Monday, June 28, 2010

NYT Predicts Alternate Ireland Reality With 100% Certainty

With "'austerity" talk in the air, someone has sicked the economic attack dogs at the NYT.com on the story of the intensified downturn in the Irish economy:
Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.
Oh yeah? How did the NYT's reporters "certainly" figure that out? I suppose they empirically and conclusively confirmed their theory by a process of comparative statics where they observed a control-Irish economy that enjoyed the recommended dose of fiscal stimulus economically outperforming the real-life, austerity-ridden Irish economy.

Wait, no they didn't, because that's impossible. There aren't two Irish economies to experiment on and empirically observe differing results. There is one Irish economy, and no alternative strategy or policy can be observed in isolation from any of the other market forces and government policies already in operation in the Irish economy.

As almost always, Mises said it best:
With regard to historical experience, however, we find ourselves in an entirely different situation. Here we lack the possibility not only of performing a controlled experiment in order to observe the individual determinants of a change, but also of discovering numerical constants. We can observe and experience historical change only as the result of the combined action of a countless number of individual causes that we are unable to distinguish according to their magnitudes. We never find fixed relationships that are open to numerical calculation. The long cherished assumption that a proportional relationship, which could be expressed in an equation, exists between prices and the quantity of money has proved fallacious; and as a result the doctrine that knowledge of human action can be formulated in quantitative terms has lost its only support.
NYT political hacks, keep trying.

Career Criminal (Finally) Bites The Dust

Robert Byrd, who raped and pillaged the rest of the country for the benefit of his West Virginia cronies for 51 long, seemingly never-ending years, has finally gone to that great Mafia Don Poker Game In The Back Room In The Sky. (NYT.com):
Robert C. Byrd, who used his record tenure as a United States senator to fight for the primacy of the legislative branch of government and to build a modern West Virginia with vast amounts of federal money, died at about 3 a.m. Monday, his office said. He was 92.

[...]

But the post that gave him the most satisfaction was chairman of the Appropriations Committee, with its power of the purse — a post he gave up only last year as his health declined. A New Deal Democrat, Mr. Byrd used the position in large part to battle persistent poverty in West Virginia, which he called “one of the rock bottomest of states.”

He lived that poverty growing up in mining towns, and it fueled his ambition. As he wrote in his autobiography, “Robert C. Byrd: Child of the Appalachian Coalfields” (West Virginia University Press, 2005), “it has been my constant desire to improve the lives of the people who have sent me to Washington time and time again.”

“I lost no opportunity,” he added, “to promote funding for programs and projects of benefit to the people back home.”

That attention brought the state billions of dollars for highways, federal offices, research institutes and dams.
Robert Byrd produced nothing during his entire long criminal career. Where, then, did he acquire the resources to provide West Virginians with "billions of dollars for highways, federal offices, research institutes and dams"?

He stole them from others, who did produce goods and services. This man's achievements, which the NYT is heralding and paying respect to, are nothing more than a police report on the aftermath of a burglary. The guy is a crook, and a proud one at that!

What's more impressive, we are led to believe by the NYT, he's a self-educated crook:
Mr. Byrd was the valedictorian of his high school class but was unable to afford college. It was not until he was in his 30s and 40s that he took college courses. But he was profoundly self-educated and well read. His Senate speeches sparkled with citations from Shakespeare, the King James version of the Bible and the histories of England, Greece and Rome.

As a champion of the legislative branch, he found cautionary tales in those histories. In 1993, as Congress weighed a line-item veto, which would have given President Bill Clinton the power to strike individual spending measures from bills passed by Congress, Mr. Byrd delivered 14 speeches on the history of Rome and the role of its Senate.
Sounds like Mr. Byrd, like every other politician before him, enjoyed an extremely selective reading of history whereby he took away all the lessons that bolstered his particular agenda and ignored all the others which, were he a more honest man, may have given him pause before setting out on his campaign of mass expropriation and redistribution of wealth.

Good riddance, Mr. Byrd.

Friday, June 25, 2010

Is UTA's James Galbraith A True Economist?

It's hard to arrive at that conclusion after listening to an hour long interview/debate on Scott Horton's Antiwar Radio program between Austrian economist Robert Higgs and Keynesian "economist" James Kenneth Galbraith.

Most of Galbraith's support for Keynesian government intervention rests on what he believes one could "reasonably" argue, where the word "reasonable" is always and everywhere a Marxist code-word for "What I think I can get unprincipled people to agree to my stealing without too much fuss."

Furthermore, he puts forth this bizarre notion of "social value" as opposed to economic value as the standard by which he judges whether government expenditure or regulation is worthy of his support (note, there are few, if any, government activities that do not meet the muster of Galbraith's rigid standards). The odd thing about "social value" is it seems completely undefined beyond his personal, arbitrary declarations. This means that other economists and scientists wishing to recreate Galbraith's economic studies and verify they arrive at the same findings as he does are unable to do so. It also means that there is no metric by which one can compare economic value and "social value" in order to judge if, for example, the "social value" gained by a program of mass highway building during the Great Depression outstrips the economic cost of doing so, arriving at a surplus of utility (Galbraith doesn't even make it clear if utility can be derived from "social value").

In other words, economists are individuals who study the production and consumption of scarce resources amongst societies. They refer to marginal utility and subjective value theories in analyzing the choices individuals make in their patterns of production, consumption and exchange to arrive at conclusions about economic efficiency and the economic value of courses of action pursued by the various actors within an economy.

