A Celebration of Christmas and Capitalism 12/25/2011
Twenty years ago today, on the morning of December 25, 1991, Mikhail Gorbachev resigned as president of the USSR, declaring the office extinct. The Soviet flag was lowered for the last time over the Kremlin marking the end of a 70 year nightmare. Famine and fear were all too common for those lucky enough not to be part of the tens of millions murdered in the name of a collectivist utopia. It is sickening to think that this criminal experiment was adopted and implemented on such a vast scale. The USSR is one of the darkest blemishes on the canvas of human history. Its collapse should be celebrated, and we should take this time be reminded of just what evils are possible when we allow individual human beings to be sacrificed for government, or society, or "the greater good". Contrast the death and destruction of the USSR to the lively prosperity of of the USA. The extent to which societies flourish in material and moral terms is directly proportional to the degree to which free-market capitalism is adopted. Christmas in America is celebration of capitalism. As noted by Leonard Peikoff, "Christmas in America is an exuberant display of human ingenuity, capitalist productivity, and the enjoyment of life." Andrew Bernstein adds that, "Santa Claus is also a symbol of good will, and thus is the appropriate holiday symbol of America, a country that, because of its material prosperity, can inspire good will in all of its citizens." Santa Claus is an advocate for justice. He gives only to the good children that have earned it. Finally, it should be noted that Christmas is a time that can be celebrated by all: "The secular meaning of the Christmas holiday is wider than the tenets of any particular religion: it is good will toward men—a frame of mind which is not the exclusive property (though it is supposed to be part, but is a largely unobserved part) of the Christian religion. The charming aspect of Christmas is the fact that it expresses good will in a cheerful, happy, benevolent, non-sacrificial way. One says: “Merry Christmas”—not “Weep and Repent.” And the good will is expressed in a material, earthly form—by giving presents to one’s friends, or by sending them cards in token of remembrance . . . . The best aspect of Christmas is the aspect usually decried by the mystics: the fact that Christmas has been commercialized. The gift-buying . . . stimulates an enormous outpouring of ingenuity in the creation of products devoted to a single purpose: to give men pleasure. And the street decorations put up by department stores and other institutions—the Christmas trees, the winking lights, the glittering colors—provide the city with a spectacular display, which only “commercial greed” could afford to give us. One would have to be terribly depressed to resist the wonderful gaiety of that spectacle." - Ayn Rand, The Objectivist Calendar, Dec. 1976 Merry Christmas! A $ A 1 Comment The Best Bet is Freedom 11/09/2011
This article by Jason Riddle originally appeared in the Freeman on 11/09/2100. 
As I was watching the recent GOP debate in Las Vegas, I couldn’t help but think of the millions of people that enter the casinos expecting to beat the odds. Some do. However, most do not. There is a reason why gambling is a multibillion dollar industry. Big profits are made as relatively small amounts are lost by the masses trying to beat the system. Of course gambling may be regarded as entertainment, but the relevant feature of gambling for present purposes is that it is a zero-sum game. One person’s winnings are necessarily another’s losses. Wealth is transferred, and the house always wins so long as enough people play the game. Similarly, politics operates as a zero-sum game. Economist Robert Murphy points out that our current political system is actually a negative-sum game, but even if we could eliminate all bureaucratic waste, we cannot escape the simple truth that when an individual wins political favor, he or she only benefits at the less obvious expense of someone else. There is no such thing as a magical public fund from which political gifts spontaneously generate. No matter how noble the intention or the cause, the benevolent politician is not Santa Claus. All goods distributed by government must first be created or produced by somebody. Whatever is given must first be taken. This is true for corporate subsidies and bank bailouts, just as it is true for transfer payments made to the very poorest members of society. People by and large accept such a system because they believe they will be able to draw more in political advantage than they lose by way of political plunder. This mentality keeps the population playing the game, and like the casino, if enough people play the game, it is the political class and the politically connected that always win.... RON PAUL “PLAN TO RESTORE AMERICA” 10/17/2011
Today, Ron Paul released his Plan to Restore America. “It’s the only plan offered by a presidential candidate that actually balances the budget and begins to pay down the debt. And it’s the only plan being offered that tries to reign in the Federal Reserve and get inflation under control.” Paul’s plan does not just rearrange the status quo. Paul’s Plan to Restore America is real fundamental reform. Here is a summary of what is included: CUT SPENDING
CUT TAXES
REFORM ENTITLEMENTS
A Golden Opportunity? 09/13/2011
