The Austrian School at the European Parliament

The Austrian School at the European Parliament

01/16/2019Max Rangeley

Last year we at the European branch of the Ludwig von Mises Institute (Europe) organised the first ever Austrian school event in the European Parliament. Member of the European Parliament Amjad Bashir — a great supporter of free enterprise within the Parliament — kindly sponsored the event, which was set up to coincide with the release of one of the best books on the Austrian school in recent years, Banking and Monetary Policy from the Perspective of Austrian Economics.

range1.png

As well as me, the other two speakers were Member of the European Parliament Professor Joachim Starbatty MEP, and Brendan Brown, Chief Economist of Mitsubishi Bank, arguably the largest bank in the world by assets other than China’s state banks. While there have been other pro-enterprise and free market events in the European Parliament, they have all neglected the “money issue” so far, at least as those within the Austrian school would see it. Professor Starbatty MEP gave an eloquent outline of the Austrian business cycle theory, while Brendan Brown brought Austrian principles to bear on current issues in the banking sector. I decided to speak about the current bubble and how this can be explained with Austrian concepts. This event also reinforces the place of the Ludwig von Mises Institute (Europe) as one of the premier think tanks in Europe; within a few months we have published a defining textbook and introduced the Austrian school within the European Parliament itself.

range2.png

In my experience, more and more free market thinkers are tending towards the Austrian School, and it is the farce of years of zero percent interest rates that has achieved this. When the current Super Bubble bursts, we must be prepared to provide answers to how this bubble was created as many will blame the “free market” and demand the government “take action”.

Below you can see my speech in which I outlined how central banks’ policies of zero percent interest rates and quantitative easing have created the largest bubble in all of human history. The West has had a Faustian Pact with the central banking system for an entire generation, with each recession being responded to by creating an even larger debt bubble with ever lower interest rates -- and of course ever worse debt dependency.

Max Rangeley Speech in the European Parliament on the Coming Economic Collapse

The book “Banking and Monetary Policy from the Perspective of Austrian Economics” is published by Springer, one of the best academic publishers. The Ludwig von Mises Institute (Europe) did the excellent work of gathering contributors for the book, which includes Jesus Huerta de Soto, Walter Block, Guido Hulsmann and Gunther Schnabl as well as other great contemporary Austrian School thinkers. Annette Godart-van der Kroon, President of LvMI-Europe, edited the book. If you are a student or lecturer see if you can persuade your institution to get a copy.

Let’s hope the trend can continue with policy-makers taking an interest in the Austrian School. We have to be patient in explaining some of these issues, but more and more minds are open to explanations for how central banks distort the economy.

Incidentally, two days later I also gave a speech at the “Future of Money Conference” at the Frankfurt School of Finance and Management. People from the Bank of England, European Central Bank and Swedish Riksbank among others were discussing how money will develop over the next generation, including so-called Central Bank Digital Currencies (CBDCs, of which you will no doubt hear more over the coming years). I had the pleasure of hearing William White, former chief monetary economist at the Bank for International Settlements and Chief Economist at the OECD, give a terrific speech about the bubble created by radical monetary policy. Bill has had distinct Austrian tendencies during his time at the top of the global monetary establishment, citing Hayek and others in his work.

The intellectual tectonic plates within economics are shifting, and the Austrian School is well placed to provide explanations for the coming bursting of the Super Bubble.

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

Venezuela's Central Bank Admits the Country's Economy Is a Mess

05/30/2019Ryan McMaken

The Venezuelan central bank has released new data showing just how far the nation's economy has disintegrated in recent years.

MercoPress reports this week (in text that is rather loosely translated from Spanish):

After several years, the Central Bank of Venezuela (BCV) published results of gross domestic product (GDP) until the third quarter of 2018, with which officially confirms the recession that is experienced in the oil country. With the data it is known then that between the third quarter of 2013 to September of last year the economy lost 52.3%. President Nicolás Maduro is on power since 2014.

The BCV report draws a demolished economy. According to the institution, the construction sector fell by 95% between the third quarter of 2013 and the third quarter of 2018, the manufacturing sector by 76%, trade by 79% and financial institutions by 79%. According to the data released on Tuesday, towards the end of 2018 the collapse accelerated.

The official figures of the BCV also confirm the magnitude of the Venezuelan economic recession that has been recorded since the arrival of Nicolás Maduro to the presidency of the country. According to the data, after a slight growth of 1.3% in 2013, as of 2014, the deterioration of the economy begins with a decrease of 3.9%; as well as a fall of 6.2% in 2015.

Among the most striking of the statistics offered by the central bank was 2018's inflation rate of 130,060.2%.

The data release was mandated by the International Monetary Fund which threatened to sanction Venezuela with limitations on its Special Drawing Rights if it did not report updated macroeconomic data.

Given the acceleration of economic decline, it looks like the IMF may need to revise its most recent estimates of Venezuela's economic growth which can be seen in per capita GDP numbers. Here are the IMF's country-by-country estimates of GDP per capita, published using extrapolations from older Venezuelan data:

ven1.png

Source: International Monetary Fund.

Note the downward trend in Venezuelan GDP (the bottom dark blue line.) It now appears likely Venezuela's growth will need to be adjusted downward.

While the magnitude of the economic decline is remarkable, Venezuela's decline in relation to other South American nations is, by now, a well established trend.

ven2.png

While much of the continent has been undergoing significant growth over the past twenty years — especially in Peru, Uruguay, and Colombia — Venezuela has been moving in the opposite direction. Indeed, according to the estimates published before the release of the Venezuelan central bank's new data, the nation's per capita GDP declined 25 percent from 2008 to 2018.

