Tuesday, December 27, 2011

Tibor Machan answers the common "What about the poor?" question

The following dialogue is from Mr. Machan's appearance in William F. Buckley's public affairs show "The Firing Line".

MR. VAN DEN HAAG: [...] Suppose there are a number of orphans in the society. They never had an opportunity to provide for their future; they were orhpaned at age 2. They can obviously not provide for themselves. And now let me make this assumption, which is not that unreasonable: For one reason or another private charity is not sufficient, is not forthcoming to take care of them. [...] Are you maintaining that since you are bitterly opposed to government intervention, these orphans should be left to starve? [...]

MR. MACHAN: Yes, as a matter of fact.

MR. VAN DEN HAAG: Thank you. Now--

MR. MACHAN: Before you continue--because obviously this sounds like a, you know, great touche--now let me just respond a little bit. Almost any political system can be asked that kind of a question with the stipulations of the sort that you made. For example, the Federal Communications Commission or the FTC or the Health and Welfare Department goes bankrupt; it hasn't got any money. I stipulate that. Now, let's see how we help unwed mothers. We can't and they starve. So we have a system in the welfare state very similar to the one that you've just outlined about a libertarian society. I think both of them are totally unrealistic, but nevertheless, if you do push me that way, that's the case.

Saturday, October 29, 2011

Favorite examples of statist cognitive dissonance

On Regulation

Leftist: Corporations own the government

Libertarian: I agree. But the State is what enables corporations to be anti-competitive and externalize costs onto the public. Hence should decrease the power of the State by eliminating taxes and regulations.

Leftist: But corporations are evil and should be regulated.

Libertarian: By what?

Leftist: The Government!!!

On Taxes and George Bush Jr.

Leftist: The greedy rich don’t pay their fair share. Tax them more!

Libertarian: The rich pay the most taxes in America. Close to half of Americans are net beneficiaries of the State and don’t pay taxes at all.

Leftist: Nonsense. Inequality increased under Bush with his tax cuts!

Libertarian: Bush Jr. also added 81,000 pages of new regulations in the federal register and increased government spending so much that it almost doubled the US national debt. Sounds like a president you should praise.

Leftist: Bush was evil. He was pro-rich. Pro-greed.

Libertarian: So you don’t want the Bush administration to have more MONEY and POWER?

Leftist: No.

Libertarian: Then you should support the Bush tax cuts.

Leftist: Huh? What are you talking about? Tax the greedy rich!!!

On Outsourcing

1. Leftists complain about corporations 'exploiting' workers.

2. Then they sic the minimum wage, regulations, and taxes on corporations.

3. Corporations respond by taking their production facilities to China.

4. Leftists then complain that corporations aren't 'exploiting' workers in the US anymore.

Saturday, October 22, 2011

Occupy Wall Street commentary

The Left and what Occupy Wall Street is all about

It looks like the Occupy Wall Street movement has gone global. Like most shows of mass activism, it indicates that the masses have reached the threshold of their tolerance for the police state. The protests are motivated by instinct; it has little to do with a definite aim to establish democracy or anything that the Left sensationalizes this movement to be. The people are simply fed up with increasing food and gas prices and high unemployment rates, even if they don’t have the remotest idea of the root cause. The role of the Left in this picture is in brewing buckets of envy and resentment towards a vague concept of the “greedy capitalist class” or as they like to call it, the “1%”, as is their standard strategy. Class warfare, though, provides the best conditions for a dictatorship to rise. To quote Walter Williams,

For politicians, it's another story: Demonize people whose power you want to usurp. That's the typical way totalitarians gain power. They give the masses someone to hate. In 18th-century France, it was Maximilien Robespierre's promoting hatred of the aristocracy that was the key to his acquiring more dictatorial power than the aristocracy had ever had. In the 20th century, the communists gained power by promoting public hatred of the czars and capitalists. In Germany, Adolf Hitler gained power by promoting hatred of Jews and Bolsheviks. In each case, the power gained led to greater misery and bloodshed than anything the old regime could have done.

Here’s something I found in a Youtube video to characterize the far leftists in OWS crowd,

They're practically begging for a new Hitler.

These protests and these demands carry with them an implication that is deeply horrifying. That being, that the most populous ideological base opposed to the entrenched fascism of the West, is radical fascism.

Let that sink in. The most widespread objection against the most profoundly interventionist economy since the Blat, is that it isn't statist enough.

Let's just all go down to the Treasury, donate what's left of our savings, children and vital organs, and get this all over with.

Peter Schiff speaks with Occupy Wall Street protesters

I saw this video of Peter Schiff discussing with OWS protesters and found common intellectual errors among the protesters.

Problem is structural, not personal

- Protesting ‘corporate greed’ implies that the problem is one of personal moral values. It’s not. I don’t care what motivates entrepreneurs to get up in the morning; all I know is that if they didn’t, I couldn’t buy any groceries. Blaming the problem on ‘greed’ is like blaming airplane crashes on gravity. Inequality is the biggest red herring in socio-political discussions. Egalitarian sentiments are really residual elements from our tribal past when wealth was more or less collectively produced and distributed. The emotion of envy regulated the amounts that each individual consumed for fear of retribution from the tribe. Today, folk/tribal economics doesn’t apply.

- The market economy, insofar as it is unhampered, has made it possible for individuals to earn income without having to personally associate with others. Trade results in win-win situations even though the participants may have incompatible personalities and never be friends. Also, by expanding our social commercial networks, the market economy provides the opportunity to expand our personal connections as well.

- The problem is structural. There’s a saying that goes “blame the game, not the players”.

Incidental versus essential features of economic depressions

There has been a lot of coverage about ‘derivatives’ in the news. These take the form of mortgage backed securities, credit default swaps, collateralized debt obligations, among others. “Derivatives” are a part of the standard narrative of “deregulation” and “lassiez faire capitalism in the United States” that we receive from the mainstream media on culpability for the current depression. The Left, of course, gullibly accepts the standard narrative presented by the same corporate-state media they claim to oppose. In that sense, they perfectly fit the description of useful idiots.

Financial derivatives, though, are only incidental features of the depression. The current depression is the inevitable result of the fractional reserve banking system which is propped up by the Federal Reserve. Artificially low interest rates cause mal-investment and overconsumption, manifested in the boom, which ends in a bust. The damage (mal-investment) is done in the boom phase and the bust is the painful, albeit necessary, adjustment phase. But the government re-inflates the bubble by printing more money and bailing out the banks.

Where do derivatives fit into this? Derivatives are just the vessels that concentrate all the artificial credit that the Federal Reserve created. If derivatives were prohibited by government decree (unenforceable but let’s just assume for argument’s sake), the artificial credit would still be there and hence the mal-investment would still occur. The current depression would have still occurred insofar as borrowing and lending of money is practiced, that is, fiat money which is continuously printed by the central bank.

This also means that the partial repeal of Glass Steagall had nothing to do with the depression. Anyone blaming the depression on the partial repeal of Glass Steagall is committing a red herring fallacy.


A causal understanding of the problem is important. Protesting the symptoms of the problem will get you nowhere. You need to eliminate the cause of the problem. For that, you need to learn economics and the nature of the power of the State in relation to money.

Lastly, belief that the State can somehow be reformed so it can be controlled by "We the People" must be shunned. A concept of "society" or "the people" that is independent of each individual that consists it is a false concept. To quote Ayn Rand,

"This meant that “society” may do anything it pleases, since “the good” is whatever it chooses to do because it chooses to do it. And—since there is no such entity as “society,” since society is only a number of individual men—this meant that some men (the majority or any gang that claims to be its spokesman) are ethically entitled to pursue any whims (or any atrocities) they desire to pursue, while other men are ethically obliged to spend their lives in the service of that gang’s desires."

Hyenas cannot be changed into lambs and politicians who worked their whole lives in attaining power will not suddenly give up that power.

Thursday, August 4, 2011

Misconception: It is important for us to understand the causes of poverty

Dr. Madsen Pirie of the Adam Smith Institute gives an interesting perspective in his book Freedom101 which can be read online

No. There are no causes of poverty. It is the rest state, that which
happens when you don't do anything. If you want to experience
poverty, just do nothing and it will come. To ask what causes
poverty is like asking what causes cold in the universe; it is the
absence of energy. Similarly poverty is the absence of wealth. For
most of humanity's existence on this planet, poverty has been the
norm, the natural condition. People hunted to survive or lived by
subsistence farming, and they were poor. In some parts of the world
this is still the case.
The unusual condition is wealth. This is what changes things. We
should ask what are the causes of wealth and try to recreate and
reproduce them. When you ask the wrong question, “what causes
poverty?” you end up with wrong answers. People fall into the trap
of thinking that the wealth of some causes the poverty in others, as if
there were a fixed amount of wealth in the world and that rich
people had seized too large a share of it.
In fact wealth is created, and it is only during the last 250 years or so
that we have found how to do this on the grand scale. Wealth is
created by production and enterprise, by the specialization of labour,
and most of all it is created by exchange. Instead of trying to take
wealth away from rich people and redistribute it, we should be
seeking to implement the conditions in which as many people as
possible can join in the wealth-creating process for themselves.
Poor countries will not become wealthier because we give them
some of our riches. They will climb out of poverty the same way we
did, by producing and selling goods and services and by creating
wealth in the process.

