Tuesday, December 31, 2024
Happy New Year 2025
Saturday, December 7, 2024
One hundred thousand dollars per second
On November 21st 2024 the US federal debt crossed the 36 trillion dollar threshold.
The debt crossed 35 trillion dollars on July 26th, 2024.
7/26/2024 $35,001,278,179,208.67
11/21/2024 $36,034,994,586,981.97
In 118 days the Federal Government added $1,033,716,407,773.30 (over one trillion dollars) to the national debt. Over this time period the national debt increased at a rate of $8,760,308,540.45 per day (almost $9 billion per day), $365,012,855.85 per hour, $6,083,547.60 per minute, or $101,392.46 per second.
You can watch the increase in debt occur in real time (fun for the whole family) at:
As you are well aware the larger the outstanding balance the larger the interest payment. Interest on the national debt is now larger than defense spending:
The details of this happy story are available at this link:
Another interesting publication is available from the US Treasury:
Look for these word of encouragement on Page 7 of the Executive Summary:
An Unsustainable Fiscal Path
The current fiscal path is unsustainable. To determine if current fiscal policy is sustainable, the projections based on the assumptions discussed in the Financial Report assume current policy will continue indefinitely.1The projections are therefore neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes need to be enacted for the actual financial outcomes to differ from those projected.
On page 9 of the Executive Summary you will find this:
Conclusion
Projections in the Financial Report indicate that the government’s debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is kept in place. The projections in this Financial Report show that current policy is not sustainable.
The USA is not the first empire to find itself in this situation:
On January 20th, 2025 Donald Trump will earn his self chosen nickname:
Sunday, November 17, 2024
Three questions
In this post I will answer questions that refer to my previous post on extreme poverty.
The first question is: How do we know that the data is correct?
In the previous post I included these graphs:
Our World In Data - extreme poverty graphs
The graphs show a decline in extreme poverty from 38% in 1990 down to 8.6% in 2024. This might seem too good to be true. This decrease in extreme poverty refutes the narrative that "capitalism causes poverty". So it would be reasonable to assume that if the data showing a decline in extreme poverty was inaccurate it would most likely be from a "pro capitalism" or right wing source. You can review the Our World In Data staff members at this link:
The staff does not appear to be right wing.
Information about the founder of Our World In Data is at this link:
Max does not appear to be a right wing conspirator.
Next we can examine the sources that Our World In Data use for their data at this link:
Their data sources are legitimate and from reputable organizations.
Other organizations have reported the same facts:
The chart presented by the World Bank shows extreme poverty declining from 44% of the world's population in 1981 down to 9% in 2022.
Here is a news story from a paper that is not considered right wing:
New York Times - Extreme Poverty
In the New York Times story we find these statistics: In 1990, about 36% of the global population lived in extreme poverty and that in 2015 the share of the world’s population living in extreme poverty fell to 12%.
A page from the United Nations website discusses the reduction in extreme poverty:
You will find the following statistics in the above UN story:
From 1990 to 2014, the world made remarkable progress in reducing extreme poverty, with over one billion people moving out of that condition. The global poverty rate decreased by an average of 1.1 percentage points each year, from 37.8 percent to 11.2 percent in 2014.
The share of the world’s workers living in extreme poverty fell by half over the last decade: from 14.3 per cent in 2010 to 7.1 per cent in 2019.
After reviewing the sources above it is safe to say that the data presented in the last blog post is accurate and extreme poverty has indeed declined from 38% of the world's population in 1990 down to 8.6% in 2024. With the additional data on this page we now know that extreme poverty has declined from 44% of the world's population in 1981 down to 8.6% in 2024.
Our second questions is: What caused this decline in extreme poverty?
The answer to this question is: The decline in extreme poverty is a result of the advance of individual liberty. China and India deregulated their economies, while the Berlin wall fell and the Soviet Union collapsed.
China’s Economic Liberalization (1978–Present) began shifting from a Marxist centrally planned economy toward a partially capitalist free market with the following results:
Growth: Sustained GDP growth averaging over 9% annually for decades.
Poverty Reduction: Over 800 million people were lifted out of extreme poverty, making it the largest poverty reduction effort in history.
Global Trade : Integration into global markets boosted exports and foreign direct investment
India’s Economic Liberalization (1991–Present):
The 1991 balance-of-payments crisis led to reforms under Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh.
Growth: India's GDP growth accelerated from 3.5% to 6-7% on average post-liberalization.
Economic Transformation: Shift from a closed, socialist, public sector-led economy to a partially capitalist free market with a strong private sector.
IT and Services Boom: Emergence as a global IT and outsourcing hub.
Over 330 million people were lifted out of extreme poverty.
Fall of the Berlin Wall (1989):
Reunification of Germany: Eastern Germany faced economic stagnation and high unemployment as it transitioned to a market economy. Massive fiscal transfers from the West funded rebuilding.
Eastern Europe: Countries like Poland, Hungary, and the Czech Republic liberalized their economies, leading to robust growth, EU integration, and modernization. Over 10 million people were lifted out of extreme poverty.
Breakup of the Soviet Union (1991):
Economic Collapse: GDP in post-Soviet states, particularly Russia, contracted sharply in the 1990s.
Hyperinflation: Rapid price liberalization led to severe inflation in newly independent states.
Privatization and Oligarchs: A flawed privatization process in Russia created oligarchic wealth while impoverishing many.
Recovery: Russia stabilized in the 2000s due to resource exports (especially oil and gas).
Soviet Satellite Republics: Baltic states successfully transitioned to EU-oriented market economies, while other states faced prolonged instability. 45–55 million people lifted out of extreme poverty
The common themes across China, India, Eastern Europe, and the former Soviet Republics is that economic liberalization: deregulation of economic activity plus respect for private property and contracts spurred GDP growth lifting hundreds of millions of people out of extreme poverty.
Our final question: Why is this tremendous accomplishment not widely publicized?
The dramatic decline in extreme poverty worldwide over the past few decades has not been widely reported or celebrated for several reasons:
1. Focus on Negative News
Media Incentives: News organizations often prioritize crises, conflicts, and disasters, as they tend to capture more attention than positive trends.
