Browsed by
Category: Politics

Federal Reserve Blows More Bubbles – Article by Ron Paul

Federal Reserve Blows More Bubbles – Article by Ron Paul

Comments 1 comment
The New Renaissance Hat
Ron Paul
May 5, 2013
******************************

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.

With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal.

In the meantime, real families are suffering. While Wall Street and the federal government take advantage of access to the Fed’s new “free” money, the Fed claims there is no inflation. But who hasn’t paid higher prices at the grocery store, the gas pump, for tuition, for insurance? It’s bad enough that household incomes have stagnated, but real purchasing power has declined so much that one in seven Americans, 47.3 million people, are on food stamps. Five million are collecting unemployment insurance with 21.5 million afflicted by unemployment according to the federal government’s own figures. That’s 13.9 percent — close to double the 7.5 percent unemployment number reported last week.

We are certainly not in a recovery. We don’t see the long unemployment and soup-kitchen lines like in the Great Depression, but that’s just because the lines are electronic now.

It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations. Allow interest rates to rise to equal the risks in the economy. Allow bad debts to be liquidated so we can build on a firm foundation. Stop printing money to benefit the government and big banks. Restore sound money to the economy and the American people. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.

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

This article is reprinted with permission.

Your Student Loan Shall Not Be Forgiven – Article by Andrew Heaton

Your Student Loan Shall Not Be Forgiven – Article by Andrew Heaton

Comments 0 Comment
The New Renaissance Hat
Andrew Heaton
May 4, 2013
******************************

There’s a decent chance you know a recent graduate with a student loan balance that makes Greece look tight-fisted. That graduate might occasionally jabber on about “student loan forgiveness,” which is a popular notion among people with large student loans.

The concept behind forgiveness is that college graduates are sweating debt through their pores like vodka, so the government ought to swoop in and write them a check. This plan sounds pretty swell if you’re a recent graduate, but if you’re some kind of weirdo who pays income tax it means you get to foot that bill. So watch out.

One such proposal presently in embryonic form is H.R. 1330, The Student Loan Fairness Act. This particular scheme would create a new “10-10” standard for student loan repayment, in which individuals would repay one-tenth of their disposable income for 10 years, after which their debt would be forgiven.

You’ll notice that representatives usually come up with similar token gestures in order to make graduates appear to be seriously contributing to their loans. For instance, a congressman might suggest that an alumnus periodically toss fistfuls of loose change at their bursar, or set up a “repayment fund” by hoarding pennies in the ashtray of their car. Then at some point, as in H.R. 1330, Uncle Sam steps in and waives their debt away. Their onerous student loan is “forgiven.”

In the world of finance, “debt forgiveness” is not the same thing as regular forgiveness, wherein the aggrieved party absolves you of guilt but secretly nurses a grudge. “Debt forgiveness” simply means someone else pays your debt instead of you. Your tuition bill does not magically disappear, but is rather transferred via legal mechanisms to another shmuck. The federal government steps in to magnanimously fork over the remainder of your tab to a university, loan shark, etc. But “the government,” which sounds distant and vaguely sterile, is funded by you.

And by me, for that matter. Which is irritating, because I strenuously avoided going into debt during college. I attended a state school despite acceptance to a pretentious “boat shoes” school. I obtained my masters degree through a scholarship. I intentionally zigzagged around accruing debt because I had the foresight to realize that both of my majors were utterly useless and would never earn the money back.

Thus, I do not carry a significant debt burden. However, I am still poor, underemployed, and probably eligible for food stamps. Assuming I make enough money this year to even pay taxes, should the government confiscate my income and give it to people who opted for expensive private colleges or who chose even more frivolous majors than I did?

Ultimately someone has to repay all these student loans, be they alumni or taxpayers. I nominate Warren Buffett. He’s always whining about not paying enough taxes anyway. If you’re unfamiliar with the man, Warren Buffett is a wealthy investor from Omaha who apparently was the inspiration for the lead character in the Pixar film Up.

Between his net worth of $53.5 billion and his endearing toothbrush-bristle eyebrows, I would like him to adopt my entire generation as his surrogate grandchildren. Then we can ask Mr. Buffett to use his vast, undertaxed fortune to pay off our student loans.

Better yet, what if we treated student loans like the sorts of investments Mr. Buffett needed to calculate himself in order to become a finance mogul? What if we treated student loans more like private enterprise? For instance, if you approached me for a $40,000 loan to obtain a degree in engineering, I might regard that as a savvy venture, whereas I might deny a $400,000 request to study Jurassic art. In a few years, you would see a dramatic reduction in redundant arts and sciences majors like myself, and no one would ever speak of nurse or technician shortages again.

