Food Regulation: The Canary In The Mineshaft?

Articles like David Limbaugh's "Just When You Thought Our Fiscal Nightmare Couldn't Get Any Worse" at Human Events are scary. I found the article via Maggies Farm and Doug Ross.

Limbaugh's article spells out the fiscal and monetary mess we face in this country. I am moved to make a couple of observations.

First, the economic problems the country faces are real. Glenn Beck and others have been criticized for fear mongering, i.e., exagerating the problem and the danger. Beck's perfect storm scenario is indeed the worst case. He predicts food shortages, violence in the streets and martial law. I will deal with the food shortage issue in a moment. Regarding martial law, I predicted four years ago and I still predict that martial law will be declared in this country before Obama's first term ends. But back to the economic problems we face. Unemployment is high. Monetary inflation is policy. Public debt is at World War levels. The dollar faces imminent collapse. Austrian economics has been predicting this crackup for many, many years. the day of reckoning is at hand. And politicians in Washington either do not know what to do or know and will not do it.

Second, are the current President and his sycophants merely economically stupid or, as Rush Limbaugh alleges, purposely steering the nation on the road to disaster? I happen to believe both. Mr. Obama is a trained socialist. He is ideologically married to the leveling Marxist philosophy of from each according to his ability and to each according to his need. I make this judgement based on Obama's rhetoric, background and policies. I do not pretend to know his motives. But I can speculate.

I believe Obama sees the United States as the last bastion of “unreformed” capitalism. By that I mean capitalism which has not been “gentled” by European-style “compassionate” progressivism. In my previous post I discuss the private market versus the public market. The U.S. is probably about 60% public and 40% private, and this is a conservative estimate. The public market is growing everyday by leaps and bounds. Obama will not rest until the public market comprises over 90% of the American economy. He probably operates under the illusion that when the mighty engine of American capitalism is “harnessed” by having its vast wealth redistributed, not only this country but the entire world will experience an economic new morning of prosperity. Of course he does not realize that the wellspring of American production, wealth and prosperity is the private market. By destroying the private market he destroys the greatest productive engine the world as ever seen. With it he destroys the prosperity Americans take for granted.

What better way to rapidly expand the public market than by allowing a fiscal and monetary crisis to bloom? Keep in mind, American voters lean heavily to the left. Arguably Dwight Eisenhower was our last conservative President. Slowly but surely we have been electing Presidents who are more and more liberal. Obama is simply the latest, though the most fervent. However, we almost elected Al Gore and John Kerry, men who rival Obama's leftism. When a fiscal and monetary crisis hits, when Americans' steady supply of goods and services becomes tight, when the dollar collapses, the American public will eagerly sign on to any "emergency" measure Obama suggests will save the day. There is no greater danger in this country than that presented by ignorance and fear in the populace AND a leftist community organizer in the White House eager to pander to both.

Third, mitigating the effects of a fiscal and economic crisis is the tenacity and resiliency of what's left of the private market in the United States. From personal experience I can testify that business, most especially small business, will not go quietly into the night. Small businessmen are used to adversity. They are fighters. They have cash reserves. Never count them out so long as they draw any breath at all. Small business men and women are the spine of our economy. If the destructive policies of the left can be overcome, small businesses will be the institutions that save us.

Fourth, there are wildcard forces at work in this nation that may be too powerful even for small business to resist. There is the mainstream media that is as economically illiterate as the American public and almost as ideological as the President. They cheerlead Mr. Obama's policies and coverup his flaws. And when economic crisis strikes, they will pimp the President's plans. This is a media caught up in meaningless and shallow celebrity, reality TV and courtroom drama. A fearful public doesn't have a chance against them.

Then, there is the popular culture. This is not the America of your grandfather or of your father. This is a nation of risk-averse and righteous individuals who are spoiled rotten. They feel they have a right to be comfortable. They have never experienced hardship. They are caught up in the fluff of modern culture: toneless jungle beat music with sappy, sexual lyrics, hollow social media blabbering, self-mutilation, selfless political correctness, artificial politeness, and a savage and unending stream of video and audio violence. Flash mobs are all the rage, and flash mobs that turn violent are merely an exciting curiosity. What will such individuals do when their toys and other of life's more essential necessities (like food, jobs and government welfare payments) are taken away? We need only look to Greece, Spain and Britain for the answer. In the face of wanton and greedy anarchy, small businessmen will react like the rest of us. They will pack up their things and take cover.

Fifth, in my opinion the canary in the mine shaft that will signal the beginning of this misery is food production and distribution. By and large, despite some federal oversight, the food industry is a thriving member of the private market. So long as it is left alone, it will be tenacious and resiliant. However, once the government begins to pay serious attention to the food industry, once it starts to hamstring it with overbearing regulation (see the latest nutritional and labeling requirements that threaten to remove certain, popular food types from the market), be they environmental, nutritional or egalitarian, production and distribution will slow. Shortages will hurt. Public complaints will be heard. Price controls and rationing will be the death knell of the industry. The canary will die.

