Posted tagged ‘Voluntary Cooperation’

Drifting Towards Fascism

September 20, 2016

man drifting in a boat

First let’s define Fascism so we can begin at the same starting point. Fascism is an economic system where the state doesn’t own the means of production, but the state makes the rules that producers and consumers have to follow. There is a bureaucratic layer between businesses and politicians which plans the economy. It is crony capitalism on steroids.

Fascism places politicians and bureaucrats as the ultimate rulers aka decision makers. The individual has no rights or liberty except what the rulers say they have. Order comes from the state, (top down) not from the individual, (spontaneous order).

I saw a great chart (below) showing America’s drift toward Fascism, in an article titled, The Road To Fascism In Just Two Charts, at bawerk.net. I have always thought economic systems fit on a line where at one end no government exists, and at the opposite end there is total government control. Where an economic system is placed on this line depends on how much government intervention exists, or put another way, how little governmental intervention exists.

WHAT IS AN ECONOMY? WHAT IS SOCIAL FREEDOM?

An economy is what results when each individual is free to decide what to produce, consume, exchange and save in a world of scarce resources which have alternative uses. Simply put, you own what you’ve produced or what you’ve received in exchange for your production. It is your property and you have a right to do with it what you wish.

Production is the creation of wealth. Consumption is the destruction of wealth. Exchange is the increase of wealth as both parties place a higher value on what they received than what they’ve given up. Saving is the preference of consumption at some point in the future to consumption in the present. Savings is the basis for capital formation. Capital formation is what increases productivity. Increased productivity is the creation of larger amounts of wealth.

Each individuals decision on what and how much he will produce, consume, exchange and save according to what he  subjectively values in a world of scarcity is the essence of freedom.

In order to have economic freedom you have to have social freedom and in order to have social freedom you have to have economic freedom. In other words, economic freedom and social freedom are different sides of the same coin. Individuals are free to act. Each individual is responsible for the consequences of his actions if they bring harm to others or himself.

I have a quote by F. A. Hayek at the top of my web site. It is my favorite quote because it sums up the choice individuals have faced since the beginning of time:

F. A. HAYEK: “THE COORDINATION OF MENS ACTIVITIES THROUGH CENTRAL PLANNING OR THROUGH VOLUNTARY COOPERATION ARE ROADS GOING IN VERY DIFFERENT DIRECTIONS, THE FIRST TO SERFDOM AND POVERTY THE SECOND TO FREEDOM AND PLENTY.

Let’s take a look at the chart and see what it reveals.

true-political-axis

Zero Government intervention into the economy starts at the bottom left of the chart and moves upward and to the right as Government intervention starts to increase. Zero Social Freedom starts at the top right of the chart and moves downward and to the left as the level of Social Freedom starts to increase.

Communism, socialism, fascism and democratic socialism are on the top right of this chart. They are economic and political systems that strangle individual liberty. Their very nature means intervention into, or control of, what is produced, consumed, exchanged and saved.

Anarcho capitalism, free market capitalism, classical liberalism and our America constitutional founding are on  the lower left of the chart. They are economic and political systems that strangle Government and allow individuals the freedom to produce, consume, exchange, and save as they see fit.

What exists today is the middle ground of crony capitalism, crony socialism and other forms of government interventionism. This is the utopian middle ground that elites think mixes the best parts of both ends of the chart. They know that free market capitalism produces great amounts of wealth as seen by our standard of living. But the elites don’t like the way the wealth is “distributed” and want to use the force of government to make this distribution  “fairer” according to their idea of “fair”.

The elites attempt to redistribute wealth differently than it would exist in the free market, creates incentives that ultimately decreases the wealth that is being produced. It divides us into groups that can be pitted against each other by political opportunists.

These statements by Ludwig von Mises tell us all we need to know about the above chart:

The issue is always the same: the government or the market. There is no third solution.”

The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments.”

Anti capitalistic policies sabotage the operation of the capitalist system of the market economy. The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. All those evils which the self-styled “progressives” interpret as evidence of the failure off capitalism are the outcome of their allegedly beneficial interference with the market.”

CONCLUSION

We are in the chaotic middle. Our choice is to move towards freedom and free markets. It is going to take a lot of time and effort to educate enough people in order to tip the scales toward freedom. Is the cost too high? It’s your decision.

