The Warfare State Lied About Afghanistan, Iraq, and Syria. They Will Lie Again.

The Warfare State Lied About Afghanistan, Iraq, and Syria. They Will Lie Again.

12/09/2019Tho Bishop

Today the Washington Post published a bombshell report titled “The Afghanistan Papers,” highlighting the degree to which the American government lied to the public about the ongoing status of the war in Afghanistan. Within the thousands of pages, consisting of internal documents, interviews, and other never-before-released intel, is a vivid depiction of a Pentagon painfully aware of the need to keep from the public the true state of the conflict and the doubts, confusion, and desperation of decision-makers spanning almost 20 years of battle.

As the report states:

The interviews, through an extensive array of voices, bring into sharp relief the core failings of the war that war is inseparable from propaganda, lies, hatred, impoverishment, cultural degradation, and moral corruption. It is the most horrific outcome of the moral and political legitimacy people are taught to grant the state. persist to this day. They underscore how three presidents — George W. Bush, Barack Obama and Donald Trump — and their military commanders have been unable to deliver on their promises to prevail in Afghanistan.

With most speaking on the assumption that their remarks would not become public, U.S. officials acknowledged that their warfighting strategies were fatally flawed and that Washington wasted enormous sums of money trying to remake Afghanistan into a modern nation....

The documents also contradict a long chorus of public statements from U.S. presidents, military commanders and diplomats who assured Americans year after year that they were making progress in Afghanistan and the war was worth fighting.

None of these conclusions surprise anyone that has been following America’s fool's errand in Afghanistan. 

What makes this release noteworthy is the degree to which it shows the lengths to which Washington to knowingly deceive the public about the state of the conflict. This deception extends even to the federal government’s accounting practices. Notes the report, the “U.S. government has not carried out a comprehensive accounting of how much it has spent on the war in Afghanistan.”

As the war has dragged on, the struggle to justify America’s military presence. As the report notes:

A person identified only as a senior National Security Council official said there was constant pressure from the Obama White House and Pentagon to produce figures to show the troop surge of 2009 to 2011 was working, despite hard evidence to the contrary.

“It was impossible to create good metrics. We tried using troop numbers trained, violence levels, control of territory and none of it painted an accurate picture,” the senior NSC official told government interviewers in 2016. “The metrics were always manipulated for the duration of the war.

Making Washington’s failure in Afghanistan all the more horrific is how easily predictable it was for those who desired to see the warfare state for what it is.

In the words of Lew Rockwell, in reflecting on the anti-war legacy of Murray Rothbard:

War is inseparable from propaganda, lies, hatred, impoverishment, cultural degradation, and moral corruption. It is the most horrific outcome of the moral and political legitimacy people are taught to grant the state. 

On this note, it is important to note that the significance of the Washington Post’s report should not distract from another major story that has largely been ignored by mainstream news outlets.

Recently, multiple inspectors with the Organisation for the Prohibition of Chemical Weapons have come forward claiming that relevant evidence related to their analysis of the reported 2017 chemical gas attack in Syria. As Counterpunch.org has reported:

Assessing the damage to the cylinder casings and to the roofs, the inspectors considered the hypothesis that the cylinders had been dropped from Syrian government helicopters, as the rebels claimed. All but one member of the team concurred with Henderson in concluding that there was a higher probability that the cylinders had been placed manually. Henderson did not go so far as to suggest that opposition activists on the ground had staged the incident, but this inference could be drawn. Nevertheless Henderson’s findings were not mentioned in the published OPCW report.

The staging scenario has long been promoted by the Syrian government and its Russian protectors, though without producing evidence. By contrast Henderson and the new whistleblower appear to be completely non-political scientists who worked for the OPCW for many years and would not have been sent to Douma if they had strong political views. They feel dismayed that professional conclusions have been set aside so as to favour the agenda of certain states.

At the time, those who dared question the official narrative about the attack - including Rep. Tulsi Gabbard, Rep. Thomas Massie, and Fox News’s Tucker Carlson - were derided for being conspiracy theorists by many of the same Serious People who not only bought the Pentagon’s lies about Afghanistan but also the justifications for the Iraq War.  
 
Once again we are reminded of the wise words of George Orwell, “truth is treason in an empire of lies."

These attacks promoted as justification for America to escalate its military engagement in the country, with the beltway consensus lobbying President Trump to reverse his administration's policy of pivoting away from the Obama-era mission of toppling the Assad regime. While Trump did respond with a limited missile attack, the administration rejected the more militant proposals promoted by some of its more hawkish voices, such as then-UN Ambassador Nikki Haley. 

In a better timeline, the ability of someone like Rep. Gabbard to see through what increasingly looks like another attempt to lie America into war would warrant increased support in her ongoing presidential campaign.

Instead, we are likely to continue to see those that advocate peace attacked by the bipartisan consensus that provides cover for continued, reckless military action abroad.

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Turkey’s Inflation Problem

10/05/2021Robert Aro

Imagine living in a country where the annual price increase of food is 30% a year. Many in the west are not very familiar with hyperinflation or a currency collapse. But when looking at a historical or present-day worldview, it’s actually not that rare.

