Power & Market

The F-35: Poster Child for Pentagon Boondoggles

07/02/2019Gary S. Goldman

Congressional lawmakers may need a primer on the meaning of a “budget.” As the average American family knows all too well, a budget is the way to determine what you can afford to spend. A family that exceeds its budget usually decides that it needs to eliminate wasteful spending.

But instead of cracking down on waste, some lawmakers want to double down. The wasteful program, in this case, is the Joint Strike Fighter, a warplane known as the F-35. The Trump administration, in its most recent defense spending request, asked for enough funding for 78 of these jets. As we’ll see, that was already a huge waste.

But lawmakers on the House Armed Services Committee want to spend even more than that. In the annual, must-pass National Defense Authorization Act, the committee: “Authorizes $10 billion to procure 94 Joint Strike Fighter aircraft, an additional 16 aircraft above the administration’s request.” Lawmakers say this spending will allow “the forces to modernize and equip themselves with the most advanced and capable fifth-generation aircraft.”

That would be great, if it was true. But the history of the F-35 tells a much different story.

First, let’s note that the entire program has been over budget almost since it was conceived in the 1990s. That’s partly because the military wanted one type of plane that could accomplish several different types of missions for three branches of the service. As the RAND Corporation later found, trying to build a one-size-fits-all platform meant spending more than building three separate platforms would have.

Over the years, the plane failed test after test, and had to be retrofitted at a cost of additional tens of billions of dollars. “The estimated total price for research and procurement has increased by $22 billion in current dollars adjusted for inflation, according to the Pentagon’s latest annual cost assessment of major projects,” Bloomberg reported back in April. “The estimate for operating and supporting the fleet of fighters over more than six decades grew by almost $73 billion to $1.196 trillion.”

Second, the military and contractor Lockheed rushed the F-35 into the air, building new jets before the prototypes had completed their shakeout flights. When new problems, with both software and hardware, inevitably cropped up, planes had to be taken out of service and fixed.

Finally, while they were good at running up a tab, the planes don’t deliver value for the money.

It’s not clear that the jet, when it does fly, is even effective. For example, the Air Force is using much older planes in some deployments, because it wants its jets to be seen (and therefore feared). The F-35 doesn’t effectively project force. Far from becoming an effective weapon, the F-35 is proving to be a fragile one that cannot accomplish its missions.

Before he took office, President Trump promised reform. “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th,” he Tweeted. His administration isn’t exactly delivering, but it’s not too late for lawmakers to reconsider.

One committee staffer recently told reporters that lawmakers want to collect more information about the F-35 and other weapon programs. “It’s been a while since we’ve seen an independent cost estimate from the services.” If the military will provide fair information about the cost of the F-35, lawmakers could still enact a sensible budget that would slash wasteful spending on this plane.

Gary S. Goldman is the nationally recognized host of “Business, Politics, & Lifestyles” a weekly talk show airing on WCRN 830 in Metro Boston MA. Learn more at garyonbpl.com.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Andrew Yang Fears Automation. He Should Fear Inflation.

06/28/2019Per Bylund

It is not automation that scares people, it is inflation. Might sound odd, but what I mean is that the promise of a fully (or at least a more extensively) automated future seems like a threat because modern currencies are fundamentally inflationary.

When we work and save, the purchasing power of our saved funds diminishes with time. This is not a natural state of things, as many nowadays would assume. It is created. The reason prices tend to go up over time is that money loses its purchasing power.

If you think about it, shouldn't innovations and competition mean we become more productive and thus can get the same benefits (goods, services) at a lower cost?  That is exactly what is happening, and it is evident in some industries like hi-tech (smartphones, tablets, PCs). Wherever there are private businesses producing and competing with others, prices fall.

The reason the number of dollars required to buy an item increases is that the number of dollars in circulation is increasing at a faster rate than productivity. Prices go up because banks, especially through central banks "run" by governments create new money. Prices of goods adjust to the additional money in circulation.

In other words, the 2% inflation target many central banks have is really, though simplified, a matter of creating new money at a rate that exceeds productivity gains by two percentage points.

