wealth confiscation and legal uncertainty, an increasing number of government-created dangers and perils and institutional depravation.

None of these are the outgrowth of a free market, as my readers may already have noticed. Of course, this attribution may just be my random opinion, an unconvinced opponent of the free market may now say. How can I be sure that free market economies are not the main culprit for social disintegration?

Well, based on the observation that humans act, we have to assume that humans structure their actions since we cannot fulfill all of our goals at the same time. In other words, humans have to prioritize their actions. Highest priority means highest importance, highest incentive or highest inclination.

Contrast the two scenarios:

a) A has complete control over all of his assets. He can be sure that no person X or Y will keep him from investing as he pleases.
b) B has partial control over his assets. He cannot directly influence the distribution of those resources that are taken away from him. He doesn't know how many resources he will be allowed to keep next year.

Which person has a greater incentive to spend and consume right now instead of saving and investing? Thus, which person will be more inclined to engage in consumer culture behavior?

a) A is responsible for his own behavior, not for the attitudes and actions of others. If his neighbor publicly insults any group of people, they will focus their anger on his neighbor rather than him.
b) B, while not being responsible for the behavior of others, will be associated with it as long as they inhabit the same country as B. Since B has little control over the behavior of all of his countrymen, let alone his government, he has to assume to be hated by others without really knowing why.

Which person has a greater incentive to behave irresponsibly since the cost of behaving badly can be partially socialized? Which person will see the future and thus future investment and future-orientation more favorably?

There is little incentive for a person living in a system of free trade and free association to behave irresponsibly, both personally and economically. Carelessness and headless behavior occur when the state mechanism sets in. Frédéric Bastiat said that "the state is the great fictitious entity by which everyone seeks to live at the expense of everyone else". Threatened by such a monstrous devourer, people tend to become present-focused as they figure there might not be much time left before the monster gets too big. They also tend to focus on playing the state game rather than being productive.

All this leads to a dull-minded consumer culture. Who cares about education if you can enjoy yourself? Who cares about farsighted decisions if the future most likely sucks? Rather drive that sports car now than expand your enterprise, can't compete against state-protected corporate giants anyway.

Once again, it is thus the state that is to blame, not the market.

Wednesday, September 17, 2008

Public school rant

Public schools are by far among the most obnoxious and pretentious institutions around. Imagine the hubris: some school bureaucrat forces you at gunpoint to pay him for compiling a curriculum according to his own preferences and value judgements, then he forces you to hand over your children so he can spoonfeed them with his ideology. Should you refuse to comply, the bureaucrat's armed friends will pull over and lock you up after they've kidnapped your children. If you're lucky though, you'll only have to pay the bureaucrat and give a good excuse for why you want to keep your children out of his reach.

I've spent 13 years in public school myself. Indeed, I did learn quite a lot. I consider these lessons to be especially important:

1) Government personnel tends to care far less about your wishes and needs than people who must rely on your voluntary cooperation to stay in business. In fact, an astonishing number of government henchmen consider it to be a benevolent action on their part to actually work for their money.

2) Education must be boring. Teaching must happen in a specifically designated building under the supervision of government employees. Learning outside of government territory requires previous training in a state-approved institution.

3) To be a good citizen, I will learn a lot, study hard, get a good job and pay my taxes. And cast a ballot for the right guy every four years or so.

It's a big relief for naysayers like me to get in contact with homeschoolers and see children getting the opportunity to discover the wonders of life outside of an uncomforting prison atmosphere. And if you think about it, "prison atmosphere" hit the nail right on the head. People get raped in prisons by inmates and sometimes guards, students get (psychologically) raped in schools by classmates and sometimes teachers. Prisons give rise to a culture of group segregation and fear, so do schools. Prisons are likely to create broken and dull minds, so are schools.

Of course, humans tend to romanticize the past, increasingly so if it's been a few decades. Everybody remembers that funny fella in sixth grade who would always crack a dirty joke. Oh, and prom night for sure. Few question the logic behind public schooling since a) nearly everyone's been there and b) many have been habitualized to believe that public schooling is the pillar of wealth and civilization. Reality's a tough act to follow sometimes.

