Showing posts with label Government. Show all posts
Showing posts with label Government. Show all posts
Saturday, December 3, 2011
Tuesday, November 8, 2011
Sunday, October 2, 2011
Tuesday, September 20, 2011
Friday, March 4, 2011
Lesser of Two Evils?: Taxes versus Deficits
Lesser of Two Evils?: Taxes versus Deficits
by Alex Merced
Hello everyone, in this months article what I wanted to talk about was the effects of higher taxes versus deficit spending. While from a political view, deficit spending does less political damage; the more important paradigm is economics and liberty as these are the factors that determine the quality of life of you and those to come. First off let's understand how both function.
Increased Taxation
If government is to increase taxation, this means more of a persons earnings must be taken whether through a direct tax like an income tax which is virtually unavoidable, or an indirect tax such a sales tax which to some extent you can control your payment of. Although one must understand what happens when someone is taxes, they are not only being stolen of their money, but since their time was spent to labor for that money or was earned from money you invested that originally came from you or someone elses labor. If more of your wages are taken, it means more of your labor is needed to maintain the same amount of purchasing power. If they decide not to labor more than then you won't have the same purchasing power meaning you have a choice, save less for rainy day, or cut back on your consumption.
The Bottom Line, taxes take away the fruits of your labor and time which you can't get back. Although, the effect taxation is to reduce CURRENT savings/consumption in the time period the tax takes place. (of course there are larger changes in institutional structures, but that's beyond the scope of this article)
Deficit Spending
If government does not want to raise taxes then it has to borrow the money to make up the deficit in it's budget. This money that is borrowed is received generally from bank lenders who are lending out the savings from a previous period, that would otherwise be lent out to other parties usually to invest in growing or starting new enterprises. If the money is not borrowed out the local or global stock of savings, then a financial intermediary like a central bank can be used to increase the money supply and offer to buy this debt from the banks to encourage the banks to make the loan. This increase in the money supply has the same effect of robbing the savings stock by devaluing the currency the stock of savings is denominated in, and also has the effect of encouraging speculation with that savings stock because of the drops in interest rates that is caused by this increase. Even worse, these loans must still be paid off from future tax increases generally on people who had nothing to do with the need to borrow initially.
Bottom Line, Deficit spending pillages savings from the past to be repaid from robbing/taxing the wages of the future.
Conclusion
Whether you find one of these tactics to fund intrusive monopolies of force (government) preferable really depends on WHEN you want to steal from: The Past, The Present, or the Future. No matter what the result is the change in peoples available resources from this financing does change the outcome of economic and social calculation of individuals in any of these periods of time causing material changes to how institutions in society are created, developed, or even destroyed.
by Alex Merced
Hello everyone, in this months article what I wanted to talk about was the effects of higher taxes versus deficit spending. While from a political view, deficit spending does less political damage; the more important paradigm is economics and liberty as these are the factors that determine the quality of life of you and those to come. First off let's understand how both function.
Increased Taxation
If government is to increase taxation, this means more of a persons earnings must be taken whether through a direct tax like an income tax which is virtually unavoidable, or an indirect tax such a sales tax which to some extent you can control your payment of. Although one must understand what happens when someone is taxes, they are not only being stolen of their money, but since their time was spent to labor for that money or was earned from money you invested that originally came from you or someone elses labor. If more of your wages are taken, it means more of your labor is needed to maintain the same amount of purchasing power. If they decide not to labor more than then you won't have the same purchasing power meaning you have a choice, save less for rainy day, or cut back on your consumption.
The Bottom Line, taxes take away the fruits of your labor and time which you can't get back. Although, the effect taxation is to reduce CURRENT savings/consumption in the time period the tax takes place. (of course there are larger changes in institutional structures, but that's beyond the scope of this article)
Deficit Spending
If government does not want to raise taxes then it has to borrow the money to make up the deficit in it's budget. This money that is borrowed is received generally from bank lenders who are lending out the savings from a previous period, that would otherwise be lent out to other parties usually to invest in growing or starting new enterprises. If the money is not borrowed out the local or global stock of savings, then a financial intermediary like a central bank can be used to increase the money supply and offer to buy this debt from the banks to encourage the banks to make the loan. This increase in the money supply has the same effect of robbing the savings stock by devaluing the currency the stock of savings is denominated in, and also has the effect of encouraging speculation with that savings stock because of the drops in interest rates that is caused by this increase. Even worse, these loans must still be paid off from future tax increases generally on people who had nothing to do with the need to borrow initially.
Bottom Line, Deficit spending pillages savings from the past to be repaid from robbing/taxing the wages of the future.
Conclusion
Whether you find one of these tactics to fund intrusive monopolies of force (government) preferable really depends on WHEN you want to steal from: The Past, The Present, or the Future. No matter what the result is the change in peoples available resources from this financing does change the outcome of economic and social calculation of individuals in any of these periods of time causing material changes to how institutions in society are created, developed, or even destroyed.
Friday, September 17, 2010
Bill Clinton Visits the Daily Show
Bill Clinton Visits the Daily Show
by Alex Merced
(This is in Reference To This interview on the Daily Show)
In former President Bill Clintons appearance on the popular satirical news show "The Daily Show" I had to say I was very surprised at Clintons candidness. Clinton, shockingly enough somewhat understood the problems that are preventing the economy from moving foward much better than any Keynes following demand sider I've heard so far. I'm not saying that all of the suddent Bill Clintons an ally or fellow traveler, on the contrary he's very far from what I would remotley call a friend of Free Markets. In that I'd like to respond to many of his points and clarify some of his mistakes.
Worker Mobility
This is actually something I discussed on my series on labor economics, you can read what I wrote about worker mobility here. While Cliton ackowledged that the problem isn't the lack of jobs but the lack of qualified and geographically available labor (the local people don't have the rights skills, and the ones that do are stuck in houses they can't sell). Although what he doesn't venture into is why we have this gap in mobility and skills, cause it then dims the picture on his major policy recommendation... government guaranteed loans.
