The Shotgun Blog
Tuesday, November 23, 2010
VIDEO: "Britain's Trillion Pound Horror Story"
Stop whatever you're doing and watch this right now.
This charming documentary on the debt was created by Martin Durkin and aired on the UK's Channel 4 earlier this month. It is one big refutation of the Broken Window Fallacy, a crash course in the political economy of Frédéric Bastiat and Henry Hazlitt, and gives the lie to the popular notion that the Cameron-Clegg coalition are actually making reductions in state spending:
(h/t Trevor Loudon)
Friday, October 08, 2010
CNBC's Larry Kudlow sounds alarm on coming US Dollar collapse
Many of us free market types (Austrian school adherents and otherwise) have been saying this for years, and now we see the mainstream cluing in. But is it too late?
The stupid Democrat in this video insists that the collapse of the US manufacturing industry is to be blamed on China's managed trade policies, and thus advocates for the US instituting it's own managed trade polices to protect American manufacturers. This is of course, weasel wording for punitive import tariffing.
We've heard this story before, and it totally ignores the fundamental structural issues in the US economy.
There is no debating that the lop-sided trading relationship between China and the US is creating an absolutely disastrous situation. But this is a symptom of the US's own economic policies. Not a situation created merely by China managing it's trade.
The US government has, for nearly a third of a century, through inflationary subsidy, fuelled the drive for home ownership and investment in the service-oriented economy, effectively pricing the manufacturing industry out of the equation.
Why do any hard work, when you can simply borrow your way to prosperity on a credit card, working in a non-exportable service job? The fact is, this has been a pie-in-the-sky American dream from the start, and it's relied on continuous monetary inflation to keep this consumer debt bubble afloat for thirty years.
The rest of the world is implicated, too. In that, it "bought in" to the American debt bubble, by lining up in droves to sell bonds to Americans to fund mortgages and consumer debt.
American consumers were more than happy to take those record low interest rates, run off to Best Buy and Wal-Mart and stock their homes with electronics and other consumer goods.
Foreign bond investors kept sending the money because they believed, falsely, that the sky was the limit for real estate prices.
Worse, the US has seemingly permanently fooled itself into believing that this cycle of consumer borrowing and buying is the lynchpin of the US economy. In fooling itself that this is the case, it has adopted economic policies that subsidize spending and consumption, and discourage the act of saving and capital investment. This is why there is no manufacturing base in the United States. Not because of China's trade policies.
America is as much of a managed economy as China is. No matter how much people convince themselves otherwise, there is nothing "free market" about a nation with state-managed asset prices in real estate and other asset classes, via monetary inflation, buying and holding of idle supply, and engaging in direct intervention into the equity markets in order that prices going up. All in the guise of raising investor and consumer "confidence" so that everyone keeps borrowing and spending.
Moreover, we've learned these lessons before. In the Great Depression -- with Hoover's disastrous trade policies which arguably turned what would have been a short and sharp recession into the a depression -- and in the 1970s.
What people have failed to realize, is that today's situation is far worse than either of those situations. In both of the previous cases, the US had the means of capital creation -- a manufacturing base -- to fall back on. When the shit hits the fan this time, consumers will be faced with mass shortages of basic consumer goods and will have no way to obtain them in any short-order, due to prohibitive import costs as a result of a severely weakened dollar.
Certainly, when this happens, investment in manufacturing will skyrocket -- out of necessity. But there will be no quick fix. America will experience a depression, followed by -- at the very least -- a decade of economic malaise, if not complete social and political breakdown.
Sunday, September 26, 2010
Is the law too complex for lawmakers to understand?
At some point tomorrow, the Jaworski family will be heading to court to learn their fate. They're in trouble because of one person's interpretation of some local bylaws. Those out there who oppose them have been saying that it would be nothing for them to do their homework, navigate through those bylaws and go and get the proper permits.
But really, how easy is it for a business to stay within the letter of the law? There's always something out there you're missing. And it's not just businesses that have trouble navigating all of these laws, rules, regulations, bylaws - even parliamentarians can be tripped up by them.
As an example, let me point to Vancouver-Quadra MP, Joyce Murray. Ms Murray is not the kind of person you would think would have trouble figuring out the rules. For one, she's a former cabinet minister.
But visit her site, and you'll see a posting for an unpaid internship. One open to: "Students, full or part-time, as well as recent graduates" (emphasis added).
And there is the problem. Now I'm sure the majority of the readers of this blog would take no issue with an individual, in school or not, contracting to do an unpaid internship with a company. Both sides benefit, the intern gets a chance to break into an industry in which they're interested, the company benefits from skilled and motivated people who are willing to try anything.
Unfortunately the government doesn't see it that way. Here in BC, the Employment Standards Act (ESA) says of internships, that in order for them to be exempt from the ESA, and thus exempt from minimum wage rules, they must be - "“hands-on” training that is required by the curriculum, and will result in a certificate or diploma.". To quote York University employment law professor, Dr David Doorey "So that’s easy: if the internship is part of a higher education co-op program, then the Act does not apply."
I exchanged emails with Dr. Doorey on this over the weekend. He agreed that the issue is very complex, but added:
My sense is that there are a whole lot of employees in Canada being improperly labeled "interns" by their employers so that the employer can avoid employment law statutes.
Looking again at the definitions above*, a 'recent graduate' is not a student, and not a participant in a program of higher education. In which case an unpaid internship for them would not be permitted. According to the ESA's of both BC and Ontario, this potential intern would likely be considered an 'employee', and in that case would need to be paid at least minimum wage.
Go back to Ms Murray's internship description and you'll see that the intern will receive a $300 honourarium at the end of their placement. The placement is 12 weeks long, for a minimum of 8 hours per week, meaning that this potential 'employee' will expect to receive the equivalent of ... $3.12 per hour. BC's minimum wage is low - it's not that low though.
Now is paying an employee $3.12 per hour exploitation? A libertarian, naturally, would say 'no'. If you can find someone who will work for that, then great for both of you. But I would imagine a Liberal parliamentarian would see it differently. After all, as we have recently seen, Liberals aren't keen on libertarianism - it's just for 'Peter Pans' after all.
The point of this isn't to hurl insults at Joyce Murray. It is to point out how terribly complex the law is, how difficult it is to obey in full and how anyone, even a former cabinet minister / current Member of Parliament could get tripped up by it.
FYI: Joyce Murray's office got back to me with this:
"It is certainly not my intention, or Ms. Murray’s, to violate BC’s Employment Standards. Please see the modified link below: http://joycemurray.liberal.ca/uncategorized/joyce-murray-mp%E2%80%99s-internship-program/"
The link shows a change to their program to bring it within the letter of the law. If we have to have all of these obscure little rules, that's precisely how to deal with violations of them. No drama, no $50,000 fines, just say sorry, fix it, and promise to follow the rules next time. If it's good enough for parliamentarians ...
Tuesday, August 10, 2010
The (gross) beauty of markets: Insect sushi
I'm not about to suggest that some things shouldn't be eaten. I may think it's gross, but the market really does provide for whatever your tastebuds crave. Including insect sushi in Japan:
h/t: Marginal Revolution
Saturday, July 17, 2010
WS on the census: Paul McKeever "Optional long form census a blow to racism"
Canada's Conservative government has announced that completion of Canada's "long form" census will cease to be mandatory in 2011. Shrieks of condemnation can now be heard from a wide range of interests. None of them are justified. To the contrary, this is one step the Harper government has announced in recent history that is actually praiseworthy.
Pursuant to the instruction of Industry Minister Tony Clement, on June 28, 2010, Statistics Canada announced, in part, that:
The 2011 Census will consist of the same eight questions that appeared on the 2006 Census short-form questionnaire. It will be conducted in May 2011.
The information previously collected by the long-form census questionnaire will be collected as part of the new voluntary National Household Survey (NHS). This questionnaire will cover most of the same topics as the 2006 Census, but will exclude the question asking for consent to release personal census information after 92 years as this is only required by the census. The NHS questions will be made available by the end of July.
The National Household Survey will be conducted within four weeks of the May 2011 Census and will include approximately 4.5 million households. (emphasis added)
The government does not believe it is appropriate to force Canadians to divulge detailed personal information under threat of prosecution. For this reason, we have introduced changes for the 2011 Census.
The rationale for objecting to lifting the mandatory completion of the long form are numerous. According to the CBC, the long-form of the census includes questions about religious affiliation every 10 years (2011 being the next such year) and religious groups complain that they need the data to deliver programs and services and to track changes the "religious landscape". The Star reports that Canadian Medical Association journal needs long-form information for health care planning. In short, a good number of private associations like getting free data, and are quite happy to have the federal government threaten Canadians with fines and jail time in order to get it.
Others, not focusing upon the use to which census data is put, complain instead that taking a gun from the heads of those asked to fill out the long form will undermine the quality of the data. For example, the Ottawa Citizen's Dan Gardner, and a host of statisticians about whom he writes, express concern that:
...the switch from a mandatory to a voluntary form will bias the data in many ways and increasing the number of households that get the long form won't correct the biases. It will just produce more numbers. That are biased. And not comparable with past census data.
Toronto Dominion Bank senior economist Drummond has complained that if the long form is optional, white middle-class individuals will submit a greater percentage of the long-forms, leaving minorities, aboriginals and the very wealthy under-represented in the data. He says that, eventually, the data would be useless.
Implied in such complaints is an underlying belief that the data collected with the long form should be used by government. So, what exactly is the nature of the data that so many are clamouring for, and to what purposes can a government put such data?
In 2006 - the year in which the most recent long-form census was sent out to Canadians - talk radio host Robert Metz described in great and illuminating detail the questions set out in the 2006 long form, which he refused to file. Metz is the founder of the pro-free-market Freedom Party of Ontario and a long-time opponent of the census. In his account (which is a must-read for anyone weighing in on the issue of continuing to force people to fill out the long form), he explains that the long form of the census divides Canadians into discrete collectives distinguished by race and wealth:
None of the census questions relate to any proper function of government or of its proper relationship to the citizen: the administration of justice, maintenance of an objective court system, or the function of the military. They're all about genetic make-up and wealth redistribution.
Many opponents of the plan to make the long form optional take the position that the long form does not take too long to fill out. Others, like Liberal Party industry critique Marc Garneau argue that:
"...no one has gone to jail over the census, at least as far back as 1981. Only about 50-60 people are charged over each census, with about six having to pay fines".
Metz's account anticipates that argument, and responds as follows:
But again, fines and jail sentences are a secondary issue, particularly when rarely enforced. The real significance of Canada's Census lies not in the seemingly senseless questions being asked, nor in the threats of penalties directed against us, but in what we are being told about our collective future. Sadly, if the racists and other collectivists who design and administer the Canadian Census have their way, Canadians can expect a continued reversion from a productive society --- which survives by consensual trade in which wealth is earned by productivity --- towards an uncivilized jungle inhabited by warring tribes forced to segregate and divide themselves according to a genetic code.
Now, before the reader rebuts that Metz, an unflinching advocate for individual freedom and free markets, might be misrepresenting the purpose of the collection of such data, consider the statement issued last Tuesday by Armine Yalnizyan, an economist with the collectivist Canadian Centre for Policy Initiatives:
The long form is a critical tool that helps business, communities and governments decide where you need your money...
Without this information, we are all punching in the dark. Without this information, we cannot properly allocate our resources. The people who will pay most dearly are those who are already most vulnerable: the poor, aboriginal communities, recent immigrants and racial minorities.
Yalnizyan essentially agrees with Metz about the intended use of the data is to redistribute wealth to collectives distinguished by race. To conclude that those not getting "our" resources (i.e., government subsidies) thereby "pay", it is necessary first to assume that the money taxed out of the pockets of those who earn it is, in fact, money that is owned by, and owed to, Canadians collectively. Characterizing collectives of
individuals defined almost exclusively by race as those who "pay", Yalnizyan confirms Metz's summation that the collectives in question are racial collectives; that the census is a tool to impose and facilitate tribalism (a state of affairs in which government governs not individuals, but collectives distinguished by race, sex, nationality, et cetera).
