Deconstructing the Myth of Social Democracy

Deconstructing the Myth of Social Democracy

Social democracy (or welfare state) may feel like the nice middle point between laissez faire capitalism and communism that many people feel comfortable with. Among the many arguments that proponents of social democracy espouse in favor of such a system there’s their concern for the poor, they ask, in a minimal state society who would help the poor?

The hidden premise in the argument is that the state really helps the poor and that it is part of the capitalist system to bring about poor people. They see a middle-sized state with moderate intervention in the market as the solution to such problem, they reject communism/socialism for well-known historical facts (authoritarianism, impoverishment, etc.).

Although an easy response to the question maybe to say that charity would help to combat said poverty, there is a more definitive yet difficult answer. One must counter the premise that the state helps to reduce poverty in any way.

The first part of the answer is look at the nature of the state, but why? To see which type organization, we are dealing with. Why does the state exist and how is it that society is under it? The state is an organization you are part of or are under from the moment you are conceived, you don’t choose to be part of it, you just happen to be born somewhere within its borders and therefore under its rules.

The state is an organization that you have are part of without choosing to do so, no one is ever presented with a contract to accept the rules of the state. In other words the state regulates you without your consent. The question remains why is there a state in the part of the world you are born?

This is a historical question, the answer lays in there, if you look at every state in the world you will find that the territories under them where conquered by them at some point in time (For more on the subject see Oppenheimer The State 1908), no one in those territories was ever asked if they wanted to be part of this state or another (Even in the event of a referendum the ones that reject it are forced to stay in the territory they are).

Now, let’s assume that we are the government and there’s poverty in our lands, what can we do to at least try to help? Which tools does a social democratic government have to combat poverty?

Money is key, the government in a social democracy has a monopoly on the money supply so what happens if they try to use this tool to combat poverty. It can do three things either contract, fix or expand the money supply, these three things will affect the entire economy, and in this circumstance badly, since changes in the money supply that are not dictated by supply and demand distort relative prices and therefore the communication system that prices are. In other words, it will cause inflation or deflation (the bad one, that means the one not generated by an increase of supply of all goods in the market).

Welfare may be the next possible option, which means giving money to poor people, but this has its own problems. First, that money you are giving is being taken from somebody else by taxes so you would be making someone richer at the expense of making somebody else poorer. Plus, by giving money away, the people receiving the money will not have an incentive to work since they are getting money anyway by doing nothing, so production will decrease affecting everybody in the economy.

Even if this redistribution is made from up to down, that means taking from the rich to give to the poor, it will still create problems since the rich are basically people that saved. Thus, if you take money from them general investment will decrease therefore affecting the expansion and creation of business, businesses that otherwise would have created jobs and bid up wages. Note that as F.A Hayek said, the means by which the state redistributes the wealth to make a society more egalitarian, are the same methods by which a tyrant would benefit a racial elite (F.A Hayek - The Road to Serfdom 1944), which means taking from someone by force to give to somebody else.

What about lowering the price of products to make them cheaper so more people can afford them? This would again create problems. Let me illustrate it this way: if person A buys X amount of a product and then the price of that product is lowered then person A will buy more of that product, that means there will be less amount of X product in the shelfs than before. In other words whoever gets first to the product will get it, richer people will be able to buy more of it before more modest people get there. The other problem is that investment in the price-controlled product will also decrease since it is now cheap and not as profitable as before thus less people will want to produce it.

That illustrates how any price control will fail to help to combat poverty even minimum wage laws that the only thing they do is to make illegal hiring someone below certain price. Then the employer that values certain worker with a price that is below the minimum will simply not hire him.

Now, let’s come to one of the main features of a social democracy, to give services for free so people that cannot afford them on the market, can get them by the state. Of course, nothing is ever “free,” always somebody is paying for it, in this situation, everyone by means of taxes is paying for these services although many of them are not even using those services.

Even worse, low-income people that are supposedly being helped by these, are actually not, since they are being taxed before they use the state services therefore being impoverished and getting nothing in return. Instead, they are financing the people that have the time to go and actually get those services. This is true for state-run services like the public school system and healthcare.

Furthermore, the money that is being taken to finance these services would have been used (if people want) to create private schools or hospital that would be more efficient than state-controlled ones. The idea of a social democracy comes from the proposition that there is a third way between capitalism and socialism. Ludwig Von Mises already took on this position and showed that a third way always leads to socialism, since one intervention in the market distorts it, prompting the government to intervene again.

What then can a social democratic government do to combat poverty? At this point it is safe to say that government through its interventions is the source of poverty and nothing it can do will help, it’s no surprise since as I have mentioned that the state does not get its members voluntarily. Basically, what the government can do is to stop being a social democracy and embrace the free market, just let the people be free to create wealth.

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Chicken, Beef, & Bugs

3 hours agoRobert Aro

You know the economy is in trouble when a CNBC headline reads:

This was a good week for inflation numbers, but whether it can last is the big question

…citing the Consumer Price Index (CPI) increase by 8.5% and the Producer Price Index (PPI) increase of 9.8% from a year ago as a mild victory. However, the celebration came with a reminder that:

Fed officials will be watching closely to see larger trends in how inflation is impacting Main Street.