It's cause of the implicit government guarantees on Freddie/Fannie loans, and the explicit guarantee on Ginnie debt that was the major catalyst for many of these people stuck in these homes which they now can't sell and are less valueable than the loans they took due to price bubbles caused by government guaranteed loans. Easy
It cause of the government guarantee of Sallie May debt that so many people can more easily and painlessly pay lavish tuitions at schools and walk away with degrees in which they learned very few if any practical skills in recession (My Bachelors is in Popular Culture Studies) and not skills that offer versatility in a changing job market (copywriting, data analysis, marketing, visual arts, programming/web design).
I'm not saying there is no value in a degree in something like ethnic studies and popular culture, but the risk in entering and succeeding in those fields is similar to that of joining the NBA. Essentially, like anything else easy money makes it easy for people to take more risk than they would usually take, if people had to pay higher rates on their loans or didn't get other types of financial aid they'd be more prudent in developing their skills (they'd still minor in their interest, but more than likely major in something like marketing or visual arts which is used in ALL industries). I can attest to this since I would of probably stuck with my original major, Computer Programming, if I was not on a scholarship. Actually I probably would've went to a local community college and transferred later on which would be the more prudent decision.
Bottom Line, since students were willing to take more risk in which skills to invest their education dollars you had a mal-investment or bubble in degrees which could not yield a return on the investment which results in a over supply of labor for some things and shortage of supply for other things. This is essentially mini occurances of the Austrian Business Cycle (easy credit leads to mal-investment which leads to market corrections).
So what would one expect if Bill Clinton had his way and Government Guaranteed loans were made for Small Businesses (it already happens under SBA, Clinton only wants to expand SBA). You'd have more small businesses starting which for sure would create jobs, but only some of those jobs would be sustainable since many of these new businesses might have risky business models that were made possible by this government guarantee (the bank wouldn't loan to a risky model naturally, so the entrepeneur would have adjust his model). The sustainable jobs that are created would've existed anyways since these companies have sound business models that would be able to be capitalized normally. Of the businesses that normally would have not gotten loans only a small chunk might survive which doesn't justify the mis-allocation of investment in the ones that don't survive which then taxpayers foot the bill for.
Construction Jobs
Clinton goes on to talk about green infrastructure and construction jobs because construction is where the most unemployment is (cause the bubble was in housing construction, so many people forgoes developing other skills to participate in the glut of construction demand at the time). Although using the same mechanism of guaranteed loans to create construction jobs is the reason so many people were concentrated in those jobs and are now unemployed in the first place. The 25% unemployment in construction workers isn't a signal that this is an industry that needs stimulus, it's a result of the mal-investment from the housing bubble and sustaining it will make that number bigger in the long run when the bubble re-occurs and even more of the workforce if over-concentrated in construction.
Bottom Line
Tax Cuts for Small Businesses and deductions for particular expenditures is the equivalent of easy credit as far as human behavior, so the solution from the republicans isn't appetizing as well. Although, instead of trying to understand why the situation is what it is, Cliton uses the current state as justification that there is need of more the current government subsidies to different industries.
In Order for the economy return to a sustainable functioning economy, participants need the incentives to make sustainable decisions and that incentive is called "Risk". Loans, Deposits, Insurance, or anything else should not be guaranteed by taxpayer money, and if those moral hazards are removed then people at all levels will be more prudent which means lowering taxes and giving them their money back would make a whole lot of sense since the population will have the right environment to make the right decisions.
by Alex Merced
(This is in Reference To This interview on the Daily Show)
In former President Bill Clintons appearance on the popular satirical news show "The Daily Show" I had to say I was very surprised at Clintons candidness. Clinton, shockingly enough somewhat understood the problems that are preventing the economy from moving foward much better than any Keynes following demand sider I've heard so far. I'm not saying that all of the suddent Bill Clintons an ally or fellow traveler, on the contrary he's very far from what I would remotley call a friend of Free Markets. In that I'd like to respond to many of his points and clarify some of his mistakes.
Worker Mobility
This is actually something I discussed on my series on labor economics, you can read what I wrote about worker mobility here. While Cliton ackowledged that the problem isn't the lack of jobs but the lack of qualified and geographically available labor (the local people don't have the rights skills, and the ones that do are stuck in houses they can't sell). Although what he doesn't venture into is why we have this gap in mobility and skills, cause it then dims the picture on his major policy recommendation... government guaranteed loans.
It's cause of the implicit government guarantees on Freddie/Fannie loans, and the explicit guarantee on Ginnie debt that was the major catalyst for many of these people stuck in these homes which they now can't sell and are less valueable than the loans they took due to price bubbles caused by government guaranteed loans. Easy
It cause of the government guarantee of Sallie May debt that so many people can more easily and painlessly pay lavish tuitions at schools and walk away with degrees in which they learned very few if any practical skills in recession (My Bachelors is in Popular Culture Studies) and not skills that offer versatility in a changing job market (copywriting, data analysis, marketing, visual arts, programming/web design).
I'm not saying there is no value in a degree in something like ethnic studies and popular culture, but the risk in entering and succeeding in those fields is similar to that of joining the NBA. Essentially, like anything else easy money makes it easy for people to take more risk than they would usually take, if people had to pay higher rates on their loans or didn't get other types of financial aid they'd be more prudent in developing their skills (they'd still minor in their interest, but more than likely major in something like marketing or visual arts which is used in ALL industries). I can attest to this since I would of probably stuck with my original major, Computer Programming, if I was not on a scholarship. Actually I probably would've went to a local community college and transferred later on which would be the more prudent decision.
Bottom Line, since students were willing to take more risk in which skills to invest their education dollars you had a mal-investment or bubble in degrees which could not yield a return on the investment which results in a over supply of labor for some things and shortage of supply for other things. This is essentially mini occurances of the Austrian Business Cycle (easy credit leads to mal-investment which leads to market corrections).
So what would one expect if Bill Clinton had his way and Government Guaranteed loans were made for Small Businesses (it already happens under SBA, Clinton only wants to expand SBA). You'd have more small businesses starting which for sure would create jobs, but only some of those jobs would be sustainable since many of these new businesses might have risky business models that were made possible by this government guarantee (the bank wouldn't loan to a risky model naturally, so the entrepeneur would have adjust his model). The sustainable jobs that are created would've existed anyways since these companies have sound business models that would be able to be capitalized normally. Of the businesses that normally would have not gotten loans only a small chunk might survive which doesn't justify the mis-allocation of investment in the ones that don't survive which then taxpayers foot the bill for.