Tuesday, May 17, 2011

Why Democracy Doesn't Work: A Short Summary

excerpted article from Ryan Faulk

This is just a quick post reiterating why democracy doesn’t work:

1. Rational Ignorance. Because you only have one vote and won’t influence an election, it is rational for most people to not spend time researching the issues. Attempts to curb this problem could be to require a poll test, but that is full of obvious problems. Democracy depends on voters being informed on issues that they cannot have an impact on, which is to say democracy depends on voters being irrational.

2. Package deals. When you buy things from a store, you get to be a la carte to a great degree. You don’t have to buy a complete kitchen set, you can buy the refrigerator and the microwave separately. The specificity depends on demand - few care to buy each component of a refrigerator separately, and so that stuff is harder to find.

With democracy, your only choice is between platforms that have a shot at winning, and this is usually only two or three and encompasses too many issues. Maybe you want school spending to be cut, and want unemployment insurance to be cut, but each candidate or party is only willing to cut one or the other, so you don’t get to truly vote your preference.

3. Voting wars. Group A votes itself the resources of group B. Simple enough. Elections aren’t really a competition of ideas, because trying to get group A to vote for not getting free stuff from group B is not a contest, it’s begging a thief. Humans are moral animals, and so theft-rationalization industries develop, which rationalize the theft with marxoid economic theories, appeals to racial identity and collective intergenerational debt, and various other obtuse and roundabout justifications.

One of these rationalizations is to call opponents of democracy social darwinists. They support an evolutionary environment that enables the irresponsible reproduction of their voting blocs at the expense of the responsible reproduction of their opponents, but you are to believe that that is NOT social darwinism, but when you advocate an environment that enables the reverse, that’s social darwinism. So social darwinism = an evolutionary environment that grants no favoritism to irresponsible reproduction of the takers.

There is also the problem of the identity-democrat, and I don’t necessarily mean advocate of the US democrat party, though that correlation high. The identity-democrat fancies himself an advocate of the little guy, and so masochistically votes for wealth redistribution schemes that harm him. The identity-democrats tend to be “progressive” on social issues and white, while the taker-democrats tend to be more conservative and black and brown (they are NOT “liberals”, they are racial national socialists).

4. Concentrated benefits, diffuse costs. When you cut unemployment insurance, you are no longer giving a concentrated group of people the money they need to survive, and many of them will die. This makes them extremely motivated in opposing cuts. Whereas the people paying for unemployment benefits won’t die from paying a little bit more.

The results of democracy are manifest - constant increases in spending, with anti-spending movements being flash-in-the-pan spoiler operations. The Taxed Enough Already (TEA) party has not achieved any of their goals of cutting spending, and they most certainly will not since the incentives of democracy are against it, as are many of the beneficiaries of democracy-enabled theft.

One should place democracy in the same ideological zone as communism, because the underlying assumption of democracy IS communism, because it assumes things are already communally owned and thus can be voted on. If they weren’t communally owned, if an individual really owned what is called “his home” and “his money”, then you couldn’t just vote to take any of it away to give it to people who don’t have value.

(That’s another reason many are militantly pro-democracy: without it, nobody would care what they said or thought. Democracy is 1 person = 1 vote, giving worthless people a level of influence they couldn’t achieve by honest means.)

Democracy is a form of communism. And the US is a representative democracy. My prediction is that democracy will be remembered as a form of communism, and just as we wonder how the USSR lasted as long as it did under the impossible regime of explicit communism, people will marvel at how the USA lasted as long as it did under a regime of implicit communism. This is easy to understand, but difficult for most to swallow.

One last point is that democracy is inconsistent. Man supposedly needs a state because if left to his own devices it’ll be Mad Max, yet this state is to be controlled either through popularity contests (representative democracy) or man’s own judgement on abstract issues which he has no rational incentive to properly research (direct democracy). Man is fallen so needs a state, but this state is to be controlled by man? Monarchy is at least consistent in this regard.

Wednesday, May 4, 2011

How high should the wage hike be?

Political organization, or more precisely, mob intimidation, cannot change the laws of economics but only make it harder for employers to keep their business running. Raising wages will in the long run reduce job opportunities and increase the price of consumer goods. The poor stand more to lose since they are on fixed income and spend a large portion of it on consumer goods. Notice also that it is always the employers who are at fault while the government itself, which is the source of the problem, is never questioned

I have already argued in a previous article that wages are primarily determined by productivity and not by the discretion of the employer. Generosity or good faith of the employer has very little to do with it. If the laborers get wages which are higher than what all of them can produce, then the employer will either have to pass the additional labor costs to the consumer in the form of higher prices or file bankruptcy.

The minimum wage laws also have glaring contradictions. The labor code allows for exceptions. Physically and mentally impaired individuals as well as apprentices and learners can be paid at least 75% of the minimum wage. Firms employing less than ten workers are exempt from paying minimum wages. If you ask why certain exceptions are made, the answer will be based on economics. But then that only defeats the purpose of the minimum wage law in seeking to reverse the laws of economics. If we must defer to economics in the case of the physically disabled workers, why not defer to economics when it comes to workers in general? After all, economics applies at all times and in all places.

Arguments against minimum wage laws are not only theoretical, as prices of consumer goods increase every time a wage hike is ordered by the Philippine government.

Some don't buy into the argument that businesses would close if minimum wage rates were increased. They charge hypocrisy on business owners who take their families on expensive vacations while not giving workers enough to eat. This is of course an exaggerated claim. If a worker's wage is not enough for him to eat, then why is he still working in that same job in the first place? It is ridiculous to claim that workers don't have enough to eat when a lot of them already support many children with that meager wage, but that is a topic for another discussion. Just because an employer is rich doesn't mean he must pay wages at more than the worker's productivity level. The employer could have gotten the vacation money from saved profits in the past. Why should the employer use those saved profits to subsidize a business which is made unprofitable by the minimum wage? Why should the employer enter into an employment agreement where he has nothing to gain? It really redounds to an advocacy of the Marxist exploitation theory, whether or not people are aware of it. Pro-labor advocates think that profits are undeserved because it is taken from labor's 'full value'. Fortunately, Marxist fallacies have been refuted by economists of Marx's own generation.

To those who think labor has a right to a share in profits, I quote from capitalism.org

"Why are the laborers who demand a share in the capitalist's profits, silent in demanding their "share" when he incurs losses? Why don't they cry out and demand that they get to receive a share in those losses? If labor is the sole cause of all profit, then is it not also the sole cause of all losses? A moments reflection will point out that laborers are only responsible for their job description -- they are not directly responsible for the losses of a business -- and that the cause of an enterprise's losses lies essentially with the owner, as do the profits."

Then there's the bargaining power argument. There are more workers than work, they say, and the workers have to accept lower than productivity wages because the employer can just hire somebody equally desperate for a job. The premise of this claim is palpably false as it does not recognize the primordial fact of scarcity, which is the whole basis for the study of economics. There is always going to be jobs available because humans have unlimited desires and limited means to meet those desires. Bargaining power is actually dependent on productivity. The greater the gap between a worker's productivity level and his wage, the greater the risk that that worker will be hired by a firm offering a higher wage. Competition among employers bids up the price of labor to the point where it approximates productivity levels. If one disdains the difference in 'bargaining power' between employers and employees, then one must place the blame on anti-competitive government interventions such as permits, regulations and anti-trust laws.

The laws of economics cannot be changed by passing legislation. The only way to deal with the primordial fact of scarcity is through entrepreneurial discovery of more efficient ways of allocating resources. This means allowing the price mechanism to work and the profit and loss system that follows it. In hard times such as these, we need markets more than ever.

Monday, May 2, 2011

The idiocy of American Nationalism and the Corrupt Philippine Police and Military

It’s disgusting to see so many people praising the US government for its assassination of Osama bin Laden. Turning on Fox News reveals that national delusion is at an all time high in the US with footage of the ignorant American sheep waving the American flag in celebration of their government’s act of murder.

