Power & Market

Shining Path II? The Dangers of Andean Agrarian Socialism

Currently, a new cycle of protests involving the Ecuadorian indigenous peoples’ organization is happening, following another cycle that took place in October 2019 and paralyzed the country for two weeks, resulting in 8 people dead, various hundreds of other people injured, including law enforcement officers sent to diffuse the demonstrations. The Ecuadorian State comptroller building was burned and sacked, severely damaging the patrimonial buildings of the Spanish-style Historic District of the capital city of Quito, and overall costing the Ecuadorian economy almost $83 million in damages.

All this destruction just to force the government to reverse austerity measures decided by then President Lenin Moreno to end the government subsidies to lower gas prices, undertaken in a failed attempt to liberalize and stimulate the Ecuadorian economy.

Back then, as well as today, the protests were spearheaded by the Confederation of Indigenous Nationalities of Ecuador, known by its acronym in Spanish, CONAIE, the country’s largest indigenous organization, led by Leonidas Iza, an Andean Kichwa native, with well-known leftist sympathies and ideas, close to the thought of Peruvian agrarian socialist ideologue, José Carlos Mariátegi, whose ideas (along with those of China’s Mao Zedong) would inspire the activities of Shining Path, a communist terrorist group responsible for around 60,000 deaths in a conflict against the government of Perú that has lasted for four decades.

But back to Iza, only a little more than a year after the 2019 protests, he co-authored, with a couple of leftist academics aligned to his Marxist-indigenous cause, a book titled Estallido (a term that could be translated as outbreak) in which they outlined the steps in their revolution towards power. The first step calls for direct action against government institutions and capital structures and the second is defining their friend/enemy distinction between various local leftist groups, including worker unions, the indigenous peasantry and progressive allies in cities against what they consider to be a counterrevolutionary alliance of right-wing populists, banking conservatives, social-democratic technocrats, a bureaucratic bourgeoisie and modernizing liberals.

He and his co-authors continuously quote the work of Mariátegui, as well as of others Socialist intellectuals like George Sorel, who is particularly known for his advocacy of violence, and end their book with the battle cry of “Amerindian communism or barbarism,” as if the actions of their movement in the 2019 protests were not barbaric, and, on the contrary, the market structures of capitalism were the true oppressors.

Iza’s actions and his book were praised by many people in Ecuador, mostly urban intellectuals, looking to capitalize on the situation and get court positions in the potential new order under the Marxist-indigenous leader. The intellectuals, however, do not realize the danger his ideas represent for Ecuadorian society, because, in many senses, what Iza did, promotes and is trying to repeat right now, is just another chapter in the long and bloody history of the global left, from Marx to Hitler, as accounted by Erik von Kuehnelt-Leddihn.

However, Leonidas Iza and his “Amerindian communism” should not be just considered as another case of intellectual leftism that appeals to those “who dream of action but never act,” as described by Mises. Instead, he is an alarmingly latent Pol Pot wannabe, for whom his vision of an indigenous, fully agrarian socialist country has to be built from the ashes of a failing republic consumed by the fire of revolution, a view he has repeatedly advocated for by demeaning the majority mestizo ethnic group in Ecuador while protecting himself from accusations of racism by virtue-signaling his indigenous ethnicity.

By his actions, Iza’s movement and ideas prove, once again, that Mises was right by defining fascism in the same terms as socialism, that is, that:

    …the fundamental idea of these movements […] consists in the proposal to make use of the same unscrupulous methods […] to exterminate its adversaries and their ideas in the same         way that the hygienist strives to exterminate a pestilential bacillus; it considers itself in no way bound by the terms of any compact that it may conclude with opponents, and it deems any      crime, any lie, and any calumny permissible in carrying on its struggle.

Nevertheless, for a self-professed Marxist follower of Andean-style Maoism, Iza’s Amerindian communism tends to be closer to fascism than to Marxism itself, given that, as Roderick T. Long explained,

     …where Communist ideology tends to be cosmopolitan and internationalist, fascist ideology tends to be chauvinistically nationalist, stressing a particularistic allegiance to one's country,       culture, or ethnicity; along with this goes a suspicion of rationalism, a preference for economic autarky, and a view of life as one of inevitable but glorious struggle….

All of these elements are present in the direction CONAIE has been tacking under Iza’s leadership, given its close indigenous ethnic component, its fondness for direct action and local, backwards agrarianism, and its violent effort for political dominance. Of course, the agrarian socialism he promotes should be by itself another big red flag, pun intended, about his intentions, for which a number of logical inconsistencies become more and more apparent the moment one stops to think about them.

For instance, he has continuously given contradicting public statements calling for the end of the oil extraction industry in Ecuador and then shouting about keeping gas prices under government subsidies, arguing that artificially low prices are a necessity for the use of tractors in agriculture. This when tractors themselves are a capital good that almost no already poor Ecuadorian indigenous peasant could even try to afford under our highly intervened economy.

