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A Plan to Make Me Great Again – Article by Jeffrey Tucker

A Plan to Make Me Great Again – Article by Jeffrey Tucker

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The New Renaissance HatJeffrey Tucker
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I was out shopping for a sweater this weekend and I ran into Donald Trump, who told me that I should stop outsourcing my job.

“You should be knitting your own sweaters.”

I explained that I’m not very good at knitting. I have other things to do, in any case. This whole idea strikes me as a huge waste of time. I just can’t see myself sitting at home doing knitting. It’s true that this would give me a job, but it is not a job I want, especially since someone else wants to do it for me.

But he strongly disagreed, explaining that the problem with this country is that we keep taking away our own jobs and keep giving them to other people, who then get the money. This is a bad thing. This is why we are all suffering so much.

I persisted with objections, so he proposed a deal. If I continue to outsource my job, I will have to pay him a 35% tax, which means that if I spend $50 on a sweater, I will need to send him $17.50. That’s a bummer, we both agreed.

Instead, he said, if I take up sweater knitting, he will reduce my income tax rate to a flat 15%, plus exempt my sweater-making from all existing regulations. I would be free to make any sweater I want. The catch is that I have to knit sweaters, because doing that will make me great.

“Just think of it,” he said, “Jeffrey Tucker is open for business!”

In some ways, this sounds pretty sweet. A bit goofy but OK. It’s awkward but I’ll take up knitting on nights and weekends, producing at least one sweater per month. I will continue to do this in order to earn the promised benefit.

Also, I’ll stop buying sweaters at the store and thus end my addiction to outsourcing my production. It’s true that I have given up a huge amount of my freedom over how I spend my time and use my resources (I have to buy all those yarns and needles), but, on the plus side, I avoid a punishing penalty, pay lower taxes, and obey fewer regulations.

The deal doesn’t strike me as very efficient, but, as Trump said, this focus on efficiency over greatness is precisely what has gone wrong in this country.

Sometimes I wonder why his version of greatness should prevail over mine, but, hey, he is the President.

One Month Later

I finally finished my first sweater, and I’m a bit behind on other things. I gave up my job driving Uber. I stopped selling stuff on eBay. I was doing volunteer work for a local charity and I had to give that up too. But at least now I have a sweater. Maybe I can make money at this after all.

I tried to sell it but I couldn’t find any buyers. It turns out that everyone else who needed sweaters had made a similar deal. They too had been persuaded to become great by knitting their own sweaters. We had all become sweater-self-sufficient.

I hope they aren’t feeling as poor as I feel now.

I gradually came to realize something. If you cooperate with others, share the work, find out what you do best, trade with others, and make your own decisions about what you want to insource versus outsource, you can eventually find the best strategy for using your time and resources well.

As Adam Smith proved so long ago, a key to prosperity is the expansion of the division of labor, that is, finding ways to benefit from the talents of others wherever they happen to be. I can only do this if I am truly free to buy and sell based on my own evaluation of what benefits me the most. And under this system, what benefits me also happens to benefit everyone.

This system, which we can call free trade, has the added benefit of creating a kind of community feeling. Peace. Prosperity. There is something great about that after all.

Jeffrey Tucker


Jeffrey 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.

To Really ‘Make America Great Again,’ End the Fed! – Article by Ron Paul

To Really ‘Make America Great Again,’ End the Fed! – Article by Ron Paul

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The New Renaissance HatRon Paul
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Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy-money/low-interest-rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have “skewered” the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.

Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.

By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.

Some Fed defenders claim that inflation doesn’t negatively affect anyone’s standard of living because price increases are matched by wage increases. This claim ignores the fact that the effects of the Fed’s actions depend on how individuals react to the Fed’s actions.

Historically, an increase in money supply does not just cause a general rise in prices. It also causes money to flow into specific sectors, creating a bubble that provides investors and workers in those areas a (temporary) increase in their incomes. Meanwhile, workers and investors in sectors not affected by the Fed-generated boom will still see a decline in their purchasing power and thus their standard of living.

Adoption of a “rules-based” monetary policy will not eliminate the problem of Fed-created bubbles, booms, and busts, since Congress cannot set a rule dictating how individuals react to Fed policies. The only way to eliminate the boom-and-bust cycle is to remove the Fed’s power to increase the money supply and manipulate interest rates.

Because the Fed’s actions distort the view of economic conditions among investors, businesses, and workers, the booms created by the Fed are unsustainable. Eventually reality sets in, the bubble bursts, and the economy falls into recession.

