Power & Market

Attention Vancouverites: Sell Your House

04/09/2018Jeff Deist

Bob Haber at Forbes has a short and sweet column warning about crazy conditions in the Vancouver real estate market. Prices for single-family detached homes have more than tripled just since 2002 in Canadian dollars, even with a Bank of Canada that has been far more circumspect in expanding its balance sheet than the Fed. 


But this time will be different! Just ask a Realtor.™ The Chinese are buying up everything with cash! It's a beautiful city! 

So why does the majority of the local population believe that this time is different? They refer to Vancouver as geographically constrained (ocean to the west, border to the south, and mountains to the north) and believe that housing will only go higher and higher. However, the same can be said about many coastal cities (including NYC) that have experienced boom and busts through typical real estate cycles over the years. This time is NOT different and investors should be aware of the possible knock-on effects of a large Canadian real estate correction.

Huber also points to the huge disparity between the cost to "own" and rent the same housing unit, a ratio which was particularly out of whack during the late years of the US housing boom in the mid-2000s. Taxes, mortgage interest rates, and personal debt to income ratios are all trending higher in Canada, which signal trouble for real-estate "investors."

Also, there are new catalysts that can’t be ignored. Taxation and interest rates are going higher. Cap rates on rentals or commercial properties are shockingly low (think 1% to 3% in most circumstances). In fact, Canada’s price-to-rent ratios are now well above what they were in the U.S. during the 2006 housing debacle. According to the Bank of Canada, 47% of Canada’s mortgages will reset in the next 12 months. To put that in perspective, a five-year fixed mortgage rate in Canada averages approximately 5.14%. This is 11% higher versus the 4.64% that it averaged for most of the past 2 years.

The specious idea that Vancouver is an international city, and thus blessed with an endless supply of foreign home buyers, seemingly applies to New York, London, and Dubai as well. Should we assume real estate prices will never fall in these cities? As for the influx of Chinese immigrants into Vancouver since the reversion of Hong Kong, that's been nearly two decades now. There are always limits to the number of cash buyers, the number of creditworthy buyers, and the amount either type will pay. And I'm reminded of when it seemed like "the Japanese" were snapping up high profile real estate across the US during the 1980s, including Rockefeller Center, Columbia Studios, and the famed Pebble Beach Golf Links.

Just a few years later, in 1993, a Japanese consortium sold Pebble Beach for a $340 million loss.  

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Abolish the Supreme Court, Not the Second Amendment

03/27/2018Tho Bishop

The crusade for greater gun control received another PR victory today with an op-ed by retired Supreme Court Justice John Paul Stevens in the New York Times calling for the repeal of the 2nd Amendment. 

Of course Stevens' hostility to gun rights is nothing new. As he notes in the piece, he was one of the four dissenters on the District of Columbia v. Heller and is one of the most prevenient legal voices to argue that the 2nd Amendment was meant to apply exclusively to militias and not citizens. When defending this view, he has referred to the work of popular contemporary historians such as Joseph Ellis, to try to bring "context" to the discussion. This is, in part, due to Stevens' larger judicial philosophy that relies on "original intent" rather than "original public meaning" - which leads him to try to search through letters and correspondence of the Founding Fathers justify a position, rather than simply looking at what the text of the Constitution was understood to have said. (Naturally his disagreements with Justice Scalia on this matter did not prevent the two from agreeing on several very bad decisions.)

The obvious problem with this is that the Founding Fathers did not share a homogenous world view, and therefore you can find conflicting interpretations among the leading voices of the era. While Stevens grounds his narrow view of the Second Amendment on James Madison's work on militias in the Virginia Constitution, the Constitution was certainly not ratified based on the limited perspective of Mr. Madison. Of course, the fact that this debate continues to this day is simply another example of the dangers of relying on the Constitutional interpretation for individual rights. 

The most unfortunate aspect about Stevens opinion is that it's hardly a radical one in the modern legal climate. This is exactly why it's a bad idea to allow a group of unelected, isolated scholars in black robes be the deciding authority on the proper size and scope of government.

The solution? Abolish the Supreme Court, or at least aim to dramatically reduce its influence. 

As Ryan McMaken wrote following the death of Justice Scalia:

We’re told by pundits and politicians from across the spectrum how indispensable, awe-inspiring, and absolutely essential the Supreme Court is. In truth, we should be looking for ways to undermine, cripple, and to generally force the Court into irrelevance.