 

Related ArticleCapitalism vs. Crony Capitalism, at austrianaddict.com.

Related ArticleSocialism Sounds Great, at austrianaddict.com.

Related ArticleWhat Creates Wealth? Freedom, at austrtianaddict.com.

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

 

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Must Reads For The Week 3/26/15

March 26, 2016

This is from Mark J. Perry at carpediemblog. “Scaling Back Government: a) A state legislative subcommittee in North Carolina recently approved draft legislation that would dissolve 15 occupational licensing boards in the state, and b) Nebraska hair braiders can’t be jailed for performing their services without a government permission slip, thanks to a new law.” This is a move in the right direction. Shrinking government is possible at the state and local levels. It is difficult at the Federal level.

Venn Diagram Sunday, by Mark J. Perry, at carpediemblog. Mark Perry’s Venn diagrams are always interesting. He shows 12 of his most recent diagrams in this post. Here is an example.

Venn7

Obamacare Turns 6 – $55 Billion In Waste, So Far, at investors.com. We had lower cost healthcare when the 30 million who didn’t have health insurance went to emergency rooms for their care. Why did we pass 2500 pages of rules to help 30 million people when they weren’t denied healthcare in the first case? Answer. Politicians wanted more power.

Under Revised Policy, College No Longer Threatens To Lock You Up For Passing Out The Constitution, at thecollegefix.com. I bet the college administrators are worried that the Marxist propaganda they’re feeding the students might have some competition.

Transgenders And School Bathroom Question Solved, at targetliberty.com. This is an outside of the box solution. “Abolish the public school system.” This would also solve a lot of other problems.

Forget “Unity” We Need The Freedom To Disagree, by Gary Galles, at misesca. In a world of scarcity and subjective value, there can be very little agreement. Using government power to force people to agree has a high cost. To have less contention between people all we need to agree on is individuals have property rights and voluntary exchange (contract). Our country was founded on these basic principles.

This Place Needs A Recession, at economicpolicyjournal.com. From the article: “The power center of America (Washington D.C.), where politicians, crony capitalists and lobbyists plot, continues to grow……..built on the backs of US taxpayers. DC needs a recession.” The growth in the power of government has allowed politicians to split Americans up into groups and pit us against each other. While we waste time bickering with each other about which party or politician has the “solutions”, government power continues to grow. We don’t realize that answers to our problems can’t come from government because the problems were caused by government “solutions” in the first place. Read (People Want A President Who Will ‘Get Something Done”.)

The Nanny Always Wins: Fantasy Sports Stop Operations In New York, by Scott Shackford, at reason.com. This is an example of private property and voluntary exchange being trumped by politicians and bureaucrats using the force of government.

German Response To Negative Interest Rates, by Paul-Martin Foss, at mises.org. Just as Japanese people responded to negative interest rates by purchasing more safes, German people are responding by withdrawing money from their accounts and putting it in safe deposit boxes. This is a perfectly logical response. But it is a response that our anointed central bankers somehow failed to see. Do you think the banks, sanctioned by government, would go into these safe deposit boxes and take the money and leave an IOU?

THE MUST READ OF THE MUST READS

Markets Are Our Best Hope For Peaceful Cooperation, by Andres Syrios, at mises.org. Excerpt from the article: “…although selfish, human beings are a social species who long for a sense of community….and while morality – such as the golden rule, may be applied universally – human cooperation and empathy are not…The question left before us is what societal arrangement does such a nature best lend itself to. Karl Marx envisioned a future that would be “From each according to his ability, to each according to his need.” But as the biologist E.O. Wilson cleverly noted of communism, “Wonderful Theory, wrong species.” Yes, what works well for ants doesn’t so much for human beings.”…….”Cooperation is a great thing, but it has only been shown to work in small groups. All that’s left with regards to large group interactions is force or exchange. So democracy, on a large scale, is merely people voting on if, when and how to use force against each other.” Read, Individual Liberty Is The Least Contentious Way Of Settling Differences.

 

BERNOPOLY: NEW BOARD GAME FROM BERNIE SANDERS

bern

Here Is Some Econ. Homework

March 22, 2016

When knowledge is allowed to flow unhampered through the market, mainly through the price system, it works to coordinate all activities as optimally as possible. But when Government interventions don’t allow this knowledge to flow freely, malinvestments and dislocations are the result. The only way to cure these problems is for the interventions to stop. This allows the market to purge itself of these wasteful activities via a recession. Unfortunately no politician, bureaucrat, or Fed policy maker wants to have this correction happen on his watch.

