Posted on

Myths About Markets

There are approximately twenty million myths about markets and market capitalism, one of the most common being this:

Markets don’t work well (or are inefficient) when there are negative or positive “externalities.”

Here’s how Tom Palmer, philosopher and economist, bunks that canard:

The mere existence of an externality is no argument for having the state take over some activity or displace private choices. Fashionable clothes and good grooming generate plenty of positive externalities, as others admire those who are well clothed or groomed, but that’s no reason to turn choice of or provision of clothing and grooming over to the state. Gardening, architecture, and many other activities generate positive externalities on others, but people undertake to beautify their gardens and their building just the same. In all those cases, the benefits to the producers alone — including the approbations of those on whom the positive externalities are showered — are sufficient to induce them to produce the goods. In other cases, such as the provision of television and radio broadcasts, the public good is “tied” to the provision of other goods, such as advertising for firms….

More commonly, however, it is the existence of NEGATIVE externalities that leads people to question the efficacy or justice of market mechanisms. Pollution is the most commonly cited example. If a producer can produce products profitably because he or she imposes the costs of production on others who have not consented to be a part of the production process, say, by throwing huge amounts of smoke into the air or chemicals into a river, he will probably do so. Those who breathe the air or drink the toxic water will bear the costs of producing the product, while the producer will get the benefits from the sale of the product. The problem in such cases, however, is not that markets have failed, but that they are absent. Markets rest on private property and cannot function when property rights are not defined or enforced. Cases of pollution are precisely cases not of market failure but of government failure to define and defend the property rights of others, such as those who breathe polluted air, or drink polluted water (source).

Under true laissez-faire capitalism, in other words, which is the only system that fully protects property and person — thereby forbidding the instigation of force in any form — you are not allowed to poison anyone.

In a socialistic, protectionist society, such as the one we now live in, no such rule of law exists because property is not regarded as private but communal.

The proof is ultimately in the water.

Posted on

Political Theory: Theory of Government

Political theory is the theory of government. It is a sub-branch of ethics, and economics, in turn, is a sub-branch of politics.

Ethics — the science of human action — precedes politics because politics is the science of human action in societies, and societies are composed only of individuals. For this reason, the individual has hierarchical primacy.

Capitalism, socialism, communism, anarchy — these are all a species of the genus ethics, as is any specific political theory.

Governments, properly defined, are the body politic that have the power to make and implement the laws of the land, and humans are the only species who possess them. But what ultimately gives rise to these political bodies, and do we really need them at all? If so, why?

Some 40,000 years ago, when Homo sapiens sapiens first emerged, we existed exclusively in bands and small tribes.

A band is the smallest of societies, consisting of five to seventy-five people, all of whom are related either by birth or marriage.

Tribes, the next size up, consist of hundreds of people, not all of whom are related, although everyone is known by everyone else.

It is for this reason that conflicts in band and tribal life are resolved without the need of government. Indeed, it’s a well-established fact among anthropologists that governments do not exist in societies of this size.

As Jared Diamond appositely explains it in his otherwise overrated Guns, Germs, and Steel:

“Those ties of relationships binding all tribal members make police, laws, and other conflict-resolving institutions of larger societies unnecessary, since any two villagers getting into an argument will share kin, who apply pressure on them to keep it from becoming violent.”

Homo sapiens lived for approximately 40,000 years in just such non-governmental societies.

Around 5,500 BC, however, chiefdoms arose.

Chiefdoms are one size up from tribes but still smaller than nations.

These societies have populations that number in the thousands or even tens of thousands, whereas nations consist of fifty thousand people or more.

It is at the stage of chiefdoms that the necessity of government begins; for when populations increase to this size, the potential for conflict and disorder increases proportionally.

And here we get a glimpse of government’s primary function: to protect against conflict.

As long as the potential for conflict exists among humans, the need for protection and adjudication exists as well.

“With the rise of chiefdoms around 7,500 years ago, people had to learn, for the first time in history, how to encounter strangers regularly without attempting to kill them…. Part of the solution to that problem was for one person, the chief, to exercise a monopoly on the right to use force” (Ibid, p. 273).

The legal use of force is the defining characteristic of government.

It is also the fundamental difference between governmental action and private action.

In the words of Auberon Herbert, speaking over 100 years ago:

Nobody has the moral right to seek his own advantage by force. That is the one unalterable, inviolable condition of a true society. Whether we are many, or whether we are few, we must learn only to use the weapons of reason, discussion, and persuasion…. As long as men are willing to make use of force for their own ends, or to make use of fraud, which is only force in disguise, wearing a mask, and evading our consent, just as force with violence openly disregards it – so long we must use force to restrain force. That is the one and only one right employment of force … force in the defense of the plain simple rights of property, public or private, in a world, of all the rights of self-ownership – force used defensively against force used aggressively (Auberon Herbert, The Principles of Voluntaryism, 1897).

Among individuals, the initiation of force is illegal, whether the force is directly used, as in rape, or indirectly used, as in extortion (a crucial distinction, incidentally, which Mr. Herbert notes in his fraud-is-force-in-disguise example above).

People can only infringe upon the rights of other people by means of (direct or indirect) force.

In this sense, government is an institution whose function is to protect the individual against the initiation of force.

In the words of Thomas Jefferson: “The legitimate functions of government extend to such acts only as are injurious to others” (Notes on the State of Virginia).

Around the same time that Thomas Jefferson was writing those words, another articulate fellow by the name of Wilhelm von Humboldt independently came to an almost identical conclusion:

Any State interference in private affairs, where there is no reference to violence done to individual rights, should be absolutely condemned…. To provide for the security of its citizens, the state must prohibit or restrict such actions, relating directly to the agents only, as imply in their consequences the infringement of others’ rights, or encroach on their freedom of property without their consent or against their will…. Beyond this every limitation of personal freedom lies outside the limits of state action (Wilhelm von Humboldt, The Limits of State Action, 1791).

What professor Jared Diamond incorrectly refers to as government’s “right to use force” (governments do not, strictly speaking, possess rights but only permissions) is a sentiment that has been stated more succinctly many times by Enlightenment thinkers, such as the best theoreticians among our Constitutional framers; but it was perhaps expressed most eloquently by the fiery political philosopher Isabel Paterson:

Government is solely an instrument or mechanism of appropriation, prohibition, compulsion, and extinction; in the nature of things it can be nothing else, and can operate to no other end…. Seen in this light, government is so horrific – and its actual operations in the past have been so horrible at times – that there is some excuse for a failure to realize its necessity (Isabel Paterson, The God of the Machine, 1943).

If, however, government only becomes necessary when societies reach the size of chiefdoms or beyond, what precipitated this sudden population leap, when for 40,000 years — by far the majority of our short history — human growth had remained relatively static?

Why, in other words, do we not still exist in bands and tribes, without the need of government?

The answer, it turns out, is food.