What are the chances such calamities will befall us? You have eyes and a brain. Decide for yourself.

Yes We Can!

A few days ago President Obama said: “We can’t simply cut our way to prosperity. We need to do what’s necessary to grow our economy; create good, middle-class jobs; and make it possible for all Americans to pursue their dreams.”

Let me translate this Washington doublespeak into plain English: “You must allow us to continue to tax, borrow and spend without limit because only we are smart enough to decide what is best for you and your family. If you tell us to stop, the markets will implode, the Treasury will default and we will all lose.”

Don’t believe him.

Federal politicians are fond of playing Chicken Little and speaking in riddles. For example, they claim we have a “mixed economy” in this country. In truth we have two, separate economies: the private market and the public market. These markets are as different as oil and water. Each expands at the expense of the other. And, like oil and water, they can’t and don’t “mix.”

The private market is where individuals voluntarily buy and sell goods and services. The public market is where individuals involuntarily participate in coerced transactions. The private market is based on the principles of (private) property, freedom and peace. The public market is based on the principles of shared ownership, administrative command and control, and political conflict. The private market operates spontaneously according to the will of individual participants. The public market operates compulsively according to the will of government politicians, bureaucrats and regulators.

Sadly, the public market is expanding, while the private market is shrinking. Consider the state of our GDP, which is a rough measure of the size of the American economy. At the beginning of the 20^th century, “the federal government collected three percent of GDP in taxes. A century later, it collects between 15 and 20 percent of GDP.” In 1903 federal spending amounted to 7% of GDP; in 2010, 40%. By 2016 the Gross Public Debt of the United States is projected to be over 100% of GDP. Even more shocking, the first issue of The Federal Register (The Code of Federal Regulations) was published in 1936 and contained 16 pages. In 2010 the number of pages in The Federal Register was 82,589!

Keep in mind that these figures pertain ONLY to the federal government. State and local taxing, spending, borrowing and regulating is another animal entirely.

Why should we care that the private market in the United States is being replaced by the public market?

Because economic theory proves that both parties are always satisfied by a voluntary trade. If you doubt this truth, remind yourself that human beings do not trade on a whim. Human beings act with purpose. If they didn’t expect to benefit from a trade, they wouldn’t voluntarily trade their labor for a wage or their money for a gallon of milk.

Granted, the benefit expected doesn’t always pan out. The satisfaction gained doesn’t always last. Conditions change and no one can know the future with certainty. But compare this result to the alternative.

At least one party will always be disappointed and unsatisfied in an involuntary trade. Why? Because if both traders expected to be satisfied, coercion would not be necessary in order for the trade to take place.

Consider taxation. Unless you believe the lie that citizens pay taxes voluntarily, politicians and bureaucrats force you to pay them your money. In exchange, you get something you don’t want, or more of something you don’t need, or something you want but could get for less on the private market.

For instance, would you voluntarily spend $10,000 per year to train Chinese prostitutes to drink more responsibly on the job? Of course not! Your family has more urgent and necessary wants and needs, like food, clothing, shelter, gas, utilities, a day at the beach and the like.

Still, federal politicians and bureaucrats recently spent $2.6-million of your tax money to research the drinking habits of Chinese prostitutes.

In this day and age we become desensitized by large numbers. Let’s put $2.6-million into perspective. Let’s assume that there are 260 families in your middle-class neighborhood. Let’s also assume that you and your neighbors pay an average of about $10,000 per family per year to the federal government (which is about right if your family income is $50,000 per year). It would take a year’s worth of taxes from your entire neighborhood to pay for that absurd study of Chinese prostitutes!

Remember, this example is just the tip of the boondoggle iceberg. President Obama’s proposed 2011 budget totaled $3.8-trillion in federal spending. Moreover, taxes from you and your neighbors only covered $2.2-trillion of this spending. The rest, $1.6-trillion, was put on the national credit card.

Are you starting to get the picture?

Taxes collected by coercion and spent on the public market by fat and pampered elites benefit and satisfy mainly fat and pampered elites. But don’t get stuck thinking only about wasteful spending and frivolous regulations. The truth is that ALL government spending and regulation transforms private markets into public markets.

Whether for Social Security, Medicare, the US military, the poor and downtrodden or Chinese prostitutes – the effect of government spending is the same. Goods and services wanted by the favored few are produced at the expense of goods and services wanted by the many. Dissatisfaction multiplies. Political conflict abounds.

Yes, we can tolerate some small percentage of public market transactions. But we didn’t build this great nation by conducting 40% of our business on the public market. Until recently, we respected private property and honored freedom. As a result, we were richly rewarded with peace and prosperity.   

Now we pay lip service to property and freedom. As a result, our prosperity declines.

But why? Why is the private market more productive, more efficient and more responsive to consumer demand?

