Power & Market

Las Vegas's New Football Stadium Is on Its Way to Becoming the "Bailout Bowl"

04/14/2020Doug French

The stadium naming curse is well known. Enron Field, Adelphia Coliseum, and MCI Center are just a few examples of bankruptcy following a company's name adorning its home team’s stadium or arena. Financial trouble typically comes after the name is attached and the team plays some games.

In the newest case, the company is struggling before a game has been played. Last August, Allegiant Airlines inked a deal with the NFL’s used-to-be Oakland, used-to-be Los Angeles, used-to-be Oakland (again), and now Las Vegas Raiders for the naming rights to the new 65,000-seat and partially taxpayer-funded stadium, which sits along I-15 in Clark County, Nevada.

Terms of the deal were not disclosed, but the Las Vegas Review-Journal (LVRJreported, “experts with experience on similar deals say Allegiant is likely paying between $20 million and $25 million in cash and in-kind services a year to put its name on the building.”

Raiders owner Mark Davis let this slip at the time, “I look forward to learning a lot more about the Allegiant brand. We’ve got 30 years ahead of us, so let’s make the best of it.”

Allegiant may be wishing it hadn’t made a thirty-year deal. Eli Segall writes in today’s LVRJ that “Allegiant Air’s parent is burning through at least $2 million in cash per day and hundreds of workers are taking two-month leave at half pay as the carrier grapples with the fallout from the coronavirus pandemic.”

March revenues were down 40–45 percent from a year ago and its prospects are likely to get much worse. The company is applying for funding from the federal government’s Paycheck Protection Program to keep its doors open. Meanwhile, “management expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year and is ‘continuously’ re-evaluating its flight schedule ‘in light of low demand for future bookings,’” Segall reports.

Allegiant (ALGT) stock has fallen from $183 plus per share in December to a close below $80 today. The company sported over $457 million in cash at year end: a couple hundred days' worth at the current burn rate, excluding a payment to the Raiders, of course.

Allegiant Stadium may work out like New York’s Citi Field, known in the years after the 2008 financial crisis as Bailout Ballpark. CNBC reported,

On the heels of announcing a naming deal that cost Citigroup $20 million a year over 20 years, the company was forced to take $45 billion in government bailouts and saw its stock price drop nearly 94 percent from its November 2006 levels. Because of the heavy taxpayer support given to Citigroup, lawmakers began urging the company to scrap the names rights deal. But the company stuck with its plans, and has managed to avoid bankruptcy.

Allegiant Stadium will likely be the Bailout Bowl, with construction requiring $750 million of taxpayer largesse and now more government bailout money required for the Bowl’s name holder to pay its Raiders bill.

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Local Scolds Are Using This Crisis to Grow the Police State

My posts on social media lately have focused on national and international issues related to COVID-19. I occasionally cruise through posts from my neighborhood's Facebook page and Nextdoor.com and just throw up my hands. The local "Karens" are condemning people for traveling, looking for offending groups of more than three people to narc on to the local hotline, and calling for increased police patrols of the neighborhood, etc. The most fundamental of civil rights mean nothing to these people.

We are being careful in my household. We don't go out much. Fortunately, we have jobs that allow us to work from home. When we go out, we take precautions as recommended.

But the mostly upper middle-class residents of my neighborhood and others—at least the ones who have time for social media—are worked up into such a lather about this that they've forgotten that there are important things about our society other than avoiding getting sick.

We will all have to live in this society after the pandemic has passed. On a national scale, we will have to live with the powers government obtains during this crisis. Whatever powers they take won't all be given back (see Robert Higgs's "ratchet effect" and his book Crisis and Leviathan). And whatever powers government obtains won't all be used to effectively fight a pandemic—they will end up being used for political purposes, as the "stimulus" act should have amply indicated. People in government are no less selfish, no more ethical in their conduct, than the rest of us. And they don't always know what is best. Local information, often at the granular level of the household or individual, is vital but usually unavailable or ignored by officials in Washington, DC, or a state capital. Even if totalitarianism is an effective way to fight a pandemic—and I'm certainly not persuaded that it is—can anyone reasonably suggest that people granted such power will nobly and promptly relinquish all that power when the crisis has passed? Despotisms have arisen out of a fearful population in a crisis calling for government to rescue them.