So what does this mean for automation?

Inflation means it is immensely difficult to save for retirement, to accumulate funds to last a lifetime--or to use savings to cut down on work time. Because those savings, if in cash, lose purchasing power over time, or must be invested, which means you risk losing them.

In other words, losing one's job is a huge problem whether or not you have savings. Which means the lack of work in a future where machines can do the work (or, perhaps, all work) appears to be a threat.

Economically speaking, it is not a threat, but an opportunity: machines relieve us from hard, time-consuming, and dangerous work so that we can do other things – and since machines save us from working because they increase productivity (produce at lower cost), prices should fall even faster. So our wages and savings should last much longer!

But in a world with inflationary currencies, this seems impossible because the perception is that we must work longer hours to keep our standard of living (imagine if you never had a raise--your standard of living would fall due to inflation's rising prices).

This loss of purchasing power, compared to the increased purchasing power we should benefit from, is basically taken from us through taxation. And this is what makes an automated future seem like a threat.

Without inflationary money, that is in a world where we benefit in full from our (individual and collective) increasing productivity, automation means we can work less while at the same time have an even higher standard of living – because all prices would consistently fall, likely at an increasing rate.

How is that not a promise?

Adapted from Twitter @PerBylund
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Rest Easy, Justin

06/27/2019Jeff Deist

Justin Raimondo, longtime editor of AntiWar.com and a great friend of the Mises Institute, has died.

Far too young, we might add, at 67. We can only mourn the silencing of his voice, and acknowledge him as perhaps the most important libertarian foreign policy writer of the past several decades.

Yet unlike many peace advocates, Justin read and understood economics—not to mention history and political theory.

Justin was well known to many readers of mises.org. He authored two important books in the paleolibertarian genre: Reclaiming the American Right: The Lost Legacy of the Conservative Movement, where he called for a return to the noninterventionist principles of the Taft/Garrett "Old Right," and An Enemy of the State, his biography of his great friend Murray N. Rothbard. He shared a special bond and friendship with Rothbard, and the two spent countless hours together working and socializing. I had the pleasure of emailing and calling him from time to time over the years, and interviewed him here. I always came away laughing at his take-no-prisoners approach, and fortified by his relentless determination.

Justin truly hit his stride during Bill Clinton's Kosovo War, for which he criticized the former president (and his wife) mercilessly. Kosovo put Antiwar.com on the map, and made Justin a star in libertarian circles. His sharp tongue and sharp pen, translated well across a keyboard. And his acerbic style, coupled with real research and broad knowledge of world affairs, made for a new kind of online journalism. Certainly many of us fondly remember bookmarking Antiwar.com in the 1990s and 2000s, eagerly waiting for Justin's latest broadside against some deserving tyrant or war profiteer.

Here's a sample of his signature takedown of self-important pols, from just a few years ago: 

Libya, Syria, Iraq, Kosovo — these countries, which lie in ruins, are grotesque monuments to the criminality of American “regime-change” operations, which have wreaked havoc everywhere they’ve been successful. With a record like this, it’s incredible that the same pack of buzzards in Washington are allowed to go on their merry way, without having to answer to anyone for their crimes. Indeed, the two leading candidates for the Democratic presidential nomination, Mrs. Clinton and Sen. Bernie Sanders, both supported this disastrous war War.

And of course he never ran out of wars to cover. We'll miss you, old friend. 

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Bovard: The Supreme Court rewrote FOIA into the Freedom FROM Information Act

06/27/2019James Bovard

This week the Supreme Court ruled that the federal government can keep secret the food stamp sales totals of grocery stores. By a 6-3 vote, the court decided that such business records are exempt from disclosure under the federal Freedom of Information Act (FOIA). This case, started eight years ago by the Argus Leader (a member of the USA Today network), is another landmark in cloaking federal data from the American people.     

The court upheld retail sales data secrecy despite no evidence that such disclosures would harm anyone. Argus Leader news editor Cory Myers labeled the decision “a massive blow to the public’s right to know how its tax dollars are being spent, and who is benefiting."

