Category Archives: Liberty

See the Cat: The Heart of Economics in One Story

Posted on by

A man was walking down a shopping street and came to a store window where there was a big drawing full of lines and squiggles. A sign by the drawing asked, “Can you see the picture?”

All the man could see was a chaos of lines going every which way. He stared at it and tried to make out some kind of design, but it was all a jumble. Then he saw that some of the lines formed ears, and whiskers, and a tail. Suddenly he realized that there was a cat in the picture. Once he saw the cat, it was unmistakable. When he looked away and then looked back at the drawing, the cat was quite evident now.

The man then realized that the economy is like the cat. It seems to be a jumble of workers, consumers, enterprises, taxes, regulations, imports and exports, profits and losses – a chaos of all kinds of activities. Here are fine houses and shops full of goods, but yonder is poverty and slums. It doesn’t make any sense unless we understand the basic principles of economics. Once we have this understanding, the economy becomes clear – we see the cat instead of a jumble. We then know the cause of poverty and its remedy. But since most folks don’t see the cat, social policy just treats the symptoms without applying the remedies that would eliminate the problem.

What is this economics cat? It starts with the three factors or resource inputs of production: land, labor, and capital goods. Land includes all natural resources and opportunities. Labor is all human exertion in the production of wealth. Capital goods are tools (such as machines and buildings) used to produce wealth. The owners of land get rent, workers get wages, and the owners of capital goods get a capital return.

Picture an unpopulated island where we’re going to produce one good, corn, and there are eleven grades of land. Continue reading →

The Triumph of Liberalism Over Socialism

Posted on by

The Economist has a great piece on France’s current socialist government and the scandal of wealth that has recently erupted there. From the report:

Now the Socialist president’s new disclosure rules reveal that seven of his ministers, including his prime minister, Jean-Marc Ayrault, are millionaires.

The French are discreet about money and flinch at ostentatious displays of wealth. So the new rules have prompted much discomfort, with ministers given only a week to declare their wealth. On April 15th Laurent Fabius, the foreign minister, who comes from a family of art dealers, duly declared over €6m ($7.9m) of assets, including a flat in Paris worth €2.7m and two country houses. Michèle Delaunay, minister for the elderly, reported €5.2m of assets, including two properties in Bordeaux and two houses in different south-west resorts. Michel Sapin, the labour minister, declared three country houses, some large tracts of farmland and a flat in Paris, for a total of over €2m. Even Mr Ayrault, a former schoolteacher, is a millionaire, with two properties to his name.

Other details raised eyebrows. Cécile Duflot, the Green housing minister who makes much of taking public transport, owns two cars, neither of them electric. Mr Fabius, despite his millions, has a €30,000 overdraft. Arnaud Montebourg, the left-wing industry minister, owns three properties and a Charles Eames armchair worth €4,300. French Socialist ministers turn out to be keen property investors; almost none holds shares.

Mr Hollande hastily devised the new rules after his former budget minister, Jérôme Cahuzac, had confessed to lying about a secret foreign bank account. Until now, only the president had to publish his wealth. Mr Hollande’s 2012 declaration included two flats in Cannes and a villa nearby, valued in all at nearly €1.2m, just under the threshold at which France’s annual wealth tax kicks in.

Now the president wants to extend the disclosure rules to all of France’s deputies. This will be tough. Even Claude Bartolone, the Socialist parliamentary speaker, denounced the exercise as “voyeurism” and expressed fears of the advent of “paparazzi democracy”. And Jean-Luc Mélenchon, a fiery hard-left European deputy not bound by the rules, mocked them by revealing on his blog his height and weight, and stating that he owned no paintings, cars, yachts or horses—and did not dye his hair.

Be sure to check out the graphic, too. The reality of the world today is that socialism is truly dead and done. Something else – equally reactionary – will arise in its place to challenge the liberal order’s peace and prosperity, but for the next few decades the world will know nothing but relative calm as it enjoys the benefits brought about by individualism and world trade.

When a new collectivism arrives to challenge liberalism, you can be sure that it will look very much like the collectivisms of old. Do you know what collectivism looks like?

L’Amérique et les armes: mise à jour.

Posted on by

Le taux de crimes à main armée (presque toutes avec armes a feu) a chute environ de moitié depuis 1990.

Pendant la même période, tous les chiffres liées à la possession d’armes privées ont augmenté.