On the other side of the globe, the Hurriyet Daily News of Turkey, reported that President Erdogan ordered Agricultural Credit Cooperatives to open:

…1,000 new markets across the country to provide “suitable” prices for consumer goods.

Not only did the government order the opening of stores, but announced the size of the stores at “500 square meters each.” Construction is expected to start soon to provide “cheap and high-quality goods,” said their President. And that:

“Such a move will help “balance the market.”

If it’s difficult to believe that a President could instruct business owners to open stores, it gets stranger:

Turkey sees annual food inflation of nearly 30 percent… Fresh fruit and vegetable prices increased 40 percent in August from the same month of 2020.

While prices increase for countless reasons, it’s a good question to ask: What, if anything, has the government or central bank done to cause these price increases?

The article provides further clues as to what might be afoot:

In early 2019, the government opened its own markets to sell cheap vegetables and fruits directly, cutting out retailers it accused at the time of jacking up prices.

It’s possible the government’s intervention created problems with price signals and the production process, which now manifests through higher prices and/or supply shortages, unless one believes governments can effectively sell fresh fruit and vegetables at more effective and lower costs to the public than the free market.

Even today, the Turkish government maintains a watchful eye:

Recently authorities have tightened inspections over alleged excessive price increases at supermarkets and marketplaces.

As for central bank intervention, less than two weeks ago Reuters announced:

Turkey's central bank unexpectedly cut its policy rate by 100 basis points to 18% on Thursday, delivering stimulus long sought by President Tayyip Erdogan despite high inflation, and sending the lira to near a record low.

Yet under the current mainstream narrative, hiking interest rates is what must be done to fight price increases. Despite high food prices in Turkey, its Central Bank explains the rationale for cutting rates by 1%:

The central bank's policy committee said a rate cut was needed because of the lower core price measures - which strip out food and some other goods - as well as shocks to supply in the wake of pandemic measures.

Meaning inflation was a little low per their measure (which excludes food). Even more surprisingly, is their belief that:

The recent rises in inflation "are due to transitory factors."

If you look at other countries around the world, government and monetary policies tend to mimic each other.

The lessons from other countries become invaluable. In Turkey, the government competes in the marketplace, opening (and possibly closing) stores at will. They also monitor “excessive price increases” in certain industries. The central bank currently holds rates at 18%, continues to offer stimulus, and claims inflation is transitory. After all this manipulation, the Turkish Lira continues to tumble on world markets and prices climb at a pace still incomprehensible to the west.

Putting it all together, Turkey’s national policies and actions of the State do not sound terribly different than what happens in America. Either economics work differently in Turkey and market distortions will never get that bad here. Or, we are being offered a glimpse into the future where the State controls every facet of the market, and the only thing certain becomes capital destruction.

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Government Spending Cannot "Stimulate" the Economy

10/05/2021Patrick Barron

Government economic policy is completely backwards. We are told that massive deficit spending, interest rates driven to zero, and now higher taxes on the "rich" will bring the American economy out of the doldrums or whatever fake malady seems to be popular. It is hard to imagine an economy in the doldrums when unemployment, the scourge of mankind for decades, is so low that businesses cannot attract enough workers. That's number one; i.e., is the US economy really so bad? I admit that it always could be better, but we are not in the Great Depression of the 1930s, in which one-fourth of those seeking work could not find a job. At least not yet. Stay tuned, though.

Stimulus Spending and the Cantillon Effect

But let's get back to the main point: Whether or not the US economy is underperforming, can government spending help? That has been the mantra since Keynesianism swept the economic and then government hallways shortly after World War II. So, we may ask ourselves, just how does government stimulus spending work? Well, from what I can conclude, the government sells its debt to the Fed (called monetizing the debt, which increases the monetary base), spends it on all kinds of programs, some (but not all) of us get more money in our pockets and spend it. So, we can see that, from government's perspective, spending is the key. More spending MUST mean that the economy is doing better. Keynesian economists call this increasing aggregate demand, just a fancy name for more spending.

The implied mechanism is that more spending via money created out of thin air somehow draws more goods out of hiding. Why these goods were hiding is not quite clear, except that aggregate demand was deemed to be too low. On the face of it, it appears logical. Let's say that you are the surprise inheritor of a great deal of money from a distant relative. Your personal lifestyle certainly will be stimulated. But let's consider the source of this windfall—your distant relative. He certainly did not print buckets of money that he left you in his will. Either he earned the money himself or inherited it from someone who did. In other words, the source of your newfound wealth was previous production. You are the new owner of that wealth. Whether you produced it or someone else, you are the new owner of what Professor Frank Shostak calls "something for something." This is in contrast to receiving stimulus dollars printed by the government. Now you have received "something for nothing." It is pure monetary inflation without any previous production in exchange. Therefore, any stimulus in the form of increased spending is pure smoke and mirrors, masking capital decumulation. The result is rising prices, at a minimum, and possibly hyperinflation if carried too far.

