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One of the Greatest Entrepreneurs in American History – Article by Daniel Oliver and Lawrence W. Reed

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Categories: Economics, History, Tags: , , , , , , , , , , , , , , , , ,

The New Renaissance HatDaniel Oliver and Lawrence W. Reed
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Introduction by Lawrence W. Reed
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One hundred years ago this weekend, James J. Hill, the subject of this fine 2001 essay by Daniel Oliver, passed away. Hill was 77 when he died on May 29, 1916, leaving a legacy of achievement surpassed only by a handful of the many great entrepreneurs in American history. He defied the now-infamous epithet, “You didn’t build that.”

James J. Hill was a “1 percenter” of his day who improved the lives of others not by giving speeches but by creating wealth.  

Hill was no Leland Stanford, who used his political connections to get the California legislature to ban competition with his Central Pacific Railroad. Hill was happy to compete because he knew he could. Perhaps he also had the conscience and good character that political entrepreneurs often lack. He built the only privately funded transcontinental railroad in American history. Unlike the ones that he competed with and that were government subsidized, his operation never went bankrupt.

Thirty years ago, I wrote a newspaper column about Hill. One of the papers that published it was the Havre Daily News in northern Montana. It turned out that the little town of Havre was the headquarters of the western division of the Burlington Northern, the successor railroad to Hill’s Great Northern. The division’s president contacted me to express appreciation and to invite me to give a couple of speeches in town. If I accepted, he promised to put me up in an old but restored executive rail car that Hill had built himself. How could I say no?!

For two nights, I lodged on the tracks in that beautiful car, marveling at its turn-of-the-19th-century fixtures and thinking how cool it was that all around me were vestiges of Hill himself. Only two other people were housed in the car during my stay — the cook who prepared my breakfasts and a security guard. After my speeches, Burlington Northern workers hooked the car to a locomotive. Accompanied by the division president and the local newspaper editor, I then experienced one of the most memorable rides of my life — west across northern Montana, through the Marias Pass that Hill himself chose as the best route for his tracks, ultimately arriving and disembarking at the town of Whitefish.

As Oliver explains, Hill deserves to be remembered as a builder, a risk-taker, and an innovator. He was a “1 percenter” of his day who immeasurably improved the lives of others not by giving speeches but by creating wealth.

— Lawrence W. Reed
President, Foundation for Economic Education


In 1962, Ayn Rand gave a lecture titled “America’s Persecuted Minority: Big Business” (collected in Capitalism: The Unknown Ideal), in which she identified two types of businessmen. Burton W. Folsom Jr. later called these “economic and political businessmen.” The first were self-made men who earned their wealth through hard work and free trade; the second were men with political connections who made their fortunes through privileges from the government.

Never before had someone tried to build a railroad without government land and grants. 

James Jerome Hill, builder of the Great Northern Railroad, was the only 19th century railroad entrepreneur who received no federal subsidies to build his railroads. All other builders, such as Cornelius Vanderbilt, received aid. Perhaps more than any other American, Hill helped to transform the American Northwest by opening it to widespread settlement, farming, and commercial development. In the process, he became one of the wealthiest men of the Gilded Age, amassing a fortune estimated at $63 million.

Some critics have charged that Hill did indeed receive federal subsidies to construct the Great Northern. But this charge confuses federal subsidies with land grants. Unlike a taxpayer subsidy, a land grant is the ceding of unimproved government land to a private developer. Critics wrongly assume that government has the power to acquire land by non-Lockean means — that is, by simply claiming to own it without “mixing one’s labor with the land.”

Early Career

Hill was born in the small town of Rockwood in southern Ontario, on September 16, 1838. Because his father died when Hill was young, he had to temporarily forgo formal education to help with family finances. Showing academic ability, however, he received free tuition at Rockwood Academy. Hill later lost an eye to an accidental arrow shot, which prevented him from pursuing the career in medicine that his parents had hoped for.

At age 18, Hill became interested in the Far East and decided on a career in trade. He headed west in hopes of joining a team of trappers, arriving by steamboat in St. Paul, a major fur-trading center, on July 21, 1856. However, Hill missed the last brigade of the year and had to stay in the city. Nonetheless, he grew to like St. Paul and decided to remain there.

Hill’s first job was as a forwarding agent for the Mississippi River Steamboat Company. He set freight and passenger rates and learned about steamboat operations. Unable to fight in the War between the States because of his eye, Hill organized the First Minnesota Volunteers. He also worked as a warehouseman, pressing and selling hay for the troops’ horses. It was there that he learned how to buy and sell goods at a profit and use the least expensive method to ship goods.

After the war, Hill became an agent for the First Division of the St. Paul & Pacific Railroad. At the time, the line used wood for fuel. Hill believed rightly that coal would be cheaper, so he made a contract with the company to supply it. He also formed a business with Chauncey W. Griggs, a Connecticut man in the wholesale grocery business. Together, they created Hill, Griggs & Company, a fuel, freighting, merchandising, and warehouse company.

Hill later became interested in the Red River of the North that flows north to Lake Winnipeg. Since Fort Garry (now Winnipeg) was an important Hudson’s Bay Company trading post, Hill began transporting personal belongings there. Later, Hudson’s Bay employee Norman Kittson left the company to join Hill in forming the Red River Transportation Company.

In 1870, Hill traveled up the Red River to investigate a French and Indian mob that had captured Fort Garry. During that trip and others, Hill saw the region’s rich soil while observing the St. Paul & Pacific’s steady decline. He became convinced that he could make the line profitable by extending it to Fort Garry. When the panic of 1873 put the railroad under receivership, he saw his chance to buy it and other lines in crisis.

Hill and Kittson went to Donald Smith of the Hudson’s Bay Company and told him their plan. Smith offered money and approached George Stephen, president of the Bank of Montreal. Together, the four bought the St. Paul & Pacific for $280,000 (millions in today’s dollars), which Hill estimated as only 20 percent of its real value.

Hill purchased rails, rolling stock, and locomotives and hired laborers who laid more than a mile of track a day. In 1879, the tracks were connected at St. Vincent, Minnesota, to a Canadian Pacific branch from Fort Garry. Since the Canadian Pacific’s transcontinental route was not yet completed, all traffic through Fort Garry had to use Hill’s route. He received two million acres of land through the Minnesota Land Grant for completing the rail line on time. He also renamed his railroad the St. Paul, Minneapolis, & Manitoba. His timing was perfect since the area experienced two exceptional harvests that brought extra business. In addition, a major increase of immigrants from Norway and Sweden allowed Hill to sell homesteads from the land grant for $2.50 to $5.00 an acre.

Expanding the Line

While planning the St. Paul, Minneapolis, & Manitoba, Hill was also involved in constructing the Canadian Pacific Railway. While Donald Smith and George Stephen led this transcontinental route, Hill gave advice about selecting routes and construction techniques. But because the Canadian Pacific would soon compete with his own planned transcontinental route, Hill resigned from the business and sold all his stock in 1882.

Only a year after purchasing the St. Paul & Pacific, Hill decided to extend his railroad to the Pacific. Many thought that he could never do it. Never before had someone tried to build a railroad without government land and grants. Railroads like the Union Pacific, Central Pacific, and Northern Pacific were all given millions of acres of government land to build their transcontinental routes. People thought that even if Hill could achieve his dream, he wouldn’t be able to compete with government-funded lines. His quest came to be known as “Hill’s Folly.”

The St. Paul, Minneapolis, & Manitoba reached Minot, North Dakota, in 1886. Because the Northern Pacific had steep grades and high interest charges and was saddled by high property taxes, the new railroad resulted in a much more profitable route.

A railroad line would obviously help the economy of any town it passed, so Hill was able to get good rights of way. However, one town, Fort Benton, Montana, rejected Hill’s request for a right of way. He decided to cut the town off by building around it. Showing his attitude toward those who tried to stand in his way, Hill left Fort Benton one mile from the railroad.

After speedy construction using 8,000 men and 3,300 teams of horses, the St. Paul, Minneapolis, & Manitoba reached Great Falls in October 1887. Hill connected it there with the Montana Central Railroad, which went on to Helena, bringing lots of new business. In 1890, he consolidated his railroad into the Great Northern Railroad Company.

Hill also encouraged settlement along the lines by letting immigrants travel halfway across the country for $10. In addition, he rented cheap freight cars to entire families. These strategies, rarely used by other railroads, encouraged even more business.

People thought Hill wouldn’t be able to compete with government-funded lines.

In 1893, the St. Paul, Minneapolis, & Manitoba reached Puget Sound at Everett, Washington. However, during the same year, a panic put the Northern Pacific as well as the Santa Fe and Union Pacific into receivership. Hill made an agreement with businessman Edward Tuck and Bank of Montreal associate Lord Mount Stephen to buy the Northern Pacific. A stockholder objected, however, arguing the deal would violate Minnesota law, and the agreement was stopped. But Hill got around this by having his associates help buy Northern Pacific stock as individuals instead of as a company. The Northern Pacific became part of the Great Northern in 1896. The lines came to be widely known as the “Hill Lines.”