“We have seen that large or dense populations arise only under conditions of food production.… All states nourish their citizens by means of food production” (Jared Diamond, Guns, Germs, and Steel).

When survival is made easier, populations increase. When populations increase, societies become more complex. When food production increases, mankind increases, societies become increasingly complex, and governments become necessary to maintain order. So it is with increased food production that the science of economics is born.

At root, economics is indeed the science of production and exchange.

Money, in the form of currency, is nothing more, or less, than a symbol of production — an invaluable one, to be sure, since money simplifies so drastically the process of exchange.

It also creates the possibility to store and save over long time periods and makes usury possible, which in turn creates more wealth. This is a crux because it illustrates the deep connection between politics and economics.

Thus, increased food production equals increased population equals increased production equals more people equals more societal complexity, and so on, reciprocally.

This is the process whereby societies develop the need for government.

This is why the fact of government is inescapable.

Whatever a society’s original size, smaller ones only make that initial leap to larger by producing more food.

(If they don’t make it, they are absorbed either by the actual use of force or by its mere threat, by the societies that do produce more food. For this reason, bands and tribes have become all but obsolete today, with a few Amazonian and New Guinean exceptions, most of which are also being swiftly amalgamated.)

Thereafter, in order for that society to flourish, it must now continue to produce food, but it must also efficiently manage its size increase, with all that ensuing complexity. Countless societies have foundered at this stage, as they still do today (see, for example, present day Yugoslavia, or Turkey, or Russia).

Advancements in irrigation, the domestication of animals, the introduction of fertilizers and pesticides, these things begin to make societies complex, because they increase food production. But with this added complexity come new challenges:

To thrive, these societies must sort out and solve a host of additional problems, ranging from mass uprisings, to increasing economic developments, to internecine warfare, to the threat of governmental takeovers, to crime and punishment, to many, many other things as well.

In the final analysis, then, we can say that governments are unique to humans because humans are the only conceptual species. We produce our food, we build our homes, we create our medicine, we extract our energy, and we deal with one another not as animals, by brute force, but as humans, by agreement.

Trade is the natural drive of the conceptual mind.

So that at this point, our world without government would collapse into chaos — until, that is, the strongest faction seized control, forcefully, you can be sure, and then laid down its own version of order (see present day Somalia).

Who would stop them?

Other warring factions?

In the end, however necessary government may be, please never forget this:

“In its best state, government is but a necessary evil; in its worst state an intolerable one” (Thomas Paine, Common Sense).

“Government is not reason, it is not eloquence — it is force. Government is like fire, a dangerous servant and a fearful master.”

Government, in short, is inherently dangerous because it holds exclusive power over the people.

The task, then, is not necessarily to do away with government altogether but rather to limit government in the extreme: to build a government which protects its citizens without, at the same time, creating oppression of any kind, including taxation to the point of plunder under that mythical guise of a “right” to redistribute your money – which is the symbol of your work.

Posted on

McDonald’s And The Clam Shell

Speaking of clams without shells, it was in the late 1980’s that McDonald’s was bullied by burgeoning environmental groups (who were concerned about “how many trees it takes to make paper” ) into switching from paper packaging to Styrofoam containers. These containers are what McDonald’s soon came to call (apparently without irony) “clam shells.”

Clam shells were not McDonald’s first choice. But Styrofoam is an exceptionally good insulator and so McDonald’s acquiesced to this environmental strong-arming.

Shortly thereafter, near the end of the 1980’s, environmentalists came along again and attacked McDonald’s use of polystyrene (the technical name for Styrofoam), because in order to make polystyrene, chlorofluorocarbons (CFC’s) are required, which chlorofluorocarbons purportedly poke holes in the ozone. So out of the goodness of their hearts, the suppliers of McDonald’s clam shell stopped using CFC’s in their manufacturing process.

This wasn’t good enough, however. The clam shell came under fire again, this time for other things:

It doesn’t “biodegrade” in landfills, environmental groups said — though, in fact, next to nothing, no matter how “organic,” biodegrades in landfills, because biodegrading requires oxygen, which compressed trash does not have.

Another reason they gave: plastic and polystyrene “take up a great deal of space.” (Untrue.)

Yet throughout this whole fiasco, McDonald’s was completely compliant.

They even embarked upon the suggested polystyrene recycling program.

Pressed, however, by the Environmental Defense Fund, McDonald’s, in the autumn of 1990, abandoned the clam shell altogether and supplanted it with a so-called quilt-wrap, which is paper coated in a thin layer of plastic.

So it was back to paper after all, back where it began.

McDonald’s received public acclaim for this change (this was before it had become quite so vogue to anathematize corporations) and the story even made the cover of The New York Times (November 2, 1990).

It soon transpired, as you would perhaps suspect, that, according to environmentalists, the quilt-wrap was “too difficult to recycle,” whereas polystyrene was not. Also, polystyrene accounted for only four percent of all McDonald’s solid waste in the past, which was much less than with the quilt-wrap.

So McDonald’s was yet again asked to switch.

And so it goes….

You may read all about this ongoing saga in Doctor William Rathje’s excellent book Rubbish! The Archeology of Garbage, — a must see for anyone wanting to understand the true nature of rubbish, as opposed to the trash-heaps of environmental propaganda that surrounds the subject. And you may listen to an excerpt of Dr. Rathje’s book here.

Posted on

Legalizing Drugs

Everyone believes in freedom — until everyone finds out what freedom actually means. Then almost no one believes in it.

Freedom means you are left alone; you are neither helped nor hindered. And that’s all it means.

Rightwing politicos and leftwing politicos don’t usually agree on specifics, but they do often agree on principle: namely, that government’s proper sphere of authority does extend beyond protection against the initiation of force.

Humans, say today’s politicians, both right and left, aren’t capable of flourishing without the aid of bureaucrats; so these bureaucrats must help us live our lives for us.

Nowhere is this (unquestioned) conviction made clearer than in the issue of drugs.

Drugs, like prostitution, provide us with a good example of how the rightwing and the left are not fundamentally opposed but merely disagree on superficialities, insofar as both sides agree that not all drugs should be legal.

This notion has been so thoroughly inculcated into the mind’s of Americans that to question its legitimacy at all is considered lunatic-fringe thinking.

True, there are representatives on both sides of the political spectrum who support legalizing marijuana and perhaps a few other drugs. But start talking about legalizing all drugs on principle, or mention doing away with drinking-age laws on principle, and all liquor laws on principle, or speak of legalizing gambling and prostitution in all states and cities — and then you really begin to sort out the men from the boys.

That principle is the principle that it is not within the proper sphere of government to be involved in these aspects of human lives.

If we each possess the right to our own life and only our own life — and we do — then using drugs is obviously the right of each individual. The fact that it has become unquestionable to the majority that we do not possess the right to use drugs is we choose is a sad testament to the power of custom.

