United Nations Taxation

http://www.foxnews.com/world/2012/09/27/as-un-opens-its-general-assembly-session-it-is-already-thinking-up-new-global/?test=latestnews

In the news today I saw that the United Nations is proposing a tax on billionaires from all member countries as well as royalties on all underwater resource mining that takes place more than a hundred miles off a nations shore.  The United Nations would most likely be using this money to lend aide to less developed countries, mostly countries other than where the money is coming from.

Most of the advanced countries are already in economic turmoil and this new tax will not help the situation any.  This may however end up being a case of the weak extorting the strong.  Since there are more “poor” countries than “rich” countries in the United States this motion could be passed.  As a result the strongest of the countries would be held to the will of the poorer countries. 

This would certainly be an example of a global government using its force on sovereign countries.  While the countries themselves would in turn have to exert their force on individual citizens to comply with the new taxes.  In this situation it may be more difficult for lobbying organizations to stop this legislation.  They would have to come together on an international level, which is much less likely than coming together nationally as they currently are use to. 

A Look at the Logic

In The Rise and Decline of Nations, Mancur Olson examines several questions - why certain places and peoples thrive at certain times, fir example - and starts his analysis of the questions by looking at the logic that governs groups. Smaller groups can take action more effectively because each member has a stake in the outcome, whereas larger groups of people have less individual incentive to participate fully, because there is less individual gain, unless there is some kind of requirement or punishment for failing to participate.

An interesting extrapolation of this can be seen in the article "Futures exchange members get relief on margin rule," a Reuters article that I saw in the Chicago Tribune. As the article explains, there are two margin rates that futures investors pay. One is a lower rate for people who are not professional speculators, who pursue less risky money, and a "speculator" rate for those that do. However, the pro speculators have apparently been paying only the lower margin, because a rule is set to be enacted by the Commodity Futures Trading Commission that will require them to pay the higher margin.

So, in order to get the most from each trade, the speculators managed to pay the lower margin and therefore reap more of a return. And it makes a certain amount of sense; futures are risky even to those who understand them, so why not take every (legal) avenue to reduce that risk, even minutely? But this was at the expense of the trade organizations, the group that allows them to trade futures. Therefore, they were working in tune with the logic.

Who is "touching the force" in the Natural Gas Industry?

http://www.businessweek.com/ap/2012-09-23/decades-of-federal-dollars-helped-fuel-gas-boom#p2

I have been hearing about natural gas drilling and hydraulic fracturing, or "fracking", from my later years of high school to now, with increasing discussions about it over time. My first exposure to the 'problem' was through a movie called Gasland, which I'm sure many university students have seen, about two years ago. The movie presented the natural gas industry in a very negative light, and pushed, explicitly and inexplicitly, for government intervention to correct the problem, which was characterized by flammable water taps and hazardous gas causing sickness near the drill sites. Since the release of Gasland, most people I talk to often reference it in their arguments against natural gas as a feasible energy source, and many people I come across believe fracking is a bad thing.

However, according to this article (which has seemingly credible sources), government may actually be the source of the rapid expansion of the natural gas industry. According to the article, over three decades, the federal government has contributed "more than $100 million in research to develop fracking, and billions more in tax breaks." Alex Trembath, a researcher at the Breakthrough Group, a California nonprofit that supports "new ways of thinking about energy and the environment", states that "[T]he Department of Energy invested about $137 million in gas research over three decades, and that the federal tax credit for drillers amounted to $10 billion between 1980 and 2002." Many of the people referenced in the article seem to believe that government is largely responsible for the size of the natural gas industry today, and rightfully so given these statistics.

Although the article seems to be presenting this in an unbiased manner, the facts that were given reveal some irony within the arguments against natural gas. As I stated earlier, many anti-natural gas advocates look to government to correct the negative externalities caused by the industry, whether it be through tax deterrents or direct intervention. However, by stating that government is responsible for the size of the natural gas industry, it implies that, without government subsidies, the natural gas industry would be much smaller than it is today. Because of the subsidies, I suspect that more and more firms will begin to enter the market, resulting in more drilling. I also suspect that petroleum and natural gas companies had some kind of lobbying interest in the tax breaks and subsidies, but the fact of the matter is that government is both responsible for and expected to fix a large market with negative externalities, quite ironic!

Two Conditions Facilitating Prosperity

Two Conditions Facilitating Prosperity

The United States is one of the most prosperous countries in the world.  Why is it that we prosper and others don’t?  It may be the market we live in, but I don’t think so because everyone has a market.  The government (force) and their ability to use their power may be a better indicator as to why we are able to prosper and others cannot.  Government may be the ultimate dictator in our ability to prosper but “To know why some countries prosper while others fall behind, then, we need to know which industries in which countries are more productive and why.”  In the political economy we live in, it can be very misleading to only look at traded goods; we tend to see international business’s facing a bunch of competition.  “Domestic industries, by contrast, are often protected from competition.”  Remember, government is force, and they can force to protect and implement policies in order to keep us safeguarded.  “Poorer countries are hampered mostly by government policies, especially high taxes that drive businesses underground, rather than by the inherent problems of poverty, Mr. Lewis argues. If they could solve their policy problems, they would attract foreign investment. Businesses could train workers on the job, achieving competitive productivity.”  We see the opposite government effect in the United States. 