Because politicians, bureaucrats and regulators do not know scarcity. They are exclusively consumers and spenders. When they run out of money to spend, they simply tax more or borrow more. Or, in a pinch, they print more. They do not understand that public market borrowing crowds out private market borrowing, that bad money crowds out good.

In the private market producers and consumers are one and the same. Traders in the private market do not enjoy unlimited resources. They are constrained by scarcity. Thus, they spend their money wisely and carefully on things they need and want most. Frivolous spending inevitably comes back to bite them.

Is it any wonder why incomes are falling and prices are up? Or why Washington thrives while middle America suffers? Or why politicians, bureaucrats and regulators plead for more spending and new taxes despite a raging recession?

Mr. Obama is wrong. We CAN “cut our way to prosperity.” We can cut spending, cut taxes, cut borrowing and cut regulations. Raising taxes on anyone will not only kill what’s left of the American private market; it will kill what’s left of the American dream.

    

More Lies And Damned Lies From The White House

“Mrs. Obama has never made any public statements about same-sex marriage."

So says Kristina Schake, Mrs. Obama's communication director in an email to Politico.

Really?

On June 27, 2008 Michelle Obama spoke to the Democratic National Committee's Gay & Lesbian Leadership Council in New York City. In this speech Mrs. Obama clearly and plainly discusses same-sex marriage in the context of "the world as it should be."

In case you don't believe me, there is a YouTube video of the speech posted here.

Watch the speech. See for yourself.

Just how stupid does this White House think we are?

How I Begin And End My Day

I read the Drudge Report and Weasel Zippers.

These internet news sources are much maligned by the elitist media as shallow and biased. This criticism is accurate, but that is not why I read them. I have a host of internet sources for in depth analysis from many different angles. I read these news blogs because they make me aware of news that is not published by the biased mainstream press.

For instance, today I learned that Colby King, an elitist commentator from the Washington Post considers Michele Bachmann Barbie with fangs. I also learned that the President of the UN Foundation wants to "undertake an aggressive program to go after those who are among the deniers" of human-caused climate change. I learned as well that Pulitzer Prize-winning author Alice Walker thinks that "the United States and Israel are great terrorist organizations."

One day I learned that President Obama thinks automation is among the "structural issues" in our economy reponsible for our high levels of unemployment. A few days later I learned that Obama thinks that automation is good for the diaper manufacturing industry.

The Drudge Report and Weasel Zippers delight in highlighting contradictions uttered by our elitist rulers. Often these highlights are complete with YouTube videos of the offending contradictory remarks. It's as if our elitist rulers are so sure of their position and power, are so confident they will not be challenged by the biased mainstream press and are so convinced of the stupidity of the Great Unwashed it is their fate to "govern," they shamelessly utter what is on their mind whether it is true or a lie, sensible or senseless. In short, they betray their attitude, understanding (or lack of it) and political philosophy. These snippets effectively expose the mindset of the enemies of property, freedom and peace, whether in government or out of government.

This is exactly why I read them everyday.

For a graphic example of the arrogance and ignorance of our elite rulers which is exposed by shallow and biased internet news sites, watch this video in which Nancy Pelosi brazenly announces to the rabble that "America's Affordable Health Choices Act will mean a cap on your cost but no cap on your benefit." Then, as if she is a teacher of a class of slow learners, she distinctly repeats: "A cap on your cost, no cap on your benefit."

At the time, July 22, 2009, Pelosi was Speaker of the House shilling for ObamaCare. The woman is shamelessly ignorant and doesn't mind flaunting it.

Anyone with a modicum of economic sense knows that Pelosi is announcing a prescription for disaster. In what fantasy world can an elite ruler promise the rabble a cap on your cost but no cap on your benefit, yet receive no critical comment or exposure from the mainstream biased media?

Right here in the United States of America.

The assault on property, freedom and peace visited upon America by the passage of ObamaCare may be a fatal blow. The tragedy is Pelosi and her ilk don't have a clue. The Drudge Report and Weasel Zippers make this absolutely clear day in and day out.

Go to Craig Steiner, U.S.

One of the very best economic blogs I've found on the internet is Craig Steiner, U.S., "Common sense American conservatism."

Craig's economic analysis is flawless and insightful to the point of being scary good. If you enjoy the subject of economics and, if you want to understand the vagaries of Washington fiscal and monetary shenanigans and their effect on you, become a regular reader of Craig's blog.

You won't be disappointed.

By the way, if we use the criteria of Property...Freedom...Peace to judge a blog's political philosophy, Craig Steiner, U.S. scores high marks.

Good Article By The Country Thinker

I like The Country Thinker blog. Today Ted Lacksonen analyzes an article in the Wall Street Journal by Professor Alan Blinder. Terrific. It moved me to comment:

Mr. Blinder illustrates the problem that economic elites have trying to figure out what's going on in the "economy" using macro-economic data, much less prescribing a "fix" for what they think is "wrong." Observing the "economy" is like observing thousands of fans pouring out of a stadium after a football game and trying to predict their post-game behavior. Will they get in their cars and drive straight home? Meet at a bar for pizza? Catch a plane?