Now, after I've been bitching around for half a page, I owe my readers some thoughtful refutation of common arguments in favor of public schooling. I'm really sorry, but I don't know where to begin. The idea that children must spend more than a decade in a bureaucrat boot camp completely detached from reality to learn "general knowledge" and "social skills" seems to me like a yellow turtle with five legs.

One thing, however, should be recommended: please read "The Underground History of American Education" by John Taylor Gatto. You can find the whole book online here. If you've ever found public schooling to be somewhat smelly, you'll be told the reasons in this great and exciting opus on public education.

Sunday, September 14, 2008

On reformism and revolution

In my last post I laid out a three-step plan which I described to be a possible road to a libertarian society. This plan involved, to some extent, political action. It is therefore often branded as "reformism". Niccolo from Catholic Market Anarchy, for example, has found pretty harsh words for "guys like me":
Conflating their system with one of incrementalist phases, claiming a monopoly on a realistic approach to change, the reformists, narrow minded and pompous, shut off completely to external logic and consistency in favor of the compromise of a crazed lunacy that suggests the nature of an entity can be overcome by the will of a handful of old men spitting and drooling into their couch cushions every night in their father’s mothball filled coats – still that’s progress from not knowing where they were sleeping to begin with.
Apart from such ungentlemanly rants, however, he still has a number of points worth considering. In short, he claims that states and their minions will always have a tendency towards more oppression, exploitation and general decay and thus, every attempt to minimize or abolish them from within must fail.

I partially agree. I consider it pointless to try to shrink the state massively from within. There is too much vested interest, too many roadblocks hindering you. The only way to stop the expansion of the state in some areas is to use roadblocks yourself, as I proposed in my last post when I encouraged people to elect decent people into local offices to impede the enforcement of harmful legislation. This uses the state's planned chaos and inner inconsistency (the reasons why government tends to screw up big time at everything it does) against itself. To hope for more is pretty much make-believe indeed. Even though Ron Paul's presidential bid might have awoken this hope in a number of people, the chances for America to "return to its founders' intent" don't exceed 0 by a lot.

Talking about Ron Paul, I'm often flabbergasted as to how much hostility is brought up against him among libertarian purists. Sure, I'm biased because it was Paul who turned me over to libertarianism, but to consider his campaign a grab for power is lunacy. He did what I recommend, too: he used the self-important state apparatus and its extensions, namely the presidential election circus which already tends to flare up 2 years before the actual election, to throw in some important issues besides the usual quip about candidate A's sex life and B's haircut.

I guess he didn't expect too much from his education campaign and just wanted to fulfill his duty. But to the contrary; many mainline conservatives and watered-down libertarians, even some disenchanted liberals, were ready for the doctor's shock treatment. He caused something big to start rolling. That's his contribution. The fact that his campaign sometimes became what it tried to fight against, political pandering, is sad but not necessarily related to Paul's aims and convictions. After all, he delegated a lot of responsibility to his campaign staff. No excuse, but an explanation.

One last point. There will be no libertarian society as long as a critical mass of people still believes in the superiority of the state. This belief is communicated very early in public schools and is also touted by the government-corporate media complex. It's self-enforcing as it is being held and expressed by a crucial number of people. It is therefore not just a nice idea, but probably essential to use traditional state institutions in our struggle against the state apparatus. To inform themselves about the possibilities of social change, people will not go to the library and read Rothbard, as some libertarians tend to imagine, but watch TV talk shows and political debates. "Our guys" need to be in those programs to reach out to an increasingly disaffected, but mostly misguided citizenship. Political action and speech, as dirty and mindless as it is, still remains an important vehicle to carry out freedom's message (note that you don't have to be in office to engage in it).

Thus, reformism, as scorned and hated as it may be, still remains a way to follow as long as practicing agorists count as a minority among the minorities.

Saturday, September 13, 2008

Undead ideologies (and how to combat them)

It's hard to believe sometimes. Just 18 years ago, one half of the planet was suffering under socialist gridlock. Finally, the pressure became intolerable and the masses flooded the streets, demanding liberty. Those bureaucrats and apparatchiks who would mercilessly beat down riots a couple of years ago were now stuck; nobody had confidence in their empty promises anymore, the vast majority didn't care about obeying orders. This proved the crucial point that government solely rests on the good faith of its subjects.

