Author Archive for Ryan McMaken

Prepare for the Global Corporate State of Facebook?

facebook-388078_640In the dystopian movie Rollerball, all the world is ruled by one giant corporate state “controlling access to all transport, luxury, housing, communication, and food on a global basis.”

Thanks to popular media and the errors of neoclassical economics, we are trained to accept this scenario, or one similar to it, often when we are told of the latest move by a mega-corporation to extend its market share.

Two recent articles about Facebook have highlighted the social media platform’s influence in determining what news articles you see and when and how you read them. Many publishers have figured out that Facebook drives a large amount of traffic to their sites, prompting many PR pundits to declare that “the home page is dead.” In a Wired article titled “How Facebook Could End Up Controlling Everything You Watch and Read Online,” Marcus Wohlson explores just that. Wohlson’s article was prompted by David Carr’s Sunday article at The New York Times in which Carr writes: “Given the amount of leverage Facebook has, many publishers are worried that what has been a listening tour could become a telling tour, in which Facebook dictates terms because it drives so much traffic. (Amazon’s dominance in the book business comes to mind.)”

Is Facebook a Proto-Amazon?

Note the reference back to Amazon. Wohlson invokes Amazon too in his own article, and this becomes especially relevant when Wohlson suggests even that Facebook will eventually “cut out the extra click” and become the publisher of content as well as the delivery platform.

The Ghost of Amazon thus looms over the equation, since Facebook is now being framed a proto-amazon which moves from “selling” the content of other publishers and becomes a publisher itself, thus controlling the content. The subtext behind this is an assumption that Amazon is itself an evil monopolist who is destroying the wonderful legacy publishers of old.

Frank Foer at The New Republic has declared that  ”Amazon Must Be Stopped” and Paul Krugman followed up with his own article claiming that Amazon  ”has too much power, and it uses that power in ways that hurt America.” The consensus seems to be that amazon is either a monopolist or at least has unjust monopsony power and must be taken down a notch. Interestingly, however, Matthew Yglesias (of all people) has stepped in to point out what every Austrian already knew: Amazon only has the market power it has because it is better at delivering the goods. Moreover, Amazon is not a monopolist at all because it already has several competitors, including the lowly underdog mom-and-pop operation known as Google.

Yglesias outlines the many ways that Amazon will not be taking over the world, and in fact is just replacing the useless and dinosaur-like book publishers of old.

So yes, maybe Facebook is the next Amazon, but as with IBM, Microsoft, Apple, and all the other megacorps that were supposed to take over the world, the fortunes of these companies rely fully on their abilities to actually attract customers from year to year.

In this, Facebook  looks weaker than Amazon. Less than a year ago, the press was declaring that Facebook still had a lock on the next generation of consumers and opinion-molders. Back in February, Pew reported that more than 70 percent of teens were still using Facebook. But only six months later, teen usage of Facebook had plummeted from 72 percent to 48 percent, meaning less than half of teens now say they use Facebook. Those are pretty grim numbers for a “monopolist” seeking to hold onto its dystopian global power.

Will Facebook be able to lure them back? Possibly, but then again, Facebook’s most fierce competitor may not even exist yet. We can’t guess what the future holds in the social media world, and those of us who are old enough to remember MySpace know how quickly reversals of fortune can unfold in this industry.

 

Patrick Barron: The End of the US Dollar Imperium, Part 2

alexJeff Deist and Patrick Barron continue their discussion on monetary imperialism. They delve deeper into US dollar supremacy, and how it might end with a whimper instead of a bang; how the Bundesbank is a potential savior for the world monetary order, while the IMF is a paper tiger; how elites will have an increasingly hard time denying gold a role in the global monetary system, and how America’s fiat dollar corrupts cultures as well as economies.

Patrick Barron is a private consultant in the banking industry. He teaches in the Graduate School of Banking at the University of Wisconsin, Madison, and teaches Austrian economics at the University of Iowa, in Iowa City, where he lives with his wife of 40 years.

This interview is also available at Mises.org and Stitcher.

The Olympics: The Biggest Corporatist Sports Scam of All

USA_I_in_heat_1_of_2_man_bobsleigh_at_2010_Winter_Olympics_2010-02-20 The 2022 Olympics (i.e., the Winter Games) is now down to only two applicant nations: China and Kazakhstan. This follows the withdrawal of Norway after the taxpayers of Norway balked on ponying up the cash necessary to make the Olympics a playground for the world’s richest cronies and politicians.