When the crash occurs the best thing for Congress and the Fed to do is allow the recession to run its course. Recessions are the economy’s way of cleaning out the Fed-created distortions. Of course, Congress and the Fed refuse to do that. Instead, they begin the whole business cycle over again with another round of money creation, increased stimulus spending, and corporate bailouts.

Some progressive economists acknowledge how the Fed causes economic inequality and harms average Americans. These progressives support perpetual low interest rates and money creation. These so-called working class champions ignore how the very act of money creation causes economic inequality. Longer periods of easy money also mean longer, and more painful, recessions.

President-elect Donald Trump has acknowledged that, while his business benefits from lower interest rates, the Fed’s policies hurt most Americans. During the campaign, Mr. Trump also promised to make Audit the Fed part of his first 100 days agenda. Unfortunately, since the election, President-elect Trump has not made any statements regarding monetary policy or the Audit the Fed legislation. Those of us who understand that changing monetary policy is the key to making America great again must redouble our efforts to convince Congress and the new president to audit, then end, the Federal Reserve.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

The IRS Believes All Bitcoin Users are Tax Cheats – Article by Jim Harper

The IRS Believes All Bitcoin Users are Tax Cheats – Article by Jim Harper

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The New Renaissance HatJim Harper
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The Internal Revenue Service has filed a “John Doe” summons seeking to require U.S. Bitcoin exchange Coinbase to turn over records about every transaction of every user from 2013 to 2015. That demand is shocking in sweep, and it includes: “complete user profile, history of changes to user profile from account inception, complete user preferences, complete user security settings and history (including confirmed devices and account activity), complete user payment methods, and any other information related to the funding sources for the account/wallet/vault, regardless of date.” And every single transaction:

All records of account/wallet/vault activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, the names or other identifiers of counterparties to the transaction; requests or instructions to send or receive bitcoin; and, where counterparties transact through their own Coinbase accounts/wallets/vaults, all available information identifying the users of such accounts and their contact information.

The demand is not limited to owners of large amounts of Bitcoin or to those who have transacted in large amounts. Everything about everyone.

Equally shocking is the weak foundation for making this demand. In a declaration submitted to the court, an IRS agent recounts having learned of tax evasion on the part of one Bitcoin user and two companies. On this basis, he and the IRS claim “a reasonable basis for believing” that all U.S. Coinbase users “may fail or may have failed to comply” with the internal revenue laws.

If that evidence is enough to create a reasonable basis to believe that all Bitcoin users evade taxes, the IRS is entitled to access the records of everyone who uses paper money.

Anecdotes and online bragodaccio about tax avoidance are not a reasonable basis to believe that all Coinbase users are tax cheats whose financial lives should be opened to IRS investigators and the hackers looking over their shoulders. There must be some specific information about particular users, or else the IRS is seeking a general warrant, which the Fourth Amendment denies it the power to do.

Speaking of the Fourth Amendment, that rock-bottom “reasonable basis” standard is probably insufficient. Americans should and probably do have Fourth Amendment rights in information they entrust to financial services providers required by contract to keep it confidential. Observers of Fourth Amendment law know full-well that the “third-party doctrine,” which cancels Fourth Amendment interests in shared information, is in retreat.

The IRS’s effort to strip away the privacy of all Coinbase users is more broad than the government’s effort in recent cases dealing with cell site location information. In the CSLI cases, the government has sought data about particular suspects, using a standard below the probable cause standard required by the Fourth Amendment (“specific and articulable facts showing that there are reasonable grounds to believe”).

In United States v. Benbow, we argued to the D.C. Circuit that people retain a property right in information they share with service providers under contractual privacy obligations. This information is a “paper or effect” for purposes of the Fourth Amendment. Accordingly, a probable cause standard should apply to accessing that data.

Again, the government in the CSLI cases sought information about the cell phone use of particular suspects, and that is controversial enough given the low standard of the Stored Communications Act. Here, the IRS is seeking data about every user of Bitcoin, using a standard that’s even lower.

Coinbase’s privacy policy only permits it to share user information with law enforcement when it is “compelled to do so.” That implies putting up a reasonable fight for the interests of its users. Given the low standard and the vastly overbroad demand, Coinbase seems obligated to put up that fight.

Jim Harper is a senior fellow at the Cato Institute, working to adapt law and policy to the information age in areas such as privacy, cybersecurity, telecommunications, intellectual property, counterterrorism, government transparency, and digital currency. A former counsel to committees in both the U.S. House and the U.S. Senate, he went on to represent companies such as PayPal, ICO-Teledesic, DigitalGlobe, and Verisign, and in 2014 he served as Global Policy Counsel for the Bitcoin Foundation.