Whether or not they realize it as explicitly as does Yalnizyan, the opponents of making the long-form optional are condemning not merely privacy and the freedom not to provide information, but also the individualism and free markets that the long form data is ultimately intended to undermine. Whether the opponents want unpaid-for data or consistent statistical history, their objections are in the service of the most vile form of collectivism - racism - and of that well-known toxin to any economy, central planning.
It would give me great comfort were I to believe, as Liberal Party industry critic Marc Garneau somehow does, that the Harper Conservatives are motivated by a desire to put an end to central planning:
"By attacking the census, this government is throwing us in the dark on immigration-related issues. They're doing the same for aboriginals, visible minorities and the disabled, and for those arguing for the need for pay equity...That's what the Conservatives' endgame is here -to permanently hobble the government's ability to enforce legislation and deliver social programs aimed at our most vulnerable."
To be sure, the economic case against the practicality of central planning is as damning as the moral case against it (the immoral being the impractical, such will always be the case, in the long term, as knowledge grows). But, alas, I do not share Garneau's belief that the Conservatives are using privacy concerns as a cover story for a secret agenda to end central planning. The painful evidence is everywhere about us that the Harper Conservatives have no particular affinity for free markets, and no particular opposition to central planning. Billions of dollars borrowed by the federal Conservatives to bail out or nationalize private companies (after having campaigned against such bail-outs and deficit spending); cuts to the rate of the inherently single-rate, less invasive GST instead of to the progressive rates of income taxes; soccer-mom hand-outs at taxpayer expense; quiet and countless transfers of billions across little community groups like Youth for Christ of Langley, BC: all stand as the best evidence that the Conservatives' only agenda is to do whatever it thinks it needs to do to stay in power.
Moreover, such Conservative actions have been backed also by Stephen Harper's unequivocal condemnation of free markets; a condemnation not made in public to lefties and righties alike, but to a closed-door conservatives-only audience in 2009 at the Manning Centre for Building Democracy. In that speech, he condemned liberals for thinking government to have a role in all economic decisions, and condemned "libertarians" for thinking government to have no role in economic decisions. Like so many on the left, his argument was founded upon the falsehood that the west's economies are free markets, and that it was the alleged free market - rather than fraud, credit inflation and government mandated loans to the uncreditworthy - that led to the current economic crisis. Playing second fiddle to no fellow Keynesian, Harper made it clear he thinks individuals are all irresponsible children that need governmental parenting from cradle to grave:
Now, I know the libertarian – and I am sure there are a few in this room that define themselves that way – the libertarian says, and it's a perspective that I have a lot of sympathy for, let individuals exercise full freedom and take full responsibility for their actions.
The problem with this notion is that conservatives know from experience that people who act irresponsibly in the name of freedom are almost never willing to take responsibility for their actions. I don't speak *just* of individuals who may have ruined their lives through drugs or crimes or whatever, but look at Wall Street, the great free-enterprise financial institutions who wanted so much freedom from government regulation. They were the first in line for government support when the recession hit. And now I read, I read yesterday, that now some of them are saying they don't like that this government money may limit their freedom.
These are not the words of a closet capitalist. They are the anti-capitalistic (i.e., anti-free-market) words of a man who, first and foremost, likes the Prime Minister's chair.
It is true, in my view, that the Conservatives do not at all care about the quality of the data collected in the long form of the Census. And I would quite agree with any leftist who said that the Harper Conservatives, in fact, have no real need or desire for census data: I sincerely doubt they will use it to identify spending priorities, and I suspect that the only reason they did not announce scrapping it altogether was to ensure that the various people wanting free data (including Conservative-friendly religious organizations) could not argue that they have been deprived of it (they are left, instead, making sleep-inducing technical arguments about statistical accuracy, and other things that few voters care about).
Though it pains me to say it, the decision to eliminate the mandatory completion of the long form is not founded upon a secret Conservative agenda to end central planning. It is, in reality, nothing more than an effort to feed a bit of red meat to that slender, politically homeless demographic that nowadays finds itself so uncomfortable associating itself with a Conservative Party so bent upon managing the economy, pandering to the more radical religious elements, and setting itself up as a hand of god that will deliver us from such 'evils' as the decision to smoke a bit of cannabis. For years, the Conservatives have dangled the carrot in front of that constituency, communicating by wink and smirk - but never by voice - a false promise to deliver a pro-free-market, pro-individualism revolution. The mandatory long-form is a long-term gripe of that constituency and making it optional - without eliminating it - is only the latest half-hearted attempt to maintain whatever party loyalty there remains among those who seek individual freedom and capitalism.
I do not think the Conservatives will gain or maintain much loyalty from that constituency, but neither do I think they have much to lose by taking the step they have taken (unless they commit the cardinal sin of, again, reversing themselves only to fend off the Liberals and other collectivists). Nonetheless, making the long form optional accomplishes something more important for Conservatives and non-Conservatives alike. I anticipate relatively few people will volunteer to spend their time filling out an optional long-form census and, if that ends up being the case, the Conservatives will at least unintentionally have struck a blow against that most destructive and dehumanizing form of collectivism: racism.
Monday, July 12, 2010
Run from the Rahn CurveRecently, Shotgun blogger PUBLIUS featured a video made by the Center for Freedom and Prosperity concerning a graph of the so-called "Rahn curve". The video serves as a good example of what is wrong with the idea of founding upon quantitative economic arguments ones advocacy of individual freedom. And, given the political orientation of those telling us about the Rahn curve, an explanation of why libertarians are prone to making the aforementioned error is warranted.
In the comments section of the blog post about the Rahn Curve, I essentially 'promised' a video response. The argument below may be a bit more precise, but I did in fact prepare a video in which I opine extemporaneously upon the same subject discussed in this post. For those who would rather watch and listen than read, I include that video response below:
There should be little argument that the Center's video is being presented by an organization that wants the world to view it as advocating individual freedom. Were that not the case, I sincerely doubt that the "Center for Freedom and Prosperity" would bother mentioning freedom, and would instead call itself something like "The Centre for National Prosperity" (a name that would be more fitting). In the video, the Center's spokesperson is Dan Mitchell, a libertarian economist who is both a founder of the Center, and is a senior fellow with the Cato Institute. The Cato Institute takes its name from Cato's Letters, which the Institute describes as "...a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution." The Cato Institute states that its mission is: "...to increase the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace." In short, the video is presented by entities that wish to be regarded as advocates of individual freedom.
The purpose of the video is informed by the fact that those providing the video wish to be regarded, in doing so, as advocates of individual freedom. Accordingly, the arguments set out in the video purport to be arguments in defence of individual freedom (hence, of capitalism). So let us turn to the content of the video for the purposes of determining whether the video's message strengthens or undermines the case for individual freedom.
The video gets off to a bad start. The "Rahn Curve" graph does not disclose what, exactly, is being plotted. The X axis is labeled ambiguously as "Economic Performance", and the Y axis is labeled just as ambiguously: "Size of Government". That ambiguous labeling, together with such narrative as "But you the viewer only need to understand one thing", suggests that the producers of the video are not very concerned with having viewers actually understand the curve, so long as viewers accept the curve as economic proof that government is currently too big. With not too much googling, one can find for oneself the units that the Center thought should be replaced with ambiguous terms. Values on the X axis (which the Center labels "Economic Performance") are actually: Percentages of Annual Growth in GDP. Values on the Y axis are (which the Center calls "Size of Government") are: Percentages of Annual GDP that is Spent by Government".
Mitchell tells the viewer that "economic performance" is maximized when government spending (a.k.a., the "size of government") is somewhere in the range of 15% to 25% of GDP. He goes on to deliver the video's take-home message: because U.S. government spending is in the 35% to 40% range, the Rahn curve demonstrates "...that government is too big, and this is reducing prosperity".
As an aside, I should add that, given that that which is spent by government must first also be taxed by government, it should not be surprising that the Rahn Curve has the same shape as the Laffer Curve. Yet the Rahn Curve is presented to the viewer as though it is a second piece of evidence that there is a right size for government.
There are numerous problems with the Center's use of the Rahn Curve as a basis for advocating individual freedom. First, consider the implications of an alleged freedom advocate advocating the maximization of annual growth in GDP. GDP growth is not a measure of the increase of any particular individual's productivity, but of the increase of the productivity of a collective entity: the country, or nation. Because the Center is advocating the maximization of GDP growth as a desired goal, it is implicitly advocating for the interests of a collective (the country, the nation), whether or not such a goal is in the interest of a particular individual. In other words, the Center is necessarily advocating in favour of what utilitarians and other collectivists are prone to calling "the greater good" ("greater", as in: "of greater importance than the good of any one individual").
One cannot seriously expect to found the advocacy of individual freedom upon maximization of something that designed to serve "the greater good"; the good of the collective. When one uses the economic benefit of the greater good as the basis for arguing that individual freedom is desirable, one instantly undermines the cause of individual freedom. Every instance of individual freedom that leads to an economic result in which the collective does less well than it otherwise would have done but for the individual freedom serves as an argument against individual freedom. Does the use of marijuana, or alcohol, or opiates decrease growth in the collective productivity of the country? If so, then the result of alleged individual freedom advocates holding up collective productivity growth as a desired goal implies that some of the revenue spent by government should be used to force individuals not to use such substances. The violation of liberty is thereby held up as somehow being consistent with, or even necessary for, the defence of individual freedom.
Second, the assertion that there is an ideal size of government, together with the assumption that the size of government is properly measured by spending as a percentage of GDP, implies that it is ideal for the government to grow – more precisely, that it is ideal for government spending to grow -- as GDP grows. The Center for Freedom and Prosperity having as one of its aims greater productivity, the Center is, ironically, advocating the continuous growth of government (assuming the economy continues to grow). So, if one starts with the libertarian notion that "the best government is the government that governs least" (i.e., that smaller government is necessarily more compatible with individual freedom than is bigger government), one is left with the self-defeating spectacle of libertarians implicitly arguing for ever-growing government; a growth allegedly serving "the greater good".
Worse, the Center provides us with not even an attempt to explain why productivity growth leads to a situation in which government needs more money. If one individual's efforts increase the productivity of the country, it does not follow that that productivity increase causes a state of affairs in which defending life, liberty, and property becomes more expensive. The notion that government spending should increase as a percentage of GDP is a welfare statist conception, founded upon the notion that so long as the percentage of wealth stolen from the public does not change, there is no harm done: the amount of wealth transferred from the increasingly productive to the under-productive or non-productive can increase as the economy grows. Such wealth redistribution, being accomplished by a gun pointed by government at the head of every producer, is neither an incentive for production nor consistent with the role of government in a free society: defending every individual's life, liberty, and property.
Third, government spending is, itself, an ambiguous concept. There is simply no way that “government spending” per se, is necessarily good or necessarily bad for productivity growth. Law enforcement is not, per se, good or bad for productivity. For example, the supposedly ideal 20% recommended in the video could be spent on defending every individual’s life, liberty and property. Trade requires that a person’s property not be obtained without his consent so, clearly, if government pays officers to ensure that nobody obtains another person’s property by such means as theft or fraud, productivity will be higher than were government to allow thefts and frauds to occur. But productivity will be undermined if government uses exactly the same amount of money to pay officers to force stores or factories to close on Sundays or religious holidays, or to seize the property of milk farmers who sell milk directly to consumers instead of complying with a law requiring them to buy quotas and sell their milk only to a milk marketing board.
As another example, the government can spend $1.8M Canadian tax dollars to pay a year’s salary to approximately 6 Canadian judges who will try and convict murderers, rapists, and thieves. Alternatively, the government can spend that $1.8M Canadian tax dollars to buy a painting comprised of three vertical stripes ("Voice of Fire"). The arrest and conviction of criminals will facilitate productivity and trade, but the purchase -- by a non-productive entity such as government - of three lines on a canvas, will not increase productivity. To the contrary, the government's purchase of the painting may well reduce productivity by taking money out of the hands of producers (i.e., taxpayers) who would have used the money as capital with which to facilitate more valuable production.
Fourth, in a political context, individual freedom means: not having ones life, liberty, or property taken without ones consent. Individual freedom is not a reference to government using force (i.e., laws, backed by guns) in an attempt to maximize the increase of the collective productivity of the country's inhabitants. Individual freedom is not a reference to government using force to increase tax revenues and government spending when the country's productivity increases. Individual freedom does not refer to government using force to redistribute wealth from those who produce it to those who do not. All such uses of force in the economy are instances of the very coercion from which the government is supposed to be protecting individuals. They are instances of the very crimes for which the government rightly arrests and imprisons people. They are evidence that the government now regards itself as being above the law.