Economist look at the whole world through a paradigm of exchange, exchange is voluntary.  So to understand power and prosperity we must not only look at exchange (voluntary social interaction), but also the logic of force-used by the government.  It is human nature to truck, barter and exchange; lie, steal and go to war; nasty, brutish and short.  We cannot think of government and economics separately, and as the point of the class we see people prosper in good governments and people suffer in bad governments.  For example, in human history we see prior to 1800 people living in subsistence around three dollars a day!!  Yet in 1800 we see a huge spike in per capita income, people going from three dollars a day to 137 dollars a day and increasing from one horse to two horses to 4 horses and eventually cars.  What we are seeing is the difference between good and bad government and the switch around the 1800’s.  In the 1800’s we had the “Great Divergence/Great Fact” and it was the masses of people that were prospering.  Many people don’t prosper like us and live in poverty for two main reasons:  (1) we have protected property rights and, (2) lack of predation.  To prosper we must all touch the force and get it to back our actions in order to have a prosperous/productive economy.

http://www.nytimes.com/2004/07/15/business/economic-scene-why-certain-countries-prosper-new-study-looks-productivity-comes.html?pagewanted=all&src=pm

Chicago Teachers Union

Being that we have just finished reading The Logic of Collective Action, I feel it to be an appropriate time to comment on the incompetent mess that is the Chicago Teachers Strike.  Union formation is inefficient – this we know – and in this case, the parents and their children are the ones being forced to suffer the consequences.  If I understand this correctly, the teachers not only want pay increases but they no longer want to be held accountable for student performance.  Well…my question is: What exactly do they want to be held accountable for?  A teacher should be evaluated on how well they are able to engage a body of students – and more importantly – how well they are able to instill a certain level of knowledge within them; with the chief emphasis being on retention of knowledge.  Compensation should be directly tied to that design, just as it is for the rest of us workers.  For example, a plumber wouldn’t keep his job very long if he couldn’t snake a simple drain.  Yet, all he would have to do is join a union that says his performance cannot be directly tied to whether or not he keeps his job and then all his problems would be solved – he wouldn’t have a care in the world.  But customers would certainly be upset, for they would all be stuck with clogged pipes due to ineptitude.  The same scenario applies to this teacher fiasco.  Parents are sending their children off to school and yet when the student comes home after a day’s worth of schooling, nothing has been learned or retained.  “Karen Lewis, president of the Chicago Teachers Union, has objected to any objective analysis of teacher performance despite the fact that just 15% of fourth-graders are proficient in reading and four of 10 CPS students do not graduate from high school.” Who’s to blame for this?  To me, it sounds like an incompetent teaching staff.  But apparently the competence of the teachers shouldn’t really matter.  These teachers must think school is just like day-care, all the way up until students reach the age of 18.  No matter whether the kids learn anything as long as I keep getting that paycheck – and whenever we feel like exploiting the taxpayer, we’ll just throw a strike and demand more money for a job not well done. 

This certainly doesn’t make any sense to me.  A city like Chicago cannot afford any unwarranted exploitation from an already greedy set of teachers.  Check this out: “John Tillman of the Illinois Policy Institute notes Chicago's unemployment rate is just under 11% and that the average Chicagoan makes just $30,203 compared with the average teacher's salary of $71,000, even before benefits are included.  And unlike parents who go to work each day to be judged on their productivity and who fear each day might be their last, dismissing a bad teacher is harder than spinning straw into gold.” What a joke.  And by the way, enough with tenure at the high school level.  I understand why University Professors gain tenure but why do high school teachers need (read: deserve) it?  Unless it is one of the honest, ethical teachers (and it doesn’t look like there are many in Chicago) all tenure does is grant already unaccountable and lazy teachers an extra cushion to abuse the time and knowledge of their students.  Enough already.  I say teachers should absolutely be directly tied to student performance because frankly I can’t think of anything else to judge them off of.  If your classroom of students are repeatedly getting low scores on standardized testing, then adios amigo! That seems to be a better plan than the alternative – which is giving the teacher a substantial raise.  

http://news.investors.com/ibd-editorials/091012-625257-chicago-teachers-union-goes-on-strike.htm

The Dependent Class

As the election inches ever closer both candidates, with any chance of winning this election, are put under a microscope and anything they say or do will be scrutinized by the opposing party. Recently a video of Republican Candidate Mitt Romney was released showing him speaking in front of a group saying "There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them." Here Romney is discussing the amount of people that depend on welfare, food stamps, government disability and similar programs. This has become the source of outrage in the media, but how far off the truth is the presidential hopeful?
As we have heard over and over in the campaign there are more people dependent on government than ever today, Obama has been given several nicknames including the "Food Stamp President." According to sources from Investor's Business Daily "A record 47 million Americans are on food stamps, a number that has risen exponentially under Obama" and "According to the Tax Policy Center, 46.4% of American filers pay "zero or negative" income tax. According to the Bureau of Labor Statistics, a record 88,921,000 Americans were "not in the labor force" in August. Only 63.5% of the civilian population participated in the labor force — lowest in 31 years." More and more people are becoming dependent on the government to aid their lives as a smaller portion of the population is paying taxes everyday. We have more people filing for food stamps everyday then those finding jobs.
When so many are dependent on so few we will inevitably see a concentration of money to a select few, and probably some form of economic collapse. So when Romney claims that he is not going to attempt to reach the 47% of the population that depends on the government for sustenance, he has good reason because they are likely to vote for the candidate that will keep these social programs going. If Romney's view really is to encourage small businesses and job creation he will have to appeal to the middle and higher class individuals as they are his best chance of becoming elected.

http://news.investors.com/ibd-editorials/091812-626150-romney-says-47-percent-dependent-on-government.htm
http://www.motherjones.com/politics/2012/09/secret-video-romney-private-fundraiser

Are we in the "Twilight Zone"?

