By Thersites, on January 8th, 2010
As mentioned in my previous post, most businessmen will do anything they can to preserve their position. This extends to people in all realms. Whether manufacturers, farmers, financiers, academics or politicians, those who wish to preserve their power will promote as many measures as necessary to do so. In the case of those in the latter two fields, they impose the same anti-competitive barriers as those in the former ones. For the statists of the academy and the capitol, they put up barriers to entry by stifling debate in marginalizing anti-statists such as the Tea Partiers, imposing punitive tariffs in engaging in ad hominem attacks against opponents and peddling their products in the marketplace of ideas by sophistry, obfuscation and at times fraud.
More generally, given that in most cases one need be accepted by the elite in order to enter academia, the political realm and even many industries, this creates another superficial barrier to entry. This is well-depicted when one considers that while the Austrians seem to be the most accurate economists, most all professors of the subject are evidently blacklisted from the most prestigious institutions, and in the fact that there are so few Ron Paul’s in Congress.
Those wedded to the state – be it the politicians or their propaganda arms in academia and the MSM further cement their power by creating a permanent underclass via their policies. This would explain why the most liberal urban areas are afflicted with the most widespread poverty, crime and education problems. It is the policies of the statists that make these areas fertile for these conditions, but the people, imbued with the notion that the state is there to help them with their plight given its coddling from day one remain even more wedded to the paternal politicians the more desperate their situation. The politicians throw their impoverished constituents crumbs, but at some point the pols will run out of crumbs when they plunder those who produce them to a large enough degree.
The slums of America reflect the ultimate end of statist policies, and the reason is as follows. Statists remove the incentives to produce by encouraging failure, extending largess and attacking mutually beneficial exchange in free commerce. The economic and political environment of urban America destroys the values that led to the creation of wealth squandered on the welfare state in the first place.
Ultimately, my sense is that those in power today, radical Cloward-Piven and Alinsky-ites that they are are not so much concerned with developing a socialist Utopia. Contrary to this, I think they are using the socialists in academia, and the elites, former students brainwashed by academia, CNN and the New York Times as useful idiots. They have institutionalized their progressive ideas over the last hundred years so that those with the most influence in society know of nothing else and more disastrously lend credence to their policies.
They are at peace with their yielding a hellish country like the ones incubated historically by leftists replete with widespread poverty, chaos and violence to reach their goal. The goal of this administration and most all in government is power. They will usurp our freedoms stealthily or outright in order to preserve and enlarge it. Most evil in my view is the man bankrolling the whole operation, George Soros, who will push the country to the brink with his puppet politicians running the show, for his own profit.
In sum, I urge you to understand that ideology is a mere means to an end – secondary to all those who use the state as an instrument, be it the One-Worlders, Greens or Marxists. Do not be fooled, their concern rests with one thing and one thing alone: power. With every state encroachment, their power increases whilst individual liberty is extinguished.
By Ajay Shah, on December 24th, 2009
Shifting away from central planning
Traditionally, Indian socialism has involved government control of all aspects of financial products or processes. As an example, government specified the time of day at which trading starts and the time of day where it stops. The RBI committee process on currency futures and interest rate futures specified that trading must start at 9 AM and stop at 5 PM.
In most areas of the Indian economy, goverment no longer controls the economy in such fashion. The government does not specify what time a shop opens or closes. There was a time when the Indian government did not permit the use of aluminium for making cans of soft drinks. A large fraction of such meddling in the economy has been dismantled (though not in finance).
A few weeks ago, SEBI came out with a liberalised policy: Exchanges could open anytime afer 9 AM and stop trading anytime before 5 PM. If NSE or BSE opt for longer hours, securities firms will face the decision about the time at which the shop opens for business and the time at which it closes. Staying open longer will involve somewhat higher costs and in return will yield somewhat higher revenues. Each shop will make its own decision about choosing a starting and a closing time.
What do we gain?
If Indian markets to be open from 9 AM to 9 PM, there are two benefits. First, consumers should have maximal choice on when they can achieve their trading needs. Recall that internationally, many grocery stores choose to stay open for 24 hours a day.
Second, in the late evening in India, the ADR market opens in the US, and it is important to link up the closing Indian prices to the opening US prices.
How will exchanges and their members cope?
If securities firms have to stay open for 12 hours a day, this will require process modification, including multiple shifts for certain employees.
These changes might seem burdensome. But similar changes have taken place before. With floor trading at the BSE, trading only lasted for two hours a day; but when NSE came along, trading moved up to 5.5 hours a day. Members doing commodity trading are already running to almost midnight.
Securities firms and exchanges will need to change their process design to achieve longer hours. If a securities firm has to trade from 9 to 9, this will require two shifts. The first shift will probably come to work at 8 AM, and stay till 3 PM, while a second shift will probably come to work at 3 PM and stay till 10 PM. Some firms will find that this does not make sense for them and they will choose to only keep their shop open for shorter hours.