The relative change has been less dramatic in more recent time frames. Brazil's growth dropped to zero between 2013 and 2018, and Argentina's growth turned negative. Both nations are notable for embracing highs-pending, high-inflation policies over the past decade. It remains to be seen if Brazil's and Argentina's more recent turns toward allegedly pro-market regimes can repair the damage.

ven3.png

Meanwhile, Venezuela has been notable for adopting an especially virulent type of socialism, even when compared to other leftist regimes, such as Bolivia and Ecuador. While Morales in Bolivia and Correa in Ecuador tended to be more pragmatic in their professed "socialism," The Chavista regime in Venezuela has doubled down on enforced "equality" through widespread expropriations and persecution of the productive middle classes.

The results have been disastrous indeed.

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

Where in the Developed World Are Average Workers Most Over-Taxed?

periodically explain that a European-sized welfare state can only be financed by huge taxes on lower-income and middle-class taxpayers.

Simply stated, there aren’t enough rich people to prop up big government. Moreover, at the risk of mixing my animal metaphors, those golden geese also have a tendency to fly away if they’re being treated like fatted calves.

I have some additional evidence to share on this issue, thanks to a new reportfrom the Tax Foundation. The research specifically looks at the tax burden on the average worker in developed nations.

The tax burden on labor is referred to as a “tax wedge,” which simply refers to the difference between an employer’s cost of an employee and the employee’s net disposable income.…The OECD calculates the tax burden by adding together the income tax payment, employee-side payroll tax payment, and employer-side payroll tax payment of a worker earning the average wage in a country. …Although payroll taxes are typically split between workers and their employers, economists generally agree that both sides of the payroll tax ultimately fall on workers.

The bad news for workers (and the good news for politicians) is that average workers in the advanced world loses more than one-third of their income to government.

May-28-19-Fig-1.jpg

In some cases, such as the unfortunate Spanish household I wrote about back in February, the government steals two-thirds of a worker’s income.

So which country is best for workers and which is worst?

Here’s a look at a map showing the tax burden for selected European nations.

Suffice to say, it’s not good to be dark red.

May-28-19-Figure-8.jpg

But that map doesn’t provide a complete answer.

To really determine the best and worst countries, the Tax Foundation made an important correction to the OECD data by including the burden of the value-added tax. Here’s why it matters.

The tax burden on labor is broader than personal income taxes and payroll taxes. In many countries individuals also pay a value-added tax (VAT) on their consumption. Because a VAT diminishes the purchasing power of individual earnings, a more complete picture of the tax burden should include the VAT. Although the United States does not have a VAT, state sales taxes also work to diminish the purchasing power of earnings. Accounting for VAT rates and bases in OECD countries increased the tax burden on labor by 5 percentage-points on average in 2018.

And with that important fix, we can confidently state that the worst country for ordinary workers is Belgium, followed by Germany, Austria, France, and Italy.

May-28-19-Fig-71.jpg

The best country, assuming we’re limiting the conversation to rich countries, is Switzerland, followed by New Zealand, South Korea, Israel, and the United States.

By the way, this report just looks at the tax burden on average workers. We would also need estimates of the tax burden on things such as investmentbusiness, and entrepreneurship to judge the overall merit (or lack thereof) of various tax regimes.

Let’s close by looking at the nations that have moved the most in the right direction and wrong direction this century.

May-29-19-Fig-5.jpg

Congratulations to Hungary, Israel, and Sweden.

I’m not surprised to see Mexico galloping in the wrong direction, though I’m disappointed that South Korea and Iceland are also deteriorating.

P.S. The bottom line is that global evidence confirms that ordinary people will be the ones paying the tab if Crazy Bernie and AOC succeed in expanding the burden of government spending in America. Though they’re not honest enough to admit it.

Originally published at International Liberty
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Trust As The Mechanism For A Better Entrepreneurial Business And A Better World: 5 Tips For Startups

05/30/2019Jeremy Vesta

Every day, we as consumers, citizens, family members, and friends experience hundreds of examples of how our trust undergirds the world we live in, and how fragile the world can be when trust is violated or broken. We’ve all experienced relationships that have faltered and beliefs that have been challenged as the result of a moment that altered our trust in a person, institution, or even corporation. It’s something so basic that the average person likely spends little to no conscious thought about trust, and how it effects the efficiency of the world around them.

A loss of focus on the importance of trust has led generations and entire nations to be seduced by the promise of regulation as a mechanism for protection against the violation of trust. The reality is that regulations and regulators replace the trust economy altogether and redirect the responsibility to act ethically and honestly away from the economic actors themselves and place it on the regulations and regulators. This ultimately leads to the outcry for further regulations and more complex legislation to take hold of the “evil corporations” and “greedy investors”. A clear understanding of the way in which the trust economy works to self-regulate shows how unnecessary and frequently harmful the regulatory system can be.

In my episode of Economics for Entrepreneurs with Hunter Hastings we spend a good deal of time discussing the beef industry. Clearly, if a food manufacturer produced adulterated product and customers became sick, we can imagine, with the trust economy as the master, how long that business would be able to continue selling product. The consumer’s trust that the product will be clean and safe would be destroyed. Conversely, as we look at these industries under regulation, we find that the consumer is confused about who to blame for any safety issues and often continues to buy from the offending party while continuing to look to government for the solution. As a result, we end up with a complex web of rules and institutions that, in the end, fail to close the loopholes and allow businesses to increase their concentration of power, leading to less innovation and less competition.