Even tough hampered markets have an appearance of sustainability, they ultimately succumb to economic forces.

Here are two articles that talk about hampered markets. The first article is titled, Mises Was Right: The Hampered Market Is Unsustainable, by Sandy Ikeda, at mises,ca. Here are some excerpts from the article:

“Regulatory Dynamics Are Worse Than Transfer Dynamics. This is all because of the central role that prices play in coordinating market processes. That means that the government’s attempt to execute macroeconomic policy by manipulating the quantity of money and credit is perhaps the worst aspect of regulatory capitalism. Monetary manipulation eventually impacts all market prices directly and severely. Other things equal, it is the most distortionary form of intervention.”

“We can rank the major categories of intervention in order of their distortionary effects and thus in order of their unsustainability: 1) Large-scale monetary manipulation, 2) Large-scale price control, 3) Large-scale income redistribution.”

“So, other things equal, a country that pursues a pure form of welfare state capitalism might last longer than a country that pursues a pure form of regulatory state capitalism……”

“……Every country that has attempted interventionism in the past 100 years or so has experienced repeated economic crises. In Russia, crisis led to the Bolshevik Revolution and later the collapse of the Soviet Union. In Germany, the failure of the Weimar Republic conditioned the rise of National Socialism and then later the “economic miracle” under Ludwig Erhard. And in the United States, regulation and monetary manipulation produced the Great Depression and, decades later, the so-called Great Recession of 2007–09, with the “Reagan Revolution” in between.”

Ludwig Erhard And The German Economic Miracle.

 

Here is the second article titled, We Live In A Time Of Piecemeal-Planning & Incremental Interventionism, by Richard Ebeling, at mises.ca. Here are some excerpts from the article:

“Wherever we turn we are confronted with politicians, political pundits, television talking heads, and editorial page commentators, all of whom offer an array of plans, programs, and projects that will solve the problems of the world – if only government is given the power and authority to remake society in the design proposed.”

“Even many of those who claim to be suspicious of “big government” and the Washington beltway powers-that-be, invariably offer their own versions of plans, programs, and projects they assert are compatible with or complementary to a free society.”

“The differences too often boil down simply to matters of how the proposer wants to use government to remake or modify people and society. The idea that people should or could be left alnoe to design, undertake and manage their own plans and interactions with others is sometimes given lip service, but never entirely advocated or proposed in practice.”

“In this sense, all those participating in contemporary politics are advocates of social engineering, that is, the modifying or remaking of part or all of society according to an imposed plan or set of plans.”

“The idea that such an approach to social matters is inconsistent with both individual liberty and any proper functioning of a free society is beyond the pale of political and policy discourse. We live in a time of piecemeal planning and incremental interventionism.

“Society is a spontaneous order not a planned one.”

“Hayek argued that the true individualism starts from the premise that “society” is not some ethereal entity having an existence of its own, nor the designed creation of one or a handful of minds imposing a “plan” on people that produces the social order.”

“Instead, society is the cumulative and interactive outcome and result of multitudes of individual human beings making their separate individual plans that interact and generate connections and associations with other individual plans to produce the overall social order and its coordinated patterns.

 

If you really want to do some home work, read The Use Of Knowledge In Society, by F. A. Hayek at mises.org.

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

Related ArticleCentral Planners Hate Economics, at austrianaddict.com.

Related ArticleCharles Hugh Smith; Why Suppressing Feedback Leads To Financial Crisis, at austrianaddict.com.

Political Correctness, A Civil Society, And The Rule Of Law

November 10, 2015

In my previous post we talked about how political correctness produces petulant people. Here is an example of what we talked about. In this video a person from the media is taking pictures of the protests at the University of Missouri. The students, and what appear to be adults, don’t like him being there. The interaction between the reporter and the people in the crowd is instructive in understanding the mentality of the crowd. I see two different kinds of people in the crowd. Some are acting like children, and others are acting like union guys on a picket line trying to intimidate a scab laborer.