Theoretically, the Olympics are a private organization, but in practice, it is a corporatist organization run by plutocrats whose mission in life is apparently to squeeze as much tax revenue as possible out of the residents of the countries and cities that host the Olympics. This is done by demanding the usual brand-spanking new stadiums and facilities from the host cities that later become white elephants. But the IOC also demands countless perks for itself, such as only the finest food and drink, and special driving lanes on streets and highways. (See photos of the abandoned Olympics facilities in Athens.)

Faced with a bevy of such demands  in a 7,000-page dossier from the IOC, Norway chose to withdrawal. The “diva-like demands for luxury treatment” for the IOC were outlined by the Norwegian media, including:

  • They demand to meet the king prior to the opening ceremony. Afterwards, there shall be a cocktail reception.
  • Drinks shall be paid for by the Royal Palace or the local organizing committee.
  • Separate lanes should be created on all roads where IOC members will travel, which are not to be used by regular people or public transportation.
  • A welcome greeting from the local Olympic boss and the hotel manager should be presented in IOC members’ rooms, along with fruit and cakes of the season. (Seasonal fruit in Oslo in February is a challenge…)
  • The hotel bar at their hotel should extend its hours “extra late” and the minibars must stock Coke products.
  • The IOC president shall be welcomed ceremoniously on the runway when he arrives.
  • The IOC members should have separate entrances and exits to and from the airport.
  • During the opening and closing ceremonies a fully stocked bar shall be available. During competition days, wine and beer will do at the stadium lounge.
  • IOC members shall be greeted with a smile when arriving at their hotel.
  • Meeting rooms shall be kept at exactly 20 degrees Celsius at all times.
  • The hot food offered in the lounges at venues should be replaced at regular intervals, as IOC members might “risk” having to eat several meals at the same lounge during the Olympics.
  • All furniture should be OL-shaped and have Olympic Appearance.

If this were all privately financed, there’s no reason to complain, but the IOC can hardly be described as “private sector.” The Norwegian controversy highlights that fact that, according to The National Post, “the International Olympic Committee is a notoriously ridiculous organization run by grifters and hereditary aristocrats [read: the descendants of highly successful thieves and murderers of old].”

Not surprisingly, Kazakhstan and China, those great bastions of thriving free markets, continue to compete for the chance to host the 2022 games. This, of course, only lends more credence to the assertion that the Games have become an enormous exercise in international prestige and fantasies about the Keynesian multiplier in which the central planners assume that it is much better to force the people to pay for another luge track rather than just allowing them to waste their money on food, clothing, or education.

Part of the reason that Norway has pulled out is that its government is at least somewhat answerable to the taxpayers while the governments of Kazakhstan and China are not. Norway’s withdrawal follows previous withdrawals from Sweden, Poland, and Ukraine. (Sweden now says is would have stayed in if the IOC were less bureaucratic.)

The controversy, and the fact that available host cities for the IOC continue to dwindle, has forced the IOC to say that it will “review” the way it demands perks from host cities, although it’s highly unlikely that anything the IOC does will put much of a dent in the huge bill that the IOC and its pals in government send to the taxpayers every few years. Denver, Colorado, where the voters refused to approve tax dollars for Olympics facilities, remains the only city to have ever rejected the IOC after it had already been chosen as the host city. Some other cities now appear to be catching on earlier in the process.

Mark Thornton on the European Debt Crisis

PressTV Reports:

Over the past several years, most of the attention of the eurozone debt crisis has been focused on the economic struggles of Greece, Spain and Portugal and without a doubt things will continue to get even worse in those nations.

However, the predictions have been that in 2014 and 2015, Italy and France will start to take center stage in eurozone debt crisis. France has the fifth largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly contracting.

See Mark’s analysis at the 12:12 mark and again at the 20:45 mark.

presstv

Amity Shlaes: Blame the Economists

John_Maynard_KeynesReading the news, one could be forgiven for coming to the conclusion that virtually all economists work for the government or the Fed, and that few of them have real (i.e., private sector) jobs. Of course, there are many practitioners of microeconomics who do an enormous amount of good in society for private clients. Austrian economists have long focused on microeconomics because only microeconomics focuses on the only unit that matters in economic action: the individual. The amount of sound, practical microeconomic wisdom found in Mises’s Bureaucracy, for example, is impressive.

In this article in the Wall Street Journal, Amity Shlaes examines the role of economists in the private sector, and the good many of them do. Macroeconomists, on the other hand, are another story. The macroeconomists, Shlaes notes, are guilty of “guildthink.” That is, macroeconomists in Washington exist in a closed system of like-thinking ideologues who shut out dissenting opinion:

When it comes to Washington policy, macroeconomists shut out innovative colleagues, some even of the sort Mr. Litan celebrates. The ruling macro-theorists, for instance, demonstrate an annihilating contempt for the Austrian School, which focuses more on individuals than aggregates. The same contempt is directed at Public Choice Theory, which predicts that governments will take advantage of market crises to expand in nonmarket sectors. Scholars from these schools do not win top positions at the Fed or at major universities and firms.