Consider the current case and controversy surrounding Facebook and its curating of news and information. Facebook seems to have violated the trust of a certain segment of their base by failing to convince them that their curation of news and treatment of private data is safe and unbiased. The natural reaction in the modern era is to look towards regulation as the answer rather than simply understanding the limited power that a private company holds over consumers in a non-regulated sector. The reality is that this violation of trust opens the door for a bevy of entrepreneurs to try their hand at supplanting Facebook by providing a product that focuses on transparency and innovates in regard to privacy and safety. Regulating Facebook, conversely, would only create a bureaucratic monster that likely would increase the barriers to entry for entrepreneurs and place an ever-increasing compliance cost on the backs of taxpayers, all while securing monopoly type powers for Facebook itself. For further evidence, Ryan McMacken makes a great case for why regulating Facebook would be a disaster in his recent article 3 Reasons Why Facebook's Zuckerberg Wants More Government Regulation .

The lesson to learn for entrepreneurs is that trust decreases the complexity of a transaction, increases efficiency, and has the potential to decrease cost. A contract between individuals who have successfully completed hundreds of transactions without significant disputes or quality claims is likely a shorter document (perhaps even a boilerplate agreement) with less time spent on legal fees and more left unsaid and uncontrolled by the contract. Conversely, a counterpart who has a history of issues, default, or simply creating headaches may find that the document they receive has been pored over by legal teams and leaves absolutely nothing to chance. Additionally, the less desirable customers are likely to find that their counterpart has priced, to a certain degree, the risk associated with accepting this company as a customer and may decline to extend credit or, at a minimum, may limit terms. Additionally, an entrepreneur will find that the development of trust can yield easier access to new markets, lower barriers to entry, and eventually lead to higher profit margin as a trusted product is valued higher on average than a product which may yield higher rates of defect.

So how can we, as entrepreneurs, earn trust in a startup environment where there have not been a multitude of completed transactions?

1) Leverage past relationships and previously developed reputations.

For those of us who have forged longstanding reputations in previous endeavors, continuing to operate in a circle where this reputation is known, and past relationships have already been developed means a leg up against the “from scratch” start-up taking a leap into the unknown. A properly placed endorsement from another trustworthy individual or entity can ensure that others unfamiliar with your past will be assured of your integrity and continued strength.

2) Be authentic.

Everything has a cost. We can try to show potential customers that we value their needs, but if the sales pitch at any point fails to meet with reality then trust is broken, and the short-term gain becomes moot. Under-promising and over-delivering may mean a longer road to those first sales, but can generate a great amount of trust currency to be leveraged later.

3) Execute!

Ultimately trust rests in action. Vigilantly ensuring that the product is delivered as promised and avoiding any complications ensures that your customer has a positive experience and learns that you are as good as your word. Solid customer service for a start up business can be as important as the product itself (which can be difficult given limited resources and lean organizations).

4) Small concessions can build great trust.

One of the advantages of being a start-up is that your organization is not large and institutionalized. You are not forced, due to the problems of organizational size, to implement hard and fast rules. Rather you can be more human in your interactions. Use discretion to affirm the authenticity of your willingness to work through even the minor problems and your customer will certainly gain trust in your organization.

5) Trust works both ways.

Nascent businesses must be more careful than well established companies in trusting their counterparts. The start up nature means that problems normally routine for a better-established firm may bring about the end of a startup. Therefore, a startup may wish to forgo its first sale in favor of finding a customer that will deal more honestly and ensure that a solid relationship can be established.

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

Will New Jersey Be Next To Legalize Recreational Marijuana?

Over a year after reform advocates first began predicting swift legislative victory, the recreational use of cannabis remains illegal in New Jersey. When Governor Murphy and Senate President Sweeney agreed on a $42 per ounce flat tax in February, legalization supporters once again hoped for quick adoption of New Jersey Assembly Bill 4497 (“A4497”). Once again, the much-publicized March 25th vote was called off due to lack of support. Now legislators have a limited window to act before the state budget deadline on July 1st.

Hopes for reform have ebbed and flowed since Governor Murphy was elected on a platform including legalization within his first 100 days. Despite his party controlling both the Senate and Assembly, the Governor has only been able to expand the medical program since taking office. That executive action doubled medical marijuana enrollment in just six months.

While the media has spilled considerable ink analyzing the political drama, actual details of the bill itself have received considerably less attention. A4497 attempts to incorporate lessons learned from other legalization regimes in Colorado, Washington, and California. Some critics argue certain provisions in the bill are too ambitious. Others wish the bill would go even farther. These disputes will need to be resolved before the ongoing 18-month saga finally comes to a vote in Trenton.

What’s in the Bill?

A4497 generally employs a vice-regulation model common to most legalization regimes. Individuals would be permitted to lawfully possess up to one ounce of marijuana. The bill would establish a Cannabis Regulatory Commission. This powerful, five-person regulatory body would have overall authority to regulate and control the cannabis industry. Three members would be appointed by the Governor, one by the Senate President, and one by the Assembly Speaker. The commission would make bi-annual reports to the Governor and legislature.

