Power & Market
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.
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.
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.
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.
Atilla Sulker has posted a new interview with Lew Rockwell at LewRockwell.com. My favoire part:
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.
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.
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.
The Free Society. By Laurence M. Vance. Vance Publications, 2018. Xii + 468 pages.
Laurence Vance is best known for his work as a specialist on the King James translation of the Bible, but he is also an outstanding writer on libertarian issues. In The Free Society, he has collected a large number of his articles for the period 2005-2017, almost all of which first appeared first in LewRockwell.com or the Future of Freedom Foundation. The articles are well worth reading, as they display the author’s sharp mind and consistent outlook.
Vance, who is a conservative Christian, maintains that the Bible supports a libertarian viewpoint. That opinion puts him at odds with those religious believers who wish to use government to enforce personal morals, but Vance is undaunted: “So why do I think that religion---in this case the Christian religion—is compatible with libertarianism? Let me give you two verses of Scripture, one from the Old Testament and one from the New, since Christians accept the authority of both: Proverbs 3:30--- ‘Strive not with a man without cause, if hath done thee no harm.’ 1 Peter 4:15----But let none of you suffer as a murderer, or as a thief, or as an evildoer, or as a busybody in other men’s matters.’ These verses, my friends, embody the essence of libertarianism. Don’t kill anyone, don’t take what’s not yours, don’t do anything wrong, don’t stick your nose into someone else’s business, and don’t bother anyone if he hasn’t bothered you.” (p.20)
Libertarianism, Vance, explains, should be taken in a strict way. The welfare state should be rejected, for example, not mainly because it is economically inefficient but because to take from some to give to others violates people’s rights. “Of course, I oppose welfare payments! It is immoral to take from those who work and give it to those who don’t---even when the government does it. All charity should be private and voluntary.” (p.39)
One final illustration of Vance’s uncompromising adherence libertarian principle: “Since no parent in the United States is forced to send his child to a government school, it is a myth that we need ‘school choice’(meaning vouchers) so that children can get out of an unsafe, failing government school.” (p.85)
Vance is a consistently illuminating writer, and I highly recommend his work.
Tonight Mises Senior Fellow Bob Murphy is debating George Selgin of Cato's Center for Monetary and Financial Alternatives on the topic of fractional reserve banking. The host is Gene Epstein's Soho Forum, an excellent monthly debate series based in New York City.
Greater London and New York City have similar population sizes at around 8.6 million. And now, for the first time, homicides in London are on a par with those in New York City.
- In January, the Met investigated eight murders whereas the NYPD looked into 18 killings
- By February, the NYPD's figures had dropped to 11, while London's rose to 15
- In March, 22 murders were investigated in London while 21 inquiries were launched in New York
These numbers, notably, exclude London homicides defined as resulting from "terrorism" — although the US does not exclude "terrorism" from its homicide counts.
Officials in London, in turn have blamed "knife crime" and even blame social media:
Britain's most senior police officer recently said social media was partially to blame for the soaring rate of knife crime in the UK.
Met Commissioner Cressida Dick said websites and mobile phone applications such as YouTube, Snapchat and Instagram were partially to blame for the bloodshed.
The current orthodoxy around homicides, of course, dictates that this should never happen. The current assumption underlying gun control laws is that gun control brings lower homicide rates.
And yet, By Western European standards, guns are easy to come by in New York City — although New York is quite restrictive by US standards.
If homicide rates continue to grow substantially, London could end up subject to the sort of crime problem not seen in the UK in more than a century. We we've discussed in the past, the UK has been a region with low crime going back more than a century. The nation's low homicide rates pre-date the introduction of gun control laws in the 1920s.
Nevertheless, officials have now been conditioned to think of all crime in terms of being caused by a lack of weapons prohibition. Hence, we hear about "knife crime" and what an epidemic it is. We even occasionally hear about calls for banning kitchen knives in the UK.
Growing crime in London also has the potential to significantly affect nationwide statistics since a sizable 13 percent of the UK population lives in Greater London.
Homicides statistics in the US have already been similarly affected since increases in crime in only a handful of cities have been driving increases in homicide rates in recent years.
As with the US, it is likely that most of the UK outside certain areas of certain cities remains remarkably safe, in spite of recent upward trends in London.