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Economic Events on February 24, 2011

B.P.T. — Thu, 24 Feb 2011 13:17:40 +0000

At 8:30 AM EST, the U.S. government will release its weekly Jobless Claims report. The consensus is that there were 405,000 new jobless claims last week, which would would be 5,000 less than the number released last week.

Also at 8:30 AM EST, the Durable Goods Orders report for January will be released. The consensus is that there was an increase of 3.0% from December.

At 10:00 AM EST, the New Home Sales report for January will be released. The consensus is that 310,000 new homes were sold last month, which would be an decrease of 19,000 from last month.

Also at 10:00 AM EST, the FHFA House Price Index for December will be released, providing more information about the direction of the housing market.

At 10:30 AM EST, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 11:00 AM EST, the weekly Energy Information Administration Petroleum Status Report will be released, giving investors an update on oil inventories in the United States.

At 4:30 PM EST, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EST, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

Economic Events on January 25, 2011

B.P.T. — Tue, 25 Jan 2011 12:33:24 +0000

At 7:45 AM EST, the weekly ICSC-Goldman Store Sales report will be released, giving an update on the health of the consumer through this analysis of retail sales.

At 8:55 AM EST, the weekly Redbook report will be released, giving us more information about consumer spending.

At 9:00 AM EST, the monthly S&P/Case-Shiller home price index report will be released. Given that most economists don’t expect the overall U.S. economy to improve until housing prices end their decline, the market will be watching this number closely.

At 10:00 AM EST, the monthly report on Consumer Confidence for January will be released. The consensus index level is 54.3, which would be a 1.8 point increase from December’s unexpectedly low number.

Also at 10:00 AM EST, the FHFA House Price Index for November will be released, providing more information about the direction of the housing market.

The System of the World (Part II)

Daniel Wilkinson — Mon, 12 Jan 2009 11:55:32 +0000

In part two of this series, I examine global demographic trends and take an initial look at the implications for global GDP growth, and by extension, the outlook for the current world-system of debt-money, as defined in part 1.

The general demographic trend over the last 500 years, and particularly so since the mid 1700s has been one of inexorable, exponential population growth. During this time the world-system of debt-money has evolved to it’s current level from very weak and inauspicious beginnings in the early 1500s. My contention is that population growth has been the trend which has sustained this world system, and that this driving trend is now abating with significant consequences for the world-system.

Many people make the mistake of reviewing total world population growth graphs, and see an ever upward trend, when in fact what really matters to the current world-system is not absolute population numbers, but the growth in population. It is growth in population year on year that provides more grist for the debt mill, and ensures that productivity increases year on year sufficient to replay the interest outstanding on the current money supply.

Another important fact most people miss when looking at demographic trends, is that the only population growth that directly sustains the world-system is growth of population within the monetary economy, or more specifically, those individuals earning a wage and eligible for bank loans. New money is created by the banks when they make new loans. It is imperative that the system always has more outstanding in new loans than loans currently due, since otherwise there will not be enough new money to pay off the original money supply plus the interest owing on it. So economic growth is required to sustain the system – and population growth is the most crucial element of economic growth, followed by productivity improvements via technology and better social organisation.

Therefore, the vast majority of recent world population growth which has been in the least developed nations on earth – mostly in sub-Saharan Africa and in the less developed Asian regions cannot immediately contribute to sustaining the debt-money pyramid since it takes considerable time to integrate the teeming masses in the third world into the monetary economy. Indeed recent progress in this regard has been very slow – certainly far slower than the third world population growth rate, due to a whole host of developmental problems, many of which have been caused indirectly or directly by the actions of developed nations. For this reason the west has found it necessary to appropriate the resources of third world nations to sustain western consumers of debt, rather than focussing on lettnig the third world nations develop in their own time – it would simply take too long to be of any utility in keeping the debt flowing.

