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Why Modern Luddites Are Attacking Uber Drivers – Article by Mateusz Machaj

Why Modern Luddites Are Attacking Uber Drivers – Article by Mateusz Machaj

The New Renaissance HatMateusz Machaj
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Earlier this year, a number of Uber cars in Poland came under attack by a group of vandals who were likely taxi drivers. In general, these types of vandalism have a long tradition in human history and have contributed to keeping populations’ general living standards at very low levels.

Attacks on Uber drivers are simply the latest chapter in a long story of efforts to intimidate and destroy innovators who are moving markets and societies in new and unfamiliar directions.

Reactions to Early Machines
For a very long time, separation of grain from the chaff was done in a very primitive manner. The process took weeks, involved hard working men, hard working women feeding them, and also children working as additional helpers. Finally, someone invented a threshing machine that allowed farmers to get rid of all this hard work: the machine could do the job much faster with less physical labor involved.

The change happened contrary to what many historical books claim: the move to threshing machines did not occur because of the patent system put in place 150 years before the change. It happened because social and political forces were too weak to stop it from happening.

Beginning in the eighteenth century in Europe, the entrepreneurial class was growing. They were a group of small profit-driven innovators interested in selling various products, and beating their competitors to markets. This “Great Change” was driven forward by many cultural, religious, political, legal, and technological factors.

At first, threshing machines were very imperfect. They didn’t always work well, and they also were expensive. There was a lot of room for improvements, and for making them better, faster, and cheaper. As they were slowly improved, it quickly became apparent the new machines were more efficient than the old manual methods. It was only a matter of time until someone would realize that steam engines could be combined with the threshing machines.

Not surprisingly, threshing machines were not welcomed by everyone. Swing Riots flared up and the Luddite movement attempted to crush technological innovation. Despite such obstacles, the entrepreneurs won out, paving the way for the future chain of market innovations, well symbolized by the modern farmer sitting in the modern air-conditioned tractor (with a good stereo system). Over the past two hundred years, agricultural workers were reduced from more than 80 percent of workers to less than 5 percent.

Economic Growth and Social Change
One of the big mysteries of human history is the question of why rapid technological and innovative growth started only around the nineteenth century. Many new ideas and technological changes were present for ages (and invented centuries before). Other cultures introduced many new innovative ideas as well.

Some steam engines were even being used in ancient times. They were applied in narrow places, however, due to social and political circumstances.

One early example of political resistance is related to us through the Roman Emperor Vespasian’s opposition to new labor saving innovations. Faced with the prospect of replacing workers with machines, Vespasian reputedly said: “You must let me feed my poor commons.”

Vespasian’s reaction is understandable; it is hard to predict what will happen in response to innovations that make certain job skills obsolete. And it’s not just the workers who fear the change. The ruling class, faced with an idle and unemployed population might also fear social upheaval.

The words of Peter Green summarize many of these concerns:

The ruling class were scared, as the Puritans said, of Satan finding work for idle hands to do. One of the great things about not developing the source of energy that did not depend on muscle power was the fear of what the muscles might get up to if they weren’t kept fully employed. The sort of inventions that were taken up and used practically were the things that needed muscle power to start with, including the Archimedean screw. On the other hand, consider that marvelous box gear of Hero’s: it was never used. That would have been a real conversion of power. What got paid for? The Lagids tended to patronize toys, fraudulent temple tricks in large quantities, and military experiments.

Naturally, human history is complicated and subject to many different factors. Nevertheless, there appears to be some truth in the argument that fixed social and political structure did not favor society open to the widespread adoption of innovation. Otherwise, it is hard to explain why so many new technical discoveries were not applied for so long, even though science and intelligence supplied them centuries before. We had to wait for the new political and social arrangements that either were tolerant of new innovations, or were unable to stop them.

Uber and Beyond
Everywhere we look, we see both the creative and destructive power of innovation. First threshing machine sellers lead to reductions in agricultural employment. Later, tractors killed the threshing machines. Telegraph and railway killed communication systems that relied on horses. Cars destroyed the horse industry. Mass production of textiles destroyed the demand for hand-crafted items. Big stores destroyed smaller shops, now discount shops (in parts of Europe) are destroying big stores. Video rentals hampered the cinema industry, now Netflix and others killed video rentals, while Napster’s success (despite its illegality) predicted a coming end to the old music industry. China’s growth and cheap efficient outsourcing reshaped traditional industries in developed countries. (From an economic perspective there is no difference between hiring cheaper labor or hiring a better machine.)

Dell smashed the traditional computer industry with eliminating many middle men. Ikea did something similar in the furniture industry. The internet destroyed regular newspapers, while Google smashed the marketing industry. Amazon destroys bookstores around the world, while Uber is doing the same with the taxi industry.

Economic progress decreases employments in one place, allows for creation of new ones, even in the service sector. During the process of liquidating employment positions, huge economic development is capable of multiplying per capita production within one generation, positively affecting all social classes.

The current state of affairs is not the end of history. Those companies, innovative today, will be endangered tomorrow. Even Jeff Bezos, creator of Amazon.com, admits Amazon won’t last forever:

Companies have short life spans. … And Amazon will be disrupted one day. I don’t worry about it ’cause I know it’s inevitable. Companies come and go. And the companies that are, you know, the shiniest and most important of any era, you wait a few decades and they’re gone.

Mateusz Machaj, PhD in economics; is a founder of the Polish Ludwig von Mises Institute. He has been a summer fellow at the Ludwig von Mises Institute. He is assistant professor at the Institute of Economic Sciences at the University of Wroclaw.

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.

The Need for a “Buy Human” Program – Article by Bradley Doucet

The Need for a “Buy Human” Program – Article by Bradley Doucet

The New Renaissance HatBradley Doucet
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The Canadian government is apparently facing growing pressure to graft a Buy Canadian program onto its billions of dollars of planned infrastructure spending. That way, all those taxpayer dollars would help support employment and economic growth here at home instead of shipping it across the border and overseas. Who could object to such a well-meaning policy to prop up good, Canadian jobs?