The operation of securities markets in India is held back by infirmities of the payment system. A shift to longer trading hours will encounter frictions owing to problems with payments.
At first, clumsy solutions will be found because of problems of the payments system. But at the same time, when the industry demands more from the payments system, we set ourselves on the course for deeper surgery of the payments system. In this 21st century, we can and should have a payments system which processes 100,000 messages per second and runs for 24 hours a day. When the industry complains enough about the infirmities of what is in place, the existing payments system will be questioned, which could ultimately lead to improvements in the payments infrastructure.
A messy situation?
NSE and BSE have gone through a series of announcements. First, BSE said they would start at 9:45. Then NSE said they would start at 9 AM. Then both said they would think about this after the holidays.
These activities seem messy and confusing in the public eye. These tactical details are an inherent part of the market economy. When government control is withdrawn, and a license-permit raj is scaled down, we go from a tranquil and stable environment — the silence of a graveyard — to a dynamic environment where firms are thinking and reacting. This should be welcome.
Doing more on moving away from central planning
SEBI needs to move forward on many fronts in terms of getting away from government control of product features. There is no reason to restrict exchanges to the zone from 9 to 5. Similarly, many other product features on the derivatives market need to be decontrolled: what underlyings to use, whether cash settlement or physical settlement, the expiry dates, the contract sizes, etc. Government control of these product features is as legitimate as government control over the design of a bicycle.
There is a difference between regulation and control. The role of government is to specify pollution standards for cars and to require seat belts or airbags. It is not to design cars.
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By Thersites, on August 25th, 2009
“Government is the great fiction through which everybody endeavors to live at the expense of everybody else.” – Frederic Bastiat
Pundits, pontificators and plebeians all have polarized around the issue of national healthcare. Many have spoken wisely on the pros and cons of the proposed system, a heartening fact given the relative deafening silence when it came to the other government boondoggles of the last few years (really the last hundred to be exact). At the heart of the matter is a debate fundamental to our liberty that the public has failed to have. This regards the broader ramifications of a government-granted right to health.
Aristotle said that man seeks pleasure while avoiding pain. Healthcare is a means to prevent physical pain, and thus I would argue secure pleasure. However, a need for healthcare is dictated by one’s physical condition. One’s physical condition is attributable to a variety of factors. First, there is the question of diet. Then, there are one’s living conditions, namely shelter and clothing. Surely there is a psychosomatic factor as well. Finally of course, there is the question of one’s physical activity level.
If we are to allow healthcare to fall under the purview of government, then certainly it must follow that all things that contribute to one’s health must also be regulated by the government.
Thus, necessarily each and every citizen will have a responsibility to provide ample food, sufficient shelter and clean clothing for each and every other citizen. Likewise, it should follow that the types of food be regulated to ensure an optimal diet, and the shelter and clothing be comfortable enough and of high enough quality to meet government standards. Since one needs a stable living environment, should not the government also have a say as to how children are raised within their homes? Naturally one’s mental health might also be tied to access to diversions, so should not all entertainment such as the arts, film and sports also be government-controlled and taxpayer-subsidized? Should not exercise be mandated, with government-run physical fitness centers for all? What scares me most is that in writing this list, government already controls many of these things in one way or another.
Naturally, a government-run system of healthcare will lead to arbitrary, whimsical intrusions into our daily lives. Who is to set the bounds as to what constitutes proper controls to make the system “competitive” and “affordable,” when the Ezekiel Emanuel’s of the world will influence the system?
Much like the Necessary and Proper Clause, nationalized healthcare will serve as a Trojan horse; it will lead to the greatest infringement on our natural rights of all, infringement on our lives. You’d think the state would already be satisfied having devoured our liberty and property (pursuit of happiness if you prefer), but always hungry for more power, under this system it will get personal.
Perhaps scarier than the details of this system, devilish as they may be is the principle that from the first day we spend on this Earth, given a right to health for all, our responsibility will be to provide for our fellow man, valuing the community above ourselves. If one were to choose to dedicate one’s life to supporting others, of one’s own volition, than this would be fine. The merits of sacrifice for others are numerous and in many cases commendable. However, under a national healthcare system, because of a handful of politicians, we will be forced from day one to work to support everyone else, because the state says so. In the end, we will all be enslaved to each other. Our common lot will be one of misery.
Call me selfish. Call me greedy. Call me immoral. I value my life above yours, insofar as the Leviathan is forcing me to subsidize your eating habits, drinking habits, smoking habits mental health and genetic predisposition. I do not want to be forced to pay for your healthcare by government decree, nor should I. The Founders guarantees my right to life, liberty and the pursuit of happiness. To presuppose that the collectives’ right supersedes my own destroys these very rights. It ensures pain for all and pleasure for none.