All of these incoherencies are then promoted under the wraps of a political discourse with heavy Ted Kaczynski undertones, which could only mean that if his brand of Amerindian communism ever gets applied, it would only mean a man-made Malthusian trap. His actions also speak for him, as for the times he has called for public demonstrations, private property has suffered the most, with businesses having to close for many days, going bankrupt, and looting becomes commonplace with the mere notice of his calls to action against the government.

Leonidas Iza is the kind of person that reminds us that we still have to fight the last wars against socialism, for his ideas and his actions would only bring even more ruin to a country like Ecuador., To simply defeat him, however, would mean nothing when ideas like his can be easily recycled by other socialist opportunists, for socialism, which appeals to envious people who crave for security and are afraid to make decisions for themselves, must vanish from the minds of reasonable human beings, as it impairs human dignity and crushes man utterly, a lesson learnt from both Austrian intellectual powerhouses, Mises and Kuehnelt-Leddihn.

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

Should Gun Laws Be Decided at the Federal Level? Or Even the State Level? Why Not the Local Level?

06/13/2022Connor Mortell

Uvalde, Texas, is where I was born. It’s where my mom taught kindergarten less than a mile from Robb Elementary. Uvalde is where I learned to master a Daisy BB gun. I took that – that took two years before I graduated to a 410 shotgun. Uvalde is where I was taught to revere the power and the capability of the tool that we call a gun. Uvalde is where I learned responsible gun ownership. And Uvalde called me on May 24th, when I learned the news of this devastating tragedy. I had been out of cellular range working in the studio all day when I emerged and messages about a mass shooting in the town I was born began flooding my inbox.

These were the words of Uvalde native actor Matthew McConaughey at the White House following the recent tragedy. This same tragedy has led to all sorts of calls for gun control. Most notably, the Protect Our Kids Act which, among other things, would raise the age to purchase an “assault rifle” to 21 and would bar the sale of large capacity magazines and dictate proper at-home gun storage.

My gut instinct as a proud gun owner is to rail against such legislation - as anyone should. As Mises Institute editor, Ryan McMaken, has written, such legislation would merely put more faith in the police. The very same police who have proven time and time again - including this very same tragedy - that they have no duty to protect you.

McMaken, in another article, explains many of the obvious inherent flaws in such gun control legislation. In addition to all this that has already been laid out, there is the fact that as Austrians we don’t believe in “gun rights” or any other specific rights but rather we know that all rights are property rights. As Ludwig von Mises has said, “The truth is that every infringement of property rights and every restriction of free enterprise impairs the productivity of labor.” Such regulation as this would infringe on the property rights of millions simply on the grounds that they may one day far down the line become a criminal (and these outcomes of becoming such a criminal are far less likely than we are often told).

However, the solution goes deeper than that. The reaction to such a tragedy should not be handled by the Congress but rather by - as McConaughey repeated many times for emphasis - Uvalde, Texas itself. Mises Institute President Jeff Deist has previously posed the question “Why couldn’t the big question of the twenty-first century be where you’re governed rather than how?” We as libertarians like to get bogged down in the how, but the question of where is equally - if not, more - important.

This issue has absolutely no realistic reason to be handled at the federal legislative level. The state of Texas has time and time again proven it values its guns highly through actions like their constitutional carry law passed last year. But despite this, Uvalde, in a moment of wholly justified fear, is calling for a reverse in that trend. We like to ask in arguments favoring soft secession and hard federalism why Alabama and California under any logical system would be forced into the same abortion laws. But the question goes further, why should Uvalde and Fort Worth, Texas, have the same gun laws? Why should Miami and Okeechobee, Florida, have the same systems? Why should Birmingham and Morris, Alabama, face the same restrictions? We find ourselves with wildly diverse cultures even within the same state. In the face of these gun control debates the answer is to allow them to be decided at the most local level. If Uvalde in the face of tragedy wants to crack down on guns, then let them. However, on the flip side, if a more conservative student body in College Station or Lubbock wants to have campus carry readily allowed then Uvalde must respectfully allow that as well.

Another Mises Wire editor, Bill Anderson, has explained that the more we politicize mass shootings the more we simply guarantee them in the future. Decentralizing these decisions will take the heat out of them and let them be more peacefully and diplomatically handled at federal levels - as with any conflict. We can close this issue with the words of Jeff Deist:

Mass democracy, under shifting rules often determined by nine politicized judges, is not a prescription for harmony and goodwill among 330 million very diverse Americans. Those millions don’t much agree about guns, God, abortion, and plenty more. But they don’t have to agree. In a “post liberal” and post-good-faith environment, aggressive federalism and realistic discussions of political secession are the obvious path forward. If you claim to love your fellow American citizens, unyoke them from the federal superstate and demand the same for yourself. The universalist, totalizing impulse, which resulted in the dramatic centralization of state power through the twentieth century, must be reversed in the twenty-first. The other way lies political strife, and worse.

