Irish Liberty Forum

“Not Evil Just Wrong”

George Bush, speaking at the APEC conference in Peru argued that the free-market could resolve the current economic crisis while global protectionism could only worsen the situation.

Mr Bush spoke passionately about his belief in the free market despite the recent world economic downturn.

He called for an Asia-Pacific region of “free markets, free trade and free people”.

“It is also essential that governments resist the temptation to overcorrect by imposing regulations that would stifle innovation and strangle growth.

Considering the intensely anti-free market policies recently implemented in the USA, the UK, the EU, Ireland,  as well as on a global level, one wonders what other so-called “free market” solutions we have in store.

When governments of the world agreed to collectively counteract the global turndown, they did not agree to a global “stimulus package”. This however will not stop the industrialised nations attempting such a stimulus packages individually. The UK government, for instance have already bowed to Keynesian depression economics. The idea behind these packages is that George Bush and co. can “jumpstart” the global economy by getting people to start spending again.

This plan is justified by the following paragraph I read on a message board:

If you tax and spend using progressive tax you take 1 euro from a rich man (who would otherwise spend it on imports) and give it to a teacher or other worker who has a higher marginal propensity to consume. That teacher then spends it and it goes into someone elses hands and so on indefinitely. This multiplier effect means that government spending can get us out of a recession. In fact if the marginal propensity to consume is 0.9 (a person who gets a euro spends 90c) then the output effect of the government spending 1 euro is 1/(1-0.9)=10!

So the more we spend, the more the economy grows.

The above is a horrible misrepresentation of how the economy works. In order for any consumption to occur there must first be production. This is summarised by Say’s Law: supply creates it’s own demand.

It doesn’t matter how many green pieces of paper are in your wallet; you can’t “demand” a TV set unless the store has an actual unit on the shelf. Pushing it back one step, no matter how many customers are lining up outside his store, the manager of Best Buy can’t stockpile his shelves with TVs unless the manufacturer has previously assembled them. And of course, the manufacturer can’t do so—regardless of how much money he is offered by the Best Buy manager—unless he can find enough workers, and enough of the relevant parts, to actually make the TVs.

In the Keynesian model of the economy, it is as if the economy is entirely composed of retailers, whereas manufacturers produce consumer goods by snapping their fingers. The multiplier only exists if this is true. However it is obviously not. The economy is made up of various stages of production, which must work to produce the goods that are finally purchased and consumed.

A lot of the “paradoxes” of Keynesian economics would be solved if the “circular flow diagram” of the economy were replaced with the Hayekian Triangle model; a more accurate depiction of the world in which we live.

The unfortunate leaking of the British National Party membership lists has caused a flurry on many political forums. Sadly, many consider this to be a breach of ‘the right to privacy’. This mythical right does not exist in reality, only tangible property rights do.

The members of the BNP gave their names to the Party under the conditions that they would not be publicly revealed. This is a contract, and a contract represents a transfer of property rights.

More simply, if I found your diary lying in a hallway and took the time to peruse it carefully, I would not be violating any rights at all. In contrast, if I obtained your diary by braking into your home and rummaging though your drawers, this would be a violation of your rights.

As Murray Rothbard often pointed out: All Rights are Property Rights.

When someone says “I have a right to free healthcare”, what they are really saying is “I have a property right to have a slave give me medical advice” or alternatively “I have a claim to someone else’s property to pay for my medical care”.

When I say “I have a right to privacy” I really mean is “I am asserting my property right which allows me to decide who sees my personal information”. 

Try converting other statements like these into property rights statements yourself and you’ll find Rothbard was right all along.

Karen DeCoster posted an extract from an article entitled “America the Illiterate” written by Chris Hedges on LewRockwell.com. I thought I would leave the extract here too:

We live in two Americas. One America, now the minority, functions in a print-based, literate world. It can cope with complexity and has the intellectual tools to separate illusion from truth. The other America, which constitutes the majority, exists in a non-reality-based belief system. This America, dependent on skillfully manipulated images for information, has severed itself from the literate, print-based culture. It cannot differentiate between lies and truth. It is informed by simplistic, childish narratives and clichés. It is thrown into confusion by ambiguity, nuance and self-reflection. This divide, more than race, class or gender, more than rural or urban, believer or nonbeliever, red state or blue state, has split the country into radically distinct, unbridgeable and antagonistic entities.

There are over 42 million American adults, 20 percent of whom hold high school diplomas, who cannot read, as well as the 50 million who read at a fourth- or fifth-grade level. Nearly a third of the nation’s population is illiterate or barely literate. And their numbers are growing by an estimated 2 million a year. But even those who are supposedly literate retreat in huge numbers into this image-based existence. A third of high school graduates, along with 42 percent of college graduates, never read a book after they finish school. Eighty percent of the families in the United States last year did not buy a book.

I can’t help but feel that what we are really witnessing is a glimpse into our own future, that it is only a matter of time before accusations of disgusting ignorance can be equally waged against the Irish. For me, it is a close tie between central banking and ‘free and compulsory education’ for what would be abolished first in a libertarian society. Keep in mind, free education came 60yrs before central banking in the US. The chicken and the egg?

This marks another major milestone along the bankruptcy of the US economy. The widely predicted collapse of the Federal Reserve dollar grows ever closer now as US creditor nations have finally had enough.

Beijing is considering changing its asset allocations during the financial tsunami in order to build up gold reserves “in a big way,” the source said.

China’s fears about the long-term viability of parking most of its reserves in US government bonds were triggered by Treasury Secretary Henry Paulson’s US$700 billion (HK$5.46 trillion) bailout plan, which may make the US budget deficit balloon to well over US$1 trillion this fiscal year.