So to summarise, the population demographic we are most interested in is the demographics of the world monetary economy, which are shown in the figure below (I had trouble adding the image so please follow the link).

http://www.flickr.com/photos/25490645@N06/3183768236/

The blue and light red lines represent the Total Fertility Rate (TFR) of the ‘developed’ and ‘less developed’ world respectively. Developed in this context can be taken to mean the western nations including the US, Japan and some parts of east Asia. Less Developed includes India, China, Brazil and so forth. The yellow and green lines are the TFR of the two regions respectively, but moved forward in time by 30 years. The dark red line is a weighted average of the developed and less developed TFR advanced by 30 years, with the developed TFR contributing at 400% the rate of the less developed TFR to the monetary economy.

Note the sharp and relatively simultaneous fall in fertility for both the developed and less developed worlds in the 1960-1975 time frame[1]. This is the origin of the ‘baby bust’ generation that followed the boom generation. A TFR below 2.1 (births per woman) will result in a falling population, and a TFR above 2.1 in a rising population. 2.1 births per woman is termed the ‘replacement rate’. The period around 1950-1960 represents the origin of the baby boomers. It should be obvious from the graph firstly that the growth of the population of the monetary economy has crashed since the 1970s, during which time the birth rate in the less developed world (mostly Asia) has also fallen sharply partly but by no means entirely as a result of China’s one-child policy.

Now, from birth it takes on average 30 years for an individual to enter the most productive phase of their working life, during which time they either contribute to labour input, borrowing, savings or both. If we recall that the world system requires an expansion of debt to continue functioning and that the market for new debt is significantly determined by new workers entering the market for housing, personal loans, business loans and so forth (and specifically, a larger number of new workers and debt-victims than existed previously is required, in order to take up the burden of interest on the money supply) , then we can see that a low in the groweth the productive population of the monetary economy represented by a low point the the monetary economy TFR curve shown in dark red, represents a point of maximum danger for the economy. The figure shows two periods of significant decline within the overall downward trend – one from 1995 to 2010, and another from 2015 to 2025. Note also that it takes a period of time equal to the average loan life-span for changes in the input of labour and new loan creation to manifest themselves in their effects on the economy. The recent low point in the monetary economy TFR corresponds roughly with the 2001 downturn and also with the recent credit bust of 2008.The developed economy productive worker TFR actually falls below the replacement rate just about the year 2000.

Looking slightly further back, it is also possible to observe a major down trend bottoming in the late 1970s, the might be partly correlated with the severe recessions of this period.

If we now mentally zoom out such that our time-scale incorporates the full period from 1500 onwards, we see a picture of exponential growth of the population of the world population up until the period some 3 years after the end of WWII. This trend has seen world TFR being strongly positive and quite stable in the 3-5 births per woman range and hence population growth has been exponential due to the compounding effect of growth, until the last 50 odd years during which growth has levelled out drastically. The UN population division predicts that the world population as a whole (this figure now includes the whole world including the least developed regions) will peak in 2050 and afterwards decline, only to level out around 2300. Note that this means that the peak population of the world monetary economy is peaking about now (or may have already peaked), since only a fraction of the population of less developed nations participate in the monetary economy. According to the UN, after the peak we might expect a period of population decline that lasts two centuries.

It is my thesis that it is mainly (but not entirely) the increase in population rather than productivity growth that has sustained the debt-money, never-ending growth world system to date since the green revolution and population explosion of the 18^th century, and that the recent significant moderation of the population of the monetary economy is partly responsible for the current problems in the global economy, and that the continuing moderation and eventual decline of this monetary population is going to result in a series of rolling recessions, and possibly destroy this world system altogether over a period of some 50 years from now. Further exacerbating factors can be seen in the form of:

