How to Join the Alt-Tech Exodus

How to Join the Alt-Tech Exodus

01/22/2021Horea Christian

Listen to the Audio Mises Wire version of this article.

So, you've heard that big tech companies have transcended the niggling free market and reached the lofty heights of partisan politics—and act accordingly. Unlike prominent political figures, you might not make the top of the purge list, but it's no secret that censorship is surging. Both to protect your freedom and to stop providing resources to those who would undermine it, it makes sense to jump ship. Now, when everybody else is also doing it. But how?

Freedom Is a Skill

In the world of technology the reeds are tall, and you only get as much freedom as your choices afford you. The taint of political virtue signaling has sadly not left the liberty-minded untouched, and there's plenty of snake-oil salesmen looking for your business. So it's paramount to know how censorship can reliably be stymied.

Freedom by Design Beats Freedom by Convention

Have you heard of this or that new platform whose board has “a strong commitment to free speech”? Well, wouldn't you know it, so did “Big Tech” until there was power to be gained by doing the opposite. A more “virtuous” platform, or a partisan platform “from your side” will not sustainably support your liberty. A platform designed with freedom in mind will.

The Core Concept of Free Design Is Decentralization over Centralization

There are two tiers for decentralized design. The first and highest standard is P2P (peer-to-peer), which connects users directly and relies on no centralized infrastructure. Sadly, not all content can feasibly be shared P2P (yet), so—in a wonderful analogy to the offline world—there is a second tier, federation. Federated services use a common protocol via which anybody can distribute content as long as they have the resources to maintain a server. Everybody could technically run their own server, but more often, a few hundred people maintain servers via which they make access to the protocol easily available to casual users. The emergent framework prevents influence (in the form of a large user base) from coagulating in one instance. Users can easily switch to a new provider (often keeping their data), and competition weeds out of abusive providers.

Tell Me What to Use Already

No. The best I can do is share with you the choices I made and provide an example rationale in light of the common priority of sustainable free speech. Your choices might be different.

Text Messaging

Text messaging fortunately is very lightweight, and P2P approaches are feasible. Tox is a protocol which allows you and all of your contacts to chat based solely on an open-source client which you can install on your device. There is no middleman who can censor you, no centralized server that can be taken down by malicious actors, and no one company which can go bankrupt or have a change of heart regarding this whole free speech thing. Yes, it also supports video and audio chat.

The Way This Works

You simply pick a client, install it, get an ID, share it with someone, and you're good. Forever.

Social Media

This is a bit more tricky, as the content requirements do not lend themselves to P2P. The biggest federated social network is known as the “fediverse.” You might never have heard of it, but you might have heard of software which uses the protocol (i.e., what an admin would run on his “instance,” i.e., his server), such as Pleroma or Mastodon. Alternatively, you might have heard of the biggest instance on the fediverse, Gab. That sadly doesn't cover it all, since the choice of an instance remains very important. To protect users from spam, or unwanted content (such as pornography) on their feed, the protocol allows instance administrators to block other instances, i.e., refuse to federate with them. While this fulfills the stated purpose, many admins also choose to block “problematic” instances. Instances generally publish a block list, though. You should check the “about” page of an instance you're considering, either for a statement that they don't block any other instance, or to ascertain that the block list is compatible with your preferences. I am looking to host my own instance, but barring that, I am considering FSE and liberdon—good free-speech instances which maintain no block list. You can also give an instance a try on a whim and switch later, though.

The Way This Works

Find an instance you like (via web search), and register an account.

Video Content

Creators who have been banned or demonetized by YouTube have congregated around a host of alternative platforms. Most of these platforms, however, are simply imitations of the YouTube model, often with cryptocurrency tacked on for futuristic appeal. There exists however a federated video-sharing protocol, PeerTube. Much of what was said about the fediverse applies here as well, other than it being less common for PeerTube instances to federate with everybody. I enjoy using QOTO and there are even a few search engines which look up all instances for content (e.g., PeerTube Index and Sepia Search).

The Way This Works

As a content consumer, you can use one of the aforementioned search engines to look for content you want to watch. No need to even register unless you want to keep track of favorites on somebody else's server. If so, you can use web search or this page to find interesting instances. Ideally, check how many instances they “follow” (more means access to more content) or how many total videos they give you access to (you can rank instances by either of these metrics here), and you're done.