One of the controversial elements of the bill are the much-debated expungement provisions. As currently written, nearly all cannabis-related offenses would be expunged. The only offenses not subject to expungement would involve possession of over five pounds or within close proximity to a school. Disorderly persons convictions may also be expunged. Drafters considered this provision significant because many cannabis offenses are pled down to this lesser offense. The bill would also prohibit law enforcement from using the smell of cannabis as probable cause or reasonable suspicion of a crime.

The language of the plan would allow for an “expedited” but not an automatic expungement system. A robust expungement program would be an immense logistical process and opponents suggest the legislation lacks adequate planning for its implementation. Other critics worry expungements could potentially extend to more serious offenses including weapons.

The bill proposes a Cannabis Control Commission to issue four tiers of licenses. Of no small controversy is the promotion of participation by disabled veterans, women, and minority licensees. Some supporters are insisting on stronger “social justice” provisions to require numerical set-asides for these groups. As written, the bill seems to consider participation by these groups as a non-binding goal. 15% of licenses would go to minorities, 15% to disabled-veterans, and 25% to “micro-businesses.” The bill does not include a cap on the total number of available licenses. “Impact Zones” are defined based on crime, poverty, and cannabis arrests and receive preferential access to licenses.

Four tiers of licenses cover every step of cannabis production including growers, processors, wholesalers, and retail establishments. Licensees will be required to pass a mandatory background check and obtain a Labor Peace Agreement from the union in order to operate. As a practical matter, this will likely result in a requirement to exclusively hire union employees.

Over 60 New Jersey municipalities have already passed ordinances prohibiting cannabis sales within their city limits. These municipalities would need to take further action within 180 days of legalization. Beyond this 180-day window local governments cannot prohibit retail establishments within a five year opt-out period.

Also noteworthy in the bill is the proposal of Cannabis Consumption Areas. These may be authorized by local governments and would attach only to Class 4 licenses (retail establishments). Cannabis Consumption Areas could be indoor or outdoor, but the consumed cannabis must be purchased on the premises. Beyond these areas public use would be prohibited, although delivery would be allowed. The bill is silent on dram shop liability.

The bill attempts to limit most employment discrimination based on cannabis use, including hiring and firing. In particular, employers would not be allowed to consider previous cannabis arrests. However, the bill would still allow employers to consider cannabis use if deemed reasonably related to the requirements of the job. Nothing in the bill would require an employer to amend their drug free workplace programs. The bill would also prohibit discrimination in the issuance or denial of mortgages arising from cannabis use. Cannabis-use could not be the sole basis for child custody decisions, although it could still be considered among other relevant factors.

The bill includes provisions regarding labeling, packaging, and advertising. Labels would need to include warnings, as well as information about THC levels, weight, serving size, growth method including pesticide information, and strain.

Finally, A4497 contains a safe harbor provision designed to comply with federal laws and the Supremacy Clause. The bill explicitly states it does not compel violation of any federal laws.

Where Does the Bill Go from Here?

“Marijuana prohibition has failed,” said Sen. Nicholas Scutari, one of the chief architects of the bill. “It is time to end the detrimental effect these archaic drug laws are having on our residents and make adult use marijuana legal.”

There is no proposed date for a vote, but supporters are hoping to bring it to the floor before the end of May. New Jersey currently spends about $127 million a year enforcing marijuana possession. Reform advocates often point to an ACLU study which indicates minorities are roughly three times more likely to be arrested for marijuana offenses in New Jersey.

Legal cannabis is expected to become a billion-dollar industry in the Garden State.

Reprinted from Liberty2.0.

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

Congress Fiddles While Trump Lurches Toward War on Iran

05/28/2019Ron Paul

Congress, and particularly the Democrat-controlled House of Representatives, seems determined to see the end of the Trump Administration before the 2020 vote. Although House Speaker Pelosi claims she is not seeking impeachment, she’s accusing the president of “covering up” something. However, she won’t say what until she can do more investigating.

But Trump’s opponents on both sides of the Congressional aisle don’t seem so enthusiastic about challenging the president when he actually does abuse his Constitutional authority to pursue a more aggressive policy overseas.

Late last week, for example, President Trump declared a national security “emergency” brought about by unspecified “Iranian malign activity” – a “loophole” allowing him to bypass Congressional review of some $8 billion in US weapons to be sold to Saudi Arabia.

Congress had been reluctant to approve yet more arms sales to Saudi Arabia after the President vetoed a bi-partisan House and Senate-approved bill requiring the US to end its military support for the Saudi war of aggression against Yemen.

What might this new Iran “emergency” be? As with the lead-up to the Iraq war, the Administration claims important secret intelligence — but of course we have to just trust them. From what we have heard from the Administration, it looks pretty flimsy. Rear Admiral Michael Gilday, the director of the Joint Staff, has outright claimed that the so-called “sabotage” of four container ships at port in the UAE is the doing of the Iranian Revolutionary Guards. But even Abu Dhabi didn’t claim Iranian involvement in the mysterious incident.

Could it have been a false flag?

Admiral Gilday also claims, without providing proof, that the recent firing of a small rocket in the general vicinity of the US Embassy in Iraq is the work of the Iranians. “We believe with a high degree of confidence that this [recent attacks] stems back to the leadership in Iran at the highest levels,” he said.

What would Iran gain by shooting off an insignificant rocket, exposing itself to US massive retaliation with no gain whatsoever? They don’t say.