Well, for starters, someone concerned with cost-effectiveness could raise an objection. Such a person might argue that our representatives in government have a responsibility to see that we taxpayers get our money’s worth when they, for example, decide from whom to buy the steel that will be used to build our bridges. Before raising our taxes even higher than they already are, or sinking us further into debt and saddling our kids with the bill, they should try to stretch each tax dollar as far as it’ll go. And if getting the best value for our money means buying steel from China, then that’s what they should do.

Someone who understands the general benefits of trade and specialization could also easily object to a Buy Canadian program. When we engage in voluntary exchange with other people, we do so because we expect to benefit—and the people we trade with do the same. By specializing in some form of production, we can get better at it, becoming more skilled and even finding better ways of doing things. Then, through trade, we benefit not only from our own skills and innovations, but from other people’s as well. Importantly, this dynamic holds whether our trading partners are across the street or on the other side of the planet.

On the flipside, someone who understands how harmful a trade war is to everyone concerned would have good reason to object to measures like a Buy Canadian program. All parties are losers in a trade war, as protectionist barriers beget more protectionist barriers. It’s like two imbeciles in a gunfight: one shoots himself in the foot, and his rival retaliates by shooting himself in his foot. As our economies limp along with these self-inflicted wounds, we are also in increased danger of seeing our strained relations deteriorate into actual wars, since instead of at least valuing foreigners for what we can get from them through trade, we find it easier to denigrate them as something less than human, the better to justify dropping bombs on them. If this seems farfetched, just think of how certain media outlets portray the people who are currently having bombs dropped on them.

And speaking of foreigners, someone whose concern for the well-being of his or her fellow humans doesn’t stop at an imaginary line on a map could also find a Buy Canadian program objectionable. It’s true that some people’s lives here at home are disrupted when businesses close, or when certain kinds of jobs disappear altogether from the local landscape. But the people we trade with in other countries? They’re people too, and trade benefits them just as it benefits someone in this country. Why their well-being should matter less to me because they live in a different country, I’ve never understood.

If we want to lend a hand to our neighbours who lose their jobs, we can help them transition to some other kind of work. But “we” shouldn’t keep making steel if “we” can’t make it at a competitive price anymore; instead, we should switch to doing something else, and buy our steel from people willing and able to produce it and sell it at a lower price. They in turn will buy from us the things that we are comparatively good at. And if other governments want to subsidize their steel industries—and therefore our purchases of steel—then our own governments shouldn’t compound the mistake by following suit.

Think about it: If it makes sense to Buy Canadian, then why not Buy Quebecois? Buy Montreal? Buy Mile-End? Buy Fairmount-between-St-Laurent-and-Clark? The simple fact is that global trade has made the globe richer, helping to bring us closer than we’ve ever been to eradicating extreme poverty, and allowing everyone not living under the boot heel of authoritarianism the opportunity to live a decent life. Parochialism will only make us poorer and less connected with other people around the world. Instead of Buy Canadian or Buy American programs, what we really need is a Buy Human policy, trading with whichever of our fellow human beings are offering us the best value for our money in their efforts to improve their own lives.

Bradley Doucet is a writer living in Montreal. He has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness. He also is QL’s English Editor.
Donald Trump Is the Nightmare Version of a Political Outsider – Article by Lucy Steigerwald

Donald Trump Is the Nightmare Version of a Political Outsider – Article by Lucy Steigerwald

The New Renaissance HatLucy Steigerwald
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Trump Is Not an Alternative to Politics as Usual: He Is Its Purest Form

At a CNN-hosted town hall debate, Donald Trump said that the US government’s core focus should be on security (times three!), health care, and education. In spite of this vague, rambling answer, and much other blathering in support of big government, the real estate mogul has a large, intense following, which includes people on the right, the left, and even some paleoconservatives and libertarians.

In some ways, it’s understandable: if the normal process of politics revolts you in any way, the dream of anti-candidate Trump is sweet. The approval rating for the presidency in general is around 30 percent, according to Gallup. For Congress, it’s a stingy eight percent. People — or at least the people Gallup calls — do not seem terribly impressed by their elected officials.

Nor should they be. Powerful men and women spy, meddle, steal, and go to war, whether the people want them to or not, and then pat them on the head and coo euphemisms when people get upset with the results.

Into this travesty strolls Donald Trump, with a terrible, shallow campaign, brilliant in its bombastic vagueness. Populism, it’s been a while. You’re looking tanned, rested, but disturbingly familiar.

When Trump boasts about being against the Iraq war, or disses Dick Cheney, or says that being called a politician is insulting, it’s all too easy to like him. It would be so nice to believe he is not one of them, but one of us. Sure, he’s a billionaire on his third wife, with numerous failed business ventures, a love of eminent domain, and his own brand of “luxury” steaks, but he feels our loathing of the political class.

Yet it is infuriating that this is the year, and this is the man who has stolen the heart of the people fed up with DC. Not someone with principles (such as one against, oh, gleefully saying literally anything to be elected), not someone notably different from the elites he professes to loathe — merely a man who knows how to blab with the purest, most bald-faced confidence ever seen on a national stage.

In one way, Trump’s presidential run is about an outsider group revolting against the status quo, the way that fringey, quixotic campaigns like Pat Buchanan, Dennis Kucinich, or Ron Paul’s were. And some libertarians and paleocons have jumped on the Trump float, but it is clearly not their parade. The cause of Trump is not small government or social democracy or even Catholic populism.

It is Charlie Sheen-esque nationalism. It is strident whining confused for truth-telling. It is nonsense mercantilist ideas, bullying as public policy, and the worst anti-immigrant scapegoating in decades. However, there are no ideas here: it’s merely a billionaire playing that he’s angry about Mexicans and rallying swarms to his meaningless sort of “patriotism.”