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

Sound Money Movement Scores 2022 Wins

06/09/2022Jp Cortez

As state legislatures clear out and head home for the summer, one reality has emerged: Sound money is a winning issue in the states.

At a time of record-high inflation and geopolitical uncertainty across the globe, states are wisely taking steps to better enable citizens to acquire, sell, and/or use gold and silver.

Last year, Arkansas and Ohio repealed sales taxes on gold and silver coins, bars, and rounds. And Ohio invested almost $1 billion worth of physical gold in its Ohio Police and Fire Pension fund.

This year brought three new legislative victories in Tennessee, Virginia, and Alabama, thanks largely to efforts by Money Metals Exchange, its customers, and its Sound Money Defense League project.

All told, sound money allies introduced bills in 11 states to remove sales and income taxation on the monetary metals, create state depositories, and/or protect state pensions and reserves with an allocation to physical gold.

Here’s a full rundown…

Eleven States Considered Sound Money Bills This Year

Virginia had exempted sales taxes on most purchases of precious metals back in 2015, but purchases under $1,000 were still taxed and the whole exemption was scheduled to sunset this year.

Mobilizing grassroots support, the Sound Money Defense League worked with Delegate Amanda Batten’s office on House Bill 936 and secured a five-year extension of the existing exemption, while also securing its expansion to cover ALL transaction sizes.

Before the ink could dry on Gov. Glenn Youngkin’s signature, Alabama finalized sound money legislation of its own.

In addition to prompting in-state supporters to make literally thousands of calls and emails to members of the Alabama House and Senate, Money Metals’ public policy team worked closely with legislative allies to extend Alabama’s precious metals sales tax exemption and also clarify that the exemption covers ALL common forms of bullion.

The successful Alabama bill also removed some burdensome reporting requirements.

During a house committee hearing on Alabama’s Senate Bill 13, the committee chairman proclaimed the precious metals bill was “the most popular bill of the session.” Governor Kay Ivey’s signed SB 13 into law in April.

Meanwhile, a groundswell of Volunteer State citizens prompted the Tennessee legislature to secure its place as the 42nd state to remove sales taxes from gold, silver, platinum, and palladium coins, bars, and rounds.

During the Senate floor vote, Sen. Janice Bowling commented, "I just want to thank the senator for bringing forward this bill along with half of the state of Tennessee that contacted all of us!"

Meanwhile, sound money bills in other states fell short of passage, but efforts laid the groundwork for victories in 2023 and beyond.

Kentucky House Bill 272 aimed to remove sales taxes on gold, silver, platinum, and palladium coins and bars, but the measure did not receive a hearing this year.

In Mississippi, the Sound Money Defense League worked with Rep. Jill Ford, the Mississippi Center for Public Policy, and in-state supporters to advance House Bill 426, another sales tax exemption effort.

HB 426 passed the Mississippi House by a vote of 121-1 but died in Sen. Briggs Hopson’s Senate Appropriations Committee without a hearing.

In Hawaii, Rep. Val Okimoto led the way in pushing sound money legislation (House Bill 1184) out of the House Finance Committee. It passed overwhelmingly out of the full House but failed to receive a hearing before Hawaii’s Senate Finance Ways and Means Committee.

Meanwhile, lawmakers in Alaska held two hearings on House Bill 167, a measure to declare gold and silver “specie legal tender” as well as prevent boroughs and cities from slapping sales taxes on purchases of the monetary metals.

In the Garden State, Assemblyman Ronald Dancer introduced A3007 to end New Jersey’s sales taxes on precious metals. A companion bill was introduced in the New Jersey Senate while other cosponsors joined the effort.

New Jersey’s legislature is still in session, so there’s still an outside chance of progress there this year.

Meanwhile, Oklahomans appear eager to build on the Sooner State’s existing sound money policies. Proponents introduced bills to eliminate capital gains tax on the sale of precious metals, establish an in-state gold depository, and protect taxpayer reserve funds with gold and silver. These bills enjoyed grassroots support, but they did not pass out of any committees.

West Virginia and Washington legislatures introduced measures to eliminate various tax liabilities on precious metals, but these bills didn’t receive hearings in 2022.

The Idaho House overwhelmingly passed a bill that would permit the state treasurer to hold gold as a hedge against the state’s massive pile of negative yielding debt paper, but the senate failed to act on the bill.

In the end, the big news for 2022 is the newly minted sales tax exemption in Tennessee – followed by more incremental wins in Virginia and Alabama.

Hawaii, Kentucky, Maine, Mississippi, New Jersey, New Mexico, Vermont, and Wisconsin remain as the only states that still charge full sales taxes on precious metals, without any exceptions.

Leading the Sound Money Push

As the de facto public policy leaders for the entire precious metals industry, Money Metals Exchange and the Sound Money Defense League are preparing to redouble efforts in the remaining eight sales tax states and continue pushing ahead on other policy fronts. We've been blessed to have broad public support on our side -- along with help from local dealers and groups like Campaign for Liberty.