Yet, understanding how Main Street is impacted is an impossible task. Measuring the average price increase, for the average person, in the average city, has severe limitations. Then there are even more immeasurable elements like human suffering, capital destruction, and opportunity cost that also comes from centrally planning an economy.

Using the Fed’s own data, we can attempt to visualize how bad things are by looking at one of the few things many people still have in common, their love of eating chicken and beef.

According the Bureau of Labor and Statistics, who compiles data used by the Fed, the average cost of chicken breasts is up almost 32% from a year ago:

The average price of ground beef hasn’t increased as much, only 12% from a year ago, per below:

Of course these titles sound unintentionally humorous and highly arbitrary. In the case of ground beef, the Fed says this applies to: “Fresh regular 100% ground beef excluding round, chuck, and sirloin. Includes organic and non-organic. Excludes pre-formed patties.” Should one be so inclined to actually read the calculation method and average price data, it will quickly be obvious how inexact a science inflation calculations really are.

They categorize meats, poultry, fish and eggs together to arrive at a change in the CPI by only 11% from a year ago:

For those who abstain from eating meat entirely the average price of beans is up 17% from a year ago:

While not everyone is looking to buy a used car, pay tuition, owns a pet, or takes public transportation, everyone must eat food; and, by all measures, grocery bills, like the price of gas, remain elevated. The future shows little promise of sustained and long-term price decreases occurring anytime soon… or ever, since the Fed is pro-inflation.

Perhaps another sign of the times was from an article the World Economic Forum published earlier this year entitled:

5 reasons why eating insects could reduce climate change

Whether one eats chicken, beef, or chooses to eat bugs, we must remain cognizant of the fact that it never had to be this way. We should get angry when the mainstream media chooses to portray a CPI of 8.5% as good news, or worse, claim that:

Wednesday’s inflation numbers could take some heat off the Fed.

Remember no amount of positive CPI or PPI is necessary to support a functioning society. All these calculations attempt to do is capture how much the cost of living has changed from the month, or year prior, with the hope that it always goes up by a certain amount. For the planner, they’re okay with making life more expensive for you with each passing year, because they need to increase the money supply in order to pay for things not generally valued by the public, like wars, corporate bailouts and tax collector salaries. In their perfect world, they’d hope this to be gradual, so the public would never become aware of the perpetual loss of purchasing power.

The thing about a central plan is that it never goes as planned. If there is a silver lining, it’s the hope that this lesson in inflation will become a generational learning curve, much like price inflation, permanently entrenched.

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Who Reads the Fed’s Annual Report?

08/12/2022Robert Aro

The Federal Reserve recently released its 2021 Annual Report for Congress. This 200+ page document aims to encapsulate the annual financial and operating affairs of America’s Central Bank. One must wonder, like all bills passed through Congress, how many state representatives actually read these documents and what pertinent information is contained therein?

It begins almost with a disclaimer:

The Federal Reserve was created by an act of Congress on December 23, 1913, to provide the nation with a safer, more flexible, and more stable monetary and financial system. In establishing the Federal Reserve System, the United States was divided geographically into 12 Districts, each with a separately incorporated Reserve Bank.

Having 12 districts is as questionable as the belief that the Fed created a safe, flexible and stable monetary system. Yet, over 100 years after Congress granted the Fed a monopoly on the US dollar, and failure after failure, the Fed is stronger than ever.

There are “five functional areas” the Fed is responsible for, per the bulk of the report. The first: Conducting monetary policy and monitoring economic developments. This section covers common concerns, the dual mandate, inflation, employment, consequences of their easy money policies, of course, without acknowledging their culpability:

Supply chain bottlenecks have plagued the economy for much of the past year. Against a backdrop of robust demand for goods, global distribution networks have been strained…

Unfortunately they fail to attribute the increase in money supply to the “robust demand for goods,” so, it omits crucial economic theory.

The second functional area: Promoting financial system stability. Various vulnerabilities and financial concerns, such as overvalued assets and excessive leverage, are mentioned as being monitored. They also included:

…climate change as an emerging and increasing threat to financial stability in the United States.

Other than reducing regulation and the regulatory burden, consideration as to just how much a central bank can do to fight climate change should be given. Since the Fed’s power largely boils down to its ability to decrease rates and increase the money supply, the positive influence this would have on climate change is questionable.

Supervising and regulating financial institutions and their activities is the third area. This deals with examinations, enforcement and related activities to ensure everyone is abiding by the law. Unless buried in the notes, nothing regarding insider trading at the Fed was noted.

Area four: Fostering payment and settlement system safety and efficiency deals with the mechanics and logistics behind the monetary system. The inevitability of Central Bank Digital Currency (CBDC) can be seen through various projections the Fed is currently working on such as “Project Hamilton,” a collaboration with the Federal Reserve Bank of Boston and MIT to form a:

…multiyear research project to research retail CBDC designs and gain a hands-on understanding of a CBDC’s technical challenges and opportunities.

