A few days ago I got into a conversation with a friend who said (something
to the effect) that capitalism
was the survival of the fittest and look what a mess this got us into. Such as I am, I couldn't let it pass so I wrote a brief commentary. To be sure, this is a lengthy topic and many volumes have been written on it, so there are many things left out, naturally. Either way, here it is.
The term capitalism itself was coined by none other than Karl Marx himself. He used the term to describe
an economic system where owners of capital rather than lords and
aristocrats were able to make economic decisions about production in
society as was the case in the manorial and feudal system. Later on
classical liberals such as Ludwig von Mises and others were quite happy
to use this term since it described rather well precisely what they were
arguing in favor of. Namely, that economic decisions in society be left
to those who were, through economy and entrepreneurship, able to amass
ever greater amounts of capital by satisfying the demands of their
customers. And therein lies the difference. Whereas before persons of
nobility, regardless of their merit, were able to determine production
and extract income from their subjects through coercion, in this new
system called capitalism there were no limits nor subscribed production
processes. Anyone could become a capitalist, provided only they saved and
had the insight to invest in capital equipment that would prove
valuable as a means of satisfying consumer demands. Private property
rights became central to this economic system since any infringement on
property rights would necessarily mean an expropriation of property,
which greatly reduces the incentive to invest in capital. Capital will be invested in and accumulated more readily and heavily if the investor can expect to
generate an income from it free from expropriation and a system with built-in disincentives to
invest in capital (which is therefore destructive of capital accumulation) could
hardly be called capitalism.
However, I cannot blame anyone for using the term capitalism to describe
our current state of affairs, many people have done so in the past and
continue to do it at present. After all, capital is a class of inanimate
objects and attaching an –ism to it can hardly describe a series of
interactions between individuals in a society. But I would still prefer
to use the term capitalism to describe the free market and resort to the
use of corporatism, fascism or socialism to describe the modern
economy. Common to all these systems, which vary in degree, rather than
character, is an economy centrally planned by an institution who’s
decrees are enforced by violence and intimidation. And this description
is much more akin to the world today than a system where private
property is absolute and the only way of gaining property is through
voluntary exchange and homesteading.
When you say survival of the fittest, that only begs the question –
fittest for what? In the pre-capitalist society where no large scale
markets existed, exchange was very limited and most people produced for
their own needs, most rich people, with the exception of the few
merchants, were rich because they exhibited the the greatest skills in
warfare. They suppressed their fellow men and were able to extract from
them because they were the fittest in physical strength and could just
take what others had produced. However, with the advent of capital, i.e.
tools and machinery for large scale production, one was able to become
rich by producing for, and not taking from, the masses. In such a system
one could only succeed, save a few exceptions, of course, by producing
something people wanted and could afford. In such a system survival of
the fittest means the fittest in producing things the public values and
one could hardly see anything wrong with that. Virtue, rather than
violence, then, becomes the norm. You will also notice that this is not
descriptive of our social order today. The whole edifice of the State
run society is founded in coercion, confiscation and violence.
Either way, if by survival of the fittest you mean survival of the
fittest to tax, regulate, punish and coerce then yes, capitalism is what
we have and it’s horrible and I denounce it. But we would also be (perhaps more so) well
justified to say capitalism is the survival of the fittest in serving
their customers, in which case we do not have capitalism at all.
So when you say capitalism is to blame for all this mess, you should
probably qualify it with a bit more than »survival of the fittest«.
Matej Avsenak Ogorevc
sreda, 8. avgust 2012
nedelja, 29. julij 2012
Murder is Murder, Theft is Theft
If I had a euro
for every time I heard »yes, your philosophy of libertarianism is all fine and
well and the principle of non-aggression sounds good, but we all know that
there is in any society a given number of people who will not adhere to these
rules and therefore we need government to bring all these people in their
place«, I'd probably be building a mansion somewhere in Thailand right now.
Once you get the
chance to talk to people and show them how libertarianism is really only based
on the principle that a man (and all men) should not initiate violence against
a fellow human being and his property, the argument above is probably the most
common one. Or, in other words, »yes, your goal seems morally correct but we
all know that in practice it is not going to work.« Therefore, the non sequitur
argument that we need a coercive government.