 The Trump Administration has been lacking any coherent foreign policy strategy for some time. It often seems the President is fighting more with his own appointees than with his opponents on Capitol Hill. As soon as he announces that ISIS is defeated and US troops must come home, his employees like National Security Advisor John Bolton “clarify” Trump’s statements to mean that troops are staying. Trump goes to Hanoi to cut a deal with North Korea’s Kim Jong-Un and Bolton shows up with a poison pill that blows up the deal.

Bolton announced plans for 120,000 US troops to the Middle East to help push the war on Iran he’s been hocking for 20 or so years. Then we heard it was 10,000. Then 1,500, of which 600 are already there.

Whether Trump is on board or not, his Administration is clearly dragging the US into conflict with Iran. While some Members remind the president that he does not have Constitutional authority to attack Iran without approval, that argument has not been very effective in deterring presidents thus far.

If Congress really wanted to rein in an out-of-control president, they have plenty of opportunity in his bogus “national emergency” declaration and his saber rattling toward Iran. But if asserting Constitutional authority means Congress acts to pull-back US militarism overseas, suddenly there is a great bipartisan silence. They’d rather impeach Trump over his rude Tweets than over his stomping on the Constitution.

Reprinted with permission.

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

Mark Thornton on "12 Principles of Austrian Economics"

05/28/2019Mark Thornton

Mark Thornton joined our friend John O'Donnell at Power Trading Radio where they discussed 12 principles of Austrian economics, and how they compare to other schools of thought. Topics include trade, entrepreneurship, and prices.

The John O'Donnell Show with Mark Thornton

 

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

Progressives Love the Poor, So Long as They Live Somewhere Else

05/27/2019Andrew Moran

Winston Churchill famously said that “socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy.” He should have added that it is also an ideology of for thee but not for me. Anytime socialist idealists have an opportunity to practice the dogma outlined in Das Kapital or the teachings espoused by Sen. Bernie Sanders (I-VT), they reject the offer and say, “Maybe some other day, but not right now.” But that won’t stop Che Guevara T-shirt-wearing leftists from encouraging others to accept this way of life, no matter how iniquitous or asinine it is.

This is on full display every day, and it isn’t so much trumpeted by the politicians — we know they say and do anything to attain or maintain power, including offering a treasure trove of free goodies on someone else’s dime. Rather, it is the typical hipster, the celebrity residing in his or her ivory tower, and the social justice warriors on Twitter who demand that others adopt their principles before they adopt these values themselves.

Recently, three instances of this were on display in Florida, San Francisco, and Sweden.

Socialism on Campus

Recently Campus Reform spoke with several university students in Florida about socialism. The website asked these young whippersnappers if they would endorse a policy whereby students with a high GPA would redistribute their grades to those with a low GPA. The students were not exactly enthusiastic about their hypocrisy being exposed, explaining that they work hard for their marks and that it’s unfair to take away someone’s college scores.

“I’m all for helping, but I wouldn’t give some of my points .… I’ve lost a lot of sleep so I don’t know if that would be fair,” one student said.

Another pupil revealed, “I, like, study all day for my grades.”

Perhaps the irony is lost on these kids. Or maybe they think millionaires and billionaires have money trees in their backyards and that they just sit and wait for Federal Reserve Notes to fall from the branches like the apple hitting Isaac Newton on the head.

Kids these days…

Limousine Liberals in San Francisco

It is safe to say that San Francisco is the home of the nation’s wokest progressives. In 2016, just 9,000 people who live there voted for President Donald Trump, so finding someone right of Rep. Alexandria Ocasio-Cortez (D-NY) is about as rare as discovering a sidewalk free from fecal matter. It is also ground zero for NIMBYism, also known as “not in my back yard.”

Last month, Mayor London Breed approved a 24-hour, 225-bed waterfront homeless center in a 2.3-acre empty parking lot in an upscale neighborhood south of the Bay Bridge. The Navigation Center would allow the homeless to bring their lovers and pets so staff could connect these individuals with local resources and services. The affluent are not pleased.

As part of the Safe Embarcadero for All initiative, nearly 300 people have raised close to $100,000 on GoFundMe to pursue legal action to fight the homeless shelter. They fear for the community’s safety, citing city data that show “a third of the homeless are drug users and some are sex offenders,” which they believe could result in an influx of addicts using drugs in the neighborhood.

A counter GoFundMe campaign, SAFER Embarcadero for ALL, was launched , receiving nearly $175,000 in contributions from more than 1,500 donors.

NIMBYism is common in affluent neighborhoods of many metropolitan cities. In 2015, a Toronto charity hoaxed the wealthy left-leaning Leaside community by announcing a new homeless shelter was going to be erected. Nearby residents were “distressed,” complaining that their real estate values would plummet, businesses would see lower foot traffic, and that area of the city would be “ruined.”

Swedes Won’t Take Migrants

Sweden has been taking in hundreds of thousands of migrants from the Middle East. So far, the social engineering experiment has been a disaster, with no-go zones becoming more prevalent and the rich Swedish culture being turned upside down. The country is gradually getting fed up with the government opening its door, hence the rise of right-wing parties that are concerned about ballooning migration.

A viral video making the rounds on the Internet shows a man asking people in Stockholm their opinions on the influx of migrants. He specifically questioned if Swedes should accept refugees into their home, wanting to know if they would consider housing an unaccompanied minor or refugee in their living space. They were amicable in their answers until a real opportunity presented itself.

When he had a refugee with him who needed a place to stay, the responders stuttered and stammered, came up with excuses, and, in the end, nobody took in the unknown foreigner.

