The Cain debacle started out as ridiculous. It has now become theater of the absurd.
The woman involved -- through her attorney -- has announced to the world that she stands behind her complaint against Cain for sexual harassment, but has decided not to come forth with details because "it would be extremely painful for her to do so."
Of course, the mainstream media is lapping this up and dutifully regurgitating it as serious, somber breaking news. The woman's attorney, who has absolutely nothing to add to the conversation except innuendo (this moron took pains to point out that there was "more than one" of these mysterious and painsful incidents), is being interviewed on the cable channels and is receiving his 15 minutes of fame.
I knew the mainstream press would make this Presidential election cycle extremely difficult for Republicans. I had not thought they could stoop this low. Neither the networks, nor the on screen reporters, have an ounce of journalistic integrity. Their bias is palpable.
Whoever supplied Politico with this garbage news story miscalculated. Herman Cain said: "The American people are starting to see through this stuff, and they are sick of gutter politics." So true.
The press also jumped the shark on this one. If I can see it, everyone in middle America can see it. I'm confident now that in the long run (and maybe in the short) this debacle will wind up biting both the media and their client, Barack Obama.
Saturday, November 5, 2011
Thursday, November 3, 2011
The Herman Cain Debacle
So, according to the mainstream press and mainstream blogs, Herman Cain is a serial, sexual harasser.
Does anyone know what that means? Seriously, what is "sexual harassment?"
I've read it's saying something that makes another person "uncomfortable," or that makes another person feel that what's been said is "inappropriate."
Come on.
Politics is a blood sport and that's my only takeaway from this mess.
It reminds me of high school student council. All the student politicians and their teacher advisors took themselves way too seriously. The rest of us could have cared less. We had young lives to live, sports to play, girls to date.
The difference, of course, is that in high school the student council was a sham, a completely powerless organization that had little to do with nothing. No wonder the rest of us didn't concern ourselves with their silly campaigns and political hysteria. In America today Congress and the President, our elite citizen governing council, affect our lives in too many ways to count. We can hardly sneeze without political permission.
We made the biggest mistake of our lives when we got out of high school and gave politicians real power. POWER! That's what this is all about. When you give a small number of people virtually unlimited power over everything and everyone, individuls are going to struggle, bite, scratch and claw their way into that small circle that wields power.
Herman Cain is running for President, which as things stand today means he wants to be King of America. The mainstream media wants to be King-makers. Two-bit, self-important bloggers want some kind of say in the matter as well, so they publish half-truths and innuendo designed to stir things up and further the career of their favorite, prospective King.
As a libertarian (for lack of a better description) my response is: Let's go back to high school. Let's take the power away from politicians and put it back into the hands of individuals. We have lives to live, families to raise.
Without real power at stake individuals would still run for President and politics would still be a blood sport. But the rest of us wouldn't give a damn because we, not they, are in charge of and in control of what matters in our lives.
The election of 2012 is not about jobs, the federal debt or even federal spending. Boiled down to its basics, this election is about drastically reducing the POWER the Washington Elite has over our individual lives. If you don't see it that way, then we are not on the same page.
If we could elect politicians of the sort we elected at the nation's beginning: citizen farmers, citizen businessmen, citizen lawyers, just plain citizens rather than career politicians, we could afford to watch the politicians bite and claw for the remaining bits of power left and be amused by their crazy antics.
Does anyone know what that means? Seriously, what is "sexual harassment?"
I've read it's saying something that makes another person "uncomfortable," or that makes another person feel that what's been said is "inappropriate."
Come on.
Politics is a blood sport and that's my only takeaway from this mess.
It reminds me of high school student council. All the student politicians and their teacher advisors took themselves way too seriously. The rest of us could have cared less. We had young lives to live, sports to play, girls to date.
The difference, of course, is that in high school the student council was a sham, a completely powerless organization that had little to do with nothing. No wonder the rest of us didn't concern ourselves with their silly campaigns and political hysteria. In America today Congress and the President, our elite citizen governing council, affect our lives in too many ways to count. We can hardly sneeze without political permission.
We made the biggest mistake of our lives when we got out of high school and gave politicians real power. POWER! That's what this is all about. When you give a small number of people virtually unlimited power over everything and everyone, individuls are going to struggle, bite, scratch and claw their way into that small circle that wields power.
Herman Cain is running for President, which as things stand today means he wants to be King of America. The mainstream media wants to be King-makers. Two-bit, self-important bloggers want some kind of say in the matter as well, so they publish half-truths and innuendo designed to stir things up and further the career of their favorite, prospective King.
As a libertarian (for lack of a better description) my response is: Let's go back to high school. Let's take the power away from politicians and put it back into the hands of individuals. We have lives to live, families to raise.
Without real power at stake individuals would still run for President and politics would still be a blood sport. But the rest of us wouldn't give a damn because we, not they, are in charge of and in control of what matters in our lives.
The election of 2012 is not about jobs, the federal debt or even federal spending. Boiled down to its basics, this election is about drastically reducing the POWER the Washington Elite has over our individual lives. If you don't see it that way, then we are not on the same page.
If we could elect politicians of the sort we elected at the nation's beginning: citizen farmers, citizen businessmen, citizen lawyers, just plain citizens rather than career politicians, we could afford to watch the politicians bite and claw for the remaining bits of power left and be amused by their crazy antics.
Saturday, October 29, 2011
Would You Rather Live In A Lifeboat Or On The Frontier?
