Sunday, June 27, 2021

My letter to the Wall Street Journal--Save Us All From Bipartisanship

  


Dear Sirs:
Objecting to this boondoggle of a spending bill would NOT be a repudiation of real bipartisanship. First of all, one may challenge the merits of this bill; i.e., that America even needs an infrastructure bill at all. Is not all infrastructure owned by some entity, which should be responsible for its upkeep? Furthermore, if the bill really is considered to be essential spending, Congress has not considered how to pay for it. This new trillion dollars of spending will rely upon the Fed to monetize the debt, what the rest of know as printing money out of thin air. No other spending is being cut. Interest rates will be suppressed. Therefore, the bill will not be supported by real savings and will lead to higher prices, hurting all Americans. Calling the passage of this bill as a great example of bipartisanship merely illustrates the incompetence of those who vote for it and the shallow reporting of those who should know better.

My letter to the Wall Street Journal re: During Covid-19 Most Americans Got Richer--Especially the Rich

 Re: During Covid-19, Most Americans Got Richer--Especially the Rich


Dear Sirs:
I am aghast that the supposedly knowledgeable Wall Street Journal would print such economic drivel. Do you really want us to believe that the path to wealth is through destroying untold thousands of businesses, throwing millions of people out of work, and then showering the nation with helicopter money printed out of thin air? Did you get your start by advising the governments of Zimbabwe and Venezuela? Do you REALLY want us to believe this? Let me call your attention to just one monetary statistic. In March of 2020 M2 stood at $16 trillion. One year later it stood at $20 trillion. That's an increase in the broadest measure of the money supply of four trillion dollars in just one year. This money was printed out of thin air, just like the product of a common counterfeiter. And just like the effect of money printing by a common counterfeiter, it will NOT increase wealth overall. It will do nothing more than redistribute wealth in order to make the counterfeiter and his cronies wealthy by robbing everyone else. The longer-term effect will be to discourage real wealth creation.

Time for the writers of the great Wall Street Journal to publish their so-called analysis under the heading of fiction.

Thursday, June 17, 2021

An Antidote to Political Correctness in Schools

 

We've all heard about the newest insult to our lives and our children. I refer, of course, to the growing adoption of "Critical Race Theory" as part of public school curriculum. Why should we be surprised? Many of our top colleges have  been adopting what can only be called Marxist indoctrination of their students for many years. A friend recently sent me a letter written by a North Korean immigrant who attended Columbia University in New York City. This courageous young woman had escaped North Korea into China at great risk, crossed the Gobi Desert to Mongolia with the help of Christian missionaries, and eventually made her way to South Korea. She then came to America to attend what she thought was a great, prestigious school (Columbia University), only to discover that Columbia's political correctness was perhaps even worse than that of North Korea!

 

Her story of escape from brutal, communist repression is not unusual. Others have done the same. I did not find as unusual her shock at discovering the same, soul destroying repression on the campus of one of America's supposedly premier institutes of higher learning. What I did find as unusual was her acquiescence to the many insults she suffered at the hands of the administration, teachers, and some of their student sycophants. She admitted that she learned to keep her head down, not offer an opinion, and not fight back! I admire this young lady a lot, so I'm perplexed at her reaction. If she crossed the Gobi Desert in search of freedom, surely she can cross a Columbia University classroom and walk out the door.

 

The answer for combating political correctness and other insults in our public schools is to refuse to attend them. There is nothing more important than inculcating the proper values in the minds of our children at such an impressionable age. If your actions to stop political correctness and other insults in our schools fails, then all you have to do is leave. Yes! Pull your child from school and send him to another that does not teach this filth. If it's a university, all the easier! Don't send them your children and your money. There are thousands of colleges in America. Find one that teaches values that are important to you. If your child is still in the public school system, you may have to sacrifice, but the rewards are worth it. Pay for your child to attend a private school. If you can't find one, then home school your child. Yes, I know that may mean that you may have to alter your work hours or even quit your current job. But this should be easier now. Perhaps the one good thing that has come out of the Covid-19 pandemic is that employees and employers have found that many jobs can be done from home.

 

Find a way. Do not feel that you have no choice but to subject your child to racism, Marxism, or anti-Americanism. WALK!