The United States has the largest gold reserves of any nation in the world by a significant margin. The U.S. is reported to hold about 8,133.5 metric tonnes of gold. Germany is a distant second with 3,401.0 metric tonnes of the yellow metal. Italy has 2,451.8 metric tonnes in reserve. Could nations tap into their gold reserves to ameliorate their sovereign debt woes? Let’s take a look at the numbers.  Presently, the Italian government’s annual deficit is nearly 4% of national output. In order cover this year’s budget shortfall at current spending levels, Italy would have to raise $72 billion. One way to do this might be to sell $72 billion of gold. Unfortunately, Italy’s total gold holdings are only worth about $81 billion at today’s prices. That doesn’t get the Italian government very far considering Italy’s current debt has grown to almost $2.2 trillion after years of fiscal irresponsibility. Furthermore, Italy is going to have to come up with $151.55 billion in financing from September to the end of this year just to avoid default, according to Goldman Sachs. It seems the Italian welfare state is insolvent, having spent far more than they have or will be able to generate. The facts do not bode well for the world’s eleventh largest economy looking at a mountain of debt that is over 120% of national output. The situation in the United States is not much brighter. The U.S. has 3.3 times the amount of gold as Italy, but nearly 6.6 times the amount of government debt. Sure, the U.S. has the largest gold reserves in the world, but the total amount of gold held by the United States is only worth about $270 billion at today’s prices. In other words, all of the gold held in Fort Knox and at the various U.S. mints would be enough to cover about one half the cost of Obama’s newest proposed spending bill. In fact, at today’s prices, the value of all the gold ever mined in the history of the world comes to a grand total of $5.2 trillion. That is just enough to fund the U.S. Federal government for a little over a year at current spending levels. The fact that government debt far outpaces the amount of gold reserves may be another signal that gold is undervalued relative to fiat currencies. This could actually turn out to be a golden opportunity to reduce sovereign debt. Perhaps, instead of dumping all of their gold at once to pay down debt, nations like the U.S. or Italy could actually take advantage of their large gold stocks and the public’s new appetite for gold by minting new coins of various weights and then selling them at a premium. The proceeds from the sale of new coins could be used to retire existing debt. As the new coins circulate, the public will be more accepting of gold. Increased demand will give countries like U.S and Italy a larger future income stream from selling their bullion. Some economists have argued that over-extended governments should sell their assets on the open market to pay down the massive debts they have incurred. I certainly agree. This would reduce government debt and return valuable resources taking from the private sector. Gold reserves should be included in such an auction. It is unlikely governments will sell bullion to pay debt. It is more unlikely governments will reduce spending in any meaningful way so long as it is easier for the politicians to print colorful paper tickets or make electronic entries to inflate the money supply. The chief problem is that governments do not have nearly enough real resources, actual or projected, to cover the cost of their exorbitant spending. History tells us that this age-old political game usually ends with destruction of the currency. It is unlikely the dollar or the euro will fare differently this time around as long as governments are controlling the money. A $ A  Now that we’ve had exactly one month to digest the debt ceiling debacle, followed by the S&P’s downgrade of the US government, let’s take a deep breath and consider the reality of the situation. The United States government remains very much in the midst of fiscal disaster. The debate over raising the debt ceiling for the 75th time since 1962 was a complete distraction from the real problem: Out of control government spending. The meager deficit reductions included as part of the debt ceiling deal represent a decrease from the amount of increasing government spending. This was not an overall decrease in spending. At the end of 2012, the government’s debt will have reached a total of over $16.5 trillion from its current level of $14.6 trillion. Ten years from now the U.S. government’s debt will reach $22 trillion dollars, given the most conservative projections. That is 51% higher than it is today. Today, our government officially spends about 3.4 trillion per year. In ten years, annual spending levels are projected to be 5.2 trillion per year by the CBO. Given those projections, the government has knowingly promised to put us in debt to the tune of at least $22 trillion dollars. If that is the case, why didn’t Congress just raise the debt ceiling to $22 trillion since that is what they are promising to do anyway? On August 2nd, our elected officials authorized the U.S. Treasury to borrow and spend an additional $2.4 trillion dollars over the next 15 months - conveniently, long enough to make it though the next election cycle. Clearly, the entire process of raising the debt ceiling for the 75th time since 1962 has been one of smoke and mirrors by both political parties. But raising or not raising the debt ceiling isn’t the issue. The government is going to find a way to spend the money it wants to spend. Without question, the debt ceiling has proven to be an ineffective tool to constrain out of control government spending. At best, it is an inconvenient formality and an opportunity for cheap political posturing. The evil here is not in the abuse of continuing to raise the debt ceiling; but rather in the government’s use of debt borrowing to fund spending on programs with which the government has no legitimate authority to be involved in the first place. The appetite of government cannot be quenched and will continue to consume the wealth and income of those working in the productive private sector as long as we let it. We are caught in the “iron triangle” of politicians, bureaucrats, and special interest groups. The only real solution to our government’s debt dilemma is to challenge the justifications for the size and scope of Washington’s reach over the lives the American people. The government has shown it has no plans to get its fiscal house in order. Americans should rediscover the proper role of government and to stop asking the government to do things for us that we are not willing to do ourselves. A $ A The Beauty of Liberty 08/26/2011