Controversies over the food stamp program have multiplied as evidence accumulated revealing that the program is a public health disaster. A 2017 study published in BMC Public Health found that food stamp recipients were twice as likely to be obese as eligible non-recipients. This confirms a 2015 USDA report which revealed that food stamp recipients are more likely to be obese than eligible non-recipients (40% vs. 32%). But the feds have consistently sought to limit public information on the program.

Food stamp supporters and food retailers helped block a 2013 congressional proposal to disclose how recipients actually spend food stamps. A limited survey by USDA released in 2016 indicated that sugar sweetened beverages are the item recipients of food stamps spend the most money on.But opening up the sales data nationwide to reveal what people purchase across the nation would do far more to spur food stamp reform and cease subsidizing junk food. ​​​​​​

Read the full article at USA Today

When commenting, please post a concise, civil, and informative comment. Full comment policy here

SCOTUS Is Right on the Census Citizenship Question, But For the Wrong Reasons

06/27/2019Ryan McMaken

The US Supreme Court on Thursday ruled that the Trump administration cannot include a question about citizenship in the 2020 census form.

In response to efforts to add a census question asking respondents about citizenship, several large US states sued the administration, claiming the question would lead to under-reporting of the true number of residents in each state.

The court did not rule that the question could not be used under any circumstances, however.

According ot NBC:

The court's majority said the government has the right to ask a citizenship question, but that it needs to properly justify changing the longstanding practice of the Census Department. The Trump administration's justification was "contrived," Roberts wrote, and did not appear to be the genuine reason for the change, possibly implying that the real reason was political.

The case, Department of Commerce et al v. New York et al, was decided by a 5-4 majority, with Chief Justice John Roberts joining the four so-called liberal judges.

The Census Is Too Intrusive

The effect of the ruling is a good one: it limits the number of questions on the census form, and thus the amount of personal information collected by census takers. Nevertheless, the ruling offers no real relief from a long-standing tradition of the US government using the decennial census to collect unnecessary data nowhere mandated by the US constitutions census provisions.1

Designed initially as simply a means of apportioning members of congress and drawing congressional districts, the US census has morphed into a program designed to collect data that can help the US government justify and plan a wide array of government programs and initiatives.

The very earliest census forms don't collect much information beyond the total number of people, whether they are male or female, how old they are, and whether or not they are slaves.

Yet, by the 1870 census, the government was asking questions about birthplace and citizenship. Questions about occupation, literacy, and disability began even before then. In 1860, it was apparently essential for the federal government to know if a person was "deaf and dumb, blind insane, idiotic, pauper, or convict."

The Citizenship Question

The fact that citizenship questions began is 1870 is significant. Prior to the 1870s, it was widely believed that the regulation of immigration was not a responsibility of the federal governments. Some state governments — especially New York and Massachusetts — enacted immigration restrictions in the mid nineteenth century. But both Congress and the Supreme court balked at the idea of imposing federal limits on migrants.

[RELATED: " American Immigration Policy 160 Years Ago " by Ryan McMaken]

This changed with sweeping new federal immigration laws passed in 1882.

At roughly the same time, federal policymakers started instructing the census takers to keep track of matters related to birthplace, immigration, and citizenship.

As the role of government expanded even further, more questions were added. These included questions on employment, housing, ethnic group, and more.

In the 1920s, Herbert Hoover, who support expanding the statistical-date role of the census bureau, became head of the U.S. Commerce Department. Hoover used his position to push for more data collection. Not surprisingly, the role of census data expanded even more with the New Deal.

In other words, policymakers needed more and more statistical information to justify a rising tide of new federal programs, and to claim that resources were being distributed equitably and rationally.

Opposition to Census Data Collection

Recognizing this close connection between government planning and census data — as well as potential violations of privacy — some political activists and policymakers have encouraged refusing to answer census questions.

For example, at the time of the 2000 census, both Senate Majority leader Trent Lott and presidential candidate George W. Bush advised Americans not to answer questions "they believed invaded their privacy." That may have been good advice, especially since the Census bureau recently admitted it failed to protect the personal data collected on 100 million Americans.