Galbraith does none of these things. In fact, he explicitly discounts the value of studies of economic value, in favor of his "social value" and "social rate of return" on investment. Galbraith, then, is not an economist studying the economy but rather a socialist studying society and how it responds to the various arbitrary dictates of the political elite that have captured it. Yet, "study" is perhaps too kind a word to describe what Galbraith does on an intellectual level, because it implies something academic or scientific in nature when the truth is that Galbraith, as a socialist, is a politician, not a scientist.

In fact, he's much further from a practitioner of science and much closer to a practitioner of divine mysticism. Galbraith is like some kind of self-appointed high priest of the social value cult, the only one able to communicate with the social value gods and return from the holy mount with the latest prophecy. What if someone else wants to go up and have a word with the spirits? Sorry, says Galbraith, they only talk to me. But, I think you're wrong, says you. I'll be the judge of that, says Galbraith.

So, Galbraith is not a true economist but a politician masquerading as one. He's also not much of a historian, which makes his interactions with Higgs (who is a historian, specifically a scholar of economic history) all the more comical. Whereas economics, according to the Austrian school, is a science of deductive logic rather than empirical examination, history is decidedly a study based in and on human experience. That's what history is, or is supposed to be, a record of human events and experience. And yet, it is here where Galbraith's arguments fall flat on their face even harder than in the theoretical arguments department.

Galbraith continually argues for a particular form of enlightened, compassionate, interventionist statism. He supports this imaginary benevolent State on the grounds that "we're better off when the government works efficiently." But how are we off when the government works inefficiently, or worse yet, works in the specific interest of a few against the many? Here, Higgs points out, the record on the matter is clear-- that the State is a predatory nightmare at its worst and a bumbling, idiot buffoon at its best, that history is an almost completely uninterrupted record of it being so and that given that kind of track record, it's a bit naive to hope or expect for the State to ever be anything else in the future given the clear demonstration of its nature in the past.

Galbraith, the non-economist, non-historian's response? "You can point to many failures, but you can also point to some successes" in studying the record of regulators, bold emphasis mine. It seems from Galbraith's imprecise choice of words that even he is aware of the futility of his viewpoint, and yet he holds to it anyway. Even more appallingly, Galbraith observed that the original gold standard in the United States was "controlled to the benefit of the money center banks in New York," and yet, acknowledging this fact of history he supports the Federal Reserve system and the fiat currency monetary regime it controls. But who, then, does Galbraith think controls the Federal Reserve? Apparently not, still, the money center banks of New York.

Another thing Galbraith proves he is not in this debate is a sound legal or ethical philosopher. Perhaps to burnish his "realist" credentials vis-a-vis the incredulous "romantic" idealist Bob Higgs, Galbraith announces to the listeners that "government is not a dirty word to me. Instead, I think of government as a tool."

Oh yes, government is a tool, and a mighty tool at that, much like the swords, clubs, chains, prisons, guns, bombs and tanks that government is after you remove all the fancy, euphemistic governmental-rhetoric. Galbraith lobbed a lot of logical softballs that any sound thinker could've smashed out of the ballpark, but claiming that "government is not a dirty word" as if this brought him and his ideas out of the clouds, planting them firmly on the ground, has got to be one of the more imbecilic moves Galbraith made.

Seeing that the idea of theft and the use of violence to achieve social ends is not a taboo one in Galbraith's mind, one is left to conclude that the only reason Galbraith prefers and advocates for the State's criminality over private criminality is because Galbraith concedes the libertarian point that the State is nothing but a monopoly crime syndicate. And because of its unique monopoly position amongst mafia groups, the State is therefore the the most efficient band of thieves around.

Galbraith is a great many things, for sure. As a man who understands almost nothing about the subjects he regularly opines on, he is undoubtedly a fool, and a self-deluded one at that. As a tool of the State and its beneficiary elites, he has proven himself to be a consistent and able-minded socialist politician. But a historian, an etho-legal philosopher and an economist, James Kenneth Galbraith surely is not.

Argentine And American Bread And Circuses

Argentine survivalist blogger FerFAL writes on his "Surviving in Argentina" blog today about the use of soccer and the Argentinian national soccer team as a social opiate by the despotic elite of the Argentine political leadership:
Soccer is a big thing in Argentina. Its always been that way. Specially during the world cup, kids don’t even go to school that day if the match takes place during school hours, and even at jobs only the most tyrannical employers will forbid workers from watching the game or at least keep track of it on internet or radio.
[...]
I guess it has something to do with poverty and the social situation here. Its always been a big thing, even during the good times, but when a person is poor, his life quality went to hell, its easy to see why soccer is so important. For some people, their team winning a tournament is the only happy event in a very long time.
His conclusion?
In a country of such poverty as Argentina, they’ve used 250 million dollars were spent to ensure the previously pay per view matches to be free for everyone. The program was called “Football para Todos” (Football for everyone) 250 million dollars, the tax payers money, many of them very poor, that money is spent on making pay per view free. So maybe you have a hard time putting food on the table, maybe you are one of the millions of unemployed, but you can rest assured your tax money is being spent in important things, such as ensuring free soccer TV for the fans out there. Maybe you sort of prefer lower taxes, specially when it comes to making food cheaper. Heck, maybe you don’t give a damn about soccer. Thank God you have the Argentine government to spend your money wisely for you instead of throwing it away on silly stuff like milk or medicine for your kids.
In America, the masses seem to do a pretty good job of opiating themselves. With one national pastime (baseball), two major national obsessions (football and basketball) and a multitude of minor national distractions (ice hockey, boxing, golf and soccer), Americans have no shortage of bread and circuses with which to satiate themselves and temper their political frustrations.

