Thursday, February 28, 2013

A Government Cut Should Be Called a Taxpayer Keep

Say a group of criminals shakes down local merchants every week.  One week, the merchants bravely ask the leader of the gang to take a little less.  The criminal scoffs.  "Don't you realize," the criminal says, "if we steal less from you, it will mean I have to lay off one of my crew, and we will each have to drink one less shot of whiskey per night.  That's not fair to us." Of course, such a response on the part of the criminals is preposterous.  It is not their money to begin with so how could they interpret the proposed cut as an injustice?

Yet, this is exactly the position of the Obama administration with respect to the sequester cuts.  According to them, if the mandated budget cuts go through, a vast injustice will be committed upon the poor souls in Washington D.C., and fire and brimstone will pour down upon the nation as the mad run riot in the post-sequester apocalypse.

But does the sequester actually cut anything?    

In his post, Earth to New York Times: Please Show Us these “Deep Spending Cuts” You Keep Writing About, blogger Dan Mitchell shows that the budget cuts mandated by the so-called sequester are actually not cuts at all.  In fact, based on CBO projections, these cuts merely impede the increase in growth of government spending - by a tiny amount.  In other words, these "savage" cuts are just a tiny cut in the rate of increase, not even an actual cut!  Senator Rand Paul has called out the Obama administration on its "doom mongering" and "histrionics" over these supposed cuts and introduced his own bill to cut the amount of mandated spending without any layoffs.  

But let's say these were real cuts and let's assume that, gasp, actual federal bureaucrats got laid off as a result of said cuts.  As was the case in the criminal example, when the government spends money, it is spending someone else's money.  The government ultimately can only fund itself through taxation, that is, through the expropriation of one person's earnings for the unearned benefit of another.  In what sense is it a "cut" when all this means is that the government will stop stealing a little bit of money for awhile and pissing it down the federal government budget toilet?  For this reason, a "cut" should be thought of and referred to as a taxpayer "gain" or to be more accurate a taxpayer "keep."

Remember, when Obama castigates spending cuts he is really criticizing your just demand to keep what you earn. So don't feel so bad.    

Friday, February 22, 2013

Study: Global Warming Can Be Slowed by Dying

Human beings must work in order to survive.  This is not an opinion.  It is a simple fact of nature.  If you lay there and do nothing, you will eventually die. You could get someone else to occasionally stick a berry in your mouth and pour water down your throat but then that other person would have to do work.

The necessity of work is part of our nature.  In fact, the more we produce, the better off we all are.  Without modern productivity, every person would have to spend all day just gathering enough food and water to subsist - a condition that was common prior to the industrial revolution and a condition that unfortunately still exists for much of the third world.

In an environment in which all of your waking hours were devoted merely to subsistence, there would be no time to research life saving drugs, invent better smart phones, find new sources of energy, erect skyscrapers, launch satellites to space, or study black holes.  In such a state, there would be no time to blog, post on Facebook, surf the web, listen to music, play video games, watch the sunset, take a road trip, go to the movies, visit a museum, take a cruise, go shopping, watch TV, attend a party, read a fashion magazine, practice an instrument, take a walk,  draw a picture, sit on the beach, go to a sporting event, watch your kids play, take a hike in the mountains, or do any of the other things people in developed countries take for granted.

Productivity is essential to the furtherance of human life.  As we find ways to produce more in less time, it allows for time to be spent on fulfilling other human desires which are unlimited.  That is why advances in technology do not create unemployment, but rather create a rising standard of living for all.

In light of this principle, what if someone were to suggest that doing less is actually beneficial? Not less in terms of any given individual's preference to work more or less based on their values, but rather, to do less in aggregate.  If someone were to make such a claim, wouldn't we have to question their definition of "beneficial" and ask "beneficial to whom?"

Well, such people do now exist and make exactly this claim. The Center for Economic Policy and Research, a liberal think tank, has concluded that working less hours is actually good for all of us.  According to this article:
A worldwide switch to a "more European" work schedule, which includes working fewer hours and more vacation time, could prevent as much as half of the expected global temperature rise by 2100, according to the analysis, which used a 2012 study that found shorter work hours could be associated with lower carbon emissions.
Evidently, working less will benefit us all, not by reducing our stress levels or for some other purported psychological or physiological reason, but to make the earth colder in one hundred years!