Construction Jobs
Clinton goes on to talk about green infrastructure and construction jobs because construction is where the most unemployment is (cause the bubble was in housing construction, so many people forgoes developing other skills to participate in the glut of construction demand at the time). Although using the same mechanism of guaranteed loans to create construction jobs is the reason so many people were concentrated in those jobs and are now unemployed in the first place. The 25% unemployment in construction workers isn't a signal that this is an industry that needs stimulus, it's a result of the mal-investment from the housing bubble and sustaining it will make that number bigger in the long run when the bubble re-occurs and even more of the workforce if over-concentrated in construction.
Bottom Line
Tax Cuts for Small Businesses and deductions for particular expenditures is the equivalent of easy credit as far as human behavior, so the solution from the republicans isn't appetizing as well. Although, instead of trying to understand why the situation is what it is, Cliton uses the current state as justification that there is need of more the current government subsidies to different industries.
In Order for the economy return to a sustainable functioning economy, participants need the incentives to make sustainable decisions and that incentive is called "Risk". Loans, Deposits, Insurance, or anything else should not be guaranteed by taxpayer money, and if those moral hazards are removed then people at all levels will be more prudent which means lowering taxes and giving them their money back would make a whole lot of sense since the population will have the right environment to make the right decisions.
Sunday, August 15, 2010
Labor Economics #4 - Unemployment Insurance
Labor Economics #4 - Unemployment Insurance
by Alex Merced
These days unemployment insurance has become more of an issue than it has in recent times. The debate on this issue seems to be misguided. To really understand the unemployment insurance issue, or the issues regarding any kind of insurance you must understand what insurance really is.
Many government advocates always discuss the role of goverment in providing a safety net for those who can't afford to pay for one themselves, this is the purpose of insurance. An insurance company pools the resources of those who have more to write contracts to cover the costs of unforseen risks for premiums that are far less than the cost of not having the insurance contract. This creates a mechanism to handle risk that doesn't deplete resources in the economy since the premiums from unrealized risks pay off the costs of those contracts which are exercised. (although due to corporatist/monopolist partnerships between insurance companies, government power has dimished the accountability of Insurance and other industries to it's consumers. an issue for another time...)
This is why many Anarcho-Capitalist such as myself see a stateless world as one where many insurance companies and similar institutions arise and compete to fill the place of the social safety net in the absence of government, with arguably much better results. One of my favorite writings on the subject is Robert Murphys "Chaos Theory".
Unemployment insurance specifically can be a useful service to help make the transition between jobs for individuals much easier, and in the grander scheme of things ease the pain when resources shift from one industry to another as the wants and needs of people change. The issue becomes what is best way to provide such insurance to individuals, the government or via private enterprise?
The Forgotten Role of Insurance in Risk
In assessing this situation is what is lost is that insurance has much great role to play than just the benefits received when exercising a insurance contract. Insurace also serves as a mechanism to internalize many risks and costs, and incentivize prudent behavior.
Let's use the example of car insurance. The premiums you may pay for your car insurance factor in many different variable; your driving record, your age, education, the model of the car, even the color to assess the risk of you getting into an accident or having your car stolen. If you buy a Red Ferrari, the chance somone may want to steal your car increases and so does your insurance premium which creates a financial incentive to choose safer car which will less likely be stolen. Also, if you were to get into an accident and file a claim the next time you purcahse insurance your premiums will be higher which again creates an incentive to be a safer driver. Overall, the premium mechanism is arguably vital to having a safety net like car insruance not cause moral hazard.
Let's pretend the government provided quality car insurance free or at a uniform fee versus what you would've paid in the private markets. The incentive to not buy the ferrari or drive safely are now diminished, cause you either didn't pay or didn't have a differential in what you would pay depending on your behavioral choices.
So it's not only about the benefit, but cost to have the benefit that helps regulate the abuse of the benefit. So now let's apply this concept to unemployment insurance.
The Moral Hazard of Unemployment Insurance
Under the Government provided system of Unemployment the employer pays the costs of insurance, very similar to the situation in retirement and healthcare created out of ERISA. The Premium the employer pays is based on a percentage of the taxable salary of the employee (which is an incentive to give smaller salaries), and is not keyed into in any way other risks such as...
- Does the Employer run a sustainable company that is fiscally sound (if not, the risk is greater)
- Does the Employee have a stable work history (if not, the risk is greater)
- What is the background/education/skills of the Employer/Employee
- What is the Turnover Rate of the Employer (higher, the greater the risk)
- How difficult is it find a similar job
Since there things are not priced into the premium, the premium may be below market or above market depending on the employer and their employee. Since the employee doesn't pay the premiums directly, they have no incentive to take a sustainable job at a company that's well run, because the unsustainable company will probably pay higher salaries which makes it harder for good companies to compete with reckless companies in purchasing talent. The reckless company may go out of business a year later but the unemployment benefit as a percentage of the higher salary may outweight the smaller salary at the sustainable job which makes it hard for modest growth sustainable companies to compete.
This is similar to deposit insurance and the savings rate, the more reckless banks will generally have a higher savings rate but since depositors don't pay their deposit insurance directly they will deposit their money in the higher savings rate bank which more than likely has some liquidity problem causing a whirldpool of good resources into bad places.
All this doesn't take into consideration the political ramifications of having government run unemployment insurance, as we see now with congress using unemployment as a fierce political issue to buy votes by extending the benefits well beyond what has been payed into them and was promised.
The Virtue of a Private Unemployment Insurance
If people could and would purchase their own private unemployment insurance, or employers voluntarily provided it from priavate insurance companies all the factors that weren't calculated into the premium now would. The insurance company would investigate the employer and the employee to assess the risk they both present in the risk of the employee becoming unemployed. So more risk, would equal high premiums leading to a lot of good incentives such as...
- An employer running a sustainably well run company who can't afford lavish salaries will be more competetive. The higher salary at the reckless company would also carry higher premiums, internalizing the risk of which is the more sustainable job. This would also be an incentive to be sustainable, cause it'll be hard to attract talent if working for the company generates high insurance premiums.
- The company would be incetivized to have a pleasent and safe work environment, cause not having one would increase their turnover rate which would increase unemployment premiums.
- The employee would have an incentive to be more prudent in choosing jobs, and to pursure more education and skills. Having a stable work history and lots of credentials and skills will only help them lower their unemployment premiums.