It is a sad testament to how people get so used to thinking about something in one way that changing minds becomes absolutely out of the question.

Yet if you believe in freedom, you not only should but must believe in the legalization of all drugs. If you do not, then you do not believe in freedom, and you must choose: freedom or statism.

This point can be made on principle alone, and it is a foolproof argument, the first and strongest line of defense. But it will not satisfy those who believe the proper scope of government does extend into telling us how we may and may not live.

It is frequently argued, for example, by the religious contingent, that if you legalize drugs, the usage of drugs will increase.

“Common sense and common experience tell us this,” says lawyer and radio talk-show host Dan Caplis, incessantly.

Next, we’re offered as evidence that the number of drinkers did increase after prohibition — a statement which is, at best, misleading, and here’s why:

Prior to prohibition, when drinking was still legal, the number of drinkers in this country was on a significant downward trend. For a decade leading up to prohibition, fewer and fewer people were drinking.

This fact is clear and not in dispute. But when, in 1920, the moralizers and busybodies got their way and legislated that the rest of the country must live as they deemed appropriate, and prohibition was then made into law, drinking still continued its downward trend. This went on for about three years.

It is very important to reiterate that the downward trend in drinking began long before drinking had been made illegal.

In the middle of prohibition — when drinking was still illegal — the number of drinkers began gradually to rise.

It continued to do so throughout the rest of prohibition, so that when, in December of 1933, prohibition was finally repealed, that upward trend continued for about a decade. But it was only the continuation of a trend that had already begun while drinking was illegal. This is a critical fact, but one you’ll never hear mention of when you hear people talking about “the number of drinkers increasing after prohibition.”

The next time someone says that “repealing prohibition increased the number of drinkers in this country,” be clear what that means: it means the number of drinkers was already increasing throughout the latter two-thirds of prohibition, and that the upward trend plateaued and then declined a decade after drinking was legalized anew.

Ask yourself also these questions: if, as the religious propound, making substances illegal prevents their usage, how is it that the number of drinkers began rising when alcohol was still illegal?

How is it that in Holland, where many drugs are legal and even subsidized(!), how is it that usage has decreased?

What does this tell us about “common sense and common experience”?

How is it that in Switzerland, marijuana usage has decreased even though it’s been made legal? And Spain?

There are those, of course, who argue that if drugs are legal, crime will increase. This is the biggest canard of them all.

Rest assured, if crime is your concern, illegalization should be what you want done away with.

There exists right now a multi-trillion-dollar underworld built up around illegal drugs, which legalizing would instantaneously crush, and which, as it stands, no amount of law, legislation, or litigation can come close to stopping. Why? The law of supply and demand is unstoppable: if there is a demand for something, supply will meet it, no matter what. All the conservative legislation imaginable cannot negate this fact. One might just as well try legislating against the tide.

When cigarettes and alcohol became so staggeringly taxed, do you know what happened? A gigantic blackmarket swept into the country. That meant more crime. People were smuggling in alcohol and cigarettes because these things could be sold for much cheaper on the blackmarket. They still are to this day.

Decriminalizing brings less crime.

For those who believe that if drugs are legalized, your kids are then more likely to use drugs, I urge you to remember that children have brains. Human beings have brains. We can learn, and we can be educated. We can be taught why not to use drugs. If you doubt the effectiveness of this, observe that cigarettes were legal for any age group until fairly recently, and the number of young smokers was sharply decreasing, and had been since the dangers of smoking were made known. Now that’s it’s illegal, teen smoking is on the rise again, and criminalizing doesn’t help.

Ask any honest school kid if he or she would have trouble getting drugs. Every honest school kid will tell you no. This despite the fact that drugs are illegal.

The inescapable law of supply and demand is why: if there’s a demand, supply will meet it. And no government bureaucracy and no middle-class morality can successfully fight it.

Making something illegal won’t decrease the supply of anything. It will only increase the underworld that provides the supply. This is a economic axiom.

Here’s another:

The only way to decrease supply is to curb demand.

The only way to curb demand is to inform, to educate, to decriminalize.

Each person must choose if he or she wants to use drugs or not, and whether those drugs are legal or illegal has little to do with the choice. There are many things that are legal and that every person has instant access to, but not everyone chooses to partake of. Why so?

The so-called war on drugs is a monumental waste of resources and money; it will continue to be so until the end of time. When something is made illegal, it develops a mystique. It entices. When something is legal, it becomes commonplace and mundane. It becomes no big deal. It is demystified.

Take, for instance, a person who’s grown up in an ultra-sheltered society and compare him or her to a person who’s grown up in the inner-city. Now drop them both off in downtown New York where there’s legal XXX shops on every street corner. Whom do you think will be more curious? And for whom do you think this will be more of a novelty?

And finally, for all the tax-happy liberals out there, think about this: if you legalize drugs, you can tax the living hell out of them. You can then use that tax money to educate with all your half-assed liberal programs, which benefit the “common good.” What more motivation do you need?

It is often said:

“Legalizing pot might be okay, but legalizing cocaine and methadrine, no way. I’ve known wealthy, white-collar, healthy, normal, successful businesspeople who’ve gotten so caught up in amphetamines that they’ve never been able to get off. They died. Suicide. OD. They’ve ruined their lives and the lives of their families. No way you should make these drugs legal.”

This is a repackaged version of the legalizing-creates-more-usage argument. It’s the same argument that drugs shouldn’t be legal because look at all the children born severely retarded and deformed because the mothers used crack throughout the pregnancy.

The first thing we must obviously note here is that all this happened (and still happens) even though drugs are illegal. Observe that making them illegal did not prevent these things from happening. Now ask yourself why.

Remember also that cigarettes and alcohol have ruined more lives and more families by far than every amphetamine combined. Should we therefore make alcohol and cigarettes illegal? And if not, why not? If it’s within the proper jurisdiction of government to run our lives, why shouldn’t we illegalize them?

And why, if that is government’s legitimate jurisdiction, draw the line at amphetamines, alcohol, and cigarettes? Why not let government run everything we consume — be it bacon, beer, or brats?

When gin made it into mainstream London, should it have been illegalized because it created such staggering addiction rates and ruined so many thousands of families?

We often hear: since alcohol can be and often is used in moderation, it should therefore be legal, whereas drugs cannot be used in moderation, and so should be illegal.

Leaving aside the questionable verity of such statements, since when did moderation become the standard for legalization versus illegalizing? That means, then, among other things, that for all those who can’t use alcohol or tobacco in moderation — for all, in other words, who are addicted (roughly half of all drinkers and more than ninety-five percent of all tobacco users) — these substances should be illegal? But for the rest, fine?

Freedom means you are left alone. It means you are neither helped nor hindered.

In this country, as in any just country, government’s proper role is not to be proscriptive or preventative.

In the words of Frederic Bastiat (1801 – 1850):

The nature of law is to maintain justice. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are ‘just’ because the law makes them so (Frederic Bastiat, The Law).