The enemy is not some bearded men carrying AK-47s living in caves in some backwater country. The real enemy of the American people is its government, which draws awesome power from the Federal Reserve System. Empires are always destroyed from the inside, when its people become infantilized and made dependent on the government, when the specter of total fiscal and monetary socialism looms on the horizon.

Here in the Philippines the government is propping up security measures to ward off possible retaliation from Muslim elements connected to Bin Laden. As a result, more money will go to the most corrupt bureaucracies in the Philippines, namely the police and military. The Philippines shouldn’t even be in this mess if its government did not enter into entangling alliances with the US government.

Here is a blog post in LewRockwell.com that says a lot about this stupid propaganda.

Every time the US waves the bloody shirt of Osama, it has a purpose. Obama has been drastically weakened in recent months, and the US has been hurt by murdering Gadaffi’s family members. The mass-killing in Afghanistan, Iraq, Pakistan, etc. is not going well. The economy is a wreck. Dollar debasement is speeding up. Gasoline prices are high. So…tah-dah…the body of Osama bin Laden for our edification and distraction. It may even be true. Certainly the CIA will assure us that its DNA test proves it.

UPDATE from Darien Sumner:

In re: Osama bin Laden’s death, here are the first three things that went through my mind:

1) Congratulations to the United States government on spending only ten years and a few trillion dollars to kill one old man.

2) This means we get all of our liberties back now, right? And our money? And the thousands of lives lost?

3) Ah, now the Libyan war is beginning to make a lot more sense from a political standpoint. The government needed a new bogeyman to chase.

Sunday, May 1, 2011

A Striking Observation of Socialist Health Systems

Actress Natasha Richardson died in 2009 because she could not be treated for head injury in Canada, she is an unfortunate victim of socialist health care

I have argued before that US health care ‘insurance’ is not really health insurance because it covers uninsurable health conditions. In my past article I said,

"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."

"[Situations which are] 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 of a business ---- it is that ludicrous!"

"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."

Ludwig von Mises stated that,

"The psychic forces which are active in every living thing, including man, in the form of a will to health and a desire to work, are not independent of social surroundings. Certain circumstances strengthen them; others weaken them. The social environment of an African tribe living by hunting is decidedly calculated to stimulate these forces. The same is true of the quite different environment of the citizens of a capitalist society, based on division of labor and on private property. On the other hand, a social order weakens these forces when it promises that if the individual's work is hindered by illness or the effects of a trauma, he shall live without work or with little work and suffer no very noticeable reduction in his income. Matters are not so simple as they appear to the naive pathology of the army or prison doctor."

"Social insurance has thus made the neurosis of the insured a dangerous public disease. Should the institution be extended and developed, the disease will spread. No reform can be of any assistance. We cannot weaken or destroy the will to health without producing illness."

Many free marketers argue that data affecting mortality rates cannot be used when comparing the US health care system (which is semi-socialized since the State comprises 50% of health care spending) with UK/Canadian health care systems because Americans kill each other more often, consume more narcotic drugs and have unhealthy lifestyles leading to obesity and illnesses. However, those unhealthy lifestyles and crime statistics are also caused largely by government and not by some wild American ‘culture’. The unhealthy lifestyle is subsidized by the welfare scheme as explained above while the high crime rates and narcotic drug usage can be explained by the destructive ‘War on Drugs’.

It is interesting because the US system encourages sickness while the UK/Canadian system discourages it. The UK/Canadian health care systems discourage getting sick because getting treatment is such a hassle and quality is low. Waiting lines don’t really coincide with consumer preferences while sin taxes and FDA regulations do not give citizens of social democratic Europe many options to live unhealthily. This is the reason Americans are obese while Europeans are fairly fit (not to downplay the thousands who die every year in the socialist hospitals of the UK and Canada, see here, here, here and here). In the end though, no one is happy and human freedom is lost when responsibility and control over health and life are surrendered to politicians.

Blessed John Paul II on the Dignity of Work

*This entry is not intended to give a political interpretation of the late Pope but rather to show what he definitely did NOT mean by contrasting what he said with the leftist perspective. Too many times Christianity is exploited by the Left in the Philippines.

When the late Pope John Paul II, who is to be beatified today, visited Legazpi City, Philippines in 1981, he expressed interesting thoughts on manual labor. I quote from this article,

“Do not be ashamed of your work. Be proud of manual labor” – Pope John Paul II

“The eloquence of the life of Christ is unequivocal: He belongs to the ‘working world,’ He has appreciation and respect for human work. It can indeed be said that He looks with love upon human work and the different forms that it takes, seeing in each one of these forms a particular facet of man’s likeness with God, the Creator and Father,” – Pope John Paul II (Encyclical Laborem Exercens, n. 26)

A paraphrase of the late Pope bluntly makes an important point here,

He said the Son of God did not disdain being called a “carpenter” and did not want to be spared the normal condition of every human being.

All form of work, even that of garbage collector or street sweeper is dignified work. And it is dignified because it serves the needs of men. Man must work for him to survive and improve his economic condition.

I point this out because political opportunists in the Philippines use the moniker ‘Christian Social Democracy’ or ‘Christian Socialism’ to deceive the gullible and get new recruits. Theirs is a political philosophy which brings dissatisfaction, shame and misery to the laborers by making the latter think the worker as a victim of some social injustice rather than an acting agent in an economy who has the ability to shape his own destiny. The pride and virtue of work is taken away by the belief that wages are not tied to the productivity of labor but is arbitrarily set by greedy employers and can hence be changed by using the political process and passing legislation.

Nothing could be further from reality. Wages reflect the marginal productivity of workers. The only way to increase wages is through higher marginal productivity which depends on the amount of capital investment per head of labor, among other factors like skill level and education. At the macro level, wages are determined by supply and demand, with the demanders of labor being the employers and the suppliers the employees. The extent to which this analysis does not apply to the real world is the extent to which the government has intervened in the market through various taxes, regulations and licensing. The average private school teacher earns less than the professional boxer because there are much more people who can teach relative to the number of people who can enter the field of professional boxing.

Before complaints can be made against working conditions and wages in a market economy, five things must be considered.

1. Real wages were much lower and working conditions harder during the time of our fathers and grandfathers than they are now.

2. That the number of occupations and employment opportunities available during the past were very limited compared to what it is now.

3. That social mobility in the past was less than what it is now. If your father was a carpenter, then you would most likely end up a carpenter despite your personal dislike of such occupation. Today, there are more opportunities to pursue one’s passion and women are not so much pressured by their parents to marry a man of high status.

4. That the accumulated savings of our forefathers which were invested in entrepreneurial ventures is the sole cause of our higher standard of living.

5. That government intervention (no matter how well-intentioned) can only serve to impede the process of economic, cultural and social development. The amenities of modern civilization such as clean toilets, hot showers, books, mobile phones, and air-conditioned homes are enjoyed by the majority of people despite of governmental activity and never because of it. The inventor of can opener has done much more for humanity than all the welfare programs of politicians combined.

Whether or not the worker feels joy or misery about his work largely depends on his mental state. The ‘grand old man of economics’ Ludwig von Mises lists two joys of work which the socialist ideology destroys.

1. Joy of being productive member of society

2. Joy coming from the aesthetic appreciation of the worker’s skill in producing something valuable

von Mises stated that,

“… anticapitalist propaganda is a systematic scheme for the substitution of tedium for the joy of labor…The worker rejoices in his place in society and his active cooperation in its productive effort. If one disparages this ideology and replaces it by another which represents the wage earner as the distressed victim of ruthless exploiters, one turn the joy of labor into a feeling of disgust and tedium.”

He further discusses,

“The worker begins to hate his work if he becomes convinced that what makes him submit to the disutility of labor is not his own higher valuation of the stipulated compensation, but merely an unfair social system. Deluded by the slogans of the socialist propagandists, he fails to realize that the disutility of labor is an inexorable fact of human conditions, something ultimately given that cannot be removed by devices or methods of social organization. He falls prey to the Marxian fallacy that in a socialist commonwealth work will arouse not pain but pleasure.”