D’accord, ça ne prouve rien. Il n’y a pas nécessairement cause à effet.

Quand même, si je gagnais ma vie le revolver àla main, j’y regarderais à deux fois avant de m’en prendre à un porteur de revolver de calibre plus ou moins égal.

Quand même, si je pensais évoluer dans un milieu où de nombreux citoyens sont armés àtitre privé, je songerais sérieusement à me reconvertir dans la fraude bancaire.

“Europe’s Job Seekers Flock to Germany”

Posted on by

That’s the title of a recent piece on immigration in Europe, as told through a Greek family settling down in Germany, by the Wall Street Journal. Among the gems:

Despite the enmity often directed at Berlin for its insistence on painful austerity as the cure for Europe’s sovereign-debt crisis, Germany has become a new land of opportunity for tens of thousands of people fleeing their recession-racked homelands.

Data released Tuesday by the German statistics agency showed immigration hit a 17-year high last year, with the increase from Europe’s crisis-riddled nations “particularly evident.”

And this:

Germany has long had an uneasy relationship with migrants. Previous generations have often integrated poorly, facing high hurdles to gain citizenship—if they even try. Many Germans also believe that migrants come to live off welfare benefits or criminal activity [but] experts say today’s renewed influx of migrants is good for Germany. As its population declines and ages, the nation badly needs qualified workers to fuel economic growth and support its pension and health-care systems [...]

The youngest, Nikos, at 15 years old, told his parents he missed his friends. Don’t worry, Mr. Karoustas replied. He’d see them again.

“I don’t hope for it,” the father told his son, “but all of them will come to Germany too.”

Read the whole thing. You can get around the WSJ‘s subscriber firewall by copying-and-pasting the title of piece and Googling it. Once you do that, just click on the article.

See our past notes on the EU here.

Welcome to the New Bohemia

Posted on by

[Editor's note: I first came across this article while living in Santa Cruz. It was in one of those trashy "arts and events" weeklys that you find littering every city in America. I have tried to locate the author of the piece but he appears to have written it under a pseudonym, and the weekly is now defunct. So, I figured I'd reprint the whole damn thing here. You can find an archived copy here]

———————————————————————————————————

We are the modern equivalent of the ancient city-states of Athens and Sparta. California has the ideas of Athens and the power of Sparta. —Gov. Arnold Schwarzenegger

California is like an artificial limb the rest of the country doesn’t really need. You can quote me on that. —Saul Bellow

Perhaps Schwarzenegger and Bellow divined what’s now painfully clear to everyone: Arnie’s California is Humpty-Dumpty, the Hindenburg and some kind of sociopolitical Holocaust all rolled up into one overstuffed exploding burrito. It’s an ungovernable, near criminally impotent and outdated mess. Remedying California’s woes requires draconian cutbacks to essential services and infrastructure. Anyway, that’s what we are told, grand allusions to Athens and Sparta notwithstanding. Others insist the fix lies with the Feds, that the U.S. Treasury need to bail California out at the begrudging consent of Congress. But another still largely muted scenario is slowly gaining traction. Continue reading →

Looking into the Crystal Ball

Posted on by

Since the rise of the first civilization, a centralized organization having access to the levers of influence on certain types of infrastructure has been a given. Specifically these are information, commercial transactions (especially the flow of goods), and human movement. The institutions of government and society have been structured to reflect this circumstance.  As I will demonstrate below, this paradigm will shift dramatically. Of course, new institutions will be needed to adapt to this reality, which is where my interests lie as should those of other liberty lovers concerned with the future.

The introduction of the internet is beginning of the direct unraveling of the first lever, and indirectly of the second. With the advent of global real time communication, boundless storage capacity and near universal access, centralized control of information is coming to a close. The internet is decentralized compared to other infrastructure.  So the only way a centralized organization, for example, the state, can control information is by a complete shutdown of the internet, i.e., the internet kill switch used in Syria during civil unrest recently and championed by many government officials around the world. The way this works is if there is a centralized structure, which in this case is your local Internet Service Provider (ISP), through whose lines people access the internet. However, advancements are being made to create a fully decentralized internet, void of middle men ISPs, functioning like a peer to peer network. Silk Road, an invitation only “internet” on which many things are traded, is a prototype of a fully decentralized network.