Tuesday, June 1, 2021

Government as the Ultimate Cause of the Tragedy of the Commons

 

A good definition of the Tragedy of the Commons is that "Resources that are un-owned and/or un-ownable will be plundered to extinction". Consider the fishes of the seas, especially those that migrate such as whales or may be found beyond any nation's territory waters. No one owns them and it may be impossible to own them. Therefore, fishermen are incentivized to take them before other fishermen take them. Over fishing results. Catches shrink. The size of the fish shrink. Treaties among fishing nations may mitigate the problem, as long as all sign the treaty and poachers are controlled.

 

In nineteenth century America it has been estimated that hunters killed forty million buffalo and trappers took two hundred million beaver. The buffalo were hunted almost to extinction, and some scientists claim that the water shortage and erosion problems of the American West are a result of the over-trapping of beaver, nature's premier water conservationist.

 

Privately owned resources are capitalized, ending their plunder

 

A solution to the problem lies in private ownership of the resource. Private owners manage natural resources to maintain their capital value. Scientists and economists have pointed out that the annual and apparently never-ending forest fires of the American West are partly due to the fact that they occur on government owned land. But government ownership is not the same as private ownership. Government has little incentive to protect the trees in order to harvest them over long periods of time. Governments' main objective seems to be simply fighting forest fires once they have begun, a policy that doesn't seem to have worked very well. Radical environmentalists would not tolerate selling the land and forests to private companies. A pity, because that is exactly what would stop their destruction.

 

Notice that the main problem that results from the tragedy of the commons is that of resource depletion. It is true that the first to grab the resource benefits, but this is a one-time grab. Privately owned forests, fisheries, oil wells, copper mines, fertile farm land, etc. will yield their bounty to perpetuity; whereas, a plunderer leaves nothing for the future. In other words, plunderers eat the seed corn.

 

This describes the state of government today. Through its money printing monopoly, government has the ability to plunder resources without limit, leaving nothing for future growth. Austrian economists call this high time preference, as opposed to low time preference. Those with high time preference prefer the satisfaction of short term wants at the expense of long term wants. The ant vs. the grasshopper fable is the perfect illustration of the principle. The ant works hard to save for the future, while the grasshopper plays in the summer sun. But the ant has food and shelter through the coming winter, while the grasshopper freezes and starves. Politicians have high time preference, because they occupy their positions of power for a limited time. They have constituents and supporters to placate. They want action and they want it now. Free fill-in-the blank.

 

The Soviet Union was the poster child of this syndrome. Prior to the Russian revolution of 1917, Russia was a highly industrialized nation that was a worthy competitor in world markets. After the revolution, it embarked on a one-time grab of all the nation's resources as it attempted to impose a completely socialist, state directed economic model. Within a few years the Russian people were starving. Only Western aid, the sale of its vast natural resources, and the plunder of Eastern European nations after the Second World War allowed the Soviet Union to survive as long as it did. When asked if the US would help restore the Russian economy after the fall of communism, President George H. W. Bush insightfully said that there was not enough capital in the entire world to do that.

 

The solution is gold, but the temptation for plunder is too great

 

Under a gold standard government cannot spend more than it taxes and borrows honestly in the bond market. Gold is a finite medium of exchange, perfectly suited for trading finite goods and services. But government can manufacture fiat money in unlimited amounts. So we have finite resources exchanged by fiat money with no limit. The temptation for government to use this power to accomplish its high time preference goals is too great for the politician/grasshoppers to ignore. Thus, all economies are being plundered by the ultimate expression of the tragedy of the commons--fiat money in the hands of profligate governments. There seems to be nothing that can prevent the disaster, since every citizen benefits is some way from government spending and no one is willing to give up his handout. In fact, the demand for more handouts keeps increasing.

 

Conclusion: Consumer spending consumes capital

 

In conclusion, we may say that the real tragedy of the commons is not that the plundered resources are claimed by a minority, but that the resources can never be capitalized to provide benefits into perpetuity. Government may plunder an economy only once. Western economies have a lot of accumulated capital resources, so it may seem that multi-trillion dollar budgets and deficits are sustainable. But they are not. What Keynesians call a post-Covid boom, due primarily to pent up consumer spending fueled by helicopter money, probably is capital decumulation. We are eating our seed corn. Fun, fun, fun...while it lasts.

 

Saturday, May 29, 2021

A Dutch Uncle's Advice to Race Warriors

 

Wikipedia describes a Dutch Uncle as follows:

 

Dutch uncle is an informal term for a person who issues frank, harsh or severe comments and criticism to educate, encourage or admonish someone. Thus, a "Dutch uncle" is the reverse of what is normally thought of as avuncular or uncle-like.

