Author: Adam Magoon

Riding Coach Through Atlas Shrugged: Part 4 – Governor’s Ball

Adam Magoon Books, Economics, History, Liberty , , , , , , , ,

Pages 48 – 53

Chapter Summary – A group of industrialists sit around a shadowy table plotting the downfall of our favorite rugged individualist.

[Part 3]

I love how cliché this chapter is. Four figures sitting around a table, their faces shrouded in darkness as they scheme over the fate of the world, the sycophant politician sniveling his consent to their plans. This is one of those times where I am not quite sure if the fiction created the trope or the fiction is following the trope but it is okay either way, it is delightful to read.

We have at our table:

James Taggert: Who is far less whiny when not in the presence of his sister.

Orren Boyle: Our socialist-industrialist representative in the story.

Wesley Mouch: Our aforementioned politician, in the pay of Hank Rearden but in the pocket of Orren Boyle.

And finally –

Paul Larkin: The man at Rearden’s dinner party last chapter.

Essentially they spend the chapter plotting against Hank Rearden and promoting a philosophy of non-competition among businesses. From a historical standpoint this is essentially what happened with Hoover and the industrialists leading up to the great depression. A series of price and wage controls were set up that distorted normal market activity leading to the boom-and-bust cycle as described by Ludwig von Mises. As a side-note it is an interesting historical misconception that Hoover “did nothing” during the great depression. Hoover was arguably the most meddling president up to that point in regards to the economy except perhaps for Abraham Lincoln, but total economic warfare is hard to beat.

But to get back on track here, for what it lacks in literary creativity this chapter makes up for with pure economic and political insight that is delightful to read. The most illuminating part is a speech, or perhaps rant, by Orren Boyle that goes as follows, some of Taggert’s responses are edited out for brevity:

“Listen Jim…” He began heavily.

“Jim, you will agree, I’m sure, that there’s nothing more destructive than a monopoly.”

“Yes.” Said Taggart, “on the one hand. On the other, theres the blight of unbridled competition.”

“That’s true. That’s very true. The proper course is always, in my opinion, in the middle. So it is, I think, the duty of society to snip the extremes, now isn’t it.”

“Yes,” said Taggart, “it isn’t fair.”

“Most of us don’t own iron mines: How can we compete with a man who’s got a corner on God’s natural resources? Is it any wonder that he can always deliver steel, while we have to struggle and wait and lose our customers and go out of business? Is it in the public interest to let one man destroy an entire industry?”

“No,” said Taggart, “it isn’t.”

“It seems to me that the national policy ought to be aimed at the objective of giving everybody a chance at his fair share of iron ore, with a view towards the preservation of the industry as a whole. Don’t you think so?”

“I think so.”

This exchange is a fantastic summary of the process involved when the government gives special privileges to favored industries under the guise of regulation. Essentially Rearden is out-competing his fellow steel producers and since they cannot compete under market conditions they intend to compete politically by ham-stringing his business through the legal process.

This process has happened time and time again throughout history and the ironic part is that these actions have almost universally been heralded as “anti-business” when in fact it is the businesses itself that propose this regulation. The first anti-monopoly laws in America were lobbied for by the competitors of the successful oil, rail, and steel businesses which resulted in the *rise* in prices of those goods. It seemed the “natural” monopolies were pro-consumer while the regulation was pro-business.

There are also historical comparisons to be made to the great depression. The whole concept of “protecting an industry” at the expense of a single, productive, individual was the cornerstone of “Hoover-nomics” especially in the farm industry. The industrial revolution brought about a massive increase in farming productivity which naturally led to a decline in prices and a surplus of labor in that industry that came to a head during the “dirty thirties”.

The natural course of the market would be for inefficient firms in that industry to liquidate; with the entrepreneurs and workforce moving to other industries. This would cause a short period of transitional unemployment as workers moved into similar or growing industries while the more efficient firms and prospective entrepreneurs would buy the liquidated capital goods of the inefficient businesses at a discount.

Consumer goods prices would fall to equilibrium where only firms able to produce goods below that price would be able to maintain production. This would have the net effect of expanding the labor pool and be a net gain for society as new areas of production would be made available by the increases in productivity. Instead, Hoover organized industrial cartels that maintained price and wage controls over the entire economy propping up inefficient businesses that continued to waste and malinvest resources resulting in what we know today as the great depression.

To summarize, this chapter is a fantastic must read five page tour de force of economic insight.

Next chapter: More Dagny, more snark, and more family drama.

Riding Coach Through Atlas Shrugged Part 3: Hit The Switch

Adam Magoon Books , , , ,

50th Anniversary Edition pages- 33-48

[Part 2]

Chapter Summary: We meet our industrialist protagonist, he makes some metal, is weirdly sentimental, and doesn’t understand basic human interaction.

This chapter is very important for a number of reasons. Several (presumably) important characters are introduced, the MacGuffin is introduced, and several elements of Rand’s writing style and her personality are revealed. Because of this final revelation I, for the first time, am going to start one of these reviews off with the negative.

Ayn Rand’s descriptions of characters and those characters’ reactions to others in the story are both highly questionable. The protagonists, so far, all have crippling social issues that are not only glossed over but indeed are celebrated; while the antagonists are universally whiny, sycophantic, card-carrying bad guys who talk with each other like Bond villains; but more about them in the next chapter.

Let me provide some examples of our pseudo-autistic heroes from previous chapters.

Eddie:

“But he still thought it self-evident that one had to do what was right; he had never learned how

people could want to do otherwise; he had learned only that they did. It still seemed simple and incomprehensible to him: simple that things should be right, and incomprehensible that they weren’t.”

While I can relate to his feeling, I think it is imperative that libertarians understand completely why people want to do the things we consider “wrong” and to do that we need to have a solid foundation of what is right or wrong. The latter belief is why I hold so strongly to natural-rights libertarianism rather than any subjective based ethical system such as rule-utilitarianism.