Hill realized that the only eastbound traffic for the first few years would be lumber, and this limitation would make the line less profitable than it might be. Wishing to acquire a line to Chicago and St. Louis, where he could deliver the lumber, Hill researched the Chicago, Burlington, & Quincy railroad that stretched from the Great Lakes to the Rocky Mountains. This acquisition would also give him a line that could haul cotton to St. Louis and Kansas City and connect to the smelters of Denver and the Black Hills. The trains would be kept full at all times. Working with J.P. Morgan, Hill purchased the Chicago, Burlington, & Quincy.

Hill began to expand his shipping empire internationally via Seattle. He supplied Japan with cotton from the south and shipped New England cotton goods to China. He also shipped northern goods such as Minnesota flour and Colorado metals to Asia.

Hill continued to expand his railroads in the early 20th century. He bought the Spokane, Portland, & Seattle Railway and added a 165-mile line from Columbia along the Deschutes River to the town of Bend. He also purchased several electric rail lines to compete with the Southern Pacific, and an ocean terminal at the mouth of the Columbia River near Astoria. He had two large steamships that operated between the terminal and San Francisco. This proved to be good competition for the Southern Pacific.

Conservation

Hill had many other business interests, including coal and iron-ore mining, shipping on the Great Lakes, finance, and milling. A major related interest was farmland conservation. Hill was widely known in his day as a leader in this area. Unlike most environmentalists today, Hill believed that natural resources should be privately owned and locally controlled, although in some cases he believed state-level ownership was justifiable. He considered the federal government too distant to competently manage resources. Indeed, he once criticized the US Forest Service, saying that “The worst scandals of state land misappropriation, and there were many, are insignificant when compared with the record of the nation.”

His interest in conservation stemmed both from his concern for the nation’s food supply, a popular philanthropic cause at the time, and from business concerns. Since his railroads largely transported agricultural products, Hill paid close attention to fluctuations in the grain markets. Falling grain yields in the Great Plains would mean fewer goods to transport.

Believing that better farming methods would both increase yields and conserve soil quality, Hill used his own resources for agricultural research and for the dissemination of findings to farmers. He even had his own greenhouse that served as a laboratory. He hired agronomy professor Frederick Crane to do soil analyses in Minnesota, Montana, and North and South Dakota. Farmers were paid to cultivate experimental plots on their land according to Crane’s instructions. These were a tremendous success, yielding 60 to 90 percent more than the conventional acreage of the time.

In a speech, Hill once said,

Out of the conservation movement in its practical application to our common life may come wealth greater than could be won by the overthrow of kingdoms and the annexation of provinces; national prestige and individual well-being; the gift of broader mental horizons, and best and most necessary of all, the quality of a national citizenship which has learned to rule its own spirit and to rise by the control of its desires.

In 1908, President Theodore Roosevelt invited Hill to a governors’ conference on conservation and appointed him to a lands commission. Hill was never pleased with the position, preferring action to talking, but he did make his views known.

Hill was also a major philanthropist. He supported the Roman Catholic seminary in St. Paul and endowed the Hill Reference Library, which operates to this day.

Views on Government

Hill was a great champion of free markets. He was particularly critical of tariffs, calling them “a great enemy of conservation” and pointing out that by prohibiting imports of such products as timber from other countries, the United States was accelerating the depletion of its own. Regarding the federal government’s ability to conserve resources, he once said, “The machine is too big and too distant, its operation is slow, cumbrous and costly.”

A 1910 speech to the National Conservation Congress in St. Paul summarizes Hill’s views on government. He remarked,

Shall we abandon everything to centralized authority, going the way of every lost and ruined government in the history of the world, or meet our personal duty by personal labor through the organs of local self-government, not yet wholly atrophied by disuse…? Shall we permit the continued increase of public expenditure and public debt until capital and credit have suffered in the same conflict that overthrew prosperous and happy nations in the past, or insist upon a return to honest and practical economy?

Hill once said, “The wealth of the country, its capital, its credit, must be saved from the predatory poor as well as the predatory rich, but above all from the predatory politician.”

A Classic Entrepreneur

In 1907, at the age of 69, Hill turned over leadership of the Great Northern to his son, Louis W. Hill. But he remained active in running his railroads and went to his office in St. Paul every day.

In May 1916, Hill became ill with an infection that quickly spread. He went into a coma and died on May 29 at the age of 77. At 2:00 p.m. on May 31, the time of his funeral, every train and steamship of the Great Northern came to a stop for five minutes to honor him.

“Shall we abandon everything to centralized authority, going the way of every lost and ruined government in the history of the world?” — James J. Hill  

Hill exhibited the classic traits of a successful entrepreneur. He diligently studied all aspects of his businesses, such as which mode of transport was best for carrying track to be laid: caboose, handcar, horse, locomotive, or passenger coach. He did all the analyses of grades and curves himself and often argued with his engineers and track foremen, demanding changes that he felt necessary. He insisted on building strong bridges made with thick granite and on using the biggest locomotives and the best quality steel.

At the end of his life, a reporter asked Hill to explain the reason for his success. He replied simply that it was due to hard work. His hard work earned him the title “the Empire Builder,” and at the 1915 Panama-Pacific Exposition in San Francisco, he was named Minnesota’s greatest living citizen.

Hill was remarkable because he developed an area that most people thought never could be developed. His railroads made Minnesota and the Dakotas major destinations for huge waves of immigrants. In fact, Hill sent employees to Europe to show slides of western farming in efforts to urge Scotsmen, Englishmen, Norwegians, and Swedes to settle in the Pacific Northwest. As a result, more than six million acres of Montana were settled in two years. And because of Hill, the small town of Seattle, Washington, became a major international shipping port.

James Jerome Hill has rightly earned a place as one of the greatest entrepreneurs in American history.


Daniel Oliver

Daniel Oliver is a research associate at the Washington, DC-based Capital Research Center and a freelance writer. 

Lawrence W. Reed

Lawrence W. Reed is President of the Foundation for Economic Education and the author of the forthcoming book, Real Heroes: Inspiring True Stories of Courage, Character and Conviction. Follow on Twitter and Like on Facebook.

This article was originally published on FEE.org. Read the original article.

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Brazil’s Lost Decade: We Must Free Our Economy – Article by Felipe Capella

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Categories: Politics, Tags: , , , , , , , , , , , , , , , , ,

The New Renaissance HatFelipe Capella
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It was a lost decade for Latin America. Years of populist governments combined with a commodity boom turned out to be our oil curse, our Dutch Disease. This disastrous mix made bad public policies look like temporary successes, pushing developing countries to an unsustainable path. The collectivist ideology monopolized the debate for more than 10 years, and now that the natural resource party is over, the harm of these policies have become clearer: deep economic crisis generated by a utopia whose greatest achievement was turning toilet paper into a rare-earth product.

Populist and authoritarian South American regimes have set up government bureaucracies aimed at pleasing special interest groups that provide political support while tirelessly harming the population as a whole. These groups are divided into several small groups with special rights and privileges: judges, civil servants, members of parliament, friendly businessmen. These factions are getting their more-than-fair share while the unprivileged citizen foots the bill.

Latin American politicians played it very well during these favorable times. Cronyism and populism greatly benefited some chosen groups, while the harms were diffused enough throughout the whole country and difficult to measure during favorable economic winds. Brazil is just the biggest and clearest example of that.

How We Got Here 

For many years Brazil’s road to serfdom was being paved by the left through a combination of the world’s worst ideas: a Venezuelan-like project to subordinate decisions of the Supreme Court to the ratification of Congress; an Ecuadorian will to regulate and control the free press; a Russian compassion for cronies handpicked by the executive; Greek style benefits for public servants; Southern European pension costs (for a much younger population); Argentinean barriers for international trade, and an American/EU taste for subsidies.

The former — and now failed — cherry-picked billionaire darling of the regime Eike Batista was showered with tax funds while ordinary entrepreneurs lacked governmental support; friendly national industries were heavily protected, while people were taxed up to 50 percent on food and health supplies. Oi Telecom, a multibillion dollar mobile company, is just the most recent example of Lula’s national-champion policy (the company has just filed for bankruptcy, with 17 percent of its debt held by state-owned banks).

That was the result of 10 years of left-populist government in Brazil, all of them enjoying the applause of the international press. For years The New York Times constantly published articles with a pro-Dilma/Lula tone. Right after Dilma’s reelection — which is now known to have been funded by money siphoned from state-owned companies — The NYT published a piece half-mocking 48 percent of voters that were concerned about Dilma’s economic and political approaches.

The good thing about bad journalism is that reality eventually catches up with it. Since that 2014 article, Dilma has since lost her job and is about to be impeached for illegal budgetary schemes and deep corruption. Her top aides are all in jail or about to be thrown there, accused of stealing dozens of billions of dollars, including former Ministers and three former treasurers of her Labor Party (which some people now deem to be the most dangerous job in the world). Brazil is in its worst economic crisis since the 1930s, which has been worsening since 2014 (while Dilma was coming up with her now-famous accounting tricks to fool the Brazilian voters). Lula had even become a frequent contributor of The Times after his presidency, but now faces criminal charges and has seen the federal police knock on his door with a coercive trip to the criminal courts.