Millions of variables affect the choices individuals make. Trying to pin down which variable is key to what we decide to do is futile. Most of the time economists use their statistics to prove what they want to prove. Competent economists use rational economic theory to explain what they observe, not the other way around. Blinder gives away the store when he observes: "As a mat­ter of pure logic that could be true."

No, Mr. Blinder, as a matter of pure logic something is either true, i.e., correctly deduced from true premises, or not. If his premises are true and his logic is correct, then -- as a matter of pure logic -- Blinder must explain how his observations can trump his logic. Unless, of course, his premises are not true.

Businessmen are hard-pressed to expand their business and, thereby, create jobs, if inventory is piling up and all their sales staff hears from customers is "maybe next year." There are a thousand and one reasons why businessmen and individuals hold their money instead of spend it. Fear and uncertainty are reasons as good as any.

Businessmen and individuals alike want to be creating, producing and trading. So what's the problem? In our advanced society we don't barter. The life blood of our human affairs is money. When deciding what money is worth at any given moment, we take our cues from interest rates, the price of groceries, the taxes we pay and the progression of federal spending from millions to billions and trillions. Then we decide whether to buy that stock or that robotic machine or to hire that extra employee, or to keep our assets nearby in liquid cash.

The more Blinder, Bernanke and friends mess with our money in order to cajole us into creating, producing and trading again, the more confused, scared and uncertain we become.

Mr. Blinder, how about you just stop trying to help us, leave our money alone and get the hell out of our way?

Check out Ted's words of wisdom here.
  

 

The Answer For Progressive Thinkers

A few days ago I posted a question for progressive thinkers:

A physician and a farmer freely and voluntarily engage in a trade: the physician takes the farmer's tonsils out in exchange for a dozen, fresh chicken eggs.

Which trader is being taken advantage of and, consequently, must be unsatisfied by the trade?

Here is the correct answer: Neither trader has been taken advantage of. Neither trader is unsatisfied.

Why?

Because trading is a purposeful action. Human beings trade with a purpose in mind. They seek to profit from their trade, i.e., they expect to be more satisfied after the trade than before.

Doesn't one trader have to lose in order for the other to gain? How can both traders profit from the same trade?

Both traders profit because each values the traded items differently. The doctor values a dozen, fresh chicken eggs more than the labor he expends taking out the farmer's tonsils. The farmer values getting his tonsils removed more than the labor he expends producing a dozen, fresh chicken eggs.

Value is in the eye of the valuer.

Some might object by asserting that a tonsilectomy is obviously of far greater value than a dozen, fresh chicken eggs. But he who makes such an assertion must explain why, if what he says is true, the doctor made the trade. We assume the doctor is of sound mind. We also know that the doctor made the trade freely and voluntarily.

He who believes value is "objective," i.e., contained in the essence of a thing, must explain why the price of water is less than the price of gold. Human life is, after all, impossible to sustain without water. Gold is a bauble. Yet, men generally value x amount of gold more than x amount of water.

He who believes value is "objective" must also explain why it is that each of two men could value the exact same thing differently. For example, assume that a boy hits a home run into the bleachers. The ball is caught by Ted, a disinterested fan. Mike, the boy's father, desires the home run ball as a souvenier. Mike values the baseball more highly than Ted.  

The truth is value is not "objective," i.e., contained in the essence of a thing. Value is "subjective," i.e., assigned to a thing by the mind of each individual.

The crux of the question is the stipulation that both the farmer and the doctor engaged in the trade freely and voluntarily. Because of this stipulation we can deduce that the satisfaction earned by both men as the result of the trade was due to their different assessed valuations of the items traded and the respective profit both perceive and expect to receive.

If, on the other hand, a third party coerced either the farmer or the doctor (or both) to engage in the trade, we can deduce that one or both of the traders will not be satisfied as the result of the trade. For if one or both of the traders truly expected to be satisfied as the result of the trade, one or both of the traders would have made the trade freely and voluntarily, i.e., coercion would be unnecessary.

Furthermore, if the doctor were coerced into making the trade, we might conclude that the trade was made in 2016 and that ObamaCare were in full force. (Just kidding!)

Now for the kicker...

If the goal of society is the mutual satisfaction of all in society, and if it is true that in a free and voluntary trade both parties always profit, i.e., both parties are always satisfied, and if it is also true that in a coerced trade both parties do not necessarily profit, i.e., both parties are not necessarily satisfied, then wouldn't it be preferable if society were organized in such a way that all trades are made freely and voluntarily and that no trades are coerced. Such an organization would result in all who trade being always satisfied, as opposed to being satisfied by some trades and dissatisfied by others.
 

It's Time We End The War On Drugs

40 years of the War on Drugs has enhanced the power of the state, eviscerated our property rights, eroded our personal freedom and radically disturbed the peace.

