Auburn Legend Pat Dye at the Mises Institute!

Auburn Legend Pat Dye at the Mises Institute!

03/08/2018Tho Bishop

The Mises Institute has been doing some grounds work the past few weeks, and we had a special visitor today as we planted a new tree: Auburn football legend Pat Dye. 

A player at the University of Georgia, Dye served as both head football coach and athletic director from 1981-1992. He was inducted in the College Football Hall of Fame in 2005,  and the playing field in the football stadium is named "Pat Dye Field" in his honor.

It was great to have Coach Dye with us today, and to show-off the Mises Institute campus to an Auburn legend. 

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Too Much Partisanship in Washington? No, Too Much Bipartisanship!

1 hour agoRon Paul

Washington is once again gripped by the specter of a government shutdown, as Congress and President Trump negotiate an end-of-year spending deal. A main issue of contention is funding for President Trump’s border wall. Sadly, but not surprisingly, neither Congress nor the administration is fighting to cut, or at least not increase, spending.

Federal spending has increased from 3.6 trillion dollars to 4.4 trillion dollars since Republicans gained control over both chambers of Congress in 2014. Some may try to defend congressional Republicans by pointing out that for two years the Republican Congress had to negotiate spending deals with President Obama. But federal spending has increased by 7.5 percent, or over 300 billion dollars, since Donald Trump become President.

A big beneficiary of the Republican spending spree is the military-industrial complex. Republicans have increased the “defense” budget by eight percent in the past two years. President Trump and congressional Republicans claim the increases are necessary because sequestration “decimated” the military. But Congress, with the Obama administration’s full cooperation and support, suspended sequestration every year but one, so the planned cuts never went into full effect. Congress and Obama also “supplemented” the official military budget with generous appropriations for the Pentagon’s off-budget Overseas Contingency Operations fund. Spending on militarism increased by as much as 600 billion dollars over the amounts allowed for under sequestration.

President Trump has proposed reducing the projected military budget for fiscal year 2020 to 700 billion dollars. This would be a mere two percent cut, yet the usual voices are already crying that this tiny reduction would endanger our security. If history is any guide, the military-industrial complex’s congressional allies and high-priced lobbyists will be able to defeat the president’s proposed reductions and convince President Trump to further increase the military budget.

This huge military budget has little or nothing to do with America’s legitimate security needs. In fact, as candidate Trump recognized, America’s military interventions in the Middle East have endangered our security by empowering terrorist groups like ISIS and al-Qaeda.

While the warfare state has been a big beneficiary of the Republican spending spree, the GOP has hardly neglected the welfare state. Domestic spending has increased seven percent since 2016. Except for a half-hearted attempt to repeal Obamacare and some food stamp reforms that were included in and then dropped from this year’s farm bill, Republicans have not made any effort to roll back or even reform the welfare state.

The farm bill, which Congress is expected to pass this week, will spend as much as 900 billion dollars over the next ten years. Much of that spending will be on taxpayer subsidies for wealthy farmers and even “farmers in name only.”

Trump’s budget deals have been supported by the majority of Democrats. Even those who have called for the president’s impeachment are more than happy to vote with him when it comes to increasing spending and debt. These Democrats are the mirror image of 1990s Republicans who made a big spending deal with President Clinton while simultaneously trying to impeach him.

We suffer from too much bipartisanship when it comes to the welfare-warfare state. This bipartisanship has resulted in a national debt that is rapidly approaching 30 trillion dollars. This will inevitably lead to a major economic crisis. The way to avoid this crisis is to replace the bipartisan welfare-warfare consensus with a new consensus in favor of limited government, peace, free markets in all areas including currency, and auditing then ending the Fed.

Reprinted with permission.

 

 

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In the Eyes of the State, We are All Russian (Bots) Now

Last September a very informative paper was published by the neoconservative Atlantic Council. In connection with this institution are such important public figures as Collin Powell, Condoleezza Rice and Henry Kissinger. The paper, written by John T. Watts, summarizes the main conclusions drawn at this year's Sovereign Challenges Conference in Washington, DC. The text allows for a deep look into some of the minds of the American elite and their allies. Its reading is therefore highly recommended. The inclined reader, however, should sometimes overlook empty phrases and distracting rhetoric to get to the heart of the matter.

At its core, it's about maintaining power. According to Watts, the big problem is “disinformation”, which is disseminated through new and alternative media. It destabilizes public institutions and in the worst case undermines the sovereignty of the state. This must be prevented.

