Thursday, September 30, 2010

Why We Don't Need Population Control

Population has become a subject of heated debate during the past few years. Proponents of the Reproductive Health (RH) bill argue that the Philippines is becoming overpopulated and that it is undermining the public welfare. Everybody will partake less of the economic pie because resources, especially land is fixed. Neighboring Asian countries have enacted population control measures and are doing better than the Philippines, so therefore, higher per capita GDP must be because of population control measures! And in the name of sustainable development, the Philippine government must enact population control measures here. The idea is that lower population equals more wealth, and more happiness!

There are many problems with this sort of thinking, but to start off, we must remember that per capita GDP describes an aggregate, and does not describe the distribution of income throughout society. A hypothetical country wherein 90% are poor but 10% are extremely rich would still yield high per capita figures. More importantly, a lower population does not imply that everybody gets a little bit more. Economic demand is not constituted solely by desire, but by desire plus purchasing power. An infinite desire to have a BMW does not mean infinite demand. Demand only exists where there is purchasing power accompanying desire. If the population of the Philippines were reduced by 1/3, the poor would not be any better financially. If we assume that the 1/3 that disappeared were part of the labor force, then society would be worse off because there would be less productivity. Division of labor is compromised making goods and services less available and more expensive.

The concept to grasp here is Say's Law, named after classical liberal economist Jean Baptiste Say. A farmers supply of wheat excess of what he consumes constitutes his demand for all other goods. You first need to produce in order to consume. A lower population means less productive labor, and hence less ability to consume.

On the individual level, the population of your country says nothing about the quality of life you can achieve. If you want to better your lot in life then you work, you take part in the division of labor. The more people take part in the division of labor, the more the specialization, and the more efficient wealth creation becomes for everybody.

The market system is not a zero-sum game. If you want to consume then you have to produce, you have to add to the economic pie. Prices determine what you must produce and what to consume. Prices of labor or wages guide people in getting jobs, as with prices for other items. The only thing government can do is impede this process and create more consumers than producers, as most Western welfare schemes, by subsidizing the unemployed. They have changed the rules of the game. For now you can earn an income and consume goods without working, ignoring the Biblical tenet "For even when we were with you, we gave you this rule: If a man will not work, he shall not eat."(2 Thessalonians 3:10)

It is vain to take the collectivistic approach and deal with charts and figures rather than real, living, changing economic agents at the ground level who are unique and make different choices. The government simply cannot look at population growth charts, compare them with population charts with other countries, and ex post facto come to a conclusion that will lead to the creation of another corrupt bureaucracy.

Empirical evidence does not warrant the claims of the population controllers. Hong Kong, Monaco, and Singapore are ranked in the top five in population density yet those three countries are also among the top ten in terms of per capita GDP. At the other end of the list, it is the poorest countries that have the lowest population density. Countries like Congo, Mozambique, Mali, and Zambia. It is important to note that just because less population does not equal more wealth for everybody, does not mean more population necessarily means more wealth for everybody. It is only when the productive worker or entrepreneur produces more than he consumes, or in the act of saving, that he can benefit society the most. The point is that in order to have high population numbers, there must be, or must have been a good workforce and capital goods enough to support it.

Poor Southeast Asian and Latin American countries have a large portion of their labor force in the agricultural sector where many working hands are needed. Large family sizes make good financial sense in the context of rural life. Children in rural areas are viewed as assets in the financial sense because they contribute to the family income at a young age. Urban families have less children because children are viewed as 'liabilities', their education and various other consumption items unavailable to rural children are expenses of the family. So contrary to the claims of the population controllers, having many children are actually good for rural families. And how could they not be? Rural folks do not mindlessly produce more children without weighing the costs and benefits. Families in the rural area are just as responsible as those in the cities. Or maybe the political establishment thinks differently?

The truth is that the poverty of the Filipino people have nothing to do with population. The Philippines is suffering because of the government interventionism hampering the market process and a majority that refuses to recognize and accept the inherent evil of state coercion.