Federal, state and local law enforcement officers fight this War on Drugs in the vain hope that American citizens will not destroy their lives by abusing drugs. Yet today the nation is awash in drug abuse. What began as a noble effort to protect American citizens from themselves has backfired. It’s a good bet that today the average citizen is more likely to be injured by violence that attends the drug trade than by drug use itself. This is the true tragedy of the War on Drugs.

Simply put, the War on Drugs outlaws the civility, order and property rights inherent in a free market in drugs. It drives the demand and supply of drugs underground where, by definition, criminals reign supreme. As a result, the black market in illicit drugs is riddled by dog-eat-dog violence. Countries where illicit drugs are produced are terrorized by drug lords. Countries like the United States where illicit drugs are demanded and consumed are terrorized by drug pushers who menace grade school play grounds and lurk in suburban neighborhoods. Gangs of drug dealers routinely shoot up urban neighborhoods. Police efforts to end the drug trade result in SWAT team terrorization of innocent families, corrupted cops, wanton property confiscation and the incarceration of a good percentage of American citizenry.

In the face of this mayhem, there are among us those who still defend the War on Drugs. They contend that the billions (some say trillions) of tax dollars spent fighting this noble War is worth it. But surely it is not worth the ever growing number of dead and wounded in our streets.

Just the other day on a national radio talk show a pundit casually commented that he is against ending the War on Drugs because he has too many friends who suffer from addiction to illicit drugs. This intelligent, compassionate man missed the point entirely! The point is that the War on Drugs has been raging for 40 years and it has not prevented his friends from buying and using illegal drugs!

The truth is that the War on Drugs, because of the economics of the black market, proliferates drug abuse and encourages the use of “home brew” drugs, like crack cocaine and crystal meth. These offshoot drugs are even more corrosive than the drugs originally outlawed.

The economics of the black market are simple: When a government outlaws drugs, it severely restricts supply but it doesn’t make drugs or the demand for drugs go away. Those who demand drugs can still buy them on the black market but at a price far higher than the free market price that would otherwise obtain. In short, government prohibition drives up prices and profit margins. Huge profit margins are the only reason pushers can afford to deal drugs to children. The high price of illicit drugs is the only reason meth heads risk life and limb to make their cheap brew. By dealing in illicit drugs violent criminals can earn fantastic amounts of money by doing what they do best, breaking necks. The criminal manufacturers, distributors and customers they extort are beyond the protection of legitimate law enforcement.

If the government were to legalize drugs, free market producers (including backyard growers), enticed by huge profit margins, would enter the market. The supply of drugs would rise. Prices would fall. In time profit margins would shrink as supply adjusts to demand. Only the most efficient and consumer-oriented producers and distributors could successfully compete. This is the way of the free marketplace. This is the way of the law of supply and demand.

Drug lords may enjoy cracking heads and killing people in order to make a fantastic sum of money, but would they continue cracking heads and killing people for miniscule profit margins? Common sense and experience argue against it. Organized criminals are powerless in the face of the law of supply and demand.

Today, nobody extorts or murders beer manufacturers and distributors. Why? The reason is obvious: beer manufacture and distribution is legal. Thus, the profit margins of beer manufacture and distribution are set by the free market not by thugs. Profit amounts to a few cents on the dollar, a far cry from the enormous profits of black market bootleggers during the era of alcohol Prohibition.

From 1920 to 1933 the American federal government fought a War on Alcohol. The outcome of this war was remarkably similar to the outcome of the War on Drugs. This should not be surprising because the laws of economics apply everywhere and always to trade in all manner of goods and services. During Prohibition the manufacture and distribution of alcohol was driven underground. The price of alcohol increased. Profit margins drastically increased. Organized crime moved in by means of terror and extortion. Gangsters grew very, very rich.

Sound familiar?

However, when Prohibition ended, there was no longer big, easy money to be made bootlegging alcohol. Organized crime left the alcohol trade and moved into gambling and prostitution, where big, easy money could still be made due to continued government prohibition of these activities. Since crime no longer paid, many ex-rum runners went “legit” and integrated back into legal and honest society.

While some alcohol-related violence continues to this day in legal bars and night clubs, these few instances of violence are the result of individual, personal disputes. Machine gun-toting, organized gangsters no longer gun down innocent bystanders in the streets over the beer trade. The extent and proliferation of alcohol-related violence today is drastically reduced because the profit-motive from running illegal alcohol no longer exists.

History doesn’t prove economic theory; economic theory explains history and predicts the future. Thus, when the drug trade is legalized, we know the extent and proliferation of drug-related violence will be drastically reduced.

The bottom line is that if people want drugs, they will get them one way or the other. Black market killers and thieves will be eager to supply illicit drugs because only they are willing to extort and terrorize in order to earn enormous profits. The logic is indisputable. The history is illustrative. The only question is, given the logic and history of the matter, why do common sense Americans still insist on a wrong-headed policy that allows the law of supply and demand to work against them, a policy that guarantees that the only people allowed to profit from the drug trade are the dregs of our society?