The leftists want workers to feel like they are victims of injustice so that they can be used to push for government intervention which is not based on any economic literacy. This only makes the worker feel unhappy about his work. If one is concerned about the lot of workers, then the first step to forming a solution is to understand the situation. This requires an understanding of economics. Economics grounds our thinking in reality. By informing us of the limits of our efforts to change society, we are more effective in pursuing that change. As economist and social theorist F.A. Hayek said,

"[t]he curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

For more info on Blessed John Paul II and his views on social issues, please read the following:

The Pope and the Cause of Freedom


Centesimus annus

Saturday, April 9, 2011

Marc Faber on Democracy

Economist Marc Faber appeared on CNBC to talk about financial markets. But along the way he launched into a devastating analysis of class relations in a democracy. Here is my paraphrasing of Marc Faber,

It’s a question of entitlements. The majority of people are not very well to do. They want entitlements so they can work less. The people who have money and work hard are outnumbered by the poor people. The rich are very few in number so they have no vote. One way to get back at masses is to print money and outsource production, say to China. So you disenfranchise the working class and your asset prices increase dramatically. If you are affluent you have the same vote as somebody who was born illegitimate and poor. More than half of American children are born illegitimate and most of them are poor and they have the same vote as someone who is affluent. So the well to-do people will cheat the system as well.

It reminds me of what I wrote about democracy more than a year ago. Democracy according to Bertrand de Jouvenel "because of its centralizing, pattern-making, absolutist drive, can easily become an incubator of tyranny". Democratic society undergoes four stages before it becomes totalitarian.

1.In a democracy, the poor outnumber the rich so they vote to take away the property of the rich through policies like progressive taxation.

2. The rich, formerly gaining wealth through honest means, are encouraged to lobby and bribe politicians to protect their wealth. Honest entrepreneurs are placed at a permanent disadvantage while those with the skills of bribery and deception at an advantage.

3. The poor are further impoverished and dehumanized by the endless conflict in politics. While those who remain rich are those with very good political connections and are more likely parasites than producers (which makes the masses blame capitalism even more)

4. The political class conflict of rich versus poor wipe out the middle class, whom are entrepreneurial or high skilled workers, and thus the oligarchy is realized.

In a democracy, there is always a manufactured class conflict to keep the political machine running. The masses have to be incited and provoked so politicians' policies can be justified and their power strengthened. Politics creates what Jose Ortega y Gasset calls the mass-man, livestock for the state. The mass-man does not have independent thought, but a product of the state propaganda apparatus. A mentality of going(or voting) with the crowd is engendered and what left of independent thought and action is eroded. All democracies today are undergoing the same process. Democracy, is most destructive, governing large geographical areas. India, the largest democracy in the world, has less than half the per capita GDP of China and is politically unstable precisely because India is a democracy and China is not. The destructive effects of democracy, however, are restrained in states of small geographical areas like Switzerland. Rousseau, the great preacher of equality, believed democracy only works in states covering small territories because people will vote on their feet. Rousseau would find the current arrangement rather idiotic.

But such an analysis is not new. Frederic Bastiat observed the inherent problem with democracy as early as in the 19th century. He called it legal plunder or the perversion of the law by turning it into a means of taking another’s property. A major contributing factor to the decline of civilization in a democracy is the corruption of the wealthy class. As government and political pull are increasingly being used to gain wealth, traditional bourgeoisie values of hard work, frugality and bravery are replaced with opportunism, deception and bribery. The result is that wealth is no longer a symbol of virtue but of vice. There is also the issue of inheritance where the poor look at the rich as undeserving due to inherited wealth. But if an inheritor is really undeserving of his inheritance, then that inheritance would quickly dissipate on consumption and frivolous activity. It is only in a statist society where the inheritor uses political pull to pass legislation creating barriers to entry in order to unjustly enrich himself at the expense of the consumer.

Friday, April 8, 2011

Capitalism starving the Philippine Left of new recruits

I rejoiced when I read this article today. Facebook has afforded the disgruntled Filipino youth an alternative, and dare I say more productive, way of venting out frustration at politics than joining the communists. It is a sick irony that more poverty creates more demand for socialism. Far leftist groups have more recruits when the voices of the marginalized in society are not heard by the government. But it is unfortunate since the government is philosophically similar to the communists. They all think in terms of egalitarianism and 'from each according to his ability' philosophy. The far left, then, only serve an emotional purpose for the marginalized when what they really need is an understanding of 'why' they are poor and marginalized. The last thing the Filipino poor need is a decrepit ideology which has failed too many times to count. Socialism is mankind's greatest failure, an attempt to play god, a misunderstanding of what it means to be human. The fact that the leftists now resort to indoctrinating the children of the elite rather than propagandizing the masses shows utter hypocrisy in the stubborn attempt to redeem leftist falsehood. Socialism has broken many eggs but has never made any omelets. Those who stick to it in the face of mountains of evidence are slaves to false idealism and are unable to live in this world.

In contrast, capitalism has provided a way to satiate the urge of the marginalized to be heard. The Philippine government might have severely hampered the life-giving market process through inflation, taxes, licenses and regulations, but capitalism has still managed to deliver the goods in the unregulated sector of cyberspace. The most unproductive in society cannot find employment because of the economic ignorance of politicians in legislating minimum wage levels. They are curtailed from having a good education because of tax-funded 'public' education. But whereas before such conditions encourage extremism and anti-social behavior, now facebook is there to provide an avenue for communication and entertainment. Capitalism has filled in the social gap through peaceful means, and on top of all the bureaucracy and wealth destroying government programs. In comparison, the socialists have to expend so much effort taking over the government and dispensing of the bourgeoisie. And only then can progress be possible, they say.

Capitalism works even without an intellectual vanguard. The universities and schools are stacked with leftists of all sorts trying to pound the common sense out of young peoples' brains. But their irrational ideology is most of the time pushed aside as untenable, because let's face it, who could honestly take the stance business, that institution which we acquire our daily meals, is a harm to society. Business provide goods, services, allow labor to be integrated into the structure of production. How can an institution which we depend on to live, simultaneously be a great evil in the world? In fact, capitalism not only provide the means for material satisfaction but opportunities for spiritual satisfaction as well, as the high levels of social production in capitalism allow more time to go to Church or on a noble advocacy. The fact that capitalism delivers even without or with little of an intellectual vanguard is a source of hope. No words better express my sentiments than that of Ludwig von Mises in saying,

"Neither economic thinking nor historical experience suggest that any other social system could be as beneficial to the masses as capitalism. The results speak for themselves. The market economy needs no apologists and propagandists. It can apply to itself the words of Sir Christopher Wren's epitaph in St. Paul's: Si monumentum requiris, circumspice(If you seek his monument, look around)"

It is a sort of a joke that 'social' networking has weakened the growth of the socialists. They must all be seething in their self-righteous rage in the mountains. And we are all better for it!

Tuesday, April 5, 2011

A la carte democracy advocacy

I got this from Ryan Faulk

One thing I find when arguing with pro-democracy ideologues is how they’re allowed to be a la carte, while I’m forced to defend every thing that comes about in a market.

Bailouts? Wars? Retarded “regulations”? The FCC “regulating” the internet? Taxation and inflation taking up 43% of GDP? Kids learning in a month online what they took a year to learn in the obsolete state schools?

See, don’t bother blaming those things on democracy. We just didn’t vote for the right things or have the right guys in office! It’s not democracy that has failed, oh perish the thought. Something as big and old and that we have known since childhood as being the manifestation of goodness as democracy can’t be to blame.

So I advocate a total market, and then some people will point out some mean things that happened. Now almost always it’s some myth, involved state intervention (like with the state giving the robber barons land grants - essentially monopolies - and then the resulting monopolies being blamed on the market), or ignores context - like working conditions in early industrialization not being humane by modern standards.

But all that notwithstanding, NEVER am I allowed to say, “Oh, well those were just the wrong businessmen. See, I’m for having nice angelic businessmen. The key is to get the right capitalists at the head of large firms.” No, I have to either defend the market as it stands or explain why X problem is not a result of a market.

Democracy pushers are allowed to make arguments from fantasy, and I’m supposed to argue not against the reality of democracy but against this hypothetical where whoever I’m debating against got their way in elections.

The problem is that most people don’t even know that they’re doing this. They don’t recognize that they’re advocating democracy anymore than a fish realizes it’s in water. And so each individual has their little a la carte proposal, and when I come in advocating a total market, they treat my idea like it’s just another democratic hypothetical, not as a paradigm alternative to democracy itself.

Monday, April 4, 2011

Repeating the Obvious

This is the cover of Ludwig von Mises' 1944 book where he popularized the term statolatry. If you think modern Philippine politics is far away from the sort of delusion depicted in the cover of this book, think again.

Statolatry looks like the new religion of the Philippines. It is defined as worship of the State. Statolatry entails that nothing exists outside of the State. The State is the means of emancipation and human progress. The State can never go wrong because 'We' are the State and 'we' only need to do 'our' part by voting and paying taxes to improve the lot of society. Moreover, the Catholic Church, which is an institution with the staying power of over 2000 years now, an institution which has contributed a lot to the glory of Western Civilization, is being undermined by the empirically unfounded pseudo-rationality of Reproductive Health Bill (RH bill) supporters. (for RH bill rebuttal, see here, here, here, here and here)

Having your heart in the right place is not enough, and could even cause harm when combined with fallacious beliefs.