The Soviet Empire imploded pretty soon after that. Maybe it was this unexpected vanishing of their ideological adversaries that left liberty-oriented people worldwide in a shock at the wrong time. All the rhetoric about how the USSR would outperform free markets, about a thriving socialist commonwealth, happy people everywhere, suddenly clashed with reality. Poverty-ridden peasants in a run-down environment with feces spilling out of the sewers (sorry for being that graphic here) were on the TV screens of middle-class people in the free world. Soon after, gulags and all the other cruelties of Comrade Stalin and his fellow revolutionaries ascended from the Soviet archives. Word of socialist tyranny was spread around everywhere.

Socialism, to put it mildly, had failed epically, and everybody knew it.

Not even two decades later, socialism appears to be as fit as a fiddle. While politicians in the US still feel a need to employ liberty-related rhetorics ("the ownership society" etc) to sell their collectivist concepts, goold ol' Europe is increasingly lusting for the total state, both in practice and in speech. In an odd and alarming way, it reminds me of the time between World War I and II, when fascist-authoritarian statists would battle state socialists on their quest for power.

But why, I often ask myself? We had fascism in various colors, it failed. We had socialism in various colors and it failed as well. Shouldn't we move on, then, just maybe?

The reason why we still have to deal with a false dichotomy between fascism (better known today as neoliberalism or neoconservatism, the fusion of state and Big Capital) and socialism (the expropriation of capitalists by the state) is the lack of libertarian courage, especially in Europe, to present solutions which do not include state action. More generally spoken, libertarians lack attention at all. Libertarians had a once-in-a-lifetime opportunity to step into the spotlight and show the way. After all, libertarian theory is one of the most sophisticated and straightforward doctrines out there. But did they?

Fortunately, in some cases, it was done for them by others. I'm thinking especially about (and please don't hate me for saying this) Larry Hunter's Contract with America. Even though conservatives are scorned as impure renegades among a number of libertarians, we owe them a favor for pushing liberty, at least in a rhetorical way, when the time was right.

Some claim this actually hurt the cause of liberty since it watered down its original meaning. While that may be true, it caused , in my opinion, a more important thing to happen, it laid the foundation for a more advanced libertarian philosophy among the general public. How do you think was Ron Paul able to rally so much support with so little backing in the mass media? He simply reaped the fruits of a decade of conservative inconsistency: while people did desire liberty, they realized that Republicans, though they liked to talk about it, wouldn't support the idea in office. Paul appeared to be a guy who would, having a pretty much pro-liberty voting record and resembling the philosophy of individual responsibility in his own life.

If Ron Paul tried to communicate his radical classical-liberal philosophy with the average European audience, he wouldn't find too many listerners I'm afraid. A mass-movement as it has formed in the US could hardly be reproduced. After literally a hundred years of fascism, socialism, social democracy and big government conservatism, people have been alienated from liberty. An approach would have to begin softly, it should believably champion improvements of the situation for the poor, the unemployed and those who live on state welfare, and it would most likely require a popular national figure. Tough job.

The US are a number of steps ahead in the process. After getting people warmed up for liberty in the 90s, now they are being moved to the streets to demand it loud and clear, just as the inhabitants of the Soviet Union did. And as the American Empire crumbles, the next step would be the formation of local landowners' associations (as is already happening in so called Gated Communities) to create alternative forms of organizing society on a small scale until the state, with increasingly shrinking resources and compliance, simply becomes a minor nuisance like bad weather.

But what do we do about all those expensive and worrisome leviathanic projects in the meantime? As for centralized Europe, I can't really say. US citizens should try to fend them off by electing trustworthy people into local offices. "Electing the good guys" is easily said, but it's a lot easier within your community than on a state or national level. As an example of how that would work out, a number of cities and communities have refused to engage in the surveillance activities prescribed by the Patriot Act. Remember, central planners may command a lot, but enforcement is an utterly different topic.

Thus, my three-stage plan for liberty is:

1. Get people excited for it - show them specific examples where more liberty and less state may be beneficial, and try to avoid too much radicalism. You don't want to scare them off.
2. As soon as a general tendency in favor of liberty is recognizable (e.g. in the rhetorics of politicians, rants of your fellow citizens), shift up gears. Make the case for uncompromised classical-liberal statehood. Totally discredit the idea of "more government", energize people even more.
3. When government has lost its glamor, replace it. Make government services dispensable. Openly compete in core fields like security, "public goods" provision like energy production (with cooperatively financed renewable energy, for example) or social security (neighborhood trust funds, or whatever comes to mind).

