Tag: Mises Does Not Approve

Capitalism Versus Socialism

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.

The Biggest Threat to Free Markets are Successful Entrepreneurs

Everybody loves freedom so long as it’s the right kind of freedom. Neoconservatives love freedom right up until somebody wants to marry somebody of the same sex. Neoliberals love freedom right up until somebody wants to buy a firearm. Statist libertarians love freedom right up until somebody wants to opt out of paying taxes to fund the military national defense force appointed by the duly elected representatives of the Very Small Government. Likewise, a lot of people love free markets until they fail to serve the market. When that happens those people turn into big government twats:

With competition so fierce and profit margins so small — roughly 2.7 per cent on average — the role Quebec’s highly interventionist government should play in one of the province’s most dynamic industries remains a source of contention.

The debate is not new and was rekindled earlier this year when Carlos Ferreira, owner of a well-known eatery, said Montreal should impose quotas in neighbourhoods to limit competition and help struggling legacy restaurants stay in business.

“I don’t believe in the free market anymore,” Ferreira said at the time. “We have to protect the good restaurants.”

And by “good restaurants” he means his restaurant.

Although I won’t claim that Quebec’s restaurant scene is currently a free market, the market was free enough that the barrier to entry was low enough for Ferreira to enter. Now, like most established corporations, he’s finding that the pressures of continuously appealing to the market tiresome and wants the State to step in to protect him and his interest at the expense of everybody.

I say the expense of everybody because as things currently stand consumers have all of the power. If a restaurant starts serving shitty food consumers can go to a competing restaurant. New restaurants have to attract customers and that means appealing to consumers. What Ferreira wants is to restrict those consumer’s choices and therefore limit the power they have.

This is nothing new. The biggest threat to free markets are successful entrepreneurs because they’re the ones that throw money at politicians to get laws passed that hinder their competitors.

Dire Straits

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.

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

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.

Fuckin’ Prices, How Do They Work?

Today is Cyber Monday, which may have been the first in a long list of regular words to get the word “cyber” needlessly tacked onto it. While people do their cyber shopping on Cyber Monday for cyber deals they may ask themselves, why the fuck can I order a big screen television for a few hundred bucks but can’t even get a simple medical diagnosis without blowing through my deductible? The answer to that, as with the answer to most economic questions along those lines, has to do with government granted monopolies:

Take a look at this chart assembled by AEI. It reveals two important points. First, there is no such thing as an aggregate price level, or, rather what we call the price level is a statistical fiction. Second, it shows that competitive industries offer goods and services that are falling in price due to market pressure. In contrast monopolized industries can extract ever higher rents from people based on restriction.

There’s no such thing as an aggregate price level? Next you’ll tell me that gross domestic product is a made up number as well!

If you click on the link and look at the chart you’ll see that prices for college tuition, textbooks, childcare, and medical care have been increasing rapidly whereas the prices for television, toys, software, and wireless services have been decreasing rapidly. The difference? The goods and services that have been increasing in price are all monopolized or otherwise heavily restricted by the State whereas the goods and services that have been decreasing in price all exist in markets with an extremely high level of competition.

The takeaway from this is that there is a vicious cycle when it comes to prices and the State. When prices go up people demand that the State intervene to bring prices down. Usually it was the State’s involvement that caused the prices to go up in the first place and if people get what they want the prices will go up even further as the State gets further involved. With the ramifications of the Affordable Care Act (ACA) becomes apparent many people are demanding the State step in to fix its mess. But most people aren’t demanding that the State decrease its involvement in the healthcare market. Instead they’re demanding that it further increase its involvement by implementing a single payer system. In other words, people are demanding that the vicious cycle be continued and if it is (which it almost certainly will be) we’ll see healthcare prices jump even higher (but those increases will probably be hidden in payroll taxes so most people remain ignorant of them and thus believe that the problem was solved).

The Issue Nobody Wants to Talk About

I didn’t watch last night’s debate. I’ve already seen enough videos of monkeys flinging feces at each other for a lifetime. But I did find an excellent video that summarizes both candidates’ position on a very important issue:

During his first presidential run, Obama spent a lot of time talking about the wars in Iraq and Afghanistan. He claimed that he was going to make ending those wars a priority. While he was lying through his teeth it was refreshing to have at least one major candidate opposing war. This year? Both major candidates are war hawks and want to turn Syria into rubble (not because of anything Syria has really done but because it’s a proxy for Russia and old Cold War attitudes die hard). But neither one of them wants to address the fact that the United States is involved in five fucking wars:

In an election flush with conspiracy theories, here’s one that’s real: Both major party nominees, as well as the journalists who cover the election and moderate the debates, are actively conspiring to avoid talking about the fact that the United States is waging war in at least five countries simultaneously: Iraq, Syria, Yemen, Libya, and Somalia.