The internet has also a great deal of influence on the second lever. It has unleashed three dimensional printing, or the ability to create or scan and recreate practically any non-biological or electronic object. From wrenches to shoes soles to burritos to guns and even a house, they have all been constructed without any physical human labor. It is only a matter of time till this becomes widespread and supersedes the need for most objects to be centrally created, hindering any potential efforts to limit production and distribution of such products. Once this happens, economies of scale will struggle to remain relevant as customization, ubiquity, and efficiencies in material usage achieved by 3D printing will supersede any value created by mass manufacturing.

If the first two sound tantalizing, the end of final lever of influence will be even more consequential than the first two combined. That is the advancement in what I like to call three dimensional travel. Vehicles that are ubiquitous such as cars and ships are limited to what is known as two-dimensional travel, meaning they can only go forwards/backwards and left/right.  The rise of private rocket company SpaceX , successfully accomplishing what only the government agencies of the U.S.A. China and Russia have been able to accomplish in space, shows private space exploration is catching up to the established players. It’s not the only rocket company with massive firepower behind it.  But getting back to Earth, nine different companies vying are for governmental approval to launch flying cars. Both are examples of three dimensional movement which aim to be available to the masses. Once successful, no one will have an inescapable dominance nor be able to realistically limit the movement of people as they will be able to escape barriers otherwise impossible in the prevalent “two dimension” travel.

As the control of these levers is decentralized, it will become imperative to understand the transformation of institutions and concepts such as economies of scale being overturned and anticipating the challenges that such innovations will bring. This however will not be enough. A focus on developing alternative institutions and solutions to mitigate those hazards must also be taken into account.

And that is where I believe libertarians need to focus. On the institutuions of the future. If we are to secure liberty for our prosterity and its future, we must study and build the institutions that will anticipate and seek to amelorite that challenges of the future well before and better than the state. Then and only then will we see the permananet demise of the state as a temprary blot on human history and a relic of agricultural society.

Economic Rationality

Posted on by

[Cross-posted at the Foldvarium]

The concept of rational action is a frontier of economic theory. The new field of behavioral economics combines economics and psychology to analyze actions that seem to be irrational. For example, people value health and long life, yet they smoke and eat unhealthy food. A related field, behavioral finance, examines psychological and emotional traits that prevent people from making wise investments. Perverse psychological biases include anchoring to past prices and facts, the bias of weighing recent events too highly relative to the more distant past, being overly confident in one’s abilities, and following the herd to a cliff.

Neoclassical economics often assumes that people are purely self-interested and always seek financial gain, and that therefore altruism is irrational, whereas as Adam Smith and Henry George wrote, human beings have two motivations: self interest and sympathy for others. Since people get satisfaction from serving others, it is incorrect to label altruism or actions based on subjective views of justice as “irrational.”

The Austrian school of economic thought has a different perspective on rationality. The Austrian economist Ludwig von Mises envisioned human action as inherently rational. A person has unlimited desires and scarce resources. Human beings economize, seeking maximum benefits for a given cost, or minimizing costs for a given benefit. At any moment in time, a person ranks his goals, ranging from most to least important. He chooses the resources to achieve the most important goal at some moment, then the second most, and so on, until his gains from trade have become exhausted. This is the inherent rationality of human action. Continue reading →

I Agree with Obama on Guantanamo but….

Posted on by

[Cross-posted at Facts Matter]

I agree with President Obama. It’s unacceptable that we, the US, have kept people as prisoners for as long as ten years without trial or any other procedure that could conceivably result in their release or  conviction.

Let me say first that it’s not an issue of toughness or not toughness. I, for one, think it’s ridiculous to invoke the Geneva Conventions to protect people who burn women and children alive and who assassinate while wearing  civilian clothing. I am also in favor of making their lives difficult, of increasing the hardship of doing their disgusting job any way we can. That would include making a public announcement that specific individuals may be volatilized from the sky anytime, any place. That sure would create a circle of isolation around them. I would also be in favor of including an option to surrender and be investigated (by us.) I don’t understand why this option does not already exist.

There are three purposes for keeping people locked up. One is  to secure them while they await trial. The lock-up time in this case should be as short as technically possible. The second reason is that they are serving a prison term, a punishment imposed  after a conviction of guilt in a well-described, appropriate procedure. Continue reading →

Cool PDF on the Dishonesty of Debate

Posted on by

From one of the concluding paragraphs:

We have therefore hypothesized that most disagreement is due to most people not being meta-rational, i.e., honest truth-seekers who understand disagreement theory and abide by the rationality standards that most people uphold. We have suggested that this is at root  due to people fundamentally not being truth-seeking. This in turn suggests that most disagreement is dishonest.