  As we slump out of the current recession, are we stuck somewhere that anything can happen?
“It could go either way,” said Joachim Fels, chief economist at Morgan Stanley in London, who coined the description in an Aug. 15 report.  "It doesn't take much to tip us into a global recession.”  As the Fed embarks on to QE3 (Quantitative Easing Round 3), which is an unconventional monetary policy set in place to stimulate the national economy by having central banks buy financial assets with newly created money.
  “Central banks have steered us from recession, but on their own they can’t bring us into sustainable recovery,” Ben Bernanke said. “To get out of the twilight zone takes government action.” The Feds decided to purchase $40 billion a month in mortgage debt until the labor market improves.  So with the increase on money supply, how much of inflation will rise as well?  Ben Bernanke is confident about the economy and "modest inflation expectations".  
  Martin Feldstein said that QE2 led to a rise in the stock market, which contributed to increased consumption in the late 2010.  President of the Chicago Fed Charles Evans, supports this policy because Evans expects unemployment to fall around to 7% within the next two years.   Evans said the Fed should be willing to risk a little more inflation in order to help improve the labor market. The Fed should “not be resistant” to policies that lower unemployment closer to its longer-run level “but run the risk of inflation running only a few tenths above our 2 percent goal.”  
  But should the recent events of the past week, impede the work of the Fed.  With an expected increase in inflation and turmoil in the Middle East, the price of oil should rise as well as causing taxes to rise and Interest Rates to fall near zero.  The injection into the economy could cause a growth that is greatly need or a terrible out come that would send us into another recession or worse.  So are we in the "Twilight Zone"?





http://www.bloomberg.com/news/2012-09-17/global-economy-in-twilight-zone-as-stocks-suggest-growth.html
http://www.bloomberg.com/news/2012-09-18/fed-s-evans-says-qe3-will-make-economy-more-resilient.html
  

Christian Libertarianism

This nation’s legislative branch has a tendency to infringe
upon our rights to liberty. According to an article by Deirdre McCloskey, “A
big or small entrepreneur, encouraged by dignity and enabled by liberty,
alertly notices an opportunity and takes it. (p. 6)” This is the mechanism by
which we prosper.
The dignity of the entrepreneur is being threatened.
Consider Occupy Wall Street. Among many vague and untenable claims, those who
‘occupy’ are protesting economic inequality. Rather than viewing entrepreneurs
as courageous and hopeful, the 99% is stripping those who successfully embark
on entrepreneurial endeavors of their dignity. The demands of those who occupy
include creating a maximum wage rate to limit inequality and an income tax
system which strips the wealthiest of their earnings.
Rich Lowry wrote an article claiming that even the president
is denying the successful entrepreneur his or her dignity. “Income inequality,
[Obama] he said, ‘gives lie to the promise that’s at the very heart of America.”
However, why would the fact that one person’s income is greater than the income
of another prevent the lower earning individual from earning more? The comments
on Lowry’s articles belie a common theme among the citizens of this country who
are bringing back the ‘evil capitalist’ mentality.
Not only is the dignity of the entrepreneur under attack,
but the liberty of the citizens of this country is being slowly eroded.
Recently, the Senate approved a $662 billion bill which removes the right to
trial for US citizens deemed a terror threat. We are slowly but surely losing
our liberty. The government to whom we granted to right to use force and
coercion is running with it.
Some people think that socialism can be advocated for on the
basis that it’s more commensurable with Christianity than is capitalism.
However, in an article by Steven Gill which provides an analysis of C. S. Lewis’s
political views, he argues that liberty is a fundamentally Christian
ideal. “In short, Lewis suspected that
populist demands for unchecked political freedom and absolute equality
originate from human pride and jealousy.”
Consider OWS: Are they just jealous of those who make more
money? Do they believe that they are entitled to whatever the wealthiest have
regardless of their worth ethic or natural abilities?
Consider the recent legislation passed: Does our rampant
fear of terrorism actually belie a belief in the superiority of the United
States?

That which waits ahead...

This is an unconventional blog, but I am hoping to make it relevant. The article I read is all about how companies are less willing to hire new graduates because of the lack of new creative ideas and because they are less tolerant of the missteps that new graduates are bound to make. The article suggests that employers adjust and invest in training of these new graduates rather than turning them away. And I got to thinking, what would liberty say about this? While mostly liberty would say that if it is the companies preference to do so, then it should be able to(should be used in the sense that there are all these pesky government regulations that might get in the way). But I was also thinking that while this could be a great risk for companies, this could create a great advantage for companies as well. Most people (myself included) graduate college with a lot of more or less non-specific knowledge. Sure we are taught the things with our majors and all those extra 'well-rounding classes' we need to take, but it is not like an apprenticeship, where we are taught the specifics of the industry that we are going into. This is nice because it allows flexibility when we do graduate but it leaves employers having to tie up the loose ends. However, if there was an actual training program for each company they wouldn't need to worry about it, they would simply tailor the student to what they needed and if at the end of the given training period the student did not work out, well at least they would find out sooner rather than later. This can also be an indicator of error, perhaps the schools are erroring and not properly educating their students. Either way this seems to me to be a big red arrow for some entrepreneur to come and fix it, or it is possible that this guy at the New York Times is full of crap but I guess I'll find out soon enough!

Slow Day for News...

Today I stumbled across the issue of the recent lift on the ban that prevented the use of federal funds to inspect facilities that slaughter horses. It turns out to be an interesting example of the effects of interventionism.

In 2006, the ban was placed and ended horse slaughter in the United States. All meat that crosses state lines must be inspected by the USDA. Because this inspection funding was banned, the horse meat market in the United States was forced to shut down.

It seems like this would be a great thing for horses. In the United States, horses are viewed as pets and as a symbol of the west. Slaughtering them for their meat is about the same as chopping up your dog and barbequing it. There is certainly no market for horse meat in the United States anyway. Why not just let them live happy lives and eliminate the possibility of being slaughtered to death.

Unfortunately, this ban did not stop the slaughter of horses and even led to horse abuse. Old horses are typically sold to slaughter houses. Since no American slaughter houses were available, they were sent out of the country to Mexico and Canada. The ban did not end the slaughter of horses. People will always find alternatives and other markets.

Also with the economic downturn, many people could no longer sustain the expensive livelihood of a horse. Because there were no slaughter houses available, many horse owners abandoned or failed to maintain enough food and veterinarian visits for their horses. Instead of just being killed, horses had to suffer for months or even years before they died. If anything, the ban created more problems. This ban that was meant to save horses only increased their suffering.