Neoconservatives are fully aware that any state system ultimately depends on the trust of its citizens. Trust is the basis for the functioning of state institutions. New communication technologies, however, have increasingly enabled “extremist ideological” currents to spread their toxic messages and deprive people of confidence in existing institutions. It is precisely this loss of trust on the part of citizens that endangers the sovereignty of the state.1

The flood of information in the Internet age plays a decisive role because it makes targeted “disinformation” by small but well-organized groups possible in the first place. It leads to exaggeration, isolation and one-sidedness within one's own “echo chamber”. According to Watts, the sudden availability of large amounts of information can overburden a society. Too much useless and qualitatively inferior information can lead to isolation and polarization. People specifically select their sources of information and limit themselves in the process. They even have to do so in view of the many alternatives available to them. But in doing so, they tend to rely on those sources that confirm and reinforce their own prejudices.

In order to underline the potential seriousness of the situation, Watts refers to Nate Silver's book The Signal and the Noise, in which a parallel is drawn between the invention of the printing press and the advent of the Internet. This analogy was also taken up by the Scottish historian Niall Ferguson in his recent book The Square and the Tower.2 Both authors recall that the invention of printing not only made Luther's Reformation of the Christian Church possible, but also provided a powerful means of communication for many populist and, from today's point of view, deterrent movements. Here, for example, one can refer to the witch hunts of the early modern period. After Luther's Reformation, Europe was also plunged into centuries of religious wars. Is something similar threatening us today in the age of the Internet? It is clear that also today existing hierarchies and power structures are questioned and start to falter. This usually leads to the old elites giving their all in order to maintain their privileged position.

But first it has to be clarified who is really behind the specter of “disinformation”. Watts refers not only to all sorts of “conspiracy theorists” like “truthers,” “chemtrailers” or “anti-vaxxers”, whose political and social impact can really be doubted, but also to Islamic terror groups or the Russian secret service, which is said to have influenced the outcome of the American presidential elections through such powerful social networks as Facebook.

At this point, however, we should pause for a moment. Is interference in the political affairs of other countries an exclusively Russian phenomenon? No. This has always been the case everywhere, especially on the part of the USA in recent history. So, if the Russian secret service is behind targeted disinformation, can the American establishment really free itself from it? Here, too, a clear no. Think, for example, of the deliberate manipulation of public opinion before various military interventions in the Middle East.

For Watts it is simply about which narrative dominates and determines public opinion. Truth is an elastic term, he claims. The question is merely: "Whose truth?” So, it is nothing but a power struggle. From this point of view disinformation is merely a truth deviating from one's own truth and must be fought against. One's own truth becomes the disinformation of the opponent. Therefore, according to Watts, new gatekeepers are needed in the modern flow of information. The prevailing opinion must be brought back on track.

The good thing, however, is that Watts is wrong. Truth is not subjective. It is, if at all, very limited in elasticity. And if it turns out that the hitherto so dominant narrative of the American establishment has overstretched the truth at one point or another, it is a blessing that modern communication technology makes it possible to point this out critically and effectively. We can only hope that technology will always stay one step ahead of regulators and gatekeepers – and that citizens will ultimately trust the narrative that is closest to the truth.

  • 1. The loss of trust is reflected, for example, in this year's Edelman Trust Barometer: Global Report. Interestingly, India, for example, has a higher trust index than the USA.
  • 2. The interested reader is referred to Dr. David Gordon’s review of Ferguson’s book.
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The Corporate Debt Market: Is It Teetering on the Edge?

Jeff Peshut answers the question that has been widely discussed in the media lately: Is There Really A Corporate Debt Bubble That’s Ready To Burst? 

To unravel the mystery, Peshut compares movements in the Rothbard-Salerno TMS monetary aggregate with movements in corporate business debt from 1978 through 2017.  At the end of 2017 corporate business debt stood at $29.1 billion or about $10 trillion above its post-crisis trough at the end of 2009.  TMS reached its cyclical trough of $5.1 trillion at the end of 2006 and increased to $13.1 trillion, a breath-taking increase of 156.9%, by the end of 2017.  For the sake of comparison, during the housing bubble TMS increased by “only” 70%, from $3.0 trillion to $5.1 trillion from 2000 to 2006. The year-over-year (YOY) rate of growth of TMS has precipitously fallen from over 7% in 2016 to less than 4% at the end of 2017. The huge increase in the money supply from 2009 onward would certainly lead us to suspect that there is a systemic overvaluation of asset markets that will sooner or later come to a bad end.  But the trillion dollar question is, of course: When?

