Power & Market
In New Hampshire today, President Trump announced his plan for tackling the opioid crisis. The main points from the plan, as reported by Axios, are:
- Work with coastal services and shipment services to set up screening technologies to detect illicit substances that are being shipped into the country.
- Support research and development efforts for technologies and additional therapies designed to prevent addiction and decrease the use of opioids in pain management.
- Reduce demand and the overprescription of opioids.
- Allocate funds for initiatives related to opioids to help states transition to a nationally interoperable Prescription Drug Monitoring Program network.
- Increase support for state and local drug courts to provide offenders with access to treatment "as an alternative to or in conjunction with incarceration, or as a condition of supervised release."
- Urge Congress to pass legislation that tightens sentencing penalties for drug dealers trafficking certain illicit opioids.
- Impose appropriate criminal and civil actions to hold opioid manufacturers accountable for any unlawful actions, and also screen federal inmates with opioid addiction and connect them to treatment services.
In short, it appears the Trump Administration's main objective is to ramp up law enforcement, spend taxpayer money on "research", and aim to "reduce demand," likely by increasing restrictions on physicians - which often pushes patients into more dangerous illicit drugs.
Sadly nothing here touches on the largest driver of the opioid crisis which, as Mark Thornton has explained, is a pain epidemic going on in America. Unsurprisingly, given the rhetoric from the administration, the idea of removing Federal restrictions on marijuana - something that appears to help actually address opioid usage - was not suggested.
Of course another much talked about part of the president's proposal is to introduce the death penalty for large scale dealers. This invites the question: should this mean the end of the CIA?
President Trump’s recent cabinet shake-up looks to be a real boost to hard-line militarism and neo-conservatism. If his nominees to head the State Department and CIA are confirmed, we may well have moved closer to war.
Before being chosen by Trump to head up the CIA, Secretary of State nominee Mike Pompeo was one of the most pro-war Members of Congress. He has been militantly hostile toward Iran, and many times has erroneously claimed that Iran is the world’s number one state sponsor of terror. The truth is, Iran neither attacks nor threatens the United States.
At a time when President Trump appears set to make history by meeting North Korean leader Kim Jong-un face-to-face, Pompeo remains dedicated to a “regime change” policy that leads to war, not diplomacy and peace. He blames Iran – rather than the 2003 US invasion – for the ongoing disaster in Iraq. He enthusiastically embraced the Bush policy of “enhanced interrogation,” which the rest of us call “torture.”
Speaking of torture, even if some of the details of Trump’s CIA nominee Gina Haspel’s involvement in the torture of Abu Zubaydah are disputed, the mere fact that she helped develop an interrogation regimen that our own government admitted was torture, that she oversaw an infamous “black site” where torture took place, and that she covered up the evidence of her crimes should automatically disqualify her for further government service.
In a society that actually valued the rule of law, Haspel may be facing time in a much different kind of federal facility than CIA headquarters.
While it may be disappointing to see people like Mike Pompeo as Secretary of State and Gina Haspel as the head of the CIA, it shouldn’t be all that surprising. The few areas where President Trump’s actions are consistent with candidate Trump’s promises are ripping up the nuclear deal with Iran and embracing the torture policies of President George W. Bush. Candidate Trump in late 2015 promised to bring back waterboarding “and a whole lot worse” if he became president. It seems that is his intention with the elevation of Pompeo and Haspel to the most senior positions in his Administration.
We should be concerned, of course, but the real problem is not really Mike Pompeo or Gina Haspel. It is partly true that “personnel is policy,” but it’s more than just that. It matters less who fills the position of Secretary of State or CIA director when the real issue is that both federal agencies are routinely engaged in activities that are both unconstitutional and anti-American. It is the current Executive Branch over-reach that threatens our republic more than the individuals who fill positions in that Executive Branch. As long as Congress refuses to exercise its Constitutional authority and oversight obligations – especially in matters of war and peace – we will continue our slide toward authoritarianism, where the president becomes a kind of king who takes us to war whenever he wishes.
I am heartened to see some Senators – including Sen. Rand Paul – pledging to oppose President Trump’s nominees for State and CIA. Let’s hope many more join him – and let’s hope the rest of the Congress wakes up to its role as first among equals in our political system!
When sharing Bob Murphy's excellent article today on the Knowledge-Calculation Debate, one of the most common responses has been "Murphy makes a good case, but why does this really matter?"
Beyond the value of grasping intellectual nuance, I think this debate has actually increased in real world importance over time with the rise of "Big Data."
Increasingly we see entrepreneurs, economists, and other thought leaders discuss the possibility of using improved data collection and algorithms to solve the "knowledge problem" Hayek famously outlined.
Now, of course, these big data central planners still suffer from their own fatal conceit, as brilliantly discussed in this article by Per Bylund. Still though, laissez-faire skeptics are able to use Hayek's knowledge critique of socialism as a way of justifying their new tech-backed schemes.
The same can't be said for the Misesian critique of socialism grounded in economic calculation, as Xiong Yue noted last year:
[T]hose who consider the problem of socialism as merely a problem of information failed to understand that the core problem of socialism lies in the absence of prices in a centrally-planned economy. The role of prices in the market economy is unique because money prices offer an indispensable tool in economic calculation. As Mises writes in Human Action,
One cannot add up values or valuations. One can add up prices expressed in terms of money, but not scales of preference.
With prices as a guide, entrepreneurs can potentially pursue profits by examining differences in the market prices of production factors and the expected prices of the final products. He or she can then organize production accordingly.