Such guildthink is what proved fatal just before 2008 and after. There were no Public Choice School theorists at the White House or powerful institutions to warn that there might be a housing bubble if government expanded its presence in the housing sector. Few elite economists warned that the administration might use a financial crisis to undermine bankruptcy precedent or socialize health care. Ironically, analysis by economists demonstrates the inefficiency of guilds, yet these scholars perpetuate their own. Until that changes, go ahead and blame the economists.

Book Review: Rothbard’s Making Economic Sense

B575Ben Kramer-Miller writes at Seeking Alpha:

Summary

  • A series of newsletter articles and shorter essays designed for the layperson interested in libertarian ideas and free market thought.
  • The book is highly entertaining and extremely accessible to people of all backgrounds.
  • Rothbard’s bluntness is appreciated in our sanitized, “PC” collective consciousness.
  • *Note that this book has been made available for free by the Mises Institute. You can find it here.

    Those who are looking for an introduction to Rothbard’s work and Austrian economics more generally should probably look at What Has Government Done To Our Money (also available at the Mises Institute) and discussed by yours truly here. But those who are interested in an informal, layman’s explanation of various economic (and political/social) phenomena as well as a work designed to be – in most places – anything but pedantic should consider reading through Making Economic Sense.

    Read the full article.

    Judge Napolitano Versus Forced Quarantines

    NNSA-NSO-1189One can make the case that in a thoroughly decentralized and anarchistic society, persons may find themselves in a state of practical near-quarantine because private owners of airlines, airports, lodging facilities, and even communities with private security may refuse entry or passage to persons suspected of being contagious. In such cases, persons would be restricted to places owned by themselves or by those who will agree to allow the person on the premises. Thus, in such a situation, a “quarantine,” practically speaking, is less like imprisonment and more like house arrest depending on negotiations with numerous private owners. In modern states, on the other hand, the widespread nature of “public goods” and prohibitions of discrimination by private owners often means that quarantine becomes a function of the central state and often ends up being little better than a jail sentence where the person in question is locked inside some official facility for a period of time.

    Thus, quarantines (of a sort) can arise within a totally (or mostly) privatized society, but how they look and are carried out in practical terms can vary significantly.

    For an example of the arbitrary, slipshod, and due-process-less way that American governments deal with such issues, we need only look to the case of the nurse in New Jersey who was being confined in spite of the fact that she had been proven to be Ebola-free. (Note: she has now returned to Maine, where the State of Maine promises to confine her although she continues to be symptom-free.)

    In the US, travelers are subject to the arbitrary edicts of politicians who can imprison people with the stroke of a pen,with  no prior warning, and no due process. As Napolitano explains in this video, US governments have known about the Ebola outbreak since March, yet did not warn healthcare workers traveling to west Africa that they could be subject to quarantine upon return. Any responsible government body would have done so. When such persons returned, no steps had been taken (at least not in New Jersey) to administer a quarantine in any way that might be described as humane. As Napolitano notes, when they quarantined the NJ nurse in question, they “put her in a tent in a parking lot” and “gave her a porta potty and a granola bar.” It seems the government intended to keep her in these conditions for 21 days.

    Read More→

    Poland to German Taxpayers: Subsidize our National Defense!

    gimmeComing in Monday’s Mises Daily, Patrick Barron will explore the moral hazard that often plagues collective security organizations like NATO. Why be careful, responsible, and restrained with your own defense when you can get the taxpayers in a foreign country to pay for it?

    Today, the news from Europe illustrates this well. From today’s Open Europe news summary:

    Die Welt reports that “Poland is worried about the weakness of the German army”, citing Polish Defence Minister Tomasz Siemoniak, during a meeting with his German counterpart in Berlin yesterday, as saying that, “We need a strong German army which does not shy away from the responsibility of defending their allies.”

    Now, I can certainly understand that old nationalistic tensions mean that many Poles may still feel that Germany owes them something big time. But every German who actually invaded Poland is either dead or will soon be dead. And they’re certainly not paying much in the way of taxes. That burden falls to much younger workers, and it’s unclear how a foreign government’s demands for more loot will help German-Polish relations in the long run. Meanwhile, NATO is simply providing the means to further stoke such tensions.

    The Economist Discovers the Entrepreneur

    Source: 'The Economist'

    Source: The Economist

    Sean Corrigan writes: 

    The Economist Discovers the Entrepreneur.