Perhaps so and we
shall never have a society where aggression against a fellow human being is
completely wiped out. But if we concede that this is the goal, then it seems to
me that we (i.e. everyone who recognizes this as a correct social norm) should
all work tirelessly towards this goal and not, contrary to our recognized
ideal, allow in our society a group of people recognized rights to
systematically aggress against other people, provided only that they carry the
badge of the State. This seems to me so contrary to the purpose of peaceful
human cooperation that I can only explain so many people believing this is because
most people go through a thorough process of thought-molding called the
government schooling system.
The libertarian
counter-argument then, correctly stated, would be as follows: »I recognize that
the initiation of aggression against people and their property is morally
wrong, but I nevertheless want to allow a certain group of people, whom we call
government, to have the right to aggress against any and all persons.« And it
gets even worse. In our age of democracy everyone is allowed to join
this group of people who have recognized rights of legal aggression. And since
it is always easier to confiscate what has been produced, rather than produce
it yourself, it is quite predictable that this group called government or
public employees will continually grow until most people are engaged in direct
or indirect expropriation and only a minority remains in production. These
kinds of conditions cannot last and always lead to conflict.
Let us draw an
analogy. We believe murder is wrong. But some say we must, in the name of
erradicating murder, allow a certain group of people, carrying the badge of the
State, recoginzed rights to murder others. What will happen is murderers will
join the legions of the State to be allowed to murder without repercussions.
And all people on the brink, considering murder, might also join the legions of
the State since it becomes allowable behavior, provided only you carry the
badge of the State. As more and more people engage in murder, this becomes
socially acceptable and society disintegrates.
By the same token,
we believe theft is wrong. But some say we must, in the name of eradicating
theft, allow a certain group of people, carrying the badge of the State,
recognized rights to steal from others. What will happen is robbers will join
the legions of the State to be allowed to steal without repercussions. And all
people on the brink, considering theft, might also join the legions of the
State since it becomes allowable behavior, provided only you carry the badge of
the State. As more and more people engage in theft, this becomes socially
acceptable and society disintegrates.
Matej Avsenak Ogorevc
petek, 27. julij 2012
Did the Free Market Cause the Crisis?
Tom Woods says no. Here is an excerpt out of his recent post:
As I’ve noted elsewhere, the current system is rather far from the Misesian [i.e. the ideal of Ludwig von Mises] ideal; it includes:
(1) a coercively imposed monopoly on the production of money;
(2) monopolistic legal tender laws, which artificially privilege the money issued by the government-established central bank;
(3) a central bank with the monopoly power to create legal-tender money out of thin air, a power granted to it by the government, and with a mandate to manipulate the money supply in the purported service of maximizing output and minimizing unemployment and price inflation;
(4) interest rates influenced by a monopoly monetary authority instead of by the free market;
(5) implicit and explicit bailout guarantees for large financial institutions;
(6) artificially low borrowing costs for large institutions, since the public knows these institutions will be bailed out;
(7) artificial protection of the banks, in the form of government deposit insurance and various Federal Reserve mechanisms, thereby keeping afloat a fractional-reserve system that would be radically different under a free market; under the existing system the banks will therefore create more money out of thin air than they otherwise would.
I would tend to agree. You can read his whole post here.This is just off the top of my head. A free-market banking system would have no central bank and no “monetary policy.” It would not rely on politicians to print up “interest-free money.” It would not require any guns or badges. It would preserve the purchasing power of people’s money, as it did even under the classical gold standard. It would make entrepreneurial profit-and-loss calculation far easier, without the white noise introduced by the monetary manipulations of the government or its privileged central bank.
torek, 17. julij 2012
How Much Are You WIlling to Pay?
You go to a bakery and you see a woman working there who has four children. You want her to make more money? Fine, so do I. But the question is not how high her salary should be because she has four children, but rather how much more are you willing to pay for bread baked by a woman with four children. Because if you are buying there, you are the one paying her salary.
No established firm in this world pays salaries to their employees, their customers always do. I say established because in a startup business the investor has to save up money to pay for all the salaries (plus capital equipment and other expenses), sometimes for months and years, before the revenues and profits (if they ever arrive) come in, and in that case the investor is the one paying the salaries. But once a firm is making profits and is therefore able to stay on the market, the customers are always signing every paycheck every month.
Think about the BMW automobile company and imagine that for some reason people completely stopped buying their cars. How many salaries could they pay out? Not many. Maybe they would scrape by for a month or two, maybe not even that. But if the customers stop coming in, the salaries stop going out. I own a business as well and I never pay my employees out of my pocket, it's always our customers. They show up in our stores, they pay for what they find interesting and at the end of the month we use this money to pay out the salaries. If the customers stopped showing up we would have to stop paying out salaries.
