“Socialism is for the Uninformed”

Sanders.PNGThomas Sowell makes a compelling case for going beyond surface level platitudes and shibboleths being all that it takes to realize that socialism can’t possibly work and that all evidence of countries that have tried a planned and wealth confiscatory approach have all failed. After making the case through some examples and counterpoints to the Sanders’ socialist agenda, Sowell delivers my favorite quote from the article, “None of this is rocket science. But you do have to stop and think — and that is what too many of our schools and colleges are failing to teach their students to do.”

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“The GOP’s Mexico Derangement”

Mexico

Bret Stephens has a biting critique of the GOP in his recent Wall Street Journal op-ed. Stephens, as ever, is able to criticize the party that he aligns with most often with eloquence and forcefulness that I admire. The GOP’s myopia and fixation, to say nothing of the lack of economic soundness and adherence to liberty, small government, and plain moral decency – was a primary source of frustration of mine with the party long before the rise of Trump. The combination of stances on immigration, free trade, and Trump are the main reasons I will be casting a Presidential Libertarian ballot this election season.

Some of the piquant highlights of the article, in which Stephens addresses common canards leveled against Mexico and Mexican immigration are as follows:

Mexico is a failed state. Mexico’s struggles with drug cartels—whose existence is almost entirely a function of America’s appetite for dope—are serious and well known. So are its deep-seated institutional weaknesses, especially the police forces that collude with the cartels and terrorize rural areas.

Then again, Mexico’s 2014 homicide rate of about 16 murders per 100,000 means that it is about as dangerous as Philadelphia (15.9) and considerably safer than Miami (19.2) or Atlanta (20.5). Are these “failed cities” that you don’t dare visit and that should be walled off from the rest of America?

Mexico steals U.S. jobs. Donald Trump recently resurrected this chestnut by inveighing against Nabisco and Ford for shifting production to Mexico from high-cost Illinois and Michigan. Never mind that one reason Ford made the move was to take advantage of Mexico’s free-trade agreements with the European Union and other countries, meaning that opposition to free trade is the very thing that drives business abroad. Then again, Mexico is the second-largest purchaser of U.S. products; the Wilson Center’s Christopher Wilson has estimated that “six million U.S. jobs depend on trade with Mexico.” That is especially true for border states. ‘Mexico is the top export destination for five states: California, Arizona, New Mexico, Texas and New Hampshire, and is the second most important market for another 17 states across the country.’

Illegal immigrants are a drain on the system. This whopper should be sold at Burger King, since illegal immigrants pay billions in state and local taxes, along with about $15 billion a year to Social Security—the benefits of which they are unlikely ever to get back. Entire U.S. industries, agriculture above all, depend on illegal migrants, without whom fruits and vegetables would simply rot in the field.

If there is a drain, it’s Mexicans going home—roughly one million returnees between 2009 and 2014, according to the Pew Research Center, outpacing the number of Mexicans moving north by about 140,000. That owes something to growth and stability in the Mexican economy, which is largely a function of the North American Free Trade Agreement.

This makes Mr. Trump’s opposition to Nafta all the more misjudged. Without it, Mexico could easily have become Venezuela, run by an Hugo Chávez-like strongman, that would have posed a real threat to U.S. security, as opposed to the one in Mr. Trump’s imagination.

 

Free Trade Lessons for the Economically Challenged

Yes, the would be trade war General Donald Trump is included in those that need these lessons. Whether he actually believes his own tirades against Mexico and China or whether he finds them politically astute given his blue collar base is beside the point, the lesson on the virtues of free trade are in constant need of defending – like a garden that is surrounded by malevolent spreading weeds that are aggressive but thoughtless.

This Neighborhood Tale from Cafe Hayek is one Orwellian dystopian view of the topic that asks the obvious question – why should government backed by freedom-hating voters decide what I get to consume and where I get my products from? Drawing the arbitrary consumption boundary to the United States is really no different philosophically and morally than drawing a consumption boundary around my neighborhood. When one paints it in this light, then the restrictions on individual liberty and punitive tariffs becomes quite the sophistry.