The whole notion of “smaller government”, similarly, has nothing per se to do with individual freedom. Individual freedom depends upon the quality of government, not the quantity of it. Individual freedom is not a function of how big or small a government is, per se, but of how effective government is in defending every individual’s life, liberty or property; how effective it is in ensuring that no person is deprived of his life, liberty or property without his consent. A small government that does not defend life, liberty and property is less desirable than a big government that limits itself to doing so. Therefore it makes no sense to assert that there is a given percentage of GDP that the government should take and spend (i.e., it makes no sense to advocate that there is a right size for government based upon economic figures). A government's expenditures will properly depend upon such things as how much crime there is; how many thieves, rapists, and murderers there are, et cetera. A largely moral and peaceful society with a given GDP will be much less expensive to govern than a largely immoral and violent one with the same GDP.
Now, if neither the alleged size of government nor the quantitative arguments of economics has anything to do with individual freedom, why do many libertarians spend so much time calling for “less government”? Why do libertarians base so many of their arguments upon the attainment of economic goals? The answer to both questions is rooted in the fact that economics deals not with the qualities of things, but with the quantities of things; it deals explicitly not with right and wrong, but with more and less. And, because economics deals with quantities instead of with qualities, an economic argument gives libertarians a rallying cry to attract individuals whose qualitative opinions about government differ greatly, or are even in opposition.
For example, quantitative economic arguments in support of “small government” allow libertarians to attract religious anti-abortionists who want to take away government’s ability to fund abortions, while also attracting anti-religious pro-choicers who want government to stop funding (or to stop providing tax breaks for) religions that oppose a woman’s right to choose to have an abortion. The result is a libertarian group that claims to advocate individual freedom though its members cannot agree about whether doctors who provide abortion services should be protected from those who bomb abortion clinics, or whether such doctors ought to be given the death penalty.
The libertarian's conscious or unconscious attraction to economics is founded upon the hope that if you give people common quantitative conclusions with which they can agree, they will voluntarily stick their heads in the sand, or keep their mouths shut, with respect to the qualitative commitments that make their fellow libertarians their political enemies. And so we have libertarians who rally behind the anti-abortion Ron Paul, a proponent of Austrian economics, joining with libertarians who rallied behind - and continue to praise - pro-choice libertarians like Murray Rothbard who, similarly, was a proponent of Austrian economics.
In discussing libertarians, I do not imply that I restrict my criticism - concerning the use of economics to justify individual freedom, or to bring people together despite their substantive opposition - to libertarians or members of Libertarian parties. The same misguided attraction to economics imperils other political parties. For example, in a recent interview of blogger Andrew Lawton by Libertas Post, Lawton took the libertarian position that health care should be entirely privatized. Lawton is anti-abortion and he considers himself a "social conservative". Yet he told Libertas Post that "at the end of the day, I think the most important issues that we have to work on as conservatives are the issues that we agree on, which are economic issues". Like the big L libertarians, the big C conservatives attempt to use economics as a no-conflict zone between warring factions who somehow think it desirable, for electoral ends, to work together though their desired governmental ends are mutually exclusive.
However, unlike libertarians and Libertarians, conservatives and Conservatives do not seek to be seen as advocates for individual freedom, and generally do not hold themselves out to be such. Accordingly, trying to unite people with economics does little to undermine the case for individual freedom when it is conservatives who engage in such folly. If anything, it undermines conservatism.
In contrast, when libertarians - holding themselves out to be proponents of individual freedom -- use economic arguments to bring together individuals who oppose one another on qualitative matters (e.g., anti-abortion vs. pro-choice), each instance of disagreement on such fundamental qualitative matters -- among alleged advocates of individual freedom -- serves to convince the public that "individual freedom" itself is itself an ambiguous concept; individual freedom itself is undermined.
The prospects for individual freedom would be undermined even more were libertarians -- having been drawn together by economic arguments -- somehow to win the reigns of governmental power. Returning to the abortion example, when conservatives disagree about abortion, and decide upon a "compromise" law in which women are free to have abortions in the first five months of pregnancy, but in which abortions conducted thereafter are punishable by imprisonment, the wisdom or insanity of the law is attributed to conservativism or to a Conservative party.
In contrast, were a governing libertarian party -- a governing party that claims to be comprised of proponents of individual freedom -- to adopt the same 5-month law for abortions in order to accomplish the same comprise between its anti-abortionist and pro-choice membership, what would that tell the onlooking public? It would tell the public a range of falsehoods: that "individual freedom is not absolute"; that compromise is, per se, a virtue, and is necessary; that "individual freedom is good in theory, but it doesn't work in practice"; that, ultimately, any argument in favour of individual freedom is flawed; that advocates of individual freedom are "naive" and should be ignored. In short, even were it possible to use economic arguments to unite de facto political opponents to win an election, the winning of the electoral battle would only serve to undermine the cause of individual freedom.
Nothing I have said about economics should be interpreted as a condemnation of economics itself. To the contrary, economics explains a great deal that should be known and that can help producers and consumers make wise choices. However, in a free society, economic choices are made by producers, who trade their respective values consensually. If the economic aim of a government is a free market, the government can ignore economic arguments altogether, and simply ensure that all trades a mutually consensual. Any other economic aim pursued by government (e.g., increasing government revenues and expenditures as the economy grows so as to maximize the productivity growth of the country), with or without economic knowledge, necessarily will involve using force to coerce individuals to part with their values non-consensually.
Accordingly, in a free society, economic arguments are of no use to government except for the identifying instances where an individual's life, liberty or property is being taken without his consent (e.g., arguments about the nature and effect of fractional reserve banking, monetary inflation, the use of gold as money, et cetera). Any economic argument in favour of government having an economic aim other than a free market serves not to defend individual freedom, but to undermine it.
Monday, November 30, 2009
Sunday Shopping in Manitoba
The issue of Sunday shopping often comes up around Christmas, when retailers expect a large spike in business for the holiday season. Being the evil capitalists that they are, they would like to "capitalize" on that shopping frenzy and be open to meet the customer demand.
There is a government prohibition on Sunday shopping in Manitoba, the government says when a business can or can't be open, and they provide monopolies to certain businesses by allowing them to stay open for extended hours (like convenience stores) while others cannot.
So, why Sunday? Why not Tuesday? Or Saturday? The answer is... Christianity. In a country that supposedly has separation of church and state, those people not of the Christian faith are forced to live by its tenant of keeping the Sabbath day "holy", by not doing business on that day.
But wait, you CAN do business on that day; if you are a gas station, convenience store, hospital, TV station, cable company, hydro worker, moving company, etc. It seems that those services are acceptable to the moralists, but oh no, want to go buy a TV on Sunday after 6PM? No way you heathen!
So as usual various business organizations beg the government for permission to do business on this holy day, in order to take advantage of the increased business this time of year.
I would love to see business owners just open up the hours that they want and ignore the government regulations. What do bureaucrats know about running a box store? Why do they get to set the hours? The answer is because if you don't obey their dictates, the men with guns come and shut you down.
If you don't support Sunday shopping, then don't shop on Sunday, and don't force the rest of us to adhere to your standards.
I welcome feedback and I ask for civility in the exchange of comments. Vulgarity is discouraged. Please express yourself creatively with other language. We discuss ideas here, attacks on a person are discouraged.
Tuesday, November 17, 2009
Canadian Constitution Foundation to defend freedom to sell raw milk
Here's the press release form one of our favourite pro-liberty organizations, the Canadian Constitution Foundation:
At a press conference at Queen’s Park today, the Canadian Constitution Foundation (CCF) announced its support for a court case involving consumer choice, freedom of contract, and the right to earn an honest living free from government regulation that is arbitrary, unreasonable, unnecessary and unfair.
The case concerns Ontario dairy farmer Michael Schmidt, who has been providing unpasteurized milk to consumers for approximately 20 years without a single incident of illness attributable to milk borne germs.
Mr. Schmidt was charged in 2006 with numerous violations of the Milk Act and the Health Promotion and Protection Act, Ontario legislation that requires milk to be heated to at least 160 degrees Fahrenheit before it can be marketed.
Mr. Schmidt has contested both his guilt under the legislation, and the constitutional validity of the legislation itself. He argues that the ban on raw milk sales violates the guarantee of “life, liberty and security of the person” in the Canadian Charter of Rights and Freedoms. The ban also violates the Charter’s equality and non-discrimination rights.
His six-day trial ended in February, 2009. The court’s judgment is scheduled to be released on January 21, 2010.
Since Mr. Schmidt was charged in November, 2006, the size of the herd he manages has doubled. There is also a waiting list of consumers wishing to participate in Mr. Schmidt’s raw milk dairy.
The CCF has announced that it will represent Mr. Schmidt in ongoing litigation challenging the constitutionality of the raw milk ban.
“This is about the rights of Canadians to choose a product that is safely consumed by tens of thousands of people around the world. It’s also about the right to earn an honest living free from government regulations that are unnecessary, unreasonable and unfair,” said CCF Litigation Director Karen Selick.
“There have been huge technological improvements in refrigeration, transportation and pathogen testing, in addition to the entrenchment of individuals’ constitutional rights. Consumers who want freedom of choice expect their government to make the transition to the twenty-first century and to respect their rights,” added Selick.
The CCF will also represent consumer advocate James McLaren, who has sought for many years to persuade federal and provincial authorities to revise the regulatory regime so that inspected and tested raw milk can be sold to consumers. Mr. McLaren will argue on behalf of consumers that the legal prohibition on raw milk violates their constitutional right to “security of the person”.
Mr. McLaren has recently established an on-line petition for consumers who want the government to conduct a policy review for the purpose of establishing safe protocols for the production and distribution of raw milk.
The press release ends with some additional, and interesting, information:
A study published in 2006 in the medical journal Clinical and Experimental Allergy demonstrated that raw milk has a beneficial effect on children’s health. Scientists from prestigious American and European universities and children’s hospitals studied 14,893 children aged 5—13 years. The children who consumed raw milk had a significantly reduced incidence of asthma and allergies, compared with those who drank pasteurized milk.
Certified or government-authorized raw milk is sold in many European countries, including: the United Kingdom, France, Germany, Switzerland, Austria, the Netherlands and Denmark. Raw milk is also available legally in about half of the U.S. states.
Canadian authorities justify the mandatory pasteurization of milk on the grounds of food safety. However, the U.S. Center for Disease Control has documented at least a dozen outbreaks of food poisoning from pasteurized milk over the past 25 years. Some outbreaks affected hundreds of thousands of people, and some resulted in death.
Posted by P.M. Jaworski
Sunday, October 18, 2009
What Happened to Arnold?
This is what happens when you go into politics, you get morally corrupted.
Hard to believe that this clip of Arnold Schwarzenegger in the early 1990's talking about free markets is the same man who recently pushed to ban plasma tv's in California that are over 40".
I welcome feedback and I ask for civility in the exchange of comments. Vulgarity is discouraged. Please express yourself creatively with other language. We discuss ideas here, attacks on a person are discouraged.
Wednesday, September 30, 2009
Congressman Ron Paul on The Daily Show
Thursday, September 24, 2009
The existential drama of Canadian communists
This post could also have been called, "How Canadian communists must come to terms with history", or even, "Why I have to re-post more pursuant to Gerry Nicholls' post". According to an article in Epoch Times, plans to construct a monument in Ottawa to honor the victims of communism are being obstructed by due regard to the feelings of Canadian communists.
The ever-industrious National Capital Commission (NCC) wants to change the name of the monument from “Memorial to the Victims of Totalitarian Communism” to something that does not demean or tarnish the self-esteem of card-carrying communists in Canada. Initially, the monument was going to be called the "Memorial to the Victims of Communism", but NCC board members found it to be polarizing, hence the addition of the term "totalitarian". Now it seems no one is completely certain about the monument, the emotional states of Canadian communists, the value of historical memory, or whether communism really deserves the bad rap it seems to have earned over the past few decades.
