Tuesday, 19 February 2013

Twisting the Treaty: A Tribal Grab for Wealth and Power [updated]

Ahem, allow me to recommend a new book—just published!


As you’ll have seen, there are one or two names there that might be familiar.

The book appears at an important time in the country’s constitutional history.  If the Treaty itself arrived just in time to cement in place and reward pre-Treaty genocidal land grabs by the likes of Hongo Hika, Te Rauparaha and others, then the Maori-National party’s “constitutional review” of today arrives at a time when Maori corporations, having been gifted billions by taxpayers for things we haven’t done, seek to have their “special” status as a permanent drain on taxpayers constitutionally protected.

If enough people read this book, it could lead to some much needed changes in the way we are governed.

I suggest that you pass on the book’s information it to all your contacts, along with the appropriate purchase information:

  • A5 paperback, 414 pages plus 16 pages of photos.
  • Price: $40.
  • Available from Paper Plus stores and independent book shops. or direct from the publisher, Tross Publishing, P.O. Box 22 143, Khandallah, Wellington 6441
  • Payment to the publisher can be by cheque, or by Direct Credit to Tross Publishing, Westpac, Wellington 030584-0210107-00. 

Recessions: The Don't Do List

Back in 2008, when even politicians started to notice the economic fertiliser had begun hitting the blade-rotating ventilation device, I suggested there were seven things governments could to to ensure the economic recession was a long one—and predicted they would do them all.
And so they did.
And here we still are.
Those seven things were taken from Murray Rothbard’s excellent book
America’s Great Depression. In this Guest Post, John Cochran updates the story.

Listening to a new report on the just-released American GDP numbers while reading Rothbard’s America’s Great Depression made me realize how relevant and important this work is relative to today’s poorly performing economy. The book briefly summarizes Austrian Business Cycle Theory and applies the theory to the period of the Great Depression from 1929–1933. The book is especially relevant in that it provides policy guidance for dealing with an economic crisis, based on both historical evidence and Austrian Business Cycle Theory. The policy recommendations include actions to avoid, as well as positive actions government could undertake to speed recovery. Unfortunately, the official reaction to the present crisis has been a virtual match to Rothbard’s “don’t do” list, while the few positive actions have been conspicuous by their absence in most mainstream policy discussions. Even more important for  future prosperity is the need for monetary reform, the key to preventing future boom-bust cycles and thus avoiding depressions altogether.

Preliminary US GDP numbers for 4th quarter 2012 were just released and, in the words of the Wall Street Journal, indicated that the “[r]ecovery shows a soft spot” with GDP declining 0.1%. As Jeffrey Tucker reports in “The GDP Shock”:Rothbard, Murray N.

Hardly anyone anticipated this. USA Today and other purportedly reliable venues immediately assured the world that this does not mean recession. Somehow after hanging onto to GDP numbers for three years—recovery is here despite your internal sense that the economy is still in a ditch—now we are told that the GDP figures are really just misleading. Recovery is still here, says the mainstream press.

Jon Hilsenrath in “Unusual Quarter of Contraction Doesn’t Mean Recession” provides a toned-down example of what Tucker is talking about:

A one-quarter contraction of economic output doesn’t mean the economy is formally in recession, but it is unusual for such contractions to happen in the middle of economic expansions.

Austrian economists are keenly aware that “GDP figures are really just misleading.” Inclusion of government spending in any measure of economic production or growth is inherently misleading.  Business cycles are characterized by greater fluctuations in the capital goods industries relative to consumer goods. Malinvestment during the boom is followed by capital restructuring during the depression/recovery. Maintaining a coordinated structure of production is essential for maintaining a given level of prosperity, and lengthening the structure is a necessary condition for an improvement in the material standard of living. When one fully incorporates capital theory into macroeconomic analysis, it becomes clear that consumption is not the “engine of the economy” (see John Papola’s “Think Consumption Is The ‘Engine’ Of Our Economy? Think Again”in Forbes online, or Mark Skousen’s “Gross Domestic Expenditures (GDE): the Need for a New National Aggregate Statistic”). Per Rothbard (Americas Great Depression, pp. 58–59):

Savings, which go into investment, are therefore just as necessary to sustain the structure of production as consumption. Here we tend to be misled because national income accounting deals solely in net terms. Even “gross national product” is not really gross by any means; only gross durable investment is included, while gross inventory purchases are excluded. It is not true, as the underconsumptionists tend to assume, that capital is invested and then pours forth onto the market in the form of production, its work over and done. On the contrary, to sustain a higher standard of living, the production structure—the capital structure—must be permanently “lengthened.” As more and more capital is added and maintained in civilized economies, more and more funds must be used just to maintain and replace the larger structure. This means higher gross savings, savings that must be sustained and invested in each higher stage of production.

Even though GDP is a highly inaccurate measure of economic activity, and regardless of whether or not one quarter of negative growth in real GDP indicates an economy on the verge of a double-dip recession, the number does provide further evidence of an economy struggling to recover from the depression which followed back-to-back Fed induced boom-bust cycles. This is an economy essentially stagnating since the reported end of the “Great Recession” in June 2009, nearly four years ago.

Mainstream economists have given competing explanations of why this is the worst recovery since the Great Depression. Many Keynesians, including Paul Krugman, have argued the recovery is slow, not because the policy response was wrong, but because it was not big enough. The policy response was strong enough to save the economy from a bigger disaster, but despite an $800 billion fiscal stimulus, deficits of over one trillion dollars leading to a public debt of over $16 trillion, and a tripling of the Fed’s balance sheet, the policy response was still too small. Carmen M. Reinhart and Kenneth Rogoff, also defend the policy response, but in This Time is Different, they argue that recoveries from recessions accompanied by a financial crisis have, based on historical evidence, always been slow compared to recessions not accompanied by financial crisis. While fiscal and monetary stimuli have not generated a speedy recovery, these policies did prevent the crisis from being even worse. According to Rana Foroohar in Time, “The Risks of Reviving a Revived Economy”:

Ironically, the stimulus is also a reason the recovery has been so slow and will continue to be for the next three to five years. Harvard economist Ken Rogoff, who, along with his colleague Carmen Reinhart, has been the best rune reader of the past few years, says that historically during financial crises “to the extent that you act to slow the deep, sharp economic pain, you also slow the recovery.”

Contra Rogoff and Reinhart, Michael Bordo has done some excellent work showing that throughout US economic history, recovery has actually been quicker following financial crises. His work has been used by John B. Taylor to bolster his argument that policy activism and the accompanying policy uncertainty, both monetary and fiscal, have impeded business planning and recovery. Much of the debate can be accessed here. Austrian economists like Robert Higgs and myself, and fellow travelers such as Mary L. G. Theroux, have pushed the uncertainty argument even further to include regime uncertainty as the key element retarding recovery.

However, readers of Rothbard’s America’s Great Depression should not have been surprised that the recent bust was not a sharp depression followed quickly by a return to prosperity and sustainable growth, albeit not necessarily to the levels expected by those fooled by the false expectations created by monetary mismanagement due to malinvestments and wealth destruction during the previous two booms (see Salerno’s “A Reformulation of Austrian Business Cycle Theory in Light of the Financial Crisis,” Ravier’s “Rethinking Capital-Based Macroeconomics,” and most recently Shostak’s “Fed’s policies expose mainstream fallacies”). While the first part of Rothbard’s great book is devoted to explaining the Austrian boom-bust theory of the business cycle, defending the theory from critics, and illustrating its applicability to the events leading up to the 1929 crisis/bust, the second part of the book is devoted to examining governmental interventions and policy errors that retarded recovery and turned a “garden variety recession” into a Great Depression.