- If working in a niche industry that may take a year or two to find a similar job, the employee can choose to buy benefits beyond what's currently mandated (6 1/2 months) this allows the freedom for those who need more to get more and those who need less to get less.
The Bottom Line
Unemployment Insurance like insurance against any unforseen risk is a healthy institution to have, but the role these institution play in the economy is far greater than just providing benefits but also pricing in the risks of every actor into premiums internalizing many otherwise external costs. When government gets involved in the insurance business it often distorts this mechanism causing the externalities of these risks to remain external causing moral hazard and an economic drain from the increased claims from this moral hazard.
by Alex Merced
These days unemployment insurance has become more of an issue than it has in recent times. The debate on this issue seems to be misguided. To really understand the unemployment insurance issue, or the issues regarding any kind of insurance you must understand what insurance really is.
Many government advocates always discuss the role of goverment in providing a safety net for those who can't afford to pay for one themselves, this is the purpose of insurance. An insurance company pools the resources of those who have more to write contracts to cover the costs of unforseen risks for premiums that are far less than the cost of not having the insurance contract. This creates a mechanism to handle risk that doesn't deplete resources in the economy since the premiums from unrealized risks pay off the costs of those contracts which are exercised. (although due to corporatist/monopolist partnerships between insurance companies, government power has dimished the accountability of Insurance and other industries to it's consumers. an issue for another time...)
This is why many Anarcho-Capitalist such as myself see a stateless world as one where many insurance companies and similar institutions arise and compete to fill the place of the social safety net in the absence of government, with arguably much better results. One of my favorite writings on the subject is Robert Murphys "Chaos Theory".
Unemployment insurance specifically can be a useful service to help make the transition between jobs for individuals much easier, and in the grander scheme of things ease the pain when resources shift from one industry to another as the wants and needs of people change. The issue becomes what is best way to provide such insurance to individuals, the government or via private enterprise?
The Forgotten Role of Insurance in Risk
In assessing this situation is what is lost is that insurance has much great role to play than just the benefits received when exercising a insurance contract. Insurace also serves as a mechanism to internalize many risks and costs, and incentivize prudent behavior.
Let's use the example of car insurance. The premiums you may pay for your car insurance factor in many different variable; your driving record, your age, education, the model of the car, even the color to assess the risk of you getting into an accident or having your car stolen. If you buy a Red Ferrari, the chance somone may want to steal your car increases and so does your insurance premium which creates a financial incentive to choose safer car which will less likely be stolen. Also, if you were to get into an accident and file a claim the next time you purcahse insurance your premiums will be higher which again creates an incentive to be a safer driver. Overall, the premium mechanism is arguably vital to having a safety net like car insruance not cause moral hazard.
Let's pretend the government provided quality car insurance free or at a uniform fee versus what you would've paid in the private markets. The incentive to not buy the ferrari or drive safely are now diminished, cause you either didn't pay or didn't have a differential in what you would pay depending on your behavioral choices.
So it's not only about the benefit, but cost to have the benefit that helps regulate the abuse of the benefit. So now let's apply this concept to unemployment insurance.
The Moral Hazard of Unemployment Insurance
Under the Government provided system of Unemployment the employer pays the costs of insurance, very similar to the situation in retirement and healthcare created out of ERISA. The Premium the employer pays is based on a percentage of the taxable salary of the employee (which is an incentive to give smaller salaries), and is not keyed into in any way other risks such as...
- Does the Employer run a sustainable company that is fiscally sound (if not, the risk is greater)
- Does the Employee have a stable work history (if not, the risk is greater)
- What is the background/education/skills of the Employer/Employee
- What is the Turnover Rate of the Employer (higher, the greater the risk)
- How difficult is it find a similar job
Since there things are not priced into the premium, the premium may be below market or above market depending on the employer and their employee. Since the employee doesn't pay the premiums directly, they have no incentive to take a sustainable job at a company that's well run, because the unsustainable company will probably pay higher salaries which makes it harder for good companies to compete with reckless companies in purchasing talent. The reckless company may go out of business a year later but the unemployment benefit as a percentage of the higher salary may outweight the smaller salary at the sustainable job which makes it hard for modest growth sustainable companies to compete.
This is similar to deposit insurance and the savings rate, the more reckless banks will generally have a higher savings rate but since depositors don't pay their deposit insurance directly they will deposit their money in the higher savings rate bank which more than likely has some liquidity problem causing a whirldpool of good resources into bad places.
All this doesn't take into consideration the political ramifications of having government run unemployment insurance, as we see now with congress using unemployment as a fierce political issue to buy votes by extending the benefits well beyond what has been payed into them and was promised.
The Virtue of a Private Unemployment Insurance
If people could and would purchase their own private unemployment insurance, or employers voluntarily provided it from priavate insurance companies all the factors that weren't calculated into the premium now would. The insurance company would investigate the employer and the employee to assess the risk they both present in the risk of the employee becoming unemployed. So more risk, would equal high premiums leading to a lot of good incentives such as...
- An employer running a sustainably well run company who can't afford lavish salaries will be more competetive. The higher salary at the reckless company would also carry higher premiums, internalizing the risk of which is the more sustainable job. This would also be an incentive to be sustainable, cause it'll be hard to attract talent if working for the company generates high insurance premiums.
- The company would be incetivized to have a pleasent and safe work environment, cause not having one would increase their turnover rate which would increase unemployment premiums.
- The employee would have an incentive to be more prudent in choosing jobs, and to pursure more education and skills. Having a stable work history and lots of credentials and skills will only help them lower their unemployment premiums.
- If working in a niche industry that may take a year or two to find a similar job, the employee can choose to buy benefits beyond what's currently mandated (6 1/2 months) this allows the freedom for those who need more to get more and those who need less to get less.
The Bottom Line
Unemployment Insurance like insurance against any unforseen risk is a healthy institution to have, but the role these institution play in the economy is far greater than just providing benefits but also pricing in the risks of every actor into premiums internalizing many otherwise external costs. When government gets involved in the insurance business it often distorts this mechanism causing the externalities of these risks to remain external causing moral hazard and an economic drain from the increased claims from this moral hazard.