Be creative. It will be rewarded.

Thursday, September 11, 2008

Spectacular hosting offer

I've just stumbled upon a really interesting file hosting offer:

FileSavr claims to provide a 30-year (yes, year, not day) free premium webhosting service for everyone who signs up until September 15th. 250 GB free webspace for everyone who's fast enough. Just sign up here.

I've registered, just in case. You never know what you need 250 GB space for ...

Sunday, September 7, 2008

With A Little Help From My Friends ...

What would you do if I sang out of tune,
Would you stand up and walk out on me?
Lend me your ears and I'll sing you a song
And I'll try not to sing out of key.
Joe Cocker's famous interpretation of this classic at the Woodstock festival has certainly been a source of inspiration for millions of eager listeners. Quite inspiring are also the vast amounts of money Washington has decided to raise in order to bail out major failing players on the US market, especially if you're a major failing player yourself. This is probably what Detroit's Big Three had been thinking all along, and indeed, now they've come out of the closet.

The last line of the article is, in my opinion, the most revealing:
But he added that "our trading partners give us no choice. Every other major auto manufacturing country protects their industry so we may have to do the same."
This ties in perfectly with the song lyrics posted above. He might as well have said:
Well, they may have done some malinvestments, yes, they kept producing gas-guzzlers for an increasingly shrinking market, maybe they didn't care too much about future planning, but everybody makes mistakes, no? You don't want to leave them alone right now, do you? After all, they're uniquely American car manufacturers. Just lend them a few billions and they'll honestly try to get in touch with customers again.
But seriously, he does make a point. Shouldn't we protect our domestic industries when foreigners do the same for their manufacturers? After all, foreigners will be able to export cheap cars, thus undermining our own efforts. Wouldn't it make sense to face "market realities" and fork some money out for a couple of minor subsidies?

First of all, there is no point in having "domestic car producers" if foreign car producers do the job more efficiently. Whether or not this is the case should be decided by customers and not by central bureaucrats. Now one might argue that tax-subsidized foreign car producers are being advantaged since they can make cheaper offers or include more features for the same price or whatever. To this I say, good for the customer. Taxpayers in a far-away land had to give their earnings to allow for such a great bargain, and Americans would only be disadvantaging themselves if they did the same or refused to take the subsidized offer.

Furthermore, subsidies lower the incentive of producers to improve price and quality conditions. Faced with below-market price competition from abroad, domestic car producers would have a huge incentive to implement even the smallest improvements, thus constantly pushing for the most efficient ways of production, the highest gas mileage, the most economical transportation routes and so on. In short, they'd be working for the customer which is what free markets are all about.

Subsidies, to the contrary, would set an incentive to hire more and better lobbying personnel to make sure the next bailout won't be all too troublesome to get. Car quality would be degraded to second rank, in spite of what all those neatly dressed spokesmen will tell you in the next few weeks.

However, there's still one concern left: jobs. Not subsidizing failing companies may result in a temporary unemployment rate hike. But there's no reason to believe that a) no new car producers would fill the gap (think, for example, of Tesla Motors, pretty much pioneers in mass-producing electric cars [thanks to Opponent for pointing me to this]) and b) people wouldn't find employment outside the car industry. Instead of producing cars that don't sell, people would engage in more profitable endeavors and would thus be doing society a much greater favor than by clinging to (at least for the moment) low-demand industries and products.

And for those (including myself, American trucks and SUVs are sure to draw my attention) who fear their "tough-built big block wonder machines" might stop being produced: there's always room for niche markets. If one of the Big Three, for example, decided to specialize on building heavy vehicles, they'd probably have to cut down on their production lines, but might be able to sustain doing "big car business" on a smaller scale, always according to market demand.

Saturday, September 6, 2008

Cressbeckler for President!

I got a tax plan for ye *spits out* that goes right there!
"Cressbeckler has been living in a mountain shack with no hot water or indoor plumbing, making him a true Beltway outsider."

"Cressbeckler also promised ... [to replace] Congress with a horse that stomps once for yes, twice for no."

Seems like ol' Cressbeckler holds a fairly libertarian stance at least when it comes to domestic policy. You can't say the same of the mainstream candidates, can you ... ?