Rothbard, Murray N.

Rothbard notes two things of significance for both then and now:

1. “[T]he longer the boom goes on the more wasteful the errors committed, and the longer and more severe will be the necessary depression readjustment” (p. 13). The current boom-bust had its roots in the boom during the late 1990s, which resulted in a bust/recession, recovery from which was aborted by aggressive Fed action beginning in 2003, which added new malinvestments and misdirections of production to the unresolved malinvestments left over from the previous boom (see my article “Hayek and the 21st Century Boom-Bust and Recession-Recovery”).

2. Unemployment, if recovery is not impeded by interventions, will be temporary. Per Rothbard (p. 14):

Since factors must shift from the higher to the lower orders of production, there is inevitable “frictional” unemployment in a depression, but it need not be greater than unemployment attending any other large shift in production. In practice, unemployment will be aggravated by the numerous bankruptcies, and the large errors revealed, but it still need only be temporary. The speedier the adjustment, the more fleeting will the unemployment be. Unemployment will progress beyond the “frictional” stage and become really severe and lasting only if wage rates are kept artificially high and are prevented from falling. If wage rates are kept above the free-market level that clears the demand for and supply of labor, laborers will remain permanently unemployed. The greater the degree of discrepancy, the more severe will the unemployment be.

When the crisis hit in 2007 and 2008, the correct policy would have been the response Rothbard recommended in 1982 in the introduction to the fourth edition (p. xxi) of America’s Great Depression:

The only way out of the current mess is to “slam on the brakes,” to stop the monetary inflation in its tracks. Then, the inevitable recession will be sharp but short and swift[emphasis added], and the free market, allowed its head, will return to a sound recovery in a remarkably brief time.

While, as mentioned above, Rothbard only briefly discusses Austrian Business Cycle Theory (p. xxxviii), “a full elaboration being available in other works,” America’s Great Depression, elaborates on the theory’s implication on government policy: “implications which run flatly counter to prevailing views [both then, 1963, and now].”

What are these implications? First and foremost (p. 19), “don’t interfere with the market’s adjustment process” [emphasis original]. The more government blocks market adjustments, the “longer and more grueling the depression will be, and the more difficult will be the road to complete recovery.” Rothbard argues it is possible to logically list the ways market adjustment could be aborted by government action and such a list would coincide well with the “favorite ‘anti-depression’ arsenal of government policy.” The list almost perfectly matches with policy responses to the crisis during both the Bush (see Thornton’s “Hoover, Bush, and Great Depressions”) and Obama administrations.

Here is Rothbard’s “Don't Do” list (pp. 19–20), with my comments in brackets:

1. Prevent or delay liquidation
“Lend money to shaky businesses, call on banks to lend further, etc.” [Done. Tarp, auto bailouts, and the Fed’s mondustrial policy. See recently John B. Taylor in the Wall Street Journal: “The low rates also make it possible for banks to roll over rather than write off bad loans, locking up unproductive assets.”]
2. Inflate further
“Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government ‘easy money’ policy prevents the market's return to the necessary higher interest rates.” [Done in spades.]
3. Keep wage rates up
“Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.”
4. Keep prices up
“Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.” [3 and 4 are both direct results of current Fed actions, including price inflation targets near 2%.]
5 & 6. Stimulate consumption and discourage saving
“We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved-capital even further. Government can encourage consumption by ‘food stamp plans’ and relief payments. It can discourage savings and investment by higher taxes, particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. Some of the private funds would have been saved and invested; all of the government funds are consumed. Any increase in the relative size of government in the economy, therefore, shifts the societal consumption-investment ratio in favor of consumption, and prolongs the depression.” [The federal government has expanded from a bloated 18–20% of the economy to 23–25% of the economy under the current administration. The Bush fiscal stimulus in 2008 and the majority of the 2009 Obama stimulus supported consumption relative to investment as did the ineffective recently repealed temporary payroll tax cut.]
7. Subsidize unemployment
“Any subsidization of unemployment (via unemployment ‘insurance,’ relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.” [Does anything need added here?]

Rothbard (p. 21) argued these were “time-honored favorites of government policy” and the last part of America’s Great Depression was devoted to showing how these were the policies adopted in 1929–1933. Current policy has followed the same path. We should not be surprised that the result has been similar, if not as yet quite as tragic. It is still not too late to change paths, but unfortunately such action, while possible is not likely to happen. Neither will the positive actions recommended by Rothbard (p. 22) to speed recovery be undertaken. Reducing the relative role of the government in the economy while reducing taxes, especially those that bear most heavily on saving and investment, are also, as I have argued previously in “Thoughts on Capital-Based Macroeconomics” (Part III),the correct actions to address the debt and size-of-government crisis.

We are again undone by the “Crisis of Authority,” the urge to action, the incorrect, but too often, as explained by Pierre Lemieux, unchallenged belief that Somebody in Charge[1] is a solution to recessions. The correct government depression policy is “Nobody in Charge.” Laissez-faire is thus the untried alternative and the preventative of depression. Sound, free market money is the untried alternative to government money. Laissez-faire and sound money would replace the recurring boom-bust, and its attendant needless depression and unemployment, with sustainable growth and relative prosperity.

* * * * *

John P. Cochran is emeritus dean of the Business School and emeritus professor of economics at Metropolitan State University of Denver and coauthor with Fred R. Glahe of The Hayek-Keynes Debate: Lessons for Current Business Cycle Research. He is also a senior scholar for the Mises Institute and serves on the editorial board of theQuarterly Journal of Austrian Economics.
This post first appeared at the Mises Daily.

He sells real estate AND …

In between selling real estate, Martyn Bradbury will be changing the NZ blogosphere. Or so he says.

His plan to “change the blogosphere” is (wait for it, wait for it!) a new blog.  One that “will bring together 30 of the best left-wing bloggers and progressive opinion shapers in NZ all onto one site to critique the news, the media, and politics to provide the other side of the story.”

I can already hear you ask how this will differ from existing blogs like, for example, The Double Standard? Well, for one thing, at least they’re all using their own names…

Launching March 1st TheDailyBlog.co.nz will feature: Chris Trotter, Selwyn Manning, Professor Jane Kelsey, Keith Locke, Sue Bradford, John Minto, David Slack, Morgan Godfery, Gareth Renowden, Coley Tangerina, Phoebe Fletcher, Wayne Hope, Queen of Thorns, Burnt Out Teacher, Steve Grey, Aaron Hawkins, Marama Davidson, Tim Selwyn, James Ritchie, Efeso Collins, Robert Winter, Lynn Prentice, Frank MacsKasy, Matt McCarten, Wayne Butson, Chris Flatt, Allan Alach, TheDailyBlog Reposts, and The Liberal Agenda.

My own invitation must have been lost in the post.

Spot the contradiction

The item all over your news last night was Education Minister Hekia Parata’s announcement of school closures, mergers and rationalisations around Christchurch.

Virtually to a man (and woman) the parents, principals and teachers the reporters spoke to were agin it.  Their response is best summed up by that of the Educational Institute (NZEI), who says  the Government “needs to listen to schools and their communities.”

