A Geek With Guns

Chronicling the depravities of the State.

Archive for the ‘Mises Does Not Approve’ tag

I Am Altering the Deal

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I have a theory that the biggest threat a government poses to an economy isn’t any specific set of regulations but constantly changing regulations. One day your business venture is perfectly legal, the next day it’s illegal:

The 2015 Butte wildfire had ripped through nearly 71,000 acres in Amador and Calaveras counties and left millions of dollars in damages behind. More than 900 structures were destroyed in the two counties, according to Cal Fire. Some residents left the community, deciding not to rebuild.

County supervisors embraced legalizing cannabis as a way for the local economy to generate revenue that could help it recover. Enticed by cheap land and friendly laws, the rural county of 45,000 people saw an influx of pot growers.

Not long after, however, anti-pot supervisors, including Mills, were elected to the five-member board. They had promised to ban cultivation in Calaveras County. In January they scored a victory with a 3-2 vote ordering growers to cease operations by June.

With a single vote a bunch of perfectly legal businesses became illegal. While the farmers are talking about suing, they won’t be able to operate their farms during the lawsuit, which could last years, and may not win anyways.

I think this story also explains the obsession most business ventures have with maximizing profits at all costs. Anti-capitalists like to blame capitalism for this obsession but any capitalist would tell you that maximizing long term profits is a better way to maximize overall profits… unless you’re operating in an environment where your business might be declared illegal overnight. I’m of the belief that business ventures are obsessed with short term profits at all costs, at least in part, because they have no idea what the rules regulating their business will be tomorrow. You can’t make any realistic long term goals when you don’t know what the rules will be tomorrow, in a month, or in a year.

This story will likely incentivize cannabis growers in California to maximize short term profits and give little through to long term profits. And when they do, anti-capitalists will blame capitalism instead of the real culprit, government.

Written by Christopher Burg

March 2nd, 2018 at 10:30 am

Playing with Other People’s Money

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Is government deficit spending good? If you ask the party in power, yes. If you ask the party out of power, no. The Republican Party likes to advertise itself as being fiscally conservative, which is a label that implies an opposition to deficit spending. And the Republicans did decry deficit spending… during the reign of Barack Obama. But now their party is in power so deficit spending is a good thing:

On Wednesday, Congressional leadership seemed united behind a budget deal that looks truly awful — at least if you care about the country’s financial future. The bipartisan deal blasts through budget caps and could return the U.S. to trillion-dollar deficits in short order. Right after getting historic tax reform passed, politicians apparently seem content to toss a huge future tax hike onto the next generation. After all, the bills will eventually come due.

And they are serious bills indeed. The proposed deal would include a one-year debt limit suspension, while raising defense spending by $80 billion and non-defense expense by $63 billion. The budget for 2019 would see similar increases, and over the 10-year window, this Chuck Schumer-Mitch McConnell budget could result in $1.5 trillion more added to the national debt.

The poles have flipped. Now the Democratic Party is suddenly concerned about deficit spending.

The United States government is like a teenager who has racked up thousands in credit card debt. It is so far in debt at this point that it cannot hope to pay it off. Hell, it can barely pay the interest on the debt. And if it’s already so far in the hole that it can’t possibly pay off its debt, why should it care if it goes further into debt?

The national debt can’t be repaid and is therefore no longer a financial point of interest. It’s purely a political point of interest that is brought up by the party not in power to criticize the party in power.

Written by Christopher Burg

February 9th, 2018 at 11:00 am

Look at All the Economic Stimulus

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A lot of statists cheered when it was announced that the Super Bowl would be coming to Minneapolis. Not only would Minneapolis have the honor of hosting the larger religious festival of the year but its piousness would be rewarded with untold riches from a million, err, 125,000 visitors hurling cash at the local establishments!

As it turns out, the fantastic economic stimulus that was promised was just that, fantasy:

Restaurants along Nicollet Mall and at the Mall of America saw plenty of traffic, but many eateries located away from those immediate areas reported quiet weeks as regular customers stayed at home to avoid the expected Super Bowl bedlam. Downtown Minneapolis skyway eateries also saw customer counts dwindle as the week went on as more downtown workers stayed away from the office and worked remotely.

Super Bowl week was “the worst week ever for us,” said Brenda Langton, co-owner of Spoonriver, located by the Guthrie Theater and just blocks away from U.S. Bank Stadium, site of Super Bowl LII. Sales were down by 75 percent.
Langton also voiced frustration that the media repeated claims by the Minnesota Super Bowl Host Committee that the Super Bowl would draw 1 million visitors, a number that turned out to not reflect the actual number of out-of-towners coming to the area. The big-number prediction wound up scaring office workers and suburban diners away from crowds that never existed, she said.

