Capitalism vs. Crony Capitalism

Posted April 23, 2014 by austrianaddict
Categories: Econ. 101

Tags: , , , , , , , , , ,

Many people who decry capitalism do so from a position of ignorance of what capitalism really is. They look at the market system that exists in the U.S. today and mistakenly call it capitalism. Our present economic system is not free market capitalism, it is crony capitalism. Crony capitalism is a branch on the same central planning tree that includes socialism and fascism. In a true free market capitalist system, businesses wouldn’t be able to lobby government to pass laws that protect their position in the market and raise the costs on their present and future competitors, because government wouldn’t have the power to make these rules. Under free market capitalism businesses are incentivized to first serve their fellow-man before they can profit in any way. They must produce a good or service that consumers will freely exchange a portion of their labor for. Under crony capitalism businesses are incentivized to protect their own self-interest at the expense of the consumers and tax payers who are usually the same people.

Here is a video titled,  Why Capitalism Works, from Prager University, featuring George Gilder. He talks about the role of the entrepreneur in free market capitalism, as well as the incentive of giving before you receive.

 

SCARCITY TRUMPS  UTOPIAN VISIONS

The problem with how people perceive an economy is they don’t understand that a utopian world can’t be created on earth. The first rule of economics, scarcity, combined with the imperfections of man, make a utopian world impossible. The real question should be: What economic system can use limited means to supply the most ends for the most people? Put another way: In a world of scarce means and unlimited ends, which economic system can satisfy the most desires, with the knowledge that many desires will remain unmet? Free market capitalism,  produces the best possible result. History shows the branches of the central planning tree, whether it’s called crony capitalism, socialism, fascism, progressivism, communism, et al, produce a system were people have a lower standard of living and less individual freedom. A free market is nothing more than individuals freely producing, consuming and exchanging what they want, and in whatever quantities they want. Any interference by government, no matter how small, in the freedom of the individual to produce, consume, and exchange, moves an economic system down the central planning road, which is what Hayek called, “the road to serfdom”.

Related Video – Walter E. Williams, The Free Market Is Not Allowed To Work, by austrianaddict.com.

Related ArticleWe Can’t Recreate The Garden Of Eden, by austrianaddict.com.

Related Video - Milton Friedman vs. Phil Donahue, Greed Is In The Eye Of The Beholder, by austrianaddict.com.

Related ArticleUnleash The Mind, by George Gilder, by austrianaddict.com.

Must Reads For The Week 4/19/14

Posted April 19, 2014 by austrianaddict
Categories: Must Reads For The Week

Tags: , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Shortest US Graduation Speech Ever? Nobel Economist Thomas Sargent”s List of 12 valuable Economic Lessons, by Mark J. Perry, at aei-ideas.org. All graduates should know these.

Kshama Sawant On Why It’s Time For Socialism In Seattle, by Rachel Soloman, at kuow.org. At least Dshama Sawant admits she’s a socialist unlike most Democratic politicians and a lot of Republican politicians. She ran for office on raising the minimum wage to $15 an hour, taxing the wealthy, and rent control. These policies lead to fewer low wage workers being hired, less wealth producing activities, and an artificial shortage of rental units. Socialism doesn’t trump supply and demand. I bet you can’t get through 4 minutes of this nonsensical drivel.

Why Some Doctors Are Bypassing And Going Cash-Only, by Susan Abram, at dailynews.com. Quote from the article, “I’ve encouraged those who want to do it,” she said. “I’ve offered to help them. Most of them feel trapped by the system. It’s really quite sad. They are not happy doctors. I encourage them to get the government out of the room…..“I had to do this to be able to do my job,” said Dr. Marcy Zwelling who has been an internist since 1987. “I get to practice the way I think I can practice best. It’s capitalism at its best.” I saw this at aei-ideas.org.

Time Lapse of the Lunar Eclipse, Blood Moon, April 15, 2014

The Educational Wit And Wisdom Of George Carlin On “Saving The Planet”, by Mark J. Perry, at aei-ideas.org. This is really good.