The article continues:
"The relationship between [shorter work and lower emissions] is complex and not clearly understood, but it is understandable that lowering levels of consumption, holding everything else constant, would reduce greenhouse gas emissions," writes economist David Rosnick, author of the study. Rosnick says some of that reduction can be attributed to fewer operating hours in factories and other workplaces that consume high levels of energy.
Let me get this straight.  What is completely certain is that by working and producing less, we will all be worse off in terms of living standards since we will have less.  Reality makes certain of this.  However, based on a highly disputed theory of global warming and the "complex and not clearly understood" relationship between "shorter work and lower emissions" we should adopt a more "European" work schedule which means work a lot less.  In other words, according to this study, we should reduce our material prosperity, life expectancy, and day to day happiness in order to possibly reduce emissions which may keep the earth from getting warmer in one hundred years.  And, on this basis, we should be willing to endure even higher unemployment rates by throttling "factories and other workplaces" down while higher unemployment and less production somehow affords the ability for us all to take "more vacations" (assuming he does not mean unemployment is equivalent to vacation).  

What this preposterous study really exposes is the environmentalist disdain for human life.  As George Reisman has pointed out before, if these people were truly concerned with man's welfare, they would suggest liberating the economy to create the greatest possible industrial base not only to cope with the day to day problems of human existence but also to cope with the possibility of "catastrophic events, whether those events be war, plague, meteors from outer space, intolerable global warming, or a new ice age."

What the religion of environmentalism really opposes is man's nature, i.e., the fact that man must reshape the earth in order to survive.  If one believes the earth is some kind of deity to be intrinsically worshiped apart from any concern with human life what amount of "slowing down" will appease them?  Is stopping the Keystone pipeline and preventing new coal plants enough for them? Are the 30,000 people that now won't have jobs really just on vacation?  How much less should we work? How much less energy should we expend in the pursuit of our life and values?  How much less should we live?      

Based on their actions and words, their answer is clear.

Monday, February 18, 2013

Repost: Where's Grover Cleveland When You Need Him?

In honor of President's Day, I am going to link to a blog post I wrote in November 2008 entitled Where's Grover Cleveland When You Need Him?

The post details a speech that Cleveland gave in 1893 in which he actually identified the cause of a particular economic disaster to be government and demanded the immediate repeal of the law that gave rise to the disaster.

In the wake of decades of destruction wrought by government policies that intervene in money, banking, housing, health care, drugs, agriculture, transportation, manufacturing, and energy to name a few, could you imagine any modern politician giving a speech recognizing government's role in creating disaster after disaster and advocating the repeal of even one law that has given rise to it rather than advocating for even more government power and more funding?

Wednesday, February 13, 2013

Obama and the Left: The Minds of Children

Anyone with kids has had some variant of the following conversation:
Kid: "I want a toy"
Parent: "No"
Kid: "Why?"
Parent: "Toys cost money"
Kid: "So, just get some money"
Parent: "And where should I get the money?"
Kid: "Just go to the bank or use that plastic card thing"
To a child, this is a simple matter.  He sees you buy things with money and just assumes that whenever you want something you just conjure up the money to pay for it.  In other words, he can not yet grasp cause and effect.  He doesn't abstract that you must earn money first, then offer that money to someone in exchange for something.  He assumes that you want something first, then for some reason there is this weird adult ritual where you must offer this green paper stuff for it.  Ultimately, it is just the desire to have something that is primary to the child, not the work or production that came before it.

Because they regard the green stuff as a mere formality that doesn't represent anything real, this leads the child to the following conclusion:
Kid: "I wish everyone just had a lot of green stuff (money) so you could just have whatever you want" or "I wish everything were free."  
While this seems like a cute anecdote to illustrate a child's first stage of conceptual development it is actually much more than that.  It represents the conceptual level of the entire left including the president, the federal reserve chairman, and Nobel Prize-winning Keynesian economists.  With respect to economics, I have blogged about this phenomena at length in at least three prior posts: "Have You Had 'Enough': Obama's Inversion of Reality", Cargo Cult Economics, and Production and the Primacy of Existence.

Naturally, this phenomena is not restricted to the field of economics. At the outset of the gun control debate, where profound conceptual level abstractions were being considered regarding the government's role in protecting individuals from crime, the purpose and meaning of the Second Amendment to the Constitution, the state's role in regulating the sale of firearms, the states role with regard to the mentally ill vis-a-vis criminal behavior, etc. the Obama administration offered letters, not from his adult constituents or legal scholars, but from grade school children.  According to this report:
....the White House released handwritten letters to the President from some of the children who will be at the White House when President Obama unveils his plan to prevent gun violence. The kids offer their own ideas on gun control - ideas that go significantly further than the President's plan.
Naturally, like with money, the children operate at a first order conceptual stage.  They know that a man with guns killed children.  Therefore, they ask the president to stop this from happening by getting rid of guns.  I remember thinking in a similar way as a kid growing up during the cold war.  Nuclear bombs were scary to me because they threatened to annihilate mankind.  Therefore, I reasoned, they should just get rid of the nuclear bombs. Of course, at that age I couldn't comprehend the difference between the West and the communist Soviet Union, nor could I understand that nuclear weapons had most likely averted another world war by threatening such destruction.

