Category Archives: Freedom

A Chart That Should Speak For Itself

The Economic Freedom (weighted average based on 2014 population) of the Core Anglosphere countries compared to the world’s Spanish speaking countries:

freedomvsinvasion

(But just in case it doesn’t speak for itself, the core Anglosphere countries have population weighted average freedom score of about 76.7 and the Spanish speaking countries have an average score of 60.5, a difference of over 16 points)

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Filed under Freedom, Multiculturalism

Beyond Reproach; On Questioning “Patriotism”

Strictly speaking, the word “Patriot” cannot apply to modern American progressives because the word “Patriot” actually means someone of Whig persuasion. To say that Progressives are not Patriots is merely to affirm the obvious fact that Progressivism is an Anti-Liberal political philosophy, and is obviously not meaningful. I do not “question the Patriotism” of American leftists, as that would be akin to questioning the Christian Faith of a Hindu. The American Patriots that fought for their rights as Englishmen were not Patriots because they “loved their country.” That would be nonsense: America was not yet a country, and most people would question whether you love a country you try to separate from. No, the Patriots loved an idea. To be sure, a fairly uniquely English idea, but certainly not one the British Government believed in, since the denied it to those in their colonial dominions. That idea was freedom, but in particular it was freedom in what Schumpeter called “the bourgeois sense.”

But the recent controversy over Rudy Giuliani’s remarks is not, contrary to the abuse of the term, over him “questioning Obama’s Patriotism.” In reality, Giuliani questioned whether Obama has the same kind of love of America, or whether he has the love of America, that people like Giuliani do.

I mean really, how dare he! You Republicans, you’d probably question Lenin’s love of Russia, or Robespierre’s love of France. Outrageous! Everyone’s Nationalism is beyond reproach: who would want to lead a country he did not love? Surely no one.

Do you see the rhetorical point I’m trying to make here? I think it’s actually obvious that American progressives cannot love American-at least, not as America is or has been. Democrat Nationalism-not Patriotism, that would be an oxymoron-is love of America as it could be, if only they could make it so. But a love of what the country could be if only you were in charge, implies a hatred of the country as it has been, if how that country has been, has been in a recalcitrant state, standing athwart your march toward Utopia. This is I believe what Giuliani has rightly observed appears to be a feature of Obama’s worldview in particular. And in some sense, if you love America you ought perhaps look askance at those who would see her transformed into something very different before they could truly be proud to call her home. I know that I would-that I do.

But far more important, I think, than whether one loves the country as it is or has been, is the question of whether what one wants for the country, for the people that inhabit our polity, is truly good for them. And this, not whether Democrats are Nationalists or not, is the truly damning indictment of their entire ideology. Robespierre loved France: he loved to see it terrorized. Lenin loved Russia: he loved to see it suffer. Of course, there are also those who love their country, in that they love to see the boot of their country on everyone else’s throat-think Mussolini or Hitler-but the left in America is relatively uninterested in directly oppressing foreigners. Contrast all of those with Patriotism, a love for what is actually good for the people of our country, love of things that would be good for everyone. The love of the American idea as such, neither a love for a people, a geographic location, or a government, but a love of American freedom.

I have absolutely no doubt that Obama has no such love for the American idea. No one should really be surprised by that. And I suspect most people criticizing Giuliani would understand that if only they wanted to. But they don’t want to.

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Filed under Freedom, General

Rationale for Freedom in Banking

I thought after obliquely mentioning it in my last post, the concept of Freedom in Banking deserves more elaboration. I initially became enthusiastic about the idea based on a simple idea, which we may call a principle of economics:

Free and voluntary exchange, coordinated by an unrestrained system of prices, is the most effective way to bring production of goods and services-the ends of suppliers-into harmony with consumer demand.