That being said, America being an exceptional place and all, perhaps when things get really bad in America (we're only in the "opening innings" of this debacle, after all, to borrow a term from one American circus act) the downtrodden and despondent won't be enjoying "football for everyone" but rather something like a DirecTV Sunday All-Access pass, replete with not only every sporting event available for viewing but every movie, reality TV show and mockumentary, including adult entertainment.

I can see the rhetoric now! "A chicken in every pot, a satellite dish on the roof of every (soon to be foreclosed) home!"

In America, we may be jobless, broke, homeless and made to strip down to our underwear everytime we want to board a plane to visit some far-flung member of our formerly nuclear family, but we'll never be stopped from enjoying a 4-hour long ballgame and a little autoeroticism, all thanks to Big Brother. They can take our wealth, they can take our pride, but they can never take away our love for the things that divert our mind from the depraved reality the political elites are planning for us on a daily basis!

Sunday, June 20, 2010

The Libertarian Toy Story 3

Non-spoiler spoiler alert.

Toy Story 3 is a fantastic movie. The animation, the sound and the comedy are all on-point. The story of a boy and his beloved toys parting ways and the related theme of "growing up" and "moving on" were touching.

But there's more to this Toy Story than just what's on the surface. Toy Story 3 actually has a well-developed libertarian sub-theme that is successfully articulated, conveyed and concluded through the course of the movie, not interrupting the larger events while not dancing around them so much that the coherence of the sub-theme itself is lost. Instead, both elements are nearly perfectly integrated-- it's like watching two movies for the price of one.

In Toy Story 3, we see the war of ideas between capitalism and communism; between a society of private ownership versus a society of public ownership; between individualism and collectivism; between hierarchy and the division of labor.

Furthermore, through this metaphorical world we see reality for what it is: workers' paradises are actually prison camps; socialist systems are involuntary and built upon patronage and coercion, capitalist ones are voluntary and built upon the productive value of the participants; it is communism that is exploitative, wasteful and erected on the lie that the worker's lot under capitalism is one of dreary repetition and a lack of appreciation for the laborer's efforts; that most politicians and self-appointed "community organizers" are trying to compensate for their own psychological trauma, and have no qualms about using other individuals and their lives and emotions as means to the satisfaction of these psychological ends.

Perhaps most importantly, we can see that only under a free social order can everyone, even the tired, old and formerly hostile members of society, live in peace, harmony and abundance.

Somebody or somebodies at Disney/Pixar seem to have recently come across a copy of Ayn Rand's Atlas Shrugged. In this day and age, their timing couldn't have been better, or more bold.

Toy Story 3 is creative, dramatic, visually appealing, exciting, dynamic and downright hilarious. Even better, it's libertarian. Grab your friends, grab your family, grab your tickets and enjoy this movie as soon as you possibly can.

The Efficiency Of The IRS

Anyone know what happens when you try to file, electronically, with the IRS website, for an Employer Tax ID on the weekend?

No? Let me show you:
Our online assistant is currently unavailable.

We apologize for the inconvenience. Please try again at a later time.

This application is available during the following hours:
Monday – Friday 6:00 a.m. to 12:30 a.m. Eastern time
Saturday 6:00 a.m. to 9:00 p.m. Eastern time
Sunday 7:00 p.m. to 12:00 a.m. Eastern time
At the IRS, the computers take the day off on the weekend.

Wednesday, June 16, 2010

When Was The BP Trial?

So BP has set up a $20 billion escrow account to pay out damages to those affected by the oil spill and I am wondering, when was BP's trial?

Normally when an accident occurs (civil liability) or negligence leads to disaster (criminal liability) there is some kind of a trial, where the defendant (BP) faces its accusers/those it harmed (the "people affected by the oil spill"). But it seems in this situation that the guilt has been presumed and the trial has simply been skipped and everyone is already participating in the "divvying up the payout"-phase.

Another question I have-- where'd they come up with $20 billion? Sure, it could be more, but I suppose it could also be less. Either way, I am curious how the government has calculated possible damages when it isn't exactly clear who has been affected and how much, at this point.

Thursday, June 10, 2010

A Scene From North Korea, Coming Soon To The US

The NYT has a story about the hardship caused by the North Korean military dictatorship's sudden devaluation of the North Korean people's currency:
Like many North Koreans, the construction worker lived in penury. His state employer had not paid him for so long that he had forgotten his salary. Indeed, he paid his boss to be listed as a dummy worker so that he could leave his work site. Then he and his wife could scrape out a living selling small bags of detergent on the black market.

It hardly seemed that life could get worse. And then, one Saturday afternoon last November, his sister burst into his apartment in Chongjin with shocking news: the North Korean government had decided to drastically devalue the nation’s currency. The family’s life savings, about $1,560, had been reduced to about $30.

Last month the construction worker sat in a safe house in this bustling northern Chinese city, lamenting years of useless sacrifice. Vegetables for his parents, his wife’s asthma medicine, the navy track suit his 15-year-old daughter craved — all were forsworn on the theory that, even in North Korea, the future was worth saving for.

“Ai!” he exclaimed, cursing between sobs. “How we worked to save that money! Thinking about it makes me go crazy.”
That is horrible, absolutely horrible. And yet, this is what happens in every country that has a central bank and a printing press, albeit less suddenly over a longer period of time. And there really is no reason whatsoever why the same exact thing (sudden mass devaluation of the currency) could not be employed as a means of solving the US's sovereign debt crisis by someone like Ben Bernanke.