Side notes:

If the goal is to reduce population numbers as such, then capital accumulation, particularly, machination and modernization of the agricultural sector is key. In the agricultural areas, the benefits of having children surpass the benefits of not having children. The solution is to reverse this. By making it unnecessary for agriculture to be labor intensive, labor will move to higher paying industrial and service-oriented sectors where children will not be needed on the fields and can be sent to school. And the only way this can happen is to get the government out of agriculture, out of fertilizer subsidies, import quotas and customs fees for agricultural commodities, out of the provision of irrigation, out of crop insurance, but that is another topic for another day.

I will be forever dumbfounded by the silly attitude of the political establishment in accusing lack of education for the alleged overpopulation of the country. This is typical leftist blame the victim mentality. For who, in fact is educating the masses of the people, the freakin' government is!

If you sincerely believe in reducing population growth for whatever reason, you can do it the moral way by spending your OWN money to buy condoms and distribute to people. Voting on other peoples' property just to serve an unfounded belief (look at sources) is wrong and is why the government can get away with a lot of horrible acts. Statism is just so easy to subscribe to. No down-payment required.


Friday, September 17, 2010

Jueteng, Rural Banks, Politics

The topic of the inquirer article in the link is about jueteng money being transacted by rural banks. According to Vicente Mendoza, Rural Bankers Association of the Philippines(RBAP) executive director,

“Rural banks are at the forefront of countryside development and it is not our desire to be used in jueteng activities. Rural Banks strictly comply with BSP [Bangko Sentral ng Pilipinas], PDIC [Philippine Deposit Insurance Corp.], and AMLA [Anti-Money Laundering Council] regulations,”

The first issue here is the ability of rural banks to help poor people in the countryside. Rural banks are mandated to offer financial services to those whom are not served by larger banks. Given this, it would make no sense to restrict the rural banks from having a larger pool of loanable funds. By not allowing jueteng money to be deposited in rural banks through the ‘anti-money laundering’ laws, development in the countryside is forestalled.

Secondly, there is really no rational basis for such ‘anti-money laundering’ laws to exist. Even taking the assumption that government has the right to stop gambling activities of its choosing, such laws will not help to stop jueteng operations. It will only create uncertainty for the subscribers of jueteng, mostly poor people, and might even empower the black market by creating a demand in it for the handling of such winnings. Then there’s the moral problem, for ‘anti-money laundering’ laws are a heinous attack on privacy. Giving the government the power to monitor commercial transactions means giving it the power to investigate your work and even your home. Such a loose framework for the state to work on opens so many opportunities for the predatory state to abuse its power.

Lastly, jueteng as a gambling activity is in no way fundamentally different from all other gambling activities, and its voluntary status makes it immoral for the government to control or abolish it. Regardless of personal reservations upon the matter, jueteng is beneficial to those who have voluntarily subscribed to it. To quote the great one Ludwig von Mises,

“Since nobody is in a position to substitute his own value judgments for those of the acting individual, it is vain to pass judgment on other people's aims and volitions. No man is qualified to declare what would make another man happier or less discontented.”

There are also unintended consequences in criminalizing jueteng. Like all other commodities or activities with high demand, a government ban on such activity would create a black market where violence is included in the medium of transaction. Barbarism is introduced and norms of practices of civil commerce like contracts, arbitration and knowledge sharing are removed. Government prohibitionism is a war against man’s ability to choose and since it undermines economic freedom, it is also a war against prosperity.

But then there’s the political dimension to all of this. The reason why jueteng will not be legalized, at least in the near future, is because the Philippine police and politically-connected rascals and mafia lords will not be able cartelize the profitable game. They get so much in bribes and in payoffs in keeping this game illegal and hence will fight to keep it illegal. It is no surprise that Noynoy is lenient on discussing the topic. This issue is just another reminder of the sad reality of politics and why nothing ever changes in government except when it is in the government’s interest.

Thursday, September 9, 2010

Obamacare Blowback

*Image taken from

*This article is also a reaction to the linked yahoo news article

This illustration indicates the rate increase attributable to Obamacare. However, we must not forget that rate increases not specifically attributable to Obamacare are the result of government hyper-regulation nonetheless.