As inflation rages on, the folly of endless currency printing becomes more undeniable.

Thankfully, individuals, states, and even countries are increasingly considering the role of gold and silver in protecting against the twin threats of Federal Reserve Note devaluation and weaponization.

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

Self-Interest Isn’t What It Seems: An Austrian Response to Socialism’s Broken Promises

A standard trope in socialist circles is that the poor and downtrodden refuse to vote their economic interests. See, e.g., Thomas’s Frank’s “What’s the Matter with Kansas? How Conservatives Won the Heart of America. This theory is used to justify various anti-democratic schemes to “protect” the vulnerable from themselves. If, after all, the poor aren’t voting their interests, then why can’t we achieve Pareto-optimal interventions on their behalf? 

Indeed, doesn’t this fact generally disprove all economic theory? You can’t very well argue that people are rational when it’s so “obvious” that they aren’t, right?

The problem, of course, with such theories is that they ignore risk. Even if socialism works exactly as advertised, even if all of its “failures” were solely the result of the fact that it hasn’t been “tried,” so what? The mere fact that socialism has failed in the past proves that socialism is risky, and risky investments must be assessed differently. 

It’s all well and good to say that a particular stock doubled just as predicted, but that doesn’t prove the would-be investor made a mistake; we’d have to consider the risk before we could assess the wisdom – or foolishness – of the decision not to invest.

Why then should the poor and downtrodden refuse to vote for socialism – even assuming for the sake of argument that socialism would work to improve their lives? It’s perfectly rational for a person living on the edge to be more risk adverse than the wealth; after all, who’s more likely to starve under socialism (if it fails)? 

Likewise, it’s perfectly rational for a person living on the edge to feel the burdens of failure will fall on them disproportionately; after all, who is more likely to form the firing squads and its victims? Who’s more likely to be in front as well as behind those rifles? Since the vulnerable are more vulnerable, it’s perfectly rational for them to fear socialism more than those who have the resources to protect themselves or flee.

Another more subtle, but important point: who is more likely to have actual personal negative experience with government than the vulnerable? The rich are less likely to have negative experiences with government and, when they do, they interact through superior counsel. The person who lost their car to parking tickets is far, far more likely to mistrust government than the person who can afford to park in a garage or pay their tickets when they don’t; therefore, it’s perfectly rational for the former to mistrust socialism more than the latter.

Note that I haven’t made any fancy assumptions about risk preferences or cognitive biases; rather, I’ve made some simple straightforward assumptions: people who are less able to bear risk are more risk adverse, and people who have suffered losses in a particular investment are less likely to repeat that same investment. Nothing fancy, and – yet – it accounts for all the observed behavior.

Now to be clear, I don’t think that socialists can deliver what they promise, but there’s nothing irrational about the skepticism of the vulnerable. To the contrary, it suggests that they prioritize their own personal experience above academic proclamations, which is the most rational preference imaginable.

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

Sanctions against Russia Are the Lockdowns of 2022

03/08/2022Tho Bishop

Russia's invasion of Ukraine is nearing its second week. Vladimir Putin's military continues its push west, with clear attempts to encircle Kyiv. To date, thankfully, America and its North Atlantic Treaty Organization (NATO) allies have held off pleas from President Volodymyr Zelenskyy to enforce a no-fly zone, which would risk the eruption of a new hot world war. So instead, along with supplying arms, intel, and—potentially—runways and planes to Ukraine, the focus of the West has been economic warfare.

What is not clear is whether the West is prepared to deal with the actual consequences of this approach.

It seems that with every passing day, America and its allies find tools to escalate financial pressure on Putin. What began with targeted sanctions on the Russian leaders and oligarchs has expanded to cutting off Russian banks from SWIFT, broad attacks on Russian industries, and now complete bans on Russian oil and other exports by some—though not all—NATO countries. Moreover, Western corporations have reinforced these policies by indiscriminately banning Russian customers from various services.

This coordinate blanket canceling of Russia is not a tool crafted by the necessity of the situation, but rather a new application of the form of warfare that the West has become the most comfortable with. America's weaponization of the dollar-backed financial system began with the war on terror, utilized against rogue state actors like North Korea, Iran, and Venezuela (the latter two Washington is now seeking assistance with for oil) and is increasingly used against domestic enemies.

Even the Swiss historical tradition of neutrality has failed to hold in an era of financial war.

Unfortunately for the West, Vladimir Putin is a far shrewder adversary than Kim Jong Un or Nick Fuentes. Russia is not only a major energy provider to global—and, in particular, European—markets but is a globally important exporter of wheat, fertilizer, metals, and other strategically important resources. To add to these concerns, the West has become increasingly frustrated by the refusal of other global powers—including India, Brazil, Mexico, and China—to follow their lead.