global wage arbitrage, which is accelerating the rate of convergence between the most developed and developing economies[2]. Most people think of convergence as a process of the third world cathing up. The reality is that we shall meet them in the middle – which is what markets are all about!
Ageing societies such as Germany and Japan exhibit huge decreases in domestic consumption due to the increasing need to save for old age. An ageing nation is a global market that is retrenching for good, hurting the exports of other younger nations. Many Asian nations such as Korea, Singapore, China will join the Germans and Japanese in being ageing societies within 25 years.
Relentlessly increasing lifespans, resulting in higher social costs for the elderly.
The contraction in growth rates is superimposed on an increase in actual population of about 3 billion between now and 2050, putting extra pressure on already strained natural resources.
After 2050, a declining world population and therefore a sustained period of economic contraction, or at least stagnant growth – not seen for over half a century – is going to turn many of the accepted economic rules on their head. Remember that the whole of the dismal science has been constructed in the last 300 years of the ‘population bull market’. Few see the coming crash during a bull run.

The next article will look in more detail at the economics of ageing societies and depopulation, along with some further ruminations on other interacting factors such as the information economy. Contrary to what the reader may take from this article my overall conclusion will be one of opportunity for humanity rather than damnation, however I shall attempt to show that a rather different world-system and cultural attitudes will be required to gain a positive outcome from population growth moderation.

Before that I shall leave one more idea for you to ponder. Recall how our developed world TFR curves started downward in the late 1960’s? Looking at the 30-year adjusted developed TFR, we see that boomers born in the 50s are entering their productive phase in the 80’s. Prior to this there is a new-worker bust as the generation born durnig WWII moves into their thirties. Afterwards the generation following the boomers – the baby bust generation born in the 70’s results in another worker-bust around 2000.

Perhaps the incontrovertible fact of the shrinking populatio of the monetary economy is correlated with the birth of fiat money after 1971. Perhaps the chronic inflation that has caused middle class incomes to stagnate for the last 30 years partly a deliberate or accidental response to the suddenly impaired population growth fundamentals of the debt-money system? In fact the debt-money world system can be sustained simply by constantly inflating the money supply sufficiently to account for falling GDP growth.

No-one can deny the huge leaps in technological productivity that have been developed over the last 30 years. So what else is it that is sucking the real growth away?

Footnotes:

[1] The reasons for fertility decline are well covered in the literature so I don’t intend to address the reasons why in this article, instead I shall focus on consequences.

[2] I shall take a further look at the effect of labour arbitrage in the next article.

“Bad Samaritans”- The “Myth” of Free Trade?

Emmanuel Tabones — Fri, 09 Jan 2009 11:35:53 +0000

I first became aware of Ha-joon Chang’s latest book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism in a critique written by Edward Glaeser , a prominent economist at Harvard University, and published in the daily paper, the New York Sun. I read this review with great interest. Professor Chang, currently with Cambridge University, is also an economist and a leading expert on development economics, which focuses on issues related to economic growth in low-income countries.

While Professor Glaeser regards this book as being “well written and far more serious” than others which share similar views, he disputes a number of points such as this idea that “there is anything secret about this history of American protectionism.” Professor Glaeser notes for instance, that the “Tariff of Abominations and the Smoot-Hawley Tariff are often taught in high school history classes.

Professor Chang insists that historically, high tariffs were largely responsible for the economic success of both the United States and Britain. Professor Glaeser disagrees, citing “insufficient evidence” based on his own findings and the work of other researchers. Meanwhile, Dartmouth economist Douglas Irwin has provided documentation that also disputes Professor Chang’s argument. For example, in response to the question,“Were high import tariffs somehow related to the strong U.S. economic growth during the late nineteenth century?”, Professor Irwin states his answer in a paper entitled “Historical Aspects of U.S. Trade Policy,” published in the non-partisan National Bureau of Economic Research (NBER), in which he cites a number of factors such as “population expansion and capital accumulation as playing a greater role in late nineteenth-century economic growth than improved productivity.” In fact, he observes that tariffs may have had a “detrimental affect by raising the prices for imported capital goods and discouraging capital accumulation.” Surprisingly, Professor Irwin has found that the “greatest productivity growth was in non-trade sectors (such as utilities and services) not directly affected by tariffs.”

Professor Irwin is barely mentioned in “Bad Samaritans” perhaps because he had expressed similar observations in his critique of Kicking Away the Ladder: Development Strategy in Historical Perspective, which was a previous work authored by Professor Chang.