In its recent opinion page about the failed Rio Olympic Games preparation, The NYT’s favorite Brazilian correspondent Vanessa Barbara wrote that “political turmoil has paralyzed the country and frozen the economy.” This rhetoric of blaming “political turmoil” for Latin American calamities does not help to set the record straight. The problems with the Olympic games stem directly from Dilma’s and Lula’s incompetence and corruption. But the problem also lies on media vehicles like The Times, always ready to turn a blind eye to mismanagement and corruption in the name of ideology.

So here we are. Brazil is a failing state after a decade of populist presidents, misguided policies and commodity boom, all under the auspices of the progressive press.

The Need for Laissez-Faire Liberalism

For a long time, Brazil has been a place where liberalism (i.e., the ideology of freedom and free markets) was mostly marginalized, despite its positive track-record. In the minds of most Brazilians, being liberal was conspiring for the wealthy, being socialist is taking care of the poor.

But if The Times does not want to recognize its mistakes, apparently the Brazilian population is more willing to deal with self-criticism. There is now a strong resurgence of liberalism throughout the country.

Partido Novo (“New Party”) is a new political party created with a clear liberal approach to the economy, and it is just one of the recent examples of how liberalism is growing in the country, waking up millions of Brazilians who were orphans of a liberal political leadership. Many creative and hardworking people that do not think that socialism (or heavy-handed South American social democracy) will make our countries more prosperous. There are substantial constituencies that want public policies driven by research, metrics and actual public interest.

Free Trade Is the Key

The European Union has no appetite and no urgency to negotiate any comprehensive trade agreement with Mercosur or other Latin American countries. The United States faces a choice between a populist protectionist and a trade-dubious democrat (to put it mildly).

It is essential for the world that someone — anyone — pushes forward the liberal pro-trade agenda. As we natives well know, it is never wise to bet on Brazil as a global force for good. But maybe — just maybe — because we are suffering first-hand the harms of a decade of interventionist, protectionist, and corrupted government, we can somehow understand that populism is an illusory lucky charm that actually curses a country for years to come; and maybe — just maybe — we can do something to redeem ourselves.

Now that international trade seems under constant attack from all places and political spectrums, and no big world economy wants to step up and bluntly defend the liberal track record — including the United States — maybe Brazil could become the champion of good policy at last, pushing for reforms throughout Latin America and holding the liberal torch high in these dark times.

As Roberto Campos advised decades ago, for us Brazilians there are only three ways out of the current mess: Rio’s airport, Sao Paulo’s airport, and Liberalism.

Felipe Capella is an attorney turned entrepreneur. He is a former law professor at the Federal University of Santa Catarina (Brazil), former attorney at Sullivan & Cromwell (New York) and the Inter-American Development Bank (Washington, DC), has Master degrees from UPenn/Wharton and Universidad Francisco de Vitoria (Spain), and holds an MBA from FGV (Brazil).

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

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Apollo 11 on Human Achievement Day – Article by Edward Hudgins

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The New Renaissance HatEdward Hudgins
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There are holidays and days of commemoration stretching from New Year’s to Independence Day to Christmas. A new one should be added to the calendar – informally rather than by government decree: Human Achievement Day — July 20th, the date in 1969 when human beings first landed on the Moon.

The most obvious benefit of living in society with others is that we can each specialize in the production of goods and services at which we are best and then trade with others, making us all prosperous. But in society we also have the opportunity to witness the achievements of others, which are constant reminders just how wonderful life can be. And among the greatest achievements in history, individuals using the three pounds of gray matter we each have in our heads figured out how to go to the Moon.

Think of the millions of parts and components and the engineering skills needed to make them function together in the Saturn V rocket, the Columbia Command module and the Eagle lunar lander that carried Neil Armstrong and Buzz Aldrin to the surface of another world. Think of the applications of old knowledge and the discovery of new knowledge needed to create those incredible systems.

Novelist-philosopher Ayn Rand understood the full moral meaning of these efforts when she wrote, “Think of what was required to achieve that mission: think of the unpitying effort; the merciless discipline; the courage; the responsibility of relying on one’s judgment; the days, nights and years of unswerving dedication to a goal; the tension of the unbroken maintenance of a full, clear mental focus; and the honesty.” It took the highest, sustained acts of virtue to create in reality what had only been dreamt of for millennia.

Ayn Rand‘s take on the landing was particularly instructive because of her novelist’s understanding of art, which, at its best, is a selective recreation of reality in light of the artist’s values. Thus Michelangelo’s David and Beethoven’s 9th portray humans as heroes. We go to art for emotional fuel and for the vision of the world as it can be and should be. In Apollo 11 she saw such a vision made manifest.

Concerning the pure exaltation from watching the launch from the Kennedy Space Center, Ayn Rand said that, “What we had seen in naked essentials – but in reality, not in a work of art – was the concretized abstraction of man’s greatness.” The mission “conveyed the sense that we were watching a magnificent work of art – a play dramatizing a single theme: the efficacy of man’s mind.” And “The most inspiring aspect of Apollo 11’s flight was that it made such abstractions as rationality, knowledge, science perceivable in direct, immediate experience. That it involved a landing on another celestial body was like a dramatist’s emphasis on the dimensions of reason’s power.”

Of course the Moon landings were government-funded; if the private sector had led the way we still probably would have traveled to the Moon, only some years later. Today it is private entrepreneurs — the kind who have given us the personal computers, Internet and information revolution — who are turning their creativity to the final frontier. Burt Rutan, who won the private X-Prize by placing a man into space twice in a two-week period on the private, reusable SpaceShipOne, follows in the spirit of Apollo. The celebration of those flights in late 2004 showed how healthy human beings relish the display of efficacious minds.

So on July 20th let’s each reflect on our achievements — as individuals and as we work in concert with others. Let’s recognize that achievements of all sorts — epitomized by the Moon landings — are the essence and the expected of human life. Let’s rejoice on this day and commemorate the best within us with, as Ayn Rand would say, the total passion for the total heights!

Edward Hudgins is the director of advocacy for The Atlas Society and the editor and author of several books on politics and government policy.

Copyright The Atlas Society. For more information, please visit www.atlassociety.org.

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Protectionism Will Not Make America Great – Article by Pierre-Guy Veer

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Categories: Economics, Politics, Tags: , , , , , , , , , , , , , ,

The New Renaissance HatPierre-Guy Veer
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At the end of June, presumptive Republican nominee Donald Trump made a fiery speech about trade in Pittsburgh. Using many of Bernie Sanders’ talking points on the subject, Trump said, among others, that he would hold China accountable for the manipulation of its currency and unfair trade practices, withdraw from the Trans-Pacific Partnership, and renegotiate the North American Free Trade Agreement with Mexico and Canada.

Trade vs. Trade Treaties

There is some wisdom on Trump’s part about NAFTA. This agreement would deserve the label “bureaucratic agreement on trade” rather than “free trade agreement.”

For example, Annex 313 states that Bourbon and Tennessee Whiskey can only be called as such (and be sold) if they are produced in Tennessee “in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.”

The same rule applies to Canadian Whisky in Canada and Tequila and Mezcal in Mexico. Annex 703.2.A.4, on its side, contains a truckload of products which are exempted from free trade, including Canada’s milk supply management which may cost the average family $267 a year.

Trump is also right about being hesitant to support the TPP. What has leaked out of it shows that the agreement has more to do about protecting intellectual property rather than genuine trade liberalization. Such protection would stifle innovation and slow economic growth – just imagine if there had been a patent on the wheel or iron casting when it was first invented.

Fairness is Buying What You Want from Wherever

However, Donald Trump is wrong to advocate for “fair” trade. In his platform he calls for a level playing field in order to have a “fairer” trading relationship with China, known for its heavy top-down approach on foreign businesses.

This amounts to protectionism that could set off a very costly trade war. American consumers will pay the price – a form of tax. It could set off a deep recession. When you consider the stakes here, you see that all of Trump’s valid complaints about trade treaties are designed to bring about something that is even worse.

If, however, Trump’s goal is really to “make America great again,” then he should not be caring about China’s trade practices, but embracing unilateral free trade.

Of course there would be unavoidable, short-term pain with job losses in industries that cannot compete with China and other industries. The steel industry, for example, would not be protected by the recently enabled 266-percent tariff imposed on Chinese steel and would shed many jobs.

However, people using steel (for construction, manufacturing, etc.) would save so much money by being able to import cheaper steel. This surplus money will not evaporate; it will return in the economy in the form of savings, job creation, and economic growth.

This is not trade theory: unilateral free trade has successfully happened. Famous French liberal Frédéric Bastiat has abundantly talked about England turning to unilateral free trade and how it helped the country become even richer.  It even “gave them bread” during a bad harvest 1847 thanks to wheat imports.

By walking down this “bold path,” to quote minister Peel who enacted free trade, America would truly be great. Government would stop subsidizing agriculture in every single form, thereby not only improving the quality of the water supply, but also reversing the contentious debate about undocumented Mexicans whose livelihood was destroyed by U.S. corn subsidies. Capital resources would be allocated in a more efficient way according to supply and demand – it might still be farming, but it could become manufacturing, mining, or even services – and save an average of $6.1 billion per year until 2019.