Another highly insightful and thought provoking entry on the topic comes from the American Enterprise Institute constructed video debate between Trump and Milton Friedman on the topic. Of course, Friedman having passed away some years ago we don’t get the pleasure of Friedman actually destroying Trump’s immature trade arguments in real time, but the artful creation of AEI does the job well enough.

A key phrase from Friedman in the video montage that I particularly enjoy (at the 2:00 minute mark) summarizes the topic of free trade quite well, “When I look at the legislation it always seems to me that the legislation is enacted to benefit a small group at the expense of the large group. Free trade is a way of benefiting a large group at the expense of the small group. But, politically, a small group always speaks with a bigger voice.”

Another common bogeyman of the protectionist is the trade deficit. To the protectionist, this is a pernicious sign of unfair trade practices. The problem with this simplistic view is an assumption that those dollars will exist in a permanent vacuum of no escape. Eventually, those dollars will have to be spent on something, which is most often re-invested back into the United States. Friedman also observes that trade surplus countries are often driven by the lack of savings opportunities in their own countries, driving them to invest in countries such as America where investment opportunities are better.

“When I look at the legislation it always seems to me that the legislation is enacted to benefit a small group at the expense of the large group. Free trade is a way of benefiting a large group at the expense of the small group. But, politically, a small group always speaks with a bigger voice.” – Milton Friedman

Another brilliant quote that I want to call out is when Friedman uses a quote (7:35 minute mark) from the classical American economist Henry George (circa 1890) that, “It’s a very interesting thing that in times of war, we blockade our enemies in order to prevent them from getting goods from us. In time of peace we do to ourselves by tariffs what we do to our enemy in time of war.”

AEI provides a fuller version of Henry George’s arguments on the inanity of protectionist policies in their text, which I have copied below. I find the similarities between Trump’s proposed 45% tariff and the 47% tariff of George’s day that President Grover Cleveland was attempting to lower an amazing coincidence.

Trade is not invasion. It does not involve aggression on one side and resistance on the other, but mutual consent and gratification. There cannot be a trade unless the parties to it agree, any more than there can be a quarrel unless the parties to it differ. England, we say, forced trade with the outside world upon China, and the United States upon Japan. But, in both cases, what was done was not to force the people to trade, but to force their governments to let them. If the people had not wanted to trade, the opening of the ports would have been useless.

Civilized nations, however, do not use their armies and fleets to open one another’s ports to trade. What they use their armies and fleets for, is, when they quarrel, to close one another’s ports. And their effort then is to prevent the carrying in of things even more than the bringing out of things—importing rather than exporting. For a people can be more quickly injured by preventing them from getting things than by preventing them from sending things away. Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade.The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Can there be any greater misuse of language than to apply to commerce terms suggesting strife, and to talk of one nation invading, deluging, overwhelming or inundating another with goods? Goods! what are they but good things—things we are all glad to get? Is it not preposterous to talk of one nation forcing its good things upon another nation? Who individually would wish to be preserved from such invasion? Who would object to being inundated with all the dress goods his wife and daughters could want; deluged with a horse and buggy; overwhelmed with clothing, with groceries, with good cigars, fine pictures, or anything else that has value? And who would take it kindly if any one should assume to protect him by driving off those who wanted to bring him such things?

 

 

Quote of the week – Friedman on Freedom

“So long as freedom is maintained, it prevents positions of privilege from becoming institutionalized. Freedom means diversity, but also mobility. It preserves the opportunity for today’s disadvantaged to become tomorrow’s privileged and, in the process enables almost everyone, from top to bottom, to enjoy a fuller and richer life.” – Milton Friedman.

A socialist society advocated by Sanders becomes an ossified one. The free market is not perfect and not advertised to be, but is still the only way known to man to provide equality of opportunity and the most effective way to ensure that people can escape poverty.