With the expected eulogies for Scalia among his supporters, we’re being berated with the idea that Scalia was an “originalist” who stuck doggedly to the clear text of the Constitution as imagined by its authors. In truth, Scalia was no originalist, since, if he had been one, he would have rejected the whole notion of judicial review, which is itself a total innovation and fabrication dreamed up by Chief Justice John Marshall. Absolutely nowhere does Article III of the Constitution (the part that deals with the court, and is half a page long) give the court the power to decide on what can be legal or not in every state, town, village or business of the United States. Moreover, as Jeff Deist notes today, the Court’s powers we so blithely accept as fait accompli are mostly made up:

  • The concept of judicial review is a fabrication by the Court, with no basis in Article III. 
  • Constitutional jurisprudence is not constitutional law.
  • The Supreme Court is supreme only over lower federal courts: it is not supreme over other branches of government.
  • Congress plainly has constitutional authority to define and restrict the jurisdiction of federal courts.

But don’t look for many in Washington to admit this any time soon. The Supreme Court serves a very important function in centralizing federal power in DC and in the hands of a small number of senior federal personnel. And how convenient it is for members of the ruling classes to influence and access these guardians of the federal government's intellectual respectability: the members of the court, presidents, and senators are all generally all members of the same socio-economic class, send their children to the same elite schools, and work and live together in the same small social circles. At the same time, this closed social and professional circle also helps to diminish the influence of those outside the Washington, DC bubble. 

If it wished to, Congress could overhaul the Court this afternoon. Nothing more than simple legislation would be necessary to radically change or completely abolish the lower federal courts.  Congress could decide what topics fall under the lower courts' jurisdiction, and thereby limit the Supreme Court’s jurisdiction as well. Congress could also decide that the Supreme court is made up of one justice or 100 justices.

Indeed, since the Supreme Court is nothing more than a legislature, why not make it one? Why not make SCOTUS a body of 50 “judges,” with the understanding that the Senate will not ratify any appointment which does not hold to the rule that each state gets a judge on the Court? Politics and ideology prevent this, but no Constitutional provision does. 

While some Constitutionalists still cling to the romantic notion of the Supreme Court as a check on the Federal legislature, American history is very clear on this matter. The Supreme Court has mainly served as a tool for centralizing power in Washington, and it should be viewed with as much suspicion as any other branch of the Federal government. 

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Another Reminder that Elizabeth Warren is a Fraud

03/13/2018Tho Bishop

Elizabeth Warren's entire career has been based on a lie. I speak, of course, of the notion that she's some sort of expert on the financial sector. Not only is the Senator from Massachusetts bad on basic economics — advocating policies that would grossly punish the poor, ignore the consequences of central banking, and being a general embodiment for everything bad about modern progressivism — but she is ignorant of basic facts that played out during the financial crisis. 

For example, today Warren unleashed a barrage of tweets targeting legislation designed to reverse some of the Dodd-Frank regulation that has helped further consolidate the banking industry and increase the size of Too Big to Fail banks. I have not yet gone through the legislation, and it's quite possible that there are objectionable parts to the legislation, but one tweet from Warren just doesn't hold up reality.

This is simply wrong. BB&T never took a bailout, because they had no need for one. In fact, the bank's CEO at the time, John Allison, was the loudest industry voice criticizing the entire scheme. While BB&T did receive TARP funds, it was only because they were forced to do so by the Obama Administration that once employed Warren. In fact, the North Carolina-based bank is perhaps the one of the large financial institutions who can honestly contend to be a victim in the Washington bailout, as they were forced to pay high rates on lending due the government forcing them to accept TARP funds

In short, Senator Warren's opinions on financial services matters should be treated with the same seriousness as her contributions to the Pow Wow Chow Native American cookbook. 

(Allison's book on the financial crisis is a personal favorite. If you purchase it — or any book — on Amazon using this link, the Mises Institute benefits thanks to Amazon Smile.)

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Auburn Legend Pat Dye at the Mises Institute!

03/08/2018Tho Bishop

The Mises Institute has been doing some grounds work the past few weeks, and we had a special visitor today as we planted a new tree: Auburn football legend Pat Dye. 

A player at the University of Georgia, Dye served as both head football coach and athletic director from 1981-1992. He was inducted in the College Football Hall of Fame in 2005,  and the playing field in the football stadium is named "Pat Dye Field" in his honor.

It was great to have Coach Dye with us today, and to show-off the Mises Institute campus to an Auburn legend. 


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Audio: Andy Duncan and Ryan McMaken on Trump's Tariffs

03/08/2018Mises Institute

Andy Duncan of Mises UK interviews Ryan McMaken on tariffs, income taxes, and the importance of free trade [20 minutes]:

Trade Wars and Trump's Trade Tariffs, with Ryan McMaken

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A Note on Campus Totalitarians

03/07/2018Jeffrey Harding

A movement is taking over America’s colleges and universities that rejects classical norms of reason, logic, and scholarship. This anti-intellectual trend is a road to totalitarianism.