I encourage every American to read the transcript of today's weekly radio address of President Obama. I'll paste it below my comments.
Mr. Obama begins his address by pointing out the growing disparity in income between the "wealthiest few" in America and the "average middle class family." He points out that this disparity is growing "during a period where the cost of everything from health care to college has skyrocketed." He goes on to point out that he has proposed a set of "common-sense jobs proposals" that will "boost the economy right away," that "will cut taxes for virtually every middle class family and small business in America." He lambastes Republicans for "not paying attention" to his jobs proposal. Because they have supported some of the proposals in the past, he implies these Republicans are merely callous and cold-hearted.
Nevermind the fact that Senate Democrats have time and again rejected the President's proposal. Clearly, in this case Republicans are at fault because they have rejected raising taxes. You see, according to the President, his jobs bill is "paid for by asking folks who are making more than a million dollars a year to contribute a little more in taxes," the very same "wealthiest few" whose income is growing by leaps and bounds! Obviously, these Republicans don't care as much about the middle class as the President does. Obviously, these Republicans are bought and paid for by the "wealthiest few."
I have discussed the President's proposed jobs bill previously. It is not the panacea the President purports it to be. I will not rehash the jobs bill here. I want to discuss a larger issue: the President's assumption that taxing the "wealthiest few" is a necessary and proper means of improving the lot of the middle class. The President said:
Is Mr. Obama's lifeboat view of this country realistic? I think not.
Despite the rules and regulations, taxes and subsidies that plague Americans, individuals in this country are still largely free to trade goods and services as they wish. Economics teaches us that in a free and voluntary trade both parties to the trade benefit. This is obviously true because if both parties did not benefit, one of the other party would refuse the trade. This truth contradicts the Obama lifeboat vision of American society. In order for that vision to be accurate, trades could not benefit each party. One party to a trade would have to benefit at the expense of the other.
But let's examine the matter of trading and benefitting from another angle. If the US economy were heavily regulated, and if lobbyists of the "wealthiest few" could persuade (or bribe) those who legislate the regulations to skew them in favor of the "wealthiest few," then trades affected by the regulations would not be free and voluntary. One party -- the influential party -- would benefit and the other party would not benefit, or would benefit to a far lesser extent.
Mr. Obama says middle class incomes are not increasing at the same pace as incomes of the "wealthiest few." He says that "the cost of everything from health care to college" is skyrocketing, causing a further burden on the middle class. Could it be that the disparity in the growth of middle class incomes and the incomes of the "wealthiest few" is due to government rules, regulations, taxes and subsidies that favor one group over the other? Could it be that the reason the cost of everything is rising because of the influence of the fat cats on the Federal Reserve and politicians who regulate the nation's banks?
I'm sure Mr. Obama doesn't believe so because his jobs proposal does not eliminate political meddling in the market place. On the contrary, his proposals amount to a half trillion dollars of new meddling! So, instead of solving the problem, Mr. Obama is further complicating it.
Now, it could be argued that Mr. Obama is simply righting wrongs of past administrations that favored the "wealthiest few" to the exclusion of the middle class. But only a man who views the "free" market as a lifeboat would attempt to solve such an inequity by taking from the favored party and giving what is taken to the disfavored party. A man who truly believed that trading parties both benefit in a market which is truly "free" would do everything possible to remove government intervention in the marketplace.
I view the free and thinking residents of this country not as captives in a lifeboat, captained by a fair and generous President, but as pioneers in the frontier where opportunities abound and prosperity is available to all who are willing to trade freely and voluntarily with their fellow citizens. The lifeboat analogy implies that the quantity of goods and services aboard the lifeboat are limited and finate. Hence, they must be shared and rationed. However, if individuals are set free to trade as they wish, all parties will benefit. The quantity of goods and services will increase to satisfy the growing appetites of all.
It cannot be denied that in such a frontier view of American society there will be an inevitable disparity in income between individuals. Some will be relatively rich; others, relatively poor. This disparity will arise naturally in the free, frontier market because some individuals are risk takers and others are not. Some are creative, ambitious and hard working. Others, not so much. The bottom line is that those who are exceptionally adept at satisfying the demands of market participants will be exceptionally patronized by those participants and will become exceptionally wealthy. However, in a frontier economy the exceptional wealth of some does not inhibit or detract from the wealth which can be earned by others because total wealth is not static, limited and finite as it is in the lifeboat economy. In fact, by expertly satisfying market demand, the "wealthiest few" in the market can make prosperity and success easier to obtain for the rest of the traders.
In today's weekend address President Obama said he wants an America where more Americans prosper. He desires an America where every American has "the chance to get ahead" and "the chance to succeed." He doesn't realize that his vision of America as a lifeboat economy does not allow for every American to get ahead and succeed. He doesn't realize that by heaping more rules, regulations, subsidies and taxes on an already heavily regulated and taxed market he will make his own goals impossible to achieve. To achieve his goals, he should do the exact opposite: eliminate rules, regulations, subsidies and taxes. Allow free men to trade their way to unlimited prosperity.
The critical question for Americans is: Do you share Obama's vision or mine? Would you rather live in society as a mere survivor in a lifeboat economy wherein prosperity is capped and fairly rationed? Or would you rather live as a free and resourceful pioneer in a frontier economy where prosperity is limited only by your own ambition, invention, talents and effort?