What is a sweatshop? Should they not exist?

MI Touring Nike's Factories
**FILE**Workers at a Nike factory on the outskirts of Ho Chi Minh City, Vietnam, assemble shoes in this Oct. 10, 2000, file photo. Michigan State, among many schools with sponsorship agreements with Nike and the school will have senior associate athletic director Mark Hollis joining Nike officials for an upcoming tour of manufacturing facilities in Vietnam and China. (AP Photo/Richard Vogel)

The fundamental question on the existence and morality of sweatshops through this podcast, as presented by Economist Ben Powell, who is located in my hometown of Lubbock, Texas at the Free Market Institute of Texas Tech University and happens to be a friend of a friend, provides a thought provoking view of sweatshops and whether we should focus our philanthropic energies on shutting them down, demanding higher wages and better workplace conditions, and/or boycotting the goods produced out of sweatshops. One would expect an economist to point out the unintended consequences of utopian decisions we would like to impose. Powell does a remarkable job of distilling economic frameworks such as price theory and immigration to their reducible and translatable components so that even the layman can enjoy and learn from them, hence my pitch to my friends and followers to give it a listen since one can rarely find economics topics presented with such clarity for the non-economist.

One of the chief insights in the podcast is that we must not fail to keep philosophy (in this case, perhaps we should call it humanism) from a connection to economics when evaluating policy and what we advocate for and support. While those of us in the West might get tremendously squeamish about sweatshop conditions and profess a knee-jerk reaction that of course they should be shut down (our humanism instincts), we must consider the unintended consequences of what would happen if we could in fact enact our plans. Economics + Philosophy must guide our knowledge, thoughts, and responses to such issues.  This ultimately forces us to consider what the next best alternative of the sweatshop worker is and to more critically examine why the individual chooses employment there. It must be stated that nobody should support slave labor, so let’s put that red herring to rest since in the vast majority of cases individuals choose to work in these factories that we in the West would admittedly deem abhorrent conditions. Thus, there is in fact an element of localized choice in these cases that we must consider. The great challenge and the deeper level to focus on is the fact that the overall range of employment options for these individuals is remarkably poor and sweatshops likely offer the best alternative on hand for them to be able to feed themselves and their families. In essence, the choice can often be working in a sweatshop or working in subsistence farming, which often offers far less money and far more grueling conditions, nor does farming provide a step onto the industrial skills ladder that sweatshop work often provides. While we may reflexively want to attack a symptom, the broader disease is nations with venal and corrupt government that have little institutional foundations that support an open and growing society that would facilitate the individual escaping their condition. The essential foundations for such a dynamic society can be summarized as limited and competent and non-corrupt government, individual property rights, the rule of law and freedom from arbitrary prosecution and perspection, freedom of contract, and a strong and impartial judicial system.

As it relates to individual choice, one might easily be led to believe that sweatshop workers should be given better working conditions such as more time off, more vacation, and safer and more elegant working conditions. Such a simplistic analysis would miss the point of economic tradeoffs. One might ask anyone in this world whether they would like more pay and better working conditions and all except for the world’s few true masochists would provide an invariable “yes” as an answer to that trite question. When pressed as to whether workers would trade off lower wages in order to receive those benefits, the vast majority of people working in sweatshops would invariably say “no” given their high dependence and relative value of cash in hand. Furthermore, to explore and get to the heart of how a worker in Bangladesh could get paid substantially far less pay than a textile worker in North Carolina, it is also absurdly simplistic to compare hourly wages. A true analysis must look at wage rate/productivity ratios for the differences between these two types of workers. Intuitively, the highly paid North Carolina worker is going to produce a tremendous amount more than their Bangladeshi counterpart through a combination of higher skills and better use of capital, dictating a higher relative wage. If a Bangladeshi is not paid significantly less, then their alternative choice to the sweatshop becomes unemployment.