In the first two presidential debates, our involvement in the Syrian civil war was briefly discussed, as was ISIS in vague terms, and the Iran nuclear deal, and Russia’s mischief-making in Eastern Europe and the Middle East, and Libya, though mostly in the past tense, focused on our 2011 intervention to depose Moammar Gadhafi and the subsequent attack on American government facilities in Benghazi a year later.

But our role in “advising” the Iraqi army “a few miles behind the front lines” as it works to take back territory from ISIS? Our “secret war” against Shabab militants in Somalia? Our support for Saudi Arabia’s bloody assault on Houthi rebels in Yemen? Our air strikes pounding positions in and around the city of Sirte on the Libyan coast?

Nada. Zip. Nothing.

While Keynesians have wet dreams over all of the economic “stimulus” wars create the only people who benefit are those within the military-industrial complex. Lockheed Martin, General Electric, Blackwater (or whatever the hell they call themselves now), etc. make big dollars on war. People (if you can really call Keynesians people) will also mistakenly point out that construction companies and other rebuilders make big dollars as well. But their ignorance of Bastiat’s broken window fallacy causes them to ignore the fact that those builders would be building newer, better buildings instead of replacing older buildings in an economically prosperous (i.e. not blown to Hell and back by war) region. Furthermore, an economically prosperous region would have goods and services to trade with other regions, which would increase the wealth of both sides. When wars are waged everybody outside of the military-industrial complex gets screwed.

In times of peace wealth is invested in developing new more technologically advanced goods and services. During times of war wealth is diverted to onetime use munitions and rebuilding everything that was blown up. Both sides are diverting wealth that was stolen from their populace into first building bombs, tanks, ships, bunkers, supply lines, surveillance technologies, etc. and then replacing them all when they’re destroyed. It’s an unending cycle of wasted potential.

The United States is already involved in five wars. Getting involved in more wars or throwing more resources into existing wars is only going to increase the amount of wealth wasted on death and destruction. No matter which president wins in November it’s clear that the current wars will not only march on but increase in intensity. This will only worsen the already tedious economic situation the country, and really most of the world, is in. And nobody wants to talk about that. Nobody wants to talk about what is probably the single biggest issue facing the world right now. What is the point of political debates if the important issues aren’t being broached (don’t answer that, it was a rhetorical question)? Where is the choice in an election if both candidates hold the exact same destructive positions on truly important issues (again, this is a rhetorical question)?

Before I end this post I want to address something. I’m sure some very decent human beings are asking themselves why I’m framing this discussion within economics instead of human lives? I’m trying to reach the statists here and as we know statists tend not to value human lives very highly (if they did they wouldn’t be statists). But they never shut up about the economy. I guess a part of me hopes that framing this discussion within economics I might be able to reach one or two of them and convince them to ask why nobody is addressing the issue of war in this election.

You Can’t Own Property, Man

Pop quiz time. Can you own property in Minneapolis? The answer is no. You can rent property in Minneapolis but that rental is subject to paying property taxes and utilizing the land in a manner that is expressly approved by the city council. If that last part sounds a bit strange it’s because you down own a surface parking lot. You see, the city council of Minneapolis has a dream. In that dream Minneapolis looked like Mega City I from Judge Dredd. Surface parking lots can’t pack in a million people so they’re on the list of properties to be axed.

So far the city council has been playing a cautious game but that looks like it may change:

It was a routine briefing of a Minneapolis City Council committee on a seemingly unrelated topic, but it offered the chance to rouse a long-simmering issue in Minneapolis:

What can the city do to rid itself of the acres of surface parking lots in and around downtown?

While development activity has seen many of those lots disappear, many remain — too many, according to Council Members Lisa Goodman and Jacob Frey, who used the May 11 briefing to press city assessor Patrick Todd to do something about it.

Like what? Goodman thinks the city should use state requirements that require property be assessed on its “highest and best use” — and not on its current use — to incentivize owners to either develop the land or sell to someone who will.

