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Working in Ron Paul’s Congressional Office

August 27, 2014 in Economics

By Ryan McMaken

Lew Rockwell talks to Tom Woods, who was guest-hosting the Peter Schiff Show, about his days as Ron Paul’s chief of staff in DC.

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Source: MISES INSTITUTE

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Steve Forbes Misunderstands Money

August 27, 2014 in Economics

By David Gordon

Billets_de_5000

A recent column by Steve Forbes on money is a peculiar mixture of insight and error.  Forbes rightly says, “The blunt truth is that an active monetary policy has never, ever led to sound, sustainable growth. Without exception it has always done more harm than good, the only variable being the degree of damage rendered…It’s truly amazing that economists and policymakers remain obliviously impervious to the mountains of evidence proving that you cannot constructively guide an economy by manipulating interest rates and bank reserves.” Given these wise words, you might expect Forbes to call for a total end to government monetary policy.

Unfortunately, a key mistake prevents him from taking this step. He thinks that money measures economic value. “Money isn’t wealth. It measures wealth the way a ruler measures length, a clock measures time and a scale measures weight.” Forbes ignores the Austrian insight that economic value is purely subjective. There is no “unit of value” that corresponds to the objective measurements Forbes mentions.

Because Forbes thinks that money measures value, he favors “stable” money. “Central banks have only two legitimate tasks: preserving stable values for their money and dealing quickly, decisively with financial panics.” Beguiled by the illusion of a stable measure of value, Forbes winds up in support of an activist monetary policy.

Forbes discusses at greater length his account on money in his recent book Money, written with Elizabeth Ames.  I review this book, with my customary lack of enthusiasm, in the forthcoming September issue of The Free Market.

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Source: MISES INSTITUTE

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The Socialist Party In Chile Gets to Work Destroying the Economy

August 27, 2014 in Economics

By Ryan McMaken

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Axel Kaiser at Mises Brasil has penned a helpful update on the situation in Chile where socialist president Michelle Bachelet was elected to a second non-consecutive term in Chile. Bechelet’s second term appears to be far more ambitious in its efforts to introduce a series of socialist programs and reforms, and it certainly looks to be far more damaging than the administration of Ricardo Lagos, who seemed largely concerned with promoting relatively-free trade in spite of his own status as a member of the Socialist Party. 

Below is the Google Translate version of Kaiser’s article (edited down a little and corrected by me):

Michelle Bachelet Intends to Destroy the Institutional Foundations of Chile’s Economy

by Axel Kaiser

Only five months have passed since the socialist government of Michelle Bachelet took power in Chile, but it has been enough to make economic growth in the country collapse. The main cause of this sudden and dramatic decline in economic activity is the increased uncertainty generated by the new Chilean government, which aims to take a tabula rasa approach to to the institutions of the free market that allowed Chile to become the most prosperous country in Latin America.

One of the most harmful proposals is a massive tax reform, which has already been approved, which will dramatically increase the corporate income tax in Chile, leaving it above the average for OECD countries. Moreover, this tax reform – which was strongly opposed by associations of Chilean entrepreneurs, and is losing popular support – grants the national tax agency arbitrary powers over taxpayers.

Another target of the radical socialist Bachelet program is the flagship pension system in Chile. As is widely known, Chile was the first country to introduce a social security system that is managed by private companies and is based on individual capitalization accounts. Under this scheme, each month, the Chilean workers deposit a percentage of their income in an account under your name, which is administered by private companies called AFP (Pension Fund Administration). The arrangement works just like a funded system.

Thus, when the Chilean workers retire, they – unlike all other current worldwide pension systems – do not depend on other workers to continue contributing to the system to receive their retirement; they just get back all the money applied adjusted for inflation plus interest.

Unlike the state pension system created by Bismarck and copied all over the world – technically called pay-as-you-go – the Chilean system is …read more

Source: MISES INSTITUTE

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The Space-Junk “Crisis”

August 27, 2014 in Economics

By Ryan McMaken

Debris-GEO1280

Whenever you see the words “Lockheed Martin” you should think “taxpayer-funded cronyism,” so when I saw the recent Drudge headline that read “LOCKHEED seeks to clean up space…” I mentally added the clause “with money stolen from taxpayers.”

The space junk crisis is apparently the latest looming global disaster that requires a government solution. Drudge links to a Financial Times article that only gets to the financial heart of the matter six paragraphs down:

[The joint venture to track space junk between Lockheed and Electro Optic System Holdings] follows the award in June of a US$915m contract by the US Air Force to Lockheed to build a “space fence” project – a powerful radar system to track and catalogue space debris. This radar will monitor 200,000 of the largest pieces of junk in orbit.

Ah, so this latest “private sector” effort is really an adjunct to a grant of nearly a billion dollars from the US Treasury to Lockheed.