There are exceptions to this Canadian confusion over communism. Tribute to Liberty, one of the groups trying to get this monument built, probably never anticipated so much controversy and stalling in the naming phase. After all, one would be hard-pressed to find honest individuals arguing against naming a monument to the victims of Nazism or fascism qualifying this description with the obvious, namely, "totalitarian".
Of course governments ruled under the ideologies of Nazism, fascism, or communism are totalitarian-- in fact, "totalitarianism" (as opposed to freedom, rule of law, or human rights) might just be their original contribution to political history. Name one communist country in the history of the world which has not been totalitarian. In fact, adding the word "totalitarian" to qualify communism is not just ignorant--it is blatantly false and dangerous. The refusal of communists and their defenders to admit the nature of communism should not prevent the public square from being the place where a spade is called a spade and the victims of communism are duly honored.
Tuesday, September 08, 2009
Prostitution likely to be banned in Rhode Island
I admit that the most surprising part of this Wall Street Journal article is that prostitution is legal in Rhode Island, but now it seems that legality is being threatened. A bill to ban prostitution has passed both levels of the legislature.
According the the WSJ, this new push to ban prostitution came from a high profile murder case involving a prostitute, a client, and Craigslist. I find this to be bizarre. Their response to this murder is to prosecute those in the same profession as the victim.
If a patient murdered their doctor would medical professionals be banned?
Monday, August 17, 2009
Hog Farm Bail-Outs
The hog industry in Canada has seen some hard times lately, and after begging for $800 million government dollars now they are being offering a nice little financial incentive to get out of the hog business, $75 million tax payer dollars.
Speaking at a research farm in rural Manitoba Saturday, (federal Agriculture Minister Gerry Ritz) said some hog operations are not viable and those farmers need help.
"We have to face the reality that some producers will leave the industry and we need to reduce our current over-supply," he said.
It's just another bail-out. If an industry is failing, then let it fail! If people want to get out of a business, then let them get out of it. Artificially sustaining failing business is not economically sound. The industry can correct itself without forcing Canadian taxpayers to fork over the cash.
"Is it what we wanted? Of course, straight cash is always nicer without any strings attached, but the reality is that wasn't going to happen," said Jurgen Preugschas, president of the Canadian Pork Council.
Yes Jurgen, straight cash would be very nice, so go out and earn it instead of expecting the Canadian public to pay for your failing businesses!
If there is not enough demand to meet the supply, then reduce prices and perhaps you sell more. Reducing the supply is the responsibility of the business owners, not the customers and not the general public.
I welcome feedback and I ask for civility in the exchange of comments. Vulgarity is discouraged. Please express yourself creatively with other language. We discuss ideas here, attacks on a person are discouraged.
Friday, July 31, 2009
With every industrialized nation struggling to survive the Great Recession, government focus has shifted back to the idea of protecting their respective economies. Up until the recession, focus seemed to be global economic interdependence ended up creating a large portion of nations’ wealth. That being said, it was and still is of the best interest of nations to trade with others. This is due mostly to the idea of comparative advantage; for instance, let’s say Country ‘A’ is able to produce wheat at $5 per unit, while Country ‘B’ can produce the same unit of wheat for $7. On the other hand, Country ‘B’ is able to produce steel at $10 per unit, while Country ‘A’ can only produce it at $15 per unit. Assuming there are little to no trade barriers between the two countries, it benefits both equally to trade with each other: Country ‘A’ sells their wheat to Country ‘B’, and Country ‘B’ sells their steel to Country ‘A’ (let’s say $6 per unit of wheat and $12.50 per unit of steel). Both countries receive profit from one good and gets another good for a lower cost than if they were forced to produce it themselves.
It’s easy to see that this simple concept is a timeless idea, but it’s not so easy to understand why some governments, particularly now, create policies that go the opposite way and hinder comparative advantage. Besides the fact that currently it’s often a matter of economic survival, it’s important to understand the various arguments or reasons why protectionism still exists in an age of mass economic globalization.
The first and most common argument involves the labour force; labourers from foreign countries that produce the same goods are often paid less than those in high-income countries like the U.S. or Canada, where the cost of business is higher. Because of this, some governments are worried companies (in other words, jobs) will move overseas to reduce the cost of operation. As we all know, wages and benefits are huge expenses for Western companies. Although most governments these days are at least partially in support of free trade, there are occasions where countries are losing jobs at an alarming rate. Governments will understandably be skeptical of the advantages of free trade if the one disadvantage out-shadows all else.
The second argument worth mentioning focuses on emerging domestic industries. In particular, governments of developing nations sometime set up tariff policies in place to protect “infant” industries; developing industries that are not yet stable and productive in comparison with the industries of more industrialized nations. These advanced economies have stable, mature industries which would otherwise crush the common industries of developing countries in a free trade situation.
Developing nations often have the lingering worry that if they allow completely free trade in the cultural industries, then the most commercially successful companies will dominate. This has the possibility of the cultural values of the developing country to erode away, replaced by the dominant culture. It’s a no-brainer that many will chose to sell American films if they far outsell films from the their home country, and America happens to have the most viable entertainment industry in the world. Unfortunately one of the most disliked countries in the world also happens to be America.
Finally, there is the case of countries deciding that another country’s trade policies unfairly discriminate against them. In retaliation, a common response is to impose similar barriers against the discriminating country. Although retaliatory tariffs and quotas can provide an incentive for negotiations (not a positive one at that), it can also lead to escalating trade wars, making both sides worse off than the original situation.
It’s now easy to see that these policies, though detrimental in the long-run, are tempting to nations desperate to survive the Great Recession. Whether they help, or whether they are morally and economically justifiable, will depend on who you ask. In the end it’s best to at least understand these anti-free trade practices, even if we don’t like them; especially if we don’t like them!
[Cross-posted at The Right Coast]
Tuesday, July 07, 2009
Big government blues
Check out my latest column, which appears in today's Sun media chain.
It examines the government-spending mania that's taking place on both sides of the border.
Tuesday, June 30, 2009
Understanding the Great Recession
Unlike the Great Depression, which occurred over 75 years ago, the global recession is a mystery to most. It’s understandable, as the Great Recession is happening now, taking away the hindsight the Great Depression now provides us. Even still, many people falsely blame ideology for these financial crises, when it is many reasons that all tie into each other, none of which lay claim to any particular ideology.
Some reasons are “conservative” or even libertarian, while others are “liberal” and left-leaning. In the end however, one can only blame humanity and accept -– and learn -– from this event.
The first point we need to understand is the housing bubble and it’s inevitable burst. From that comes mortgage securitization and the complexity of large insurance firms that fooled the banks and subsequently the world. Finally, the lack of regulations surrounding foolish financial activity was the green light for the Great Recession. In a darkly hilarious manner, even the U.S. government, for better or for worse, helped speed up the Great Recession. Clearly it was for the worst.
Putting it all together, one will see how the term “bad” in macroeconomics is not very subjective, and that it’s that way for a reason. Macroeconomics is not about theory or ideological origin –- it’s about using history and our amazing capability of reason to our advantage to predict the future of the worldwide economy and to educate how it works. Why is this fact overlooked in most aspects of every day human life? In the end, it’s not about who to blame but how it really happened and why we must fix it. Never creating a severe recession would be a bonus, but humanity is far too short-sighted for that.
In the past, the main cause of housing crises has been reduced demand due to declining domestic investment in the housing market. This time, while that effect is still there, it’s a minor issue compared to the latest housing market collapse, which kick-started the Great Recession. Congressman Ron Paul (R-TX), among others, has been warning against and predicting this exact crisis for several years, perhaps even for more than a decade. Of course, the media payed little attention and so the public knew little of the matter. The short recession of 2001 in the U.S. was triggered by a sharp decline in domestic investment, mainly in telecommunications infrastructure. As a fall-out, the stock market assets of households declined, but housing assets held up, cushioning the normal decline in consumption that comes with recessions. This event isn’t that well known compared to what’s happening now, perhaps because it happened to be minor or that it worked itself out. Unfortunately, it’s not the case with the Great Recession.
A popular metaphor for crises of this nature is to call it the “bubble bursting”, and for good reason. In this case however, the balloon works much better. Consider the imaginary balloon represents the housing market, and sub-prime mortgages to be the air inflating the balloon. Sub-prime mortgages occur when banks lend to un-credit-worthy customers –- that is, handing out loans to people who want to buy a house that they can’t actually afford. This may seem obvious to us all now, but at the time people of all types -– bankers, potential home owners -– were disillusioned by the notion of housing prices continuing to go up.
The idea was that although it wouldn’t pay off now, since houses and property are long-term assets, when they are ready to turn the home over to new owners, the supposed increase in the value of the home would compensate for the lack of income in the household. As one can imagine, the idea was popular for both bakers and for eager to-be homeowners. Bankers lend more (which means more return for them in the long-run if the market goes well), and average folks get a better house than they could have otherwise -– a win-win situation, right? So the inflation of the balloon begins, filling up with lending amounts close to and exceeding equity (what one owes compared to what one owns), and eventually the rubber wears thin enough to burst.
So now you’re wondering “Where did the banks get all this capital that they’re lending out from?” The answer is one that’s overlooked but played a crucial role in the development of this recession. Simply put, many mortgages during this time of ballooning credit were packaged and sold as financial security instruments by banks to other institutions in exchange for additional capital the banks could then lend out (to those with bad credit, no doubt). The institutions that bought these packages benefited by being guaranteed a repayment. If they don’t receive the repayment, they have the legal right to take back their capital or assets worth an equivalent amount, hence the use of the word “security”. Since security is rarely seen as bad in any context, it seemed like yet another win-win situation. The fact that the American currency was the global common currency helped it make sense financially as well. As icing on the cake, the two institutions that were the lead buyers were Fannie Mae and Freddie Mac, created in 1938 and 1970 respectively, were government created.
These institutions weren’t the only thing the government created in the 1900s. In the early 1980s the government deliberately created a severe (relatively speaking) recession to control inflation using contractionary monetary policy. In other words, the money supply was reduced and interest rates were increased in order to reduce aggregate demand in the economy. A decline in demand means a decline in prices. At a time when inflation was on the run, the result was prices staying more or less the same while the nation’s output and income dropped. It’s bad, but the fear of hyper-inflation, which was a legitimate fear, would have been worse.
An economy that as a whole is generally strong, for example the U.S. economy, is able to recover from the recession along with slowly lowering interest rates speeding the recovery up. Although not necessary, increased government spending and tax cuts (expansionary fiscal policy) could have also sped it up –- which it probably did considering in 1986 the deficit rose to be well over five per cent of national GDP. Believe it or not, that was considered a huge deficit at the time. Currently, the U.S. deficit created to end the Great Recession is about 12 per cent of national GDP. and don’t think for a moment that it’s going to stop growing any time soon. Either way, the “severe” recession of the 1980s focused on expansionary monetary policy.
This time, strong expansionary fiscal policy is being used worldwide as it is much faster and more effective than the monetary policy used in the 80s. It leads to staggering deficits which are never good, but it does lead to an a strong enough increase in aggregate demand to ride of the recession without the world coming to a screeching halt. Milton Friedman is probably turning in his grave, especially with the mass amounts of bailouts to major insurance companies and banks –- many of which created this mess in the first place.
The bailouts were accepted by policy makers much easier than in the Great Depression of the 1930s. They let the banks fail and the money supply contract. At a time when 100 per cent free markets was extremely popular amongst major economists, it’s understandable why the government let them fail. In an ideal world, the free market should have corrected it all itself, but in a world full of foolish people, it just didn’t happen.
