Tag: Mises Does Not Approve

You Keep Using That Word: Monopoly Edition

you-keep-using-that-word

Monopoly is one of those words that gets thrown around too loosely. The word monopoly means, “exclusive control by one group of the means of producing or selling a commodity or service.” So monopoly actually defines a condition that only exists under government interventionism. But the word, like so many other words, has been twisted by the State. Today monopoly implies any company that has become extremely large. Case in point, Google:

BRUSSELS — European Union lawmakers have overwhelmingly backed a motion urging antitrust regulators to break up Google. The non-binding resolution approved Thursday by the European Parliament is the strongest public signal yet of Europe’s concern with the growing power of U.S. tech giants. The resolution is a largely symbolic protest vote without immediate impact. But it was approved with a large majority — 384 votes to 174, with 56 abstentions — showing widespread political backing. Andreas Schwab, German conservative lawmaker and co-sponsor of the bill, said it was a political signal to the European Commission, which is tasked with ensuring a level playing field for business across the 28-country bloc. “Monopolies in whatever market have never been useful, neither for consumers nor for the companies,” he said. Google declined to comment.

Google isn’t a monopoly. In fact it’s not even close to being one. Every single product and service it provides is also provided by others. I’m proof of this since I use very few Google products or services. Most of my searching is done using DuckDuckGo. My e-mail is handled by my server sitting in my dwelling. My phone is manufactured by Apple and runs iOS. None of my laptops are Chromebooks.

The only Google services I really utilize are Google Maps and YouTube. I use Google Maps because I find the alternatives provided by Microsoft and Apple lackluster and choose YouTube because it has more content I’m looking for than Vimeo. But in both cases you’ll notice I mentioned competitors that exist.

If you want an actual example of a monopoly look up Ma Systems. Ma Bell was a company that enjoyed a government granted monopoly over telecommunications. But outside of government intervention in the marketplace you’re going to be hard pressed to find an actual monopoly so you may want to stop throwing that word around so willy nilly.

OpenBazaar Will Kill Us All

Mainstream economists are obsessed with control. Unlike the Austrian tradition, which correctly states that there is no way to control economies, mainstream economists believe that an ideal economy, whatever that is, can be had if a strong enough centralized power forces people to obey the correct plan. This obsession leads them to see doom and gloom in the strangest of places. Consider OpenBazaar. OpenBazaar is a decentralized commerce platform that allows anybody to buy and sell goods online without going through a middleman such as Amazon or eBay. Sounds empowering, doesn’t it? Not according to mainstream economists. To them the idea of OpenBazaar undermines the control they worship and is therefore a threat to humanity:

While Hoffman could be right that OpenBazaar will revolutionize online commerce, its business model could also potentially threaten America’s tech industry. The wild and uncontrollable nature of OpenBazaar’s technology, especially if it winds up being used to facilitate terrorism, could push authorities to launch a broad crackdown on other technologies as well that law enforcement considers an impediment to its work.

And if the potential harm from a marketplace seems limited to you, consider what could happen from the combination of this type of technology with Artificial Intelligence. As AI evolves, even tech visionaries like Microsoft founder Bill Gates and Tesla chief Elon Musk have expressed concern over the ability of humans to control the outcome, especially if machines are eventually able to ‘think’ autonomously. Now apply OpenBazaar’s decentralized and police-resistant model to this and you have a recipe for disaster: machines with free will and the ability to communicate with each other under the human radar. Maybe an Isaac Asimov-inspired fantasy at one time, this is hardly an impossible scenario anymore given the rapid pace of technological development.

You have to admire how he states OpenBazaar could hurt the technology industry and immediately turn around and explain how it could greatly enhance the technology industry by helping artificial intelligence (AI) advance (although, again due to an obsession with power, he sees the advancement of AI as extremely dangerous).