With respect to the corporate debt market, Peshut gives us a cogent ad informed forecast.  He finds that in the last three complete credit cycles, from 1994 through 2009, the trough in the YOY growth rate of TMS has preceded the trough in the YOY growth rate of corporate business debt by about three years in each case.  Given this three-year lag, even if TMS has already reached its trough, Peshut concludes that claims that the corporate debt bubble is about to pop are premature and the more likely scenario is that the bubble bursts in 2021 or 2022. 

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Austrians Should Pay Attention to the "Replication Crisis" in Scientific Research

12/07/2018Michel Accad

Austrian economists should take an interest in the so-called “replication crisis” in science, which is affecting primarily the field of psychology, but is likely under-recognized in other social sciences—and in economics in particular.

Over the last several, an increasing number of reports have highlighted the fact that scientists are frequently unable to replicate the results of prior experiments in psychology, even when those experimental or correlational studies were conducted and analyzed according to commonly accepted methods. The magnitude of the problem was made concrete in a 2015 Science paper by lead author Brian Nosek. Replication rates, in terms of statistical significance or effect size, were only between 25-50% (depending on the particular field of psychological study).

The doubts raised by Nosek and his collaborators are metastasizing to other human sciences, including medicine. Reports of poor research reproducibility are now appearing routinely in scientific journals. Interestingly , in the context of such a replication study pertaining to the social sciences and published this past August, it was discovered that scientists are able to predict a priori with a high degree of accuracy which particular result will be replicated and which will not!

A perhaps even more startling study was just published last month. Nosek submitted a very rich data set, taken from the 2012-2013 soccer season, to 29 different teams of statisticians for analysis. The question to be answered by the statisticians was whether a darker skin tone increased the likelihood that a player would receive a red card. The variability in the methods chosen and in the results obtained was astounding, especially since, at one point in the process, the teams of analysts were encouraged to compare notes and give each other feedback.

We interviewed Nosek on our podcast about his work. It was a fascinating conversation. As an empiricist, he remains hopeful that, perhaps through greater transparency, sharing of data, and collaboration among scientists, the replication crisis will resolve itself. And he expects that the resolution will occur while preserving the standard theoretical assumptions of empiricism.

I’m not so “optimistic,” and I suspect that the crisis will be protracted. But I am hopeful that, over time, social scientists will come to recognize and accept that certain types of knowledge can only be obtained by human judgment, rather than by measurement—provided that the judgment and reasoning proceed logically from a basis of reasonable assumptions. This is a good opportunity for Austrians to showcase their methodological alternative to the scientific world

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Trump is the Rare Honest Politician about US Debt

12/06/2018Tho Bishop

Once again Donald Trump’s presidency has done a great job of highlighting the hypocrisy and delusion of the beltway bubble.

A recent story from the Daily Beast reports that Trump is frustrating advisers with his apathy towards the current trillion dollar deficits coming out of Washington. 

Since the 2016 presidential campaign, Donald Trump’s aides and advisers have tried to convince him of the importance of tackling the national debt.

Sources close to the president say he has repeatedly shrugged it off, implying that he doesn’t have to worry about the money owed to America’s creditors—currently about $21 trillion—because he won’t be around to shoulder the blame when it becomes even more untenable.

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the national debt in the not-too-distant future. In response, Trump noted that the data suggested the debt would reach a critical mass only after his possible second term in office.

“Yeah, but I won’t be here,” the president bluntly said, according to a source who was in the room when Trump made this comment during discussions on the debt.

Trump’s lack of concern for the debt should hardly be surprising. As a candidate, he boasted about his desire to preserve various entitlement programs while simultaneously promising significant increases in military spending – a promise he has delivered on. Left unsaid in the report is that the goal of at least some of Trump’s advisors was undoubtedly to encourage the president to embrace some form of tax increase. We know, for example, that Treasury Secretary Steve Mnuchin has encouraged Trump to embrace a VAT tax in the past, a policy that would be particularly damaging to America’s low and middle class. 

What’s all the more comical, however, is the resulting jeering from DC pundits and political enemies acting as if Trump’s view on the debt is some radical new threat to American stability. On the contrast, all Trump is doing is being honest about the views held by almost everyone that has served in Washington the past several decades. While politicians from both parties love to give lip service to “fiscal responsibility”, the closest thing we’ve come to meaningful action on budgetary restraint was the budget sequestration of 2013. Of course those cuts to future spending increases (not to be confused with actual spending cuts) came into place simply because of the inaction of federal legislators and faced instant bipartisan condemnation.

This isn’t the first time that Trump’s truth telling over the debt has thrown opposing politicians and pundits into a tizzy. On the campaign trail, Trump was accused of threatening financial Armageddon when he suggested that America could default on its debt. What should be obvious to anyone who has paid even passive attention to American politics is that US default is inevitable. The only question is what form will it take.