Thursday, September 4, 2008

More internet insights

Since I shared my views on net neutrality and politicization of the internet with you just yesterday, I was quite pleased to see a similar, far more informed article appear on LewRockwell today.

It's most certainly worth reading.

On the legitimacy of private property

One of libertarianism's cornerstones most certainly is the idea of private property. But what is property, how does it come to be private and who defines the borders? Libertarians approach the topic this way:

Man owns himself. If this weren't so, those who disagree would have to explain who gave them permission to express disagreement and why exactly this circle of persons owns them while at the same time delivering a universal explanation of body ownership. Since this borders on impossibility, we assume self-ownership to be correct. Should man indeed own himself, then he also gets to own his labor, that is the product of his body's actions. But in order to use his bodily powers, he needs something to legitimately refine. This he finds in nature: unowned, unclaimed objects. Mixing his labor with unowned nature creates his own private property which is now subject to his own jurisdiction.

But why should individuals be allowed to claim nature for themselves? It is the only conclusive way of distributing resources. If we desired to establish collective ownership of the land, i.e. nobody owns anything, it is questionable whether we have a right to stand (sit) on the ground we do right now. Who gives us the right? Furthermore, who is to decide on the use of the land in such a society? Government? But isn't government just a number of powerful people and would therefore create just another form of private property in which central planners act as ultimate property owners? Every other shade of collectivist land ownership, be it Gesell's Freiwirtschaft (which Wikipedia, at this point in time, is for some reason calling a "libertarian economic idea") or social-democratic property redistribution schemes, suffer from the same philosophical weakness.

Of course, libertarian property theory is not to be used as an apology for existing property distribution either. Vulgar libertarians tend to do this in defense of corporations quite often. If person or corporation X illegitimately steals property from some native tribe or from poor locals, this most certainly constitutes a crime as well and should be punished.

Wednesday, September 3, 2008

Liberty and extremism

As long as I've held conscious and thought-out views on how to organize society, I have been pretty much an extremist. Throughout my adolescense, I would advocate nationalization of industries as a means for just distribution of goods produced and profits reaped or propose expropriation of those who work against the "common good". Sounds scary for someone who nowadays claims to be a libertarian, doesn't it?

These days, I've switched to the other extreme. I support laissez-faire markets, privatization (not in the corporatist sense, however) of former state property or the abolition of compulsory institutions like the draft, public schooling or even taxes. This attitude has been troubling me for quite some time since a number of acquaintances of mine have been expressing worry about my unyielding stance on things. Some have even stopped arguing with me for my lack of willingness to compromise. Maybe, I thought, I'm just a simplistic moron without sensitivity for exceptions.

However, I've recently developed another more encouraging explanation which I would naturally favor to believe. My hardcore socialist views, as well as my unrelenting libertarian stance, are simply the result of rational deduction from given premises. While being a socialist, I accepted the Hobbesian theory of "homo homini lupus" and the consequent need for a monopoly of force. But I advanced from there: if people really are inherently bad and only work to trick one another, how in the world can we allow a market-based economy and society to exist? This view was reinforced by the Marxist theory of capital accumulation which states that in a capitalist economy, capital tends to concentrate in an ever diminishing number of hands until there is only one great capitalist or one powerful oligarchy left. This, of course, coincided with the view that humans act to fool each other and provided the economic background for the philosophical observation. I just needed to follow the path ahead to consider socialism superior to every free market organization.

Thanks to Ron Paul and several other conservatives and libertarians, I was able to question the Hobbesian premise. If people are inherently bad, how can we allow a monopoly of force to be run by them? This produced a huge crack in my socialist think-wall. As I later found out, among many other insights, about the mutually beneficial nature of market transactions and the principle of self-ownership, I had to change my philosophy in order to stay consistent.

Thus, my extremist views were simply rational deductions from my philosophical premises. Being "extremist" simply meant employing logic. A change in premises may imply differing results which made me arrive at libertarianism.

As Barry Goldwater concisely put it,
"I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!"
Good to know, isn't it?

People's republic of Internet?

About a week ago, members of the German left-wing anti-fascist activist alliance "Antifa" hacked the forums of the racist "Blood and Honour" organization. A German statement, plus links to the downloadable forums, can be found here.