Last, area five: Promoting consumer protection and community development, also deals with examinations of financial institutions but looks at fairness, inclusion, equality, etc… It handles complaints, of which 5,814 were made in 2021. Of these, 93% are now considered closed. The stats are as follows:

In 44 percent of investigated complaints against Federal Reserve regulated entities, evidence reviewed did not reveal an error or violation. Of the remaining 56 percent of investigated complaints, 12 percent were identified errors that were corrected by the bank; 5 percent were deemed violations of law…

Ultimately, it’s clear this central bank system is designed not for the prosperity of “the People,” but for the prosperity of “the State.” The apparatus is entrenched within society, with a complicated history and deep vested interests at hand, forming the foundation of Wall Street. If the annual report is useful to anyone on Main Street, it’s to serve as a reminder just how little those on Main Street matter to those at the top.

 

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2 Months of QT Down

08/08/2022Robert Aro

The Federal Reserve is shrinking its balance sheet, albeit at a snail’s pace. Let’s see how they’ve done compared to last month. Per latest data release:

  • On July 6 the US Treasury (UST) balance was $5,744,344,000,000. The balance on August 3 now stands at $5,719,119,000,000, for a reduction of roughly $25.2 billion.
  • On July 6 the Mortgage-Backed Security (MBS) balance was $2,709,336,000,000. The balance on August 3 now stands at $2,717,552,000,000 for an increase of roughly $8.2 billion.

Two months after the official start of Quantitative Tightening, the Fed has reduced Treasury holdings by about $50 billion… while Mortgage-Backed Security holdings increased by over $10 billion!

Think about the stock market in this same amount of time, after a net reduction of just $40 billion in June and July, the worst is still ahead, if all goes according to the plan. As it currently stands, after August, the UST reduction limit will increase from $30 billion to $60 billion a month, while MBS goes from $17.5 billion to $35 billion.

This is strange for a variety of reasons, one being the gross lack of the Fed’s credibility. Since they only reduced Treasuries by half of the maximum limit while increasing the MBS holdings, it’s difficult to fathom that they’ll start accelerating QT by next month.

Yet, in Jerome Powell’s world, everything is fine and, by September, we’ll feel the full force of the Fed’s tightening. Just last week, when asked how the balance sheet reduction is going, he responded:

So we think it's working fine… And in September, we'll go to full strength. And the markets seem to have accepted it. By all assessments, the markets should be able to absorb this. And we expect that will be the case. So, I would say the plan is broadly on track. It's a little bit slow to get going because some of these trades don't settle for a bit of time. But it will be picking up steam.

It's unclear what he means by the trades not settling on time, that doesn’t explain why the MBS balance has seen two months of increases. Nonetheless, he claims the tapering will be “picking up steam,” so we’ll be watching and waiting.

It’s important to reiterate that, despite the slow pace of the tapering, we are still in the middle of the bust. The Fed has abandoned easy money policies. So until further notice, we must accept that rates will continue to rise and the balance sheet will continue to shrink. The yield curve on the 10-year minus 3-month reached 0.04 last week, per the Fed’s data, and is destined to go negative any minute now.

This author reminds readers to not be fooled with stock market rallies, Russia’s war, Putin’s price hikes, an invasion of Taiwan, any government promise to reduce inflation, or other media distraction. The days may be slow, but the crash will come fast. With monetary and fiscal policies long since destroying the economy, much of the average person’s attention is forced to focus on stock market speculation and ways to prepare for more dollar destruction; so please remember, without the Fed’s Marvelous Magical Touch due to the return of Quantitative Easing, tread carefully in the market, if at all.

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Is It a Rothbardian Moment? Populists Win in Arizona GOP Primary

08/06/2022Aaron Cummings

The Republicans for National Renewal (RNR) held a promotional event in Phoenix, Arizona for the holiday season last year after an extensive lineup was sponsored on social media. At the time, they had little to no bragging rights as they fought an uphill battle against election integrity.

During the late hours of night in August 2022, it was clear that two themes were stated with confidence: Conservatives were out, and populists were in. The election results proved that the political landscape has been malleable, however there had been a lack of momentum from conservatives.

Like Murray Rothbard, others were estimating what the future ideological divide could be. Sam Francis was infamous for naming names, yet his most academic profile was the philosophical foundation that aligned with Rothbard. He asked:

“Should we be Lockians, Hobbesians, or Burkeans: natural rightsers, or traditionalists, or utilitarians? On political frameworks, should we be monarchists, check-and-balance federalists, or radical decentralists? Hamiltonians or Jeffersonians?”

These were the questions rarely asked outside of Mises conferences, but one man has been making them relevant again. Peter Thiel provides a backstory that only Rothbard seemed interested in years prior. When public gatherings like RNR were organized, a refreshing dialogue had a visible impact on the audience and sounded similar to Francis’s pitch. He said:

The strategy of the Right should be to enhance the polarization of Middle Americans from the incumbent regime, not to build coalitions with the regime's defenders and beneficiaries" (p. 230).