Eventually, he'll have to print money, and a lot of it. The tragic, life-savings destroying overnight devaluation is all but inevitable, as is the concomitant misery and outrage that will follow.

If you think the government has already stolen enough of your wealth and savings, you ain't seen nothing yet!

ZeroHedge's Tyler Durden In The Dark?

Tyler Durden over at ZeroHedge is asking if Columbia's Jeffrey Sachs sees the light?
A few weeks ago Zero Hedge offered a modest critique of Jeffrey Sachs after his disastrous performance in a round table debate with Hugh Hendry and Gillian Tett, in which the Columbia professor came out sounding as clueless as a first year economics major. It now appears that Mr. Sachs may be attempting to atone for his myopia memorialized by the BBC, in the following FT Op-Ed in which he unabashedly lashes out at Keynesianism. In it we read: "Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year. Now, against a backdrop of a widening sovereign debt crisis, we need to abandon short-term thinking in favour of the long-term investments needed for sustained recovery." Such words of caution from a man who as recently as two weeks ago was encouraging precisely the very steps he is now purporting to be against. Nonetheless, we greet with open arms this most recent act of contrition by yet another economist who leaves the warm innards of the corpse of the economic false religion, and finally sees the light. Welcome Jeffrey.
I'm not sure if Tyler Durden read the same, fallacy-ridden Op-Ed I did but I have to believe he did because I recognized the "money quote" he pasted in from the conclusion of the Op-Ed.
Now we face a world economy with weak aggregate demand in the US and Europe, bulging budget deficits, sovereign debt downgrading and consumers unwilling to borrow. Governments are fighting for market credibility via draconian cuts in spending. This too is the wrong approach. We should avoid a simplistic austerity to follow the simplistic stimulus of last year. Here are some suggested guidelines.

First, governments should work within a medium-term budget framework of five years, and within a decade-long strategy on economic transformation. Deficit cutting should start now, not later, to achieve manageable debt-to-GDP ratios before 2015.

Second, governments should explain, and the public should learn, that there is little that economic policy can do to create high-quality jobs in the short term. Good jobs result from good education, cutting-edge technology, reliable infrastructure and adequate outlays of private capital, and thus are the outcome of years of sustained public and private investments. Governments need actively to promote post-secondary education.

Third, governments must of course also ensure social safety nets: income support for the poor, universal access to basic healthcare and education, a scaling up of job training programmes and promotion of higher education.

Fourth, governments should steer their economies towards needed long-term structural transformation. External-deficit countries such as the US and UK will need to promote exports over the next few years, while all countries must promote clean energy and new transport infrastructure.

Fifth, governments and the public should insist that the rich pay more in income and wealth taxes – indeed, a lot more. The upward re-distribution of the past 25 years has made our economies into extravagant playgrounds for the super-wealthy. Politicians of both the mainstream left and right in the US and UK have fawned over those who pay their campaign bills in return for low taxation. Even playgrounds should collect tolls – when it is billionaires in the sandpit.

We need, in sum, to reset our macroeconomic timetables. There are no short-term miracles, only the threat of more bubbles if we pursue economic illusions. To rebuild our economies, the watchword must be investment rather than stimulus.
Tyler opines that this "tirade" could've "come from the pen of any Austrian". Is it April Fool's Day today?

Tyler, you need to go back to Mises U and learn about the Austrian school of economics.

Austrians do not support: government-engineered "economic transformation"; public "invesments"; government subsidies for post-secondary education; social safety nets, universal government healthcare and government job training programs; government "steering" of economies; taxation, specifically of the rich.

In other words, there was nothing, I repeat NOTHING, Austrian about Sachs's proposal. In fact, it was just more neo-Keynesian mercantilist fallacies, also known as fascism.

Yes, that's right-- if you actually read Sachs's column he calls for more government intervention, not less. He is more fearful of the reign of the free market, not less, as an Austrian would be. He wants an economy characterized by "public-private partnerships", Soviet-esque Five Year Plans for government piloting of the economy and overall a set of economic circumstances in which enlightened academic technocrats and other noble, selfless public servants such as himself would be tasked with making decisions about tradeoffs and where to deploy scarce resources.

Far from running from Keynes to the Austrians, Sachs is running toward Jean-Baptiste Colbert, one of the early proto-fascist intellectuals of the burgeoning French absolute State and predecessor to Keynes, whose own fallacious mercantilist ideas were informed by his experiences working for the British Empire's colonial offices in India.

And Tyler Durden fell for it.

Friday, June 4, 2010

The NYT Admits Economics Is About Tradeoffs, Time Is Scarce

Unwittingly handing the Austrian School a crushing victory (and the Omnipresident School a simultaneous crushing defeat) today, one NYT reporter stumbled upon an undeniable economic truth in the form of Austrian time-sensitivity theory and the scarcity of time as an economic good:
Yet the president’s time and energy are finite and every day devoted to the oil spill is one that he cannot focus as much of his own resources on other issues.
Now, how long will it be before the NYT and its reporters are able to follow their own logic to the conclusion that resources expended on the oil spill fiasco by the president are resources that can not be used in other parts of the economy by private actors, and that furthermore, resources in general used by the government are resources that are not available to be used for other productive and consumptive purposes throughout the rest of the economy?

My suggestion: don't hold your breath, unless you think you've been getting too much summer sun and you'd look "cooler" in a nice shade of blue.