This article shows just how insane of an obsession with power mainstream economists possess. Anything that could be potentially disruptive, which all technology can be, is seen as a threat. Computers were originally feared by many mainstream economists because they stood to replace a lot of human labor. In fact this attitude is still alive. Light bulbs probably had numerous mainstream economists shitting their pants because they would replace the candle.

Here we have a platform that enabled individuals to buy and sell goods without having to go through a middleman or front the expense of running their own commerce front end. It could allow some little old lady in the backwoods of Alabama to sell the excellent arts and crafts she’s known locally for. A manufacturer or parts for old automobiles who only sold locally could setup an online presence and sell to anybody in the world. There is so much potential for this kind of platform but mainstream economists don’t see it because the potential derives from an ability to bypass controls.

Let us also not forget the cost of control. Silk Road was revolutionary not because it allowed people to buy and sell illicit drugs but because it protected people participating in voluntary trade from violent law enforcers. It made the illicit drug trade much safer for everybody involved because the biggest threat to somebody buying or selling illicit drugs is a group of heavily armed trigger happy cops kicking down their door at oh dark thirty in the hopes of finding a little baggy of pot and a dog to shoot (not necessarily in that order). The control mainstream economists worship requires violence and tools that protect people from that violence stand to make the world a safer place. That’s why I don’t believe tools like OpenBazaar are a danger to society. If anything they stand to save a lot of peaceful people from the truncheon of the state.

They’re Finally Getting the Right Idea

The economically ignorant have been demanding the minimum wage be set at $15.00 per hour. If you understand basic economics you know that minimum wage laws don’t guarantee a living wage but merely make it illegal to hire entire swaths of people. Nobody is going to hire a teenager with no skills if they have to pay them $15.00 per hour. And a minimum wage of $15.00 per hour makes no sense for a teenager because they usually live at home, are fed by their parents, and have few bills. They live for a lot less money than an adult raising three kids. And if a business owner does decide to hire them for less then $15.00 per hour they will get a visit from the gang in blue who will either issue a fine or kidnap the owner.

But my biggest criticisms of people advocating for the minimum wage to be raised is their lack of belief. Why only $15.00 per hour? Why not jack it up to $20.00 per hour or even $100.00 per hour? Thankfully the Freedom Socialist Party (an oxymoron if there ever was one) has stepped up to the plate and is demanding minimum wage be raised to $20.00 per hour:

But Doug Barnes, the party’s national secretary, told The Huffington Post on Saturday that the group relies heavily on donations from low-wage workers and could not afford to pay much to an inexperienced designer.

“We’re practicing what we’re preaching in terms of continuing to fight for the minimum wage,” Barnes said, making his first public comment on the controversy. “But we can’t pay a lot more than $13.”

He said the party’s revenues would increase if the minimum wage were raised to $20 — and he’d even prefer $22, at least in Seattle. The city will begin phasing in a $15 minimum wage in April.

“Our donor base would all be affected, and the low-wage workers who support us with $5 to $6 a month would be able to give more,” he said. “That would affect our ability to pay higher wages as well.”

I love his reasoning. Raising the minimum wage will result in more money for the Freedom Socialist Party. How capitalistic of him!

But I do give him credit for at least believing in what he preaches to the extent of demanding an even more absurd minimum wage. Maybe he could kick start the minimum wage inflation movement where minimum wage will be set to inflate by at least two percent every year! That way we could render almost everybody unemployable and the underground economy would flourish.

As an agorist the best feature of minimum wage laws is that they push people into the underground economy. People aren’t going to stand by and starve simply because it’s illegal for anybody to hire them. They’re going to offer their services illegally. That means they won’t pay taxes on their income and will starve the state of some resources. Anybody partaking in illegal services isn’t going to pay sales tax, obtain permits, or do anything else that might tip the authorities off. Part of the reason I want to see minimum wage jacked up is because it will cause the underground economy to expand at a rapid pace. Socialists may have funny economic ideas but that doesn’t mean their ideas are without merit.