Because parking is scarce in Minneapolis a person can make pretty decent money with a surface parking lot. That really bothers certain council members such as Lisa Goodman. It bothers her so much that she wants to change the rules to make them unprofitable. That rule change is a simple one. Instead of assessing a parking lot as a parking lot for property tax purposes she wants to assess them as if they were being used for her vision of their best use. Since her vision is high density apartment complexes the assessment would jack up the property taxes to, she hopes, a level the owners can’t sustain. In fact she flat out says that they must not be paying enough taxes:

“If they’re making enough money by selling parking downtown,” she said, “then they’re not being taxed high enough, and they’re certainly not being taxed high enough for a potential Class A office use.”

Do you know what those surface parking lots were taxed enough for? Funding a study to decide on how best to destroy them:

In 2013, amid planning for the new Vikings Stadium, the group HR&A Advisors conducted a $40,000 study of ways to reduce the number of surface lots in Minneapolis. Several council ordinances have sought to force beautification of parking lots, something that could have also increased the costs associated with operating them. And a bill introduced by state Sen. Scott Dibble, DFL-Minneapolis, would allow Minneapolis and St. Paul to impose a per-stall fee on parking, with revenue going to public plazas, transit lines, bike facilities and pedestrian improvements.

This is another reason you should avoid paying whatever taxes you can. When you pay taxes they are often used to fund your destruction.

What we have here are central planners run amuck. Consumers have already spoken and they want surface parking lots. How can I say this since there hasn’t been any kind of vote? Unlike voting, the market actually indicates what consumers want. Because there are enough consumers paying to use these surface parking lots to make them profitable we know for a fact that those lots are in demand with consumers. Goodman doesn’t like them and instead of offering to buy those lots herself she’s using tax dollars to fund studies to determine the best way to destroy them… in a manner that requires the denizens of Minneapolis pay for it.

In the end I predict that the city council will get its way because it will just keep cranking up the taxes until it bleeds surface lot owners dry. Then those lots will sit empty because if developers really wanted those lots they’d have already bought them.

When Your Return On Investment Doesn’t

As a resident of the Twin Cities I’ve recently suffered the bullshit spewed by stadium advocates. When the local handegg team started whining about wanting an even bigger stadium the smart people said it was a stupid idea and the stupid people said it was a smart idea. The stupid side claimed the stadium will bring a huge boost to the local economy. People from around the country will supposedly flock to the new stadium where they wouldn’t have come to the old stadium (apparently handegg fans travel to games for the buildings, not to watch the teams). This, in turn, will flood local eateries, convenience stores, hotels, and every other business with patrons. And that will lead to a flood of tax revenue (handegg fans also seem to think tax revenue is a meritorious thing). Since everybody will benefit, they claim in spite of facts, the stadium should be at least publicly funded.

One issue never touched by stadium advocates is what happens when the breadwinning team decides to leave? That’s the question denizens of St. Louis are probably wishing they had asked themselves before they built their shiny new stadium:

The St. Louis Rams’ decision to relocate to Los Angeles brought a double dose of bad news for the city’s residents on Tuesday: Not only are they losing the football team they’ve hosted for the last 21 years, they also still have to pay for the stadium they built to lure the Rams to their hometown in the first place.

At the beginning of 2015, city and state taxpayers still owed more than $100 million in debt on the bonds used to finance the Edward Jones Dome, the stadium St. Louis put $280 million in public funds behind in 1995.

It isn’t scheduled to pay off that debt until at least 2021, and that could be more difficult without the Rams and the $500,000 rent payment the team made each year. The city itself owes $5 million per year over that period, and the loss of the Rams could increase costs in the short-term.

Politicians, being incapable of admitting to fuck ups, are trying to spin this to their favor. But the bottom line is the city will have to pay off the stadium without a continuos source of rent. That will almost certainly lead to a rise in property taxes if not other taxes to make up the difference.

Publicly funded stadiums are nothing more than exercises in transferring wealth from the people to the politicians and their cronies. Even though the Rams are moving on the team gets to enjoy a great deal of wealth it otherwise wouldn’t have had because it was tight with the local politicians who were willing to put the tax victims on the line.

Only In A Socialist Paradise

A lot of soft socialists (my name for your typical socialist who is too timid to just go full socialist) cite Nordic countries as being a veritable paradise. Free healthcare! Free education! Free everything! All of this comes at a cost though. The most notable is positively brutal personal income tax rates. A lesser considered but more insidious cost is ridiculous economic controls. Where else but a socialist paradise could you find police being tasked with wielding State violence against people who sell pizza too cheaply?