I leave you with some prescient words from Grover Cleveland – the last respectable Democrat – regarding his reasoning for rejection of an act to appropriate federal funds for drought-stricken Texas farmers. He declared:
The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of the kindly sentiment and conduct which strengthens the bonds of a common brotherhood.
By Bron Suchecki, on July 22nd, 2009
Received the email “parable” below today. Interesting that I received it just after reading Chris Leithner’s latest newsletter (yesterdays post) – synchronicity?
An economics professor at a local college made a statement that he had never failed a single student before but had once failed an entire class.
That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on socialism. All grades would be averaged and everyone would receive the same grade.”
After the first test, the grades were averaged and everyone got a B.
The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.
Could not be any simpler than that.
By Dan McLaughlin, on June 22nd, 2009
Socialism is alive and well. In America, as elsewhere, however, the socialist movement isn’t and never has been a worker’s movement, as it has been made out to be. Socialism has been, from the start, a movement of intellectuals. It festers on college campuses. It is a framework constructed by very smart people who think that ordinary people are too stupid to run their own lives. Those less capable underlings need wise, educated people, like the intellectual socialist class, to tell them what to think, what to buy and not to buy, and to determine what is good and bad for them and their families. Workers of the world, they consider you to be the incompetent slugs who cannot manage your affairs.
Since the beginning, the workers of the world have been used as pawns for the wealthy and intellectual socialist elite to achieve political power. Together, the Kim Jong Ils, the Robert Mugabes, the Maurice Strongs and George Soroses of the world control billions of dollars in personal wealth. Not your typical working class guys.
While Karl Marx gave the pseudo-theoretical justification to the revolutionary class struggle approach to socialism, he was not of the working class, nor was his benefactor, Freidrich Engles, a wealthy industrialist. The inevitable Marxian state dictatorship is not made up of workers, but rather the political elite. The workers become slaves wherever Marx’s flavor of revolutionary socialism is forced upon them.
Fabian Socialists use a very different method than the Marxists. It is the gradualist approach, which uses the institutions of a society to turn public opinion against voluntary markets and individual freedom. It seems that they have been very successful over the last few decades, as a large share of American politicians and high level bureaucrats are either closet socialists or outright, self avowed socialists.
The problem with socialism is that, whether it is the brutal Marxian version or the patient Fabian version, it is still slavery. It is the forfeiting of the rights of the individual to the state. Ultimately, there can be no middle way. There can be no mixed economy in the long run. Socialism is the abolition of voluntary markets. To the extent that socialism wins out, freedom loses. The ultimate expression of socialism is totalitarianism because people don’t give up their freedom voluntarily. The only way to make people obey the will of the state is with the iron fist.
The societies that appear to be mixed economies now are not really mixed. They are free markets that are in the process of being overrun by socialism. They are precursors to the socialist state. It is a very uncomfortable idea, but the United States is actually a very long way down the road in that direction. Most Americans are simply normal, good natured, busy people who want to live their lives without being bothered by politics, except for a few days during election season. Unfortunately, those who wish to take their freedom from them are very happy to work diligently all year round. Fortunately, it is not an inevitable progression, and it has been reversed in the past, when the people vigorously fight against it.
Things are happening startlingly quickly. The events of the day have many politicians reciting the mantra, “Never let a good crisis go to waste.” The consolidation of power needs crisis for legitimacy. Some of the things we are seeing now have never happened in this country in my lifetime, nor that of most living Americans. A disturbing number of people have forgotten or have never learned what it is to be an American, a citizen of the only country the very foundation of which is freedom of the individual and responsibility for one’s own life. It is time for Americans to sit up and take notice that history repeats itself when people forget, and history is often not pretty.
These events have happened in the past, even the recent past, in other countries. History is littered with the ashes of egalitarian workers paradises, or the corpses of the workers themselves. Members of the political class under any form of highly centralized government, whether they are made up of corporatists, czars or commissars, necessarily use the common person for their own benefit.
Marx’s famous words from the Communist Manifesto, “Workers of the world, Unite!”, is an appropriate theme for today. With its obvious tendency to create mass misery, the workers should realize they must unite against socialism for their own benefit.
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By Thersites, on May 27th, 2009
Franklin Delano Roosevelt proposed a “Second Bill of Rights” during his State of the Union Address in 1944. He noted that while “under the protection of certain inalienable rights…our nation has grown in size and stature, however—as our industrial economy expanded—these political rights proved inadequate to assure us equality in the pursuit of happiness….true individual freedom cannot exist without economic security and independence. “Necessitous men are not free men.” People who are hungry and out of a job are the stuff of which dictatorships are made.” He argued that we “cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.” Under the auspices of “economic security and independence,” FDR laid out the following list of rights for the American people:
The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
During and after FDR’s presidency, many programs were taken up to establish these so-called rights. The US government implemented a minimum wage with the hopes of providing people with a baseline level of income to be able to pay for life’s necessities, and created unemployment insurance so that people would have sufficient money to purchase goods when they lost their jobs. They created agricultural subsidies to protect farmers. They implemented all sorts of regulations and restrictions to stop (certain) companies from dominating their competitors. They created HUD and devised the CRA to force lenders to finance housing for those who were less well off, to ensure the “American dream of home ownership.” They provided healthcare for the old and poor. They created Social Security to allow the old to receive checks after they were retired. They expanded public education and pushed for everyone to receive a college degree. They empowered the Federal Reserve to flatten the business cycle and protect against recessions.