What raised my attention was one phrase in the statement. Translated into English, it says "dear citizens of the people's republic of Internet". I was struck by surprise since I'd never considered the Internet to resemble "a people", let alone a "people's republic". I'm not sure whether this was just a fun phrase used by the notoriously socialist Antifa people or whether some more deeply rooted conviction had been expressed by it.

I tend to favor the latter as there are manifold examples of attempts to "democratize" the Internet. The net neutrality movement is a somewhat famous one. Net neutrality advocates claim that internet providers have no right to suppress certain internet activities on their wires or to discriminate against specific contents or services by slowing the data transmission over their wires. Most internet users would readily agree with this postulate since the internet is now widely considered to be "a public good", something not to be interfered with by single individuals or companies.

But is it really? Is the internet a public good, a democracy or a people's republic?

Actually, the internet is a prime example of a libertarian success story. In a number of ways, the internet may be compared to a completely privatized city. Private road owners (internet providers) connect real estate owners (servers, content hosts). Everything is defined by private property rights; road owners have created agreements on crossings and traffic allocation which allows for the fastest possible and therefore most profitable data exchange. Server owners are free to discriminate against any content they deem inappropriate (for example, quite a lot of hosts don't allow porn on their networks). So are (or were) road owners; they are (or were) free to slow traffic to and from content distributors they considered improper. That's a fine example of a self-governing private property society, but most certainly not of a people's republic.

But the primary difference between the internet and a people's republic is the lack of government. The internet equals a spontaneous order, created and maintained without centrally planned advice. Western governments, while certainly desiring to control and regulate the internet, have so far mostly confined themselves to only intervening when "real world laws" were broken within the framework of the net.

This could dramatically change with the onset of net neutrality legislation. While initially just working towards "net justice" and "securing equal access", government will soon begin to pursue special interest wishes in the name of these formerly named goals, just as "real-life government" now extends to almost every aspect of life even though it had been installed to merely "protect life and liberty". Net neutrality advocates ignore this danger of "legalizing government" and instead trust in the wonders of democracy to secure that "good people are being elected" in order to keep the internet clean and free. Just like it works in the real world, doesn't it?

Conclusively we might say the internet is a libertarian private property anarchy and that's why it has been so vibrant and successful. Every attempt to modify it by government regulation will most likely strangle its self-correcting mechanisms and thus, diminish its seemingly inexhaustible potential. Therefore, keep it clean of legislation !

Wednesday, August 27, 2008

Dear Neocons

With all due respect, but what's going on in your red-white-and-blue brains?

Short story of what happened: I've just learned from Gary North that several US aircraft carrier task forces have recently been sent to the Persian Gulf area without a publicly defined mission. Speculations on why they were dispatched come to vastly different conclusions; some claim they might simply replace currently patrolling carriers, others name the possibility of preparations for an attack on Iran.

Whatever the reason may be, moving considerable parts of one's military forces around the globe without giving a plausible explanation is like setting up a sniper rifle aimed at your neighbor's bedroom window. Or charging at your neighbor screaming "You dead man soon" with a knife in your hand. In the first scenario, it may have been "just a nice garden decoration" and the perceived knife attack may have been you rehearsing for your drama group play, but people will think of you as a lunatic anyway and treat you that way as well.

You may not care about your neighbors, but you better care about the biggest oil exporters in the world that happen to be flirting with one of the most potent resource distributers, Russia. You also better care about world peace, at least for the sake of your (or other folks') children.

What is it that makes neocons so bellicose?

Tuesday, August 26, 2008

Free markets and morality

I've recently come across the same exemplified argument against free trade several times, so I decided to put a few of my thoughts on it down on my blog. The point goes like that:
On a free market, those who cannot pay the price for bread won't be able to buy bread. Thus, free markets rob poor people of their right to life and cannot possibly be associated with liberty.
On first glance, this appears to be valid since it contains an oversimplified, but common definition of a free market and niftily blinds out the alternative. But let's put first things first.

One reason why not every person X can afford good or service Y at price Z is because producer A wants to make a profit. Profit is a personal reward for the entrepreneur which is added to the cost of production. Profits are not immoral as one particular good or service wouldn't be available without a specific person offering or creating it; thus, you are not being exploited by profit-seeking entrepreneurs, but merely award a thoughtful man for producing a good or service you happen to desire. Remember: without him, it wouldn't be there.