The new campaign, which is being publicised on police social media accounts, asks people to inform officers if they spot a pizza on sale for under six euros (£4.50), national broadcaster Yle reports. “Unless a pizza is on temporary sale there is no way a legitimate establishment can offer pizza for less than six euros,” Det Insp Minna Immonen of the Uusimaa police department is quoted as saying. Police are trying to crack down on the “grey economy”, which costs the country millions of euros in lost tax revenue each year. They also want people to make sure they get a receipt for their pizzas, regardless of value.

There is no legitimate way an establishment can make a profit by selling pizza for less than six euros? Odd. I can think of many. Pizza can, for example, be used as a loss leader at an establishment that makes its real profit from alcohol or cannabis sales (I’m not sure if cannabis is even legal in most Nordic counties but their status as a veritable paradise leads me to believe it must be).

Even more interesting than the idiocy of tasking the police with enforcing this ridiculous restriction is the reason. According to the broadcast the State is merely protecting businesses from themselves (because, apparently, they’re too stupid to know how much they can sell a pizza for and still profit). But the real reason is the loss of plunder from taxes that aren’t stolen.

The cost of free shit is so high that a person can’t even sell a pizza for less than six euros because the State won’t get a big enough cut.

Libertarianism: Simultaneously Impotent And The Most Dangerous Force On Earth

The best thing about being a libertarian is that you’re simultaneously accused of being completely impotent and the most dangerous force on Earth. Making the situation even better is the fact libertarianism is often blamed for things it has absolutely no part in. Take this recent article by statist economic stooge Will Hutton:

Yet there is a parallel collapse in the economic order that is less conspicuous: the hundreds of billions of dollars fleeing emerging economies, from Brazil to China, don’t come with images of women and children on capsizing boats. Nor do banks that have lent trillions that will never be repaid post gruesome videos. However, this collapse threatens our liberal universe as much as certain responses to the refugees. Capital flight and bank fragility are profound dysfunctions in the way the global economy is now organised that will surface as real-world economic dislocation.

The IMF is profoundly concerned, warning at last week’s annual meeting in Peru of $3tn (£1.95tn) of excess credit globally and weakening global economic growth. But while it knows there needs to be an international co-ordinated response, no progress is likely. The grip of libertarian, anti-state philosophies on the dominant Anglo-Saxon political right in the US and UK makes such intervention as probable as a Middle East settlement. Order is crumbling all around and the forces that might save it are politically weak and intellectually ineffective.

We’re seeing signs of the very economic turmoil libertarians have been warning about for decades. This turmoil is the result of unsound monetary practices, namely the reliance on debt instead of wealth for economic activity between nations. No matter how much evidence libertarians point to or how loudly libertarians scream the statists seem entirely unwilling to adjust their monetary policies. Instead they continue trying the same thing — only harder.

So who’s to blame for the current turmoil? Libertarians, of course!

There’s so much to laugh at in this article but the insinuation that libertarian, anti-state philosophies have any kind of old on the political right of the United States (US) or United Kingdoms (UK) is a real gut buster. The political right and left can best be defined as anti-libertarianism. Libertarianism is about individual empowerment at the expense of state power. Strong centralized militaries, militarized domestic police forces, national surveillance apparatuses, fortress-like borders, fiat currency, and other such nonsense the political right has a raging hard-on for are anti-libertarian in nature. Likewise the redistribution of wealth, heavy-handed market controls, widespread censorship, restrictions on voluntary association, almost zealous opposition to self-defense, and other politically left ideas are equally anti-libertarian in nature.

The economic philosophies, which Mr. Hutton claims to be libertarian, of both the US and UK are entirely statist in nature. Libertarians advocate for wealth-based currencies, usually in the form of gold or silver backed warehouse receipts, whereas the US and UK both use fiat currencies that are backed by little more than each nation’s respective capacity for violence against anybody who doesn’t recognize their full faith and credit. Debt, the US and UK’s preferred excuse for printing more worthless paper, is the antithesis of libertarianism’s advocacy of spending within one’s means.

The current economic turmoil is the result of authoritarian, pro-state philosophies. If libertarianism actually had a grip on these nations we almost certainly wouldn’t be facing this economic crisis.

But, of course, libertarianism is the boogeyman of statists everywhere so it must be blamed for all things, whether or not those accusations make sense.