Free trade

Tariffs are making headlines, and free trade is a hot topic in global discussions. But when people refer to "free trade," do they mean a complete absence of government policies that restrict imports and exports? That’s the only definition of trade that is truly free of protectionism.

Government policies affecting trade include not only tariffs and taxes but also a range of other measures known as non-tariff barriers (NTBs). Examples include:

1. Quotas: Limits on the quantity or value of a specific good that can be imported.
2. Import Licensing: Requirements to obtain special permission or licenses before importing.
3. Technical Barriers: Standards or regulations (such as health and safety or environmental requirements) that can be difficult for foreign producers to meet.
4. Sanitary and Phytosanitary (SPS) Measures: Health and safety measures, especially concerning food and agricultural products.
5. Rules of Origin: Policies that determine where a product was made, which can affect its eligibility for certain trade agreements.
6. Customs Procedures: Complex or opaque customs clearance procedures, document requirements, or valuation practices that slow down or raise the cost of trade.

In many cases, NTBs are more burdensome than tariffs. So, two countries can have a reciprocal no-tariff policy and still have little trade in goods and services due to NTBs.

Tariffs and NTBs are always and everywhere supported by the producers that receive protection from competition. This was the topic of a satirical essay written by Frédéric Bastiat in 1845:

The Candlemakers' Petition

When supporting tariffs and NTBs to “level the playing field” or defend against “unfair competition,” keep in mind the absurdity of Bastiat’s petition.

If the goal is to attract businesses to establish operations in the United States, consider this approach: repeal the corporate income tax. This would trigger a surge of U.S. companies returning and a wave of foreign companies relocating here. Once that momentum slows, repealing the National Labor Relations Act, along with other federal labor laws and regulations, would spark a second wave of business investment and migration into the country. The United States would experience the “giant sucking sound” in reverse, as per Ross Perot.

Rescission

The Department of Government Efficiency (DOGE) has identified outrageous ways the federal government is wasting our tax dollars. Unbelievably Congress just re-authorized spending for these wasteful programs.

If you have been paying attention you just witnessed the Trump administration identify and cancel funding for these wasteful programs on one hand, then the Trump administration lobby Congress to pass a continuing resolution (CR) (spending bill) that funds those wasteful programs again.

 

Representative Thomas Massie and Senator Rand Paul vigorously opposed the CR. They pointed out the absurdity of defunding the wasteful programs under DOGE and then funding the same wasteful programs under the CR.

 

Defunding the wasteful programs can be done by a simple majority in Congress, but the President must initiate this process by submitting a rescission package to Congress. There is only a 45-day window under the Impoundment Control Act for these spending cuts to be made permanent by rescission, so time is of the essence.

 

What exactly is the process for consideration of rescissions?

 

Step 1: The President submits a special message formally asking for a rescission. The special message must specify:

 

• How much is proposed to be rescinded.
• The specific accounts where the rescinded budget authority (BA) comes from.
• Projects and functions affected.
• Why the BA should be rescinded.
• The estimated fiscal, economic, and budgetary impacts of a rescission, and the impact on the programs and functions of such a rescission.

The special message starts a 45-day clock. If Congress doesn’t act in 45 days, the President’s proposal expires, and the executive branch must spend the money as prescribed.

 

Step 2: Congress may draft a rescission bill in response to the President's special message, and that bill is referred to the appropriate committee.

 

Step 3: If that committee does not act on the bill after 25 days, a discharge petition for the bill is in order. The motion to discharge is privileged with a limitation on debate and is only subject to a majority vote.

 

Step 4: Once either chamber has a rescission bill (either via the committee process or discharge), they can act on it. In the House of Representatives, debate on the bill is limited to no more than two hours.

 

In the Senate, consideration of the bill is subject to a ten-hour clock for debate, which means it is not subject to the cloture requirement of 60 votes to stop debate (it is not at risk of a Filibuster). Amendments in the Senate must be germane, and no amendment may be debated for longer than two hours.

 

Step 5: If the bill or its conference report passes both chambers, the budget authority is rescinded. If the bill fails, or if the 45-day clock runs out, the President must spend the money and cannot propose its rescission again.

We are the future and you are the past

The European Union and Europe’s political elites are faced with many new political leaders that champion individual liberty and oppose socialism. Below you will meet 2 new European politicians that strongly oppose current European political policy.

Afroditi Latinopoulou, is a lawyer and former championship tennis player. In 2024 she established the Voice of Reason political party in Greece and was elected a member of the European Parliament. 