As I discussed in previous posts here and here, simplicity is the essence of good thinking within a certain context, namely that prior facts or principles be fully integrated into a conclusion.  For example, Einstein's theory that "matter is energy" sounds very simple, but it integrates an enormous body of prior knowledge.  The case of children not grasping cause and effect nor being able to integrate a vast body of prior principles such as the concepts of freedom, individual rights, and self-defense does not represent an example of "simple" thinking, but rather, an example of primitive conceptual development and therefore has no place in a serious discussion.  In the case of adults making the same errors, it is an example of illogical, irrational, or wrong thinking.  In the case of adults exploiting childrens' errors for propaganda, it is an example of evil.  

Saturday, February 9, 2013

Let's Drop Modern Economists from Helicopters Instead

Today's economics profession is a cesspool of myopic number crunching erected upon a foundation of disintegrated concepts, half-truths, and outright contradictions. Given this, it was not surprising to hear the recent discussions of trillion dollar coins nor was it surprising to read Adair Turner's recent lecture: Debt, Money, and Mephistopheles: How do we get out of this mess?.  Turner, in the style typical of modern academics, does not define anything, cites facts out of context, acknowledges cause and effect, but then attempts to have his cake and eat it too.  It is with this method that he seems to be laying the intellectual groundwork for dropping money from helicopters or OMF ("overt money finance"), the logical next step for central bankers, particularly those nicknamed "Helicopter Ben", whose computer models tell us there is nothing to worry about as long as this time they stay "massively more worried" about the droppings.

I once likened central bankers to firemen who are sent to put out a blaze but do not understand cause and effect so that they are as likely to throw a ham sandwich on the fire as to pour water.  This is exactly the position of today's intellectuals coping with the apparent dilemmas of so-called "monetary policy." Given that central planning has never worked and can not work in any sector of any economy, you might think they would question whether it could work when applied to the entire monetary and banking system of the largest economy in the world. Yet, their approach is never to understand cause and effect much less to question the very system of central banking itself.  Instead, their approach is to study data empirically and correlate lagging economic statistics to the various central planning "levers" at their disposal, hoping that some combination of the throttles will move some contrived statistic, such as unemployment or GDP, in some direction they have arbitrarily decided is to everyone's benefit.

But what if we consider cause and effect?

As George Reisman explains in great depth (see Chapter 19 Part B Section 5-9 from his book Capitalism full book downloadable here and here for the work of other Austrian economists), printing money out of thin air inflates revenues and incomes and encourages excessive debt to be held against this revenue and income. Artificially low interest rates encourage malinvestment or investment in businesses that only appear profitable because of inflation (see real estate in the 2000's).  When inflation stops, revenues and incomes contract leaving no means of paying back the debt which in turn leads to insolvency and bankruptcy setting off a "self-reinforcing spiral of deflation."  As depression and deflation take root, modern politicians and central bankers, ever in search of the path of least resistance, are led to re-inflate (create even more money out of thin air) as they attempt to reverse the disasters unleashed by their own policies.  In other words, inflation of the money supply by the government (and private fractional reserve banks) is the cause of depressions and deflation and the so-called boom-bust cycle.  In light of these facts, the solution to the boom-bust cycle must be the abolition of the federal reserve system and the imposition of a 100% reserve gold standard.

The fact that central banking itself is the cause of the very disasters that central bankers seek to remedy is of monumental importance yet completely ignored by establishment economists. Here we are, years into the worst depression in a half century, and their best minds are recommending dropping money from helicopters and creating trillion dollar coins. In this light, it is clear that what retards the intellectual growth of this profession is not just bad ideas but their method of thinking.  Scientific conclusions can be objectively scrutinized - weighed with reason and evidence and accepted or rejected. But irrational methods, like those of the religious mystic or the modern Keynesian economist, are impenetrable and can lead to truth only by accident.

Consider another example not from monetary policy.  Imagine you proposed cutting the government's budget by $2 trillion.  Most modern economists would instantly focus on the effect of the cut on the all important GDP since this would reduce government spending, a component of GDP.  In fact, Keynesian economists urge the government to deficit-spend to increase so-called GDP and therefore, such a cut would be regarded as positively horrifying.  They might perform a historical regression to measure the empirical effect of budget deficits on GDP. Most would add that cuts of this kind will lead to unemployment, a drop in consumer spending, and a spiraling downward effect on GDP...oh no!