This was the place where the August election started its trajectory. It may have looked like a smaller competitor to the concurring Turning Point USA conference just down the street. In terms of finances, this would certainly be accurate. Another notable presence were the youth groups disaffected by the Republican organizations. Years ago, there were a handful of college opportunities that provided proper networking opportunities. Today, the groups are more distinct beyond the vague patriotism heard in conservative media. If donors like Thiel remain regulars in this populist faction, the financial gap may not be an obstacle moving forward.

As the title suggests, the event was a referendum on the GOP’s direction and not a carbon copy of the party platform. Many of the speakers consisted of Republicans, although not in the conventional sense. Blake Masters, backed by Thiel, delivered a speech on his prominent one income policy reverting to a human centered economy. Two more Arizona regulars, Kari Lake, and Wendy Rodgers shared dissident views on branching away from the party in favor of the Trumpian model over its neoconservative counterpart.

All the Rothbardian staples were present. They argued that the renewal within the GOP started with Pat Buchanan’s presidential campaign in 1992 and succeeded with Donald Trump. A list of the greatest hits were shared from the declining standard of living to unapologetic nationalism. According to Newsweek, this was part of a broader trend among Generation Z seeing where the wind is blowing and seizing the opportunity.

The culture wars were waging once more at the forefront of the event. Economic concerns, championed by the conservative establishment, took a back seat as social topics surfaced above everything else. The usual suspects were under the gun including Big Tech, unregulated capitalism, and feckless Republicans. The alliance binding all these Trumpian senators and influencers contributed to the “working-class realignment.” Based on the guest list, a coalition of grassroots conservatives were underway and anticipating the midterms with revitalized enthusiasm.

It was also a safe haven for the often-neglected paleo libertarians of the Mises Institute. Books from Hans-Hermann Hoppe and others were scattered throughout the greeting tables. Tho Bishop appeared as the main representative, opening one of the first serious speeches of the night. The tone resembles what Murray Rothbard referred to as “Right Wing Populism” and claimed to be the only strategic way to win elections in the long run. After a lengthy celebration in August, many have speculated that this trend isn’t exclusive to the state of Arizona.

For all their flaws, Generation Z is reaching an impasse, and many are hedging their bets on college organizations as the way forward for the GOP. But, if they’re wrong, Rothbard’s prominent words may be palatable among the new generation of populists.

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Rothbard was Right about Water Fluoridation

08/05/2022Joshua Schubert

Water fluoridation was pushed in the United States as a public health policy for interventionist gain. The medical and environmental research has since shown that the alleged dental benefits to water fluoridation are outweighed by negative effects on other systems in the body. This compulsory measure has not only violated the rights of consumers, but it is also antithetical to human health.

Murray Rothbard in his 1992 essay Fluoridation Revisited uses his training as a historian to weave an engaging yet accurate narrative of who did what for who's benefit in the push for water fluoridation in the mid-20th century. 

Of particular interest to me is the role the Mellon Institute, ALCOA's research lab in my home of Pittsburgh, played in bringing about compulsory water fluoridation:

In 1931, the PHS sent a dentist named H. Trendley Dean to the West to study the effect of concentrations of naturally fluoridated water on people’s teeth. Dean found that towns high in natural fluoride seemed to have fewer cavities. This news galvanized various Mellon scientists into action. In particular, the Mellon Institute, ALCOA’s research lab in Pittsburgh, sponsored a study in which biochemist Gerald J. Cox fluoridated some lab rats, decided that cavities in those rats had been reduced, and immediately concluded that “the case [that fluoride reduces cavities] should be regarded as proved.”

The following year, 1939, Cox, the ALCOA scientist working for a company beset by fluoride damage claims, made the first public proposal for mandatory fluoridation of water. Cox proceeded to stump the country urging fluoridation. Meanwhile, other ALCOA-funded scientists trumpeted the alleged safety of fluorides, in particular the Kettering Laboratory of the University of Cincinnati.

During World War II, damage claims for fluoride emissions piled up as expected, in proportion to the great expansion of aluminum production during the war. But attention from these claims was diverted when, just before the end of the war, the PHS began to push hard for compulsory fluoridation of water. Thus the drive for compulsory fluoridation of water accomplished two goals in one shot: It transformed the image of fluoride from a curse to a blessing that will strengthen every kid’s teeth, and it provided a steady and substantial monetary demand for fluorides to dump annually into the nation’s water.

Suspicious Connection

One interesting footnote to this story is that whereas fluorine in naturally fluoridated water comes in the form of calcium fluoride, the substance dumped into every locality is instead sodium fluoride. The Establishment defense that “fluoride is fluoride” becomes unconvincing when we consider two points: (a) calcium is notoriously good for bones and teeth, so the anti-cavity effect in naturally fluoridated water might well be due to the calcium and not the fluorine; and (b) sodium fluoride happens to be the major by-product of the manufacture of aluminum.

30 Years Later


As it turned out, the research has shown that the nondental effects of water fluoridation in humans is harmful, according to health literature. Professor Philippe Grandjean published a 2019 meta-analysis on the subject titled Developmental Fluoride Neurotoxicity: An Updated Review in the Journal of Environmental Health. Multiple large studies have shown that fluoride in early development “can result in IQ deficits that may be considerable.”