Therefore, even if we have some excellent data already, without this market-price mechanism, neither the economic calculation nor the efficient allocation of resources is possible; the planned economy is therefore not feasible. Because rationally planning or resource allocation requires the ability to calculate economically, such calculations need the prices which can be determined only in the market by the real-world exchange of owners of private property in the first place. Since the planned economy requires state and collective control of resources — and thus does not allow for these necessary voluntary exchanges between owners — it cannot rationally plan the operation of the modern economic system.
As a result, it's theoretically impossible for a planned economy to determine the prices needed for economic calculation. The cutting-edge technologies may help Jack Ma to optimize his strategies in his private enterprises in a relatively capitalist society. However, for a modern economy, as long as there are no prices available on which to base economic calculation, the failure of a planned economy is inevitable. As Joseph Salerno writes in his postscript to “Economic Calculation in the Socialist Commonwealth”:
[I]n the absence of competitively determined money prices for the factors of production, possession of literally all the knowledge in the world would not enable an individual to allocate productive resources economically within the social division of labor.
As someone who has witnessed first hand Barney Frank quote F.A. Hayek in order to justify the creation of new government bureaucracies, I have seen how dangerous people can twist his ideas to justify all sorts of elaborate government schemes. It is much harder to do so with Ludwig von Mises.
In the face of staggeringly high tax rates and growing housing costs, people are abandoning San Francisco at such a rate that U-Haul prices have skyrocketed in the area.
The start of the NFL off-season offers an amusing illustration of just how significant the California tax burden is compared to other states. As Mike Florio of ProFootballTalk notes, when center Daniel Kilgore was traded from the 49ers to the Miami Dolphins, he saw his roster bonus increase by over $300,000 dollars thanks to Florida not having California's 13.5% income tax.
Unfortunately for Kilgore, he won't be quite so lucky with his remaining $2.525 base salary. The majority of states with professional sports teams have what is often referred to as a "jock taxes," where states (and some times cities) steal from the game checks of pro athletes. It was these taxes that actually led to Cam Newton having to pay the State of California for the privilege of losing in Super Bowl 50. While Kilgore will avoid them every time he plays a home game, only one of his 2018 away games (against the Houston Texans) is in a state that doesn't engage in this practice.1
Still, Kilgore was a financial winner thanks to his trade to South Beach. Now whether the extra cash is worth moving from Jimmy Garrapolo to Ryan Tannehill is another matter altogether.
- 1. Along with Florida and Texas, Washington and Tennessee are the only other states without these taxes. Nevada will be the fifth, after the Raiders move to their new tax-payer subsidized stadium.
In fact, most geniuses seem to simply not get economics. An example is the recently departed physicist Stephen Hawking, who - like so many - made rather ridiculous statements of economic nature. Quoted by MSN/MarketWatch, Hawking makes several very simple mistakes in his attempted economic commentary. For instance, he seems to not understand the difference between a natural resource (the physical production factor) and an economic resource (the subject value), which leads him to erroneously conclude that hoarding, and the resulting increased scarcity of physical resources, impoverishes humanity. Also, Hawking noted:
“If machines produce everything we need, the outcome will depend on how things are distributed,” he wrote. “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.”
This is a common view that at best captures a fundamental misunderstanding of economics: that ownership of the means of production somehow implies power (economic or otherwise). But, as we've known since Menger, the means of production have only value to the extent they contribute to the production of consumers' goods, the consumption of which is the realization of value. In other words, if I buy all machinery in the world and refuse to use any of them to produce goods, the economic value is zero. If I don't use the machinery to produce and sell consumers' goods, I have destroyed the economic value of my property.
The real effect of robots "producing everything" is that the cost of production plummets, which offers producers profits. But as we're flooded with goods, their market price also plummets. And as the (only) role of capital is to increase the productivity of labor, it means we don't have to work much to support a very high standard of living. The true gig economy is that we can work only for an hour or two - when we feel like it - to support a month's (or maybe a year's) worth of luxurious leisure.
This is apparently a problem to some geniuses.
Venezuela continues to be one of the great humanitarian crises of our times. Every day brings new horrific headlines of starvation, violence, and chaos. Not only should this tragedy serve as a reminder of the true evils of socialism, but is vivid illustration of what hyperinflation looks like in the modern world.
While the Venezuelan government has tried it hands with modern gimmicks - like the largest cryptocurrency scam since Prodeum - the citizens continue to struggle with the realities of a currency so worthless that thieves don’t even bother picking it up off the floor.
The question now is simply how long this horror story continues.
Elections in the country are set for May, but of course no one expects politics to offer much hope for the Venezuelan people. What’s interesting here is that it provides another fascinating example of how dangerous the United Nations truly is.
Stalin is credited to have said, “It's not the people who vote that count, it's the people who count the votes.” Understandably his ideological heir, Nicolás Maduro, feels pretty good about his re-election chances in Venezuela. His opponents have no delusions to think elections will be handled fairly, and are calling boycotting elections.
In enters the UN, who is considering sending in observers to ensure the integrity of the election process. Of course this is precisely what the Maduro government desires. After all the Venezuela people, beaten and starved, are unlikely to take the presence of a few foreign bureaucrats as the protection they need to stand up to their oppressive leaders. The UN’s presence will only serve to prop up Maduro, at least until complete economic collapses leads to military intervention – which some analysts think could be in the next 12 months.
Still, the fact that the UN would ever consider serving the desires of Venezuela’s socialist government is simply another reminder that the UN is worse than useless.
Of course, at the end of the day, any inevitable change in leadership in the country will not solve the plight of the country without a revolution in ideology. As Jose Nino has noted in several great articles for us, socialist ideology was a Venezuelan problem before Hugo Chavez, and risks outliving the rein of Maduro.