This might seem obvious to some people but I write this only because I can assure you that to many it is not. Some will say "let's pass a law raising her salary and making it harder to fire her and that will take care of that." I would reply that these people have not taken the time to study the nature of human action. Such a mandate passed by the government would, as most government decrees do, only make the situation for this woman worse. Raising her salary above the market wage will cause her employment to become unprofitable and thus fewer people will want to hire her. And if you make it harder to fire her, then employers will again be afraid to hire her because the risk of her not being the right employee suddenly becomes much higher. So whereas before she actually had a job which she had chosen among the alternatives that she could choose from, now no one will be willing to hire her and she becomes jobless with four kids.
So then if the capitalists don't employ us but rather we employ each other and thus our wages depend on the number of our customers and the thickness of their wallet, rather than on the "greed" of our employers, how do we get a higher wage for this woman and indeed for everyone in society?
How to get more customers? We allow her employer the freedom to invest and thereby make her work more productive and the products more attractive in order to attract more customers. And how do we make the customers richer? We allow everyone else in society to invest in order to make labor more productive. The fact is that we are (materially - and we all need material things to survive) only as rich as our productiveness allows us to be. And we become more productive only by investing in new and better capital equipment (machines & tools) so that we can produce more with fewer resources. Then things become better and cheaper.
But people will only save and invest if they can expect to receive a profit from their investment. The bigger the share of the savings and profits that is taken away from investors, the less they will invest. The more money a central bank prints, the more this money loses value, the less people will save. Less savings equals less funds available to invest. The more the government taxes profits, the less attractive it is to invest. The more the government taxes wages, the higher the wage cost, the lower the profits. Low profits equals less investment. Less investment means we become poorer.
All the above is of course descriptive of the economic means, i.e. through production and trade, of making profits. There is also the political way, i.e. through extortion and confiscation, of making profits, but that is a whole other subject...
Thanks for the inspiration to Ludwig von Mises and his short book Economic Policy: Thoughts for Today and Tomorrow, which is available online for free here.
Matej Avsenak Ogorevc
No established firm in this world pays salaries to their employees, their customers always do. I say established because in a startup business the investor has to save up money to pay for all the salaries (plus capital equipment and other expenses), sometimes for months and years, before the revenues and profits (if they ever arrive) come in, and in that case the investor is the one paying the salaries. But once a firm is making profits and is therefore able to stay on the market, the customers are always signing every paycheck every month.
Think about the BMW automobile company and imagine that for some reason people completely stopped buying their cars. How many salaries could they pay out? Not many. Maybe they would scrape by for a month or two, maybe not even that. But if the customers stop coming in, the salaries stop going out. I own a business as well and I never pay my employees out of my pocket, it's always our customers. They show up in our stores, they pay for what they find interesting and at the end of the month we use this money to pay out the salaries. If the customers stopped showing up we would have to stop paying out salaries.
This might seem obvious to some people but I write this only because I can assure you that to many it is not. Some will say "let's pass a law raising her salary and making it harder to fire her and that will take care of that." I would reply that these people have not taken the time to study the nature of human action. Such a mandate passed by the government would, as most government decrees do, only make the situation for this woman worse. Raising her salary above the market wage will cause her employment to become unprofitable and thus fewer people will want to hire her. And if you make it harder to fire her, then employers will again be afraid to hire her because the risk of her not being the right employee suddenly becomes much higher. So whereas before she actually had a job which she had chosen among the alternatives that she could choose from, now no one will be willing to hire her and she becomes jobless with four kids.
So then if the capitalists don't employ us but rather we employ each other and thus our wages depend on the number of our customers and the thickness of their wallet, rather than on the "greed" of our employers, how do we get a higher wage for this woman and indeed for everyone in society?
How to get more customers? We allow her employer the freedom to invest and thereby make her work more productive and the products more attractive in order to attract more customers. And how do we make the customers richer? We allow everyone else in society to invest in order to make labor more productive. The fact is that we are (materially - and we all need material things to survive) only as rich as our productiveness allows us to be. And we become more productive only by investing in new and better capital equipment (machines & tools) so that we can produce more with fewer resources. Then things become better and cheaper.