This is not a defense of government bailouts, especially to the culprits of the Great Recession, but simply an explanation of why they were done. It’s interesting when people pay attention to certain aspects of history and ignore others –- selective attention anyone It must also be said that the wrong monetary policy was used during the Great Depression. Unlike in the 1980s where contractionary monetary policy worked, in the 1930s it was a total failure by the Federal Reserve. Milton Friedman named this decline in income, prices, and employment the “Great Contraction”, as much of this was caused in the tight contraction of the money supply. Like the 1980s recession however, the government at least partially created this recession as well. At the very least the government ensured that the recession turned into a depression. Interesting enough, current Federal Reserve chairman Ben Bernanke has been quoted as saying:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton [Friedman] and Anna Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
Back to the present, one might now be wondering “Well, why didn’t the banks know of the huge risks of securitization”. Great question! Complexity is the culprit; whether intentional or simply the result of mass bureaucracy, it’s often been at the root of many people’s problems skimming over the fine-print. Those pesky security instruments were further packaged in complex ways as derivative security instruments and sold again to other financial institutions, including back to the banks themselves. In simpler terms, these are bought for lower levels of risks such as interest rates or to help determine whether underlying prices will increase or decrease. This occurred because of foreigners trying to exchange cash for American securities (negotiable items that represent financial value), allowing banks and other buyers to increase returns. That was what was thought any way, but some large insurance companies such as AIG insured the packages without capital backing them up, calling them “credit default swaps”. As expected, the packages ended up being worthless. When this creates a ripple throughout the entire world in terms of mass amounts of assets going bad, we know this isn’t a normal old recession that’s expected to occur every once and a while. Although weak regulation in general was not the cause, the lack of regulation surrounding banks’ mortgage lending, banks’ capital requirements, and insurance “swaps” secured the collapse of the financial system, and can now be looked back upon when creating new policies regarding lending and capital requirements so that a crisis such as this cannot happen again.
Of course, not all of this happened spontaneously. Recall that foreigners bought up a lot of those security instruments because the U.S. dollar was so stable and strong. When the mortgages went bad, the security instruments that were held globally also went bad. The huge amount of bad assets in the bank’s financial books ceased the credit market, resulting in an unusually large recession that was and still is felt worldwide. From here, it can be said that asset prices normally decline in a recession as a result of the wealth effect (less household income, less consumption, and vice versa). This fact certainly doesn’t help fix the problem – if anything, it makes it worse. The real reasons -– sub-prime mortgages, securitization, complexity, and the lack of regulation –- pulled the world down into a sever recession. The government policies used to curb recessions (and those that help create them) differ from the past, mostly because of the sheer severity of this problem. Hopefully the world will learn from its many mistakes and get past this human flaw of over doing things; hopefully we understand more, look at the long-term more, and listen more. As Edmund Burke wrote over two centuries ago, “[e]very thing human and divine sacrificed to the idol of public credit, and national bankruptcy the consequence”.
Saturday, June 27, 2009
Will the economy recover and what will it look like if it does?
The American Thinker has an interesting article that questions whether or not the U.S. economy will ever recover from the current recession:
Haven't they heard? The America that always recovers is not in anymore. Any assumption of a recovery fails to consider the idea that we now have a government run by people who ignore American history and who are hell bent on changing America's future.
Obama has done more than apologize for America's greatness and generosity while abroad. He is wreaking havoc on the economy that paid for that greatness and generosity at home. Don't you remember? He is "the one" we've been waiting for to finally do something right around here.
Thus the conviction that Americans always bounce back and bring their economy with them is not necessarily relevant anymore. The rules for business have changed and continue to do so daily. Incentive has been devastated. The reliable motivations of the past do not matter, because most of those dynamics have been targeted as what is wrong with this country and they are systematically being removed at a stunning pace.
In reaction, Atlas is shrugging. And who can blame him (and her).
We cannot be on the verge of any meaningful recovery because we are in a downward swirl of liberal policy consequences -- and we have a government determined to correct this by getting more and more liberal.
Likewise, a recent report from Sprott Asset Management looks at the question of who is going to buy the massive amount of new debt the American government is creating and comes up with some troubling conclusions:
As we hope the breakdown above has revealed, the future solvency of the United States as a nation state is currently in jeopardy. It is in far deeper trouble than the mainstream press cares to admit. There are simply not enough new buyers of debt on this planet to support the spending programs of the United States government - and it appears that current holders of debt are beginning to sell. Because it is impossible to balance the budget from outside sources of capital, the only source of funds left for the US, in all reality, is continued money printing.
The Federal Reserve's policy of Quantitative Easing is failing. The US budget is ludicrous, spending is out of control, spending promises are out of control, the world knows it - and we know it. For all the pundits who see the economy improving over the next year, we invite you to explain to us how this debt crisis will resolve itself without significant turmoil. We've tabulated the numbers above - and they do not lie. As we wrote this past January, welcome to 2009.
While these are troubling signs, I think there's little doubt the American economy will bounce back eventually. As just about any economist will tell you, the business cycle is cyclical, rising and falling every ten years or so. This is one reason why I was surprised by all the fear mongering talk of "the next great depression" when the recession first hit. The bigger question is what the economy will look like when this is all said and done.
I think that a lot of the fear, uncertainty, and doubt (FUD) about the economy was largely created by the media. The tangible effect of this fear was a global recession and a willingness on the part of world governments—including Canada's Conservative government—to implement Keynesian economic policies. Despite the fact that Keynes claimed he was trying to save capitalism, I would argue he's actually a socialist, as is anyone who is now trying to blame the recession on a failure of the capitalist system. The argument might hold some weight if we had a capitalist system to begin with.
The legacy of this worldwide shift to the left will likely be an economic system that bears little resemblance to capitalism. Capitalism is the most efficient economic system known to man. Granted, it is not always fair, but life in general is not fair either. The role of government should be to help people deal with economic shifts, rather than try to ensure they don't happen in the first place. Capitalism achieves its efficiency by weeding out inefficient companies and industries and shifting resources to more efficient sectors. In this respect, recessions are not only expected, they are necessary.
Capitalism operates in the same manner as evolution, the dodo birds go extinct, while humans thrive and conquer the Earth. By trying to bailout inefficient industries through government intervention, we are managing the economy as though it were communist. This, history has shown, does not work. Now that Bush and Obama have spent trillions bailing out the banks, is there any reason to expect they won't make the same stupid mistakes again? None whatsoever. This is like giving a dog a bone every time it pees on the carpet. How can you expect it not to repeat the same bad behaviour, when it actually has a disincentive to do so?
Likewise, when North American governments bailed out the auto sector, they ensured that land, labour, and capital would continue to be tied up in an inefficient and uncompetitive industry, rather than being shifted to industries that could help the North American economy thrive in the long-run. So what will the economy look like in the future? I worry that our children will by left to deal with the effects of an inefficient socialist economy and a massive debt load, all because our politicians made the politically expedient moves, rather than the economically sound ones.
Friday, June 26, 2009
Toronto Strike Solution
Earlier this week 24,000 Toronto municipal civil service employees walked off of the job. Some of the services that have been interrupted are garbage pickup, city-run daycares, swimming pools, summer camps, museums, some libraries and others.
This has caused a lot of turmoil for Toronto residents; garbage is piling up in the streets, closed day cares are forcing people to stay home from work, etc. Regardless of the reasons that the civil service employees are striking, the core problem here is one of economics; supply and demand.
Since the city are the ones that pick-up garbage, when they go on strike there is no-one left to provide that service. Whether it is city employees themselves on strike or a private company with a city provided monopoly, there is no one ready else to step in cases where there is an interruption of service.
Imagine that there was no government garbage collection service, what would people do? They would do what they do with other services they want, hire a company to provide that service. Just as there is competition with cable providers, in a free market there would be competition with garbage services. You could pick and choose between a variety of providers, especially in a large market like Toronto where there would be several companies competing for your dollar. If one company goes on strike, you can hire another to take over.
Strikes would be resolved much quicker, since company owners know that everyday that goes buy while their employees are off the job, they loose customers; they would have an incentive to resolve these strikes quickly. In the current situation, there is no one else that can step in and take over because it is a government enforced monopoly.
By moving these services into the free market situations such as this would be less likely to arise.
Tuesday, June 16, 2009
Somebody has to pay...
Nothing demanded by the government comes to the public without a cost.
This is a fact that I can prove anew, based on something that happened at work today.
I clerk for a temp service when not blogging. This afternoon, three of my company's temps returned from working at a warehouse.
I sometimes ask the workers what they did, and in this case, they worked a full 8 hour day doing labelling work. The warehouse had received an big shipment of canned fish from Europe.
"We spent all day putting Canadian labels on the cans." Not French/English labels, but the labels stating the percentage of vitamins in the product, how many calories each "serving" has, and such. Consumers, one assumes, can guess for themselves that each fish serving will have less calories than pure lard and more calories than a serving of celery. But, the government makes sure that we know precisely how much thanks to the labels that my company's workers had to put on.
I can't reveal trade secrets, but I can say that our temps do have a cost. And I can make an educated guess that the added cost is passed on to the consumer in the form of a few cents added to the cost of the canned fish.
I'm not complaining, as my workers value the work, and my company is thankful for the business. But European fish fanciers might, if they think about what costs might be added by the government that may be unnecessary.
Friday, June 05, 2009
Tax Freedom Day
Today is the day that the Fraser Institute calculates as when Canadians have made enough money this year to pay their taxes. That's right five months into the year and you are finally working for yourself and not the government. To celebrate the Fraser Institute has released this video:
Wednesday, May 20, 2009
Marc Emery vs. Vancouver city hall
Western Standard columnist and libertarian publisher Marc Emery is facing the possibility of being kicked out of business by the government.
After operating his various businesses for over a decade without complaint, Emery requested business licenses in December of 2008 after shutting down the B.C. Marijuana Party (the stores were operated under the purview of the political party before). Citing Emery's 2004 conviction for "trafficking" (Emery passed a joint around) in Saskatoon, the city decided to refuse his request.
Hearings into the licenses for his three stores -- Cannabis Culture headquarters and paraphernalia store, and his 420 convenience store -- have begun, but are slow and on-going. Only one witness appeared during the three-hour May 18 hearing, and the city still intends to put eight witnesses on the stand. A separate hearing has been scheduled for July 21.
“This is totally related to the Olympics,” Emery told The Province. “They’re just nervous to show the culture of what Vancouver is really like to the world.
“This is a total political battle. It has nothing to do with passing a joint five years ago, that’s just an excuse.”
Here's CTV News reporting on the bureaucratic rigamarole:
Friday, May 15, 2009
We're all statists now
As J.J. Jackson pointed out in an essay in Enter Stage Right this week, Americans (and Canadians, of course) talk a good game about smaller government but in reality most of them are as addicted to the government teat as the targets of their ire.
The reason why I bring this up is a new poll conducted by Fox News suggests that a huge majority of Americans want less government in their lives and think spending is out of control.
That's nice, but I imagine once you get down to a granular level, where we start addressing individual government programs that many Americans "benefit" from, I imagine the numbers demanding a shrinkage in government would rapidly diminish. No different from Canadians, of course, who complain about welfare queens but vociferously support things like socialized health care, the Canada Wheat Board and middle class entitlements.
Friday, May 08, 2009
King Joe, or, why workers in capitalist countries are kings compared with workers in non-capitalist countries
Here's a cartoon from 1949 explaining why the typical American worker is so much better off compared with workers in non-capitalist countries. It's a wonderful lesson in what makes free market capitalist economic systems work:
Canadian banking is better
For those who claim an under-regulated lending market in the U.S. caused the housing bubble, I submit a few facts about Canadian banking from Nick Rowe via Tyler Cowen:
1. We never had restrictions on interstate banking, so Canadian banks spread their assets and liabilities across Canada. (So it doesn’t matter if a local housing market goes bust).
2. We don’t have Glass-Steagal. The investment banks joined the retail banks some years ago.
3. We don’t have mortgage interest deductibility from taxes. So paying down your mortgage is a tax-free investment. So most people want to pay down their mortgages.
4. (Except in Alberta), mortgages are fully recourse. You can’t just walk away from a negative equity home and hand the keys to the bank; the bank will come after you for the difference.
Those are some pretty good reasons the housing bubble didn't do to Canada what it did to the U.S. Also notice every one of these differences in Canada's favor represent fewer regulations than in the U.S. No restrictions, no Glass-Steagal, no manipulated tax code to artificially incentivise "the American Dream" of home ownership. Number four may seem like a stricter regulation, but I would argue even that is not a regulation, but simply a better protection of property rights (I didn't even know Canada had those!).
I'm sure you Canucks could tell me more about the problems of Canadian banking, but as Yankee I am envious of the short list above.
Tuesday, April 28, 2009
Michael Caine: If taxes go up, I'm moving to the U.S.