Whether Trump was inevitable, or whether he simply speaks to the truly mediocre 2016 candidates is uncertain. But boy is it frustrating that the man who wants to raze DC is the one who wants to erect a statue of himself in its place. He tells it like it is, he knows politicians don’t work for the people! But he’s going to wave his hands and make a Mexico wall and 18th-century trade policy appear by incantation.

Back in September, the New Yorker wrote that “Trump … is playing the game of anti-politics.” We should be so lucky. Trump is merely politics distilled down to the size of one angry rich guy. On the campaign trail, would-be officials swear they can do anything and everything (and in the first 100 days, no less). Trump is bolder, brasher, and even more divorced from reality. But he’s still essentially that. The waking reality of the presumptive GOP nominee — who disses Dick Cheney, Hillary Clinton, and both party establishments — is that he is, heart and soul, a consummate politician.

His critique of the political class is not that they meddle too heavily in the lives of individuals, but that they haven’t done enough. If they had, wouldn’t we have a 50-foot wall on the southern border? Wouldn’t all those manufacturing jobs come back from China? For Trump and his supporters, the problem with Washington is not the inherent disaster of a massive bureaucracy with no consequences for failure and a surplus of corrupting power. No, it’s lack of strident, Trump-like spirit: a lack of will.

In spite of his twitches towards a less militaristic foreign policy — in between suggesting the United States rip up the Geneva Conventions, bomb the hell out of Syria, and seize Iraq’s oil — there is nothing really consistent about Trump. He may or may not be worse in practice than the status quo, but there is no reason to suspect that he is the savior of anything except his own ego. Indeed, his view that the government is incompetent due to bad managers sounds more like progressive technocracy than anything conservative. But somehow his screaming fans have gotten their signals crossed or, more grimly, they are as disinterested in small government as he is.

Hating DC is fun, but it doesn’t magically translate to supporting liberty. And populism is a not principle — it has no policies, feasible or otherwise. It is raw emotion. It is preaching. It is the flimflam, finger-pointing, and impossible promises of traditional assembly-line politics, just stripped down to bare parts. Trump is the schoolyard version of everything Marco Rubio or Bill Kristol advocates. He isn’t flattering anyone’s intelligence with his policy acumen. He doesn’t think we’re terribly smart, but he also thinks those fancy pants DC elites are not as smart as they pretend. He’s right about all of that. It’s not as if politics is noble or deserves better than Trump. It is Trump.

The Donald is not some demon summoned from another dimension to destroy America. He probably isn’t a new Hitler or Mussolini. He is a part of us, a glitzy, gilded reflection of the dark soul of politics: the lies, the self-promotion, and the delusion. Take a good, long look.

Lucy Steigerwald is a contributing editor to Antiwar.com and a contributor to Playboy; she previously worked as an Associate Editor for Reason magazine. Her articles have appeared at Playboy, Vice, Antiwar, Reason, Pittsburgh City Paper, the Pittsburgh Tribune-Review, and various libertarian blogs.

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

Public Education Is Superior and Must Be Protected from Competition – Article by Kevin Currie-Knight

Public Education Is Superior and Must Be Protected from Competition – Article by Kevin Currie-Knight

The New Renaissance HatKevin Currie-Knight
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Opponents of School Choice Can’t Make Up Their Minds

Defenders of public education often point to data showing public schools to be as good as or better than private alternatives. A recent book celebrating such data is The Public School Advantage: Why Public Schools Outperform Private Schools.

Public schools, according to the authors, tend to outperform private rivals on a variety of metrics. Such groups as the National Education Association teachers’ union have used this research to make a case against “privatization.” (The book’s research has been criticized in some quarters for using flawed research methods, and other data show that private schools tend to outperform public ones.)

But when school choice proposals make legislative headway and threaten public school systems, this confidence seems to evaporate. People start fulminating about how school choice programs would effectively crush the public education system.

If competition from private education would doom public schools, then how confident can the public system’s proponents really be about the schools they’re defending? And if public education really is superior to private alternatives, why worry that people would prefer private schools if given a choice?

Spotting the Monopoly
Imagine that I am a spokesperson for the dominant car dealership in your area, and you’ve been hearing good things about a rival dealership. Not to worry, I convince you: our cars outperform theirs on a variety of metrics.

Now, imagine that that rival car company is about ready to open up a dealership down the street, and you hear me petition to the legislature not to allow it: “Permitting this other dealership to move in will surely spell the death of our company. Once people are allowed another option, it is only a matter of time before our profits dwindle to the point where we can’t sustain our business.”

“Wait,” you say, “I thought you just told me how confident you were in the superiority of your cars. Surely, if you are that confident, you wouldn’t be so worried about competition!”

You’d be right. And this situation is basically the one we are in regarding American public schools. Proponents point to data showing that, on several metrics, public schools fare no worse and sometimes better than private schools. Yet, when local governments entertain school choice programs, the public system’s defenders suggest that competition will spell the death of public schooling.

Either you’re confident that your product is the best choice or you’re not.

The Sky Is Falling!
Indiana, for instance, is entertaining two bills (House Bill 1311 and Senate Bill 397) that would allow students in the state to use money that would have been spent on their public education to receive private educational services. The Indiana State Teacher’s Association website declares that this change would “be a major blow to public schools.”

We see a similar lack of confidence in reactions to Arizona’s recent attempt to open up a very targeted voucher program to all students by 2018. “This is the end of public education in Arizona,” laments state senator Steve Farley.

Perhaps the fear mongering is just about rallying the troops. Maybe public school defenders know their product is superior but want to motivate their base with “the sky is falling” rhetoric.

But notice that such declarations about the “end of public school” share school choice advocates’ basic assumption: given the option, consumers will leave the public schools to the point where public schools need to be concerned for their financial viability.