Trade liberalization, combined with Trump’s promises to lower business income tax to 15 percent and tackle the deficit and debt, would truly “make America great again.” Because after the unavoidable short-term pain of adjusting to new incentives, Americans will get back to work and better supply the world’s demand on their own.

Pierre-Guy Veer


Pierre-Guy Veer

Pierre-Guy Veer is a Linguistic Reviewer at Lionbridge

This article was originally published on FEE.org. Read the original article.

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How Pokémon GO Brightened a Dark World – Article by Jeffrey A. Tucker

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The New Renaissance HatJeffrey A. Tucker
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All weekend, I’ve fielded texts from people who are despairing about the state of the country. Is some kind of unsolvable civil war developing between police and people, even between races? And how can politics solve this when the candidates seem to have every interest in actually exploiting and even exacerbating the problem? The opinion pages overflowed with expressions of deep sadness and warnings that, once again, the center is no longer holding. The nation is falling apart.

What could possibly be the solution here? These problems seem so deep as to be insoluble.

Oddly, the answer might be in your pocket. Through our smartphones and the app economy, we are being given tools to allow us to reach the world and connect with others in ways that were previously unimaginable. This is not a political solution; in fact, it might be solution precisely because it is not political.

Pokémon Brings Us Together

Poetically, it was exactly this weekend – following so much terrible news and after a season in which two-thirds of Americans report being alarmed by their coming presidential choices – that millions downloaded and played one of the most delightful digital apps to yet appear: Pokémon GO.

It has broken all records on the numbers of downloads in such a short time. In only a matter of a few days, the mobile app had nearly as many real-time users as Twitter. It now lives on more smartphones that even Tinder. As a term, Pokémon is top trending. If you follow your Facebook home feed, you know all about this. If any application could be described as having swept the nation, this was it.

How can a silly game lift up our hearts and give rise to the better angels of our nature?

That something marvelous had happened was obvious to anyone living in dense population areas. Parks filled up with people playing the game. They were hanging out in public areas around malls, at bus stops, in parking lots, and just about everywhere.

People were holding their phones, playing the game, laughing and moving around. Crucially, people were meeting each other with something in common – people of all races, classes, religions; none of it mattered. They found new friends and came together over a common love.

And there was a common feature to all the people doing this. We smiled. We smiled at each other. Even now, even in the midst of a world in which “the center no longer holds,” we actually found that center again: a heart-felt affection for something we love and an awareness that others share that same aspiration.

It was absolutely beautiful to watch. With an element of fantasy and the assistance of marvelous technology, we experienced the common humanity of our neighbors and strangers in our community. This kind of experience is key for building a social consensus in favor of universal human rights.

Why We Love It

The integration between digital and physical in the Pokémon GO game go beyond anything most people have ever experienced. Turn on your camera and you suddenly find opportunities for catching and collecting pocket monsters all around you. Head outdoors and chase them around, going up level after level and eventually find yourself at a gym where you can digitally battle other players in real space.

Dazzling doesn’t quite describe it. It is fun and imaginative, tapping into the inner kid of all of us. All the technological and intellectual discoveries over the last decades are on display. It all feels so real, all this capturing, collecting, and battling.

The industry calls it “augmented reality.” It’s a new level of gamification, not just something that happens on a screen. It reveals a layer of fantasy within the existing structure of reality itself, meaning that it brings to life the most delightful imaginings of our hearts. It helps us see what we would otherwise not see, and allows us to interact directly with the digitally existing thing.

In this way, Pokémon embodies something that we’ve all begun to intuit but haven’t been able to frame up completely. It is this: there is no longer a separation between what we once called real and what we think of as being a pure Internet fiction. The two are blending in ways that are dramatically enhancing our lives. We are to the point where we can no longer even imagine how the world even worked – and how our minds worked – before market forces blessed humanity with digital innovations.

The Great Blurring

Market-driven technology is not some invading imposition that makes people change the way they live without their permission. Instead it seeks to serve us and make our lives better; that’s its whole purpose and ethos. In the whole course of the digital revolution that began some twenty years ago, we’ve seen the gradual blurring between the physical and digital realms. What was created through code started to become just as substantial and meaningful in our lives as anything that took up physical space and we could touch.

We see this not only in games but also in health care, in finding our way around cities, in opening businesses, in driving, in dating, and in millions of life activities. Crucially, such apps are available to everyone regardless of life station. They spread capital and productivity across all classes of people, and more and more of our lives are migrating to this realm to escape the frustrating limits of physical space.

Of course the doubters have kvetched for two decades now. Old timers have screamed about how all this fascination with the Internet was causing a breakdown in human relationships, how the old-fashioned letter was so much better, why ebooks could never replace the glorious romance of physical books, how online music would kill the industry, how dating apps were killing romance, how time-killing blather on Facebook and Twitter were killing productivity, and so on.

Oh, and remember how video games were going to wreck our health by making us all sedentary? Now we have Pokémon GO players romping over hill and dale to “catch ‘em all.” As a wit on Facebook said, “Pokemon GO has done more for childhood obesity in the last 24 hours than Michelle Obama has in the past 8 years.”

Indeed, none of these fears have panned out. In fact, the opposite has proven true. The digital revolution has connected people as never before and given rise to more of what we love in life, whatever that happens to be.

Such doubters were missing something crucial. The key to the digital realm is its unrelenting adaptability to consumer preferences, thanks to the capacity of innovators to learn from the successes and failures of others. Digital innovation allows the crucial element of discovering and innovating to be crowd sourced, creating an environment of exponentially fast progress.

Market-driven technology is not some invading imposition that makes people change the way they live without their permission. Instead it seeks to serve us and make our lives better; that’s its whole purpose and ethos. Whatever it is we want to do – read, listen, play, study, create – the technology is there to make it easier and more widespread. It democratizes the tools we need to live better lives.

And what does it make possible? Whatever the human mind is capable of creating. And the element of surprise is always there. Just when we think we’ve reached an insuperable limit to the possible, something appears that surpasses that limit.

The individual human mind is not capable of outsmarting the brilliance of a market process that operates without limits.The challenge became very intense when Bitcoin came about in 2009, and the cryptocurrency gradually took on monetary properties. Economists claimed this could never happen, since money absolutely had to originate in a form of real-world scarcity of something you could hold.

I recall a conversation I was having with one skeptic on Skype who kept saying that Bitcoin can’t be money because it doesn’t exist. Frustrated, I asked him if the conversation we were having right then really existed. He said yes. I reminded him that I was not standing next to him and everything we were looking at and hearing was nothing but code.

Our conversation was purely fictional by his standards, simply because its only existence was in the digital realm. And yet it seemed to me to be actually happening. He was speechless.

The lesson here is that the individual human mind is not capable of outsmarting the brilliance of a market process that operates without limits. And within digital spaces today, we experience the closest thing we have to a free market. It is making things no one thought possible, and doing it daily, and doing it for everyone.

Overcoming Power with Humanity

Mobile apps like Pokémon GO can of course be dismissed as just another game, distractions that do not address serious life problems like race conflict and the tit-for-tat killings between police and citizens. But actually there is more going on here.

A few weeks ago, Facebook rolled out its live video functionality for all users – and keep in mind that this is free for everyone on the planet to use. When a police officer shot Philando Castile with four bullets during a routine traffic stop, his girlfriend Diamond Reynolds took out her phone and live streamed one of the most dramatic and powerful moments yet seen on the subject of police power.

It shocked the consciences of millions. Facebook was her 911. Had private enterprise not been there, the world would not have known. Now that we do, change is made more likely.

That’s the serious side of technology while Pokémon GO represents the delightful side. They work together, each making a valuable contribution to enabling a better life. What they have in common is that both are non-state solutions to crying human needs. No politician in history has ever achieved so much for the cause of human rights and human happiness.

Jeffrey Tucker

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education and CLO of the startup Liberty.me. Author of five books, and many thousands of articles, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.  Follow on Twitter and Like on Facebook. Email

This article was originally published on FEE.org. Read the original article.

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Globalization’s So-Called Winners and Losers – Article by Chelsea Follett

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Categories: Business, Economics, Tags: , , , , , , , , , , , , , , , ,

The New Renaissance HatChelsea Follett
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A recent Washington Post analysis has argued that political events as diverse as the Brexit and the rise of Donald Trump can be explained by a “revolt” of the world’s economic “losers.”

Before proceeding, it is important to keep in mind that all income groups in the world have seen gains in real income over the last few decades. That said, some have gained more than others. Between 1988 and 2008, for example, the lowest gains were made by people whose incomes fit beteen the world’s 75th to 90th income percentiles. That includes much of the middle and working class in rich countries.

The Washington Post calls the people in this group the bitter “losers” of globalization. But, are they?

follett1There are at least two problems with characterizing such people as “losers.” First, it seems to suggest that income growth rate matters more than absolute income level. Yet a person in the 80th income percentile globally would not want to trade places with or envy someone in the bottom 10th percentile, despite the latter’s much higher income growth rate.

