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.

Friday, August 15, 2014

45% Of Likely American Voters Are Numbskulls (+/- 3 Percentage Points)

In a recent opinion column Nobel Laureate Paul Krugman praised the DMV:
The point is that the vision of hopeless government isn’t grounded in personal experience, let alone data. At this point it’s a cultural cliche, or a projection by people who read Atlas Shrugged in their teens and never grew up.
Of course, there were no "data" in Krugman's piece one way or the other. And by "personal experience" Krugman means "his" personal experience not "my" personal experience or "yours." Obviously, "his" personal experience is real and accurate. Mine and yours amount to a bogus "cultural cliche." Therefore, Krugman implies, social and economic policy in these United States should rightly be legislated based on "his" personal experience which is uncorrupted by perpetual, childish fantasy.

In other words, Krugman is saying that any American citizen who has had a bad personal experience visiting their local DMV, Post Office, VA hospital, IRS or Social Security office is delusional. According to Krugman, DMV employees are "generally helpful and the lines...moved fast." Thus, Americans should expect new and burgeoning federal behemoths like Homeland Security and ObamaCare to be like the DMV: models of efficient and effective customer service.

Hundreds of individuals in the comment section of Krugman's article agree with him. Apparently, libertarians and conservative Republicans are delusional, driven by emotions and ideology rather than fact and reality, mislead by biases against democratic government and influenced by wealthy corporate interests. On the other hand, liberals and progressives are extremely educated, street-smart and grounded in reality.

Meanwhile, over at Rasmussen Reports, we learn that 17% of likely American voters believe that the era of big government is over. Another 28% are undecided.

You explain it. I can't. Is almost half of the American electorate blind, stupid or both? All I know for sure is that libertarian politicians have their work cut out for them. How do you reason with voters, almost half of whom are numbskulls?

As for Krugman, Chico Marx said it first in Duck Soup: "Who are you going to believe, me or your own eyes?"

Actually, whether or not the lines at the Post Office move as fast as the lines at Federal Express is beside the point. Individuals patronize Federal Express because they want to. They spend money at the Post Office because they have to. Federal Express has customers. The Post Office ministers to a captive audience.

Krugman won his Nobel Prize in economics. Rather than boasting about how helpful employees keep the lines moving at the DMV, you'd think he'd be asking himself why DMV's in their present form exist in the first place. Ultimately, that is the single and distinctive difference between government agencies and private enterprises. Every day a private business exists in the free market, the entrepreneur who owns it must justify its existence and its method of operation. If he doesn't, a competitor will.

If Krugman had lived in socialized Italy during the middle of the last century, no doubt he'd write a column praising railroad conductors for being helpful and Mussolini for keeping the trains running on time.

Talk about missing the point!   

Friday, April 11, 2014

Really, My Leftist Friends, You Can't Be That Stupid!

As an advocate of the free market and laissez faire, I am often lectured by leftists who rant that unregulated capitalism is a danger to good and honest people. "We need government," they tell me, "to force industrialists to be fair and to prevent big business and corporations from becoming monopolists and robber barons who exploit the common man and nefariously enrich themselves and their crony friends."

Well, leftists should be pleased. We live in a country which is now overrun by federal regulators and government bureaucrats who inspect, manage, audit and control virtually every aspect of our lives. Are we better off as a result? Quite the contrary. It is our government politicians and bureaucrats who have become the robber barons. For evidence, all we have to do is examine the news.

Take the case of Tony and Heather Podesta, a high-powered pair of rich, Washington lobbyists who are currently in divorce court. The Washington Free Beacon explains their lifestyles and their political connections in an article titled, Divorce Beltway Style.

The Podestas -- consummate Washington insiders -- reap a fortune suckling at the teat of the Washington cash cow. If their last name sounds familiar, it's because Tony Podesta's brother John has been a powerful, Washington insider since 1997, when he served as President Bill Clinton's Deputy Chief of Staff. John Podesta went on to found the Center For American Progress, an influential, progressive think tank which -- you guessed it -- specializes in government policy creation. According to Wikipedia John Podesta is the current chair of that organization and also serves as Counselor to President Obama.

Because of their political and family connections Tony and Heather Podesta are able to profit by playing both ends against the middle. According to the Beacon article, here's how they do it:

As government expands, extending its reach to every aspect of business, every sector of the economy, private citizens and corporations require sherpas to lead them through the mountains of regulations and tax provisions, to discover exemptions and special favors and other forms of relief or favoritism to improve the bottom line. And who better to act as sherpas than the relatives of the Democrats who impose the regulations and tax provisions in the first place, who better than the lively proprietors of a family business operating in the luxurious and morally uncomplicated world of the caste of limousine liberals who dominate politics, culture, news, and finance.

And the profits the Podesta's glean from the federal cesspool are substantial indeed:

In 2009, with the inauguration of Obama and the dawn of unified Democratic control of Washington, business boomed. Revenues at Tony’s firm close to doubled, and revenues at Heather’s firm increased by 50 percent. The money has continued to roll in. The Podesta Group had some $13 million in lobbying income in 2013, sporting clients such as Lockheed Martin, Wells Fargo, U.S. Airways, Walmart, and the National Biodiesel Board. Heather Podesta + Partners made some $4 million, lobbying on behalf of health companies, the American Beverage Association, Brookfield Power, DeVry University, and others. A portion of that money was recycled, contributing to Democratic campaigns, opening up avenues of influence: Tony gave some $45,500 in 2013, all to Democrats; Heather some $95,798 to Democrats, Democratic committees, and liberal groups.
Nice work if you're connected enough to get it. Reportedly, the Podesta's own a multi-million dollar mansion in Washington, DC and have an apartment in Venice, Italy which they visit "up to a dozen times a year." They both run with the most powerful crowd in DC. The problem is you and I pick up the tab for their extravagances by paying higher prices for the products made by their crony capitalist clients and higher taxes for the huge bureaucratic establishment the Podesta's lobby and patronize.