Posted on

How The American Healthcare Crisis Began

Staff of Asclepius, symbol of healing

What is now termed modern medicine actually began in the early 1920s when science — in particular, germ theory — culminated to a point that sickness and disease were at last being treated reliably.

It was then that doctors and hospitals got much better at the business of saving lives. This more highly developed service and expertise raised the value of their work, and they charged accordingly for their increased skill and labor.

And that, really, is when the situation started: when lives can be saved and health can be gained because of developments in technology, everyone suddenly believes that it’s his or her right to have that thing.

We see the same principle at work in, for example, the platitude “No one should go hungry when Americans are throwing away food.”

The error in both cases is the fraudulent notion that survival should be assured. This notion neglects the singular fact that abundance and technology are produced — and produced, moreover, by individuals.

No one has the right to the life and labor (i.e. production) of any individual, including the life and labor of doctors.

An easy way to demonstrate this truth is by asking the following: where was that right before these goods and services were produced or invented?

It is a fact that American medicine is already 50 percent socialized.

It is also a fact that there’s a clear correlation between rising healthcare costs and the socialization of medicine in this country. More government intervention will only compound the problem.

In the 1920s, when advancing healthcare became more expensive (though still very reasonable), the administrator of Baylor Hospital in Dallas, one Dr. Justin Ford Kimball, created a system called Blue Cross. The Blues (so-called) were nonprofit health insurers. They served local organizations like the Rebeccas and the Elks Club, and — please pay attention — they kept their premiums low in exchange for tax breaks.

Tax breaks are one of the main components to our current healthcare crisis. They’re what initially created the problem.

Blue Cross, you see, was successful only because of these tax breaks. Up until then, commercial insurers had always regarded medicine as a mediocre market, and therefore commercial insurers didn’t deal too much in medicine. But when commercial insurers saw that the Blues were making money, it convinced them to enter the medical field. This was not a problem, at first — until the 1940s, when private insurers increased their efforts to get around wartime wage controls, thus:

During World War II, Franklin Delano Roosevelt’s price-and-wage people, who didn’t generally permit wage increases or price increases (regardless of market forces) sanctioned a form of tax discrimination: specifically, they allowed employers to pay for employee medical insurance with pretax dollars.

This quickly became one of the few ways employers could attract new and better employees, since FDR had actually mandated that employers were no longer permitted to pay out higher wages. (How this ridiculous idea came about is another story, for another time.)

To this day, those who get employer-financed healthcare are purchasing their healthcare coverage with pretax dollars. On the other hand, those who buy their own healthcare are purchasing it with after-tax dollars.

This is a much bigger issue than you might at first realize.

As far as the employer was (initially) concerned, this wasn’t any different from additional labor costs — which is to say, medical insurance was not, from the employers perspective, any different from a rise in wages, and yet FDR’s price-and-wage control people did not at all see it as a wage increase. They therefore allowed it, which may seem surprising in light of FDR’s desire to control the entire economy.

Likewise, the IRS bureaucrats under FDR did not regard this maneuver as a wage increase, and for this reason they didn’t slap a tax on it. Neither did the employees see it as a real raise in wages — a fact that is singular to how this whole horrible precedent was set — because these costs are what economists call hidden costs.

The upshot: people didn’t and very often still don’t know that it is, after all, their own money paying for this prepaid medical coverage, and that medical coverage isn’t free.

In fact, health insurance today isn’t even really health insurance. It’s more properly called prepaid healthcare. But — and this is an another crux — it gives the appearance of being free or substantially free to the user, and it therefore substantially increases the demand for it and therefore its cost.

Of course, the root of this whole problem is the misbegotten notion that healthcare is not a good and service to be traded on the open market, but a right.

Let us remember what insurance actually is:

Insurance, properly defined, is what you purchase in order to avoid financial ruin in the case of a rare emergency.

Under the dangerous system FDR created, employees came to regard their healthcare coverage as a kind of blessed phenomena which came without cause or consequence. Quickly, this phenomena was absorbed into the working culture and as quickly was taken for granted: employees got used to receiving free goods, which goods, however, were not actually free. Employees just could not see that they were paying for them, and paying for them, furthermore, with pretax dollars.

A family in the bottom fifth of the income distribution pays about $450 more in taxes than insured families at the same income level. For families in the top fifth of the income distribution, the tax penalty is $1,780. On average, uninsured families pay about $1,018 more in federal taxes each year because they do not have employer-provided insurance. Collectively, the uninsured pay about $17.1 billion in extra taxes each year because they do not receive the same tax break as insured people with similar income. If state and local taxes are included, the extra taxes paid by the uninsured exceed $19 billion per year (“Are the uninsured freeloaders?” National Center for Policy Analysis, Brief Analysis No. 120).

Among other things, this illustrates again why entitlements are such a deadly precedent: once they’re entrenched, it’s virtually impossible to retrogress. Why? Because people acclimate to entitlements and in no time cannot imagine life without them.

Posted on

The Great Overpopulation Myth

The population of the entire world could fit shoulder-to-shoulder in a space about the size of Jacksonville, Florida.

Ninety-seven percent of the earth’s land surface is empty.

If you allotted to each person 1,250 square feet (which is quite a bit), all the people in the world would fit into the state of Texas.

According to the Food and Agriculture Organization, world food supplies exceed requirements in all world areas, amounting to a surplus approaching 50% in 1990 in the developed countries, and 17% in the developing regions.

Problems commonly blamed on ‘overpopulation’ are the result of bad economic policy. For example, Western journalists blamed the Ethiopian famine on ‘overpopulation,’ but that was simply not true. The Ethiopian government caused it by confiscating the food stocks of traders and farmers and exporting them to buy arms. That country’s leftist regime, not its population, caused the tragedy. In fact, Africa, beset with problems often blamed on ‘overpopulation,’ has only one-fifth the population density of Europe, and has an unexploited food-raising potential that could feed twice the present population of the world, according to estimates by Roger Revelle of Harvard and the University of San Diego. Economists writing for the International Monetary Fund in 1994 said that African economic problems result from excessive government spending, high taxes on farmers, inflation, restrictions on trade, too much government ownership, and over-regulation of private economic activity. There was no mention of overpopulation.

The government of the Philippines relies on foreign aid to control population growth, but protects monopolies which buy farmers’ outputs at artificially low prices, and sell them inputs at artificially high prices, causing widespread poverty. Advocates of population control blame “overpopulation” for poverty in Bangladesh. But the government dominates the buying and processing of jute, the major cash crop, so that farmers receive less for their efforts than they would in a free market. Impoverished farmers flee to the city, but the government owns 40% of industry and regulates the rest with price controls, high taxes and unpublished rules administered by a huge, corrupt, foreign-aid dependent bureaucracy (Dr. Jacqueline R. Kasun).

The world’s population is expected to max out at around 8 billion by 2050. Then it starts to decline.