If one holds that this is true for all “ordinary” goods and services, it becomes very strange indeed to simultaneously maintain that the provision supply of money to meet the public at large’s demand for money holdings, and a medium of exchange, is somehow best served by a government sponsored monopoly. That being said, most economists have tended to take for granted the need for regulation of the banking system, and government control of the money supply-Even Milton Friedman, who once remarked that the if the government were put in charge of the Sahara Desert there would be a sand shortage in a few years, generally took central monetary control for granted. Rothbardians, because they believe fractional reserve banking to be fraud, want de facto regulation of banking through a private court system-Any bank holding less than 100% reserves against it’s outstanding liabilities would be prosecutable as criminal. (As an aside here, most Austrians seem to believe fractional reserve banking is the inherent problem (that is, the root cause monetarily induced business cycles) but the Rothbardians distinguish themselves by believing it to be criminal. For Mises, fractional reserve banking was a creature created by government intervention, so in terms of policy he favored laissez faire. While he was almost certainly wrong to believe fractional reserve banking would not survive under free banking, he got the remedy right anyway. For my part I favor the views of those more like Larry White or George Selgin, who would have it that monetary instability comes from central banking, not fractional reserves per se) And it should go without saying that the Left, especially those who belong to the Conspiracy School of Economics, favor government reflexively.

Despite such opposition from practically all sides, I still defend the case for monetary laissez faire. Why? Let’s sketch a brief outline:

1. To begin with, not only is it not clear that a Central Bank, a government created monopoly, is an improvement over freedom in banking, it isn’t clearly an improvement even over a system like that which immediately preceded the creation of our current one in the United States-itself an un-free system, with restrictions on branching and taxes and regulations that basically limited note issue to what could be backed 100% with a particular kind of Government bond.

2. A so called “demand side recession” can only occur if there is an excess-that is, unmet-demand by the public to hold money balances. Otherwise, the observation of Jean-Baptiste Say applies: people supply goods and services only because they want to acquire money to purchase goods-that is, only because they they want to demand things: Supply creates it’s own demand. The virtue of a free banking system of competitive note issue is that it automatically achieves this monetary neutrality, ie monetary equilibrium. How, exactly? Without getting into too much detail, essentially: for a given quantity of reserves (the quantity is determined by the base regime. A stable quantity would be easy to achieve, we could have monetary policy set by a computer, or we could even close the Fed’s open market operations entirely, and freeze the monetary base-something Milton Friedman favored later in his life), banks will expand and contract lending to maintain a constant nominal income MV-to put it another way, the Banking system accommodates increases and decreases in the public’s desire to hold inside money. In loanable funds market terms, the supply of loans increases in response to an increase in voluntary savings and contracts in response to a decrease-thus achieving the Wicksellian Natural Rate of Interest, the displacement from which is at the core of the Austrian Business Cycle Theory. In other words, competitive forces automatically achieve two results which different economic schools of thought consider necessary to avoid or ameliorate business cycles, without the need for government intervention at all; One which Monetarists and certain Keynesians would be keen on is automatic “rule” that amounts, essentially, to NGDP targeting, Austrians should like that it should maintain the interest rates that would clear credit markets on the basis of voluntary savings-and thus prevent systematic malinvestment of capital. Essentially the only recessions we’d have to worry about any more would be “real shocks” of the sort a modern, large economy is not particularly susceptible to-but which, at any rate, no government policy could ever avoid, for the same reason even a completely free economy could not avoid them: they’re just bad luck. The theoretical basis for these arguments can, if anyone is interested, be found here.

Also, the question could be raised, since I mentioned it above, what the “optimum” monetary base regime is. Monetarists would tend to favor, generalizing here, anything from a Monetary base growth rate that would maintain 0% consumer price inflation, to a small positive rate of consumer price inflation. I tend to lean away from this view as excessively inflationary, but I demur on how much productivity and growth based deflation is optimal. I will simply observe that if population is stable, Selgin’s productivity norm converges to the frozen base proposal. To the extent that we may expect our population levels to stabilize in the future, we can treat the productivity norm as a transitionary regime towards eventually freezing the base.