This example shows that government intervention creates more problems that it attempts to solve. The ban did not end horse slaughter. Instead slaughtering was simply outsourced to other countries or horses were abandoned and left to suffer.

In case you’re wondering, horse meat is considered a delicacy in Asia and Europe. It is also considered a good source of protein for zoo animals. There is no market for horse meats in the United States so don’t worry about being force fed horse burgers because of the lift on the ban. Your chicken nuggets and Taco Bell meals are horse free!

On Healthcare

To begin, it might be worthwhile for readers to check out the article that inspired my thoughts this time around (it should be linked above, but just in case: http://www.hslda.org/hs/state/mi/201111290.asp).

What bothers me the most about the abuse that health care professionals are able to practice is that they are only able to carry it out because of the trust they receive from society and the support that they receive from the State. The United States of America is fortunate enough to enjoy the benefits of a health system that more or less operates autonomously from State control...relatively speaking.

It still puts up with Medicare/Medicaid.
It has the Food & Drug Administration to deal with.
There's a good chance private insurance will be a thing of the past if our Hopeful Leader has anything to say about it.

What could possibly go wrong? Except the violations of human rights that you see every day in countries where decisions about patient care are taken out of the hands of patients and put into the hands of members of an establishment.

Doctors in the Netherlands exercise euthanasia without explicit patient permission.
Special boards in the United Kingdom use the following calculation to determine who receives treatment: #of productive taxpaying years remaining - cost of treatment = X, where X must be a positive amount in order for the patient to be treated.
Children receive dangerous treatments without a reasonable risk assessment in Michigan because the doctor is inflexible in "this type of case".

My only hope if State control of health care in the U.S. increases is that if I ever need serious medical treatment I might be able to afford a Carnival Cruise to the Bahamas where an Ivy League graduate will perform my surgery using recycled scalpels that a good autoclave sterilized but were still deemed "unusable" in the nation of my birth because of a government regulation. And maybe my transplanted kidney came from a person suffering from poverty in Guatemala. My life is on the line, and the decisions foisted on me by a controlling State leave me with fewer options, fewer chances to exercise survival in a way that is consistent with liberty.

How is the State's control of medical care supposed to help anyone prosper if it enforces its opinions on what life, particularly the life of its slaves, are worth? In ancient Rome many slaves enjoyed practical autonomy from their masters, even being serviced by other slaves because they were so valuable to their masters through their intelligence or productivity...yet in the end, when they became sick, or old, or an accident befell them, the common practice of a Slave master was to end his liability.

I am not a liability, nor is any person who is willing to put their self on the line and say "I am a person, not your property."

Economics: Brain Drain, Brain Gain and Brain Circulation

For economic growth a company or a country as whole need human capital. More importantly, skilled workers are engines of the innovation that allows a company or a country to stay competitive; not only nationally but also internationally. A couple days ago I was reading news on the internet and I came across an interesting topic in one of UK newspapers Telegraph. The story was by Rebecca Smith “African Countries Losing Doctors in the “Brain Drain.” Building on thought of freedom of movement and pursuit of happiness the topic raised many questions in mind that enticed me to read further. In my readings, I found that not only there is a brain drain, but also “brain gain, brain circulation. The question is what does this mean on economic perspectives.  In his book:  “Naked Economics, Undressing the Dismall Science, Charles Wheelan wrote: “Human capital is the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a baseball fast.” (Wheelan 127).

It should be noted that no matter how developed a country’s economy is, there is always a shortage of skilled workers in various fields such as medical, engineering, management - just to name few and this is a shared burden across the world but dynamics are of course different. Talking about professional migrants from developing nations such as those from Africa or Asia, they do so for various reasons.  Some decide to leave their home countries to the west in the hope that they will get a better life, better job and better prospect. According to Dr. Harley Balzer, Associate Professor of Government and International Affairs at Georgetown University - audio presentation at the Center for Strategic and International Studies of April 14 2010, “People migrate to other countries in response to economic conditions and try to maximize their options.” He continued saying that there is an estimate of 35-40 million Chinese who live abroad and this exodus started in 1978 (not all of them are skilled professionals).

 Hence, while the migration of skilled human capital is still debatable on who benefits and who loses, some would argue that people have the right to move and live wherever they want (when applicable). However, when it comes to brain and drain, Ms. Smith asserts: “In total the nine sub-Saharan countries in the study lost the equivalent of $2billion as doctors left the continent to work overseas while the UK benefited by the equivalent of $2.7billion and America benefited by $846million.” Also, the brain drain might be true when you read the following segment of the World Bank report on Sierra Leone  on the htt://irinnews.org/report.aspx?reportid=82755 :  “In Sierra Leone, for a population of more than five million there are 75 state medical doctors as of February 2009, according to the Ministry of Health.”

Clearly, losers are countries where skilled professionals are coming from. First, in many circumstances political unrest, civil wars and poor governance do not give much of options to skilled human capital other than leaving their home countries. In quoting Mr. Gary Becker speech, Wheelan, wrote: “While all forms of capital-physical capital, such as machinery and plants, financial capital, and human capital- are important, human capital is the most important. Indeed, in modern economy, human capital is by far the most important form of capital in creating wealth and growth” (Wheelan 134).

Conversely, the brain circulation also exists. For example some people may go back to their countries after studying in developed countries. Dr. Balzer contended that a good fraction of some Chinese who studied abroad return back to their countries to apply acquired knowledge.  In this light, China and India have recognized the importance of investing in human capital by putting more focus and effort in education. According to Uttara Dukkipati, “The growth of China’s higher education sector provides a good example of how private investment can be used to improve the status quo.” He added saying that “According to Venture Intelligence, in 2000, the Chinese tertiary enrollment ratio was 6 percent and the regulation on for-profit participation in higher education was murky. In 2002, the government issued a law permitting for-profit participation in the higher education sector. China’s higher education enrollment increased from 14.7 million students in 2002 to 23 million by 2006.”

