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.