Superior or Not — Which Is It?
Let’s go back to the example of the fictional car dealership. When shopping for a car, you certainly care what the research says on the cars you’re looking at. But would you be content if the car dealer told you, “You don’t need to look into that other car manufacturer. I assure you, lots of studies show that our cars are better than theirs on a variety of metrics”?

My guess is that you’d keep the claim in mind but look at the other dealer’s cars anyway. Yes, you want the best car, but you also want the flexibility to decide which car is best for you.

When you then hear the car manufacturer’s lobbyists worrying to the legislature that allowing competitors into your area would surely spell the death of their employer’s company, it seems like cause for concern. The most plausible explanation — which the car manufacturer would never admit — is that they really are worried that consumers would prefer the competitors if given a choice.

When a car dealership, a school system or anyone else believes that competition will destroy their business, you can assume they aren’t confident about what they’re selling and wonder if their product or service is inferior.

Public school proponents can’t have it both ways. Under school choice programs like the ones Indiana and Arizona are considering, public schools will compete for funding with private educational services. Students who choose public schools will send their “tuition” money to their chosen public school. Therefore, the only way these choice programs could kill public schooling is if families en masse choose, and continue to choose, to direct public dollars away from the government’s school system and into private schools.

And if that’s what parents prefer for their children, then why shouldn’t they have that choice?

Kevin Currie-Knight teaches in East Carolina University’s Department of Special Education, Foundations, and Research. His website is KevinCK.net. He is a member of the FEE Faculty Network.

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

Will Trump Boycott Grocery Stores for Their Unfair Trade? – Article by Edward Hudgins

Will Trump Boycott Grocery Stores for Their Unfair Trade? – Article by Edward Hudgins

The New Renaissance HatEdward Hudgins
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Donald Trump’s stump thump against Mexico is that it runs a $58 billion annual trade surplus with the United States. Trump somehow thinks this leaves America the poorer.

He claims that it is out of that money, presumably sitting in some giant vault in Tijuana, that Mexico will pay for the border fence he wants to build to keep immigrants from entering the United States illegally. Trump’s pronouncements only demonstrate how he keeps facts and reason from entering his thoughts and, how he would keep Americans from making their own free choices in a free market.

International free trade is win-win
Trump’s very language reveals a glaring error concerning trade. Mexico and America do not trade. Mexicans and Americans do. Mexicans have $58 billion more in cash (pieces of paper with George Washington’s picture on them or the equivalent credits on bank ledgers) and Americans have $58 billion more in goods (electrical equipment, Trump-themed apparel).

And Trump doesn’t bother to ask, what are those Mexicans supposed to do with those pieces of paper? If they don’t spend them in America, they’ve got nothing but useless paper. So the Mexican trade surplus also means that Mexicans are investing an equivalent amount in America, helping the U.S. economy grow.

Further, the fundamental nature of trade between individuals is a win-win situation. Someone who buys an orange Donald hat for $20 to show his support for the former host of “The Apprentice” values the hat more than the twenty. And the manufacturer in Mexico who has a warehouse full of said head gear prefers the $20.

If The Donald slaps a 30% tariff on all goods coming from Mexico, maybe his starry-eyed supporters would shell out $26, the higher cost of the hat. But a poor mother with five kids seeing the price of a pair of shoes jump from $20 to $26 might be hard-pressed to afford the extra $30 she’d need to cover the feet of all her five little ones. But Trump doesn’t care. He wants to get rid of that pesky trade imbalance and what better way than to discourage that mom from buying Mexican-made shoes for her family! On the other hand, maybe he will notice when Mexican investors pull out of his latest golf resort or skyscraper projects, because his policies have destroyed their profits.

Trump’s grocery store trade deficit
If Trump is so against trade deficits, he should have a serious problem in his own household. Trump no doubt runs a huge trade deficit with his grocery store. He gives them piles of money when he buys food—no doubt top-priced cuisine—but the store never buys anything from him. Maybe he should boycott it. Maybe we should all boycott our local grocery stores lest we be victims of a trade deficit. Maybe if elected president, Trump will slap a 30 percent “grocery tariff” on everything that those stores try to sell to us poor, exploited schleps until those stores start purchasing stuff from us.

Trumps versus liberty
Trump poses as a friend of the people, but he wants to use government to prohibit the Americans from purchasing goods from whomever they wish—including Mexicans. The Donald presumes to know better what individual Americans should buy with their own money and at what price than they do. He’s determined to drive up the prices for Americans buying from Mexicans to teach those Mexicans a lesson. So what if American consumers and businesspeople are collateral damage.

Trump’s policies would only add more instability to an already unstable world. Ayn Rand explained that “The essence of capitalism’s foreign policy is free trade—i.e., the abolition of trade barriers… the opening of the world’s trade routes to free international exchange and competition among the private citizens of all countries dealing directly with one another. During the nineteenth century, it was free trade that liberated the world, undercutting and wrecking the remnants of feudalism and the statist tyranny of absolute monarchies.”

When governments take away the liberty of individuals to pursue their self-interest by trading freely with other individuals—a win-win situation—they set the stage for conflicts and even wars between countries. Trump’s proposed trade war is really a war on the American people.

Dr. Edward Hudgins directs advocacy and is a senior scholar for The Atlas Society, the center for Objectivism in Washington, D.C.

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

Star Wars: Intellectual Property Strikes Back – Article by Matthew McCaffrey

Star Wars: Intellectual Property Strikes Back – Article by Matthew McCaffrey

The New Renaissance HatMatthew McCaffrey
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IP Deflates the Expanded Universe

Star Wars: The Force Awakens is already one of the most successful films of all time, and the Star Wars franchise is poised to grow at .5 past light speed for the foreseeable future. Yet, while Disney rapidly develops new chapters for the saga, it’s also quietly deleting some old ones: in 2014, Lucasfilm announced that to make way for the new films, the Star Wars Expanded Universe (or EU) would no longer be considered canon, a decision that disappointed many longtime fans.