These are the same people, and the very same NZEI, that wholeheartedly supports top-down centralised control of state schools—which takes all important decision making away from schools and their communities; that stands against bulk funding of those schools—which would support schools and their communities to make their own decisions; and that is violently opposed to Charter Schools—which gives almost complete autonomy to schools and their communities.

Can you spot the contradiction?

Because they can’t.

" Keep The Home Fires Burning - With Your Census Form"

DOWN TO THE DOCTOR'S: This week, Dr Richard McGrath is getting his matches ready...

Yes, it's that time again: when freedom lovers across the land express their antipathy to that recurrent symbol of bureaucracy and the Nanny State -- the five yearly census form --by turning it into a carbon footprint.

Libertarians object to being told to fill in a census form for two reasons: first, being ordered to fill in a questionnaire (they never just ask nicely, do they) is a violation of a peaceful person's right to be left alone; second, the information obtained via the census is utilised for all manner of central planning by the State.

This central planning prolongs the existence of many government agencies that libertarians believe lie outside the scope of limited government --departments and ministries such as education, welfare, tourism, ethnic affairs, health, finance, agriculture, trade, transport, employment, fundraising, the voluntary sector and environmental protection, to mention just a few.

By refusing to hand over details of your private life to bureaucrats, even if it doesn't make someone in government sit up and reflect on the violation of civil liberty that the census represents, at least you will annoy a few of them by creating more work.

Should you choose not to warm your dwelling by oxidising your census forms, at least drag your feet on completing them by the due date. Let the lapdogs of the State come running to you and, when they do, refer them to the Privacy Commissioner, whose office "seeks to develop and promote a culture in which personal information is protected and respected". Ultimately, ask them to meet you in a public place where they can kneel down with hands clasped and beg you to fill their forms in. Surely they will if the information is that important.

And when or if you do hand it over, be aware that the only information their own law compels you to supply is your name and address.  Which they already have.

Click here to read the Libertarianz Party's response to news of the coming head-count-at-the-point-of-a-gun.

See ya next week!

Richard McGrath
Libertarianz Party leader

Monday, 18 February 2013

Europe by night

By crikey, the human environment is beautiful!

SUZUKI SAMURAI: Doing what NGOs do

Guest post by our roving Asian correspondent Suzuki Samurai, who woke up this morning in Cambodia realising he worked for an NGO.

NGO is not a term I like. To call an organisation "non-government" suggests that government is the natural first point of call for those in dire need. I could look at it positively I suppose and say that NGO Non Governmental Organisation actually shows that people outside of government know the government will do a shit job – so we best do it ourselves. NGOs, such as the one I work for, face a number of difficulties that I’d not cared to think about before. The securing of funds through donation is pretty straight forward, as it turns out; it’s how to effectively make that money work that makes things much less so.

Take for example my NGO: one way they help is by giving $12 per child, per month directly to families considered the poorest, on the condition that the child attends their local government school (and can demonstrate that with an appropriately completed attendance record). Unfortunately, many parents like the money, but they keep their kids working in the fields instead of going to school. They play the system to keep getting the money.

Another factor is the cultural influence of continuing to breed. The NGO's German country manager and I were visiting a family the other day--the mother and her four children are living in what could only be described as a tree-house; she was all of 24 years old. Upon being asked if she intended having further children she said, “I hope not." Now in Cambodia there is a pretty good education program about contraceptives, including booklets about the pill, injections, condoms, and some other thingy-me-jig. Turns out her husband doesn't like condoms, especially when he’s pissed, and she keeps forgetting to get the other ‘free’ alternatives. I suspect she will be pregnant again in no time - a fifth mouth to feed.

The NGO is duty bound not to put ‘less breeding please’ as a condition of receiving payment, though in our culturally sensitive times I don’t think they’d say so even if they could.

Another example is that of the NGO funding a family of a working mum and her four kids (dad’s dead) to the tune of $48 per month + a bag of rice – next thing, mum quits work as that was near-on the money she was bringing in when she was working. (I remember Jake Heke making the same observation)

Then there are examples of other NGOs funding and managing sewing shops, craft manufactories etc to enable locals to make products for tourists. Once these things are up and running & successful the NGOs hand them over to local managers to continue the good work--only to find that six months later the factory has been embezzled, run into the ground and left to rot.

There are many more examples like this I’m sure among the other 1000 NGOs operating in Cambodia, just as I’m sure there many success stories. But it demonstrates to me what welfare does to people.

It is one thing to build a water treatment plant or a well, or a school house, or provide some teachers – but to simply dole out money is often a dead end, except for the opportunity to learn anew the Law of Unintended Consequences.

What’s required is for good people to demand an end to corruption, to bring about the rule of law, to institute property rights; by doing so it will encourage much needed foreign investment to bring about the work that will enable the locals to fix their own problems themselves.

Until such time as these things happen, not much in the lives of the ordinary folk will really change at all.

Sunday, 17 February 2013

Christianity: Good or Bad for Mankind?

Last weekend, top Objectivist intellectual Andrew Bernstein debated Christian apologist Dinesh D’Souza on the topic ‘Christianity: Good or Bad for Mankind?

New Atheists,” such as Christopher Hitchens, Daniel Dennett, and Michael Shermer, have debated Mr. D’Souza in the past, but their critiques of Christianity have been based on skepticism, subjectivism and relativism. In short, they’ve argued  on the basis od uncertainty, and have failed to properly critique religion’s history or offer any rational alternative to religious ethics.

Dr. Bernstein’s case against Christianity however (and against religion in general) is grounded in Ayn Rand’s philosophy of Objectivism.  How did this play out? Watch and see:

Friday, 15 February 2013

3 or 4 year terms?

Sinclair Davidson spotted the interesting debate in the The New Zealand Initiative's weekly email update on whether or not to lengthen the three-year parliamentary term to four year.

Oliver Hartwich wants the term lengthened:

Elections are about choosing people we trust and task with decision-making on problems we may not even know at the time of the election. If you are uncomfortable with that then you have not understood the concept of parliamentary democracy.
    The more substantive problem with three-year terms is that it leaves little time for parliamentary work. With new MPs and positions reshuffled, it takes the best part of a year for a new parliament to start functioning. Parliament also typically descends into a pre-election campaign well before the likely end of its term.
    Currently this leaves just about one year for good, substantial governance. Increasing electoral terms to four years would double this quieter mid-term period when parliament can properly fulfill its role as the legislature. It would allow more time for good law-making, and it could well result in a better quality of policy. It might even encourage governments to undertake necessary reforms, even if their positive results do not materialise immediately.

Luke Malpass disagrees:

The arguments for four- (or five-) year fixed parliamentary term can be summed up as stability, predictability and giving government time to implement its agenda. By having a longer fixed term, government governs better.
    This is all well but ignores the basic principle that liberal democracies are founded upon: fear of tyranny. This fear is institutionalised through checks and balances to limit power of government.

“I’m inclined to agree with Luke,” says Sinclair. Me too.  “Luke’s point about tyranny is decisive. The only way to keep the bastards honest is to throw them out of office. That means shorter not longer electoral periods.”


Oliver reckons the “substantive problem with three-year terms is that it leaves little time for parliamentary work.” But this is not a bug, it’s a feature!  It’s the parliamentary work they’re doing that is making our lives worse.

