Quotulatiousness

November 5, 2019

The three ways human beings can organize themselves

Filed under: Government, History, Liberty, USA — Tags: , , , , — Nicholas @ 03:00

In the latest Libertarian Enterprise, L. Neil Smith relates the time he took a week-long seminar with Robert LeFevre:

I already considered myself a libertarian — of the Randian variety — when I first met Bob in 1972, at a seminar he delivered in Wichita, Kansas, sponsored by the Love Box Company and the local 7-up bottlers. I spent five magical 8-hour days in a motel basement meeting room, with about forty other people, listening to Bob’s moral, historical, and economic observations. Nearly half a century later, I can still remember large swatches of them, virtually verbatim. Bob reminded me of Frank Morgan in The Wizard of Oz. I didn’t agree with everything the Wzard of Libz said and thought (most notably, Bob was a Gandhian pacifist, while anyone who knows me or my work will tell you that, I, decidedly am not.)

But it was Bob’s unique view of history that won me over and changed my life. There are only three ways, he said, for human beings to organize themselves: (A), one guy tells everybody what to do; (B), everybody tells everybody else what to do; and (C) nobody tells anybody what to do. The last, he insisted, is the very definition of libertarianism.

Inevitably, Bob was an advocate of (C), and so was I, once he had rid me of the cob-webs in my head and the myth of “limited government”, which, he pointed out, somehow never manages to stay limited. Option (A), he suggested, was the way that the world had turned for ten thousand years or longer.

(B) is supposed to be the be-all and end-all of sociopolitical arrangements. It encompasses various forms of collectivism, including socialism, fascism, and the most dangerous of all, democracy, under which you are encouraged to believe that you’re free, but your neighbors can vote to control your life and impoverish you any time they want. As Robert A, Heinlein (a friend of Bob’s) put it, “‘Vox populi, vox dei‘ usually means ‘How the hell did we get into this mess?'”

The violent transition to (B) in 1776 accomplished two important things. It may yet prove to be a pathway to real liberty (no, I’m not holding my breath). In terms of what I’ve written here, it also pissed off all the right people. It schmussed humble pie in the face of the insane King George III and the rest of his inbred, slithery, pampered ilk. And when British General Corwallis surrendered his sword to George Washington, the band (where the hell did that come from?) played a little ditty called “The World Turned Upside-down.”

Most of history since then, according to Bob, has been a series of attempts — the War Between the States, public schooling, World War I, the Federal Reserve banks and the income tax, World War II, the United Nations, communism’s rise in Europe and Asia, the overpopulation and Global Warming hoaxes, the Silicon Valley commisars, the socioeconomic war on the Productive Class — by the pre-Revolutionary elites (who all seem to be related to each other) to regain the power they once wielded over the rest of the human race.

Aside from what I’ve written in The Libertarian Enterprise about the political significance of gun ownership, if you want to see who’s really on what side, take a look at the war on cattle and red meat. For centuries, the aristocrat class have hunted, and they have dined lavishly on animal protein, while trying to forbid the peasantry — us deplorables — the same rights and forcing them to subsist on boiled turnips. There’s a good reason for this: meat is mind. If you remembver nothing else of what I’ve said here, remember that: meat is mind. It contains certain components that let you build a strong and efficient nervous system (look up myelin), creating uppity peons, the last thing any right-minded upper cruster wants.

For decades, these creepy, perverted parasites have been sneaking up on us, falsely calling themselves “Progressives”, hoping to reverse the American Revolution and everything it has meant to humanity. Since socialism was invented in the early 19th century by Pierre-Joseph Proudhon, they’ve made more and more of what they regard as “progress”. By the beginning of the 21st century, they thought their victory was inevitable — until it was rudely snatched out of their blood-soaked hands by those uppity meat-eating peasants, eventually led by Donald J. Trump. The patricians and their surrogates are the swamp Trump wants to drain.

