Wednesday, October 15, 2008

If anyone wants to know why it's been eons since I last posted - I've been cheating on my blog.

I have been writing on the Irish Liberty Forum. Anyone in Ireland or Europe is welcome to read it.

I will get back to everyone with my bizzare views about the world soon enough.


Tuesday, September 30, 2008

Who Could Have Possibly Predicted A Collapse?

Murray Rothbard, that's who.

In the 1991 preface to his Case for a 100 Percent Gold Dollar, Rothbard predicted the collapse of the United States banking system, and foretold with incredible accuracy the situation the American government currently finds itself in:

"The United States authorities would then be faced with two stark choices. One would be to allow the entire banking system to collapse, along with virtually all the deposits and depositors in that system. Since, given the mind-set of American politicians, and their evident philosophy of “too big to fail,” it is certain that they would be forced to embrace the second alternative: massive, hyper-inflationary printing of enough cash to pay off all the bank liabilities. The redeposit of such cash in the banking system would bring about an immediate runaway inflation and a massive flight from the dollar."

The world is full of ironies. It appears that by rejecting the ironically-named Emergency Economic Stabilisation Act, the US Congress has prevented a catastrophe of epic proportions. At least for now.

Perhaps it's America that's doomed?

Friday, September 19, 2008

GDP: A Load of Rubbish (Part 1.1)

Bobby Kennedy said it better than I ever could:

Monday, September 1, 2008

GDP: A Load Of Rubbish (Part 1)

Look inside any economics textbook and it will present you with a formula. It may look something like this:

GDP = Y = C + I + G + X - M

Gross Domestic Output = Consumption + Investment + Government Spending + Exports - Imports

However this metric, when used as an indicator of a country's 'well-being' is essentially flawed. Let's see why:

C (Consumption)

This is the aggeregate of all private spending in the economy. Everything from food to clothes to pianos to computers. However the figure soesn't include the various supply-constraining measures that the government imposes it. The Common Agricultural Policy for example has the effect of raising food prices for everybody. This will show up as an increase in consumption spending, when in fact the poorest people suffer the most from it. Any government licensing fees also limit supply, and hence artificially push up consumption.

Also calculated within 'consumption' is the money spent on combatting government violence. Lawyers and accountants are two professions that come to mind. Governments always make the legal system and the tax code more complicated, thereby increasing demand for the services of lawyers and accounants. This expenditure does not add any wealth to a nation, it merely keeps the money flowing from person to person.

That's what consumption calculates. But what doesn't it calculate? Well, all services rendered for free or as barter transactions do not show up in GDP. If I paint your fence and you mow my lawn, we both receive a benefit but it does not add to GDP.

Finally Black Market activities are not included in consumption data. Money traded for illicit goods like guns and drugs, and illicit services like prostitution and gypsy cab rides, does not add to the GDP figure.

I (Investment)

This is a fairly good indicator in GDP. However in the GDP formula, 'investment' refers to 'gross investment', rather than 'net investment'. It does not calculate the effects of depreciation of the capital stock. In reality we should be using 'net investment' as our indicator and hence 'net domestic product' (NDP) as the gauge of a nation's prosperity.

G (Government Spending)

Government spending is the aggregate sum of all spending on goods and services by the government. It does not include transfer payments, which are just transactions where money is taken from one individual and given to another.

The assumption that all government expenditure is good for the economy is ludicrous. Many occupations funded by the government would not survive in the free market. Governments are ripe targets for rent seeking activity, whereby powerful interest groups lobby the government for more money without increasing their productivity in return. Government jobs are seen as cushy, insulated and uncompetitive.

Lastly, as governments collect their money involuntarily, there are always problems when it comes to the greater economy. If the government gets its money from taxes, it disincentivises work and investment. If it gets its money from the printing press, it causes inflation. If it raises its money from creating debt, it distorts the interest rate.

(X - M) (Exports minus Imports)

This is also known as the 'trade balance'. The best critique of this measure is, for me, Milton Friedman's. In Free to Choose, Friedman wrote:

"Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports...

...In your private household, you would surely prefer to pay less for more rather than the other way around, yet that would be termed an "unfavorable balance of payments" in foreign trade." (Source)



GDP is a broken measure. The only reason it stays in use as an indicator is because every nation on earth uses the same broken indicator.

In Part II, I shall examine how GDP is susceptible to the Broken Window Fallacy , paying close attention to the Great Depression. In Part III, I will discuss some alternative measures of national well being.

Who Really Owns Their TV?

Many European countries have TV licencing laws.

Here in Ireland, the price of owning a colour television set is €160 per annum. This money is then used by the government to fund the great television programmes that probably would not survive without the warm woolen blanket of government.

But that's not the point I'm trying to make here. My point is about ownership.

In econospeak, ownership is defined as full control of the resource in question. Ownership means not having to pay anybody for the privilige of using a resource. This is contrasted with renting, where a fee is charged periodically for the use of the resource. Failure to pay rent may result in fines or imprisonment.

By this metric, economically speaking, nobody in Ireland, Britain, France and
many other European countries owns a television. We perpetually rent them from our governments.

Friday, August 29, 2008

A Tale of Two Libertarian Zions

I love Micronations.

From the BjornSocialist Republic, which comprises of a rock, to the Crown Dependancy of Forvik, which recently split from the UK and EU...they are all great. All micronations have a libertarian bent, and are ripe for study.

Two micronations fascinate me the most, and they happen to be the most famous ones: Sealand and Christiania.