The fact both Lott and Bush were republican policymakers is not a coincidence. At the time, there was a significant — albeit not overwhelming — movement among the conservative grassroots that insisted Americans ought to refuse to answer census questions — whether on the short form or the new ACS long form — which went above and beyond number the population.

The movement now appears to have been turned on its head with Trump supporters now insisting it is entirely appropriate to use census questions for purposes other than counting US residents — and to require honest responses. 

Meanwhile, those who sought to keep the citizenship question off the census form were, for the most part, among the people who insist a wide array of census-collected data is necessary to distribute hundreds of billions of dollars of taxpayer-funded handouts to targeted populations.

They're fine with asking lots of questions on the census. They're just opposed to a citizenship question. While these opponents of the citizenship question claim to be motivated by obtaining an accurate count, the true reason is likely political: they don't want citizenship to become a political football in re-districting debates or debates over the size and scope of the non-citizen resident population.

That's an understandable position, but it would be best if opponents of the citizenship question were more honest about their motivations.

As it is, today's SCOTUS ruling has implications for partisan politics. But it does little to rein in the census bureau or return the decennial census to its originally intended purposes.

  • 1. Not that a constitutional mandate would make additional questions desirable or moral. Government data collection has always been an important tool in augmenting government power. A constitutional provision authorizing data collection does not change this reality.
When commenting, please post a concise, civil, and informative comment. Full comment policy here

As Democrats Push a "Wealth Tax," Here's Why Other Countries Got Rid Of It

wrote five years ago about the growing threat of a wealth tax.

Some friends at the time told me I was being paranoid. The crowd in Washington, they assured me, would never be foolish enough to impose such a levy, especially when other nations such as Sweden have repealed wealth taxes because of their harmful impact.

But, to paraphrase H.L. Mencken, nobody ever went broke underestimating the foolishness of politicians.

I already wrote this year about how folks on the left are demonizing wealth in hopes of creating a receptive environment for this extra layer of tax.

And some masochistic rich people are peddling the same message. Here’s some of what the Washington Post reported.

A group of ultrarich Americans wants to pay more in taxes, saying the nation has a “moral, ethical and economic responsibility” to ensure that they do. In an open letter addressed to the 2020 presidential candidates and published Monday on Medium, the 18 signatories urged political leaders to support a wealth tax on the richest one-tenth of the richest 1 percent of Americans. “On us,” they wrote. …The letter, which emphasized that it was nonpartisan and not to be interpreted as an endorsement of anyone in 2020, noted that several presidential candidates, including Sen. Elizabeth Warren (D-Mass.), Pete Buttigieg and Beto O’Rourke, have already signaled interest in addressing the nation’s staggering wealth inequality through taxation.

I’m not sure a please-tax-us letter from a small handful of rich leftists merits so much news coverage.

Though, to be fair, they’re not the only masochistic rich people.

Another guilt-ridden rich guy wrote for the New York Times that he wants the government to have more of his money.

My parents watched me build two Fortune 500 companies and become one of the wealthiest people in the country. …It’s time to start talking seriously about a wealth tax. …Don’t get me wrong: I am not advocating an end to the capitalist system that’s yielded some of the greatest gains in prosperity and innovation in human history. I simply believe it’s time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else. …let’s end this tired argument that we must delay fixing structural inequities until our government is running as efficiently as the most profitable companies. …we can’t waste any more time tinkering around the edges. …A wealth tax can start to address the economic inequality eroding the soul of our country’s strength. I can afford to pay more, and I know others can too.

When reading this kind of nonsense, my initial instinct is to tell this kind of person to go ahead and write a big check to the IRS (or, better yet, send the money to me as a personal form of redistribution to the less fortunate). After all, if he really thinks he shouldn’t have so much wealth, he should put his money where his mouth is.

But rich leftists like Elizabeth Warren don’t do this, and I’m guessing the author of the NYT column won’t, either. At least if the actions of other rich leftists are any guide.

But I don’t want to focus on hypocrisy.