EDIT: Some of the above requires some alteration from a more detailed examination of the “math” behind the logic linking freedom in banking to a “stable” nominal income. I was a bit mislead by almost interchangeable use of “stability” and “constancy” of MV when the monetary base is frozen. Strictly speaking the growth rate of MV is only zero under certain other assumptions, or families of sets of assumptions, about interest rates versus penalties for reserve shortages, the number of banks, and the ratio of number of clearing transactions of a certain “real” value to the number of equivalent transactions of a particular “real” value in the economy. That being said, it would be relatively trivial to write a computer program to manage the size of the monetary base to maintain an approximately fixed nominal income. Which means you could close the Fed and the FOMC.

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Filed under Economics, Freedom

Neo-Free Soil

In 1848, Salmon P. Chase coined a simple slogan for the Free Soil Party, which later became a core part of the Republican Party.

Free Soil, Free Speech, Free Labor and Free Men

I believe that something similar is in order today. In fact, many of these very same brief summaries of positions would be adaptable to present day policy debates in parallel with past ones, and naturally align with the American Conservative/Right-libertarian positions, with a few additions:

Free Soil

The Government lays claim to large swaths of land in the American West. Their claim to property rights over this territory is theoretically dubious; indeed, from a Lockean perspective, it is totally illegitimate. As such, while it might be pragmatic to pay down the debt by selling off public land, it is bad law to do so. My suggestion would be to pass a new Homestead Act, whereby this property could transition to private ownership from non-ownership, through use. Economic activity on and development of this land would be encouraged by temporary exemption of all State, Local, and Federal taxation therein. Some portions could be set aside for the establishment of private parks and nature preserves, with the provision for ownership changed from any use, to exclusively use as parks where the owners would be free to charge whatever fees for access they see fit, on condition that they maintain the land well (Not that they attempt to keep the land in a static state, it must be said) . Legal authority (ie law enforcement jurisdiction) within the territory is to belong solely to the States or the relevant Local Government, but all property rights are to be private, and certain state regulations are to be considered abrogated within the property at least for the duration of the development period. This is a program that not only restores the right notion of property rights to our laws, but will also spur economic development and growth, as reopen the once closed frontier.

Free Speech

Freedom of Speech is under assault in America, make no mistake about that. Whether it be Harry Reid and his ilk seeking broad, sweeping power to ban the use of money by corporations to give the views of the people they are composed of a platform-including, it must be noted, all media corporations, between which there is no legal distinct or distinct of substance-or be it the effective nullification of anti-SLAPP laws for anyone who dares speak against a publicly funded High Priest of the New Religion, or State sponsored Universities have explicit or implicit speech codes and whereby in the latter case aggressive intimidaters can force Universities to suppress anyone from speaking there that they don’t agree with. American Conservatives/Right-libertarians must stand against all this, in favor of absolute, unequivocal freedom of speech.

Free Labor

We should favor the elimination immediately of the minimum wage-a barrier to entry in the labor supply market for unskilled, inexperienced workers. We should favor the elimination of most if not all occupational licensing. We should abolish the National Labor Relations Board that supports labor supply cartelization that could not survive in the market otherwise. We should pass a national right to work law forbidding and abrogating all closed shop clauses in labor contracts. The labor market must be competitive and free, as should be all other markets.