Harper holds a JD from the University of California–Hastings College of Law.

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

Memo to the Next Administration: Defense Spending Must Be For Actual Defense – Article by Ron Paul

Memo to the Next Administration: Defense Spending Must Be For Actual Defense – Article by Ron Paul

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The New Renaissance HatRon Paul
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In a disturbing indication of how difficult it would be to bring military spending in line with actual threats overseas, House Armed Services Chairman Rep. Mac Thornberry (R – TX) told President Obama last week that his war funding request of $11.6 billion for the rest of the year was far too low. That figure for the last two months of 2016 is larger than Spain’s budget for the entire year! And this is just a “war-fighting” supplemental, not actual “defense” spending! More US troops are being sent to Iraq, Syria, Afghanistan, and elsewhere and the supplemental request is a way to pay for them without falling afoul of the “sequestration” limits.

The question is whether this increase in US military activity and spending overseas actually keeps us safer, or whether it simply keeps the deep state and the military-industrial complex alive and well-funded.

Unfortunately many Americans confuse defense spending with military spending. The two terms are used almost interchangeably. But there is a huge difference. I have always said that I wouldn’t cut anything from the defense budget. We need a robust defense of the United States and it would be foolish to believe that we have no enemies or potential enemies.

The military budget is something very different from the defense budget. The military budget is the money spent each year not to defend the United States, but to enrich the military-industrial complex, benefit special interests, regime-change countries overseas, maintain a global US military empire, and provide defense to favored allies. The military budget for the United States is larger than the combined military spending budget of the next seven or so countries down the line.

To get the military budget in line with our real defense needs would require a focus on our actual interests and a dramatic decrease in spending. The spending follows the policy, and the policy right now reflects the neocon and media propaganda that we must run the rest of the world or there will be total chaos. This is sometimes called “American exceptionalism,” but it is far from a “pro-American” approach.

Do we really need to continue spending hundreds of billions of dollars manipulating elections overseas? Destabilizing governments that do not do as Washington tells them? Rewarding those who follow Washington’s orders with massive aid and weapons sales? Do we need to continue the endless war in Afghanistan even as we discover that Saudi Arabia had far more to do with 9/11 than the Taliban we have been fighting for a decade and a half? Do we really need 800 US military bases in more than 70 countries overseas? Do we need to continue to serve as the military protection force for our wealthy NATO partners even though they are more than capable of defending themselves? Do we need our CIA to continue to provoke revolutions like in Ukraine or armed insurgencies like in Syria?

If the answer to these questions is “yes,” then I am afraid we should prepare for economic collapse in very short order. Then, with our economy in ruins, we will face the wrath of those countries overseas which have been in the crosshairs of our interventionist foreign policy. If the answer is no, then we must work to convince our countrymen to reject the idea of Empire and embrace the United States as a constitutional republic that no longer goes abroad seeking monsters to slay. The choice is ours.

 

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

“Inferno” and the Overpopulation Myth – Article by Jonathan Newman

“Inferno” and the Overpopulation Myth – Article by Jonathan Newman

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The New Renaissance Hat
Jonathan Newman
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Inferno is a great thriller, featuring Tom Hanks reprising his role as Professor Robert Langdon. The previous movie adaptations of Dan Brown’s books (Angels and Demons and The Da Vinci Code) were a success, and I expect Inferno will do well in theaters, too.

Langdon is a professor of symbology whose puzzle solving skills and knowledge of history come in high demand when a billionaire leaves a trail of clues based on Dante’s Inferno to a biological weapon that would halve the world’s population.

The villain, however, has good motives. As a radical Malthusian, he believes that the human race needs halving if it is to survive at all, even if through a plague. Malthus’s name is not mentioned in the movie, but his ideas are certainly there. Inferno provides us an opportunity to unpack this overpopulation fear, and see where it stands today.

Thomas Malthus (1766–1834) thought that the potential exponential growth of population was a problem. If population increases faster than the means of subsistence, then, “The superior power of population cannot be checked without producing misery or vice.”

Is overpopulation a problem?

The economics of population size tell a different, less scary, story. While it is certainly possible that some areas can become too crowded for some people’s preferences, as long as people are free to buy and sell land for a mutually agreeable price, overcrowding will fix itself.

As an introvert who enjoys nature and peace and quiet, I am certainly less willing to rent an apartment in the middle of a busy, crowded city. The prices I’m willing to pay for country living versus city living reflect my preferences. And, to the extent that others share my preferences or even have the opposite preferences, the use and construction of homes and apartments will be economized in both locations. Our demands and the profitability of the varied real estate offerings keep local populations in check.