Professor Glaeser similarly pointed out that “Bad Samaritans” could have been more effective if it had “delved deeper into understanding the broader historical impact of trade protectionism in the United States and Britain in relation to other economic factors.”

Having read the book, I believe that Professor Chang’s focus on high tariffs as being key to economic growth above most everything else is a fundamental flaw in his position along with the argument that “American and British free trade advocates are guilty of hypocrisy” because historically, their countries have not always practiced what they have preached.

Perhaps Professor Glaeser said it best when he mentioned that there is “alternative view that economists shouldn’t be required to endorse the worst policies of their own countries.”

CNN’s Error Inadvertently Gets it Right

J.D. Seagraves — Wed, 31 Dec 2008 12:33:40 +0000

A recent headline at CNN.com said “Fed bails out GMAC with $6 billion.” Since I had heard it was the Treasury department funding the GMAC giveaway, I had to check the story to make sure this wasn’t another $6 billion being thrown down the drain. Fortunately, CNN just got it wrong: it was the feds , not “the Fed,” engaged in this particular instance of kleptocracy.

CNN’s error, of course, is not surprising. After all, an easy majority of financial journalists in the mainstream media clearly do not know the difference between the discount rate and the fed funds rate, nor do they have any clue what the Federal Reserve is or what it does. But thinking about the Fed made me realize that CNN’s error was actually no error at all. It will be the Fed that ultimately bails out GMAC.

The Treasury, after all, doesn’t have $6 billion, and it’s not going to tax us to get it — that’s way too old school. Where will Hank Paulson get the money, then? By issuing new debt. And who will buy this debt? A substantial portion of it will be bought by the Fed, which can “monetize” any debt or asset (i.e., print money to pay for it and say the new money is “backed by the debt (or asset)” for which it was printed).

More importantly, it is the power of the printing press that leads everyone else (China, Saudi Arabia, etc.) to buy American debt. If these foreign bondholders thought that their interest and principal would have to be financed by taxation, they’d know there’d be a second American Revolution before they recouped their investments. Instead, they know their money is “safe” so long as the Fed can create it at will to make good on the government’s bonds.

But there’s a reason “safe” appears in scare quotes. The Fed is creating an unprecedented amount of money, and as Austrian economic theorist Peter Schiff pointed out in a recent Wall Street Journal editorial, “each additional dollar printed diminishes the value those already in circulation.” Foreign bondholders are currently putting up $1 million to receive $21,360 in annual interest. If the dollar’s decline in purchasing power merely maintains current ten-year trends, then the real value of the principal at the end of the ten-year maturity will be just $767,330. And is anyone deluded enough to think price inflation won’t be much higher over the next ten years than it has been over the past decade?

Apparently so — for now. But as soon as these creditors wise up to the fact that the U.S. is broke, be prepared for a massive devaluation of the dollar: it’s going to zero.

The System of the World (Part I)

Daniel Wilkinson — Tue, 30 Dec 2008 15:17:11 +0000

What is the System of the World? One social scientist defines it as follows:

“…a social system, one that has boundaries, structures, member groups, rules of legitimation, and coherence. Its life is made up of the conflicting forces which hold it together by tension and tear it apart as each group seeks eternally to remold it to its advantage. It has the characteristics of an organism, in that it has a life-span over which its characteristics change in some respects and remain stable in others. One can define its structures as being at different times strong or weak in terms of the internal logic of its functioning.”

This definition comes from the world-systems school of global social science. It is not the purpose of this article to advocate this or any other approach to the social sciences (including economics), but rather to examine the ‘System of the World’ such as it currently exists and according to the definition above, and to place the current system in the context of other long term trends in human existence.

The current world system is Money. Money, and more specifically debt, or credit. In the 21^st century some 97% of the supply of circulating money is in the form of electronically created bank loans. This is interest-bearing money created from thin air backed by little or nothing of any intrinsic value. So today, nearly all money is also debt.