First time I saw this article I told myself 'What do you expect!?!'. No rational and decent person would want to participate in a corrupt welfare scheme, which is really what this is, it has nothing to do with insurance. In fact, government has completely destroyed the idea of health insurance long before Obamacare was enacted. There can only be insurance where insurance companies can create groupings and sub-groupings of classes. In order to do this, they have to --- wait for it --- discriminate! Suppose insurance company X has a number of professional boxers and economists as clients. They would of course have to segregate the two groups. The professional boxer has to pay a higher insurance premium because his risk of injury is much higher than that of the economist, more importantly, he has to be pooled together with other boxers while the economist has to be pooled together with other economists. Putting the two groups in one pool will amount to a redistribution scheme as the economist has to pay a higher premium, subsidizing the boxers he is being pooled with.

A rule of thumb when it comes to insurance is that events under the control of individuals are not insurable. There is really no such thing as car insurance since the physical condition of a car falls under the responsibility of its owner. No insurance company would offer car insurance since they will incur losses because of clients taking advantage of car insurance. This rule is also the reason why so -called government 'unemployment insurance' creates more unemployment. The government has created, in the realm of health care, a scheme similar to having insurance on the loss of sales ---- it is that ludicrous!

Here are a few actual examples of what modern health insurance in America is like:

- insurance coverage for alcoholism
- insurance coverage for drug addiction
- insurance coverage for psychological problems
- insurance coverage for body transplants (liver and heart)
- insurance coverage for hair loss
- allocation of funds to sperm banking
- allocation of funds to social workers
- insurance companies cannot ask what lifestyle people lead
- no genetic tests

It is obvious that health care insurance in the United States even before Obamacare is really just a fraudulent redistribution scheme creating perverse incentives that will make a population less healthy and more degenerate. It is therefore no surprise why so many Americans do not have health insurance for the simple reason that they did not want to pay high premiums to subsidize sickness, recklessness and degeneracy and in the process creating more of such. It is proven that the main reason for Americans being 'uninsured' is this voluntary refusal. About one third of the 'uninsured' in America are illegal immigrants, who do not have the means to pay for hyper-regulated health coverage owing their poor beginnings.

Obamacare further destroys application of sound actuarial science and economic calculation by expanding the problems stated above. Unfortunately, the blowback from government intervention will only cause a ratchet effect, inducing more government intervention and controls in the health care industry.

Whereas it is cheaper and more rational for a person to just pay the penalty in the current version of Obamacare, I have a feeling that the US administration will try to abolish this option and create a full socialist health care system in the future.

Tuesday, September 7, 2010

Views on Libertarian Amoralism or Moral Non-cognitivism

Cyberspace is a deep ocean to explore. Even an ideology composed of a very small minority of politicos and young philosophers in the world like libertarianism can branch out into many subcategories if one is searches long enough. Looking through several forums and websites, I have found out ideological cousins of libertarianism that are quite weird and extreme even for the most hardcore Rothbardians in the Austro-libertarian tradition.

I label them as the moral non-cognitivists, the Stirnerites, the Nietzschans and post-Rothbardians. These individuals base their beliefs on the works of a diverse range of intellectual influences such as Anthony de Jasay, Max Stirner, Friedrich Nietzche, Edmund Burke, Micheal Oakeshott, Erik von Kuehnelt-Leddihn, Robert Nisbet, Ayn Rand and Ludwig von Mises. Some of them contend that Ludwig von Mises was a moral non-cognitivist at least in his economic work. That he strove to separate economics from morality and to create a value-free economics. That is why they adapt the same Misesian economics of the Austrian school. However, their ideology is not limited to pure economics and critical reason (in the traditional sense, that is deductive) but encompasses the cultural and sociobiological aspect of society.

Voluntarism is something heavily criticized because of its basis in natural rights. A liberal individualist order with private arbitration and defense agencies are fantasies because statism is firmly rooted in the sociobiology of man. Power relations, social hierarchy, and tribalistic urges are in favor of government. Voluntary membership into government is inefficient for everybody in the long run because of rigid norms and social convention. The basic contention is, government is a fact of civilization.