Tony and Heather Podesta are merely a single example of the millions of lobbyists and federal bureaucrats and politicians who every day feed off of each other and the American consumer and taxpayer. Here's another example. The federal Bureau of Land Management (BLM) describes itself as "a small agency with a big mission: To sustain the health, diversity, and productivity of America’s public lands for the use and enjoyment of present and future generations."

Why then is the BLM currently attempting to force a Nevada rancher to stop grazing his cattle on federal land? According to the MailOnline, the rancher, Cliven Bundy, claims his family has been using the range land to graze cattle since the 1870's. The BLM claims it is trying to evict the rancher in order to protect the habitat of an endangered species of desert tortoise.

But knowledgeable locals tell a different story:

“It is not about turtles it is about water. There are developers working for military contractors that want that land and water for mining weapons grade minerals for industry… they want to sell the land by the highway for real estate development because it’s close to I-15 and the Bundy’s have been refusing to sell what they actually own directly for over 20 years. Many buyers sent me out there with crazy offers for that land for many years. It is prime real estate not worthless desert. There is a natural gas pipeline going through there and lots of water under ground too. Somebody connected to a military corporation is using political power and the BLM to muscle those people out.”
Imagine that! Federal politicians and regulators using their monopoly on the use of force and coercion to manipulate the real estate market in favor of crony friends, family and political campaign donors! Apparently, such practices are business as usual for the federal government, especially in Nevada.

According to the Los Angeles Times, Nevada Senator Harry Reid has a long history of helping his pals in the real estate business at the expense of the American taxpayer and those on the other side of the political fence:

It was the kind of legislation that slips under the radar here.

The name alone made the eyes glaze over: "The Clark County Conservation of Public Land and Natural Resources Act of 2002." In a welter of technical jargon, it dealt with boundary shifts, land trades and other arcane matters -- all in Nevada.

As he introduced it, Nevada's senior U.S. senator, Democrat Harry Reid, assured colleagues that his bill was a bipartisan measure to protect the environment and help the economy in America's fastest-growing state.

What Reid did not explain was that the bill promised a cavalcade of benefits to real estate developers, corporations and local institutions that were paying hundreds of thousands of dollars in lobbying fees to his sons' and son-in-law's firms, federal lobbyist reports show.
Maybe it's merely a coincidence that Cliven Bundy lives in Clark County, Nevada, the place where Harry Reid cut his political teeth as a freshman in Congress many years ago. Maybe it's merely a coincidence that Reid was accused on more than one occasion of abusing his legislative power to benefit his family and friends. In fact, maybe it's merely a coincidence that, according to the Los Angeles Times, Reid and his family have their fingers in just about everything that goes on in Nevada:

So pervasive are the ties among Reid, members of his family and Nevada's leading industries and institutions that it's difficult to find a significant field in which such a relationship does not exist.

Furthermore, the Los Angeles Times reports, Reid's power over land interests in Nevada is extraordinary:

As a senator, Reid exerts a degree of power over local affairs that is unknown in most states.

That is because the federal government owns 87% of Nevada's land; to a large extent, Washington decides whether cities and businesses can expand and where economic growth may occur. Even local zoning may become a federal matter.

Over the years, Reid has used legislation to move federal land into private hands and private land into the public realm. He says he has done so to preserve scenic and environmentally sensitive areas while freeing up more land for urban growth.

Such was the case with the Clark County legislation.
Does Reid have anything to do with the BLM trying to evict Cliven Bundy's cattle from grazing land in Clark County, Nevada? I don't know if he does or doesn't, but I do know that the current head of the Bureau of Land Management is Neil Kornze, a Nevada native who, MailOnline reports "served previously as a senior adviser to Senate Democratic Majority Leader Harry Reid."

No, I wouldn't be surprised if Reid is involved. After all, it wouldn't be Reid's first rodeo. According to Wikipedia:

A series of investigative reports in the Los Angeles Times[43][44][45][46] suggested that Reid had introduced legislation and imposed pressure on regulatory agencies to advance the business interests of his close friend Harvey Whittemore, a Nevada attorney-lobbyist who contributed heavily to Reid's campaigns and leadership fund and who employed Reid's son Leif as his personal attorney. With Reid's help, Whittemore was able to proceed with construction of a $30 billion planned golf course development, Coyote Springs, a project heavily criticized by environmental groups for reasons including its projected effects on several endangered species.
Just imagine how exploited we'd all be if Senator Harry Reid and the BLM weren't around to protect us from potential robber barons like Cliven Bundy.

Oh, by the way, according to the Gateway Pundit various private militia groups from around the nation are assembling in Nevada in support of the rebellious rancher.

Which reminds me of another story in the news this week. Reportedly, Attorney General Eric Holder disclosed the fact that his Department of Justice is looking into ways to make guns "safer." His department has requested "$382.1 million in increased spending for its fiscal year 2014 budget for 'gun safety.'”

Meanwhile, "President Barack Obama’s budget proposal also calls for $1.1 billion to “protect Americans from gun violence—including $182 million to support the president’s ‘Now is the Time’ gun safety initiative.”

Holder said he wants to force gun owners to wear a "gun control bracelet" on their shooting wrist so that he can make sure that only "lawful" gun owners are able to make their guns shoot. Holder expects both sides of the gun control debate to support his gun control bracelet idea.

I am amazed that Holder is so out of touch with both the American public and the US Constitution that he would go public with such a boneheaded idea. Surely he knows that any gun control bracelet smart enough to make a gun shoot is also smart enough to prevent that gun from shooting.

Law enforcement is already able to shut down your automobile in an emergency by remote control. A bill has already been introduced in the US Congress giving the federal government the authority to shut down the internet in a time of national emergency. Is it beyond the pale to imagine that the federal government might use a gun control bracelet to effectively disarm dissidents in a national crisis, perhaps a crisis like the one developing in Clark County, Nevada? (I am assuming of course that the government would require private citizens to wear the gun control bracelet and not members of the government's myriad swat teams.) 