Today’s column is about the destructive economics of wealth taxation.

report from the Mercatus Center makes a very important point about how a wealth tax is really a tax on the creation of new wealth.

Wealth taxes have been historically plagued by “ultra-millionaire” mobility. …The Ultra-Millionaire Tax, therefore, contains “strong anti-evasion measures” like a 40 percent exit tax on any targeted household that attempts to emigrate, minimum audit rates, and increased funding for IRS enforcement. …Sen. Warren’s wealth tax would target the…households that met the threshold—around 75,000—would be required to value all of their assets, which would then be subject to a two or three percent tax every year. Sen. Warren’s team estimates that all of this would bring $2.75 trillion to the federal treasury over ten years… a wealth tax would almost certainly be anti-growth. …A wealth tax might not cause economic indicators to tumble immediately, but the American economy would eventually become less dynamic and competitive… If a household’s wealth grows at a normal rate—say, five percent—then the three percent annual tax on wealth would amount to a 60 percent tax on net wealth added.

Alan Viard of the American Enterprise Institute makes the same point in a columnfor the Hill.

Wealth taxes operate differently from income taxes because the same stock of money is taxed repeatedly year after year. …Under a 2 percent wealth tax, an investor pays taxes each year equal to 2 percent of his or her net worth, but in the end pays taxes each decade equal to a full 20 percent of his or her net worth. …Consider a taxpayer who holds a long term bond with a fixed interest rate of 3 percent each year. Because a 2 percent wealth tax captures 67 percent of the interest income of the bondholder makes each year, it is essentially identical to a 67 percent income tax. The proposed tax raises the same revenue and has the same economic effects, whether it is called a 2 percent wealth tax or a 67 percent income tax. …The 3 percent wealth tax that Warren has proposed for billionaires is still higher, equivalent to a 100 percent income tax rate in this example. The total tax burden is even greater because the wealth tax would be imposed on top of the 37 percent income tax rate. …Although the wealth tax would be less burdensome in years with high returns, it would be more burdensome in years with low or negative returns. …high rates make the tax a drain on the pool of American savings. That effect is troubling because savings finance the business investment that in turn drives future growth of the economy and living standards of workers.

Alan is absolutely correct (I made the same point back in 2012).

Taxing wealth is the same as taxing saving and investment (actually, it’s the same as triple- or quadruple-taxing saving and investment). And that’s bad for competitiveness, growth, and wages.

And the implicit marginal tax rate on saving and investment can be extremely punitive. Between 67 percent and 100 percent in Alan’s examples. And that’s in addition to regular income tax rates.

You don’t have to be a wild-eyed supply-side economist to recognize that this is crazy.

Which is one of the reasons why other nations have been repealing this class-warfare levy.

Here’s a chart from the Tax Foundation showing the number of developed nations with wealth taxes from1965-present.

Jun-25-19-Tax-Foundation-Chart.jpg

And here’s a tweet with a chart making the same point.

 

P.S. I’ve tried to figure out why so many rich leftists support higher taxes. For non-rich leftists, I cite IRS data in hopes of convincing them they should be happy there are rich people.

P.P.S. I’ve had two TV debates with rich, pro-tax leftists (see here and here). Very strange experiences.

P.P.P.S. There are also pro-tax rich leftists in Germany.

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Harvard Economics is Changing

06/26/2019Mark Thornton

Harvard has been a leader in the economics profession for better or worse. In recent years the economics department has been viewed as relatively free market oriented where human action is seen as rational, research is guided by economic theory, and where markets work most of the time. Symbolically, the introductory undergraduate course was taught for many years by conservative economist Martin Feldstein and since 2005 by Gregory Mankiw, who could be described as a middle of the road Republican. Mankiw is also the author of the leading textbook for principles of economics, a sign of Harvard's broader influence. The faculty has several noteworthy free-market-leaning members, including libertarian Jeffrey Miron.

However, there have been big signs that things are changing for Harvard economics and not for the better. In March, Markiw wrote that he would be stepping down from teaching the principles of economics course. There has been no official replacement announced, but Raj Chetty teaches a popular alternative course called Economics 1152: Using Big Data to Solve Economic and Social Problems.

