About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Saturday, August 29, 2015

Isn't Venezuela's "failed state-led economic model" Wonderful?

from: The Telegraph
Woman, 80, trampled to death in Venezuelan supermarket stampede

"Due to the shortage of food ... the desperation is enormous," local opposition politician Andres Camejo said, according to the coalition's website. It published a photo of an elderly woman's body lying inert on a concrete floor.
Camejo said thieves had also attacked the crowd, members of which were seeking to buy cheap food on offer at an outlet of the state's Mercal supermarket chain in Barinas state.
Another person was killed and dozens detained following looting of supermarkets in Venezuela's southeastern city of Ciudad Guayana earlier this month.

President Nicolas Maduro accuses opponents of deliberately stirring up trouble, exaggerating incidents, and sabotaging the economy to try and bring down his socialist government.

Did you get that? Did you expect anything different? It's called SOCIALISM!!!

Friday, July 17, 2015

Foreign Relations Is Macroeconomics: The Individual Is Unwitting and Impotent

There is so much I don't know. Or so much I think I know that isn't so. How is it possible for an ordinary citizen to decipher fact from fiction in foreign relations?

All Praise To Barack Obama For Stiffing The War Party—- Peace Is Finally Being Given A Chance

So in the context of all of that history we now have a solemn international agreement that’s designed to insure that the nuclear weapons program that the CIA has never found and that the Iranians say they never had and that their Supreme Leader has forbidden—does, in fact, never happen.

And who can say he knows for sure that Stockman is not right?

When TR said "Speak softly and carry a big stick..." he was on to something. The trick is knowing what to say and when to swing the stick.

Saturday, July 11, 2015

Scott Walker For America

My money is on Scott Walker winning the Republican Party nomination for President and, eventually, the Presidency. Ten to one odds ain't bad and Walker knows how to campaign in this age of "anything goes" Progressivism.

Nick Gillespie wrote an excellent opinion piece yesterday on Hillary Clinton and how to defeat her. He ends with:

If the eventual Republican nominee—whether it’s Jeb Bush or Rand Paul or god help us all Donald Trump—wants a real chance at the crown, they’d do best to back away from Hillary and the anger-bear rhetoric that only makes her more sympathetic. The nominee would do well to outline an actually positive and inclusive message about how they plan to guide the country into the 21st century rather than constantly harp on last century’s scandals, the need for even newer and bigger wars, and protecting us from the scourge of immigrants so desperate for a better life that they’re willing to risk arrest to come to America.

A Republican employing positive rhetoric—which is exactly how Barack Obama toppled Clinton in 2008—would pull her out of her crouch and cause her to swing recklessly and wildly. In all that lunging, she’d be likely to knock herself out. But so long as the Republicans keep smacking themselves in the face, she’s smart to hold her punches.

A "Republican employing positive rhetoric?" That, my friends, is Wisconsin's own Scott Walker, a plain-spoken, positive, Reaganesque dark horse. He's an experienced, many-times winner in Wisconsin, a blueish state with more than it's share of whackadoodle Moonbats. Walker took them head on with a no nonsense, positive message that appealed to the State's rural and middle class voters.

Scott Walker, like Reagan, is capable of pulling all branches of the Republican Party together, not by bashing his rivals with negativity, but by knocking them senseless with down to earth honesty and a positive vision for the future.

Thursday, July 2, 2015

Keynes vs The Free Market

The best technical explanation of Keynes' famous multiplier remains that of Murray Rothbard here.

Thus, income = independent expenditures (private investment + government deficit) + passive consumption expenditures. Using our illustrative consumption function, income = independent expenditures + 90 percent of income. Now, by simple arithmetic, income equals ten times independent expenditures. For every increase in independent expenditures, there will be a ten-fold increase in income. Similarly, a decrease in independent expenditures will lead to a ten-fold drop in income. This "multiplier" effect on income will be achieved by any type of independent expenditure — whether private investment or government deficit. Thus, in the Keynesian model, government deficits and private investment have the same economic effect.

Please note that:
1) Rothbard is EXPLAINING the multiplier, not defending or agreeing with it;
2) Rothbard selected the 90% figure to make the math easy. That figure is a VARIABLE which is, according to Keynes, based on research. It is derived from the Keynesian consumption function which, like marginal utility, is mathematically derived from aggregate economic data.
3) Please note the last two sentences in boldface. Keynesian theory says the multiplier applies whether the expenditure is public or private.