But people will only save and invest if they can expect to receive a profit from their investment. The bigger the share of the savings and profits that is taken away from investors, the less they will invest. The more money a central bank prints, the more this money loses value, the less people will save. Less savings equals less funds available to invest. The more the government taxes profits, the less attractive it is to invest. The more the government taxes wages, the higher the wage cost, the lower the profits. Low profits equals less investment. Less investment means we become poorer.
All the above is of course descriptive of the economic means, i.e. through production and trade, of making profits. There is also the political way, i.e. through extortion and confiscation, of making profits, but that is a whole other subject...
Thanks for the inspiration to Ludwig von Mises and his short book Economic Policy: Thoughts for Today and Tomorrow, which is available online for free here.
Matej Avsenak Ogorevc
ponedeljek, 2. julij 2012
How About I Operate on Your Kidney, Sir?
Would you trust me to perform kidney surgery on you? Probably not, and that would be a wise decision too, for I know nothing about kidney surgery. Then why would you trust politicians to make good economic decisions? Or even any good decision whatsoever for you? Why do people want to be in power? Simple, they want power. With very few exceptions, people get into politics because they have what is called libido dominandi, the lust to dominate. With political positions comes power, money, and prestige. In this kind of environment the worst of power mongers succeed and the worst cases of libido dominandi get to the very top. And I don't distinguish between the left and right either. The differences are purely cosmetic and insubstantial.
But back to economics (yay!).
All the above being said, there are a lot of "experts", such as university economists and political advisers, who give advice to all these politicians and surely then these politicians will be well informed and will make good decisions, right? Not so fast. First of all, all these supposed experts, if they are giving advice to politicians, are on their payroll. You should not expect them to give politicians advice they do not want to hear. Rather, their job becomes to invent semi scientific apologies for policies politicians are going to adopt anyway. So don't look for sound economics in the realm of politics and government run and/or funded educational institutions. This is not to say there isn't any. But the odds to find it there are rather against you.
Don't believe me? Let us do a short exercise. We have learned recently that the EU Commission will enact (new) price controls on mobile service providers in the EU for international calls, price controls downwards, of course. Now, which of the following scenarios do you think is more likely to play out: a) the mobile service providing corporations are going to say "oh well, guess our profits are just going to have to be smaller henceforth", or is it b) "since we cannot charge our preferred rates on international calls, we will have to raise our prices on domestic calls and other services in order to maintain our profitability". If you can answer this correctly (I will not be giving out any hints this time), you know more about economics than all the eurocrats combined. And trust me, there are quite a few of them. So in essence, what this move by the Commission does is transfer the cost of international calls to domestic users. In other words, the poorer people who cannot afford to travel as much will now be paying for the international calls of wealthier people when they are traveling. Brilliant institutions we have in our government, no? The excellence of their genius never ceases to amaze me. I do suppose it is also possible that they are aware of the sinister effects of their actions but... That just makes my case that much stronger.
So how would I suggest you read and watch the news then? After all, the saying "How can you tell when politicians are lying - when their lips are moving" is not very far off. My first suggestions would be learn Austrian economics. Short of that, whenever you hear a proposal from a politician, ask yourself where the money is going to come from. Who is going to lose money so that this can be undertaken? What is not going to come to life because this new political project has siphoned off the resources? What productive enterprise will see its funds stolen so that the politicians will have it their way? After all, government doesn't have any money that it didn't first confiscate from private citizens. So in short, when you see a project is being funded through coercive measures of the State, you should not support it. And by that I don't mean growing a mohawk and throwing stones at the parliament. I mean be principled and be against the initiation of force and theft against peaceful people, whether it's called taxation, tariffs, fines or any other euphemism we have become accustomed to.
Matej Avsenak Ogorevc
But back to economics (yay!).
All the above being said, there are a lot of "experts", such as university economists and political advisers, who give advice to all these politicians and surely then these politicians will be well informed and will make good decisions, right? Not so fast. First of all, all these supposed experts, if they are giving advice to politicians, are on their payroll. You should not expect them to give politicians advice they do not want to hear. Rather, their job becomes to invent semi scientific apologies for policies politicians are going to adopt anyway. So don't look for sound economics in the realm of politics and government run and/or funded educational institutions. This is not to say there isn't any. But the odds to find it there are rather against you.