But let me give you two thought experiments. For the first one, let's assume that you and some others are marooned on an uncharted island, similar to the plot of the hit TV comedy Gilligan's Island. The only resources you have are whatever washed ashore when your ship sank, whatever natural resources are at hand, and whatever survival skills you possess. Now let's suppose that some large boxes wash ashore later. You rush to open them and find that they contain millions and millions of dollars in paper Federal Reserve notes. Not knowing when, or even if, you will be found, what good are these millions to you and your fellows? Do you all cheer, because now you all are rich? Since your most urgently desired goods certainly are not paper dollars, I doubt it. You all are left with the original resources—natural resources at hand, whatever goods washed ashore earlier, and your survival skills. But, you may say, I do not live on an uncharted island. I certainly can spend the millions and enrich my life. OK, now let's assume that in the middle of the night Federal Reserve chairman Jerome Powell wakes you and slides a suitcase with a million dollars in Federal Reserve notes under your bed. Wow! What would you do? You might spend a little time thinking how to spend the money, but sooner or later you will take your suitcase of money and start to spend. Then you are shocked to find out that Mr. Powell, like a magical Santa Claus, visited every one of America's 300 million-plus citizens and gave everyone of them a suitcase with a million dollars in Federal Reserve notes, too. You find that all the luxury cars are gone from dealers' lots. When you enquire about ordering one, you find that the price has skyrocketed. When government engages in stimulus spending, the same thing happens, only on a smaller scale. A fortunate few, mostly bankers and bond dealers, get the newly printed money first. They buy current goods at current prices. Good for them! But subsequent receivers of the new money find that prices have gone up and their newly acquired money really doesn't do them that much good. Then people much further down the line as recipients of the new money find that prices have gone up and their incomes haven't gone up nearly as much or not at all (think of retirees on fixed pensions). Rather than enticing production out of hiding, government stimulus spending has caused a transfer of wealth from the later receivers of new money to the earlier receivers of new money. This is known in economic circles as the Cantillon effect.

A Four-Point Plan from Forty Years Ago

So, what can government do, if anything, to aid the economy? I have four main points, all from the Republican platform of 1980. (These four points were articulated by vice presidential candidate George Herbert Walker Bush on the steps of the capitol building in Springfield, Illinois, in the summer of 1980. I was in attendance.)

  1. Return to sound money by freezing the money supply. That requires two reforms. First, do not increase the monetary base by selling government debt to the central bank. Government must spend only what it raises in taxes or obtains through honest borrowing in the bond market. Secondly, forbid the ability of banks to engage in credit expansion through fractional reserve banking, whereby banks themselves create money out of thin air when they increase lending.
  2. Cut government spending. Of course, this is exactly opposite of what government does today, but government spending is parasitical on the real economy. Government does not create goods and services itself. It can only hand out what it has taken from others. It is the private economy that brings people what they most urgently want, not what government thinks they want or what government wants them to have.
  3. Number three, reduce regulations. The free market economy and the legal system are all that is needed to bring people what they most urgently want . Disputes are best resolved in the commercial and criminal justice systems.
  4. Number four, once the budget is balanced, finally goes into surplus, and the debt is slowly being reduced, government can begin to cut taxes. Tax reductions will take money from the destructive power of government spending and increase the capital accumulation power of the private sector. Since the money supply has remained the same, increased production will result in a slow and steady fall in prices, benefiting all levels of society. The cost of living will fall and the standard of living will rise.

The American people need to be told the truth. Government can help the economy only by protecting you and your property. A free market economy, limited government, and the rule of law are the keys to prosperity and peace.

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A Natural Rights and Logic Approach to Guiding Pandemic Policy

10/04/2021Patrick Barron

Government officials at all levels—federal, state, and local—feel impelled to adopt some sort of pandemic policy, from outright lockdowns to mandates for wearing masks under certain circumstances. It all seems quite arbitrary, because it is! I contend that defending natural human rights and using logic can guide us to adopting a proper pandemic policy, even if that policy is to do nothing at all.

First of all, one must accept that the foundation of natural rights is the right to our own bodies. Many people reading this short article may agree with me at this point but will disagree with me as to where this leads via logic. Number one, if we own our own bodies, then no can tell us what to put in our bodies or, conversely, what NOT to put in our bodies. Many may agree that if we own our own bodies, then no one can force us to "take the jab." OK. Now let's expand that to agreeing that no one can prevent us from putting whatever we want into our bodies, including addictive drugs. I'm sure I lost a few supporters after this statement, but it is undeniable from the standpoint of the "we own our own bodies" principle.