Web Search

Believe it or not, there is such a thing as P2P web search: YaCy. YaCy is fairly easy to run on your own personal computer, and does not require you to maintain a server. In a sort of combination between a P2P or federated model, you can run your own YaCy (which is the recommended approach), or use somebody else's as far as they make it available (e.g., noisytoot). Your mileage may vary, and sadly it will never be as fast as centralized web search, though it could be similarly fast if you install it on your own computer and have a good internet connection.

The Way This Works

You can just download and install YaCy, and you're set up to search the web on your own. There are very very many configuration options, but you don't have to use them.

Email

Email is already federated, as it turns out. This might also help you grasp the concept of federation. That the text following “@” differs from contact to contact, is a dead giveaway for federation (social media accounts look similar on the fediverse). That most people still go for large-scale providers with questionable involvements in nonmarket processes is simply a symptom of good marketing and herd mentality. Many email providers will offer you more censorship-robust services. I particularly enjoy smaller providers, as they tend to have low running costs and can actually finance the service fully through donations. Further, you can host your own email server, as I do.

The Way This Works

If you are concerned about your current provider, you can simply run a web search for alternative providers; the process is much the same.

Some of These Options Look Daunting

Apathy and comfort are the enemies of freedom and very good bait to incentivize you to give it up. After all, that's how we got here. On a more gentle note, you don't have to go for all of the above, but if there is one particular service—such as social media or messaging—where you feel the cold breath of censorship down your back, it would be a good idea to give that a very serious try right now. None of these options require any particular expertise in technology, though, so it's rather a question of stepping out of your comfort zone than of studying anything at any great length. Not least of all, people are happy to help. Most of these technologies have support chats linked on their websites, and their support is considerably better than what you might have become used to from your current provider's help desk. Though it may not be overt or partisan, the spirit of freedom runs deep in the world of alt-tech, and people are more interested in empowering human action than in corralling you into their service. Be wary of “alternatives” which behave otherwise.

Image source:
Getty

The Abortion Battle We Don’t Need

09/26/2023Ron Paul

Former President Donald Trump infuriated many anti-abortion voters last week when he refused to commit to national abortion restrictions and seemed to blame them for Republican losses in the 2022 mid-term elections. Trump even criticized the six-week abortion ban signed by Florida Governor (and fellow Republican candidate) Ron DeSantis. So, not only is Trump balking at national restrictions but he is criticizing a state restriction. What are pro-life voters to do?

Politically, Trump may feel he does not need the pro-life vote as much as he did in his previous presidential runs. After all, he is so far ahead in all primary polls that absent an extremely unusual event he is all but the presumptive Republican nominee. He hasn’t even felt compelled to participate in any of the primary debates, skipping the first one to sit for a hugely popular interview with Tucker Carlson.

Trump has attempted to placate pro-life voters by repeating that he is the most pro-life president in American history and by touting that the Supreme Court overturned Roe V. Wade on his watch and with his nominees. He is positioning himself as a moderator and dealmaker, promising to finally make peace on the abortion issue after 52 years of political warfare.

It is understandable that Trump may feel he has more wiggle room on the abortion issue this time. Pro-life voters are likely sufficiently angered by the rapid advance of Cultural Marxism and social chaos of the past three years under Biden that they are ready to jump at even the possibility of a return to more socially conservative values to the White House. If pro-life voters just stay home on election day, they may end up with something far worse than a generally friendly occupant in the White House.

But it doesn’t need to be this way. I strongly believe that the more difficult the issue is, the more local should be its solution. That is the real success of the Dobbs decision, because abortion should have never been a federal issue in the first place. Overturning Roe v Wade returned us to where we belonged, with state and local laws governing all issues not Constitutionally reserved for the Federal Government.

Bigger problems are best decided closest to home. Look for example at what happened when parents started going to school board meetings and demanding accountability on everything from Covid restrictions to transgenders in school bathrooms. Parents were extremely effective because they only had to travel to the local school board meeting to demand – and get - results. Does anyone think they would have been able to get the same results at the Department of Education in Washington DC?

Similarly, immigration is much better handled by those closer to the action. Ideally it would be a property rights issue, but at the least states like Texas should be taking an active role in preventing a foreign invasion into its borders rather than waiting for Washington to make a move.

