Classical Liberalism versus Anarchocapitalism

According to Jesus Huerta de Soto (in his essay "Classical Liberalism versus Anarchocapitalism"), the great flaw in the Founding Fathers' thinking was "their ideal is theoretically impossible, as it contains the seed of its own destruction, precisely to the extent that it includes the necessary existence of a state (even a minimal one), understood as the sole agent of institutional coercion."

When you consider how the Founding Fathers viewed the differences between republics and democracies, you can see the flaw in their thinking. For example:

"The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended" - James Madison

As long as people view the government as some anomolous "other" entity outside of themselves, then any government is doomed to failure, regardless of whether it is a monarchy or a democracy or a representative republic.

Madison was right about one thing: The larger the government, the less connected to it will be the people under it. As long as people feel no responsibility for their own government, they will inevitably seek to use government towards their own ends. We see this today with the proliferation of special interests, ranging from the lowest welfare recipient to the highest CEO on Wall Street, with all of them seeking to get their cut from our government.

Another example:

"Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide" - John Adams

What Adams forgets is how the Ancient Roman republic devolved into dictatorship. Representation did not protect the people from the follies of poor representative leadership (which handed over dictatorial powers to Julius Caesar, and then Augustus Caesar), leading to the Empire, and the inevitable fall of Rome.

Jesus Huerta de Soto's essay does get the part right about how no government has ever succeeded over the long term, and the Founding Fathers were wrong to assume they could do what had never been done before. However, de Soto does fail to deal with one problem: other governments.

As de Soto describes it, anarchocapitalism does sound like a great idea, until you start to consider: How do you protect it from other ideologies, and more specifically other governments? Inevitably, some dictatorship will come along and use force to enslave an anarchocapitalist "government".

Unless anarchocapitalists are willing to live like the people in Afghanistan, which is really the only comparable system to what they propose that has actually shown an ability to defend itself along with an ability to maintain their political/cultural system, then anarchocapitalism is doomed to failure. The only difference will be that anarchocapitalism's failure will come from outside of itself.

No beef in global warming stupidity

From the timesonline.com:

People will need to turn vegetarian if the world is to conquer climate change, according to a leading authority on global warming.

In an interview with The Times, Lord Stern of Brentford said: “Meat is a wasteful use of water and creates a lot of greenhouse gases. It puts enormous pressure on the world’s resources. A vegetarian diet is better.”

Let us assume for the moment that Lord Stern is correct, and we follow his absurd advice.

Everyone stops eating meat from cows and chickens and other domesticated animals. Of course, based on Lord Stern's argument about these animals using too much water and creating greenhouse gases, I assume we will be discontinuing the consumption of milk and other dairy products, since their continued consumption would create no net reduction in water usage or greenhouse gases. So no more cheese, milk, eggs, etc.

After we go on our strictly vegetarian diet, what will become of all these farm animals? If we release them into the wild, most of them will die, although some might survive, continuing to use water and create greenhouse gases. No, we will have to slaughter all of them. Who knows which cow fart might lead to the end of the world as we know it?

Naturally, unemployment will rise as all dairy workers will be out of a job. On the bright side, Global Warming will be creating more arable land in currently cold climates, so there will be plenty of farming jobs available. We will need them too, since we will all be consuming more vegetation. However, if Lord Stern's plan works, even this avenue for employment might be closed. This also means there will be less food available for the world's current population. But the deaths of millions is fine, since they will also be creating fewer greenhouse gases. It might even solve the unemployment problem!

When all is said and done, assuming Lord Stern is correct, we will save the planet from Global Warming, but have fewer people and jobs, and all dairy animals will be extinct.

This reminds me of the old Sam Cooke song:

Don't know much about history,
don't know much biology.
Don't know much about a science book,
don't know much about the french I took.
But I do know that I love you,
and I know that if you love me, too,
what a wonderful world this would be.

Global Warmers like Lord Stern definitely "don't know much", but will they still be calling it a "wonderful world" after they get done with it?

Quote of the Day: Global Warming Edition

"We cannot predict weather accurately for more than a week, why should we allow the same predictions to be accepted for all of the future? The answer is we should not." - George Giles (from lewrockwell.com)

The perfect description of our government's current efforts:

"Things will get better-despite our efforts to improve them." - Will Rogers

Toss out the bums

It is time to toss out the bums. No, I don't mean our elected representatives, or the president. Rather, I mean the PEOPLE responsible for electing these morons and looters.

It is time to toss out the voters.

Before you say I can't do that, shall I remind you there is no such thing as a "right to vote"? While there are laws which prevent discrimination in voting privileges, there is no actual "right to vote" anywhere in the Constitution. Feel free to prove me wrong, because you can't.

So back to the idea of tossing out the voters. This is easily done: just ban everyone from voting. This also has the side benefit of eliminating the whining every four years that someone was denied their voting rights, since no one will be able to vote!