Below is the transcript of the Presidents entire radio address to the nation. Decide for yourself...
Mr. Obama begins his address by pointing out the growing disparity in income between the "wealthiest few" in America and the "average middle class family." He points out that this disparity is growing "during a period where the cost of everything from health care to college has skyrocketed." He goes on to point out that he has proposed a set of "common-sense jobs proposals" that will "boost the economy right away," that "will cut taxes for virtually every middle class family and small business in America." He lambastes Republicans for "not paying attention" to his jobs proposal. Because they have supported some of the proposals in the past, he implies these Republicans are merely callous and cold-hearted.
Nevermind the fact that Senate Democrats have time and again rejected the President's proposal. Clearly, in this case Republicans are at fault because they have rejected raising taxes. You see, according to the President, his jobs bill is "paid for by asking folks who are making more than a million dollars a year to contribute a little more in taxes," the very same "wealthiest few" whose income is growing by leaps and bounds! Obviously, these Republicans don't care as much about the middle class as the President does. Obviously, these Republicans are bought and paid for by the "wealthiest few."
I have discussed the President's proposed jobs bill previously. It is not the panacea the President purports it to be. I will not rehash the jobs bill here. I want to discuss a larger issue: the President's assumption that taxing the "wealthiest few" is a necessary and proper means of improving the lot of the middle class. The President said:
Now, in this country, we don’t begrudge anyone wealth or success — we encourage it. We celebrate it. But America is better off when everyone has had the chance to get ahead — not just those at the top of the income scale. The more Americans who prosper, the more America prospers.The President's clear implication is that the "wealthiest few" have increased their income at the expense of everyone else. This makes sense of course only if one regards living in society and trading with his fellow citizens as a zero sum game. As I've said before, everything Mr. Obama says and does indicates he believes that the country is a lifeboat in which we're all rowing, struggling to get ahead. Egalitarianism makes perfect sense in such a lifeboat. Why should some do the bulk of the rowing while others enjoy the bulk of the rations? All are traveling in the same direction, at the same speed, why should a lucky few have advantage over the rest?
Rebuilding an economy where everyone has the chance to succeed will take time.
Is Mr. Obama's lifeboat view of this country realistic? I think not.
Despite the rules and regulations, taxes and subsidies that plague Americans, individuals in this country are still largely free to trade goods and services as they wish. Economics teaches us that in a free and voluntary trade both parties to the trade benefit. This is obviously true because if both parties did not benefit, one of the other party would refuse the trade. This truth contradicts the Obama lifeboat vision of American society. In order for that vision to be accurate, trades could not benefit each party. One party to a trade would have to benefit at the expense of the other.
But let's examine the matter of trading and benefitting from another angle. If the US economy were heavily regulated, and if lobbyists of the "wealthiest few" could persuade (or bribe) those who legislate the regulations to skew them in favor of the "wealthiest few," then trades affected by the regulations would not be free and voluntary. One party -- the influential party -- would benefit and the other party would not benefit, or would benefit to a far lesser extent.
Mr. Obama says middle class incomes are not increasing at the same pace as incomes of the "wealthiest few." He says that "the cost of everything from health care to college" is skyrocketing, causing a further burden on the middle class. Could it be that the disparity in the growth of middle class incomes and the incomes of the "wealthiest few" is due to government rules, regulations, taxes and subsidies that favor one group over the other? Could it be that the reason the cost of everything is rising because of the influence of the fat cats on the Federal Reserve and politicians who regulate the nation's banks?
I'm sure Mr. Obama doesn't believe so because his jobs proposal does not eliminate political meddling in the market place. On the contrary, his proposals amount to a half trillion dollars of new meddling! So, instead of solving the problem, Mr. Obama is further complicating it.
Now, it could be argued that Mr. Obama is simply righting wrongs of past administrations that favored the "wealthiest few" to the exclusion of the middle class. But only a man who views the "free" market as a lifeboat would attempt to solve such an inequity by taking from the favored party and giving what is taken to the disfavored party. A man who truly believed that trading parties both benefit in a market which is truly "free" would do everything possible to remove government intervention in the marketplace.
I view the free and thinking residents of this country not as captives in a lifeboat, captained by a fair and generous President, but as pioneers in the frontier where opportunities abound and prosperity is available to all who are willing to trade freely and voluntarily with their fellow citizens. The lifeboat analogy implies that the quantity of goods and services aboard the lifeboat are limited and finate. Hence, they must be shared and rationed. However, if individuals are set free to trade as they wish, all parties will benefit. The quantity of goods and services will increase to satisfy the growing appetites of all.
It cannot be denied that in such a frontier view of American society there will be an inevitable disparity in income between individuals. Some will be relatively rich; others, relatively poor. This disparity will arise naturally in the free, frontier market because some individuals are risk takers and others are not. Some are creative, ambitious and hard working. Others, not so much. The bottom line is that those who are exceptionally adept at satisfying the demands of market participants will be exceptionally patronized by those participants and will become exceptionally wealthy. However, in a frontier economy the exceptional wealth of some does not inhibit or detract from the wealth which can be earned by others because total wealth is not static, limited and finite as it is in the lifeboat economy. In fact, by expertly satisfying market demand, the "wealthiest few" in the market can make prosperity and success easier to obtain for the rest of the traders.