For the post-Rothbardians, voluntarism is based purely on deductive reasoning and economics and that the dynamics of society cannot be explained by solely by such means. Thus they employ the determinism of biology and psychology and are methodological collectivists. Voluntarism has a narrow view of the state in that it views the state mostly as a physically coercive institution which happens to be approved by the public. For them, morality is also a kind of statism in that it imposes certain obligations and duties. Moralists, according to them, are most likely to be statists and that there is a stark difference between an anarchist who reached the same conclusion because of morality and one who reached it because of utility maximizing calculation.

There are certainly a lot of things that can be said about these individuals and their philosophy but unfortunately I am limited in rhetorical ability to expound more about them from my research. Nonetheless I shall attempt to refute this grandiose and alien philosophy through the logical reasoning that they so dismiss as unsatisfactory.

First, arguing ethics with one who eschews ethics is useless as the purpose of ethics is dispute resolution. Trying to settle a dispute with one who does not want to settle a dispute is futile. Also, the fact that these moral non-cognitivists boisterously argue on various forums shows their performative contradiction. If some amoralist initiates an argument against me and I ignore him, if he then comes to me and expresses his indignation then he is really not an amoralist. It is interesting how argumentation ethics is dismissed as too much of a shortcut or philosophical gibberish by the usual critics but so useful against those intellectuals --- or wannabe intellectuals --- who dig deep into this mumbo jumbo.( Yet focusing on the ultra-abstract to the point of incomprehension is exactly how modern sociologists and can intellectually intimidate and strengthen the argument from authority -- which is a fallacy -- in promoting cultural marxism and social democracy)

Secondly, the amoralists are willing to reject the non-aggression principle on the basis that man has to be obedient and assimilate himself into civilization. Total independence and freedom of man would mean that the worst men have the freedom to be a nuisance to the social fabric so therefore, paternalistic violence is necessary. The amoralists do not realize that they are the ones violating this principle by accepting a position that is completely out of touch with social norms. I could well argue that amoralism is a nuisance to the social fabric and is pareto negative because it is very remote and alien to the common man.

Third, I would argue that moralism is sociobiological and that man has always had morality. Morality will always exist because it is 'psychologically economical'.

I don't really know what purpose these amoralists have in accepting and popularizing their position. I surmise that a moral non-cognitivist position is mere intellectual stimulation. I am perfectly contented to remain a 'statist' in the sense that I follow a moral code that helps me live my life and interact with other people.

Note: I do not think that one can combine disciplines of study such as sociobiology and economics to formulate a blueprint of social dynamics. That is the reason why the term methodological dualism was coined by Ludwig von Mises. By trying to combine, the subject in question seem to attempt to incorporate sociobiology and cultural notions into the ontological structure, in a sense adding a layer of determinism in their ideology. But philosopher and logician Kurt Godel asserted that any body of knowledge, even one such as mathematics, can never be perfect since they are ultimately a product of human fabrication. Even the postulates of mathematics are ultimately rooted in human experience and cognition. Similarly, Rothbard admitted that even a priori deductive laws of economics are ultimately experiential. Human action exists in a historical medium and is perceived in history. All scientific systems are like a Godelian trap, the question is, which is most effective in explaining society, or at least economic phenomena? I am ever more convinced of the strength of Misesian economics and Rothbard-Hoppe ethical theory.