By the way, has anyone thought to point out how monumentally hypocritical it is for Emperor Obama to put in place a moratorium on Gulf of Mexico oil drilling, resulting in less oil for everyday Americans and their mundane, relatively unimportant lives, while El Presidente continues to jet back and forth across the country and the world on his 747 jumbo jet, never once experiencing the impact of a reduced supply of oil resources in his day-to-day life?

Unless Obama wants to ride a bike up and down the East Coast, he really shouldn't be so quick to force everyone else to do so.

Stock Charts Of The Week - USD vs. S&P 500; S&P 500/Gold

The Dollar-Weakness Rally, Dollar-Strength Crash - S&P 500 vs. US Dollar Index

via StockCharts.com



A True Pummeling - S&P 500 down 18.7% from March highs in terms of gold

via StockCharts.com

The NYT Declares War On Low Airline Prices

This is some pretty ignorant stuff, even for the NYT:
Airlines complain that delays and other inconveniences are often not their fault but the result of inadequate airport infrastructure or other causes. They argue that regulations will only lead to increased prices and other unintended consequences.

These arguments should not stay regulators’ hands. It is true that many airlines are barely profitable. But the road to profitability should not be built on stranded passengers and crummy service. And the warnings about the unintended consequences of regulation should be taken with a large grain of salt.
So, apparently, airline regulation either doesn't have unintended consequences or somehow the unintended consequences that might arise are magically marginal in nature-- this would put the airline economy in a separate class from the rest of the economy and connote a special, unique airline economic theory.

And apparently the airlines' profitability (totally questionable as the airline industry, like the American automobile manufacturing industry, has been the recipient of government bailouts for decades) is built on serving their customers poorly when they could just as easily (that is, no additional cost) serve them well. What villains!

Or maybe the NYT is hinting that the airline industry should be nationalized, and the nasty profit-motive banished. Or maybe they don't care if some airlines can't stay profitable and go out of business, because somehow, in airline economic theory, a lower supply of airlines and routes does not lead to higher prices for remaining airlines and routes.

Or maybe the NYT figures none of this matters because the airline industry can just be handed another bailout if they become unprofitable.

The editorial ignores the consideration that many of the current problems in the airline industry in terms of wait, delays, high costs and "crummy service" might have originated in the government's regulatory crack-down following September 11th, 2001, and it further ignores the contribution that oppressive government security measures make to the overall inglorious state of American air travel and concludes:
In late April, a new rule went into effect that set a three-hour limit on the time airlines can keep passengers waiting on the tarmac before letting them get off. That same month, airlines’ punctuality rose, three-hour delays were virtually wiped out and despite airlines’ warnings that flight cancellations would rise, they plunged. This might be a coincidence, but we suspect not.
So, once again, was there no cost? Because if there was no cost than surely the airline industry is populated by some of the most sick, sadistic and sociopathic cretins around. "But I suspect not."

Thursday, June 3, 2010

Russ Roberts Wants To Know If The Gaza Embargo Is A Crime?

The Israel-Palestine conflict is like some kind of deadzone where libertarian brainwaves can't get through. So many people who would reject collectivism in any other circumstance suddenly excuse it when it's applied to the Israel-Palestine conflict.

Russ Roberts, co-author of the Austro-libertarian minded Cafe Hayek blog, is an otherwise consistent practitioner of libertarian thinking concerning social issues who nonetheless provides a perfect example of the kind of flawed thinking I've seen so many others make on this particular topic:
My first thought on this comes from someone who recently wrote on Twitter–if the people of Gaza exported fewer rockets, maybe they’d find it easier to import stuff.

Israel gave up sovereignty over Gaza. The result of leaving was an on-going series of rocket attacks on civilians in towns closest to Gaza. No doubt a prosperous Gaza is in Israel’s interest. But how to get there from here? Gaza is ruled by a party, Hamas, that does not recognize Israel’s right to exist and promises its destruction. Hamas was democratically elected by the people of Gaza. They aren’t so good at the rule of law/prosperity thing.

Is the embargo a strategic mistake? Maybe, though it’s easy to encourage Israel to “search for weapons” while sitting safely in the United States. Is it a crime? I’d say the moral responsibility lies elsewhere.
Huh? Let's break this down point-by-point.

First, "the people of Gaza" have not been exporting rockets into Israel. That is a collectivist view of things. The reality is that individual Gazans/Palestinians/Arabs (whatever you want to call them, and whoever they are) have been firing rockets into Israel and other individuals have provided food, shelter, supplies and moral support to these individuals. A third group of individuals has not contributed to either the firing of missles or the support of those firing missles and is therefore innocent and uninvolved. That is the individualist view of things.

Second, it is irrelevant whether Hamas was "democratically elected" or not. This is a rookie, freshman-year political science mistake, which Lysander Spooner ripped to shreds about 140 years ago! There are many reasons why an individual might vote in the first place, and many more reasons after that why they might vote for a group like Hamas. The fact that some people did vote for Hamas does not legitimize their power or "sovereignty" in any meaningful way because they're still a government meaning their power rests on their willingness to aggress against other individuals, Israeli and Palestinian alike. Just because some people voted for Hamas does not then mean that Hamas represents all of the people within their claimed territorial jurisdiction or that their exercise of monopoly violence is justified.

Third and finally, engaging in moralistic finger-pointing does not answer the question "Is the embargo a crime?" The embargo can still be a crime even if Hamas and individual Palestinian people have acted immorally themselves, even as a precedent to the embargo.