“The media needs to stop putting the fear of God into everybody and understand that other cities have weathered [the Super Bowl] just fine and not to terrify everyone,” Langton said. “I just want to have people come back downtown and get over the Super Bowl. It was very good for a few people and that’s what happens.”

PinKU Japanese Street Food, a quick-service Japanese restaurant in Northeast Minneapolis, had some of its slowest days of business ever during Super Bowl weekend, said Co-founder and Head Chef John Sugimura On Super Bowl Sunday, for example, the restaurant made just $303, only 15 to 20 percent of its typical Sunday revenue.

While the entire article lies behind a paywall, it’s not a very effective one. Just disable JavaScript for the domain and the story will display. You can also find the contents of the article in the page’s source code.

This news is only surprising to the economically ignorant. Stadiums and large events don’t create wealth. The most they do is shift wealth around. Money that individuals would have spent on other forms of entertainment are instead spent on attending stadium events. Moreover, large events can run the usual customer base out of town. If I’m an employee working near a stadium and want to grab a quick lunch, I’m going to likely avoid any restaurants in my area during stadium events because I’m worried that they’ll be too busy for me to get served within the block of time I have.

The security large events like the Super Bowl employ can also scare people away. I, for one, have a policy against attending events that require military hardware to defend. Any event that’s thought to be a big enough target to warrant such security is riskier than I want to bother with. I also have a general distain for militarization in general so even if the risk isn’t high enough to warrant the security, I don’t feel like living the life of a poor bastard in an occupied foreign city even for only a few hours.

So stadiums and large events merely shift wealth around. A few establishments will enjoy a significant windfall but they are the exception that proves the rule. Most establishments will notice, at most, a minor increase and oftentimes they’ll suffer a notable decrease in business.

Written by Christopher Burg

February 9th, 2018 at 10:00 am

War is Good for Business

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Working in the military-industrial complex must be nice. While companies in other industries are forced to market their own goods and services, companies in the military-industrial complex enjoy subsidized marketing from the United States government:

WASHINGTON (Reuters) – The Trump administration is nearing completion of a new “Buy American” plan that calls for U.S. military attaches and diplomats to help drum up billions of dollars more in business overseas for the U.S. weapons industry, going beyond the limited assistance they currently provide, officials said.

President Donald Trump is expected to announce a “whole of government” approach that will also ease export rules on U.S. military exports and give greater weight to the economic benefits for American manufacturers in a decision-making process that has long focused heavily on human rights considerations, according to people familiar with the plan.

Not only will military attaches and diplomats provide free marketing but since the weapons sold by the United States have a tendency to fall into the hands of its and its allies’ enemies this proposal could create a continuous cycle of sales. First the United States sell weapons to one of its allies then those weapons fall into the hands of its allies’ enemies then the allies need to buy more weapons to fight off their enemies.

Written by Christopher Burg

January 10th, 2018 at 10:30 am

The Cure to Inflation Must Be More Inflation

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What happens when you give dictatorial powers to somebody who is entirely ignorant of economics? Socialism:

CARACAS (Reuters) – Venezuelan President Nicolas Maduro announced a 40 percent increase to the minimum wage as of January, a move that will foment what many economists already consider hyperinflation in the oil-rich but crisis-stricken nation.

Inflation is getting out of hand, what should we do? I know! We’ll increase the minimum wage! That’ll fix it!

Every proponent of a minimum wage is ignorant of the fact that mandating a minimum wage doesn’t actually increase anybody’s purchasing power. When you mandate a minimum wage you guarantee that any work that isn’t worth that minimum wage is eliminated. Teenagers bagging groceries may be worth $2.00 an hour but not $3.00. If the minimum wage is set to $3.00 an hour, those teenagers suddenly find themselves unemployed. The higher the minimum wage is set, the more jobs are eliminated.

In addition to eliminating jobs, minimum wage laws also increase inflation. Some jobs simply can’t be eliminated by a business, which is something many proponents of minimum wage bring up when the above point is brought to their attention. A restaurant can’t operate without cooks (At least not yet. But cost decreases in automation will make such restaurants feasible very soon). If a minimum wage is set to, say, $15.00 an hour but a cook is only worth $10.00, then the restaurant owner has to either close shop or increase their prices. Most restaurant owners will opt for the latter, which means the cost of a meal goes up. Suddenly an $8.00 mean becomes a $10.00 meal and everybody who eats out finds themselves with less purchasing power.

By increasing the minimum wage 40 percent, the Venezuelan government guaranteed the elimination of many jobs and major increases in prices. These two things will only cause the average Venezuelan more misery. But dictators are seldom concerned with the amount of pain the average person has to suffer. Dictators are concerned with enriching themselves.