In today's weekend address President Obama said he wants an America where more Americans prosper. He desires an America where every American has "the chance to get ahead" and "the chance to succeed." He doesn't realize that his vision of America as a lifeboat economy does not allow for every American to get ahead and succeed. He doesn't realize that by heaping more rules, regulations, subsidies and taxes on an already heavily regulated and taxed market he will make his own goals impossible to achieve. To achieve his goals, he should do the exact opposite: eliminate rules, regulations, subsidies and taxes. Allow free men to trade their way to unlimited prosperity.
The critical question for Americans is: Do you share Obama's vision or mine? Would you rather live in society as a mere survivor in a lifeboat economy wherein prosperity is capped and fairly rationed? Or would you rather live as a free and resourceful pioneer in a frontier economy where prosperity is limited only by your own ambition, invention, talents and effort?
Below is the transcript of the Presidents entire radio address to the nation. Decide for yourself...
This week, a new economic report confirmed what most Americans already believe to be true: over the past three decades, the middle class has lost ground while the wealthiest few have become even wealthier. In fact, the average income for the top one percent of Americans has risen almost seven times faster than the income of the average middle class family. And this has happened during a period where the cost of everything from health care to college has skyrocketed.
Now, in this country, we don’t begrudge anyone wealth or success — we encourage it. We celebrate it. But America is better off when everyone has had the chance to get ahead — not just those at the top of the income scale. The more Americans who prosper, the more America prospers.
Rebuilding an economy where everyone has the chance to succeed will take time. Our economic problems were decades in the making, and they won’t be solved overnight. But there are steps we can take right now to put people back to work and restore some of the security that middle-class Americans have lost over the last few decades.
Right now, Congress can pass a set of common-sense jobs proposals that independent economists tell us will boost the economy right away. Proposals that will put more teachers, veterans, construction workers and first responders back on the job. Proposals that will cut taxes for virtually every middle class family and small business in America. These are the same kinds of proposals that both Democrats and Republicans have supported in the past. And they should stop playing politics and act on them now.
These jobs proposals are also paid for by asking folks who are making more than a million dollars a year to contribute a little more in taxes. These are the same folks who have seen their incomes go up so much, and I believe this is a contribution they’re willing to make. One survey found that nearly 7 in 10 millionaires are willing to step up and pay a little more in order to help the economy.
Unfortunately, Republicans in Congress aren’t paying attention. They’re not getting the message. Over and over, they have refused to even debate the same kind of jobs proposals that Republicans have supported in the past — proposals that today are supported, not just by Democrats, but by Independents and Republicans all across America. And yet, somehow, they found time this week to debate things like whether or not we should mint coins to celebrate the Baseball Hall of Fame. Meanwhile, they’re only scheduled to work three more weeks between now and the end of the year.
The truth is, we can no longer wait for Congress to do its job. The middle-class families who’ve been struggling for years are tired of waiting. They need help now. So where Congress won’t act, I will.
This week, we announced a new policy that will help families whose home values have fallen refinance their mortgages and save thousands of dollars. We’re making it easier for veterans to get jobs putting their skills to work in hospitals and community health centers. We reformed the student loan process so more young people can get out of debt faster. And we’re going to keep announcing more changes like these on a regular basis.
These steps will make a difference. But they won’t take the place of the bold action we need from Congress to get this economy moving again. That’s why I need all of you to make your voices heard. Tell Congress to stop playing politics and start taking action on jobs. If we want to rebuild an economy where every American has the chance to get ahead, we need every American to get involved. That’s how real change has always happened, and that’s how it’ll happen today.
Thank you.
Friday, October 28, 2011
What Is A "Free" Market?
Recently on CNN Peter Schiff debated Cornell West. Schiff's point is that the Occupy Wall Street crowd should be protesting government because if the market were truly free, a financial crisis would have been averted. Insolvent players would have suffered losses and would have ceased to be participants in the market. Cornell West argues that government is necessary to protect small players by guaranteeing fair play, i.e., preventing big business from running roughshod over small business. He says there is a natural tension between the free market price and social justice. Thus, he says, government was responsible for doing away with child labor and providing workers with a 40-hour work week.
Such debates are tedious. The debaters make economic assertions and then rely on historical examples to justify their assertions. Was it the free market that eliminated child labor or big government? Was it runaway capitalism that caused the Great Depression of the meddling of the Federal Reserve and Washington politicians? Such debates devolve into little more than noise, pointless shouting matches which prove nothing and teach nothing. They aren't even good theater because listening is so frustrating.
Economics is a logical science, not an experimental science. You can't do economics in a test tube laboratory. You can't make sense of historical data by observing trends and cause and effect. In the real world the truth is that it is impossible to isolate variables, which is the method of experimental, laboratory science. The chemist isolates conditions in ten identical test tubes, adds a different chemical to each test tube, then observes the effects caused by the added chemical. The chemist knows the added chemical is responsible for the observed effects because conditions are controlled and constant. The added chemical is the only variable. It's effects are isolated.
In the world of human action, which is the subject matter of the science of economics, variables cannot be isolated. In the real world millions of individuals are making individual decisions based on ever-changing conditions. Economic data is simply a distilled, numerical snapshot in time of these actions. When the data changes over time, who is to say that it changed because of a new Washington policy or a new product innovation or a new state policy or a conflicting local policy or because several actors came down with the flu? All of these "causes" are happening at once.
In addition, the truth is these phenomena do not "cause" the actor to act in a certain way. They simply present varying conditions to the actor who decides and acts based on his personal preferences. No two actors necessarily make the same decision or necessarily act in the same way when presented with similar circumstances.