The aforesaid examples indicate that there is a striking correlation between a country’s level of human capital and its economic well-being. As long as the unrest, poor governance, lame economic growth and political instability continue, people will always try to maximize their options and try to respond to their economic conditions.

http://csis.org/files/publication/sam_141.pdf

http://www.telegraph.co.uk/health/healthnews/8912781/African-countries-losing-doctors-in-brain-drain.html

Who is to save Europe, German Chancellor Angela Merkel and President Nicolas Sarkozy of France, China or the US?

As the world continue going global whatever affects one country will certainly affect neighboring countries or even across the continents. This is true nowadays when you look at both political and economic spectrums. Building on ideas “What is the role of government in people’s life” I think that we as people across the globe gave too much power to governments. Be in capitalist or socialist (not to mention communism) countries people relied on their governments. People trust in governments and its institutions to do the right job for its citizens as well as to the country. However, what is still unknown to many is that from economic stand point, governments are different from businesses so, they are or should be run differently. As an example, a businessman will carefully count every penny that comes in or goes out on cash-flow while the government institutions manage public funds (tax payers). Also, most politicians tend to follow their own interest rather than working or championing for the welfare of people they represent. This phenomenon happened globally so the sentiment of angry citizens is spread all over. Yet, people continue to rely on government to take measures in tackling the inequality, poverty and financial problems. One thing to recognize is that to have gone global, losers and winners were created. As matter of fact, some countries are more advanced than others in intellectually, economically, politically, just to name few.

In this light, it is hard to know who would like to help Europe recover from its pressing financial crisis as all countries are on the edge. After all Robert Heinlein said it. “There ain't no such thing as a free lunch.” Therefore, building on what the president of World Bank Robert Zoellick said China may intervene in Eurozone financial crisis http://www.thisdaylive.com/articles/eurozone-seeks-bailout-funds-from-china/101540/. In fact, it is in China’s interest to help Eurozone because China has a significant investment in various European countries. For instance,
Alessandro Antonelli, an economist, John Cabot University reckons that China will be interested to buy European government bonds. During an interview on Reuters, he added saying that China will buy assets in those European suffering countries (Portugal about 10 billion dollars, Greece about 9.5 billion dollars etc). It is important to mention also that German’s export sector would benefit from the existence of Europe.

In the meantime, another important and crucial issue the Eurozone may be facing is how member countries have historical, political and socio-economical divergences. This may be a factor that some European countries tend to act behind the curve in dealing with common currency. According to Antonelli, there is also a credibility issues among Europeans. He gave an example in which top German politicians would say one thing today and a different one tomorrow. This may be true in the same footstep when German Chancellor Merkel was quote by Reuters addressing the Polish audience six months ago that “If the euro fails, then Europe and the idea of European Union will fail.” Next, Cimbalo on asserts that the Polish had the desire to join the EU but now those ambitions were set back given what is happening in current EU members. http://www.huffingtonpost.ca/jeff-cimbalo/euro-crisis_b_1086194.html

Nevertheless, what the US would like to do about the pressing European financial crisis? Given the controversy in this matter, people will give opposing views. If my memory can recall correctly, in the last televised republican presidential debate in Michigan some days ago, Herman Cain and Mitt Romney and others said that US should not intervene to rescue EU. I found their position as detriment especially when we continue to rely on (them) politicians. First, reading the report by James K. Jackson of February 1 2011 I found that Europe holds $2 trillions of US investment (about 70% of US investment abroad). http://www.fas.org/sgp/crs/misc/RS21118.pdf. in any case, US as global economic player should wary some. When a neighbor’s house is burning you cannot sit dull. You do something.

The Best Party

If the ideal government is one which is thoroughly prevented
from using its force and coercion to accomplish anything other than protecting
our property rights, what would this look like? Surely this government would look
vastly different from the one we are currently subjected to. Due to a personal
view that anyone in power should not be in power because they want to be in power
and thereby gain the prestige riches and power that go along with it (Plato); I
can’t help but think that a government which countenances libertarian values is
inherently impossible. If I reason correctly, then this is a tragedy, and all
we have left to do is fight the government tooth and nail for every right it
tries to take away from us.
What if I don’t reason correctly? What if it is a possible
to elect the type of government or government official who has identified
problems with the status quo, is capable of stringing together coherent
sentences which relate his views to the masses, has surrounded himself with
loyal friends rather than plundering politicians, and is in no way interested
in the prestige surrounding political office but just wants to get in, fix some
stuff, and get out?
Consider Iceland. The situation which I will eventually claim
is analogous to what a free market government would potentially look like is
not truly analogous. The United States has a population of roughly 300 million
people. Reykjavik, Iceland has a population of about 120,000. The Unites States
no doubt has a wider spread of viewpoints, a larger government, more money,
more power, and more to lose (Iceland declared bankruptcy in 2008). It seems
unlikely that the situation which has occurred there would ever occur here.
Jon Gnarr and his party, The Best Party, won the 2010
election for mayor of Reykjavik. This city is home to more than a third of the
country. Among the issues on his campaign platform included promising polar
bears in the zoo, free towels in public pools, and Disneyland in the airport.
To those watching the campaign progress, it appeared to be a joke; Gnarr is a
well-known comedian and musician in Iceland. Then he won and the joke became a
reality.
Under the surface of the comedic campaign videos slogans and
promises which he prefaced with the claim that many would not actually be
fulfilled (as he said, he’s a politician after all) was a disgruntled citizen.
In the aftermath of the 2008 bankruptcy he is quoted as finding himself in a
moral dilemma; it seemed he owed money to Britain and the Dutch that he himself
did not spend so he decided to do something about it. It wasn’t a frantic grope
for power, but a desire to upend the corruption of those who were previously in
power which led him to make his election bid.
What is more is that behind his promises which seem
initially absurd, hid decent rationale. Bring the polar bears to the zoo, he
proclaimed, because many more had been swimming ashore due to ice caps melting
and instead of continuing to shoot them, his plan was to put them to good use. Gnarr
supported free towels in the public baths to draw in tourism; public baths
count as spas under European Union law only if they provide free towels.
Regardless of how good or bad these ideas are I suppose that
my main point is that Iceland had a man running for election who was not doing
it out of political prestige, he simply wanted to make changes. Gnarr was more
than willing to make fun of himself and the political process he was partaking
in. He was honest and effective and was surrounded by people he trusted and
upheld the same values. And Reykjavik voted for him. They realized that the
current system is flawed, and that it takes someone outside the system to
change it. What would happen in America if someone ran for president, or any
office for that matter, in the same honest and delightful manner?
Also, just for viewing pleasure, this is his campaign song
and video.
http://www.youtube.com/watch?v=xxBW4mPzv6E