The Rent Is too Damn High

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Remember Jimmy McMillan, the founder of the Rent Is too Damn High Party?

He wasn’t wrong:

A recent survey by New York councilmember Helen Rosenthal found 12% of stores on one stretch of the Upper West Side is unoccupied and ‘for lease’. The picture is repeated nationally. In October, the US surpassed the previous record for store closings, set after the 2008 financial crisis.


“It’s not Amazon, it’s rent,” says Jeremiah Moss, author of the website and book Vanishing New York. “Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that.”

Part of the problem is the changing make-up of New York landlords. Many are no longer mom-and-pop operations, but institutional investors and hedge funds that are unwilling to drop rents to match retail conditions. “They are running small businesses out of the city and replacing them with chain stores and temporary luxury businesses,” says Moss.

In addition, he says, banks will devalue a property if it’s occupied by a small business, and increase it for a chain store. “There’s benefit to waiting for chain stores. If you are a hedge fund manager running a portfolio you leave it empty and take a write-off.”

Fucking late stage capitalism!

I wrote that sarcastically but there are people who are saying it seriously. If one only possesses an infantile knowledge of capitalism, it would be easy for them to blame this predicament on capitalism instead of the real culprit, government. The economic system the United States operates under can best be described as government manipulated privately held businesses. While businesses in the United States are nominally private they are heavily manipulated by government. Wealthy businesses are able to hire lobbyists who can influence politicians into massaging the regulatory field. The lobbyists work to create a regulatory field that favors their employers while simultaneously hurting their employer’s competitors. For example, a lobbyist working for Comcast might influence city politicians to raise the cost of the permits required to bury fiberoptic cable. A large Internet Service Provider (ISP) like Comcast can easily soak up those additional permit costs whereas small local ISPs are not able to and thus are forced to go out of business.

This manipulated environment is also a feedback loop. As wealthy organizations are able to push out more and more competitors they are able to become more and more wealthy. As they become more and more wealthy they are able to afford more regulatory manipulation and so on. The inevitable end of this feedback loop is an economy controlled by a handful of wealthy politically-connected players and devoid of small businesses. Banks, as major players in the regulatory manipulation game, recognize this and thus acknowledge that properties occupied or owned by large corporations are far more valuable that properties occupied or owned by individually owned businesses. Property owners going off of the banks’ assessments will let their properties sit empty until a large corporation shows interest in buying or renting it.

Parts of the United States are already reaching the point where individually owned businesses can no longer succeed. Other parts of the United States will eventually reach the same point. The feedback loop will continue until small businesses can only exist in the black market.

Written by Christopher Burg

December 29th, 2017 at 10:30 am

Increasing the Forced Labor Pool

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The Pentagon has begun pushing for a policy to require women to also register for the draft. Why would the United States even bother with continuing the draft now that it’s using mercenaries for so much of its fighting? Because mercenaries want to get paid and the Pentagon wants to have the option of free labor available to it:

Not surprisingly, the Pentagon, the report reminds us, wants the Service Program to continue indefinitely. No surprise there. But now, the Pentagon wants to expand draft registration so it can include millions of young people who had not previously been eligible.

This proposed change will be couched in a variety of irrelevant issues like “gender equality” and “women in combat.” At the heart of the matter, however, is the fact that the Pentagon wants an even larger list of potential forced laborers who can be paid below-market wages. In other words, draft registration offers — and has always offered — a list of people who can be forced to pay higher taxes in the form of mandatory “service”:

“Conscription is slavery,” Murray Rothbard wrote in 1973, and while temporary conscription is obviously much less bad — assuming one outlives the term of conscription — than many other forms of slavery, conscription is nevertheless a nearly-100-percent tax on the production of one’s mind and body. If one attempts to escape his confinement in his open-air military jail, he faces imprisonment or even execution in many cases.

When you stop paying a mercenary, they go home. When you enslave draft an individual and fail to pay them or pay them below the market rate, they can’t go home because they’ll be arrested for desertion. The other downside with mercenaries is that you can’t force them to do anything. They’re contracted for a specific type of work. Drafted individuals, on the other hand, can be forced to perform any task:

Should the American state decide that it’s necessary to finally make use of the Selective Service lists, the new draftees won’t be people sent to carry rifles on the front lines. The military doesn’t want poorly trained conscripts in combat, anyway. But this fact by no means precludes the potential usefulness of conscription to the federal government.

What the US state does want — especially in case of dropping revenues due to economic crisis — is cheap labor to build military bases, drive trucks, prepare food, load cargo, mop floors, and perform the countless non-combat tasks that are required to further expand military prerogatives both at home and abroad. Yes, the US government can pay people to do all those things now. But conscripts could be much cheaper.