As for the prevention of dental cavities, Grandjean and others propose topical use of fluoride for that purpose, rather than systemic ingestion of fluoride.


Calculating the Yearly Population Level IQ Loss in Newborns due to Water Fluoridation in the United States


Here I will attempt to calculate a rough estimate for the net IQ loss in Newborns in 2020 in the United States, using the causal research combined with population figures and data on overall water fluoridation levels in the United States. Perhaps of more interest to curious readers would be a similar calculation for your local municipality that fluoridates its water.


About 3.6 million babies were born in the US year 2020, and 73 percent of the US population "receive water that has the optimum level of fluoride recommended for preventing tooth decay." And that "optimum level" per the CDC is 0.7mg/L which is equal to 0.7 parts per million. And in prenatal urine the benchmark concentration level (BMCL) to cause a 1 IQ point drop for children is 0.2mg/L (at a confidence level of 95 percent). [A big thank you to Professor Philippe Grandjean who pointed me to this article after I read his 2019 meta-analysis on the topic.] And we can assume this relationship is linear above the BMCL, as that best approximates the current data. There is a 1:1 relationship of water concentration to urinary concentration of fluoride. Therefore, pre-natal IQ loss from fluoride is 3.5 points per child whose mother drinks primarily fluoridated water at "optimum levels".

If that 73 percent of the US population's water has the "optimum level" of fluoride, translates to 73 percent of Pregnant women getting the "optimum level" of fluoride. Then 73 percent of newborns each year are experiencing this 3.5-point IQ deficit, with 73 percent of the 3.6 million babies born in the US in 2019 being 2.628 million.

2.628 million newborns with an unrealized IQ potential of 3.5 points each means that: 9.198 million IQ points of newborns were lost due to water fluoridation in one year in the US.

Not only that, but this number also undercounts the total newborn loss of IQ due to water fluoridation because the water fluoridation in some areas is higher than the "optimum amount" of 0.7mg/L. In some areas it is lower than that "optimum amount" yet still higher than the BMCL (benchmark concentration level bound) for 1 point of IQ loss, which is equal to 0.2mg/L. However, we are only counting the 73 percent of the US population that receives water at that “optimum level” per the CDC of 0.7mg/L.


Conclusion

The ongoing newborn population IQ loss due to water fluoridation is a public health disaster. Not only is it harmful, but it also violates the Nuremberg Code of Medical Ethics. It is imperative that local authorities cease the fluoridation of municipal water supplies and leave medical decisions between individuals and doctors that have earned their trust.

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Household Employment Goes Nowhere for Fourth Month

08/05/2022Ryan McMaken

With the release of new employment data from the Bureau of Labor Statistics today, most commentators have focused on the big gains seen in the total number of jobs as reflected in the establishment survey. According to that survey, total nonfarm jobs reached 152 million which—30 months later—finally puts total jobs back at their pre-covid peak during January and February of 2020. This was hailed as an enormously strong jobs report by many observers. 

But the grand employment successes indicated by the establishment survey are not reflected in the household survey which, rather than measuring total nonfarm jobs, measures "total employment" or employed people. In that case, employed persons are about a half a million jobs below the February 2020 peak, but the more worrying trend is in the fact that total employment has been flat for the past four months. total employment was 158 million in March 2022 according to the survey. In July, it was also at 158 million. 

hh

That's quite a difference between the two employment surveys. The establishment survey shows that since March total jobs have grown by 1.68 million while total employment has fallen by 168,000. That's a difference of 1.8 million. 

This suggests that the total number of jobs is growing, but the total number of employed people is not. In other words, people are taking more second jobs, but more people aren't employed. 

Employment weakness also shows up in the labor force participation rate (for the 25-54 age group, excluding most retirees) which remains below the 2020 peak, and also below where it was for the entirety of the period from the late 1980s to the 2008 financial crisis. 

part

The overall narrative for the most recent employment data, however, was that jobs are "smashing" expectations and that the labor market is red hot. Yet, it's apparently not hot enough to bring the working-age labor force back to where it was before the GFC. Nor is it hot enough to bring total employment back up to 2020 levels. 

Theoretically, this sort of thing could always be explained by the idea that household earnings are so strong that many workers simply don't need to work anymore. That is surely true in some cases, but we also know that the savings rate is falling while debt is mounting. 

For example, after surging to historically high levels in 2020—thanks largely to stimulus checks and people putting off recreation and vacations—the personal savings rate has collapsed since December of last year. As of June, the personal saving rate is at 5.1 percent, which is the lowest since 2009. 

saving

Moreover, household debts are mounting as well. According to the Federal Reserve consumer debt and revolving credit have grown rapidly since March of 2021, and are now at a new high and in July was up more than 17 percent year-over-year. Other data suggests consumers are still doing plenty of spending, but many are apparently doing it using consumer credit and at the expense of savings. 

This is not shocking since wages are not keeping up with the CPI inflation rate

What does all this mean for the economy? It suggests neither collapse nor robustness. The fact that employment data tends to be a lagging indicator, however, means the employment data probably doesn't mean much in terms of telling us where the economy is headed. Many economists and policymakers are busy debating semantics and whether or not the call the current situation a recession. But falling real wages, high inflation, rising debt, and two quarters of negative GDP growth suggest falling standards of living, which is mostly what matters. 