    In its latest edition, in a piece entitled ‘Monetary Policy: Tight, Loose, Irrelevant’, the ineffably dire Ekonomista considers the work of three members of the Sloan School of Management who conducted a study of the factors which – according to their rendering of the testimony of the 60-odd years of data which they analysed in their paper, “The behaviour of aggregate corporate investment” – have historically exerted the most influence on the propensity for American businesses to ‘invest’.

    The article itself starts by deploying that unfailingly patronising, ‘it’s economics 101′ cliché by which we should really have long ago learned to expect some weary truism will soon be rehashed as fresh journalistic wisdom.

    It may be only partly an exaggeration to say that the weekly then adopts a breathless, teen-hysterical approach to a set of results which, with all due respect to the worthies who compiled them, should have been instantly apparent to anyone devoting a moment’s thought to the issue (and if that’s too big a task for the average Ekonomista writer, perhaps they could pause to ask one of those grubby-sleeved artisans who actually RUNS a business what it is exactly that they get up to, down there at the coalface of international capitalism). Far from being a Statement of the Bleedin’ Obvious, our fearless expositors of the Fourth Estate instead seem to regard what appears to be a tediously positivist exercise in data mining as some combination of the elucidation of the nature of the genetic code and the first exposition of the uncertainty principle. This in itself is a telling indictment of the mindset at work.

    For can you even imagine what it was that our trio of geniuses ‘discovered’? Only that firms tend to invest more eagerly if they are profitable and if those profits (or their prospect) are being suitably rewarded with a rising share price – i.e. if their actions are contributing to capital formation, realised or expected, and hence to the credible promise of a maintained, increased, lengthened or accelerated schedule of income flows – that latter condition being one which also means the firms concerned can issue equity on advantageous terms, where necessary, in the furtherance of their aims.

    Read the whole thing.

    Roy Cordato Explains Obamacare

    6839833657_c7b0ecf372_bRoy Cordato has written an insightful piece on Obamacare at the Carolina Journaldemonstrating that the “right” to health care granted by Obamacare is really a “legal obligation” to purchase health care insurance:

    For decades pundits have been debating whether people have a “right” to health care. The notion of rights that is typically invoked is distinct from the question of whether people have a right to enter the market for health care services and engage in exchange activity in order to obtain health care.

    “Rights,” in the view of the president and those who believe in a specific “right to health care,” imply a guarantee that the right holder can obtain health care services either without charge or at prices that are “affordable,” hence the official title of Obamacare: the Affordable Care Act. (See this previous “Economics & Environment Update” newsletter for a more detailed discussion of different conceptions of rights.)

    This notion of rights therefore implies an obligation on the part of others. There are two possibilities. The first, typically not invoked, is that health care providers have an obligation either to provide their services for free or to adjust the prices of their services according to the incomes of their clients. There is a reason why this kind of obligation is not advocated by anyone, although Medicaid reimbursement schemes do attempt to invoke this approach to a limited extent. It is a form of price control that would dramatically curtail the supply of heath care services, as occurs in the Medicaid system.

    The other, and more typical, scenario is that the obligation to sustain this right falls on taxpayers. That is, the cost of health care to the health care rights holder is made affordable through taxpayer subsidies. This is the single-payer model in which the government, within limits defined by the government, picks up everyone’s health care tab.

    So how does Obamacre fit into this picture? The fact is, it doesn’t. The centerpiece of Obamacare is not a universal right to health care but a universal obligation to obtain health insurance. Because of this, it does not recognize or grant rights of any kind but denies them while mischaracterizing obligations as rights.

    What distinguishes all rights from obligations is the ability to refuse to exercise the right. If someone is not legally allowed to refrain from engaging in an activity, then there is no right, only an obligation.

    Allegedly Obamacare guarantees a right to access health care by guaranteeing a right to obtain health insurance, either by purchasing a plan through the Obamacare exchanges, through an employer plan, or, if income-qualified, through Medicaid. But since it is illegal to refuse to exercise this so-called right, it is not a right at all but a legal obligation.

    It cannot be both. The right to say no is an implication of the right to say yes.

    In examining Obamacare’s so-called right to health insurance, the farce of using the language of rights can be exposed easily. This point is made quite obvious with the individual mandate, which imposes a fine on any person who does not purchase a government-approved health insurance policy. Obamacare guarantees a right to health insurance only in the way that the draft guarantees a right to serve in the military.

    Read the full article. 

    Image credit. 