The Pentagon can have its cake and eat it too. By paying mercenaries to fight its wars, the Pentagon can have access to professional soldiers. By drafting people into slavery, the Pentagon can save money by having the infrastructure required to fight the war built for less than the market going rate.

Requiring women to register for the draft would offer the Pentagon an even larger pool of potential slave laborers, which would give it the option to expand itself further than it currently could without having to invest a lot more money.

Written by Christopher Burg

October 31st, 2017 at 10:30 am

War is Good for Business

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War is good for business. At least if you’re on the waging side. It’s probably not so good for those on the invaded side. But who can bring themselves to care about them when we’re talking about numbers like this:

BOSTON, Sept. 26, 2017 /PRNewswire/ — Force modernization will be one of the primary factors underpinning growth in global defense spending, driven by unprecedented developments in autonomous systems, missile, space and cyber-electronic warfare, and other technologies. Strategy Analytics: The Strategy Analytics Advanced Defense Systems (ADS) service report, “Global Defense Spending Outlook 2016-2026,” forecasts the global defense budget will grow to $2.41 trillion in 2026, with the opportunities available to industry growing at a CAGR of 3.5% to reach $771 billion.

Force modernization, if it follows in the footsteps of the F-35, will involve a great deal of money. However, there will be little to show for that money. The F-35, for example, still has problems reliably delivering oxygen to pilots even though it has cost over $1 trillion. Imagine the same thing happening with other military equipment. If we look at the raw numbers alone, it’ll be amazing economic growth!

Unfortunately, all of the resources invested in “force modernization” cannot be allocated to productive uses like new manufacturing plants, office buildings, and research and development for new consumer products.

Written by Christopher Burg

September 27th, 2017 at 10:30 am

Corporate Welfare Commission Decides Cheap Solar Panels Are Bad

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Big corporations tend to be very friendly with big government because big government can help them monopolize their market. While this process of monopolization is bad for consumers, neither the government nor the corporations that have allied themselves with it give a damn. For example, solar power has become increasingly viable over the years thanks to cheap solar panels. However, these cheap panels are being produced overseas, where the lack of government restrictions makes it more viable to make cheap products. To compensate domestic solar panel manufacturers for the restrictions it put in place, the Corporate Welfare Commission, sometimes mistakenly referred to as the International Trade Commission (ITC), has ruled that overseas panels are a threat to domestic manufacturers:

On Friday, the International Trade Commission (ITC) sided with bankrupt solar panel manufacturer Suniva, voting 4-0 that cheap imported solar panels and modules have harmed domestic panel manufacturers.

The commission now has until November to send recommendations on remedies to President Trump, who will be responsible for either setting a tariff on imported solar materials or finding some other remedy. Given Trump’s promises to bolster American manufacturing, it’s likely that he’ll favor restrictions on solar panel imports.

I’m sure the ITC will settle on a tariff because the other remedy, removing government created restrictions from domestic manufacturers, is unthinkable. What does this mean for consumers? It means us consumers will be paying more for solar panels. This is a bit ironic since the government dumped so much money into encouraging manufacturers to make solar panels affordable in the first place. But what government giveth, government taketh away. It may favor cheap solar panels today and oppose them tomorrow.

Written by Christopher Burg

September 26th, 2017 at 10:30 am

All Hail Hurricane Harvey, Savior of Our Economy

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A lot of people like to write off the Austrian school of economics as lunacy. Those same people usually cite mainstream economics as the right and true school of thought. However, I have a difficult time taking their opinions seriously when they believe shit like this:

Devastating Hurricane Harvey, unprecedented in its rainfall, could be a slight negative for U.S. growth in the third quarter, but economists say it may ultimately provide a tiny boost to the national economy because of the rebuilding in the Houston area.

Goldman Sachs economists estimate a very preliminary impact of the storm to be $30 billion in property damages, making it the ninth largest since World War II in terms of domestic property damage. Goldman economists say, in a note, the storm could take 0.2 points off of growth in third quarter because of the impact to the energy sector.

The problem with mainstream economics is its reliance on activity. So long as money is changing hands mainstream economists see a strong economy. If $30 billion of property is destroyed, they see $30 billion of activity and therefore a stronger activity. What totally flies over their head is the fact that that $30 billion isn’t producing new wealth, it’s merely replacing lost wealth. The Austrian school of economics is at least intelligent enough to address this fact.

What’s especially bad about the viewpoint that destruction is good for the economy is that it was refuted by Frédéric Bastiat way back in 1850:

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Resources spent on rebuilding lost wealth cannot be used on creating new wealth. The rate of creation of new wealth is a far better indicator of the strength of an economy that simple economic activity.

Written by Christopher Burg

August 30th, 2017 at 11:00 am