Social Security Stops Trying To Collect On Old Tax Payer Debts, at economicpolicyjournal.com. We can push back against government overreach.

Jesus Lived In A Police State, by John W. Whitehead, at rutherford.org. Excerpt from the article, “Unfortunately, the radical Jesus, the political dissident who took aim at injustice and oppression and was nailed to a cross as a warning to others, has been largely forgotten today, replaced by a congenial, smiling Jesus trotted out for religious holidays but otherwise rendered mute when it comes to matters of war, power and politics.”

 

 

 

Tax Form 1040 From 1913: Look How Far We’ve Come

Posted April 16, 2014 by austrianaddict
Categories: Government and Politics

Tags: , , , , ,

Yesterday was April 15 the tax filing deadline. I bet you were in a great mood. So to cheer you up I thought you would like to know what the original 1040 tax form looked like. The 1913 form 1040, complete with instructions can be seen here.

Here are the original tax rates and income brackets.

1% of income over $20,000 but not exceeding $50,000

2% . . . . . . . . . . . . .  $50,000 . . . . . . . . . . . . . . . . .$75,000

3% . . . . . . . . . . . . . $75,000 . . . . . . . . . . . . . . . . . $100,000

4% . . . . . . . . . . . . . $100,000 . . . . . . . . . . . . . . . . $250,000

5% . . . . . . . . . . . . .$250,000 . . . . . . . . . . . . . . . . .$500,000

6% . . . . . . . . . . . . .$500,000 . . . . . . . . . . . . . . . .

I bet you wish these were the rates today, and the form was this simple to fill out.

The people who passed the 16 amendment were either duped or stupid. In their wildest dreams they could have never imagine it would lead to the almost incomprehensible 73,954 page tax code that we have today.

This graph is from Wolters Kluwer CCH, is shows the growth in the tax code since its inception in 1913.

CCH Standard Federal Tax Reporter Tax Law Pile Up 2013

Here are the tax rates and income brackets today. We should be proud of how far we have evolved, or devolved, in the last 100 years.

2013 Tax Brackets (for taxes due April 15, 2014)

Tax rate Single filers Married filing jointly or qualifying widow/widower Married filing separately Head of household
10% Up to $8,925 Up to $17,850 Up to $8,925 Up to $12,750
15% $8,926 to $36,250 $17,851 to $72,500 $8,926 to $36,250 $12,751 to $48,600
25% $36,251 to $87,850 $72,501 to $146,400 $36,251 to $73,200 $48,601 to $125,450
28% $87,851 to $183,250 $146,401 to $223,050 $73,201 to $111,525 $125,451 to $203,150
33% $183,251 to $398,350 $223,051 to $398,350 $111,526 to $199,175 $203,151 to $398,350
35% $398,351 to $400,000 $398,351 to $450,000 $199,176 to $225,000 $398,351 to $425,000
39.6% $400,001 or more $450,001 or more $225,001 or more $425,001 or more
Read more: http://www.bankrate.com/finance/taxes/tax-brackets.aspx#ixzz2z1OPahhk
This is yet another example of why we should never believe politicians and bureaucrats when they tell us that giving them more power will benefit us. What kind of monstrosity do you think the 2500 page Affordable Care Act will grow into? How stupid will future generations think we were for passing it into law?

Walter E. Williams Explains The Long, Tragic, Ugly Story Of Government,

Posted April 15, 2014 by austrianaddict
Categories: Government and Politics

Tags: , , , , , ,

In a recent article by Walter Williams titled, How To Assist Evil, he makes the point that since the beginning of the 20th century,  170 million people have been killed by their own government, where as only 60 million were killed in wars. When it comes to killing your own citizens we always think of the Holocaust in Nazi Germany. Unfortunately it was just one of the many examples of Government atrocities against their citizens.

Here are some excerpts from the article.