On a more local scale, we're all going to be neighbors when this is over. In this crisis, a neighborhood should be growing closer, chatting (from a six-foot distance of course) with the people who live on our streets, picking up items from the grocery store for those whose risk of an outing is greater, or sharing a couple of extra rolls of TP. Instead, I'm seeing posts on Facebook calling for the arrest of kids in the neighborhood who dare to assemble in groups of more than three. Unqualified shaming of people who don't "stay home," when we really have no idea what the personal situation is that might result in venturing out. Calls for draconian policies from government that would have warmed Stalin's heart and that could severely impact neighbors. I'm not doing anything that would contravene current policy where I live. But I'm appalled at the instincts of some of my neighbors. The thought has already crossed my mind as I walk or run around my neighborhood—who among these people would inform on me if I appeared to be doing something that doesn't comply with a government order? Will they knock on my door and share their concern (from a six-foot distance) or just call the cops? (Is it paranoia if they have already publicly stated a desire to have people arrested?) Or worse—a few days ago an eighty-six-year-old woman died in a New York City hospital after being shoved by another patient who didn't like how close the elderly woman was standing. Will violence increase?

We may have a long way to go before the restrictions on our activities begin to be loosened rather than tightened. Stress is building. Most of us are worried about getting sick, or having a family member get sick. Many households are struggling financially. Family members who don't get along well at the best of times are living together in a pressure cooker environment. Parents are trying to shepherd children through online schooling. Some employees are trying to adjust to working from home and are worried about the future of their employers. People are already reaching a breaking point.

In the face of all this stress and anxiety, a commitment to civil and peaceful relationships with neighbors is even more important. Let's think before we condemn neighbors for not "social distancing" enough, and have polite conversations to persuade those who disagree. And let's refrain from calling on the social institution whose primary distinctive is the use of force to induce compliance. After calling the cops on our neighbor or our neighbor's kid—or advocating policies that render our neighbors jobless—we will still have to live around each other.

We have an opportunity to build relationships with those around us who have perhaps been ignored for years. Let's not squander that opportunity by looking for chances to narc on each other. That means you, Karen.

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Lebanon's Debt Crisis Has Destroyed the Nation's Economy

04/02/2020Mario Keyrouz

On October 17, 2019, civil protest erupted in Lebanon. The reason for the eruption was a proposed tax on the popular WhatsApp app.1 The tax served as only a spark to ignite the uprising. Over the years the economy of Lebanon has been steadily worsening. Of course, the usual suspect is the state, and the preferred method is interventionism.

Economic Conditions

Although there is no reliable data to track the unemployment rate in Lebanon, at a certain point in 2018 the president himself stated that the unemployment rate was about 46 percent. He attributed this high number to the grave economic situation and to Syrian refugees.2 According to the IMF, the debt-to-GDP ratio is projected to grow to about 185 percent in 2024.3 The official conversion rate of the US dollar to the Lebanese pound is about USD 1 dollar for LBP 1512.5, but in reality as of March the rate at which people are exchanging is USD 1 for LBP 2700.

During the first days of the civil protests, banks shut down and blocked depositors' access to their funds. They then moved to set some severe withdrawal limits on dollar accounts. Some banks have set a limit of USD 600 a month. Although there have been no severe limitations on accounts in Lebanese pounds, as of March 1 I am no longer allowed to spend more than fifteen dollars per month for international transactions using my debit card. Yes, you read that correctly! Fifteen dollars per month. And to top it all, the first sovereign default in Lebanon’s history took place on March 9. Much can be said regarding the current Lebanese economic conditions. But It is self-evident that Lebanon is currently undergoing the worst financial crisis since its independence. Not even during the civil war (1975–90) did people witness such a financial crisis. It could be that during the civil war the state was much more powerless than now and wasn’t able to intervene in the economy as much as it is now.