Student loans, unlike all other species of finance, are ineligible for discharge in bankruptcy. Why not remove this legal impediment, allowing graduates to decide for themselves the pros and cons of filing for Chapter 7, which results in a personal balance sheet purged of debt, but a horrendously blemished credit rating? This option is better than the current option for students, which consists of faking their own deaths. Couple that with student loan speculation, and you could potentially push students toward degrees they might actually benefit from. Allowing them the option of bankruptcy would create an opportunity for true “forgiveness” of debt.

The combined student debt of our nation’s college graduates is massive, sad, and oppressive. We need to come up with solutions to deal with it. But remember: forgiveness of debt punishes someone else. The spiritual world may run on confession and absolution, but the financial realm is still firmly ruled by Mammon and Karma.

Guest blogger Andrew Heaton is a former congressional staffer, now working as a writer and standup comedian in New York City. More of his wit and insight can be found at his website, MightyHeaton.com.

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

The Unplanned Order of Houston, TX – Article by Bradley Doucet

The Unplanned Order of Houston, TX – Article by Bradley Doucet

Comments 0 Comment
The New Renaissance Hat
Bradley Doucet
May 1, 2013
******************************
“Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”
 – Jane Jacobs, The Death and Life of Great American Cities
***

I recently had the pleasure of visiting the great American city of Houston, Texas. I was only there for two days, and so only saw a tiny fraction of what there was to see. But I was able to spot some evidence and hear some firsthand accounts of one of the city’s important peculiarities: its lack of zoning laws. With a population of 2.1 million (6 million in the metro area), Houston is the largest city in America without zoning laws—and it gets along just fine without them, thank you very much.

In the Zone

If there’s one thing that seems certain in this world besides death and taxes, it’s that cities have zoning laws. These laws determine what kinds and sizes of homes and commercial buildings can be built where, the densities of neighbourhoods, the outward appearances of structures, and so on. But as much as we have come to take these minute regulations of city life for granted, it wasn’t always so. According to Samuel R. Staley, who teaches graduate and undergraduate courses in urban planning, regulation, and urban economics at Florida State University in Tallahassee, “Before the twentieth century land-use and housing disputes were largely dealt with through courts using the common-law principle of nuisance.” If a smelly pig farm set up shop in a residential area, for instance, residents could go to court and either be compensated for the harm caused by the noxious fumes or get the pig farmer to cease operations or move elsewhere.

As Staley explains, that all changed with the ascendancy of the Progressive movement in the early years of the last century. Progressives argued that the common-law approach to nuisance was too expensive, time-consuming, and complicated, making it a difficult avenue for the less fortunate members of society to use. Zoning would be more efficient and fair, they claimed. Yet whatever the good intentions behind it, its effect, writes Staley, “was to fully politicize land-use decisions,” often in favour of the politically powerful.

Houstonians, unique among the residents of large American cities, rejected zoning in popular referendums on three separate occasions: in 1948, in 1962, and again in 1993. Despite pleas before the 1993 vote from the Houston Homeowner’s Association about the need “to stop the cancerous erosion of the quality of life in many of our neighborhoods,” the city’s registered voters did not seem overly concerned about their quality of life, as few of them even bothered to come out for the vote.

How Can People Live This Way?

So, does chaos reign in The Big Heart (a nickname earned when Houstonians pitched in to help many tens of thousands of refugees from New Orleans in the aftermath of Hurricane Katrina)? Hardly. There were no slaughterhouses or pulp and paper mills in the residential neighbourhood I was staying in. There was a charming Mexican restaurant, though, with parking for maybe twenty vehicles, a small bridge crossing a little creek, and an expansive patio bordered by tall shade trees.

CB Richard Ellis, a big property company, explains how the city manages to avoid “a disjointed landscape where oil derricks sit next to mansions and auto salvage yards abut churches” without recourse to zoning laws: “What is unique about Houston is that the separation of land uses is impelled by economic forces rather than mandatory zoning. While it is theoretically possible for a petrochemical refinery to locate next to a housing development, it is unlikely that profit-maximizing real-estate developers will allow this to happen.” The spontaneous order of the market encourages charming restaurants in among private homes, but discourages incompatible uses. As author James D. Saltzman has written, “heavy industry voluntarily locates on large tracts near rail lines or highways; apartments and stores seek thoroughfares; gas stations vie for busy intersections.”

It is not the case, however, that Houston is completely bereft of regulation. Developers commonly employ private covenants and deed restrictions to limit the uses of land in a given development. These can keep businesses or apartments out of the neighborhood, or even stipulate lawn care and acceptable house paint colours. But importantly, as Saltzman points out, “However detailed, deed restrictions contain rules voluntarily accepted by home buyers, unlike the edicts issued to property owners by a zoning commission.”