Today, King Obama looks to be finishing off the dirty work of the progressives of the last century. He is pushing for “fair” credit card charges, universal healthcare, onerous governmental control of business under the guise of environmental protection, government control of college loans and empathetic justices who understand the concerns of everyone who is not white, male or wealthy.
Essential to the justification for this platform is FDR’s argument that there be equality in the pursuit of happiness, and that “individual freedom cannot exist without economic security and independence.” What those like FDR and Obama mean is that there is not equality as an outcome of the pursuit of happiness, i.e. equality of condition. By economic security and independence, FDR and the King mean that people need safeguards so that they can keep their jobs, pay for products and be comfortable in retirement.
All of the ends that these progressives seek seem admirable, but the means to achieve them end up making it impossible for the ends to be obtained. Nobody wants to see masses of unemployed, sickly or uneducated people. But the government policies implemented to protect against these problems – to guarantee the “rights” listed above – end up leaving people unemployed, unhealthy and uneducated. They impoverish the citizens by destroying the inalienable rights that even FDR admits allowed the US to gain its strength as the world superpower.
It was not economic security or independence that allowed our country to thrive, but a system in which people voluntarily traded and had the opportunity to innovate and take entrepreneurial risks. Failure, not economic security, had to be a motivator because there was no safeguard against it; no notion of being too-big-to-fail. If you failed, you simply had to pick up and try again. The Federal Reserve in attempting to protect against failure ends up leaving the people economically insecure by decreasing their purchasing power and savings through inflating the money supply, and by incentivizing people to allocate resources improperly through the manipulation of money and credit which leads to the painful boom and bust cycle. The moral hazard created by providing safeguards against failing, be it in business or in one’s own life ends up weakening the people.
Economic security and independence come as a result of our rights to life, liberty and property, not the other way around. The best thing the government can do to ensure these rights, the rights that lead us to maximum wealth, the fullest employment for those who seek it, the best and cheapest medical care and the most practical and affordable education is simply to protect its citizens from attacks on their individual rights. Individual rights, not entitlements. Entitlements beget more entitlements. Entitlements breed laziness in the citizenry. Entitlements cause people to take things for granted. Freedom is the one thing that cannot be taken for granted. As Reagan put it, “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.”
If you disagree with this in principle, then look at the results of the governments’ policies, those policies representing the antithesis of freedom. The US populace is probably dumber than it has been at any other time in history, even though a greater number of people are graduating from public high schools and attending colleges than ever before. Our economy teeters on the brink of collapse. Our government is larger, more intrusive and more corrupt than it has ever been. It is also effectively bankrupt minus its monopoly power to print money; interesting that it can have this monopoly power while also protecting people from “unfair business competition and domination by monopolies at home or abroad.”
Other examples of government failures abound. Amtrak is a money-loser, as is essentially all public transportation. If public transportation is not a money-loser, then I would venture to guess that it still isn’t as cheap or efficient as private alternatives. The US postal service is nowhere near as effective as FedEx. The DMV is a joke. The purchasing power of our dollar has decreased by over 95% since being under full control of the Federal Reserve, and we have had more frequent recessions than prior to the Fed’s creation. In countries with nationalized healthcare, we see that the price of better-quality, private healthcare increases, while public healthcare services leave people waiting sometimes for months on end for essential medical procedures. People flee to the US if their lives are in danger with good reason. If King Obama gets his way, they will have nowhere to flee anymore. Ironically, when it comes to almost every sector of our economy, while economists would have you believe that government corrects market failures, it appears that we would be far better if markets corrected government failures.
In the final analysis, there is not one good or service that the government provides that is cheaper and better than the equivalent one in the private sector, with the caveat that in terms of defense, only the government can coordinate the forces necessary to effectively protect us. And even then, the government outsources weapons development and certain tactical supports to private defense companies. And even then, the government screws up at times in the way it carries out its wars.
I want to reiterate that only the market can provide the people with the best goods and services at the best prices. This is the same for credit as it is for housing as it is for healthcare. If you take the market out of the equation and try to centrally plan, in the end you impoverish society and leave a nation to anarchy and revolution. Through a dictatorship, which is what the Second Bill of Rights effectively creates (a tyrannical government), you create the unemployed and the hungry that FDR speaks of.
With the burgeoning deficits at the state and national levels, the impending tsunami of inflation and the undermining of the rule of law and protection of life, liberty and property by our leaders, it looks as if in their quest to grant us the Second Bill of Rights, they have also destroyed the rights granted to us by an authority higher than that of our politicians, our natural ones.