Most objections to this hands-off policy fall into two categories. One, that drug addicts will cause harm to others, and, two, that drug addicts will cause our taxes to rise in order to support those who harm themselves and now must be "taken care of." I do not deny that drug addicts may cause harm to others, but they should be prosecuted for the harms they cause, just as we prosecute those who drive while intoxicated and cause harm to others. Being under the influence of a mind-altering substance, whether alcohol or drugs, does not absolve anyone from paying society's prescribed penalty for the harm that one causes. Secondly, society should be under no obligation to provide drug and alcohol rehabilitation programs or to support those who now cannot care for themselves due to their self-inflicted harms. Sounds rather severe, doesn't it? But notice that I said that society should be under no obligation to provide such serves. I did not say that private individuals should not provide them voluntarily. But, you may counter, what if private individuals do not provide these services voluntarily? What now? Well, you have just answered your own question. If we will not provide a service voluntarily, what right does government have to force us to provide it? Who decides what government may force us to provide? If government is our servant and not our master, then it has no natural right to force us to provide for others against our will for any reason, whether it is from self-harm due to drug addiction or because we must support some European-style aristocratic class.

Now let us return to natural rights and the pandemic. Does government have a right to force businesses to close against their will and against the will of their customers? Of course not! The business owners and their patrons have internalized the risk and have chosen either to continue to patronize these businesses or not. But, you may say, doing so may cause the pandemic to spread. That may or may not be true, but it makes no difference. Avoiding patronizing businesses is your right, but you have no right to prohibit others from doing so, either from a logic or natural rights approach. If others internalize the risk and continue to patronize businesses, they do not harm those who do not continue to patronize businesses. How can they? If someone wants to reduce his own risk of infection, all he has to do is protect himself by staying home. He may not force others to do the same, because they cannot harm him if he stays home. This logic becomes even stronger, but is not necessarily required, if a vaccine become available. Now those who feared infection and now are vaccinated can patronize businesses and mingle with others without fear. The fact that others may not want to get vaccinated is no one else's business. We may look upon people who refused to be vaccinated, came down with covid, and perhaps died as having exercised poor judgment, but that is their right. The argument that the unvaccinated spread the disease is of no relevancy either, because they spread it only to like-minded, unvaccinated people.

The bottom line is this: take whatever action you may think is suitable to your own circumstances and leave others to do the same. Let natural rights and logic guide your actions. Those fearful of mingling with others may stay home. Remember the wise words of my favorite philosopher, Yogi Berra: "If people don't want to go to the ballpark, no one's going to stop them."

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Warren v. Powell / The Pot v. The Kettle

10/01/2021Robert Aro

The testimony Federal Reserve Chair and U.S. Secretary Janet Yellen gave this week was one for the ages. Yellen’s duty to please hit new heights and still remains quite beyond belief. Luckily the transcript confirmed her views on the spending bill. When asked:

Secretary Yellen, do you believe that President Biden’s Reconciliation Package proposal, the one with the $3.5 trillion in total spending, will cost zero and be fully paid for?

She replied:

Yes, I do. We have a full program that the President is proposed to raise revenue that would cover the cost of the program.

If true then everyone, especially the rich should prepare for fairly substantial tax hikes in the future. As to how the next bill, and the one thereafter will be funded has yet to be seen.

While amusing, it was Senator Elizabeth Warren (D-MA) who pulled out some big punches, as CNBC reports, saying Chair Powell:

Your record gives me grave concerns. Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination.

Nonetheless, a Powell lambaste from Warren doesn’t seem honest. To be clear, this is the same Senator who vehemently opposed Judy Shelton’s nomination, tweeting:

These fringe economic theories haven’t been named. It’s well understood Shelton made some remarks regarding the gold standard, government manipulation of exchange rates and the Fed’s independence. But what’s the point of economics as a study, if economists can’t discuss such thought provoking topics?

Much could be said about Senator Warren. She’s credited with the creation of the Consumer Financial Protection Bureau (CFPB), an organization which might be even more opaque than the Fed itself, headed by a director who can only be fired by the President for “just cause.”

Per Congressional Research Service Report:

The CFPB is funded through the earnings of the Fed, not through appropriations. The CFPB requests monetary transfers from the Fed to the extent needed to fund its operations, subject to a cap based on a statutory formula.

$517 million was transferred from the Fed to the Bureau of Consumer Financial Protection in 2020! This is impressive as normally we think of the U.S Treasury and the Fed’s stockholders as the entities who receive payment directly from the Federal Reserve.

But let’s humor Warren:

If Judy Shelton is not good because she asks too many questions, and if Powell is not worthy of his job, despite being one of the most accommodative Fed Presidents of all time, then who would Senator Warren want to helm the nation’s central bank?

She doesn’t say, but we can infer from another tweet she made:

Yikes!

It seems she’d want someone more accommodative who will be keen on expanding the money supply and national debt.

On a very serious note, it’s called the Austrian causal-realist approach because Austrian economists concern themselves with the cause and effects of human action; realist because the concern is only for what takes place in the real-world economy. This is very different, if not the opposite, from other schools which concern themselves with purely theoretical ideas that have little to no basis or relevance in reality.

Certainly, we can raise the minimum wage to $15, or even to $25.

And of course, all student loans can be cancelled. More money can go into social security and the government can fund universal child care for everyone in the nation. Nothing is stopping the government from doing this. The question we must ask is: at what cost?

As the tax burden on some doubles or triples, maybe more forms of asset forfeiture would be developed. The national debt would surely skyrocket and the money supply would balloon to unimaginable levels. Even if our central planners were fine with this, there would be some adverse effects to consider.