Public Debt

Between 1993 and 2018, Lebanon’s public debt increased from $4.2 billion to $85 billion4—a debt that has been forced on the Lebanese people, and the burden of which Lebanese citizens have been dealing with for years. To put things into perspective—and this is from the IMF report:

Because of the large public debt, interest payments exceeded 9 percent of GDP. Tax revenues in 2018 were lower than forecast, with all tax revenue categories disappointing in the slow economy except taxes on income and profits.5

Consequences of the State’s Actions

I could go on discussing the awful policies and actions of the Lebanese state. I could give a very accurate description of its anatomy, which is an abomination. But what I would like to shed light on is the forgotten youth of Lebanon. How long is it going to be before the economy recovers? Is it still possible for a young Lebanese to build a better future for himself? Can all the young Lebanese who emigrated ever hope to come back? Existential crises, as bad as they already are for young individuals, have been made worse by the Lebanese government. Future Lebanese generations will inherit a debt that cannot be repaid. The state has robbed us of our prosperity.

Hope Remains

Despite everything that has happened, there’s still some hope for the youth of Lebanon. Lebanese have learned a lot from the past few months. It has become self-evident that the government of Lebanon holds too much power and is too centralized. Traditional political parties in charge of the government have had their popularity diminish dramatically. And the best thing is that some Lebanese have been resorting to cryptocurrency as a way to bypass the bank and transfer money. Above all, I truly hope that in the future Lebanese people will aim to reduce the concentration of power that the state holds.

  • 1. "Lebanon: WhatsApp tax sparks mass protests," Deutsche Welle, Oct. 10, 2019, https://www.dw.com/en/lebanon-whatsapp-tax-sparks-mass-protests/a-50880357.
  • 2. "Lebanon's president says unemployment is at 46 percent. Is it true?," StepFeed, Apr. 4, 2018, https://stepfeed.com/lebanon-s-president-says-unemployment-is-at-46-percent-is-it-true-7375.
  • 3. H. Plecher, "Lebanon: National debt in relation to gross domestic product (GDP) from 2014 to 2024," Statista, Nov. 13, 2019, https://www.statista.com/statistics/455257/national-debt-of-lebanon-in-relation-to-gross-domestic-product-gdp/.
  • 4. Rouba Chbeir and Marwan Mikhael, "A Historical Analysis of Lebanon’s Public Debt" (Blominvest Bank, 2019), p. 2.
  • 5. 2019 ARTICLE IV CONSULTATION—PRESS RELEASE, p. 5
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Legislation Should Help Rather Than Hinder the Gig Economy

02/19/2020Mark Thornton

Former Mises Fellow Peter St. Onge, senior economist at the Montreal Economic Institute cowrote an op-ed in the Globe and Mail (Toronto) that highlights the increasing importance of part-time workers and the benefits they provide customers over traditional lines of work. 

Casual or “gig” work has been around a very long time, but the sharing economy has put freelancers in the spotlight. It’s especially important for workers who can only work part-time: single parents, college students, the elderly, and seasonal workers. These groups have long counted on the ability to work flexible hours when they really need to, be they waiters, nannies, deliverymen, or translators.

So far, labour laws have helped by sheltering casual workers from the hassle of paperwork, and employers from the risks inherent in hiring permanent employees. Unfortunately, regulators are becoming hostile to this new job creation. California Assembly Bill 5 (AB 5), which took effect on Jan. 1, effectively turns freelancers into employees. The goal was to improve conditions for gig workers, but, in practice, it has meant the disappearance of their jobs. Mass layoffs of part-time and full-time freelance workers have occurred in the media and the film industry, with fears of more to come.

The experience of California illustrates why governments should avoid interfering in the sharing economy. Despite good intentions, forcing employers to provide benefits to contract workers risks pricing low-wage workers out of employment altogether. Studies have also shown that even when the company is paying for the benefits, the costs get directly passed along to the employees. So even workers who don’t lose their jobs end up paying for the mandated benefits through reduced wages.