One of the greatest myths in DC is that America has never defaulted on its debt, something repeated not long ago by Fed Chair Jerome Powell in a Congressional hearing. Of course this is simply absurd.

As James Grant and other financial historians have explained, the federal government has defaulted numerous times in its history, the most recent of which occurred when Richard Nixon closed the gold window.  In that case, the out of control spending, led by the Vietnam war and LBJ’s Great Society, led the US to default on its obligations to foreign governments, repaying their loans with dollars valued at far less than the $35 per ounce they were promised.

This form of monetary default may be the future of the dollar, an outcome that Ron Paul has long warned us about

Another option, one that Murray Rothbard advlocated, is simple debt repudiation. As he wrote in 1992, when US debt was a quaint $4 trillion:

I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation. Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice only differs by degree from "normal" public debt. For, conversely, why should the Communist government of the Soviet Union have been bound by debts contracted by the Czarist government they hated and overthrew? And why should we, struggling American citizens of today, be bound by debts created by a past ruling elite who contracted these debts at our expense? One of the cogent arguments against paying blacks "reparations" for past slavery is that we, the living, were not slaveholders. Similarly, we the living did not contract for either the past or the present debts incurred by the politicians and bureaucrats in Washington.

Rothbard goes on to suggest that a more traditional debt restructuring – similar to what Trump touched on during his campaign  –  could also be an option if outright repudiation was considered to be “too draconian.”

The government is an organization, so why not liquidate the assets of that organization and pay the creditors (the government bondholders) a pro-rata share of those assets? This solution would cost the taxpayer nothing....The United States government should be forced to disgorge its assets, sell them at auction, and then pay off the creditors accordingly....This combination of repudiation and privatization would go a long way to reducing the tax burden, establishing fiscal soundness, and desocializing the United States.  

Peter Klein has also written on the absurd hyperventilating in the beltway when such an idea is ever suggested:

[T]he idea that the US can never restructure or even repudiate the national debt — that US Treasuries must always be treated as a unique and magical “risk-free” investment — is wildly speculative at best, preposterous at worst. Every other borrowing entity — individuals, business firms, and governments — has the option of renegotiating interest payments and even defaulting on loans. It is hardly an extraordinary event, even for sovereign borrowing — that’s why lenders charge a risk premium beyond the return they require to compensate for time preference.

There is lots of evidence on private, corporate, and sovereign defaults, and the results are hardly catastrophic. Depending on the circumstances, the benefits of reducing debt can exceed the costs of harming the borrower’s reputation and thus increasing the costs of future borrowing. Anyone who has been through a personal or corporate bankruptcy knows this.

At the end of the day Trump’s views on dismissal of US debt illustrate is another example of short-sighted economic thinking. It’s absurd, however, to treat this as some radical change from his more “dignified” and “respectable” predecessors. Instead, just like his views on tariffsmonetary policy, and defense spending, Trump’s real sin is simply being a continuation of the status quo on these issues

The difference is that Trump says out loud the part politicians are supposed to keep quiet.

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We Need Unilateral Free Trade with Post-Brexit Britain

12/06/2018Ryan McMaken

In order to whip up opposition to Brexit, pro-EU activists have long relied on generating fear by suggesting that without EU membership, British trade will suffer, and export totals will collapse.

This, however, has always been an unconvincing argument because EU membership tends to restrict participation in global trade more than it enhances it. Even the EU admits that "growth in global demand is coming from outside Europe, noting that 90% of global economic growth in the next 10–15 years is expected to be generated outside Europe, a third of it in China alone."

Moreover, the importance of the EU as an export market for the EU has been declining in recent decades. 15 years ago, the EU accounted for over 50 percent of all UK exports. By 2015, the number had fallen to 44 percent, reflecting the shift toward markets outside of the EU.

Even the EU's core members like Germany know the real future of global trade lies outside the EU. As Alasdair MacLeod noted last year,

[W]ith respect to trade, Fortress Europe’s trade policies are increasingly disadvantageous to her. Germany now exports more to China than to any individual European country, benefiting big businesses. The power of the large German corporations, and their influence on the federal government, should not be under-estimated. She sees on her Eastern flank, of what used to be Prussian territory, a pan-Asian phoenix arising in the form of the Shanghai Cooperation Organisation (SCO), led by Russia and China. And it is growing.

Only this week, India and Pakistan also became full SCO members, taking the rapidly-industrialising membership to nearly half the world’s population. The Silk Road is sending goods to Europe, and will transport Mercedes, BMWs, and VWs the other way. Asian demand for German engineering and capital equipment is likely to become the largest market by far for the foreseeable future.