This course provides an introduction to modern applied economics in a manner that does not require any prior background in economics or statistics. It is intended to complement traditional Principles of Economics (Econ 101) courses. Topics include equality of opportunity, education, health, the environment, and criminal justice. In the context of these topics, the course provides an introduction to basic statistical methods and data analysis techniques, including regression analysis, causal inference, quasi-experimental methods, and machine learning.

This data driven approach should rightly scare traditional economists because "data driven" often results in "personal viewpoint driven" conclusions, even by professional economists. In the hands of undergraduate students there is no telling how many more crackpot progressives might graduate from Harvard or how many economics departments might be influenced in this direction. 

When commenting, please post a concise, civil, and informative comment. Full comment policy here

Negative Rates Have Damaged Banks, But That Is Not The Worst Effect

06/25/2019Daniel Lacalle

Different members of the ECB state that effects of monetary policy on banks’ profitability have been “broadly neutral”.  Many also refer to papers defending that banks lend more under a negative rate scenario.

Here is a paper they use frequently trying to say that negative rates are good, do not hurt banks and makes them lend more: Why Have Negative Nominal Interest Rates Had Such a Small Effect on Bank Performance? (Lopez et al).

The paper ignores the collapse in net income margin and ROE and even dismisses ROTE (return on tangible equity) to try to defend the idea that banks earnings have not suffered from negative rates.

Looking at Bloomberg earnings from the Eurozone banks (SX7E Index) between 2014 and FY 2018:

  • Net Income margin is down 29% on average since Quantitative Easing started
  • Earnings per share is down an average of 12.3%
  • Non-Performing Loans reduction has been moderate, and the figure remains elevated, at 3.3% of total banking assets, an important difference compared to other economies (the US is 1.1%) but also because eurozone bank assets are much larger relative to GDP than in other economies.
  • The main beneficiaries of the sovereign and corporate bond purchase program have been deficit-spending countries that have all but abandoned any structural reform as borrowing costs fell, the automakers in Germany and semi-state owned utility conglomerates. As such, the ECB QE has increased the crowding-out effect, disproportionately benefiting the indebted and inefficient at the expense of savers.

The worrying part is that these statements ignore the fact that one of the main reasons why banks’ bottom line has not fallen more is they have almost stopped making provisions on bad loans.

There is no critical analysis of the rising risk in these central bank comments. The ECB and the above-mentioned paper assume a direct correlation between negative deposit rates and lending, without considering the risk of endless refinancing of zombie loans and the higher risk for a lower return embedded in the credit growth. Zombie companies have risen with low rates, and the ECB itself acknowledges the connection between weak banks and walking dead firms in this paper (Breaking the shackles: Zombie firms, weak banks and depressed restructuring in Europe).

It is also worrying that the ECB finds no problem seeing “high yield” companies borrow at an all-time low of 360 basis points spread or that bubbles are forming in the infrastructure and housing segments where multiples have soared in recent years despite the weak growth and modest salary and unemployment improvement.

What I find astonishing is that the ECB does not even show concern about the rise in malinvestment, whitewashing of populism by artificially lowering yields on the sovereign debt of deficit countries, misallocation of capital, and the abomination of charging for deposits to lend to almost bankrupt governments and firms at extremely low levels.

Originally published a Dlacalle.com
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Why All Proper Economics is "Free Market" Economics

06/24/2019Per Bylund

There is a lot of confusion about the term "free market economics." It is not a matter of advocacy, but a description of what's studied. Just like labor economics is not a matter of standing up for working class interests, but a study of how labor markets work.

So free market economics is a study of how free markets (would) work. It is a positive theoretical study, not ideology. So, for instance, Austrian economics is free market economics in this very positive sense, and for good reason: in order to understand how an economy (specifically, markets) functions, one must first establish which processes are innate to markets and how they work. Only after this has been established can one introduce (theoretically) exogenous influences such as institutions (including but not exclusively interventionism).