In addition to these voluntary restrictions, though, there are also some land-use ordinances regulating things like trailer parks, rendering plants, and commercial landscaping. And in fact, these city regulations have not all had positive effects, either. Michael Lewyn, associate professor at the Touro Law Center, points out that rules regarding minimum lot sizes for single-family homes, minimum street widths, and mandatory parking space requirements for both residential and commercial buildings have made Houston less dense than it would have been if its development had been left entirely to market forces. This means the sprawling city is more dependent on cars and less pedestrian friendly than it could be.

Reaping the Benefits

Despite such laws, however, Houston still regulates land use to a significantly lesser degree than other cities. The payoff, in addition to a welcome, convenient, eclectic mix of uses, is more affordable housing. As prices were soaring across the country in the inflation-fueled housing bubble a few years back, they remained relatively stable in Houston. And not having soared, they did not plummet when that bubble inevitably burst. According to Federal Reserve Bank of Dallas senior economist Bill Gilmer, lack of zoning deserves a lot of the credit.

As Jane Jacobs wrote about in her classic 1961 work, The Death and Life of Great American Cities, city planners often behave as if the rest of us who live in a city had no plans of our own. In Houston, more than in most cities, people can pursue their own plans. Rather than leading to chaos, this leads to a more spontaneous, more organic kind of order. If residents of other cities could move away from imposed, top-down order, we too could be freer to pursue more of our own plans without the hassle and added cost of zoning laws.

Bradley Doucet is Le Quebecois Libré‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.
Liberty Was Also Attacked in Boston – Article by Ron Paul

Liberty Was Also Attacked in Boston – Article by Ron Paul

Comments 0 Comment
The New Renaissance Hat
Ron Paul
April 28, 2013
******************************

Forced lockdown of a city. Militarized police riding tanks in the streets. Door-to-door armed searches without warrant. Families thrown out of their homes at gunpoint to be searched without probable cause. Businesses forced to close. Transport shut down.

These were not the scenes from a military coup in a far off banana republic, but rather the scenes just over a week ago in Boston as the United States got a taste of martial law. The ostensible reason for the military-style takeover of parts of Boston was that the accused perpetrator of a horrific crime was on the loose. The Boston bombing provided the opportunity for the government to turn what should have been a police investigation into a military-style occupation of an American city. This unprecedented move should frighten us as much or more than the attack itself.

What has been sadly forgotten in all the celebration of the capture of one suspect and the killing of his older brother is that the police state tactics in Boston did absolutely nothing to catch them. While the media crowed that the apprehension of the suspects was a triumph of the new surveillance state – and, predictably, many talking heads and Members of Congress called for even more government cameras pointed at the rest of us – the fact is none of this caught the suspect. Actually, it very nearly gave the suspect a chance to make a getaway.

The “shelter in place” command imposed by the governor of Massachusetts was lifted before the suspect was caught. Only after this police state move was ended did the owner of the boat go outside to check on his property, and in so doing discover the suspect.

No, the suspect was not discovered by the paramilitary troops terrorizing the public. He was discovered by a private citizen, who then placed a call to the police. And he was identified not by government surveillance cameras, but by private citizens who willingly shared their photographs with the police.

As journalist Tim Carney wrote last week:

“Law enforcement in Boston used cameras to ID the bombing suspects, but not police cameras. Instead, authorities asked the public to submit all photos and videos of the finish-line area to the FBI, just in case any of them had relevant images. The surveillance videos the FBI posted online of the suspects came from private businesses that use surveillance to punish and deter crime on their property.”

Sadly, we have been conditioned to believe that the job of the government is to keep us safe, but in reality the job of the government is to protect our liberties. Once the government decides that its role is to keep us safe, whether economically or physically, they can only do so by taking away our liberties. That is what happened in Boston.

Three people were killed in Boston and that is tragic. But what of the fact that over 40 persons are killed in the United States each day, and sometimes ten persons can be killed in one city on any given weekend? These cities are not locked-down by paramilitary police riding in tanks and pointing automatic weapons at innocent citizens.

This is unprecedented and is very dangerous. We must educate ourselves and others about our precious civil liberties to ensure that we never accept demands that we give up our Constitution so that the government can pretend to protect us.

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

This article is reprinted with permission.

Why Can’t We All Travel To Cuba? – Article by Ron Paul

Why Can’t We All Travel To Cuba? – Article by Ron Paul

Comments 0 Comment
The New Renaissance Hat
Ron Paul
April 24, 2013
******************************

Earlier this month, entertainers Jay-Z and Beyoncé were given a license by the US government to travel to Cuba. Because it is not otherwise legal for Americans to travel to Cuba, this trip was only permitted as a “cultural exchange” by the US Treasury Department. Many suspect that the permission was granted at least partly due to the fame, wealth, and political connections of the couple.

Some Members of Congress who continue to support the failed Cuba embargo, demanded that the Administration explain why these two celebrities were allowed to visit Cuba. The trip looked suspiciously like tourism, they argued in a letter to the White House, and American tourism is still not allowed in Cuba. They were photographed eating at the best restaurants, dancing, and meeting with average Cubans, which these Members of Congress frowned on.