Saturday, September 4, 2010

'Public' Intellectuals and the Calculation Problem Applied to Public Schools

The Alliance of Intellectuals and the State

Modern professional intellectuals in general, and especially those employed in tax-funded schools, are begotten to the state apparatus because it is the source of their income. Even in so-called private universities, the curricula are still determined by the state through various directives so that change and innovation are sacrificed. Your professors might not explicitly advocate left-statism, but indoctrination is never overt. Modern sociology for example, promotes a class division in society by slicing and dicing it into many warring factions. For them, there is always one class exploiting the other. Men are exploiting women, whites exploiting blacks, rich exploiting poor, Christians exploiting Muslims. In doing this they serve to perpetuate the class division that they sought to erase. A foremost Filipino historian once wrote that historians are, by default, marxists with a small ‘m’. Without a philosophy grounded in reality and knowledge in sound (Austrian) economics, historians tend to draw interpretations out of the air because they do not have the proper methodology to identify real cause-effect relationships. I am not saying their facts are wrong, but only the interpretation. In a free market, competition in the provision of education will promote change and improvement, intellectuals will have to keep up to new ideas lest their human capital go down, and hence their wages. In a free market, wages of intellectuals are determined just like wages for computer engineers and construction workers, on the basis of merit. In a statist school system, career success of intellectuals depends on how close you are to the state. Survival means you have to accept statist premises. Since justifying government depredations into our everyday life is easier than open debate and intellectual change, intellectuals naturally ally with the state.

Calculation Problem Applied to Tax-funded Education

Even if the government were filled with angels, government would still create shortages and dismal quality of services. The problem with government is not intellectual, it is not psychological, it is not the character of government officials, the problem with government is economic calculation.

Government can put children into classrooms, arrange a curricula, hire teachers, build school structures, fix number of hours for schooling, make students answers tests and read textbooks. All those the government can do. What the government cannot do is educate. Let me explain. First of all, today’s school curricula and teaching methods are decided on by the arbitrary whims of the bureaucrat. No matter how intelligent and experienced the bureaucrat is, he does not have an objective basis for his decision making. He can never know what tens of millions of unique Filipinos really want and need. How can tens of millions of Filipinos’ valuations be aggregated and be made useful? Only through the price mechanism. Price is the objective expression of countless peoples’ subjective valuations. The only way to make sure school curricula and teaching methods correspond to what skills Filipinos really need is through the market process itself. Free market education is superior to government education because free market education systems are coordinated by the price mechanism. This is opposed to education wherein FEW bureaucrats decide. The difference is between the knowledge of millions of education consumers and the knowledge of few pompous bureaucrats.

My Defense of Capitalism Against A Red

Let's start with the definition of free market. Free market just means a system wherein people voluntarily exchange their own goods in the absence of (state) coercion. For this to happen, there has to be acknowledged private property rights.

So from the above definition there cannot possibly be anything wrong with a free market because there is nothing wrong with voluntarily supplying and exchanging goods. In contrast to this natural social order of capitalism that needs no enforcement, socialism which is broadly defined by forced redistribution of property titles needs physical force of the state to succeed. This clearly violates natural law and therefore is immoral. The real problem is your view of the free market. You think it's about corporations exploiting laborers, ravaging the earth, and causing mass social inequality and poverty when in fact what we have is a neoliberal fascistic system.

Let's now go on to the monopoly problem. A firm gains profit and grows in a free market by giving value to the consumer. So if a firm grows very large, it just means it is successful in giving value to the consumer(and as a corollary employed lots of people and given high wages). So no one should really worry about corporate growth in a free market.

Monopolies by definition cannot exist in a free market because the free market by definition is characterized by free entry in the production of goods in addition to the fact that nobody is talented enough to have all the market share. Some anomalies to this are DeBeer and the New York Stock Exchange but the NYSE now takes government assistance. Monopolies can only exist because of government special privileges and corporate welfare and subsidies and most especially anti-trust laws. If you take a look at the anti-trust cases in America, it will be very clear to you that large firms are the ones that usually file them against their younger, smaller competitors. This is what creates a monopoly. US agribusiness like Monsanto receive 40% of their income through government subsidies. When you think about it and start from first principles and then integrate all the facts there is no doubt that what we have is NOT a free market.

Lastly, you said that monopolies would emerge because of mercenary recruitment and training of private armies. Go back to the definition of free market. It's a system where force is absent. So if a corporation hires a private army to attack its competitors, that is exactly the antithesis of a free market. In contrast, government itself functions entirely by means of force through taxation. Government defined as a territorial monopolist of law, order and ultimate decision making is the ULTIMATE PRIVATE ARMY and MONOPOLY!