What now passes for erudition in many liberal arts departments would not qualify as good scholarship using the proven tests of critical thinking. Worse, dissent is being shouted down, not debated. And many administrators support this trend making it, in effect, de facto campus policy.

This trend has all the hallmarks of societies that have gone totalitarian.

The first wave is always an assault on intellectuals and reason. Whether their shirts were black, brown, or red, academic dissent was shouted down, dissenters were persecuted, and reason was discarded. Many historians have chronicled the similarities of these movements: Friedrich von Hayek’s  Road To Serfdom; William Shirer’s Rise And Fall of the Third Reich; Sean McMeekin’s The Russian Revolution; Ayn Rand’s semi-autobiographical novel about the rise of the Bolsheviks in We The Living.

These totalitarian regimes were almost all collectivist whereby the government dictated the economy and eventually society in order to achieve goals they believed were just and noble. You can call them socialists, or communists, or fascists, but really, they all operated similarly. Today in America it is “social justice” which is just another word for coercive state control over the individual. But, as Friedrich von Hayek said, their desires outstrip their understanding: history has shown that this path will end in tragedy, not utopia.

What set me off on this critique of contemporary ideology was Professor Nancy MacLean whose book, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America has been praised in Progressive circles. In it she claims that James Buchanan, a distinguished Nobel prize winner in economics, was at the intellectual forefront of a dark libertarian movement to support segregation and to protect the rights, position, and capital of rich white folks. The National Endowment for the Humanities awarded her $50,400 to write the book.

As an expert on the philosophy and history of the libertarian movement, I can assure you that her premise is absurd. James Buchanan was a fine scholar with a long record of excellent scholarship. Her scholarship on the other hand has been eviscerated by many academics as consisting of lies, innuendo, exaggeration, misquotes, unsubstantiated citations, and taking things out of context. They have challenged her to refute their very specific criticisms, but she doesn’t respond other than to make personal attacks on her critics. The fact that she doesn’t understand economics (her admission) would lead one to question her ability to criticize a Nobel-awarded economist.

Yet her book was praised by Progressive media such as the New York Times, The New Republic, The Atlantic, Oprah Magazine, NPR, and Slate. Many enthusiastic reviewers cited her extensive list of citations as evidence of her scholarship. The point about MacLean, an outspoken Progressive, is that she formed a conclusion and then tried to fit facts to support it. That is not scholarship. One prominent critic called the book “speculative historical fiction.” Her premise is that libertarians wish to impose a draconian regime on America to preserve “capital” and position of the wealthy. Anyone with a smattering of knowledge about libertarianism would know that control over others is a very unlibertarian thing to do. Yet Progressives love her. MacLean is emblematic of the trend in academia where political ends trump scholarship.

Her latest response to critics is to accuse libertarians of being autistic. “It’s striking to me how many of the architects of this [libertarian] cause seem to be on the autism spectrum. You know, people who don’t feel solidarity or empathy with others and who have difficult human relationships sometimes.”

This quote should give you some idea about her shallow scholarship. That she would be lionized by the Left reveals their anti-intellectualism and groupthink mind set, which has been characterized as symptomatic of authoritarian personalities.

Which leads me to my next point about the anti-intellectual response on campuses to critics of various theories that are now the rage in academia (Multiculturalism/Critical Theory (Neo-Marxism)/Postmodernism/Post-structuralism). If you disagree with and dissent from these epistemologically-challenged theories, you will be punished. You will be publicly condemned, threatened, and ostracized. But, while you will be shouted down, you won’t be challenged on the merit of your ideas. There is no debate because they know their ideas won’t stand up to rational analysis and criticism.

Law professor Amy Wax of the University of Pennsylvania was on the receiving end of this because she wrote an op-ed piece supporting bourgeois ideals. The reaction among faculty and students was overwhelming. She was accused of hate speech and being a racist. One of her deans asked her to cease teaching and take a leave of absence. 33 colleagues signed an open letter condemning her. Yet none of them addressed her ideas to explain the error of her ways. As she said: “Hurling such labels doesn’t enlighten, inform, edify or educate. Indeed, it undermines these goals by discouraging or stifling dissent.”

