Government bank versus government bakery
Over at Cafe Hayek, Don Boudreaux once again hits the nail on the head when he points out the foolishness of government control of money through a central bank.
Here's a snip:
Government bureaucrats with monopoly control over the supply of money can no more be expected to adjust that supply to optimally meet consumers' nuanced and changing demands for money than could, say, government bureaucrats with monopoly control over the supply of bread be expected to adjust that supply to optimally meet consumers' nuanced and changing demands for bread.
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Rothbard on myths about libertarianism
Old but good stuff from the late Murray Rothbard:
Myth and Truth About Libertarianism
Rothbard addresses the following myths:
1. Libertarians believe that each individual is an isolated, hermetically sealed atom, acting in a vacuum without influencing each other.
2. Libertarians are libertines: they are hedonists who hanker after "alternative lifestyles."
3. Libertarians do not believe in moral principles; they limit themselves to cost-benefit analysis on the assumption that man is always rational.
4. Libertarianism is atheistic and materialist, and neglects the spiritual side of life.
5. Libertarians are utopians who believe that all people are good, and that therefore state control is not necessary.
6. Libertarians believe that every person knows his own interests best.
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Will draconian carbon rules avert global war?
John Kerry claims that a failure by government to address what he believes to be a coming catastrophic climate change will lead to an increase in war that will threaten U.S. national security:
Kerry panel looks at climate change and national security
Interesting.
Here's how I see it.
Scenario 1: Government does nothing, and individuals continue to prosper and (if they deem it prudent for themselves) prepare for changes in climate as best they can under current government controls; the feared climate changes either come to pass in the next century or so, or they don't; and the climate changes, if they do occur, will just as likely open up new resources as destroy current ones, and those people negatively affected would at least have been able to further develop economically in the meantime, which is the best way to mitigate any negative effects.
Scenario 2: Government cracks down even more on carbon dioxide emissions, thus plunging the world into a severe economic downturn, driving billions of people into poverty, and forcing much of the world's population to start to consider extreme measures to survive; and all this without even having a clue if those drastic and coercive government controls will have any positive effect on the climate (however one defines positive in this case).
Which scenario seems more likely to lead to massive conflict?
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Government gonna fix it good this time, y’all
Obama and the more leftist Democrats in Congress are bound and determined to "fix" American health care with some form of massive federal involvement in health insurance coverage. As with the financial crisis, the government is purporting to fix a problem that stems from too much government interference in the market...by imposing even more government interference in the market.
In industries burdened far less by government tampering consumers get products of ever-increasing quality at ever-decreasing prices. In a free market we would especially expect to see such a pattern in health care, but we don't. And the reason has nothing to do with "greedy" doctors or drug companies or insurance companies--unless of course you think that greed (that is, the natural human desire to improve one's circumstances) is limited to the health care industry and that all those cell phone, computer, and coffee maker companies are giving you better and cheaper products out of a sense of charity. No, the reason has everything to do with government actions hindering a free market.
Here are just a few of the ways, in no particular order, that government (often in the name of "protecting the consumer") keeps you from enjoying the benefits of a free market in health care:
1) Professional licensing. Every state government requires health care providers (doctors, nurses, pharmacists, chiropractors, etc.) to be licensed by the state. This is simply a barrier to entry that existing providers tend to favor because it reduces competition and allows them to charge higher fees. Rather than protect consumers, it leaves them with fewer (and more expensive) choices.
2) Pharmaceutical and medical device regulation. The FDA regulates drugs and devices and imposes massive costs on their development. The result is that many drugs and devices that could help people never make it to the market, and those that do are delayed by many years, are much more expensive, and usually are restricted even further by being prescription-only.
3) Tax code. The federal tax code creates an incentive for employers-provided health coverage (a practice that originated as a result of totalitarian WWII-era wage controls), thus encouraging extensive third-party medical payments. When consumers pay less for something, they use more of it. Medical providers know that individual consumers are not shopping around, so there's less incentive for them to be competitive on price.
4) Medicare and Medicaid. Just as with government subsidies for college tuition, the subsidizing of health care through Medicare and Medicaid cause demand to be artificially increased, thus causing prices for everyone else to rise well beyond natural market levels. And of course the increasing prices drain individuals’ income and thus create additional “need” for Medicaid and other government welfare. In addition, when you subsidize health care, you incentivize poor health, increasing demand yet again. Finally, the large number of Americans now on Medicare, combined with the rules governing reimbursements for each procedure or medication, means that medical pricing in America is now grossly distorted by the federal government. On a related point, the government requires hospitals to admit and treat anyone who comes in, thus further increasing demand on these facilities and raising prices for everyone.
5) Insurance regulation. Insurance companies are regulated by state governments, which restrict insurers’ and consumers’ freedom to contract with one another as they see fit. Insurers are forced by law to insure uninsurable risks, thus driving up prices. They are prevented from effectively discriminating between various risk levels among consumers, driving up prices even more. And states often prohibit the purchase of insurance across state lines, further limiting consumer options.