This reminds me, mostly, of debates about the illogicality of more federal gun control laws or using American military power to intervene in a foreign conflict that has nothing to do with national security (see, on this last point, my recent post “Imperialism: The Illogical Nature of Humanitarian Wars“).

Why, just the other day I was deleted by a female FB acquaintance for pointing out to her that her facts were wrong on gun control and that the numerous, hastily Googled  studies that she threw at my feet contained either errors in statistical reasoning (“saying that ‘more guns equals more crime’ is like saying ‘the black cat is a cat because it is black’”) or simply wanted to inflame passions rather than discern truth from tall tale.

On this second point, I even went so far as to suggest that since the piece did not contain any quantitative reasoning whatsoever, it would be safe to agree with me that it was merely an attempt to inflame passions rather than educate. The female (a UC Santa Cruz alumni, in her defense) did just the opposite: after acknowledging that the piece contained no intellectual argument whatsoever, she stated – matter-of-factly – that the piece was an attempt to document all 62 mass shootings over a 30 year period with visuals (posting the killers’ faces to a timeline) and explain that most of the guns used were obtained legally. Therefore, it was quantifying the evidence and proving that mass murders were on the rise, federal gun control is proven to work, and that bans on certain types of guns have been proven to work.

Indeed. This is the face of the enemy of freedom, and it’s not Satan. It’s the bimbo next door.

Read the whole PDF. Grab a cup of coffee or hot tea first.

A couple of tips for figuring out if you are on the right side of the facts or not:

  1. If you are defending somebody else’s words – especially the words of a politician, a religious leader or even an intellectual, there is a good chance you are on the wrong side of truth.
  2. If you attempt to justify the horrible crimes committed in the past by looking at the virtuous deeds that were accomplished because of the crimes, then you are most likely on the wrong side of the facts. For example Franklin Roosevelt’s policies did absolutely nothing to get the US out of the Great Depression. All economists are in agreement on this. Where they disagree is on whether or not his policies exacerbated the Great Depression – as most libertarian economists argue – or simply that the New Deal did absolutely nothing (Left-wing economists generally see World War 2 as the economy’s savior). Yet many people give Roosevelt credit where credit is not due. They even go so far as to overlook his ruthless campaign to rid the West Coast of citizens with Japanese and German ancestry (locking them up in concentration camps), copying Hitler’s policies of cartelizing the economy, banning Jewish refugees from entering our shores, and raising taxes to unjustified levels in order to carry out his worthless policies. Fidel Castro is another good example of this.
  3. If you take the argument personally, then you are on the wrong side of the facts. If you have a tendency to delete people on social media sites because they failed to acknowledge your genius, then you are on the wrong side of the facts.

Hope this helps!

Questions About Going Into Assad’s Syria

Posted on by

The question that many of you will assume I am answering was clearly (and emphatically) intended for someone else, so instead of answering it I’ll be making comments that, given the timing and the subject matter, just happen to answer the question anyways. I don’t want to do so directly because I would prefer it if Dr. Delacroix kept pestering Brandon and left me out of it. I do not want to draw his ire. I’m too busy with other things. So, this piece, and it’s similarity to recent pieces by Brandon and Andrew is coincidence and nothing more, I assure you. Just so you are not totally confused by what I am referring to, here is the question (that I remind you I am not specifically or directly answering):

This is for Brandon:

A question: If you were 100% convinced that Assad of Syria had used chemical weapons on civilians, would it affect your judgment about the desirability of American intervention in Syria?

I know it will sound eerily similar to the following question(s), but that sort of thing happens I guess:

So, say there is this country, this regime (you’ll assume it anyways, so let’s call it “Syria under Assad”) that has weapons, perhaps even the chemical variety. It has used them on its own population, threatens to use them again, and likely will make good on that threat. Let’s also assume that Syria under Assad is the chief aggressor and that every victim was either innocent or, if guilty (of inciting mob violence, say), deserving of a far better fate than what their fate ended up being. Should not someone do something to stop the Syrian dictatorship? Should not someone intervene and make it all better? Continue reading →