Multiculturalism and Critical Theory are now the driving forces behind rising campus intolerance to dissenting ideas and thus, free speech. Words, meanings, reason, and motives are ignored. Speech is to be used as a weapon to further Progressive political goals and to subvert classical liberal concepts such as tolerance, free speech, individualism, reason, and equality under the law. Dissent from Progressive orthodoxy is now “racist hate speech”, a vestige of (white) privilege, and is an act of violence against protected (“oppressed”) groups. The meanings of words are to be manipulated to serve Progressive political goals. Protected groups, all advocates of social justice, are thus “liberated” from the bonds of tolerance and free speech. Intolerance to the speech of dissenters (often violent) is justified to achieve political goals. Any means to an end.

The result is the rise of intolerance and groupthink in academia, which, of all places is supposed to be a bastion of free speech where ideas can be debated and students can learn to think. But, that is not so. Campus free speech is dying.

This is all calculated. These social justice warriors are using these philosophies to achieve Progressive goals. It’s all about politics and their quest for power. Truth, justice, reason, tolerance, and scholarship be damned.

We need to shine light on these trends. We need to expose them for what they are: a proto-totalitarian vanguard. By rejecting free speech and the rigors of scholarship, they chip away at the ideas and ideals that have delivered the greatest advances in health, wealth, and well-being in human history. History has shown that these movements do not end well.

This article originally appeared at An Independent Mind.

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AUDIO: Stop Blaming Mexican Violence on American Guns

02/26/2018Ryan McMaken

We've now posted the second episode of Radio Rothbard, which today is the audio version of Friday's column on gun violence in Mexico. Here's the mp3 version, and it's also available on our Youtube channel:

Stop Blaming Mexican Violence on American Guns

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A Reminder that the Police have No Obligation to Protect You

02/22/2018Tho Bishop

The Broward County Sheriff's office announced this afternoon that Deputy Scot Peterson resigned after being suspended for not engaging the shooter at Marjory Stoneman Douglas High School. He had been making over $75,000 a year as the school's Student Resource Office, a position he had held since 2009.

While the report of Deputy Peterson's inaction has understandable resulted in public outrage and disgust, it's important to note that the Supreme Court has found that government police officers are under no obligation to actually protect the public. 

This is why, as Chris Calton noted in an article earlier this year, it's useful to recognize that "law enforcement" is really not synonymous with "security:"

The problems we find in the institution of the police, then, stem from two different areas. The first is the one that typically gets acknowledged, and that’s the government policies in running the police. The negative incentives that attract dangerous people, the lack of consequences for mistakes and abuses of authority, and the low criteria for earning a badge. Many libertarians argue for the privatization of the police as a way of reversing these incentives so that they have a positive effect. The recent string of sexual harassment allegations demonstrates the different levels of accountability between private individuals and those in government positions.

But when libertarians advocate privatizing the police – a position I’ll admit that I share – they are usually advocating the privatization of security. The motto of the police is “To Protect and Serve.” This is the motto of a security industry. But despite continuing to fly this banner, the police today hardly constitute a “security” service. In fact, the security industry is already privatized, and there are more private security guards employed in the United States and other countries than there are police officers.

The synonymous term for “police” is “law enforcement,” and this is a distinction worth remembering. The role of police is not, and has never been, to keep people safe; it has always only been to enforce the law.

When a public police force was first created, the idea of “law enforcement” and “public safety” almost went hand-in-hand. Most laws were actually designed to protect the person and property of private citizens (with exceptions, of course). So even if a public police force was less efficient than a private alternative, its job was still, for the most part, to keep people safe by enforcing the laws designed to protect them from violent criminals.

But as government has grown into the leviathan we know today, the law has expanded well beyond a small criminal code designed to protect life, liberty, and property. But the police, true to their role as law enforcement officers, are just as obligated to enforce these laws – the ones prohibiting marijuana use, lemonade stands, and collecting rainwater, to name only a few oft-cited legal absurdities – as they are to enforce laws protecting people from violent criminals. In fact, if we factor in the negative incentives police departments have guiding the allocation of their resources, it’s reasonable to conclude that an officer is more obligated to enforce the laws against non-violent criminals than the laws against violent ones.

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AUDIO: School Security and More

02/22/2018Ryan McMaken

With "Radio Rothbard" I'll be doing short podcasts highlighting some of our columns and authors, while also providing audio versions of my own columns. But, I'll also add just a little extra commentary and also read it the way I'd want it to sound in your head. This week's edition is an audio version of "Security Works at Disney — But Can't Work at a Public School?" [Length: 9:55]

The podcast is also available on iTunes, Google Play, Stitcher, Soundcloud, and via RSS.

Security Works at Disney — But Can't Work at a Public School?

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A Valentine, from Murray to Joey

02/14/2018Tho Bishop

Found in our archives by Barbara Pickard.

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