Consider real GDP per person, adjusted for differences in purchasing power, in China and the United States. Between 1988 and 2008, China’s per person GDP grew by over 340 percent. America’s per person GDP, in contrast, grew by “only” 40 percent. China may be making gains more quickly, but it would be wrong to argue that the United States was a “loser,” for American GDP per person in 2008 was $52,704 and China’s $8,104.

chinagrowth

Poor countries are seeing faster income gains partially because their starting point is so much lower—it’s a lot easier to double per person GDP from $1,000 to $2,000 than from $40,000 to $80,000.

The second problem is that the Washington Post piece suggests that the incredible escape from poverty that has occurred in poor countries during my lifetime has come at the expense of the middle classes in the developed world. (This is a fascinating reversal of the more popular, but equally inaccurate, opinion that the Western riches came at the expense of poor countries).

Thus, the Washington Post piece claims, “global capitalism didn’t always work so well for workers in the United States and Europe even as—or, in some cases, because [emphasis mine]—it pulled hundreds of millions of people out of poverty everywhere else.”

Fortunately, prosperity is not a zero sum game.

When trying to understand the “winners” and “losers” of globalization, it is important that we do not compare income growth rates over the last few decades with some imagined ideal. Instead, we should compare income growth to what would have happened in a world without globalized trade. In such a world, hundreds of millions of people would have remained in extreme poverty. And the middle class of the developed world would also have made fewer gains. Just look at the amazing reduction in price of consumer goods that we have collected at HumanProgress.

A few individuals in select industries would benefit from protectionism, like the U.S. sugar industry does now. But on average everyone would be poorer, just as in 2013 Americans collectively paid 1.4 billion dollars more for sugar than they would have without protectionism. (The U.S. manufacturing industry, it may be worth noting, would not be among the “select industries” to benefit—most manufacturing job losses have come from mechanization rather than outsourcing, and have been offset by new jobs in other sectors).

Thanks to trade and exchange, people in all income percentiles have made real gains, and living standards for the middle class in advanced economies have soared in ways not captured by looking at income alone. America’s middle class is getting richer, and the people in the world’s 75th to 90th income percentiles are also winners.

Chelsea Follett is the Managing Editor of HumanProgress.org, a project of the Cato Institute which seeks to educate the public on the global improvements in well-being by providing free empirical data on long-term developments. Her writing has been published in the Wall Street Journal, Newsweek, and Global Policy Journal. She earned a Bachelor of Arts in Government and English from the College of William & Mary, as well as a Master of Arts degree in Foreign Affairs from the University of Virginia, where she focused on international relations and political theory.

This work by Cato Institute is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

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Taking the Low Road on Free Trade – Article by Chris Baecker

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Categories: Economics, Politics, Tags: , , , , , , , , , , , , , ,

The New Renaissance HatChris Baecker
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During the holidays, I took my daughters to my aunt and uncle’s house in Rogers, TX. Over the last few years, when not working their day jobs at Scott and White hospital in Temple, they have grown a large garden of marketable produce, devoting more than 4 acres to the operation. I sent some photos to a friend of mine who has his own backyard garden. His enthusiasm was palpable. This is a guy who once told me, “everyone should have a garden.”

Fast forward to this spring. I finally got around to buying a bookshelf. As I set about putting it together, I started thinking, “I could put together a nicer, sturdier one than this. All I’d need is some wood, sandpaper, stain/paint, braces … never mind. This one will do for now.”

I don’t have all the tools at my disposal to carry out that sort of a project, any more than I do for gardening. My interests lie elsewhere. In a free society like ours, each person is allowed to pursue their own preferred interests. Eventually, however, we do require other goods for sustenance, and leisure, so we trade with each other.

In what has been the most unpredictable and surprising election season of my lifetime, one issue that has come under unusually widespread attack is free trade.

The Opposition

Resistance to free trade has typically been found in the Democratic Party. Its union supporters fret about their jobs being “shipped overseas,” and environmentalists express concerns about trading with countries that lack “adequate” protections thereof. A few decades ago, that bloc was countered by the relatively more market-friendly Democratic Leadership Council, whose influence peaked with the election of Bill Clinton as president.

Remaining democratic opposition was joined by a couple of protesters from the center-right, H. Ross Perot and Patrick Buchanan. Mr. Perot famously claimed during a 1992 presidential debate that we would hear “a giant sucking sound” of manufacturing going south to Mexico. Four years later, while seeking the Republican Party nomination for President, Mr. Buchanan campaigned on a fear of losing nationality as goods and labor move more seamlessly across borders.

Nowadays, the DLC is defunct (2011) while the spirit of Messrs. Perot and Buchanan has morphed into this election season’s wild card, Donald Trump. The similarities amongst the three are many: businessmen (Perot and Trump), populist streaks, insurgent outsiders, meticulously crafted coifs, etc. They also share a skepticism of free trade.

A few Trump talking points have jumped out at me: “we don’t make things anymore,” we’re in “imbalance (deficit) with” other countries and threatening a 45% tariff on Chinese goods.

Trade protectionism has been around for ages. Our Founding Fathers supported tariffs, which used to be a prominent source of government revenue. Alexander Hamilton even coined the “infant industry” argument, whereby the government shields from international competition new and developing industries deemed important to self-sufficiency and independence.

Trade and Trump

In trade debates of modern times, Republicans have typically argued for “free” trade, whereas “fair trade” was sought by Democrats. Mr. Trump has picked up the mantle of the latter, saying the 45% tariff is merely a threat to achieve such fairness.

I’m reminded of the interrogation scene in the movie “Starsky and Hutch” where
Ben Stiller tries to coerce some information out of a suspect … by pointing the gun at his own head. Why threaten the American consumer with price hikes? Why not, for example, allow domestic steel-input consumers to benefit from rock-bottom prices that result from Chinese overproduction? How does it make sense to protect the American steel industry with a tariff of more than 500% if employment in, and value produced by, those input consumers is greater?

The answer also happens to explain why we’re lagging behind the rest of the world in the sugar trade: concentrated benefits (domestic industry) vs. dispersed costs (artificially inflated prices for consumers). Such beneficiaries typically have more clout with policymakers than consumers do. It’s this kind of rent-seeking that prevents us from being able to take advantage of the shortcomings of a centrally-planned (though certainly less so than a couple generations ago) economy like China’s, or the fact that some countries just flat out produce something more efficiently than we do.

Ironically enough, if Mr. Trump is so concerned with illegal immigration from our south, perhaps he should first take a look at the agricultural and dairy subsidies Uncle Sam doles out that put Mexican farmers out of business and drive them north to get a piece of our artificially- inflated industry.

Moreover, when he asks “(w)ho the hell cares if there’s a trade war?” someone should remind him of the Smoot-Hawley Tariff Act of June 1930. In an effort to protect domestic agricultural and industrial interests, President Herbert Hoover signed it into law over a petition signed by a thousand economists. Other nations retaliated and the world headed toward depression. And that was when trade was a smaller part of the global economy.

Lesson learned, after the war, the world moved toward freer trade. In that time, our real exports of goods and services rose steadily, accelerating in the mid-1980s, belying the claim that “we don’t make” stuff.

fred_graph1

As Harvard professor and former Chairman of the President’s Council of Economic Advisers Greg Mankiw recently pointed out in The New York Times, manufacturing is currently at an all-time high. The problem, as it were, is that we’re doing it with less manpower.

The Effectiveness of Efficiency

That very transformation is currently underway in the energy industry. Even after the price of oil started tanking, and rigs were idled, and jobs were being eliminated, production still increased. We became more efficient. It won’t take the same quantity of capital and labor to respond to $50 oil the next time it rises to that level. The displaced resources can be redeployed to other areas of the economy.

There are undoubtedly industry shakeups in freer markets. Labor, capital, and entrepreneurs are reshuffled. But our society encourages innovation by safeguarding intellectual and property rights. That allows us to find new and better ways of doing things.

This is just the latest example of our capacity to achieve the self-sufficiency that was the goal of our first Treasury Secretary (Mr. Hamilton) when he submitted to the second Congress suggestions of “encouragement” and “protection of government” in his “Reports on Manufactures.” All the “protection” we need for the aforementioned “encouragement” is between our ears. The human capital that we’ve built up over the years doesn’t go away, but rather accumulates.

Without free trade, there might be an erosion of two of its most important exports: peace and freedom. The world has to cooperate and get along if we all want to prosper. And the freer the people, the greater the likelihood of greater prosperity. Besides, should that peace unfortunately break down again someday, the Second Amendment and our bread basket give us time to dust off and tap that know-how to rev up the necessary industries.

Counterbalancing Deficits

Nevertheless, more trade liberalization is afoot. My industry has a new market: the rest of the world, thanks to the repeal of the oil export ban last December. That’ll surely alleviate something else nearly all our leaders are prone to complain about: our trade deficit.
fred_graph2

It’s a curious thing that you rarely hear that it’s actually only half of an equation, but it is.