 

In this essay I will give some Dutch Uncle advice to those who fancy themselves as fighting the good fight in the war over racism. I assume that your intentions are honorable, because if they are not, then my advice will be dismissed out of hand because it is irrelevant to your true intentions of eternal conflict.

 

Your premise is that you or your ancestors were the victims of past discrimination based on race; therefore, you are justified in admonishing your fellow citizens who are not minorities, perhaps even demanding reparations. Furthermore you are entitled to practice discrimination against them as compensation and force them to repent publicly for their own actions and for the actions of their ancestors. You demand these humbling admissions even if there is no evidence of individual discrimination. As a recipe for never-ending racial conflict, you could hardly have adopted better tactics.

 

First of all, there is no objective or valid method for determining the extent of past, nationwide discrimination other than a close examination of discriminatory laws. The so-called Jim Crow laws of the post Reconstruction era South certainly qualify, but it is safe to say that these were removed long ago. Today the only discriminatory laws punish those who are not considered to be minorities. I leave it to you to decide who these victims of "affirmative action" might be. Race warriors are left with nothing more than seeking insult and injury in the completely legal actions of your fellow citizens as they go about their daily lives. This is especially divisive when inculcated into the minds of children; i.e., telling them at an impressionable age that they cannot achieve their full potential in life because others hate them for the color of their skin.

 

Now here's my first Dutch Uncle advice: Forget about it. Yes, forget about it. Ignore it. Put it out of your mind. There is nothing--I repeat, nothing-- that you can do to change people's minds....OTHER THAN PRACTICING EXEMPLORY BEHAVIOR YOURSELF. Do not become bitter. Do not ask government to intervene in some way to placate your real or perceived insults. All that will happen is the opposite of what you truly desire. Telling someone that he is a racist, whether he knows it or not, will get you nowhere. In fact it will get you LESS than nowhere. It will harm your cause.

 

Here are some more Dutch Uncle rules for would-be race warriors:

 

1. Perfect yourself through continuous self-improvement and self-reflection. Every man contains the seeds of good and evil within himself, but he must fight his own devils alone. No one can make you a better person and no one can prevent you from becoming one.

 

2. Forget about "fighting for social justice, etc." as an occupation. Your occupation should be finding a way to integrate yourself into the market economy. You do this by building your personal capital base. Become someone others can rely upon, who has skills and knowledge that others admire. Yes, you get it now. Stay in school. Pay attention in school and do your best. Become self reliant and self dependant. Do not rely upon government handouts. These are traps to a lifetime of dependency and bitterness. This should be a strong principle. Work hard. Work smart. Live within your means and do not begrudge others who are more successful. This is the true path to good self-esteem. The most important component of your personal capital base is good character, honesty, reliability, integrity. These are the traits that are most desired in life and also the traits that are most lacking. One can acquire many skills and honors, but nothing is so valuable as one's own good name.

 

3. Turn the other cheek. Do not respond negatively to perceived slights. Be magnanimous; i.e., assume that others did not intend to slight you. Remember the adage--Those who seek trouble usually find it. Do not be that person. Hall of Fame baseball star Ernie Banks once was asked if he had ever suffered insults and discrimination due to his race. He said of course he had. When asked how he responded to these insults and how he remained so cheerful, Banks said, "I killed them with kindness." This is the path to true self-worth. Do not let others make you bitter. Pity them instead.

 

4. Build a strong, loving relationship with your family. Cultivate lasting friendships. Make friends by being a friend. No one can have too  many friends. Be helpful. But most of all, remember that charity begins at home. In other words, your family is your foundation to happiness. Cultivate a strong family network. Do not keep a mental scorecard of whether you have helped your friends or family members more than they have helped you. Just be the person upon whom others can rely, whom others consult in times of trouble, whom others look upon as a rock of kindness and wisdom.

 

None of this is headline grabbing. None of this will get your name and picture in the paper. Forget about seeking accolades from becoming a race warrior. The real, lasting accolades, and the only ones that are important, will come to you anyway.

Sunday, May 9, 2021

Denying Reality Leads to Tyranny and Societal Failure

 

The common thread that connects failed societies, from Weimar Germany to the Soviet Union, is an almost pathological insistence on denying reality. Weimar Germany denied that masses of printed money would destroy civilized society. The Soviet Union insisted that Soviet Man would emerge spontaneously from the ashes of capitalist society. Weimar Germany spawned Nazi Germany. Nazi Germany was completely destroyed, both physically and politically, by the World War II Allies. Mercifully, the Soviet Union simply collapsed after seventy years of consuming capital to achieve the  phantom of the classless society. Today both Nazi Germany and the Soviet Union are synonymous with tyranny and failure. Both nations murdered millions. Both nations no longer exist. True, Germany exists as does Russia, but I contend that both are  new nations. Neither is perfect, but neither claims a political heritage to the nation that preceded it.