The EU refers to the vast number of novels, short stories, comics, and games that explore the Star Wars universe outside the major films. These works enjoy an enormous following but are now consigned to a kind of alternate universe called Star Wars Legends. In other words, they will be disregarded by Lucasfilm’s officially licensed material, and any new Star Wars stories will have to fit the new canon. The original EU is discontinued, which understandably has fans feeling abandoned.

Why should the EU pose a problem, though? Why can’t artists and fans simply continue developing the canon they love, while Lucasfilm does the same? The answer is simple: intellectual property law.

Disney’s ownership of Lucasfilm allows it to license the Star Wars brand and all related intellectual property rights, especially its copyrights and trademarks. Anyone adding to the universe can only do so with permission, giving Lucasfilm power over any content within the universe or even similar to it.

In fact, Lucasfilm has a long history of aggressively litigating its IP, suing everyone from small businesses to major corporations. One of the most infamous cases was brought against the original Battlestar Galactica TV series, which was accused of copying at least 34 distinct ideas from Star Wars. These included such astonishingly original concepts as a friendly robot, an imprisoned heroine, and a movie ending with an awards ceremony.

Returning to the EU, it does make some artistic and financial sense for Disney to steer the franchise in a new direction by discontinuing older content. At the same time, artists and fans want to enjoy the EU they already know and love, something Lucasfilm legally prohibits by enforcing its IP.

My point is not that one stream of content is objectively better, but that it’s vital for all involved to freely choose the kind of content they want to create and sell. By increasing costs to both consumers and innovators, IP has already played a role in the decline of art forms like classical music, and copyrights and trademarks have similar effects in the world of pop art.

For Star Wars, original content mainly revolves around trademark rights, of which Lucasfilm owns many. Its usual defense of these properties is that unlicensed content causes confusion: without legally enforceable restrictions, consumers might think they’re buying “genuine” products when they’re actually getting cheap imitations. Furthermore, products similar to those created by Lucasfilm might be used to earn profits for noncreators who capitalize on confusion. A licensing deal from the original source ensures people won’t be taken in by unskilled or unscrupulous artists.

Assuming this is the real motivation for trademark protection, the argument is still weak. Like many consumer-oriented regulations, trademark law is patronizing: its basic assumption is that people are too dim to distinguish between official products and knockoffs or other free riders on the brand. But consumers, especially the kind of devoted fans Star Wars inspires, are perfectly capable of figuring out for themselves which content they prefer. The real issue boils down to revenue: Lucasfilm doesn’t want other businesses profiting from ideas it “owns,” and it’s perfectly happy to use monopoly privileges to protect its bottom line.

But Lucasfilm doesn’t need to litigate its trademarks to preserve profits or brand identity, which would likely be stronger in the long run without IP. For example, without trademarks, Lucasfilm would continue to officially sanction content it approves of and let consumers know which works are not “official.” If fans respect its judgment, the official Star Wars brand would thrive as people adopted Lucasfilm’s endorsement as a benchmark for quality and narrative continuity.

Competition for fan loyalty would drive official and unofficial creators alike to produce high-quality content. Different groups of creators would specialize in their own alternate universes that would succeed or fail based on their ability to satisfy fans. This would also eliminate the uncertainty surrounding fan fiction, which exists in the complex gray area of “fair use” laws. Most importantly, we’d all be able to decide for ourselves which works we treat as canon and which we abandon to the garbage masher of history.

The only truly expanded universe — one that’s creative, innovative, and prosperous — is one without IP protectionism. When we embrace genuine competition in ideas instead of competition through legal privilege, then, as Obi-Wan Kenobi would say, we’ve “taken a first step into a larger world.”

Matthew McCaffrey is assistant professor of enterprise at the University of Manchester and editor of Libertarian Papers.

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

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

The New Renaissance HatDaniel Bier
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A Vesuvius of Tribalism and Economic Illiteracy

At Sunday’s Democratic presidential debate, Bernie Sanders attacked American trade with Mexicans, Chinese, Vietnamese, and presumably all other foreigners who might try to steal our jobs. Sanders harangued Hillary Clinton,

NAFTA, supported by the Secretary, cost us 800,000 jobs nationwide, tens of thousands of jobs in the Midwest. Permanent normal trade relations with China cost us millions of jobs.

Look, I was on a picket line in early 1990’s against NAFTA because you didn’t need a PhD in economics to understand that American workers should not be forced to compete against people in Mexico making 25 cents an hour.

… And the reason that I was one of the first, not one of the last to be in opposition to the TPP is that American workers … should not be forced to compete against people in Vietnam today making a minimum wage of $0.65 an hour.

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

First, let’s note his dodgy job numbers. As Dan Griswold noted in 2011, in response to a similar claim about jobs “lost” from the “trade deficit” with Mexico,

In the first five years after NAFTA’s passage, 1994-98, when we could have expected it to have the most impact, the U.S. economy ADDED a net 15 million new jobs, including 700,000 manufacturing jobs.

Behold, the horror unleashed on US manufacturing jobs by trade with Mexico:nafta-manufacturing

In fact, since NAFTA went into effect in 1994, total US employment has increased by 28 million jobs. Even if we buy the dubious claim that NAFTA “cost us 800,000 jobs” over the last 22 years, this amounts just 36,000 jobs a year.

As Griswold noted, even in good times, 300,000 Americans file for unemployment each week. The US economy creates and destroys more than 15 million jobs every year. This alleged displacement amounts to less than one day’s worth of job losses.

It’s true that, in the long-run, manufacturing jobs have been in decline in the United States. But this is not because manufacturing is in decline. The myth (promoted by the other nationalist blowhard in the race) that United States “doesn’t make stuff anymore” is not just wrong — it couldn’t be further from the truth.