Central Banks aren’t Radical or Revolutionary

Radical, according to Google, means “advocating or based on thorough or complete political or social reform; representing or supporting an extreme section of a political party.” Revolutionary, according to Google again, means “involving or causing a complete or dramatic change.” I theorize that a majority of people who use these words haven’t looked up either in a dictionary.

Iceland made headlines recently by entertaining the idea of a, according to many, radical policy of giving a central bank the authority to print money. Many have even declared the proposal revolutionary:

Who knew that the revolution would start with those radical Icelanders? It does, though. One Frosti Sigurjonsson, a lawmaker from the ruling Progress Party, issued a report today that suggests taking the power to create money away from commercial banks, and hand it to the central bank and, ultimately, Parliament.

double-facepalm

What in the gods’ names is revolutionary about giving the power to print money to a government controlled central bank? That’s a page out of the playbook of basically every other major nation on Earth. This is why I’m left to believe people who use the terms radical and revolutionary are entirely ignorant of their meanings.

A radical or revolutionary move would be to take the power of making money away from any central authority and allow markets to handle it. Markets are another concept that people are almost entirely ignorant of today. People often mistakenly believe that granting power to commercial banks to print money is a market solution. But markets are what happens in the absence of any coercive authority. In other words markets are the result of individuals making choices themselves.

If you want an example of a market solution to money you need only look to Emperor Norton:

Norton also issued his own money to pay for his debts, and it became an accepted local currency in San Francisco. These notes came in denominations between fifty cents and ten dollars; the few surviving notes are collector’s items.

Norton didn’t coerce anybody into accepting his currency. He merely created it and offered it in payment of his debts. His creditors accepted it of their own volition. A market solution to money is simple. Each individual is free to propose their own currency. Success is determined by whether or not people are willing to accept a currency in exchange for goods and services. No coercion is necessary.

Statists will come up with any number of excuses as to why money creation must be monopolized by the state. Most of them will then turn around and bitch that the state doesn’t print enough or prints too much. They demand control and they get pissed when that control isn’t used in the manner they prefer.

There are only two real options when it comes to choices. You can either give power to somebody else to make choices for you or you can make them yourself. In this era of statism the radical or revolutionary option is to make choices for yourself.

Venezuela Going Full Dictatorship

It was bound to happen. As the failure of centrally planned economics wrecks the lives of Venezuelans and the United States places more sanctions on the country to make those miserable wretches even more miserable somebody was going to demand absolute power in the name of fixing everything. That demand was made by the country’s president, Nicolas Maduro, and was granted:

Venezuelan President Nicolas Maduro has been granted the power to govern by decree until 31 December.

The measure was approved by the National Assembly, where Mr Maduro has a majority.

He requested the approval of the Enabling Law after the United States issued new sanctions against Venezuelan officials.

The opposition says he is using the incident to amass power and divert attention from the economic crisis.

Mr Maduro said he needed the special powers to deal with the threat posed by the United States, which he accuses of meddling in Venezuela’s affairs.

The opposition, that is to say the members of the National Assembly who aren’t completely ignorant of history, called it. Maduro is just exploiting a horrible situation to amass power. This is the exactly same playbook used by a million despots before him and will likely continue to be successful in the foreseeable future. What can Venezuela expect? It depends on how drunk with power Maduro gets. In the best case scenario little changes and his power to rule by decree goes away at the end of the year. But the worst case, which is also the more commonly case, involved his opponents all dying and his ability to rule by decree lasting indefinitely.

I really hate to see the lives of so many people become as miserable as the Venezuelans have. But our species seems entirely unwilling to learn from the mistakes of centrally planned failures. Even when we get reminders such as Venezuela the common reaction seems to be blaming the entire mess on not enough centralized power being wielded.