Lockheed knew how to strike when the iron was hot, of course, since the recent movie Gravity make space junk an issue in the popular imagination:

The 2013 Hollywood movie Gravity, which starred Sandra Bullock and George Clooney, focused public attention on the space junk problem, which Nasa [sic] has been grappling with for years.

It’s not hard to imagine the Powerpoint presentation delivered by Lockheed salesmen to USAF bureaucrats featuring a clip of the space-junk-caused disaster at the beginning of Gravity as an illustration of just how important it is that Lockheed get $900 million ASAP.

This isn’t to say that space junk isn’t a real issue. Space junk is causing real damage to actual property in orbit as noted in the article:

Awareness of the dangers posed by man-made space debris has grown since the first hypervelocity collision between satellites in 2009, which took place 800km above Siberia. Iridium 33, which was part of a network of satellites providing phone services, was destroyed when it collided with a deactivated Russia satellite Cosmos-2251.

But if space junk is a real problem for private parties, then it would appear that they have a large stake in solving the problem either through clean-up or by constructing space crafts differently. In other words, there’s an incentive to put private money into solving the problem. But why use voluntary and peaceful means when it’s easier for Lockheed to just go back to the well of taxpayer funds? When you’re a lobbyist-heavy corporatist outfit like Lockheed, it’s always easier …read more

Source: MISES INSTITUTE

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We Awaken to National Militarization of Police, Not Only in Ferguson

August 27, 2014 in Economics

By Nat Hentoff

Nat Hentoff

We may eventually know the actual facts in the killing of 18-year-old Michael Brown by policeman Darren Wilson in the Missouri town of Ferguson, but the widely publicized full-scale war on protesters there by the police has finally begun to alert Americans of all backgrounds to the militarization of law enforcement in many areas of our nation.

Constitutional lawyer John Whitehead, founder and president of civil liberties defender The Rutherford Institute, has been reporting often on this aggrandizement of our police:

“This is not just happening in Ferguson, Missouri. As I show in my book ‘A Government of Wolves: The Emerging American Police State,’ it’s happening and will happen anywhere and everywhere else in this country where law enforcement officials are given carte blanche to do what they like, when they like, how they like, with immunity from their superiors, the legislators and the courts …

“We’ve not only brought the military equipment used in Iraq and Afghanistan home to be used against the American people. We’ve also brought the very spirit of the war home” (“Turning America Into a War Zone, Where ‘We the People’ Are the Enemy,” Whitehead, Rutherford.org, Aug. 20).

Also reporting on police militarization is Walter Olson of the Cato Institute (where I am a senior fellow):

“Why armored vehicles in a Midwestern inner suburb? Why would cops wear camouflage gear against a terrain patterned by convenience stores and beauty parlors? Why are the authorities in Ferguson, Mo., so given to quasi-martial crowd control methods (such as bans on walking on the street) and, per the reporting of Riverfront Times, the firing of tear gas at people in their own yards? (‘ “This is my property!” he shouted, prompting police to fire a tear gas canister directly at his face.’) (“Police Militarization in Ferguson — and Your Town,” Olson, Cato.org, Aug. 13).

Olson added: “The dominant visual aspect of the story, however, has been the sight of overpowering police forces confronting unarmed protesters who are seen waving signs or just their hands.”

Meanwhile, in a recent op-ed in Time, senator and possible 2016 presidential candidate Rand Paul noted: “There is a systemic problem with today’s law enforcement. Not surprisingly, big government has been at the heart of the problem. Washington has incentivized the militarization of local police precincts by using federal dollars to help municipal governments build what are essentially small armies — where police departments compete to acquire military gear that …read more

Source: OP-EDS

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The Economics of Perpetual War

August 27, 2014 in Economics

By Matt McCaffrey

Cyprian_War

The 100th anniversary of the beginning of World War I seems like an ideal opportunity to spread a message of peace and economic cooperation; sadly, 2014 has so far been a year of new and renewed conflict far more than one of reconciliation.

By now, talk of the horrors of war is nothing new. Everyone knows about the total destruction war brings; in fact, we’ve known for millennia. As Lew Rockwell points out, “just about everyone makes the perfunctory nod to the tragedy of war, that war is a last resort only, and that everyone sincerely regrets having to go to war”—but war continues all the same. Even classical military strategists like Sun Tzu believed war should only be used only as a last resort, and argued that military campaigns could bankrupt states and ultimately, destroy them. Art of War actually states that “no country has ever profited from protracted warfare,” and cautions generals to “fight under Heaven with the paramount aim of ‘preservation.’” Yet as far back as we have historical records, these sorts of ideas have fallen on deaf ears among governments and military organizations alike.

Economics offers many insights into war making and why it persists, but the most fundamental explanation is an institutional one. It’s tragically simple: warnings about the horrors of war go unheeded because the power to make war—as well as “justify” it in the eyes of those forced to fight and finance it—lies in the hands of the state and its business and intellectual allies. States are monopolists of organized force, and as such decide when and how to use their power on a grand scale, especially when they wish to confront other monopolists.