Real US manufacturing output is the highest it has ever been. Simply put, the US makes more stuff than ever.

manufacturing-indexHow can this be? Because manufacturing productivity — the amount of value added per hour worked — has gone up dramatically in recent decades. Manufacturing employment is declining because of automation; a US factory worker today can add a lot more value per hour than one in 1970.

manufacturing-employees-output-per-hour

It’s simply not true that trade devastated the US economy and wiped out millions of jobs. Employment has shifted within the US economy, out of industry into service jobs, and manufacturing has shifted around the globe, aligning production with the comparative advantages of each country’s labor and capital markets.

The resentment stoked by nationalists like Trump and Sanders is based on a nonsensical proposition, a mirage of high-paying blue collar jobs stolen by conniving foreigners, which we could reclaim if only we had the will to wage a trade war.

But the machines and global production chains are here to stay, and the jobs being done in Vietnam and China for fifty cents an hour are on the extreme low end of the value-added chain — which should be obvious, when you think about it, since they pay so little. (On the back of every iPhone is a short economics lesson on this point: “Designed by Apple in California. Assembled in China.”)

Do we really want to “bring those jobs back”? Do we envision a future where the American middle class is sewing textiles in sweatshops for a dollar an hour? Of course not. Americans today likely wouldn’t do those jobs at any wage, but especially not at the wages paid to low-skilled workers in developing Asian and Latin American countries. Those jobs only exist at those wages; at higher wages, they are scarcer, higher-skilled, and more capital intensive.

True, we could make t-shirts and Happy Meal toys in the United States, but we’d be doing it with far, far fewer workers and a lot more capital. Instead of 30 workers at fifty cents an hour, it’d be one person with a machine for $20 an hour.

The real difference would be that everyone would be poorer as a result: consumers paying higher prices, foreigners working in worse conditions and for less money, and American resources being diverted away from where they are most productive.

This is where economic ignorance stops being morally neutral and becomes a real threat to the life and well-being of the poor, especially in the developing world.

Not content to merely keep Mexicans from working in the United States (where, thanks to US capital and infrastructure, they could earn three or four times more than they make in Mexico), Bernie Sanders now objects to the right of Mexicans to work in Mexico, if they dare to sell goods and services to Americans — or, God forbid, try to compete with American firms.

For a champion of the poor like Sanders, there’s a double irony here, in that poor Americans are already much wealthier than poor Mexicans, and that tariffs also make goods more expensive for native consumers, disproportionately hurting the poorest Americans. Not only are poor Mexicans made worse off, by losing access to the US market and thus losing jobs, but poor Americans are also made worse off by having less disposable income, which is thus not spent elsewhere in the economy to sustain other American jobs.

And this is just the first order effects of closing off trade with Mexico. When the Mexican government inevitably retaliates, US exports to Mexico (which totaled $236 billion in 2015) will also be devastated and more jobs will be lost. And of course, simply multiply this orders of magnitude for China, Vietnam, and every other country on the nationalistic hit list.

Who gains from this? In the long run, nobody, which is why (after decades of gradual reform) we finally got relatively free trade with our closest neighbors, signed into law by a liberal Democrat. But in the short run, a few US corporations and labor unions would benefit from trade tariffs — at the expense of both poor foreigners and poor Americans as a whole.

(For those keeping score, this makes it an ironic hat trick for Sanders, whose tirades against free trade and open borders are laced with fear-mongering about “corporations.”)

Finally, let us ponder Sanders’ Alice-in-Wonderland solution to the imagined ills of free trade:

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

Did I say Alice in Wonderland? I meant Atlas Shrugged. Ayn Rand was justly accused of having unbelievable, one-dimensional stereotypes, but sadly, American politics seems to have the same problem.

It’s anyone’s guess how Sanders imagines he could force factories not to close and order companies to stay in the United States, but the “you can’t shut down” solution is almost directly lifted from “Directive 10-289,” the order that Rand’s antagonists use to try to “stabilize” the economy:

All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment… All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation…

Faced with economic decline, the government believed that the only option was to stop the decline, rather allowing people to go where they choose, buy what they choose, and make what they choose. “What it comes down to is that we can manage to exist as and where we are, but we can’t afford to move!” archvillain Wesley Mouch exclaims. “So we’ve got to stand still… We’ve got to make those bastards stand still!”

When Rand first published this in 1957, this was hyperbole about the fear of change, the reductio ad absurdum of the argument for keeping things as they are. Now, it’s an applause line for mainstream presidential candidates.

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

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

Free Trade Is the Path to Prosperity – Article by Georgi Vuldzhev

Free Trade Is the Path to Prosperity – Article by Georgi Vuldzhev

The New Renaissance HatGeorgi Vuldzhev
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The political circus of the 2016 presidential election has revived and reinvigorated popular belief in age-old protectionist fallacies. Currently Donald Trump and Bernie Sanders are both in favor of expanding protectionist trade policy, with both of them arguing that free trade “destroys” jobs and hurts domestic workers and producers by exposing them to foreign competition. Both candidates espouse an utterly misguided zero-sum view of economics, in which one side to an exchange wins only when the other side loses. Both men are, of course, completely wrong.

Free Trade Does Not Destroy Jobs

It is true that greater competition between domestic and foreign workers can lead to a decline in wage rates and possibly unemployment in some sectors of the economy. But this is only a short-term effect. Free competition between foreign and domestic producers also naturally leads to lower prices for the goods and services which can now be freely imported from abroad. So, while nominal wage rates are pushed down in some sectors, real wage rates rise overall for everyone in the economy because of the decline in prices.

Thanks to free trade consumers spend less money on certain goods and services and this allows them to spend more money on others, which leads to rising demand and thus profits in the sectors providing the latter, and consequently leads also to more investment by entrepreneurs. This higher rate of investment naturally leads to the creation of more jobs in these sectors and thus offsets any original rise in unemployment that might have occurred.

Alternatively, the consumers may choose to save the extra disposable income that was freed up by the decline in prices. This rise in the savings rate will lead to a decline in interest rates, which makes profitable certain long-term capital-intensive projects which were not profitable beforehand. Seizing the opportunity presented by this increase in savings, entrepreneurs will start borrowing and investing in those long-term capital intensive projects, which on its own already creates more jobs, but it also leads to a rise in demand for capital goods, which raises profits in the capital goods industries and consequently leads to more investment and job openings in those sectors.