Really, by staying in the EU — which is obsessed with tightly regulating and controlling trade with countries outside the bloc — the UK is limiting its own ability to be flexible with the rest of the world.

These facts, however, are not readily apparent to the general public in the UK or elsewhere, and the idea that the UK will be somehow "isolated" without the EU continues to turn heads.

But how to help illustrate that Brexit really means more openness in trade?

There is an easy way to help with this, of course, and it would be the right thing to do with ou without Brexit: The US should immediately adopt a position of unilateral free trade with the United Kingdom.

The US, of course, should adopt unilateral free trade with everyone, but the UK is certainly an acceptable place to start.

I suggest the UK as a starting point because open trade with Britain is an easy sell, politically.

After all, opening up unfettered free trade with the UK would be an easy choice strategically. It would make the US an indispensable partner all the more, and solidify the UK as an important part of the North American economy.

Moreover, any claims that unilateral free trade with the UK is "enriching our enemies" would be laughable. The UK and the US have been at peace for more than 200 years. Unilateral free trade doesn't lead to "exploitation" of the US in any case, but even if it did, this would not be an issue of military importance.

From an economic standpoint, of course, unilateral free trade is always to the benefit of the country which adopts it. It would mean lower production costs and less expensive consumer goods for countless Americans and entrepreneurs. Even if the UK maintained tariffs on American goods, the end result would only mean more inexpensive goods for Americans, and more investment in the US by British companies who reap the rewards of selling more goods to Americans.

Claims that the US would be flooded with "cheap goods made by slave labor" — as some anti-China protectionists like to claim — would be obviously non-sensical, of course. British labor laws are similar to those in North America, and the cost of British labor is similar as well.

Moreover, when it comes to trading with the British, it is harder for protectionists and xenophobes to capitalize on nationalist impulses to push their agendas. Are we really to believe that we ought to fear exploitation by English-speaking high-income foreigners who, by the way, have an extensive history of investment in American industries?

Trump's Mishandling of the Brexit Situation

Unfortunately, for all his big talk about building strategic advantages for the US government, Trump has badly mismanaged the Brexit situation and will probably botch the opportunity to draw the UK further into a greater partnership with the US.

Instead of using Brexit as a means to build a better relationship with the UK at the expense of the EU's quasi-socialist bureaucrats, Trump has instead attempted to isolate the UK further in order to force UK acquiescence to Trump's economically-illiterate campaign against free trade.

This hurts American consumers and producers while also potentially helping politicians in both China and the EU. As Tomas Wright at Politico notes:

A post-Brexit Britain needs close relations with other major countries, and if the United States is difficult to deal with, it will find itself increasingly tempted into a closer economic partnership with China, one that will surely have political consequences. Trump’s antagonistic approach also plays into the hands the leftist leader of the opposition, Jeremy Corbyn, a persistent critic of a close U.S.-UK alliance who would likely leap at the chance to weaken the special relationship.

My personal position is that it is not important or in our best interests to engage in foreign policy posturing with China or any other country. Political neutrality and open commerce is always the best position. However, I do know that Trump and his allies think that playing games with China and the EU are important policy goals. And in this regard, the administration's anti-UK protectionism is counter-productive.

No doubt Trump's supporters will stick to their little narrative in which Trump is playing 4-D chess and has some grand plan that will both stick it to the EU and massively increase American exports to the UK at the same time.

This is a pipe dream, of course, but some people seem to actually believe it.

Were the Trump administration wiser, it would pursue unilateral free trade not just with the UK, but with the entire Anglosphere of Canada, Australia, and New Zealand. Both the economic and strategic benefits would be substantial.

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Big Tech has Big Problems, but More Regulation Will Only Hurt Consumers

12/06/2018Zachary Yost

Big Tech has long faced calls for more regulation, and as their companies have grown, so has the pressure. Now those demands are coming from within Silicon Valley itself. Apple CEO Tim Cook recently told Axios that, though he supports the free market, it’s only a matter of time before Big Tech is restricted. “We have to admit when the free market is not working. And it hasn’t worked here,” Cook said. “I think it’s inevitable that there will be some level of regulation.” Indeed, a newly released Axios poll found that 55 percent of Americans “fear the federal government won’t do enough to regulate big tech companies.” That figure is up 15 points over last year.

The problem is that, if implemented, such regulations would only entrench existing firms and hurt consumers.

As Axios notes, Big Tech regulation has become “a rare topic uniting Republicans, Democrats and Independents.” In August, Representative Steve King, Republican of Iowa, floated the idea of turning tech giants into public utilities. On the Left, writer Richard Eskow went even further by calling for companies like Amazon and Google to be nationalized. The young right-wing firebrand Charlie Kirk recently advocated that Google be classified as a monopoly and anti-trust law be brought to bear against it.