Don't believe me? Let us do a short exercise. We have learned recently that the EU Commission will enact (new) price controls on mobile service providers in the EU for international calls, price controls downwards, of course. Now, which of the following scenarios do you think is more likely to play out: a) the mobile service providing corporations are going to say "oh well, guess our profits are just going to have to be smaller henceforth", or is it b) "since we cannot charge our preferred rates on international calls, we will have to raise our prices on domestic calls and other services in order to maintain our profitability". If you can answer this correctly (I will not be giving out any hints this time), you know more about economics than all the eurocrats combined. And trust me, there are quite a few of them. So in essence, what this move by the Commission does is transfer the cost of international calls to domestic users. In other words, the poorer people who cannot afford to travel as much will now be paying for the international calls of wealthier people when they are traveling. Brilliant institutions we have in our government, no? The excellence of their genius never ceases to amaze me. I do suppose it is also possible that they are aware of the sinister effects of their actions but... That just makes my case that much stronger.
So how would I suggest you read and watch the news then? After all, the saying "How can you tell when politicians are lying - when their lips are moving" is not very far off. My first suggestions would be learn Austrian economics. Short of that, whenever you hear a proposal from a politician, ask yourself where the money is going to come from. Who is going to lose money so that this can be undertaken? What is not going to come to life because this new political project has siphoned off the resources? What productive enterprise will see its funds stolen so that the politicians will have it their way? After all, government doesn't have any money that it didn't first confiscate from private citizens. So in short, when you see a project is being funded through coercive measures of the State, you should not support it. And by that I don't mean growing a mohawk and throwing stones at the parliament. I mean be principled and be against the initiation of force and theft against peaceful people, whether it's called taxation, tariffs, fines or any other euphemism we have become accustomed to.
Matej Avsenak Ogorevc
četrtek, 14. junij 2012
Five Reasons Why You Should Think Progress Differently
Think Progress just came out with this article listing 5 reasons why Americans should blame Bush for the economic woes we are enduring. While there are plenty of perfectly sound reasons why one should blame the former president and his aides, these are not 5 (or 4, to be fair) of them.
1. Deregulation caused the crisis? The article goes, and I quote, "Sweeping financial deregulation helped build the housing bubble". This statement would have you believe there was massive abolishing of regulation across the board going on in the previous decade under Bush's presidency to build up the housing bubble which ran roughly from 2002 to its peak in late 2006 and early 2007. But wait a minute, then the article links to a proposed (whether it ever got enacted or not, I do not know and the article or the sites it links to do not make this clear) plan by Bush's treasury secretary Henry Paulson in 2008! Now even if it was true that this plan really did deregulate the financial industry, how a proposed plan in 2008 could cause a housing bubble in the previous 5 years and a recession starting in December 2007 is beyond me. This logic has yet to penetrate my mind. But as we open the sites that the article links to, we learn that the proposed plan did not really deregulate anything. Honestly, read it and decide for yourself. It shifted more power in one direction, chiefly to the Treasury and to the Fed, and supposedly took away from others. The best the article manages is to link to three single changes to or abolishments of rules of certain regulatory agencies. Even if you take the author at his word that these changes to the rules really did destabilize the industry, and he does not provide a causal relationship at all, this is hardly the "sweeping financial deregulation" we were told was going on. If you subscribe to this website you might also be surprised to know that the Securities and Exchange Commission (SEC), one of the chief regulatory financial bodies in the US, saw its funding increase by 140% during the Bush years. That's right, from $377 million in 2000 to $906 million in 2008. To boot, Boston University professor Laurence Kotlikoff points to 115 agencies regulating the financial industry in 2010. Sweeping deregulation, right? Yeah.
The Financial system went off its rails simply because the Fed was providing cheap money for everyone to go crazy and gamble with. And they did go crazy, they invested in all the wrong places that looked profitable because interest rates were artificially set insanely low by the Fed and when the interest rates crept back up the system went broke. There was also a major moral hazard built in the system where everyone more or less suspected that the government would bail out the big players if things went sour. They suspected correctly.
2. Cutting taxes for the rich did it? No. Cutting taxes simply means you have more money left in the hands of private citizens to spend it productively. This on its own cannot cause a downturn. Besides, the US government cut taxes massively after 1918 and then again after 1945 and these policies were followed by vigorous economic growth and prosperity both times. To be sure, there is one significant point that the authors make correctly - cutting taxes without cutting government spending means increasing the national debt and this truly is toxic and dangerous. But not tax cuts on its own.
3. Wars. This is the one thing the authors get right fully and wholly. Wars are destructive, both morally and economically, and the empire the US has built for itself is going to cost Americans dearly.