Surely my leftist friends are smart enough to see through Holder's tomfoolery.

On the other hand, if leftists are foolish enough to believe that Harry Reid and his bureaucratic pals are protecting Americans from robber barons rather than acting like robber barons themselves, maybe they are stupid enough to believe just about anything.

Saturday, February 22, 2014

Birds Of A Feather

Nicolas Maduro (Reuters / Carlos Garcia Rawlins)
On November 15, 2013 Nicolas Maduro, the President of Venezuela and an avowed Marxist, was granted the power to rule by decree.

On January 14, 2014 Barack Obama, the President of the United States and a de facto Marxist, granted himself the power to rule by decree, saying: "I've got a pen and I've got a phone."

On November 22, 2013 the Washington Times reported that President Maduro "issued a decree that profit margins can be limited." The Washington Post reported:
Earlier this month, after railing against “bourgeois parasites,” Maduro ordered troops to take over a major electronics store chain and force managers to sell goods ranging from plasma TVs to stereos at bargain-basement prices.

On February 12, 2014 President Obama issued a decree that the minimum wage for federal contractors be increased to $10.10 an hour. On February 18, 2014 the White House blog stated that the minimum wage increase mandated by the President would not cause unemployment if the nation's bourgeois parasites lowered their profit margins:
In addition, businesses can adjust in other ways rather than reducing employment (for example, by accepting lower profit margins).

The Subway To Serfdom

Map courtesy of The Independent

Friday, February 14, 2014

"Strange Fruit" or "The Lynching of Venezuela by Rollo Tamasi"

Chavismo, the leftist ideology of the late Hugo Chavez, is bearing "strange fruit" in Venezuela's streets.

Venezuelan students are being "disappeared," or clubbed and shot to death by Rollo Tamasi, and still there is not a single toilet paper square to spare in the hands of the "workers."

Who is Rollo Tamasi? He's the Klansman under the white hood who hangs "niggers" and gets away "clean."


He's the policeman in military armor who swings a nightstick and fires an AK-47 at unarmed, fleeing civilians.

He's the pretty, empty-headed woman -- Andreína Tarazón -- who is the National Superintendent for the Defense of Socio-Economic Rights.

He is Venezuela’s Dictator-President Nicolas Maduro who rules by decree.

While you loiter in a federal food line, awaiting your turn and your portion of government rations, while you shit in a hole and wipe your ass with pages of the family Bible, Rollo Tamasi dines on caviar and wipes with tissue paper that is soft as a cloud. When the world goes to shit, thugs and thieves are always well off.

Rollo will tell you he's neither a thug nor a thief. He's a seeker of justice and fairness. Every skull Rollo cracks, every egg he "liberates" is not for his benefit, but for yours. At least that's his story and he's sticking to it.

And he gets away with it because you believe him. Why? Because you're either blinded by envy, seduced by stupidity or paralyzed by fear.

What do you think of the following? According to the Caracas Chronicles, this is what recently gushed across the tongue of Rollo Tarazón, the National Superintendent for the Defense of Socio-Economic Rights:
She claimed that the Law of Fair Prices “doesn’t seek to limit the private initiative, but aims to boost national production and secure the worker’s access to goods and services.” And about the penalties foreseen by the new piece of regulation, Tarazón said that they would be implemented progressively under the “principles of justice” and that “the Judicial System would play an important part in setting them.”
You see now why the world goes to shit? You allow vacant-headed morons to takeover. And when they do you are powerless or too scared to do anything about it. You've got your "socio-economic rights" but no food or toilet paper.

You want to know how and why things end badly, read this article: Venezuela: The Last Days of Private Enterprise, by Enrique Standish. That is not his real name by the way. Enrique is in Venezuela. He uses the pseudonym for "safety reasons." Enrique writes:
The private sector in Venezuela has barely managed to survive in Venezuela after 15 years of the “Chavista regime.” Most of Venezuela’s largest companies, as well as most banks, insurance companies, and agri-business industries were long ago nationalized or confiscated by Hugo Chávez. Now the final death sentence for the remaining businesses has come through new foreign exchange and price control regulations.
And, contrary to pretty Ms. Rollo, this is how Enrique describes the Law of Fair Prices:
According to this law, no economic activity in any field can be performed in the country without the prior permit from the Orwellian “National Superintendency for the Protection of Socioeconomic Rights.” Thus, if a lawyer wants to open his own firm or a farmer wants to sell from his truck, they will need a permit, even if they have previously registered companies to that effect.
Well? No wonder the pretty bureaucrat, Rollo Tarazón, is enamored with the law. Maybe she's not as empty-headed as portrayed.

No, in truth it is the Venezuelan "workers" who are the empty-headed numbskulls.

To me, there is only one thing worse than empty-headed Venezuelans...empty-headed Americans. Why? Because I am an American, and because Washington, DC is full of Rollo Tamasi's named Barack Obama, Kathleen Sebelius and Janet Yellen. American "workers" adore them.

Yesterday America, today Venezuela, tomorrow America. Rollo's work never ends. He never tires...

Strange Fruit
by Abel Meeropol*

Southern trees bear strange fruit,
Blood on the leaves and blood at the root,
Black bodies swinging in the southern breeze,
Strange fruit hanging from the poplar trees.

Pastoral scene of the gallant south,
The bulging eyes and the twisted mouth,
Scent of magnolias, sweet and fresh,
Then the sudden smell of burning flesh.

Here is the fruit for the crows to pluck,
For the rain to gather, for the wind to suck,
For the sun to rot, for the trees to drop,
Here is a strange and bitter crop.

* Abel Meeropol is the pseudonym of Lewis Allan, who wrote "Strange Fruit" while living in New York in 1937. Did Allan use a pseudonym for "safety reasons?" Did he fear the wrath of Rollo Tamasi?