As Clint Eastwood would say, "I know what you're thinking...": Who would run the country? Not that it matters to any of you, since you ARE the people responsible for the mess we are in, but the exact same people who run the country now. You didn't seem to care when our elected officials were taking bribes (in the form of campaign donations) to support a financial system that made many people wealthy (not you, of course), so why would you care if they remain in power? Let's remove the pretense that any of our elected officials will actually lose in the next election, because the overwhelming majority of them won't lose. Re-election for incumbant legislators in in the 90th percentile of probability.

But here is the best part: If we make our current Congress and President permanent, they won't have to give us health care, and they can go about the business of actually attempting to fix what is wrong with this country, instead of handing out free candy like health care to try and make their jobs permanent. You didn't honestly think they were planning to give us health care out of the goodness of their hearts, did you?

No wonder you voted for these morons and looters...

H1N1: So what?

Here is the story from FoxNews.com:

CDC: 87 Children Dead From H1N1

Federal health officials said Friday that 11 more children have died in the past week, bringing the total up to 87.

The Centers for Disease Control and Prevention says about half of the child deaths since September have been among teenagers.

According to the same Centers for Disease Control, in 2005, 1,377 children died from cancer.

In order for H1N1 to even get close to the number of children killed by cancer 4 years ago, H1N1 would have to kill approximately 107 children every week for the rest of the year.

Even then, you are only talking about roughly 0.00045% of the U.S. population.

While I sympathize with the parents who have lost their children to H1N1, from a macro perspective, this news story is insignificant.

Move along people, nothing to see here...

The Real Solution to Health Care Reform

Economics reminds us of one simple rule regarding any good or service: If you offer people something they want at a cost of less than it is actually perceived to be worth, they will acquire more of it than they need. Under the rules of supply and demand, the cost is out of alignment, forcing the demand to exceed the supply, which will lead to insufficient supply to meet the demand. In a normal free market situation, the price would increase to pay for the needed increase in supply to meet the demand.

Unfortunately, when the price is set by the government, there is no mechanism to increase the supply without subsidization by the government.

On the issue of health care, there is a way to avoid the whole supply and demand problem which universal health care causes: Only provide those medical procedures and drugs which nobody wants. In other words, provide catastrophic health care only.

No one is going to use too much chemotherapy for their cancer treatments. No diabetic is going to use more insulin than they need (at least not intentionally). No one with a slipped disk in their back will be actively trying to acquire too many spinal surgeries to correct the condition. And people with heart conditions won't be begging for that extra triple bypass surgery.

On the other hand, do we need to pay for abortions? How about every case of the sniffles?

We need to draw a hard line, and let the health insurers take care of the little things, like preventive medicine.

Out sick

If my blogging seems a little light lately, there is a good reason: I am suffering from a sinus infection. There is nothing like sinus congestion to make my mind even more muddled than it already is.

Sorry folks. No deep thoughts from me for awhile. Hopefully, I will be back in action later this week or early next week.

One last Helen Keller joke

What did Helen Keller say when she found out they put her statue in the U.S. Capital? Nothing, she's dead!

Sorry, I couldn't resist.

The Economic World War

With the growing din of rumors of many countries planning to end the use of the dollar as the world's trade currency, what are the implications?

If this were to happen, expect trillions of dollars to return to America. While U.S. exporters will benefit from the weakened dollar, inflation will increase by a huge amount.

But the curious aspect in this is China's involvement. According to the US-China Business Council, China exported $252 billion in goods to the U.S. in 2008. Overall, China exported $1.4 trillion to all countries. By letting the U.S. dollar fail, China would be risking up to 18% of it's export economy. While it would be unrealistic to expect U.S. imports from China to drop to zero, it would undoubtedly cause a drop in China's export business here.

Here is where it gets interesting. If China maintains their currency peg to the dollar, they could make their goods even cheaper on the world market, and still maintain their export trade with the U.S. But then China would be in the driver's seat economically, allowing them to de-peg their currency from the dollar slowly, allowing them to grow their economy away from a reliance on the U.S. export business. Chinese goods will grow in cost at a rate close to our own inflation rate.

In case you have not already guessed it, the U.S. economy will be a huge mess. While our export businesses will thrive, import businesses will dry up. The price of gas will shoot up, hurting our economy in multiple ways, with the most obvious being the increased cost of goods and services.

Let us not forget, the Federal Reserve will have it's hands tied by our heavy government debt burden. If they increase rates, they will also increase the government's cost of financing our debt, thereby digging our debt hole deeper. If they don't increase rates, inflation will soar.