His name, as they say, is Michael Caine. And he's not a happy bunny. The 76-year-old film star has revealed in colourful terms that he has had it, and will leave Britain if taxes get any higher.
"The Government has taken tax up to 50 per cent, and if it goes to 51 I will be back in America," he said at the weekend. "We've got 3.5 million layabouts on benefits, and I'm 76, getting up at 6am to go to work to keep them. Let's get everybody back to work so we can save a couple of billion and cut tax, not keep sticking it up."
Fraser Institute: Canadian families paying more in taxes than they do for food, clothing, and shelter combined
The average Canadian family spends nearly half its total income on taxes, more than it spends on food, clothing, and shelter, according to a new study from independent research organization the Fraser Institute.
The Canadian Consumer Tax Index 2009 shows that even though the income of the average Canadian family has increased significantly since 1961, their total tax bill has increased at a much higher rate.
- In 2008, the average Canadian family earned an income of $71,764 and paid total taxes equaling $31,535-43.9 per cent of its income.
- In 1961, the average Canadian family earned an income of $5,000 and paid $1,675 in total taxes-33.5 per cent of its income.
"Canadian families have seen their total tax bill increase by an astounding 1,783 per cent over the past 47 years," said Niels Veldhuis, the study's co-author and the Institute's director of fiscal studies.
"The tax burden faced by Canadians extends well beyond income tax. When you add up all the taxes Canadians pay to all levels of government, the typical family is sending more of its income to government than it spends on basic necessities such as food, clothing, and housing."
The Canadian Consumer Tax Index calculates the total tax bill of the typical Canadian family by adding up the various taxes that the family pays to federal, provincial, and local governments. These include direct taxes such as income taxes, sales taxes, Employment Insurance and Canadian Pension Plan contributions, as well as "hidden" taxes such as import duties, excise taxes on tobacco and alcohol, amusement taxes, and gas taxes.
"At this time of year, most Canadians are focussed on filing their income tax returns. But personal income taxes account for just 33 per cent of the total tax bill paid by the average Canadian family in 2008," Veldhuis said.
The Canadian Consumer Tax Index attempts to answer the question: How has the tax burden of the average family changed since 1961?
In 1961, the average family had to spend 56.5 per cent of their cash income to obtain food, clothing, and housing. In the same year, 33.5 per cent of the family's income went to governments as tax.
By 1981, the situation had been reversed; governments took 40.8 per cent of the income in the form of taxes, while the family used 40.5 per cent to buy food, clothing and housing.
By 2008, the average family was giving 43.9 per cent of its income to governments for taxes while using 35.7 per cent of its income to buy the necessities of life-food, clothing, and housing.
Since 1961, the total tax bill for the average Canadian family has increased 1,783 per cent. By comparison, the cost of housing has increased 1,218 per cent, the cost of food 532 per cent, and the cost of clothing has increased 536 per cent since 1961.
"Over the past 47 years, the amount of money the average Canadian family pays in taxes has grown more rapidly than any other expenditure, to the point where taxes are now a family's single largest expense," Veldhuis said.
The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.
[Source, Emphasis added]
Monday, April 27, 2009
Lies my school teacher taught me
Not that I believed them at the time:
The results speak for themselves. During the heartless "liquidationist" era before Hoover, depressions (or "panics") were typically over within two years. Yes, it was surely no fun for workers to see their paychecks shrink quite rapidly, but it ensured a quick recovery, and, in any event, the blow was cushioned because prices in general would fall too.
So what was the fate of the worker during the allegedly compassionate Hoover era, when "enlightened" business leaders maintained wage rates amidst falling prices and profits? Well, Econ 101 tells us that higher prices lead to a smaller amount purchased. Because workers' "real wages" (i.e., nominal pay adjusted for price deflation) rose more quickly in the early 1930s than they had even during the Roaring Twenties, businesses couldn't afford to hire as many workers. That's why unemployment rates shot up to an inconceivable 28 percent by March 1933.
One of the killer arguments my old economics professors used to bring out, supposedly devastating proof that markets don't really work all that well, is the Great Depression. Prices remained "sticky" during the crisis, wages even more so. Long and often convoluted explanations were provided for this problem of "stickiness." Workers were resistant to wage cuts. The inherent irrationality of markets in a crisis. Not once was it mentioned in any classroom by any professors the policies of the Hoover administration. I discovered the actual policies of the Great Engineer while reading obscure and yellowed texts written by Austrians and libertarians in the 1930s and 1940s.
Wednesday, April 22, 2009
Canadian Constitution Foundation: Women's gym won't be bullied by human rights commission
The CCF today announced it will support John Fulton, owner of Downtown Health Club for Women in St. Catharines, Ontario, in defending against a complaint brought under Ontario’s human rights laws.
The complaint was filed in 2006 by a male person intending to undergo a sex change operation, but still physically male, against one of John Fulton gyms, reserved for women only. Out of concern for the privacy and dignity of his female clients, Fulton had hesitated to accept a membership application from the complainant, who would have had 24/7 access to the women’s locker room, showers and toilets. The complainant has since had his operation and moved to Ottawa, so would not benefit from membership in the St. Catharines gym, but the complaint continues, with a large claim for damages.
The case is to be heard by the Human Rights Tribunal of Ontario on June 15th, 2009. Human rights complainants are usually helped by a staff lawyer of the Ontario Human Rights Tribunal, a taxpayer-funded entity.
“I am just a small business owner, trying to make ends meet during difficult economic times,” said Fulton.
“The enormous legal costs deter the majority of the accused from fighting such complaints. It would have been easier and cheaper for me to settle at the mediation hearing. However, on principle I decided not to settle and pay the amount demanded of me, because I hope to shed light on the unfair and overzealous pursuit by human rights tribunals across Canada that have plagued so many small business owners,” continued Fulton.
John Fulton, 48, has owned and operated fitness clubs in the Niagara area since 1982. John has supported and advocated for many charitable and community-related groups for nearly three decades. His fitness clubs have supported the Niagara AIDS Walk for Life as a title sponsor for over 12 years.
Citizens interested in supporting Fulton should visit here to make a donation to the CCF.
[Source: CCF newsletter]
Tuesday, April 14, 2009
Texas Gov. Rick Perry Backs Resolution Affirming Texas’ Sovereignty Under 10th Amendment
Gov. Rick Perry today joined state Rep. Brandon Creighton and sponsors of House Concurrent Resolution (HCR) 50 in support of states’ rights under the 10th Amendment to the U.S. Constitution.
“I believe that our federal government has become oppressive in its size, its intrusion into the lives of our citizens, and its interference with the affairs of our state,” Gov. Perry said. “That is why I am here today to express my unwavering support for efforts all across our country to reaffirm the states’ rights affirmed by the Tenth Amendment to the U.S. Constitution. I believe that returning to the letter and spirit of the U.S. Constitution and its essential 10th Amendment will free our state from undue regulations, and ultimately strengthen our Union.”
A number of recent federal proposals are not within the scope of the federal government’s constitutionally designated powers and impede the states’ right to govern themselves. HCR 50 affirms that Texas claims sovereignty under the 10th Amendment over all powers not otherwise granted to the federal government.
It also designates that all compulsory federal legislation that requires states to comply under threat of civil or criminal penalties, or that requires states to pass legislation or lose federal funding, be prohibited or repealed.
HCR 50 is authored by Representatives Brandon Creighton, Leo Berman, Bryan Hughes, Dan Gattis and Ryan Guillen.
To view the full text of the resolution, please visit: http://www.capitol.state.tx.us/tlodocs/81R/billtext/html/HC00050I.htm.
Is there uni-tea in the protests?
Last week, I posted about the possible pitfalls of tea parties. Sure, there are distractions and side-shows, but in general these are genuinely frustrated everyday people who want the political class to slow down, shrink down, and become accountable to them.
The party in power and the media have largely mocked the protests -- they have some legitimate points, especially the fact that the protests were not occurring during the big spending Bush years. (Which also raises the question, where are all the war protesters from the Bush years?)
Though I wish the tea party attendees were hosting similar protests during the GOP spending era, there are a few notable differences. For one, the spending has continued to accelerate. The final months of Bush and the first months of Obama swept by like a whirlwind of massive intervention and spending. Each act was more brazen and more expensive than the one before. The anger that had been mounting, even during the Bush years, has now come to a head.
Another reason is that the average American is "rationally ignorant" of government activity. During the Bush years, no matter how much GW spent, media reports largely focused on how much more he could've spent and how "free-market" he was. Bush himself talked a limited government game. The message picked up on by the casual observer was essentially, "government isn't big enough because Bush is a conservative free-market type". I'm sure many doubted this, but without the time to look into it the average citizen wasn't really aware just how massive the government was becoming.
Contrast that with today's administration that rarely attempts to give free markets and limited government lip-service. Media outlets seem to gleefully report the massive spending. The message to the somewhat attuned citizen is clear, "government is growing huge and fast". It was during the Bush era too, but it wasn't clear to most people so they didn't have a visceral reaction.
That's no excuse for this to become a stupid partisan yelling match. The greedy, inbred, self-serving, deceitful and corrupt political class spans both major parties (as it would minority parties if they ever achieved any measure of power in the U.S.). It's government that we should be protesting, not the figure head associated with it.
Once again, Jack McHugh offers some wisdom on the topic. McHugh outlines the basic meaning and message of the tea parties:
"The Tea Party protest has become a broad-based “big tent” because it is focused on a few simple things:
The complaint is chronic fiscal irresponsibility, now become acute fiscal extremism.
The target is an inbred, self-serving, self-perpetuating and bipartisan political class that no longer represents the will of the people.
The goal is to send that political class packing and restore genuine representative government, with whatever policy implications that entails.
What are those policy implications? A balanced budget amendment and honest government accounting are two strong possibilities. The effects of just those would ripple through the welfare state with surprising and healthy results.
It’s true that some Tea Party protesters are also passionate about other issues -- immigration, abortion, school choice, etc. It’s also likely that there are Tea Party protesters on both sides of those issues.
What unites them is the complaint, the target, and the goal described above.
“What do we want?”
“When do we want it?”
Not the most catchy chant, but its substance is just right."
Monday, April 13, 2009
Minister Day introduces Canadian capitalists to Chinese communists; new contracts signed
I’ve always been sceptical of government trade missions. I love trade, but the idea of government officials supervising introductions among business leaders -- like parents at a debutante ball -- collides with my uncorrupted vision of laissez faire capitalism and my idealization of ruggedly independent entrepreneurs going it alone.
Wouldn’t it be better if the political class left the business of trade to the capitalists and keep itself busy...umm...doing...ummm...busy doing...well wouldn’t it just be better if the government left the business of trade to the capitalists?
But when you’re trying to do business in a place like China, you’d likely not get very far without a little political help. And seven Canadian construction companies got that help recently from Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway.
Day announced that seven construction contracts between Canadian and Chinese companies were signed today in Beijing:
“Canada and China enjoy a growing commercial relationship, and construction is one sector where we see particularly strong opportunities,” said Minister Day. “Canadian expertise in construction-sector goods and services is recognized around the world. Our companies have a stellar record of constructing high-quality buildings with minimal environmental impact, and this trade mission will help create even more opportunities for Canadian business. I was pleased to be a part of these ceremonies to celebrate our successes.”
The reason freedom-loving people should celebrate this growing trade with China, besides the profits to be enjoyed by private Canadian companies, is because trade is a liberalizing force in society, a case I’ve made often (you can find an example here) to a somewhat sceptical Western Standard readership.
Here are the companies heroicly serving their own private interests while bringing trade and liberalism to China:
• GenesisTP, a division of Genesis Worldwide Inc. of Mississauga, Ontario, will provide its green building products and technologies to China Perfect Machinery Industry Corp., Ltd. for all its six-storey-or-less building projects.
• China National Materials Industry Import and Export Corp. will become the Hebei province distributor for the soft foam insulation and air barrier system manufactured by Icynene Inc. of Mississauga.
• Y+S International Design Ltd., of Markham, Ontario, will provide its ecological, integrated design services to Beijing Haigang Real Estate Development Co., Ltd.
• Soprema, of Drummondville, Quebec, will supply its waterproof membrane building material to Beijing Engrand Technology and Development Co. Ltd.