It’s understandable why so many across the political spectrum have an uneasiness about Big Tech. After all, it has an immense amount of power, especially in regard to stored information.

But increased regulation will only empower Big Tech and leave it less accountable than before. The “revolving door,” through which officials move between government and the private sector, allows businesses to heavily influence regulation. Sometimes they’ll even advocate that regulation be increased as a means of ensuring that the new regulations work to their advantage. When groups like Business for a Fair Minimum Wage, whose members already pay employees “well over the minimum wage,” advocate for an increase in the minimum wage, it’s not out of benevolence toward workers. They want to force their competitors to pay more in the hope of driving them out of business. In economics, this is known as regulatory capture, an idea developed by Nobel laureate George Stigler.  

Another tactic is making the regulatory hurdle so high that it ensures new competition and smothers startups in the cradle. A startup in someone’s basement can’t afford an army of lawyers to navigate through reams of regulations like Google and Facebook can.

Historically, Big Tech has been hands-off when it comes to lobbying, but that’s starting to change and the numbers show it. In 2017, Google, Amazon, Facebook, and Apple spent over $50 million on lobbying, a 32 percent increase for Facebook and a 51 percent increase for Apple. In fairness, that’s much less than other industries spend on lobbying—but as talk of regulation increases, expect to see Big Tech kick up its lobbying even further and for its competition to get squelched.

In a free market, companies only have the power that consumers give them when they make their consumption choices. Google, Facebook, and Amazon are huge and powerful because so many choose to utilize their services. Economist Ludwig von Mises called this “consumer sovereignty,” writing, “The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that.” No matter how large a business is, if it doesn’t give consumers what they want, it will eventually falter. Just look at Nokia. In 2007, the company controlled almost 50 percent of the world’s smartphone market. By 2013, that number had fallen to less than 5 percent. Such a drastic change in fortunes occurred because consumers chose to make it happen—and because other companies innovated more to attract them.

But if Big Tech becomes entrenched and protected from competition through regulation, the consumer’s power over them is diminished. It’s a recipe for decreased innovation and customer service. Big Tech is kept on its toes by the fear of becoming the next Nokia, which is why they spend tens of billions of dollars every year on research and development. There will be far less incentive to do so if they know that they’re safe from potential upstarts supplanting them.

Big Tech has big problems, but increased regulation will only lead to more lobbying, less competition, and less innovation. Consumers have given Big Tech its power, and as long as there are competition and alternatives, they also have the power to take it away. Let’s hang on to that control rather than demanding that the government exercise it for us.

Republished with permission from the author.
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The Obvious Contradictions of Politicians on Trade

12/05/2018Per Bylund

The trade policies of both the USA and the EU seem to be based on the contradictory philosophy that unrestricted trade is beneficial within its borders, even if across internal borders, but not with parties outside those borders.

But this makes no sense. From the point of view of trade, the voluntary exchange of goods, why are the borders between USA and Mexico, and Greece and Turkey, different from the borders between Missouri and Kansas, and France and Germany?

The difference is political and arbitrary.

If protectionism works, which is the policy applied on the USA's and the EU's 'external' borders, then it should work for other borders at well. But instead the 'internal' policy is free trade, and it's considered as obvious for the latter as restricted trade for the former.

Protectionists may produce an argument that 'within USA' is different, since it is within a country. While likely based on a romantic fiction of the (federal) nation, there is significant coordination of policy that facilitate trade between states. That's exactly the core of the European Union as a trade union between countries with different languages, cultures, and political traditions. Countries within the EU are at least as similar and dissimilar as the USA and Canada. Or as the USA and the EU. The differences that can be identified are differences that are caused by policy, which makes them highly suspect as possible rationales or reasons for (specific and different) policy. The question remains, why is protectionism good for some borders, and free trade for others?

It really comes down only to this: politics is able to produce emotionally compelling reasons, based on simplistic identity claims and 'us vs. them', for completely contradictory policies for different instances of the same phenomenon (political borders).

No politician in his right mind would claim that Washington, DC, should adopt a protectionist trade policy with respect to the 50 states. He would be laughed at. But saying the same about, say, the US and Canada is considered very different. And this is the case also for the EU, where it would be political suicide (although not as much [because EU is younger and not yet as politically integrated?]) to state there should be protectionism between Germany and France or between Sweden and Denmark. But it's the 'obvious' and correct policy for the waters between Greece (EU) and Turkey (not EU).