What happens to all prices, price discovery, savings, production, interest rates, the strength of the dollar… not to mention the infringement on liberty and freedom these policies require?

Someone like Judy Shelton, many laypeople, and any student of the Austrian school would ask these questions, looking for the effects of the action to consider if these are good ideas. Someone like Senator Warren does not. But many powerful people cling to the idea that we can live in a society where debt doesn’t matter and money creation is a public good which carries no consequence.

 

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America Is Not Meant to Recover

09/27/2021Robert Aro

It’s been said that the war is not meant to be won; but what about America’s recovery from COVID-19? Hearing Fed Chair Jerome Powell speak last week as he held interest rates steady and continued with monthly billion-dollar asset purchases didn’t offer any assurances that victory is on the horizon.

The way he uses the word recovery, a word he uses six times in his speech, should cause the public to wonder what exactly is going on. Pay attention to the message he conveys through his various quotes below, starting with some justification of easy money policies:

These measures, along with our strong guidance on interest rates and on our balance sheet, will ensure that monetary policy will continue to support the economy until the recovery is complete.

Meaning, if the recovery never happens, then monetary accommodation will never stop. He continues:

Progress on vaccinations and unprecedented fiscal policy actions are also providing strong support to the recovery… Real GDP rose at a robust 6.4 percent… The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery.

Per above, he cites vaccinations and fiscal response being the reason for a rise in GDP. There exists this bizarre negative feedback loop, because GDP includes government spending. Ergo, the greater the fiscal response (i.e., government spending), the greater the increase to GDP. However, the more the government spends, the worse off society becomes. Yet the worse off society becomes, the more society becomes reliant on the government...

The path of the economy continues to depend on the course of the virus… The Delta variant has led to significant increases in COVID-19 cases, resulting in significant hardship and loss, and slowing the economic recovery.

According to Powell, economic recovery depends on the virus. This is unfortunate as the new Delta variant is taking a real toll on the country.

Luckily, the Fed Committee members closely monitor for signs of the recovery. He speaks of the upcoming asset tapering:

While no decisions were made, participants generally view that, so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate.

The key phrase being: so long as, meaning the tapering will begin so long as the recovery continues to stay on track. Also notice how he doesn’t mention the start date but believes the end date will be next year, probably June/July.

At last, the speech concludes, but not before reminding us:

Everything we do is in service to our public mission. We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.

Something just doesn’t add up. If the Fed will only stop once the recovery is finally complete, then one thing becomes certain: The Fed will never stop helping.

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The Rise of the Digital Hand and The Emerging Class of Digitalpreneurs

09/27/2021Raushan Gross

In An Inquiry Into the Nature and Causes of the Wealth of Nations, Adam Smith described what he called the Invisible Hand - a metaphor to describe the mechanism of the market and the social benefit that individuals who participate in the market in self-interested ways intentionally and unintentionally serve others. The invisible hand guides individuals entrepreneurially to improve their own circumstances, and they unintentionally or unconsciously create social benefits for everyone by serving the ultimate purpose of creating markets, economic growth, trade and prosperity. The invisible hand guides individuals’ purposes to the most needed ends – the benefit that customers value most highly - and they express these purposes by using their skills and resources in market pursuits that benefit the larger society, intended or otherwise.

Alfred Chandler, on the contrary, took the opposite approach and described the visible hand, which he said was a managerial revolution. The visible hand guided the managerial class of large enterprises and replaced the spontaneous order of the invisible Hand with the visible hand of experts managing production, focusing on mass manufacturing and distribution. Alfred Chandler said, "Such internalization permitted the Visible Hand of administrative coordination to make more intensive use of resources invested in these processes of production and distribution than could the Invisible Hand of market coordination." Chandler sought to replace the implicit guidance of the invisible hand with the explicit control of an elite management class and the tools of organizational structure, command-and-control methods and tightly constructed processes.

We are seeing the results of the visible hand today, in the rigid structures of established businesses that struggle to respond to fast-paced change and rapid innovation, and also in the rejection of business by younger generations who see it as elitist and exploitative.

Happily, the visible hand is losing its grip. Today, what I see emerging is the Digital Hand.

Table 1: Descriptions and Characteristics of The Market Hands

 

As Table 1indicates, the digital hand is the enablement of a broad and deep population of new entrepreneurs who have easy access to infrastructure and resources available via the internet and who can connect to every available source of knowledge, expertise and support. The digital hand opens economic opportunities for everyday people who can participate as entrepreneurs in today's economic marketspaces. Ecommerce and digital marketspaces are giving rise to digitalpreneurs, both nationally and globally. Chandler's visible hand has made significant improvements in the production of economic goods and mass service offerings, no doubt. However, never in human history has there been a digital hand guiding individuals who offer services, products, and entertainment, with the power of prosperity except in this current time of mass accessibility of eCommerce platforms.