And so to answer Roberts question, yes, the Gaza embargo is a crime. It should always be considered a crime for some group of thugs to indiscriminately hold an entire group of people and their commerce hostage in the name of attempting to restrict, control or punish some other group of thugs who claim to represent those people.

Collective punishment for individual crimes is itself a crime because it is the initiation of the use of force and not an act of specific self-defense. It's the same reason why it was wrong for the US military to invade, occupy and subjugate the entire country of Iraq for the crimes and alleged/potential crimes of Saddam Hussein and his WMDs. It's the same reason why it was wrong for the US military to invade, occupy and subjugate the entire country of Afghanistan for the crimes of Osama Bin Laden and the sheltering of Bin Laden by the Taliban.

And finally, it's the same reason why Osama Bin Laden was wrong to launch his attack on the United States on September 11th, 2001, in the name of punishing the American people for the crimes of their democratically elected federal government.

Wednesday, June 2, 2010

An Argentinian Blogger's View Of America After A Recent Trip

Fernando "FerFAL" Aguirre, Argentinian survivalist blogger and author of Surviving the Economic Collapse, recently traveled to the Dallas-Fort Worth area in Texas and shared some of his impressions of America in a blog post:
I visited the big Cabela’s in FW/Dallas and then a few supermarkets.
It was surprising in all of them the abundance of just about anything. Shelves full of ammo (and cheap!) as well as all kind of gear. Same thing in supermarkets, huge family packs for little money compared to what I’m used to. Over here in Argentina everything is smaller and more expensive.

There’s also much less variety of everything. I’d say 1/10 or 1/20 of what you guys have at least. We have chesse, muzzarela ofr pizza and a couple other, maybe four or five more in a bigger store. In a walmart in USA there’s dozens of varieties, maybe hundreds.

You guys are used to seeing all that as normal, it really isn’t.
The same translated to other areas as well. We don’t get soda drink refills here in any diner or fast food store. You just get one cup, small medium or large, and that’s all you get. (and of course its more expensive and more diluted with water).
I went to Starbucks in College Station and asked for a small coffee… they didn’t have any. The smallest they had was “medium”, and the medium is about twice the size of a large coffee in Argentina.

The abundance and excess of everything isn’t bad, but I can see how it can spoil people, specially if they don’t know any better or think that normal.

The comparison of relative scarcity FerFAL makes is significant because what he is experiencing now in Argentina is essentially a preview of what's to come in the US. Argentina experienced it's own mass inflation, massive political corruption and the ensuing civil unrest and most Argentinians continue to linger in a state of day-to-day hardship and general unease following the economic collapse and the confiscatory interventions by the Argentinian government.

The days of near overabundance of almost every good and service Americans have become accustomed to enjoying will soon be but a glee-filled memory of the past. A darker, scarcer future awaits as not only more and more previously "middle class" people and families find themselves to have dropped several rungs on the economic ladder, but everyone in every economic strata will have to make do with paying more for less.

Charles Gasparino Takes Buffett Down A Few Notches, Ruffles Liz Claman's Feathers

ZeroHedge is carrying a must-see clip of Charles Gasparino repeatedly body-slamming Warren Buffett on the Fox Business Network concerning his conflict of interest with the NRSROs, aka "ratings agencies" (partial transcript provided by Tyler Durden):
He believes [the rating agencies are] a sleazy business and he's gonna own it. Well that takes Warren Buffett down three notches in my book... If Moody's had a superior product, investors like Warren Buffett, who does not use the ratings, would be buying them one at a time. They do not have an effective product. They have a deformed product, a product that basically was at the forefront of the mess in 2008 and 2007. Warren Buffett who opines about politics all the time, constantly opines about right and wrong, defends wrong because it was a good investment. He is defending the indefensible. Rating agencies are not defensible at this. He is Mr. Do Good, yet he is defending the most corrupt business model in corporate America.
As brutal as the clip is, Gasparino wasn't done. He also penned a follow-up column at the Huffington Post where the beast-like beat down continued:
The rating agencies, as most people know, were among the chief culprits of the financial crisis, which has its roots in the housing bubble, which the raters missed as well. It's one thing to be wrong, but there is a growing body of evidence that the raters were wrong because they were paid to be wrong.

Keep in mind, the only way all those new mortgages handed out to people who couldn't repay them could be made was if the loans could be taken off the balance sheets of the banks and packaged into mortgage debt. And the only way all those countless billions of mortgage debt could be sold is if the rating agencies placed their coveted triple-A ratings on those bonds.
Gasparino's conclusion?
If Buffett is honest, (and if Angelides has the balls to press him) he will say that he doesn't rely on the ratings of Moody's or any other ratings agency because they're basically worthless. The big raters have missed every market implosion dating at least as far back as the New York City financial crisis in the mid 1970s, and continuing through the Orange County Calif bankruptcy in 1994, the bond market collapse in 1998 that led to the bailout of the giant hedge fund Long-Term Capital Management, and of course to the most recent, mother-of-all collapses, the 2007-2008 financial crisis.

If he's honest, he'll also say that he invests in Moody's (he once owned a 30 percent stake but has since been selling shares) because it's a government sponsored cartel along with its chief competitor Standard & Poor's and Fitch. The government mandates that nearly all the ratings business must go to two "nationally recognized' rating agencies. It means every bond deal that comes to market must be rating by any two of the agencies that split the massive fees on billions of bond deals each year. In other words it's a license to steal.