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Innovation TrumpsGovernment Dictates in Reducing Waste as UK Researchers Create “Edible Plastic”

I've always cared for the environment. I was indoctrinated into it, and during my university career wrote all my lecture notes on the back of discarded “misprints” from the library. Why waste?

Nonetheless I cringe and cringe at token efforts to reduce plastic waste by putting mandatory charges on shopping bags while almost everything we pick up from supermarket shelves are coated in plastic wrapping! Listen guys - we all wanna save the world, but we ain't gonna do it by banning plastic straws.

It's transparent to us that these measures are more about making it look like elected officials are doing something while nothing of any substance is being accomplished. Monsanto get away with spraying toxic chemicals that run off into “public land” and rivers every single day the world turns, and while they poison me slowly to death, I've got paper in my mouth from sipping this mojito.

Besides, people aren't as stupid as lawmakers think. They were already recycling their plastic shopping bags by using them as bin-liners and things. Now they need to go out and buy a roll of plastic bin-liners instead.

We will never see the end to environmental degradation until the land has private owners who can sue despoilers. Garbage disposal has to be privitized so that people are charged for their waste in proportion to how difficult it is to dispose of. Suddenly there will be a surge in innovation in sustainability as people rush to minimize the cost of having their trash bags picked up.

Until then, the do-gooders in government will continue to lecture us on carbon emissions while travelling the world in private jets.

I Love Plastic Straws

Whether you happen to be a sceptic of “the green agenda” or you’re worried that your continent is going to be under sixteen feet of water by 2030, recent innovations should put a smile on your face.

A team of researchers, led by Professor Saffa Riffat from the University of Nottingham, are working to introduce a plant-based alternative to food packaging that will not only be eco-friendly, but edible too. It uses starch, konjac flour, cellulose, or proteins to produce. All the materials can be safely eaten and so they don't pose any threat to wildlife or the oceans, and because they are organic, they are also biodegradable as well.

Professor Riffat says:

Plastic materials have been in use for around a century, their poor degradability is now known to cause serious environmental harm…We need to find degradable solutions to tackle plastic pollution, and this is what we are working on... The packaging materials we are working on have low gas permeability, making them more airtight. This feature cuts moisture loss, which slows down spoilage, and seals in the flavour. This is of great importance for the quality, preservation, storage, and safety of foods.

The new materials are tipped to give consumers access to fresher produce by providing better storage, safer usage, and a longer shelf life. With a little luck, they won't turn to mush in my beverage

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D.C.’s Dangerous Consensus: We Hate Iran!

With Republicans and Democrats in Congress having openly expressed their united opposition to the Biden administration reentering the nuclear agreement with Iran (the JCPOA), it should come as no surprise that negotiations have gone nowhere.

The reason?

Beneath all the bluster about nefarious Iranian activities in the Middle East and the back and forth over lifting the sanctions Trump’s team imposed on Tehran after unilaterally ripping up the JCPOA in the first place, Joe Biden is a wimp afraid of facing political backlash for undoing one of Trump’s worst foreign policy decisions.

Afterall, it was Biden’s own current team of Malley, Blinken, and Sullivan who worked out the nuclear deal with Iran while working for Obama.

So even though Biden has admitted Trump pulling out of the deal was a "gigantic mistake," he won’t agree to lift sanctions neocon Trump officials like Elliot Abrams admitted were only put in place to try and prevent Biden from reentering the deal in the first place.

This includes the labeling of the Iranian Revolutionary Guard Corps as a terrorist organization, which though Biden had been using it as an excuse not to get back into the deal Tehran has recently dropped it as a demand in negotiations – this while the Wall Street Journal openly reports the Israeli military and intelligence services are assassinating Iranians left and right, including inside Iran itself.

The truth, unfortunately, is that Biden lacks the courage of his convictions and is no longer serious about getting back into the deal. As a consequence, war with Iran looks increasingly likely – and over nuclear weapons our own CIA director, William Burns, says publicly the Iranians aren’t pursuing making.

Despite the fact that every U.S. intervention in the Middle East over the past twenty years, from Afghanistan, to Iraq, to Syria, to Yemen, has strengthened Iran’s position in the region, the groundwork for the next disastrous war has already been laid – building on the foundation of the Abraham Accords to bring India on board with Israel, Egypt, the UAE, and Saudi Arabia to gird for direct conflict with Iran. Speaking in Israel, Biden has already gone so far as to threaten the use of force to prevent the Iranians from getting the bomb they aren’t pursuing, but which, if they were wise, Tehran would start building as a deterrent immediately.

Apart from the pressure from our “allies” in Riyadh and Jerusalem, the former a regime so despotic Freedom House ranks it lower than China, while the latter simply needs an enemy to keep the billions in annual U.S. aid flowing, the Abraham Accords already have their own caucus in Congress, and the military industrial complex salivates at the prospect of a Middle East NATO to buy even more of their products.