Perhaps it is true that this couple used their celebrity status and ties to the White House to secure permission to travel, but the real question is, why can’t the rest of us go?

The Obama administration has lifted some of the most onerous restrictions on travel to Cuba imposed under the previous Bush administration, but for the average American, travel to the island is still difficult if not impossible.

However, even those who are permitted to go to Cuba are not allowed to simply engage in tourist activities — to spend their money as they wish or relax on a beach.

The US government demands that the few Americans it allows to travel to Cuba only engage in what it deems “purposeful travel,” to “support civil society in Cuba; enhance the free flow of information to, from, and among the Cuban people; and help promote their independence from Cuban authorities.”
They must prove that they maintain a full-time schedule of educational activities, according to Treasury guidelines for “people-to-people” travel.

Leave it to the federal government to make the prospect of visiting that sunny Caribbean island sound so miserable.

The reason the US so severely restricts and scripts the activities of the few Americans allowed to travel to Cuba is that it believes travel must promote the goal of taking “important steps in reaching the widely shared goal of a Cuba that respects the basic rights of all its citizens.”

Although I have no illusions about the Cuban government – or any government for that matter — it is ironic that the US chose to locate a prison at Guantanamo Bay, Cuba because the indefinite detention and torture that took place there would have been illegal on US soil. Further, the US government continues to hold more than 100 prisoners there indefinitely even though they have not been found guilty of a crime and in fact dozens are “cleared for release” but not allowed to leave.

Does the administration really believe that the rest of the world is not annoyed by its “do as we say, not as we do” attitude?

We are told by supporters of the Cuba embargo and travel ban that we must take such measures to fight the communists in charge of that country. Americans must be prohibited from traveling to Cuba, they argue, because tourist dollars would only be used to prop up the unelected Castro regime. Ironically, our restrictive travel policies toward Cuba actually mirror the travel policies of the communist countries past and present. Under communist rule in the former Soviet Union and elsewhere it was only the well-connected elites who were allowed to travel overseas – people like Jay-Z and Beyoncé. The average citizen was not permitted the right.

Although the current administration’s slight loosening of the restrictions is a small step in the right direction, it makes no sense to continue this nearly half-century old failed policy. Freedom to travel is a fundamental right. Restricting this fundamental right in the name of human rights is foolish and hypocritical.

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

This article is reprinted with permission.

Congress Exploits Our Fears to Take Our Liberty – Article by Ron Paul

Congress Exploits Our Fears to Take Our Liberty – Article by Ron Paul

Comments 0 Comment
The New Renaissance Hat
Ron Paul
April 24, 2013
******************************

This week, as Americans were horrified by the attacks in Boston, both houses of Congress considered legislation undermining our liberty in the name of “safety.” Gun control continued to be the focus of the Senate, where an amendment expanding federal “background checks” to gun show sales and other private transfers dominated the debate. While the background check amendment failed to pass, proponents of gun control have made it clear they will continue their efforts to enact new restrictions on gun ownership into law.

While it did not receive nearly as much attention as the debate on gun control, the House of Representatives passed legislation with significant implications for individual liberty: the Cyber Intelligence Sharing and Protection Act (CISPA). CISPA proponents claim that the legislation is necessary to protect Americans from foreign “cyber terrorists,” but the real effect of this bill will be to further erode Americans’ online privacy.

Under CISPA, Internet corporations are authorized to hand over the private information of American citizens to federal agents, as long as they can justify the violation of your privacy in the name of protecting “cyber security”. Among the items that may be shared are your e-mails, browsing history, and online transactions.

Like the PATRIOT Act, CISPA violates the fourth amendment by allowing federal agencies to obtain private information without first seeking a warrant from a federal judge. The law also allows federal agencies to pass your information along to other federal bureaucrats — again without obtaining a warrant. And the bill provides private companies with immunity from lawsuits regardless of the damage done to anyone whose personal information is shared with the federal government.

CISPA represents a troubling form of corporatism, where large companies cede their responsibility to protect their property to the federal government, at the expense of their customers’ privacy and liberty. In this respect, CISPA can be thought of as an electronic version of the Transportation Security Administration, which has usurped the authority over airline security from private airlines. However, CISPA will prove to be far more invasive than even the most robust TSA screening.

CISPA and the gun control bill are only the most recent examples of politicians manipulating fear to con the people into giving up their liberties. Of course, the people are told the legislation is for “limited purposes,” but authority granted to the federal government is rarely, if ever, used solely for the purpose for which it is granted. For example, the American people were promised that the extraordinary powers granted the federal government by the PATRIOT Act would only be used against terrorism. Yet soon after the bill became law, reports surfaced that it was being used for non-terrorism purposes. In fact, according to data compiled by the American Civil Liberties Union, 76 percent of the uses of the controversial “sneak-and-peak” warrants where related to the war on drugs!