    Nobel Winner Jean Tirole’s Faulty Views on Monopoly

    6942Mises Daily Wednesday by Frank Shostak:

    Economics Nobel Prize winner Jean Tirole still clings to the old neoclassical model “perfect competition” and monopoly, in which there is no place for entrepreneurship, and which fails to grasp that consumers benefit more from a diversity of goods than a diversity of firms.

    More Politics Means More Conflict

    kids2Mises Daily Tuesday by Ryan McMaken:

    A recent study shows that one’s political views are now the most widespread source of discrimination and conflict in American society. Politics is now more important than ever because the state is now more powerful than ever.

     

    Could the ‘Taylor Rule’ Have Prevented the Housing Bubble?

    broken measureMises Daily Tuesday:

    Tom Woods and Mateusz Machaj discuss the problem with John Taylor’s rule for monetary policy.

    The Great Deformation Is Now in Polish

    299486-352x500David Stockman’s huge volume on the background of the 2008 financial crisis, and on the role of the fed and government bailouts in the continuing crisis, is now available in Polish.

    The Polish edition, Wielka deformacja, czyli jak skorumpowano amerykański kapitalizm, appears to be available for purchase at Amazon.fr. It’s also available directly from the publisher.

    We’ve covered the English version of the book extensively here at Mises.org. Here is a Q and A with David Stockman about it, and Stockman’s author page features several selections from the book.

    Robert Wenzel has posted the introduction from the new book (in English.)

    Be Sure to Tune In for Mises Circle November 8

    The West Coast Regional Mises Circle in Costa Mesa is sold out, but be sure and mark your calendars so you can join us live via Mises.org. On November 8 —one week from Saturday— we’ll be broadcasting all the lectures and speeches from Costa Mesa. I’ll provide you exact links as the event draws nearer.

    Here’s the schedule:

    Tentative Schedule (all times Pacific)
    Grand Ballroom

    10:20 a.m. Welcome
    10:30 a.m. Jeff Deist “The Case for Optimism”
    10:50 a.m. David Gordon “Thinkers Who Challenged the State”
    11:10 a.m. Lew Rockwell “Against the State”
    11:30 a.m. Presentation of the 2014 Mises Entrepreneurship Award to Louis E. Carabini
    11:40 a.m. – 1:00 p.m. Lunch and discussion, bookstore open
    1:00 p.m. Judge Andrew P. Napolitano “The Natural Law as a Restraint Against Tyranny”
    1:30 p.m. Ron Paul “Freedom Doesn’t Come from Government”
    2:00 p.m. break, bookstore open (final opportunity to purchase books for speakers to autograph)
    2:20 p.m. Speaker Panel Q&A
    3:00 p.m. Closing remarks
    3:10 p.m. Adjourn

    Istock_0000

    The Many Ways the State Taxes the Poor

    6938Mises Daily Monday by Julian Adorney:

    Contrary to the political myth, poor people do indeed pay taxes, and they pay into a system that robs them of control over how they can spend, save, or invest their own property. In addition, the poor are taxed by a perverse incentive structure that punishes their financial success

    Why People Trade

    1421163_10152517945798935_4979687098529242252_o (1)

    Obamacare Is Not a Revolution, It Is Mere Evolution

    healthMises Daily Weekend by Roger McKinney

    Liberty-loving people are right to be appalled by the Patient Protection and Affordable Care Act. However, just about every evil in the legislation has already been inflicted on the market through 50 years of state destruction of the healthcare market.

    Looking for Introductory Materials on Austrian Business Cycle Theory?

    SS466Michael Pollaro, Mark Thornton, and I went looking for some good introductory materials to help newcomers understand Austrian Business Cycle Theory.

    Pollaro posted this helpful article over at Forbes, noting:

    Indeed, we would say that without ABCT investors are at a competitive disadvantage, for it is only through ABCT that one can truly understand what is underpinning the economies and financial markets of today.

    And he links to several resources including this journal article by Joseph Salerno, and this very easy breakdown by John Cochran.

    There are many other resources, Mark and I might point you to as well.

    For starters, there is Rothbard’s Economic Depressions: Their Cause and Cure, and Richard Ebeling’s collection of essays, including works by Hayek, Mises and Garrison.

    Other resources include:

    This survey of ABCT on the Mises Wiki.

    Manipulating the Interest Rate: a Recipe for Disaster by Thorsten Polleit

    Austrian Business Cycle Theory: A Brief Explanation by Dan Mahoney.

    Explaining Malinvestment and Overinvestment by Larry J. Sechrest.

    And several videos including:

    Read More→

    Why Money Doesn’t Measure Value

    gold2Mises Daily Friday by Robert Murphy:

    Robert Murphy, contra Real Clear Markets and Forbes, explains why money is not like a ruler and doesn’t measure value.