The balance of payments (BoP) is basically an accounting of our international transactions. The current account (trade) is the one we always hear about when it’s in deficit. Interestingly enough, it tends to trend back toward break-even only when we’re heading toward recession. It makes sense that imports rise in good times. “We’re Americans,” I tell my students, “we like to buy stuff. We like to buy stuff so much, we rent storage facilities in which to put all our extra stuff!” Regardless, there’s nothing inherently wrong with a trade deficit.

The counterbalance is the capital account. We have a big example of that in our backyard: the Toyota plant in south San Antonio. This is foreign direct investment. That plant is in the heart of truck country. It gives Toyota direct access to that market here. And, they employ highly-skilled Texans. That seems like a win-win, a sign of strength perhaps, when a foreign company wants to locate operations here.
fred_graph3

You actually contribute to the capital account when you crack open a Bud Light after feeding Purina to Scooby, who was hungry because you forgot to feed him while you were eating a Smithfield ham steak (that had been stored in a GE freezer) for dinner before going to see “X-Men: Apocalypse” at the AMC Rivercenter 11. All those companies are foreign-owned. The profit portion of the prices paid for those goods is exported to another country. Foreign entities saw value in the brand recognition of items Americans know and love. And they were able to buy those companies in part because they do more of something that we don’t: save.

When the consumer expenditure portion of the Gross Domestic Product [GDP] started climbing in the 1980s from 60% to almost 70% today, it was arguably fueled by the concurrent proliferation of the all-purpose credit card. Perhaps it goes without saying, but when you’re spending, you’re not saving. And when you’re borrowing, you are dissaving. Much of the consumer savings derived from more efficient global production of goods could go to more savings. Instead, it seems to go toward buying more stuff.
fred_graph4

When you think about it though, our incentive to save has slid right alongside available interest rates.

fred_graph5

A couple years after they were pushed way up to break the inflation of the 1970s, interest rates have been on a steady march downward: ~7-8% in 1980s, ~5% in the 1990s, half that in the 2000s, and now near 0%. Monetary policy that could be enticing us to invest in learning new skills, opening a new business, guarding against unforeseen events, etc., instead has nudged us toward $1,000,000,000,000 in both credit card and automobile debt this year. What was the current trade deficit again?

If bringing down the trade deficit is the goal, increasing domestic savings and investment is preferable to erecting trade barriers. And if curbing interest-bearing consumer indebtedness happens as well, all the better.

While former Secretary of State Hillary Clinton seems like little more than a 21st century version of the pandering, “meaningless platitude-spouting” Kevin Fogerty from a classic episode of “Cheers,” Senator Bernie Sanders and Mr. Trump have been more consistent in their views toward free trade. But the aggressive tone they sometimes take toward it and our trading partners reminds me of when my four daughters (average age, 9) bicker with one another. Only it’s more understandable that my girls have to be taught to take the high road.

As for me, one of these days I could take up woodworking, or gardening, or some other hobby/trade that produces tangible output. Right now though, my spare time is best served educating. It’s what I like to do. It’s where I feel most productive. And given this season’s crop of presidential aspirants, there seems to be a need for it.


Chris Baecker

Christopher E. Baecker manages fixed assets for Pioneer Energy Services and is an adjunct lecturer of economics at Northwest Vista College in San Antonio.  He can be reached via www.chrisbaecker.com, @chrisbaecker71 & LinkedIn.com

This article was originally published on FEE.org. Read the original article.

 

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Yes, We Still Make Stuff, and It Wouldn’t Matter if We Didn’t – Article by Steven Horwitz

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The New Renaissance HatSteven Horwitz
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One of the perennial complaints about the US economy is that we don’t “make stuff” anymore. You hear this from candidates from both major parties, but especially from Donald Trump and Bernie Sanders. The argument seems to be that our manufacturing sector has collapsed and that all US workers do is to provide services, rather than manufacturing tangible goods.

It turns out that this perception is wrong, as the US manufacturing sector continues to grow and in 2014 manufacturing output was higher than at any point in US history. But even if the perception were correct, it does not matter. The measure of an economy’s health isn’t the quantity of physical stuff it produces, but rather the value that it produces. And value comes in a variety of forms.

Manufacturing is Up

The path to economic growth is not to freeze into place the US economy of the 1950s. Let’s deal with the myth of manufacturing decline first. The one piece of evidence in favor of that perception is that there are fewer manufacturing jobs today than in the past. Total manufacturing employment peaked at around 19 million jobs in the late 1970s. Today, there are about 12.5 million manufacturing jobs in the US.

However, manufacturing output has never been higher. The real value of US manufacturing output in 2014 was over $2 trillion. The real story of the US manufacturing sector is that we have become so much more efficient, that we can produce more and more manufactured goods with less and less labor. These efficiency gains are largely the result of computer technology and automation, especially in the last fifteen years.

The labor that we no longer need in order to produce an ever-increasing amount of stuff is now available to produce a whole variety of other things we value, from phone apps to entertainment to the expanded number and variety of grocery stores and restaurants, to the data analyses that makes all of this growth possible.

Just as the workers in those factories we are so nostalgic for were labor freed from growing food thanks to the growth in agricultural productivity, so are today’s web designers, chefs at the newest hipster café, and digital editors in Hollywood the labor that has been freed from producing “stuff” thanks to greater technological productivity.

Or, put differently: those agricultural, industrial, and computer revolutions collectively have enabled us to have more food, more stuff, and more entertainment, apps, services, and cage-free chicken salads served with kale. The list of human wants is endless, and the less labor we use to satisfy some of them, the more we have to start working on other ones.

But notice something: all of the things that we produce have something in common. Whether it’s food or footwear, or automobiles or apps, or manicures or massages, the point of production is to rearrange capital and labor in ways that better satisfy wants. In the language of economics, the point of production (and exchange) is to increase utility.

When we produce more cars that people wish to buy, it increases utility. When we open a new Asian fusion street food taco stand, it increases utility. When Uber more effectively uses the existing stock of cars, it increases utility. When we exchange dollars for manicures, it increases utility.

Adam Smith helped us to understand that the wealth of nations is not measured by how much gold a country possesses. Modern economics helps us understand that such wealth is not measured by how much physical stuff we manufacture. Increases in wealth happen because we arrange the physical world in ways that people value more.

Neither producing cars nor providing manicures changes the number of atoms in the universe. Both activities just rearrange existing matter in ways that people value more. That is what economic growth is about.

Misplaced Nostalgia

We’re richer because we have allowed markets to produce with fewer workers. When we are fooled into believing that “growth” is synonymous with “stuff,” we are likely to make two serious errors. First, we ignore the fact that the production of services is value-creating and therefore adds to wealth.

Second, we can easily believe that we need to “protect” manufacturing jobs. We don’t. And if we try to do so, we will not only stifle economic growth and thereby impoverish the citizenry, we will be engaging in precisely the sort of special-interest politics that those who buy the myth of manufacturing often rightly complain about in other sectors.

The path to economic growth is not to freeze into place the US economy of the 1950s. We are far richer today than we were back then, and that’s due to the remaining dynamism of an economy that can still shed jobs it no longer needs and create new ones to meet the ever-changing wants of the consumer.

The US still makes plenty of stuff, but we’re richer precisely because we have allowed markets to do so with fewer workers, freeing those people to provide us a whole cornucopia of new things to improve our lives in endless ways. We can only hope that the forces of misplaced nostalgia do not win out over the forces of progress.

Steven_Horwitz

Steven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions.

He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

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4 Ways to Misuse Gun Statistics – Article by Daniel Bier

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The New Renaissance HatDaniel Bier
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There are a lot of false, misleading, or irrelevant numbers being thrown around about guns and crime, so here’s a brief guide to four potentially misleading types of statistics.

1. “The United States has a gun for every person.”

It’s practically a rule that every report about guns has to mention some version of this statistic. There are “300 million guns in the United States,” “one gun for every person,” “more guns than people.”

This number is problematic not just because the estimates are dodgy (nobody really knows how many guns there are — estimates range from 250–350 million) but also because of the way guns per capita is used interchangeably with the rate of gun ownership.

Confusing the two is a common mistake. Reported increases in guns per capita often makes it appear that a tidal wave of guns is washing over the country. The Washington Post’s Wonkblog sounds the alarm that there are now “more guns than people.” Sounds scary — we’re outnumbered!

But the General Social Survey finds that 2014 actually marked an all-time low for gun ownership in the United States. (Gallup finds different numbers, but recent surveys by Pew and YouGov essentially confirm the GSS estimate.)

Yes, maybe if you collected all the guns in the country, you could give one to each man, woman, and child, and maybe there’d even be some left over. But this isn’t how gun ownership works. Just because there’s “one gun for everyone” doesn’t mean everyone has a gun. (Easy way to check this: look around you — see any guns? No? Okay then.)

The “one gun for every person” factoid is ubiquitous because it’s easy to remember and hammers home just how many guns there are. There’s some value in pointing out the huge total number of firearms in the United States — it captures the sheer scale of the issue when people are talking about trying to regulate, control, or confiscate them.

But it’s misleading to use the per capita figure to measure the kind of prevalence of guns that matters: how many people actually have firearms?