6) Perpetuating the "right to health care" myth. Government at all levels tends to make pronouncements and take actions that perpetuate the erroneous belief that there is a right to health care. Any regular readers of my blog know where I stand on that--it is logically impossible to have a right to something when the provision of that right requires the forcible confiscation of another person's property (thus, there can be no such thing as a right to a certain level of health care, housing, wages, etc). But government creates a feedback loop with its health-care-is-a-right propaganda that boosts support for additional socialist measures to control health care.
These are just a few of the government actions that have caused our health care costs to rise so dramatically. And Obama's solution is more government control of the industry? I can only hope there are enough Americans still possessing enough critical reasoning aptitude and desire for freedom and prosperity that this latest attempt to expand government oppression will fail.
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Drug war boosts drug use
More evidence that government attempts to prevent voluntary exchange in the market have unfortunate consequences:
Police crackdowns may encourage drug use
From the article:
TOUGH policing of the illegal drugs market may have the perverse effect of making drugs more affordable and thereby encouraging people to use them, according to a new model of the dynamics of this market.
No net good can come from using force to interfere with natural human interactions that aren't harming anyone other than those who choose to harm themselves.
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Is libertarianism utopian?
As I was working the booth for the Libertarian Party of North Carolina at the Festival for the Eno on Friday, I was approached by a woman who proclaimed, inexplicably, that since she was a biological scientist she knew that a libertarian society could never work. I asked her if she could explain what she meant, and she said that she has "just seen too much bullshit, you know?" She then made a few more vague generalizations (that could just as easily have been applied to her feelings about pizza or gardening) before finally making herself clear by stating her belief that you could only do away with government if everyone in the society was good and never tried to harm or take advantage of anyone else. Ahh, now I see (although what it had to do with being a biological scientist I'll never know).
So, what we have is a recurring argument against the idea of a free, stateless society: that libertarianism is utopian and can't work in the real world of flawed, and sometimes evil, human beings.
I believe that argument has things completely backwards. One of the great things about libertarianism is that it accepts that we live in an imperfect world and that it works just fine when you include flawed humans in the mix. It's self-regulating and at the same time involves no top-down goal for creating a perfect world.
The majority of market participants always want to minimize violence and maximize protection of person and property, so market mechanisms will always tend to arise (as long as there is not a state to get in the way) to accomplish those goals. Even with the government in the way, the market attempts to do that in the form of various private security agencies, private arbitration agreements and businesses, charities that work with at-risk kids, even neighbors who organize to watch out for one another.
In addition, despite oppressive and destructive government regulations on nearly every conceivable consumer good and service and entire agencies designed to restrict things like food and medicine, there are rating companies and organizations that evaluate goods and services and provide the information through the voluntary processes of the market. You could get rid of the FDA and state licensing laws, and such companies would stand ready to obtain and disseminate information to consumers at various levels of detail and prices points, with the added benefit that no one would be using violence (as is currently done) to prevent you from getting a certain medicine or using a real estate agent, plumber, or hairdresser not approved by the state.
It seems the real utopians are those who claim that government can solve problems. Instead of accepting that the world is imperfect and allowing people the freedom to interact voluntarily in an attempt to make the best of it, believers in government want to try to "fix" various problems by force in order to create a more perfect world (or their idea of it). And I think it's especially utopian to believe that you can set up a "limited" government and expect it to stay that way when you've given it a monopoly on the use of force within its territory (I'm talking to you, Founding Fathers). Government supporters seem to think that a group of people who are given the power to legitimately (so to speak) coerce others will somehow not be subject to the same human flaws as the rest of us. For some reason, once someone is a government official he's supposed to be a selfless servant of "the people," a concept particularly popular among supporters of democracy since they believe that being nominally answerable to the voters is some kind of special restraint on abuse of power (they seem oddly unaware of over 200 years of history here in America and in other represenative democracies).
So on one side you have libertarianism, which (in its undiluted form) holds that life is not perfect and that the best we can do is live in the most just way possible by abolishing government. And on the other side you have statism, which holds that it's possible to forcibly correct the imperfections of life.
Maybe I'm wrong, but which one sounds more utopian to you?
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Independence Limited
Doesn't matter what you see
Or into it what you read
You can do it your own way
If it's done just how I sayIndependence limited
Freedom of choice is made for you my friend
Freedom of speech is words that they will bend
Freedom with their exception
I think these lyrics from Metallica's "Eye of the Beholder" are appropriate for today, Independence Day. It's a stark reminder that there are two distinct aspects to the commemoration of American independence. First, there's the historical occurrence of national independence--when the American colonists declared their independence from the British crown and subsequently waged a successful revolution. Then there's the celebration of the resulting individual independence (or freedom) for American citizens, and this is what most people now focus on.