Crazy as it seems, this system has by and large served humanity well for the past 500 years [1] from it’s origins with Italian and German proto-bankers of the 14^th and 15^th centuries. It has taken many forms and names, such as monarchism,imperialism, mercantilism and capitalism, all of which represent incremental improvements in the social efficiency of production, but which are all based on the same fundamental world-system.

The world-system of debt-money is stable only when the money supply (essentially the value of goods and services available at any time, as represented by the volume of the accepted medium of exchange) grows such that it becomes possible to pay back both the principal – the original loan-money issued by the banks – and the interest on it. With a fixed money supply and no (or low), money supply growth the only possible outcome for the debt-money system viewed as a whole would be be a default on the interest owed, or default on a number of loans roughly equal in value to the value of the total interest borne by the money supply, and thus for the systems collapse

How then has the system remained stable? The answer lies in the astonishing productivity growth of the human race over the last half century. This productivity growth has in general been sufficient to sustain this world system for an impressive period of time. In fact productivity growth has been symbiotic with the debt-money system in the sense that the debt borne by society impels it to develop the productivity gains required to fund interest payments on the principal, thereby repaying the original loan and thus facilitating further expansion of credit to fund yet more development.

The key components of productivity growth required to sustain the current world system are technology growth and population growth. Technology growth improves the productivity of each human in general. When the increase in productivity of one man or woman due to technology is multiplied by the increase in population we arrive at the total productivity growth for the economy. As long as this combined increase can generate new economic value sufficient to cover the interest owing on the money supply, the system is both stable and self perpetuating. This has remained the case for a good half century during which technology growth and population growth have both been explosive when compared with earlier epochs of human history. As long as people continue to innovate and procreate, it is reasonable to assume this system will continue to deliver. Unfortunately however, the fundamentals are not encouraging at the start of the 21^st century.

Population growth, contrary to popular understanding is actually now declining. This is not to say that the population per-se is shrinking, merely that the rate of positive change is slowing. Recent reports from the UN population division predict that the global population will peak around 2050, after which it will begin a gradual decline, reaching a steady state of around 9 billion in 2300.

As the crucial population element of the productivity growth equation approaches zero, productivity growth can come only from two sources – direct technological innovation, and improvements in how humans organize themselves to produce. If the UN forecasts are in the right ballpark, then in fact a declining population will require that productivity growth from these two sources must not only make up for a lack of positive population growth, but must increase to compensate for a declining population. In all liklihood this heralds a decline in global GDP growth with respect to the last five centuries.

This series of articles will investigate the details behind the population dynamics, and what that means for technology and social organization improvements and ultimately overall growth, followed by a discussion of some likely outcomes of this scenario in terms of a world-system that might be able to adequately serve a prolonged period of low, zero or negative growth. Some of these discussions will touch upon environmental and ecological issues, however these will be tangential to the main argument, since it is possible based on current demographic data to show that population growth is likely to slow and ultimately to decline without significant recourse to ‘environmental limit’ arguments.

In summary, we can return to the definition of the world systems approach as follows:

“Apart of these, Wallerstein defines four temporal features of that. Cyclical rhythms represent the short-term fluctuation of economy, while secular trends mean deeper long run tendencies, such as general economic growth or decline. In the theory the term contradiction means a general controversy in the system, usually concerning some short-run vs. long run trade-offs. For example the problem of underconsumption, wherein the drive-down of wages increases the profit for the capitalists on the short-run, but considering the long run, the decreasing of wages may have a crucially harmful effect by reducing the demand for the product. The last temporal feature is the crisis: a crisis occurs, if a constellation of circumstances brings about the losing of the system’s structure, which also means the end of the system.”

Cyclical rythms we are already familiar with in terms of business cycles or even kondratiev waves. Secular trends we can see in the form of 500 years of population growth. Contradictions we can see in the form of both business cycles and in the debate over the environmental commons, and crisis we can see as the coming end of the debt-money, growth based paradigm primarily as a result of population growth fall-off and secondly as a result of human population approaching and exceeding the social carrying capacity of the environment.