Perception Bias: People are more drawn to problems needing immediate solutions than to progress already achieved. This "negativity bias" leads to underreporting of positive long-term trends.
2. Complexity of the Story
Abstract Data: Declines in extreme poverty are often expressed in statistics and long-term trends, which can seem abstract and less relatable than personal or localized stories of hardship.
Slow Progress: Poverty reduction is a gradual process and lacks a single dramatic moment, making it less newsworthy.
Complex Causes: The reasons behind poverty reduction (e.g., globalization, technological advances, market liberalization) are complex and not easily summarized.
3. Misperceptions About Global Poverty
Outdated Beliefs: Many people assume global poverty is static or worsening due to exposure to stories of suffering in specific regions, ignoring overall trends.
Lack of Awareness: Public understanding of global development issues is often limited, with many unaware of how much progress has been made.
4. Criticisms of Progress Narratives
Focus on Inequality: Critics argue that while extreme poverty has declined, income inequality has risen in many countries, diverting attention from poverty reduction achievements.
Environmental Concerns: Positive news is overshadowed by emphasizing the environmental costs of economic growth, such as deforestation and carbon emissions, which contribute to poverty reduction.
5. Ideological Divides
Skepticism of Capitalism: Much of the poverty reduction has been driven by globalization, trade, and market liberalization, which are controversial topics in political and academic debates.
Distrust of Data: Some question the reliability of statistics from developing countries or view poverty definitions (e.g., $2.15/day) as too low to reflect real well-being.
6. Competing Global Issues
Focus on Crises: Attention has shifted to pressing global challenges such as climate change, pandemics, migration, and conflict, overshadowing positive developments in poverty reduction.
To thoroughly examine the reasons that this type of story is not widely publicized read the following essay by F. A. Hayek:
Consider this quote from a rising star in the economics profession, Per Bylund: "What causes poverty? Nothing. It’s the original state, the default and starting point. The real question is: What causes prosperity?"
Tuesday, November 12, 2024
Extreme Poverty
Are you aware that the number of people living in extreme poverty worldwide has declined from 38% in 1990 to 8.6% in 2024? (Extreme poverty is defined as living below the International Poverty Line of $2.15 per day. This data is adjusted for inflation and for differences in the cost of living between countries.) Data supporting this fact is available at the following link:
This is a dramatic and wonderful accomplishment. The greatest reduction in extreme poverty in recorded history.
If you were not aware of these statistics you are not alone, most people think global poverty is rising when in fact the opposite is happening:
News media and schools are not sharing the facts about the decline in extreme poverty. This may be because the main driver behind the decline is that more people are gaining the freedom to make their own economic decisions. The shift from central planning to freer markets has unlocked human creativity and productivity.
This good news should be celebrated and shared by all who value human flourishing.
Sunday, October 27, 2024
Pre-bunking
Your wise overlords are looking out for you. There is a possibility that you could be exposed to harmful ideas, and they are going to vaccinate you against this possibility. EU President Ursula von der Leyen will keep you safe.
The following article by John Leake provides all of the exciting details (be sure to watch the video):
Ursula von der Leyen Pre-bunking
Aristotle once said, "All men by nature desire to know," He argued that this innate quality distinguishes humans from all other species. This idea became a cornerstone of Western philosophy, shaping various schools of thought and guiding intellectual pursuits for generations. Fortunately for us in today's modern society we have Ursula and her enlightened deputies to do the learning for us. We no longer need to wade through information to decide what is useful or correct. Ursula will provide us with the correct and useful information in advance!
John Leake refers to John Milton’s 1644 essay, Areopagitica, that was presented to the English Parliament in opposition to licensing for printers. In this essay Milton argues that censorship is a barrier to truth, intellectual growth, and individual liberty, asserting that individuals must have the freedom to engage with all ideas, even controversial ones, to reach true understanding.
If there is a sequel to George Orwell's 1984, Pre-bunking must be included.
Saturday, August 31, 2024
Price controls always and everywhere cause shortages
Consumer price increases are not inflation itself; they are a symptom of inflation. Similarly, a fever is not the infection; it is a symptom of the infection. Milton Friedman clearly stated this fact when he said:
Inflation is always and everywhere a monetary phenomenon.
What he meant by this statement is that debasement of currency requires more money to exchange hands for every given transaction. In our current situation the Federal Reserve Bank has created so much money out of thin air that the purchasing power of the dollar is collapsing. This requires us to spend more dollars on our purchases.
Rising costs can and do cause price increases for individual goods and services, but rising costs cannot cause an increase in the general price level. When the price of a good or service increases consumers will substitute another good or service in its place. A general increase in prices across a wide band of goods and services can only be caused by an increase in the money supply.
With price controls becoming trendy again, I've included links to 11 articles on the topic in the post below. Each link is followed by a brief highlight from the associated article. I am sure that you will find something in the list below to impress your friends at the next cocktail party.
A 4,000 year history of economic calamity
There is a four-thousand-year historical record of economic catastrophe after catastrophe caused by price controls. This record is partly documented in an excellent book entitled Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamon Butler, first published in 1979.
In Babylon some 4,000 years ago the Code of Hammurabi was a maze of price control regulations. Such laws “smothered economic progress in the empire for many centuries,” as the historical record describes. Once these laws were laid down “there was a remarkable change in the fortunes of the people.”
The Continental Congress wisely adopted an anti-price-control resolution on June 4, 1778 that read: “Whereas it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purpose proposed, but likewise productive of very evil consequences--resolved, that it be recommended to the several states to repeal or suspend all laws limiting, regulating or restraining the Price of any Article.”
At the end of World War II American central planners were even more totalitarian when it came to economic policy than were the former Nazis. During the post-war occupation of Germany, American “planners” rather liked the Nazi economic controls, including price controls, that were in fact preventing economic recovery. The notorious Nazi Hermann Goering even lectured the American war correspondent Henry Taylor about it! As recounted by Schuettinger and Butler, Goering said:
Your America is doing many things in the economic field which we found out caused us so much trouble. You are trying to control peoples’ wages and prices — peoples’ work. If you do that you must control peoples’ lives. And no country can do that part way. I tried and it failed. Nor can any country do it all the way either. I tried that too and it failed. You are no better planners than we. I should think your economists would read what happened here.