Today Stephan Kinsella wrote a great piece for Mises.org about a five-week online course he is offering called "Libertarian Controversies". I have taken several courses through Mises Academy and have very much enjoyed the experience. However, what captured my attention today was Kinsella's splendid articulation of the personal joys that come from championing a reason-based philosophy of life and liberty. Kinsella writes: "What could be more beautiful than the idea that we ought to respect each other's rights so we can live in peace and harmony? It's refreshing to be part of a community that has a passion for justice, freedom, and goodness — for truth, reason, and consistency. We believe society and prosperity are achievable if we simply adopt a civilized political ethic. It's a beautiful way to look at the world. Appreciating the logic of liberty and the role of property rights in the social order is enlightening, provocative, and inspiring. Our approach also provides striking analytical advantages over conventional "left" and "right" oriented political views. Leftist and rightist political thinking alike are hypocritical, inconsistent, collectivist, and contrary to economic science and human nature. They give lip service to liberty and reason but renounce it on a dime to preserve their cherished statist policies. They end up defending policies and consequences contrary to their professed values. By contrast, the libertarian perspective strives for consistency and justice. It recognizes the nonaggression principle and the important role of property rights in justice and the promotion of peace and prosperity." Well said Stephan Kinsella! A $ A Bruce Smith's 3 Principles for Lawmakers 08/24/2011
Bruce Smith (1851-1937) in Liberty and Liberalism: A Protest against the Growing Tendency toward undue Interference by the State writes: "The broad principles, then, which I should venture to lay down as guides for any one assuming the responsible position of a legislator are three in number.
All legislators should keep these principles in mind. Unfortunately, guidelines that lead with the words "the state should not" are quickly ignored by rulers and central planners. 2011 or 1931? 08/22/2011
"Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth. Rather, it arose because the credit expansion created the illusion of such an increase. Sooner or later it must become apparent that this economic situation is built on sand." - Ludwig von Mises, 1931 "To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about." F.A. Hayek, 1931 As we stand ready for the Fed to announce QE infinity, I can hear voices from history warning against this failed policy. Read more about Hayek's insights from a recent article by Jeff Tucker on mises.org: Hayek's Ghost Haunts the World Below is a list of intriguing quotations I pulled from the book Bureaucracy by Ludwig von Mises, written in 1944: Bureaucracy “Bureaucracy is but a consequence and a symptom of things and changes much more deeply rooted.” “Of course, America is faced with a phenomenon that the framers of the Constitution did not foresee and could not foresee: the voluntary abandonment of congressional rights. Congress has in many instances surrendered the function of legislation to government agencies and commissions, and it has relaxed its budgetary control through the allocation of large appropriations for expenditures…” “…government control of business is ultimately incompatible with any form of constitutional and democratic government.” “The trend toward bureaucratic rigidity is not inherent in the evolution of business. It is an outcome of government meddling with business.” “Thus a tendency toward rigidity originates….In all countries all tax laws are today written as if the main purpose of taxes were to hinder the accumulation of new capital and the improvements which it could achieve…..Modern policies result in tying the hands of innovators no less than did the guild system of the Middle Ages.” “The popular ideas of government interference with business and of socialism have undermined the dams erected by twenty generations of Anglo-Saxons against the flood of arbitrary rule.” “Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do.” “Bureaucratic management is the method applied in the conduct of administrative affairs the result of which has no cash value on the market. Remember: we do not say that a successful handling of public affairs has no value, but that it has no price on the market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money.” “The objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods.” “What many people nowadays consider an evil is not bureaucracy as such, but the expansion of the sphere in which bureaucratic management is applied.” “People blame bureaucracy, but what they really have in mind are the endeavors to make the state socialist and totalitarian.” “It is a mistake to judge the efficiency of a government department by comparing it with the working of an enterprise subject to the interplay of market factors.” Capitalism “Capitalism or market economy is that system of social cooperation and division of labor that is based on private ownership of the means of production.” “It is the most precious privilege of man to strive ceaselessly for improvement and to fight by improved