Can a Tsunami Hit Politics not Economics in any Given Country?

Looking at what is happening around the world; one would argue that politics and economics are indeed intertwined. Therefore, when there is a fire in economy, politics will feel the heat. This may be true when you observe what is going in Eurozone. Greece, one of the European members was to be bailed out by Euro bank because it was almost on the edge of a financial precipice. Because of the flip flop, George Papandreou, the Greek prime-minister, calling - and then cancelling - a referendum on the bailout plan.  Papandreou is to resign because he was seen as incapable for assuring other European members that they will pay back.

Also, due to prevailing economic-political situation, Italy may be the next. Next, the politic and economic sphere in Greece pushed stocks around the world into the fresh shockwaves of doubts about the sustainability of the Eurozone.
Stacy Meichtry, in Wall Street Journal; quotes Girgio Napolitano, Italian president saying that Silvio Berlusconi, Italian prime-minister is to resign and a new national unity government is to be formed in order to tackle and overhaul Italy’s economy and take immediate steps to reduce its 1.9 trillion euro debt.

US politics is not safe when it comes to the influence on politics and economics vice versa. According to Daniel Eisenberg, University of Michigan and Jonathan Ketchan, University of Southern California contended in their article “Economic Voting in the US Presidential Elections: Who Blames Whom for What”  in which they presented  four evidences that influence voters namely:

 1) Which is more important for determining people’s votes, national or local economic conditions?

2) What time frame do people consider in economic voting?

3) Which demographic groups are most sensitive to the economy in their voting behavior?

4) How does economic voting depend on the political context—in particular, whether a candidate is running for re-election, and whether the incumbent party also controls Congress?

To sum up, their findings showed how economic conditions influence greatly voter’s decision.

Reference

http://www.bepress.com/cgi/viewcontent.cgi?article=1285&context=bejeap

http://online.wsj.com/article/SB10001424052970203804204577016213985874218.html?KEYWORDS=greek+debt

http://online.wsj.com/article/SB10001424052970204190704577025613250061628.html?KEYWORDS=italy

Oh, Ayn Rand...

So mostly this article has nothing to do with economics, but there is a small part that I have some problems with and thought I would dish them out here. So the article is about Ayn Rand's Objectivism (by the way my 'i' key is not workng so well, it is highly probable I will miss a couple), and guiding your life by such values. Apparently she wrote a book detailing out what she means by each of the 4 objectives, however I have not read it. A friend of mine sent me this site telling me how much she thought I would love this yadda yadda. One of the problems is that she doesn't know about my feelings on Ayn Rand, but when I did read this little abstract, I found myself thinking 'Gee, Ayn Rand should have taken an Economic Freedom course'. On the surface (or rather if these two paragraphs - numbers 3 and 4 by the way), it all sounds fine and dandy, but I stopped and reread it and thought oh boy. And here's why:

First she talks about how man must do things for himself, not for others, he must act in his own rational self-interest. But this implies very little human connection. It may not be in your self-interest to loan a family member money, but you do it for them out of love. (And if this blog was about more than just economics I would go into, what is life without love?). It also implies that people know all the things they need to know in order to make 'rational' decisions, as we have discussed many times in class, this is simply not true. People do not get to have all of the facts they need when making decisions.

She also talks about how the only way to have growth in a society is by banning physical force. That is all fine and dandy (even though it is likely that we have less growth now, we still do have growth, and physical force). But, I take issue that is specfically says physical force, and then she goes on to talk about how persuasion is necessary to organize human activity. The government does not hold a gun to my head and force me to pay my taxes in that manner, but rather they force me by using persuasion that paying my taxes is better than going to jail. Also, necessary for the organization of human activity, what? I don't necessarily have anything to combat this with, but mostly because I don't understand. Perhaps we have different definitions of persuasion, and this is where these problems really lie. Persuasion to me has always had a negative connotation, people don't try to persuade you into doing things that you want to do, it is usually not a good thing. In what I have read she basically replaces 'entrepreneur' with 'persuasion' which doesn't work very well or make much sense.

Another claim she makes is quite funny, she says that capitalism is the only system which bars physical force. Ayn, did you do your homework?

She also makes a point to talk about using capitalism in order to achieve the highest moral principles of man's life. I pretty instantly get nervous whenever the word 'moral' comes into any discussion of economics. While I can hope that she simply means that the purpose of a man's life should not be to murder every person he ever sees and what not, it is still ambigous and makes me become skittish.

One last issue, Ayn rather quickly says that the state and economics should be separated, "in the same way" that the state and the church are separated. So they should be only kind of/sort of separated is what you're saying?

Maybe one day when I'm not devoting all of my time to work, school and my dog I will read this (though not very likely, I'm not an Ayn Rand fan), and I will think 'gosh how silly of me to have bashed this in such a way, this philosophy is in fact the greatest thing I've ever heard of!' in which case I will log back onto this blog (if I can) and announce my apologies, but I wouldn't hold my breath on that one. And upon reading a comment on my last blog, perhaps I should bite my tongue on my opinions that differ from these hot-shots, for Ayn Rand might come back from the grave and challenge these views I have presented in this blog.