That’s when the real trouble begins.

Posted on

Depression Before the Great Depression

Martin van Buren
The following is Chapter 21 of Leave Us Alone:

Before the Great Depression of the 1930’s and 1940’s, there were a number of depressions and recessions in this country, two of the most notable being the Panic of 1819 and the depression of 1837. In every instance prior to the Great Depression, the government policy was essentially a policy of hands-off.

Which was exactly as it should have been, since depressions are not caused by the private sector but by government interference in the marketplace, and only that.

What were the results of these hands-off policies prior to the Great Depression?

Answer: a drastic reduction in the amount of time the depression lasted.

Let us reiterate and emphasize that the only way to create wealth and jobs is through production.

That is why capitalism, true laissez-faire capitalism, is the only possible way to end an economic depression or recession.

Government spending will always compound problems. Why? Because government can only obtain money by taxing or borrowing or printing.

Always remember: government by definition is not an agency of production: it is a mechanism of force. That is its defining characteristic.

Thus the money that government takes away from the private sector depletes money that would otherwise have by choice (as opposed to by coercion) been saved or spent upon other things.

Private money, in other words, is diverted from the capital sector into the hands of bureaucrats. Which is exactly the thing that exacerbates and prolongs the preexisting economic problem.

It is so very easy to spend money that is not yours, money that you’re not fully accountable for, money that you obtain through force or the threat of force. Whereas, on the other hand, cutting governmental borrowing and spending and taxation and printing, it frees private money and private resources, which in the end is the one and only thing that can produce genuine wealth.

Printing more and more money to cover the cost of government spending will only ever bring inflation. It can happen in no other way.

Economic law cannot be abolished, just as mathematical law cannot be abolished, and for the exact same reasons. It doesn’t even matter how many politicians wish to abolish these economic laws, or how charismatic the masses find these bureaucrats: economic laws will not be subverted. One might just as well try turning back the tide with one’s own two hands.

Here, then, is how to end a recession or depression as swiftly as possible:

Slash government spending.

Slash taxes.

Stop the inflationary process that fiat money (i.e. money printing) inevitably brings.

Deregulate private enterprises so that the private sector can function – which is to say, free the market so that businesspeople can start up businesses, produce products, and create more and more jobs.

That’s all there is to it. And yet it’s a pill that bureaucrats simply cannot swallow.

The depression of 1837 was the biggest depression this country had seen prior to the Great Depression. The good President Martin Van Buren and his administration did exactly the right thing: they stepped back and let the market correct itself, which indeed it did, so that the depression lasted less than a year.

Martin Van Buren stated in his inaugural address that he advocated a policy of laissez faire.

Two months later, the United States experienced a banking crisis. President Van Buren stuck to his guns.

“All but six of the nation’s eight hundred or so banks had ceased redeeming their bank notes in gold or silver, but in his first message to Congress the President proclaimed that his policy would be one of governmental retrenchment” (Dr. Thomas Dilorenzo, How Capitalism Saved America, p. 158).

In President Van Buren’s own words:

“All communities are apt to look to government for too much, especially at periods of sudden embarrassment and distress…. All former attempts on the part of Government to assume management of domestic or foreign exchange have proved injurious.”

President Van Buren added that the solution is “a system founded on private interest, enterprise and competition, without the aid of legislative grants or regulations by law” (James D. Richardson, A Compilation of the Messages and Papers of the Presidents, New York: Bureau of National Literature, 1922).

It should be noted that Van Buren had to fight every step of the way against governmental intervention by such notable statists as Daniel Webster, Henry Clay, and the young Abraham Lincoln, all of whom remained statists until the day they died.

President Van Buren waged a tireless war for deregulation of finance, and he thereby created the Independent Treasury System in which all bank notes were redeemable in gold and silver.
In so doing, he brought this country the strongest and most stable monetary system it’s perhaps ever had.

President Van Buren also, in the words of historian Jeffrey Hummel, “thwarted all attempts to use economic depression as an excuse for expanding governments role.”

Conversely, interventionists like Henry Clay and his young protégé Abe Lincoln saw this economic downturn as a political opportunity to create pork-barrels for so-called internal improvements. Sound familiar?

These same statists also attempted to get the federal government to bail out the states, but President Van Buren fought them tooth-and-nail and eventually won; so that government spending actually fell during his term, and the debt remained steady, the free-market price system allowed to operate without intervention.

That is why the depression of 1837 lasted only one year.

That is why it never spun out of control, as today’s crisis has.

By refusing to pile up debt, President Van Buren thereby refused to drag out the economic downturn, which by necessity steals money from the private sector.

Compare that to, in the next chapter, the brief but by-no-means exhaustive list of extraordinarily destructive policies followed first by Herbert Hoover, who was an admirer of Soviet Russia and “believed that human manipulation could triumph over any alleged ‘laws’ of economics,” and then the even more brutal Franklin Delano Roosevelt, a discussion of whom will come in the chapter after the next.

Posted on

Natural Resource and Goods Theory

Carl Menger, Founder of the Austrian School of Economics

The two essential claims of the environmentalists, which I take for granted are already well known to everyone, are (1) that continued economic progress is impossible, because of the impending exhaustion of natural resources (it is from this notion that the slogan “reduce, reuse, recycle” comes), and (2) that continued economic progress, indeed, much of the economic progress that we have had up to now, is destructive of the environment and is therefore dangerous.

The essential policy prescription of the environmentalists is the prohibition of self-interested individual action insofar as the byproduct of such action when performed on a mass basis is alleged damage to the environment. The leading concrete example of this policy prescription is the attempt now underway to force individuals to give up such things as their automobiles and air conditioners on the grounds that the byproduct of hundreds of millions or billions of people operating such devices is to cause global warming. And this same example, of course, is presently the leading example of the alleged dangers of economic progress (source).

In his groundbreaking Principles of Economics, Carl Menger (1840-1921), the founder of the Austrian School of Economics, developed what he came to call the Theory of Goods.

This theory has direct and immediate relevance regarding, for example, global warming, ozone depletion, resource scarcity, and so on. Indeed, its relevance cannot be overstated.

Menger’s Goods Theory begins by pointing out that there is a crucial distinction between objects in and of themselves and “goods” proper.

The object alone — for example, any resource before it actually becomes a resource — does not possess value intrinsically. Rather, it is in relation to human use that the thing becomes valuable. It is precisely this, then, that makes it a good.

Or put another way: a thing becomes a good when it is able to satisfy some human need or want.

Menger lists the following four criteria that need to be simultaneously met to reach what he calls the “goods-character.”

* A human need.

* Such properties as render the thing capable of being brought into a causal connection with the satisfaction of this need.

* Human knowledge of this causal connection.

* Command of the thing sufficient to direct it to the satisfaction of the need (Principles of Economics, page 52).

It is important to note that these last two things are man-made.