Sadly, I expect this week’s tragic attacks in Boston to be used to justify new restrictions on liberty. Within 48 hours of the attack in Boston, at least one Congressman was calling for increased use of surveillance cameras to expand the government’s ability to monitor our actions, while another Senator called for a federal law mandating background checks before Americans can buy “explosive powder.”

I would not be surprised if the Transportation Security Administration uses this tragedy to claim new authority to “screen” Americans before they can attend sporting or other public events. The Boston attack may also be used as another justification for creating a National ID Card tied to a federal database with “biometric” information. The only thing that will stop them is if the American people rediscover the wisdom of Benjamin Franklin that you cannot achieve security by allowing government to take their liberties.

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

This article is reprinted with permission.

Liberty Through Long Life – Video by G. Stolyarov II

Liberty Through Long Life – Video by G. Stolyarov II

Comments 0 Comment

To maximize their hopes of personally experiencing an amount of personal freedom even approaching that of the libertarian ideal, all libertarians should support radical life extension.

References
– “Liberty Through Long Life” – Essay by G. Stolyarov II –
– Resources on Indefinite Life Extension (RILE) –
– “Libertarian Life-Extension Reforms” – Video Series – G. Stolyarov II –
– “Massive open online course” – Wikipedia
– Mozilla’s Open Badges
– “Open Badges and Proficiency-Based Education: A Path to a New Age of Enlightenment” – Essay by G. Stolyarov II
– “Deep Space Industries” – Wikipedia
– “Planetary Resources” – Wikipedia
– The Seasteading Institute
– “Seasteading’s Potential and Challenges: An Overview” — Essay by G. Stolyarov II
– “Seasteading’s Potential and Challenges: An Overview” — Video by G. Stolyarov II
– “Bitcoin” – Wikipedia
– “Benjamin Franklin and the Early Scientific Vision – 1780” – Foundation for Infinite Survival
– “Revisiting the proto-transhumanists: Diderot and Condorcet” – George Dvorsky – Sentient Developments
– “Marquis de Condorcet, Enlightenment proto-transhumanist” – George Dvorsky – IEET
– SENS Research Foundation
– “Ray Kurzweil” – Wikipedia

Liberty Through Long Life – Article by G. Stolyarov II

Liberty Through Long Life – Article by G. Stolyarov II

Comments 0 Comment
The New Renaissance Hat
G. Stolyarov II
April 14, 2013
******************************

            It is commonly recognized among libertarians (and some others) that the freedom of individuals to innovate will result in a more rapid rate of technological progress. In “Six Libertarian Reforms to Accelerate Life Extension” I described six liberty-enhancing political changes that would more swiftly bring about the arrival of indefinite human longevity. But, as is less often understood, the converse of this truth also holds. Technological progress in general improves the prospects for liberty and its actual exercise in everyday life. One of the most promising keys to achieving liberty in our lifetimes is to live longer so that we can personally witness and benefit from accelerating technological progress.

            Consider, for example, what the Internet has achieved with respect to expanding the practical exercise of individual freedom of speech. It has become virtually impossible for regimes, including their nominally private “gatekeepers” of information in the mass media and established publishing houses, to control the dissemination of information and the expression of individual opinion. In prior eras, even in countries where freedom of speech was the law of the land, affiliations of the media, by which speech was disseminated, with the ruling elite would serve as a practical barrier for the discussion of views that were deemed particularly threatening to the status quo. In the United States, effective dissent from the established two-party political system was difficult to maintain in the era of the “big three” television channels and a print and broadcast media industry tightly controlled by a few politically connected conglomerates. Now expressing an unpopular opinion is easier and less expensive than ever – as is voting with one’s money for an ever-expanding array of products and services online. The ability of individuals to videotape public events and the behavior of law-enforcement officers has similarly served as a check on abusive behavior by those in power. Emerging online education and credentialing options, such as massive open online courses and Mozilla’s Open Badges, have the power to motivate a widespread self-driven enlightenment which would bring about an increased appreciation for rational thinking and individual autonomy.