According to the GSS, just 31 percent of Americans live in a household with a gun — down from over 50 percent in the late 1970s — and only 22 percent personally own a gun. How can this be? Because most gun owners have more than one (and stores and collectors have a whole bunch).

 2. “The US has the highest rate of gun ownership in the world.”

Kinda, sorta, probly, maybe? This again is based on the number of guns per capita. This, at least, is unequivocally clear: whatever estimate you use, the United States has more guns per person than anywhere else.

But that doesn’t necessarily mean that the rate of ownership is higher here than in other countries, even countries with a lot fewer guns per capita.

How could that be? First, survey data for a lot of countries (particularly poor or repressed countries) is dodgy, hard to collect, outdated, and there are lot of unreported or illegal firearms. But more important, again, is the issue with conflating guns per capita with the rate of gun ownership.

Depending on the year and the estimate, the US has between 79 and 113 guns per 100 people. (Note the difficulty of getting an accurate figure, even in a developed country like the United States.)

For simplicity’s sake, let’s use the most commonly cited estimate from the 2007 international Small Arms Survey (SAS): about 88 guns per 100 people.

In the same SAS, Yemen comes second with an average estimate of about 55 guns per 100 people (low estimate: 29; high estimate: 81).

Yet this doesn’t necessarily mean that the US has a higher rate of gun ownership. Remember, in the US, only one third of people live in households with guns, and only about one fifth personally own guns.

There are several ways that Yemen could have a higher rate of gun ownership.

First, guns could be more evenly distributed: Yemen is poor, and guns are expensive, so it might be that in poor countries, more families have guns, but each owns fewer on average. (For instance, some sources claim, even under Saddam Hussein, most Iraqi households had a gun.)

Second, the average American household has 2.6 people; Yemen has 6.7 — meaning that if someone owns a gun, three times more people live in that household in Yemen than in the US, on average, meaning that the household gun ownership rate could be a lot higher.

Third, the median age in Yemen is 18.6 years; in the US, it’s 37.6 years. Relative to population, Yemen has a lot more children than the US, so the rate of gun ownership among adults could be higher than in the US.

Serbia is also sometimes cited as having the second most guns per capita, but it’s hard to know because estimates vary so widely. According a report from Radio Free Europe, “Some 15 percent of Serbia’s citizens legally own firearms.” Serbs have 1.2 million legally registered firearms, but some estimates of illegal firearms more than double that figure to 2.7 million guns.

Assuming that the legal gun owners don’t also own all of the illegal guns, illegal weapons could easily make the actual rate of gun ownership among Serbia’s seven million people higher than the US rate of 22 percent.

The same could also be true in developed countries like Switzerland and Finland (each with an estimated 45 guns per 100 people).

It’s definitely true that the US has the most guns in the world, but it isn’t certain that it has the highest rate of gun ownership.

What does this imply? I suspect it means very little — making uncontrolled international comparisons is generally deceptive — but given the ubiquity of the claim, a lot of people seem to think it matters a great deal to their argument. That it isn’t clear this claim even is a fact should, perhaps, give them pause.

3. Conflating suicides with homicides

The Washington Post’s Fact Checker gave President Obama “two pinocchios” (signifying “significant omissions and/or exaggerations”) for his claim that “states with the most gun laws tend to have the fewest gun deaths.”

Setting aside the ambiguity of what it means to have the “most gun laws,” let’s pay attention to that last phrase. You’ll hear “gun deaths” or “gun-related deaths” referenced a lot when discussing statistics on shootings and gun control.

But, as Reason’s Jacob Sullum points out, about two-thirds of gun deaths are suicides.

While suicide is an important issue, it has nothing to do with crime, murder, or mass shootings. (And the research is mixed about whether restricting gun ownership reduces suicide.) Lumping suicide in with murder roughly triples the number of “gun deaths,” but it’s a deceptive way to look at the problem of violence committed with guns.

Both Sullum and WaPo’s fact checkers found that when you only look at states’ rate of gun homicides, excluding suicides, it makes a huge difference:

Alaska, ranked 50th [the highest in rate of gun deaths] … moved up to 25th place. Utah, 31st on the list, jumped to 8th place. Hawaii remains in 1st place, but the top six now include Vermont, New Hampshire, South Dakota, Iowa and Maine. Indeed, half of the 10 states with the lowest gun-death rates turn out to be states with less-restrictive gun laws.

Meanwhile, Maryland — a more urban state — fell from 15th place to 45th, even though it has very tough gun laws. Illinois dropped from 11th place to 38th, and New York fell from 3rd to 15th.

Suicide and murder have very different causes, consequences, and solutions, and they should always be discussed separately. When they aren’t, it’s a good time to be skeptical.

4. Juxtaposing two random numbers

This is a popular genre of pseudo-statistics, in which people throw together two totally unrelated numbers to try to inflate or downplay one of them.

For instance, the New York Times’s Nicholas Kristof claims, “In America, more preschoolers are shot dead each year (82 in 2013) than police officers are in the line of duty (27 in 2013).”

This is so irrelevant and so meaningless that I’m at a loss as to how it even occurred to Kristof to make this comparison. It serves no purpose at all but to emotionally rig the conversation.

There are maybe several hundred thousand police officers in the United States. There are 20 million children under age five.

What on earth could it mean that there are more preschoolers who die from guns than police killed in the line of duty? Do we have some reason to expect there should be a relationship, higher or lower or parity, between those numbers?

Or is it just that any number of tragedies above zero is going to churn up people’s emotions?

We’re not even comparing the same things: 27 felony murders of police with 82 gun-related deaths of children under five. According to the CDC, 30 of the gun-related deaths were accidents and one was “undetermined intent,” so there were actually 51 felony shooting deaths (typically, stray bullets from other crimes).

Kristof also used the 2013 figure for police murders, but 2013 was an aberrantly low year for cop killings. In 2014, 51 officers were killed in the line of duty; in 2011, it was 72. Presumably he thought it made a better comparison, but it’s just false to say 27 police are killed “each year.” Since 1980, the average is 64 officers killed each year.

What does this prove about the risk of gun violence? Absolutely nothing. And it is precisely as meaningful as Kristof’s comparison, or the common refrain that “more Americans have been murdered with guns in the last X years than in X wars.” There’s not even a suggestion about how these numbers should be related.

In America today, there are more preschoolers who drown (416 in 2013) than firefighters who die in the line of duty (97 in 2013).

What does this mean for the debate about water-related activities? Less than nothing.

Numbers don’t tell us what to do; at best, they tell us what we can do.

There’s no denying America has a lot of guns and a lot of gun crime (although much less than it used to). But numbers won’t tell us what to make of these facts. First, the raw facts of our situation are not as clear as we think, and to the extent we understand them, they don’t tell us much about our policy options. They won’t tell us what we should do about gun crime, or if there’s anything we constitutionally can do (with respect to gun ownership), or if those things sacrifice other important values.

Yet, too often, the debate consists of flinging random numbers and dubious statistics around and then emoting about them. Noting these problematic figures doesn’t prove anything one way or another about any particular policy; instead, let’s first clear out the rubbish so we can actually see the ground we’re fighting over.


Daniel Bier

Daniel Bier is the editor of FEE.org. He writes on issues relating to science, civil liberties, and economic freedom.

This article was originally published on FEE.org. Read the original article.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

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It’s Time to Postpone Your Appointment with the Grim Reaper – Article by Gerrard Jayaratnam

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Categories: Philosophy, Science, Transhumanism, Tags: , , , , , , , , , , , , , , , , , , , , , , , ,

The New Renaissance HatGerrard Jayaratnam
******************************

How long would you like to live for? Is there a limit to how long we can live for? These are not questions you hear often, but do not be surprised if they are repeated more frequently in the future. The reason? Life extension. It is the concept of living well beyond the average lifespan. [1]

Humans are already living longer due to vaccines and improvements in sanitation. [2] The World Health Organization reported that the average life expectancy at birth increased from 48 years in 1955 to 65 years in 1995, and is projected to rise to 73 years by 2025. [3] As medical techniques continue to improve, we are more inclined than ever to pursue life extension. [1] Indeed, from the Epic of Gilgamesh to China’s First Emperor, prolonging life has been an ever-present thought in society. [4, 5] Both individuals failed to escape death, but the idea of life extension ironically lives on. Even so, is it truly possible and what should upcoming doctors and scientists consider if they are to join the most ambitious of quests?

The “Horcruxes” of reality 

In the fictional Harry Potter series, “Horcruxes” were objects where people could hide a fragment of their soul in an attempt to take one step towards immortality. [6] Of course, humans cannot split their souls and hide them in objects, but there are several proposed means by which life extension may be achieved. [1] This is a testimony to the progress within the life extension field, but there remains much room for improvement.