So how do we gain economic knowledge if not by experimenting in the real world, observing and gathering data?
We gain economic knowledge by reasoning, i.e., logical argument. We imagine actions which take place in a vacuum. We create mental circumstances which are controllable and constant, and then introduce a variable. We can then learn the effects of that variable. We define human action as purposeful behavior and then examine our mental experiments in the light of that definition.
For example, let's examine the Peter Schiff vs Cornell West debate over the "free" market. Schiff and West could not communicate on the same page because each defined the free market differently. Schiff thinks of a "free" market as a market which is truly free, i.e., no government intervention, no incumbrances, no coercion. In Schiff's "free" market all trades and exchanges take place voluntarily between willing individuals. There is no duress. No force. Traders are not forced to trade by any other trader or player in society.
West on the other hand sees the "free" market as a jungle market, wherein some individual traders have the power to coerce other traders into making trades, wherein some individual traders use physical force to adjust the conditions of individual exchanges in their favor.
So, when the discussion turns to child labor, Schiff assumes that in a "free" market, if children are working for a business owner, the agreement to work is mutually agreeable. He assumes that if children could be forced to work for a business owner, either by the owner or the child's parents, then the market in which the child works is not truly "free."
West, on the other hand, recalls a time in human history which historians describe as having a "free" market. He notes that in these times children worked involuntarily in factories. Thus, he concludes children can be forced to work in a free market and that government is required to pass labor laws to prevent children from working in factories, period.
Schiff would argue that, because law must be written and applied impartially, such a government intervention necessarily prevents ALL children from working in factories. However, in a truly voluntary and "free" market, there are bound to be children who want to work in factories voluntarily. Why should they be prevented from doing so by the government?
Similarly, West would probably argue that no individual should work for less than a wage of, say, $10.00 per hour, which we will assume for the sake of this argument is the government mandated minimum wage. However, such a government law prevents ALL individuals from working for less than $10.00 per hour. Why should individuals and business owners who want to voluntarily agree on a lower wage be prevented from doing so? It should be obvious that a government mandated minimum wage would create unemployment in this case.
When an analytical economist, i.e., an economist who reasons and reaches conclusions by means of logical argument, speaks about the effects of a government mandated minimum wage, he says that such a mandate will create unemployment PROVIDED there exist individuals willing to work for less than that minimum wage. For instance, a minimum wage law would create unemployment if the minimum wage were set above the prevailing "free market" wage. In other words, the economist KNOWS which conditions will prevail when certain conditions are assumed because he has reasoned the problem out in an imaginary scenario with these conditions controlled and isolated, just as I did above.
Now, when an experimental economist goes out into a community and compares employment data from one year to employment data from another year and claims his research proves that a recently passed minimum wage law did not create unemployment and concludes, therefore, that there is no necessary connection between unemployment and a mandated minimum wage, he is mistaken. The analytical economist knows he is mistaken. The analytical economist knows that there must be other factors, other variables that exist in that particular community that the experimental economist did not consider and could not measure.
Peter Schiff is an analytical economist who studies the logic of human action. All his statements about the "free" market ASSUME a market in which all individuals make trades of goods and services freely and voluntarily. If he had made this plain to West, West could not rely on historical examples to disprove Schiff's point. He would have to debate the logic of Schiff's argument.
Alternately, if West could not prove Schiff's argument illogical, he could contend that the concept of a totally free and voluntary market is impractical to establish in the real world. Or he could contend that such a market could be established, but that it should not properly exist because it is unjust or immoral. Schiff, of course, could then argue with West, not on the pure economics of the matter, but on the practicality or morality of the matter.
The most irritating aspect of discussions, such as the Schiff vs West TV discussion, is that the science of economics is ignored and abused. Economics, properly understood, should help resolve disagreements, not prolong them. Austrian economics, indeed all economics, must rely on precise definitions and exact language. Analytical, free market economics must be understood to refer to a market that is absolutely free and voluntary. Experimental observations aimed at discrediting the logic of the analytical economist have no place in such a discussion.
Imagine two matheticians in a TV discussion about baseball statistics. One mathematician claims that the top player in the league has a batting average of .358. The other disagrees. He claims the players batting average is .249. The two go back and forth, citing different years in the player's career and the batting average of retired players for comparison. The first mathematician argues that batting average is the ratio of hits divided by at bats. The second mathematician scoffs that such math might work in theory but in the real world social justice issues must be factored in. He cites a study made by two Nobel Prize winning mathematicians. He says the data from that study of Ted Williams' career in Boston in the 1950's showed that Ted Williams average was, in reality, much lower than the record books say, if the data is adjusted for certain social factors of the day.
An argument such as this would seem absurd on its face. Anyone listening to it would quickly be frustrated and switch channels. If mathematicians cannot agree on the theory that two plus two equals four everywhere and always in the universe, then what's the point of continuing the discussion about mathematical phenomena in Boston in 1950? Analytical mathematicians with scientific integrity must agree on basic logic and method before they can disagree on theory or its application in the real world.
Yes, mathematicians may disagree on the social or moral issues surrounding specific applications of their theory. For instance, mathematicians working on a doomsday weapon of some sort may disagree on whether or not it is moral to use their theories in the construction of such a weapon. But it would be absurd and illogical to claim that mathematical theory itself is invalid and useless when applied to doomsday weapons.