Empirically, job losses from mandatory benefits disproportionately target low-income workers. A similar phenomenon occurred in Ontario where an Montreal Economic Institute study estimated that 50,000 young workers lost their job[s] in the wake of a hike in the minimum wage from $11.49 to $14 on Jan. 1, 2018.

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Lew Rockwell Discusses His Book The Left, the Right, and the State

02/12/2020Ryan McMaken

If you haven't yet bought yourself a copy of Lew Rockwell's Against the Left: A Rothbardian Libertarianism do yourself a favor and pick one up.

But at the same time, I recommend Lew's 2010 book The Left, the Right, and the State.  I don't think this book has received as much attention as it deserves, and if you like radical stuff—I mean really radical unapologetic antistate stuff—this one can be mined for all kinds of great insights.

I was recently reminded that Peter Quiñones is also a fan of Against the Left, and back in November, he interviewed Lew about it on Peter's podcast.

If you're looking for a fun refresher on why state-sponsored mass murder and impoverishment are bad things, you might enjoy this one.

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Leonard Read on Violence, Liberty, and Love

02/03/2020Gary Galles

Virtue is widely preached and admired. Most consider themselves virtuous. Yet in our society, virtue is being progressively crowded out by coercion. That suggests a need to give more consideration to the differences between social coordination based on virtue, which is voluntary, and that based on coercion, which actually degrades what we consider good and atrophies the muscles of virtue.

Leonard Read, FEE’s founder, thought long and hard about this distinction. But perhaps his most insightful discussion came in his 1950 Students of Liberty, celebrating its seventieth anniversary this year, which framed the discussion in terms of violence versus love:

  • The principle of violence finds widespread application.
  • A citizen is compelled to give of the fruits of his labor to meet…”needs” of others. Freedom of choice as to what he does with his own capital and income (property) is denied him. Freedom of choice gives way to the dictation of an authority…backed by brute force.
  • The government’s claim becomes the first lien on everything a citizen owns.
  • The reason that most of us do not think of government coercion as meaning obedience under penalty of death is because we…acquiesce before the ultimate meaning of compulsion is realized.
  • Here…government was strictly limited; that there was a minimum of organized violence.
  • Restriction and destruction by government, to be useful, must be confined to that which is bad: fraud, private violence, conspiracy, and theft or other predatory practices…in the original plan, all creative functions were to be carried on by such voluntary, cooperative, and competitive elements as the population contained. Government was to be confined to the protection of personal liberty.
  • I cannot make inspired violence square with ethical concepts. Aggressive coercion…[h]ow this brute force can be used and be considered moral, except to restrain violence otherwise initiated, is beyond my capacities to reason.
  • As a private citizen, the predatory person is only one among millions. As an agent of government he becomes one over millions.
  • I have no faith, whatever, in any “good” that can come from these measures based on violence.
  • The political means…is…communalization by force, or legal thievery. It is simply the political device by which citizens pool their votes to extort the fruits of the labor of others for the purpose of satisfying the desires of themselves, their group, their community, or their industry.
  • Communalization by violence…[can] destroy the society from which it derives its parasitical existence.
  • The cause of our ills is a reliance on the principle of violence.
  • When we as citizens turn over to the state an item in the responsibility for our welfare, the state assumes a proportionate authority over our lives.
  • The alternative to violence is love….the application of the kindly virtues in human relations such as tolerance, charity, good sportsmanship, the right of another to his views, integrity, the practice of not doing to others what you would not have them do to you, and other attributes which result in mutual trust, voluntary cooperation, and justice….Why, then, don’t we be done with violence?
  • Reason will not support the idea of the principle of love as impractical….We practice the principle of love in most of the aspects of our daily lives without recognizing it as such….But where violence once takes the place of love, most of us seem to consider the matter settled, and conclude that love has forever been ruled out as possible of application…aid on a voluntary basis has been all but forgotten as a possibility.
  • This would be a better world if a trend away from violence could be begun and a trend toward love initiated.
  • What are the conditions essential for this needed reversal in form?
  • Love prospers only in liberty. It generates and grows among free men….As violence begets violence so does one personal act of kindness beget another.
  • Authority over one’s own actions is lost precisely in the degree that responsibility is shifted to someone else….Self-improvement [is] the only practical course that there is to a greater liberty.
  • Understanding liberty is knowing how to live in a condition where voluntary efforts will be at the maximum, and the use of force against persons at the minimum.