Speaking of Tamasi, he was created in the mind of a movie character, Ed Exley, in the movie LA Confidential. IMDB quotes a conversation in the movie between Exley and fellow cop, Jack Vincennes:
Jack Vincennes: Why in the world do you wanna go digging any deeper into the Nite Owl killings... Lieutenant?
Ed Exley: ...Rollo Tamasi.
Jack Vincennes: Is there more to that, or am I supposed to guess?
Ed Exley: [aftre gathering his thoughts] Rollo was a purse snatcher. My father ran into him off duty, and he shot my father six times and got away clean. No one even knew who he was. I just made the name up to give him some personality.
Jack Vincennes: What's your point?
Ed Exley: Rollo Tamasi is the reason I became a cop. I wanted to catch the guys who thought they could get away with it. It's supposed to be about justice. Then somewhere along the way, I lost sight of that...
  Actually, I think somewhere along the way "justice" lost its meaning.

Saturday, February 8, 2014

Black Market Anarchism

Jakub Bozydar Wisniewski has written a paper on market anarchism which has been published in The Quarterly Journal of Austrian Economics. The paper, entitled "Legal Monocentrism and the Paradox of Government" can be read here. Visit Wisniewski's blog here.

Wisniewski argues that legal monocentrism, or the provision of law and law enforcement by a coercive central government, cannot overcome the problem of the "paradox of government," i.e., a government powerful enough to coerce thieves and murders would be powerful enough to become a thief and a murderer itself. He claims that only legal polycentrism, or the provision of law and law enforcement by a free and competitive market, can solve this problem.

In many respects this is the same, free market argument we've heard before from anarcho-capitalists: that law and law enforcement are merely consumer goods, and that any good provided by a free, competitive market will better satisfy consumers than a good provided by a monopoly.

Wisniewski puts a new face on the free market/efficiency argument for anarchism by attacking legal monocentrism from a logical and praxeological point of view. He claims legal monocentrism cannot overcome the paradox of government by means of the ballot box nor by means of structural checks and balances. Moreover, he argues it is impossible for consumers of law and law enforcement to make comparative judgments of these goods if they are provided by a monopolistic government. 

According to Wisniewski, these problems are not encountered by the system of legal polycentrism because law and law enforcement goods and services are provided by many and varied vendors who must compete for the consumer's business in the free market.

Interested readers can study Wisniewski's economic analysis of government and decide for themselves whether it is logically sound. For me, it misses the point. I concede that a free market is more efficient in satisfying consumer demand for goods and services than an unfree market. The problem is that law is not, like a pair of shoes, a market commodity. Neither is law enforcement a mere consumer service, like Pinkerton rent-a-cops. 

Law is the intersubjective ethic that binds people together in a cooperative society. Without a common ethic which outlaws murder and theft, cooperative society could not exist. Law enforcement is society's legitimate means of coercing individuals to comply with its common ethic.

From this prospective, polycentrism is an oxymoron. In a cooperative society, the ethical code which prescribes proper behavior and proscribes improper behavior must be commonly understood and agreed to by all cooperating individuals. A cooperative society cannot have multiple, competing codes of ethics. Such a society would splinter into factions, each faction following a different code. In time the larger society would crack up into smaller societies. 

Anarchists and non-anarchists alike seem to agree that some means of final arbitration of disputes is necessary to the survival of a society of cooperating individuals. This is because, as human beings, we all understand that it is possible for reasonable people to disagree and disagree beyond reconciliation. In a cooperative society when reasonable people disagree about the specific meaning of the ethical code, and when that dispute is intractable, i.e., the disputants will not concede their position and cannot settle the dispute by themselves, further cooperative action is impossible. The society itself cracks up.

When two cooperating partners become embroiled in an intractable dispute, resolution is elementary. The two disputing cooperators go their separate ways. Their cooperative action easily cracks up.

However, when many people cooperate in a society, the problem of settling intractable disputes is not so easy. In a large, cooperative society many individuals have great amounts of time and effort invested in the cooperative action. They cannot afford to lose that investment if their cooperative action cracks up, especially if the intractable dispute is over a relatively unimportant issue when considered from their majority point of view. 

Cooperating actors anticipate this situation. Large societies devise means of intractable dispute resolution and include these means in their ethical code. Also in that code, they legitimize an authority to enforce these means of resolution by coercion. 

This authority may be a single individual or a council of individuals, but either way the power of the coercive authority is decisive. Intractable disputes between cooperating actors are settled. The end result is that the cooperative action -- the society -- survives.

Throughout history cooperating individuals have preserved their cooperative action--their society--by granting legitimate decisive and coercive authority to varied individuals: fathers, mothers, chiefs, kings, queens, parliaments, sheriffs, etc. etc. Yes, it is a paradox of sorts, that these authoritative individuals, invested with the legitimate power to preserve society, may use that power in illegitimate ways to crack up society. But this is the nature of cooperative action. Men either cooperate or they don't. They either act in concert, or it is every man for himself. There is no third option.

Wisniewski thinks polycentrism is a third option. He imagines a market society which is anarchic, i.e., a society in which law (the common ethical code) and law enforcement (legitimate, decisive and coercive authority to enforce the ethical code) is freely and competitively traded. But how would intractable disputes between individuals be resolved in such a society? Wisniewski tells us that, due to the "superior allocative properties of the market, freely competing protection and arbitration agencies would provide these goods at a much higher level of quality than a monopoly of force does..."

Are significant disputes regarding a society's code of ethics and its legitimate, decisive and coercive authority merely a matter of "quality?" Are they merely a matter of "superior" allocation of resources and vendors? 

Imagine a society in which half of the cooperators believes abortion is murder and the other half believes it is a harmless means of contraception. Their dispute is personal and intractable. If this society practiced legal polycentrism, wherein competing laws for and against abortion were marketed like shoes and many varieties of legitimate, decisive and coercive authority were available for purchase, would the intractable dispute of the cooperators stand a better chance of resolution than in a society practicing legal monocentrism?