Free Trade Is Win-Win

Free trade not only doesn’t “destroy” jobs, but it also promotes specialization between nations, which improves the efficiency and productivity of workers, and leads to a rise in living standards for all. Trade is not some kind of a zero-sum game in which if one side wins, the other has to lose.

When two countries such as the United States and China, for example, trade freely with one another, their citizens are incentivized to specialize in those lines of production in which they have a comparative advantage. Due to the difference in factors of production endowments it is best for different countries to specialize in producing those types of goods and services which they can produce most efficiently in comparative terms. A higher level of specialization, through the effect of economies of scale, makes production more cost-efficient.

By specializing in a certain line of production and then exchanging the goods and services produced for those that others are specialized in producing, the people of a given country can substantially raise their living standards because the gains in productivity are naturally followed by an increasing supply of goods and services and thus rising real incomes. This way free trade allows for the flourishing of what can be called an “international” division of labor. Just like a greater degree of division of labor can lead to big gains in productivity and thus real incomes on an intra-national (i.e., internal for a given country) level it can also do so on an international level.

Protectionism Makes You Poor

When international trade is restricted, for example, by protectionist legislation which places tariffs on certain imports, this process of specialization is hindered and thus the gains in productive efficiency are diminished. By artificially raising the price of imports, tariffs allow otherwise uncompetitive and inefficient domestic businesses to remain in operation. Consumers are forced to pay higher prices for the goods the importation of which is penalized by tariffs, and this effectively constitutes a redistribution of resources from the consumers to the domestic producers.

More importantly, protectionism hinders the process of specialization described in the previous section and thus prevents living standards from rising in the long-term, or worse — it can even lead to their decline. By propping up the profits of comparatively inefficient domestic producers and keeping in business, tariffs prevent the labor shift from those inefficient sectors, to more comparatively efficient ones. Consequently, because this prevents a higher degree of specialization from taking place, or even reverses it, the benefits that specialization leads to cannot be obtained. Productivity does not increase (or at least not to the same degree as it could) and thus real incomes do not rise.

Contrary to the popular political rhetoric nowadays, free trade does not “destroy jobs.” It can only lead to a shift of resources (labor, capital, and other factors) from one comparatively inefficient sector or group of sectors in the domestic economy to another more comparatively efficient one. This process of specialization in the comparatively advantageous lines of production not only does not destroy jobs, but it also enables big gains in efficiency and productivity to take place, which leads to a rise in real incomes. This is how, far from somehow hurting the domestic workers, free trade actually does the opposite — it makes them richer. It is, in fact, protectionism which makes us all poorer, workers included, by artificially propping up inefficient businesses, leading to a misallocation of resources and a decline in standards of living for us all.

Georgi Vuldzhev is a student and an intern at the Institute for Market Economics in Sofia, Bulgaria. He has written articles on economics and politics for the European Students for Liberty blog, where he is a regular contributor, and various Bulgarian publications. His main interests are Austrian economics and libertarian political theory.

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.

This Crazy 100-Year-Old Law Makes Almost Everything More Expensive – Article by George C. Leef

This Crazy 100-Year-Old Law Makes Almost Everything More Expensive – Article by George C. Leef

The New Renaissance HatGeorge C. Leef
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It’s time to repeal the absurd, costly “Jones Act”

The 2016 presidential campaign so far has featured almost no discussion of downsizing the federal government. Americans would benefit enormously if we could get rid of costly old laws that interfere with freedom and prosperity, and future generations would benefit even more.

I keep hoping that someone will manage to put this question squarely to the candidates in either party: “What laws would you seek to repeal if you were the president?”

There are so many laws that ought to be repealed, including countless special interest statutes that benefit a tiny group while imposing costs on a vastly greater number of Americans. But if candidates need an idea of where to start, one such law is the Merchant Marine Act of 1920, also called the “Jones Act.”

The Act requires that all shipments between American ports to be done exclusively on American ships. As Daniel Pearson explains,

Its stated purpose was to maintain a strong U.S. merchant marine industry. Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels.

The theory behind the law is musty, antiquated mercantilism — the notion that the nation will be stronger if we protect “our” industries against foreign competition.

Imagine how strong we would be if there had been a Jones Act for automobile transportation. Would Americans be better off today if the Detroit automakers had remained an oligopoly by keeping out all of those Hondas, BMWs, and Hyundais? Obviously not — yet this logic has handicapped US shipping for 96 years.

A recent op-ed in the Honolulu Star-Advertiser nicely explain the absurd consequences of this law. The writer just wants to buy a cabinet, but “although the cabinet was made in Taiwan, it could not be off-loaded in Hawaii, but rather had to be shipped to the West Coast, then loaded onto an American ship for the costly backward journey to Hawaii.” Tons of time, fuel, and expense wasted, all thanks to the Jones Act.

We get a more comprehensive view of its costs from a report by the Government Accountability Office (GAO) last September. The report, titled “International Food Assistance: Cargo Preference Increases Food Aid Shipping Costs,” shows the heavy cost of the law. The GAO, known for its non-partisan, straight-shooting approach, found that the Jones Act increased the cost of shipping food aid by 23 percent.

What does that mean? Between 2011 and 2014, the taxpayers had to fork over an extra $45 million to ship food for USAID. With Washington’s prodigious spending, we’ve gotten used to the idea that amounts under a billion are too small to bother with, but that is the wrong way to look at things. Even if we didn’t have a constantly increasing national debt, we ought to root out every needless federal expenditure.

Treading very delicately, the GAO states that, because the Jones Act “serves statutory policy goals,” Congress should merely tweak it so that aid agencies can find less costly shipping. But the federal government has no constitutional authority to be in the business of international aid, and carving out a special exemption for this would simply help the government avoid the consequences that it is inflicting on everyone else. Congress should simply repeal the protectionist law entirely.