In 301 AD, Roman emperor Diocletian implemented price ceilings on over 1,200 goods. The silver coinage had been debased over the past 250 years, and the citizens were understandably unhappy about high prices.
The English translation of Diocletian’s edict is fun to read. It shows that not much has changed in politics over the millennia. Diocletian is introduced as “dutiful, blessed, unconquered” and the empire’s military victories are acknowledged as having produced a wonderful peace. But, the emperor is obliged to “secure the quiet we have established with the reinforcements Justice deserves.” The barbarian tribes had been vanquished, the Samaritans, Persians, and Britons had been conquered, but now a new war must be waged against greed: “Greed raves and burns and sets no limit on itself.” Greedy businessmen were exploiting the poor with high prices and “It is appropriate to the forethought of us who are the parents of the human race, that justice intervene in matters as a judge.”
Lactantius, a philosopher, wrote about the effects of Diocletian’s edict a few years later:
While Diocletian, that author of ill, and deviser of misery, was ruining all things, he could not withhold his insults, not even against God. This man, by avarice partly, and partly by timid counsels, overturned the Roman empire.
He also, when by various extortions he had made all things exceedingly dear, attempted by an ordinance to limit their prices. Then much blood was shed for the veriest trifles; men were afraid to expose aught to sale, and the scarcity became more excessive and grievous than ever, until, in the end, the ordinance, after having proved destructive to multitudes, was from mere necessity abrogated.
In the 1970s, thanks to years of big-time federal spending on wars and welfare programs, the US abandoned its gold obligations under the Bretton Woods system, and Nixon closed the gold window. Knowing that this would cause prices to rapidly rise, the Nixon administration also implemented a number of wage and price controls as part of a “temporary” 90-day freeze on wages, prices, and rents. These were the first peacetime price controls in US history. As you might guess, however, price controls did not end after 90 days. Only the “freeze” lasted 90 days. After that, prices would be governed by a “Price Commission” and “Pay Board” that would only slowly abolish price controls—but not until after the 1972 election, of course.
By early 1973, many producers had endured price controls for 18 months. US Senate report then concluded that price controls had caused a breakdown in energy production and distribution. Fuel shortages were “far more extensive than anticipated.”
A freeze on prices meant it was no longer profitable for many producers to bring products to markets. The supply of goods and services fell while prices rose.
For those who bother, however, to learn about economics and economic history is to understand how the regime is ripping us off. Without this knowledge—and without some understanding of the benefits of private property and free markets—it’s easy for politicians to simply assert that their latest tax or regulation will make everyone better off. Trump does it when he calls for higher taxes in the form of tariffs. A lot of people believe it. Harris is now doing the same thing with price controls. Many will believe her and happily support the latest government policy that will further crush them under a rising cost of living.
Democrat presidential candidate Kamala Harris is demonstrating why monetary debasement has always been a favorite way for government officials to plunder the citizenry. Rather than focusing on the Federal Reserve as the root cause of prices rising across society, she’s blaming rising food prices on grocery-store owners. Consequently, she says that if she is elected president, she’ll get a federal “anti-gouging” law enacted that prevents grocery stores from raising prices.
In other words, she’s going to impose price controls, which inevitably means that we are going to have to deal with shortages of everything in grocery stores that has a price control imposed on it.
Let’s assume that the government is spending $2 trillion more per year than what it is bringing in with taxes. Let’s also assume that the government is already $34 trillion in debt.
Where does the government get that $2 trillion? One way is to raise taxes. Another way is to borrow it and add it on to the overall federal debt. But people get angry when taxes get too high. They also get concerned when they see the government’s debt getting excessively high because they know that ultimately taxpayers are on the hook for paying it off.
Thus, the government has to figure out a way to tax people without their realizing that they are getting taxed. That’s where a central bank (i.e., the Federal Reserve) and the printing press come into play. The central bank simply prints up that $2 trillion and the government goes out and spends it.
But that $2 trillion in new paper money has consequences. It lowers the value of everyone’s money. And there is only one way that that lower value can be reflected: through higher prices of most everything in society. In other words, people’s money simply doesn’t buy as much as it did before the government’s monetary debasement. Let’s say it buys 20 percent less than it did before. That’s the same as if the government had taxed people an additional 20 percent of their income.
Except that there is a big difference between raising income taxes by 20 percent and a 20 percent monetary-debasement tax. The difference is that people can see the 20 percent increase in taxes but many of them can’t see that the government is behind the 20 percent debasement tax. Instead, they see the rising prices in the grocery store and blame it on the grocery-store owners rather than on the Federal Reserve, which has lowered the value of their money through monetary debasement.
Price Controls Are The ‘Hail Mary’ Play of a Bankrupt System
All the usual tricks which got us this far, money printing, interest rate suppression, ballooning debt have finally run out of runway because they are now resulting in consumer price inflation.
This is 100% the fault of bad political leadership and central bank policy but that will never be admitted…Instead, politicians will resort ad hominem attacks on the productive class, and absurd accusations that it is the fault of investors and entrepreneurs, who must navigate the risks of monetary debasement, for causing it.
After one looks at the historical record – 4,000 years of endless failures, in price controls, communism and every permutation of centrally planned economies, there has to be a reason politicians are still reaching for it as a solution to problems they have caused and why a small – but vocal and influential, segment of the public cheerleads this as a net benefit for society.
The secret sauce of “it’s different this time” is technology – particularly Big Tech, big platforms, Total Information Awareness and surveillance. Central planners think it is now technically feasible to run all the calculations and tracking in real time that would enable unrestrained monetary stimulus while keeping a lid on negative externalities like inflation.
The stage is set, when politicians tell you they want to be able to control prices, believe them – but what the public must understand is that price controls means spending controls.
The politicians will tell you that it’s all about putting “greedy CEOs” in their place.