Once we have a strong ethical foundation to build our beliefs on we begin to understand why most people operate outside those beliefs in practice despite the fact that most people would agree to them in theory. How many people would openly advocate violence against person or property when stated in such clear terms? Very few would, which is why society functions. It is only when we hide violence in plain sight through the control of language and education that most people begin to agree with their necessity. Extortion becomes taxation. Kidnapping becomes imprisonment. Murder becomes war and fraud becomes inflation.

Dagny:

“[b]ecause she thought that such a feeling was not within the humanly possible”

“She had always avoided personal reactions, but she was forced to break her rule when she saw the expression on Taggart’s face.”

Another clear lack of empathy in regards to dissimilar belief systems as well as some more personal social awkwardness. I wish I knew why Dagny “avoided personal reactions”. Did Rand think that emotion was a weakness? I cannot wait to spend more time with Dagny because she seems like such an unnecessary enigma.

And finally we have our new character, Hank Rearden whose complete lack of empathy boggles my mind. Hank begins the chapter at his foundry as the first batch of Rearden metal is poured. He waxes sentimentally over his past, especially his status as a self-made man; however the real story begins to be told when he leaves his work and returns to his home where his family is having a dinner party; or rather, the end of a dinner party. This scene provides us with two important sets of information.

First, Rearden’s family resents him for his aloofness and his lack of understanding of their problems and second he resent his family for not empathizing with him.

Let’s start with the relationship with his brother.

Phillip Rearden is a man who “had not been able to decide on any specific ambition.” A fact that Hank is generally disgusted by, he believes that “[T]here was something wrong…with a man who did not seek gainful employment.” When we meet Phillip he is a representative of a charitable foundation called “The Friends of Global Progress”. This organization is in dire need of ten-thousand dollars in its quest for “free lectures on psychology, folk music, and co-operative farming”.

Phillip is distraught that he cannot convince enough people to donate to the cause and Hank, in an attempt to improve his brother’s morale, simply donates the needed sum of ten-thousand dollars. Hank is then surprised when Phillip rebuffs his generosity. Hank misses the entire point though; Phillip isn’t upset that that he doesn’t have the money. Phillip is upset that more people don’t believe in his cause, something libertarians should have some measure of empathy for. We have to ignore the fact that Rand chose a completely ridiculous organization for Phillip, the scope of that organization is irrelevant. It is the relationship between the brothers that is vital.

Hank’s reaction, on the other hand, is far more vitriolic. He resents the fact that Phillip is acting selflessly to the point of wanting to hit him. “He wanted to slap Phillip’s face. But an almost unendurable contempt made him close his eyes instead.” Who seems more reasonable in this situation? Our “hero” or the villain?

Here is where Rand either rejects or misunderstands praxeological reasoning. Phillip, though acting selflessly, is also acting selfishly. Mises said that every action is taken in order to remove a “certain uneasiness”; this uneasiness is what drives human action. Even the most selfless act is done for the benefit of the person acting. How often has someone who risks their life for another uttered the phrase “I just couldn’t live with myself if I hadn’t done such-and-such.” It all comes down to a question of subjective valuations. No two people’s values are identical and there is no way to compare or rate those values against one another. Despite Hank’s objection that he “would not impose his standards on Phillip…” that is exactly what he does at every turn.

Next we have Hank’s wife Lillian. Our first reference to Lillian is as follows:

“He touched the bracelet in his pocket. He had had it made from that first poured metal. It was for his wife. As he touched it he realized suddenly that he had thought of an abstraction called ‘his wife’ – not of the woman to whom he was married.”

I think it is very telling that the first we hear of Hank’s wife he isn’t even considering her as a person, barely even as an object. “An abstraction” that throughout the rest of the chapter is the only one who even remotely stands up for Hank, even though she seems to do it only out of duty and not love. Another case where I can relate more to the character portrayed as the villain than the hero.

Lillian ends the chapter by holding up the aforementioned bracelet Hank had given her and calls it “the chain he uses to hold us all in bondage.” This rings true on several levels. Hank supports his family out of duty to them and then gets upset when they cannot stand on their own. Hank is proud of having earned everything he has on his own but then doesn’t expect the same from his family. He wants them to support him in his endeavors but only pays lip service to theirs. They pursue senseless causes but he supports them financially at every turn.

At this point in the story Hank is a contradiction. He is attempting to live in two worlds and because of that is failing at both. His family is biting at his heels and he cannot see the political danger right in front of him which will be revealed in the next chapter.

P.S. I forgot about his mother. She is essentially a high-class snob. I don’t really have any sort of insight on her other than she is insufferable.

 

P.P.S.  I have been scarce as of late due to a recent promotion and an increased workload as well as a series of outrageous summer adventures.  Thanks to Brandon for not kicking me out yet.

Riding Coach through Atlas Shrugged: Chapter 2 – Whistling In the People’s Key.

Adam Magoon Books, Liberty, Philosophy , , , , , , ,

Part One

50th Anniversary edition pages 20-32

Chapter Summary – We are introduced to Dagny Taggart, brother of James, who reflects on neo-classical music, throws her family name around a bit, cuckolds her brother’s business, and smokes, also Kellogg turns down an offer he can’t refuse.

Dagny is one of the characters who I am somewhat familiar with due to cultural osmosis. Her strong willed antagonism, her intelligence and stubbornness, her anger, her misery, and her smoking. All things that I expected that were confirmed in her first chapter in Atlas Shrugged.

What I didn’t expect however was the amazing paragraphs about Richard Halley’s symphony.

“It was a symphony of triumph…”

the notes of the symphony

“spoke of rising and were the rising itself.”

Emphasis mine. The way Dagny is enveloped by the symphony, it consumes her, and just for a moment she can do nothing but feel when she hasn’t in so long.

Then it is revealed that she is merely hearing it being whistled from across the train car by some blond brakeman. If one man whistling one part of that symphony can fill Dagny with such joy then what effect would a full orchestra have on her, on the people, on society?

That feeling is the very thing I hope to gain from this project. The sense of wonder that Dagny is overwhelmed with and a reminder that

“[T]his is why the wheels have to be kept going, and this is where they’re going.”