THE HOLOCAUST

“Though the Holocaust ranks high among the great human tragedies, most people never consider the most important question: How did Adolf Hitler gain the power that they needed to commit such horror?

“Through the Enabling Act (1933), whose formal name was “A Law to Remedy the Distress of People and Reich,” Hitler gained the power to enact laws with neither the involvement nor the approval of the Reichstag, Germany’s parliament……It was decent Germans who made Hitler’s terror possible - Germans who would have never supported his territorial designs and atrocities.”

OTHER ATROCITIES IN THE 20th CENTURY

“….since the beginning of the 20th century, governments have killed 170 million of their own citizens. top killers were the Soviet Union, which, between 1917 and 1987, killed 62 million of its own citizens, and the People’s Republic of China, which, between 1949 and 1987, was responsible for the deaths of 35 to 40 million of its citizens. In a distant third place were the Nazis, who murdered about 16 million Jews, Slavs, Serbs, Czechs, Poles, Ukrainians and others deemed misfits, such as homosexuals and the mentally ill.”

“We might ask why the 20th century was so barbaric. Surely, there were barbarians during earlier ages. Part of the answer is that during earlier times, there wasn’t the kind of concentration of power that emerged during the 20th century.”

IT CAN’T HAPPEN HERE

“….The more power a government has, the more it can act arbitrarily according to the whims and desires of the elite, and the more it will make war on others and murder its foreign and domestic subjects…..the elite’s use government to dupe and forcibly impose its will on the masses. The Masses are always duped by well-intentioned phrases….what German could have been against “A Law to Remedy the Distress of People and Reich”?….and who could be against the “Patient Protection and Affordable Care Act”?” 

“We Americans ought to keep the fact in mind that Hitler, Stalin and Mao would have had more success in their reign of terror if they had the kind of control and information about their citizens that agencies such as the NSA, the IRS and the ATF have about us…”

The Road To Serfdom, by F.A. Hayek was written in 1944. It is a book that answers the question Dr. Williams asks in his article. Hayek lived in Germany during the time before Hitler came into power. He explains how the concentration of power just doesn’t lead to serfdom, it is the road to serfdom.

Related Article, Terminus On The Road To Serfdom, by D.W. MacKenzie, at mises.org.

Here is The Road To Serfdom, at mises.org.

Here is The Illustrated Road To Serfdom , at mises.org.

 

 

 

 

 

 

 

 

 

 

Must Reads For The Week 4/12/14

Posted April 11, 2014 by austrianaddict
Categories: Must Reads For The Week

Tags: , , , , , , , , , ,
The pen is mightier than the sword...

 The pen is mightier than the sword… (Photo credit: mbshane)

Equal Occupational Fatality Day Will Occur On December 20 2023, by Mark J. Perry, at aei-ideas.org. When it comes to work related deaths, a huge gender gap exists that needs to be addressed. Women earn only 7.7% of the fatalities on the job, compared to the 92.3% of the fatalities that men collect. Why aren’t women’s rights groups and opportunistic politicians screaming for equality in this area?

The Value Of A Taxi Medallion In NYC Has Increased 5X Faster Than The S&P 500, by Mark J. Perry, at aei-ideas.org. It’s simple supply and demand. When supply is restricted it makes a scarce resource artificially more scarce. The price has to go up in order to ration the scarce resource. Quote from the article, “In fact, there are fewer NYC taxi medallions today (13,605) than there were in 1937 (16,900) when the medallion system first created the NYC taxi cartel.” Ultimately the free market rides to the rescue of the consumer. Read this quote, “… the app-driven ridesharing genie is out of the bottle” and too many consumers in too many cities have “gotten a taste” of the convenience and affordability of ridesharing services like Uber and Lyft, and they’ll never want to go back to the traditional taxi cartel model….”

Former Obama Girl Finds The Light, by Chris Rossini, at economicpolicyjournal.com. I’ve found that many young people are starting to naturally move toward the libertarian ideology. This is good news because young people have more energy, are more tech savvy, and aren’t as risk averse compared to us older people. They will lead the way toward individual freedom and away from big government. Our job is to mentor them, not tell them what to do.