Another interesting insight from the podcast is the alcohol prohibition analogy of Baptists and Bootleggers in grouping the cast of characters in the sweatshop debate. Baptists are the NGOs and philanthropists who are actually committed to the cause of reform, at least making them morally principled. They just often have wrongheaded and misinformed notions of policy prescriptions that should be pursued as a result of their convictions and their effectiveness. Bootleggers are the Unions and others who have a tremendous vested interest in pushing sweatshop wages to a higher point such that they are rendered uncompetitive, thus boosting their own wages. Bootleggers will thus remain unrepentant hurdles to reform while cynically acting as if they have the sweatshop worker’s interests at heart. The intent of the podcast is implicitly to convince the “Baptists” that they will do more harm than good with their approach and to direct their energies elsewhere.

This begs the question of where the concerned over the plight of sweatshop workers should direct their focus. As Powell indicates, the most effective policy reforms would be to support more open forms of immigration. This simple act of changing one’s domicile from a nation lacking the foundations I listed above to one that does (i.e. from Bangladesh to America) increases their wage earning potential 1000% overnight, according to Powell. In the long run, policies that support institutional and government reform will greatly aid in lifting millions from their plights within their native lands. What is clear is that demanding higher wages could very well result in no job and is therefore the opposite of what we should be advocating. Similarly, demanding safer workplace conditions will result in lower wages, which will harm those most in need of straight up cash.

As an aside, I can’t help but notice that Libertarianism.org uses some of the same visuals that I do for this blog – Washington’s crossing of the Delaware and Plato’s Academy. I am not sure whether I should feel validated or concerned that people will assume that I am a copycat, but I assure you that the usage is purely coincidental. I began the blog back in October and just recently picked up the podcast. Great minds think alike…

The drift towards socialism

Sanders

Given all of the momentum behind Bernie Sanders, fueled by what I heard one pundit call, “the children’s brigade of people supporting Sanders that have never had to watch thousands of dollars go out of their paychecks for taxes,” I created this post, in which I essentially copy and paste from one of my hidden away comments from within the About Me section.

My guiding principles on the appropriate order of society is that man should be free to do as much as they possibly can on their own without coercion of their fellow man. Freedom from coercion will inherently mean a small and limited government, which is the antithesis of what an avowed socialist such as Sanders advocates. It is not that I don’t like the idealism of a utopian state of all of us cooperating to build a just society, it is that I believe that empirical evidence of countries that have tried socialism have failed to deliver the utopia and have instead descended into quite the dystopia. The problem is that to have such a system, the ruling elites of a society change from one in which the invisible hand of the pricing system and the free market determine who is elite based upon individual skills and effort to one in which favors and status are doled out arbitrarily by a government elite. We can’t pretend that those entrenched with government power will suddenly become benevolent and all-wise benefactors. As William McGurn indicated in an op-ed in the Wall Street Journal, the unfortunate reality is that the end result of a socialist society is not idealistic cooperation, it is in fact collusion of a small governing elite and their attachments and hangers on. It is no accident that the richest woman in Venezuela is Hugo Chavez’s daughter. It is no accident that Brazil is dealing with corruption charges at all levels of government due to government officials abusing their power to milk bribes and embezzle money from the state-owned oil and gas company Petrobas.

It seems unquestionable at this point that in the last 8 years, the Democratic party has made a tremendous shift to the left, which is pulling Hillary Clinton leftward as well. Granted, much of Bernie’s recent success is in converse relation to Clinton’s inherent weaknesses in campaigning, trustworthiness, and likability, but it is still clear that voters are driving the party in a leftward lurch. This is perhaps a natural outcome of 8 years of anemic economic growth and a drumbeat of income inequality. I would submit that the income inequality seems to have been greatly aided and driven by conscious decisions by the federal reserve (by extension, government) to fuel asset prices through quantitative easing that props up asset prices owned mostly by the ultra wealthy and pins down meager saving rates largely owned by the middle class on down. We have thus ignored and swept away the hard fiscal and government reform that would actually unshackle the economy and tried to take the easy but much less effective path of monetary policy manipulation that also is much more prone to fueling asset price increases to the benefit of the rich and inflates the probabilities of a bust cycle requiring more bailouts that benefit the wealthy in the future. The clarion call warning is that if you haven’t been able to trust the angels that run government before to structure your life and make it all better before, why would you hand them the keys to even more power and control over your lives? Take some time to view the outcomes of socialist governments in the past and whether they delivered the utopia that is being proclaimed today. You will find that 100% of the time, they failed to live up to their ideals and instead descended into a different and less accountable elite-controlled society with sclerotic growth and a much more income stratified society that becomes much less fluid and changeable.