The brakeman is interesting as well. Rand’s description of him as a worker with no loose muscles was very telling to me. This blue-collar laborer is the one carrying the tune that is Dagny’s hope. This is in stark contrast to the train conductor for example who doesn’t seem to care about the problems he faces and simply hopes everything will work out.

He jerked his head up at the red light. “I don’t think the signal is going to change. I think it is busted.”

“Then what are you doing?”

“Waiting for it to change.”

I almost wonder if this theme of hard working but uneducated versus apathetic educated middle class will continue. I always felt that Rand was somewhat anti-laborer, that those who were not entrepreneurs were merely leaches on the productive members of society but I am beginning to think that impression may have been unfounded.

Speaking of entrepreneurs there were two major economic principles stated in this chapter. First was Dagny exemplifying the attributes of an entrepreneur when she makes the call to use Rearden Metal for the new railroad tracks. When James protests the use of the new metal she tells him that she is making the call using her own judgment, knowledge, and personal experience. She is willing to assume the risk for this venture based on a gut feeling and her own personal belief that it will work. It is important to notice that she doesn’t deflect responsibility or assume some other person or entity will absorb any losses if she is wrong.

The second economic point was in regards to monopolies. A great exchange takes place between Dagny and James that goes as follows:

“It isn’t fair,” said James Taggart.

“What isn’t?”

“That we always give all our business to Rearden. It seems to me we should give somebody else a chance, too. Rearden doesn’t need us; he’s plenty big enough. We ought to help the smaller fellows to develop. Otherwise, we’re just encouraging a monopoly.”

“Don’t talk tripe, Jim,”

“Why do we always have to get things from Rearden?”

“Because we always get them.”

“I don’t like Henry Rearden.”

“I do. But what does that matter, one way or the other? We need rails and he’s the only one who can give them to us.”

“The human element is very important. You have no sense of the human element at all.”

“We’re talking about saving a railroad, Jim.”

“Yes, of course, of course, but still, you haven’t any sense of the human element.”

“No. I haven’t.”

This exchange exemplifies the free market vs anti-property positions on monopolies but misses one crucial point. This anti-monopoly activity is driven solely by the free choice of the individual. Taggart is perfectly able to restrict his business from any source he chooses for any reason he chooses and this is the pure libertarian position on the matter.

Now, don’t get me wrong, he is making a poor entrepreneurial choice since Associated Steel has repeatedly failed to deliver on the contract and from a purely economic standpoint Dagny is correct. From a libertarian standpoint however, both are correct.

James is totally justified running his business into the ground for any reason he chooses and Dagny has every right to seek out new opportunities. Assuming of course she owns part of the company or has been granted the authority to act in the company’s name. The latter is the case here as far as I can tell.

I would also like to point out that other non-humanistic arguments against monopolies are almost universally false. Predatory pricing for example has essentially never happened successfully even in the case that made it illegal.

Now for the negatives.

Primarily I feel like James is a bit too obvious as a villain, he is almost too petulant and whiny. I just don’t buy that anyone would follow him and that the board of directors would have kicked him off years ago. I suppose Rand is pushing the whole feudalism thing. How many nations have fallen because of a weak King or Queen?

Also, I just don’t know how to feel about Dagny yet. The quirkiness is what bothers me the most. Sitting on the arm of the chair, her snarkyness and her general self-importance. I am not sure how much I am going to like her character yet but there is plenty of book to go so we shall see.

Finally I have to give the last story beat in this chapter credit. The final conversation Dagny has with Kellogg was an amazing piece of the mystery that literally gave me chills of anticipation. Where are these people going? Why are the best and brightest suddenly missing but still creating? And most importantly…

Who is John Galt?

Riding Coach Through Atlas Shrugged. Chapter 1: The Calendar Hung Itself.

Adam Magoon Books, Culture, Current Events, Economics, Liberty, Philosophy , , , , , , , , , , ,

50th Anniversary Edition pages 11-20*

*Note: The actual chapter ends on page 33 but I am splitting these up based on POV changes for easier digestibility.

Chapter Summary: White-collar worker Eddie Willars runs into a peculiar homeless man, reflects on a decaying city, and attempts to convince his boss of an urgent matter in Colorado.

My initial impressions are all pretty positive. The opening line: “Who is John Galt?” accomplishes everything an opening should and most importantly sets up a mystery to pique the reader’s interest.

Even with my limited knowledge of small parts of this book I was still immediately hooked by the questions presented on the first page: “Who is John Galt?”, “Why does it [the above question] bother you?”, and without missing a beat (or answering those questions) Rand describes the world that frames these questions quite beautifully with several potent, if a bit obvious, metaphors.

The bum as the faceless masses, intelligent but wearied and cynical without the energy to change their station but able to if inspired. “The face was wind-browned, cut by lines of weariness and cynical resignation; the eyes were intelligent.”

It also seems to be relevant that the bum is our introduction to the character of John Galt. The nameless, faceless masses knowing about the coming change almost instinctively and long before the more comfortable and well off middle class.

The city, in my estimation, represents society as a whole. Once beautiful but now decaying and, like the old tree on the Taggart estate, hollow and rotting from within. “…the shafts of skyscrapers against them were turning brown, like an old painting in oil, the color of a fading masterpiece.” The seed of beauty and triumph is there but it has rotted from within.

Eddie is who really intrigued me though; he reminded me a lot of Tolstoy’s Ivan Ilyich. A middle man in society who knows something is wrong but doesn’t have the skills to do anything about it. While he cannot identify the sinking feeling that permeates every fiber of his being he does have a stable foundation to latch onto.

“When he was asked what he wanted to do [in life], he answered at once, “whatever is right”…”twenty two years ago. He had kept that statement unchallenged ever since; the other questions had faded in his mind…[B]ut he still thought it self evident that one had to do what was right; he had never learned how people could want to do otherwise.”

As a natural-rights libertarian I believe that there are absolute moral and ethical truths and Eddie’s commitment to a similar personal philosophy deepened my ability to relate to the character. It also stands in stark contrast to more modern interpretations of ethics such as “rule utilitarianism” which will always decay to subjective act-utilitarianism.