November 3, 2019

Colby Cosh on the origins of carbon taxes

Filed under: Economics, Environment, Government — Tags: , , , , — Nicholas @ 05:00

In response to a column by Andrew Coyne in the National Post, Colby Cosh outlines the intellectual origins of carbon pricing:

As Andrew knows, the intellectual origins of carbon pricing are purely classical-liberal. Maybe you have to belong to our club to spot that he has carefully not called it an invention of the “left.” When I was an undergraduate, it was the unfashionable libertarian and Hayekian zanies, not the despondent post-Cold-War Marxists, who were preaching what would become mainstream environmental economics. The left has been slow rather than fast to accept the idea of putting a mere price on what they regard as an inherent evil.

British economist Arthur C. Pigou (1877-1959).
Photo via Wikimedia Commons.

All of the foundations of carbon pricing were developed by economists that the left, in all varieties, now regards as cartoonish modern-day demonoids. The gentle Arthur Pigou, who developed the concept of economic externalities and the idea of taxing them, might still pass muster. But Pigou’s reformer-reviser Ronald Coase is deeply suspect, having pioneered an amoral analysis of externalities that tackles social-cost problems like environmental pollution without assigning blame to, or even necessarily acting against, the polluters.

In his paragraph Andrew almost explicitly outlines the theory of the “double dividend” from replacing bad, economically distorting taxes (like the one we impose on incomes) with taxes laid directly on externalities like carbon. The double dividend is pure Gordon Tullock, who is now a hate figure on the left for his role in creating public choice economics.

You can see that this analysis gets pretty complicated in a hurry. The idea of carbon taxation isn’t really of the right or the left. The best term for it might be “neoliberal,” although some people think there is no useful place for that word. To the degree that the left has accepted carbon pricing, they have done so as a (perhaps mostly unwitting) compromise with otherwise abominable thinkers like Coase and Tullock. Total state command-and-control of the economy isn’t an option in today’s Western world, and since there’s a neo-Malthusian crisis in the atmosphere around us, we had better try to solve it without having to execute a global socialist revolution first.

But if instinctive suspicion of the state is a feature of the conservative mind, carbon pricing doesn’t solve the problem completely. Canadian carbon tax designs have been given redistributive features, which makes them more acceptable politically to people who aren’t instinctive or innate conservatives, but creates confusion and distaste for those who are. And to the degree conservatives are inclined to doubt that the state will cut other taxes to make carbon prices revenue-neutral, they have been partly justified, so far, by the history of Alberta and B.C. The “double dividend” is a good idea: can governments be trusted to actually let us collect it?

In a nutshell, that lack of trust is why I’m generally opposed to the federal carbon tax system, even though the idea of carbon taxes (when properly implemented) are far less distorting to the economy than the hodge-podge of taxes and regulations we have now.

Alberta and the Liberals

Filed under: Cancon, Economics, Government, Politics — Tags: , , , — Nicholas @ 03:00

Andrew Coyne summarizes the deep-seated anger in Alberta toward the federal Liberals … and the rest of Canada:

The point sometimes arrives in politics when a complex of different issues coalesce into one; when people stop listening to the arguments in favour of or against each, and instead allow their emotions to dictate a single response to the lot. We are at such a point in Alberta.

Pipelines, carbon taxes, equalization, the Canada Pension Plan — to which familiar litany we can now add the departure of Encana’s headquarters from Calgary — have become, not so much issues in themselves, but arguments in another, grander meta-controversy. All of the questions raised by each (is there a problem? if so, how is it to be solved? who pays? etc) have been pureed into a single narrative: of a Liberal government that is at best indifferent and at worst hostile to Alberta, whose re-election confirms the rest of Canada is as well.

There is, it should be said, some truth in this. Whether the Liberals have failed to win more than a handful of seats in Alberta in over a half a century because of their historic disdain for the province, or whether the causation runs the other way, the chicken is as malignant as the egg. There’s no doubt some people in some parts of the country would cheerfully shut down the oilsands tomorrow, nor is it impossible to detect a strain of anti-Albertanism in some of the rhetoric on the subject.