Afroditi Latinopoulou

Seriously ladies and gentleman, was it the right wing that destroyed industry? Was it the right wing that made an idol out of Greta Thunberg? Was it the right that imposed green energy at the expense of industry destroying the EU's competitiveness? Or was it the socialist governments that have been ruling the European Union for 50 years?

France, Italy, Germany, Spain, and my homeland Greece have been devastated by groundless socialist policies. And today you, the destroyers of Europe have the audacity to wag your finger at us claiming that we conservatives are a threat to Europe? I laugh, I truly laugh.

As Margaret Thatcher wisely said: "The problem with socialism is that you eventually run out of other people's money." So abandon these ghost stories about supposed far-right threats and implement liberal economic policies. Lower taxes, increase competitiveness bring back plastic straws leave lignite [coal] alone invest in the industry and above all face reality: YOU HAVE FAILED. Follow what we're telling you before it's too late for everyone. 

You have failed. We are the future and you are the past.

Kemi Badenoch just became the first black woman to lead the UK’s Conservative Party, the oldest in British politics, colloquially known as “the Tories.” 

Kemi Badenoch

The first step is to explain the value of liberty. Our opponents do not value liberty. They see it as the freedom to do bad things, whether they are offensive or exploitative; that is all they think about. But liberty is foundational for a flourishing society, not just a philosophical “nice to have.”

The second thing we have to do is to stop the expansion of the state.

The third thing we have to do is to stop being afraid to defend our beliefs.

People should always be treated as individuals (ideologies that suggest otherwise must be passionately opposed). Due process must always be ensured (there can be no room for mob justice of any kind). The rule of law must be protected, and the law must be applied neutrally (and there can be no special treatment depending on identity).

I will die to protect those things

And it isn’t so much about being on the left or being on the right, but about finding the common ground. So I am on the right. But I also recognize that just talking about things within your own bubble is not how to win other people over. I’m able to have conversations with people who have very different philosophies because there’s a way you can speak that shows the commonality and shows that we’re all trying to get to the same place. And that’s what I’m trying to do with my party now.

Tariffs “protect” us from lower prices

Here are 5 articles that might diminish your enthusiasm for tariffs:

Tariffs and Industrial Policy Fail

High tariffs distorted resource allocation, favoring inefficient industries over more competitive sectors. This misallocation led to higher consumer prices and suppressed overall economic welfare.

Their study highlights how tariffs weakened competition in manufacturing by protecting inefficient firms, which inevitably inhibited productivity.

His analysis reveals that trade liberalization—not protectionism—is consistently associated with higher economic growth. By reducing barriers to trade, economies can reallocate resources to more productive sectors, enhance competition, and promote innovation. The evidence strongly suggests that countries embracing open trade policies experience faster and more sustainable economic progress than those that rely on tariffs to shield domestic industries.

The failures of tariffs and industrial policies in the United States, Japan, and China underscore the broader limitations of anti-market economic strategies. These policies often stem from the belief that governments can outmaneuver markets in allocating resources and driving innovation. Yet, as history repeatedly demonstrates, markets are better suited to these tasks.

Our History of Protectionist Tariff Train Wrecks

Protectionist tariffs are associated with a long history of economic and social calamities in America.

The only real difference between a lobbyist for protectionist tariffs and an armed robber is that the robber is armed. 

Tariffs Are an Attack on Natural Rights

“Free Trade” means perfect freedom for every kind of industry; and it includes liberty to every man to employ his money or his labour in the way that he himself thinks most advantageous, and to buy and sell wherever he can do so with the greatest profit.

Bright asserted that the freedom to exchange the produce of one’s labor for that of his fellows anywhere in the world was the most fundamental of rights. Bright argued that there was no liberty without this liberty, which was simply the liberty to live. 

Tariffs Are Taxes on Americans

Protectionism remains popular. But, as Henry Hazlitt put it, voter support for raising tariffs is ”the result of looking only at the immediate effects of a single tariff rate on one group of producers, and forgetting the long-run effects both on consumers as a whole and on all other producers.” Those who are incapable or unwilling to examine policies beyond their most short-term effects are easy targets for protectionist rhetoric.

Tariffs have inspired a profusion of economic speculation and argument. The arguments for tariffs have one thing in common: they all attempt to prove that the consumers of the protected area are not exploited by the tariff. These attempts are all in vain.

The Immorality of Protectionism

Politicians who support these taxes and regulations like to frame it all like it’s some kind of public service to the community. These arguments generally employ some sort of feel-good language like “tariffs level the playing field for Americans workers.” 

In reality, of course, calls to raise or maintain tariffs are nothing more than a call to raise taxes on Americans. Describing these taxes as a burden only for foreign workers or foreign importers requires either dishonesty or impressive levels of ignorance about how trade barriers work. 