Another reason why some goods may not be affordable to certain people may be the cost of production itself. This includes the cost of raw materials, wages, transport and many other factors, and usually exceeds the amount of profit reaped.

So, if good G is offered, without alternative, for a fixed price Y, and person P is only able to pay "Y - x", there will indeed be no transaction happening. That's how enemies of the free market often tend to portray it: as a rigged profit game with winners and losers.

Now for the real story. Prices on a free market are set according to supply and demand. Both sides change constantly, and they mostly do in favor of the customers in an unregulated market. This has a number of causes:

- The easier it gets to enter a market, the more competitors will there be. Competition leads to falling prices as cheaper providers will attract more customers. Government regulation, however, creates obstacles which tend to discourage potential competitors. This obviously hurts the customer.

- Free market means no tariffs. Tariffs are a surcharge on prices created by government to increase its revenue or to protect domestic producers who fear the competition from abroad. As the classic supply and demand curve shows, higher prices lead to falling demand; thus, tariffs lower the accessibility of goods and services. That doesn't feed the hungry at all.

- If nothing hinders the flow of information on a free market, technological advancements will be implemented in the production process as fast as possible. This lowers the cost of goods and services and therefore increases their accessibility. The Soviet economy, as an example, seriously lacked efficiency compared to Western economies which has certainly been caused, in part, by the communication roadblocks set up by the numerous bureaus and planning committees.

Plus all the other things I didn't mention right now. As we have demonstrated, free markets tend to produce the best access to goods and services. Also, there's always room for charitable actions of wealthy individuals who might want to donate to the less fortunate. Charity is part of a free market as well.

To put it in a nutshell, you'll have the best chances of getting your hands on something you want if you live in a free market.

But this didn't solve the original problem, our fellow progressives might say. What if someone really can't pay for bread? Shouldn't the government intervene so this doesn't happen?

Unforunately, laws don't bake bread. People do.

Congress might pass a bill today stating that everyone should own a '59 Cadillac, but that's just words on paper.

In an attempt to conciliate reality with utopia, quite a few measures have been proposed which appear more reasonable at first glance, but turn out to be just as inefficient when it comes to implementing them. We'll discuss price controls and welfare as the most prominent examples.

Price controls are seen as a guarantee for low prices, but they are by nature unable to live up to their goal. As I pointed out before, laws are just words. In order for bread to exist, people have to produce it. They won't produce if it doesn't pay. Whether it does pay or not is not defined by regulations and politicians, but by supply and demand. So either controlled prices are being set high enough for an entrepreneur to make a profit, in that case they wouldn't have been necessary in the first place, or they are being set too low which causes a thing called "production bottlenecks". As it isn't profitable anymore to bake breads, people will give up doing so and do profitable things instead. Now you have low prices and low bread supplies. Doesn't feed the poor either.

Welfare creates a moral hazard and is thus economically unsustainable. Instead of accumulating wealth through the production of goods and services, needs and wants are satisfied by fiat. This doesn't emancipate welfare recipients, but rather shackles and paralyzes them while at the same time slowing progress among those who finance the system. It has the same effect as simply stealing bread and giving it to others: at some point in time, bread-producing people will be fed up and stop working. "If everybody else is given bread, then so will I", they think and the redistribution machine implodes in lack of funds. Those who have been at the receiving end for a long time will be hit the hardest as they need to relearn being productive. Who will feed them in the meantime? Ask that a caring progressive.


Free markets are still undefeated in making goods and services accessible to the greatest number of people. Government regulation and redistribution schemes, to the contrary, produce poverty and misery in the long run. And most imporantly: There is no free lunch. Even if the law says so.

Monday, August 25, 2008

Hayek and the Seminoles

You know, one of my musical passions is to listen to Country music, as odd as that sounds to most "city dwellers". Among my favorite tunes ranks "Seminole Wind" from John Anderson which is best played in quiet and reflective situations.

Of course, I can't help trying to sense any libertarian tendency whatever I do, and so it happened that I noticed this particular line in John Anderson's song:
Progress came and took its toll
And in the name of flood control
They made their plans and they drained the land
Now the glades are goin' dry
In other words, the regular Seminole Indian Joe had been living in soaking wet swamps for all his life, just as his parents and grandparents most likely had. At some point in time, when living in swamps had become unimaginable for average whites, some well-intentioned people with governing powers probably decided it was best to drain the home swamps of the Seminoles so they didn't have to live in fear of floods anymore, and besides it'd sure look like a nice gesture to their suburban constituency.