• MHKW Architects Inc., of Toronto, Ontario, will design a mixed hospitality and residential development in Tianjin for the Tianjin Supply and Marketing Co.
• MHKW Architects will also design the Guangzhou Tian Ze Sheng Royal Hotel.
• ACICC Trading International Co., of Surrey, British Columbia, will supply western red cedar, hemlock and SPF (spruce-pine-fir) lumber to the Longfor Group; Canada Mortgage and Housing Corporation helped facilitate the contract.
“I am pleased that this trade mission is leading to concrete results that will inject millions of dollars into our economies and help create new jobs in Canada and China,” said Minister Day.
Day is in China as part of an April 8 to 17 visit to China and Japan to open doors for Canadian businesses and strengthen trade and investment ties.
Posted by Matthew Johnston
Monday, April 06, 2009
AUPE members “negotiate” while French workers take hostages. Is there really a difference in tactics?
The right to strike comes from the basic libertarian idea of self-ownership. Since you own your body and your mind, you also own your labour and the products of that labour. And since you own your labour, you can strike if you don’t like the terms of your employment, notwithstanding any existing contract to which you might be subject.
The right to join a union also comes from the basic libertarian idea of freedom of association. If you feel your position within a company might be enhanced by the collective bargaining process, you should be free to join a union.
But employers should have the same basic right to self-ownership and freedom of association. An entrepreneur should have the same right to his labour, and to control the products of his labour, as the people he chooses to employ. If he doesn’t like the terms of his relationship with his employees, he should be able to break that relationship, provided there are no existing contracts.
Freedom of association, to have any coherent meaning at all, must include the freedom not to associate -- and an employer may decide that striking workers are not the sort of employees he wants. In fact, he may decide that unionized workers, in general, are not the sort of people with whom he wishes to associate. Similarly, workers may choose not to associate with employers who forbid unions.
In a free society, wages would be freely negotiated. Labour unions would work hard to drive wages and benefits up using collective bargaining and the threat of strikes; employers would work hard to drive wages and benefits down in order to maximize profits. And from this perpetual struggle would come a market clearing price for labour.
But we don’t live in a free society.
In a press release today, Alberta Union of Provincial Employees (AUPE) announced that a private sector long-term care employer has ratified a collective agreement with its AUPE members that matches the wage and benefit improvements achieved in province-wide health sector bargaining last year.
The agreement was ratified by a “huge majority” of members at an April 2nd vote at the privately-owned and operated Forest Grove Care Centre in Calgary, said AUPE Staff Negotiator, Ken Cutrell. Approximately 160 members of AUPE Local 048/017 are employed at Forest Grove.
“This confirms that the wages and benefits set in province-wide bargaining with the health regions last year are fair and affordable for all employers, including private health care employers,” said AUPE President Doug Knight.
What’s “fair” is what is freely negotiated, and what’s “affordable” will no doubt depend on the business circumstances of each and every organization. This agreement proves nothing except the power of unions to force agreements where no real agreement exists.
While a collective agreement was ratified by AUPE members at the Forest Grove Care Centre, 60 AUPE members employed by AgeCare at the Valleyview Care Centre in Medicine Hat have been on strike since March 13, seeking a contract similar to that “negotiated” with the Forest Grove care facility employees.
“We encourage AgeCare’s owners -- Drs. Kabir Jivraj and Hasmukh Patel -- to recognize the value of their staff, and meet the standards set by the majority of health care employers in this province,” said Knight.
But what if the owners of AgeCare disagree with AUPE brass on the value of their employees, and what if they don’t think their unique and constantly changing business circumstances make it possible for them to meet the standards to which other health care employers are complying, including the Alberta government, which is free from market forces?
That’s the question I asked Mark Wells, Communications Officer with AUPE. He kindly responded:
You asked: "What is the law concerning firing workers on strike and replacing them with non-unionized workers?"
The answer: It's illegal.
Illegal? It’s not much of a “negotiation,” is it, if only the unionized employees can exercise their basic right to self-ownership and freedom of association? If an employer cannot replace striking workers, he has little choice but to "negotiate" at the barrel of a gun, metaphorically speaking.
In France, however, workers have dispensed with this “barrel of a gun” metaphor in favour of the real thing. Last week, the media reported that:
French workers burned tires, marched on the presidential palace and held a manager of U.S. manufacturer 3M hostage Wednesday as anger mounted over job cuts and executive bonuses.
The French workers, like the AUPE members, are “negotiating” for better wages and benefits. The French have just dispensed with the legal niceties that attempt to hide the exploitation of entrepreneurs and business owners, and have opted instead for a more honest form of coercion: naked violence.
It’s unlikely that the rights of business owners in either jurisdiction will be protected by law in accordance with natural justice.
Posted by Matthew Johnston
Friday, April 03, 2009
Newt Gingrich: 2012 might see a third party movement if the GOP doesn't shape up
"Remember, everything Obama’s doing, Bush started last year,” said former Republican speaker of the House Newt Gingrich. “If you’re going to talk about big spending, the mistakes of the Bush administration last year are fully as bad as the mistakes of Obama’s first two, three months.”
Gingrich was speaking to an audience at the College of the Ozarks in Missouri. He was busy warning GOP leaders of the possibility of a significant third party rise come 2012 if the Republicans don't manage to regain their status as the small government party: “If the Republicans can’t break out of being the right wing party of big government, then I think you would see a third party movement in 2012.”
Gingrich is right. The movement started by Ron Paul when he ran to become the Republican nominee for president seems only loosely tethered to the Republican party. The Campaign for Liberty, as it's now called, has a large and passionate following.
Fox News host Glenn Beck is tapping into a similar small government sentiment with his program, which has the highest viewership amongst news stations in its time slot, and occasionally outstrips The O'Reilly Factor for viewers. Beck frequently includes third party leaders like Libertarian presidential candidate Bob Barr on his broadcast.
Meanwhile, the anti-big government Tea Party protest movement is strong and growing, with no discernible ties to Republicans.
Gingrich himself has openly mused about possibly seeking the presidency in 2012, a decision he will make come 2011. Given the content of his speech, there's reason to think that he might be testing the waters of running third party himself, possibly as a Libertarian Party candidate, a Constitution Party candidate, or as an Independent candidate.
Wednesday, April 01, 2009
Iowa tax protesters kicked out of Iowa House
Here's a great video of Iowans getting rowdy in the State House over changes to the tax code. Tax protesters were sufficiently angry to interrupt discussions at the Capitol, before House Speaker Pat Murphy kicked all of the protesters out.
Friday, March 06, 2009
Economic Freedom vs The Recession
Here's a debate piece for you. Each year the Wall Street Journal publishes a ranking of countries by degree of 'Economic Freedom'. They define the term in these words:
"The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself."
Here is a list of Eurozone countries ordered according to the Wall Street Journal's rankings . Their GDP growth or decline in the 4th quarter of 2008 is shown in brackets next to their name (NB - some Eurozone countries were left off the list because I couldn't find 4th quarter numbers.)
12 - Netherlands (-0.9%*)
17 - Finland (-2.4%*)
20 - Belgium (-1.3%*)
23 - Austria (-0.2%*)
24 - Cyprus (+0.6%*)
25 - Germany (-2.1%*)
29 - Spain (-1.0%*)
36 - Slovakia (+2.1%*)
53 - Portugal (-2.0%*)
64 - France (-1.2%*)
76 - Italy (-1.8%*)
81 - Greece (+0.3%*)
Anyone have an idea what these numbers mean for Economic Freedom? Any explanations for the growth of oppressive Greece, and the recession in the free-wheeling Netherlands?
Tuesday, March 03, 2009
Jim Rogers sounds like a defeatist, and a good thing too
I just posted about Stephen Harper's "defeatist" statements about Afghanistan. Harper thinks we can't defeat the insurgency in Afghanistan. I suspect that Harper is being honest, that he is telling us what is most likely in the conflict. And I'm of the opinion that actually saying what is most likely is better than just blowing smoke up our collective arses and urging mindless hope and vapid optimism.
Then I came across the following video of investment man Jim Rogers, who has been busy telling us that things are going to get worse before they get better. Here's Rogers insisting that we need to face reality:
Jim Rogers is a defeatist. Jim Rogers is a pessimist. Jim Rogers is rational. Jim Rogers is doing what many, many others really ought to be doing -- leveling with us, and allowing us to make decisions with the best information available. Thank goodness for the Jim Rogers of the world.
h/t: Stanford Liberty
Tuesday, February 24, 2009
Rick Santelli calls for a Tea Party, activists respond
Rick Santelli, CNBC market pundit, has caused a giant stir with a rant last week on TV. Here's the YouTube video that has spread like wildfire (here's the original):
Kathryn Jean Lopez on National Review's The Corner blog suggested that Santelli might want to consider running with Sarah Palin in 2012 (I prefer any combination of Rick Santelli, Gary Johnson, Ron Paul, Jeff Flake, or Mark Sanford. Put any one of those folks on a ballot, and I will be glued to the TV set come election time in the U.S. Put two of them on the same ballot, and I'm going campaigning).
Andrew Malcolm from the LA Times' Top of the Ticket blog thought the rant was going to be Obama's biggest challenge when he talked up the stimulus to Congress.
And today, I got an email from FreedomWorks, Dick Armey's pro-liberty political action committee. Here's the text of that email, and the start of a U.S.-wide tea party in Santelli's honour, which you can check out at the website IamwithRick.com:
Last week you may have seen or perhaps heard about CNBC’s Rick Santelli and his report from the floor of the Chicago Mercantile Exchange, ground zero for American capitalism and free market commerce, where he called for a “Taxpayer Tea Party” in the wake of efforts to enact a new, multi-billion dollar taxpayer funded housing bailout.
If you are like me, you stood up and cheered.
Rick was channeling what so many limited government advocates have been feeling now for a long time when it comes to out-of-control spending on the backs of hardworking U.S. taxpayers to reward the irresponsible and the corrupt: enough is enough!
Whether it’s this latest housing bailout bill (the second in less than six months), a bailout for the auto-industry or failed banks, the more than $1 trillion sham of a “stimulus” bill, or the $400 billion omnibus spending bill that Congress is now debating, Americans are sick and tired of their hard-earned money being thrown around. In just the last few weeks, FreedomWorks has been contacted by volunteers within the ranks of our own membership (a nationwide network of hundreds of thousands of activists) that want to take to the streets in mass protest to this big government bonanza.
And FreedomWorks is answering the call with a new website, IamWithRick.com. True to its name, the site features the video of Rick on the floor of the Chicago Exchange and seeks to enlist those concerned taxpayers who want to go to the Taxpayer Tea Party that he talked about this summer in Chicago. In addition, FreedomWorks is also helping to organize other tea party protests in cities around the country. Currently, we have events planned in Chicago, Washington, DC, Atlanta, Philadelphia, Fort Myers, Orlando, Greenville, SC and cities across North Carolina.
We need your help to make these events a success. Go to IamWithRick.com, sign up and select one or more of the tea parties that you would like to attend or help us to organize...
Nancy Pelosi, Harry Reid, and the new Obama Administration are running the bailout train full steam ahead towards the destruction of our American capitalist system and ultimately to outright socialism. They must be stopped!
Advertising, choice, and happiness
There is little doubt that advertising can make us want frivolous things that we didn't want before. There is evidence that the way we portray a certain good will make us want it more than the good taken by itself.
"Lifestyle advertising," for example, tries to associate a product with a lifestyle and, appealing to our desire for the lifestyle, makes us confused about the role some product plays in getting that lifestyle. It's a confusion because the product is incidental to the lifestyle. You don't get many friends and beautiful men and women in bathing suits by drinking Bud Light, and you don't get to be an excellent skier or snowboarder by drinking Coors Light, and you don't become a wealthy CEO by clicking away on your Blackberry.
But the insight is often exaggerated. Often, many people insist that the job of advertising is to dupe and confuse, to create whole-cloth new desires that we didn't have before. There are many interesting cases of this, but the cases remain few relative to the vast majority of actual cases. In the vast, overwhelming majority of cases, what we already want is what product manufacturers are trying to discover and cater to.