But what about on a global scale? The Inferno villain was concerned with world population. He stressed the urgency of the situation, but I don’t see any reason to worry.

Google tells me that we could fit the entire world population in Texas and everybody would have a small, 100 square meter plot to themselves. Indeed, there are vast stretches of land across the globe with little to no human inhabitants. Malthus and his ideological followers must have a biased perspective, only looking at the crowded streets of a big city.

If it’s not land that’s a problem, what about the “means of subsistence”? Are we at risk of running out of food, medicine, or other resources because of our growing population?

No. A larger population not only means more mouths to feed, but also more heads, hands, and feet to do the producing. Also, as populations increase, so does the variety of skills available to make production even more efficient.  More people means everybody can specialize in a more specific and more productive comparative advantage and participate in a division of labor. Perhaps this question will drive the point home: Would you rather be stranded on an island with two other people or 20 other people?

Malthus wouldn’t be a Malthusian if he could see this data

The empirical evidence is compelling, too. In the graph below, we can see the sort of world Malthus saw: one in which most people were barely surviving, especially compared to our current situation. Our 21st century world tells a different story. Extreme poverty is on the decline even while world population is increasing.

world-population-in-extreme-poverty-absoluteHans Rosling, a Swedish medical doctor and “celebrity statistician,” is famous for his “Don’t Panic” message about population growth. He sees that as populations and economies grow, more have access to birth control and limit the size of their families. In this video, he shows that all countries are heading toward longer lifespans and greater standards of living.

Finally, there’s the hockey stick of human prosperity. Estimates of GDP per capita on a global, millennial scale reveal a recent dramatic turn.

rgdp-per-capita-since-1000

The inflection point coincides with the industrial revolution. Embracing the productivity of steam-powered capital goods and other technologies sparked a revolution in human well-being across the globe. Since then, new sources of energy have been harnessed and computers entered the scene. Now, computers across the world are connected through the internet and have been made small enough to fit in our pockets. Goods, services, and ideas zip across the globe, while human productivity increases beyond what anybody could have imagined just 50 years ago.

I don’t think Malthus himself would be a Malthusian if he could see the world today.

Jonathan Newman is a recent graduate of Auburn University and a Mises Institute Fellow. Contact: email

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.

Horror: Pirate Contacts Lenses! – Article by Andrew Quinlan

Horror: Pirate Contacts Lenses! – Article by Andrew Quinlan

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The New Renaissance Hat
Andrew Quinlan
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This Halloween, scores of consumers have purchased nearly 100,000 pairs of “counterfeit, illegal, and unapproved” colored contacts for costumes, all of which have been seized by “Double Vision,” an FDA-led consumer safety campaign.

Not surprisingly, optometrists and their favored lens manufacturers like Johnson & Johnson are using this news hook as a means of inciting fear. They are now stepping on the gas of their congressional lobbying efforts so that their bill, The Contact Lens Consumer Health Protection Act (CLCHPA), is passed into law.

The CLCHPA’s objective is to rid the country of the free market reforms brought about by The Fairness in Contact Lens Consumer Act (FCLCA), a 2003 bill that opened the contacts lens industry to free market competition for the first time.

Before the passage of this bill, eye patients had virtually no rights, while optometrists had almost total control over the sale of contact lenses. Doctors were not obligated to give patients copies of their prescriptions. As a result, they could mandate specifically where patients were allowed to purchase lenses. This usually meant that consumers had no choice but to purchase Johnson & Johnson’s Acuvue lenses—eye doctors’ favored brand—directly from optometrists at inflated retail costs.

The Republican-controlled Congress’ 2003 FCLCA legislation stopped this government-created monopoly by enforcing consumer rights. It forced doctors to give patients copies of their prescriptions and gave them only an 8-hour window to file complaints regarding third-party sale requests, halting the process of “pocket vetoing” valid sales.

As a result, consumers were left with far more buying options. With barriers to entry significantly curtailed, third-party lens sellers like Walmart, Costco, and 1-800 Contacts had a much easier time selling contacts. This, in turn, led prices for contact lenses to spiral downward, allowing over 41 million Americans to purchase more than $7 billion worth of contact lenses every year.

Eye Safety?

Enraged, optometrist associations and contact lens vendors like Johnson & Johnson immediately began lobbying Congress to change the law. For the past decade, they have been claiming that these third-party vendors are jeopardizing the eye safety of millions of Americans. Specifically, they have expressed concern that these lenses pose a risk of developing keratitis, an eye infection affecting the cornea.