The pro-life voters and a seemingly more moderate Trump are making a mistake drawing federal battle lines on the issue. The doors are wide open for state and local activism on the abortion issue. All in all, it is a win rather than a loss for power to be devolved from Washington to your local capital or city hall.

Libertarian Autobiographies: Moving Toward Freedom in Today's World

Libertarian Autobiographies, edited by Jo Ann Cavallo and Walter Block, delves into the trials, tribulations, intellectual formation, and accomplishments of 80 libertarians from around the world—in their own words! The following is an amended excerpt from the introduction written by the co-editors:

It is our fervent belief that libertarianism is the last best hope for humankind with regard to economics, liberty, justice, prosperity, peace, and thus even survival (pardon us for hyper-ventilating, but we maintain this is indeed the case). This belief of ours is predicated upon the crucial importance of the non-aggression principle (NAP): proper law should allow all people to engage in whichever acts they prefer, with the one exception being any behavior that violates this precept or any threat thereof. Thus, murder, rape, theft, kidnapping, fraud, and similar evil actions should be prohibited, and virtually everything else should be legally permitted.

But why assemble a collection of autobiographies penned by libertarians? Why not, instead, offer a collection of scholarly articles demonstrating the benefits of liberty? Many of the contributors to this volume have published just that sort of work on numerous occasions. Why not do so one more time? Although people may gain an understanding of this philosophy via rational argument, it cannot be denied that autobiographies, too, are important for the promotion of liberty. The personal touch may reach some people not approachable via any other means. Additionally, we all want to know the libertarian stories of people such as those who appear on these pages. Indeed, we find that libertarians have the most interesting stories to share because they often embrace this philosophy as the result of intense encounters with foundational texts or life-changing experiences.

One of the big “problems” we have with some of the best-known libertarians throughout history—such as John Locke, Lord Acton, Ludwig von Mises, Isabel Paterson, Henry Hazlitt, Friedrich Hayek, and Murray Rothbard—is that they never wrote an autobiography. Of course, if they had, alternative costs being what they are, they would likely not have been able to write other precious publications of theirs. But what about libertarians alive today? Would they be willing to share their stories? We already have the example of two volumes of libertarian autobiographies: Why Liberty: Personal Journeys Toward Peace & Freedom (Cobden Press), with 54 autobiographies edited by Marc Guttman, and I Chose Liberty: Autobiographies of Contemporary Libertarians (Mises Institute), with 82 autobiographies edited by one of the co-editors of this present volume, Walter Block (available as a free pdf at https://mises.org/library/i-chose-liberty-autobiographies-contemporary-libertarians). Both volumes were published over a decade ago, however, in 2010. We wanted to learn more about the lives of contemporary libertarians not covered in these two volumes and of others who have emerged since the time of these publications.

We therefore reached out to a number of influential scholars, activists, professors, journalists, and cultural icons who have worked toward a freer society across the globe, inviting them to write a brief autobiography for this collection. We asked them to articulate, for example, what their lives and thoughts were before they embraced libertarianism; which people, texts, or events most influenced their intellectual formation; what experiences, challenges, tribulations, and achievements they have had as participants or leaders in this movement; and how this philosophy has affected their personal or professional lives.

A volume of autobiographies on the part of libertarians immediately raises the question of precisely what constitutes this political economic philosophy. In our “big-tent” view, it comprises several strands. They all have something in common, such as an appreciation for individual liberty, private property rights, the rule of law, and free enterprise, but there are also discernible differences. That is why if you get ten libertarians in a room and ask them a question, you’ll likely get eleven (or more!) different responses. In this volume, we invited libertarians across the political-philosophical spectrum, including (1) anarcho-capitalism; (2) minimal government libertarianism, or minarchism; (3) constitutionalism; (4) classical liberalism; (5) thick libertarianism. The contributors to this volume range over the five main viewpoints mentioned above, and also fill in the gaps between them. Their essays express different perspectives on many issues even while articulating the same core principles. In fact, it is our desire that their very differences of opinion on some matters will invite readers to think for themselves. What we have sought to present is a sampling of the myriad individual journeys toward libertarianism, however defined.

Although the majority of contributors to the volume live in the United States, we are grateful to the libertarians from around the world who accepted our invitation to share their stories. This volume thus includes voices from Argentina, Austria, Brazil, Bulgaria, Canada, Chile, China, Colombia, Czech Republic, England, Germany, Guatemala, India, Ireland, Israel, Italy, Jamaica, Japan, Kenya, Korea, Nigeria, Peru, Poland, Romania, Russia, Scotland, South Africa, Spain, Sweden, and Ukraine. 

