A Geek With Guns

Chronicling the depravities of the State.

Archive for the ‘Economics’ Category

Labor Versus Capital

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“Labor is superior to capital,” the gathered mob yelled as they raised their crude clubs above their head in anticipation of their seemingly inevitable victory over the poor bastard they had cornered.

Then their would-be prey pulled out a gun.

Written by Christopher Burg

April 5th, 2017 at 10:00 am

Posted in Economics

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Capitalism Cannot Give Consumers Taste

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It was brought to my attention that an Internet meme managed to nail a multi-million reality television show. This news didn’t surprise me because she became an Internet meme by being trashy and trashy television sells. Some people aren’t happy about this because they think everybody should watch highbrow television (i.e., whatever television show they like). But the market has spoken and while the market can’t give consumers taste, it does at least give them a choice:

According to reports, Danielle Bregoli, the 14-year-old girl who became a popular internet meme this year due to a failed intervention on the Dr. Phil show, has signed a deal for her own reality television show. On a personal level, there is much to find offensive in Bregoli’s fame, in spite of her obvious marketing prowess. She is, after all, internet-famous simply for her improper English, toxic personal behavior, and apparent lack of respect for anyone around her. On an economic level, however, her rise is an interesting example of how capitalism rewards the interests of the masses, regardless of the opinion of the cultural elite.

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Capitalism cannot give consumers taste, just as democracy cannot give voters wisdom. What capitalism does do, however, is give consumers choice — and creates the incentives necessary for producers to meet the desires of the people. Democracy simply offers the masses the ability to enforce the whims of the majority against the wishes of the minority. In America no one will be forced to watch a minute of a reality show about Danielle Bregoli, but should it find commercial success, its viewers will have the ability to shape American policy going forward.

A lot of people believe that their preferences should be everybody’s preferences. State socialism is the ultimate expression of their attitude because the State controls all means of production and therefore dictates what will and will not be provided to consumers. Whoever controls the State, in that case, controls what options consumers have.

Markets work the other way. Anybody can possess means of production and therefore bring options to consumers. Whether one wants media that forces a particular viewpoint down consumers’ throats, show epic space battles, or feature annoying teenage girls being jackasses, they can have their show under a market economy. So while I might judge your for your tastes, the market won’t.

Written by Christopher Burg

March 29th, 2017 at 10:00 am

Cost Effective Drone Defense

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Fourth generation, or asymmetrical, warfare is much more reliant on economics than firepower. Instead of attacking an enemy directly, a military practicing fourth generation warfare tries to slowly chip away at its enemy until that enemy loses the ability or will to fight. If, for example, a military can cost their enemy $3 million by spending $200 it’s only a matter of time until their enemy is bankrupt:

A Patriot missile – usually priced at about $3m (£2.5m) – was used to shoot down a small quadcopter drone, according to a US general.

The strike was made by a US ally, Gen David Perkins told a military symposium.

“That quadcopter that cost 200 bucks from Amazon.com did not stand a chance against a Patriot,” he said.

According to the story, the missile was fired by an unspecified United States ally. Perhaps they were given the Patriot launcher for free and therefore aren’t concerned about the cost disparity. But anybody looking at the United States and its allies is probably getting some clever ideas. Sure, it’s unlikely that a Patriot will be used to take down a cheap quadcopter again but the basic idea is pretty solid, cheap drones can lead to an expenditure of expensive military equipment.

If the United States’ allies continue pulling this kind of stunt the country will have to decide whether it will keep handing out expensive toys or not. If not, its allies will be weakened and its enemies will be able to declare a victory. If so, the United States will continue throwing money down a hole until it’s bankrupt, which will cause its enemies to declare victory as well. There’s no winning when you enemy can cost you millions of dollars by spending a couple of hundred dollars.

Written by Christopher Burg

March 16th, 2017 at 11:00 am

The Opportunity to Provide Free Labor to Billionaires

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Are you friendly? Can you pass a background check? Are you stupid enough to provide free labor to a multibillion dollar organization? If so, there’s an opportunity for you:

Minnesotans who aren’t Hall of Fame quarterbacks can still make a play to get in the action for the 2018 Super Bowl.

The Minnesota Host Committee needs 10,000 volunteers to run the event, and the process starts Wednesday with online applications.

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Obviously, volunteers don’t get paid, but they do get a complete Super Bowl LII outfit unique to the effort that will include top-grade winter gear, including a parka built to withstand extreme cold, a sturdy backpack, beanie and thermos.

Talk about a sucker’s deal. 10,000 people will provide labor to the National Football League (NFL) and in return they only receive marketed attire that will allow them to act as free walking advertisements in the future. They don’t even receive a free ticket to the event they’re going to bust their asses for. And you know what? The Minnesota Host Committee will get its volunteers. It’ll probably get so many volunteers that it’ll be able to pick and choose who it wants.

