Looting and Freedom

Whether political freedom or economic freedom is more important is a moot question.

The most basic property right is self-ownership. To the degree that right is compromised, so is freedom. A commenter at the linked article above noted this:

“I propose in the following discussion to call one’s own labor, and the equivalent exchange of one’s own labor for the labor of others, the ‘economic means’ for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the ‘political means’.”

   – Franz Oppenheimer, The State. New York: Free Life
      Editions, 1908 (1975), pp. 24-25

Beyond the unabashed wealth redistributionism of a Bernie Sanders, ‘unrequited appropriation of the labor of others’ includes all forms of rent-seeking: Regulation favoring entrenched business (from tariffs to requiring hair braiders to take hundreds of hours of training, to subsidies for solar panels, movies, art, mortgages, etc., etc., etc.); union shops; civil asset forfeiture and eminent domain; and zoning laws.

We may agree politically to give some portion of some of those freedoms to the State, but we will, by definition, be less free; and bureaucracies will always take more than is granted.

Principled resistance to the looting is a requirement of freedom.

A note on jobs

We face an employment problem. Not the one Donald Trump refers to when he talks about bringing manufacturing jobs back. Those jobs do not add much value any more. I’d argue we don’t want them back.

Take, for example, what happened to US auto manufacturers who paid far more to assembly line workers than those workers were worth: Bankruptcy. They had to lay off workers, screw over bondholders, suck-up taxpayer dollars and, in 2007, implement a two tier wage.

Entry-level auto-workers get $15.78 to $19.28 hourly. Slightly above what the economically ignorant are now demanding for flipping burgers.

Full rate auto-workers get $28 an hour. The top tier also provides better benefits, including a pension instead of the 401(k) entry-level workers get. The total difference in the two compensation scales is about $20 an hour.

How much value is added by screwing in a sensor (200 times a day) that will keep cars from crashing into each other? What value is added by designing that sensor? Which job do you want?

If Mexicans and Chinese do those rote assembly jobs for less than UAW wages and benefits, is anyone surprised? Are they still “good jobs?” Is doubling the wages of an entry level UAW worker in Detroit sustainable?

How many of you would appreciate a doubling in the cost of a new automobile, or a $9 McDonald’s fish sandwich?

Those jobs, within our lifetimes, will mostly be done by robots. Then who will Trump blame?

Donald Trump’s jobs “plan” is like insisting we bring back jobs manufacturing buggy whips.

Unlearn for Bern

You know, the Bernie voters more and more resemble the demographic contingent that “got clean for Gene.” Minus the clean bit, lacking the civility of the Vietnam era and adding tribalist whining about the 1st Amendment.

On a whim I checked ‘sarc’ on Duck-Duck-Go: “Sexual Assault Response Coordinator.” In this case, that’s Bill Clinton, Gloria Steinem and Madeline Albright. It’s all in how you parse “sexual assault response.” Camille Paglia had some thoughts on this – “Sexism has nothing to do with it”.

But back to my point: The main difference between Gene McCarthy and Bernie Sanders is that no one in the 1960’s could possibly have run on an overtly socialist platform. But for Obama, no one could run on one now. Bernie’s acolytes think the problem is Barack didn’t transform enough.

The new generation of students doesn’t remember the Soviet Union, hasn’t read the Black Book of Communism or The Road to Serfdom and paid no attention to the lessons of Hugo Chavez (much less Mao, Stalin or Castro). Their “war” is fueled by abysmal economic ignorance. Not that the Vietnam era protestors were students of the dismal science, it just wasn’t their reason for being, and they couldn’t have sold socialism to a wide audience however much protest leaders may have wanted to.

How quickly we forget when the far left runs the government schools.

Creative Accounting

Reuters reports “U.S. posts $3 billion budget surplus for January“. They fail to note that from December through January US debt rose by $137 billion.

This “surplus” is as if you counted a $500 per month raise as extra cash, while calling the $20,000 you borrowed and spend at the race track “long term debt.”

Four more years

The president’s insistence on taxing “the rich” is populist tripe, because he presents an argument that a relatively tiny amount of taxation revenue will make a serious contribution toward solving our deficit and indebtedness problems, while he simultaneously promotes more government spending.

His ideological refusal to stop incurring debt makes a mockery of his argument for any tax increase whatsoever: He’s just going to spend it. His plan appeals to the economically ignorant; from Nobel Prize winning “economists” such as Paul Krugman, through welfare scammers, to the truly destitute – for many of whom Barack Obama already bears personal responsibility.