Poor Iran – not so bad as to prevent Ronald Reagan selling them weapons through Israel during the 1980s, as Gareth Porter has convincingly documented, after the first Cold War ended Tehran found itself picked out as one of the new threats that would continue to justify the empire.

So as increasingly delusional screeds by walking disasters like John Bolton populate the opinion pages of the major papers and Republican and Democrats unite to bully a weak President already inclined to serve the interests of our ostensible client states, who benefits from our Iran policy is as obvious as who doesn’t: the American people.

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It’s Not 1970 or 1980

08/04/2022Robert Aro

It’s closer to 2023, yet, we’re constantly reminded how the Fed has learned from the Volcker era, therefore knows how to steer the economy in the right direction. Nothing could be further from the truth.

On Tuesday St. Louis Fed President James Bullard told CNBC that the economy can still avoid a recession and that rates will likely “have to go to 3.75% - 4% by the end of 2022,” in order to fight (price) inflation. He continued by drawing comparisons to over 40 years ago, as reported:

Bullard compared the Fed’s current situation to the problems central banks faced in the 1970s and early ’80s. Inflation is now running at the highest points since 1981.

In the time-honored tradition of throwing one’s predecessors under the bus, claiming this time will be different, Bullard said:

Modern central banks have more credibility than their counterparts in the 1970s.

According to him, it’s this credibility that the Fed and European Central Bank:

…may be able to disinflate in an orderly manner and achieve a relatively soft landing.

He bases his confidence on the Fed’s “credibility,” as if this determines what causes recessions or cures periods of high inflation. The article tries to explain his theory:

But Bullard argued that the ability for the Fed to steer the economy toward a soft landing rests largely on its credibility, specifically whether the financial markets and the public believe the Fed has the will to stop inflation. He differentiated that from the 1970s era when the Fed enacted rate hikes when faced with inflation but quickly backed off.

It's quite the explanation! However, it offers little confidence that anyone at the Fed knows what they’re doing, appealing to the passage of time and hope for a better future, more than anything.

Bullard makes a final plea to this fabled credibility as the difference maker:

That credibility didn’t exist in the earlier era… We have a lot more credibility than we used to have.

Unfortunately, it will take a lot more than credibility to get the economy out of its current (or upcoming) recession and bust cycle. Displaying little knowledge of the Austrian Business Cycle and how changes to the money supply alter the structure of production causing the boom/bust, it will be difficult for the Fed to “do the right thing,” which would simply be leaving the economy alone.

The on-going comparisons between now versus several decades ago is worrisome. Considering the national debt in 1981 was still under $1 trillion, but now is over $30 trillion, it’s disingenuous to say 2022 is the same as 1981. Still, one might argue that it’s all relative, and GDP has grown since then.

Despite the problems with GDP, looking at the debt to GDP ratio shows something troubling, making the comparison between now and then even more difficult to support:

Between 1970 to 1980, the debt to GDP ratio hovered around 35%. By comparison, today’s ratio is at 123%! Very roughly, if the national debt were closer to 7 to 9 trillion dollars, we could say it has grown consistently with GDP. But we cannot say that. Either the national debt has drastically exploded, GDP has inexplicably shrunk, or a combination of the two.

Beyond that, it's exceedingly difficult to believe that any central banker or government official learned anything from 40 to 50 years ago, since they’ve done nothing except take on more debt and increase the money supply every year in as much time; if they really learned, then inflation would never have gotten this high to begin with. Technology is different. The Geo-Political landscape is also different. The accumulation of all debts, past inflations, price valuations, and malinvestments over time are now all combining to increase the severity of the next bust.

Other than “high inflation” now and “high inflation” then, and the hope to lower the rate of price increases, it’s best to believe that the Fed steers this ship without a rudder. Since little comparison can be made to now versus half a century ago, it makes little sense to cite this period pretending like our new central planners are more advanced, learned, or better than their predecessors.

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Is There an Opportunity for Real Change in Britain?

(Endorsed by Godfrey Bloom, Alasdair Macleod, Simon Hunt, and Claudio Grass)

In a few days the British Conservative Party will select a new prime minister from within its ranks. The new PM will have a short-lived opportunity to select new ministers. But more importantly, due to the inevitable adverse consequences of a decade and a half of unprecedented money printing, little real action to complete the promise of Brexit, and war in Ukraine, the new PM can select ministers pledged to sound money, a rational and pro-growth tax policy, free markets, limited government, and a non-interventionist foreign policy.

Sound Money

In perhaps an apocryphal story, it is held that Ludwig von Mises was once asked what one reform he would select if allowed only one. He quickly answered...return to sound money. By sound money, Mises meant a money not controlled by government but rather by the market. Without a doubt the market would choose a commodity-based money, most likely gold. Sound money would force government to live within its means. Under a sound money regime, it becomes clear that every pound or shilling spent by government comes directly from the people. Government spending reduces private spending pound-for-pound. The so-called "spending multiplier" by which one pound of government spending increases total spending by multiples of that amount is a complete fallacy.