            Many other technological advances are on the horizon. The private space race is in full swing, with companies such as SpaceX, Virgin Galactic, Deep Space Industries, and Planetary Resources embarking on ever more ambitious projects. Eventually, these pioneering efforts may enable humans to colonize new planets and build permanent habitats in space, expanding jurisdictional competition and opening new frontiers where free societies could be established. Seasteading, an idea only five years in development, is a concept for building modular ocean platforms where political experimentation could occur and, through competitive pressure, catalyze liberty-friendly innovations on land. (I outlined the potential and the challenges of this approach in an earlier essay.) The coming decades could see the emergence of actual seasteads of increasing sophistication, safety, and political autonomy. Another great potential for increasing liberty comes from the emerging digital-currency movement, of which Bitcoin has been the most prominent exemplar to date. While Bitcoin has been plagued with recent extreme exchange-rate volatility and vulnerability to manipulation and theft by criminal hackers, it can still provide some refuge from the damaging effects of inflationary and redistributive central-bank monetary policy. With enough time and enough development of the appropriate technological infrastructure, either Bitcoin or one of its successor currencies might be able to obtain sufficient stability and reliability to become a widespread apolitical medium of exchange.

            But there is a common requirement for one to enjoy all of these potential breakthroughs, along with many others that may be wholly impossible to anticipate: one has to remain alive for a long time. The longer one remains alive, the greater the probability that one’s personal sphere of liberty would be expanded by these innovations. Living longer can also buy one time for libertarian arguments to gain clout in the political sphere and in broader public opinion. Technological progress and pro-liberty activism can reinforce one another in a virtuous cycle.

            To maximize their hopes of personally experiencing an amount of personal freedom even approaching that of the libertarian ideal, all libertarians should support radical life extension. This sought-after goal of some ancient philosophers, medieval alchemists, Enlightenment thinkers (notably Franklin, Diderot, and Condorcet), and medical researchers from the past two centuries, is finally within reach of many alive today. Biogerontologist Aubrey de Grey of the SENS Research Foundation gives humankind a 50 percent likelihood of reaching “longevity escape velocity” – a condition where increases in life expectancy outpace the rate of human senescence – within 25 years. Inventor, futurist, and artificial-intelligence researcher Ray Kurzweil predicts a radical increase in life expectancy in the 2020s, made possible by advances in biotechnology and nanotechnology, aided by exponentially growing computing power. But, like de Grey and perhaps somewhat unlike Kurzweil, I hold the view that these advances are not inevitable; they rely on deliberate, sustained, and well-funded efforts to achieve them. They rely on support by the general public to facilitate donations, positive publicity, and a lack of political obstacles placed in their way. All libertarians should become familiar with both the technical feasibility and the philosophical desirability of a dramatic, hopefully indefinite, extension of human life expectancies. My compilation of Resources on Indefinite Life Extension (RILE) is a good starting point for studying this subject by engaging with a wide variety of sources, perspectives, and ongoing developments in science, technology, and activism.

            We have only this one life to live. If we fail to accomplish our most cherished goals and our irreplaceable individual universes disappear into oblivion, then, to us, it will be as if those goals were never accomplished. If we want liberty, we should strive to attain it in our lifetimes. We should therefore want those lifetimes to be lengthened beyond any set limit, not just for the sake of experiencing a far more complete liberty, but also for the sake of life itself and all of the opportunities it opens before us.

The Myth of Crumbling Highways – Article by David Hartgen

The Myth of Crumbling Highways – Article by David Hartgen

Comments 0 Comment
The New Renaissance Hat
David Hartgen
April 2, 2013
******************************

Crumbling infrastructure has a direct impact on our personal and economic health, and the nation’s infrastructure crisis is endangering our future prosperity.

—D. Wayne Klotz, former president of the Society of Civil Engineers

Ah, spring. The snow melts and orange barrels return to the nation’s roads. We hear the usual calls for repairs of “crumbling infrastructure.” Authors of several national studies cite overwhelming needs. President Obama calls for fixing structurally deficient bridges. There are tales of woe in nearly all of these plaintive accounts of America’s highways, and most are used to justify yet more government stimulus spending.

So we decided to look.

Far from crumbling highways, our new Reason Foundation report finds that America’s state-owned highways have actually improved on key measures of road performance. There’s no doubt state governments can do better. In many ways, they’re inefficient, and state transportation dollars are a trough for cronies. But the crumbling-infrastructure meme is just a myth.

The Reason study tracks seven measures: urban and rural interstate condition, deficient bridges, congestion, fatalities, rural primary road condition, and narrow rural roads. We compile data from the states’ reports to the federal government from 1989 through 2008 (the last year available). We also track spending and compare each state with national averages.

Perhaps surprisingly, the U.S. highway system actually improved on all seven measures over the last two decades:

  • The percentage of rural interstates rated “poor” declined by two-thirds, from 6.6 percent to 1.9 percent.
  • Urban interstates with poor pavement dropped from 6.6 percent to 5.4 percent.
  • Rural primary poor pavement improved from 2.8 percent to 0.5 percent.
  • Deficient bridges improved from 37.8 percent to 23.7 percent.
  • Fatality rates improved from 2.16 to 1.25 per 100 million miles driven.

Even urban interstate congestion declined, from 52.6 percent to 48.6 percent, although some of that may be recession-related. During the same period, expenditures for state-owned highways increased by more than 181 percent. Spending per mile increased 177 percent in nominal terms and 60 percent adjusted for inflation.