 

Pathological policy errors flowed inexorably from a skewed view of reality in both Nazi Germany and the Soviet Union. Once this view of reality was deemed to be above criticism, its champions adopted increasingly tyrannical policies. Nazi Germany's Aryan Supremacy racial theories seemingly justified the murder of the handicapped, Gypsies, those of alternative sexual orientation, Jews, and Slavs. In the name of birthing a new Soviet Man, the Soviet Union murdered anyone who stood in the way of its program to confiscate all businesses, including small farms. When businesses and farms failed, there was no soul searching as to root causes that might lie in Marxism itself. No, the problem had to be saboteurs within society. Reality, you see, was what the Soviet Union's Politburo said it was. As the vanguard of the proletariat, the Politburo stood outside society and saw its flaws. Those who disagreed were blind to this insight and had to be eliminated.

 

Chasing the Phantoms of Alternative Reality

 

Today the West especially is adopting policies that flow from alternative realities that, frankly, do not exist. Here I list just a few:

 

1. Catastrophic global warming/climate change is caused by man and must be stopped. I prefer to qualify the term "global warming/climate change" by the adjective "catastrophic". Is the world warming? Who knows? Is the climate changing? Probably. But neither global warming nor climate change is "catastrophic". Yet it has become almost an article of faith that the earth is on the precipice of an environmental catastrophe, requiring ever more radical handicaps on our freedoms and the economy.

 

2. White privilege in the US is responsible for crimes against minorities and disparities in wealth. This critical race theory has spawned witch hunts for secret and shadowy white supremacist groups especially in the military, which has empowered investigators to find evidence of these groups and root them out. It will be imperative that these investigators actually uncover such groups, whether they exist or not. Critical race theory is the old Marxist class struggle theory in new clothes. The Marxist class struggle theory postulated that we all are born into a class and cannot escape its prejudices. But notice that the Marxist and now the Race theorists consider that they themselves are not susceptible to the prejudices in which all the rest of us are trapped. Very convenient, eh?

 

3. Covid-19 is an existential threat to human life on earth. Constitutionally guaranteed human rights may be violated with impunity. Who gets to decide all this? Why, elected officials and government bureaucrats, of course.

 

4. Modern Monetary Theory (MMT) explains that government need not moderate its spending. Government can always manufacture more money in  order to fund new programs and pay its debts . More government spending can always prevent a drop in aggregate demand. Government debt is irrelevant, because "we owe it to ourselves". MMT gave government elected officials exactly what they always wanted--carte blanche to spend, spend, and spend some more and not worry about justifying or prioritizing spending. As Keynes actually said, pay people to dig holes in the ground and pay others to fill them back up. What could possibly go wrong?

 

Champions of the above denials of reality refuse to discuss whether their view of reality is accurate. All are articles of faith and cannot be questioned. In fact, to question them is considered to be an admission of ignorance, guilt, or perfidy. One wants to destroy Mother Earth, enslave minorities, kill innocent people, and prevent all in society from enjoying unlimited prosperity. It's the old straw man fallacy on steroids. Furthermore, resources will be expended to pursue these phantoms, and more resources will be expended to protect oneself from being caught in a witch hunt. Society will live in fear--fear of global warming, fear of being branded a racist, fear of contracting a dread disease. Unfortunately, what society does not fear is that our lifetime's savings will be wiped out by the hyperinflation made possible by MMT.

 

The Austrian View of Reality

 

Contrast these phantoms with Austrian economic theory, a central feature of which is that in order to prosper man must face the reality of human existence, primarily scarcity and uncertainty. People's preferences must be accepted at face value. Man acts. This is an irrefutable axiom in that to deny it is to confirm its validity. His action is rational in the sense that he believes that his action will improve his condition. He understands cause and effect. He performs one act at a time. He performs the most important act first; in other words, he ranks his actions in order of importance. Performing an act means that he must sacrifice the execution of others until later; in other words, acting means giving up some other preference, at least until some later time. Man's ordinal ranking of preferences means that the cost of an action is determined by what he eschews until later. No two  men have the identical ordinal ranking of preferences; plus, the preferences cannot be assigned a cardinal value in order to compare one man's preferences with another. Man discovers the concept of comparative advantage and adopts the division of labor in order to accomplish more. Through the market process, man adopts a universal medium of exchange (money) in order to break the tyranny of direct barter. Now man can indirectly exchange his specialized production for a universal  medium of exchange in order to obtain his real wants. Man invents government as a specialized service in order to protect his person and his property at a lower cost. He invents law in order to adjudicate inevitable disputes.