It’s impossible to reason with ignorant children because there is no starting point on which to agree. And the only way to deal with bullies is to stand up to their intimidation. Unfortunately you can’t educate ignorance if the ignorant don’t want to be educated, and standing up to bullies can ultimately lead to a physical confrontation.

The reporter in the video shows us how difficult it is to educate ignorance and stand up to bullies. I tip my hat to his courage. Here is what he says to an ignorant lady who won’t listen, “Ma’am , ok ma’am, the first amendment, ma’am, ma’am, Don’t yell at me ma’am. The first amendment protects your right to be here, and mine.” Of course she didn’t hear him or wouldn’t listen to what he said.

Then the union like bullies try to intimidate him, and when he doesn’t back down they push a little harder.

Make sure you watch the last 20 seconds of the video to see how an “adult” acts when a different reporter tells her he doesn’t have to move. She says, “You need to get out, you need to get out, you need to get out, you need to get out.” Doesn’t that sound like a child repeating I want my mommy, I want my mommy, I want my mommy. Then she yells to the crowd, “Hey, who wants to help me get this reporter out of here. I need some muscle over here.” She showed she was childish and a bully.

CIVILIZED SOCIETY AND THE RULE OF LAW.

A civilized society can only function when there are behavioral standards that are accepted by a majority of its members. These standards are not top down rules from government, like the PC crowd wants to impose on people. These behavioral standards (how we treat each others), are passed down from previous generations. These societal norms evolved spontaneously over time because acting a certain way produced more cooperation and less conflict.

The break down of the rule of law is causing what we are seeing happen from Baltimore to the University of Missouri. If the rule of law is defined as “general rules, known in advance, and applying to the rulers as well as the ruled”. Than the breakdown of the rule of law is caused by government making laws that are micro managing, so numerous we can’t possibly know them in advance, and not applying to the rulers, only to the ruled.

As more rules are passed, Government power grows. As this power increases, individuals outside of government, begin to see opportunities to lobby bureaucrats and politicians to achieve their goals.

It’s not just the PC crowd who want to use government to push an agenda. People from crony capitalists, to environmental crazies, are trying to use the power of government law making to force others to comply with their ideas.

What we are seeing is the correction for giving the government too much power. The best possible solutions for most of our problems, or perceived problems, are not found in one size fits all decisions by third party Government bureaucrats and politicians. The best possible solutions to problems are revealed when individuals voluntarily cooperate. We have traveled so far down this road that I fear the correction will have a high cost in strife between people. I hope I’m wrong.

Related articlePolitical Correctness Produces Petulant People, at austrianaddict.com.

Related ArticleThe Result Of The Break Down Of The Rule Of Law, at austrianaddict.com.

Related ArticleAbuses Of Power By Individuals In Government, at austrianaddict.com.

 

The Essential HAYEK.

June 16, 2015

The Frasier Institute has come up with a project called Essential Hayek (here). It consists of a book, a website, and videos, that explain F.A. Hayeks ideas on liberty and economics in simple understandable language.

I remember reading The Road To Serfdom by F. A. Hayek in September of 1994. I don’t think I comprehended a quarter of the book at the time, but what I did comprehend opened my eyes to the fact that the US was traveling down this road rapidly. I have reread this book several times and have also read The Constitution of Liberty, all three volumes of Law Legislation and Liberty, The Fatal Conceit, Prices and Production, A Tiger By The Tail, Individualism and Economic Order, and many of his articles and essays.

When you first read Hayek he is not easy to understand because he was writing about abstract concepts and his native tongue was German. As you start to know his writing style, which includes the lengthy sentences he constructs, he becames much easier to comprehend.

Here are two short videos from Essential Hayek.

Economic Booms And Busts

Everything Has Its Price (And That’s A Good Thing)

 

My Favorite Hayek Quote, is at the top right of my blog.

“The coordination of men’s activities through central planning or through voluntary cooperation are roads going in very different directions. The first to serfdom and poverty the second to freedom and plenty.

Volumes have been written explaining this quote, or these two sentences explain volumes of writings.

Spontaneous Order

The spontaneous order of the market far exceeds coordination through central planning, in the use of knowledge, the use of scarce resources, the creation of a higher standard of living. If you don’t understand the concept of spontaneous order it will be difficult to understand how the world works.

F. A. Hayek—” The free market pricing mechanism has a double misfortune. It is not the product of human design, and the people guided by it usually do not know why they are made to do what they do.”