“Increasing electoral terms to four years would double this quieter mid-term period when parliament can properly fulfil its role as the legislature,” says a deluded Oliver Hartwich.  Because these bastards are not in there legislating to make our lives better, or freer, or more prosperous, and they haven’t been for a very long time indeed--and if Oliver or anyone truly thinks they are then they’re either blind or stupid.

As Mark Twain used to say, neither life, liberty nor property is safe while parliament is in session. If a three-year term means parliament is in session for fewer hours—and in those fewer hours less work is being done—then I’m all for shortening parliamentary terms, not making them longer.

Indeed, if a three-year term really only leaves one year when parliament fulfils its role as the legislature, then I’m all for making the parliamentary term only two years. Then the bastards wouldn’t have time to do anything at all substantial.

And how bad could that be?

Where Is the Inflation?

Food prices are rocketing, but this is nothing to worry about burble those who read CPI statistics.   This is not inflation, they say, because food prices often do rise in January/the increase last month reflected more expensive grocery food after drops in prices in recent months/fruit and vegetables showed seasonal increases (pick one).

So, with all the money printing going on around the world, where is the inflation?  Read on…

Where Is the Inflation?
Guest post by Mark Thornton

Critics of the Austrian School of economics have been throwing barbs at Austrians like Robert Murphy because there is very little inflation in the U.S. economy. Of course, these critics are speaking about the mainstream concept of the price level as measured by the Consumer Price Index (i.e., CPI).

Let us ignore the problems with the concept of the price level and all the technical problems with CPI. Let us further ignore the fact that this has little to do with the Austrian business cycle theory (ABCT), as the critics would like to suggest. The basic notion that more money, i.e., inflation, causes higher prices, i.e., price inflation, is not a uniquely Austrian view. It is a very old and commonly held view by professional economists and is presented in nearly every textbook that I have examined.

This common view is often labeled the quantity theory of money. Only economists with a Mercantilist or Keynesian ideology even challenge this view. However, only Austrians can explain the current dilemma: why hasn’t the massive money printing by the central banks of the world resulted in higher prices.

Austrian economists like Ludwig von Mises, Benjamin Anderson, and F.A. Hayek saw that commodity prices were stable in the 1920s, but that other prices in the structure of production indicated problems related to the monetary policy of the Federal Reserve. Mises, in particular, warned that Fisher’s “stable dollar” policy, employed at the Fed, was going to result in severe ramifications. Absent the Fed’s easy money policies of the Roaring Twenties, prices would have fallen throughout that decade.

So let’s look at the prices that most economists ignore and see what we find. There are some obvious prices to look at like oil. Mainstream economists really do not like looking at oil prices, they want them taken out of CPI along with food prices, Ben Bernanke says that oil prices have nothing to do with monetary policy and that oil prices are governed by other factors.

As an Austrian economist, I would speculate that in a free market economy, with no central bank, that the price of oil would be stable. I would further speculate, that in the actual economy with a central bank, that the price of oil would be unstable, and that oil prices would reflect monetary policy in a manner informed by ABCT.

That is, artificially low interest rates generated by the Fed would encourage entrepreneurs to start new investment projects. This in turn would stimulate the demand for oil (where supply is relatively inelastic) leading to higher oil prices. As these entrepreneurs would have to pay higher prices for oil, gasoline, and energy (and many other inputs) and as their customers cut back on demand for the entrepreneurs’ goods (in order to pay higher gasoline prices), some of their new investment projects turn from profitable to unprofitable. Therefore, you should see oil prices rise in a boom and fall during the bust. That is pretty much how things work as shown below.

As you can see, the price of oil was very stable when we were on the pseudo Gold Standard. The data also shows dramatic instability during the fiat paper dollar standard (post-1971). Furthermore, in general, the price of oil moves roughly as Austrians would suggest, although monetary policy is not the sole determinant of oil prices, and obviously there is no stable numerical relationship between the two variables.

Another commodity that is noteworthy for its high price is gold. The price of gold also rises in the boom, and falls during the bust. However, since the last recession officially ended in 2009, the price of gold has actually doubled. The Fed’s zero interest rate policy has made the opportunity cost of gold extraordinarily low. The Fed’s massive monetary pumping has created an enormous upside in the price of gold. No surprise here.

Actually, commodity prices increased across the board. The Producer Price Index for commodities shows a similar pattern to oil and gold. The PPI-Commodities was more stable during the pseudo Gold Standard with more volatility during the post-1971 fiat paper standard. The index tends to spike before a recession and then recede during and after the recession. However, the PPI-Commodity Index has returned to all-time record levels.

High prices seem to be the norm. The US stock and bond markets are at, or near, all-time highs. Agricultural land in the US is at all time highs. The Contemporary Art market in New York is booming with record sales and high prices. The real estate markets in Manhattan and Washington, DC, are both at all-time highs as the Austrians would predict. That is, after all, where the money is being created, and the place where much of it is injected into the economy.

This doesn’t even consider what prices would be like if the Fed and world central banks had not acted as they did. Housing prices would be lower, commodity prices would be lower, CPI and PPI would be running negative. Low-income families would have seen a surge in their standard of living. Savers would get a decent return on their savings.

Of course, the stock market and the bond market would also see significantly lower prices. Bank stocks would collapse and the bad banks would close. Finance, hedge funds, and investment banks would have collapsed. Manhattan real estate would be in the tank. The market for fund managers, hedge fund operators, and bankers would evaporate.

In other words, what the Fed chose to do ended up making the rich, richer and the poor, poorer. If they had not embarked on the most extreme and unorthodox monetary policy in memory, the poor would have experienced a relative rise in their standard of living and the rich would have experienced a collective decrease in their standard of living.

There are other major reasons why consumer prices have not risen in tandem with the money supply in the dramatic fashion of oil, gold, stocks and bonds. It would seem that the inflationary and Keynesian policies followed by the US, Europe, China, and Japan have resulted in an economic and financial environment where bankers are afraid to lend, entrepreneurs are afraid to invest, and where everyone is afraid of the currencies with which they are forced to endure.

In other words, the reason why price inflation predictions failed to materialize is that Keynesian policy prescriptions like bailouts, stimulus packages, and massive monetary inflation have failed to work and have indeed helped wreck the economy.

* * * * *

]Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the book review editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition, coauthor of Tariffs, Blockades, and Inflation: The Economics of the Civil War, and the editor of The Quotable Mises, The Bastiat Collection, and An Essay on Economic Theory.
This article first appeared at the Mises Daily.

I’m so hungry, I could eat a horse!

First, the news:

“British supermarkets have pulled tens of thousands of frozen beefburgers from their shelves after tests revealed that products from Irish supply company Silvercrest contained horse and pig DNA. Tesco was first to remove the products yesterday.” - TELEGRAPH.CO.UK

A spokesman for one supermarket chain said they are not entirely sure how they are going to get over this hurdle.

And in related news:

A woman has been taken into hospital after eating horse meat burgers from Tesco. Her condition is said to be stable.

Tesco has also been forced to deny presence of zebra in burgers, as shoppers confuse barcodes for serving suggestions.

And Tesco are now testing all their vegetarian burgers for traces of unicorn.

Meanwhile, family counsellors are pointing out Tesco Quarter Pounders may be the affordable way to buy your daughter the pony that she's always wanted!