It is the hope and expectation of the editors that by bringing together a range of contemporary voices from outside the dominant left–right paradigm, this volume will contribute to the viewpoint diversity that is crucially needed in today’s public discourse. Moreover, these personal and intellectual journeys not only offer compelling insights into their individual authors and the state of the world in our lifetime, but may also serve as an inspiration for the next generation who will feel called upon to make our society a freer one.

N.B. The publisher’s link to the book is: https://link.springer.com/book/10.1007/978-3-031-29608-6. Both the hardcover and the ebook are available for purchase internationally. Get 20% off the printed book or eBook by entering the following coupon code at checkout on link.springer.com: H5DoMQW47RT2HD (valid until Oct 13, 2023). In addition, the MyCopy version (printed ebook) is available at a low cost ($39.99 in the US) to individuals who belong to a university subscribed to SpringerLink. If your university subscribes to SpringerLink, you can also read the book online for free. (If you’re not on a university-sponsored device, a VPN, or the school’s WiFi, you might have to access the book through your university’s library page.)

DC Seeks to Destroy Those Who Say the Obvious: America’s Fiscal Crisis is Here

09/25/2023Tho Bishop

America’s debt clock has ticked past $33 trillion, reaching a billion dollars of spending every hour. Meanwhile, the monetary policy conditions that have emboldened Washington’s spending spree are over. Current estimates predict a $2 trillion deficit for 2023, while the Federal Reserve’s rising interest rates are quickly forcing payments on that debt to become the highest budget item for the federal government.

America’s fiscal crisis is here.

Unsurprisingly few in Congress, of course, have an interest in recognizing the monster they have created. 

Right now, the crisis in Washington is not the economic reality federal spending has created, but the small handful of legislators trying to disrupt the process that has created these conditions. To read Beltway-based publications, the real threat is a government shutdown, eroding support for yet another round of Ukrainian funding, and “far right” legislators seeking to return to a normal appropriations process.

The face of the opposition is Florida Congressman Matt Gaetz, who has made himself one of the most hated men in Washington as a result of his unrelenting criticism of Republican leadership, his entrenched opposition to budget-by-continuing resolution that has become the norm, and his made-for-clip sharing charisma that allows him to effectively communicate the corruption, hypocrisy, and relative dysfunction of the current political elite.

Gaetz, who helped spearhead the historic coronation of Speaker of the House Kevin McCarthy, has managed to build up enough of a coalition of his colleagues to stymie recent attempts to kick the can down the road. His stated goal is to force McCarthy to honor the promises made to the GOP caucus earlier this year, to force the House to vote on twelve single-issue spending bills as required by the Budget Control Act of 1974 rather than the bundled-together appropriation bills that have become the DC norm since the 1990s.

The reality is that any return to legislative normality is a threat to modern Washington. Most of Congress has no interest in vetting appropriations bills, as illustrated by the backlash Rep. Thomas Massie faced by standing in the way of allowing a voice vote to authorize $2 trillion covid-related spending bills. The role of a modern member of Congress is to fundraise and beat the market on stock trades, allowing the professional political class embedded in government bureaucracies to do the real governing.

In an all-too-perfect illustration of this dynamic, last Friday the Republican Appropriations Chair Kay Granger left a Congressional meeting dedicated to the upcoming spending battles early to attend a fundraiser with lobbyists for her political committee. 

While the Gaetz-led coalition’s battle for restoring normality to the appropriations process is commendable, it is noteworthy that it is ultimately insufficient to tackle the basic math problems DC faces. Even the highest ambitions from fiscal hawks have been to cap discretionary spending roughly a third of federal spending to 2022 levels, baking in the massive spendingl increases seen during the Trump presidency.  Untouched are the much larger drivers of fiscal destruction, military spending, entitlements, and the aforementioned financing of the debt. Even the uni party’s dogmatic dedication to the Zelenskyy regime has made the relatively low-hanging fruit, ending future aid to Ukraine that has seen its public support collapse in recent months, a seemingly impossible political sell on Capitol Hill. 