Eat less, live more

Caloric restriction (CR) is one proposed method for life extension. [1] In the CALERIE (Comprehensive Assessment of Long term Effects of Reducing Intake of Energy) trial, 218 non-obese humans were randomised to either a control group or an intervention group. The latter aimed for a 25% reduction from baseline energy intake. At the end of the 2-year study period, the intervention group had significantly greater reductions in circulating levels of TNF-α – an inflammatory marker involved in many age-related diseases. [7] Dr Alexander Miras, winner of the 2014 Nutrition Society Cuthbertson Medal for his research on bariatric surgery, acknowledges that the study was a “good first step,” but argues that “the evidence in humans is lacking.” “A definitive RCT (randomised controlled trial),” Dr Miras continues, “would be very hard, if not impossible.” He also spots a glaring consequence of CR. “My personal approach is to avoid caloric restriction as this leads to hunger which is an unpleasant feeling. I would rather live a shorter life, but enjoy my food.”

Manipulating telomerase

One alternative is modulating telomerase activity – as attempted with the anti-ageing TA-65MD® supplement. [8] Telomeres protect the ends of chromosomes [9]; they resemble the aglets on the ends of shoelaces. Just as shoelaces would unravel without the aglet, chromosomes would lose vital DNA sequences in the absence of telomeres. [9] Our cells divide over time, causing telomeres to shorten. Once the telomere becomes too short, cell division ceases, and short telomeres correlate with cellular ageing. [10] Telomerase is an enzyme that can oppose telomere shortening [10] – it was what Hamlet was to King Claudius; what exercise is to obesity; and what junior doctors, in England, will be to Jeremy Hunt.

Reactivating telomerase in telomerase-deficient mice reversed both neurodegeneration and degeneration of other organs. [11] This proved the concept that boosting telomerase activity could have anti-ageing effects, but there is little proof that this occurs in humans. While the mice were telomerase-deficient, humans normally have some telomerase activity. It is like giving food to someone who has been fasting for hours and to someone who has just eaten a three-course meal – the starved individual would unquestionably benefit more. A 12-month long RCT, involving 117 relatively healthy individuals (age range: 53-87), found that low-dose TA-65 significantly increased telomere length when compared to placebo. High-dose TA-65, however, failed to do so. [12]

Dancing with the devil

What is more worrying than treatments that may be ineffective? Side effects. Telomerase is a double-edged sword and by reducing telomere attrition, it can promote unlimited cell division and cancer. [9] Elizabeth Blackburn, co-winner of the 2009 Nobel Prize in Physiology or Medicine for her role in the discovery of telomerase, has doubts about exploiting the enzyme. Speaking to TIME magazine, she said, “Cancers love telomerase, and a number of cancers up-regulate it like crazy. . . . My feeling would be that if I take anything that would push my telomerase up, I’m playing with fire.” [13]

A cauldron of rewards

CR and boosting telomerase activity are just a small sample of life extending techniques, yet there is the notion that such techniques will be intertwined with risks. However, risks are always weighed against rewards, and Gennady Stolyarov, editor-in-chief of The Rational Argumentator and Chief Executive of the Nevada Transhumanist Party, believes life extension would bring “immense and multifaceted” rewards. “The greatest benefit is the continued existence of the individual who remains alive. Each individual has incalculable moral value and is a universe of ideas, experiences, emotions, and memories. When a person dies, that entire universe is extinguished . . . This is the greatest possible loss, and should be averted if at all possible.” Stolyarov also envisages “major savings to healthcare systems” and that “the achievement of significant life extension would inspire many intelligent people to try to solve other age-old problems.”

Former chairman of the President’s Council on Bioethics, Leon Kass, disagrees with this view and argues that mortality is necessary for “treasuring and appreciating all that life brings.” [14] Hence, increased longevity could lead to an overall reduction in productivity over one’s lifetime. Perhaps Kass is correct, but the array of potential benefits makes it seem unwise to prematurely dismiss life extension. In fact, a survey, which examined the opinions of 605 Australians on life extension, highlighted further benefits – 23% of participants said they could “spend more time with family” and 4% cited the opportunity to experience future societies. [15]

Learning from our mistakes

Conversely, life extension may result in people enduring poor health for longer periods. 28% of participants in the Australian survey highlighted this concern. [15] Current trends in life expectancy reinforce their fears. Professor Janet Lord, director of the Institute of Inflammation and Ageing at the University of Birmingham, explains, “Currently, in most countries in the developed world, life expectancy is increasing at approximately 2 years per decade, but healthspan (the years spent in good health) is only increasing at 1.7 years. This has major consequences . . . as more of later life is spent in poor health.” This is a consequence of treating “killer diseases” – according to Dr Felipe Sierra, director of the Division of Aging Biology at the National Institute on Aging. “The current model in biomedicine,” says Dr Sierra, “is to treat one disease at a time. Let’s imagine you have arthritis; cancer; and are starting to develop Alzheimer’s disease. So what do we do? We treat you for cancer. You now live longer with Alzheimer’s disease and arthritis.” A better approach is clear to Dr Sierra who stresses the importance of compression of morbidity – “the goal is to live longer with less time spent being sick.”

Learning from our successes

Even with Dr Sierra’s approach, individual boredom and social implications, including overpopulation, would still be problems.[16] According to Stolyarov, the boredom argument does not hold up when facing “human creativity and discovery.” He believes humans could never truly be bored as “the number of possible pursuits increases far faster than the ability of any individual to pursue.”

In his novel Death is Wrong, Stolyarov explained that the idea that society could not cope with a rapidly expanding population was historically inaccurate. The current population “is the highest it has ever been, and most people live far longer, healthier, prosperous lives than their ancestors did when the Earth’s population was hundreds of times smaller.” [16] If it has been achieved in the past, who is to say our own society – one far more advanced than any before it – cannot adapt?

The verdict

Life extension research is quietly progressing, and there is a good chance that it will eventually come to fruition. Although there are doubts about current techniques, Dr Sierra draws attention to novel interventions, such as rapamycin, which “delay ageing in mice.” He concludes that the next challenge is to “develop measures than can predict whether an intervention works in a short-term assay.” Such measures would provide the scaffolding for future clinical trials that test life extension techniques.

Given what may be gained, it is no surprise that artificially prolonging life is exciting some in the same way the Tree of Knowledge tempted Eve. The impact on society? Impossible to predict. It would undoubtedly be a big risk, but perhaps in this complex and uncertain scenario, we ought to remember the words of the poet Thomas Stearns Eliot: “Only those who will risk going too far can possibly find out how far one can go.” [17]

Gerrard Jayaratnam is a student of Biomedical Science at Imperial College London.

References

  1. Stambler I. A History of Life-Extensionism in the Twentieth Century. Ramat Gan: CreateSpace Independent Publishing Platform; 2014.
  2. National Institute on Aging. Living Longer. 2011. https://www.nia.nih.gov/research/publication/global-health-and-aging/living-longer.
  3. World Health Organization. 50 Facts: Global Health situation and trends 1955-2025. 2013. http://www.who.int/whr/1998/media_centre/50facts/en/.
  4. Encyclopaedia Britannica. Epic of Gilgamesh. 2016. http://www.britannica.com/topic/Epic-of-Gilgamesh.
  5. Lloyd DF. The Man Who Would Cheat Death and Rule the Universe. Vision. 2008. http://www.vision.org/visionmedia/history-shi-huang-emperor-china/5818.aspx.
  6. Rowling JK. Harry Potter and the Half-Blood Prince. London: Bloomsbury Publishing; 2005.
  7. Ravussin E, Redman LM, Rochon J, et al. A 2-Year Randomized Controlled Trial of Human Caloric Restriction: Feasibility and Effects on Predictors of Health Span and Longevity. J Gerontol A Biol Sci Med Sci 2015;70:1097-1104.
  8. A. Sciences. What is TA-65®? (n.d.) [Accessed 3rd April 2016]. https://www.tasciences.com/what-is-ta-65/.
  9. De Jesus BB, Blasco MA. Telomerase at the intersection of cancer and aging. Trends Genet 2013;29:513-520.
  10. A. Sciences. Telomeres and Cellular Aging. (n.d.) [Accessed 3rd April 2016]. https://www.tasciences.com/telomeres-and-cellular-aging/.
  11. Jaskelioff M, Muller FL, Paik JH, et al. Telomerase reactivation reverses tissue degeneration in aged telomerase deficient mice. Nature 2011;469:102-106.
  12. Salvador L, Singaravelu G, Harley CB, et al. A Natural Product Telomerase Activator Lengthens Telomeres in Humans: A Randomized, Double Blind, and Placebo Controlled Study. Rejuvenation Res 2016; ahead of print. doi:10.1089/rej.2015.1793.
  13. Kluger J. The antiaging power of a positive attitude. TIME. 2015.
  14. Than K. The Psychological Strain of Living Forever. Live Science. 2006. http://www.livescience.com/10469-psychological-strain-living.html.
  15. Partridge B, Lucke J, Bartlett H, et al. Ethical, social, and personal implications of extended human lifespan identified by members of the public. Rejuvenation Res 2009;12:351-357.
  16. Stolyarov II G. Death is Wrong. 2nd ed. Carson City, Nevada: Rational Argumentator Press; 2013.
  17. The Huffington Post. 11 Beautiful T.S. Eliot Quotes. 2013. http://www.huffingtonpost.com/2013/09/26/ts-eliot-quotes_n_3996010.html.
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