The War on Drugs is a classic case of economic illiteracy and unintended consequences. It’s time the laws of economics worked for us instead of against us.

It’s time we end the War on Drugs!

Questions For Mr. Obama Over Dinner

Follow the link in this article, fill out the appropriate form and you could be the lucky person selected by the Obama campaign to have dinner with the President. By the way, no need to actually contribute to the campaign for Mr. Obama's re-election. As in all such contests, the fine print allows individuals to enter the dinner lottery FREE OR CHARGE. I say go for it. And I did.

Should I be selected to have dinner with Mr. Obama, I thought it might be prudent to prepare with appropriate questions for our fearless leader. I limit myself to questions because I have more to learn from him than he does from me:

1) Mr. President, every month the government releases data on the status of jobs created or lost in this nation, and every month you or your administration remind us that during your tenure as President the nation has experienced many, many consecutive months of private sector job growth. Tell me Mr. President, what specific, governmental economic policies that you or your administration initiated are responsible for this private sector job growth?

2) Mr. President, you recently commented that "there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers." As an example of such structural unemployment, you named the banking industry's use of ATM's and the airline industry's use of check-in kiosks. Would you cite the economic theory which explains this "structural" unemployment argument?

3) Mr. President, you once said: "I do think at a certain point you've made enough money...” Would you please tell me at what point you and your wife will have made enough money?
  

A Question For Progressive Thinkers

A physician and a farmer freely and voluntarily engage in a trade: the physician takes the farmer's tonsils out in exchange for a dozen, fresh chicken eggs.

Which trader is being taken advantage of and, consequently, must be unsatisfied by the trade?

New Leftist Mantra: Big Business Is Sitting On Trillions!

The left has a new talking point exemplified by this excerpt from a post at DemocraticUnderground.com:

"Big corporations are enjoying VERY robust profits and are sitting on trillions in cash reserves. But they are not expanding and hiring, at least not to the levels they should."

Juan Williams just got through saying basically the same thing on the Sean Hannity Show a few minutes ago. During a newsbreak, I heard the ABC News announcer say virtually the same thing.

This new talking point betrays the left's distrust of the free market and it's infatuation with government overseers and spenders. In the post above the writer presumes to know the levels at which business should be "expanding and hiring." He also presumes to know better than the business owners and directors themselves. Unspoken is the implication that "big corporations" are sitting on trillions in cash reserves because they are greedy, profit-hungry goliaths that are preventing the little guys from sharing in this cash reserve bonanza. Also unspoken is the presumption that these trillions in cash reserves should be taxed away from the private sector and spent by the public sector because those in Washington know best how trillions in cash reserves "should" be spent.

Leftists like Juan Williams who spout such collectivist nonsense should be challenged with a basic and simple question: Who has the right to determine how money should be spent? The individuals who own that money? Or politicians and bureaucrats?

In other words: Do you believe in the principle of private property, or not?

Mr. Williams was recently awarded a $2-million contract by Fox News. Who does Mr. Williams think has the right to determine how that $2-million in private property should be spent or invested? Mr. Williams himself? Or federal bureaucrats and politicians?

I suspect corporations are sitting on trillions in cash reserves for the same reason the mass of American individuals are sitting on trillions in cash reserves: uncertainty. Before business invests capital in expansion and hiring, it must be confident that the return on such an investment will be worthwhile. Apparently, business is not confident that their return on investment in expansion will be greater even than the paltry interest earned on savings. This is how pathetic the business climate is in this country at the moment.

The investment climate in this country is not much better. Why should an individual with investable cash bet on today's chancy and lackadaisical market? The demand to hold cash is high no matter who you are. This is why individuals hesitate to spend their disposable income. People sense crisis around the corner. They are preparing to deal with this crisis as best they can.

The only spendthrifts in today's economic climate are politicians and bureaucrats. They can afford it. They're playing with house money, i.e., money they've either extorted, borrowed or printed.

Inflation Portent

According to this article at CNSNEWS.COM "the Fed has surpassed mainland China as the top owner of publicly traded U.S. Treasury securities." There can be no doubt that the Fed is monetizing U.S. debt, which can mean only one thing: our government has decided -- as all governments eventually and inevitably decide -- that the easiest way out of the hole it has dug itself is not spending reductions or tax increases but money printing. Inflation is the means most preferred by politicos because inflation allows them to repay debt with devalued money. Inflation is their silent partner who, at least in their mind, allows them to have their cake and eat it too.

The game they are playing reminds me of house-flipping during the housing bubble. The money is easy and plentiful so long as you are not the unlucky player left holding the bag when the bubble bursts. The problem is the bubble they are fooling with is the money supply. The fools do not appreciate the critical role money plays in our modern, division-of-labor economy. For the most part, modern human beings dwell in huge cities. The lifeline for these human beings is money, money they either earn by barter or obtain by government gifts, grants or subsidies. As the value of money declines, the stuff men need to live increases in price. Foodstuffs become dear.