This, of course, forced the Seminole people to abandon their traditional way of life, and guess what they did instead:
In 1979, the Seminoles opened the first casino on Indian land, ushering in what has become a multibillion-dollar industry operated by numerous tribes nationwide.
And with gambling most likely came all the other side-effects which plague Indian reservations today such as alcoholism or an alarmingly high rate of family breakups.

So, one may ask, was the decision to forcibly change the native peoples' way of life really a sensible step? Or was it just assumed to be helpful, but turned out to be ruinous? This is what F.A. Hayek coined "presumption of knowledge", the hubris of central planners which makes them believe they can judge all the individual results of their one-man (or one-committee) resolution well enough to know it's "good for the community".

Those responsible for the swamp drains probably didn't foresee how people with completely different world views and approaches to life would react to a sudden change in their environment. They didn't get together and said "Well guys, the party's over, let's industrialize", but are now stuck between the ways of their ancestors and shady business schemers whose projects have (illegitimately) been banned outside of native territory and who now make use of the debilitated Indians, as these folks are probably glad about anyone offering any kind of work.

But that's what happened. And that's what is going to happen over and over again as long as we allow individuals with limited knowledge to make decisions that would require a vastly superior overlook. Several measures of improving a planner's overlook have been proposed, including the use of equations, the consulting of various "experts" or planning by majority vote, but all of these merely attempt to conceal the limited abilities of planning individuals when it comes to regulating whole markets, that is huge aggregates of mutually beneficial trades and transactions as well as unplannable price signals.

Indian wisdom still teaches us a lot today, and so does the recent history of the natives. As well as country music, or so it seems.

Philosophical overlook

As this is going to be my first blog entry on "Road to Rothbard", I figured I might introduce you to what I believe and why I don't believe in what you might consider my beliefs to be. Compris?

I desire a thing called liberty. Liberty has probably become one of the most meaningless nouns in the English language. Almost anything or anyone has made use of it in some context or another.

As liberty won't suffice to describe my views, I'll try "individualism". While individualism has also lost much of its appeal due to overuse, it stills conveys the original meaning of "indivisible entities", of people existing as individual beings rather than as a mass or a collective.

In addition to individualism, I believe in self-ownership. Most people do without realizing. However, from self-ownership derive quite a few interesting implications which are seldomly expressed, but hardly to be contested.

If I solely own myself, then nobody else can. That means I alone have the right to control my body, just as the sole owner of a car is the only person which has the right to use it. He may grant it to another person, but he has to consent. Otherwise, nobody may take it from him.

Just like nobody may take the right to use your body from you. You can make use of your body in versatile ways; it can be employed to refine previously unowned nature which, by combining it with your labor, becomes your property. One may ask: true, nature is unowned at some point, but who grants exactly you the right to make it your own? Well, if nature may not be appropriated by any person on his or her own, then it cannot be appropriated by any individual in particular.

Depending on which philosophy one follows, either all of mankind had to agree on a specific use for a particular piece of nature which is both impractical (self-evident) and unfair (since those who are assigned to till the land are, in effect, slaves to the commanders, which is all of mankind, and therefore every man would be every man's slave: "homo homini servus"). Or nature should not be appropriated at all as it has intrinsic value as a living cosmos. In that case, we had to kill ourselves immediately in order to stop hurting the "Earthen Entity" which makes it not a human, but an anti-human philosophy completely unfeasible to structure societies of (living) humans.

Therefore, as people make use of their appropriated land, they will eventually desire to engage in trade to satisfy their ever-growing needs and desires. Thereby, they create wealth. Individuals who engage in aggression (robbery, murder etc.) to enhance their standard of living are subject to punishment as they do not resort to mutually beneficial transactions with other individuals to increase the value of their estates, but decide to make use of other individuals' property without their consent. This system of mutually beneficial transactions is called "the free market".

Now the cat's outta the bag. I believe in individualism and free markets. I could've said it in less words, but just wanted to make sure my views are still logically deductible. Which I hope you'll agree they are.

That said, I'm looking forward to blogging. More to come soon if nothing gets in the way.