None of this should be particularly surprising. China's interest in using Russia as a foil against American global hegemony has been clearly illustrated for years—even prior to Trump-era escalation and the covid outbreak. Nations like India, Brazil, and Mexico have seen the rise of nationalist political parties that have echoes Putin's critiques of the globalist West.

Already Putin has demonstrated a willingness to wield his natural resources as a wedge to pull traditionally subversive global actors away from America's leadership. The Russian government has made a list of countries that have been hostile to its military actions and has directed trade to favor countries that have remained neutral. Meanwhile, Russian nationalists have celebrated the West's economic response to the Ukraine invasion, identifying the possibility of shifting consumer trends away from America- and Europe-based companies toward Eurasian products.

As a result, it is precisely the Russians that are the most culturally aligned with the West that are the most penalized by the American response to Putin's actions. This is similar to the way American sanctions against Iran most victimized the most liberal members of their society.

While the West has made vividly clear its sense of moral self-righteousness in imposing this financial warfare, it is less obvious whether there are any planned off-ramps to deal with the shock back home. In America, gas has already hit all-time highs, while market signals indicate that the cost of food, energy, and other vital resources is soon to follow. In response, the Biden White House and its allies have lectured Americans on the virtues of electric vehicles and other forms of "green energy." Not even Tesla's Elon Musk believes this line of logic holds up.

Ultimately any attempts by Western governments to soothe the concerns of their citizens depend upon convincing them that the very same expert class that believed preconflict inflation was "transitory" is intellectually equipped to handle this new conflict. It is uncertain how successful they will be.

The question largely left unasked as firefights continue to play out on Ukrainian streets is what the long-term consequences of the West's financial war on Russia will be. If peace were to break out tomorrow, what would that mean for market actors?

Many of the same leaders that have engaged in an increasingly vicious economic conflict with Russia supported debilitating lockdowns in the face of covid. In the case of the latter, many seemed to act as if the economy could simply be turned on and off with relative ease—like a computer suffering from an operating malfunction. The world is still dealing with the consequences. How long will the scars from this last?

What if Russia and China are serious about undermining America, the dollar, and its subservient allies? What if Putin recognizes that the economy of the debt-saturated West is far weaker than our policy makers believe it is? Is there any reason for Americans to question the judgment of the decision-makers at the Fed or Treasury?

As Austrian economists have long pointed out, it is no coincidence that the century of total war rose at the same time as the era of central banking. By relying on debt and the printing press rather than direct taxation, nations could hide from the public the immediate costs of war. Over time, global powers have turned central banks into weapons themselves. America's abuse of its power has even forced longtime allies to speak out.

In 2020, global powers ignored the economic consequences of lockdowns in order to "boldly" respond to the perceived risks of covid. The damage done was catastrophic, and the impact of the policies was minimal.

In 2022, many of those same global powers are destroying the lives of innocent Russians to signal their virtuous opposition to invasion. Unfortunately, when the dust settles, the underlying damage done to their nations may be far worse.  

Image source:
Getty
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Some Secession Basics

01/13/2022John M. Taylor

"If any State in the Union will declare that it prefers ‘separation’ over ‘union,’ "I have no hesitation in saying, 'let us separate.'" 1

~ Thomas Jefferson

In 1998, Russian Professor Igor Panarin, former KGB analyst, lecturer, and writer tied to Russia’s Foreign Ministry, predicted the economic and moral collapse of these United States, leading to eventual civil war and breakup by 2010. His predictions appeared in The Wall Street Journal and other publications. Of course, to this date, no such separation has come to pass. However, with the lingering 2020 election controversies (thousands of votes mysteriously appearing early on November 4th, hundreds signing sworn affidavits attesting to election fraud and the near impossibility that any of these accusations will ever be examined, questionable voting machines, etc.), various assaults on individual rights, increased centralization of government power, Marxist indoctrination within the education system, and other factors, some in Texas and other States have openly talked about secession.

After considerable bloodshed, the Thirteen Original Colonies seceded from the British Empire. Post-Revolutionary War, Britain and these “United States” signed the 1783 Treaty of Paris, which stated: “His Britannic Majesty acknowledges the said United States, viz., New Hampshire, Massachusetts Bay, Rhode Island and Providence Plantations, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Virginia, North Carolina, South Carolina, and Georgia, to be free, sovereign, and independent States.”2 Furthermore, “In 1781, the original thirteen States entered into a ‘Confederation’, and drew up ‘Articles’, one of which said: ‘Each State retains its sovereignty, freedom and independence, and every power, jurisdiction, and right which is not by this Confederation expressly delegated to the United States.’”3The States have never relinquished their sovereignty.