This difference between the United States in 1929 and the United States in 2011 is the number of Americans who are self-sufficient, who have talents and skills suited to barter for stuff men need to live. In the time of the Great Depression a vast majority of the country was rural. People were accustomed to being largely self-sufficient. Moreover, people then were producers first and consumers second. Nowadays people do not produce what is needed to live. They produce -- at least those few who actually produce -- what is needed to play, to entertain, to amuse, to gratify. For years and years after the War Americans have increasingly lived primarily as consumers. This trend must and will take its toll.

Another Banner Day For Property...Freedom...Peace

Today I learned that the United States is conducting a "secret" air war in Yemen.

I also learned that on Tuesday of this week a U.S. Dept. of Education SWAT team invaded a California home and "reportedly roughed up a man."

Meanwhile, in Atlanta the Obama administration is in court defending itself against a law suit brought by Florida and various other States contending that ObamaCare is an unconstitutional overreach of federal power.

On Wednesday, back in Washington, the U.S. Dept. of Agriculture announced it has awarded $17.4-million to fund "pilot projects that will begin exploring how to establish a market for greenhouse gas (GHG) credits, a key component of a cap and trade system." (A cap and trade system, I might add, that has no chance of being passed in the Congress.)

While all this was going on, President Obama was at a northern Virginia community college saying that cutting federal spending on environmental and educational programs "is not our history, that is not who we are." He went on to say that he doesn't "accept that future for the United States of America."

How can anyone who values property, freedom and peace not be alarmed by these events?

That the United States is engaged in a secret war in Yemen is not shocking. Presidents making war around the world without overt Congressional consent is commonplace in this day and age. However, this news comes on the heels of a controversey occasioned by this President's flouting of the requirements of the War Powers Act. Apparently, we have a President in Obama who believes he need not be accountable to Congress or to the people for violating on a whim the sovereignty of foreign nations by means of military force (despite campaigning against such unaccountable use of military force). If the President notified Congress of his use of military force in Yemen, he did so behind the back of the American public.

But operating behind the back of the American public is standard procedure for this President. ObamaCare was rushed through the Congress largely on the word of this President. Few in Congress understood the provisions of the thousand-plus-pages bill. Many Congressman admitted they had not even read the bill. Throughout the process of passing the bill, the media centered its coverage on Obama's folksey explanations of the bill, but what he had to say was many times at odds with the bills provisions. Yet, he was not challenged. For example, Obama argued that the provision of the bill which mandated that Americans purchase health care insurance was not a "tax." To call the mandate a "tax" would have violated the President's famous pledge not to raise taxes on Americans who earn less than $250,000 per year. Yet, yesterday in federal court the Obama administration argued that the ObamaCare mandate is a "tax."

Bald-faced lies are the rule rather than the exception for this President and his administration. Except for internet sources, his lies are rarely if ever challenged. On June 4, 2011 this President stood before auto workers and said: "Chrysler has repaid every dime and more of what it owes American taxpayers for their support during my presidency.” This statement is a bald-faced lie and, on this occasion, the mainstream media did call him on it. According to the Washington Post (and the U.S. Treasury Department) "U.S. taxpayers will not recoup about $1.3 billion of the entire $12.5 billion investment when all is said and done." Any administration dithering to the contrary is nothing more than Clintonesque parsing of the language (hiding behind interpretations of what the meaning of "is" is).

When the President asserts that cutting massive federal spending on environmental and educational programs "is not our history," he is lying. A cursory review of U.S. history will reveal that massive federal spending on the environment and education is a relatively new phenonmenon with roots stretching no further back than the 20th century. Any honest and impartial student of U.S. history will admit the truth of the matter. Could they be informed that in the 21st century the federal government would include a massively expensive Dept. of Education empowered to enforce its edicts by means of military SWAT teams, our founding fathers would certainly roll over in their graves. There can be no question about that.

Yet, this is the state of our nation now. Moreover, it is a glimpse of the future that this President seeks to create for our once free nation. What he can't accomplish in the Congress by means of public lies, he seeks to accomplish in the federal bureaucracy he directs and controls. If the Congress, or the States, or the people object, he will take us to court, paying for his efforts against us with money he has extorted from us in taxes or created out of thin air.

In light of all this one is hard-pressed to argue that the crisis in America now with regard to property, freedom and peace is different than the crisis suffered by Americans circa 1776.

 

A Reason For Despair

Now in the market economy this alleged dualism of two independent processes, that of production and that of distribution, does not exist. There is only one process going on. Goods are not first produced and then distributed. There is no such thing as an appropriation of portions out of a stock of ownerless goods. The products come into existence as somebody's property. If one wants to distribute them, one must first confiscate them. It is certainly very easy for the governnlental apparatus of compulsion and coercion to embark upon confiscation and expropriation. But this does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation.