State-Owned Highways

Most states saw substantial improvements.

All 50 states lowered their highway fatality rates between 1989 and 2008, saving about 150,000 lives. New Mexico, Nevada, and Mississippi saw the biggest decreases in fatality rates. Even if you don’t like the idea of government funding road construction, this fact should be celebrated.

Overall, 40 states reduced their number of deficient bridges from 1989 to 2008. In 1989, over half of Mississippi’s bridges were deficient, but by 2008 only 24.7 percent were rated deficient. Nebraska went from 55.1 percent deficient to 23.6 percent deficient. The numbers rose in 10 states: Hawaii, Alaska, Massachusetts, Rhode Island, Idaho, Arizona, Utah, Ohio, South Carolina, and Oregon.

Thirty-seven states improved the condition of rural interstates, but that progress was made mostly in the 1990s and has slowed since then. Five states (Missouri, Rhode Island, Idaho, Nevada, and Wisconsin) reduced their percentage of poor rural interstates from over 20 percent to near zero. But two states, New York and California, reported rural interstate condition worsening by more than five percentage points.

Twenty-seven states improved the condition of urban interstates—indeed, Nevada and Missouri made remarkable turnarounds. In 1989, 47.8 percent of Nevada’s urban interstates were in poor condition, but by 2008, it was just 1.6 percent. Missouri’s urban interstate mileage in poor condition decreased from 46.7 percent in 1989 to 1.3 percent in 2008.

Seven states, however, reported more than 10 percent of their urban interstates in poor condition in 2008. A quarter of Hawaii’s interstates rated poor. In 1989, just 4.1 percent of California’s urban interstates were in poor condition, but by 2008 that number had ballooned to 24.7 percent. Vermont went from 2.9 percent of urban interstates in poor condition in 1989 to 17.5 percent in 2008. New Jersey, Oklahoma, New York, and Louisiana also reported more than 10 percent of urban interstates in poor condition in 2008.

Overall, twenty-nine states reduced urban interstate congestion between 1989 and 2008. Six states—Delaware, Massachusetts, Virginia, Alaska, Missouri, and South Carolina—reported improvements greater than 20 percentage points. But 18 states reported a worsening of urban interstate congestion. The greatest increase in congestion, 36.2 percentage points, was in Minnesota.

Overall, 11 states—North Dakota, Virginia, Missouri, Nebraska, Maine, Montana, Tennessee, Kansas, Wisconsin, Colorado, and Florida—improved on all seven performance measures. Eleven more improved on six measures and 15 improved on five measures. So, 37 states improved in at least five of the seven metrics.

Disbursements_per_mile

In another surprising finding, the study notes road spending seems to be only loosely related to performance.

Of the 22 states that improved on six or seven measures, only one (Florida) spent more than the U.S. average per mile, and several large states (notably Virginia, Missouri, Oregon, Minnesota, and Texas) spent less than half the national average. The study suggests a widening gap between most states making progress and a few spending much more but still performing poorly. It also suggests that the higher road systems, particularly the interstates, are performing better than lower-level systems that are locally owned.

So, if resources are not the problem, what is?

Some of the poor performers have older systems, lots of traffic, and hard winters, but so do some good performers. More likely, the cause is high unit costs—policies that push funds to low-priority projects and “ribbon cuts,” draw attention away from maintenance, and use available revenues inefficiently.

So there are still plenty of problems to fix, but our roads and bridges aren’t crumbling. The overall condition of most state-owned road systems is actually getting better, and you could make a case that they have never been in better shape. The key is to target spending where it will do the most good. If your state is not on our “Top 22” list or is spending more than the U.S. average, ask why.

David T. Hartgen is Emeritus Professor of Transportation at UNC Charlotte, president of The Hartgen Group, and adjunct scholar at the Reason Foundation. This study was sponsored by the Reason Foundation and is available at www.reason.org.

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

Cyprus and the Unraveling of Fractional-Reserve Banking – Article by Joseph T. Salerno

Cyprus and the Unraveling of Fractional-Reserve Banking – Article by Joseph T. Salerno

Comments 0 Comment
The New Renaissance Hat
Joseph T. Salerno
March 30, 2013
******************************

[Originally posted on Circle Bastiat, the faculty blog of the Mises Institute. Read Circle Bastiat for Austrian analysis of current economic events from today’s top Misesian and Rothbardian economists.]

The “Cyprus deal” as it has been widely referred to in the media may mark the next to last act in the the slow motion collapse of fractional-reserve banking that began with the implosion of the savings-and-loan industry in the U.S. in the late 1980s.