Free Banks

Banking has been substantially regulated in the US from it’s very earliest days. Monetary Laissez Faire was never allowed to prevail, even during the “free banking” era. Economic theory and historical experience both favor a free system of competitive note issue (historically, under a commodity standard, ie Gold) has produced far greater economic stability than a Central Bank could hope to achieve-indeed, Central Banks are the cause of much monetary disequilibrium and thus economic and financial instability. Scotland, the home nation of Adam Smith, offers particularly strong historical evidence in this regard, but the experience of our Canadian neighbors to the North are also especially informative, where during various periods Canadian banking was not subject to certain regulations and restrictions that were often plaguing the US, and escaped many of the associated problems. This amounts to a proposal for the eventual privatization of the Money Supply. As we recognized, the demand for a good is best met when competitive, private forces supply it to the public, meeting Demand for it by finding the appropriate price to clear the market. At present, however, a monopoly over meeting demand for money by the Government means that Supply is essentially arbitrary, and unsurprisingly shortages and surpluses result as always when the Government attempts to control the provision of a good. In this case it is the good that stands in for all others, or more precisely when we speak of money demand (that is, to hold, not spend, money, where the immediate demand is for money for it’s own sake, that is, for forgoing present consumption in favor of future consumption), the present good that stands in for future all possible future goods. Equally unsurprisingly, all manner of mischief results from this central planning of the Money Supply. A system of free, unregulated banking would all but eliminate business cycles caused by monetary disequilibrium, leaving only those cycles caused by real shocks, which are unavoidable no matter what the economic system. It would accomplish this by stabilizing nominal income (MV), and implicit monetary rule far superior to any difficult to implement Federal Reserve policy. And while historically these systems have involved Gold or other commodity standards, it would be possible to implement gradually and without having to first define statutorily the dollar as redeemable in gold-banks would, of course, be free to write contracts of that sort, but high-powered or base money could be used as reserves in the meantime-with the stock thereof being frozen. In the previously linked book on the Theory of Free Banking, economist George Selgin outlined how this could all be achieved, in addition to the many reasons such a program would be a great reform for our monetary system.

Free Markets

Myriad subsidies, taxes, bailouts, handouts, and other Government interventions in the marketplace should be ended. We must liberate the economy from the controls that are holding it back, the interferences that get in the way of real progress. If we are to restore our economy to a healthily growing state, this is an imperative.

Free Trade

End the Export Import Bank and unilaterally repeal all protective tariffs. Restricting free exchange of goods across an arbitrary boundary is just bad economics.

Free Men

Whether it’s government intrusion on our civil liberties, like listening in on all our phone conversations and storing massive amounts of information on us using illegal writs of assistance, or claiming upwards of half of our earnings in some States, and half our wealth upon death, or compelling us to purchase health insurance on penalty of prohibitive fine-sorry, “tax”-which must be paid or else one is a criminal, it is clear that our Government no longer sees us as citizens, but as serfs. The leaders of both parties seek to enfranchise the foot soldiers of an invading army of a hostile country-the so-called ally who teach their children that half of our country belongs to them, who continue to keep an American as a prisoner of war-effectively erasing our own right to vote by cancellation-and have the unmitigated cheek to accuse attempts to counter this of disenfranchisement! We must reject and reverse this. The people should be free, free to keep the fruits of their labor, and retain their basic freedoms from Government control and intrusion. And free to determine the form of their own Government, and not have it decided by enemy combatants given access to the ballot box.

So that’s my simple slogan, and what it means to me. Free Soil, Free Speech, Free Labor, Free Banks, Free Markets, Free Trade, and Free Men.

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Filed under Conservatism, Economics, Freedom, General, History

Honk If You’re Over-Employed!

We live in an absurd world. You may be aware of a recent report-not, let’s keep in mind, from some right wing think tank, but from the Keynesians at the Congressional Budget Office-that Obamacare will lead to a very large increase in the number of people working part time instead of full time, and the CBO officials even seemed to have opened up introductory texts on actual economics saying the law creates “a disincentive to work.” In English for those of you playing at home: it destroys jobs.

Now, despite the fact that this is a government report, the government isn’t gonna take an insult to itself, from itself, lying down. The Obama administration has given the excuse that this is not due to anyone actually involuntarily losing their job, it’s due to people choosing not to work, because they never really wanted to have a job, they just had to to get health insurance.

Follow that? Millions of people won’t be working anymore, but it’s okay, they didn’t want to be working. They were over-employed because they really only wanted health insurance, not a job. In fact, the assertion amounts to a statement that the American people suffer from a chronic over employment problem.

Huh? That’s self-evidently nonsense. Of the entire population of the US, about 43% of people are employed. Of those between the ages of 15 to 64 a little less than 68% of people are employed. And keep in mind, those are people employed at all-the percentage of people with full time jobs is more like 34% and 54%, respectively. I don’t see how anyone could come to the conclusion, looking at those numbers, that too many people have to work too much.