In modern Washington, any responsible voices on fiscal issues will necessarily be presented as reckless extremism. The sacred cows of the Beltway must be slaughtered. National default on debt obligations, including entitlement promises, will be required. Those brave enough to state the obvious will be ruthlessly attacked by the political class and the obedient press, just as Ron Paul was during his Congressional career.

America’s fiscal crisis has required decades of work by both political parties to create. The underlying incentives of America’s political process reward economic myths over recognizing this reality. Younger generations will continue to be made poorer thanks to the policies authorized by the older legislative body in US history. Standing up for a basic return to procedural normality is the easiest challenge facing Congress. Anyone unwilling to take that stand will only continue to fuel a Washington that is preying upon the future of its citizens.

As Ludwig von Mises understood, the destruction of a nation can only be stopped with a change in an underlying shift in the ideology leading to its destruction. This is why the Mises Institute is dedicated to telling these unpopular truths. If you support this mission, please consider making a $5 donation this week during our fall campaign.

The Responsibility of Price Stability

09/24/2023Robert Aro

After not raising rates to fight inflation last week, Federal Reserve Chair Jerome Powell delivered his usual speech and Q & A. He opened with three very peculiar sentences regarding price stability, leading to a few unsettling conclusions.

He starts with:

Price stability is the responsibility of the Federal Reserve.

This statement raises concerns. First, it fails to define what price stability means. Even if Congress had assigned this responsibility to the Fed, it’s not something many would agree with if given the chance. While the approach to achieving this desired state of price stability appears quite absurd, for argument’s sake, let’s consider this statement true.

In Powell’s following sentence he inadvertently shares the dire consequences of giving this responsibility to a central bank, as explained:

Without price stability, the economy does not work for anyone.

This is a rather bold, yet hollow statement. He essentially suggests the economy cannot function without the Fed's intervention.

Examining the history of America reveals that central banking hasn't always been a requirement for prosperity and development. Looking at present-day and historical hyperinflations, it becomes evident central banking is largely culpable in a nation's currency collapse. From what we’ve seen of the Fed, there’s little reason to believe this current iteration of America's central bank is somehow different.

The Austrians have argued for over a century that a currency monopoly or central authority controlling a nation's currency is unnecessary, much like we don't need a czar to regulate the production of shoes, cars, or gold.

To state that the Fed makes the economy work for everyone is simply untrue. It’s clear how bankers who receive bailouts and capitalize off borrowing millions and low interest rates are better off; but the average person on main street who ultimately pays for this market distortion can hardly say the Fed’s policies work in their favor.

The third sentence follows a similar vein as the previous:

In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.

This claims that a strong labor market is due to the Fed’s management of price stability. He’s taking credit for something that cannot be verified. It would be useful if, during the Q&A session, a reporter inquired as to how the Fed ascertains what a "strong" labor market is and how market intervention contributes to a stronger labor force. However, questions like this are seldom asked.

Returning to one crucial point: although Powell does not address what he means by price stability, the St. Louis Fed has an article elaborating on it…

Price stability means that inflation remains low and stable over the longer run. When inflation is low and stable, people can hold money without having to worry that high inflation will erode its purchasing power.

In addition to not utilizing the historical definition of inflation, the notion that a gradual reduction in purchasing power could ever be beneficial to society is something everyone should recognize as false.

It's also worth noting Powell’s same three sentences have been used nearly verbatim in speeches in February of this year, as well as August and November of last year. If one were the wagering type, it would be reasonable to bet these three sentences have been reiterated more than four times during Powell's tenure.

Poland Cuts Back Ukraine Aid and Says Ukraine Could Pull Poland Down with It

09/22/2023Ryan McMaken

The Government of Poland announced this week that it is no longer providing weapons support to Ukraine, and that Warsaw will focus on building up Polish weapons stockpiles instead. 

Prime Minister Mateusz Morawiecki said Wednesday, “We are no longer transferring weapons to Ukraine, because we are now arming Poland with more modern weapons.” 

Warsaw's decision comes as diplomatic relations between Ukraine and Poland have worsened due to a dispute over imports of Ukrainian grain into Poland. The conflict has its roots in the fact that Russia has largely prevented Ukraine from exporting grain via its Black Sea ports. Ukraine then turned to exporting grain by land, with much of it going through Poland. Waraw, however, feared that a massive influx of Ukrainian grain in Polish markets would drastically cut incomes for Polish farmers. As in many European countries, farmers in Poland retain sizable political clout, and Warsaw  moved to convince the EU to restrict Ukrainian grain sales in Eastern Europe. 