New taxes will always be unpopular and rightly so. Increase in government borrowing can only happen by pre-empting private borrowing, via higher interest rates, which is recessionary by its very nature. It is natural and good that government must overcome the public's reluctance for new taxes and more government debt to increase spending. Government must justify their increased spending plans to the people. By the same token, government spending cuts will mean that the public will have more to spend themselves.

A Rational Tax Policy

Like the need for sound money, the need for a sound taxation policy is one of the most important, yet least understood, aspects of government. Even the current debate between the final two Prime Ministerial contenders, who of all people should be better briefed, reveals a profound confusion that exemplifies Frederic Bastiat’s distinction between what is seen and what is not seen.

Every time one of them declares an intention to cut, say, corporation tax and more recently, even income tax, the predictable counterblast is:

But that will cost the Exchequer ‘£x billion’ per annum and will mortgage our children’s future, creating ‘£y billion’ of additional borrowing that will take ‘z years’ to repay. The nation can’t live on credit-card economics! I will first address the problem of inflation, and only then cut taxes – that’s the responsible approach!

These emotive responses perfectly illustrate Bastiat’s “what is seen” – but it completely misses the vast potential increase in tax revenues that might flow from a lower rate. What is not seen is the effect of international tax competitiveness on the number of businesses that will register their residence in the UK because it has a comparatively low rate of corporation tax – witness Ireland, which has a corporate tax rate of only 12.5%, compared with the USA rate of 21%.

Consequently, what is not seen is the gain to the exchequer of welcoming thriving, profitable companies into the UK, rather than the converse - losing UK businesses to jurisdictions with lower tax rates.

Also “not seen” is the economic benefit that will flow from the presence in this country of thousands of employees and their families. Because it is not seen, it is also unquantifiable – but what is certain is that we shall see supply-side net economic growth. The “tone” will have been established – and the direction of travel is bound to be positive. It will result in a bigger pie – not a bigger slice of a diminishing pie.

What is seen is always limited – such as revenue from new tariffs on imports – while ignoring the harmful market distortions and negative price impacts that impinge directly and indirectly on the cost of living. There are important lessons here.

Free Markets

The examples of the failure of government run programs is there for anyone who is not an ideologue to see. Just this past week, the Financial Times reported that the government may halt all increases in new housing in the London area due to the lack of adequate capacity in the power grid. In other words, Britain's publicly owned and operated power system is not producing enough electricity. A top to bottom privatization of not only power generation but fuel sources is required.

Scrap regulations on all sources of energy including nuclear and fossil fuels. Nuclear power is one of the safest and lowest cost sources of power available. Its higher costs are completely the result of unnecessary regulation that, frankly, seems intended to end nuclear power completely. Britain has been a leader in nuclear power technology for over half a century. All its important warships and submarines run on nuclear power, and hardly anyone thinks a thing about it.

Britain has been a fossil fuel giant since the eighteenth century. Coal made the industrial revolution possible. North Sea oil has never met its full potential. There is no reason that Britain needs import fuel, unless it can be purchased more cheaply elsewhere, such as the Middle East or even, dare we say the word, Russia.

Limited Government

Limited government means two things--limited government involvement in the economy and limited spending. The two go hand-in-hand. An additional benefit is that limited spending can be funded out of lower taxes. The British legal system, based upon the common law, is all that is required for the smooth regulation of economic matters. For example, fraud and contract law are well defined in the British legal system for the smooth regulation of commercial life. Tort law regulates harms inflicted, making product liability laws, for example, unnecessary. Just as a better mousetrap drives fewer effective ones from the market, better and cheaper products drive less effective and more expensive ones from the market, making product regulation completely unnecessary.

A better template than the unitary state is the Swiss principle of subsidiarity. Switzerland is a multi-ethnic land, making a one-size-fits-all government impractical. Therefore, government is pushed down to the lowest governmental level possible wherever practical, and it turns out that much of day-to-day practical government can be handled at local levels where the people really do have a voice. Britain should try this approach

The National Health Service is a disgrace on almost any objective basis of functional and cost-effective analysis, and it's getting worse rather than better. End taxpayer support and put a fee-for-service price on its operation, forcing it to compete with private healthcare providers.

There is no room for EU regulations, quotas, etc. in a sovereign country ruled by common law with limited government. Only Brexit supporters should be considered for ministerial jobs.

A Non-interventionist Foreign Policy

The war in Ukraine has illustrated how nations can be dragged into war when their own national interest has not been threatened. NATO expanded eastward after the fall of the Berlin wall three decades ago, until it ran into real opposition in the form of Russia. There was no need for this expansion and there is no need for Britain to be involved in Ukraine in any way.

The war there has taken on a life of its own and only a strong leader with a dedicated cabinet of peace minded ministers will be able to dislodge Britain from this conflict and prevent Britain from being dragged into similar conflicts, such as the new dispute between Serbia and Kosovo. Instead of taking sides in purely local conflicts, Britain should do all it can to create a new Concert of Europe. This will require real statesmanship. Britain can and should lead the way.

A truly sovereign Britain can defend itself when its real interests are threatened. Armed neutrality requires a strong national defense and a non-interventionist foreign policy. The emphasis is on "defense" and "non-intervention.” A good maxim to follow is "Mind your own business and set a good example."

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