Recent data suggests that social e-platforms, digital stores, and online marketspaces are a $200 billion industry. The cause of this boon is the result of human action and not of human design; the effect is the opportunity for regular people – not Chandler’s elite - to be guided to economic success by the digital hand. Now brick-and-mortar business models can be offered through a digital marketspace or a hybrid of both click-and-mortar. One person startups or small teams or small and medium sized businesses can harness the virtually unlimited resources of the digitally interconnected global economy and serve its digitally interconnected markets.

Is the entrepreneurial participation of everyday people using digital platforms via the digital hand the final, irreversible shift to free and unhampered markets? Is the level of ease for the average person to be involved in the market process the great breakthrough for individual economic freedom, even though their investment in entrepreneurial endeavors is not as consequential as an investment of a high-profile millionaire or billionaire? In the short run, we see more real people – you, your neighbor, and your friend – profitably exercising their talents, serving consumers, using the digital hand. In the long run, an entire emergent class of individuals can realize their positive impact on society using the digital hand.

With a tremendous uptick in digital businesses opportunities within the past decade, there is anticipation that more digitalpreneurs will arise in the future, thereby expanding this class of entrepreneurs. Facebook's Marketplace has grown to millions of sellers across many countries, providing real people with enormous entrepreneurial and innovative opportunities within just a few years of its formation in the digital space. No matter the division of labor one represents in the eCommerce sphere, there are sufficient and inexpensive marketspaces to enable the expression of entrepreneurship. Poshmark, eBay, Etsy, Shopify, Volusion, and other eCommerce marketspaces have built-in buyer networks serving millions of people. These e-platforms remove arbitrary barriers to the advancement of everyday people who wish to participate in the marketspace. Digitalpreneurs, newcomers, or entrepreneurs transitioning to digital platforms develop entrepreneurial skills and can profit from them.

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A Word on Statism

09/27/2021Oliver Adamson

His reply read, “Ok, found the statist.” A grin spread across my face as I chuckled at his response. It was, after all, in jest. My friend was well aware of my hesitant feelings towards the state. But many online are deadly serious while machine-gunning the term “statist” at anyone failing to toe their line. Unable to pinpoint its earliest deviation point, it’s fair to look to the anarchist movement’s recent involvement in redefining the term for its purposes. Much like the struggle to reacquire the term “liberalism,” some are not in the habit of affording groups the right to redefine words to suit their needs.

The term statism first appeared circa the 1600s in reference to church-state matters. The two were nearly inseparable and exercised substantial control over the individual. By the late 19th century, the term represented the “art of government” before eventually signifying the political opposite of individualism by the early 20th century. In his book, “Socialism: An Economic and Sociological Analysis,” Ludwig von Mises referred to it as “etatism” and wrote:

“Marxism relies upon the infallible judgment of a proletariat filled with the revolutionary spirit, Etatism upon the infallibility of the reigning authority. They both agree in belief in a political absolutism which does not admit the possibility of error.”

 

Mises preferred the term “etatism,” which contains the French word “état,” meaning “state,” over “statism.” This change reinforced that the statist mindset had not originated in the Anglo-Saxon culture. Origins aside, the term has more recently come to be defined as:

“Concentration of economic controls and planning in the hands of a highly centralized government often extending to government ownership of industry.”

 

Add to this that when looking up the term “statist,” many dictionaries merely describe it as an advocate of statism. Therefore, classically defined, a statist argues for and pursues a high degree of government centralization and control, which stems from their belief in the superior nature of central planning over free-market actions. 

Statism implies a preferred or desired state of affairs – not someone’s acceptance of unavoidable compromise. Many individualists dream of a world where voluntary interactions and mutual respect for private property abound; perhaps an impossibility if we are to believe the 17th-century English philosopher Thomas Hobbes’ view of the state of nature. Arguably, without the rule of law, the unprotected fundamental securities of life would lead to continual wealth destruction and de-civilization. Christianity also addresses this precept when pointing to the depraved state of humanity, a consequence of sin entering into the world.

Recognition and mindfulness of such foundational beliefs are essential to the discussion at hand. There is no contradiction in acknowledging the government’s inevitable existence and coercive nature and then seeking to restrict its power as the end goal. Political activism towards reducing government does not positively represent government endorsement. It merely represents a pragmatic rather than idealistic approach to remedying a problem: large-scale co-existence and civilization-building in light of the human tendency towards plunder and violence. 

Etatism or statism is altogether different; the deep-seated belief in a benevolent and far more efficient central authority flies in the face of free markets and personal responsibility. The statist and utilitarian are united in their view that government planning, decision-making, and emphasizing collective happiness are morally superior to individualism and its relationship with private property.

By definition, statism propagates activities that validate increasing government control over our lives. Voting for political parties who endeavour to reduce government size and promote free-market friendly policies is disharmonious with the statist worldview and does not follow its classical definition.

Social media platforms are ripe with pseudo-intellectualism and hurlers of insult. A better strategy would be to pursue sober-mindedness and become better acquainted with one’s arcs of fire. Indeed, there is nothing wrong with idealism, for without it, to what would humanity aspire? But to discount pragmatism, which confronts the world as we know it, would be disastrous and short-sighted. 