“David Lyons argued that collapse occurs because for any given rule, in the case where breaking the rule produces more utility, the rule can be sophisticated by the addition of a sub-rule that handles cases like the exception. This process holds for all cases of exceptions, and so the ‘rules’ will have as many ‘sub-rules’ as there are exceptional cases, which, in the end, makes an agent seek out whatever outcome produces the maximum utility.”

In short, any attempt to prevent the “ends justify the means” outcome of utilitarian ethics, without some sort of higher moral authority, inevitably fails and the system is reduced to one of pure utilitarianism. I was actually under the impression that Rand was a bit of a utilitarian herself so I will be interested to see if this commitment to the universal “right” turns out to be a character flaw in Eddie or whether it remains an ideal to be upheld.

Eddie’s confrontation with James Taggart was also quite inspiring. A man who knows he is stepping out of line but is willing to do so for the sake of his personal convictions is an ideal that many of us could due to imitate. I will save my examination of James until the next installment but the important thing I took from this interaction between James and Eddie was how uncomfortable James grew when Eddie looked into his eyes.

“What Taggart disliked about Eddie Willars was this habit of looking straight into people’s eyes. Eddie’s eyes were blue, wide and questioning; he had blond hair and a square face, unremarkable except for that look of scrupulous attentiveness and open, puzzled wonder.”

If, as I suspect, Eddie is the everyman (or reader avatar) in this story and James is an (the?) antagonist then what I am supposed to take from this is that the villains in this world, and in ours, cannot stand up to scrutiny. They are filled with uneasiness when we examine their actions and question their motivations. If Eddie is an ideal, then his attentiveness is an ideal as well.

Eddie’s relationship with the Taggarts as a whole is something I hope is explored more. It is obvious he admires and respects Dagny since they grew up together and the fact that he still has some sort of respect for James leads me to believe that the latter wasn’t always so insufferable. What made Eddie so devoted to this family? Was it simply their entrepreneurial spirit or was there something more?

I had a few small criticisms but I am going to have to wait to see how they play out. As I mentioned briefly at the start of this entry Rand’s metaphors were really straight forward which isn’t bad in and of itself but simply something I am taking note of and will look for as the chapters go by.

I cringed a bit when Eddie admitted that he was simply a serf pledged to the Taggart lands. The whole feudalism angle is one that I am going to keep an eye on since one of the most common attacks on libertarianism is that it would descend into a neo-feudal corporatist society.

Of course I may be taking the line a bit too seriously since Eddie was simply trying to get James to agree to his requests to support the Rio Norte line. In fact it could very well turn out to be a rebuke of that attack once all is said and done.

Finally I have no idea what the giant calendar is supposed to represent or foreshadow. Perhaps it is simply a literal translation of the city’s days being numbered which would both be very clever and kind of groan-worthy at the same time. Hopefully Eddie shows up again soon to let us know but I have a sneaking suspicion that our protagonist isn’t Mr. Willars despite my initial preoccupation with his character.

Check in next time for first impressions of Dagny, a word of support for monopolies, and our first real look at James Taggart. I wish this was a George R.R. Martin novel so maybe he would be dead before the book was over. Hey, I never said I would be impartial.

Part 2

Into the ear of every anarchist that sleeps but doesn’t dream…

Adam Magoon Books, Culture, Current Events, Economics, History, Liberty, Links, Philosophy, Politics , , , , ,

We must sing, We must sing,We must sing…

 

 

There is no libertarian art.

Well, that is a slight exaggeration, but not much of one. Art is a vital part to any social movement and it is one area where libertarians suffer immensely. Sure there are libertarian leaning authors such as Robert Heinlein and modern Austrian economic art like the guys over at www.econstories.tv but for the most part there are few non-academic ways to inspire potential libertarians.

This is a problem I lament when I am feeling negative about the prospects for a free society which, to be fair, is usually the case. Sometimes reading an article about Intellectual Property just isn’t enough to get the passion flowing.

“But Wait!” You say, “you failed to mention the author who brought tens of thousands of people into the libertarian fold. The late, the great, the Ayn Rand!”

 

….yea about that.

 

I don’t like Ayn Rand. There, I said it. Bring out the pitchforks and tie me to a Rearden Steel railroad track if you must but I stand by my statement. Now I know what you are all thinking: “But her works exemplify the individual freedoms that a libertarian society should strive for!” or “Dagny is a strong independent woman who don’t need no government!”

Yes, I am aware, but it isn’t Ayn Rand the author I dislike. Actually it isn’t even Ayn Rand the person that I dislike. I don’t like the idea of Ayn Rand. The metaphysical zeitgeist that surrounds and worships her throughout every circle of the libertarian movement from Walter Block to Milton Friedman to every other subscriber on www.reddit.com/r/libertarian.

All too often I have had to argue about libertarianism through the lens of someone whose only exposure to the philosophy is Ayn Rand and the objectivist selfishness that nearly everyone associates with capitalism. In short, I think she is bad for libertarianism and provides no end of ammunition that can be used against those of us with a more nuanced moral/ethical position.

Here is the kicker though. I have not read a single Ayn Rand novel. Not Anthem, not the Fountainhead, and especially not her magnum opus Atlas Shrugged. My knowledge of her works (outside of objectivist philosophy) comes mostly through a bit of osmosis during many diatribes in my conversion to libertarian thought and the first few chapters of Anthem I read in high school before being bored to tears.

I feel that my lack of personal experience with the work of Ayn Rand is a great injustice to someone so influential to many (but certainly not all) of the ideals that I hold so dear and maybe, just maybe, I can siphon off some of the passion that so many others feel when reading her novels.

So it is my objective to spend the next several weeks (months perhaps) reading Atlas Shrugged along with you, the faithful readers here at www.notesonliberty.com, and recording chapter based summaries of my thoughts, opinions, and analysis from a literary, ethical, and philosophical standpoint. These will be full of personal anecdotes and armchair analysis so be prepared for a tumultuous ride through one of the “great?” works of the 20th century.

Part one of many comes tomorrow morning.