That was my impression when I saw this photo of students protesting the government, particularly the Department of Labor and Employment (DOLE), for its failure to provide jobs for Filipinos who then work abroad and become vulnerable to abuse. Although well-intentioned, they cannot think outside the State apparatus. The fact that these students think of the government as job provider when people are employed in private firms everywhere they look is alarming. As George Orwell put it,

"...we have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men. It is not merely that at present the rule of naked force obtains almost everywhere. Probably that has always been the case. Where this age differs from those immediately preceding it is that a liberal intelligentsia is lacking. Bully-worship, under various disguises, has become a universal religion, and such truisms as that a machine-gun is still a machine-gun even when a "good" man is squeezing the trigger..."

And whereas those on the Left think of themselves as 'progressive' and independent thinkers who are fighting an uphill battle against the 'neo-liberal' oligarchy, but the powerful influence of Marxism is evident in that its opponents also think like Marxists. As Ludwig von Mises said,

"...the ideas of Karl Marx ... are widely accepted today, even by many who emphatically declare that they are anti-communist and anti-Marxist.To a considerable extent, without knowing it, many people are philosophical Marxists, although they use different names for their philosophical ideas."

Today, only self-confessed morons and over-educated college professors call themselves Marxists, but it is no doubt that the vast majority still think in terms of egalitarianism, collectivism, class struggle, sacrificing the self to society, etc. It would be unfathomable for the leftists to think that it is their ideology which is the cause of social ills. As a political philosophy, Marxism will remain dead from the neck up, but its body is still swinging the bludgeon on the life-giving market order.

The answer to social ills lies in an understanding of basic economics. Its importance cannot be overstated.

Fruits of State Resource Management: The Case of Pasig River, Manila Bay and Makati Area Slums

Public property can be seen as one type of interventionism. The most pollution happens in public land because government does not have an incentive to take care of its property. As a result, those on the perimeters of the public land are affected. People living on the side of roads, seas, and rivers suffer from the pollution that is encouraged. Just look at Pasig River. Huge amounts of money and effort were expended to pressure the government to 'do something' about the dying river. And even now the its pH level is just enough for fish to survive. We would likely see little or no outcry if that river was privately owned. The owner would make use of it in the most profitable way he can think of, which means that resource will be used in the most socially optimal way. Even if the government successfully cleans Pasig River, it would still remain an idle resource slowly accumulating pollutants again.

Pollution is encouraged when the resource has no owner, i.e. public property.

Recently, there has been news of a residential community urging the government to cleanup the shores of Manila bay. As a result, 130,000 squatter families will be displaced without relocation. Here we see another effect of public property, the creation of conflict between different groups of people. The poor cannot find work because of the minimum wage and are made dependent on government urban planning schemes. They end up in public land that are then leased to those who have political pull. If private property were respected, then the homesteaders (the first to imprint his mark as owner) of the shores of Manila Bay would become the rightful owners. The squatters who now stay there would not have been made dependent and treated as expendable by politicians but would have found employment at a wage matching their level of productivity.

Public property not only encourages pollution, but creates conflict between different groups of people. The government relocates slum dwellers to areas which are polluted due to its own mismanagement. Now their homes are going to be demolished because of the whims of those with political pull.

In a free market, poor urban areas would be bristling with commerce because of employment opportunities provided by capitalists. Wages would be bid-up through competition between different capitalist employers vying for labor power. The relationship between rich and poor would be mutually beneficial, give-and-take, value for value. It now be very different from the situation now where wage controls restrict employment opportunities and the location of the urban poor is arbitrarily determined by government zoning. If the minimum wage, urban planning and welfare schemes were abolished, the poor would either find employment in the city or move to areas where the cost of living is low or in the peripheries of the city. Government urban planning creates disorder, leading many to wonder why there are slums not so far away from large banks and 5-star hotels like in Makati. It gives the impression of an inherent conflict of interest between the rich and the poor, with the former gaining at the expense of the latter. How is it that there can be cooperation across long distances, as in the case of foreign capital investment putting upward pressure on wages in China, but not amongst individuals a few kilometers away? This is the destructive power unintended consequences of interventionism. It makes enemies out of neighbors by outlawing mutually beneficial employment through the minimum wage on the one hand, and promoting dependency through welfare on the other. This economic and social inequality is then exploited by the Left to promote Marxist class struggle theory which only make the problem worse. The last thing slum dwellers need is a false ideology.

Most of the slum dwellers are unemployed or work in undeveloped extra-legal economies. Why aren't the rich in Makati 'exploiting' the nearby slum dwellers by making them work for low, but higher than pre-existing, wages? The answer: The government makes it illegal for them to do so.

Under conditions of capitalist freedom, the shores of Manila Bay would be de-socialized ( 'privatization' is misleading) and the residential community living nearby would own shares to it. The squatters, since they are also victimized by government intervention, could also be given shares, albeit less since they are 'late-comers'. The government would not be paid anything. Voluntary arbitration (not political pull) would settle the matter with equal representation of the two groups and conflict easily relieved. Private property is the best means man has discovered to solve conflicts. A society, for it to be considered civilized, must recognize it.

To contrast, 130,000 families are going to be driven to the streets just so to waste tax-payers money on cleaning up the shores of Manila Bay, unproductive land which will eventually accumulate pollution in the future. Not only is this insensitive, it is un-capitalist and uncivilized.

Sunday, April 3, 2011

Should the Government Regulate the Financial Markets?

A summary of a debate between Walter Block and Richard Squire. The video can be found here

The modern banking system is based on fractional reserves which is government sanctioned fraud. It is therefore anti-capitalist.

Richard Squire:

1. Creditors of banks are not as vigilant as creditors of other agencies so a bank-run on one bank means a bank run on all banks.

2. Private credit rating agencies do not have the incentives.

3. Insider trading: Block argues that insider trading is arbitrary, no real victim, unenforceable, and stops information from being reflected in prices. But regardless, inside traders will create volatility in the market to make money.

4. Block will argue that corporations could ban insider trading in their charters. But there is no empirical support for this.

Walter Block:

1. Government is immoral because it forces people to pay taxes and it won’t allow you to secede. If it won’t allow you to secede then you’re a slave. Government is inefficient because it can’t go bankrupt. FEMA wouldn’t allow any help to come in. They killed 1500 people. Are they still in business? Yes. So we shouldn’t have a government at all because its immoral and inefficient. If the government shouldn’t exist at all then they shouldn’t intervene in anything.

2. Financial markets are too important for the government to intervene in them. If we really should have government intervention, let it be in the production of paper clips and rubber bands. One half of every trade is money so financial industry is very important. The Fed is a Soviet central planning board. A gold standard would mitigate volatility. The reason we have bank runs is fractional reserve banking. Fiat money, legal tender and FDIC are all bad.

3. Yes, FDIC prevents bank runs by creating money galore but this will cause hyperinflation.

4. There is no market failure if there is no market to begin with. So the solution is to remove the government intervention that created the problem in the first place.

5. If the fact that ordinary individuals are not sophisticated enough to regulate banks themselves is the reason we should have government intervention in the financial markets then we should have government intervention in all areas of the economy as well since we are not sophisticated in most things which are not related to our hobby or occupation.

6. The volatility of the stock market before and after the inception of the Fed is very different. The Fed causes the instability.

7. ABCT – Fed misallocates resources by lowering interest rates. The debate is monetary or fiscal intervention. Fiscal Keynesianism versus monetary Keynesianism.

8. Insider Trading: Michael Milkin: He is the private solution to market volatility. The CEO high salaries were possible by giving lower dividends to shareholders so the stock price plummeted. Michael bought shares and kicked out the CEOs. But the government put him in jail.

9. Market rating agencies: Government influenced the credit rating agencies.

Richard Squire:

1. ‘Road to Serfdom’ theory is not empirically founded. Europe has a lot of political freedom even while being increasingly interventionist.

2. Empirical evidence trumps your reduction ad absurdum.

3. Fractional Reserve Banking existed before fiat money. It is the government that limits FRB by requiring minimum reserves. FRB is what private banks naturally want to do.

4. Takeover artists like Milkin are going to be banned by corporate charters.

5. There are a lot of takeover artists who were not jailed.

Walter Block:

1. Reduction ad absurdum is good because it challenges the premises.

2. He called me an ideologue but aren’t we all ideologues since we study ideas.

3. The government looks good when you only look at one-half institution. Anything that the government does cannot be justified because its based on coercion.