Is Paul Krugman The New Economic Adviser In Rahmaland? at economicpolicyjournal.com. Funny video about the economic benefits of not fixing potholes. It is a version of the broken window fallacy.

Consumer Spending “Recovery” Stalls As Pent Up Demand Fails To Appear, at  zerohedge.com. When will we learn that in an unhampered free market, spending {consumption} doesn’t create wealth, stimulate production, or make an economy grow. Spending {consumption} can only happen as a result of production. You can’t consume something that hasn’t been produced. In a hampered market counterfeiting money can bring about consumption before production. But ultimately counterfeiting destroys wealth, misallocates scarce resources into areas of production that can’t be sustained, and slows or shrinks economic growth.

The Game Is Up For Climate Change Believers, by Charles Moore, at telegraph.co.uk. People are starting to see through the man-made global warming hoax.

I saw these cartoons at theburningplatform.com.

146504 600 How To Deter Putin cartoons

146712 600 Saving for Retirement cartoons

 

The “Equal Pay Day” Canard

Posted April 9, 2014 by austrianaddict
Categories: Hall of Fame

Tags: , , , , , , ,

Thomas Sowell

I have read Thomas Sowell’s analysis concerning this topic since I stumbled upon his writings in 1995. I thought he had driven as stake through the heart of  “the gender pay gap” myth. I wasn’t going to post anything about this topic, but reading and listening to the news this week has changed my mind. Since I couldn’t possibly cover this topic as authoritatively or as eloquently as Thomas Sowell, I’m not even going to try. I’m going to let him do it in his own words.

QUOTE FROM THOMAS SOWELL’S ‘KNOWLEDGE AND DECISIONS’

Here is an excerpt from my favorite book, Knowledge and Decision, which Dr. Sowell wrote in 1980:

“With women the key variable is marriage. Even before “affirmative action” quotas, women in their thirties who worked continuously since high school earned slightly more than men in their thirties who worked continuously since high school. In the academic world, where many discrimination charges have been filed under affirmative action, female academics earned slightly more than male academics when neither were married  – again even before “affirmative action” – and unmarried female Ph.D.’s who received their degrees in the 1930′s and 1940′s became full professors in the 1950′s to a slightly greater extent than did unmarried male Ph.D’s of the same vintage. In short, the male-female differences in incomes and occupations are largely differences between married women and all other persons….the clear-cut income parity (or better) among women who never married suggests once again that systemic variables have more to do with the statistics than the intentional decisions at the work place at which the statistics were collected.”

He wrote this in 1980 so it’s safe to say that the gender pay gap canard was used as a political bludgeon for many years prior to 1980.

THOMAS SOWELL ON FIRING LINE

Dr Sowell is discussing the gender pay gap issue in this video from 1981.

Click, Firing Line – Thomas Sowell  w/ William Buckley Jr. 1981, to watch the whole show.

 THOMAS SOWELL ARTICLE “THE REAL WAR ON WOMEN”

Here is an article by Thomas Sowell titled, The Real ‘War On Women’. It was written in 2012, and covers the same gender pay gap fallacy. Here are some excerpts form the article.

“The old — and repeatedly discredited — game of citing women’s incomes as some percentage of men’s incomes is being played once again, as part of the “war on women” theme.”

“When you compare women and men in the same occupations with the same skills, education, hours of work, and many other factors that go into determining pay, the differences in incomes shrink to the vanishing point — and, in some cases, the women earn more than comparable men.”

“But why let mere facts spoil the emotional rhetoric or the political ploys to drum up hysteria and collect votes?”

THOMAS SOWELL ON ‘UNCOMMON KNOWLEDGE

Here is a video of Thomas Sowell in 2008 on,Uncommon Knowledge, with Peter Robinson, talking about Gender Bias and Income Equality.