The tornados of life don’t whirl about the inside of vacuums. We often experience the tug of wars between principle and pragmatism and the difficult decisions that go along with them. Human tribalism and the need to organize aren’t going anywhere, and so it seems degrees of governance aren’t going anywhere either. While the individualist works to curtail this reality, the statist will always devote his efforts to its expansion. 

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A Problem with Mathematical Economics

09/27/2021Myles Watts

Eighty years ago, the American economist Paul Samuelson published his acclaimed doctoral dissertation "The Observation Significance of Economic Theory," which would later form the basis of his book Foundations of Economic Analysis. These works were instrumental in convincing the majority of economists that the use of mathematical and statistical methods are the indispensable means of investigating economic phenomena. Any economist who objects to the “Samuelsonian consensus” is derisively referred to as a literary economist. The literary economist is not really an economist at all because he refuses to use the superior methods delineated by Samuelson and other mathematical economists. To the mathematical economists, the Austrians are the vanguard of literary economics and thus not authentic economists; they are aberrant logicians who obstinately cling to anachronistic methods, which have been rendered defunct by the advent of quantitative economic methods. 

Yet, this was not always the case. Before empiricism-positivism swept through the economics discipline, virtually all economists conceived of economic theory as a purely deductive framework. Indeed, Lionel Robbins' book The Nature and Significance of Economic Science, which was first published in 1932, is essentially praxeology in all but name, and it was heralded as the gold standard of economic methodology for almost twenty years. In his preface, Robbins expresses his intellectual indebtedness to Ludwig von Mises, whom he identifies as the foremost influence on his own methodological position. 

Moreover, while mathematical economics can be traced back to the marginal revolution of the 1870s, it was not, as aforementioned, until Paul Samuelson’s treatise appeared in 1947 that the quantitative approach usurped the traditional qualitative approach – the approach to economics propounded so eloquently by Carl Menger in his 1871 Principles of Economics. Clearly, then, the qualitative economics practiced by the Austrians is not a mere idiosyncrasy peculiar to the Austrian school; it was once the dominant methodology.

The fundamental defect of quantitative, mathematical economics is manifest. Quantitative analysis implies the possibility of measurement, but measurement implies relating something to a standard. Without a standard, there is no measurement. In the realm of economic phenomena, there are no standards and, therefore, there can be no measurement. Mises has poignantly articulated this point, "There are, in the field of economics, no constant relations, and consequently no measurement is possible." 

Menger postulated that all economic phenomena are ultimately caused by the purposive actions of individuals. But there is no objective, fixed standard for measuring the minds and values of men; they are not perfectly predictable inanimate objects, but conscious actors with minds of their own. In short, there is no constancy in the province of human behavior. Accordingly, mathematical economics is nothing but an epistemologically sterile exercise in symbolism. It cannot yield explanations of economic phenomena and has contributed nothing but confusion and intellectual incoherence to the science of economics. 

In sum, the absence of empirical constants precludes the fruitful use of mathematics in economic theorizing. Contrary to the prevailing doctrine, economics is not an empirical, a posteriori science—it is a deductive, a priori science. The whole corpus of economic theory can be deduced from the axiom of purposeful human behavior. And since it is strictly impossible to derive true economic propositions from the use of mathematics, the attempt to do so can produce nothing but empirically redundant formalisms. The adoption of mathematical economics by the great body of economists represents a profound regression in our economic understanding, and it is the noble endeavor of the Austrians to oppose this inherently unscientific and perverse doctrine. 

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Name, Image, and Likeness

09/22/2021Connor Mortell

It’s the best time of the year: college football season. However, this is a particularly unique college football season because this year, for the first time ever, players will be able to be paid for their name, image, and likeness. This is the culmination of a long raging debate over whether or not college football players should be paid for the work they do. Arguments for paying players claim that they rake in cash for their schools, they give their schools valuable exposure, playing for the team is hard work, sports detract from studies, athletes need spending money, and the potential for injury compensation is a must. However, while these are initially convincing, upon further examination they are somewhat lacking. It is true that these athletes provide valuable exposure for their schools, but it is equally true that the universities provide valuable exposure for the athletes. However, the strongest critique that comes from those opposed to paying players is that these players are already receiving scholarships and are thus already being paid. The belief is that none of these arguments for paying players are in dispute because players are already being paid. For this reason, while we describe the argument as whether or not we pay players, the real debate is whether or not we pay players enough in the form of scholarships. This is what makes this college football season so exciting for economists, as this question can finally be addressed.

Because we as Austrians understand that value is subjective, we therefore also understand that we cannot say whether or not a scholarship is the appropriate amount to pay a college athlete. The answer to that has to come from the market process of economic calculation. Each player who takes the action to play football in exchange for a scholarship demonstrates that he values the scholarship and perhaps the potential future offered there more than he values the time spent and effort exerted playing football. In an unhampered market, as these decisions are made at different levels by different individuals; we see economic calculation take place and we see prices that we expect as market rates begin to form. As Ludwig von Mises explains in Socialism: An Economic and Sociological Analysis,

Every man who, in the course of economic activity, chooses between the satisfaction of two needs, only one of which can be satisfied, makes judgments of value. Such judgments concern firstly and directly the satisfactions themselves; it is only from these that they are reflected back upon goods.