Anecdotes abound:

A waitress in Tesco asked if I wanted anything on my Burger. So I had a £5 bet each way !

Had some burgers from Tesco for my tea last night.... I still have a bit between my teeth

Anyone want a burger from Tesco? yay or neigh?

"I've just checked the Tesco burgers in my freezer...THIS TIME, AND THEY'RE OFF"

A cow walks into a bar. Barman says 'why the long face?' Cow says 'Illegal ingredients, coming over here stealing our jobs!'

I hear the smaller version of those Tesco burgers make great horse d'oeuvres.

These Tesco burger jokes are going on a bit. Talk about flogging a dead.. NO! NO NO NO!

Said to the Mrs, these Tesco burgers given me terrible trots.

But some remain philosophical:

To beef or not to beef. That is equestrian.

Thursday, 14 February 2013

SUMMER SNIPPETS: ‘The Authorized Biography of Robert A. Heinlein’ (Vol. 1, Learning Curve, 1907-1948)

More snippets clipped from my summer reading, this time from William Patterson’s 2010 biography of the SF master.

Heinlein’s hard-core un-common sense, dosed out mostly as entertainment, had given the parentless generations of the mid-twentieth century something of what previous generations had gotten, in quiet moments, one-one-one with their fathers and their tribe’s wise men: their portion, all they could take, of life wisdom.  They counted Heinlein their “intellectual father,” as an earlier generation regarded Mark Twain…  They had needed, sometimes desperately, to hear what he had to say—not slogans, but tools:
        ‘What are the facts? Again and again and again—what are the facts?  Shun wishful thinking, ignore
    divine revelation, forget ‘what the stars foretell,’ avoid opinion, care not what the neighbours think, never
    mind, the un-guessable ‘verdict of history’—what are the facts, and to how many decimal places?  You
    pilot always into an unknown future; facts are your single clue.’

“[The film from Heinlein’s screenplay] Destination Moon was released in 1950 and caused a national sensation by visualising for the people of the world the first trip to the Moon…  Now, in 1969, he was a celebrity again, his big satire on hypocrisy Stranger in a Strange Land still picking up steam, though almost nobody seemed to understand it was not a book of answers, but a book of questions.”

“[It was July 20, 1969, and as Neil Armstrong took that small step onto the moon’s surface for first time,] Heinlein sat in a makeshift studio in Downey California … with Walter Cronkite and Arthur C. Clarke … they wanted him for commentary, when he was too excited, almost, to talk at all.  Heinlein had yearned for the moon most of his life, and had done what he could to make it happen—in aeronautical engineering in the Navy, then writing about it, making real to readers … [as he] got on with his real work of teaching people who to live in the future…
    “This is a great day,” Heinlein told Cronkite:
        ‘This is the greatest event in all the history of the human race, up
    to this time.  This is—today is New Year’s Day of the Year One.  If
    we don’t change the calendar, historians will do so. The human race—
    this is our change, our puberty rite, bar mitzvah, confirmation, from
    the change from infancy into adulthood for the human race.  And we
    are going to go on out, not only to the Moon, to the stars: we’re going
    to spread.  I don’t know that the United States is going to do it; I hope
    so.  I have—I’m an American myself; I want it to be done by us.  But
    in any case, the human race is going to do it, it’s utterly inevitable:
    we're going to spread through the entire universe.’

So successful was his writerly mission that Heinlein was increasingly sought out as a guru—a position he rejected.  At almost the same time Stranger in a Strange Land was speaking to the spiritual life of a new generation, so too The Moon is a Harsh Mistress was galvanising another movement of young people coming together.  The movement has suffered many ups and downs, but well into the twenty-first century libertarianism is still with us … stile holding out Heinlein’s vision of what an untrammelled society might look like.”

In his first naval placement, Heinlein was impressed that his hard-pressing ship’s commander on the USS Lexington Captain, later Admiral, King “always looked unhurried and unworried, but he worked very hard anticipating anything that could go wrong and paying attention to every detail—even the ones he seemed not to notice at the time… King expected performance from his subordinates—and got it: ‘I find a boss who consistently requires high performance much easier to work for than one who blows both hot and cold.  As for the third sort, who are always satisfied with poor performance—I quit!’”

As a fan of his science fiction writing, Heinlein was initially sympathetic to H.G. Wells’s brand of socialism, which muckraking journalist and 1930 Socialist Party candidate for California governor Upton Sinclair described as having been killed by Communism:
        ‘Socialism [like Wells’ which was creative is stunned, and Communism, which is the sabotage of civilisation by the disappointed, has usurped its name and inheritance … The new Marxist Socialism, therefore, with its confident dogmas, its finality and hardness, its vindictive will, developed an intensity and energy that drowned and almost silenced the broader, more tentative, and scientific [sic] initiatives of the older, the legitimate Socialism.  Communism, with its class-war obsession, ate up Socialism.’ "
    “The socialism of Sinclair and Wells was ‘progressive’—the term means social change by progressive stages of education and gradual political conversion, as opposed to the violent revolutionary change should by Marxist theory.  Progressivism fit very comfortably with the liberal orientation of the Democratic Party platform; Sinclair switched his party affiliation on September 1, 1933, changing his techniques, he said, but not his principles:  ‘I found I was not getting anywhere as a Socialist,’ he explained… , ‘ and so I decided to make progress with one of the two old parties.’ ”

In July 1935, the Seventh World Congress of the [Communist International] announced the Popular Front against fascism throughout the world, bizarrely holding up the Nazi government of Germany as ‘the highest form of capitalism.’  The success of this peculiar ‘big lie’ would crippled the ability of traditional liberals to resist the growth of totalitarian ideology.  They would have to be antifascist, anticommunist and anticapitalist all at the same time.  Liberals didn’t realise it yet, but traditional—‘classical’—liberalism began to collapse as an intellectual movement … from that moment.”

“[In 1936] Robert  and [his wife] Leslyn started hosting informal breakfasts Sunday mid-mornings for [electioneering Democrat] workers in their district, to provide a neutral ground where all the  [party’s] different factions could come face-to-face…  Leslyn Heinlein recorded some thoughts about this process:
        ‘…one of the most useful functions Bob and I performed in
    our political activities was that of getting people together who were in basic agreement and didn’t know it.  It
    is amazing how quickly methods of accomplishing a desired end can be worked out, once two people who
    have been busy hating each other’s guts get the idea they want to accomplish the same end and have
    been fighting over how.’ ”

Pragmatically, Robert and Leslyn knew that the Democratic Party was rotten with communists… [and] were very much in the way insofar as the success of the Democratic Party was concerned… For his efforts, he got on the Communist Party’s ‘better dead’ list…  The dislike was mutual.  Individual communist may not be villains, but Heinlein had then then common liberal’s abhorrence of communism as an active force in the world:
       ‘Let me go on record that I regard communism as expressed by the U.S.S.R and its friends here and
    elsewhere as a grisly horror, a tyranny maintained by force and terror, utterly subversive of human
    liberty, freedom of thought, and dignity.  I regard it as Red fascism, distinguishable from black and
    brown fascism by differences of no importance to me nor to its victims.’ ”