For these reasons, members of the medical lobby drafted the CLCHPA, a new bill that will greatly increase regulations in the contact lens industry, making it extremely difficult for third-party lens vendors to stay in business.

The bill is a solution in search of a problem. It will re-capture the contact lens industry and propel prices upwards, all while failing to increase safety even the slightest degree.

It is ridiculous that some doctors are correlating buying contact lenses from reputable third-party companies like Costco, Walmart, and 1-800 Contacts with purchasing them illegally from a Halloween street vendor.

For one, the lenses sold by third-party sellers are federally regulated. You still need a prescription to purchase contact lenses from online sellers (although numerous studies, as well as practices in other nations, have shown that even prescriptions are not necessary), and doctors still have the ability to strike down each sale if there is a legitimate health concern.  

In a letter written to the CLCHPA’s authors, Dr. Paul B. Donzis, a professor of ophthalmology at UCLA, made clear that buying contacts from online sellers poses no danger.  “Based on…authoritative scientific articles, it appears that online sales of contact lenses have not contributed to any increase in the incidence of contact lens related injury,” he said.

Moreover, the medical studies match the doctor’s rhetoric. A 20-year epidemiologic study conducted by Doctors  Schein, Stapleton, and Keay, published in 2007 by the medical journal Eye & Contact Lens, found that there has not been any increase in microbial keratitis since the online contact industry sprouted up and began providing more and better affordable choices for consumers.

The empirical data is as clear as day: no one is at risk from purchasing lenses from third-party contact lens vendors. The only risk that third-party vendors pose is to the market share of the crony medical lobby.

This Halloween, Congress should not be duped by the false claims coming from the mouths of the medical lobby. Congress is tricked often enough. This time, they should give American families a treat by reading through these prominent medical studies and striking down the anti-consumer Contact Lens Consumer Health Protection Act (CLCHPA) once and for all.

quinlan

Andrew Quinlan

Andrew F. Quinlan is co-founder and president of the Center for Freedom and Prosperity (@CFandP).

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

The Bad Economics Behind “Monopoly” – Article by Chris Calton

The Bad Economics Behind “Monopoly” – Article by Chris Calton

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The New Renaissance Hat
Chris Calton
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In 1868, a young Henry George wrote an editorial on the nearly completed Pacific Railroad that was soon to connect his state of California with the rest of the country. This editorial, “What the Railroad Will Bring Us,” acknowledged the progress that railroads would signify in the industrializing economy of the Gilded Age, but George saw this as a boon only for the privileged few. Like many thinkers of his time, he was concerned with the “labor question,” which he referred to as one of “the riddles of a Sphinx, which not to answer is death.” Why was there poverty in an age of economic expansion?

Henry George believed that he figured out the riddle after a horseback ride in Oakland Hills, California. While stopping to give his horse a drink of water, George engaged in polite conversation with a farmer, casually asking the value of the land around him. The farmer told him of some land for sale nearby for $1,000 per acre. With this thought in mind, George concluded that land values would inevitably rise as the population grew, and speculators — that economic specter historians love to fear — could own land unproductively to profit merely off its natural increase in value. This, George decided, was the reason why there was poverty in a progressing economy.

In 1879, George published the book Progress and Poverty, formally laying out this conundrum and his answer to it. In it, he detailed for the first time his “Single Tax Plan” that proposed to tax land in proportion to its increase in value, which he believed would lead to the end of property rights in land entirely.

Apparently, George’s idea hit home with a lot of people at the time. His book outsold every book the year it was published except for the Bible, and a movement to form “Single Tax Clubs” spread throughout the country and beyond. Henry George became a Gilded Age rockstar.monopoly1

Among his followers was a woman named Elizabeth Magie. She believed that George’s land value tax plan was the solution to economic woes, and she wanted to bring this idea to as many people as she could. To do this, she developed The Landlord’s Game. This board game intended to demonstrate the horrors of land accumulation and rent, and to illustrate the benefit of George’s Single Tax Plan.

The original game, patented in 1904, closely resembles the modern game of Monopoly, that would later evolve out of it. Players started in a square that said “Labor Upon Mother Earth Produces Wages.” As the original rules state, “Each time a player goes around the board he is supposed to have performed so much labor upon Mother Earth, for which after passing the beginning-point he receives his wages, one hundred dollars, and is checked upon the tally-sheet as having been around once.”