What they won’t tell you is that price controls also means is telling you what you can or cannot eat, how you use energy – whether you’ll be permitted to travel, or make any other kind of economic decision or make any kind of value exchange that you used to take for granted.
Throughout history, price controls have always brought about serfdom and tyranny because that is the only way to override individual incentives. In today’s highly wired world that would mean total technocratic feudalism.
The most vivid example we have today is Venezuela – where price controls were so effective, the rabble had to break into public zoos to eat the animals.
Why price controls should stay in history books
Note that this article is written by Christopher J. Neely, an economist and senior economic policy advisor at the St. Louis Federal Reserve Bank and is published on the St. Louis Federal Reserve Bank website.
- As inflation rises, some have called on the government to impose price controls. But such controls have significant costs that increase with their duration and breadth.
- Prices allocate scarce resources. Price controls distort those signals, leading to the inefficient allocation of goods and services.
- Appropriate fiscal and monetary policies can reduce inflation without the costs imposed by price controls.
Let’s consider the impact of price ceilings. High prices have two economic functions:
1. They allocate scarce goods and services to buyers who are most willing and able to pay for them.2. They signal that a good is valued and that producers can profit by increasing the quantity supplied.
That is, prices allocate scarce resources on both the consumption and production sides. Price controls distort those signals.
"We're dealing with a lot. The net profit in grocery stores is about one and a half percent — if you're doing really good, one and three quarters. Just in layman's terms, it's about a $1.50 for every $100 that you go through the registers. And what we've seen in the last three to four years has been pretty horrific," Rep. Michael Rulli, R-Ohio, told Fox News Digital in an exclusive interview.
"This will be a nail in the coffin of this industry that no one can imagine."
He pointed to the bar code, known as the stock keeping unit (SKU), denoting the individual product and said his stores, for example, carry items with 38,000 different bar codes, whereas larger grocery chains carry more.
"What will happen in four years of a Harris administration is those 38,000 SKUs will go all the way down to 5,000 SKUs, and you will be living in Cuba or Venezuela."
To accommodate the federal government’s irresponsible spending, the Federal Reserve has ballooned the money supply from $4.7 trillion at the start of this century to $21 trillion today, an increase of 347%! Over the same period, U.S. GDP has risen 108%. As money in circulation increases faster than the production of goods and services does, the price level must rise. In other words, the dollar’s value relative to goods and services it can buy continues to decrease.
To make matters worse, the Federal Reserve has been buying debt issued by the federal government, allowing the latter to continue its out-of-control spending habit. The Federal Reserve has expanded its balance sheet to over $7 trillion and is now by far the largest holder of U.S. federal debt.
Incidentally, “inflation” as an economic term originally meant the creation of new money and credit, not rising prices. Those wishing to confuse the public on which is the cause and which the effect has gradually redefined inflation as rising prices. Check any hard copy Merriam-Webster dictionary printed in the 20th century and see for yourself.
Only the Federal Reserve can cause a general rise in prices and only when it creates new US dollars that didn’t previously exist (inflation).
New dollars can only be created permanently by the Federal Reserve. The reason prices have steadily risen over the past 111 years is because the Fed has constantly increased the supply of dollars over that period.
The reason prices rose so much more over the past four years than they had previously is the Federal Reserve created far more dollars in the past four years than it has on average during the past century.
Probably no argument for the cause of higher prices is more absurd than “corporate greed.” Politicians resort to this argument to deflect blame. But no matter how greedy corporations are or become, they have no power to increase general price levels.
First, every corporation always seeks maximum profit. If this is greed, then corporations are always greedy. There would be no reason for them to suddenly become greedier just at the moment when consumer prices are rising. On the contrary, corporations generally compete by trying to lower their prices to undercut competitors.
But even if corporations did suddenly all decide at once, through coincidence or collusion, to raise their prices at the same time, this could not cause prices in general to rise. It would merely force consumers to make different decisions on what they purchase and what they do not. Consumers would pay the higher prices for those products most important to them, then the next important, and so on until they ran out of money. They would forgo those items lower on their value scales they could no longer afford, putting downward pressure on the prices of those products.
There are many other non-monetary arguments made for what is commonly called “inflation,” but they all fail for the same reasons as those analyzed here. There is no way to increase the price of one product without a corresponding fall in the demand for others unless new dollars are added to the economy. It’s the Fed, stupid.
Rising grocery costs continue to put the squeeze on families. Overall, the cost of a trip to fill the pantry rose nearly 22 percent since the beginning of 2021. Many specific staples rose far more — eggs are up 110 percent, flour up 29 percent, orange juice up 82 percent. A family of four spending $1000 per month just three and a half years is spending an additional $2,640 annually for this same shopping list.
Unfortunately, Vice President Harris misdiagnosed the source of the problem as “bad actors” seeing their “highest profits in two decades.” She blames the initial surge in food prices on supply chain issues during the pandemic — certainly a major contribution to the shortages and price increases on many items early in the pandemic.
However, Harris mixes this truth with falsehood by claiming businesses are now pocketing the savings after these supply-chain issues have subsided. Her proposed solution — “the first-ever federal ban on price gouging on food” — will compound the misery.
The flood of new money coursed through the economy. The M2 money supply swelled by 40 percent in just two years. More dollars chasing goods and services ultimately resulted in dramatic price hikes.
Another point the Biden White House misses is that profits were higher in nominal terms because of inflation. The number of dollars was higher than the previous year, but those dollars were worth less than before.
So, when you take a normal 3-8% profit margin and multiply it by the 13% inflated dollars, you end up with a staggering number, which Kamala and Joe claim was price gouging. In reality, it wasn’t price gouging—it was just the normal effects of inflation.