Wednesday, August 11, 2010
Big Government (or any Government) Will Never Lead to Prosperity
Big Government (or any Government) Will Never Lead to Prosperity
by Alex Merced
What we constantly get told in some form or other, is that you need government for things to work... but in all reality things work in spite of government. It's like when your a kid and you want something, all the rules in the world won't stop you from trying.
For Example, two countries that are catching up very quickly if not surpassing the US and Europe in economic power are China and India, arguably their governments are bigger and more coercive in scope of control. You can take the economist approach and see that spending as a share of GDP is vastly less than the US, but what I want to take a look as is the rules they govern with, not so much the spending.
China: By having it's non-democratic central government, the current leadership in China has LIBERALIZED a lot of it's economic policy and up until recently has focused on having a savings economy. While it's intervention in the supply of savings has and will cause problems, it couldn't of done it without somewhere to invest those savings in which the US more than glad to play the role which arguably leads to more problems for the US as the Spending economy. Another aspect to take a look at is Hong Kong, once the best bastians of Free Marketeering on the globe which played it's role in sparking the economic growth in the region if not being the Seed that grew into it.
India: This country is known for some of the largest amount of red tape and barriers to entry of any country, with buildings filled with stacks of pending applications for all sorts of things. Yet no one can honestly make the argument that the excessive beuracracy has led to it's quickening growth. So while the same type of Liberalization we see in China isn't in india, a system of corruption and bribery has developed to supercede the beuracracy and foster a freer market... essentially a black market for merely "permission" to enter and participate in commerce.
People will never be diverted from purposeful action no matter what the rules, every rule in the US either eventually is found to have loophole or has some built into it initially. What keeps people honest is their respect for boundries which comes from their own self developed ethical framework. So if we care about what people do in their social and business lives we may affect more change by discussing principles to live life by than about which rules we should establish that people will ignore if their principles allow.
by Alex Merced
What we constantly get told in some form or other, is that you need government for things to work... but in all reality things work in spite of government. It's like when your a kid and you want something, all the rules in the world won't stop you from trying.
For Example, two countries that are catching up very quickly if not surpassing the US and Europe in economic power are China and India, arguably their governments are bigger and more coercive in scope of control. You can take the economist approach and see that spending as a share of GDP is vastly less than the US, but what I want to take a look as is the rules they govern with, not so much the spending.
China: By having it's non-democratic central government, the current leadership in China has LIBERALIZED a lot of it's economic policy and up until recently has focused on having a savings economy. While it's intervention in the supply of savings has and will cause problems, it couldn't of done it without somewhere to invest those savings in which the US more than glad to play the role which arguably leads to more problems for the US as the Spending economy. Another aspect to take a look at is Hong Kong, once the best bastians of Free Marketeering on the globe which played it's role in sparking the economic growth in the region if not being the Seed that grew into it.
India: This country is known for some of the largest amount of red tape and barriers to entry of any country, with buildings filled with stacks of pending applications for all sorts of things. Yet no one can honestly make the argument that the excessive beuracracy has led to it's quickening growth. So while the same type of Liberalization we see in China isn't in india, a system of corruption and bribery has developed to supercede the beuracracy and foster a freer market... essentially a black market for merely "permission" to enter and participate in commerce.
People will never be diverted from purposeful action no matter what the rules, every rule in the US either eventually is found to have loophole or has some built into it initially. What keeps people honest is their respect for boundries which comes from their own self developed ethical framework. So if we care about what people do in their social and business lives we may affect more change by discussing principles to live life by than about which rules we should establish that people will ignore if their principles allow.
Sunday, July 18, 2010
Rights and Principles and their roles in society
Rights and Principles and their roles in society
by Alex Merced
If one where to subscribe to the Hamiltonian view which is usually championed on the left end of the political spectrum you'd then have conflicts with many of the "rights" movements that come from people on the left such as fighting for the right of other people in other nations. If people rights come from government, how can you fight for rights of people in other nations for which their government has not granted them? Although, those people who fight womens rights in middle eastern countries due seem to understand that peoples rights are beyond what the government they live under saids is right and wrong. This would leave us to believe that the natural rights point of view to be the more consistent with peoples view of "rights violations"by government, cause a government could only violate rights if they were independent of government.
Natural Rights
Aristotle, Locke, Jefferson, Paine, many important individuals in the formation of Natural Rights as a philosophy and I recommend reading their work to understand it's origin since my take will be slightly different. If Natural Rights are intrinsic to being human, it can only encompass what an individual has true absolute control over which is their mind and their body, no decree or law can change the way you think or how you use your body but only set guidelines on how to punish you for using your natural right over your mind and body. People don't have absolute control over anything external to the individual, so things like property rights and the non-aggression theorem would be difficult to wrap in this theory of intrinsic human rights. Although, if you only organized society based on natural rights it'd be difficult for those who choose not to use their rights over their mind and body with non-aggression avoid tyranny from those who would use it from aggression, so this is why a framework of logical external principles come into place.
Principles
To me, property rights and the non-aggression axiom are not true natural rights, but frameworks of principles to help humans use the rights over their internal individual selves in the external world of other individuals with their own individual rights and help determine how establish who has a claim when the rights of two or more individuals collide.
conclusion
The differentiation between internal and external is important, cause government can take away external factors from an individual but they cannot take the internal without taking their life which is the source of all their rights, cause once your life is gone you have no ability to exercise your individual rights at least in the mortal world as we know it.
Sunday, July 11, 2010
Understanding Social Policy
Understanding Social Policy
by Alex Merced
You may have seen my recent video discussing how people are socialized by institutions, and how all institutions fall into three categories. I then followed up about how this framework can be applied to understanding and combating institutional discrimination. I thought I'd recap much of what I said in a written article for those who prefer these ideas written.
Intersocial Institutions
Definition: These are institutions that are made of people with similar interests, goals, or other unifying interests that are not spiritual. Since these are not spiritual they cannot use to the fear of violence in the afterlife to accept customs, traditions and practices.
Examples: Family, Friends, Clubs, Jobs, etc.
How it enforces Customs: A intersocial institution can only use the fear of being no longer allowed to participate in the institution to keep members in line. These Institutions are voluntary and since they don't threaten violence only removal from the institution, it's the least influential and least destructive to individual liberty of the three types on institutions.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose to not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Spiritual Institutions
Definition: These are institutions organized by institutions that exploit the existance or belief in of spirituality.