In the next article, we begin with the crisis – the likely demographic trends over the next few centuries.

[1: Footnote] 500 years is only moderately impressive in historical terms – the Roman, Imperial Chinese and Byzantine empires lasted considerably longer.

When Up is Down and Rocks can Fly

Dirk McCoy — Mon, 22 Dec 2008 13:11:58 +0000

The New York Times published an article today placing blame on the Bush Administration for the current (latest) global economic meltdown. The staff piece recounts the actions of George Bush- in championing home ownership, in allowing banks, brokers, and finance companies to expand home lending, and in failing to reform Fannie Mae and Freddie Mac- and comes to the conclusion that this led to a housing bubble doomed to inevitable collapse and ensuing loss of wealth. This not new thinking, just another biased account focusing on George Bush’s role in this latest mess.

What the authors fail to recognize, however, are three important facts. The first fact is that home prices increased at historic rates after the double whammy of significant capital gains tax changes in the late 90s and historically low interest rates. The second fact is that this led to major investment in housing, and a vast increase in housing in the US- actually a good thing. And the third fact is that the economic tailspin was not created because too many people had houses with mortgages. It was created because 18 Fed rate hikes created a tripple whammy- crushing debt service, reduced homeprices, and slowed business expansion- that turned into rolling financial crisis.

The result is that a normal citizen, the vast majority never having taken a single course in economics, is to believe that championing home ownership is wrong, is to believe that free markets are destructive, is to believe that asset bubble always produce financial crisis. This is akin, however, to believing up is down, and that rocks can fly. It is nearly the opposite of truth.

Home prices rose thanks to the 1997 tax reform bill. Profits from selling a home could now free from taxation up to $500,000 a couple, and no longer limited to a single instance. Coupled with historically low interest rates, the financial incentive for home ownership had never been higher- but this occurred before, and largely independent, or George Bush. And, these incentives were, in fact, productive.

The goal of an economy is to create and distribute goods and services. History has proven that economies are more effective at doing this when excess production can be invested to create additional supply capacity- capital. So, creating more housing is good. This increase in housing meant that there were larger, nicer, and usually more efficient, homes. People had room to put in home offices, home gyms, home workshops, and larger kitchens with more ovens. Meanwhile, houses were purchased by investors and put up for rent, keeping rents lower and more affordable. The NY Times authors prefer to look at this glass as half-empty, citing a former Bush official who felt a housing bubble was evident because rents didn’t rise as fast as home prices. But the effect was to more effectively distribute housing- a good thing.

All this progress did not have to lead to an economic collapse. As of 2004, homebuilding costs were rising, and supply would have begun to catch up with demand, eventually slowing the market. But, ever cognizant of the “Scarcity Paradigm” crowd that was in full voice about “suburban sprawl”, “unsustainable growth”, “global warming”, and an “overheated” economy, the Fed raised rates 18 times, to 6%, between 2004 and 2006. The effects were chilling. As ARM rates climbed, the most vulnerable homeowners were faced with increases in debt service of 50% or more. This led not only to climbing default rates, but responsible homeowners putting their homes for sale- quickly creating excess supply and dropping prices. We all know what happened thereafter- and it didn’t require Fannie and Freddie.

The Federal Reserve has reversed course in a big way, but is learning the lesson that destruction is much easier, and faster, than construction. Monetary stimulus takes time, usually 6-9 months, and the (well-placed) crisis in confidence in our financial system will slow this recovery further. Eventually, inflation will emerge, creating incentives for money to be spent and invested, and economic growth will resume in a world of 3 billion people living on less than $2.50 per day.

But the lesson of this downturn cannot be that production- even if it creates temporary imbalances- is bad. It cannot be that wider distribution- even in the face of risk- is bad. It must be that the Federal Reserve should never increase debt service requirements by a factor of 2-3X on households and companies in less than, say, 5-6 years. Because our economy, like rocks, can fall very fast when they do.