In April 1939, “flat broke following a disastrous political campaign … and with a heavily-mortgaged house” Heinlein submitted his first short story “Life-Line” to Astounding Science Fiction and was rewarded with a cheque for $75, then a fairly princely sum. “ ‘How long has this racket been going on?” he demanded rhetorically. “And why didn’t someone tell me about it sooner?’ ”

“Germany … rejected  Great Britain's ultimatum to return to its borders after the invasion of Poland, and the suddenly revealed Hitler-Stalin pact had American communists spluttering.  England declared war on Germany, and the French were mobilising.  On September 3, 1939, Heinlein composed a memorandum/prediction for his own files: ‘A note from Robert A. Heinlein of this date to R.A.H. of some later date, just to keep the record straight’:
        ‘Great Britain has just declared war on Germany.  France joins them.
        ‘Germany has not attacked Britain nor France… I do not justify Germany’s attack, but let’s keep the
    record straight.  Britain is not entering this war to save democracy (Poland is a dictatorship), nor because of
    the "holiness" of her treaty obligations (remember both Ethiopia and Czechoslovakia—a democracy,
    incidentally—and Spain).
        ‘So far as I can see, Britain is entering this war because Germany is getting stronger than she likes.  She
    has decided to fight Germany because she thinks she can lick her now, and isn’t sure she can later-let’s not
    be sanctimonious about it.
        ‘This war isn’t being fought for Thomas Mann, nor Albert Einstein, nor for other persecuted Jews.  Nor is
    it being fought for "democracy."  It’s being fought to preserve the worst and most unjust features of the
    Versailles Treaty.  Let's get that straight.  And stop Hitlerism makes as much sense as Hang the Kaiser.
        ‘Hitler is a symptom of Versailles—we caused him.  The insanity he typifies we caused.
        ‘This is where we came in—want to sit through another show?’

    “He added a handwritten postscript:
        ‘I’ll bet two bits that from here on anyone who is not pro-British will be called un-American.’

“Toward the end of 1940, … Heinlein [was persuaded to] take up photography as a hobby. ‘I am completely nuts on the subject of cameras,’ he told [a friend]. ‘This produces a vicious cycle: I have to write stories to support my camera, darkroom, buy gear etc., but I really haven't got time to write stories because photography is a full time occupation.’  Nude photography was what he spent most of his free time and spare cash on.  Heinlein never had any difficulty getting women to pose for him—which astonished his friends and acquaintances.  To him, it was simply a numbers game:  ‘If you approach a woman right, one out of two will post nude for you…  Leslyns’s chaperonage is the main reason I can get anyone to pose for me I want for the purpose.’  The Heinleins also belonged for several years to a camera co-op that hired live models at group rates.  In 1941, the co-op brought him the perfect model, Sunrise Lee.  ‘She could not fall into an ungrateful pose,’ [he said].  A nude study hung in his house for the rest of his life.”

“With the money [from writing] coming in … making a studio for himself [went to] the top of his list…  He didn’t bother getting a permit for the work, but sneaked materials in under cover of night, and even cut the windows and outside door at night so that the neighbours could not catch on and complain. When the structure was completed, he posted a sign … on the outside door, to discourage random visitors and door-to-door salesmen:
                                                               ‘ENDOSTROPHIC THERAPY ROOM.  KEEP OUT!
                                                                                           DO NOT KNOCK!!!
                                                                      Use upper door—it works quite well’

“The ‘upper door’ was the main house … where Leslyn had posted her own sign:
                                                               ‘Anyone knocking on this door before eleven a.m.
                                                                                   will be buried free of charge.

“There is a certain type of personality … unfortunately common in science-fiction fandom, for which adoration [of SF writers] is a red flag.  A dozen or so of these boys … followed him around [at conventions] and made a ‘steady and malicious effort’ to whittle him down to size.  This irritation loomed large in his mind.  ‘They were so rude that I did not enjoy [the guest-of-honour experience].’  He wondered for years why the more socially adept fans didn’t rein them in.”

“I haven’t anything which could properly be termed a religion [he wrote to a friend when asked about the subject].  My thoughts on religious subjects are matters of intellectual rather than emotional conviction.  The nearest thing to a religious feeling I have, and, I believe, strong enough to justify calling it religious feeling, has to do with the United States of America.  It is not a reasoned evaluation but an overpowering emotion.  The land itself as well as the people, its culture in the broadest most vulgar sense, its history and its customs … I have no God.  The only think which inspires in me a feeling of something much bigger and more important than myself … is this country of ours.  I know it is not logical—I presume that a mature man’s attachments should be for a set of principles rather than for a particular group or a certain stretch of soil.  But I don’t feel that way … every rolling word of the Constitution, and the bright sharp brave phrases of the Bill of Rights—they get me where I live.  Our own music, whether it’s Yankee Doodle, or the Missouri Waltz, or our own bugle calls—it gets me.”

Caleb Catlum's America: The enlivening wonders of his adventures, voyages, discoveries, loves, hoaxes, bombast and rigmaroles in all parts of America, ... zone, and a thousand tricks of lovemaking“Not even overwork to the point of exhaustion put a serious crimp in Heinlein’s omnivorous reading… Robert particularly enjoyed C.S. Lewis’s Screwtape Letters [written] from the perspective of a senior demon giving infernal advice to his nephew, a tyro imp, on how best to corrupt human souls.  The conceit ticked Heinlein's fancy.
    “Vincent McHugh, whose 1936 Caleb Catlum’s America Heinlein was still using as a touchstone by which to measure the compatibility of potential friends (along with Charles G. Finney’s The Circus of Dr Lao and an odd little  French graphic novel Private Memoirs of a Profiteer by Marcel Arnac) published his fourth book, I Am Thinking of My Darling—a response to H.G. Wells’s In the Days of the Comet....
    “But Philip Wylie’s Generation of Vipers so exactly said things Heinlein believed desperately needed I to be said that Heinlein’s enthusiasm ran away with him and he gushed for an hour about the book to e very uninterested fan … who came to visit one day in 1943.”

“Heinlein had come to despise his [wartime] job [at the Naval Aeronautics Lab]—the waste, the inefficiency, the absolute rigidity of the bureaucratic read tape that tied everything up in knots and made it nearly impossible to get anything useful done…
       ‘I found here my conception of the navy had been incorrect or at least incomplete … and I began to be
    ashamed of being a naval officer (yes, ashamed).  Presently the heroic exploits of the fleet compensated in
    part and gradually I began to understand the mechanism which produced, automatically, [the place he and
    his co-workers had dubbed] Snafu Manor.  It does not produce bastards, but it gives them scope…”

“ ‘It was Ian Hay, I believe, who first discovered that any military administration is divided into three departments: the Fairy Godmother Department, the Practical Joke Department, and the Surprise Party Department.  By preparing for Come-What-May I may circumvent and discourage the latter two and be turned over to the benevolence of the first.  But I am not optimistic; the resourcefulness of the two larger departments can hardly be measured.’ – Letter to a friend, 1944.”