Most of the squares look at least somewhat familiar. Many gave sale prices and rent costs, not unlike modern monopoly. This was explicitly meant to illustrate the belief that land rent transactions were involuntary, a notion that Benjamin Powell has already addressed. The railroads are also present, representing “transportation, and when a player stops upon one of these spaces he must pay five dollars to the ‘R.R.’” Less familiar squares demonstrated the horrors of private property rights by saying “No Trespassing. Go to Jail” from which the more ambiguous “Go Directly to Jail” corner would evolve in the modern game.

cal2

In 1913, a version of the game was picked up in Britain called Brer Fox an’ Brer Rabbit, taking the name from the African fables of Brother Fox and Brother Rabbit (the native language of African slaves lacked the diphthong syllable, so the word “brother” was pronounced “br’er” when told in English). In this, the clever Br’er Rabbit represented the wily landowner earning his immoral rents. The pesky Br’er Fox was meant to represent British reform leader David Lloyd George, who was of no relation to Henry George but was a strong supporter of his land value tax. In 1909, Lloyd George came up with the “People’s Budget” which instituted a version of Henry George’s land tax and planted the seeds for the British welfare state. His face is imposed on the figure of Br’er Fox on the original cover for the British game.

cal3

This version of the game was actually used to educate students about Henry George’s ideas in places like the University of Pennsylvania and Columbia. The Landlord’s Game and its British variant attempted to teach people the socialistic concepts that wages come from land, private property in land was immoral and destructive, and the economy is a zero-sum environment. The game evolved over time into the modern version Monopoly, whose invention is falsely credited to Charles Darrow.

Today, of course, the specifically Georgist elements have been removed from the game. There are no longer any “No Trespassing” squares, and what once was known as “The Poor House” where bankrupt players were forced to go upon running out of money is now the “Free Parking” square. The several “Absolute Necessity Taxes” across the board (perhaps the one aspect of the game’s educational commentary that libertarians could agree with) have been reduced to the Luxury and Income Tax squares. And of course, the unambiguously socialistic “Mother Earth” starting square became simply “Go.” Nonetheless, the modern variant retains the zero-sum myths of monopoly land accumulation, and in this, the legacy of Henry George is retained. If you’ve ever finished a game of monopoly with a frustrated player overturning the board and scattering the pieces, then it’s possible that Lizzie Magie accomplished her original goal.

Chris Calton is a Mises University alumnus and an economic historian. See his YouTube channel here.

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.

Hurricane Matthew Has No Silver Lining – Article by Dan Sanchez

Hurricane Matthew Has No Silver Lining – Article by Dan Sanchez

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The New Renaissance Hat
Dan Sanchez
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Hurricane Matthew is barreling down on the southeast Atlantic coast. Sadly, the region is not only plagued by disastrous weather, but economic fallacies that compound the disaster. Like clockwork, outrage and policies against “price gouging” were the first to emerge.

For some intellectuals, common sense is for mere commoners.And now, just as predictably, the Broken Window Fallacy is emerging on the horizon. Discussion about the storm is playing out just like the famous parable of the broken window, created by Frederic Bastiat, and updated for modern audiences by Henry Hazlitt. In Hazlitt’s version of the parable, a youth throws a brick through the window of a bakery. Neighbors gather around to commiserate with the baker over his misfortune.

Similarly, decent people all over the country are sending their hearts out to the unfortunate people whose homes and businesses are in Hurricane Matthew’s path. The category 4 hurricane is sure to break a great many windows. In fact, in one video I saw, debris shattered a house’s window right behind an intrepid weather reporter as he was talking to the camera.

Of course, the damage will go far beyond broken windows. Entire houses and businesses will be flooded. Lives will be financially ruined. Some lives have already been lost entirely. It is only common sense to recognize such vast destruction as pure loss and misfortune.

But for some intellectuals, common sense is for mere commoners. They delight in using more sophisticated reasoning to arrive at contrarian conclusions, which they generously share with their ignorant, benighted brethren.

Taking Away Resources

In the parable, the clever ones among the crowd console the baker by pointing out the social good that will come from his private misfortune. As Hazlitt puts the argument:

How much does a new plate glass window cost? Three hundred dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $300 more to spend with other merchants, and these in turn will have $300 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.

And now, this very morning, we have a USA Today writer playing this exact same role in the discussion of Hurricane Matthew. Paul Davidson consoles the storm’s victims as follows:

But hurricanes typically don’t harm a nation’s economic growth. And much of the losses in the region are later offset. Most damaged homes, businesses and infrastructure are repaired or rebuilt, generating economic activity. And at least some of the disruptions to retail and other businesses are made up in the following weeks and months as consumers release pent-up demand. (Emphasis added.)