Another example of double-speak: This is what happens when Time Warner Cable is forced to compete

Adam Magoon Current Events, Economics, Law, Liberty , , , , , , , , ,

This is what happens when Time Warner Cable is forced to compete

Such a laughable headline when government regulations are what caused the cable/telecom monopolies in the first place.

“This report admits that in the days when cable was challenging airwave broadcasters, regulators “did not hesitate to grant exclusive franchises to cable operators”4. It speaks specifically of a long history of successful regulatory lobbying by the cable industry. This report claims that lobbying of regulators resulted in a variety of tactics to deter competition (p. 35). It claims that regulators protected and favored cable incumbents for years. Licensing policies have directly or effectively barred competition in many local markets (p. 44). Such practices are no longer official, but cable companies still succeed in enlisting the help of regulators to bar direct competition (p. 44). Incumbent cable companies have also gotten regulators to use “level playing field laws” to increase the costs of entering the cable market (p. 45). Cable companies have also saddled new competitors with disproportionate shares of subsidies for public education and government programming (p. 45). The cable industry has also succeeded in getting the FCC to quash new competitors with prices for leased access no competitor “could pay and remain commercially viable” (p. 47).”

Much like the drug law argument I talked about last week this is another example of people lauding governments for solving problems that the government itself is responsible for.  We need to look beyond the double-speak and identify the underlying issues at hand.  In this case government privilege granted to favored corporations.

A taste of local flavor: Remington Outdoor Company to announce major expansion to Huntsville

Adam Magoon Current Events, Liberty, Politics , , , , , ,

Remington Outdoor Company to announce major expansion to Huntsville

“The site will rank with ROC’s largest facilities. Ilion, N.Y., is home to the largest facility at more than 1 million square feet, followed by other sites such as its ammunition plant in Lonoke, Ark., and its factory in Mayfield, Ky.

Sources say manufacturing operations in Ilion will not be affected by the expansion and there are no plans to move manufacturing from that site, where Remington has been building firearms for nearly 200 years.”

I have to wonder how much Governor Cuomo’s anti-gun policies contributed to this decision.  We will see if Remington holds true to their word but this author is predicting the Ilion factory to be gone in the next five years.

I would also like to suggest that any New Yorkers check out this page for information on anti-gun restriction protests happening this spring.  While they are not a libertarian organization there is some semblance of solidarity.

Thousands of Connecticut Gun Owners ‘Flout’ New Registration Law

Adam Magoon Current Events, Liberty, Politics , , , , ,

THOUSANDS OF CONNECTICUT GUN OWNERS ‘FLOUT’ NEW REGISTRATION LAW

The most prescient point from State Senator Tony Guglielmo is “I honestly thought from my own standpoint that the vast majority would register.” He then added, “If you pass laws that people have no respect for and they don’t follow them, then you have a real problem.”

It seems that in many cases the average person is more libertarian than they realize.  Or to use the phrase provided by pseudo-libertarian author Robert Heinlein:

“I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do.”

Italy overturns ‘absurd’ drug law equating marijuana and hard drugs

Adam Magoon Current Events, Liberty, Philosophy , , , , , , , ,

Italy overturns ‘absurd’ drug law equating marijuana and hard drugs

The title really gives all of the details. Libertarians are usually quick to celebrate these kinds of liberalizations of government authority but I always take these times to reiterate and oft forgotten fact.  Italy has not “given more rights to drug users”.  I hear this so often and strangely enough almost universally from more “left” policies such as gay marriage “Massachusetts has given the right to marry to homosexuals.”  This is a blatant misrepresentation of the truth.  The right of self-ownership is universal and each and every person already has the right to consume any drugs they please or to marry whomever they choose.  Government action has taken away those rights and them removing that restriction is not the same as giving away rights.  Rights cannot be granted, they are innate and inalienable.  Rights can only be removed by force.  Two forces in this world deny rights to others.  Criminals and the Government.  Most libertarians do not make a distinction between the two.

Obama: “I can do what I want”

Adam Magoon Current Events, History, Law, Liberty, Politics ,

Obama: “I can do what I want”

Let us contrast this to the president that the founding fathers of America intended.   As Alexis de Tocqueville put it in the early 19th century, the president “has but little power, little wealth, and little glory to share among his friends; and his influence in the state is too small for the success or ruin of a faction to depend upon his elevation to power.”

How far we have come…

Risks Of Regulation

Adam Magoon Current Events, Economics, History, Law, Liberty, Politics , , , , , , , ,

A bit dated but still very relevant.

Regulation; the four letter word of the business world.  Many people see regulation as a protective shield from the ‘dangers’ of the businessman; a way to protect people, property and the environment.  The oil industry is one of the most heavily regulated enterprises in the United States.  Despite being intended to protect us; these regulations failed catastrophically on April 20th, 2010 when the Deep Water Horizon oil rig suffered a mechanical failure resulting in an explosion which sank the rig two days later(1).  Yet, when the disaster happened, we were met with pleas for more government oversight and more red tape.  The regulations on that industry, both in the Gulf Mexico and throughout the country, helped cause the Deepwater Horizon disaster and removing them would help prevent similar disasters in the future.

Regulations in the Gulf of Mexico begin with the Minerals Management Service (MMS).  Created in 1982 due to the Federal Oil and Gas Royalty Management Act the MMS “both regulates the [gulf oil drilling] industry and collects billions[of dollars] in royalties from it”(2, 3).  The MMS’s responsibility to regulate includes monthly inspections, issuing safety documentation, and issuing safety citations(3).  Royalty collection is based on number of barrels of oil removed and varies from well to well.  The MMA also provides  “royalty relief“ to a number of rigs based on previous legislation. Until November of 2000 the royalty relief was issued based on the Outer Continental Shelf Deep Water Royalty Relief Act of 1995, better known as DWRRA.  This act “relieves eligible leases from paying royalties on defined amount of deep-water production”.  At depths over 2,526 feet oil companies did not have to pay the United States royalties on 87.5 million barrels of oil, between 1,312 and 2,625 feet the relief was 52.5 million barrels and between 656 and 1,312 feet the relief was only 17.5 million barrels.  While this act expired in the year 2000 it was replaced by an incentive program that allowed royalty relief to be “specified at the discretion of the MMS”(4).  This incentive program provides more relief if a drilling site is “more expensive to access” even if it is at the same water depth as another rig receiving less relief (2).  The royalty relief system provides incentives for Oil Rigs to operate in deep waters, especially those classified as “Ultra-Deepwater” by reducing the royalties paid on those sites(5).