4. Didn't help homeowners? Yes and no. The help the authors are presumably envisioning is precisely the kind of "help" that led to the whole housing fiasco in the first place. Government can help one homeowner by taxing another, or, more likely, by taxing the same homeowner. So now your mortgage is lower but your taxes are much higher. Great! It can also "help" you by making borrowing more attractive through subsidies and loan guarantees. But that is exactly what it did in the last decade and that is what helped pump the housing bubble. The authors are correct, however, to point to the endless bank bailouts in the wake of the financial crisis. This has been a disastrous policy and will only lead to more reckless behavior by these banks in the future.
5. Weakened workers? Apparently less government labor regulation and less labor unionism equals financial meltdown. First of all, work safety does not happen because government passes laws and regulations. It "happens" because businesses compete for labor on the market and one way of attracting workers is to offer them a safer workplace. It also "happens" because, believe it or not, entrepreneurs don't actually want their workers to get killed. If nothing else, injuries cost money. You can read here for more detail. As for collective bargaining - I am not against it. I am, however, against the notion that an oligarchy of labor union bosses can prevent someone else fom signing a contract on their own terms and thereby trow millions of people out of work. But again, we are supposed to believe that a smaller amount of labor laws and regulations in the US caused or at least helped cause the greatest systemic global economic collapse in our generation, if not in modern history. I'm done inferring, you draw your own conclusions.
To learn more about the causes of depressions and the role of government in them see this video, this, this or this book.
Matej Avsenak Ogorevc
1. Deregulation caused the crisis? The article goes, and I quote, "Sweeping financial deregulation helped build the housing bubble". This statement would have you believe there was massive abolishing of regulation across the board going on in the previous decade under Bush's presidency to build up the housing bubble which ran roughly from 2002 to its peak in late 2006 and early 2007. But wait a minute, then the article links to a proposed (whether it ever got enacted or not, I do not know and the article or the sites it links to do not make this clear) plan by Bush's treasury secretary Henry Paulson in 2008! Now even if it was true that this plan really did deregulate the financial industry, how a proposed plan in 2008 could cause a housing bubble in the previous 5 years and a recession starting in December 2007 is beyond me. This logic has yet to penetrate my mind. But as we open the sites that the article links to, we learn that the proposed plan did not really deregulate anything. Honestly, read it and decide for yourself. It shifted more power in one direction, chiefly to the Treasury and to the Fed, and supposedly took away from others. The best the article manages is to link to three single changes to or abolishments of rules of certain regulatory agencies. Even if you take the author at his word that these changes to the rules really did destabilize the industry, and he does not provide a causal relationship at all, this is hardly the "sweeping financial deregulation" we were told was going on. If you subscribe to this website you might also be surprised to know that the Securities and Exchange Commission (SEC), one of the chief regulatory financial bodies in the US, saw its funding increase by 140% during the Bush years. That's right, from $377 million in 2000 to $906 million in 2008. To boot, Boston University professor Laurence Kotlikoff points to 115 agencies regulating the financial industry in 2010. Sweeping deregulation, right? Yeah.
The Financial system went off its rails simply because the Fed was providing cheap money for everyone to go crazy and gamble with. And they did go crazy, they invested in all the wrong places that looked profitable because interest rates were artificially set insanely low by the Fed and when the interest rates crept back up the system went broke. There was also a major moral hazard built in the system where everyone more or less suspected that the government would bail out the big players if things went sour. They suspected correctly.
2. Cutting taxes for the rich did it? No. Cutting taxes simply means you have more money left in the hands of private citizens to spend it productively. This on its own cannot cause a downturn. Besides, the US government cut taxes massively after 1918 and then again after 1945 and these policies were followed by vigorous economic growth and prosperity both times. To be sure, there is one significant point that the authors make correctly - cutting taxes without cutting government spending means increasing the national debt and this truly is toxic and dangerous. But not tax cuts on its own.
3. Wars. This is the one thing the authors get right fully and wholly. Wars are destructive, both morally and economically, and the empire the US has built for itself is going to cost Americans dearly.