In order for us to understand the values appropriate for college football players, we must allow for calculation so that we can see these judgments reflected back upon the players. However, a flaw has always existed for calculation in the world of college athletes. Mises goes on to explain that for calculation to exist, units must exist—prices must exist. Scholarships serve that purpose for us here. However, scholarships have a distinct ceiling of being able to offer at most the price of attending the university. Calculation has never been able to occur at a higher price point than that of tuition. Until now, the best of college football players have received these scholarships; however, it is entirely possible that they could find an incredibly higher value on an unhampered market. For the first time in the history of college sports, we will finally be able to run this experiment, as the ceiling of scholarships is finally gone.

However, the fact that athletes may be compensated for their name, image, and likeness still leaves one wanting in terms of calculation, as it only allows one form of competing on the market above the price of tuition, and that is in sales based on your fame. However, a lineman may not end up having the same demand for commercial appearances as a quarterback, despite the fact that it's possible a quarterback may only be so successful because he has such an exceptionally talented offensive line. Thus only certain members of the community may contribute to the new calculation that is taking place. For that reason, I will conclude with a few options that would allow for more effective economic calculation to allow us to understand better how much any given athlete brings to a school. First and foremost, it’d be helpful if schools were allowed to directly pay players and thus enter the competition themselves. This would lead to the school being allowed to calculate and we’d see the most direct valuations of what the player brings to the school. Additionally, if the National Football League did not require experience playing in college to enter the draft—as several other sports allow—we would see even more competition in the marketplace. Most importantly, this suggestion would allow us to evaluate the degrees, exposure, and potential that the schools offer the players, because right now every player is forced to receive this exposure and pursue a degree, whether they want it or not. Each of these suggestions has its own ethical arguments for and against it, but from a perspective of economics, this is the only way to better answer the question of how much athletes deserve to be paid. If we want to honestly understand this question, we must listen to what Florida state representative Chip LaMarca, said while running the bill to allow compensating players in Florida, “You either allow someone to enter the free market, or you don’t. I don’t think you put training wheels on them.”

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On Powell’s Plate

09/20/2021Robert Aro

This Wednesday concludes September’s Federal Open Market Committee (FOMC) meeting. It couldn’t come at a more tremulous time for Chair Powell and the Board of Governors. As of Monday, the Dow saw massive sell off, news headlines over China’s Evergrande facing bankruptcy continued, DC is facing another debt ceiling debate and COVID continues to dominate. As for the Fed, they too have been coming under scrutiny. A CNBC headline reads:

After years of being ‘squeaky clean,’ the Federal Reserve is surrounded by controversy.

And another titled:

Fed Chief Powell, other officials owned securities central bank bought during Covid pandemic.

Those were last week's headlines as the story only recently broke. To their credit, CNBC is asking novel questions like:

Should the Fed have banned officials from holding, buying and selling the same assets the Fed itself was buying last year when it dramatically widened the types of assets it would purchase in response to the pandemic?

The security trading involved key members, such as Powell, who held municipal bonds from around $1.25 to $2.5 million. Other Fed Presidents were also named in the press. Perhaps top ranking decision members at the Fed should not be able to own the same securities they were buying through America’s central bank? It would at least remove the optics of having a conflict of interest or acting in a way that is against the public's interest.

To be clear, as far as the public is aware, no member of the Fed violated any laws. But one should always remember there is a difference between law and ethics.

Adding to Chair Powell’s agenda is what appears to be a growing divide amongst the Board of Governors over the timing of the Fed’s tapering strategy. Per CNBC:

By Goldman Sachs’ count, six officials who have spoken publicly on the issue of tapering asset purchases are for it and six are against.

Having a split board on something as large as asset purchases doesn’t make his job any easier. The voting results and minutes will reveal if they managed to work out their differences during their closed door meetings this week. And what of inflation? Do they still believe we’re living in a transitory period?

With uncertainty over Powell’s term as chair, which expires in a few months, the last quarter of 2021 promises to make for interesting news stories. As to what Biden might do, a former chief economist of the National Economic Council provided a solution:

The administration is understandably going to wait and see how the Fed handles the taper and what the markets do. That could be the determining factor in whether he’s reappointed.

An interesting feature of the Fed becomes captured: For the entity entrusted to manage the nation’s unemployment and rate of inflation, it seems we’re always concerned as to how the market, namely stock, bond and real-estate reacts to every move the Fed makes. While not in their job description, the Fed has, for a very long time, been the de facto market savior.

Should Biden, or his advisors, use market performance to judge the merits of Powell’s tenure, as the article suggests, then Powell would be confronted with another moral dilemma. Trading securities as Fed chair has already pushed ethical boundaries. But having one’s job security tied to stock market performance, when you have legal authority to increase the money supply at will, creates another set of challenges. One can only hope those in charge use more than the market’s response as a barometer of Powell’s achievement... but it must be reiterated: one can only hope.

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