My contention is that the entire concept of government deficit spending creating multiple increases in real income is baloney. Deficit spending merely increases economic activity in that it increases the total of money in circulation. Any increases in money income are a matter of prospective and MUST be accompanied by increases in expenses and vice versa. From the prospective of the government, deficit spending must be paid for by a corresponding amount of income, either obtained from taxes or debt financing. From the prospective of the "receivers" of government money, their new income must be accompanied by expenditures of their own before that money can become anyone else's income and so on and so on. Any difference in income and expenditures from the prospective of each individual involved becomes profit or loss in terms of money. Profits realized from this process are what benefits the economy, not an increase in the aggregate income of all concerned. However, whether these profits are "real" is also a question we must consider and this depends upon the amounts of government deficit spending and its effect on inflation. If inflation is significant, profits may appear on individual income statements, but these profits may not appear for the individual in real terms.

In sum, if any kind of "multiplier" exists in an exchange economy it is real profit.

Money can be created in our current fiat monetary system by the government and the Fed by means of deficit spending and public debt financing, or money can be created by the private fractional reserve banking system making loans to private individuals.

So, the larger question is: Which of the above two options is in the best interests of individual Americans?

Keep in mind, from the Keynesian prospective any fictional "multiplier" works equally well whether government deficit spending or private investment, so that part of the equation shouldn't come into play. The question really boils down to which political/economic system do you think best satisfies the desires (felt needs) of the American consumer: government spending directed by 535 federal politicians (and thousands of unelected bureaucrats) or the unfettered free market?

Saturday, June 6, 2015

Mother Of All Questions

Scientists agree that the mechanical, mathematical world of Newtonian physics no longer exactly reflects reality. Now there is a new world of quantum physics which recognizes a certain fuzziness in nature which must be accounted for in our calculations. Scientists allow the validity of the Heisenberg uncertainty principle which recognizes that the more we can know about one variable, the less we can know about another.

And this thinking holds in Physics! A science which must assume that there is a regularity in the concatenation of natural events which allows us to exactly predict future natural events.

I think, in the realm of human economics, Keynesianism is analogous to Newtonian physics. It regards human nature and human relationships as mechanical behavior. It considers human beings and human society as machinery that can be exactly observed, predicted and manipulated with mathematical precision. It believes all economics is macroeconomics.

Austrian economics, on the other hand, is analogous to quantum physics. It allows a certain fuzziness in human beings and in the realm of human relationships. It regards human society as the product of purposeful, individual action. It understands that individuals are prone to act differently in similar situations because they each seek subjective ends that are inconstant and personal. It understands that manipulation of variables in society by a central authority can have no exactly predictable result in society because each individual in society acts upon and values each variable differently. It believes all economics is microeconomics.

The interesting question is this: If the scientifically minded person is willing to accept the uncertainty principle in the realm of physics, which studies the interplay of unthinking, purposeless, inanimate objects, why does he refuse to accept the uncertainty principle in the realm of economics, which studies the interplay of thinking, purposeful, human individuals?

Friday, May 29, 2015

The New Normal In The Nerd Reich

A couple days ago the American Thinker published an article by Jack Curtis entitled: "Impoverishment: America's New Normal."

Most authors will begin their article by stating their main theme and then building upon it. Curtis waits until the third paragraph from the end to put his finger on the point I think he's trying to make:

There seems little doubt that the economic pattern [of impoverishment] results from government intervention; it is nothing new in history. India’s static caste system and China’s 15th century halt of exploration and change both embedded poverty via economic stasis. In America, it has been overregulation and the increasing corruption accompanying crony capitalism.

Still, the article is written so badly that the author seems to miss his own point. He begins by listing the "conditions that lifted North America so far above the economic norm:"

...available land and resources, a smaller, pro-development government, disparate post Renaissance and mostly post Reformation immigrants that shattered traditional classes, and an industrial revolution supported with European capital.

He only mentions "government intervention" in passing and then refers to it as "smaller" and "pro-development." I suppose a government that barely exists could be considered "pro-development," but saying early government in America is "smaller" than government nowadays is crazy and misleading. It's like comparing the development of boats over the centuries and saying colonial frigates were "smaller" than the USS George H.W. Bush.

The unique and requisite "condition" that lifted America "above the norm" was a new culture that embraced laissez-faire government and individual liberty. People emigrated from Europe to escape old world aristocracy, intolerance and tyrannical rule. In America they built a nation based on equality of opportunity, tolerance and independent self-reliance. That cultural base has been eroded and all but destroyed since, and that is why the future of America today, both political and economic, is so bleak.