These are not the only ones to have reservations about accepting a total stranger into their home. J.K. Rowling, an elitist multimillionaire, tweets about how important it is to let migrants into the U.K., and anyone who questions that is a racist. Unfortunately, despite having an 18-bedroom mansion, she has not housed a single refugee. Hundreds of refugees have established a shantytown near George Clooney’s beautiful Lake Como home in Italy, so why isn’t he letting these people stay in his elegant villa?

What Leftists Have in Common

When Homer Simpson ran for sanitation commissioner in Springfield, he came up with a campaign slogan that would personify the left: “Can’t Someone Else Do It?” It is apropos for those on the left on a wide variety of issues, from taxation to migration and the environment. They lead the charge to let someone else pay higher taxes or assist the poor. It’s akin to the self-righteous virtue-signalers who tweet all day about how white people stole land from Sen. Elizabeth Warren’s (D-MA) ancestors but undoubtedly would refuse to cede their own property to Native Americans.

Democrats love to grab easy political points by alluding to unconscious biases and how there needs to be more minorities and women in public office. Yet, these same individuals never admit to implicit prejudice – it’s always somebody else – and you will not see former Rep. Beto O’Rourke (D-TX) or Sen. Sanders bow out of the race to let a minority or female take his place.

The doctrine of leftism advocates that it is your moral duty to advance pseudo-moralistic social justice. But the leftists’ genuine ethical stance is to sacrifice others before sacrificing themselves. It’s like the old joke about neoconservatives who proudly say they have given to the war effort, by having three cousins and their wives’ brothers die in battle.

Rather than signing a petition and marching in a social justice parade, leftists should instead turn the moral mirror on themselves. If they did, they would see the Picture of Dorian Gray.

[Originally published by Liberty Nation.]

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

Theresa May’s Final Act and What Comes Next for Brexit

[Editors note: After this article was written, Theresa May officially announced she is leaving the position of Prime Minister on June 7th.]

Brexit has been a long, drawn-out saga. But finally, Theresa May’s indecision appears to be coming to an end. She has finally been cornered in a tragic opera with more twists and turns than Wagner’s Ring Cycle. May’s Götterdämmerung is reaching its conclusion. Brünnhilde is riding Grane, her trusty steed, into immolation on the funeral pyre of her heavily-amended withdrawal agreement. 

Mrs May’s initial error was to seek consensus between Remainers and Brexiteers. In the words of one of her sacked advisers, Nick Timothy, she viewed Brexit as a damage-limitation exercise. Her mission statement evolved from her Lancaster House speech, when she declared she would deliver Brexit in terms which were clear, complying with the referendum and applauded by ardent Brexiteers. It became a fatally flawed compromise, which has failed to be ratified by MPs on three occasions so far, and a proposed fourth in the next week or so is likely to suffer the same fate. 

Her problems started in earnest when she over-ruled her first Brexit secretary, David Davis. Unknown to her Brexit ministers, with her own civil service advisors she began negotiating behind her Brexit secretary’s back. Davis was informed of May’s Chequers proposal only a few days before that fateful Checkers meeting, following which Davis and Boris Johnson (Foreign Secretary) resigned from the Cabinet, while five other ministers and Parliamentary Private Secretaries also resigned.

If ever there was evidence that in politics you should keep your enemies close and your friends closer still, this was it. It has allowed those that have resigned to expose May’s duplicity to their fellow MPs and to organise the opposition to May’s Chequers proposal and the subsequent Withdrawal Agreement she cooked up with the EU.

Mrs May was always a Remainer, and her presence as Prime Minister has encouraged leading Europhiles to overturn the Brexit referendum. That is why she sees it as a damage limitation exercise: produce something that can be said to be Brexit, but still leaves the UK tied to Brussels. It is Hotel California, with Britain only leaving if both sides agree to it, or alternatively, Northern Ireland remains in the EU’s customs union. That cannot happen, not least because the DUP would end its vital support for May’s minority government.

Putting the Northern Ireland issue to one side, in order to get the agreement of the other EU nations for a full and final exit, the UK relies on “The duty of good faith which prohibits the deliberate exploitation of the implementation period to damage British interests” (Barclay’s emphasis). This was written in a letter by Steve Barclay, the current Brexit Secretary, to John Redwood, a senior Conservative backbench MP, in response to his concerns over the Withdrawal Agreement. 

Good faith in politics? Barclay must be joking. Spain has a political interest in securing Gibraltar: won’t a future Spanish politician not be tempted to only agree to opening the door to Hotel California if Gibraltar is signed over? French fisherman enjoy free access to British fishing grounds. What French politician has the resolve to stand up to striking fisherman on a good-faith commitment? We haven’t seen one yet.

In short, May’s attempt to limit Brexit damage is a stitch-up, pleasing neither side of the House.

Labour’s Role in All This

In desperation, Mrs May has turned to Jeremy Corbyn’s Labour Party to gain sufficient support to push her Withdrawal Agreement through the House against the wishes of her own MPs. Corbyn is a Marxist, as is his Shadow Chancellor, John McDonnell. Both of them have promoted far-left activists, who now have a high degree of control over both party policy and the selection of Labour MPs, meaning that moderates are being side-lined and expunged. 