How a Free(d) Market Would Give Us Zero Unemployment

J.D. Seagraves — Fri, 19 Dec 2008 12:07:20 +0000

One persistent problem in America’s political discourse is the misuse of the term “free market.” So-called “conservatives” like President Bush and his Republican acolytes like to claim that they support the “free market,” and liberals, normally skeptical of everything that comes out of conservatives’ mouths, take their word for it. The Right defends the system we have as “free market capitalism,” which aids the Left in its straw-man attacks against it. A side effect of this inexact taxonomy is that real free-market partisans are misconstrued as defenders of “Big Business.” But as Austrian theorist and Cato blogger Roderick Long demonstrates , this is far from being the case.

There is currently a debate raging between the so-called “left” and “right” factions of the libertarian underground. The so-called “left” faction, led by Professor Long, insists that businesses would be smaller and more democratic in the absence of the state. The “right” faction, while not defenders of the current system (which many of them consider to be “fascist”) argue that businesses would be even larger under completely laissez-faire, and this would probably be a good thing.

The libertarian-right’s case is based on the size-limiting effects of anti-trust laws and protectionist trade policies, among other regulations. At first, this argument is compelling, but as Long points out, these effects are likely very minimal when compared to the tremendously destructive impact the government has on would-be small businesses. Just imagine, he says, if there were no longer any licensing requirements for starting a taxi service: tens of thousands of cab companies would start up tomorrow. What if you could open a restaurant in your living room? What if you could start a daycare without jumping through burdensome regulatory hoops? What if you could hire people at any wage at which they were willing to work? Indeed, there would likely be no unemployment under laissez-faire.

It should be stressed that, for the most part, the “left” and “right” factions of anarcho-libertarianism agree on the proper role for government: none . Neither faction supports the regulations that keep firms small or prevent them from starting up at all. This is largely an academic debate about how laissez-faire would work if ever adopted, but both sides agree that it would work better than the current system, and that it is more moral.

Personally, I come down on Professor Long’s side, and I think it’s important for libertarians to differentiate themselves from conservatives at every turn. Libertarians are not conservatives — they are liberals in the classical sense. In fact, modern liberalism is merely a variant of classical conservatism, which is one reason there’s so little difference between the two Establishment parties. Long says that today’s liberals attempt to use conservative means to achieve liberal ends, such as full employment. But in reality, classical liberal ends (laissez-faire) would achieve those ends more effectively, and more morally, too.

The Recession Brings the Division of Labor to My Neighborhood

J.D. Seagraves — Fri, 12 Dec 2008 09:17:49 +0000

I really hate shoveling snow. I live on a large corner lot with lots of sidewalk, so the job can take me over an hour. Snowblowers, I’ve found, are overrated. I’ve had two and neither did a very good job and both had maintenance issues. I bought both used, so that might be part of the problem, but when faced with buying a new one (after my 2005 model died this past week), I thought about how much I hated dealing with the snow and questioned the economics of hiring someone to do the shoveling for me.

It’s a little embarrassing. I’m thirty and work from home. I guess I could be considered “lazy” for not doing my own snow removal, but I prefer to think of myself as an ardent believer in the economic concepts of comparative advantage and the division of labor . So I went on Craig’s List and posted a job for “Regular Snow Removal, Good Pay” with all the details. Since there was only one local posting offering snow-removal service, I didn’t know if I’d get a response… But I didn’t have to wait long to find out.

Almost instantly, I got two emails. By the time I woke up the next day, I had ten. By the end of the second day, more than twenty. Two people stopped by my house to introduce themselves. And after about eight inches of snow rained down last night, a third young man showed up, unannounced, to take care of it for me.

I paid him $40 and he did a great job. Was this worth it? Well, consider this: as a freelance writer, I typically earn between $25 and $50 an hour. My average is probably around $40. So, assuming I can find an extra hour of work to do, I just have to think of it this way: would I rather spend an extra hour writing or shoveling snow? It’s an easy decision for me to make. In fact, even if I earned only $20 or even $10 an hour, I still think it’d be worth it — that’s how much I hate dealing with the snow.