Quote of the Week

Hayek

It is incredible given the current debates around Common Core how much has not changed since Hayek’s time of writing his seminal book, The Constitution of Liberty in the early 1960s. This is evident in his chapter covering the role of government in education and research when he writes,

Even if education were a science which provided us with the best methods of achieving certain goals, we could hardly wish the latest methods to be applied universally and to the complete exclusion of others – still less that the aims should be uniform. Very few of the problems of education, however, are scientific questions in the sense that they can be decided by any objective tests. They are mostly either outright questions of value, or at least the kind of questions concerning which the only ground for trusting the judgment of some people rather than others is that the former have shown more good sense in other respects. Indeed, the very possibility that, with a system of government education, all elementary education may come to be dominated by the theories of a particular group who genuinely believe that they have scientific answers to those problems should be sufficient to warn us of the risks involved in subjecting the whole educational system to a central direction.

Thus, one of Hayek’s main concerns with the a predominate role of government in education was centralized control over the methods of instruction and shutting down any diversity and innovation in teaching methods, even going so far as to indicate that at best such control could invariably lead to a stultifying “scientific” uniform approach to education, and at worst, would lead to a dictatorship of mind control, thus repressing freedom of the mind.  Hayek’s policy prescriptions in the face of such negative consequences, while recognizing the need to still educate one’s citizens and children, was that it is proper for government to mandate children’s education and to provide resources for the truly indigent, but otherwise allow parents and children to choose which manner of education was most suited to them, and conversely for their to be a proliferation of education options that provided a diversity of instructional methods.

 

Abuse of the Establishment Clause of the First Amendment – Football coach suspended over private prayers

http://www.cnn.com/2015/10/29/us/washington-football-coach-joe-kennedy-prays/

I welcome the looming judicial review of the abuse of the Establishment Clause of the First Amendment cited by Bremerton, WA school officials in the suspension of a high school football coach that has a routine of praying at the 50 yard line after games. Over time, students chose to join him on their own volition. In today’s hypersensitive, increasingly secular, and Orwellian society this singular coach’s action is somehow astonishingly interpreted as a state institution promoting or enforcing a state religion. The school officials involved here seem to flatter themselves that by virtue of one coach making a private choice to exercise religion in a public fashion is somehow conflated to them being significant enough to suddenly jump to the vertiginous conclusion that this is enough to serve as the establishment or promotion of a single faith.

Perhaps one of the most alarming elements within this episode is that we are entrusting our children’s education to school officials such as these that can’t seem to pass the most basic tests of reading comprehension and an understanding of the governing charter of our land, the U.S. Constitution. So let’s review the First Amendment cited as a reason for removing the coach in this case:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

The school officials are inherently twisting the “shall make no law respecting an establishment of religion…” into a justification that somehow a private coach’s prayer is the state’s sanctioning of a religion. They in turn conveniently ignore the rest of the clause, which is, “…or prohibiting the free exercise thereof…”

Since secular militants like to abuse and misconstrue language of Thomas Jefferson on “separation of church and state,” let’s review some of the language that Founding Father had on this topic, taking from an earlier post I made on the topic of Thomas Jefferson on religious liberty: https://gymnasiumsite.wordpress.com/2015/10/27/thomas-jeffersons-concepts-of-religious-liberty-even-more-relevant-today/

“Almighty God hath created the mind free…no man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever, nor shall be enforced, restrained, molested, or burthened in his body or goods, nor shall otherwise suffer on account of his religious opinions or belief, but that all men shall be free to profess, and by argument to maintain, their opinions in matters of Religion, and that the same shall in no wise diminish, enlarge or affect their civil capacities.”