Now, forget about GDP (a flawed Keynesian concept to begin with).  Imagine that instead of sending $2 trillion to Washington D.C. we invest it in the technology companies of Silicon Valley (or any productive area of the economy).  In the short run, many people in Washington D.C. would become unemployed.  (It might actually lead to a bad "jobs number" next month!)  In the long run, imagine how much better off we would be if this capital were redeployed in productive enterprises engaged in researching and developing technologies that make the world more efficient, healthier, and enjoyable rather than being spent on inefficient bureaucrats pushing paper in Washington (or worse, making life more difficult for businessmen by enforcing strangling regulations).  Imagine that eventually, all of the inefficient bureaucrats were eventually employed by businesses spun off by the new technologies created with the $2 trillion.  In which scenario would we all be better off?

The modern economist would never think this way. There is no regression to compute and no printing press and certainly no helicopter.     

Tuesday, February 5, 2013

Obama's Argument for Killing Americans

"Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety." - Benjamin Franklin
Since 9/11, the federal government has set one legal precedent after another abrogating individual rights in the name of fighting "terrorism." With the creation of the Department of Homeland Security, the passage of the Orwellian "Patriot" Act, FISA courts and the like by the Bush administration, the federal government erected the foundation, both legally and practically, for the creation of a vast police state. 

Under the Obama administration, this dangerous trend has only gotten worse. 

In 2011, I blogged about the National Defense Authorization Act ("NDAA"), which authorizes the arrest and indefinite detention of Americans without due process. In 2010, I blogged about a Washington Post expose on a vast "alternative geography" of top secret governmental efforts to control the internet and to monitor and control the flow of ideas. In the wake of fear unleashed by the events of 9/11, the American public has largely acceded to these violations under the illogical and unprincipled premise that these unconstitutional powers would only be applied to so-called "terrorists" - not to them.

Well, if you ever worried that burgeoning government power erected on the basis of non-objective, arbitrary laws could somehow go awry, then you were onto something.

The latest example comes in the form of a Justice Department white paper which argues for the "extrajudicial killing" of certain American citizens as long as they can be deemed to be "continuing threats." In a recent blog post, Jameel Jaffer, the depuy legal director of the ACLU, writes: 
The paper's basic contention is that the government has the authority to carry out the extrajudicial killing of an American citizen if "an informed, high-level official" deems him to present a "continuing" threat to the country. This sweeping authority is said to exist even if the threat presented isn't imminent in any ordinary sense of that word, even if the target has never been charged with a crime or informed of the allegations against him, and even if the target is not located anywhere near an actual battlefield. The white paper purports to recognize some limits on the authority it sets out, but the limits are so vague and elastic that they will be easily manipulated.
Jaffer rightfully concludes that such a power is so broad and vague, that it gives the government essentially unlimited power to kill whomever it chooses. He writes: 
....My initial reaction is that the paper only underscores the irresponsible extravagance of the government's central claim. Even if the Obama administration is convinced of its own fundamental trustworthiness, the power this white paper sets out will be available to every future president—and every "informed high-level official" (!)—in every future conflict. As I said to Isikoff, that's truly a chilling thought.
So what exactly is a terrorist and how exactly could we be sure that an "informed, high-level official" will recognize one before he decides to kill him?  We all seem to think that it is a guy with a bomb strapped to his back standing in Times Square with his finger on the detonator.  Fair.  But once the concept of "imminence" is eliminated, what exactly are we talking about?  Is a "threat" someone who is actively plotting an attack, or, is it simply someone who criticizes the government or is "suspicious" of centralized authority as recent DHS memo classified "right wing extremists?" 

As the government blurs the line between someone imminently engaged in violent action and someone who intellectually opposes government policy, at what point could anyone who affiliates with the Tea Party, believes in constitutional government, or defends the second amendment be considered a potential "terrorist" subject to inclusion on a kill list?   And, if your not worried about Obama's people, what about the next administration of "informed, high-level officials?" What will their definition be?  What will it be in twenty years?  

As I have argued in the past, given the legal traditions and relative freedom of Americans over the past two centuries, it is unlikely that America would devolve into a fascist dictatorship overnight. However, America has been philosophically ripened for fascism over the past century as a result of modern philosophy's assault on reason. These trends have eroded the intellectual ability to think in principle and for most to judge the actions of the government from the perspective of morality and individual rights.  This reckless disregard of the rule of law and individual rights has already strangled the economic sphere.  Now, theory is meeting practice in another way.  Dating back to the Bush administration, there clearly is a pattern of policies that use the specter of "terrorism" as a blanket justification for a pyramiding escalation of rights violations and more broadly, the overthrow of the Constitution and the rule of law. 

Chilling thought indeed.