Albertans, for their part, are not just in a fight to defend their major industry today, but have been for decades. It is inconceivable, to take the most obvious example, that the National Energy Program, that vast attempt to expropriate Alberta’s oil wealth for the benefit of central-Canadian oil consumers, would have been visited upon either Ontario or Quebec, were the situations reversed.

October 30, 2019

Defending the work of Dr. Beeching

Filed under: Britain, Economics, Government, Railways — Tags: , , , , — Nicholas @ 09:20

Ever the contrarian, Tim Worstall responds to an article calling for the “Beeching Axe” cuts to the British passenger railway network in the 1960s to be reversed:

The British Railways Board’s publication The Reshaping of British Railways, Part 1: Report, Beeching’s first report, which famously recommended the closure of many uneconomic British railway lines. Many of the closures were implemented. This copy is displayed at the National Railway Museum in York beside a copy of the National Union of Railwaymen’s published response, The Mis-shaping of British Railways, Part 1: Retort.
Photo by RobertG via Wikimedia Commons.

For background, as the “Beeching Axe” is far less well-known today than it used to be, here’s Wikipedia’s introduction:

The Beeching cuts (also Beeching Axe) were a reduction of route network and restructuring of the railways in Great Britain, according to a plan outlined in two reports, The Reshaping of British Railways (1963) and The Development of the Major Railway Trunk Routes (1965), written by Dr Richard Beeching and published by the British Railways Board.

The first report identified 2,363 stations and 5,000 miles (8,000 km) of railway line for closure, 55% of stations and 30% of route miles, with an objective of stemming the large losses being incurred during a period of increasing competition from road transport and reducing the rail subsidies necessary to keep the network running; the second identified a small number of major routes for significant investment. The 1963 report also recommended some less well-publicised changes, including a switch to containerisation for rail freight.

Protests resulted in the saving of some stations and lines, but the majority were closed as planned, and Beeching’s name remains associated with the mass closure of railways and the loss of many local services in the period that followed. A few of these routes have since reopened; some short sections have been preserved as heritage railways, while others have been incorporated into the National Cycle Network or used for road schemes; others now are lost to construction, have reverted to farmland, or remain derelict.

Worstall says:

[Dr. Richard] Beeching is one of the most universally hated figures in British politics, yet I have no doubt that he was that rare creature, someone working for the state who actually got things about right.

What Dr Richard Beeching mostly did was a cold, analytical report into the railways and recommended cutting large chunks of it that no-one was using. This was done because the railways were losing a fortune every year. And he mostly got it right. He assumed that we would replace trains with buses, which isn’t a bad idea at all. […]

One of the reasons I think Beeching ended up more right than he thought was the arrival of the car. Yes, cars can be environmentally damaging, cause deaths and so forth. Personally, I lean towards the bus or train as a preference. But you can’t ignore the upsides of cars.

The biggest problems with trains are connection time, flexibility and that there’s no market in there. Rail is quite poor at doing their one job: getting a train from A to B. You’d think after 150 years, they’d have it going pretty good, but crew not turning up, signal failures, electrical failures, doors not closing properly. industrial action are not that rare. The problems are certainly more common than if you drive a Toyota Corolla on the motorway to work. Your driver will turn up (because it’s you), the doors will close, the car will run pretty much perfectly. You also have no connection time in that Corolla. You turn off one road straight onto another. You can also go when you please. Middle of the night, middle of the day.

Maps originally from Losing Track by Kerry Hamilton and Stephen Potter (1985), by way of Is Your Journey Really Necessary?, 2012-12-31.
https://isyourjourneyreallynecessary.wordpress.com/2012/12/31/nice-work-if-you-can-get-there/
Click map to enlarge.

October 25, 2019

Civil servants tend to be of the left … this should be no surprise to anyone

Filed under: Bureaucracy, Government, Politics, USA — Tags: , — Nicholas @ 03:00

Arthur Chrenkoff on the political tendencies of people who work for the government:

The western front of the United States Capitol.
Photo via Wikimedia Commons.