But think about it: if a trade policy is beneficial across some (political) borders, shouldn't it be beneficial across all such borders? The answer is rather obviously 'yes'.

Except in politics, where 'yes' and 'no' are irrelevant--what matters is that a story can be told that, for the time being, may gather support from the electorate. Often by pointing to a threat--always by some 'them'. Canadians are not us; Turks are not us. But Midwesterners and Manhattanites are the same, just like Germans and French are the same?

Originally posted on Twitter @PerBylund
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Trump Foreign Policy: Doing the Same Thing and Expecting a Different Result

12/05/2018Ron Paul

After a week of insisting that a meeting with Putin on the sidelines of the G20 meeting in Argentina was going to happen, President Trump at the last minute sent out a Tweet explaining that due to a Russia/Ukraine dispute in the Sea of Azov he would no longer be willing to meet his Russian counterpart.

According to Trump, the meeting had to be canceled because the Russians seized three Ukrainian naval vessels in Russian waters that refused to follow instructions from the Russian military. But as Pat Buchanan wrote in a recent column: how is this little dispute thousands of miles away any of our business?

Unfortunately it is “our business” because of President Obama’s foolish idea to overthrow a democratically-elected, pro-Russia government in Ukraine in favor of what his Administration believed would be a “pro-Western” and “pro-NATO” replacement. In short, the Obama Administration did openly to Ukraine what his Democratic Party claims without proof the Russians did to the United States: meddled in a vote.

US interventionism in Ukraine led to the 2014 coup and many dead Ukrainians. Crimea’s majority-Russian population held a referendum and decided to re-join Russia rather than remain in a “pro-West” Ukraine that immediately began discriminating against them. Why would anyone object to people opting out of abusive relationships?

What is most disappointing about President Trump’s foreign policy is that it didn’t have to be this way. He ran on a platform of America first, ending foreign wars, NATO skepticism, and better relations with Russia. Americans voted for this policy. He had a mandate, a rejection of Obama’s destructive interventionism.

But he lost his nerve.

Instead of being the president who ships lethal weapons to the Ukrainian regime, instead of being the president who insists that Crimea remain in Ukraine, instead of being the president who continues policies the American people clearly rejected at the ballot box, Trump could have blamed the Ukraine/Russia mess on the failed Obama foreign policy and charted a very different course. What flag flies over Crimea is none of our business. We are not the policemen of the world and candidate Trump seemed to have understood that.

But now Trump’s in a trap. He was foolish enough to believe that Beltway foreign policy “experts” have a clue about what really is American national interest. Just this week he told the Washington Post, in response to three US soldiers being killed by a roadside bomb in Afghanistan, that he has to keep US troops fighting in the longest war in US history because the “experts” tell him there is no alternative.

He said, “virtually every expert that I have and speak to say if we don’t go there, they’re going to be fighting over here. And I’ve heard it over and over again.”

That is the same bunkum the neocons sold us as they lied us into Iraq! We’ve got to fight Saddam over there or he’d soon be in our streets. These “experts” are worthless, yet for some reason President Trump cannot break free of them.

Well here’s some unsolicited advice to the president: Listen to the people who elected you, who are tired of the US as the world’s police force. Let Ukraine and Russia work out their own problems. Give all your “experts” a pink slip and start over with a real pro-American foreign policy: non-interventionism.

Reprinted with permission.

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For Climate Interventionists, New Taxes are Only the Beginning

[Editors Note: After days of rioting in the streets of Paris, French President Emmanuel Macron was forced to backtrack today on proposed gas taxes. While this episode demonstrated the unpopularity of trying to raise taxes in the name of fighting climate change, Mises Institute Senior Fellow Robert Murphy recently noted at IER that this is only the start for "climate interventionists."]

Say what you will about the climate policy discussions at Vox, but they don’t mince words. They come right out and tell you how much they want to micromanage every last detail of your life. Vox’s resident expert, David Roberts, recently interviewed policy wonk and author Hal Harvey, to discuss which areas of society government should regulate in the name of slowing climate change. Everything was on the table—ranging from building codes to auto fuel efficiency to diet to family size—with the only debate being over the relative results from the various interventions.

Among other results, this peek into the interventionist mentality should serve as a wake-up call for the few writers who keep charmingly calling on libertarians and conservatives to strike a carbon tax deal with progressive leftists. As the Roberts/Harvey discussion says quite plainly, a carbon tax is just one arrow in the quiver of those championing aggressive government intervention to slow climate change.

A Carbon Tax Is Not Enough

Let me validate the carbon tax claim first. Here’s the key exchange from the Vox interview:

David Roberts: These days, people across the political spectrum are talking about carbon pricing. How does it fit into the larger effort?