It's also a license to produce crummy ratings, I hope Buffett points out. Aside from bankers playing one rating agency off another, when was the last time a business cartel, created and protected by the government did anything well? Not the post office, not the department of motor vehicles and certainly not the all those Wall Street firms that were considered Too Big To Fail and went out and took so much risk they blew themselves up, and of course, our entire economy.

If Buffett really levels with Angelides he'll say there's no reason to have rating agencies and given the weight of his words, that could be the final nail in the coffin of this scam of a business.

That's if he's honest and if Angelides has the balls to ask the right question.

I'm not holding my breath on either count.
This is hard-hitting stuff for anybody to publish, let alone a mainstream journalist, in which case it's akin to a bishop telling his Catholic flock that there is no god.

Gasparino has gotten a lot of flack for his move from CNBC to Fox Business, with a lot of commentators and bloggers accusing him of promising big scoops but only delivering on being the recipient of a much larger paycheck. But with this one-two KO punch, I'm putting my estimation of Gasparino's Serious Journalist Credentials about three notches higher, to play on his negative judgment of Buffett in the video clip at ZeroHedge.

This is an inspiring trend-- not only questioning the idea of NRSROs and government-supported cartels in the financial markets, but openly accusing them of playing a deleterious role in the recent financial crisis is positive momentum toward more and more people waking up to what's been going on this whole time.

Today, the government, the banksters and the various political entrepreneur attaches, such as Warren Buffett, were on the ropes. It'd be nice if we could keep them there, but unfortunately they bribed the ref long before the title match was even being contemplated.

Tuesday, June 1, 2010

More On Exploitation Theory And The Chinese Labor Market

I wanted to follow up my last post on calls for the unionization of the Chinese labor force by delving a bit further into free market labor theory (ie, reality) versus Marxist exploitation theory (ie, fantasy).

In the Marxist world view, the value of goods and services is objective. Therefore one can determine before a market transaction, such as a labor exchange, what a laborer should earn in exchange for his labor and when he doesn't earn enough -- according to this objective standard of value -- it is clear that he has been exploited. His exploiter is always his employer, the capitalist, and the value of his labor that has been stolen from his consists of the entirety of the capitalist's profit.

In the free market (I'm not calling it a world view because it's not a world view, it's reality) value is subjectively determined by each individual economic participant. This necessarily rules out "exploitation" in voluntary transactions such as laborer and capitalist because the laborer would never agree to work for the capitalist if he felt that the terms of the exchange were exploitative to begin with. That means that the only way exploitation can occur in a free market is if a.) the capitalist is in fact a slaver and is literally assaulting/stealing from his employees, which would be considered a violation of the employees' natural rights and therefore an inexcusable crime or b.) it is not in fact a free market but a regulated market whereby the capitalist has some advantage provided to him by the government which forces laborers to accept these exploitative conditions under penalty of law.

These last two considerations are, of course, inconvenient truths for socialists everywhere, because the first is not something systematic and the latter is all due to the State, which in their view is the savior rather than the oppressor.

But there's more worth considering than just the role of the objective-subjective value debate.

First, and this point gets made often by advocates of the free market, if the laborers in the Chinese tech factories really felt they were being given a raw deal, they are always theoretically free to take other jobs or to return to their rural communities and farm duties (assuming that is where many of them ultimately came from). They're even free to become voluntarily unemployed, which would certainly seem like a preferable option to being routinely exploited if that's how they feel they are being treated.

The second point, made much less often, is that if anyone is exploiting the Chinese laborer, it is the end consumer of the laborer's product, NOT the capitalist employing him. The LATimes articles linked to made numerous mentions of the fact that these workers were being "exploited" in order that the manufacturer could cut costs as much as possible. Yet, the manufacturer is only working so diligently to cut costs because he is dealing with the competition of other manufacturers who are selling the same or similar items to the end consumer market. Ultimately, the end consumer marketplace will purchase the cheapest product available, everything else (quality, durability, capability, etc.) being equal.

No one seems to stop and blame the consumer for being such a penny-pincher and putting the Chinese laborer through so much stress he feels like he must jump off the top of the factory to his death to escape the mindless exploitation. Instead, it's the profit-collecting capitalist intermediary (the employee of the end consumer!) who is blamed for the plight of the laborer.

Now, when the Chinese labor market is eventually unionized, which it likely will be as most countries seem to go through this phase of politicization of markets after finishing the birth of markets phase, it will be the end consumer that loses out, not the capitalist employer. Even in unionized labor markets there are still capitalists and the capitalists are still profitable. What nobody pays attention to is the way in which the now unionized labor market produces less goods, of lower quality and at higher prices for the end consumer.

This is the fattening of the Chinese laborer at the expense of the relative impoverishment of the end consumer. It is assumed that the end consumer worked for his wages with which he buys the product of the Chinese laborer-- left unexplained is why the unionized Chinese laborer is entitled to more purchasing power than the lowly end consumer.

And let's not forget that if it costs more to hire Chinese laborers once they're unionized, less of them will ultimately be hired as a result! How many of the soon-to-be-unemployed Chinese laborers would prefer involuntary unemployment to voluntary "exploitation" by capitalist manufacturers?

Ludwig von Mises and the Austrian school teach economists that it is the voluntary, harmonious exchange of the division of labor that produces all the world's material wealth. This system of production is most effective when it is most voluntary, that is, when the various participants, laborer and capitalist alike, are most satisfied with the terms of exchange. In the long run, no business gains anything from creating an environment of hatred and animosity amongst laborers and managers, which is why the reference to punching bags with photos of the faces of the bosses of the Chinese laborers is so mysterious.