To me this demonstrates the sordid state of economic education in this country. Anybody willing to provide free labor to a multibillion dollar organization is a goddamn fool in my book. Especially when you consider the fact that the organization needs workers and would therefore offer some kind of actual compensation if nobody was stupid enough to provide labor for free.

Written by Christopher Burg

March 16th, 2017 at 10:00 am

If Everything Sucked as Much as Public Schools

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The Foundation for Economic Education posted an excellent article explaining how absurd it would be to run grocery stores like public schools. But the best piece of information in the article is this:

One often hears that education is too important to leave to the whims of the market. Yet food is even more important; it’s a prerequisite before education can be considered. In spite of this, the (relatively) free market in food seems to work quite well.

Consumers get a wide variety at a low cost. Even people that have niche dietary requirements like gluten-free or vegan have products suited to them. And while complaints about the quality of public education are rampant, one rarely hears objections about the quality of the grocery stores. In the latter case, people don’t have to complain; they just take their business to someone who will serve them better.

Education isn’t even possible if one doesn’t have enough food to survive. Yet public education is a sacred cow. If you criticize public education or, worse, advocate for its complete elimination you are going to hear a lot of people accusing you of hating children. However, if you don’t advocate for socializing grocery stores nobody cares. In fact, everybody seems to be fine with grocery stores remaining private.

Don’t get me wrong, I’m glad that grocery stores in the United States are private. If they weren’t they’d operate like the grocery stores in the former Soviet Union or current ones in Venezuela. You’d have to wait in line for hours just to find out that the store doesn’t have anything you need in stock.

Written by Christopher Burg

February 24th, 2017 at 10:00 am

The Wonders of Socialism

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Socialism ensure that everybody is equal..ly poor:

In a new sign that Venezuela’s financial crisis is morphing dangerously into a humanitarian one, a new nationwide survey shows that in the past year nearly 75 percent of the population lost an average of 19 pounds for lack of food.

The extreme poor said they dropped even more weight than that.

The 2016 Living Conditions Survey (Encovi, for its name in Spanish), conducted among 6,500 families, also found that as many as 32.5 percent eat only once or twice a day — the figure was 11.3 just a year ago.

How can the people of a nation with such plentiful resources end up starving? Through the wonders of socialism!

Venezuela is yet another example in a long, sad list of examples of centrally planned economics failing. As Ludwig von Mises explained so thoroughly, centrally planned economies are always doomed to fail. It’s not possible for a handful of individuals to accurate determine the wants and needs of millions of people. Especially when the wants and needs of every single one of those millions of people are constantly changing.

The only question here is whether or not the Venezuelan government will do the decent thing and disband itself or if the people will have to rise up and overthrow it.

Written by Christopher Burg

February 21st, 2017 at 10:00 am

The Truth Hurts

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Donald Trump has promised to bring in a new wave of protectionism for American businesses. This news has been met with cheers from the small government advocates in the Republican Party. The democrats haven’t been cheering but only because Donald Trump is promising it. If Hillary Clinton had promised it they would be cheering but at least the cheering wouldn’t come immediately after claiming they’re for a small government.

Protectionism is almost always promised by people who blame foreign countries from a bad domestic economy and this case is no different. Trump and the republicans are claiming that China has been stealing American jobs. But Jack Ma, Chinese billionaire, sees things slightly differently:

Ma says blaming China for any economic issues in the U.S. is misguided. If America is looking to blame anyone, Ma said, it should blame itself.

“It’s not that other countries steal jobs from you guys,” Ma said. “It’s your strategy. Distribute the money and things in a proper way.”

He said the U.S. has wasted over $14 trillion in fighting wars over the past 30 years rather than investing in infrastructure at home.

While I disagree with his claim that the money was merely misappropriated, he’s entirely correct in saying that the $14 trillion spent in fighting wars was wasted.

Any economist who isn’t a complete moron, of which there are very few, knows that wars don’t produce wealth. Sure, it often looks like wars are good for the economy because jobs are created to feed the war machine but none of those jobs are productive. They exist to destroy wealth. Every piece of military machinery is build to be destroyed. Ammunition is expended. Tanks are either destroyed in combat or destroyed after they’ve been made obsolete by a new tank. Aircraft carriers that aren’t sunk by the enemy are sunk by the owners when they’re decommissioned to make way for the new fleet. Every building, road, and telephone pole destroyed in a war must be rebuilt afterwards. No actual wealth is created by war. Wealth is merely dumped into building expendable equipment or redoing work that was previously done. This is also why fourth generation warfare is so effective. One side spends pennies while the other spends trillions.

Instead of waging an endless war, the people of the United States could have been doing productive things. But the government chose warfare, the people rolled over and accepted warfare, and a huge amount of wealth has been diverted to unproductive endeavors, which has done nothing good for the economy. China isn’t taking American jobs, the United States government is destroying those jobs.