This is what helps account for the explosion of options in our supermarkets in something like the late '80s and throughout the '90s. Product manufacturers realized that, in the words of Canadian trend-follower and chronicler Malcolm Gladwell, there is no best Pepsi, only best Pepsis.
The words are said by Gladwell, but he is referencing Dr. Muscowitz, a food researcher from back in the late '70s, early '80s, who was asked by Pepsi to figure out the ideal amount of sweetness, aspartame, to put in their Diet Pepsi product. Muscowitz discovered that there was no ideal amount, only ideal amounts for different groups of people. And that just means that, in very many cases, the product manufacturer is better off catering to the preferences we actually have, rather than try to launder our preferences, or create preferences, through advertising.
Watch the TED lecture for more:
Friday, February 13, 2009
The worst of all possible predictions, also "by their deeds you shall know them"
If you're not depressed yet, Gerald Celente, trend forecaster, might help you get there. Here's video of Celente on Russia Today. While I don't share his analysis and predictions -- I don't think there are going to be kidnappings in the U.S., and massive violence -- I do share his conviction that we should utterly ignore what politicians say and, instead, focus on what they do and the history of what they have done.
UPDATE: I'm sort of mesmerized by dire predictions. Sort of like rubber-necking on the highway passing a scene of an accident. Here's Celente on Glenn Beck, making the case libertarians and small government conservatives have been trying to make. Listen carefully: You can't spend your way out of an economic problem. You can only produce your way out of an economic problem. And to add what will seem obvious to just a few: The government can only move wealth around, it cannot produce wealth. If you accept those premises, then you'll come to this conclusion -- the government should do less, and get off the backs of entrepreneurs and market actors. Watch Celente:
Since I didn't know anything about Celente, I was busy looking to see what his track record was like. It looks like it's been pretty good. Here's a video of Celente making predictions in the past, and a little bit more about what will happen:
Vincent Geloso: Keynes was never a liberal
With both Canada and the U.S. poised to begin Keynesian "stimulus" spending, it looks like the whole world has accepted the theories and prescriptions of John Maynard Keynes. When liberal Democrats in the U.S., and so-called "conservatives" in the Conservative Party are both agreed that we need socialist spending to save capitalism, it's worth taking a good, long look at the man whose theories are stimulating the stimulus.
Vincent Geloso is taking a second look at the man behind the stimulus. A man who claimed to be something of a liberal in the classical sense just couldn't bring himself to view with suspicion the Nazi German, Fascist Italian, and Soviet Russian economic systems. Instead of deriding them, as honest liberals were busy doing, Keynes was happy to call them "experiments," and to blame their failures not on inherent flaws with totalitarian and centralized economic systems, but to incompetency and bungling on the part of civil servants.
Here's an excerpt from Geloso's piece, "Keynes was never a liberal":
Keynes was a man who often changed his mind (which is not a reproach in and of itself) but harboured very deep inconsistencies. While he probably never tried to destroy capitalism or liberalism, he never tried to save it either. Instead, he unconsciously adhered to ideas that were to have disastrous impacts on the course of human history. Keynes was never a liberal.
Thursday, February 12, 2009
Judy Shelton: Let's go back to the gold standard
Writing in the Wall Street Journal, Judy Shelton, an economist and author of Money Meltdown: Restoring Order to the Global Currency System, makes a case for permitting competition in legal tender. Permit those of us who want to the use of gold and silver as currency:
If capitalism is to be preserved, it can't be through the con game of diluting the value of money. People see through such tactics; they recognize the signs of impending inflation. When we see Congress getting ready to pay for 40% of 2009 federal budget expenditures with money created from thin air, there's no getting around it. Our money will lose its capacity to serve as an honest measure, a meaningful unit of account. Our paper currency cannot provide a reliable store of value.
So we must first establish a sound foundation for capitalism by permitting people to use a form of money they trust. Gold and silver have traditionally served as currencies -- and for good reason. A study by two economists at the Federal Reserve Bank of Minneapolis, Arthur Rolnick and Warren Weber, concluded that gold and silver standards consistently outperform fiat standards. Analyzing data over many decades for a large sample of countries, they found that "every country in our sample experienced a higher rate of inflation in the period during which it was operating under a fiat standard than in the period during which it was operating under a commodity standard."
Given that the driving force of free-market capitalism is competition, it stands to reason that the best way to improve money is through currency competition. Individuals should be able to choose whether they wish to carry out their personal economic transactions using the paper currency offered by the government, or to conduct their affairs using voluntary private contracts linked to payment in gold or silver.
You can read the rest here.
Tuesday, February 10, 2009
Thomas Woods appears on Glenn Beck to discuss the "Meltdown"
Young Americans for Liberty have been busy with a project called "Get Tom on TV," an effort geared at getting Thomas Woods on television. Woods, a senior fellow at the Ludwig von Mises Institute, is the author of nine books, most recently "Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse ."
Whether this is because of the Get Tom on TV project or not, Woods did appear on Glenn Beck's show yesterday. Here's video of that:
Sunday, February 08, 2009
Milton Friedman on greed
Greed gets a bad rep
(I found this video at Surly Beaver)
Saturday, February 07, 2009
Fraser TV: An interview with Preston Manning
Here's a Fraser TV interview with Preston Manning, who needs no introduction, on the recent economic mess and some possible solutions:
Peter Schiff: The fiscal "stimulus" package is going to be devastating to the U.S. (and Canadian) economy
Via Yahoo! finance:
The fiscal stimulus bill being debated in Congress not only won't help the economy, it will make the recession much worse, says Peter Schiff, president of Euro Pacific Capital.
Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a "terrible" recession. But the path of increased government intervention will lead to "unmitigated disaster," says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks.
The problem, he says, is the government is trying to perpetuate a "phony economy" based on borrowing and spending. With the U.S. consumer tapped out, the government is "now taking on the mantle" of consumer of last resort, he continues, predicting the bond bubble will soon burst - if it hasn't already - ultimately leading to a collapse of the dollar and an "inflationary depression worse than anything any of us have ever seen."
Yahoo! Tech Ticker spoke with Peter Schiff yesterday. At the beginning of the video, Schiff is asked to defend himself against recent charges that, while Schiff was right about the housing bubble and the collapse of the economy, he was wrong on the dollar. That is, Schiff has been predicting significant inflation, and a depreciation of the U.S. dollar. But that hasn't happened. In fact, the dollar has rallied against other currencies, and many of Schiff's clients have lost money in 2008.
Watch the video for Schiff's response:
Friday, February 06, 2009
Sarah Palin and the stimulus package, part three (or: why it's okay to root for Palin again)
Alaska governor and former Republican vice presidential candidate Sarah Palin has come under some criticism from conservative and libertarian circles. Her stance on the so-called "stimulus" package was difficult to discern, and many concluded that she was supportive of the principle of a stimulus package, even if she wanted to change the details.
It is beginning to look like I'll have to eat my words. At least, I hope I will. Big government is on the march everywhere, including in Canada, with a so-called "Conservative" party in charge. The more opponents to mega-spending we can get, the better. And it is becoming clear that Sarah Palin is joining the small, but vocal, chorus of people who are saying "no" to big government spending, and saying "yes" to small(er) government:
Gov. Sarah Palin is opposing the federal economic stimulus package pushed by her former campaign adversary, President Barack Obama.
"I agree with the decision of Senator (Lisa) Murkowski and Congressman (Don) Young to vote NO on the package," Palin said in a written statement.
Normally the views of a small-state governor on the stimulus package would draw only local interest. But Palin is a different story. There's been national media speculation about her position and, according to the governor's office, erroneous reports in the Lower 48 indicating that she is supportive of the stimulus.
By Wednesday afternoon, the press statement issued by the governor's office opposing the package was up on Palin's Facebook Web page -- right below an invitation to donate to SarahPAC, her new national political action committee.
Palin also e-mailed a letter to SarahPAC supporters around the country Wednesday, promising to speak out and propose new policies to "ensure that America's best days are ahead of us."
Palin said she agrees some kind of stimulus plan is needed and supports getting federal money for tax breaks and construction projects in the state. But Palin said she's "against increased federal programs that will become a state's unfunded mandate to continue funding for generations."
Palin and Republican leaders of the state Legislature wrote a letter to members of Alaska's Congressional delegation earlier this week expressing that same concern.
h/t Elizabeth in the comments. I'm grateful to both iac and Elizabeth for following the story and sending me up-to-date news about Palin's stance on this issue.
Thursday, February 05, 2009
Congressional Budget Office part of the Do-Nothing Crowd -- stimulus bill worse than doing nothing in the long run
Small government conservatives and libertarians have been urging a reduction in the size and scope of government and a lowering or elimination of certain taxes as their solution to the current economic woes facing the U.S. and Canada. Alternatively, they've urged that the government do nothing at all. Eamon Javers and Jim Vandehei delightfully dubbed the latter camp the Do-Nothing Crowd.
Now the non-partisan U.S. Congressional Budget Office is adding punch to the Do-Nothing Crowd by insisting that the "stimulus" package proposed by Obama (and we can probably safely extrapolate their findings to the "stimulus" package proposed by the Conservative Party) is worse, in the long run, than doing nothing at all:
President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
Here's the right solution for our economic woes: At a minimum, do nothing at all. Change nothing, alter nothing, sit on your hands. Better: Cut taxes, slash government spending, programs, and departments. Deregulate. All for the sake of getting the government off of the back of the economy, so it can move again.
Maybe that's not politically feasible. If it isn't, that's only because too many voters are clueless about economics. But, at least in Canada, I think it would have been politically feasible, especially given the political situation at the time.
Wednesday, February 04, 2009
Canadian Taxpayers Federation delivers 17,000 petition signatures urging Saskatchewan government to permanently cut school property tax
Here's the latest Canadian Taxpayers Federation video:
Here's the article from the CTF:
This morning, Lee Harding of the Canadian Taxpayers Federation (CTF) presented another 5,102 petitions calling for relief on school property taxes to Sask Party MLA Jim Reiter. This brings the all-time total to 17,002.
“School tax frustration is reaching new heights,” explained Lee Harding, Saskatchewan Director for the Canadian Taxpayers Federation. “And no wonder. Government commissions have called for the province to pick up 75 per cent of school costs since 1986. More than 20 years later, almost half the cost is still left to be collected from regressive school taxes. When will this finally change?”
Last year, MLA Jim Reiter, the Legislative Secretary for Education, asked for public input on what to do about property taxes. In response, the CTF submitted its report, "Solving the Problem: Fixing Saskatchewan's antiquated K-12 funding system." Regrettably, the Reiter report won't be made available to the public until after the provincial budget is tabled in March.
"School taxes were our number one issue during our pre-budget consultations with Finance Minister Rod Gantefoer," said Harding. "In rural areas, school property taxes already represent 62.5 percent of the property tax bill. School boards in Regina and Saskatoon say they'll have to raise school taxes by more than 8 percent in the year to come. This issue is too urgent to ignore."
A survey of CTF supporters revealed that 59 per cent want school property taxes to be eliminated entirely even if it means higher taxes elsewhere. Another 16 per cent would support such a move only if it could be done without raising other taxes. The petitions called on the province to increase its share of school funding to 75 per cent of the total, leaving just 25 to property tax.
"Saskatchewan is projected to have nation-leading economic growth for the second straight year. What we are calling for is an additional $120-million from the province over each of the next three years. We believe this is possible without a tax increase," concluded Harding.
The CTF school tax report can be read here (PDF).
To sign the petition, click here.
Sunday, February 01, 2009
Publisher of Forbes: "Ron Paul is spot on right"
Here's Forbes publisher Rich Karlgaard on whether or not "job creation" is the goal of an economy:
Saturday, January 31, 2009
Fiscal conservatives hate the Conservative deficit budget
In surprising news, Peter Coleman of the National Citizens Coalition is actually standing up for fiscal conservatism, rather than just plumping for the Conservative Party, as has been the habit of the NCC since Gerry Nicholls left that organization. In unsurprising news, Kevin Gaudet of the principled and consistent Canadian Taxpayers Federation continues to man the barricades and oppose the massive pro-deficit, pro-big government, anti-fiscal conservative budget.
Watch the video:
You can have your say about whether or not this budget proves that the Conservatives are conservative in name only on our most recent poll here.