Protectionism  means Americans who are already taxed and regulated to the skies via income, sales, and property taxes must endure additional levels of taxation and regulation to get their hands on foreign goods. All these additional costs and taxes imposed at the import stage naturally filter down to the entrepreneurs, small business owners, and ordinary people  who benefit from access to less expensive foreign goods. 

There’s no moral high ground here for the protectionists, just unfounded self-righteousness. Of course, if protectionists don’t want foreign goods in their country, they are welcome to avoid purchasing such goods. Protectionists are also welcome to try to convince other people to not purchase those goods. One could also advocate against domestic regulations that drive up the cost of domestic production.

Investing for you

The opening paragraph of the news article below speaks volumes about the troubling state of today's society:

Maryland Gov. Wes Moore (D) on Tuesday announced a plan to raise income tax rates for the state’s wealthiest residents, money that would help close a looming $3 billion budget deficit and fund public taxpayer investment in private industries meant to strengthen the state’s economy.

Moore announces tax increases for the wealthy to close budget gap

The Governor proposes to steal money from individuals and then invest the spoils into private industries. For those of you who do not see a problem with this proposal, consider the definition of Fascism provided by the founder of that political philosophy:

Everything within the State, nothing outside the State, nothing against the State.  — Benito Mussolini, from a speech delivered to the Italian Chamber of Deputies on December 9, 1928

If this seems like an inappropriate comparison, how would you categorize the State taking money from private individuals and then investing it in private industry? Do you consider this free market activity? Do you consider this Capitalism?

Contrast Governor Wes Moore’s proposal with this advice:

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. — Thomas Jefferson, First Inaugural Address, 1801

One hundred thousand dollars per second

On November 21st 2024 the US federal debt crossed the 36 trillion dollar threshold.

US Treasury debt to the penny

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:

US Debt Clock

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:

Looming debt crisis

Another interesting publication is available from the US Treasury:

Financial Report of the USA

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:

Empire Killer

On January 20th, 2025 Donald Trump will earn his self chosen nickname:

The King of Debt

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:

Our World In Data - team

The staff does not appear to be right wing.

Information about the founder of Our World In Data is at this link:

Max Roser

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:

Data

Their data sources are legitimate and from reputable organizations.

Other organizations have reported the same facts:

World Bank poverty

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:

UN - Ending 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: 

The Intellectuals and Socialism

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?"

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:

Extreme Poverty

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:

Wrong about world poverty

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.

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:

AIER-Green-Policy-in-Retreat

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.

Running the world

 During ABC News' exclusive interview with President Joe Biden on July 5^th, 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.”

FullTranscript of Interview

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?

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.

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

Full Transcript

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

Full Transcript

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.

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:

Javier Milei speech to WEF

Read the transcript of the speech at this link:

Transcript

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.

Bartiromo

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:

The Root Of Liberty

Don’t cry for the Central Bank, Argentina

 

Argentina has elected Javier Milei a uncompromising Libertarian to the office of President.  Milei has promised to shut down the Central Bank.  In honor of this most noble crusade, I present the following song (sung to the music of Andrew Lloyd Webber’s "Don't Cry for Me Argentina"):

Don’t cry for the Central Bank, Argentina
The truth is, it never helped you
All through its wild days, its mad existence
It never kept a promise. Don't keep your Pesos
Has it said too much?
There's nothing more it can think of to say to you
But all you have to do is look at it to know

That its every word is a lie

It ends with a whimper.

And just like that, the pandemic ends in Iowa.

Iowa Governor Kim Reynolds announced on Thursday that she will allow the “public health disaster emergency proclamation” to expire on February 15, 2022.

“We cannot continue to suspend duly enacted laws and treat COVID-19 as a public health emergency indefinitely. After two years, it’s no longer feasible or necessary. The flu and other infectious illnesses are part of our everyday lives, and coronavirus can be managed similarly,” stated Gov. Reynolds. “State agencies will now manage COVID-19 as part of normal daily business, and reallocate resources that have been solely dedicated to the response effort to serve other important needs for Iowans.” 

Restrictions are easing or lifted in many states, see the following article: 

USA Today map of state restrictions

Defeat the Mandates

A rally was held in Washington DC on Sunday, 1/23/22.  The name of the rally is Defeat the Mandates: An American Homecoming.  As you might assume from the name the rally was held in opposition to vaccine mandates.  40 speakers and organizations made presentations including Master of ceremonies JP Sears, Robert F. Kennedy JR., Dr. Robert Malone, Dr. Peter McCullough, Del Bigtree, and Steve Kirsch.