Written by Christopher Burg

January 19th, 2017 at 10:30 am

Capitalism Versus Socialism

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One of the biggest criticisms socialists make against capitalism is that under capitalism a poor individual may starve. But under socialism a poor individual… may starve:

PUERTO CABELLO, Venezuela (AP) – When hunger drew tens of thousands of Venezuelans to the streets last summer in protest, President Nicolas Maduro turned to the military to manage the country’s diminished food supply, putting generals in charge of everything from butter to rice.

But instead of fighting hunger, the military is making money from it, an Associated Press investigation shows. That’s what grocer Jose Campos found when he ran out of pantry staples this year. In the middle of the night, he would travel to an illegal market run by the military to buy corn flour – at 100 times the government-set price.

Queue all of the socialists claiming Venezuela isn’t real socialism. But the military is part of the State and therefore it having a “legitimate” monopoly on food distribution most certainly is socialism.

Scarcity is a law of nature. Because of that, no system can guarantee that every individual will receive everything they need to survive. Socialists claim that they can overcome this rule of nature but socialists countries have been proving them wrong time and again.

The difference between capitalism and socialism is how wealth is distributed. Under capitalism wealth is distributed by one’s ability to serve the market. If you are able to serve the market successfully you can obtain wealth. Under socialism wealth is distributed by one’s favor with the State. If you can curry favor with the State you can obtain wealth.

Neither system can prevent starvation or nefarious people from obtaining wealth. But the former relies on pleasing the masses whereas the latter relies on pleasing the elites in power. To me it seems rather obvious which is more ripe for abuse.

Written by Christopher Burg

January 3rd, 2017 at 10:00 am

Dire Straits

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In Finland the jobless can get their money for nothing and they don’t have to install microwave ovens:

Finland will soon hand out cash to 2,000 jobless people, free of bureaucracy or limits on side earnings. The idea, universal basic income, is gaining traction worldwide.

The computer graphics in that video are almost as bad as this idea!

Before any advocates of universal basic income start creaming their pants over this let me point out that this is a solution to a problem that was, not surprisingly, created by the government in the first place:

While entrepreneurs are eager to put these people to work, the rules of Finland’s generous social safety net effectively discourage this. Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance. For laid-off workers from Nokia, simply collecting a guaranteed unemployment check often presents a better financial proposition than taking a leap with a start-up in Finland, where a shaky technology industry is trying to find its footing again.

The problem isn’t that there aren’t jobs available. The problem is that the Finnish government has created a system that discouraged unemployed individuals from seeking another job. Instead of fixing that problem the Finnish government has decided to exacerbate the problem by giving unemployed individuals money for being unemployed. How will that encourage them to seek a new job? It won’t.

I’m sure a bunch of advocates of universal basic income are ready to accuse me of hating workers because I’m not onboard with their little scheme. But I don’t hate workers. In fact, I am a worker. But universal basic income is an unsustainable idea because it relies on taxes and taxes only exist if there is wealth to steal. Ask yourself this, without employees motivated to work how can employers create the goods and services that create the wealth that supports universal basic income? Without employers wealth isn’t created. Without employees the employers can’t create wealth. This means that eventually the supposedly guaranteed income is no longer guaranteed because there is no money to pay it with.

TANSTAAFL, there ain’t no such thing as a free lunch, is the rule that the universe runs by. A few words written by some bureaucrats in a marble building can’t make that rule go away.

Written by Christopher Burg

December 22nd, 2016 at 11:00 am

If Keynesian Economics isn’t Solving Your Problem Then You’re Not Using Enough of It

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Although it’s unlikely he actually said it, it is often claimed that Albert Einstein said that the definition of insanity is doing something over and over again and expecting a different result. By that definition there are a lot of insane people out there discussing mainstream economics.

Take this article, for example. The article tries to argue that Keynesian economics could save the United States. The problem with the article, besides its advocacy of nonsense, is that it’s based on the false premise that the United States government ever stopped following Keynesian economics.

The United States is in the mess that it’s in, in part, because it followed Keynes’ advice instead of Mises’. Instead of relying on free markets, a commodity based currency, and debt avoidance the United States has been relying on cronyism, a fiat currency, and racking up more debt than a drunken teenager with their parents’ credit card. The natural correction mechanisms of markets have been suppressed for decades, which has lead to a massive misallocation of resources. Eventually the problem will become so bad that no force will be able to continue suppressing these market forces and people will get to enjoy the mother of all depressions. Debt, likewise, is unhealthy in the long run because creditors eventually refuse to loan any more money (or buy your debt in the case of the United States) and call in outstanding loans. When those loans are called in and you don’t have the money to pay you end up going bankrupt (or killing your creditors as the United States will likely try to do).

The current United States economy is what you get when a government goes full Keynesian. If you’re really interested in trying to fix this mess you should pick up some books written by Ludwig von Mises and follow their advice.