4. If you jail one takeover artist then that sends a signal to other takeover artists.

5. FRB implies bank run because its instantaneous debts are greater than its instantaneous assets. It’s only got 100 bucks and has a 190 outstanding so it ought to be allowed to be bankrupt but the government is protecting it.


Why haven’t we had free market anarchism if it’s so good?

Block: Countries with more economic freedom are richer. Libertarians are a small minority because humans are not hardwired for implicit cooperation. We do not fear bathtubs but we fear snakes even if bathtubs have killed more people than snakes. This is an example of sociobiology. Another example is that people who stood in line wanting to benefit from price gouging during Katrina cheered when the police arrested the price gouger.

The winner of this debate is....

Subsidy through mandatory oil price discounts will not work

Anybody with knowledge of economics101 knows that price controls create shortages by pushing the price below the point where supply and demand meet. Price controls also discourage production by reducing profit margins, even wiping them out. Marginal producers are likely to go out of business because of lower profit margins than well established firms. So when it comes to the oil industry, one can't cry oligopoly whilst supporting price controls.

Subsidization of an interest group, such as drivers of Public Utility Vehicles (PUVs), by forcing gas stations to give discounts also has the effect of disrupting the price mechanism. But in this case the market still has the opportunity to prevent shortages by charging higher prices to consumers not given a discount. There is no such thing as a free lunch. Government intervention to subsidize one interest group, PUV drivers, can only be possible at the expense of those not included in that interest group, everybody else who buys gas.

Some would argue that mandatory discounts are only fair. After all, PUV drivers are at the lower rung of the income bracket. Moreover, most individuals who use PUVs to travel are also part of the lower income bracket. Mandatory discounts at the gas station would remove the need to raise transportation fares, and in effect subsidize consumers.

But if poverty justified economic subsidization then we would also need to pass legislation to give the poor discounts in buying food, medicine, clothes, etc. But we do not give mandatory discounts to the poor even in these basic necessities. Even scholarships and other financial subsidies in universities are not given solely on the basis of poverty, but on academic merit. And there is a lesson to be learned here. In a free society, poverty is only a stage in life. Each person is born under unique circumstances and some may be considered more permanent than others, but individuals are largely placed in their 'proper' role in society by the time they reach middle age. By then, poor people are poor because of only three reasons:

1. Incompetence, laziness, antisocial behavior resulting in low productivity
2. Contentment with current financial condition
3. Injustice caused by government (e.g. minimum wage, taxes, inflation)

If poor who fall into category 1 are subsidized, then the ills associated with them will also be subsidized and society will have more incompetence, laziness and antisocial behavior. If the poor who fall into category two are subsidized, then this will amount to minding of other peoples' lives and presuming to know what's best. The poor who fall into category 3 should be helped by repealing legislation such as the minimum wage. It is clear that government intervention should not be used in all three counts. The simple fact is, if the poor had the same material standard of living as the rich, then no one would want to be rich. In other words, no one would have the incentive to work hard and produce for his fellow man. Both theory and history teach us that the result of egalitarianism is a Soviet economy where the only incentive to work is fear of death and torture. (Socialism cannot 'work' w/o killing fields, this is something the Leninists knew that the social democrats still haven't learned)

Let's go back to the main issue of mandatory gas price discounts for PUV drivers/operators. Some would still support such legislation not because PUV drivers are poor, but because their fuel cost increase makes them the most affected among the poor. But this is only because of standardized transportation fares. Without government standardization, drivers would be able to raise transportation fares to a level where profit margins are not much reduced (if not for increase in gas prices). Freedom of individual PUV drivers to set fares would remove their being a 'special' case among the poor and make mandatory gas price discounts unjustified.

Non-subsidization of PUV drivers and removal of standardized fares will prevent further problems but it will not solve the main problem of higher gas prices. The solution lies in economic freedom. Cut taxes, remove regulations, lower tariffs, abolish licensing. That's only the tip of the iceberg. More ambitious would be to stop the war in the Middle East, outlaw fractional reserve banking, and de-socialize public land for purposes of oil drilling. Lower prices can only come about via increased supply and stable currency. All the aforementioned government interventions discourage production either directly or indirectly and hence should be abolished. Freedom is always the solution, always.

There are of course some people who's ideas, if followed, assure not only increased costs but destruction of the social order itself.

Saturday, April 2, 2011

Crisis of Capitalism by David Harvey: A Response

A 2010 youtube video features Marxist intellectual David Harvey discussing the recent economic recession as a failure of capitalism. It's main contentions are as follows:

1. Since the liberalization of markets in the 1980s, wages have been stagnant or falling in OECD countries.

2. But wage earners are also consumers so reducing wages means less demand for capitalist products.

3. So the capitalists loaned money to wage earners and set the stage for the economic crisis.

4. Economic recovery in the United States does not absolve capitalism of its ills because the crisis was just shifted other countries like Greece, Spain and Portugal.

5. Financial institutions allocate capital efficiently but make financiers rich therefore resulting in injustice.

Similar to my approach in this article, we will examine the internal consistency of statements. Economic theory is also important but Marxist propositions are so convoluted with logical fallacies that a discussion of economics is superfluous.

The first statement, that wages have been falling, will be taken as true. We will no longer examine the difference between household income and individual income. No discussion will be had on the function of profits and their necessity for the increase in wages. (an empirical rebuttal to Harvey can be found in this video)

The second statement is amusing because older Marxists never thought about the fact that wage earners were also consumers who bought, and hence benefited, from the mass production possible under capitalism. It would seem that the Marxists have gotten less wrong in their beliefs.

Statement three suggests that statement two was made only to justify the ad hoc theory that wage earners were 'forced' into debt to compensate for the reduced ability to consume as a result of declining wages. The accumulated debt on the backs of wage-earners/consumers is then the cause of the credit crunch. Capitalism is hence destroyed because greedy capitalists could not see the flaw in lending money to unsound borrowers.

So let me get this straight. Capitalists were smart enough to solve the problem of demand by making credit accessible to the masses but they were too blind in their greed not to lend to unsound borrowers. If capitalists are blinded by greed to the prospect of major long-term losses then it should have also blinded them to the lack of demand resulting from lower wages in the first place. What we see here is a double standard in the application of the premise. Not only that, but the whole proposition is based on belief in a capitalist conspiracy theory!

Are the capitalists really to blame for the recession? The question of moral responsibility needs to be reassessed. I would venture into the possibility that it is the (gasp!) wage earners who are to blame for the recession. After all, there would be no recession had the wage earners not defaulted on their debts. As the saying goes, 'it takes two to tango'. Surely, some responsibility ought to be assigned to the wage earner for the decision to borrow money he knew he could not repay. If the capitalist creditor is blinded by greed, then so is the wage-earning debtor. If we are not to be hypocrites, then both capitalist and wage-earner are to blame for their freely chosen actions which resulted in the recession.

But my ramblings mean little to Marxists who would surely argue that unlike the capitalists, the wage earners were 'forced' to indebt themselves since their wages were below subsistence. This claim is even more ridiculous considering the context of United States, where the consuming wage-earners used credit to fund exuberant lifestyles. But the main point here is that the reality of 'voluntariness' of trade is totally ignored. Every transaction in capitalism is voluntary. For a wage-earner to be exploited by a capitalist implies the consent of the alleged victims of exploitation. This reality is totally ignored because it exposes the necessarily violent means employed by anti-capitalists to achieve their intended goals. Extreme situations such as a worker starving to death if he did not submit to 'exploitation' do not change matters. Freedom is the absence of physical coercion. It is not about doing whatever one wants. Man must work, provide value for value, for him to improve his lot in life. A jobless individual starving to death under conditions of natural freedom can only mean that the person does not have anything of value to provide his fellow man. The miserable state of this individual is not an injustice but justice since he deserves it for not using his mind, which is the only tool for man's survival. Since such a dire scenario would be unlikely in a free society, its presentation only shows the philosophical nihilism of those giving such examples.

Go back to the five statements. We find other ad hoc explanations in defense of the leftist position. The possibility of an economic recovery might salvage capitalism in the US so our Marxist author says the harm is not eliminated only moved to other countries. The fifth proposition shows the author's downright bigotry of wealth and success. Such asinine claims do not even merit discussion.