Wisniewski's argument is slight of hand. He conflates the free and competitive market, which results in "superior" allocation and improved "quality" of consumer goods and services, to the process by which individuals make ethical choices. Ethical codes and legitimate, decisive and coercive authority are not consumer goods and services, nor can they be traded as such. Rather, they are the philosophical basis and the moral foundation of exchange in a cooperative society. 

Furthermore, Wisniewski argues that "protection and arbitration agencies" -- his euphemism for providers of ethical codes and legitimate authority -- will be of a "much higher level of quality" if they emerge from a free and competitive marketplace. But how is a free and competitive market created in the first place? Certainly not in a system of legal monocentrism which is subject to Wisniewski's Paradox of Government. No, a free and competitive market can only be created in a system of legal polycentrism. 

So Wisniewski is faced with another paradox of his own making: in order to create legal polycentrism he must first presuppose its existence. If not, then how can he be sure markets are free and competitive and that the protection and arbitration agencies emerging from that market will be of a higher quality?

The only way out of this logical box is to assume "freely competing" protection and arbitration agencies can emerge from legal monocentrism, which brings us back to the beginning of this logical circle.

The truth is a truly intractable dispute between cooperators cannot be resolved by means of an arbitration agency of a higher "quality" or a "protection agency" selected from a myriad of competitors. A truly intractable dispute can only be resolved by means of coercive action by a legitimate authority.

Toward the end of his paper, Wisniewski writes:
... just as people all over the world are very diverse with respect to, e.g., their culinary, sartorial and artistic preferences, and thus prone to patronizing different food, clothing and art providers, they are also diverse with regard to their unwritten legal and moral customs, their beliefs concerning justice and fairness..."
If people really are "diverse with regard to...their beliefs concerning justice and fairness," what leads Wisniewski to believe that legal polycentrism must result in all members of society being better off, when considered from their own point of view. 

We know there are many people who believe that a free and competitive market is anything but just and fair. In a system of legal polycentrism wouldn't these people be working to subvert a free and competitive market? If people are so "diverse with regard to their unwritten legal and moral customs," how can Wisniewski jump to any conclusion at all with regard to character of the marketplace in a system of legal polycentrism or the quality of arbitration and protection agencies that may emerge from that marketplace.

In most western societies today that practice legal monocentrism individual cooperators are easily able to recognize legitimate authority. They can easily determine the territorial jurisdiction of this authority and its methods and means of enforcement. Thus, it is a relatively simple matter for traders to decide where, how and with whom to cooperate.

However, in a system of legal polycentrism any individual in the society could become an entrepreneur in law and law enforcement. He could legitimately vend law and offer his services in the marketplace as a legitimate, decisive and coercive authority. If the citizens of this society were truly diverse, the market-allocated law would be diverse in kind and quality. Law enforcement service could be anonymous, without territorial bounds or jurisdiction. Under these uncertain conditions market participants would constantly have to decide with whom to trade, how to trade and where to trade. A daunting task indeed.

The concepts of "market anarchism" or "anarcho-capitalism" have always reminded me of a "black market" which can only exist in Wisniewski's system of monocentrism. No matter how efficient or inefficient the legitimate, decisive and coercive law and law enforcement authority is in the parent monocentric market, legitimate law and law enforcement authority is non-existent in the black market offspring. It is the closest system to legal polycentricism I can imagine. 

On the black market buyers and sellers make their own law and enforce it in their own way. There are no written laws against murder and theft, although the black market functions according to the "unwritten legal and moral customs" of the people who operate in it. Thus, safeguarding one's person and property is of primary concern to participants in the black market, especially if the participants belong to a disfavored ethnic or social group. The strongest and most violent participants have the upper hand. Arbitration and protection agencies -- of a sort -- exist. However, their quality is suspect to say the least. Extortion rules. Honesty and integrity are in short supply.

A trader in the polycentric black market may be able to judge whether the protection agencies competing there are comparatively efficient or inefficient. A trader in a legal monocentric society may be at a disadvantage in that regard. But he will at least be able to immediately recognize legitimate authority and judge for himself whether that legitimate authority is fair or unfair according to his own standards. He can then decide whether or not to cooperate in such a society.

In conclusion, it should be clear that legal polycentrism, or black market anarchism, is not the nirvana some represent it to be. However, in some strange, ironic way, the black market may be the potential solution to the paradox of government that Wisniewski does not mention. As the ethical code and the legitimate, decisive and coercive authority of the parent monocentric society become more and more corrupted, as politicians, bureaucrats and crony capitalists in the monocentric society act more and more as outright thieves and murderers, individual traders in that society will cease cooperating in the parent society and, of necessity, begin cooperating on the black market. 

As the illegitimate power of a monocentric government becomes greater and greater, and as the illicit black market grows larger and larger, the parent monocentric society is faced with the ultimate solution: reform or die.

Friday, January 24, 2014

From The Ridiculous To The Sublime

A few days ago an article by Robert Reich caught my eye: "David Brooks is dead wrong about inequality." Reich is a former US Secretary of Labor who often advocates progressive policies like income equality. In his article Reich writes:
First, when almost all the gains from growth go to the top, as they have for the last thirty years, the middle class doesn’t have the purchasing power necessary for buoyant growth.
I don't know what "buoyant growth" is or how it is measured. I don't think Reich knows either. It certainly is not a working concept of economics. Reich's article is a meaningless collection of assertions and undefined terms. It is pure demagoguery preached to the choir. One of the choir members named "Steve Lives" commented as follows on Reich's piece:

In the system of money management that we call Capitalism, it only makes sense for the capitalists to automate as much as possible, to increase profit. Unfortunately, this doesn't work out too well for the rest of us. We can go on as we are today, stumbling from economic collapse to economic collapse, suffering the fall out from such an ideology, or we can just accept that the knowledge and technology of humanity today can provide for all of us if we redesign our society with intelligence and forethought. Of course this would mean the end of the current work ethic, the end of currency (if we wanted to), current politics would become obsolete, and if implemented world wide, no more wars. Pretty hard to imagine huh? But it is possible, and wouldn't be that hard to do. [emphasis mine]
Yes, the Nirvana Mr. Lives describes is "hard to imagine." As I marveled at Mr. Lives' naivete, I wondered how people come by such bizarre opinions. Then Mr. Lives filled me in. He recommended readers visit the website of something called: "The Venus Project." So I visited the site and couldn't believe my eyes. The site immediately reminded me of Jim Jones and his "People's Temple" religious movement.