It is equally important to realize that the last one is for the most part achieved by means of labor and the capital that that labor produces.

This implies – to quote Dr. Reisman – that the resources provided by nature, such as iron, aluminum, coal, petroleum and so on, are by no means automatically goods. Their goods-character must be created by man, by discovering knowledge of their respective properties that enable them to satisfy human needs and then by establishing command over them sufficient to direct them to the satisfaction of human needs.

For example, iron, which has been present in the earth since the formation of the planet and throughout the entire presence of man on earth, did not become a good until well after the Stone Age had ended. Petroleum, which has been present in the ground for millions of years, did not become a good until the middle of the nineteenth century, when uses for it were discovered. Aluminum, radium, and uranium also became goods only within the last century or century and a half.

The upshot of all this is that nature — or, if you prefer, the environment — is not some relatively limited pool of resources that man merely plucks, exploits, depletes, and then moves on from. On the contrary, as Menger makes incontrovertibly clear, mother nature gives us only the barest material — “the physical properties of the deposits in mines and wells” — but she does not provide the goods-character. We provide that.

“Indeed, there was a time when none of them were goods” (Ibid).

Nature, contrary to what the environmental philosophy would have you believe, does not possess intrinsic value.

That — and nothing else — is the fundamental argument against all of environmentalism.

The earth is a plenum: it’s a solid sphere packed full of chemicals. Those chemical elements are indestructible. They can change properties and forms, but they cannot cease to exist.

That mass of teeming chemicals are all potential resources.

As humans evolve — as we make new discoveries and develop newer and ever newer technologies — we find new resources; we find things we cannot conceive of even months before. We find new uses for things that were once useless, like oil, which is barely 100 years old as a resource (a “goods character”); and we find new ways of using old. We move on from whale oil and wood, to kerosene, to coal, to hydro, to nuclear….

Most of what people think they know about energy is so very wrong that their convictions, heartfelt though they may be, lie beyond logical contradiction or refutation….What most of us think about energy supply is wrong. Energy supplies are unlimited; it is energetic order that’s scarce, and the order in energy that’s expensive….Supplies do not ultimately depend on the addition of reserves, the development of new fuels, or the husbanding of known resources. Energy begets more energy; tomorrow’s supply is determined by today’s consumption. The more energy we seize and use, the more adept we become at finding and seizing still more. What most of us think about energy demand is even more wrong. Our main use of energy isn’t lighting, locomotion, or cooling; what we use energy for, mainly, is to extract, refine, process, and purify energy itself. And the more efficient we become at refining energy in this way, the more we want to use the final product. Thus, more efficient engines, motors, lights, and cars lead to more energy consumption, not less (Peter Huber and Mark Mills, The Bottomless Well).

The earth, far from being “raped and nearly depleted,” has barely been touched.

This mass hysteria regarding CO2 and chlorofluorocarbons and so on is a waste of time and energy.

Human freedom breeds human progress. And progress by definition is not static. The economist Joseph Schumpeter called it creative destruction.

Today’s consumption determines tomorrow’s technology. The more we use, the more we innovate — provided, that is, we are left free to innovate.

Politically and economically free.

The profit motive, as its very name implies, motivates and incentives; for humans have a limitless desire to better their lives.

Wealth not only builds progress; wealth is progress.

If there is a demand for something to replace, for instance, freon, the untrammeled freedom to innovate will meet that demand by far the fastest.

Thus, if it is the environment you’re concerned about, then it is pure, unadulterated laissez-faire capitalism you should be fighting for tooth and nail. It is this, and not centralized power, or the establishment of worldwide central-planning committees to regulate CFCs and CO2 — this is what brings cleaner environments.

To think anything less is to commit a grave logical fallacy.

Real, positive knowledge of the profit motive and the price system, of saving and capital accumulation, of money, economic competition, and economic inequality, and of the harmony of interests among men that results from the joint operation of these leading features of capitalism — all this knowledge is almost entirely lacking on the part of the great majority of today’s intellectuals. To obtain such knowledge, it would be necessary for them to read and study von Mises, who is far and away the most important source of such knowledge. But they have not done this.

Ignorance of the ideas of von Mises — the willful evasion of his ideas — has enabled the last three generations of intellectuals to go on with the delusion that capitalism is an “anarchy of production,” a system of rampant evil, utter madness, and continuous strife and conflict, while socialism is a system of rational planning and order, of morality and justice, and the ultimate universal harmony of all mankind. For perhaps a century and a half, the intellectuals have seen socialism as the system of reason and science and as the ultimate goal of all social progress. On the basis of all that they believe, and think that they know, the great majority of intellectuals even now cannot help but believe that socialism should succeed and capitalism fail (George Reisman, “Environmentalism Refuted”).

Posted on

Peak Oil?

From the moment oil first made it into the mainstream, peak oil and the imminent depletion of fossil fuels have been vehemently predicted.

A by-no-means exhaustive list of those predictions might run something like this:

“I take this opportunity to express my opinion in the strongest terms, that the amazing exhibition of oil which has characterized the last twenty, and will probably characterize the next ten or twenty years, is nevertheless, not only geologically but historically, a temporary and vanishing phenomenon – one which young men will live to see come to its natural end” (1886, J.P. Lesley, state geologist of Pennsylvania).

“There is little or no chance for more oil in California” (1886, U.S. Geological Survey).

“There is little or no chance for more oil in Kansas and Texas” (1891, U.S. Geological Survey).

“Total future production limit of 5.7 billion barrels of oil, perhaps a ten-year supply” (1914, U.S. Bureau of Mines).

“Reserves to last only thirteen years” (1939, Department of the Interior).

“Reserves to last thirteen years” (1951, Department of the Interior, Oil and Gas Division).

“We could use up all of the proven reserves of oil in the entire world by the end of the next decade” (President Jimmy Carter speaking in 1978 to the entire world).

“At the present rate of use, it is estimated that coal reserves will last 200 more years. Petroleum may run out in 20 to 30 years, and natural gas may last only another 70 years” (Ralph M. Feather, Merrill textbook Science Connections Annotated Teacher’s Version, 1990, p. 493).

“At the current rate of consumption, some scientists estimate that the world’s known supplies of oil … will be used up within your lifetime” (1993, The United States and its People).

“The supply of fossil fuels is being used up at an alarming rate. Governments must help save our fossil fuel supply by passing laws limiting their use” (Merrill/Glenco textbook, Biology, An Everyday Experience, 1992).

(Give particular heed to that last sentence.)

Quotes like these could fill hundreds of pages easily.

There comes a point, however — and we reached it long ago — when one needs to stop swallowing these scare-mongering scenarios.

There comes a point when one needs to look at the entire history of doomsday predictions and learn something from their long and undistinguished history of incontrovertible failure.

There comes a point, finally, when one needs to question what motivates these people.