While not specific to the gulf, there are a variety of moratoria on drilling throughout the country.  These moratoria take two forms.  The first set, known as “leasing moratoria” are general bans on drilling in select areas , the second set are temporary bans due to specific incidents.  Since   the fiscal year 1982 congress has denied funds to the MMS to “conduct leasing for the specified Outer Continental Shelf areas”.  Currently there is a “blanket moritorium” on leasing in effect “through 2012” that covers a large portion of both the East and West coasts( 2).  One of the largest bans on drilling however exists in the Arctic National Wildlife Refuge(ANWR).  Located in the “northeast corner” of Alaska over ten million acres of land are off limits to drilling.  In this wildnerness it is estimated that there exists “between ten billion and sixteen trillion barrels of oil” that could supply twenty percent of U.S. demand for nearly thirty years(6).  The most recent temporary bans have been a result of the Deepwater Horizon disaster.  A “30-day pause in offshore drilling” followed the sinking of the Horizon rig(11).  This did not only cover BP’s rigs but all offshore drilling “based on water depth”(7).  That ban was removed by a federal court, but was replaced with a revised ban that will be in effect until November, 2010(7).

Beyond physical limitations on drilling there are also economic regulations.  There are a number of federal subsidies and tax breaks for the drilling industry.  David Kocieniewski says that “examination of the American tax code indicates that oil production is among the most heavily subsidized businesses”.  These tax breaks occur for a number of reasons.  Many are simply to lure oil companies to American shores, others were “born of international politics” or “date back nearly a century”(8).  Beyond that the United States government has put “Liability Limits” on drilling operations.  The Oil Pollution Act of 1990 limits an oil companies liability for damages to only $75 million dollars.  Any remaining damages, up to $1 billion, are payed through the Oil Spill Liability Trust Fund.  This fund is “financed primarily through a fee on imported oil”(1).  Senator Robert Menendez from New Jersey recently introduced bill, S. 3305 which would raise that cap to $10 billion(9).

All of these laws and regulations have one thing in common.  They increased the probability of a catastrophic oil spill in the Gulf of Mexico.  Each regulation increased the risk of such a spill in some way and when combined they resulted in the disaster that is causing massive destruction in the Gulf today.  The Minerals Management service was organized to be the overarching regulatory body for the Oil Industry.  Why did it fail in its duty?  Why did “spills from offshore oil rigs…in U.S. waters more than quadrupled this decade” despite the MMS’s oversight(10)?  This question was answered by economist Walter Block in his book The Privatization of Roads & Highways (12).  Quoting Cecil Mackey, former Assistant secretary of transportation, he says:

“As the more obvious regulatory actions are taken; as the process becomes more institutionalized; as new leaders on both sides  replace ones who were so personally involved as adversaries in  the initial phases, those who regulate will gradually come to reflect,     in large measure, points of view similar to those whom they regulate.”

Quite simply, the MMS adopted the views of the Oil Industry completely negating their ability to regulate it.  Congressman Nick J. Rahall confirms this saying “MMS has been asleep at the switch in terms of policing offshore rigs”.  Using numbers supplied by the MMS in the prior 64 months before the incident “25 percent of monthly inspections were not performed”(3).  Are we to believe another agency would be any more efficient?  Bureaucracy and corruption are not the only things to blame however; legislation played a vital role in this disaster as well.  DWRRA, for example, incentivized the risk to drill in deep waters.  Under DWRRA the greater the depth being drilled the greater the royalty relief amount.  These waters are inherently less safe to drill in.   It is easy to compare the difficulties in dealing with a site 5000 feet below the ocean against one 500 feet below the surface.  These incentives were made worse when DWRRA expired.  Under the new program “the most economically risky projects would receive the most relief”, safer projects on the other hand would receive “little or no relief”(4).

While acts like DWRRA incentivize the risk of deepwater drilling the greater incentive to drill in the Gulf of Mexico is simply that there are so few places to drill in the continental United States.  The United States Exclusive Economic Zone extends “200 nautical miles” from all of it’s shores(2).  Yet, much of this area is off limits to drilling.  The “blanket moratorium” issued by former President George H.W. Bush in 1990  restricts drilling in “all unleased areas offshore Northern and Central California, Southern California except for 87 tracts, Washington, Oregon, the North Atlantic coast, and the Eastern Gulf of Mexico coast”.  The Gulf of Mexico is the only economically viable offshore area left for them to drill.  This of course pales in comparison to the Arctic National Wildlife Refuge.  Most of the 10-million-acre area is not even adjacent to the ocean, surely drilling on land or in shallow water is much safer than drilling 5000 feet under the ocean(6).  Beyond helping to cause the spill in the first place the government is increasing the risk of future disasters.  The temporary ban issued in response to the Horizon spill “neither improves safety nor mitigates risk”(11).  By forcing drilling to stop you immediately cause a number of problems.  Reentering a location is as dangerous, if not more so, than the original drilling operation.  Experienced workers have been fired, laid off, or relocated and will need to be replaced with less experienced ones.  Equipment in worse quality will be all that remains when the moratorium ends(11).

The economic regulations were the proverbial straw that broke the camel’s back.  A single tax break for the Deepwater Horizon oil rig covered “70 percent of the rent” or “$225,000 a day”.  Or, as policy analyst Sima J Gandhi describes it “We’re giving tax breaks to highly profitable companies to do what they would be doing anyway”(8).  These breaks are not only an unfair advantage, they incite these companies to make riskier choices.  If the potential cost of the Deepwater Horizon rig wasn’t offset by these breaks it may not have been economically viable to drill in such a dangerous location.  On top of the lower cost of the initial operation; the Liability Caps ensured that any potential risk was marginalized by the government.  The $75 million limit that has been in effect since 1990 was a message to the industry to attempt increasingly risky drills(1).