Friday, March 25, 2011

Burying the RH bill


After reading the comments of this blog post criticizing the hero of the pro-RH bill (reproductive health bill) movement, I was disappointed at closed-mindedness of the commenters in denouncing an opinion which they most likely have never heard. It is my observation that RH bill supporters pride themselves in thinking independently and practically about social issues, particularly such issues as overpopulation and its relationship with poverty in the Philippines. But after reading the comments, it seems like RH bill supporters’ ardor in activism is based on feelings of self-importance rather than reason and experience. Their opposition to the Catholic Church is similar in nature to that of the atheists. That is, they like to sound as if reason in on their side just because the opposition's views are founded on religious doctrine or theological propositions (which is even ridiculous since theology involves complex reasoning much beyond the grasp of your average pro-RH bill dolt).

If this is true about RH bill supporters, then it makes no sense arguing with them at all since their main motivation is not truth but a shallow and false sense of satisfaction and worth that comes from a naive view of the world. Carlos Celdran fans think of themselves as 'progressive' in opposing what is stereotyped as and old and inflexible institution, the Catholic Church. But if there are RH bill supporters who actually care about truth and morality then it is advised that they continue reading.

Taking Your Naive Assumption

In arguing for or against something, it is always better to have fewer assumptions than more. So I will not anymore make the case that overpopulation is a myth, I will rather borrow the assumption of my opponents that overpopulation really exists and contributes to poverty in the Philippines. Then I will argue that the RH bill should be rejected even with this assumption.

So if indeed the way to solve poverty, according to 'progressives', is to curb population growth then clearly the solution is to provide condoms and such contraceptive items to the public. It does not follow, however, that the government should provide such items. Indeed, economic theory shows that the government is the worst agency to use when solving social problems. What RH bill supporters commit is the red herring fallacy. It is defined as introducing facts or arguments that are irrelevant to the issue at hand.

What is being debated is the issue of 'overpopulation as the cause of poverty and how to solve it'. But RH bill supporters center the debate around the RH bill without considering possible alternatives. That is why opposition to the RH bill is immediately branded as either a religious dogmatist, apathetic, or ignorant. The belief is that without the RH bill then RH (reproductive health) services would not be provided at all. Again, no non-government alternative is even thought of.

To illustrate my point is a made-up dialogue between two persons standing in line for bread during the time of the Soviet Union.

Yago: I'm hungry. Why can't this line move faster?
Vlad: We're all hungry, but we won't be able to eat if we don't wait.
Yago: This system is so inefficient!
Vlad: Hey, we have to be thankful. I heard that in a capitalist society, the government doesn't even provide the bread. Can you imagine how worse it would be?

Condoms and contraceptive items are just like bread or any other good, they are most efficiently provided under the conditions of economic freedom. Private firms always outperform government when it comes to quality, cost and safety. Projects are usually twice as expensive when done by the government than by private firms because the latter is subject to profits and losses.

Government is not a productive entity and operates by taking (by force) money from some to give to others. So it is not actually the government that provides reproductive health products and services but a contractor of the government, a formerly private firm. The extent to which a private firm earns its revenues from the government (really the taxpayers since the government has no money) is the extent that it is not a private firm and is part of the government and therefore becomes a parasite itself on productive activity.

So the RH bill is not really about the ‘people’ but about the wishes of certain moneyed interests to become a monopoly provider of ‘reproductive health’ in order to shield itself from market competition. After all the shameful government failures we have witnessed in the past, it is imperative to consider a way of looking at the government that is different from what is taught in high school civics class. As I have said before, the government is the worst agency to use when trying to solve social problems.

Some might object by saying that private firms, as they function right now, do not cater to the poor or that the poor are not educated about such things or are too poor to buy condoms and contraceptive items. Notice the absurdity in saying that the poor cannot afford condoms when those who make this claim have seen that the poor are able to feed children. But regardless, if curbing population growth via reproductive health is really so important then for more reason we should not use the government because we know that many people are willing to fund it voluntarily. It makes no sense to force people into paying for what they already deem as important. A likely explanation for such behavior is a fear that the ‘people’ are actually not on one’s side and a desire to impose one’s values on others.

Now here lies the hypocrisy of the RH bill movement. They spend a huge amount of time and energy protesting against the Church and pushing for reproductive health services through political means but I see no voluntary collective action to distribute condoms to the poor. I only see political bickering and smug preaching of an economically illiterate position. The only way to test if a person really wants something is to make him spend his own money (the rewards of productive use of time and effort) on a venture he believes in. Effort should not be spent on trying to influence the government to impose one’s values on others (taxpayers) but on persuasion and voluntary measures such as fundraising.

Lastly, it should be pointed out that there is simply no distribution of goods in a predominantly market society like the Philippines. Only in a socialist state does a bigger population mean less resources distributed per person. Only in a socialist society is population a problem. The cognitive dissonance observed in our automatic thinking that resources are distributed (or that one man's gain is another man's loss) can be explained by sociobiology. The advocate of the RH bill must choose between capitalism and socialism before his judgments about population become even relevant. But that's another matter altogether.

Here are examples of statements by RH bill supporters along with my commentary.

Do you even know what you are talking about? Obviously you are not a woman. I wonder if you even have a mother, a sister or a grandmother. A daughter perhaps? Reproductive health is everything that makes a woman -- her vagina, her ovaries, her breasts.

Red herring fallacy, you assume that I am against reproductive health just because I am against the RH bill. One can be against the RH bill precisely because of the desire to slow down population growth by promoting reproductive health practices.

And by the way, if you don't believe in this how about sponsoring at least ten poor children in Payatas and send them all the way from grade school to college. Walk the talk.

Again, you commit the red herring fallacy. But aside from that you are a hypocrite. If you really believe in stopping overpopulation then you go to Payatas to distribute condoms to the poor. If you are tactless enough not to feel guilty of minding others’ sex life no one will stop you.

RH bill supporters also hold false philosophical views

Can you even imagine if your mother had 12 other children and you did not even finish high school because your parents can not afford it? You would even be probably wearing a toothless smile by the time you are fourteen because your parents can not afford dental and medical attention

That would be a sad state of affairs but then I do not assume that the government or society has the obligation to take care of me. The world is not perfect (although the notion of perfect is questionable) and we are all born under unequal circumstances. Trying to change the rules of nature cannot work because man is unable to go outside his relationship with reality. New rules entail rule-makers who are subject to the very rules they are trying to change. More importantly, real freedom is not about the quantity of choices but the quality. One can be born physically weak, ugly and dull but can end up a very happy person by realizing his full potential. Leftism is a dangerous ideology which propagates collectivized ethics and a victim mentality that prevent man from standing up on his own two feet and realizing that only he can improve his lot in the world.

The government provides free education. The Church does not. They even charge the most exorbitant fees and are the most expensive schools in this country.

No. Government is a parasite on the productive class. It is the government which charges exorbitant fees (taxes) for mediocre education. Catholic schools train the youth to become upstanding individuals with moral integrity. Catholic organizations used to do a lot more charity work for the poor and sick but that relied on patrons’ capital accumulation which has been discouraged by taxes and inflation.


We reject the RH bill even if we take the false assumption that a lower population equates to better economic conditions. We reject it on the basis that statist solutions to social problems are worse than voluntary ones.

Friday, January 7, 2011

Prices, Fares, Toll Fees and Statism

The Central Lesson Here: Government is Bad

Food prices – Government prevents the supply of food from abroad by its imposition of tariffs on commodities such as rice, wheat and sugar. The logic of the state is that without the high prices created by the imposition of tariffs, local producers would go unemployed. Yet Noynoy Aquino is going to sign an executive order removing the tariff on wheat in order to reduce flour prices by P20.00 per bag. It seems that the government is very arbitrary as to its trade policies, not wanting to put too much of a shock on the consuming public.

The uncertainty created by land reform affect the prices of food as landowners become hesitant to invest funds to make their operations more efficient. Land reform thrusts the peasant farmer into an entrepreneurial position where he may not be suited for. There are many reports of the distributed land being sold back to the landowner because of bad debt-management and necessary technical know-how. The point is that land reform lowers output and contributes to high food prices.

Lastly, there is the nefarious National Food Authority, which, under the same logic of protectionism, buys commodities from the agricultural sector only to be brought to waste because of corruption and incompetence.

Transportation (tolls, fares) – Higher fuel prices are the cause. What’s the cause of higher fuel prices? Yes, government. Military interventionism in the Middle East and a global oil cartel OPEC results in the underproduction of oil, or manipulates oil supply making it nearly impossible for entrepreneurs to anticipate.