The problem with Davidson’s analysis is the same problem that beset the 19th century writers whom Bastiat was lampooning when he wrote the broken window parable. Their clever contrarianism is more sophistical than sophisticated. As Bastiat put it, they only look at “the seen” and entirely neglect “the unseen.” The “unseen” is the opportunity cost of repairing damage. As is so often the case, sound economics vindicates common sense by giving the unseen its due regard. As Hazlitt wrote:

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker is to learn of a death. But the shopkeeper will be out $300 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $300 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. The see only what is immediately visible to the eye.

Indeed, we can consider even more “unseen” victims of the vandal. A new suit can be considered a consumption good. But what if the baker would have otherwise spent the $300 on a producer’s good? What if he would have used it to buy a new, more efficient oven? The need to repair the window would have prevented that investment: an investment that could have increased the amount of baked goods available to the community. All those consumers who would have benefited from that greater abundance would then have also suffered a loss.

Similarly, USA Today’s Davidson sees the “economic activity” generated by the repairing and rebuilding of homes, businesses, and infrastructure that will be damaged or destroyed by Hurricane Matthew. But he neglects the economic activity that would have created entirely new goods and services: activity now made impossible because the resources needed are tied up restoring old goods and services.

Hazlitt also deals handily with the counterargument that the replacements will be more modern and better than what was destroyed:

It is sometimes said that the Germans or the Japanese had a postwar advantage over the Americans because their old plants, having been destroyed completely by bombs during the war, could be replaced with the most modern plants and equipment and thus produce more efficiently and at lower costs than the Americans with their older and half-obsolete plants and equipment. But if this were really a clear net advantage, Americans could easily offset it by immediately wrecking their old plants, junking all the old equipment. In fact, all manufacturers in all countries could scrap all their old plants and equipment every year and erect new plants and install new equipment.

The simple truth is that there is an optimum rate of replacement, a best time for replacement. It would be an advantage for a manufacturer to have his factory and equipment destroyed by bombs only if the time had arrived when, through deterioration and obsolescence, his plant and equipment had already acquired a null or a negative value and the bombs fell just when he should have called in a wrecking crew or ordered new equipment anyway.

We do the victims of Hurricane Matthew no service by offering them false consolation. Sound economics, common sense, and common decency all arrive at the same conclusion: that natural disasters truly are disasters to those afflicted. And the victims deserve our unstinting sympathy and support.

dan-sanchez


Dan Sanchez

Dan Sanchez is Managing Editor of FEE.org. His writings are collected at DanSanchez.me.

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Trump’s Economic Plan Faces Well-Deserved Ridicule – Article by K. William Watson

Trump’s Economic Plan Faces Well-Deserved Ridicule – Article by K. William Watson

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The New Renaissance HatK. William Watson
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Earlier this week, the Trump campaign released a white paper written by senior policy adviser Peter Navarro to elaborate and quantify the candidate’s economic plan.  The goal of the paper is to explain how Donald Trump’s promises to renegotiate trade agreements and raise tariffs will promote economic growth and raise revenue for the government.

The plan betrays embarrassing ignorance of how trade negotiations work and a farcically simplistic and erroneous understanding of economics.  In essence, the plan justifies Trump’s policies by reimagining how the world works.

Trump’s entire view of trade and its impact on the U.S. economy is wrong.  He believes that trade is good for the United States only if we export more than we import and that trade relations are a contest between countries, which we are losing because they sell more stuff to us than we sell to them.  He claims to be the tough-guy who will the save the American economy from shrewd foreign cheaters and the inept government officials who let them beat us.

Since that’s not how things work in the real world, he has to rely on falsehoods and bad economics to justify disastrous policies.  This new white paper is just a continuation of that tactic.

But you don’t have to take my word for it.  If you think I’m being too harsh or would like to learn more about the “Trump Trade Doctrine” and what’s wrong with it, I recommend you read lengthier condemnations from experts who have called the plan’s analysis “truly disappointing,” “not only wrong, but foolish,” “magical thinking,” “a complete mess,” and the sort of thing “that would get you flunked out of an AP economics class.”

Bill Watson is a trade policy analyst with Cato’s Herbert A Stiefel Center for Trade Policy Studies. His research focuses on U.S. trade remedy policies, disguised protectionism, and the institutional aspects of global trade liberalization. He manages Free Trade, Free Markets: Rating the Congress, Cato’s online database that tracks votes by Congress and its individual members on bills and amendments affecting the freedom of Americans to trade and invest in the global economy. Watson received a BA in political science from Texas Christian University, a JD from Tulane University Law School, and an LLM in international and comparative law from the George Washington University Law School.