Tuesday, August 13, 2024
The Moral Case for Capitalism
Dr. Wanjiru Njoya's recent article, published by the Mises Institute, offers a concise yet powerful defense of capitalism while decisively condemning socialism. If you believe that capitalism's success is inevitable and socialism's failure is a given, it's worth taking a closer look. You can read the full article at this link:
Presenting the Moral Case for Capitalism-capitalism
Here are some of my favorite excerpts from the article:
There is a widespread perception that capitalism is a system designed to encourage greed, envy, selfishness, and other moral failings to flourish...No economic system, no matter how efficient and productive, can flourish if it is widely regarded as the root of all evil.The assumption of many capitalists is that the demonstrable benefits of capitalism ought to speak for themselves – people will enjoy the material comforts that only capitalism can produce, and that will suffice to make the case for capitalism. Add to that the fact that socialism is invariably accompanied by tyranny, deprivation, and ultimately death, and it is reasonable to suppose that there is no need for debates about morality – the facts will speak for themselves.While the facts to a large extent speak for themselves, socialists who cling to their ideological interpretations with a cult-like devotion have now achieved dominance in most schools and institutions of higher learning. They offer an interpretation of history that seems superficially attractive – the rich are rich because the poor are poor, wealth comes from theft and exploitation, those who oppose wealth redistribution are motivated by hate, socialism only fails because the wrong people are put in charge, and the like.These arguments are central to the “decolonize the curriculum” movement that has swept universities in the last few years. Underpinning this ideology is a commitment to egalitarianism, and the belief that inequality of income, wealth, or circumstance is wrong. The notion that inequality is presumptively evil, and that capitalism is therefore immoral because it produces inequality, persists.We therefore defend the morality of capitalism by highlighting the importance of capitalism for liberty, and in turn emphasizing the importance of liberty for justice and peace. We argue that whether people have the same amount of wealth or different amounts of wealth is neither moral nor immoral. The moral debate concerns neither equality nor inequality, but people’s natural right to live in peace and liberty. Liberty is the foundation of morality and justice.We defend capitalism not because we think systems of free exchange are inherently moral, but because we understand free exchange as an attribute of self-ownership and property rights. In a wider context different foundations for morality and justice may be held by different people, based on moral philosophy or religion, for example, but such foundations would not be objective or universal. Self-ownership and property rights are the only moral foundation of justice in an objective and universal sense.A moral defense of capitalism is therefore premised on our inherent and inalienable right to life, liberty, and property.
Dr. Njoya's remarks bring to mind one of Milton Friedman's well-known quotes:
A major source of objection to a free economy is precisely that it gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.
Tuesday, July 30, 2024
There are no solutions; there are only trade-offs
In his book "Basic Economics: A Common Sense Guide to the Economy" first published in 2000, Thomas Sowell makes the following observation: "There are no solutions; there are only trade-offs." Sowell explains that every decision involves compromises, and that recognizing and understanding these trade-offs is crucial for effective economic thinking and policy-making.
A recent article by Jonathan Miltimore of American Institute for Economic Research (AIER) discusses how economic reality has recently impacted environmental political policy. The article can be found at this link:
Highlights from this article:
A quote from a farmer at a protest in Pamplona, Spain: "They're drowning us with all these regulations. They need to ease up on all the directives and bureaucracy.”
First, it’s becoming apparent — especially in Europe where energy is more scarce and expensive — that people are souring on Green policies.
...voters don’t actually like being told what car they must drive and how to cook their food and heat their homes.
Green parties and environmentalists have had success largely by getting people to focus on the desired effect of their policies (saving people from climate change) and to ignore the costs of their policies.
Politicians seem to grasp that their policies come with trade-offs, which is why their bans and climate targets tend to be 10, 15, or 30 years into the future. This allows them to bask in the glow of their climate altruism without dealing with the economic consequences of their policies.
This is one of the most salient differences between economics and politics. Economics is all about understanding the reality of trade-offs, but politics is primarily about ignoring or concealing these realities.
The economic impacts of environmental political policy is discussed by Roger Pielke Jr. in the following article:
The iron law of climate policy
Highlights from this article:
Climate policy, they say, requires sacrifice, as economic growth and environmental progress are necessarily incompatible with one another. This perspective has even been built into the scenarios of the IPCC. However, experience shows quite clearly that when environmental and economic objectives are placed into opposition with one another in public or political forums, the economic goals win out. I call this the iron law of climate policy. Opinion polls show that the public is indeed willing to pay some amount for attaining environmental goals, just as it is with respect to other societal goals. However, the public has its limits as to how much it is willing to pay.
In her novel "Atlas Shrugged" Ayn Rand makes the following statement: “We can evade reality, but we cannot evade the consequences of evading reality.” Environmental political policies are experiencing the consequences of evading economic reality.
Tuesday, July 23, 2024
Increase your intellectual ammunition
The following quote is from Tom Woods:
“We're in a minority, so we can't afford to be ordinary. Each of us has a responsibility to the cause we represent to become as informed as we can, to be the best communicators we can, to go the extra mile so our impact will be greater than our numbers.”
Increase your intellectual ammunition. Read the 12 short essays and books on the “Essential Reading List” at the following link:
Sunday, July 7, 2024
Running the world
During ABC News' exclusive interview with President Joe Biden on July 5th, 2024, the following statement was made:
PRESIDENT JOE BIDEN: “Look. I have a cognitive test every
single day. Every day I have that test. Everything I do. You know, not only am
I campaigning, but I'm running the world.”
It is telling that the President of the United States'
statement claiming he is "running the world" did not elicit any
remarks from the interviewer or the subsequent reporting press. Do the citizens of the United States expect
or approve of their President “running the world”?
Central planning has always and everywhere been a
failure. The approximately 205 sovereign
states of the world might not agree with President Joe Biden’s assessment of
his authority.
Apparently, President Joe Biden has decided to enhance the cold
war title “leader of the free world” that was first applied to President Harry
S. Truman. This is arrogance characteristic
of an empire not a constitutional republic.
Compare our current President’s opinion of US foreign policy (and apparently the opinion of the main stream media) with that of two esteemed prior Presidents.
During his first inaugural address on March 4, 1801, Thomas
Jefferson described the essential principles of our government: “Equal and
exact justice to all men, of whatever state or persuasion, religious or
political; peace, commerce, and honest friendship with all nations, entangling
alliances with none…”
John Quincy Adams delivered a speech on July 4, 1821,
celebrating the anniversary of American independence while serving as Secretary
of State under President James Monroe. In this speech, Adams articulated his
vision of American foreign policy, emphasizing the principles of
non-intervention and neutrality. "Wherever
the standard of freedom and independence has been or shall be unfurled, there
will her [America’s] heart, her benedictions and her prayers be. But she goes
not abroad, in search of monsters to destroy. She is the well-wisher to the
freedom and independence of all. She is the champion and vindicator only of her
own."