Whoever starts with the present economy as-is finds himself in a problematic situation, because it is impossible to then separate what effects, outcomes, and orders are due to markets per se and which are due to other influences.

Markets (actually, economies) are inherently endogenous (causes are human action, which are influenced by the effects). This is also why a study of markets and economies cannot be studied inductively, because the result is just one big blob of interrelated data points.

Economists have understood this for centuries, which is why economics proper has always been primarily a study of theory.

To put it differently, there are no pure market economies in the world that one can study empirically to establish economic regularities to then apply on mixed and control economies.

In this sense, ALL economic theories must to some sense be free market economics: in order to study how economies work  what the effects of added or removed influences will be, etc.  one must first understand the pure mechanisms of what 19th century scholars called the "economic organism" (the economic aspect of society).

One can perhaps criticize economics on the ground that there are no pure economic mechanisms, that there is no economic aspect to human behavior. But experience (my own as well as economics' more than quarter-millennium-old) shows that such critiques are predominantly ideological and not theoretical.

The fact that economics proper is "free market" in the positive sense is no stranger than natural sciences using controlled experiments to separate true causes. It's just that economics is more difficult, because there is no way of constructing such experiments to capture the true workings of a complete economy, including the profit-and-loss system, real entrepreneurship, accumulation of capital etc.

To criticize economics proper, one must do better than to use one's own ideological biases to create misinterpretation of theory as ideology.

Formatted from Twitter @PerBylund
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Decentralization as the Bridge to a More Libertarian Society

The state and its evils are but the shadow cast by public opinion, and this is why advocates for freedom and free markets put so much emphasis on education. We focus on spreading the arguments about the workings of the profit motive versus bureaucratic management, state monopolies versus free competition, international trade versus protectionism and so forth. But we also know that a libertarian is not made overnight. Ask anyone, and the tale of how they became a libertarian usually involves reading numerous books, and often having long conversations with those who are already convinced of the value and virtue of liberty. In short, going through a months and years-long conversion process of learning, reading, and overturning previous convictions and beliefs one after another.

Therefore, as salespeople of liberty, our conversion process might literally take many years to come to fruition. That should give us a pause. This is because we cannot make strides towards a free society by relying solely on the ideological war through arguments. Once again, these arguments are indispensable for the deconstruction of any statist proposition, but they seem to be insufficient for a positive program for liberty, especially one that has the potential to win over a majority in any democratic election.

The solution for this, I believe, is to put much more emphasis on the cause of decentralization. In short, we do not push for political decentralization hard enough.

To reiterate the argument for decentralization in the shortest possible form: the greater the degree of political decentralization in a given territory, the easier it will be for the populace to move if one government becomes ever-increasingly tyrannical. And as governments seek to retain their tax base, decentralization imposes a natural limit on state power.

[RELATED: "What Must Be Done" by Hans-Hermann Hoppe]

Often, the basic premise here can be phrased as follows: you and I may have different ideas about how to organize society to achieve the best conditions for all its members. If you believe that your ideas will bring about the best, most livable system, and if I believe the same about my convictions, why not put both of them to test? Instead of a top-down system of politics, why not have a competition of free cities, communities, districts, states and counties, each of them free to implement the policies they deem to be the best, and the rest, seeing the resulting increase in living standards, will be incentivized by those who would vote with their feet to follow them.

To implement the political program of decentralization requires only one simple step — a mere constitutional amendment — that can be effected in every country of the world: If the majority of the inhabitants of a village, town, district or a city express in a freely conducted plebiscite their opposition to any given law ratified by local, state or federal governments, they are to be exempt from the jurisdiction of that law.

One need not be a libertarian to see the value of such a decentralist program. Indeed, this is arguably the only program which has the potential to unite just about everyone globally, whether they be left or right, capitalist or socialist or anything in between under a single worldwide decentralist movement of self-determination to liberate every community, so they may shape their society according to their own values, instead of those imposed on them by the might of the centralized, leviathan state.

When commenting, please post a concise, civil, and informative comment. Full comment policy here
Shield icon power-market-v2