The Venus Project is run by a couple of characters named Jacque Fresco and Roxanne Meadows who advocate something called a "resource-based economy" in which there is no money, no law and no government. The economy would be run efficiently and dispassionately by computers. All goods and services would be free. The latest technology and strategically placed "sensors" would determine the nature and quantity of what needs to be produced by robots. Individuals in a "resource-based economy" would not work, they would simply do as they please and, at the same time, enjoy the benefits of products and services they need.

I'm not kidding. Check out the site's rather extensive FAQ page. It's truly ridiculous.

Needless to say, after visiting the site and reading the mush produced by individuals like Robert Reich, Steve Lives, Jacque Fresco and Rosanne Meadows I became depressed thinking about America's future.

Then today I came across this article by Austrian economist George Reisman: "The Very Deserving Super Rich." In his article Reisman elegantly explains the logic of the free market and defends successful, wealthy free market entrepreneurs as true "benefactors of mankind." Moreover, Reisman writes, those "who have earned their fortunes by means of such positive productive contributions fully deserve them."

So there you have it, from the ridiculous to the sublime. Two views of the capitalist economic system which are polar opposites. Two policy roads which lead directly to two drastically different, future Americas. How can individuals think so differently about capitalism? Reisman chalks it up to ignorance:
The enemies of such economic inequality are ignorant of economics. They know nothing about profits, innovation, or capital. They do not realize that in entailing the confiscation of high profits and aborting the earning of fortunes, their policies would stifle economic progress.

The enemies of such economic inequality believe that wealth is a pile of consumers’ goods that somehow is just here and can be taken for granted. They believe that the capitalists, whom they depict as fat men, allegedly have too much of this pile. Some of it, they claim, must be given to the starving masses. On this basis, they are led to advocate a policy of seizing capital in order to consume it— a policy of eating the seed corn and being impoverished.

In their ignorance, the enemies of the free-market’s economic inequality are fueled by envy and resentment, biting the hands that feed them.
I tend to agree with him. Mr. Lives certainly is ignorant of economics, as is the staff of The Venus Project. But Robert Reich is no uneducated fool. He's studied economics, as I have, and has arrived at opposite conclusions about how the economy works. How can that be explained?

Reisman provides the answer at the beginning of his article where he exempts some wealthy capitalists from his defense:
I exclude fortunes built on a foundation of government subsidies, or government regulations harming competitors, and those built merely on a foundation of inflation and credit expansion. In today’s “mixed economy,” many great fortunes have mixed foundations. In such cases, my discussion applies only to the free market element in the mixture.
Reisman refuses to defend capitalists who earned their fortunes by becoming cronies of governmental authority. Reisman trusts the free market, by means of competition and bankruptcy, to neutralize the fortunes of fraudulent, dishonest and manipulative capitalists .

On the other hand, Robert Reich and those who buy into the policies advocated by The Venus Project distrust the free market. They trust some incarnation of authority to keep capitalists honest. There lies the difference and the rub.

Both Reisman and Reich understand that some human beings are prone to take the dishonest, fraudulent route to wealth and comfort. Reisman thinks such dishonest human beings are just as likely to become governmental authorities as they are capitalists. So he distrusts government and advises against government intervention in the market.

Reich believes that those in government are somehow immune to fraud and dishonesty or, if they are not immune, he believes they will be kept honest by "the people" through democratic institutions or through direct and intense community scrutiny of government. Therefore, he advises government intervention in the marketplace at every turn.

Having been in business and having successfully competed in the free market, I side with Reisman. As a small business owner I observed first hand how large businesses and corporations seek advantage and favors from their friends in government. I saw how government officials were easily and willingly manipulated. I saw how they sought power and used it to their advantage and to support their own personal agendas...most often to the detriment of consumers in the marketplace.

Perhaps Reich is an honest man and perhaps he acted honestly when he was a powerful government official. However, I think the vast majority of Americans have observed politicians long enough and well enough to know that if Reich was truly honest then he was an exception to the rule.

Isn't it a self-evident truth that putting our trust in a politician or a bureaucrat -- or even in the meaningless abstraction of "the people" -- is a sublimely ridiculous notion in America today?

Wednesday, January 22, 2014

Do As I Say, Not As I Do

I've written here frequently on what's happening in Venezuela. The country is being destroyed by leftist policies and a tyrannical leader. It's come to my attention that back in November of 2013 the staff at Global Public Square, an organization at CNN run by Fareed Zakaria, weighed in on the Venezuelan situation with an article entitled: "Five ways to ruin an economy."

What are the five ways? Maru Angarita summarizes them:
Rule #1. Attack big business.
Rule #2. Create hyperinflation.
Rule #3. Induce a currency crisis. 
Rule #4. Subsidize, subsidize, subsidize
Rule #5 Become a dictatorship
The rules are self-explanatory except for Rule #3. Here's how the staff at Global Public Square explains it:
Rule #3. Induce a currency crisis. The easiest way to curb inflation is to increase the value of your currency. Basically, print less money. But it turns out Caracas actually has a cash crunch, so it actually needs to do the opposite. Meanwhile, the black market for American dollars is thriving. The official exchange rate is 6.3 Bolivars for every greenback. In reality, the black market rate is 7 to 10 times that amount. For a country which imports 70 percent of its basic goods, this is a big problem. You may remember recently that Venezuela ran out of toilet paper. Why? Well, it's running out of a different kind of paper – the money to pay for it.  [Italics are mine]
This explanation is bogus for a couple of reasons. First, the prescription to print more money (Bolivars) is the last thing the government of Venezuela needs to do. How do the authors of this article think their Rule #2 was accomplished? In fact, the Venezuelan government created hyperinflation by printing more Bolivars -- much too many Bolivars! Printing more now would not solve the problem, only exasperate it.