Present-day talk and writing…for the most part is an argument for the rearrangement of the rules of violence…[But] progress is possible only when human energy is freed of restraint.

Once the reliance on self is removed, once the responsibility for a portion of our being has been assumed by another…we cease to think about or apply our ingenuity to the activities thus transferred….Creative thought is abandoned by man as a free and thus a creative agent, and assumed by man as an agent of coercion.

Understanding liberty requires that we think…of replacing violence with voluntary action.

In Students of Liberty, Leonard Read drew out the superiority of a society whose organizing principle is virtue—love voluntarily acted out in practical terms toward those we interact with—over one whose organizing principle is the threat of violence. Unfortunately, we have been heading down the wrong path. Read’s insights can help us reverse course. And the alternative is not appealing:

The principle of love prospers in a condition of liberty….[T]he principle of violence thrives in the absence of the principle of love….[T]he principle of violence is destructive of ourselves, of civilization, and of mankind.

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Let Alaskans Decide The Fate of Alaska's Forests

09/19/2019Ryan McMaken

Mother Jones today reports on how the Trump administration is loosening some restrictions on logging in some public-lands areas of Alaska.

In response, a group of indigenous women traveled to Washington to oppose the plan.

Most of the article goes into how the forests — left untouched — are good for local residents, and how the forests are allegedly a defense against global warming.

But it was a phrase in the headline that struck me most: "These Native Women Traveled 3,000 Miles to Stop It."

That is, a group of people from the Alaska panhandle, in order to talk policy about a forest right next door, had to fly thousands of miles to do so.

That strikes me as a bit odd.

I was reminded of the outcry from non-Alaskans when the Feds proposed renaming the state's highest mountain, now called Denali. Back in 2015, I wrote:

Here's the basic story: About 100 years ago, some people started calling Denali mountain in Alaska "Mount McKinley." Eventually they managed to convince the federal government to make "McKinley" the official name. In 1975, however, the government of Alaska petitioned the federal government to change the name back to "Denali." To this day, Alaskans routinely refer to the mountain as "Denali" in spite of the fact that the Federal government, seated 4,000 miles away in Washington, DC, had not respected their request. Then, during a recent trip to Alaska, Barack Obama decided that the federal bureaucracy is going to start using the name "Denali" for the mountain.

Reading this, the whole thing should strike any sane person as immediately absurd. Why do people in Alaska have to ask a bunch of non-Alaskans thousands of miles away to call their name by the locally preferred name? If the Alaskan government, not to mention most of the locals, call a mountain "Denali," then the mountain is obviously named "Denali."

But that's not how it works in the land of the free. Here in America, apparently, people from Ohio (McKinley's home state), 3,000 miles from the mountain in question, get to veto Alaskan petitions. In this article in the Washington Post, a writer from Ohio makes the case (with a straight face, no less) that it's mean and nasty of the federal government to defer to the Alaskans about the names of Alaskan mountains. For the Ohioans, it seems, it is of monumental importance that the United States Congress, composed of 533 non-Alaskans, and three actual Alaskans, decide what that mountain should be called.

This latest controversy over an Alaskan forest just highlights the absurdity of federal control of federal lands yet again. But while Mother Jones highlights the fact Alakans had to travel across a continent to address issues going on 50 miles away, the publication nonetheless considers this to be perfectly right and normal.

This, of course, is to be expected from those with a progressive mindset. For them, policy should be decided by "experts" perhaps 3,000 miles away who ought to control every aspect of life for people who have far less power and far less ability to affect policy than the experts in the metropolitan centers of power.

If this group of Alaskans fails to win the day, then that's just a sign that maybe some California billionaires should get involved bossing Alaskans around from a different ideological perspective.