To the millions of you who believe the latest round of dire forecasts, I ask you this in all seriousness:

What do you really think — that all the other apocalyptic predictions and predictors, over all the centuries and millennium, were wrong, but people like James Howard Kunstler and Richard Heinberg have at last got it right?

The fact is that anyone can say whatever he wants about anything. But that doesn’t necessarily make it true.

The 1970s book Limits to Growth, for instance, is chock full of reams of “hard data” proving mass famine and the end of the world as we know it — all to occur in a just couple of short decades from when it was written — but none of it came to pass. Not one word of it.

Thomas Malthus’s economic predictions of population-caused famines also failed stupendously, and Malthus himself — a guru of present-day environmentalists — eventually came to reject his early writings. No matter: This doesn’t stop neo-Malthusians like environmental high priest Lester Brown from forecasting a “2004 or 2005 worldwide famine.”

Or Dr. Paul Ehrlich of Stanford University laying “even odds that by the year 2000 Great Britain will no longer exist.”

Neither does it stop any of the endless predictions concerning global warming, species extinction, or forest depletion — for instance, the famous statement made by biologist Norman Myers, which sent environmentalists everywhere scurrying to their soapboxes, that “2 percent of all tropical forest was being destroyed per year,” and that by “2000 we will have lost a third of the world’s tropical forest” (Myers cited in Goudie 1993:46), which flew so far afield it would be laughable were it not so sickening.

(The Food and Agriculture Organization [FAO] puts tropical deforestation in the 1980s at 0.8 percent. In 2001, satellite imagery, which is precise, shows that tropical deforestation had declined to 0.46 percent.)

The history of humankind is replete with false prognostications. It’s time to ask why these predictions are not only always wrong but why they are always so spectacularly wrong.

Here is a crux:

In calculating the amount of natural resources, whether the resource is fossil fuel, crude oil, bauxite, bitumen, gold, or anything else, there is a vital principle at work; it is a principle that doomers of all persuasions have failed to discover and no longer, I think, have the capacity to grasp:

“No matter how closely it is defined, the physical quantity of a resource in the earth is not fully known at any time, because resources are sought and found only as they are needed. Even if the quantities of a particular resource were exactly known, such measurements would not be meaningful, because humans have a near-limitless capacity for developing additional ways to meet our needs: developing fiber optics, for instance, instead of copper wire …” (Julian Simon, The Ultimate Resource 2. Emphasis mine.)

The following is another secret about natural resources, which any legitimate graph or study will confirm:

The more a resource is used, the more that the supply of that resource increases.

It will sound counterintuitive, but only at first. Here’s why:

We begin to know about a resource only when we begin to use the resource. Knowing about that resource includes a cursory calculation of its quantity. The more we use of it, the more adept we become at finding it and calculating its quantity, extracting it and refining it. Thus, the more of it we use, the more of it we’re able to find.

The whole history of resource supply-and-demand has followed this exact principle.

Fossil fuel is no exception:

Observe any non-biased chart on the subject, and it will show that over the last century, oil supply has risen significantly, not diminished, as has virtually every other resource, so long as we’ve continued using it.

Quoting Peter Huber and Mark Mills:

Most of what people think they know about energy is so very wrong that their convictions, heartfelt though they may be, lie beyond logical contradiction or refutation….What most of us think about energy supply is wrong. Energy supplies are unlimited; it is energetic order that’s scarce, and the order in energy that’s expensive….Supplies do not ultimately depend on the addition of reserves, the development of new fuels, or the husbanding of known resources. Energy begets more energy; tomorrow’s supply is determined by today’s consumption. The more energy we seize and use, the more adept we become at finding and seizing still more.

What most of us think about energy demand is even more wrong. Our main use of energy isn’t lighting, locomotion, or cooling; what we use energy for, mainly, is to extract, refine, process, and purify energy itself. And the more efficient we become at refining energy in this way, the more we want to use the final product. Thus, more efficient engines, motors, lights, and cars lead to more energy consumption, not less (Peter Huber and Mark Mills, The Bottomless Well).

Some of the real data about fossil fuel is this:

Humanity consumes about 345 Quads of fossil fuel each year. A quad is a quadrillion British Thermal Units.

Of those 345 Quads, the United States consumes approximately 100.

The United States consumes by far the most, but — and here is a fact too often neglected in discussions of U.S. fossil fuel consumption — the United States also produces by far the most.

The inevitable exhaustion of fossil fuels, so strenuously predicted since the 1880’s, is a notion that’s invariably built upon a fraudulent premise: it’s built off the data of what today’s technology makes accessible.

This reasoning, as we’ve touched upon already, is demonstrably flawed.

No one seriously disputes that with better technology, and better power, we could retrieve far more [fossil fuel]. We already know where to find centuries’ worth of coal – global deposits hold 200,000 Quads. Oil shale deposits hold 10 Million Quads; heavy oils are already being extracted by brute force from the Canadian Athabasca deposits, and bioengineered bacteria could make the earth’s vast deposits of these oils economically accessible everywhere within a decade or less. Even more abundant is the energy locked up within uranium and other radioactive elements. The world’s oceans contain over 10 trillion Quads’ worth of deuterium, a fuel that we will in due course learn to unlock with nuclear fusion. And nothing very fundamentally new will be required to unlock it (Ibid).

Energy begets energy.

The more energy we use, the better we become at developing, extracting, and refining ever more.

Stopping or even slowing the use of fossil fuel would not, contrary to what you’ve been told, solve this (non-existent) fossil fuel problem: on the contrary, it would bring progress to a grinding halt; but even more than that, it would do so by shutting down the rational mind, which is the uniquely human method of survival.

It would blast us back to the stone age.

Which is precisely what many environmentalists, especially those of the better informed variety, want.

There exists no technology that can survey and measure the total quantity of oil and potential oil beneath all the land and sea, including tar sand and shale oil and the conversion of coal to oil.

So where exactly the doomers get their dire predictions is unclear.

What motivates these doomers is even more obscure.

And more frightening.

A quote from The Wall Street Journal, January 2005:

The cost of oil comes down to the cost of finding, and then lifting or extracting. First, you have to decide where to dig. Exploration costs currently run under $3 per barrel in much of the Mideast, and below $7 for oil hidden deep under the ocean. But these costs have been falling, not rising, because imaging technology that lets geologists peer through miles of water and rock improves faster than supplies recede. Many lower-grade deposits require no new looking at all.

To pick just one example among many, finding costs are essentially zero for the 3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that’s trillion – over a century’s worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Please note particularly that last paragraph.

And, while you’re at it, do yourself another big favor:

Ignore all the dire predictions about peak oil and the end of fossil fuels that you’ve been hearing for the last one hundred years.

Ignore the catastrophic scare-mongering that books like The Party’s Over and The Long Emergency propound.

At every point in human history, the individual has been attacked by some government somewhere, on one side of the globe or another, always for the sake of some group.