Principality of Sealand, located off the coast of Sussex, England, is a former military installation that has been siezed by former British Major Paddy Roy Bates. It survived a military coup in 1978 and a disasterous fire. However it has also succeeded in recieving several de facto recognitions of its sovereignty. For instance, the Netherlands and Germany sent diplomats to Sealand to negotiate the release of their citizens after the coup was quelled.

Christiania, a small neighbourhood of Copenhagen is a semi-autonomous, self-governing community with anarcho-communist leanings. The community transformed a disused military barracks into a flurishing community - despite several disputes with the State of Denmark.

Christiania is built on the principle that "every individual has a responsibility for his/her own life and his/her home". Despite its obvious leftist leanings, Christiania has retained many of the property rights intrinsic to the capitalist world.

Now...both micronations are aspiring not to demolish the state, but to create a new one. Sealand is locked in a struggle to be recognised as a sovereign entity. Christiania has repelled many State invasions by the Danish police, confirming the rule that the group who governs is the group that is better at using force and fraud.

The problem with micronations is that they are, quite frankly, too small to be anything other than a running gag for larger nations. Take Forvik for instance. No income tax. Great. No corporation tax. Wonderful. So where are all the eager industrialists and entrepreneurs?

Also, libertarian zions are self-defeating. They still have to rely on the State (and other States) and all its peripheries to survive. If these free societies bore the full brunt of their secession they would hardly last a day.

Free societies would also have to pay taxes on whatever goods and services they use. They are still strenghening the State.

So Libertarian Zionism isn't the way to go, at least, for now.

Tuesday, August 26, 2008

Here's One I Prepared Earlier

I made this myself on a dreary afternoon. It's a spoof of those American "this is your brain on drugs" commercials. I think it's awesome!

Saturday, August 23, 2008

Usain Bolt, Equality, Mises and Socialism

Ludwig von Mises begins his epic Human Action with the statement: "humans act".

All action has a meaning and a purpose.

Elsewhere, Mises states that humans aim to exchange their current predicament for a more favourable one.

So through Action, we constantly try to make ourselves better off.

This is why Usain Bolt trained for years - he was looking for a way out of his impoverished Jamaica. He has won 3 gold medals in the process. This is why children in the
favelas of Brazil emulate Ronaldinho - they are trying to escape from their poverty.

Many socialists think that "material equality" is a universally desired goal. But they don't realise this concept is fundamentally flawed.

If we are all to have "equal material wealth", then what incentive is there to practice, to invest in education, to acquire skills, to work. Why should we
act at all? The productive people don't work as the fruits of their labour will be taken away from them. The poor don't bother working either, as the government will provide for them.

The result? We are all equal. Equally poor. Everyone lives in ghettoes under socialism. The ideology can only collapse in on itself.

Friday, August 22, 2008

Spotlight on Discrimination

The other day I tried to join a female-only gymnasium. I was refused permission to use their facilities. I suspect my member got in the way of me becoming a member. I tried to blow off steam at a gay nightclub, but I was refused entry for not being a homosexual. Annoyed, I strolled to the nearby pub where I was refused admittance because I was under the age of 22. I argued with the bouncer until he let me in. When inside I tried to chat up this hot black girl. She refused my advances, claiming "she only goes out with black guys".

Over the course of my day I could easily be discriminated on the basis of my gender, sexuality, age and colour. The question is: should this be illegal?

My answer is: no. Here's why...

First off, 'discimination' is not a dirty word. 'Discrimination' in the economic sense merely means 'to choose between rival alternatives'. There is nothing bad about discrimination
per se. We do it all the time. Walter Block points this out in his pithy book Defending the Undefendable.

Secondly, discrimination of any kind is not a 'crime'. It is not a violation of person, property or a breach of contract. In fact,
discrimination is merely a refusal to trade with certain people.

Thirdly, the right not to be discriminated against does not exist. The only right that does exist is the right to own your person and your property. That is, property rights. I don't have the right to hang around people who don't like my opinions, my sexuality or my colour.

Let's say, hypothetically that I own a pub. Only people that I select can enter my pub. If someone who I do not approve enters my establishment they are violating my property rights - trespassing.

I also hate redheaded people, or as I call 'em, "carrot heads".

I constantly refuse redheaded people into my establishment. And that's fine. Nobody has a right to be in my pub unless I say so. Frequenting my pub is a
privilige not a right. This is the confusion in which many of us get caught up.

Let's further analyse the scenario. Refusing one redhead will have eaten into my profits for the evening. Redheads might tell their friends to not drink at my pub. I may be labelled the town racist. A label that's difficult to shake off. My discrimination might cost me my pub.

Furthermore, in a society where everyone is allowed to own property, there is nothing stopping redheads opening their own redhead pubs where they can drink all the
ginger beer they like.

In econospeak, they can
capture the redhead drinkers market. Unless the government creates barriers to market entry, through say, strict licencing laws or a restriction to own property.

This is how the market acts as a wonderful anti-racism mechanism.

Finally, anti-discrimination laws are enforced arbitrarily. Consider these three scenarios:

1. I choose to date within my own race, because it is superior.
2. I choose not to shop in Asian food shops because they are an inferior race.
3. I refuse to serve black people in my store because I think they are inferior.

In all scenarios I am discriminating on the basis of race, that is, I am a racist. But only in the last scenario am I branded a criminal.

This is why we should adopt a strange idea. Perhaps we should change the definition of 'racism' to 'the belief that humanity is separated by race'.

That's what I've done.

The Killers

I am exhausted after seeing Bloc Party and The Killers last night at Marlay Park.

I reeked of mud and sweat, and I believe someone chucked a cup full of piss at me during the gig.

Nevertheless, I will muster the energy to write up another blog post as 'Europe is Doomed' been recently plugged by the Irish Liberty Forum blog.