4. Didn't help homeowners? Yes and no. The help the authors are presumably envisioning is precisely the kind of "help" that led to the whole housing fiasco in the first place. Government can help one homeowner by taxing another, or, more likely, by taxing the same homeowner. So now your mortgage is lower but your taxes are much higher. Great! It can also "help" you by making borrowing more attractive through subsidies and loan guarantees. But that is exactly what it did in the last decade and that is what helped pump the housing bubble. The authors are correct, however, to point to the endless bank bailouts in the wake of the financial crisis. This has been a disastrous policy and will only lead to more reckless behavior by these banks in the future.
5. Weakened workers? Apparently less government labor regulation and less labor unionism equals financial meltdown. First of all, work safety does not happen because government passes laws and regulations. It "happens" because businesses compete for labor on the market and one way of attracting workers is to offer them a safer workplace. It also "happens" because, believe it or not, entrepreneurs don't actually want their workers to get killed. If nothing else, injuries cost money. You can read here for more detail. As for collective bargaining - I am not against it. I am, however, against the notion that an oligarchy of labor union bosses can prevent someone else fom signing a contract on their own terms and thereby trow millions of people out of work. But again, we are supposed to believe that a smaller amount of labor laws and regulations in the US caused or at least helped cause the greatest systemic global economic collapse in our generation, if not in modern history. I'm done inferring, you draw your own conclusions.
To learn more about the causes of depressions and the role of government in them see this video, this, this or this book.
Matej Avsenak Ogorevc
sobota, 14. april 2012
Stefan Molyneux on Voluntraysim
This piece below is and excerpt of Stefan Molyneux guest hosting the Peter Schiff show. It is one of the best short and comprehensive cases I've ever heard made in favor of a free stateless society. I hope you find he is absolutely spot on:
"I think we have to look at why we believe we need a government, and I think fundamentally we believe we need a government because we're afraid of bad people. We are afraid of bad people doing bad stuff to us and taking our property. Now, logically it doesn't make much sense to put a government into place to do that. It's like - I'm afraid that someone might come and steal my property so I'm going to create a monopoly of violence with the right to violate my property and take 50% of it pretty much at will. And that really doesn't make any sense, but it's sort of what we've inherited from the past.
We understand that if everybody was an angel we wouldn't need a government, and people who are voluntaryists or are looking for a stateless solution in the long run are often called idealistic - we don't understand how bad human beings can be and not everyone is perfect and therefore we need a government. But if you think about it logically, I think quite the opposite is true. I think that voluntaryists really recognize that human nature has a pretty dark side. If you create a government in order to save you from bad people then the smartest and most able bad guys - where are they going to go? They are going to flock like flies to a big mount of horsy cac, they're going to flock straight to the government. Because what do evil people want? They want something for nothing and they want to escape the consequences of their actions. Well, that is the government, the government gives you something for nothing - you get to print money, you get to go to war, you get to do all these terrible things with no negative consequences - so you get to get something for nothing and you get to escape the consequences of your actions. So I believe that government, this hierarchical violence that we use in society, is something that attracts and draws bad people in to run it. You do not protects yourself from bad people by creating a monopoly of violence that bad people will infest and expand at your expense."
And here is the whole show (the excerpt starts at 48:30):
"I think we have to look at why we believe we need a government, and I think fundamentally we believe we need a government because we're afraid of bad people. We are afraid of bad people doing bad stuff to us and taking our property. Now, logically it doesn't make much sense to put a government into place to do that. It's like - I'm afraid that someone might come and steal my property so I'm going to create a monopoly of violence with the right to violate my property and take 50% of it pretty much at will. And that really doesn't make any sense, but it's sort of what we've inherited from the past.
We understand that if everybody was an angel we wouldn't need a government, and people who are voluntaryists or are looking for a stateless solution in the long run are often called idealistic - we don't understand how bad human beings can be and not everyone is perfect and therefore we need a government. But if you think about it logically, I think quite the opposite is true. I think that voluntaryists really recognize that human nature has a pretty dark side. If you create a government in order to save you from bad people then the smartest and most able bad guys - where are they going to go? They are going to flock like flies to a big mount of horsy cac, they're going to flock straight to the government. Because what do evil people want? They want something for nothing and they want to escape the consequences of their actions. Well, that is the government, the government gives you something for nothing - you get to print money, you get to go to war, you get to do all these terrible things with no negative consequences - so you get to get something for nothing and you get to escape the consequences of your actions. So I believe that government, this hierarchical violence that we use in society, is something that attracts and draws bad people in to run it. You do not protects yourself from bad people by creating a monopoly of violence that bad people will infest and expand at your expense."
And here is the whole show (the excerpt starts at 48:30):
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