Guy Fawkes

"Remember, remember, the fifth of November, the gunpowder treason and plot."

Today is the four-hundred and sixth anniversary of a failed attempt by English Catholics to destroy the English Parliament. Made popular in recent years by the movie "V for Vendetta", today is heralded as a day of remembrance for "fairness, justice, and freedom" as "more than words, but perspectives."

The problem that I have with this is how utterly skewed this perspective is. In the perspective of today, Guy Fawkes bears a striking resemblance to Islamist terrorists, a fanatic who attempted to impose his minority will on the greater populace through an act of gross violence: the murder of most of a somewhat representative government...well, not really.

For the government of England was hardly better than the beliefs that Fawkes supported. Neither the English Parliament nor the Catholic autocracy represented by the influence of the Pope believed in "fairness, justice, and freedom." The main criticism of "the Church" throughout history has always been for its behaving too much like the State.

All too often the State seeks to control the influence that "true faith" holds over a populace. It need only find something it can control and that people can wish to believe. The popular wish is that humanity is somehow capable of achieving utopia if left to its own devices. The main problem with such a wish is the decision our professor spoke of in class. Each person must constantly choose to either give of themselves in order to please others or to use force in order to compel others to please them. It appears far simpler for those who possess great force to use compulsion, and humanity prefers simplicity.

Guy Fawkes chose the latter because the people who led his "true faith" were proponents of the Church acting like the State. If there is anything to be learned about "fairness, justice, and freedom" from Guy Fawkes, it is simply that he supported none of them, for the State is so often the thief of liberty, rather than its enabler.

Perhaps you should occupy your free time instead...

I’m surprised to find, in a blog dedicated to one of the more politically charged classes on campus, that no one yet has mentioned Occupy Wall Street. Media coverage of this movement is spreading as quickly as the gathering of demonstrators themselves. Everyone from Fox News, the BBC, National Public Radio, and all those in between have has put out extensive new coverage on the protests since they began in September. However, any well-defined explanation as to the purpose of their assembly is hard to find. Even for me, I had very little specific information other than the fact that their numbers were, and still are, rapidly growing. Herein lies my issue and the purpose of this blog—why assemble if not for common purpose? I beg the question, then, that If the purpose of peaceful assembly is to combine the voice of individuals to form a group in the effort to achieve a common goal, then what are they really doing? I offer a possible theory as to the real aim of this movement, as well as some basic facts about their purpose, in case anyone else finds that they are as confused as I am.

Unfortunately, however, it seems that there is so little commonality amongst the various off-shoots of Occupy Wall Street that almost no information about the movement is to be found from scholarly sources. The Economist magazine seems to agree about the cluttered nature of the protests: “Some want to tax the rich, others to decertify business schools. Hostile references to Wal-Mart and Starbucks outnumber those to any Wall Street firms.”(2011). It would be easy to simply say that Occupy Wall Street unanimously operates under the slogan, We Are the 99%. ‘But of course! They are protesting the widening gap in wealth between the infinitesimal minority of the super-rich and the growing number of those who live in poverty!’ However, it would be just as easy to claim that they are protesting government corruption being fed by corporate lobbyists, as indicated on the Occupy Wall Street website: “Our nation, our species and our world are in crisis. The US has an important role to play in the solution, but we can no longer afford to let corporate greed and corrupt politics set the policies of our nation.” The problem is that these protests are directed toward both issues, and even more still. Occupy Wall Street, while possibly having had a common end in mind in the very beginning, has grown into a network of increasingly smaller and dissimilar movements, each of which has their own reason for protesting.

As Mises would say, they have become special interest groups, each lobbying for the realignment of law in their favor. Because Occupy has fallen into this category, the strength of its movement becomes immediately less credible: “On the one hand, they are obliged to rely on only a small group, because privileges cease to be privileges when they are granted to the majority; but, on the other hand, it is only in their guise as the champions and representatives of the majority that they have any prospect of realizing their demands.” (Mises, 169). The very use of the 99% slogan indicates this behavior. They are referring to their cause as being an issue that affects the majority of the country, rather than the minority only, or the group with the special interest in mind. Ignoring the fact that the original reason for their protest is based in factual misdirection, the very method of their protest now bears no efficacy in their fight for the changing of the law.

Their methods are firmly set and are being followed by an increasing number of people every day. Whatever their goals are, I would not quickly assume that the Occupy Wall Street movement would die out before seeing those goals fulfilled, even in part. That’s what scares me; if their goals are not all similar, how can they all possibly be achieved? Let’s assume for a moment that the entirety of the Occupy movement in the United States had in mind only three goals whose accomplishment would end the need for their protest, those are ending government corruption, removing the power of corporations to create corruption within the government, and shortening the income gap between the wealthy and the poor. How would those goals be accomplished? The answers to the first two are easy, and can be accomplished through the reinstatement of policies that are more consistent with liberty. Particularly, this means the removal from law any policy that grants special privilege to any particular group. However, the answer to the inequality of wealth is non-existent. In any economy that adheres even loosely to the principles of free exchange and private property there will be inequality, and for good reason. Even Mr. Rockwell would agree: “In fact, that 1 percent includes some of the smartest, most innovative people in the country — the people who invent, market, and distribute material blessings to the whole population. They also own the capital that sustains productivity and growth.” (Rockwell Jr., 2011).

Whether or not it is Wall Street or Pennsylvania Avenue that is being occupied, the reason for the occupation must be consistent amongst all of its members. In the same way that I cannot simultaneously protest for lower tuition rates and wider availability of quality education, Occupy Wall Street cannot simultaneously protest for a multitude of different issues. With that being said, I invite the occupiers to protest randomly to their hearts’ content, while I sit back and watch the real issues unfold unchallenged by any serious-minded intellectuals.