The oil companies should be liable for the full cost of any damages done by their rigs.  The worry that “operators and nonoperators in the U.S. Gulf of Mexico will be unable to obtain adequate protection from insurance” is totally unjustified (1).  If the site is not economically viable then there is no reason to drill there.  If BP and Transocean knew they would have been liable for all damages they would not have received a citation for “not conducting well control drills as required and not performing ‘all operations in a safe and workmanlike manner'”(3).  There would have been an incentive to spend money on safety, training and equipment instead of the incentive to take risks knowing they would be protected.  Or as one lawyer explained the situation “arbitrary liability caps are just not reasonable.  You cannot decide the expense of a disaster before it happens.  Liability caps allow companies like BP to avoid bearing the responsibility for the full cost of the damage they inflict”(9).

The oil has stopped flowing from the bottom of the Gulf; for now.  The question remains: How can we prevent this from happening again?  There, of course, is no easy answer.  Accidents, mistakes, and disasters can never be guarded against completely.  We can however mitigate the risk involved in those dangerous operations that are needed for the sake of humanity.  The best way to increase the safety of the oil industry is to remove the regulations that incentivize the risks involved in their industry.  Preventing drilling in safer areas, tax breaks, royalty reductions, liability limits; all these things make an already dangerous prospect that much more perilous.  We need to neither help nor hinder these companies, they must succeed or fail on their own merits.

Sources available upon request.

UK considering long prison terms for file sharers

Adam Magoon Current Events, Economics, Liberty, Philosophy

https://torrentfreak.com/uk-considers-throwing-persistent-internet-pirates-in-jail-140123/

Up to ten years in fact.  While there is debate in the libertarian community over intellectual property laws I think that I would be hard pressed to find many libertarians that think downloading a movie should put an “offender” in prison for a similar amount of time as stealing a car. 
 

Is China running out of cash?

Link Adam Magoon Current Events , , , , , , , , ,

Is China running out of cash?

China Halts Bank Cash Transfers

“The People’s Bank of China, the central bank, has just ordered commercial banks to halt cash transfers.”

Could we be seeing the start of total economic collapse? The answer, ceteris paribus, is yes and the Austrian Business Cycle Theory (ABCT) explains why.

To quote Ludwig Von Mises’ explanation of the final act of the ABCT:

“Ludwig von Mises stated that the “crisis” (or “credit crunch“) arrives when the consumers come to reestablish their desired allocation of saving and consumption at prevailing interest rates.[12][“

This means that when consumers finally realize that the money they have invested has actually been malinvested in the economy they then seek to acquire as much of their money as possibly from said investments. Most of which take the form of bank deposits.

The linked article reminds us that this is the numerous such time that China has adopted this policy saying:

“So what’s really going on?  This crunch follows similar incidents in June and December of last year.  In June, for instance, the central bank used the excuseof a “system upgrade” to allow banks to shut down their ATMs and online banking platforms.  As a result, they conserved cash and thereby avoided a nationwide meltdown.”

Other instances, such as this one in England where “[s]ome HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it,” show that this problem may not be contained to China and may be spreading to the international market.

What does Murray Rothbard say will happen when this “credit crunch” inevitably occurs?

Wasteful projects, as we have said, must either be abandoned or used as best they can be. Inefficient firms, buoyed up by the artificial boom, must be liquidated or have their debts scaled down or be turned over to their creditors. Prices of producers’ goods must fall, particularly in the higher orders of production—this includes capital goods, lands, and wage rates […]

this means a fall in the prices of the higher-order goods relative to prices in the consumer goods industries. Not only prices of particular machines must fall, but also the prices of whole aggregates of capital, e.g., stock market and real estate values. In fact, these values must fall more than the earnings from the assets, through reflecting the general rise in the rate of interest return […]

“Since factors must shift from the higher to the lower orders of production, there is inevitable “frictional” unemployment in a depression, but it need not be greater than unemployment attending any other large shift in production. In practice, unemployment will be aggravated by the numerous bankruptcies, and the large errors revealed, but it still need only be temporary […]

Another common secondary feature of depressions is an increase in the demand for money. This “scramble for liquidity” is the result of several factors: (1) people expect falling prices, due to the depression and deflation, and will therefore hold more money and spend less on goods, awaiting the price fall; (2) borrowers will try to pay off their debts, now being called by banks and by business creditors, by liquidating other assets in exchange for money; (3) the rash of business losses and bankruptcies makes businessmen cautious about investing until the liquidation process is over.

With the supply of money falling, and the demand for money increasing, generally falling prices are a consequent feature of most depressions. A general price fall, however, is caused by the secondary, rather than by the inherent, features of depressions.

So is the massive failure of all economies imminent? Well not necessarily because the government can take some steps to prevent the immediate failure.

According to Mises:  

“Continually expanding bank credit can keep the borrowers one step ahead of consumer retribution (with the help of successively lower interest rates from the central bank). In the theory, this postpones the “day of reckoning” and defers the collapse of unsustainably inflated asset prices.[12][14] It can also be temporarily put off by price deflation or exogenous events such as the “cheap” or free acquisition of marketable resources by market participants and the banks funding the borrowing (such as the acquisition of land from local governments, or in extreme cases, the acquisition of foreign land through the waging of war).[15]

The “false” monetary boom ends when bank credit expansion finally stops – when no further investments can be found which provide adequate returns for speculative borrowers at prevailing interest rates”

These steps only “kick the can down the road” and delay the inevitable since “the longer the “false” monetary boom goes on, the bigger and more speculative the borrowing, the more wasteful the errors committed and the longer and more severe will be the necessary bankruptcies, foreclosures and depression readjustment.”

We may be seeing the beginning of the next great depression here but only time will tell.  One thing is certain though, a massive economic readjustment is coming and the central banks of the world have only been aggravating the problem.  When it will hit is anyone’s guess but in this author’s opinion we are either looking at a repeat of the early 30’s or a repeat of the early 40’s and I can only hope we can avoid going through both.