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By Ajay Shah, on May 26th, 2009
An alternate history that I find interesting is a scenario where, in 1947, the British kept one city in India – e.g. Surat. This is analogous to the British control of Hong Kong in China after the communist revolution.
Why is Surat interesting for such an analysis, and not Bombay? It sounds too implausible for free India to have tolerated colonial rule for Bombay. A solution like Hong Kong, Macao or Goa for a less important place is more plausible. The other reason why Surat is of interest is that before Shivaji sent the merchants of Surat scurrying to the safety of British-controlled Bombay, Surat was the commercial capital of the West Coast. So there is perhaps some natural geographical advantage of that location.
If the British had run Surat in the fashion that they did for Hong Kong, how might this have changed India’s trajectory? The analogy with Hong Kong is straightforward. In this scenario:
- Surat would have become a place with a market economy, with strong public goods of law and order, judiciary and legal system.
- When India embarked on socialism, this would have been a place for people and capital to go to. Some of the brain drain and capital drain that India suffered to locations all over the world would have instead gone to Surat.
- Surat would have then become a key mechanism for India to plug into globalisation, for trade in goods and services and for financial services.
- When India started stepping out of socialism, a good deal of institutional capability, human capital and financial capital would have been ready at hand to help get the mainland going again.
- When a country wants to undertake institutional reform, it is quite useful to have `regional role models’ (a term drawn from the World Bank’s East Asian Miracle book). India unfortunately has few regional role models other than the good work done in Sri Lanka on trade liberalisation before the war, and the work done in Bangladesh in microfinance; this is in contrast to East Asia where each country is able to pick and choose from regional success stories in any area of reform. If Surat had been a Hong Kong, then institutional arrangements there would have been a natural starting point for thinking about legal, regulatory and institutional development in India. This would have given faster institutional evolution and thus growth in India, once India wanted to actually do institutional reform.
- The last point is a bit speculative. Suppose Surat was a vibrant outpost of good institutions and laissez faire, while India was headed off into a bad institutions and dirigisme from the late 1950s onwards. Would the very existence of a visible alternative have modified India’s trajectory? It is easy to think that from the early 1990s, when India was getting interested in reintegrating into the world economy, and in building institutions, that a Hong Kong would have helped. But look back even before that; would India’s long descent have been reduced or even averted by having a counterpoint? We know that in the Chinese case, they had Hong Kong and still suffered from the disasters of the cultural revolution. But in a functioning democracy with freedom of speech, the power of ideas and impact of information is greater.
In summary, if you think that China’s incredible economic success was aided by having laissez-faire Hong Kong handy, then in this alternate history, a similar evolution for Surat would have helped India.
I recently came across similar arguments being made by Paul Romer. He uses the term `Bridge Cities’ for such cities, which can help speed up the development of the host country.
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By Trace Mayer, on March 11th, 2009
At Casey Research, we are trying not to be overly pessimistic, but there’s no denying the mass of bad news coming to us from all fronts: the forces of collectivism are using the cover of the crisis they largely created, aided and abetted by capitalism’s quislings, to roll over the individual.
Even so, contained within the dire reportage is also some very good news for you personally.
THE BAD NEWS
As fully anticipated, with its first budget plan, the Obama administration has fired a salvo into the side of the productive classes. For those of you who are not U.S. citizens, feel free to use Team Obama as a proxy for what is likely to occur where you reside.
Yes, we expected the $1.75 trillion budget deficit, which will, by the time all is said and done, come in a lot closer to the $2.5 trillion number anticipated some months ago by our Chief Economist Bud Conrad.
Yes, we expected the government to begin raising taxes, which they are proposing to do with vigor – starting with an increase of $1.4 trillion on the people who earn in excess of $250,000 a year. “Right on!” shouts the mob, on the way out the door to burn Porsches.
For no other purpose than to keep the record straight, it’s worth noting that thanks to the government’s steady dose of inflation, $250,000 today will only buy you 77% of what it would have in 1998… and 56% of what it would have in 1988.
A decade from now, given the inflation rate we expect, the dollar’s purchasing power will erode by another 50%, and probably a lot more than that. In fact, at the current rate of money creation, by the time the dust settles, $250,000 might be the annual wage commanded by burger flippers.
But, hey, look at the bright side, at that point everyone will be rich!
The further details of Obama’s budget plan are a hodgepodge of this and that, some of which we even agree with (like cutting business subsidies). On the whole, however, the overarching mandate appears to be to thrust the hand of government, like some motion picture kung fu villain, deep into the heart of American enterprise.
And government’s expansion is far from over. The news continues to pour in…
- Citigroup to get another $25 billion bailout from the U.S. Treasury.
- Treasury officials work on bailout plan for auto parts manufacturers.