Examples: Churches, Religons, Youth Groups
How it enforces Customs: A Spiritual Insitution uses FUTURE VIOLENCE as a threat to get participants to participate in it's customs and traditions. The threat that in the afterlife one may live the next life as an inferior being or be casted into eternal damnation are threats of post-life violence. Due to peoples TIME PREFERENCE* this threat of violence is typically less influential than the threat of violence from government.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Governmental Institutions
Definition: Tese are insitutions created by a government which is monopoly of violence, and everyone who's governed by this government may or may not consent to be governed, so withdrawl from these institutions is not an option.
Examples: Internal Revenue Service, Department of Education, Federal Drug Administration
How it enforces Customs: A government insitution keeps all people participating through the threat of CURRENT VIOLENCE. If people choose not to obey laws, they are threatened with penalties, incarceration, and inevitably violence to comply. Due to time preference, this CURRENT VIOLENCE is a much stronger influencer than the FUTURE VIOLENCE of the spiritual institutions, on top no one chooses to participate in a governmental institution but are subject to it due to their location or other arbritrary factors
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can't choose to withdraw so unlike intersocial or spiritual institutions which can be reformed by voluntarist means, a government institution can only be reformed by using the insitutions own power to reform it which means one must climb the power structure and then change the rules. Since this is the only way to reform this institution, it makes it the slowest institution to change and the more influential in keeping discriminatory and collectivist social structure in place for prolonged period of time even after attitudes and values have changed.
Conclusion: While Intersocial and Spiritual institutions both have their roll in discrimintation, violating liberty, and other social problems; they are fairly easy to deal with due to their voluntarist nature. The government on the other hand cannot be dealt with by voluntarist means and is structured in a way that can only serve to keep the status quo in place much longer than it is in the minds of individuals. This is why Libertarians and Anarcho-Capitalist focus so much on abolishing this particular type of institution versus allowing individual to reform the others through voluntarist means.
* Time Preference is a theory developed by Austrian Economist such as Carl Menger and Ludwig Von Mises that states people value present goods over future goods. Alex Merceds views on Sociology/Anthropology are based on an Indivudalist Philosophy (Isaiah Berlin, Murray Rothbard) with an sociological application of Time Preference theory to different threats of Violence.
by Alex Merced
You may have seen my recent video discussing how people are socialized by institutions, and how all institutions fall into three categories. I then followed up about how this framework can be applied to understanding and combating institutional discrimination. I thought I'd recap much of what I said in a written article for those who prefer these ideas written.
Intersocial Institutions
Definition: These are institutions that are made of people with similar interests, goals, or other unifying interests that are not spiritual. Since these are not spiritual they cannot use to the fear of violence in the afterlife to accept customs, traditions and practices.
Examples: Family, Friends, Clubs, Jobs, etc.
How it enforces Customs: A intersocial institution can only use the fear of being no longer allowed to participate in the institution to keep members in line. These Institutions are voluntary and since they don't threaten violence only removal from the institution, it's the least influential and least destructive to individual liberty of the three types on institutions.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose to not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Spiritual Institutions
Definition: These are institutions organized by institutions that exploit the existance or belief in of spirituality.
Examples: Churches, Religons, Youth Groups
How it enforces Customs: A Spiritual Insitution uses FUTURE VIOLENCE as a threat to get participants to participate in it's customs and traditions. The threat that in the afterlife one may live the next life as an inferior being or be casted into eternal damnation are threats of post-life violence. Due to peoples TIME PREFERENCE* this threat of violence is typically less influential than the threat of violence from government.
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can choose not to participate in these institutions and encourage others to withdraw as well which would destroy these institutions from within. No further coercive method is needed since these insitutions can only survive through voluntarism.
Governmental Institutions
Definition: Tese are insitutions created by a government which is monopoly of violence, and everyone who's governed by this government may or may not consent to be governed, so withdrawl from these institutions is not an option.
Examples: Internal Revenue Service, Department of Education, Federal Drug Administration
How it enforces Customs: A government insitution keeps all people participating through the threat of CURRENT VIOLENCE. If people choose not to obey laws, they are threatened with penalties, incarceration, and inevitably violence to comply. Due to time preference, this CURRENT VIOLENCE is a much stronger influencer than the FUTURE VIOLENCE of the spiritual institutions, on top no one chooses to participate in a governmental institution but are subject to it due to their location or other arbritrary factors
How to Reform: If certains customs or beliefs of the institution are discriminatory or offensive, one can't choose to withdraw so unlike intersocial or spiritual institutions which can be reformed by voluntarist means, a government institution can only be reformed by using the insitutions own power to reform it which means one must climb the power structure and then change the rules. Since this is the only way to reform this institution, it makes it the slowest institution to change and the more influential in keeping discriminatory and collectivist social structure in place for prolonged period of time even after attitudes and values have changed.
Conclusion: While Intersocial and Spiritual institutions both have their roll in discrimintation, violating liberty, and other social problems; they are fairly easy to deal with due to their voluntarist nature. The government on the other hand cannot be dealt with by voluntarist means and is structured in a way that can only serve to keep the status quo in place much longer than it is in the minds of individuals. This is why Libertarians and Anarcho-Capitalist focus so much on abolishing this particular type of institution versus allowing individual to reform the others through voluntarist means.
* Time Preference is a theory developed by Austrian Economist such as Carl Menger and Ludwig Von Mises that states people value present goods over future goods. Alex Merceds views on Sociology/Anthropology are based on an Indivudalist Philosophy (Isaiah Berlin, Murray Rothbard) with an sociological application of Time Preference theory to different threats of Violence.
Wednesday, June 16, 2010
Saturday, April 24, 2010
Individualism, Creativity, and Innovation
Individualism, Creativity, and Innovation
by Alex Merced
Premise 1: That creativity comes from tapping into your inner child
Kids say the darndest things don't they? It's this innocent nature that we admire in kids, when they are young before society begins socializing, limits, values, artificial barriers in their minds. Even then, during their adolescents they typically rebel against many of these constructs until one day the fight becomes to much and "they grow up". It's when one loses the ability to think beyond the barriers given to you that creativity dissapears and only your ability to see what is seeable is there, and you lose the ability to see what is not there.