Here are some related articles about spontaneous order.

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

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

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

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

Charles Hugh Smith – After 6 Years Of Unprecedented Central Planning, The Economy Is More Fragile Than Ever

June 23, 2014

File:Organiztion of the Federal Reserve System.jpg

Charles Hugh Smith does another brilliant analysis of how central planning, by the Federal Reserve, has markets completely distorted to the point that nobody knows what is real or fake, in this article, After 6 Years Of Central Planning, The Economy Is More Fragile Than Ever.

Artificially holding interest rates lower than they would be in an unhampered market, distorts the production process. It brings about economic activities that wouldn’t have existed if the market was left to decide what the interest rate should be. Interest rates “coordinate production across time”.  Any interference with the knowledge that passes through the production process, because the interest rate is distorted by the Fed, consumes scarce resources, scarce capital, and scarce labor. As we talked about in this article Capital Consumption, aka, Eating Our Seed Corn, and this article, A Look Over The Horizon At What Lies Ahead If We Continue Down The Central Planning Road.

Here are some excerpts from CHS’s article.

“Here are the key characteristics of Central Planning:”

1. “The central bank/state intervene in the economy in a dominant fashion, controlling functions such as interest rates…”

2. “The central bank/state pick winners and losers: ….. The central bank/state bailed out the too big to fail banks private losses with public-taxpayer money. In effect, the central state/bank enrich cronies at the expense of everyone else.”

3. “The central bank/state manipulate the nominally “free” market to boost asset valuations as a way of enriching cronies who own most of the financial assets and as a public-relations charade to mask the failure of their picking winners and losers.”

“In other words, in centrally planned economies, markets are not allowed to discover price–they exist only to reflect positively on Central Planners.”

4. “The central bank/state use the power of the printing press to create as much money as they need to reward cronies and cram their decisions down the throat of the economy.”

5. “The central bank/state use the power of their public policy announcements to manipulate behavior and the financial markets while keeping programs that might attract scrutiny secret.”

“Central planning fails for intrinsic reasons unrelated to the specific policies. The decentralized, self-organizing market is like the immune system for the economy; it keeps the system healthy by burning off the deadwood of failed bets and failed investments and distributing credit and risk on performance rather than cronyism.”

“By eliminating the economy’s immune system, Central Planning dramatically increases vulnerability and guarantees systemic crises down the road…”

“The economy becomes dependent on the The central bank/state intervention and loses the ability to function in the real world. When the real world finally intrudes, the weakened, strung-out addict, no longer capable of responding to reality in a positive fashion, expires.”

The damage done by Central Planning has yet to come home to roost. Six years into the Grand Experiment–that Central Planners can pick winners who just happen to be their cronies–the chickens of consequence are still making their way home.”

CHS  has some great charts that show the results of the Feds interventions, which are hard to see let alone understand. As J.M. Keynes wrote, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

In order to understand what Keynes was talking about concerning counterfeiting by central banks, you first have to understand this quote by his rival F. A. Hayek, “The coordination of mens activities through central planning or through voluntary cooperation are roads going in very different directions, the first to serfdom and poverty the second to freedom and plenty.”

Voluntary cooperation through free markets brings about individual freedom and a higher standard of living, while its opposite, central planning, brings about coercion by the state and a lower standard of living.

Related Article/VideoKeynesianism vs. The Austrian School, by austrianaddict.com.

Related Article/VideoKeynes vs. Hayek Round II, The Fight Of The Century, by austrianaddict.com.

 

 

 

Walter E. Williams Talks About Free Market Morality

August 2, 2013

I saw this video titled Free Market Morality at prageruniversity.com. In it Walter Williams talks about the voluntary action between individuals in the market as opposed to the coercive action used in a centrally planned economy. He also talks about the market being a positive sum game instead of a zero sum game because both sides in an exchange are better off. He explains concepts as only he can. Watch listen and learn.

Related Article-Video,  Walter E. Williams: Voluntary vs. Involuntary Exchange, or Seduction vs. Rape, at ausrtianaddict.com.

Related Article-Video,  Walter E. Williams: Free Market Capitalism Produces A Higher Standard Of Living For Everyone, at austrianaddict.com.

Related ArticleI Love Greed, by Walter E. Williams, at jewishworldreview.com.