Weekly Wakeup 01-24-2014

Adam Magoon History, Liberty , , ,

Making this a quick copy paste job today.  It has been a busy week.

To make a long story short, read this.

Myth:  The Great Depression was caused by government inaction in the face of a failing economy.

Reality:  The Hoover administration was the most active interventionist of a non-war economy in American history.

To quote the man himself:

“[W]e might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action.

No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living have been reduced before wages have suffered.”

And to quote the Murray Rothbard about Hoover’s actions:

At St. Paul, at the end of his campaign, Hoover summarized the measures he had taken to combat the depression: higher tariffs, which had protected agriculture and prevented much unemployment, expansion of credit by the Federal Reserve, which Hoover somehow identified with ‘protection of the gold standard’; the Home Loan Bank system, providing long-term capital to building-and-loan associations and savings banks, and enabling them to expand credit and suspend foreclosures; agricultural credit banks which loaned to farmers; Reconstruction Finance Corporation (RFC) loans to banks, states, agriculture, and public works; spreading of work to prevent unemployment; the extension of construction and public works; strengthening Federal Land Banks; and, especially, inducing employers to maintain wage rates. Wage rates ‘were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.’ But was there any causal link between this fact and the highest unemployment rate in American history? This question Hoover ignored.

Hoover had, indeed, “placed humanity before money, through the sacrifice of profits and dividends before wages,” but people found it difficult to subsist or prosper on “humanity.” Hoover noted that he had made work for the unemployed, prevented foreclosures, saved banks, and “fought to retard falling prices.” It is true that “for the first time” Hoover had prevented an “immediate attack upon wages as a basis of maintaining profits,” but the result of wiping out profits and maintaining artificial wage rates was chronic, unprecedented depression. On the RFC, Hoover proclaimed, as he did for the rest of his program, “Nothing has ever been devised in our history which has done more for those whom Mr. Coolidge has aptly called the ‘common run of men and women.'” Yet, after three years of this benevolent care, the common man was worse off than ever.

Hoover staunchly upheld a protective tariff during his campaign, and declared that his administration had successfully kept American farm prices above world prices, aided by tariffs on agricultural products. He did not seem to see that this price-raising reduced foreign demand for American farm products. He hailed work-sharing without seeing that it perpetuated unemployment, and spoke proudly of the artificial expansion by business of construction “beyond present needs” at his request in 1929-30, without seeing the resulting malinvestment and business losses.

While claiming to defend the gold standard, Hoover greatly shook public confidence in the dollar and helped foster the ensuing monetary crisis by revealing in his opening campaign speech that the government had almost decided to go off the gold standard in the crisis of November, 1931—an assertion heatedly denied by conservative Democratic Senator Carter Glass.

The spirit of the Hoover policy was perhaps best summed up in a public statement made in May, before the campaign began, when he sounded a note that was to become all too familiar to Americans in later years—the military metaphor:

The battle to set our economic machine in motion in this emergency takes new forms and requires new tactics from time to time. We used such emergency powers to win the war; we can use them to fight the depression (321-323).

Introducing the Weekly Wakeup

Adam Magoon History, Liberty , , ,

History is one of my passions and one I share with the late Murray Rothbard.  His examinations and refutations of the commonly accepted truth were one of my early inspirations into exploring libertarian thought.  I urge you to consider this quote from Plato’s Apology: “I am wiser than this man, for neither of us appears to know anything great and good; but he fancies he knows something, although he knows nothing; whereas I, as I do not know anything, so I do not fancy I do. In this trifling particular, then, I appear to be wiser than he, because I do not fancy I know what I do not know.”  This is the first in what should be a long series of weekly blurbs about common misconceptions and downright lies about history.  I will be looking forward to responses and suggestions for future topics in the comments.

Weekly Wakeup for 01-17-2014

Myth:  Early European colonists in North-America enacted a systemic genocide of native peoples from the start.

Reality: “The most hideous enemy of native Americans was not the white man and his weaponry, concludes Alfred Crosby,’but the invisible killers which those men brought in their blood and breath.’ It is thought that between 75 to 90 percent of all Indian deaths resulted from these killers.”

Another source confims:

“[B]ased on the data, the team estimates that the Native American population was at an all-time high about 5,000 years ago.

The population then reached a low point about 500 years ago—only a few years after Christopher Columbus arrived in the New World and before extensive European colonization began.

Study co-author Brendan O’Fallon, a population geneticist who conducted the research while at the University of Washington in Seattle, speculates that many of the early casualties may have been due to disease, which ‘would likely have traveled much faster than the European settlers themselves.’

For instance, the Franciscan friar Toribio de Benavente—one of the first Spanish missionaries to arrive in the New World in the early 1500s—wrote that Mexico was initially ‘extremely full of people, and when the smallpox began to attack the Indians, it became so great a pestilence among them … that in most provinces more than half the population died.'”

Myth: This disease epidemic was directly caused by settlers through planned biological warfare.

Reality:

“Unfortunately for this thesis, we know of but a single instance of such warfare, and the documentary evidence is inconclusive. In 1763, [ed. Notably long after the “500 years ago” mark where the population was already markedly declined] a particularly serious uprising threatened the British garrisons west of the Allegheny mountains. Worried about his limited resources, and disgusted by what he saw as the Indians’ treacherous and savage modes of warfare, Sir Jeffrey Amherst, commander-in-chief of British forces in North America, wrote as follows to Colonel Henry Bouquet at Fort Pitt: ‘You will do well to try to inoculate the Indians [with smallpox] by means of blankets, as well as to try every other method, that can serve to extirpate this execrable race.'”

I would like to point out that this attack, if it ever did actually happen, was initiated not by individual settlers but instead by the military government in that region.  A group that I do not and would not defend under any circumstances.   I would also like to preemptively say that I am not attempting to justify the forced relocation of Native peoples later in history, wars waged by either side or the murder of civilians by either group.  Instead I merely wish to question the assertion that there was an intentional and premeditated genocide.  A fact that seems obvious when you consider up to 90% of the native population was already dead from disease before the first colonists even arrived.