Events of the 1800s included:

  • In 1803 the New England States threatened secession; the Louisiana Purchase was seen as a dilution of their power. Massachusetts Senator Thomas Pickering stated: “I rather anticipate a new Confederacy exempt from the corrupt influence of the aristocratic Democrats of the South…There will be a separation…”4
  • Largely due to dissatisfaction with the War of 1812, the New England States considered secession in 1814 during the Hartford Convention. Secession sentiments ebbed after American victory was assured.
  • The New England States mulled secession in 1845. “John Quincy Adams and fellow New Englanders so opposed the admission of Texas that they openly urged the withdrawal from the Union.”5 Again, they saw it as a dilution of power.
  • Seven Southern States seceded in 1860-1861. (The remainder seceded after Lincoln’s call for 75,000 troops to invade sovereign States.) They protested the North’s perversion of the U.S. Constitution, e.g., usurpation of Southern rights, slavery disagreements, and the punitive protectionist tariffs that supported Northern industry. The late Charles Adams explained: “When Southerners realized what they were up against with respect to a high tariff and a new Congress and Republican administration, only two courses of action seemed open to them–secession from the Union and a low tariff for the Confederate states.”6

The American Colonies and Southern States both had valid reasons to secede. As members of a voluntary compact, the Southern States had the best case; whereas, the American Colonies were one part of a vast Empire. Virginia, New York, and Rhode Island entered the Union under the proviso they could withdraw if it was in their best interests. From the 1788 Virginia Convention, we have the following: “We the delegates of the people of Virginia, duly elected in pursuance of a recommendation of the General Assembly and now met in Convention, having fully and freely investigated and discussed the proceedings of the Federal convention and being prepared as well as the most mature deliberation hath enabled us to decide thereon, do in the name and in behalf of the People of Virginia declare and make known that the powers granted under the Constitution, being derived from the People of the United States, may be resumed by them whensoever the same shall be perverted to their injury and oppression, and that every power not granted thereby remains with them and at their will.”7 New York and Rhode Island mirrored Virginia’s language: ”their conventions ordained the root principles on which the right was founded: ‘That all power is naturally vested in, and consequently derived from the people’: and ‘That the powers of government may be reassumed by the people whensoever it shall become necessary to their happiness.’”8

Even Lincoln, the extreme nationalist, commented on January 12, 1848: “Any people, anywhere, being inclined and having the power, have the right to rise up and shake off the existing government, and form a new one that suits them better. This is a most valuable, a most sacred right, a right which we hope and believe is to liberate the world.”9

If Panarin’s predictions eventually come to fruition, we must all hope that it is accomplished peacefully. After all, there is nothing more American than secession. 

  • 1. Earl Starbuck, “Was Secession Treason?” [Quoted from an 1816 letter to William H. Crawford], Abbeville Institute Blog, September 18, 2020, at: https://www.abbevilleinstitute.org/was-secession-treason/.
  • 2. John S. Tilley, Facts the Historians Leave Out, Twenty-Second Printing (Nashville, Tennessee: Bill Coats, Ltd., 1991), 25-26.
  • 3. Ibid., 25.
  • 4. Ibid., 34.
  • 5. Ibid.
  • 6. Charles Adams, When in the Course of Human Events--Arguing the Case for Southern Secession, (Lanham, Maryland: Rowman & Littlefield Publishers, Inc., 2000), 81.
    [1] John Remington Graham, A Constitutional History of Secession, (Gretna, Louisiana: Pelican Publishing Company, 2002), 106.
  • 7. John Remington Graham, A Constitutional History of Secession, (Gretna, Louisiana: Pelican Publishing Company, 2002), 106.
  • 8. Ibid.
  • 9. Tilley, 32.
     
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Subjecting the Global Warming Hysteria to Rationality and Logic

12/07/2021Patrick Barron

So much of our time, energy, and resources have been sacrificed to the Global Warming Hysteria without subjecting the issue itself to rationality and logic. I intend to provide a logical step-by-step approach that may be used for evaluating just about any controversial issue, whether it be personal or worldwide such as global warming.

Step One: Is the earth really warming?

The Global Warming Hysteria posits that the earth is warming and that our economies need to be altered to stop it. But there are a lot of assumptions built into that single claim. First of all, is the earth warming? I've been told that it is. Maybe it is so, but there's much more to this assumption. What is the starting point and what is the ending point? How were these points chosen? Was there a steady rise from start to finish? Probably not. So, what caused the ups and downs? According to NASA the earth's temperature has risen point eight of one degree Celsius (.8C) since 1880. Why since 1880? Why not since 1780 or 1280? Or, why not just a decade? Furthermore, why is point eight of one degree Celsius considered to be too much? What is an acceptable amount? One half degree? Zero change? How was this standard chosen? How accurate is it? How can we know the temperature of the entire earth over one hundred and forty years ago with any confidence? Actually, the earth has cooled and warmed several times in the past three hundred and fifty years. The last cooling period began in 1850. Now, isn't that interesting, since NASA's report of a slow warming period began thirty years later in 1880!

Step 2: Would global cooling be preferable to global warming?