Consider this: Would you enjoy greater individual liberty and a lower burden of national debt today if the USA had adhered to the advice of Thomas Jefferson and John Quincy Adams?
Monday, March 11, 2024
Choose socialism, or human freedom
The link below leads to an article by Murray N. Rothbard that was published in the September 1977 issue of the “Libertarian Review:”
The Myth of Democratic Socialism
Some of the highlights are:
In any debate between a socialist and a free-market capitalist, all too often the socialist quickly puts the free-market advocate on the defensive, and the entire time is consumed by the free-market person fending off attacks on the ability of the market to prevent inequality, or business cycles, or even the ravages of affluence and "materialism." Being on the offensive, socialism emerges spotless and unbesmirched, and it is implicitly assumed on all sides that the market economy must prove its worthiness to be in the same moral and ideological ballpark as socialism. In fact, the morality of socialism is rarely questioned in these discussions, the critic confining himself to doubts about socialism's practicality or workability.
Yet, in truth, socialism is neither workable nor moral; both in theory and in practice, it is a system unsurpassed in brutality, despotism, mass murder and exploitation. It deserves no solemn respect or moral salute.
Before turning to socialism, the morality as well as efficacy of the contrasting system of the free market can be established very quickly. The free market is a vast network of two-person exchanges, conducted voluntarily at each step of the way by each participant because each believes he will benefit from the exchange. Since the exchanges and choices are free and voluntary, the free market economy is harmonious and cooperative, while allowing fullest room for the free play of individual choice. And the economy works splendidly, because the free price system and the profit-and-loss incentives arising from that market bring efficiency and order out of the "anarchistic," seemingly chaotic interplay of free and voluntary choices. Yet it is an order arising spontaneously out of freely adopted choices, rather than one imposed by violence and coercion. Such a free market, in its pure form, does not exist anywhere in the world today.
Socialism, in short, places the lives, the fortunes, and the sacred honor of every citizen under the total command of the State and its ruling elite.
Unfortunately, in discussions of socialism in the United States, socialists have usually been allowed to get off the hook with a general disclaimer: that it is terribly unfair to tar them with the brush of Hitler, Stalin and Mao. For that is not the kind of "socialism" they want and advocate; in fact, they don't consider these regimes to be "socialist" at all—despite the fact that these regimes precisely fit the general linguistic definition of socialism that we have mentioned above. For their socialism would be peopled by "good guys," not by those terrible people who have staffed the actual socialist regimes of this century.
But these disclaimers are simply not good enough. The essence of socialism is not the specific people that the individual socialist would like to see in power. The essence of socialism is the system itself: total State power over the means of production. And if the result of all the socialisms so far has been grisly and monstrous, and if no "humanist" nice guys have yet come to the fore, then perhaps, as the Marxists would say, "this is no accident," but a result embedded within the system itself. And that is our contention: that Hitler, Stalin, Mao, et al. are inherent systematic tendencies within socialism itself.
And so the essence of socialism is forced labor. Where but under a socialist regime could a Mao decide to "end the contradiction between physical and mental labor" by shipping hundreds of thousands of urban students to live permanently in the frontier province of Sinkiang—and to force them to grow rice in a dry climate for the good of their souls—or, to use a more Marxian term, for the benefit of their "reeducation"?
socialism with democracy or civil liberties is a chimera because the socialist government will necessarily have total power over the processes of education: over schools and the media. Possessing that power, the ruling cliques will use it to try to mold a subject population that will be filled with love for their rulers and eager willingness to obey their every command. Call it what you will: "brainwashing," "cultural rehabilitation centers," or whatever, it is inevitable that a ruling elite given total power over education will use it for such "social" purposes, to create an eagerly sought New Socialist Man: a Man who will love and obey his rulers and who will put his rulers' commands above any personal qualms or considerations. Hopefully, human nature is such that the government cannot succeed; but the society is a living Hell while the rulers try their best.
On top of all this moral and social horror, socialism can't work; that is, lacking a free price system, socialism cannot operate an advanced industrial economy to suit even the goals of the rulers of the State. A socialist industrial economy will suffer grave shortages, poverty, famine, and breakdown, and ultimately the death of a large portion of its population.
In short, Professor Falk has stated the choice before mankind correctly: it is socialism, or human freedom. It is one or the other. Humanistic or democratic socialism is a chimera, a contradiction in terms.
Thursday, February 29, 2024
Listen to our neighbors
Our neighbors from Central and South America have provided us with a warning and a virtuoso economics lesson.
First, we received a warning from Nayib Bukele, President of El Salvador who was reelected to a second term on February 2, 2024:
Nayib Bukele speech at CPAC 02/23/2024
Highlights of this speech:
If you want globalism to die here too you must be willing to unapologetically fight against everything and everyone that stands for it, fight for your freedoms, fight for your rights.
The next president of the United States must not only win an election he must have the vision the will and the courage to do whatever it takes and above all he must be able to identify the underlying forces that will conspire against him. These dark Forces are already taking over your country you may not see it yet but it's already happening.
We had to remove corrupt judges and corrupt attorneys and prosecutors. These corrupt judges and prosecutors were setting the gang members free. It wasn't just the gangs. The corrupt system worked in tandem with the so-called international community, the NGOs and of course the fake news. Just like it happens here in the United States. Unelected bureaucrats are trying to install public policy.
The people of El Salvador have woken up and so can you. The global elites hate our success, and they fear yours. The people's free will to choose their leaders is something they despise because they cannot control that. You have experienced this firsthand here in the United States. The global Elites control the mainstream media they finance campaigns, District Attorneys to mention a few. They abuse their powers; they persecute political opponents.