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

Why Was Coffee Drinking Once Scandalous? – Article by Jeffrey A. Tucker

Why Was Coffee Drinking Once Scandalous? – Article by Jeffrey A. Tucker

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The New Renaissance Hat
Jeffrey Tucker
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In 18th-century Europe, many products and services reached a newly emergent middle class for the first time in human history. The capitalist age was maturing, and that meant that average people had money for the first time and lots of choices on how to spend it. One of the new products they could buy was coffee. With that came a great deal of social suspicion and even dread.

None other than Johann Sebastian Bach satirized the puritanical fear of coffee in his delightful and witty “Coffee Cantata.” It was one of the few times he ever tried his hand at pure pop entertainment. Of course he succeeded brilliantly; he was Bach after all!

The “Coffee Cantata” tells the story of a daughter who scandalized her father due to her devotion to coffee. She couldn’t stop singing about how wonderful it is, while her father corrected her constantly.

“You naughty child, you wild girl, ah!” the father yells at his daughter. “When will I achieve my goal: get rid of the coffee for my sake!”

“Father sir, but do not be so harsh!” she responds. “If I couldn’t, three times a day, be allowed to drink my little cup of coffee, in my anguish I will turn into a shriveled-up roast goat.”

She happily agrees to do everything he says in every area of life except one: she will not give up coffee.

And then follows a beautiful tribute to coffee: “How sweet coffee tastes, more delicious than a thousand kisses, milder than muscatel wine. Coffee, I have to have coffee, and, if someone wants to pamper me, ah, then bring me coffee as a gift!”

The father threatens her: “If you don’t give up coffee for me, you won’t go to any wedding parties, or even go out for walks.”

She still refuses.

Then the daughter plays a little game. She has a husband in mind and extracts from him a promise that if she marries him, he must allow her to drink coffee. He agrees. Then she goes to her father, who opposes the marriage, and makes a deal: if she is permitted to marry him, she will give up coffee. The father is delighted, and agrees.

Thus does the daughter gain a new husband, and, much more importantly, a permanent right to drink coffee whenever she wants!

What was this fear of coffee? Why was this such a big deal? It does have some narcotic properties to it, as we all know so well. It can give you a delightful lift.

But that alone does not account for the early opprobrium with which coffee-drinking, particularly for young girls, was greeted. For a fuller account, we need to understand something larger and more socially transformative: the advent of the coffee house itself.

The coffee house was one of the earliest public institutions, operating on a purely commercial basis, that brought a wide variety of social classes, not to mention a mixture between men and women, in a market-based social setting. In the 18th century, coffee houses spread all over Europe and the UK, attracting young people who would sit and drink together and discuss politics, religion, and business, and exchange any manner of ideas.

What the father in the Cantata is actually objecting to is not coffee as such but unapproved, unchaperoned social wanderings.

The Loss of Control

This was a huge departure from the tradition that entitled parents and other social authorities, including governments, to determine what kind of associations their children would have. Coffee houses introduced a kind of anarchy to the social structure, and introduced new risks of randomized contact with ideas and people that parents could no longer control. Coffee represented freedom itself – the freedom to mix, mingle, and consume what one wanted.

Indeed, coffee houses became a great source of public controversy. In England, in the 17th Century, Charles II tried to ban them all on grounds that they were “places where the disaffected met, and spread scandalous reports concerning the conduct of His Majesty and his Ministers.” Even a century later, women were banned from attending them, and this was true in France as well. Germany had more liberal laws concerning women and coffee but public suspicion was still high, as the “Coffee Cantata” suggests.

houghton_ec65a100674w_-_womens_petition_against_coffee

Women who were banned from coffee houses developed a very clever response. In the famous “Women’s Petition Against Coffee” of 1674, women said that coffee was responsible for the “enfeeblement” of men. Historians say the campaign contributed to the gender integration of coffee houses.

We see, then, that the commercial availability of coffee actually contributed to the advance of women’s rights!

Looking back at the astonishing success of Starbucks in our own time, it doesn’t seem surprising. They too serve as gathering spots, social mixers, places of business, and centers of conversation and ideas. We are more accustomed to it now than centuries ago, and yet even today, how much political controversy is engendered by access to products and services of which social authorities disapprove?

War on pot anyone?

As the “Coffee Cantata” concludes:

Cats do not give up mousing,
girls remain coffee-sisters.
The mother adores her coffee-habit,
and grandma also drank it,
so who can blame the daughters!

 

Jeffrey Tucker


Jeffrey 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.