Works Cited:
Not quite together. (Cover story). (2011). Economist, 400(8756), 73-75.

Von Mises, L. (2002). Liberalism: In the classical tradition. (3rd ed.). Irvington-on-Hudson: The Foundation for Economic Education, Inc. Retrieved from http://mises.org/books/liberalism.pdf

Rockwell Jr., L. H. (2011, October 24). The state is the 1 percent. Retrieved from http://mises.org/daily/5776/The-State-Is-the-1-Percent

The Latest Teen Craze and Economic Freedom

The Hunger Games series has teen cult-like following similar to that of Twilight and Harry Potter. Naturally, I absolutely had to read it. After such a popular following in the books, the first of three movies comes out in March. Unfortunately, unlike both Harry Potter and Twilight, Robert Pattinson will not be starring. I finished the last of the three books a few weeks ago and I noticed a relationship between the world of the Hunger Games and many ideas of economic freedom.

It takes place in the future in a country called Panem, which is post-apocalyptic North America. Twelve districts are lead by the Capital, a socialistic government that maintains control over its people by a violent police force called the Peacekeepers, control of all resources, and the yearly Hunger Games. In this event, children from the ages of 12 to 18 are chosen from each district in a raffle to compete against each other. A theatrical, but deadly arena is built for the players each year and it is televised just like a reality show. The last person alive is the winner. The Hunger Games is a tool for the government to maintain control over Panem. Acts of violence on these children foster a major fear of the government and quell any possibility of rebellion.

Government control of all factors of production creates scarcity. Consequently, starvation and poverty affect all of the twelve districts. One way to get more food is to add your name into the Hunger Games raffle again, increasing your odds of being chosen for the games. There is another way to get food or even liquor. A black market called “The Hob” exists in an old barn. The main character, Katniss Everdeen hunts in the surrounding forest and then sells or exchanges her game so that she can buy bread or other meat.

Even under an all powerful government, a market still forms. People want more than what the government provides in a socialistic government. The Peacekeepers (the government police) shop in The Hob. They like to buy soup made with strange meat, usually dogs or mice, from a creative cook name Greasy Sae. Haymitch, a notorious alcoholic, buys unlimited bottles of homemade alcohol here. When it’s burned down by the Capitol, Haymitch suffers withdrawals and has no other place to buy liquor. Government officials even have a weakness for products on the black market. Katniss sells strawberries to the mayor every week.

While this example is entirely fictional, it seems possible. It is possible for a nuclear war or major pollution to destroy most of the world. Throughout human history socialist governments have been formed and still exist today. The use of government force can always be manipulated and used to hurt its people. However, I appreciate the author’s choice to include a black market. People like markets. They allow consumers to be fully dependent on alcohol and eat weird dog meat soup or whatever their heart desires. It’s possible for a wide array of strange demands to be satisfied in a market.

The Noble Highwayman

"Of all tyrannies, a tyranny exercised for the good of its people may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end."
-C.S. Lewis

This particular quote draws our attention to the ethical side of liberty and makes no direct mention of economic freedom. However, I believe that its sentiment potentially captures what exactly it is about the government that so bothers the anarchists, and also occasionally irritates everyone whose government declares itself a protector of the arenas in which no one desires protection.

The next quote I will use is from The Ethics of Liberty by Rothbard. Rothbard’s claim is that there exists no way to structure government so that it will escape from certain allegations. Among these being that a government cannot possibly follow its own laws and creates a monopoly over things like the money supply, violence, and land/transportation using force and coercion. In chapter 22 Rothbard quotes a 19th century anarchist Lysander Spooner who points out that the way a government conducts its robberies is more ‘dastardly and shameful’ than that of a highwayman [a robber who conducted his robberies on the side of the highway up until the early 19th century]:

“[The highwayman] does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a ‘protector,’ and [to profess] that he takes men’s money against their will, merely to enable him to ‘protect’ those infatuated travelers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection.”
A further distinction, Spooner explains, between the highwayman and the government which ties in directly to the previous quote by C.S. Lewis is that:

“[The highwayman] does not persist in following you on the road, against your will; assuming to be your rightful ‘sovereign,’ on account of the ‘protection’ he affords you. He does not keep ‘protecting’ you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands.”

And so it is; the government-unlike the upstanding highwayman or robber baron-skulks behind a parade of promises and empty justifications, tirelessly working to improve the lives of its subjects-whether they like it or not.

Issue Avoided.

I stumbled upon this article while procrastinating of facebook a couple of weeks ago, and at first didn’t think of it for a blog until I read the comments. The article is about a girl who wore a shirt that said ‘Marriage is so Gay’ on it to her public school one day and was forced to change. She went to the news and explained she just wanted to show her support for the gay community. The ACLU got involved, and it became a big deal. Majority of the comments are people explaining how they think that being gay is the equivalent to being a child rapist, somewhere criticizing the school, some criticizing her parents, and other saying that they supported her but felt that the shirt was inappropriate for school.

It was these last kinds of comments that got me to thinking about economic freedom, and freedom of speech and such. Regardless of how you feel on the subject of gay marriage, the real question at hand here has to do with ‘freedom of speech’ or rather it even more so has to do with private property. Many people will say it is her right to wear that shirt because of free speech, other will say it is the right of the students to not be distracted.The question that came up a lot was where do you draw the line? The example used most frequently was what if she had worn a shirt that said ‘Marriage is so Christian’? These people who asked these kinds of questions will probably never realize that they were questioning the entire right to free speech. But as we established in class because there is nowhere to draw the line, the right to free speech is rubbish.

Instead of trying to figure out whether or not this young girl was within her rights to wear the shirt or not, why not just enforce property rights? If the school was privately owned, the owner gets to make the rules, and say yes you can wear that shirt to school or no, you can’t wear that shirt. If the girl and her parents don’t like it, they can go to another school, and the same extends for other students and parents.