Properly reasoned, economic theory is valid and useful everywhere and always. A minimum wage set by law above the free market price of labor absolutely creates unemployment. Cornell West may argue that there is a "tension" between this free market price of labor and someone's understanding of social justice. However, he may not call this tension "natural." He must be prepared to acknowledge that the free market price is the result of the free, uncoerced and voluntary actions of all traders in that market. In this context, the only "natural" relationship is between price and the voluntary actions of market participants whose actions set that price. This truth cannot be disputed. The question of whether or not such a price satisfies some individual's conception of "social justice" is another matter entirely, separate and distinct from the free market and the science of economics.
Such debates are tedious. The debaters make economic assertions and then rely on historical examples to justify their assertions. Was it the free market that eliminated child labor or big government? Was it runaway capitalism that caused the Great Depression of the meddling of the Federal Reserve and Washington politicians? Such debates devolve into little more than noise, pointless shouting matches which prove nothing and teach nothing. They aren't even good theater because listening is so frustrating.
Economics is a logical science, not an experimental science. You can't do economics in a test tube laboratory. You can't make sense of historical data by observing trends and cause and effect. In the real world the truth is that it is impossible to isolate variables, which is the method of experimental, laboratory science. The chemist isolates conditions in ten identical test tubes, adds a different chemical to each test tube, then observes the effects caused by the added chemical. The chemist knows the added chemical is responsible for the observed effects because conditions are controlled and constant. The added chemical is the only variable. It's effects are isolated.
In the world of human action, which is the subject matter of the science of economics, variables cannot be isolated. In the real world millions of individuals are making individual decisions based on ever-changing conditions. Economic data is simply a distilled, numerical snapshot in time of these actions. When the data changes over time, who is to say that it changed because of a new Washington policy or a new product innovation or a new state policy or a conflicting local policy or because several actors came down with the flu? All of these "causes" are happening at once.
In addition, the truth is these phenomena do not "cause" the actor to act in a certain way. They simply present varying conditions to the actor who decides and acts based on his personal preferences. No two actors necessarily make the same decision or necessarily act in the same way when presented with similar circumstances.
So how do we gain economic knowledge if not by experimenting in the real world, observing and gathering data?
We gain economic knowledge by reasoning, i.e., logical argument. We imagine actions which take place in a vacuum. We create mental circumstances which are controllable and constant, and then introduce a variable. We can then learn the effects of that variable. We define human action as purposeful behavior and then examine our mental experiments in the light of that definition.
For example, let's examine the Peter Schiff vs Cornell West debate over the "free" market. Schiff and West could not communicate on the same page because each defined the free market differently. Schiff thinks of a "free" market as a market which is truly free, i.e., no government intervention, no incumbrances, no coercion. In Schiff's "free" market all trades and exchanges take place voluntarily between willing individuals. There is no duress. No force. Traders are not forced to trade by any other trader or player in society.
West on the other hand sees the "free" market as a jungle market, wherein some individual traders have the power to coerce other traders into making trades, wherein some individual traders use physical force to adjust the conditions of individual exchanges in their favor.
So, when the discussion turns to child labor, Schiff assumes that in a "free" market, if children are working for a business owner, the agreement to work is mutually agreeable. He assumes that if children could be forced to work for a business owner, either by the owner or the child's parents, then the market in which the child works is not truly "free."
West, on the other hand, recalls a time in human history which historians describe as having a "free" market. He notes that in these times children worked involuntarily in factories. Thus, he concludes children can be forced to work in a free market and that government is required to pass labor laws to prevent children from working in factories, period.
Schiff would argue that, because law must be written and applied impartially, such a government intervention necessarily prevents ALL children from working in factories. However, in a truly voluntary and "free" market, there are bound to be children who want to work in factories voluntarily. Why should they be prevented from doing so by the government?
Similarly, West would probably argue that no individual should work for less than a wage of, say, $10.00 per hour, which we will assume for the sake of this argument is the government mandated minimum wage. However, such a government law prevents ALL individuals from working for less than $10.00 per hour. Why should individuals and business owners who want to voluntarily agree on a lower wage be prevented from doing so? It should be obvious that a government mandated minimum wage would create unemployment in this case.
When an analytical economist, i.e., an economist who reasons and reaches conclusions by means of logical argument, speaks about the effects of a government mandated minimum wage, he says that such a mandate will create unemployment PROVIDED there exist individuals willing to work for less than that minimum wage. For instance, a minimum wage law would create unemployment if the minimum wage were set above the prevailing "free market" wage. In other words, the economist KNOWS which conditions will prevail when certain conditions are assumed because he has reasoned the problem out in an imaginary scenario with these conditions controlled and isolated, just as I did above.
Now, when an experimental economist goes out into a community and compares employment data from one year to employment data from another year and claims his research proves that a recently passed minimum wage law did not create unemployment and concludes, therefore, that there is no necessary connection between unemployment and a mandated minimum wage, he is mistaken. The analytical economist knows he is mistaken. The analytical economist knows that there must be other factors, other variables that exist in that particular community that the experimental economist did not consider and could not measure.
Peter Schiff is an analytical economist who studies the logic of human action. All his statements about the "free" market ASSUME a market in which all individuals make trades of goods and services freely and voluntarily. If he had made this plain to West, West could not rely on historical examples to disprove Schiff's point. He would have to debate the logic of Schiff's argument.