- President Obama exploring automatic workplace pensions and an expansion of unemployment insurance.
- AIG, now a government lap puppy, takes another big loss, and is again looking to its master for another handout.
- Speaking of lap puppies, Fannie Mae, has lost another $25 billion and is looking for $15 billion more from the Treasury. The value of this zombie institution’s net assets is now a negative $105 billion, and eroding. Great investment of your tax dollars, eh?
- Then there’s the new administration’s cap-and-trade green tax… a stunning new initiative that will bring many U.S. businesses to their knees.
There is more, so much more, including a $638 billion reserve fund for healthcare reform in the president’s budget that loudly broadcasts that, “Yes, we’re going there.” There being nationalized health care.
However, there’s also some good news to be found in the way things will be.
THE GOOD NEWS
My fellow citizens of planet Earth, it is now abundantly clear that the trend toward socialism in all its many disguises is about to, once again, shift into high gear.
We’ve been here before, encouraged by the words of Karl Marx, a distinctly unsuccessful individual (to read his life story is to read of almost unending misery, poverty, and discontent) but a decidedly successful phrase-coiner, knocking the world off its axis with his “From each according to his ability, to each according to his need.”
While no one with any real sense of history, not to mention economics, can take any overt joy at the prospect of the dark clouds of collectivism looming high in the sky above us, there is, if you pay close attention, a very big opportunity in all of this.
Namely, we are now presented with a relatively rare chance to see with some clarity into the future.
Imagine if eight years from now you could step into a time machine and zip right back to this very moment. How much money do you think you could make?
Well, just because the chattering masses have the blinders on as they march forward to their collective penury doesn’t mean we need to join them. And, if we are even a little bit careful, we won’t.
So, what is it about the future we can now see? Some broad strokes…
- Currency depreciation.
- More taxes.
- Rising interest rates.
- A price capitulation in real estate, with a collapse in commercial.
- Exchange controls (now that Team Obama is raising your taxes, you don’t really think they’re going to let you pick up your wealth and leave, do you? The window for global diversification will soon be closing.)
- The return of mega-labor unions.
- Trade wars, shooting wars, and other forms of heightened geopolitical tension.
This is a topic we are discussing at greater length, backed up with specific recommendations, in the March edition of The Casey Report, released on March 3. Among its many highlights, Doug Casey has contributed an article titled “Street Fighting Man” about the prospects for social unrest.
Provided you keep your personal wealth profile low (there was a reason Sam Walton, founder of Walmart, drove a beat-up pickup truck), your financial powder dry, and, maybe most important of all, retain your sense of humor, the opportunities in the unfolding crisis will be abundant.
Whatever you do, don’t be complacent about what’s coming.
We are long past the point where doing nothing is an option. Review your personal finances, cut out unnecessary expenses, talk to your accountant about tax planning, and, if you’re a U.S. citizen, consider moving at least some of your wealth out of the country while you still can (but please, don’t try to hide it… that’s a fool’s errand). If you own gold, only you and your spouse, if you have one, should be aware of it.
Ask yourself, “If I just dropped in from eight years in the future, what measures would I take?”
Now, take them.
There is no time to lose in taking the necessary steps to preserve (and multiply) your wealth. The best way to do so is going with the flow and playing the trend… a strategy that can pay off handsomely, even in an economic crisis.
By Thersites, on March 3rd, 2009
When I started Socialist Watch, I did not anticipate how quickly things would unravel in the US and abroad. Perhaps it is because despite my best judgment, I did not want to believe it. Unfortunately, my worst nightmares are being realized. This time, things are different. When Rahm Emanuel said, “You never want a serious crisis to go to waste,” he meant business, like Ari Gold negotiating on the High Holidays.
Glancing over the headlines of the week, it is clear that a creeping sense of socialism in this country is no longer creeping — it is a very real threat that no future administration may come close to being able to stop. If I am reading this situation correctly, we are at a true turning point in world history. The forces of freedom and liberty are fast being swept aside. We are heading into a Rousseaun era in which the United States and indeed all other states will degenerate in a large collectivist cesspool. Ayn Rand said, “We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.” How right she was.
As I forewarned, other states, besides just New York are beginning to come up with creative ways to tax their citizens. One policy analyst says, “The most common phrase you hear from the states is, everything is on the table.” A California legislator says “We’re all jonesing now for money.” States are throwing out creative “solutions” to their shortfalls like making marijuana legal so as to tax it, or allowing gay civil unions in order to boost tourism.
But think this through for a second. If people are struggling to make ends meet, why should taxation to support government be the number one priority? Why does a state have a right to our property to support itself before we do? Why in the hell do they have these big budgets to support in the first place? If we are having trouble paying our own bills, then forget about the state’s bills. Let it wither away! If I sound angry, it’s because I am.