The idea that It's the same attitude, of course, that we encountered in response to the Brazilian forest fires in recent months. Wealthy, powerful first-world politicians united to boss around impoverished Brazilians and tell them how to run their country. After all, we were told the Brazilian forests aren't really Brazilian anyway. They belong to everyone else because they are "the lungs of the world." Therefore, in their minds, the Frenchman Emmanuel Macron ought to be dictating to the Brazilians on the matter.

The same thinking rules the day in Washington, DC, including among Republicans who have no intent of relinquishing control over federal lands they now enjoy. For instance, when questioned about his willingness to decentralize control of federal lands to the states, Trump appointee Perry Pendley of the Bureau of Land Management called the idea "silly" and "illogical" even though he has admitted that the authors of the US constitution never envisioned the sort of vast federal land holdings that are now common in the US.

If there's anything DC politicians can agree on, it's that Washington, DC should have the final say over everything everywhere. This, of course, even extends to foreign countries.

For them, the idea of leaving Alaska to the Alaskans remains simply a bridge too far.

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Lew Rockwell on Amash, Nationalism, Black Sabbath, and More: An Interview

08/09/2019Ryan McMaken

Atilla Sulker has posted a new interview with Lew Rockwell at LewRockwell.com. My favoire part:

AS: Why do you think people like the Bushes and the McCains, who in many ways can be seen as nationalistic imperialists, denounce Trump’s brand of nationalism? 

LR: I don’t think that imperialism is at all, necessarily connected to nationalism. The good nationalism has nothing to do with imperialism. It should oppose imperialism, because it brings war and destruction to your own people, as well as other people. But I think Bush and McCain, both of course, extremely evil and promoters of world government, are not nationalists at all. Maybe they want to see their own families and their own connections at the height of the global government running everything. But they don’t like Trump, because of what they thought he might turn into, in terms of America first, and no more wars. So that unfortunately hasn’t happened, although he (Trump) hasn’t started any big wars. But he has done terrible things like fund the war in Yemen, by giving or selling weapons, and selling weapons to Saudis. And of course his constant drumbeat of aggression against Iran is horrendous, and he’s strangling those people.

American sanctions are worse than sanctions that the Bushes put on against Iraq before they invaded. In that famous exchange with the Secretary of State (Madeleine Albright), she was asked that apparently 500,000 children and people had died because of sanctions, and she said “we think it’s worth it.” I just heard this recently from Pompeo, but this has been going on for a long time. The reason you have sanctions, according to these people, is to hurt the citizens of the other country, so they will rise up and overthrow their government. I’m not aware of any instances where that has ever happened. In fact, it just makes people more loyal to their own government.

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Libra as a Competitor to Inflationary Central Banks

As an international private currency, Libra will be in competition with publicly issued currencies. It could have large and fruitful repercussions on the global monetary policy, especially with reference to those countries where central banks are still heavily subject to political influence and tend to pursue inflationary monetary policies.

The introduction of the Libra project to the public has generated a lot of fuss over the consequences this cryptocurrency may have for the stability of the global financial system.

At first, we need to clear the ground from the most common mistaken facts about Libra running over the news. As detailed in this white paper, Libra will be a fully backed cryptocurrency, it will be issued solely upon demand, and its value will be given by a basket of reserves whose composition will be diversified, privileging safe assets and stable international currencies (as thoroughly described in the technical part of the white paper dedicated to the functioning of the reserve mechanism).

Thus, despite the rumors, we know as a fact that Libra will not:

  • run its own monetary policy, since it will not be in control of its money supply;
  • create commercial-banks money, since it will not leverage on its costumers’ deposits to create new units of Libra operating under a fractional-reserve scheme like regular commercial banks do;
  • be pegged to any existing currency, since it will not take a specific commitment to fluctuate in a stringent range vis-a-vis any currency or basket of currencies.