QUOTE FROM THOMAS SOWELL’S ‘ECONOMIC FACTS AND FALLACIES’

In Economic Facts And Fallacies, Chapter 3 titled, Male-Female Facts And Fallacies, covers gender pay gap and much more. Here is an excerpt form the chapter.

“Even when women and men earn the same incomes in the same occupations, differences in the distribution of the sexes among different occupations lead to differences in their average incomes.

“In principle it does not matter whether the attorney is male or female but, in practice, with women more often than men carrying the burden of domestic responsibilities for children and the care of the home, careers that involve much unpredictable night and weekend work are less attractive to women. Having it all – a career and a family and an upscale lifestyle- is fine but doing it all is often harder for a woman, given the usual division of domestic responsibilities between the sexes and the inevitable differences in childbearing.”

“Moreover since men are never pregnant, women are disadvantaged in such work by the physical limitations of pregnancy, which can be work limitations as well in obs that require long, irregular and unpredictable hours,….”

Related ArticleThe New, Old, Buzz Words, “Income Inequality”, at austrianaddict.com.

Related ArticleIncome Inequality II: Increase The Minimum Wage, at austrianaddict.com.

 

 

 

 

 

 

 

Tiger Drops Out Of Masters + Ticket Prices Fall = Value Is Subjective.

Posted April 7, 2014 by austrianaddict
Categories: Econ. 101

Tags: , , , , , , , ,

File:Tiger Woods Masters 2006.jpg

VALUE IS SUBJECTIVE

This article titled, Masters’ Ticket Prices Drop In Wake Of Tiger”s Absence, by Dan Wetzel, at yahoo.com, shows that value is not objective it is subjective. Value exists in the mind of each individual, it does not exist in an object. I could produce the best mouse trap ever invented for a price of x, but if no one is willing to pay x,  it has no value to anyone other than me. If you offered a sports fan  free tickets to either Saturdays third round at the Masters, or Saturdays Final Four games, he would make the decision based on which event he valued more, not on the monetary value of the tickets.

SUPPLY AND DEMAND

What does the drop in the price of the tickets mean? It doesn’t mean that people don’t value the Masters tournament, it just means that some people value it less when Tiger is not playing. After a bad back forced Tiger to withdraw from a tournament a month ago, demand for Masters tickets started to slow as people began to speculate that he wouldn’t play in this years Masters. Demand really dropped off when he officially withdrew from the Masters. This drop in demand revealed itself as the price for tickets began falling. The law of supply and demand is always in play, and in this case it says; if demand is low and the supply is fixed, the price will fall, and conversely if demand is high and the supply is fixed, the price will rise.

CONSUMER SETS WAGES

When you hear people say “they wouldn’t pay a particular athlete a particular amount of  money”, or “this athlete isn’t worth that much”, they obviously don’t understand subjective value, or supply and demand. The reason Tiger gets paid more than any golfer is because the value he creates is in high demand. There is a high number of people who value what he produces. Put simply, when there is a fixed supply of Tiger Woods, and a high demand for him, his price rises. If there weren’t enough consumers to voluntarily pay for the value they subjectively think Tiger produces for them, he wouldn’t get paid these “outrageous” sums of money. The consumer ultimately sets all prices in the process of production, and this includes the wages or salaries of all workers. So if you think certain professions don’t get payed enough, blame the greedy consumer, and if you think other professions get paid too much, blame the generous consumer.

Related Article – In a previous post, Ticket Scalping; The True Free Market In Action, we talked about voluntary exchanges from the stand point that each person involved in the exchange values what they receive more than what they give up, or no exchange would take place. Value is increased in voluntary exchanges.

Related ArticleSpontaneous Order = Free Market Economy, by austrianaddict.com.

Related ArticleSpontaneous Order Utilizes More Knowledge Than Central Planning Could Ever Hope To Utilize, by austrianaddict.com.

Related ArticleSpontaneous Order More Complex Than Top Down Planning, by austrianaddict.com.

Related ArticleSpontaneous Order Demonstrated By Traffic With No Signals, by austrianaddict.com.

 


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