Last week, however, the European Commission moved to allow Ukrainian grain sales across the bloc prompting unilateral bans on sales in Poland, Hungary, and Slovakia. Ukraine then sued all three countries in the World Trade Organization, and has accused Warsaw of "acting in Moscow's Interests." 

Thus, Poland's decision to pull back its Ukraine support comes after weeks of threats from Kyiv and the ongoing trade dispute. It is unlikely, however, that Warsaw's latest move is a mere bluff designed to push back Ukraine's grain exports.  There is good evidence that the Ukrainian regime is beginning to wear out its welcome with Poland. Polish president Andrzej Duda this week compared Ukraine to a drowning person who pulls down people who try to save him. Duda suggested it becomes "necessary to act" to "protect oneself from being harmed by a drowning person" who "can pull you into the depths." 

Also notable is the fact that these moves from Warsaw come as election season, so comments like these can also be read as attempts to shore up support with significant voting blocs within the country. 

The fact that Poland is slowly souring on endless largesse for Ukraine is quite a reversal from 2022 when Warsaw was one of Kyiv's most enthusiastic supporters. Indeed, as we noted here at mises.org, Polish support for Ukraine was downright reckless with Polish calls for a "no-fly zone" and a Polish scheme to ship F-16s to Ukraine in an attempt to escalate the conflict. Poland has also been a key partner to Kyiv in continuing to provide safe haven to about a million Ukrainian migrants seeking to escape conscription, war, and economic devastation in Ukraine. Poland also spent more than 8 billion euros on supporting these migrants in 2022 alone.

The slackening support for Ukraine also likely stems from the fact that more astute observers have perceived that initial predictions about the potential for a Europe-wide Russian invasion were clearly wrong. Russian tanks will obviously not be rolling through Poland or Hungary any time soon, even if NATO completely withdraws from Ukraine. 

It is not a given, however, that the current ruling party in Poland will be rewarded in the upcoming elections for its softening support on Ukraine. NATO's operations in Ukraine—funded overwhelmingly by American taxpayers, of course—still has many supporters in Poland. However, if the ruling party comes out of the election unscathed following its pullback from Ukraine, this will likely be bad news for Kyiv which has already lost its summer "offensive" and continues to endure unsustainable losses. The Russians aren't giving up their control of southeast Ukraine any time soon. Moscow must retain control of the Cherson regime to keep control of irrigation waters for the Crimea, and total control over the Sea of Azov is key to ongoing plans to open up the trade routes with the Caspian Sea and the Volga River basin. 

The longer Ukraine fails to make any progress in its south, the more likely other European regimes will conclude that endangering their own domestic budgets and agricultural voting bases are no longer worth the trouble. 

Image source:
Adobe Images

Five Year Plans Won’t Work

09/22/2023Dave Arnott

The Biden Administration is celebrating the first anniversary of the passage of the Inflation Reduction Act, which allocates trillions of dollars in taxpayer subsidies to industries of their choice. Welcome to five-year plans. 

While guest-lecturing in Moscow one cold March night in 1993, a student asked why western firms didn’t invest more in Russia. I had just finished my PhD Dissertation on the subject of US-Russian joint ventures, so I probably gave a long, boring answer, that ended with an observation that in Russia, it was hard to make plans. One bright student quipped, “We used to have plans. Five-year plans.” And the whole room erupted in laughter. 

When I tell that story in my classes in the US, no one laughs. That’s because the Biden administration has just launched their version of “five-year plans.” They won’t work. I explain the failure of the Soviet socialist five-year plans in the classroom by asking a student who might be wearing a Patrick Mahomes Kansas City Chiefs jersey, “Will Mahomes be with the Chiefs in five years? Will they be in the Super Bowl in five years? Will they still be the Kansas City Chiefs in five years, or will they move to another city?” Students quickly get the idea that five-year plans are dumb because no one knows what jersey will be demanded in five years. Yet, five-year plans require that you make that prediction. 