In fact, economic reasoning tells us that conflict is an integral part of the logic of states, which are inherently prone to warfare and imperialism. That war is an essential and practically inevitable behavior of government has been known since ancient times: for instance, Art of War begins by stating that “War is the greatest affair of state, the basis of [its] life and death, the Tao to survival or extinction.”

The central problem is that government is based on the use of the “political means” rather than the “economic means” of social organization. States are not producers of goods and services in the market; rather, they operate by forcible redistribution. They …read more

Source: MISES INSTITUTE

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The Welfare State

August 27, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

One hundred ten million! That’s how many Americans now live in households that receive some form of means-tested welfare benefit from the federal government. According to a report from the Census Bureau released last week, that’s the highest absolute number in American history, and it represents 35.4 percent of the American population. Think about it — more than one out of every three Americans live in households that are now on welfare. Looked at another way, America’s welfare state now has nearly three times the population of the largest actual state.

Because many of these households include more than one person, the number of individual households is smaller, but still a record — roughly 33.5 million, more than a quarter of the country’s households. Worse, 10.5 million households receive benefits from three or more separate programs.

While liberals would undoubtedly like to blame this on the bad economy, the welfare rolls have actually grown by nearly 4 million households since the end of the recession. Welfare is rising even as unemployment declines.

On the other hand, the growing welfare caseload cannot be blamed solely on President Obama. True, the number of people on welfare has increased by 12.5 million since he took office. But welfare also increased during the Bush administration: The proportion of households receiving SNAP (food stamps), TANF (Temporary Assistance to Needy Families), or SSI (Supplemental Security Income for the disabled) increased 36 percent during his presidency.

And none of these numbers include the middle-class social-welfare programs like Medicare and Social Security. Counting these programs, more than 153 million Americans, nearly half the population (49.5 percent), are living in households now dependent on government for a significant portion of their income.

Of course seniors may object to linking entitlement programs like Social Security and Medicare with welfare programs, since they paid payroll taxes that they were told financed those programs. But, in reality, payroll taxes are simply taxes like any other form of tax and are unrelated to benefits. As the Supreme Court held in Helvering v. Davis (1937), “The proceeds of both [the employer and employee] taxes are to be paid into the Treasury like internal revenue generally, and are not earmarked in any way.”

Besides, if you counted taxes paid into the system, today’s seniors get back far more than they ever contributed. For example, a two-earner middle-income couple will pay roughly $150,000 in Medicare taxes over their working lifetimes. While that is …read more

Source: OP-EDS

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Defeat ISIS by Letting Syria Loose

August 27, 2014 in Economics

By Doug Bandow

Doug Bandow

Obama administration officials proclaim that the Islamic State’s isolated experiment in 7th century Islam to pose a dire threat to America. After promising to strictly limit the military mission in Iraq, the president is preparing to expand the war to Syria, where the administration is working to overthrow the Assad government — which now blocks Islamic control over the entire country. Instead, the administration should encourage other nations, starting with Syria, to kill ISIS radicals.

Iraq is a catastrophic failure. Yet the Obama administration risks falling into war there again. The president originally undertook what he said would be a limited bombing campaign. Since then the campaign has broadened to general support for forces opposing ISIS.

Now Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, wants to address the Islamic State “on both sides of what is essentially at this point a nonexistent border” between Iraq and Syria.

However, Washington’s intelligence capabilities remain limited over the “nonexistent” border. More important, the Obama administration has spent three years attempting to overthrow Syria’s Assad regime, which possesses an air defense system.

Before putting U.S. personnel and material at risk, the administration should reconsider its policy in Syria. The Assad government is even more committed than Washington to eliminating the Islamic State as a geopolitical force.

Yet support for the opposition obviously has weakened the Assad government’s ability to fight ISIS. Washington’s preference for less radical groups also has discouraged Damascus from targeting the Islamic State, whose existence inhibits U.S. involvement.

Reaching a modus vivendi with Damascus would encourage Assad to focus on his most competent and dangerous enemy, ISIS. Assad is no friend of liberty, but Washington must set priorities.

The administration also should emphasize the responsibility of surrounding states to combat the group. Baghdad pursued a narrow sectarian course, crippling politics and the military.

Replacing Maliki is a good first step, but not nearly enough. Iraq must reach a broader understanding with Sunnis and Kurds to strengthen internal forces against ISIS.

Ankara, which claims a position of regional leadership, has much at stake as well. The group considers Turkish lands to be part of the “caliphate.” The Islamic State’s attacks on Kurdistan could spur Kurdish refugees into Turkey.

Jordan is far more vulnerable. The Gulf States are more distant, but Sunni radicals are unlikely to leave the Sunni royals in peace.

While these countries may not be willing to abandon their campaign to oust Assad, they could better …read more

Source: OP-EDS

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Five Libertarian Ideas #23 – Libertarian national defense, Part II

August 27, 2014 in Blogs

By Political Zach Foster