Second, the reason there is a "cash crunch" in Venezuela is because of Gresham's law -- good money drives out bad money. The black market for American dollars is thriving in Venezuela because American dollars are driving out the greatly depreciated Bolivars. In contrast to the Bolivar, US dollars are widely accepted in exchange for hotly demanded goods and services. The problem is that openly shopping with US dollars is illegal. Hence, the supply of goods and services is driven underground where the black market US dollar thrives.

The black market and the Bolivar's depreciation will continue so long as the central Venezuelan authority keeps printing the currency in massive quantities. 

Leftist ignorance of basic economics is astounding. Not only do the authors misunderstand the cause of inflation, they don't seem to realize the affect of government spending. In the paragraph under Rule #4 they write:
If Caracas is running out of money, the government doesn't seem to know. Just last month, President Maduro raised public sector salaries by 10 percent across the board. This comes after two recent elections, where the government lavished subsidies to win votes.
Question: If there is a "cash crunch" in Venezuela, how does the government find cash to pay salary raises and subsidies to their crony friends? I think it's obvious: they print it. But, as the authors seem to realize, such printing has no positive effect on the country's "currency crisis."

Another thing that struck me about the CNN article was that the authors' "five ways to ruin an economy" is the exact political policy and economic plan of the Obama administration for the US!

Could it be that the Global Policy Square staff believes that economic laws apply to banana republics like Venezuela but not to reserve currency empires like the US?

Thursday, January 16, 2014

Want A Good Laugh?

Google "The Economy."

The first items you'll see listed are ads from Goldman, Sachs and The Economist magazine. Don't try to understand "the economy" on your own. Ordinary chumps like you and I need brokers and technical magazines to explain it to us. Goldman, Sachs makes money investing us in "the economy;" The Economist makes money warning us that investing in it might not be a good idea.

Next we've got CNN bringing us "breaking news" on "the economy." Then, Whitehouse.gov weighs in. (Is anyone surprised?) Then, Wikipedia, the internet's go to site for explaining everything we don't know about, has its say. Then, there are newspapers like the LA Times reporting that the "housing market is still a drag on the economy." Next are "in-depth articles" about a "green economy" and an "innovation economy..."

Really? These sites treat "the economy" as if it were some kind of machine akin to a sports car or a jet airplane, a machine that can be slowed down by a faulty aerodynamic design. The best economy is a streamlined economy. A "green economy" is preferable to an economy of another color. Next year's "innovation economy" will be superior to this year's sluggish model.

If you want a really good laugh, read what the experts -- the professional economists -- have to say about "the economy."

Professional economists come in just about every flavor under the sun. There are Keynesians, Post Keynesians, Neo-Keynesians, Monitarists, Classicists, Neo-classicists, Ricardians, Marxists, Austrians, etc. etc. Each flavor has "the economy" figured out and dissected down to its last marginal utility and demand curve. It's rarified air thinner than Denver's, believe me.

The truth is professional economists are flimflam artists and their profession is smoke and mirrors. 99% of them are arrogant blowhards who love to hear themselves talk and crave seeing themselves published because that's how they become tenured professional economists, or professors. These are the guys who spend their entire adolescent and adult life sitting behind a Steelcase desk tucked away in a shabby office on the eighth floor of a State University academic building.

Professional economists are not like engineers who attend college, learn the physics behind building bridges, then graduate into the real world to actually build bridges. Professional economists never leave school. They don't build anything except their academic reputations and curriculum vitaes. Their idea of striking it rich is speaking at a Chamber of Commerce annual meeting where the sponsors will spring for airfare and a per diem. Their ultimate dream, of course, is winning the Nobel Prize. Sadly, this dream comes true for roughly one in a million of them.

But enough about the dreary lives of economists. Let's concentrate on what we can't learn from them. Barely one of them has the sense or the courage to say what "the economy" really is and to explain how it really works. "The economy," you see, is nothing more and nothing less than you and I and our neighbors cooperating...earning a living, running businesses, buying groceries, making and spending money. It's that simple.

So why do economists fuss so about supply and demand, optimal utility, endogenous money, multiplier effects and propensities to consume?

In order to answer that question, you have to understand the economics profession which is basically comprised of two different types of individuals: those who like to stick their nose in your business, and those who don't.

As I said, "the economy" is no mystery. It's simply you and I and our neighbors cooperating, trading, buying and selling, exchanging our skills, labor, ingenuity, products and services in factories, schools, grocery stores and shopping centers. In other words, "the economy" is you and I living our everyday life.

The problem is that some of our neighbors, namely the economists who like to stick their nose in other peoples' business, don't like the way you and I live our life. So they trick us into believing that "the economy" is something vitally important and threatening. They invent unfathomable jargon to describe it. They delude us into thinking they know what they're talking about. But all the while they are devising ingenious and devious means of using "the economy" to force us to live our life in a way they find more satisfying. The means they devise center around government coercion.

Left alone, individuals generally function pretty well in society. They know what's best for them and their families. For the most part, they cooperate with others and earn a pretty decent living. The problem is that nosy economists don't study individuals and their unique situations; they study faceless aggregates, i.e., they gather data on billions of nameless individuals and trillions of transactions, homogenize it all in a computer and print it out in statistical reports. Upon analysis of this anonymous data, they discover that some arbitrary group of people earns a higher income than another arbitrary group. Some arbitrary groups have bigger cars, fancier houses, better health insurance and loads of disposable income.