His ideology is cynical, cruel, elitist and dangerous.

Let us look at just two results of the enervating Federal Government spending he promotes:

[T]he amount spent on federal welfare programs last year was enough to mail a $60,000 check to every one of the 17 million households living beneath the poverty line. And that doesn’t include spending by state and local governments.

If a single Federal agency just wrote checks to those who merely express need, we’d use the money more efficiently. Maybe we’d even see an eventual revival of shame, for those who lied about their need. They’re currently brazen enough to brag about it. Even though we couldn’t completely trust all the claimants, I’ll bet half of them wouldn’t need assistance by 2014.

We have entrenched bureaucracies who resist the idea that individuals under their care can ever become self sufficient. It isn’t about their clients, it’s about their own salaries. Not their fault. We created the system rules.

And here’s a simple, clear example of what government spending does to the market: Editorial: Federal flood insurance subsidizes risks

…Get appraisals for their homes, write them a check, knock the homes down and just let it go back to its natural state,” said Steven Sweeney, a Democrat and president of the New Jersey Senate.

Good luck with that. A huge federal apparatus and powerful special interests are intent on doing just the opposite. The best illustration of this misguided policy is the National Flood Insurance Program, created in 1968 to provide insurance to homeowners on coasts and near rivers who had trouble getting private coverage.

It’s why people are still willing to build houses in high risk locations. They get a discount on disaster.

We will not be seen to have been doing these people any favors when we can no longer supply the welfare, or market distorting subsidies. Stein’s law applies: “That which cannot continue will stop.” A catastrophic stop, the kind our leaders are arranging, will damage the poor most. We will eventually run out of the money we are stealing from our great-grandchildren.

All this brings me to a point about morality. It isn’t simply immoral for government to lie to people about the economy, it is evil.

Governments aren’t just inefficient at spending, they lie about it. Fiat currency is just governments’ way of lying about the value of money and imposing the hidden tax of inflation on every citizen. That hurts the poor most, too.

We’ve seen this movie several times before. It never ends well.

Vulture Statist

Maybe the first three letters of “economics” and “ecostatism” being the same are confusing the president. He thinks the “private sector” is Solyndra, ethanol subsides and windmills. You know, the corporatist whores to whom he’s given a hundred billion dollars, and who keep going bankrupt.

The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.

And so, you know, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is how do we help state and local governments and how do we help the construction industry?
– president Barack Obama

If Republicans want to be helpful they’ll be sure to vote in November.

Coming soon to a country near you?

From Jim Rickards‘ @jamesgrickards Currency Wars: The Making of the Next Global Crisis. #currencywars

Rickards is speaking here about alternatives to Keynesian economic theory.

The most promising new school is complexity theory. Despite the name, complexity theory rests on straightforward foundations. The first is that complex systems are not designed from the top down. Complex systems design themselves through evolution or the interaction of myriad autonomous parts. [Explaining why restricting autonomy is the favored approach for administrative government mavens, AKA “Czars.”]

The second principle is that complex systems have emergent properties, which is a technical way of saying the whole is greater than the sum of its parts — the entire system will behave in ways that cannot be inferred from looking at the the pieces. The third principle is that complex systems run on exponentially greater amounts of energy. This energy can take many forms, but the point is that when you increase the system scale by a factor of ten, you increase the energy requirements by a factor of a thousand, and so on. The fourth principle is that complex systems are prone to catastrophic collapse. The third and fourth principles are related. When the system reaches a certain scale, the energy inputs dry up because the exponential relationship between scale and inputs exhausts the available resources. In a nutshell, complex systems arise spontaneously, behave unpredictably, exhaust resources and collapse catastrophically. When you apply this paradigm to finance, you begin to see where currency wars are headed.

On March 20 Greece has a bond payment of 14.5 billion euros ($18 billion) due. Close enough to the Ides of March for government work.

“[E]xponentially greater amounts of energy.”

Source: PBOC, ECB, FED, BoJ (via Things That Make You Go Hmmm…)

Chris Whalen says "print money"

In a King World News broadcast, yesterday, the respected bank analyst openly and unequivocally calls for the Fed to “print money”.

I defer to Whalen’s judgment regarding bank securities (he thinks BAC should declare Chapter 11). But I often disagree with Whalen on policy issues, and this money printing nonsense is another example.

As I have previously opined, this guy is no Austrian.