But the assertion is, at any rate, based on the presumption (perhaps shared by the CBO) that Obamacare actually alleviates anyone’s health insurance woes. And, in alleviating these woes, it allows people to make the choices they would “naturally” chose to make, if only it weren’t for having to worry about health insurance. One might well make the argument that people could “naturally” chose not to work, if only they didn’t have to worry about eating. But there is nothing “natural” about the decisions one can make when one is able to use someone else’s income to purchase one’s health insurance-as is the case with subsidized insurance bought with the help of the government. It’s the “natural” choices the slave master can make with the fruit’s of his slave’s labor, or the “natural” choices a thief may make with his ill begotten loot. Of course, people receiving such things from the criminal gang that is the government are not themselves criminals or slave masters-that is the government. They are no more guilty of the crime itself than the thief or the slave master’s children, whom they feed with their ill gotten gains. But it is absurd and perverse in the extreme to suggest nothing untoward is going on, simply because people are responding to incentives. One might as well conclude nothing untoward is ever going on in the economy-people always respond to incentives. This doesn’t mean that incentives can’t be bad.

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Filed under Common Sense, Dumbasses, Economics, Freedom, Healthcare

A simple thought experiment to illustrate why a Government cannot facilitate exchange better than Capitalism

Suppose an economy of eleven people. In this economy, 5 people have X and want Y, 5 people have Y and want X, and there is one person who knows this (each individual party is ignorant of this fact). This person recognizes a profit opportunity: he can buy X from 5 people and Y from 5 people for, say, $4 dollars each, and sell them to the people that want them for $5 each. He makes a total profit of $2 per exchange, or $10 dollars.

Now, technically this represents an inefficiency. If we all possessed omniscience, and there was no cost to us actually getting our goods to each other, we could simply exchange with one another directly. This can be, and moreso now than ever is, resolved by technology; thanks to the internet, we can cut out the middleman more and more in our exchanges. But it must also be recognized that a perfectly efficient exchange could only be achieved by omniscient beings with unlimited power to act as the please. It is impossible in the real world. Some amount of inefficiency always exist, and where it does it represents a profit opportunity that will be exploited. In this example our choices are to let the middleman profit and each of us pay a dollar to engage in our exchanges, or not engage in the exchange at all, and not get what we want.

But what if we had the Government as the middleman? Couldn’t they do it without profiting, so we wouldn’t have to pay a dollar to get what we want? In a word, no.

The reason can be illustrated simply. Suppose the Government acted as the middleman, or more specifically, the a government employee is ordered by “the Government” to do, as his job, the facilitation of our exchanges. He is ordered to buy and sell X and Y in such a way as to make no net profit: $4 each. In net, the Government makes no profit and each of us gets what we want. However, if the Government is to do this it needs to pay the employee what he is willing to work for to facilitate the exchanges. That will be, judging from the Capitalist middleman, $2 per exchange; in other words, $10 dollars. Now, he would not be willing to do it for less than that, because he could just facilitate the exchange under the table without the Governments knowledge and make that much money. So the Government has to pay him at least that much. But the Government made no profit, so how is it to pay it’s employee’s wages? The answer is that it must raise revenue through taxation-Here the difference from Capitalism becomes interesting, because the Government can tax different people different amounts through the use of force: it can implicitly tax future people by borrowing money, it can tax everyone implicitly by inflating the currency and reducing the value of their dollars, or it can simply explicitly tax people, but at different rates. But either way it has to take the same amount of money from the people in total as the Capitalist did,  but unlike the Capitalist, who got the voluntary consent of those paying him, the Government does so with or without their consent, by force. If our Government strives to be fair, it taxes all 10 people equally (and cannot tax the employee of the government without raising his pay, because if his net pay is less than $10, he has an incentive to facilitate the exchange under the table.) The net result is that all ten people each pay a dollar to engage in the exchange, which was the same exact result achieved by the Capitalist who made a profit. We introduced a Government into this process, exchange, and we failed to improve the outcome for anyone. We could have improved the outcome for some individuals only at the expense of others (by harming them). And all this resulted from rather generous assumptions about how the Government would act. In the real world, the Government does not merely fail to improve on market outcomes, it actually does significantly worse; which is to be expected, since we assumed away that the Government would, itself, constitute a use of the 10 people’s resources and an additional cost to their exchanges. Which means that since the Government failed to improve upon the exchange process, there is no justification for having it interfere in it; if it can’t actually improve it, why should it?