Think of all the people you consider creative, arn't they generally playful and childlike and then think of all the frumpy people you consider an "adult" and put their creativity into perspective. So in economics the idea of seeing the unseen is called "opportunity cost", the unseen costs of every action you take. To be able to appreciate opportunity cost you must have this childlike nature to see beyond the barriers given by society, you must be creative.
This is why I feel I see such a stark difference from when I see Austrian economist who are generally very light-hearted and humorous versus Keynesians who are usually more cynical and serious. Yet, it's the Austrians who are more equipped to see the unseen opportunity costs, and realize what could have been to look to the future to see what could be. Keyensians, on the other hand focus on only known results to draw conclusions, and only draw self-destructing solutions based on actions that have "visible" results even if the results don't accomplish anything.
(For example, deficit spending has the visible result of increasing GDP but it doesn't fundamentally fix the real, unseen problem of diverting capital).
Another place I noticed this was on a recent interview with Ron Paul on Hardball where the serious and cynical Chris Matthew interviews the optimistic and light-hearted Ron Paul and discusses how Paul remind Matthews of his childhood hero, Barry Goldwater, but then he grew up. This was a sad and depressing statement that shows that at some point he gave in to the barriers that society imposes and became an "adult", while Ron Paul was able to this day in his 70's retain that childlike innocense that allows children to see things for what they are not how society wants them to be.
Do an experiment, give the facts to a child on a issue, and ask for their response.
Premise # 2: Collectivism kills Creativity, while Individualism births it
Creativity must come from an individual with little barriers of the mind as possible, although to think in groups and collectives as done in a collectivist framework would mean imposing more barriers in order define yourself into this "Collective". To see why this would be the case watch this video on the difference between Individualism and Collectivism:
Premise # 3: Innovation comes from Creativity
Innovation results from finding news way to do the same things, which will results in needing less time and resources to survive and spend more time on leisure and personal interests which is a true increase in the standard of life which can be numerically measured. Although innovation requires two things:
1) Investment: These Innovations require capital to develop and distribute, without investment there is no way to develop the most useful innovations.
2) Creativity: You can have all the capital for investment but if there is no ideas to invest in, it's useless, so you need creative people to see the unknown whcih can be developed.
So creativity is pivotal in the process of Innovation, so creating a individualist framework for inviduals to grow up with actually would increase the rate of Innovation and increase the quality of life of these individuals who use these innovations.
Premise # 4: Government Destroys Innovation
Government with it's coercive monopoly on violence accomplishes two things that destroy innovation:
1) They destroy investment through taxation and borrowing which puts incredible constraints on the available investment capital.
2) They destroy creativity by imposing values of the ruling class on society, and creating standards that only impose even more barriers of the mind.
Without creativity and invesment, innovation can occur and this only hurts individuals in their pursuit to impove their individual lives.
by Alex Merced
Premise 1: That creativity comes from tapping into your inner child
Kids say the darndest things don't they? It's this innocent nature that we admire in kids, when they are young before society begins socializing, limits, values, artificial barriers in their minds. Even then, during their adolescents they typically rebel against many of these constructs until one day the fight becomes to much and "they grow up". It's when one loses the ability to think beyond the barriers given to you that creativity dissapears and only your ability to see what is seeable is there, and you lose the ability to see what is not there.
Think of all the people you consider creative, arn't they generally playful and childlike and then think of all the frumpy people you consider an "adult" and put their creativity into perspective. So in economics the idea of seeing the unseen is called "opportunity cost", the unseen costs of every action you take. To be able to appreciate opportunity cost you must have this childlike nature to see beyond the barriers given by society, you must be creative.
This is why I feel I see such a stark difference from when I see Austrian economist who are generally very light-hearted and humorous versus Keynesians who are usually more cynical and serious. Yet, it's the Austrians who are more equipped to see the unseen opportunity costs, and realize what could have been to look to the future to see what could be. Keyensians, on the other hand focus on only known results to draw conclusions, and only draw self-destructing solutions based on actions that have "visible" results even if the results don't accomplish anything.
(For example, deficit spending has the visible result of increasing GDP but it doesn't fundamentally fix the real, unseen problem of diverting capital).
Another place I noticed this was on a recent interview with Ron Paul on Hardball where the serious and cynical Chris Matthew interviews the optimistic and light-hearted Ron Paul and discusses how Paul remind Matthews of his childhood hero, Barry Goldwater, but then he grew up. This was a sad and depressing statement that shows that at some point he gave in to the barriers that society imposes and became an "adult", while Ron Paul was able to this day in his 70's retain that childlike innocense that allows children to see things for what they are not how society wants them to be.
Do an experiment, give the facts to a child on a issue, and ask for their response.
Premise # 2: Collectivism kills Creativity, while Individualism births it
Creativity must come from an individual with little barriers of the mind as possible, although to think in groups and collectives as done in a collectivist framework would mean imposing more barriers in order define yourself into this "Collective". To see why this would be the case watch this video on the difference between Individualism and Collectivism:
Premise # 3: Innovation comes from Creativity
Innovation results from finding news way to do the same things, which will results in needing less time and resources to survive and spend more time on leisure and personal interests which is a true increase in the standard of life which can be numerically measured. Although innovation requires two things:
1) Investment: These Innovations require capital to develop and distribute, without investment there is no way to develop the most useful innovations.
2) Creativity: You can have all the capital for investment but if there is no ideas to invest in, it's useless, so you need creative people to see the unknown whcih can be developed.
So creativity is pivotal in the process of Innovation, so creating a individualist framework for inviduals to grow up with actually would increase the rate of Innovation and increase the quality of life of these individuals who use these innovations.
Premise # 4: Government Destroys Innovation
Government with it's coercive monopoly on violence accomplishes two things that destroy innovation:
1) They destroy investment through taxation and borrowing which puts incredible constraints on the available investment capital.
2) They destroy creativity by imposing values of the ruling class on society, and creating standards that only impose even more barriers of the mind.
Without creativity and invesment, innovation can occur and this only hurts individuals in their pursuit to impove their individual lives.
Thursday, April 22, 2010
How the Government destorys real democracy
When we think of democracy or a democratic process we really think of several individuals acting on their preferences and values, and when this happens large commonalities would steer society. So while any value or preference held by a large number of values and individuals would steer the ship, this only works if everyone else is free and able to voice and act on their opinion, and more important able to form one.