Institutions were created to serve the people and not the other way around. Somewhere along the way those people forgot their fundamental purpose, which is more important than the institution itself. When the judicial system was created it was created out of the necessity to bring justice but now it seems that survival and control of the judges of the attorney generals among others are paramount and the need to bring Justice is merely a little more than an afterthought.
So, who's financing the government? Your government is financed by treasury bonds. Who buys the treasury bonds? Mostly the Fed. How does the FED buy them? By printing money. But what backing does the FED have for that money being printed? The treasury bonds themselves. So basically, you finance the government by printing money out of thin air. Someone could ask well so if the government can print limited amounts of money out of thin air why do they collect taxes? I mean in theory it will make sense right if they can print unlimited amounts of money why would they need taxes? The answer is simple but it's very shocking. The real problem is that you pay high taxes only to uphold the illusion that you are funding the government which you are not. It's shocking but it's true. The government is funded by money printing paper backed with paper a bubble that will inevitably burst.
We didn't tolerate being told what to do in doing so we did the unthinkable against all adversity we transformed our El Salvador from the most dangerous country in the world to the safest in the Western Hemisphere. We did it by defying the global elites. We told them no more and that is my message to you. Put up the fight because in the end it will be worth it. It has been for us, and you will have your country back.
The next speech is a brilliant economics lesson from Javier Milei the newly elected President of Argentina:
Javier Milei speech at CPAC 02/24/2024
Highlights of this speech:
Today I will focus on the technical underpinnings of those political views and along those lines I will focus on neoclassical economics and how its view of market failure is conducive to the advance of statism and how this destroys economic growth, putting a break on the improvements in well-being and the fight against poverty.
The thing about the neoclassical model is that when the model doesn't match reality, they get mad at reality calling it a market failure.
The first thing we need is to have a good definition of the market, what the market actually is. The free market is actually a social cooperation process where you voluntarily exchange property rights. Actually, since these exchanges are voluntary there can be no market failure because nobody would be self-inflicting harm. So, if we define the market properly all definitions that are interventionist in nature collapse. It is also very important to be clear as to what institutions are the foundations of the market. Two major institutions are private property and markets that are free from State intervention. If you're going to exchange property rights it means that private property is important and if the exchanges are voluntary there's no room for the intervention, encroachment, and Invasion by the state.
Actually, when someone engages in an exchange and gives something in exchange for money this creates a historical record or register which is price and that historical record we call price is an information transmission mechanism and also becomes a coordination mechanism as it makes some people be on the supply side and others on the demand side There’s also an adjustment process because demand and supply don't always perfectly match. When demand goes up prices go up and the other way around so private property and free markets determine the price system, and this is the basis of economic calculation.
This shows why none of the varieties of socialism can work. In the most extreme cases because there's no private property you can't engage in the exchanges that the market would require. In the milder varieties that do allow the existence of the private sector what happens is that state intervention creates noise in the price system and the more State the more government there is the more violence there is the more distortion there is and the worse the system functions.
The division of labor combined with the notion of social cooperation ends up being fully destructive as far as socialist ideas are concerned. I could actually hate him but I need him to buy my product so I must treat him nicely, so as Bastiat used to say when trade goes in soldiers don't and promoting free trade is promoting peace.
This idea of the market as a social cooperation mechanism is a tremendous bomb for socialism because if exchanges are voluntary, it means that it's win-win for both sides so there's no room for the theory of exploitation or for surplus value or for Marxism and socialism.
Regulating prices and quantities or amounts destroys property rights.
The other major threat or attack from socialists and statism has to do with efficiency as opposed to distribution and so they say that capitalism is high individualist as opposed to the altruism of socialism, (always with the money of others). This aberration is pursued in the name of social justice. Hayek used to talk about weasel words whenever they chose an adjective it was actually the exact opposite. So social justice is violence and unjust, it's not just or anything of the sort, far from it. It's an aberration. It's unjust because it involves unequal treatment before the law.
I come from a country that bought all of those stupid ideas and from being one of the most efficient countries in the world now we rank 140. Don't surrender your Liberty, fight for your freedom. If you don't fight for your freedom, they will drag you into misery.
I would also like to leave a message of optimism with you. Argentina seemed to be a country doomed to be like sheep driven by socialists. When I started my political career in Congress as a congressman, I said that I wasn't there to herd sheep, but rather to awaken lions.
Wednesday, February 21, 2024
Five converging issues
Adherents of the political ideology that considers themselves socialists, democratic socialists, woke, progressive, social justice warriors have achieved gains that were unimaginable at the beginning of the 20th century. The following five issues are converging to fracture the collation that has supported this ideology.
1. Transgender militancy. Young children diagnosed with "gender dysphoria" are now prescribed hormone blocking therapy or gender reassignment surgery, sometimes over the objections of one or both parents. Men using women's restrooms. Men competing in women's sports. Lowell Collegiate, and then there is this: Members bar
2. Support for Hamas. The largest donors to the left have traditionally been Jewish. Even though many in the Jewish community do not support Zionism or the current war in Gaza, very few members of that community will provide financial support to organizations openly support Hamas and the destruction of Israel. DSA, DSA Layoffs, Harvard
3. Immigration. Immigration has exploded into a fiery debate in the "sanctuary cities". Black citizens are outraged that new immigrants are receiving tax funded benefits and resources. Chicago
4. Inflation. Average ticket price paid for Taylor Swift's Eras Tour was $3,801.00. Average ticket price paid for Super Bowl 58 was $8,600.00. The assets owned by the Federal Reserve have increased from $475 billion in 2008 to $4.7 trillion today. The money supply (M2) has increased from $7.5 trillion in 2008 to $20.8 trillion today. Taylor Swift, Super Bowl 58, Fed Assets, M2, and then there is this: Hyperinflation
5. Lawfare. The use of the legal system to persecute political opponents is becoming obvious to even the casual observer. A loser state, Focus on Texas & Florida
Monday, January 22, 2024
Long Live Freedom, Damn It!