Alternately, if West could not prove Schiff's argument illogical, he could contend that the concept of a totally free and voluntary market is impractical to establish in the real world. Or he could contend that such a market could be established, but that it should not properly exist because it is unjust or immoral. Schiff, of course, could then argue with West, not on the pure economics of the matter, but on the practicality or morality of the matter.
The most irritating aspect of discussions, such as the Schiff vs West TV discussion, is that the science of economics is ignored and abused. Economics, properly understood, should help resolve disagreements, not prolong them. Austrian economics, indeed all economics, must rely on precise definitions and exact language. Analytical, free market economics must be understood to refer to a market that is absolutely free and voluntary. Experimental observations aimed at discrediting the logic of the analytical economist have no place in such a discussion.
Imagine two matheticians in a TV discussion about baseball statistics. One mathematician claims that the top player in the league has a batting average of .358. The other disagrees. He claims the players batting average is .249. The two go back and forth, citing different years in the player's career and the batting average of retired players for comparison. The first mathematician argues that batting average is the ratio of hits divided by at bats. The second mathematician scoffs that such math might work in theory but in the real world social justice issues must be factored in. He cites a study made by two Nobel Prize winning mathematicians. He says the data from that study of Ted Williams' career in Boston in the 1950's showed that Ted Williams average was, in reality, much lower than the record books say, if the data is adjusted for certain social factors of the day.
An argument such as this would seem absurd on its face. Anyone listening to it would quickly be frustrated and switch channels. If mathematicians cannot agree on the theory that two plus two equals four everywhere and always in the universe, then what's the point of continuing the discussion about mathematical phenomena in Boston in 1950? Analytical mathematicians with scientific integrity must agree on basic logic and method before they can disagree on theory or its application in the real world.
Yes, mathematicians may disagree on the social or moral issues surrounding specific applications of their theory. For instance, mathematicians working on a doomsday weapon of some sort may disagree on whether or not it is moral to use their theories in the construction of such a weapon. But it would be absurd and illogical to claim that mathematical theory itself is invalid and useless when applied to doomsday weapons.
Properly reasoned, economic theory is valid and useful everywhere and always. A minimum wage set by law above the free market price of labor absolutely creates unemployment. Cornell West may argue that there is a "tension" between this free market price of labor and someone's understanding of social justice. However, he may not call this tension "natural." He must be prepared to acknowledge that the free market price is the result of the free, uncoerced and voluntary actions of all traders in that market. In this context, the only "natural" relationship is between price and the voluntary actions of market participants whose actions set that price. This truth cannot be disputed. The question of whether or not such a price satisfies some individual's conception of "social justice" is another matter entirely, separate and distinct from the free market and the science of economics.
Thursday, October 27, 2011
Individual Liberty Writ Large
Every individual in this nation makes at least one trade each day. We trade our labor for money wages. We pay the neighbor kid money to cut our lawn. We trade money for a newspaper or a cup of coffee. Nobody believes that such individual trades require the government to step between the two traders and regulate them. In these simple voluntary exchanges it is perfectly clear that both parties always benefit. Which begs the question: Why does the government intervene in the economy? If both parties always benefit in a voluntary trade and, if all trades are voluntary, wouldn't every individual in the nation benefit? Why is government needed?
If two individuals can voluntarily exchange goods and services without government intervention, why can't an entire nation of individuals exchange goods and services without government intervention?
When two individuals voluntarily make a trade they perform their own due diligence. They examine the pros and cons of making the trade. Each subjectively decides whether the goods or services they're trading for are more valuable to them than the goods or services they are giving up. These are decisions individuals are able to make without the help or mandate of a government bureaucrat. Why then do we have government bureaucrats and politicians intervening between individual traders.
Why must governments demand that certain medicines can only be purchased with the approval of a licensed physician? Why must the government specify how certain goods and services are manufactured and sold?
A bureaucrat might answer: There are crooks out there intent on defrauding you. We're needed to protect your interests.
This is hogwash. In most trades individuals can decide for themselves whether or not their prospective trading partner is honest. If he has doubts, he can hire an attorney, or consult Consumer Reports, or talk to his friends. Why does the bureaucrat insert himself into our business even when he is not needed or is not asked to do so?
The bureaucrat might say: When one of the trading partners is a huge and powerful corporation, we must insert ourselves into the transaction to protect the little guy?
Really? What power does a huge corporation have over an individual in a free and voluntary society? If I feel I am being taken advantage of by a huge corporation, I am free to walk away from the deal.
But huge corporations may conspire to monopolize markets, giving consumers no choice but to trade with them and pay exorbitant prices. Or corporations might price gouge during times of severe shortages of certain commodities.
These are bogus arguments as well. In a free and voluntary market alternatives always exist, or I can always do without. Let's imagine a huge corporation were to develop a drug that allowed people to live forever. The corporation keeps the formula secret, keeping others from producing the drug. It puts an incredibly high price on the drug. Should the government step in and demand the corporation lower the price of the drug to make it affordable and available for all?
How you answer this question will indicate whether or not you truly believe in property, freedom and peace.
If two individuals can voluntarily exchange goods and services without government intervention, why can't an entire nation of individuals exchange goods and services without government intervention?
When two individuals voluntarily make a trade they perform their own due diligence. They examine the pros and cons of making the trade. Each subjectively decides whether the goods or services they're trading for are more valuable to them than the goods or services they are giving up. These are decisions individuals are able to make without the help or mandate of a government bureaucrat. Why then do we have government bureaucrats and politicians intervening between individual traders.