In this century alone, to cite only a few of the more conspicuous examples, the individual was subordinated in Communist Russia to the proletariat; so too in Communist China, let us forget the millions upon millions of proletarians murdered or imprisoned under these romanticized regimes.

In Nazi Germany, the individual was subordinated to the “superior race.”

In Socialist Europe, in present day Germany and France, “labor” or the masses or The Environment all trump the individual.

In the United States as well claims concerning the environment threaten, as we speak, the individual’s right to her own life and property.

And the scare-mongering only increases: misinformation about fossil fuels has spawned, among a traditionally secular left, such a glut of doomsday predictions that they rival or eclipse any heard from the Religious Right — the only real difference being, instead of telling us to “repent, for the kingdom of heaven is at hand,” we’re told “learn to conserve and farm, for the end of the industrial society is at hand.”

But whether secular or non-secular, dogma is dogma, oppression is oppression, and the misguided doomsday predictions we hear from environmentalists are ultimately every bit as misbegotten as any doomsday predictions we hear from the Religious Right – and, one might well add, ultimately just as banal.

In one form or another, this propaganda is as old as mankind herself — the only real difference being the agenda.

Which agenda is this: let your big benevolent government regulate and control fossil fuels and all other energy besides, and let this same big benevolent government control your property as well, and thereby your life.

It’s called Environmentalism. But it’s really Neo-Marxism.

And Marxism by any other name is, and always will be, the same plain old discredited Marxism.

Posted on

George W. Bush


Under President George W. Bush, who was the Herbert Hoover of his day, appropriated government programs grew from $298 billion to $613 billion.

Under President George W. Bush, Social Security spending went from $406 billion to $662 billion.

Under President George W. Bush, Medicare spending went from $216 billion to $425 billion.

Under under President George W. Bush, Medicaid spending went from $117.9 billion to $259 billion.

Under President George W. Bush, “miscellaneous spending” went from $290 billion to $673 billion.

Under President George W. Bush, net interest dropped from $222.9 billion to $139 billion.

Under President George W. Bush, disaster cost went from $0 billion to $4 billion.

In George W. Bush’s eight years, government spending increased more than 55 percent, largely due to woefully misbegotten wars.

Even when adjusted for inflation in constant dollars, federal expenditures under Bush soared by 29 percent.

During his Presidency, real Gross Domestic Product (GDP) only increased by 17.3 percent, and over the Bush years, real government spending went up nearly twice as fast as the actual U.S. economy.

The left should therefore be in love with George W. Bush. He, like his father and like Ronald Reagan, was a complete statist.

There’s more:

Under George W. Bush, Washington ran deficits almost every year. Total federal debt doubled and rose from 58 percent to 66 percent of GDP, for a 14 percent increase in taxpayer debt burden (in terms of the Gross Domestic Product).

Here’s a quick rundown:

• Payment for Individuals: $1054.6 billion in the year 2000 to $1397.1 billion in the year 2007.

• Social Security and Railroad Retirement: $410.5 billion in the year 2000 to $487.7 billion in the year 2007.

• Federal Employees Retirement and Insurance: $100.3 billion in the year 2000 to $116.0 billion in the year 2007.

• Unemployment Insurance: 21.1 billion in the year 2000 to 27.1 billion in the year 2007.

• Medical Care: $362.7 billion in the year 2000 to $559.9 billion in the year 2007.

• Student Assistance: $10.9 billion in the year 2000 to $24.9 billion in the year 2007.

• Housing Assistance: $24.1 billion in the year 2000 to $27.0 billion in the year 2007.

• Food and Nutrition Assistance: $32.4 billion in the year 2000 to $46.3 billion in the year 2007.

• Public Assistance and Related Programs: $88.3 billion in 2000 to $103.4 billion in 2007.

• Other Transfers to Individuals: $4.3 billion in 2000 to $4.7 billion in 2007.

Of course, there was also the $700 billion Troubled Relief Assets Program (also known as the TARP bailout), and yet if you think these figures are difficult to fathom and the expenditures over-the-top, I assure you they do not even begin to compare to the massive spending apparatus that Barack Obama has unleashed.

Indeed, next to Barack Obama, George W. Bush’s reckless spending is downright frugal.

Posted on

Laissez Faire and Hong Kong


Laissez faire is a social system based upon private ownership of the means of production and the preeminence of the individual over the group.

The word capitalism was popularized by Karl Marx, in the 1850’s. Marx used it to denounce private ownership of the means of production and the autonomous workings of the free market.

Many people use “capitalism” to denote laissez faire, but the word capitalism has become a laden and loaded word, easily misunderstood with its opposite: crony capitalism.

Laissez faire is an entire political theory — not, as is sometimes supposed, merely economic. In this regard — and only in this regard — it is akin to communism.

The exclusively economic component of laissez-faire may be described as the right to life, liberty, and property applied to commerce and industry.

Pure laissez-faire, which does not exist now and has never existed fully, means that government removes itself from all commerce (and that includes healthcare), in the same way that government removes itself from your bedroom.

In addition to early America, there is at least one other society that has come close to laissez faire:

After the War Hong Kong had no minimum wage, low and simple taxes, zero tariffs, zero capital controls, and a stable legal environment. Postwar Hong Kong went as far with economic laissez faire as any other country in history. This resulted in economic development that benefited virtually all the people of Hong Kong. Living standards increased substantially even for the poorest people in Hong Kong (Stefan Karlsson, Inflation Leads to Protectionism, 2004).

Laissez faire means that commerce and industry are entirely privatized.

Corporations that receive government subsidies are not capitalistic. They’re the opposite: they’re mercantilistic.

The same is true of small businesses and farms that receive subsidies.

Trade tariffs are not capitalistic but mercantilistic.

Mercantilism is an ancient and more primitive form of socialism. It is socialism before Karl Marx.

Political theory is the theory of government, and government, properly defined, is the body politic that possesses rule over a certain geographic region.

Economics is the science of production and exchange, but production does not just mean agriculture, although that is certainly included.

Productive work is any kind of work geared toward the task of survival — survival in the fully human sense of the word, including, therefore, arts, sports, industry, and so on.

Thus the essential questions of government are these:

Do humans exist by right or by permission? Are we free by nature? If so, why? Are we free to produce, exchange, and exist, or do politicians, elected or not, have authority and jurisdiction over the lives of us — to any degree?

Obviously, there’s only one sane answer to all these questions; for to say that humans do not exist by right is the same as saying humans only exist when someone permits us to. But if that were true, we must then ask: who permits? And why? And who gives these people permission?

Fundamentally, political freedom can be achieved only through recognizing each and every single individual’s right to life.

If, then, you believe that we are each individuated and sovereign, and if you believe that our lives are entirely our own and not the government’s and not another’s, if, in short, you believe “we each have a property in our person,” as John Locke said, then you believe in the inalienable right to life, liberty, and property.

You believe, therefore, in laissez-faire capitalism.