The exuberant responses I’ve gotten from people wanting to shovel my sidewalk and driveway have me thinking of other ways I can kill two birds with one stone: help people who are out of work and lessen the number of unpleasant tasks I have to perform. I’m thinking of hiring someone to do my family’s laundry, for example. It’s the type of thing that always seems to get only half done (i.e., all of my clean clothes are still in the basement, not hung up in my closet) for one reason or another. Perhaps picking up an extra hour or two of writing work (which I enjoy) could save me and my wife from having to do the laundry (a constant source of marital strife) and help someone put food on the table too. Capitalism is win-win.

International Human Rights Day

Dan McLaughlin — Mon, 08 Dec 2008 11:12:31 +0000

December 10th, 2008 will mark the 60th birthday of the United Nations Declaration Of Human Rights (DHR) and kick off a year long propaganda campaign pressing its agenda. The document has 30 articles which purport to catalog the rights that every human has. Most of those rights are what can be called positive rights, things that a person can demand someone provide for them. By contrast, negative rights are the ones that we, as Americans, are most familiar with. They include the rights to life, liberty and property. They say that nobody has a right to take the life, the liberty or the property of any individual without his consent.

The DHR is riddled with inconsistencies and inner conflicts. It begins by saying that all of the listed rights are inalienable. The normal view of “inalienable” means “cannot be alienated” by anyone, including government. The DHR ends with articles describing the circumstances where the stated inalienable rights can be alienated by the United Nations or member governments. Rights are given and rights are taken away. The term “inalienable” in the introduction is an outright fraud.

Many positive rights are granted under the DHR, such as the right to food, water, shelter, education and so forth. Negative rights, such as the right to own property without confiscation, are also granted. Whenever you grant positive and negative rights together, there is an insoluble problem. In order to provide anything to anybody, it must first be taken from someone else. In order to take it from someone else, their property rights must necessarily be violated. The donor has no rights in the confiscated property. Inalienable property rights are a fraud under the DHR.

Compulsory education under the Declaration is to be directed at socializing our children, making good subjects of international government and furthering the activities of the United Nations. The silly notion of educating our children to help them to be more productive and prosperous never occurs to the writers of the DHR. Education under DHR is a fraud.

Article 29 (1) says that “Everyone has duties to the community in which alone the free and full development of his personality is possible.” This manifests itself in calls for compulsory community service for all citizens. There is discussion of that very thing in America today. If a person is compelled to do service against his or her will by anyone, including politicians and bureaucrats, that is a form of slavery or involuntary servitude. It is in direct conflict with article 4 of the DHR: “No one shall be held in slavery or servitude…” Freedom doesn’t exist under DHR.

Article 30 ends the list. It says that “Nothing in the Declaration may be interpreted as implying for any State, group or person any right to engage in activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.” The net effect of that statement is that, if anyone tries to roll back government interference, to limit welfare, unemployment, social security or any other government program, they are guilty of humanitarian crimes under the Declaration. Their rights are not protected. They have no rights, under the DHR, to speak or write about the abolition of those programs, belong to organizations that promote their abolition or take part in rallies or hold seminars that speak out against them.

The bottom line is that the Declaration Of Human Rights is not a statement of inalienable rights, in any sense of the word. It is, rather, a comprehensive manifesto, aimed at promoting world socialism under the United Nations. The U.N. was founded on the idea that national sovereignty is an outdated notion and that an international government is needed to enforce peace and to provide for equitable distribution of the world’s wealth.

Article 22. “Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international cooperation, and in accordance with the organization and resources of each state, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.” As Karl Marx, the father of communism, said, “From each according to his ability, to each according to his need.”

The DHR is the socialist manifesto. This December 10th and for the whole year, people interested in maintaining free societies need to counter the United Nations propaganda with information on the reality of the document and the world socialist agenda of the United Nations.