Unfortunately, most people, lost in their patriotic fervor, don't realize the freedom they celebrate is a figment of their imagination. It's true that America can probably be considered more free, on a relative basis, than many other countries in the world (although every year there seems to be more places that come in above us on things like the State of World Liberty Project and the Index of Economic Freedom).
But I'm not sure it means much to say America is one of the freest countries in a world dominated by government oppression. From an objective point of view, it would be hard to describe this country as free. It's hard to think of a single aspect of your life that the government (an entity based on the initiation of force to accomplish its goals) doesn't touch in some way.
Personally, I think the government and its promoters love that we fire up the grill, crack open a cold one, and watch fireworks in giddy observance of our "freedom," because, until very recently, it served to dampen the growing recognition by Americans that we are approaching a critical point at which the chains of government (chains we can believe in, Mr. President?) will lead to some form of modern revolution.
But in the last year or so, I've noticed a change. More and more people are refusing to fall for all the nationalistic (i.e. pro-government, anti-freedom) manipulation and are reacting to it by questioning the foundational principles (i.e. government is here to help, there are some things free markets just can't handle, it's okay to initiate force against others if it's for a 'good cause,' etc.) they've been taught in government schools.
No doubt various pro-government elements have taken notice of this and are planning ways to counter it, but I have a feeling they won't have much luck in halting the powerful human drive for freedom and the prosperity that flows from it.
Here's to a new revolution.
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Bang! Welcome to America!
As many people prepare to celebrate America's Independence Day, marking the beginning of a revolution that was to transform America into a land of relative freedom to which people would flock in vast numbers, one of our most recent new additions was welcomed by a bullet to the stomach from a government agent.
The man's crime? He was suspected of having crossed an imaginary line on the ground drawn by politicians (who themselves subsist criminally by violently appropriating other people's money) without following the politicians' rules and procedures for such movement. Yes, a truly heinous crime.
Kind of makes me wonder what we're actually celebrating on Independence Day. We remember that intrepid generation of Americans who gained their independence from one ruler but forget that another ruler immediately took its place and has grown progressively more oppressive ever since, to the point where something as simple and beneficial as immigration can be deemed illegal by the rulers.
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Insurance for climate change
New Scientist has this article about how insurance could be used to at least partially mitigate the problems that poor people around the world might face as the result of some potential future climate change (warming? cooling? Krugmaning?).
As well as providing protection from the increasingly unpredictable weather, the premiums could also be a powerful way to get poor people to adapt to climate change by encouraging them to invest in measures like drought-resistant crops. Is this profit-driven endeavour too good to be true?
What's so sadly amusing about this is that New Scientist describes it as if it's some brilliant new discovery, but free market economists have been making that exact argument for decades. The magazine even tries to link it to tyrannical statists like former U.N. Secretary General Kofi Annan (saying he's a supporter of it), with the implication I guess being that it's not really a free market process (because as the government schools teach us, nothing about the free market can help poor people)!
Now a different type of insurance scheme is being rolled out in Adi Ha and many other places in Africa, Latin America and Asia, backed by corporate giants such as Swiss Re and Munich Re. Instead of insuring against lost crops, "index insurance" protects farmers against the vagaries of the weather. For example, if rain gauges at local weather stations drop below a certain level, insurance companies can automatically transfer a payout to farmers without having to visit them.
The fact is, it's long been a profitable business to insure farmers against lost crops, and insurance companies have incentives to come up with ever more creative ways to help people manage risk (i.e. this new index insurance). It should be no surprise that they're doing it again and helping (as free markets always do) the poorest of the poor, those who are preyed on by governments.
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Is the government on crack?
When someone does something so completely and obviously at odds with what he should have done, it's common to ask him if he is consuming a potent brain-destroying chemical, i.e., "Dude, are you on crack?"
So it's only fair to ask the same question of Barack Obama and most of the members of Congress since they have been working incredibly hard to make our current economic situation even worse than it already is. In particular, this drive to "stimulate" the economy through public spending and the encouragement of private spending. Even the Republicans (who strangely label themselves the party of freedom and free markets) are, with a few exceptions, actually one-upping the Democrats by criticizing many of the public spending projects for not being "shovel-ready" (that is, not getting money spent fast enough)!
We could be forgiven for thinking that we had suddenly materialized in an episode of The Twilight Zone. We're in the midst of an economic downturn resulting from the government's monopoly over money and its manipulation of the supply of money and credit that caused (as it always does) a massive misallocation of resources (which the markets are now attempting to reallocate properly), and our keepers in Washington are doing their very best to put the brakes on the needed correction and prop up an artificial system that is not only unsustainable without violence (government action) but destroys vast amounts of wealth in the process.
I could understand if Obama and Congress came forward and said, "Look, we really don't think you, our hapless subjects, should be allowed to engage freely with one another in mutually beneficial production and exchange and enjoy the resulting increase in your standard of living, and we'd really like to see you all dramatically impoverished in order to financially benefit us and our politically connected friends." I mean, then it would all make sense.
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