This trend continued with the currency crises in Russia, Mexico, East Asia, and Argentina in the 1990s in which fractional-reserve banking played a decisive role. The unraveling of fractional-reserve banking became visible even to the average depositor during the financial meltdown of 2008 that ignited bank runs on some of the largest and most venerable financial institutions in the world. The final collapse was only averted by the multi-trillion dollar bailout of U.S. and foreign banks by the Federal Reserve.

Even more than the unprecedented financial crisis of 2008, however, recent events in Cyprus may have struck the mortal blow to fractional-reserve banking. For fractional-reserve banking can only exist for as long as the depositors have complete confidence that regardless of the financial woes that befall the bank entrusted with their “deposits,” they will always be able to withdraw them on demand at par in currency, the ultimate cash of any banking system.

Ever since World War Two governmental deposit insurance, backed up by the money-creating powers of the central bank, was seen as the unshakable guarantee that warranted such confidence. In effect, fractional-reserve banking was perceived as 100-percent banking by depositors, who acted as if their money was always “in the bank” thanks to the ability of central banks to conjure up money out of thin air (or in cyberspace).

Perversely the various crises involving fractional-reserve banking that struck time and again since the late 1980s only reinforced this belief among depositors, because troubled banks and thrift institutions were always bailed out with alacrity—especially the largest and least stable. Thus arose the “too-big-to-fail doctrine.” Under this doctrine, uninsured bank depositors and bondholders were generally made whole when large banks failed, because it was widely understood that the confidence in the entire banking system was a frail and evanescent thing that would break and completely dissipate as a result of the failure of even a single large institution.

Getting back to the Cyprus deal, admittedly it is hardly ideal from a free-market point of view. The solution in accord with free markets would not involve restricting deposit withdrawals, imposing fascistic capital controls on domestic residents and foreign investors, and dragooning taxpayers in the rest of the Eurozone into contributing to the bailout to the tune of 10 billion euros.

Nonetheless, the deal does convey a salutary message to bank depositors and creditors the world over. It does so by forcing previously untouchable senior bondholders and uninsured depositors in the Cypriot banks to bear part of the cost of the bailout. The bondholders of the two largest banks will be wiped out and it is reported that large depositors (i.e., those holding uninsured accounts exceeding 100,000 euros) at the Laiki Bank may also be completely wiped out, losing up to 4.2 billion euros, while large depositors at the Bank of Cyprus will lose between 30 and 60 percent of their deposits. Small depositors in both banks, who hold insured accounts of up to 100,000 euros, would retain the full value of their deposits.

The happy result will be that depositors, both insured and uninsured, in Europe and throughout the world will become much more cautious or even suspicious in dealing with fractional-reserve banks. They will be poised to grab their money and run at the slightest sign or rumor of instability. This will induce banks to radically alter the sources of the funds they raise to finance loans and investments, moving away from deposit and toward equity and bond financing. As was reported Tuesday, March 26, this is already expected by many analysts:

One potential spillover from the March 26 agreement is the knock-on effects for bank funding, analysts said. Banks typically fund themselves with some combination of deposits, equity, senior and subordinate notes and covered bonds, which are backed by a pool of high-quality assets that stay on the lender’s balance sheet.

The consequences of the Cyprus bailout could be that banks will be more likely to use contingent convertible bonds—known as CoCos—to raise money as their ability to encumber assets by issuing covered bonds reaches regulatory limits, said Chris Bowie at Ignis Asset Management Ltd. in London.

“We’d expect to see some deposit flight and a shift in funding towards a combination of covered bonds, real equity and quasi-equity,” said Bowie, who is head of credit portfolio management at Ignis, which oversees about $110 billion.

If this indeed occurs it will be a significant move toward a free-market financial system in which the radical mismatching of the maturities of assets and liabilities in the case of demand deposits is eliminated once and for all. A few more banking crises in the Eurozone—especially one in which insured depositors are made to participate in the so-called “bail-in”—will likely cause the faith in government deposit insurance to completely evaporate and with it confidence in the fractional-reserve banking system.

There may then naturally arise on the market a system in which equity, bonds, and genuine time deposits that cannot be redeemed before maturity become the exclusive sources of finance for bank loans and investments. Demand deposits, whether checkable or not, would be segregated in actual deposit banks which maintain 100-percent reserves and provide a range of payments systems from ATMs to debit cards.

While this conjecture may be overly optimistic, we are certainly a good deal closer to such an outcome today than we were before the “Cyprus deal” was struck. Of course we would be closer still if there were no bailout and the full brunt of the bank failures were borne solely by the creditors and depositors of the failed banks rather than partly by taxpayers. The latter solution would have completely and definitively exposed the true nature of fractional-reserve banking for all to see.

Joseph Salerno is academic vice president of the Mises Institute, professor of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics. He has been interviewed in the Austrian Economics Newsletter and on Mises.org. Send him mail. See Joseph T. Salerno’s article archives.