Meanwhile, on a national scale, things are no better. We continue to throw money down the bottomless pits that are AIG and Citi. If what we are doing is not nationalization, then I don’t know what is. We are nationalizing everything: banks, insurance companies, automobile manufacturers and the housing market. We are burdening future generations with insolvent and bankrupt institutions that should have been allowed to go under months ago. I thought this was America, but alas, we have car czars (call it the Presidential Task Force on Autos, same thing) and urban czars too. Lenin is blushing in his grave right now.
Then we have this whole green issue. I largely ignore reading what environmentalists have to say because it generally enrages me. Being at Columbia, everywhere I go everything is green anyway. It’s not that I have anything against nature…I like clean air and clean parks just like everyone else. But this stuff is not about a clean world. This is about politics. Al Gore has made a fortune selling global warming to idiots across the world. Scientists have made their careers off of pandering about this stuff. But the bottom line is, as I understand it, there is no consensus at all as to whether or not what we do on Earth even makes so much as a dent in the overall climate patterns that occur over thousands of years.
Even if we did, how could anyone honestly feel that their livelihood should be sacrificed to nature. If people want to reduce themselves to foraging for berries then they can go right ahead, but they should bear in mind that they wouldn’t be able to survive without that food taken from nature. I for one will continue eating what I want, driving cars, using my computer, television, lights and paper because I want to live my life. It is not the government’s job to tell me what I can and can’t consume.
If we followed this kind of philosophy from the start, we would still be cavemen. There would have been no Industrial Revolution. A million of the things that we take for granted today would have never come to be. If we didn’t use the fruits of nature, we would not be able to live. But I suppose the Democrats might prefer this.
Their cap-and-trade bill looks to me like Smoot-Hawley’s little grandson in terms of its disastrous implications and terrible timing. For a little taste of what we might be looking at, listen to what Obama himself had to say about it:
“You know, when I was asked earlier about the issue of coal, uh, you know — Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”
But forget about specifics. What this represents is a commitment to the environment over the people. It seems like a great idea to me to raise the price of all types of energies, while putting hundreds of people out of business by imposing these costs on our economy in the midst of a depression.
There is also talk of funding roads with a tax based on how many miles we drive. The government would be able to implant some kind of chip in our cars to keep tabs on us. I mean is there any way possible that this could be considered Constitutional? What justification is there for this based upon the limited powers we are supposed to grant our government? This stuff is sickening. They are literally looking to make robbery legal.
More sickening are Gordon Brown’s a musings on a “global New Deal,” led largely by President Obama and himself. This sounds like another brilliant idea — what better way to shepherd in socialism then to subject everyone in the civilized world to it. What is so ironic about it all is that Brown calls for a world “where we defeat not only global terrorism but global poverty, hunger and disease.” Yet socializing one’s nation creates these very things. It brings civil unrest and leads to poverty, hunger and disease for the masses. This also factors into the discussion of having a world government. We see the problems that have befallen the EU now that some states aren’t quite carrying their weight, yet with the world putting their blind faith in Barack Obama, there is more and more talk of global solutions to problems, and perhaps even a global regime. When all the paper currencies collapse, I won’t be to surprised if at the least we move to a global currency, so we can all enjoy the hyperinflation together.
It is dizzying how fast this is all unfolding before us. Dizzying and also sobering. I for one do not want live in a world in which I have to pay for someone else’s mistakes. I don’t want to live in a world in which the government has a claim on my property before I do. I don’t want to live in a world in which the government determines that the environment takes precedence over my life. I don’t want to live in a world in which free speech is protected, yet I have to be afraid that everything I say is “politically correct.” Most of all, I don’t want to live in a world in which the rights of the smallest and most important minority, THE INDIVIDUAL, are sacrificed to the mob for the public good.
One of the reasons I look to Rousseau in all of this is that his love of the state of nature is reflected in the socialism of the day. Rousseau said of leaving the state of nature that “most of our ills are of our own making…we could have avoided nearly all of them by preserving the simple, regular and solitary lifestyle prescribed to us by nature.” Of imagination he says, “Imagination, which wreaks so much havoc among us, does not speak to savage hearts.” Rousseau marvels at the barbarian whose, “desires do not go beyond his physical needs. The only goods he knows in the universe are nourishment, a woman and rest; the only evils he fears are pain and hunger.” Of private property he said, “The first man who, having fenced in a piece of land, said “This is mine,” and found people naive enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” Clearly ’tis better to be a savage than a civilized human being.
This is the philosophy that is waging its war on whatever shreds of Lockeanism are left in this once great place. We need to fight this. People should be in the streets rioting over the ridiculous usurpations of power that the state is making right now, yet most seem to go on with their lives in many ways completely unaffected and ignorant of the terrors surrounding them.br /br /But these ignorantly blissful folk are getting the government they deserve to be sure. This is the ultimate result of a democracy in which every man seeks to gain at the sake of every other man through the instrument of legal plunder that is the state.