The democratic process occurs in several places, not just government. Eveytime you participate in market transactions and purchase a good or service you are expressing your value or preference for that good or item. When a large group of people purchase the same product, be sure that it will effect whether more or less of that product will be produced. Although our money isn't the only resource we have demonstrates our values and preferences. An individual ca also donate their time to join different groups such as religious groups, activist organization, militias, or any volunteer association.
So you can DIRECTLY effect the the dialogue of values and preferences in society through how you allocate your money and time. Although the less money and time you have then the less your able to DIRECTLY participate in this true democratic process.
- As resources are used for the Government Agenda, taxation occurs and resources are taken from individuals meaning they have less money to DIRECTLY participate
- As the money have shrinks cause of taxation they may have to work more time to make up it allowing them less time to volunteer and DIRECTLY participate
Several laws create other ways in which your money and time is taken from you, which reduces you ability participate democraticly such as the issue with sugar tariffs and corn subsisidies which create for an unhealthy culture and higher healthcare costs. Since the cost of health is higher, once again more time must be worked to make up the rising costs of healthcare meaning less time to participate in the democratic dialogue outside of government. Other rising costs in healthcare, energy, food, and more also put more pressure on your time and money.
After these effects take place then people begin to become dependant on Government as the sole method of expressing values and preferences in society since only a few have the time and money to do it elsewhere. People begin to proclaim the acts of elected officials as "The Will of the People".
First off, the people is made of several individuals all with slightly different views, so there can't be any collective "will of the people". Accepting this, each individuals votes for their elected official for different reasons, so while an official may win an election it's impossible to tell if they had a majority vote cause of a particular view or in spite of it. More than likely they pieced together a majority vote based on several different issues and sometimes votes just to spite the opposition. So winning an election does not determine, "The will of the people".
The only way to have a true to democratic process is for people to have the time and resources to participate in the community, and this can only happen by rejecting government as the sole tool for democratic action and accepting sound economic principles (Austran Economics) for people to have the time and money to participate.
The democratic process occurs in several places, not just government. Eveytime you participate in market transactions and purchase a good or service you are expressing your value or preference for that good or item. When a large group of people purchase the same product, be sure that it will effect whether more or less of that product will be produced. Although our money isn't the only resource we have demonstrates our values and preferences. An individual ca also donate their time to join different groups such as religious groups, activist organization, militias, or any volunteer association.
So you can DIRECTLY effect the the dialogue of values and preferences in society through how you allocate your money and time. Although the less money and time you have then the less your able to DIRECTLY participate in this true democratic process.
- As resources are used for the Government Agenda, taxation occurs and resources are taken from individuals meaning they have less money to DIRECTLY participate
- As the money have shrinks cause of taxation they may have to work more time to make up it allowing them less time to volunteer and DIRECTLY participate
Several laws create other ways in which your money and time is taken from you, which reduces you ability participate democraticly such as the issue with sugar tariffs and corn subsisidies which create for an unhealthy culture and higher healthcare costs. Since the cost of health is higher, once again more time must be worked to make up the rising costs of healthcare meaning less time to participate in the democratic dialogue outside of government. Other rising costs in healthcare, energy, food, and more also put more pressure on your time and money.
After these effects take place then people begin to become dependant on Government as the sole method of expressing values and preferences in society since only a few have the time and money to do it elsewhere. People begin to proclaim the acts of elected officials as "The Will of the People".
First off, the people is made of several individuals all with slightly different views, so there can't be any collective "will of the people". Accepting this, each individuals votes for their elected official for different reasons, so while an official may win an election it's impossible to tell if they had a majority vote cause of a particular view or in spite of it. More than likely they pieced together a majority vote based on several different issues and sometimes votes just to spite the opposition. So winning an election does not determine, "The will of the people".
The only way to have a true to democratic process is for people to have the time and resources to participate in the community, and this can only happen by rejecting government as the sole tool for democratic action and accepting sound economic principles (Austran Economics) for people to have the time and money to participate.
Thursday, April 1, 2010
The Real Immigration Issue
Being a first generation American I have an appreciation for the immigration issue and it's complexities. Although at the end of the day I feel that many of problems in immigration isn't immigration but the struggle over remaining resource in a economy that is getting weaker and weaker everyday from a growing government. So in a debate at RonPaulForums.com about immigration I had this to say:
Correlation is not causation, there are two main problems economically with
the current state of immigration.
1) The Welfare State - due to having a welfare state
citizens and non-citizens are becoming more and more a drain on taxpaying
citizens and non-citizens... you have to dismantle the welfare system. The
solution to this issue is a supply response, not a demand response. As long as
there is a supply of government services, there will be a demand for it whether
it's domestic or foreign. We must dismantle the supply of government services
which taxpayers must pay for. Volunteered from private sources are encouraged
and a not a drain on those who choose not to volunteer their limited resources.
Also as far as immigration goes, these types of programs attract probably the
wrong people. If you have no welfare system there is no incentive for anyone to
immigrate unless it's to be productive and to have the opportunity to be
productive.
2) Growing Public Sector, Shrinking Private Sector - Due
to unions and a growing state the amount of public sector jobs have increased
which have very rigid wages, they don't go down, and they always go up. This
growing sector has consumed the amount of private sector jobs who have more
elastic wages that can adjust to changes in the supply of labor and demand for
the goods produced. Shrink the public sector, the private sector will grow
enough and be vibrant enough to handle immigration. With the growth in labor
there is a growth in demand for goods to offset it in a healthy free market
economy.
In countries where open borders have had problematic effects have had large
governments and small private sectors. Prosperous countries like Switzerland
have multiple languages spoken. As far as assimilation, culture is constantly
changing on a daily basis, so to argue that there is some constant standard of
values, traditions that hasn't changed in perception or execution is an
idealistic delusion. The beauty of humanity is how it's culture changes one
generation to the next.
None of us talk with a 1920's accent or vocabulary or wear 60's attire
(without a sense of novelty). The world is constantly changing faster and
faster, you either diversify your outlook, knowledge and skills to adapt or get
lost in the changes. It's in this diversity of culture, ideas, and values where
innovation is conjured.
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