Soon Central Banking Failures Will Be Our Fault

The state is the undisputed champion of passing the buck. Whenever it fucks up it finds a way to blame the people. Did the politicians screw up the economy? That’s our fault for voting them in! Is your local police department out of control? You voted for the sheriff! There isn’t enough money circulating throughout the economy? What do you expect when people save hoard money? Accumulated debt is causing chaos in the banking system? Obviously people aren’t saving enough money!

Now the Bank of England is setting itself up to blame the people for arbitrarily set interest rates not bringing prosperity:

According to Sky News, the world’s eighth oldest bank will now assess the frequency of job searches and monitor prices online to understand potential unemployment rates and monitor inflation. It will also gauge language used on social networks to better understand the state of some financial markets. It’s another example of the shift towards “big data,” where companies collect and analyse huge sets of digital data rather than use traditional database techniques to detect patterns as they happen. The Bank of England says it used these techniques to help impose new controls on the housing market earlier in the year, and hopes this “big shift from the past” will help it better judge Britain’s financial status in the future.

Inflation will now be our fault because we sent the wrong signals over our social media feeds! Isn’t the state brilliant? There’s nothing it can’t blame on somebody else.

Dey Tuk Er Jurbs

While I understand economics isn’t everybody’s favorite subject of study it’s also not rocket science either (although if you look at some of the magical formulas concocted by Keynesians you might think it is). There is no reason why people today should still believe the myth that automation leads to unemployment. But people still believe it:

The Associated Press has a three-part series on one of the biggest questions business and society will face in coming years.

Are we prepared for a world where 50 to 75 percent of workers are unemployed?

It seems like a ridiculous question, but it’s something economists and technologists say we seriously need to think about. It’s just math.

If you believe this then do yourself a huge favor and read Hazlitt’s Economics in One Lesson. Chapter seven, title The Curse of Machinery, buries this myth under six well deserved feet of ground.

Back when the industrial revolution was in full swing people often cursed automation as the killer of jobs. Then computers came to the market and they were going to render us all unemployed. Now we’re all supposed to be afraid of the job killing robots. In the end every supposed killer of jobs has failed to render everybody unemployed. Instead the employment market changed. People are still needed to do things that machines cannot. Even if we do reach a point where a vast majority of work is performed by robots it will only mean that goods and services will be so incredibly cheap that people will have to perform very little work to afford them. It will also mean that labor will become more specialized and therefore more expensive so an individual could live a very comfortable existence by only working a handful of hours a week, month, or year.

The robots may render specific jobs obsolete but they won’t render everybody unemployed. That’s just history.

Everything I Want is a Human Right and Should be Free

Economic ignorance has lead to widespread belief in many silly things. For example, people believe that war is good for the economy because it creates manufacturing jobs. Frédéric Bastiat explained why this belief was bullshit in 1850 with the parable of the broken window. Another silly belief many people seem to have is that there is such a thing as free. This belief has become especially commonplace now that everybody equates anything they want as a human right and therefore should be provided for free.

The latest case of this belief being proliferated is tampons. I’m not kidding. This article, which argues that tampons should be free, has been making the rounds on the Internet and many people have deemed it to be a good idea:

We need to move beyond the stigma of “that time of the month” – women’s feminine hygiene products should be free for all, all the time.

Sanitary products are vital for the health, well-being and full participation of women and girls across the globe. The United Nations and Human Rights Watch, for example, have both linked menstrual hygiene to human rights. Earlier this year, Jyoti Sanghera, chief of the UN Human Rights Office on Economic and Social Issues, called the stigma around menstrual hygiene “a violation of several human rights, most importantly the right to human dignity”.

[…]

But this is less an issue of costliness than it is of principle: menstrual care is health care, and should be treated as such.

We’ve come full circle. Since so many people believe that healthcare is a human right and therefore must be provided to all for free anything that can be somehow tied to healthcare should likewise be provided to all for free. But nothing is free. Everything good requires resources. First raw resources must be collected, which in of itself requires energy. Then those raw resources must be refined into something useful for the manufacturing of capital goods, which also requires energy. After that those capital goods must be further refined into something consumers can us, which requires more energy. Energy itself is a resource as is time and basically everything else that touches the manufacturing process.