We can we assume that the earth's temperature is never static. It's always warming or cooling. Would it be better if the earth were cooling? This seems to be implied in the Global Warming Hysteria; i.e., if we fear the warming periods, we should celebrate the cooling periods. I doubt it. The last ice age ended just shy of twelve thousand years ago, a blip in time for planet earth. Ice covered most of North America to a depth of between one and two miles, hardly conducive to human existence.

Step 3: Might not global warming be a net benefit?

Even if the earth is warming, might not warming be beneficial on net? More favorable climate for food production. Longer ice-free passages for global trade. Fewer resources expended for heating in the shorter winters. Better health due to more favorable climate for enjoying the advantages of the great outdoors. It's really hard to come up with any advantages to global cooling.

Step 4: Is man a major contributor to global warming?

Assuming that malign global warming does exist, is man a major contributor? If not, end of inquiry. If so, how so? The earth has warmed and cooled over the previous several hundred years. Man could not have been a major contributor to these events, so there must have been some other phenomenon causing them. Perhaps that phenomenon, even if we can't identify it, is the major contributor to global warming now. The key point is that we must identify the man-made significant cause of global warming--if it's really happening, of course--before we can ask the next question.

Step 5: Would the mitigation action produce a net benefit?

Assuming that we have gotten this far--i.e., the earth is warming; warming is bad, and man is the cause-- what actions should be taken that will not cause even greater harm than simply letting man continue doing what he's doing? Trashing economies around the world by restricting the benefits of fossil fuels would inflict horrendous hardship on billions of people. Might it not be wiser to adapt to global warming than to revert to a more primitive economy that cannot support existing human life on earth at its current level of comfort and with the promise of even more comfort for billions more in the future? By what criteria do we assume that stopping or slowing global wealth creation is a net good?

Conclusion: The hidden assumptions to the Global Warming Hysteria need to be challenged

The Global Warming Hysteria has been subjected to very little serious, logical, and rational inquiry. The hidden assumptions to the movement need to be challenged. It is incumbent on those who wish to inflict great harm on worldwide economies to justify their proposed actions. World leaders need not act until they have done so.

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

Swiss National Bank Fights Climate Change

11/18/2021Robert Aro

The latest quarterly filing statement of the Swiss National Bank (SNB) has been issued. Switzerland’s publicly traded central bank had a decrease in the value of its US stock holdings by around $5 billion in Q3 of 2021, ending the quarter with a value of $157 billion. SNB currently has a profit of over $40 billion for the 9 months ended in the year. Perhaps subjective, it looks like a banner year for an entity who turns a profit through currency manipulation.

As for other affairs the central bank has been concerned with since last quarter; how about climate change?

Several weeks ago the question was asked to board member Andrea Maechler, whether the bank should use its money to “influence companies” linked to climate change initiatives. According to Reuters, the board member responded that it wasn’t the SNB’s job:

We don't have the goal to make the world greener. That's not our mandate.

A bold statement, and something one would be hard pressed to hear coming from a central banker on this side of the Atlantic.

But then the following week happened. On November 3 Reuters reports:

The Swiss National Bank reiterated its commitment to tackling climate change on Wednesday, saying it would take environmental factors into consideration in its macroeconomic modeling and monetary policy analysis.

The SNB bought “green bonds and excluded companies that systemically cause severe environmental damage.” Mining companies are also excluded from their purchases, which is ironic since green technology like electric vehicles rely heavily on the mining industry.

Despite Ms. Maechler comment, the SNB is using some of its power to invest in the green economy. To what ends remains anyone’s guess.

She was again in the news last week, reiterating their ongoing currency intervention strategy, also to ends which no one knows:

The reality is, we continue to have a safe-haven currency… It is something that we do continue to monitor, and we will continue to do so.

Ensuring the currency doesn’t become too strong is the stated reason behind SNB’s money creation scheme, one of the outcomes being the buying and selling of US stocks.

There are almost 200 national currencies in the world. If history is any indication of the past, and if one can reasonably predict the future, it's likely there will only be a handful of safe-haven currencies in the world at any given time. Even if all national currencies continue to decline into inflationary oblivion, there will always be the best of the worst currencies. The US dollar, the Japanese yen and Swiss franc are a few of a handful of such winners.

For all the concern over the risk of the franc becoming too strong, they should be concerned with the franc becoming too weak. Undoubtedly, the SNB will never want to lose the franc’s status as a safe-haven currency. So they're looking to find a level where the franc is weaker than some, or all other safe-haven currencies, but strong enough to maintain safe-currency status.

Like central bank investments into the green economy, no measurement, calculation nor logic will suffice to explain just how weak the franc should be. But with just a little more money creation, maybe one day, their objective can be met.

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

Social Obligations and Entrepreneurship

11/15/2021Lipton Matthews

In an era where entrepreneurs feel compelled to be agents of social change displaying deep commitments to social causes can yield immense admiration. Therefore, Corporate Social Responsibility (CSR) has become a seminal topic in the arsenal of entrepreneurship research. Often researchers divulge the pros and cons of CSR, though few consider the impacts of social obligations on entrepreneurship at the community level.