Technically speaking, the U.S. will be in the middle of a perfect economic storm: heavy government debt with reduced tax revenue, soaring inflation, and weakened domestic businesses leaving unemployment high (and possibly growing). If the Democrats manage to pass universal health care, they will be forced into heavy rationing of it long before they had hoped. With Social Security and Medicare debts coming due as more Baby Boomers retire (or are forced into retirement by unemployment), our government debt burden will increase even more.

In summary, we are screwed if the dollar is removed as the world's trade currency.

Random NFL Thoughts

I recently moved, so this was the first weekend of this NFL season that I got to sit down and watch some games. Some random thoughts about what I saw:

1. Bears QB Jay Cutler is awesome. He may not be Mr. Charisma, but the guy knows how to run an offense. You can watch him reading the defense, looking off receivers, and then gunning the ball where it needs to be. Cutler has the brains and the natural ability to be a great NFL quarterback for years to come. The Bears are lucky to have him.

2. The Oakland Raiders have HUGE problems. Their defense might be good enough for them to win some games, IF they had an offense. They have no passing game to speak of, which leaves their running game at the mercy of opposing defenses. It is going to be an ugly year for Raider fans.

3. The Jets defense is one of the best I have seen since the Ravens in 2000. If their offense was even mediocre, they would be dominant. Unfortunately, QB Mark Sanchez is a work in progress.

4. The Saints running game will end any Super Bowl hopes they have eventually, although the quality of the NFC might allow the Saints to slip into the Super Bowl, where they will get dispatched.

An Ideal America

I am stealing the following post in it's entirety from Mises.org, because it reflects my own beliefs perfectly. It was originally written by Leonard Read in November, 1954:

Every person should be free
-to pursue his ambition to the full extent of his abilities, regardless of race or creed or family background.

-to associate with whom he pleases for any reason he pleases, even if someone else thinks it's a stupid reason.

-to worship God in his own way, even if it isn't "orthodox."

-to choose his own trade and to apply for any job he wants — and to quit his job if he doesn't like it or if he gets a better offer.

-to go into business for himself, be his own boss, and set his own hours of work — even if it's only three hours a week.

-to use his honestly acquired property or savings in his own way — spend it foolishly, invest it wisely, or even give it away.

-to offer his services or products for sale on his own terms, even if he loses money on the deal.

-to buy or not to buy any service or product offered for sale, even if the refusal displeases the seller.

-to disagree with any other person, even when the majority is on the side of the other person.

-to study and learn whatever strikes his fancy, as long as it seems to him worth the cost and effort of studying and learning it.

-to do as he pleases in general, as long as he doesn't infringe the equal right and opportunity of every other person to do as he pleases.

The above, in a nutshell, is the way of life that the libertarian philosophy commends.

It is the way of individual liberty, of the free market, of private property, of government limited to securing these rights equally for all.

Leonard E. Read

After reading that, ask yourself: Is this the America in which I live? Is this the America in which I WANT to live?

In case you doubt it, the America about which Read is talking is NOT the world sought by most Republicans or any Democrats. Keep this in mind the next time you vote for a Republican or Democrat just so you don't "waste your vote" on a third party. Is it more important to vote for a winner, or vote for someone who espouses what you believe?

Ken Lewis cashes out

As a former employee of Bank of America, I have a few thoughts on the news of CEO Ken Lewis's retirement.

First, when I worked there, Lewis seemed to be a reasonable CEO. He always seemed to do what was best for Bank of America, from fostering internal growth after the Hugh McColl era of heavy acquisitions (including the NationsBank/Bank of America merger), to eventually doing some good acquisitions of his own, including MBNA and Fleet.

But last year was the beginning of the end for Lewis. First there was the head-scratching acquisition of Countrywide. Why acquire a subprime mortgage lender in the middle of the mortgage market's meltdown?

Then there was the Merrill Lynch acquisition. While I don't entirely blame Lewis for that fiasco, he should have been more upfront with investors. If he had doubts, and made them public, it would have put pressure on Ben Bernanke to not take punitive actions against Bank of America. Instead, Lewis became spineless at a time when Bank of America needed strong leadership.

Frankly, I don't have any sympathy for Lewis.

As for Lewis's successor, the Board of Directors is allegedly looking internally for a successor. Of the names mentioned so far, I cannot really speak to them, as I don't have any real experience working for any of them there, nor have I heard anything that would lead me to a reasonable speculation on their chances of success.

However, I would throw one name into the mix: Floyd Robinson, president of Bank of America's consumer real estate and insurance services division. I worked under him when he was involved with marine and recreational vehicle dealer financing. While he was meticulous, arguably to an extreme, he got results. Generally speaking, Robinson was the kind of executive you would bring in when you needed to make an organization more efficient and profitable.

While he might not be popular with the shareholders (he is NOT charismatic), I personally would feel safer as a shareholder if they elevated Robinson to CEO. He would clean up Bank of America and make them leaner and more profitable. That said, I doubt he will get it, although I would buy stock in Bank of America if he did.