Turning back to Rand, she said that, “It only stands to reason that where there’s sacrifice, there’s someone collecting the sacrificial offerings. Where there’s service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.” Barack Obama is the man collecting the sacrificial offerings and being served. But I don’t want to sacrifice my life to him. Deep down, I don’t think most Americans desire to either. But if the people do not awake shortly, they may find that one day soon they may not recognize the land they once called home, nor will they much appreciate the masters of the house.
By J.D. Seagraves, on November 10th, 2008
A few weeks before the election, “Joe the Plumber” asked Barack Obama about his tax plan, and Obama said that he intended to reform the tax code to “spread the wealth.” The McCain campaign seized on this gaffe and ran with it: what Obama was advocating, they said, was tantamount to “socialism.”
The “socialist” charge was repeated many times throughout the remainder of the campaign, and it continues to be levied against President-Elect Obama even after his historic election. Recently, Investor’s Business Daily editorialized that the “change” Obama favors “can only be described as socialistic.” But what does this even mean?
Is “Socialist” Nothing but a Slur?
Kansas City Star editorialist Lewis Diuguid says that “socialist,” in the context used by McCain and his supporters, is nothing more than a thinly veiled racial epithet. After all, Diuguid points out, iconic African-Americans such as Martin Luther King, Jr., W.E.B. Dubois and Paul Robeson were all smeared as “socialists” by their racist opponents. But the inconvenient truth is that King, Dubois and Robeson were socialists.
Dubois and Robeson were long-time members of the Communist Party of America, and Martin Luther King, in just one of many examples, once gave a speech in which he called for a “better distribution of wealth” and opined that “maybe America must move toward a democratic socialism.” Socialism was “not the sum of these men,” says libertarian Lew Rockwell, “but they were all red-blooded socialists.”
Regardless, “socialist” can definitely be used as a mean-spirited slur, but the word also has a legitimate meaning. The question remains: Is Barack Obama a socialist?
What is Socialism?
Socialism is defined as an economic system wherein the means of production and distribution are collectively owned, typically by a monopoly government. Politically, a socialist state can be democratic, dictatorial or anything in between: contrary to popular belief, the method in which leaders are chosen is not an element of socialism.
There is no such thing as “private property” under socialism: production is centrally planned by committees on the basis of what they think people want or need. Theoretically, each individual is expected to produce according to his ability and consume according to his need. It sounds like heaven on earth—or does it?
It is often said that socialism is good in theory but bad in practice. Actually, this is untrue. The Austrian economist Ludwig von Mises proved that socialism is not good in theory and cannot work in practice. Mises’s 1922 work Socialism demonstrated that a pricing system and for-profit ownership of the means of production are necessary to signal to producers what to produce. Mises thus predicted the collapse of the Soviet Union, with great accuracy, almost 70 years before the fall of the Berlin Wall.
Democratic Socialist or Social Democrat?
Even the most paranoid “ditto head” could not seriously think that President Obama will collectivize all U.S. property in the hands of the federal government. Clearly, Obama will not usher in a truly socialist America. He might, however, move us in the direction of greater “social democracy.”
Our national confusion in regard to political taxonomy dates back to the New Deal, when the word “liberal” changed meanings in America. Previously, a “liberal” had been someone who emphasized individual liberty, private property and limited government. These were the ideas that dominated the Democratic Party from Jefferson through Cleveland, and although Woodrow Wilson’s “progressivism” represented a departure, Franklin Delano Roosevelt actually campaigned as a traditional, classically liberal Democrat. Once in office, however, FDR “flip flopped”—and took the term “liberal” with him.
What we now consider “liberalism” in the United States is referred to as “social democracy” throughout the rest of the world, and “social democrats” are often slurred by their opponents as “socialists.” But social democracy differs from socialism in that it leaves at least nominal ownership of industry in private hands, while heavily regulating, subsidizing and managing various sectors of the economy in pursuit of social goals. Key elements of social democracy include government-controlled education and healthcare, a broad economic safety net, environmentalism, protectionism, multiculturalism and a foreign policy that “promotes democracy.”
Dawning of a New Age?
In that same editorial cited earlier, Investor’s Business Daily said Obama “may be guided by principles different from what we’re used to and on which the nation was founded.” Based on his campaign rhetoric, President-Elect Obama certainly sounds like a social democrat, but does he really represent a radical change from our recent history as a nation? After all, George W. Bush signed Sarbanes-Oxley into law, expanded federal funding of education and healthcare and invaded a sovereign nation in order to install a “democracy”—his presidency may not have been textbook social-democratic, but it certainly leaned in that direction.
The truth is that our nation was founded on the classically liberal principles of political decentralism and laissez-faire. Regardless of what right-wing radio says, these founding principles are not at risk of going down the drain under President Obama because they were jettisoned decades ago. So while the Obama administration might represent a modest shift to the “left” (whatever that means), the essential nature of America’s political and economic systems will remain unchanged under his leadership. And that’s unfortunate.
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