You could believe the whole “protect[ing] the interests… of the American people” shtick if after all this time and the incalculable amount of energy and effort expended on bringing down the President, all those patriotic public servants have been able to show something – anything – for it. So instead of disinterested paragons of civic virtue, it increasingly looks like the federal bureaucracy is full of hard core progressives and liberals who can’t stomach a non-Democrat usurper who doesn’t share their values, ideas and objectives.

It’s not a shocking revelation that public service is overwhelmingly staffed by left-of-centre people. Government work attracts the left the same way that private sector and military attract the right. The left believes in the power of government to affect change and implement its vision. Even the spooks are no different. A couple of years ago I wrote briefly about the myth that the intelligence community is a hive of shady right-wing types. In reality, the CIA – just like the Department of Education – has always been a liberal institution. That so many people believe that the intelligence community is some sort of a vast-right wing conspiracy instead of another part of the liberal establishment, is a testament to the narrative power of the far-left, for whom indeed anyone to the right of selves is right wing, including everyone from John F Kennedy to Hillary Clinton.

Most public servants can be professional enough to work under any government, even if they would clearly prefer that government to be of the left – forever. But others can’t stomach working for people whom they believe not merely wrong but positively evil. The honourable thing to do in such circumstances, of course, is to resign; if you can’t in good conscience work to implement policies you strenuously object to, you should make room for someone who can. But why quit your often lucrative job and watch from the sidelines as the country is in your opinion going to hell in a hand basket, when you can stay on and try to sabotage the government and save the world? Thus you can convince yourself you are protecting the people, even if in reality it’s the people who voted in your new, unsavoury masters. It’s easy if you try; like so many others in the recent past you can argue that the people did not in fact elect the government, which is therefore illegitimate, or you can default to the standard left-wing position that the people don’t know what’s good for them, so their democratic choice as expressed at the ballot box has no decisive meaning. We know what’s best for everyone, hence taking a different position is equated to “the war on… expertise”.

It’s an interesting, if of course also self-serving theory, that public servants don’t work for the government of the day, but for “the people”. As Cottle’s logic demonstrates, it gives you a licence to essentially do whatever you want instead of what your political bosses tell you. The problem, as I mentioned above, is that “the people” don’t vote for bureaucrats, they vote for their elected representatives, based on which policy program they like best – or hate least. Seeing that we – still – live in a democracy, the people are given the opportunity to judge their politicians every few years. If they consider that their interests have been negatively affected by the executive’s excesses, they will vote somebody else in. The problem is that the progressives only like the people if the people agree with them. By and large, however, the people can’t be trusted; like children or mentally handicapped they need someone – like the government, or if the government is in hostile hands, the public service – to look after them. It’s the unspoken technocratic mantra and it justifies the existence of an in loco parentis state, deep or otherwise.

October 18, 2019

Hong Kong

Filed under: Britain, China, Government, History, Liberty — Tags: , , , — Nicholas @ 05:00

David Warren on how Hong Kong got to be Hong Kong:

The motto of the resistance in Hong Kong is on my lips much lately, though often I am not applying it to Hong Kong. Nor am I not. I look at this “Oriental entrepôt” (as we used to say before political correctness), where once I lived for a couple of months, from a great and widening distance. The people there are quite another generation from that which I remember; of course they seem much younger. The idea of the inhabitants of Hong Kong nearly closing the city with demonstrations, week after week, was not formerly possible to imagine. But their enthusiasm for the personal freedom they once enjoyed (under the aegis of British imperialism and colonialism, descending from opium wars), hardly surprises me.

The British approach was finally, live and let live; but it had an administrative basis. From the 1950s, Hong Kong was an experiment. What would happen if they deregulated almost everything, and cut taxes to match? If they consciously de-politicized the colonial administration? If they shrank police functions to what was needed only to direct traffic, and defeat crime? The result was, as ever, unprecedented prosperity, but more: a people who forgot the habit even of kow-towing to men “dress’d in a little brief authority.”