The bottom line is somebody has to invest the resources necessary to produce a good. When somebody says they believe something should be free what they really mean is that everybody in the world should be forced to set aside a portion of their resources to manufacture that “free” product. To further simplify the matter when somebody says they believe something should be free what they really mean is that everybody else should pay for it.

Now the people who want free shit usually use very utilitarian arguments. This article, for example, points out that approximately half of the population of this planet can utilize tampons. I’m going to one up that. What is an activity that every human being does that can negatively impact sanitation? Shit! Therefore I propose something different. Instead of “free” tampons I propose “free” toilet paper for all! Obviously I’m joking since I’m not economically illiterate and I’m not such an asshole that I want government violence brought against you so I can get something for “free”. But I believe my point has been made.

The Importance of Business Models

When Google announced that it was killing Reader I went on the lookout for a new Really Simple Syndication (RSS) service. During my quest I came up with several “must have” features including Reeder support (either current or upcoming), a decent online interface, and a coherent business model. The last requirement may surprise many people who sought a free service to replace Google’s free service but I didn’t want to again encounter the hassle of finding an alternative service anytime soon. I settled on Feedbin, in part, because the developed had a business model (at the come I signed up he charged $2.00 a month or $20.00 a year, now he charges $3.00 a month or $30.00 a year). Since the developer of Feedbin makes a profit from his service I doubt it’s going to go away anytime soon so it’s unlikely that I’ll have to deal with this:

Since we launched first public version almost a year ago up until March 2013 we have been working on The Old Reader in “normal” mode. In March things became “nightmare”, but we kept working hard and got things done. First, we were out of evenings, then out of weekends and holidays, and then The Old Reader was the only thing left besides our jobs. Last week difficulty level was changed to “hell” in every possible aspect we could imagine, we have been sleep deprived for 10 days and this impacts us way too much. We have to look back.

The truth is, during last 5 months we have had no work life balance at all. The “life” variable was out of equation: you can limit hours, make up rules on time management, but this isn’t going to work if you’re running a project for hundreds of thousands of people.

[…]

That’s why The Old Reader has to change. We have closed user registration, and we plan to shut the public site down in two weeks.

It’s unfortunate that the developers of The Old Reader felt as thought maintaining the site was, in their words, hell. But the part that made me roll my eyes was the following:

For those who would like to start the usual “VC, funding, mentor” or “charge for the damn thing” mantras — please, spare it. We’re not in the Valley where it might be super-easy, and, after all, not everyone wants to be an entrepreneur. We just love making a good RSS reader.

It’s true, not everybody wants to be an entrepreneur but it’s also true that working on a project is much more fulfilling when one gets paid to do it. I have a lot of hobbies, and they often cost a fair amount of money, but I put my truly useful skills, the ones that can be used to provider services that other people want, to work in a manner that makes money. Getting paid motivates me to do a good job and continue on with the job even during those times that it sucks. In all likelihood the developers of The Old Reader wouldn’t find their work hell if they were receiving a decent paycheck for their efforts. When Feedbin began to gain subscribers the service started to become slow. Did the developer quit because the complaints ate away at his soul? No, he improved the service because he was making money from his efforts. It was a win-win situation. He received money for his work and his users received a kick ass RSS service.

Business models are too often undeveloped in the technology field. Great developers create great services without having any workable strategy to monetize their efforts. This lack of foresight tends to have one or two results: either the service is purchased by a large service provider, such as Google, or the service is shutdown when the hassle of maintaining and improving it becomes too great.

If you create a great service don’t be afraid to ask for payment. It’ll work out better for both you and your users. Likewise, if you want to utilized a great service don’t get angry when the developer asks to be paid. It’ll work out better for both you and the developer.