This creates Labour’s own crisis, with Marxist activists alienating moderate Labour voters in the constituencies. Furthermore, the Parliamentary Labour Party has its own split between Remainers and Brexiteers. The whole Brexit issue is a hot potato with which the Labour leadership would rather not be involved. It was with this in mind the Labour leadership held talks with Mrs May’s government, at her invitation, to try to find common ground.

Labours tactics were simple, only an increasingly desperate Prime Minister seemed unable to see them. Labour took and kept the moral high ground, appearing reasonable by accepting the invitation to talks. They ensured they would go nowhere (not difficult, given Mrs May’s stubbornness), then withdraw blaming her for the breakdown. Their hope is to force a general election following a No Confidence Motion only after Brexit has been resolved, capitalising on Mrs May’s disastrous handling of the Brexit issue. And if Mrs May brings her proposed withdrawal agreement to the House for a fourth time, they almost certainly won’t support it, again blaming Mrs May for her “failure to listen”.

The Labour leadership will be observing with interest the battle to succeed her, and it will be clear to them that either No Deal or a compromise in that direction will be the result. This is unlikely to worry them on two counts. Firstly, Labour will not want to alienate voters in their northern constituencies any further by compromising on Mrs May’s deal or anything close to it. And secondly, the leadership, being committed Marxists, will probably take the view that a “right-wing” Prime Minister will improve their own prospects in a general election.

It all points to a continuing strategy of not supporting Mrs May, avoiding any deal with the Conservatives, and hoping the Conservatives will elect a leader that will destroy the Conservatives’ electoral prospects.

Mrs May’s Likely Replacement

At the time of writing, it appears that Mrs May will fail disastrously if she puts her amended withdrawal agreement to a Commons vote for a fourth time. She has tried to appeal to the Remainers with a fourth vote by offering a possible second referendum if MPs back her bill. She has now broken every red line she previously set out. She may not even get the chance for it to be voted.

In the coming days, her position will surely become untenable, though we have all said that before. But this time, she will have exhausted every possibility and have nowhere else to go. And if the Conservative vote collapses in today’s European elections, the fence-sitters in Parliament will be galvanised into getting rid of her.

In the last few days, leadership contenders have been lining up their bids for the premiership. Those jostling for position are talking of everything but Brexit. The Remainers, such as Philip Hammond (the Chancellor) do not appear to be in the race and have become so unpopular outside Parliament that they wouldn’t get a mandate from the constituencies anyway. The next leader is very likely to be a staunch Brexiteer.

It would bore an international audience to list and analyse the runners, other than to concentrate on the clear favourite, Boris Johnson, who currently shows as 7/4-on. His nearest rival, Dominic Raab is 9/2-against. The news on Boris is for him both good and tricky. The good is that he is clearly the favourite with the constituency members, and if he can be one of the two names put forward, he should be home and dry. The tricky bit is Remainer MPs and fence-sitters in the parliamentary party, who claim to be one-nation Tories, would rather not support Boris.

He is regarded as right-wing, when in fact he favours freer markets, less regulation, and free trade. He is a classic Tory. It is the party’s middle ground that has become socialistic. In an op-ed in the Daily Telegraph he wrote the following:

“What we cannot now know – as the great French economist Bastiat observed in the 19th century – is the unseen opportunity cost of the way the UK economic structure has evolved to fit the EU over the last four and a half decades, and the productive ways in which it might now evolve.”

The reference to Frédéric Bastiat is important. He is referring to Bastiat’s parable of the broken window, which points out that the state’s intervention (the boy who broke the window) denies the more productive use of the baker’s money to his desired ends. The fact that Johnson knows the parable and understands the message is good evidence of his libertarian credentials.

That being the case, it is the socialistic element of the Conservative parliamentary party, masquerading as one-nation Tories, that he has to overcome. Reportedly, he has been having one-to-one meetings with his fellow MPs to do just that. Sometime ago, there was a well-founded belief that if Johnson became leader of the Conservative Party at least five MPs would resign the whip. Since then, Change UK, a dustbin of disillusioned Remainers has been formed with eleven MPs, three of which were Conservatives. It has been a complete failure and a sharp lesson to other would-be jumpers, so there are likely to be no more defections on a Johnson leadership. 

Johnson has also been taking the advice of Lynton Crosby, probably the most successful political strategist today. It was Crosby who advised Scott Morrison in last weekend’s Australian election, when the expected Labour opposition victory was successfully overturned. He also advised Johnson in his successful elections as Mayor of London in 2008 and 2012. 

This is interesting, because Johnson appears to be working to a carefully constructed plan. He avoids press comment over Brexit and writes about anything else in his Monday column at the Daily Telegraph. His contributions in Parliament have been brief, the few on Brexit generally confined to democracy rather than trade. He has positioned himself to rescue the party from electoral destruction if called upon, rather than appear to be an overtly ambitious politician, unlike all the other contenders. It is quite Churchillian, in the sense there is a parallel with Churchill’s election by his peers to lead the nation in its darkest hour. He even wrote about it in a recent bestseller, The Churchill Factor1,and understands intimately what it took for Churchill to gain the support of the House.

It is therefore hardly surprising Johnson is the favourite to succeed Mrs May. His appreciation of free markets means he is not frightened by trading with the EU on WTO terms. Furthermore, President Trump admires him, and would be likely to fast-track a US trade deal with the UK. However, Johnson is likely to pursue a deal on radically different terms on a take-it-or-leave-it basis with no further extensions to Exit Day.