methods against the obstacles that nature opposes to his life and welfare.” “It is therefore nonsensical to contrast production for profit and production for use. With the profit motive the enterpriser is compelled to supply the consumers with those goods which they are asking for most urgently.” “Thus the capitalist system of production is an economic democracy in which every penny gives a right to vote. The consumers are the sovereign people.” “In the capitalist system all designing and planning is based on the market prices.” “The devices of bookkeeping and accountancy are so familiar to the businessman that he fails to observe what a marvelous instrument they are. It needed a great poet and writer to appreciate them at their true value. Goethe called bookkeeping by double-entry “one of the finest inventions of the human mind.”” “Responsibility to the consumer is the lifeblood of business and enterprise in an unhampered market society.” “Profit is the reward for the best fulfillment of some voluntarily assumed duties. It is the instrument that makes the masses supreme. The common man is the customer for whom the captains of industry and all their aides are working….under capitalism, their main task is to serve the consumers.” Politics “Bureaucratization is only a particular feature of socialization. The main matter is: Capitalism or Socialism? Which?” “The emergence of a large class of such men dependent on the government became a serious menace to the maintenance of constitutional institutions.” “…both industrial inefficiency and corruption are the consequences of methods of government interference with business…” “The worst law is better than bureaucratic tyranny.” “Representative democracy cannot subsist if a great part of the voters are on the government pay roll.” “The modern trend toward government omnipotence and totalitarianism would have been nipped in the bud if its advocates had not succeeded in indoctrinating youth with their tenets and in preventing them from becoming acquainted with the teachings of economics.” “Economics deals with the operation of the whole system of social cooperation, with the interplay of all its determinants, and with the interdependence of the various branches of production. It cannot be broken up into separate fields open to treatment by specialists who neglect the rest.” “The government pretends to be endowed with the mystical power to accord favors out of an inexhaustible horn of plenty. It is both omniscient and omnipotent. It can by a magic wand create happiness and abundance.” “The truth is that the government cannot give if it does not take from somebody.” “At the bottom of all this fanatical advocacy of planning and socialism there is often nothing else than the intimate consciousness of one’s own inferiority and inefficiency.…He who is unfit to serve his fellow citizens wants to rule them.” “Paternal government by an order of lofty and wise men, by any elite of noble bureaucrats, can claim a very eminent champion, Plato. Plato’s ideal and perfect state is to be ruled by unselfish philosophers.” “Whether one likes it or not, it is a fact that the main issues of present-day politics are purely economic and cannot be understood without a grasp of economic theory. Only a man conversant with the main problems of economics is in a position to form an independent opinion on the problems involved.” “All the others are merely repeating what they have picked up by the way. They are an easy prey to demagogic swindlers and idiotic quacks. Their gullibility is the most serious menace to the preservation of democracy and to Western civilization.” Can we compromise between capitalism and socialism? “The most detrimental outcome of the average citizen’s repugnance to a serious concern with economic problems is his readiness to back a program of compromise. He looks upon the conflict between capitalism and socialism as if it were a quarrel between two groups—labor and capital—each of which claims for itself the whole of the matter at issue. As he himself is not prepared to appraise the merits of the arguments advanced by each of the parties, he thinks it would be a fair solution to end the dispute by an amicable arrangement: each claimant should have a part of his claim.” “Thus the program of government interference with business acquired its prestige. There should be neither full capitalism nor full socialism, but something in between, a middle way. This third system, assert its supporters, should be capitalism regulated and regimented by government interference with business.” “The conflict between socialism and capitalism is not a struggle between two parties for a greater share in the social dividend. To see the matter this way is tantamount to a full acceptance of the tenets of the Marxians and the other socialists.” Conclusion “The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship….They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office.” Meet the new boss, same as the old boss... 03/19/2011
 The following headline was just posted on Drudge Report: MARCH 19, 2011 OBAMA: 'Today we are part of a broad coalition. We are answering the calls of a threatened people. And we are acting in the interests of the United States and the world'... MARCH 19, 2003 BUSH: 'American and coalition forces are in the early stages of military operations to disarm Iraq, to free its people and to defend the world from grave danger'... ************ From AP: "We cannot stand idly by when a tyrant tells his people there will be no mercy." - Obama From Reuters: "As I said yesterday, we will not, I repeat, we will not deploy any U.S. troops on the ground." - Obama What role do you think the US government should play in the politics of the Middle East? | A note from A-equals-A:
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