That statement from former House Speaker Dick Armey should be on the wall of every congressperson in DC. “The reason markets are smart is because they aggregate all the information available from every possible producer and consumer. Markets are where everyone votes. Isn’t that a good way to solve problems? Wasn’t that how the congressional representative was elected? We hear cries continually about “threats to democracy.”  Well, the recent flood of money into narrowly specified industries is a threat to the democratic medium that we call the market. Why should only government elites get to vote? What’s wrong with “one person, one vote?” Because that’s what happens in a market. Here’s how economist Friedrich von Hayek explained it, "The advantage of a free market is that it allows millions of decision-makers to respond individually to freely determined prices, allocating resources - labor, capital, and human ingenuity - in a manner that can't be mimicked by a central plan, however brilliant the central planner." 

When our house was built in 1999, the owner wanted to be “ahead of the curve,” so he ran three physical hard wires to every room: TV, telephone, and internet. We don’t use any of them. The investment was wasted. As the trillions of dollars in funding through the Inflation Reduction Act will be wasted. The Biden administration’s commitment to broadband, the power grid, and electric vehicles will suffer the same fate. No one knows which technology will dominate in the future. 

“Predictions are difficult, especially those about the future,” quipped Danish Physicist Nils Bohr. But that doesn’t seem to slow the economic humanism that’s behind the motivation that encourages governmental bureaucrats to pick winners and losers. Speaking of those Kansas City Chiefs, would any reasonable person suggest that the government put their enormous resources behind ONE of the 32 teams in the NFL? Of course not, that would destroy the league. What do you think providing $28 billion via the Chips Act will do to the semiconductor industry?

When Milton Freidman popularized the phrase, “There is no free lunch,” he was making the point that trillions of dollars forcefully extracted from taxpayers are dollars that could have gone to other investments. Financial folks expect a return on their investment that is equal to, or above the average rate of return. Government subsidies perform well below that expected rate. Thus, every dollar that is committed to a government subsidy - on average - underperforms. That makes all of us poorer. 

Solyndra is a classic example of governmental elites trying to predict the future. The solar panel manufacturer received $535 million in loan guarantees. When it failed, President Obama observed that he didn’t know which technologies would prevail. He’s right, he does not know. But the market does. The half-billion dollars that President Obama flushed down the Solyndra toilet was forcefully extracted from obedient, tax-paying citizens by the use of power. That’s why we should rely on the market. 

When the market works, investors willingly contribute their own assets, by choice. 

So it’s pretty simple: Would you rather have a society operated by power, or by freedom? That’s why it’s called free market capitalism. Another warning from the economist Hayek, “I regard the preservation of free markets, as an essential condition of the very survival of mankind.” Or as Whole Foods founder John Mackey said, “Capitalism is humanity’s greatest invention.” Then, government subsidies are humanity’s worst invention.

 

$33,000,000,000,000

09/21/2023Robert Aro

Only three months ago, the US debt crossed the $32 trillion mark. Here we are again, this week passing $33 trillion, with still no end in sight. As usual, Democrats are blaming Republicans, Republicans are blaming Democrats, as the political circus in Washington perpetuates a never-ending debt ceiling crisis.

The New York Times attempts to shed light on some of the reasons behind this relentless debt growth.

The Inflation Reduction Act of 2022 was previously estimated to cost about $400 billion over a decade, but according to estimates …. it could cost more than $1 trillion thanks to strong demand for the law’s generous clean energy tax credits.

Connecting clean energy tax credits with inflation reduction remains a rather vague proposition; and trillion-dollar spending programs are notorious for blowing through budgets.

It’s bad enough the State forces taxation upon the People; but, the inability to spend within an annual multi-trillion-dollar budget only adds insult to injury.

The New York Times highlights another troubling issue:

In late 2022, the I.R.S. delayed by one year a new tax policy that would require users of digital wallets and e-commerce platforms to start reporting small transactions to the agency. The policy was projected to raise about $8 billion in additional tax revenue over a decade.

Now, picture being $33 trillion in debt while looking for new and innovative ways to tax private citizens on their crypto wallets to “raise” $8 billion over a 10-year period. It’s evident taxation alone will never sufficiently address the fiscal challenges in Washington.

Also explained:

A Treasury Department report last week showed that the deficit — the gap between what the United States spends and what it collects through taxes and other revenue — was $1.5 trillion for the first 11 months of the fiscal year, a 61 percent increase from the same period a year ago.

The feasibility of extracting an extra $1.5 trillion in annual tax revenue must be questioned. Barring significantly increasing the wealth confiscation of the masses, making up for this annual shortfall by simply taxing more will never suffice. Even if higher taxes were the solution, we shouldn't be surprised if deficits persist.