Yes, the American middle income segment of the population is shrinking. Wealth is being drawn away from that segment to the wealthy elite by two institutions: a monetary and financial system that enshrines continuous and steep inflation; and an interventionist state that embraces logrolling, cronyism and outrageous aristocratic corruption on a scale surpassing the Old European status quo that early American pioneers fled.

Is it any wonder then that "impoverishment seems likely to be the new normal for America?"

As for "robotic production" putting "masses of workers" on the dole, it's a red herring. Fears of "automation" are as old as technology. Progressives believe that each average, normal American shlub should have a "good" job and a "decent" living wage. That is simply bull shit propaganda. Americans don't live to work; they work to live. They want their efforts to translate into an improved standard of living. They want what capital accumulation, automation, a sound currency and government non-intervention provide: goods and services at a lower price and an easier life for themselves and their children.

A world in which robots make production of consumer goods and services more profitable and efficient is the world we should be striving for, not the world we need to fear...unless that world is devoid of truly private capitalists and entrepreneurs and is flush with crony capitalists who are in league with a managerial, interventionist state.

Curtis writes:

Robert Reich, former Secretary of Labor and now a Professor of Public Policy, said that redistribution of incomes will be necessary to support the masses of workers unemployed as the machines take over.

This type of reductionist nonsense is so typical of progressives. They can't imagine a laissez-faire economy in which free individuals are able to manage their own affairs and their own property to their own best advantage WITHOUT government interference. In short, they believe ordinary Americans are too stupid and incompetent to survive on their own without the guiding mandates of the progressive, intellectual elite enforced by the heavy hand of an interventionist government.

Reich and his arrogant, aristocratic, fellow traveling morons are the reason America today is not the prosperous country our forefathers founded.

Saturday, May 16, 2015

"There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?"

Robert F. Kennedy was a typical Progressive. He lived and died in the service of a dream that can never come true.

The Progressive sees himself as a cog in a social machine, not as a self-reliant individual capable of producing his own prosperity in a society of free and cooperative traders. In order for a Progressive to be all right with the world, the entire world must first be all right...or at least there must be a social dream in place that makes the Progressive believe the entire world will be all right.
Just as it is impossible to imagine that a particular cog in a gear could work and succeed independently of the other cogs, so it is impossible for a Progressive to imagine his own success and happiness existing independently from the success and happiness of "the masses." So long as there exists a single, unprosperous individual among us, thinks the Progressive, none of us can be truly prosperous or truly happy. 

The corollary to this mode of thinking is that all individuals must properly strive for the prosperity of all. There can be no child left behind. No senior lacking a comfortable pension. No sick person with a pre-existing condition lacking health care. No human being left unsatisfied.

Of course, there is a huge problem with such thinking: harsh reality. Neither as individuals nor as economic actors is it possible for us to satisfy others. Reality does not allow me to control your thoughts or your level of satisfaction, i.e., your happiness. I can only control how I think, what I feel and what I do.

Thus, the social programs Progressives devise to ensure the contentment and happiness of all are doomed from the start by the dual realities of nature and human nature. Even if it was possible to harness the entire human race in the service of the world's needy masses, the realities of time and resources would prevent the success of the endeavor. 

"Need" is a function of the human imagination which is limitless. "Rich" and "Poor" are relative terms describing disparities in material possessions which are finite. Any attempt to satisfy "Need" by ending the disparity between "Rich" and "Poor" is impossibly absurd. 

Moreover, unlike beasts of burden, human beings universally resent the bite of the bridle and the sting of the whip. Individual humans act with purpose toward achieving ends of their own making. Human beings forced or coerced to strive after ends devised for them by others will resist by becoming part of the problem, i.e., they will become unproductive and "needy," the very condition the system was designed in the first place to eliminate.

Progressivism is a syndrome of youth. By the time they have reached adulthood and have embarked on the very American tradition of "earning a living," most conservatives have become acquainted with and respectful of harsh reality. As a consequence, they have exorcized the mush of Progressivism from their minds.

If only my liberal friends would do the same. There is nothing more pitiful or more destructive to a society built upon the principles of private property and individual freedom than a graying Progressive who has not outgrown his or her youthful delusions, especially if this Progressive is elected to a position of authority. 

Barack Obama is living proof of this truism.