Hal Harvey: The thing about carbon pricing is, it’s helpful, but it’s not dispositive. There are a number of sectors that are impervious to a carbon price, or close to impervious.

A carbon price works when it’s part of a package that includes R&D and performance standards. It does not work in isolation. It helps, but it doesn’t do nearly as much as is required.

Harvey elsewhere in the interview explicitly criticizes the standard “market solution” rhetoric behind a carbon tax when he says:

[Government-mandated performance standards] have a bad rep from an age-old and completely upside-down debate about “command-and-control” policy. But we use performance standards all the time, and they work really well. Our buildings don’t burn down very much; they used to burn down all the time. Our meat’s not poisoned; it used to be poisoned, or you couldn’t tell. And so forth. If you just tell somebody, this is the minimum performance required, guess what? Engineers are really good at meeting it cost-effectively.

In addition to their (naïve) promises of revenue neutrality, those pushing for a carbon tax swap deal also promise conservatives and libertarians that a “price on carbon” would allow for the dismantling of the existing top-down regulations. Yet we now have several lines of evidence to show just how naïve this hope is: (1) Harvey in the quotation above throws them under the bus. (2) The recent Curbelo carbon tax bill contained no *meaningful* regulatory relief. (3) Economist Paul Krugman is fine with outright bans on new (and existing?) coal-fired power plants, and (4) the people at Vox have said for yearsthat a carbon tax would only work in conjunction with other anti-emission government policies. Notice that I am not scouring obscure subreddit threads to find Marxists posting from a hipster café, I am quoting from quite mainstream sources who are openly declaring that putting “a price on carbon” will not do enough to reduce emissions.

The Interventionist Mentality

The reader should also realize that Roberts and Harvey don’t merely consider fuel economy standards and building efficiency codes when it comes to “command and control” regulations. Everything is on the table, and the only reason to refrain from pursuing certain strategies is the dilution of political capital. The following excerpt illustrates:

David Roberts: The book also has nothing about behavior change — no turning off lights or going vegetarian. Do you find that lever unrealistic? 

Hal Harvey: It’s a policy design book, and there aren’t many policies that have people change their diet. Michael Bloomberg taxed sugar, so there’s one. But we’re not gonna have the tons-of-barbecue-per-capita tax in North Carolina…

We have limited political bandwidth. If you’re serious about change, you have to identify the decision makers that can innovate the most tons the fastest….There are 7.5 billion decision makers on diet. There are 250 utility commissioners in America — and utility commissioners control half the carbon in America.

Trying to invoke behavior change on something as personal as eating en masse is morally sound, it’s ecologically a good idea, but as a carbon strategy, it doesn’t scratch the surface.

Indeed, even when they give a nod to basic human rights, Roberts and Harvey sound creepy. Consider this exchange:

David Roberts: Paul Hawken’s Drawdown Project looked at options for reducing greenhouse gases and found that educating girls and family planning were the two most potent. 

Hal Harvey: When I was at the Hewlett Foundation, we sponsored a study by the National Center for Atmospheric Research that asked the question: Globally, if you met unmet need for contraceptives — that is to say, no coercion whatsoever — what would it cost and what would the carbon impact be?

We found large-scale abatement at less than a dollar a ton. So I’m completely in favor of that. [Bold added.]

It’s the part in bold that is chilling. For starters, I point out that this is the one area of life—the decision on how many children to have—where Harvey apparently feels that the government should not be using coercion to alter people’s behavior; coercive interventions in every other arena—from building design to diet to urban transit—were only tempered by pragmatic considerations.

Beyond that, the reason Harvey had to stress that his approach would be voluntary is that historically, this wasn’t taken for granted. There is a long and sordid history of wiser-than-thou social planners forcibly restricting how many children others could have, all in the name of some higher social good.

Indeed, Vox’s founder—Ezra Klein—recently got himself into an awkward spot when the website originally promoted his discussion with Bill Gates using the following tweet:

vox_bm_0.png

Vox quickly deleted the tweet after outrage and advertised the interview in a more sensitive manner, but the whole episode offered another peek into the interventionist mindset.

Conclusion

On these pages I have tirelessly pushed back against the small but vocal group of pundits and scholars who call on conservatives and libertarians to accept a carbon “tax swap deal” with leftist progressives. Beyond their failure to appreciate some of the technical nuances in the tax literature, these pleas overlook the simple fact that the mainstream thought leaders among the wonkish progressives have long since moved beyond the idea of a simple “price on carbon.” Every aspect of our lives, from our cars to our meals to our family sizes, affects global emissions—and therefore the interventionists want every tool at their disposal to control others.

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