A Libertarian Message from AlexMerced.com

Economic Equality versus Economic Liberty

Economic Equality versus Economic Liberty by Alex Merced

One of the fundamental divides among activist economics is what is the goal when thinking of policy and the economy. Progressives focus on Economic Equality and how policy can manipulate the economy to distribute resources in a more "equitable" or "fair" way as measured through income statistics. While Libertarians and Conservatives are more concerned with Economic Liberty allowing capital to flow freely increasing the odds of that capital to flow into the hands of those with the greatest entrepeneurial ability who can put that capital to use developing the division of labor, structure or production, and into innovations that create more accessibility to scarce goods for all.

It's hard to measure the effects of Economic Liberty via statistics because it's about the quality of products and services improving and their costs dropping. For example, the Iphone may not be a cheap gadget, but because of it there are many other purchases I can bypass such as buying watches, gaming consoles, calculators,  and many other things people would spend a lot of their wages on is now in one device for much less than all of those individual goods put together. So while looking at income statistics may show "real wages" havn't grown in decades but quality of life sure has increased since less wages are needed to have access to a variety of benefits since you need fewer devices to do more tasks. This is the result on entrepeneurship and innovation which can be magnified by free flow of capital and information which those who support economic liberty focus on.

 Although, those who support Economic Equality measure their policies via aggregate macroeconomic income statistics. Just because numbers such as "real wages" grow or "the income distribution" narrows doesn't mean that an increase in the quality of life has occured because quality of life is not tied to how much you make, but what you can buy with it (oh yeah... and if it makes you happy, which is not measurable) which is constantly being imporved by productivity gains and innovation from entrepeneurs. So instead of the hyper focus on labor wages, they'd be better of focusing on fostering entrepeneurship in individuals like the Economic Libertarians.

How do you read the Economy?

How do you read the Economy?
by Alex Merced

 Many people always ask me, since I'm so critical about using any type of statistics to measure whether the economy is doing well or bad, how would I measure the performance of the economy? I wouldn't, while I believe some economic environments are better than others, I don't really buy into measuring the economies performance as a whole for many reasons including;

1. Regional Differences in culture and resources
2. Does the country really have it's own economy? Aren't the borders just arbitrary lines? So what makes such a drastic difference being on one side of the line other than the governments?
3. Aggregating data smooths out outliers in the data, unlike somebody's grades those outliers can be very important economic events that effect peoples quality of life, which statistics erase with vast amount of aggregated data.

Albeit, even using that macro data, many Austrians have still been able to see standard free market principles hold up, but it seems fruitless. There is so much value in joy versus despair in peoples lives that can't be measured by wages, GDP, unemployment numbers which aggregate too much information to mean anything despite their sometimes questionable methodology.

Although, one of the things you can infer from data is how well is the market doing it's job, creating innovations and getting them widespread adoption. Happiness, that's our job, a good or bad economy is still world where you can be happy if you try. Although, it doesn't hurt to have new gadgets and tools to make my day to day life easier and free up my time to pursue that happiness... and that's the roll of a free market.

So if I'm assessing the economic environment on any level I ask myself many questions;

What is the most recent big innovations? (example: smartphones and e-readers)

What is the adoption of that product?

If the adoption is high, is savings increasing to provide capital to develop the next innovation?

If savings isn't increasing, is there another innovation or good that I'm missing?

I ask these questions because it's that adoption of new technologies to me is a much better sign of growing standard of life than most wage, employment, and GDP statistics. I know people who are perfectly content to stay unemployed in their parents basements with their gadgets, and they're happy. Not everyone can be rich, nor should they, the only benefit to being rich is having a say in what gets produced, which ends quick if you choose wrong.

So letting the market sort out the best people to wield power over capital, and allowing real incentives for people to save when there is no innovation to adopt is important to keep this real growth in the standard of life important.

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.