Amidst this alarming $33 trillion milestone, Treasury Secretary Janet Yellen appears unfazed by the debt level, appearing on CNBC, addressing the nation with a straight face saying:

The statistic or metric that I look at most often to judge our fiscal course is net interest as a share of GDP.

By the same logic, should the government borrow and spend $10 trillion at 1% on make-work projects, this would be okay as the trillion-dollar interest expense pales in comparison to the boost in GDP. If so, it rings true that debt doesn’t matter, so long as taking on new debt services the old debt.

The causal nature of the Federal Reserve is seldom made. But we must keep in mind that the Fed’s ability to buy government debt makes the US Government's ability to spend money it doesn’t have that much easier. It’s true the Fed does not own all the US debt. But if it weren’t for the Fed, we wouldn’t be $33 trillion in debt as it is.

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Playing with Official Inflation Statistics: An Example from Germany

The Harmonized Index of Consumer Prices (HICP) consists of 12 subindices, which are weighted according to their shares in total household expenditures. If, for example, food and non-alcoholic beverages (subindex 1) account for 15% of expenditures, they should also be given a weight of 15% in the overall index. In this way, each expenditure category would be given the importance it has for an average household. This is the claim of official statistics. But here, too, as so often, aspiration and reality diverge.

In Germany, the traditionally largest subindex covers housing, water, electricity, gas and other fuels (subindex 4). It has always accounted for more than 21% of the overall index since the mid-1990s. Between 2020 and 2022, the weight had increased to slightly more than 25%. The official statistics thus assumed that German households spend on average around a quarter of their total expenditure on goods of this category. This is too little in the eyes of some critics. Many households spend significantly more on goods of this type. In larger urban areas, households often spend more than a third of their income on rent alone.

There has now been an unexpected change in 2023. The Federal Statistical Offices did not increase the weight of subindex 4, but lowered it from 25.2% in the previous year to 16.5%. No valid justification for this has yet been provided. On the website of the Federal Statistical Offices, there are only empty phrases: "The Corona pandemic, which has been prevalent since 2020, with its restrictions on public life and the resulting consequences, makes it necessary to change the usual procedure for updating the goods weights for the third year in a row as well." (translated with DeepL because AI is really good at translating bureaucratic talk.)

How could one even justify such an implausible adjustment? As a matter of fact, the adjustment means that from now on official statistics will assume that the average German household spends only 16.5% of its total expenditure on housing, water, electricity, gas and other fuels. Whether this assumption is realistic is something everyone can consider for themselves.

What is clear is that the down-weighted subindex 4 has been showing above-average inflation rates for some time now. Between 1996 and 2022, it has risen by 84% overall, but the HICP as a whole has risen by only 59%. Only subindex 2 for alcoholic beverages, tobacco and narcotics has risen even more strongly during this period, by 115%.

During the inflationary phase of last year, prices in subindex 4 rose the most of all. The inflation rate here was 13.9%, more than 5 percentage points above the official average inflation. That the Federal Statistical Offices have now decided to lower the weight of this subindex has one practical effect: the officially measured inflation will be lower. But it measures past reality.

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QJAE: Publication Activity in Austrian Journals, 2011–20

Abstract: Counts of publications in the academic journals of the Austrian school of economics are used to rank scholars and institutions by research productivity in Austrian economics over the preceding decade. The journals surveyed are, alphabetically, Advances in Austrian Economics, Cosmos + Taxis, the Journal des économistes et des études humaines, the Quarterly Journal of Austrian Economics, and the Review of Austrian Economics. Ranking methodology follows the established mainstream literature but focuses on publications in journals that specialize in the Austrian school. An appraisal of the Austrian school’s progress over the past decade is provided, and implications for the future are suggested.

JLS: Are Pay Equity Policies Justified?

09/19/2023Bruce Gilley

ABSTRACT: This article identifies the lack of policy analysis as a major research gap in pay equity policies. Applying a policy analytic approach, the article applies comparative empirical evidence to the tasks of problem structuring and policy prescription as well as to three different evaluation methods: effectiveness, cost-effectiveness, and benefit-cost analysis. The results show that pay equity policies lack fundamental justification as public policies. Implications for research and policy revision follow.

Read the full article at the Journal of Libertarian Studies.