Note Jefferson’s emphasis on that no man should suffer on account of his religious opinions or beliefs and that they should be free to profess their religious opinions, and here is the most important point he makes: that this shall not diminish, enlarge, or affect their civil capacities.

The Liberty Institute will be bringing the suit, since the school officials can’t seem to have the wisdom or foresight to back down, and perhaps it is time for us to have this discussion and find the balance between overt coercion and enforcement and promotion of a religion at an institutional level and a private individual following their own private religious beliefs. Religious beliefs held in a public manner are protected too. In a way, I personally welcome the escalation to the higher court so that we can have this conversation and decision at a national level.

There is some Supreme Court precedence here that the Liberty Institute cites that:

  • Teachers and students do not shed their constitutional rights to freedom of speech or expression upon entering the schoolhouse (Tinker v. Des Moines Independent School District, 1916)

  • The First Amendment protects religious activity that is initiated by individuals acting privately, like Coach Kennedy during his post-game prayers (Everson v. Board of Education, 1947)

  • The government may not restrict the speech of private individuals for the sole reason that their speech is religious (Good News Club v. Milford Cent. Sch., 2001)

  • That speech by a public employee—including a teacher—does not always represent or appear to represent the views of the state (Tucker v. California Department of Education, 1996)

http://blog.libertyinstitute.org/2015/10/devastated-school-stubbornly-suspends.html?m=1

In essence, not only would a reasonable reading of the First Amendment and an understanding of the Founders’ intent behind it but also judicial precedence serves to indicate which way this case would go.

Thomas Jefferson’s concepts of religious liberty – even more relevant today

Thomas Jefferson for Today: Why Religious Liberty is a 21st Century Cause

http://www.faithstreet.com/onfaith/2014/01/20/30451/30450

We are certainly passing through a transformational transition stage in which the cultural plurality will transition from what has predominantly been one of Protestant dominance and belief to one that will increasingly erode into an ever diffuse plurality of non-affiliated people who hold some nominal religious belief as well as an increasing percentage of agnostics and atheists.

Even in an age of religious dominance, Jefferson was right to stress religious freedom as a foundational plank of individual liberty – namely the freedom from coercion of government or coercion of fellow man.

As Meacham (who wrote the seminal biography of Thomas Jefferson) notes, Jefferson made his case for religious liberty not only in secular but also in theological terms when he states:

“Almighty God hath created the mind free…no man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever, nor shall be enforced, restrained, molested, or burthened in his body or goods, nor shall otherwise suffer on account of his religious opinions or belief, but that all men shall be free to profess, and by argument to maintain, their opinions in matters of Religion, and that the same shall in no wise diminish, enlarge or affect their civil capacities.”

Meacham elaborates:

Jefferson argued, essentially, that if God Himself did not compel obedience, then no man should try to enforce what the Lord chose to leave as matters of free will. The “Holy Author of our religion,” wrote Jefferson, as “Lord both of body and mind . . . chose not to propagate it by coercions on either.”

I really enjoy the closing points Meachem makes on moderation throughout this transition and to remember the value of liberty and freedom of conscience for both those of a religious bent, like myself, and those of a secular bent:

In what is likely to be a tumultuous period ahead, it seems important to remember that our Founders had it right: religion is a matter of choice, not coercion. Believers should be on guard against self-righteousness; secularists should take care not to fall prey to smugness. “America proudly stands with people of every nation who seek to think, believe, and practice their faiths as they choose,” Obama said last week. “We urge every country to recognize religious freedom as both a universal right and a key to a stable, prosperous, and peaceful future.” That’s a message worth heeding not only on January 16, but every day.