People were transformed, from indifferent parts in a rusting machine, to free agents. (Unfortunately, in a broader view, prosperity also kills, as people use their freedom only for material gain, and a new jackboot state grows around the need to protect against the consequences.)

Hong Kong is a city now of seven million souls. It has, as it had, economic and social classes — plenty of them — yet the present “troubles” have nought to do with class. Opposition to the Communist government is as broad as it was in all ex-Soviet states, as we discovered when the Berlin Wall fell, and nearly discovered across China in the moment of Tiananmen. Rebellion, to start, is an urban phenomenon; it begins with a sudden collective sense that “we have the numbers.” The fear, upon which all tyrannical regimes depend, evaporates. What happens next is anyone’s guess, except, we can know the regime is doomed.

2019 Hong Kong anti-extradition law protest on 16 June, captured by Studio Incendo from Flickr.
Photo via Wikimedia Commons

October 6, 2019

Finally a reason to climb on the impeachment bandwagon

Filed under: Economics, Government, Humour, Politics, USA — Tags: , , , , — Nicholas @ 05:00

Andrew Heaton, in his latest newsletter, explains why he’s finally come down on the side of impeaching President Trump:

Okay, here’s the main thing I wanted to talk to you about: America is about to slap a TWENTY-FIVE PERCENT tariff on scotch. The underlying story involves the WTO and Airbus, but I think I can save everybody a lot of time by pointing out that our president is a mouthbreathing protectionist who’s too lazy to read Adam Smith’s wikipedia page.

Here are a few things to consider:

  • Tariffs are just taxes, designed to punish you for having the gall to buy something from a foreigner.
  • This will hurt Scottish distillers, and potentially price out distillers with low profit margins.
  • I might have to switch to wine on dates.
  • We have now spent more money needlessly bailing out farmers from a trade war with China than we did bailing out banks under Bush.
  • We’ve known about the idiocy of tariffs since The Wealth of Nations came out in 1776.
  • Trump, a man lacking an ideological core, for reasons which boggle the mind, seems to genuinely believe tariffs and protectionism are good things, as he has maintained since the 80s.

Chances are if you subscribe to this newsletter you’re not a teetotaler, but on the off chance you are, allow me to make a case against whisky taxes even if you are not personally apoplectic about a tax hike on Laphroaig. (A concoction personally invented by Almighty God. It’s like you’re drinking a campfire. Try it.)

There’s an old saying: when goods don’t cross borders, armies do. I concur with this. In fact my largest contribution to the field of economics (Nobel Prize forthcoming) is Heaton’s Peace Through International Mistresses Theory.

My groundbreaking idea is that we want to have an interconnected, global economy with lots of transnational trade, because businessmen will be less supportive of bombing cities their mistresses live in. When trade wars happen, international trade collapses, and suddenly businessmen are flying to Berlin and Paris a lot less. Pretty soon we’re firebombing Tokyo.

It would probably be more appropriate of me to dedicate my political analysis to the forthcoming Ukraine/Trump/Biden/Impeachment circus which will dominate our lives for the next few months. However in my case I don’t need to. The president has messed with my scotch. Now it’s personal. I’m all in.

Impeach the guy.

#FreeTrade

You can subscribe to Andrew’s email newsletter here.

October 4, 2019

Foreign aid now an issue in the federal election

Filed under: Cancon, Government, Politics — Tags: , , — Nicholas @ 03:00

The Milk Dud actually said something worthwhile on the campaign trail the other day:

Andrew Scheer, paid tool of Big Dairy, chugs some milk during a Press Gallery speech in 2017. I’ve called him the “Milk Dud” ever since.
Screencapture from a CTV video uploaded to YouTube.

Andrew Scheer’s announcement that a Conservative government would cut foreign aid by 25% has been met with the usual wailing and gnashing of teeth by the out-of-touch elites.

Yet, it’s a policy that all Canadians can support because it will benefit all of us.

As I’ve said many times, the Canadian government is called “Canadian” for a reason.