These facts of life are not all that disturbing to most Americans who understand that individuals are all uniquely different. Some are smart; some are stupid. Some are ambitious; some are not. Some are young and just starting out; some are in the prime of life. Some are retired business owners; some are just plain retired and bagging groceries. Most Americans aren't too concerned about how their neighbor earns his living. Most Americans are too wrapped up in making their own living. Most realize that what their neighbor earns or doesn't earn won't affect them in the least.

However, the economists with their noses stuck in their aggregate statistics are extremely disturbed by what they see. They ask themselves why one class of worker in "the economy" should earn lower wages than another class of worker? Why should one gender be paid more than another gender? Or one race be paid more than another race? Why should one group of Americans live relatively high on the hog while another group has to work two or three jobs to feed their families, and yet another group can't find work at all?

Perched high up in their university office towers, these nosy economists can't distinguish one human individual from another. Nor can they fathom unique human circumstances. The see only the aggregates: the masses, the groups, the classes, the categories and the factions -- all arbitrary, and all of their own invention. To the economist the masses casting about beneath them resemble ants and "the economy" the anthill. However, contrary to the anthill, this human economy seems chaotic and unplanned.

So they devise plans to fix it from on high. To eliminate income inequities they suggest taxing one aggregate and using these taxes to subsidize another. They suggest raising the wages of one "class" and they rationalize away the negative affects this policy will have on another "class." They surmise that "the economy" they study and observe would function better and more equitably if it were planned and if that plan was administered by a centralized manager in the government. And who better to fill the role of the planning and managing government bureaucrat than the "experts" who have made studying "the economy" their life's passion?

So these nosy economists sell themselves and their theories like cheap whores to newspapers and political think tanks, to industry and unions, but most of all to government executives, legislatures and bureaucracies. After all, what good are economic theories if they gather dust in old books on a library shelf? What good is an economist unless he has the power to test his theories on real, live human ants?

And believe me, these nosy economists know how to gain power. They gain enough to vacate their shabby university offices and take up residence on Wall Street and in the White House and in the Congress and the Federal Reserve. And their theories follow wherever they go.

As a result, the government spends massive amounts of money it doesn't have and incurs mountains of debt following the advice of economists who insist "the economy" be stimulated in order to smooth out the bumps in their charts and graphs.

And where does it get us? Nowhere. Individuals like you and I have a more difficult time living life. Our taxes are higher. Our wages are lower. Our money is depreciated. Our savings are depleted. We are showered with worthless government programs we don't need and don't use. In order to retire we are forced to go on the government dole. In order to get ahead, or at least keep from falling behind, we have to lobby our congressman at every turn...or make a donation to his campaign fund.

Our kids are brainwashed in public schools. Even our light bulbs are regulated. And our health insurance and health care system are controlled from a luxurious suite full of highly paid bureaucrats and economists at the top of a building in Washington, DC.

Bottom line: We're not better off but the economists sure are.

Gee, maybe they're the ones having a good laugh.

Saturday, January 11, 2014

My Economic Freedom For "An Apartment And Some Groceries"

According to Jesse A. Myerson, America is an "economic hellhole." As much as I agree with Myerson, I disagree with his prescriptions for climbing out.

Myerson prescribes five means which will, supposedly, allow Americans to climb out of their economic hellhole: a government-mandated "guaranteed job;" a government-mandated "guaranteed income;" government-mandated community-owned "land trusts;" government-ownership of the "private sector;" and government-ownership of the "banking game."

Of course, in order to do all this, the government would have to own you and whatever "private" property you now think you own. Moreover, the politicians and bureaucrats that make up government would have to be smarter than you, more efficient than you, more ambitious than you and more honest than you. All doubtful propositions.

Jonah Goldberg wrote a followup piece reminding Myerson that his "concrete proposals" for creating a "just, fair society" are hardly new. Rather, they are well-worn and tried prescriptions of Marx and Lenin. Goldberg offers an opinion as to why the "failure of communism didn't put the debate [between capitalism and communism] to rest." He chalks it up to youthful ignorance of economics and history.

In a rebuttal to Goldberg's followup, hard to imagine squeezing in the Continental Congress in a world where Thomas Jefferson had to run across town to his minimum-wage night job." He suggests Jefferson might have achieved more if his pals in the Continental Congress had voted to provide him with an "apartment and some groceries."

What kind of moral outlook must a fellow have who could even imagine a man like Thomas Jefferson working for and being satisfied with a "minimum wage night job?" Or a man like Jefferson being demoralized and economically defeated by the lack of an apartment and three squares a day?

Rensin describes his "moral outlook" as follows: "Freedom, in the most prosperous nation on Earth, must entail the freedom to act without the constant specter of homelessness, hunger and preventable illness." He grounds his endorsement of Myerson and Myerson's communist prescriptions in this moral outlook. I contend Rensin's moral outlook is both unrealistic and illogical. Therefore, it is nothing less than 21st century snake oil.

It is obvious that Rensin's moral outlook can be realistic and logical only in the context of a nation that is already "prosperous." To deny this is to endorse the absurd. How could there be freedom from the "constant specter of homelessness, hunger and preventable illness" in a nation which is already beset by homelessness, hunger and preventable illness?

What Rensin, Myerson and their fellow "lefty millennial activists" don't seem to comprehend is that individuals like Thomas Jefferson create prosperous nations because they are haunted by "the constant specter of homelessness, hunger and preventable illness." This specter is the incentive that motivates their individual creativity and industriousness, that causes them to earn themselves out of poverty, that creates a nation of prosperous individuals.

Poverty, not prosperity, is the natural state of mankind. So the proper question for lefty millennials to consider is not how should the spoils of prosperity be divvied up, but how was this prosperity created in the first place?

And how will this prosperity continue to be created if individual Americans come to believe they must no longer create it themselves?