Socialists will be quick to take this particular example and try to twist it into an emotional denunciation of the caustic and belligerent nature of the free market and the profit-motive. In reality, this sounds like a case of poor management practices within specific enterprises in China along with the ignored contribution of an authoritarian socialist state and its labor and production policies only further complicating the matter in ways in which many observers are simply choosing to not to pay any consideration.

What Is Going On In The Chinese Labor Market?

Tom Garrett writes:
Apparently, 9 young workers have committed suicide after being pushed too hard to meet the rush of orders for the iPads.

Would love to hear your take on it.
He sends along a link to an LATimes story about the spate of suicides in Chinese tech factories, including some of the Foxconn facilities responsible for producing the new Apple iPad:
Psychologists and Buddhist monks have come to console workers. There is a suicide hotline, piped-in music and a stress-release center where workers are invited to hit a punching bag with a picture of their supervisor.

But so far, nothing and nobody have been able to stop the suicides at Foxconn Technology Group, which manufactures Apple's iPhones as well as Dell and Hewlett-Packard components in Shenzhen in southern China.

The latest worker to commit suicide jumped to his death Tuesday. He was a 19-year-old identified as Li Hai, a migrant from Hunan province who had worked for the company just 42 days. He was the ninth worker at the Shenzhen facility to jump to his death this year. Another Foxconn worker committed suicide in northern China, and two others in Shenzhen survived falls.
Later, the LATimes published another article following up on the story, proclaiming the "End of cheap labor era for China pits workers against manufacturers":
Global manufacturers struggling with life-or-death pressures to control costs are finding that the legions of low-wage Chinese workers they rely on have limits.

A strike at Honda Motor Co. and the official response to a spate of suicides at Foxconn Technology, a maker of electronics for industry giants such as Apple, Dell and Hewlett-Packard, suggests China's leaders are at least tacitly allowing workers to talk back.

Over the weekend, the top communist party leader in Guangdong province visited Foxconn's sprawling factory where 10 workers have committed suicide and urged the company to adopt a "better, more humane working environment" for its mostly young workers, state media reported.

"The 80s and 90s generation workers need more care and respect and need to be motivated to work with enthusiasm," said Guangdong party chief Wang Yang, who has backed efforts to shift Guangdong up the industrial ladder away from reliance on exports of low tech, cheap products.
Even the Financial Times is in on this gig, with an online video interview of Chinese "labour activist" Han Dongfang (who made an "expert" appearance in the original LATimes article and was heavily relied upon for the majority of its substance) who claims that the Chinese labor system is "sick" and extols the benefits of labor unions in China.

So, the narrative according to the Western media is as follows-- the increasingly capitalistic Chinese economy is rife with the exploitation of workers by profit-driven factory owners, who in their single-minded quest for the lowest cost production method available have driven their benighted workers to anxiety-induced suicide attempts.

And, oddly enough, it comes during a time when massive volatility in Forex markets have thrown previously longstanding trade "balances" out of wack, leading numerous Western political leaders (including the Obama administration) to do a bit of saber-rattling on the trade war/competitive currency devaluation front.

In fact, I think the timing of these news pieces is the most significant part of the story as a whole, and not the incidence of suicides amongst young Chinese tech fabricators upon which they're based. Undoubtedly there have been other suicides amongst Chinese factory workers in the past. Contrary to popular belief, the proto-industrial China of the 1950s, '60s and '70s was not a worker's paradise by any means. But then, the workers were guided (owned) by the benevolent Chinese communist state, whereas now they're at the mercy of for-profit manufacturer mercenaries.

Fast forward to today, where populist and political rage about the outsourcing of jobs to China is all the rage amongst Western voters and politicians alike. A couple of well-timed, poorly researched media hit pieces on the deplorably stressful conditions of Chinese factories could really tug on the heartstrings of Western voters and help bolster the case for continued/renewed pressure by Western politicians and diplomats to encourage their Chinese counterparts to support the unionization of the Chinese labor force.

A unionized Chinese labor force is, as in the West, a more expensive, less productive one... and voila! Instant-competitiveness for Western workers!

As economist George Reisman explains, what's truly perverse about the whole frame-up by Western media of this "capitalist" travesty in China is that it's all based upon flawed Marxist exploitation theory, a theory which blames capitalism for the exploitation that is actually inherent in socialist economic systems, such as China's:
As a final irony it turns out not only that capitalism is not a system of the exploitation of labor, but that the actual system of the exploitation of labor is socialism. Socialism establishes the very kind of exploitation for the alleged existence of which people seek to overthrow capitalism.

The socialist state holds a universal monopoly on employment and production. Its citizens are economically powerless in their capacity both as workers and as consumers. No economic factor compels the socialist state to take account of their wishes. From an economic point of view, the rulers of the socialist state need be concerned with the values of the citizens only insofar as it needs them to have the health and strength required to work.

Moreover, the leading moral-political principle of the socialist state is that the citizen is not an end in himself, as he is acknowledged to be under capitalism, but is a means to the ends of "society." Since society does not inhabit any known mountain top, and cannot be communicated with in any direct way, its ends can be made known only through the rulers of the socialist state. Thus, the principle that the individual is the means to the ends of society necessarily means, in practice, that he is the means to the ends of society as divined, interpreted, and determined by the rulers of the socialist state. And what this means is that he is the means to the ends of the rulers. A more servile arrangement can hardly be imagined.
There's more where that came from, read the rest here.