It exists to serve the Canadian People, not to serve foreign, often corrupt, countries.

When we have such serious problems here at home, including a growing opioid epidemic, veterans who are homeless and struggling, and many Indigenous communities that lack access to good housing and even clean drinking water, then it’s obvious to everyone that we need to focus our resources here at home.

Personally, I would like to see all foreign aid (aside from disaster relief) eliminated and redirected towards Canadian citizens.

Still, the Conservative proposal has (along with earlier calls by the PPC to end all foreign aid) finally shifted the conversation around foreign aid, and will help wake up many Canadians to the reality that a large amount of our tax dollars are given away to foreign countries while Canadians here at home are suffering.

It’s appalling that the Canadian government sends money to foreign regimes (where the money is often appropriated by corrupt leaders and used for things very different than aiding the poor and destitute) while First Nations communities here in Canada still lack basic drinking water and sanitation facilities.

September 29, 2019

Being a dictator is a stressful vocation

Filed under: Books, China, Germany, Government, History, Italy, Russia — Tags: , , , , , , — Nicholas @ 03:00

Gustav Jönsson reviews a new book by Professor Frank Dikötter on twentieth-century dictators:

One of the first things to emerge from Professor Frank Dikötter’s eagerly awaited new book How to Be a Dictator is that it is a stressful vocation: there are rivals to assassinate, dissidents to silence, kickbacks to collect, and revolutions to suppress. Quite hard work. Even the most preeminent ones usually meet ignominious ends. Mussolini: summarily shot and strung upside down over a cheering crowd. Hitler: suicide and incineration. Ceausescu: executed outside a toilet block. Or consider the fate of Ethiopia’s Haile Selassie: rumoured to have been murdered on orders of his successor Mengistu Haile Mariam, he was buried underneath the latter’s office desk. Not the most alluring career trajectory, one might say.

Dikötter’s monograph is a study of twentieth century personality cults. He examines eight such cults: those created by Mussolini, Hitler, Stalin, Mao, Kim Il-sung, Duvalier, Ceausescu, and Mengistu. For them, cultism was not mere narcissism, it was what sustained their regimes; foregoing cultism, Dikötter argues, caused swift collapse. Consider Pol Pot and the Khmer Rouge. Cambodians were unsure of Pol Pot’s exact identity for years, even after he had assumed leadership of the country. The Khmer Rouge, meanwhile, was in its initial stages merely called “Angkar” — “The Organisation.” There was no inspiring iconography. There was no ritualised leader worship. There was only dark terror. Dikötter quotes historian Henri Locard: “Failing to induce adulation and submissiveness, the Angkar could only generate hatred.” The Khmer Rouge soon lost its grip on the country. Dikötter makes an obligatory reference: “Even Big Brother, in George Orwell’s 1984, had a face that stared out at people from every street corner.”

Readers of Orwell will remember that INGSOC has no state ideology. There is only what the Party says, which can change from hour to hour. Likewise, Dikötter argues, there was no ideological core to twentieth century dictatorships; there was only the whim of the dictator. Nazism, for example, was not a coherent creed. It contained antisemitism, nationalism, neo-paganism, etc., but its essence was captured in one of its slogans: The Führer is Always Right. That is what the creed amounted to. Indeed, the NSDAP referred to itself simply as “the Hitler movement.” Nazism was synonymous with Hitlerism. Italian Fascism was perhaps even more vacuous. The regime’s slogan was simple: Mussolini is Always Right. Explaining his method of politics, Mussolini said: “We do not believe in dogmatic programmes, in rigid schemes that should contain and defy the changing, uncertain, and complex reality.”