When the Vikings turned their backs upon a community of autarkic peasants whom they had plundered, the surviving victims began to work, to till the soil, and to build again. When the pirates returned after some years, they again found things to seize. But capitalism cannot stand such reiterated predatory raids. Its capital accumulation and investments are founded upon the expectation that no such expropriation will occur. If this expectation is absent, people will prefer to consume their capital instead of safeguarding it for the expropriators. This is the inherent error of all plans that aim at combining private ownership and reiterated expropriation.

The above quotation is from Ludwig von Mises, Human Action, page 800-801.

Throughout human history in virtually every human society well-intentioned social reformers have observed with disdain a dichotomy of wealth: on the one hand there are the rich; on the other there are the poor. This dichotomy has existed and does exist in all societies no matter how they are organized with respect to property, freedom and peace. The reason this dichotomy exists is obvious: human beings are different. Some are strong; others are weak. Some are ruthless; others are gentle. Some are talented; others are dull. Some are industrious; others are lazy. Society is a cooperative arrangement between and among individual human beings. The differences between individual human beings in society are not without consequence. These differences result in differences in status and wealth between and among individuals, no matter how society is economically organized.

Well-intentioned social reformers dispute this last sentence. They imagine a society in which human differences are levelled, not in fact but in effect. They take an imaginary inventory of all desirable social products and services without regard to their productive source and then divide this inventory by the number of individuals in that society. Their mental gymnastics result in an imaginary society without rich and poor, a society wherein all individuals are blessed with more or less the same portion of desirable goods and services. Imagining such a society is easy. Imagining how such a society could be implemented in the real world is the hard part. Mises put his finger on the reason why.

We cannot imagine a human society able to exist in the real world without taboos against random killing and taking. Society is cooperative action between individuals. Individuals cooperate to attain goals they cannot attain without cooperative action. How could a cooperative society exist if the goals attained by some individuals could be legitimately appropriated by other individuals by means of random killing and taking? Such a society could not exist, at least not for long. Rational individuals would not form such a society, nor would they long cooperate in such a society. However, human beings are clever and creative.

While no society can exist wherein random killing and taking are legitimate social actions, societies can and do exist in which specific acts of killing and taking are legitimate social actions. Cooperative individuals draw distinctions between certain acts of killing and taking based on social context. Most societies allow individuals to legitimately kill in self-defense. Most allow individuals to legitimately take in taxation. Thus, specific social acts of killling and taking which are not deemed legitimate in a particular society are regarded as taboo and are called murder and theft. Therefore, by variously and creatively defining the taboos of murder and theft, societies of cooperative individuals are able to exist in the real world wherein the goals of some individuals can be legitimately appropriated by other individuals by means of legitimatized killing and taking. Of course, the longevity of such a society still depends completely on the willingness of individuals to cooperate in such a society.

Social reformers who seek to create an egalitarian society by apportioning the total goods and services in that society more or less equally among all individuals in that society can only do so by legitimizing more and more social acts of killing and taking. This must be so because, as Mises points out, desirable goods and services are produced not by some disembodied force of nature, but by individuals. Now, all individuals in such a society may selflessly volunteer the products of their toil to the common store in full measure according to their ability. Moreover, all individuals in such a society may prudently take products from the common store in a measure congruent only to their needs. However, these individuals would be imaginary. They would not be individuals in the real world who may be selfish, greedy or ruthless. In order to implement their imaginary egalitarian society in the real world social reformers must control and suppress these undesired traits of certain human individuals. They do so by legitimizing social acts of suppression, i.e., specific acts of killing and taking performed on some by others.

That collectivist societies can exist is clear. Mises tells us why they cannot exist for long. Eventually and inexorably capital is consumed. As a result the total inventory of goods and services in the collectivist society diminishes. Consequently, the portion allocated to each individual diminishes and approaches nothing. The collectivist social reformers never understand that the cornucopia of riches they seek to divide and allocate among the masses exists only because of capital owned and employed by individuals. As the reformers socialize ends they simultaneously destroy the only means by which those ends can be attained.

In light of the above consider this latest Gallup Poll: Americans Divided on Taxing the Rich to Redistribute Wealth. According to the poll a representative number of Americans were asked: Do you think our government should or should not redistribute wealth by heavy taxes on the rich? 47% answered in the affirmative. Moreover, according to the attendent article, Gallup "polling last year found two-thirds of Americans in favor of the wealthy paying higher Social Security taxes as a way to help keep that system solvent."

With almost half of Americans putting themselves in the collectivist camp of social reformers, there is reason to despair for the future prosperity of our great nation. I wonder how many of these social reformers understand that the policies they advocate will inevitably and inexorably lead not only to their own impoverishment, but also to the destruction of the very engine that makes prosperity possible -- private property.

How many of these individuals will read and understand Mises' quotation above? How many will believe it?