 

 All this is reality. Peaceful exchange requires social cooperation, which brings about peace and prosperity among men everywhere. As advice columnist Ann Landers used to say, Wake up and smell the coffee!

Thursday, April 22, 2021

A Rights and Logic Based Approach to Pandemics

 

We all are too familiar with the approach to pandemics taken by governments at all levels in the US. In the name of "public safety" governments assumed "emergency powers" to restrict the citizens' right to peaceful assembly (a violation of the first amendment to the Constitution) and to deprive citizens of property without due process of law (a violation of the fifth amendment to the Constitution). The fourteenth amendment applies these protections to the states, too. I will not repeat all the justifications that emanated from government that supposedly negated these Constitutional protections. Instead I will concentrate on whether they are defensible logically, using government's own criteria as the judge. The individual will be the subject of our inquiry, not the group.

 

Claim number one:

Peaceful Assembly Threatens Your Health and the Health of Others

 

Let's assume that government is right. If individuals assemble, they threaten one another's health in some way. But why should government make the decision about what constitutes a threat to health? What is its criteria? What is the threshold? Some individual in government makes this decision, but why should his level of acceptable risk be the group standard? Can't each individual decide how much risk he willingly assumes? Furthermore, if a person decides to assemble with like-minded individuals, what risk is that to those who do  not wish to assemble? You've willingly quarantined yourself, as governments recommended. Your risk is not affected by those who do not wish to quarantine themselves. They assume more risk; yours remains the same. Even if the pandemic spreads more rapidly, it does so only among those who took the risk in the first place, not you. Again, you have not been subjected to any additional risk. This is the reasoning behind the actions of many hypocritical politicians who ignored their own orders to their constituents. They merely decided that they were willing to take additional risk, and no one suggested that they were threatening others who remained in quarantine. So, logically the government imposed quarantine, AKA restricting the citizens' right to peaceful assembly, makes no sense logically.

 

Claim number two:

"Non-essential" Businesses Threaten Your Health and the Health of Others

 

The same logic can be applied to governments' decisions to lockdown "non-essential" businesses. (All businesses are essential, so that qualification is nonsense.) Government used the same rationale; i.e., that mingling with one's fellow citizens in places of business threatened the individual himself and others. But these "minglers" assumed the risk and threatened no one who did not "mingle".

 

The big question becomes this: why do those who quarantine themselves insist upon forcing quarantines on others? Certainly, businesses who choose to close may do so voluntarily. Why should they be concerned over those who do not choose to close. (Actually, I am not aware of any business that voluntarily closed due to risk intolerance. But maybe such a business does exist.) Businesses can adapt their premises to allay the fears of potential customers. This seems to be happening voluntarily for those "essential-businesses" that were permitted to remain open. Why should government dictate business practices to those who remain open? This is a decision for individual businesses alone. If such businesses adopt too stringent entry requirements, patronage will flow to more friendly competitors. If such businesses adopt too lenient entry requirements, the same thing will happen. There is no objective guideline for determining entry practices. In fact, the same kind of businesses may be more or less stringent, attracting more or less risk averse clientele.

 

Let Perfect Freedom Prevail

 

Each individual has the right to "perfect freedom" in deciding for himself how much risk he is willing to assume from any of thousands of daily risks. We practice perfect freedom every day without even thinking about it as we go about our daily lives. Each individual may choose his own risk tolerance, because his decision cannot affect those who wish to take less or even more risk. Risk averse individuals protect themselves. Likewise, each individual business decides what is best for itself and its customers, ranging from closing down to taking no additional risk mitigating measures at all. If customers decide that the business is not taking appropriate measures, they can stay home and/or patronize other businesses with risk mitigating measure more attuned to their liking. In other words, there is no logical reason that our Constitutionally guaranteed rights of peaceful assembly and right to protection of our property need be violated in order to protect "society". Society is composed of millions upon millions of individuals, all with different risk profiles. Let perfect freedom prevail.