Why must governments demand that certain medicines can only be purchased with the approval of a licensed physician? Why must the government specify how certain goods and services are manufactured and sold?
A bureaucrat might answer: There are crooks out there intent on defrauding you. We're needed to protect your interests.
This is hogwash. In most trades individuals can decide for themselves whether or not their prospective trading partner is honest. If he has doubts, he can hire an attorney, or consult Consumer Reports, or talk to his friends. Why does the bureaucrat insert himself into our business even when he is not needed or is not asked to do so?
The bureaucrat might say: When one of the trading partners is a huge and powerful corporation, we must insert ourselves into the transaction to protect the little guy?
Really? What power does a huge corporation have over an individual in a free and voluntary society? If I feel I am being taken advantage of by a huge corporation, I am free to walk away from the deal.
But huge corporations may conspire to monopolize markets, giving consumers no choice but to trade with them and pay exorbitant prices. Or corporations might price gouge during times of severe shortages of certain commodities.
These are bogus arguments as well. In a free and voluntary market alternatives always exist, or I can always do without. Let's imagine a huge corporation were to develop a drug that allowed people to live forever. The corporation keeps the formula secret, keeping others from producing the drug. It puts an incredibly high price on the drug. Should the government step in and demand the corporation lower the price of the drug to make it affordable and available for all?
How you answer this question will indicate whether or not you truly believe in property, freedom and peace.
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It is fashionable for pundits to call this a center-right country. Not true, as the numbers demonstrate.
Now, it is possible that there exists a sizeable "silent majority" who are center-right but just don't vote. I have no idea. Either way, conservatives aiming to turn this country back from a welfare state to a bastion of free enterprise have their work cut out.
Here is another aspect of the problem: In order to get the Tea Party and the Christian right amped up, donating and campaigning for a Republican in 2012, the candidate cannot be Mitt Romney, but a true conservative. However, can a true conservative win?
There is much talk about a possible third party candidacy. Donald Trump, the populist billionaire, has mentioned the possibility. Ron Paul, the libertarian Republican, won't rule it out. Buddy Roemer is making noise. The Upward Sprial group of Starbucks CEO Howard Schultz has been active. If any of these candidates run in a serious way, I can't see how a Republican -- any Republican -- defeats Obama.
Furthermore, the biggest albatross around Obama's neck at this moment is the jobless rate and the down economy. Don't count on either to help the Republicans in 2012. The oldest trick in the book is for a sitting President to fudge numbers. A well-timed QE3 by the Fed could have the economy humming nicely, if only temporarily, by election season.
There are other means by which a sitting President can stack the deck, especially one like Obama who is so inclined. We've already seen Obama govern by executive order. The federal bureaucracy, especially the FCC which governs the talk radio airwaves, is in the President's camp. The old "wag the dog" use of foreign policy to distract the public has been done before by Presidents from both parties.
Any hint of civil disorder or terrorism requiring a response from Homeland Security can be to the sitting President's advantage as he locks down the problem. Ditto an earthquake, hurricane or other natural disaster. And then there's always the bully pulpit which Presidents have used since the nation's founding. This President has demonstrated his willingness to say anything and everything, whether true or not, to rally the public to his cause.
And then there is the mainstream media that is positioned squarely in Obama's corner, ready to prove that the man they supported in 2008 is fit to be re-elected.
Moreover, you can bet your life that, despite moans and groans of disappointment in Obama from the far, far left, standard run-of-the-mill Progressives, socialists and unionists realize the strides Obama has made toward making America a European-style social democracy. They are not about to let go of power without a fight. They are a ready-made source of campaign funds and manpower. Obama is an expert in using them.
Lastly, there is at least one man who realizes what Obama has accomplished and who will fight like hell to keep the President in power: Obama himself. Consider what Obama accomplished in his first two years when Democrats controlled Congress. He virtually nationalized 1/6 of the economy by ramming ObamaCare through the Congress. He appointed two liberal Supreme Court Justices. He sheparded through the congress a $-trillion "stimulus" bill which was nothing more than a naked expansion of the welfare state. He appointed Marxists, socialists and even avowed communists to influential and, now, entrenched positions in the federal bureaucracy. He's similarly filled countless Czar-positions with like-minded individuals bent on transforming this country from capitalism to crony capitalism to downright social welfarism.
Even in his third year, after he lost the house, he's managed to govern by edict rather than legislation. Who knows what lasting effects his administration will have in areas like immigration, trade, foreign policy, the justice department, education, the environment and the like. The federal bureaucracy is unimagineably huge, complex and far-reaching. From day one on the job Obama set out to control and transform every aspect of it to suit his purposes.
No, President Obama will not go quietly into the night. He will fight tooth and claw to retain his grip on power in this country.
The stakes are high. Despite all the damage he has caused in his first term, I believe he will cause much more in his second, if re-elected. Why? Because he will be a lame duck. There will be no portent of a coming election to check his actions. It will be a no holds barred second term. Who knows what the end game will be? No possible outcome is too unrealistic or dangerous to imagine.
So as mobs of malcontents and morons Occupy Wall Street, we can be amused by their antics, like attempting to end crony capitalism by bombing banks with "mass paper airplane throwing."
Too funny.
Unfortunately, defeating Obama in 2012 will be no laughing matter.