Javier Milei delivered a fearless speech to The World Economic Forum in Davos, Switzerland on 1/14/2024. He presented a classical demolition of collectivist policies and extolled the accomplishments of individual liberty. Watch the speech by clicking on this link:
Read the transcript of the speech at this link:
This was such a well written speech you should watch or read all of it. In my opinion these are the highlights of his speech:
Unfortunately, in recent decades motivated by some well-meaning individuals willing to help others and others motivated by the wish to belong to a privileged cast the main leaders of the western world have abandoned the model of freedom for different versions of what we call collectivism. We're here to tell you that collectivist experiments are never the solution to the problem that afflicts the citizens of the world, rather they are the root cause.
That said when you look at per capita GDP since the year 1800 and until today what you will see is that after the Industrial Revolution Global per capita GDP multiplied by over 15 times which meant a boom in growth that lifted 90% of the global population out of poverty. We should remember that by the year 1800 about 95% of the world's population lived in extreme poverty and that figure dropped to 5% by the year 2020 prior to the pandemic. The conclusion is obvious. Far from being the cause of our problems, free trade capitalism as an economic system is the only instrument we have to end hunger, poverty and extreme poverty across our planet. The empirical evidence is unquestionable.
The problem is that social justice is not just and it doesn't contribute either to the general wellbeing. Quite on the contrary it's an intrinsically unfair idea because it's violent it’s unjust because the state is financed through tax and taxes are collected coercively or can anyone of us say that they voluntarily pay taxes? Which means that the state is financed through coercion and that the higher the tax burden the higher the coercion and the lower the freedom.
If the goods or services offered by a business are not wanted the business will fail unless it adapts to what the market is demanding. If they make a good quality product at an attractive price they will do well and produce more. So, the market is a discovery process in which the capitalist will find the right path as they move forward.
Countries that have more freedom are 12 times richer than those that are repressed. The lowest decile in terms of distribution in free countries are better off than 90% of the population of repressed countries.
...libertarianism is the unrestricted respect for the life project of others based on the principle of non-aggression in defense of the right to life, liberty, and property. Its fundamental institutions being private property, markets free from State intervention, free competition, the division of labor, and social cooperation as part of which success is achieved only by serving others with goods of better quality or at a better price. In other words, capitalists, successful businesspeople are social benefactors who, far from appropriating the wealth of others, contribute to the general well-being.
Why do I say that the West is in danger? I say this precisely because in those of our countries that should defend the values of the free market, private property, and the other institutions of libertarianism, sectors of the political and economic establishment some due to mistakes in their theoretical framework and others due to a greed for power are undermining the foundations of libertarianism, opening up the doors to socialism and potentially condemning us to poverty, misery, and stagnation.
It should never be forgotten that socialism is always and everywhere an impoverishing phenomenon that has failed in all countries where it's been tried out. It's been a failure economically, socially, culturally, and it also murdered over a 100 million human beings.
On the pretext of a supposed market failure, regulations are introduced which only create distortions in the price system, prevent economic calculus, and therefore also prevent saving, investment, and growth.
The market is a mechanism of social cooperation where you voluntarily exchange ownership rights. Therefore, based on this definition, talking about a market failure is an oxymoron. There are no market failures if transactions are voluntary. The only context in which there can be a market failure is if there is coercion and the only one that is able to coerce generally is the state which holds a monopoly on violence.
However, faced with the theoretical demonstration that state intervention is harmful and the empirical evidence that it has failed couldn't have been otherwise. The solution to be proposed by collectivists is not greater freedom but rather greater regulation which creates a downward spiral of the spiral of regulations until we're all poorer and the life of all of us depends on a bureaucrat sitting in a luxury office.
Neo Marxists have managed to co-opt the common sense of the western world and this they have achieved by appropriating the media, culture, universities, and also international organizations.
Today states don't need to directly control the means of production to control every aspect of the lives of individuals. With tools such as printing money, debt, subsidies, controlling the interest rate, price controls, and regulations to correct the so-called market failures, they can control the lives and fates of millions of individuals. This is how we come to the point where by using different names or guises a good deal of the generally accept political offers in most Western countries are collectivist variant whether they proclaim to be openly communist, fascist, Nazis, socialists, Social Democrats, National Socialists, Democrat, Christians, Christian Democrats, progressive populist, nationalists, or globalists. At bottom there are no major differences. They all say that the state should steer all aspects of the lives of individuals. They all defend a model contrary to that one which led humanity to the most spectacular progress in its history. We have come here today to invite the rest of the countries in the Western World to get back on the path of prosperity, economic freedom, limited government, and respect for private property are essential elements for economic growth.
...I would like to leave a message for all businesspeople here and for those who are not here in person but are following from around the world. Do not be intimidated either by the political cast or by parasites who live off the state. Do not surrender to the political class that only wants to stay in power and retain its privileges. You are social benefactors, you are heroes, you’re the creators of the most extraordinary period of prosperity we've ever seen. Let no one tell you that your ambition is immoral. If you make money, it's because you offer a better product at a better price thereby contributing to general wellbeing. Do not surrender to the advance of the state. The state is not the solution, the state is the problem itself. You are the true protagonists of this story and rest assured that as from today Argentina is your staunch unconditional ally.
Why would WEF invite Javier Milei to speak?
FOX Business host Maria Bartiromo attended the WEF annual meeting. She witnessed Executive Chairman Klaus Schwab walk out of the room during President Milei’s speech.
Daniel Hannan writes in The Telegraph that WEF invited Milei to speak to provide "at least a warning to that most self-regarding of conferences that voters can make terrible choices."
Hannan also notes that Milei, a former economics professor made no attempt to meet his audience half way. On the contrary, he began by warning that Western values had been betrayed by “those who want to belong to a privileged caste”.
Did WEF invite Milei to speak so that they can concoct a narrative to embarrass or discredit Milei?
Does WEF intend to edit Milei's speech so that they can release soundbites that will discredit his message?
If Milei's invitation to speak was without hidden intentions, then it suggests that the WEF believes they can dismiss any critique and continue with their collectivist plans.
To enhance your knowledge of the philosophy of individual liberty, click on the link below:
Sunday, January 7, 2024
Climate Quiz
Click on the link below to test your climate knowledge. You will be surprised by some of the answers.
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