As soon as the 31 October deadline has passed, Remainers will no longer have a cause. They have yet to appreciate the fact, and they may vote for him in the hope that after restoring the party’s fortunes, they can get rid of him and mend relations with the EU. But the Brexit debate would effectively end after Exit Day and its divisiveness with it. Farage’s Brexit party will wither on the vine, its purpose of restoring democratic accountability to Parliament and delivering Brexit being restored.

Johnson would then have the task of rebuilding the party for the next general election, set for 5 May 2022. 

In the coming days, having seen Mrs May’s last roll of the dice, all these factors will be uppermost in the minds of both backbenchers and of government ministers in their private capacity. If there is one thing that is certain, the Conservative Party is a survivor. If Boris Johnson is the best option, MPs will swallow their prejudices and elect him.

Excerpted from Brexit – Theresa May’s Final Act
  • 1.
    Published by Hodder, 2015.
When commenting, please post a concise, civil, and informative comment. Full comment policy here

Was Bastiat an Economic Theorist?

Most economists, while recognizing the great 19th-century French liberal Frédéric Bastiat as an outstanding economic journalist and a master polemicist for free trade and other liberal economic policies, have summarily dismissed him as an economic theorist.  These include economists from Mises and Hayek to Schumpeter and Marx.  Lately some economists have begun taking a second look at Bastiat’s work in economic theory. 

Right now there is a stimulating online conversation going on about Bastiat's contributions to economic theory in his treatise Economic Harmonies.  The conversation marks the completion of a draft of Liberty Fund's new translation of Economic Harmonies and is led by Dr. David Hart, the Academic Editor of Liberty Fund's Bastiat translation project and the leading authority on Bastiat and his work.  It is part of the series “Liberty Matters: A Forum for the Discussion of Matters pertaining to Liberty.”   Besides David and me, the participants include two prominent academic experts on Bastiat, Professors Don Boudreaux of George Mason University, and Guido Hülsmann of the University of Angers. 

The contributions to the discussion are lively, concise, accessible to Bastiat fans of all ages and backgrounds, and well worth reading. 

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

Education Needs More Market Signals, Not "Credential Signals"

05/24/2019José Niño

Dirty Jobs’ Mike Rowe does not pull punches when it comes to tearing down conventional wisdom in professional advancement.

Rowe has had choice words for the university system and how it has kept Americans ill-prepared for the real world. One of the greatest insights that Rowe has shared with many Americans disillusioned with their professional prospects is to look the other way in the blue-collar sector for lucrative opportunities.

On Tucker Carlson’s nightly show, Mike Rowe continued his attacks on higher education in America. Rowe claimed that Americans and legacy institutions are “obsessed with credentialing, not education.”

Rowe continued, “I think because stuck in this binary box, this or that. Right, blue-collar or white color, good job or a bad job. Higher education or higher alternative education.”

The TV show host then said:

“The cost of college today has almost nothing to do with the cost of an education, and everything to do with the cost of buying a credential. That’s all a diploma is. Some are more expensive than others, but none of them reflect the character of the recipient, none are necessary to live a happy and prosperous life, and none of them come with any guarantees.”

Rowe gets the surface details correct, however, there is more to the story than meets the eye. Ever since the federal government got involved in education, not only has the quality become suspect, but the cost of education has skyrocketed.

A study from the National Bureau of Education Research (NBER) found that the average net tuition increased by 106 percent from 1987 to 2010. We can thank government subsidized loans for that.

These guaranteed subsidies artificially drive up demand, and in turn, universities take advantage of this by raising tuition rates . On top of that, rigorous accreditation standards shield established universities from competition. Gary North explains how the American university has evolved during the past century:

Accreditation was initially private. Private regional accrediting associations were set up. Today, there are state laws governing the use of the word 'university.' A university must be accredited.

In effect, these legal barriers to entry restrict the supply of academic institutions providing educational services, thus keeping prices high.

With how democratized information has become due to technology like the Internet, it no longer matters what educational institution you go to. Now, people from all over the world can learn information that was only available to rich elites. In theory, the playing field should already be leveled. Unfortunately, the government has not caught up with this trend and impedes the market from doing its thing.

The U.S. political economy, from its tax code to an out-of-control bureaucracy, has in many ways created a quasi-rigged environment against new entrants. Further, the education system helps perpetuate this vicious cycle of control. From the primary level up until the university level, students are treated as if they are cogs in a machine. Go to class, get lectured, memorize material. Rinse, lather, and repeat.

Once students enter the real world, they are up to their necks in debt and ill-prepared to be a part of the workforce. It’s even sadder when young individuals, disillusioned with their dreary corporate jobs, end up gravitating toward government solutions to these problems. The same government that constricts our job prospects, has also constricted our mindsets when it comes to working. Indeed, we can aspire for more.

It’s time to recognize that not everyone needs a traditional degree to have a successful career. Some people’s calling belongs in trades, not an office cubicle. Our society’s blind acceptance of the university to the corporate pipeline has stunted the professional imagination of countless individuals.

Rowe’s insights on higher education are a breath of fresh air. The next step is for Rowe and others to embrace free markets as the solution to the higher education conundrum.

Rowe might not have the correct specifics but he’s at least starting a conversation that must take place if we want to overhaul our education system. We can start by treating education like a good or service, not some positive right that has to be provided or stimulated by the most primitive institution to rule them all—the State.

Originally published by Advocates for Self-Government.

When commenting, please post a concise, civil, and informative comment. Full comment policy here
Shield icon power-market-v2