Large businesses are resourced to fund social activities, however prioritizing social obligations pertaining to family and community can hamper business growth. Unlike the narrative of CSR, social obligations are embedded in micro-structures operating at the family or communal level. The former is a call for companies to curate transcendental goals that comply with socially progressive causes. Yet there is an appreciation that companies can only fund social causes when they are prosperous.

Although some dispute the efficacy of CSR at least advocates accept that businesses are better situated to accommodate social demands when they are financially successful. However, the norm of social obligation in a communal setting is a different affair. In the context of social obligation, responsibilities are foisted on entrepreneurs because of the perception of prosperity. Social obligations are more relevant in collectivist societies where people are pressured to satisfy the interests of the group to the detriment of individual achievement.

Shedding light on the norm of social obligation can plausibly explain variations in high-growth entrepreneurship across regions. The potential for growth is stifled when a small business owner is expected to cover the expenses of family members and friends, due to the speculation that “he is rich.” Unfortunately, for the entrepreneur dismissing the solicitations of associates could result in him being depicted as selfish, so to avert this image, he may indulgence costly demands.

Using Africa as a case study researchers illuminate the adverse effects of committing to social obligations: “The kinship system in Africa exerts pressure on individuals to provide for the needs and obligations of other kin members. In East Africa, demands from one’s social relations, particularly kin, may include financial contributions to community projects, paying school fees or medical expenses, and providing for financial expenses of social events like weddings and dowry payment.” People usually comply with these burdensome requests to prevent social exclusion: “Because of fear of consequences of non-conformity to the kinship normative value “ “sharing without reckoning,” for instance losing legitimacy, status, and a following, entrepreneurs are forced to comply with demands from their social relations.”

Such developments exist because of the mistaken belief prevalent in some quarters that entrepreneurship ought to serve a social agenda. Similar beliefs are less pervasive in individualistic cultures, where people value autonomy, achievement, and self-actualization than group solidarity. Since individualistic societies, emphasize personal achievements entrepreneurs in these societies are more likely to perceive entrepreneurship as a tool to attain success by creating value.

In contrast, the constraints of social obligations levied on small entrepreneurs in a collectivist setting diverts attention from business expansion when scarce resources are directed to social obligations. By nature, the process of entrepreneurship aims to procure value for society. Hence jobs and the capacity to assist family members are merely the consequences of producing value. When one becomes an enabler of social requests, he is no longer managing a business, but existing to serve a social agenda.

Accordingly, Khayesi and George (2011) argue that high levels of communal orientation increase the acquisition of resources due to compliance with unreasonable social obligations and demands from kinship ties. Another recurring problem in these settings is that entrepreneurs might feel obliged to employ family members as a noble gesture. Yet, as research shows this can be a great error considering that the distribution of skills possessed by relatives could be narrow thereby limiting the scope of talent available for business expansion.

Moreover, neither is it cheap to maintain a network of dependents. In fact, researchers describe social payments to dependents as a solidarity tax, since failure to comply with demands will result in the isolation of entrepreneurs. Furthermore, beneficiaries of the entrepreneur’s benevolence often develop an entitled mindset motivating them to believe that the entrepreneur is permanently obligated to service their desires. This automatically slows growth by reducing resources available for capital expansion. However, in the long-term, beneficiaries are also victims.

By succumbing to their requests, the entrepreneur has ensured that they remain mendicants and this could deter them from acquiring the skills required to compete in an economy. On a broader scale, the negativities associated with excessive communal involvement often lead to declining profitability, negative firm growth, and ultimately financial demise. In hindsight, it is evident that unnecessary social obligations also impede the actualization of other businesses that could have been created with greater capital. Similarly, expending resources on social projects would have also depleted investments available for retooling.

However, the most pernicious effect of this arrangement is the perpetuation of the narrative that entrepreneurs exist to serve a social agenda. Without altering cognitive styles future generations will mature to embark on similar ventures, even to the extent of prioritizing social obligations before job performance.

To remedy the problem policymakers in developing countries where the situation is most dire ought to focus on reorienting cognitive perceptions of entrepreneurship. Entrepreneurship must be conceptualized as a medium to create value and not a tool to pursue social agendas.

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

Some Questions about Income Tax Audits

11/09/2021George Reisman

An income tax audit is essentially a search. Why, consistent with the Fourth Amendment to the US Constitution, doesn’t it require a search warrant signed by a judge?

Since income-tax audits sometimes lead to criminal prosecutions and jail sentences, why is it not a requirement that anyone whom the IRS wishes to audit first be given a Miranda warning, with its notification of the right to remain silent and to have an attorney present?

Why isn’t the Fifth Amendment to the US Constitution and its protection against self-incrimination a routine basis for the refusal to submit to an audit, thus requiring the IRS to make its cases without the cooperation of citizens forced to help in their own incrimination?

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