Early in July 1945 the imperial Japanese government had approached the Soviet government to open diplomatic discussions for a negotiated peace.  By this time however, it was clear that what the Japanese wanted was a ‘breather’ to rebuild their shattered war machine, and that was not acceptable: there would be no prospect for peace so long as the military was in control of the Japanese government…  Early in the morning of August 6, 1945, the specially modified bomber Enola Gay  approached the industrial city of Hiroshima … and dropped its payload, the U-235 bomb code-named Little Boy… Heinlein had known about a secret War Department project involving uranium and did his best to keep talk about the subject in his presence to a minimum, preferably none at all.  Now, atomics were a reality—and the future rushed in.
    “Even while he struggled to grasp the enormity, his mind flashed ahead to the meaning of the event. ‘That’s the end,’ he said flatly.  The end of the war, almost certainly—but also, Goodbye To All That, the end of the whole world as it was before August 6, 1945…
        ‘Combine the atomic bomb with the V2 and I believe it is evident o any sober-minded technical man that
    the events of 6 Aug, et seq., should cause us carefully to re-examine all plans, proposals, and projects
    which obtained before that time …  In the broad sense we are out of business, just as thoroughly out off
    business as were wooden fighting ships after the battle of the
Monitor and Merrimac… It is a simple fact that
    (1) we cannot afford a war ever again, (2) the atomic bomb cannot be abolished, nor can it be indefinitely
    kept from other peoples.  We must ride the lightning and ride it well.  I conceive the atomic bomb as being
    the force behind the police power for a planetary peace … such a force there must be if we are not be
    ourselves destroyed.’ ”

The Naval Air Materials Center, the research wing of the Naval Aircraft Factory, should organise ‘a major project’ with all the usual apparatus of its wartime R & D projects, to develop a man-carrying rocket out of V2 technology.  The first step could be an unmanned ‘messenger rocket’ to the Mon, guided by the new radar target-seeking technology…
        ‘It must be noted that it is really much easier to build a successful Moon rocket than to build a proper war rocket [he wrote in a memo that went up the Naval and diplomatic channels].  Nevertheless either problem can be sued to solve the other—the choice between the two is a choice in diplomacy and politics.’
    “The public, he said, is now ready for such a project, and Robert Goddard had suggested a good test in his 1920 technical paper: the Moon rocket could carry a fifty-pound payload of carbon black.  An explosion just before touchdown could disperse it far enough for eth mark to be seen on Earth, even by quite low-powered amateur telescopes…. ‘The unique prestige which would accrue to the United States of America, to the U.S. Navy, and to NAMC in particular cannot be expressed.’ ”

Heinlein set out his understanding of the current situation in a letter [to a friend]:
        ‘As I see it, we finally finished off the war by plunging the globe and ourselves in particular into the
    greatest crisis, the most acute danger, in all history.  I am not deploring it.  I know that the discovery of
    atomic power was inevitable and I know that you can’t turn the clock back, no turn sausage back into hog.  It
    is here.  We’ve got to face it and deal with it.  I am overwhelmingly thankful that we got it first and that it
    was brought out into the open by the war.  Now we have a fighting chance to save civilisation as we know it
    and the very globe we stand on. If the Axis had gotten it we would have had no chance.  It might have been
    a thousand years before freedom and human dignity would ever again have been known.
        ‘But I am bitterly afraid of the way we may handle it.  There are two crazy approaches … The first says
    "We’ve got it … From now on they got to do what we tell them too" … The second crazy viewpoint regards
    the atomic bomb as just another weapon, powerful but bound to be subjected in time to an effective
    counter weapon…  There is a third reaction, one of deploring the whole thing [and] of passing
    resolutions expressing regret that we ever used so barbarous a weapon…
        ‘You might call these three types of dunderheads the bloody minded, the common or garden
    unimaginative stupid, and the custard head.  God deliver us from all of them
.’ ”

imageMagician [and Heinlein friend] Jack Parsons rented out rooms in the large house in Pasadena he had inherited, seeking odd and eccentric characters of all kinds.  This suited L. Ron Hubbard’s needs [who had just finished lodging at Heinlein’s house], and he moved in.  Parsons had assumed leadership of the Los Angeles chapter of Aleister Crowley’s Ordo Templi Orientis (OTO), and he gave weekly presentations of the ‘Gnostic Mass’ in the attic of the house.
    “The Gnostic Mass was a theatrical piece rather than a true religious rite, suitable for introducing newcomers to the basic concepts of Crowley’s religion of Thelema…  Parsons found Hubbard [who was later to create the religion of Scientology]  ‘the most Thelemic person I have ever met.’  Hubbard immediately became comfortable in Parsons’s eccentric ménage—and soon started an affair with Parson’s live-in lover and magickal assistant, Sara ‘Betty’ Northrup…  It appears Parsons had little objection to make when Hubbard took over Betty’s affections; Betty’s affections were habitually strewn around pretty indiscriminately, and not just as a matter of adolescent friendliness… Instead, Parsons immediately threw himself into a magickal project to call down an elemental to take her place.”

In January 1946, [Heinlein] wrote another of his atomics articles, ‘America’s Maginot Line’—this time pointing out how inadequate conventional weapons were to address the strategic demands of atomic weaponry… Offense had so far outrun defence that trying to rely on conventional weaponry was virtually an invitation to a pre-emptive strike with atomic weapons.
        ‘I believe that present plans for national ‘defence’ are not only useless and a waste of money but tend to lull
    the public into thinking that ‘older and wiser’ heads have the situation under control…
        ‘The most expensive thing in the world is a second-best military establishment.’

“[As he began writing his novels for boys] he kept in mind his conversations with [film-maker] Fritz Lang, since the same considerations would apply to any films… Above all, he did not want [them] to be what H.G. Wells had once called the ‘artificial and meretricious fricloity forced upon the young.’ 
        ‘Before starting [Rocket Ship Galileo] I established what has continued to be my rule for writing for
    youngsters; Never write down to them.  Do not simplify the vocabulary nor the intellectual concepts... The
    story should have lots of action and adventure … [and] plot use of difficult intellectual or scientific concepts:
    the kids enjoy getting their teeth into such—much more than their parents…
        “I have been writing the Horatio Lager books for this generation, always with the same strongly
    moral purpose that runs through every line of the Alger books… "Honesty is the best policy"—"Hard work
    is rewarded"—"There is no easy road to success”—"Courage above all"—"Studying hard pays off, in happiness
    as well as money"—"Stand on your own feet"—"Don’t every be bullied"—"Take your medicine”—“The
    world always has a place for a man who works, but none for a loafer."  These are the things the Alger books
    said to me, in the idiom suited to my generation … and I have constantly tried to say them to a
    younger generation which I believe has been shamefully neglected by many of the elders responsible for
    its moral training.

[To be continued]

Wednesday, 13 February 2013

Atlas in South America

Turns out that Atlas Shrugged, Objectivism and Ayn Rand—and Austrian economics—are growing in popularity in South America, including reports from Cuba of a tractor and cart used for transportation between two villages wit he words “John Galt” emblazoned on its sides.

And in Guatemala the Universidad Francisco Marroquin (UFM) has a Ludwig von Mises library, a Centro del Capitalismo, a Centro Henry Hazlitt, and has made Atlas Shrugged required reading for all students—with the events in the novel integrated with the economics courses—and The Fountainhead assigned reading for all architecture students. Our mission,” says the University, “is to teach and disseminate the ethical, legal and economic aspects of a society of free and responsible individuals.

If only other universities could say the same.

Here’s the  sculpture by Walter Peter Brenner adorning the business school:  photographed in 2007 at its unveiling to commemorate the golden anniversary of Atlas Shrugged’s publication, the fourteen-foot square bronze relief is called “Atlas Libertas,” and described as “a tribute to the spirit of enterprise and creative power of the individual.”