This link will take you to a video of the event.  There are many speakers which makes for a long viewing process.  If you have limited time I recommend that you watch Robert F. Kennedy JR's speech which begins at the 2 hour and 20 minute mark.  I was impressed by Kennedy's speech, but even more impressive is that this speech is from a prominent member of the Kennedy family.  Please click the link below: 

 Defeat the Mandates

Those who can make you believe absurdities, can make you commit atrocities

Rachel Reeves is a Member of Parliament (MP) in the United Kingdom.  She holds the office of the Shadow Chancellor of the Exchequer.

On a British news channel, she was asked the following question:

Is it transphobic to say that only women have a cervix?

Chancellor Reeves has great difficulty answering this question.  Please view for yourself at the following link:

Rachel Reeves interview

The title of this post is a quotation from Voltaire’s ‘Questions sur les miracles’ (1765).  Voltaire continued with this warning: "If you do not use the intelligence with which God endowed your mind to resist believing impossibilities, you will not be able to use the sense of injustice which God planted in your heart to resist a command to do evil. Once a single faculty of your soul has been tyrannized, all the other faculties will submit to the same fate."

Reject the absurdities of tyrants.  Do not let tyrants capture your heart and soul.  Do not become a participant in atrocities.

Los Angeles takes a Great Leap Forward

Los Angeles city planners ignored history and have chosen a name for their newest welfare program that is eerily similar to a program instituted by Mao Zedong: "The Great Leap Forward" that killed tens of millions of Chinese.

The BIG:LEAP is a basic income guarantee (BIG) program.  Los Angeles will provide approximately 3,000 individuals with $1,000 per month for 12 months. These will be unconditional, regular, and direct cash payments to individual participants that supplement existing welfare programs.  Details are available at this link:

BIG:LEAP

The program website linked to above provides this explanation of poverty:

The relentless poverty experienced by too many Angelenos emerges out of a lack of financial resources, not a lack of judgment. While Angelenos are doing everything in their power to achieve financial security, the burdens of a high cost of living, unaffordable housing options, and insufficient wages too often exceed families’ ability to confront those challenges on their own — and we know that the economic difficulties caused by COVID-19 will outlast the pandemic itself.

It is quite ironic that government regulation and taxation cause the high cost of living and unaffordable housing.  Occupational licensure and minimum wage laws cause limited access to jobs with sufficient wages.  Economic difficulties caused by COVID-19 are all the result of government mandates.  Therefore all of the causes of poverty in the above list are the result of government action.  The solution promoted is of course more government action!  Ronald Reagan said: "The more the plans fail, the more the planners plan."

In another section of the BIG:LEAP website we find this paragraph:

GBI programs are founded upon the belief that the people enduring financial instability or poverty are best positioned to make informed financial decisions that efficiently address their household’s needs— whether that means paying for rent, a new tire, or an unexpected trip to urgent care. These participants are granted the freedom to meet their most pressing needs without delay.

The planners got one thing right when they say "...the people enduring financial instability or poverty are best positioned to make informed financial decisions that efficiently address their household’s needs."  The principle underlying this sentence would solve most of society's problems: let individuals make their own decisions.

Government is the national religion

New York Governor Kathy Hochul addressed a gathering in New York City's Christian Cultural Center on Sunday, September 26, 2021.  A short video excerpt from her speech is available at the link below:

The gospel according to Kathy

“And I wear my vaccinated necklace all the time to say, "I'm vaccinated." All of you. Yes, I know you're vaccinated. You're the smart ones. But, you know, there's people out there who aren't listening to God and what God wants. You know this. You know who they are. I need you to be my apostles.”

 

A new location for the goal posts (further down the field)

Now the goal for Hawaii is to keep “cases” (positive test results) under 100 per day.  The last goal of “70% of the population vaccinated” has been achieved but will not result in any change in mandates because the goal posts have been moved (again).

Gov. Ige interview with the Honolulu Star-Advertiser Spotlight Hawaii

Note that the video includes these statements:

1. “Safe Travels will continue as long as there are those traveling that are not vaccinated”.  – What is the guideline for ending this program?  Will travelers arriving in 2025 still be subject to these requirements?

2. “Governor Ige said that he is considering plans to incorporate booster shots and antigen tests into the Safe Travels program as well.” – Apparently, travelers will soon be required to have a booster shot before entering Hawaii without a quarantine.

How does Ige’s last emergency proclamation provide authority to set goals that would take effect on 1/1/2022?  This date is more than 60 days beyond the effective date of the emergency proclamation.