The US government will fund the bailout by printing new money or issuing huge amounts of new debt, either of which will put severe pressure on the value of the greenback and on government bond yields.

The United States holds 8,133.5 tonnes of gold reserves valued at US$188.23 billion. China holds gold reserves of just 600 tonnes, worth only US$13.89 billion.

Beijing’s reserves could easily go up to 3,000 to 4,000 tonnes, Tanrich Futures senior vice president Colleen Chow Yin-shan said.

Iran is quoted as having also just begun the process of converting its financial reserves (tip: Max Keiser).

Iranian newspapers are quoting Mojtaba Hashemi Samareh, a top advisor to President Mahmoud Ahmadinejad, as saying the country has converted its financial reserves into gold.

The papers did not specify how much of Iran’s estimated $120 billion in reserves would actually be converted into gold.

This is happening precisely as Peter Schiff predicted.

The Daily Mail reports on the new scheme implemented by the British government to be trialed in the north of England:

Fat people will be paid to walk their children to school under a controversial new Government scheme to tackle the obesity epidemic.

A new supermarket-style loyalty card will allow people to gain points if they attend a keep fit class, go running in their local park or take part in any activity which could help them to lose weight.

The points could then be used to buy healthy food, sports equipment or sessions at the gym.

The most commonly cited arguments for a system of taxing fatty foods or subsidising exercise is that the poor health of the obese will impact negatively on others, that is, we all have to pay for their treatment. This however is a sham reason, and is not a genuine “externality”. If the nationalised healthcare system currently in place in the UK were removed the “externality” disappears, along with the moral hazard.

The new scheme provides an incentive for fat people to lose weight, however few of us realise such incentives already exist in the free market. The government can only supress them.

It’s worthy to note that it was Ludwig von Mises who first realised that government interventions in the economy do not solve market distortions, but rather distort the market further. The government can either repeal its policy or try to intervene more. It most often chooses the latter.

This is no different.

Look inside any economics textbook and it will present you with a formula. It may look something like this:

GDP = Y = C + I + G + X – M

Gross Domestic Output = Consumption + Investment + Government Spending + Exports – Imports

However this metric, when used as an indicator of a country’s ‘well-being’ is essentially flawed. Let’s see why:


C (Consumption)

This is the aggeregate of all private spending in the economy. Everything from food to clothes to pianos to computers. However the figure soesn’t include the various supply-constraining measures that the government imposes it. The Common Agricultural Policy for example has the effect of raising food prices for everybody. This will show up as an increase in consumption spending, when in fact the poorest people suffer the most from it. Any government licensing fees also limit supply, and hence artificially push up consumption.

Also calculated within ‘consumption’ is the money spent on combatting government violence. Lawyers and accountants are two professions that come to mind. Governments always make the legal system and the tax code more complicated, thereby increasing demand for the services of lawyers and accounants. This expenditure does not add any wealth to a nation, it merely keeps the money flowing from person to person.

That’s what consumption calculates. But what doesn’t it calculate? Well, all services rendered for free or as barter transactions do not show up in GDP. If I paint your fence and you mow my lawn, we both receive a benefit but it does not add to GDP.

Finally, Black Market activities are not included in consumption data. Money traded for illicit goods like guns and drugs, and illicit services like prostitution and gypsy cab rides, does not add to the GDP figure. 

I’ve just finished reading Albert Jay Nock’s “The Theory of Education in the United States” (1932) and I found a fascinating off-the-cuff analogy of the United States economy as he viewed it then in the aftermath of the Wall Street Crash. One must certainly ask whether we have learnt anything at all from history…..

Many people are uneasy about our economic system as you know, experience is forcibly directing attention to it, with the result that its unsoundness of theory is becoming more and more clearly apparent. Many people think it should be changed, even radically; there is no trouble about seeing just how it should be changed; but nobody is quite prepared to face the enormous deflation that would ensue if it were changed.

One is reminded of the story of the boa-constrictor that swallowed a rabbit, then reached through a hole in a fence, and swallowed another. The bulk of the rabbits held the snake’s body immovable in the hole; he could go neither forwards nor backwards. He could have backed out into freedom by disgorging the second rabbit, but he was not prepared to face this deflation and so he died. Our economic system is in just that situation, and so, in all its essential respects, is our educational system. The general disposition would be to hold tight, like the snake, yielding nothing, and hoping vaguely that some saving intervention might come along to cut in between cause and effect. This disposition is no doubt profoundly unintelligent; the entertainment of this hope is quite unhistorical—no such hope was ever yet rewarded. But we all know that this disposition is what a sound and really effective reform of our system would chiefly have to reckon with.

The same party has caused all the wars in the United States for the last century; the political party. Inter-country war is an outward reflection of the war that is already waged by the political class against people through taxation, inflation, monopoly and coercion. Before a political class can wage war, it must first enslave, de-humanise and oppress those it wishes to carry out its bidding. Talk of which US political party has a greater peace credential is meaningless. Every US president this century has presided over the butchers of ‘national defense’. If anybody has any more wars to add, please say so and I will update the list! Here’s a few to get the ball rolling:

WW1 President Wilson Democrat
WW2 President Roosevelt Democrat
Korea President Truman Democrat
Viet Nam President Kennedy Democrat
Bay of Pigs President Kennedy Democrat
Grenada President Reagan Republican
Panama President Reagan Republican
Gulf War President Bush Sr. Republican
Bosnia-Herzegovina President Clinton Democrat
Somalia President Clinton Democrat
Kosovo Pres. Clinton Democrat
Afghanistan President Bush Jr. Republican
Iraq President Bush Jr. Republican
8 Democrat
5 Republican