While it is uncontroversial to argue that Nazism and Fascism were without ideology, as Dikötter writes, the “issue is more complicated with communist regimes.” Naturally, Marxism was connected with Stalin, Mao, Ceausescu, Kim, and Mengistu. But Dikötter rightly says that it was Lenin’s revolutionary vanguard, not Marx’s philosophical works, that inspired them. Doctrines can be interpreted in contradictory ways, creating schismatic movements — as shown throughout the history of socialism. In this regard personality cults are far safer because they are substantively empty. Marxist dictators thus subverted Marxism. Engels had said that socialism in one country was impossible, but that is what Stalin’s Soviet Union favoured. Or consider Kim’s North Korea, which in 1972 replaced Marxism with Great Leader Thought. And as Dikötter writes, “Mao read Marx, but turned him on his head by making peasants rather than workers the spearhead of the revolution.” Reading Marx under Marxism, Dikötter says, was highly imprudent: “One was a Stalinist under Stalin, a Maoist under Mao, a Kimist under Kim.” In short, Marxism was whatever the dictator said, and not what Marx had actually written.

QotD: Crony capitalists and corrupt politicians love tariffs

Filed under: Business, Economics, Government, Politics, Quotations — Tags: , , , , , , — Nicholas @ 01:00

Any survey – and certainly any careful study – of the history and reality of tariff policy confirms that tariffs (and other trade restrictions) are almost always dispensed, not for any plausible public-interest reasons, but to satisfy the private interests of rent-seekers. Even if, contrary to fact, economic journals and textbooks were filled with several plausible scenarios under which trade restrictions can improve the economic well-being of home-country residents, the actual history of trade policy is that this policy is one in service to domestic plunderers.

Many who agree with me here will nevertheless scold me for using, à la Bastiat, the provocative word “plunderers.” But I stick to my choice of words.

“Plunderers” is descriptive, for plunder is in fact what trade restrictions are all about. For two and a half centuries now we proponents of free trade have played mostly on the rhetorical turf of protectionists. On this turf there are language biases galore, such as “trade deficit,” a lowering of home-country tariffs described as “concessions” to foreign countries, the arrival in the home country of especially low-priced imports condemned as “dumping,” and, indeed, the word “protection” itself. Also, don’t forget the constant, clanking parade of inapposite military and sports metaphors.

For two and a half centuries now we proponents of free trade have typically treated the efforts of rent-seekers and rent-dispensers to portray their use of the state to enrich themselves at the expense of others with intellectual and moral respect. Why?

No one attempts to intellectually rationalize the theft and violence committed by street gangs. No one attempts to rationalize shoplifting, vandalism, armed robbery, arson, or rape. (It would, do note, be child’s play for a competent economics graduate student to develop a coherent theory of “optimal gang violence” that shows that, under just the right set of circumstances, there is an “optimal” amount of gang violence that improves the national welfare.) We call these destructive exercises of theft, coercion, and violence “theft,” “coercion,” and “violence.” We call these predatory activities what they really are.

By calling protectionism what it really is – the plunder of the many by the politically powerful few – we more vividly and widely expose protectionism’s ugly and cruel reality.

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2019-08-04.

September 28, 2019

How the Federal Reserve Works: After the Great Recession

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 02:00

Marginal Revolution University
Published on 3 Apr 2018

In response to the Great Recession, the Federal Reserve has implemented some new instruments and policies – including quantitative easing, paying interest on reserves, and conducting repurchase (and reverse repurchase) agreements. In this video we cover how these tools work, and why they matter.

September 27, 2019

How the Federal Reserve Worked: Before the Great Recession

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Marginal Revolution University
Published on 13 Mar 2018

The Federal Reserve has massive influence over the United States and global economy. But how the Fed uses its tools to stimulate or shrink aggregate demand has changed since the Great Recession. We’ll start by covering how it was done prior to 2008.

September 26, 2019

QotD: Preventing “price gouging” is counter-productive in an emergency

Filed under: Business, Economics, Government, Quotations — Tags: , , , — Nicholas @ 01:00

During an emergency like a hurricane, many different categories of goods and services experience supply-demand shocks. The shock may be because of a fall in supply (e.g. oil companies can’t get gasoline into the area) or a spike in demand (e.g. for generators or plywood) or a combination of both. In a free market, prices will rise to help match supply and demand. Higher prices cause people with less valuable or more frivolous uses of the scarce goods to defer purchase, and can cause suppliers to expend extra effort to get product into the area, even diverting supplies from other areas.