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Filed under Common Sense, Economics, Freedom, General

A Teeming Horde Of Socialists

-Or, the Capitalist Suicide Pact.

Is it the case that the restraint of free movement of people across international boundaries is, in essence, of the nature of the error of the protectionist? Is, it not the case that imposition on such free movement represents violation of the natural right of man by the State?

Resolved that these propositions are, so the citizen of the Capitalist World, fear hypocrisy, deigns it that the artificial construction of a border ought not restrain migration, and he welcomes with open arms as a brother the worker, the talent, the human resource, (for he does not make the error of the population alarmist, that more people is bad) into the nation he calls home, but which, thinking on it, he holds in no special regard, except in so far as it may be an exemplar of his capitalist ideal-and that it is not, so much the more reason to hold it in contempt.

And, being that he may occasionally dislike the results of elections, but thinking the results of human events must inevitably favor liberty in the end, he excepts democracy, perhaps hesitantly. He thinks not for a moment that, in the regions from which his new brothers come, in choosing their own governments freely they have chosen despotism, tyranny, socialism. He is, after all, not racist, to think that ideology could be genetic. He thinks, such is the product of their institutions, but our institutions favor the market-One supposes he forgets that this is not so often, his patriotism is oddly restored from his-deserved-early contempt. And more importantly, he reasons, these are Christians, and we all know how Christians vote. Oh sure, he thinks, my wife or lover may not be able to get an abortion the next time she gets pregnant, but trade will be reasonably unrestrained. He is, unaware? Perhaps, of the evidence the prevailing opinions of these folks, on the contrary, are much the opposite of the typical evangelical Christian. He attributes, instead, all the evidence of every passing election, of evidence of purposeful thought by a block of voters seeking to righteously punish the truculent. And, he says, surely if we do away with the truculent, these people will, so long as we may make the issue ours, vote more in line with their religious beliefs. Religion, not biology, determines ideology, all human history not withstanding.

And lo, political victory! He achieves his goal, and across the nullified national boundary comes the teeming horde. Wonder, glory, at the production from this labor! Huzzah, a victory for mankind, for the future! And thus, on the surface, it seems.

But things are not as they appear. Look upon those things our Capitalist Citizen holds, rightly, in contempt: government largesse swells, and strains to be supported by a tax structure that burdens exclusively the upper income earners; for now, the state of Social Security and Medicare improve, at the expense of Medicaid and welfare programs.

Never fear! The election is here! Finally in good conscience, Capitalist Citizen can support Republicanism again, having defeated the bigots and reclaimed it’s name for the Truly Righteous. And, he expects-contrary to recent evidence-that the people are generally intelligent enough to realize that socialism isn’t working. He is enthusiastic. And so election day arrives.

Disaster! Calamity! Well, on the bright side, your wife can get that abortion. It is the first electoral college unanimous election since George Washington.

Republican Crass Crusty is defeated by Democrat Hugo Vladimir Gonzalez in a landslide. The election is attributed by pundits to the Hispanic vote.

Well, an election is just an election, there will be another one. So he waits, and in the mean time the Democrats further transform the country into something he does not recognize as remotely Capitalist. They win the next election, too, and the next one.

After an entire generation of ruin, Citizen Capitalist is in despair. In his squalid, rent controlled apartment, Citizen Capitalist commits suicide, not able to face the world anymore, it’s future so dim.

Of course, in reality, he committed political suicide a generation ago.

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Filed under Common Sense, Dumbasses, Economics, elections, Freedom, General, humor, Republicans