Lastly, the fear that a sudden bank-run may cause the collapse of the Libra is either irrational or it confirms early critics have not yet understood the basic functioning of the project. In fact, the fully backed-ness of Libra would make it much safer than commercial-banks deposits we daily accept as means of payment, because Libra would be always redeemable—at least—into legal-tender currency; this redeemability would not be just theoretical (as it occurs with commercial-banks money and fractional-reserve banking) but also practical, because a unit of Libra could be created if, and only if, a unit of monetary base (i.e., legal-tender currency) or a claim on it (i.e., a unit of commercial-banks deposits) were conferred in exchange for that very unit of Libra.

In other words, while commercial-banks money (that is, deposits) can be created out of thin air—simply granting a loan—Libra would be instead created if, and only if, backed by a formerly existing unit of money—either of the central bank or of commercial ones (recall: money of commercial banks are deposits, which entitle the owner to claim a unit of monetary base, i.e., legal-tender currency).

For all these reasons — sticking to what we really know about Libra so far — Libra will have a value which will be stable in time with respect to the main reserve-currencies of the world. The relatively stable value of Libra, together with its worldwide accessibility, is what we believe may have positive and interesting repercussions. Libra may become a safe, accessible, cheaply storable reserve of value for those people living in countries that experience unbearable high levels of inflation to this day.

Moreover, the analogies between Libra and the first steps of the Hayekian proposal of “Denationalization of Money” (1976) are strikingly patent, insofar as Libra:

  •  is a privately issued medium of exchange;
  •  is subject to a 1:1 reserve system, in which money-creation out of thin air is not allowed;
  •  remains fully redeemable in terms of existing legal-tender currencies.

Therefore, Libra — if not impeded by governmental legislative power — would provide consumers with a medium of exchange whose inflation would be the weighted average of the safest legal-tender currencies of the globe, thus naturally displaying a potential standard deviation of its value — that is, deflation or (more likely) inflation — closer to them than to that of more volatile currencies. After a while, highly inflated legal-tender currencies (especially in those countries with relevant governmental interference and political influence over central bank’s activity) would be gradually less demanded in exchange for goods and services and, were governments not to forbid payments denominated in terms of Libra-units (that is, were they to allow Libra to exist as a full-fledged means of payment), then Libra could (analogously to what is postulated by the Grisham’s Law, but —somehow — in reverse) drive governmental money out of the payment-mechanism and prompt agents to hold to Libra for payment-purposes.

Thus, citizens would be induced to hoard governmental money only in order to pay taxes — since government would not, most likely, forego their privilege of imposing which unit of account taxes are to be paid in, that is, which unit of account is decreed to be legal-tender currency — and would be given the opportunity to access a slightly more competitive money-market.

For example, were Libra allowed to circulate alongside the publicly issued currencies in countries such as Turkey or Argentina, which at present experience high level of inflation, citizens of these countries will soon start to be interested in storing their wealth in Libra-coins, which is what has in part already happened with Bitcoin or major international currencies — like the dollar. The advantage Libra could have over Bitcoin is that it promises to deliver far better in price stability, while the advantage it could have over the dollar is that it has the potential to flow freely over the internet, overcoming the capital control barriers and all sort of government limitations.

Surely, critics point out that the currencies of said countries will not be accepted as a collateral for the issuing of Libra, hence these people will not be the early adopters of the currency. Nevertheless, Libra may eventually get to these countries from the international trade, via inflows of capital or (more likely) goods and services purchasing; and, since money transfers in Libra would be far cheaper and easier to handle, Libra could then start to be adopted as an alternative currency by more and more people inside the country. In such a scenario, people will express their preference for Libra instead of their local currency, and that will represent an incentive to the local central banks not to act inflationary so to restore the confidence in their own currency, displaying the fruits competition could bear also in a traditional public dominated market — as that of currencies currently is.

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Lee Iacocca: American Crony "Capitalist"

07/03/2019Ryan McMaken

Few people who write for the news media — most of whom have only ever studied journalism or "mass communications" — know much about markets or entrepreneurship. Thus, it's not difficult to understand by people who are not entrepreneurs or capitalists get labeled at such in newspapers and on TV news shows.