Abolish Regulations on Public Vehicles – there should be no regulations, coerced standardization, and licensing of public vehicles. Without regulations, price competition will ensue and different services catering to different needs will emerge in the market. Some individuals may choose lower quality or older vehicles because of the lower fare charged. Some may want the safest ride they can get no matter how high the fare. Under a free market, both the consumer and the servicemen choose the ‘right’ fare with proper consideration to the scarcity of the factors of production. If the problem is that fares are too high, then servicemen will be encouraged to innovate in cost-cutting in order to satisfy the need for lower fares. Government can only be detrimental to this entrepreneurial process. Legalize free choice in transport.

Privatize the Roads and Mass Transit – No more Build-Operate-Transfer Projects. No more public-private partnerships. Separate all transportation infrastructure development from government. The majority of the population does not make use of the road system as much as large statist corporations. Government roads shift the cost of transport from corporations to the taxpayer. Government mass transit had to be created in order to allay the dissatisfied majority. Privatization and denationalization of all transportation infrastructures would radically change it into something more suitable to the average consumer, with much less sprawl and congestion. This would require abolishing agencies such as the Metropolitan Manila Development Authority (MMDA), Land Transportation Franchising and Regulatory Board (LTFRB), and Department of Public Works and Highways (DPWH).

Money Supply – The main cause of rising prices for almost everything is the central bank which preposterously makes the claim of controlling inflation. The central bank, which holds a legal monopoly in money printing, is the root of the problem.

Thursday, January 6, 2011

Changing the Mainstream Concept of the Political

The word politics comes off to the anti-statist as a dirty word. The word connotes power, matters of state, control, running peoples’ lives, property expropriation. Rothbard equated politics with economic violence. Hence, consistent libertarians, adhering to the principle of peaceful relations among men, are fundamentally opposed to anything political. Radical libertarians are predisposed to despise the political and attack the views of those who follow it.

The Left and mainstream political thought, on the other hand, views politics in a very different way. Politics is human affairs, it is consensus building, it is communication. In other words, the Left ascribes to the word politics qualities that are the very opposite to what anti-statists ascribe to it. This semantic divide creates needless antagonism between the two camps. Libertarians can be more successful in airing their views if they borrow the word ‘politics’ and use it in a positive way.

Now to be sure, there is a good reason the libertarian does not have a positive view of politics. Politics is associated with the state to the point where the two concepts are interchangeable. The libertarian, recognizing that the state is really a form of organized crime, rejects this association. It is therefore the leftist, in his failure to grasp the criminal nature of the state, who is at fault.

It would certainly be wise to borrow the word politics and use it against the state. That way, libertarians can utilize the many positive connotations that come with a word which is familiar and dear to mainstream political thinkers. If it could be proven that politics, in the true, classical sense, is to be found in the market, then accusations of the market as being an anti-social force would lose teeth.

The Ancient Greeks were the first to define politics as social interaction, matters of human relations and consensus building. Plato talks of the polis, or the just city. The furtherance of justice is the goal of politics. In defining the just city, Plato speaks of the division of labor.

The Polis, Society, and Division of Labor in Book II of Plato’s Republic

Here I quote passages from Book II of The Republic where the ideal polis is presented. Plato recognizes the fact that humans cooperate not out of loving feelings for one another but because of the selfish need.

Socrates: Well, then, a city, as I believe comes into being because each of us isn’t self-sufficient but is in need of much. Do you believe there’s another beginning to the founding of a city?

Adeimantus: None at all

Plato emphasizes the value of specialization in one job. This conclusion comes from accepting the natural diversity and inequality of man.

Socrates: Now, what about this? Must each one of them put his work at the disposition of all in common --- for example, must the farmer, one man, provide food for four and spend four times as much time and labor in the provision of food and then give it in common to the others; or must he neglect them and produce a fourth part of the food in a fourth part of the time and use the other three parts for the provision of a house, clothing, and shoes, not taking the trouble to share with others, but minding his own business for himself?

Adeimantus: Perhaps, Socrates, the latter is easier than the former.

Socrates: It wouldn’t be strange, by Zeus! I myself also had the thought when you spoke that, in the first place, each of us is naturally not quite like anyone else, but rather differs in his nature; different men are apt for the accomplishment of different jobs. Isn’t that your opinion?

Adeimantus: It is.

Socrates: And, what about this? Who would do a finer job, one man practicing many arts, or one man one art?

Adeimantus: One man, one art

Plato blasts protectionism.

Socrates: And further, just to be found the city itself in the sort of place where there will be no need of imports is pretty nearly impossible.

Adeimantus: Yes, it is impossible.

Plato even realizes the radical idea that people undertake risks to fill other people’s needs. In explaining the emergence of tradesmen, he is presenting the idea of entrepreneurship and the beauty of spontaneous market order.

Socrates: Now, if the agent comes empty-handed, bringing nothing needed by those from whom they take what they themselves need, he’ll go away empty handed, won’t he?

Adeimantus: It seems to me.

Socrates: Then they must produce at home not only enough for themselves but also the sort of thing and in the quantity needed by these others of whom they have in need.

Adeimantus: Yes, they must.

Socrates: If the farmer or any other craftsman brings what he has produced to the market, and he doesn’t arrive at the same time as those who need what he has to exchange, will he sit in the market idle, his craft unattended?

Adeimantus: Not at all, there are men who see this situation and set themselves to this service... They must stay there in the market and exchange things for money with all those who need to sell something and exchange, for money again, with all those who need to buy something.

Socrates: This need, then, produces tradesmen in our city....

Socrates: Then has our city grown to completeness, Adeimantus?

Adeimantus: Perhaps.

Politics during the time of the Ancient Greeks was about human interaction and as we have seen from the text of The Republic itself, the division of labor and trade---- otherwise known as the market ---- is the central element in the polis.

A New Perspective of Politics

In order to revive and refine the classical definition of the polis as the market, we must understand a fact that collectivists try to suppress --- society is composed of individuals. The individual must be once again thrust to the center of political discourse, for the workings of society can only be understood in terms of the actions of individual men. The collectivist must work on the assumption that the individual is irrelevant. He must assume that all individuals are the same --- in other words ---- there is no individual, only an individual unit. Society, for the collectivist, has pronounced its collective will and wishes its leaders to act. By making such assumptions, they become the spokespersons of the masses and are justified in grandiose schemes to improve humanity. Politics is thus transformed into statism. Everybody is forced to participate. This arrangement makes no room for individual action, preferences and ultimately, freedom.

Take for example education. Why are so many people complaining about education? It is because everybody’s interests are pitted against one another by the state. People want different methods and content for education. Yet, there can only be one type of education. If I want to change the educational system, I have to convince 51% of the electorate of my idea before it can get implemented. This is not the same with goods in the private sector. If I want to have a mango, I go to the market and buy one. The only politics that exists in that arrangement is between me and the seller of the mango. We both benefit from this arrangement, no third person loses. Now imagine if I know of a cure for cancer but need funding and help in order to develop it. I then go and try to convince investors to risk their money for my project. I also call up medical professionals to ask if they are interested in becoming partners in my undertaking. Politics now exists between more than two persons. Realize that both investors and medical partners are involved for their own profit (or possible loss), yet the benefactors are the whole of humanity.

This is the beauty when we drop our leftist assumptions about human equality. How, again, is human inequality present here? The arrangement of the investors, inventor and partners are only among themselves, others are excluded because they do not have the desire nor the ability to undertake such a task. This is what we mean by inequality. And it is from social acceptance of this reality, and its ethical-economic implication of private property rights, that all of human achievement, creativity, and progress has come about.

With that said, our new understanding of politics must be that it is dynamic and spontaneous. We must stand aback, suspend our value judgments, and learn to appreciate the individual as he interacts with other individuals. Society is composed of individuals. There are tasks which require politics between only two individuals, and there are tasks which require politics among thousands. The important thing is that we understand that human relations are always changing. There is in the course of human affairs no certainty, no fixed arrangement. Politics is only possible if individuals have the freedom not to engage in it.

Remarks on Philosopher-Kings and Political Framework in Plato’s Republic

Plato conceived of the philosopher-kings as having to live a communal lifestyle in order for them to rule the city well. He outlined what might be considered a rather totalitarian program for the polis, advocating such things as eugenics to control the genetic quality of the citizenship and propaganda to control the mass culture. The philsopher-kings must not have any ties to family for the citizenship is their family. Their happiness must be the welfare of the constituents.

Such details do not refute our new conception of politics. Book II of The Republic clearly established that the city was complete when individuals cooperate under the division of labor. It is only because Glaucon thought it not enough and demanded a more sophisticated city. He was not satisfied with a system of political self-determination. It is from this demand that the dialogue continues and the philosopher-kings are invented to impose personal preference on how society should be organized.

Source: The Republic of Plato. Translated by Allan Bloom