[Hat tip Greg D. and the  HB List]

Solar energy is clean energy?

You like solar energy because it’s “clean energy”?

But are you sure about that?

Despite the daydreams by the likes of Russel Norman, solar energy still struggles to be economic. It’s not sustainable. This industry that’s never made a profit wouldn’t survive without being subsidised by industries that do.

And it’s filthy:

Nowhere is the waste issue more evident than in California, where landmark regulations approved in the 1970s require industrial plants like solar panel makers to report the amount of hazardous materials they produce, and where they send it. California leads the consumer solar market in the U.S. — which doubled overall both in 2010 and 2011.
    The Associated Press compiled a list of 41 solar makers in the state, which included the top companies based on market data, and startups. In response to an AP records request, the California Department of Toxic Substances Control provided data that showed 17 of them reported waste, while the remaining did not…
    The state records show the 17 companies [who did report] had 44 manufacturing facilities in California, producing 46.5 million pounds of sludge and contaminated water from 2007 through the first half of 2011. Roughly 97 per cent of it was taken to hazardous waste facilities throughout the state, but more than 1.4 million pounds were transported to nine other states: Arkansas, Minnesota, Nebraska, Rhode Island, Nevada, Washington, Utah, New Mexico and Arizona…
Solyndra, the now-defunct solar company that received $535 million in [“stimulus” money], reported producing about 12.5 million pounds of hazardous waste, much of it carcinogenic cadmium-contaminated water, which was sent to waste facilities from 2007 through mid-2011…


“Having this stuff go to … hazardous waste sites, that’s what you want to have happen,” said Adam Browning, executive director of the Vote Solar Initiative, a solar advocacy group. [But this is less likely] as manufacturing moves from the U.S. and Europe to less regulated places such as China and Malaysia.
    The Silicon Valley Toxics Coalition, a watchdog group created in 1982 in response to severe environmental problems associated with the valley’s electronics industry, is now trying to keep the solar industry from making similar mistakes through a voluntary waste reporting “scorecard.” So far, only 14 of 114 companies contacted have replied. Those 14 were larger firms that comprised 51-per cent of the solar market share.
    “We find the overall industry response rate to our request for environmental information to be pretty dismal for an industry that is considered ’green,”’ the group’s executive director, Sheila Davis, said in an email.

So it’s not profitable, and it’s not really green.

So why exactly did you like it?

QUOTE OF THE DAY: What’s at stake

“Future generations will wonder in bemused amazement that the early 21st century’s developed world went into hysterical panic over a globally averaged temperature increase of a few tenths of a degree, and, on the basis of gross exaggerations of highly uncertain computer projections combined into implausible chains of inference, proceeded to contemplate a roll-back of the industrial age.” 
            - Professor Richard Lindzen

Tuesday, 12 February 2013

Wishing for a “living wage”

Unions are calling for a “living wage” for everyone of at least $19 per hour, enforced by government on every employer. People “need” this they say, therefore they should have it.

This idiocy is not primarily economic—although economist Matt Nolan does give it a thorough spanking, pointing out that “by imposing a ‘price floor’ you are ensuring there are a group of people who can’t get jobs and will get hurt—but unions don’t care because they don’t represent the unemployed.”

See, it is idiotic. But the idiocy is not primarily economic; the idiocy is primarily philosophic. You see, these people are utterly blind to causality. They see no connection at all between how much a person can produce and how much they are able to consume: as if wishing for a loaf of bread were enough on its own to bring that bread on your plate. They se no causal chain connecting what is produced and what is consumed: as if the two were separate things going on with no reference to each other. They see no causal link at all between between production and consumption: as if need itself is sufficient to set the wheels of production in motion.

Yet not an ocean of tears nor a plane-load of hand-wringing former Hobbit actors can bring into existence the bread you will need tomorrow—not unless those hand-wringers are able to put those hands into productive ends.

Taken seriously, the call for this “living wage” is nothing but a whim—that is, “a desire experienced by a person who does not know and does not care to discover its cause.”

The thing these people need to learn is that wishing doesn’t make it so. Reality just isn’t made that way.

“Let them come”

New Zealanders and Australians like to think they are charitable folk. They like to think they are caring, sharing and good hearted towards others. They sit warm and self-satisfied in that thought, right up until the point that those “others” come to our places by boat—and right at that point these good-hearted folk are happy to have these other folk, these other human beings escaping desperate situations, held up at the point of a gun and thrown into detention centres that are little more than concentration camps.

So much for the virtue of benevolence.

It seems benevolence ends where the welfare state begins.

The Welfare State forces every person to be responsible for every other person, whether they like it or not. And like it or not, those who pick up the cheque for New Zealand's welfare state resent that forced imposition.

The Welfare State dehumanises people—forcing us to view another human being as either a wallet or a mouth—upsetting those with the wallets at the prospect of many more mouths being fed at their expense.

The existence of the Welfare State means that instead of seeing every other human being as a potential gain to ourselves, which is what they are, instead we see them as just another mouth to feed and a family to house.

This is criminally wrong.

This is the way the Welfare State is. It is a State in which every human being is set against every other human being.

What we should abhor is not the existence of “boat people”—people in a desperate situation yearning to breathe free, whom we dehumanise by that disgraceful epithet—but the existence of this “forced charity.”

It is all force, and no charity.

There is a better way to deal with immigrants and refugees than with guns, camps and a death sentence.

As author Robert Heinlein suggested, successful immigrants demonstrate just by their choice and gumption in choosing a new life that they are worthy of respect. So why can’t we?

Why not simply let people look after them voluntarily?

This shouldn’t be difficult. Every time an issue like this comes to light, many charitable New Zealanders and Australians raise their voices in support of the embattled minority; so why not take these calls literally?

Instead of announcing that New Zealand is about to buy into Australian inhumanity, Prime Ministers Key and Gillard could instead have announced that between them they will accept whoever arrives on our shores, but only as long as a sufficient number of charitable Australians and New Zealanders can be found to take full responsibility for them until they are on their feet. People who will offer their own voluntary welfare and 'naturalisation services' to help these people start their new life.

Who could possibly, or reasonably, object to that?

Finding a sufficient number should not be a problem. Even the numbers gleefully posted every week by xenophobes like new-Australian Andrew Bolt  only measure in their hundreds--a “flood” of several-hundred souls at most trying to “pour” into a country of 20-million people and a thousand-million empty acres.

And given the initiative refugees will have already shown in getting down here, I would expect that getting on their feet will not take them very long.

This solution demonstrates the stark contrast between generosity and enforced charity, and the simple benevolence at the heart of the libertarian philosophy.

Compulsory 'charity' is a misnomer - it dehumanises both taxpayer and recipient. But when charity is voluntary, people are set free to be benevolent again.

The Welfare State is a killer for benevolence, for the human spirit, for open immigration, and a literal killer for immigrants and refugees braving dangerous waters and the integrity of unscrupulous people-smugglers.

I say set these people free through the generosity of benevolent New Zealanders—while taking a good hard look at what the Welfare State does to people.

I say that the simple libertarian philosophy be adopted with all immigrants, including refugees: that until the Welfare State we endure is permanently dismantled we simply allow all peaceful people to pass freely just as long as they make no claim at all on our enforced charity.

I say Let Them Come.

The principle of individual rights demands it.