When George Steinbrenner died, for example, he was hailed in the media as a great entrepreneur and capitalist. In reality, Steinbrenner was a con artist and a tax mooch. His "entrepreneurship" consisted mostly of fleecing working-class taxpayers to pay for his luxury stadiums.

And now, with the death of Lee Iacocca, we see a similar phenomenon. Within the many tribute articles about Iococca, he is commonly called the "savior" of the auto industry, or as Car and Driver describes him "the face of American capitalism."

In truth, it was the American taxpayer who "saved" Chrysler, not Iacooca. And thanks to Iacocca, the taxpayer did so against his will since Iacocca was an expert at leveraging the coercive power of government to make others pay for his corporate schemes.

Back in 1985, when Iacocca was being hailed as a capitalist extraordinaire, James Bovard, in typical Bovardian fashion, threw cold water on the nation's celebration of faux capitalism:

Iacocca is so popular largely because of his reputation for taking Chrysler from the brink of bankruptcy to the heights of profitability. But Chrysler is raking in the billions now not because it is making better cars, but because Iacocca and others persuaded Uncle Sam to prohibit Americans from buying more better-made Japanese autos.

Iacocca brags that the 1979 government bailout of Chrysler was a huge success, and even says federal loan guarantees are “as American as apple pie.” But since 1978, Chrysler has laid off more than a quarter of its workers and shut down 21 factories. A bailout intended to save jobs still resulted in tens of thousands of Chrysler workers losing their paychecks.

Iacocca even tried to cheat the government on the bailout deal. To cover the government’s risk in guaranteeing a $1.2 billion loan to a bankrupt corporation, Chrysler gave the Treasury Department warrants to buy 14 million shares of Chrysler stock at $14 a share. At the time of the bailout, Chrysler was trading at $7 a share; a few years later, thanks largely to the bailout and import quotas, Chrysler stock was up to $27 a share. When the Treasury announced it would cash in the warrants and collect a few hundred million dollars for taxpayers, Iacocca raised hell and tried to welch on the bargain. Iacocca whined, “That kind of profit is almost indecent….” Even though Chrysler has made billion thanks to government protection, Iacocca still tried to avoid paying Uncle Sam a single penny.

Iacocca wants the entire economy restricted, squeezed, and bled in order to benefit Chrysler. Iacocca tried to block the GM-Toyota joint effort to produce small cars in California, saying the partnership would be terrible for the auto industry. But at the same time Iacocca was doing his “Chicken Little” routine, Chrysler was already colluding with Mitsubishi, selling tens of thousands of their cars in the U.S.

Iacocca is America’s leading Jap-basher. Iacocca sweats that the Japanese “want to rape the market” and that “We’re a colony again, this time of Japan.” When Iacocca gave a speech on Dec. 7 on Japanese imports, he reminded his audience that it was a “day of infamy,” invoking Pearl Harbor and trying to stir up hatred for a valuable ally. Congressman Robert Matsui, D-Calif., derided recent Iacocca remarks as “racist.”

But it is understandable that Iacocca would seize every chance to slur Japan. Japanese car makers are still putting his company to shame.

Thanks to Iacocca, real American entrepreneurs — i.e., not welfare queens like the execs at Chrysler — had to pay much more for automobiles and auto parts, while paying taxes to bailout a huge corporation. Many also had to settle for lower-quality American cars.

But few seemed to care because then — as now — many Americans can't think through the implications of trade barriers and government bailouts. They don't notice the widespread unseen costs of protectionist trade barriers paid by consumers and entrepreneurs throughout the economy. All that really matters, in the minds of politicians and gullible taxpayers, is that Iacooca "saved Chrysler" and stuck it to those Japanese who think we're "lazy."

Of course, all that was before the 2008 financial crisis when it became the norm to bailout banks and auto companies, and when George W. Bush declared "I’ve abandoned free market principles to save the free market system."

Iacocca could have easily uttered those words himself. He was well versed in destroying competition, limiting choice, and sticking it to the taxpayer in the name of American big business.

There's no doubt Iacocca was a savvy businessman and a great lobbyist. But don't confuse what he was doing with entrepreneurship or capitalism.

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