When the government institutes price gouging laws in an emergency, the supply-demand mismatch that leads to the rising prices isn’t magically eliminated. First, without higher price incentives, all the incentives to get more supply into the area are lost. Supply and demand under these regulations can only be matched by rationing demand, and typically this is through queuing and increasing search costs (e.g. driving around all over the place looking for a station that is open and has gas). People who gain the limited supplies in this regime are thus those with a lot of time on their hands, where the marginal cost of queuing and driving around does not impose a lot of cost. Think about a roofer scrambling to repair roofs after the a storm — do they have time to have their trucks and crews sitting dormant in gas lines? Thus, price gouging laws tend to ensure that scarce goods in an emergency flow to those with the least use for them.

Warren Meyer, “Price Gouging Laws: Allocating Goods in An Emergency To People Who Have Nothing Much Valuable to Do”, Coyote Blog, 2017-08-26.

September 25, 2019

The Money Multiplier

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Marginal Revolution University
Published on 25 Jul 2017

When you deposit money into a bank, do you know what happens to it? It doesn’t simply sit there. Banks are actually allowed to loan out up to 90% of their deposits. For every $10 that you deposit, only $1 is required to stay put.

This practice is known as fractional reserve banking. Now, it’s fairly rare for a bank to only have 10% in reserves, and the number fluctuates. Since checkable deposits are part of the U.S. money supplies, fractional reserve banking, as you might have guessed, can have a big impact on these supplies.

This is where the money multiplier comes into play. The money multiplier itself is straightforward: it equals 1 divided by the reserve ratio. If reserves are at 10%, the minimum amount required by the Fed, then the money multiplier is 10. So if a bank has $1 million in checkable deposits, it has $10 million to work with for stuff like loans and reserves.

Now, typically, the money multiplier is more like 3, because banks can always hold more in reserves than the minimum 10%. When the money multiplier is higher, like during a boom, this gives the Fed more leverage to move M1 and M2 with a small change in reserves. But when the multiplier is lower, such as during a recession, the Fed has less leverage and must push harder to wield its indirect influence over M1 and M2.

Next up, we’ll take a closer look at how the Fed controls the money supply and how that has changed since the Great Recession.

QotD: Big government is not human

Filed under: Bureaucracy, Government, Quotations — Tags: , , — Nicholas @ 01:00

An email from a correspondent, who is not in Guam, reminds me to remind gentle reader of a truth I take for self-evident, but perhaps others don’t. We personalize the State. I do myself, when I refer to it as Big Brother, Big Sister, Twisted Nanny, &c. But this is a conceit. As anyone caught in the jaws of Big Shark should realize, it doesn’t think like a human. It thinks more like a mechanism. Of course, when the mechanism has selected one’s own person for food — I am thinking here of the Revenue Department, but government agencies are all much the same — little can be done. One might beg for mercy, but the thing is not designed to dispense mercy. That is not its function. Its function is to absorb protein.

Guvmint agents themselves — the cells and their switches — are task-oriented. Each signed off his right to make humane judgements when he took the job.

We used to have reactionary courts, to restrain the creature. Now we have progressive courts, to urge it on.

Among the foibles of democracy, is the notion that “the peeple” are somehow in control. The people, however, consist of persons, with their quite various moral flaws, which tend to cancel each other. They elect politicians for show. This helps them put a human face on the enterprise, so they have someone to blame at the electoral intervals. It is true that a government with a majority and a will can alter the course of history: usually by putting more sharks in the tank. And that the policy wonks are, arguably, human. But they are cells themselves, within Leviathan.

We live, I say from time to time, in an age of “total war” and “total peace.” The one condition resembles the other: a command economy, focused on results. We have, as it were, totalitarianism with a human face. It is a kind of smiley face, painted on the tip of the missile.

David Warren, “Notes from the sheepfold”, Essays in Idleness, 2017-08-11.

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