The Jones Act also distorts our energy market and leads to higher prices than otherwise. Writing at The Federalist, trade attorney Scott Lincicome points out that, due to the law’s restrictions, only thirteen ships can legally move crude oil between US ports, and those ships are “booked solid.” As a result, shipping American crude from Texas to Philadelphia costs more than three times as much as it would cost to send it all the way to Canada on a foreign vessel.

One of the Act’s few congressional opponents is Arizona Senator John McCain, who pointed out in this testimony that Hawaiian cattlemen who want to sell livestock on the mainland “have actually resorted to flying the cattle on 747 jumbo jets to work around the restrictions of the Jones Act. Their only alternative is to ship the cattle to Canada because all livestock carriers in the world are foreign-owned.”

Hawaii is especially hard hit by the Jones Act, but other states and territories that depend heavily on water-borne shipping also suffer. Consider Puerto Rico: a 2012 study by the New York Fed found that it cost about $3,063 to ship a 20-foot container from an east coast US port to Puerto Rico, but shipping the same container to a foreign destination, such as Jamaica, would cost only about $1,687. Because it is an American territory, the poor island pays almost twice as much to import American products.

For nearly a century, we’ve paid more at the pump, more for goods, more in taxes, and even more to do charitable aid, all because of this ancient special interest law.

All that the Jones Act accomplishes is to guarantee a market for costly, unionized American shipping. It is similar in purpose to the Davis-Bacon Act, which guarantees a market for high-cost unionized construction (as I explain here).

Such special interest laws are never good for the country as a whole, but they are passed and maintained because their lobbyists are crafty, knowledgeable, and highly motivated, while the voting public is mostly ignorant.

It takes a spotlight and presidential leadership to get rid of them. Will any of this year’s crop take up the challenge?

George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

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

Mises on Protectionism and Immigration – Article by Matt McCaffrey

Mises on Protectionism and Immigration – Article by Matt McCaffrey

The New Renaissance HatMatt McCaffrey
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The economic causes and consequences of immigration are among the most important issues facing the world today. Both pro- and anti-immigration advocates are digging in their heels, and both sides look increasingly unlikely to relent. Despite the bleak outlook, however, there is still hope for a peaceful and charitable discussion of the economics of immigration.

With that in mind, I want to consider Mises’s thoughts on the topic. For Mises, emigration and immigration are motivated by a simple economic fact: the conditions of production are not the same in all places. Natural and human conditions change constantly, and as a result, the productivity of land, labor, and capital do so as well. Therefore in order to take advantage of changing conditions and produce in the most productive ways possible, people must constantly migrate to those places where their contributions are most valuable (1919, pp. 84–85).

The desire to move from low-productivity to high-productivity regions is for Mises the fundamental explanation for the migration of peoples, and limits overpopulation (1919, p. 85). We can say a country is relatively overpopulated when the same amount of capital and labor is less productive there than in another nation. Reducing overpopulation means reducing this “disproportion” by allowing for the mobility of persons and goods (1919, p. 86). In Mises’s view, mobility was an achievement of liberalism:

The principles of freedom, which have gradually been gaining ground everywhere since the eighteenth century, gave people freedom of movement. … Now, however — as a result of a historical process of the past — the earth is divided up among nations. Each nation possesses definite territories that are inhabited exclusively or predominantly by its own members. Only a part of these territories has just that population which … it would also have under complete freedom of movement, so that neither an inflow or an outflow of people would take place. The remaining territories are settled in such a way that under complete freedom of movement they would have either to give up or to gain population. Migrations thus bring members of some nations into the territories of other nations. That gives rise to particularly characteristic conflicts between peoples. (1919, pp. 86–87)

Mises has two types of conflict in mind: economic and social. Economic conflict occurs because domestic workers resent that fact that immigration bids down their wages:

[I]n territories of immigration, immigration depresses the wage rate. That is a necessary side effect of migration of workers and not, say, as Social Democratic doctrine wants to have believed, an accidental consequence of the fact that the emigrants stem from territories of low culture and low wages. (1919, p. 87)

Social conflict can also arise. Mises emphasized, however, that in most cases immigrants are obliged to give up their national identity and adapt themselves to the culture of their new home. Only in relatively extreme cases, such as European imperialism, was it historically possible for immigrants to replace original inhabitants and their cultures (1919, p. 89). In fact, according to Mises, strong cultures need not resort to government in order to protect themselves:

A nation that believes in itself and its future, a nation that means to stress the sure feeling that its members are bound to one another not merely by accident of birth but also by the common possession of a culture that is valuable above all to each of them, would necessarily be able to remain unperturbed when it saw individual persons shift to other nations. A people conscious of its own worth would refrain from forcibly detaining those who wanted to move away and from forcibly incorporating into the national community those who were not joining it of their own free will. To let the attractive force of its own culture prove itself in free competition with other peoples — that alone is worthy of a proud nation, that alone would be true national and cultural policy. The means of power and of political rule were in no way necessary for that. (1919, pp. 103–04)

However, for Mises, cultural considerations are mainly an aside. In general, he saw conflicts over immigration as being driven mostly by protectionism rather than insurmountable differences in human beings or cultures (1935). In particular, domestic unions support government policies to restrict immigration and thus keep low-wage competition out of the labor market:

Public opinion has been led astray by the smoke-screen laid down by Marxist ideology which would have people believe that the union-organized “proletariat of all lands” have the same interests and that only entrepreneurs and capitalists are nationalistic. The hard fact of the matter — namely that the unions in all those countries which have more favorable conditions of production, relatively fewer workers and thus higher wages, seek to prevent an influx of workers from less favored lands—has been passed over in silence. (1935)

As Per Bylund notes, this is precisely what is happening in Sweden, where unions prevent the integration of immigrants so as to keep wages high. Protectionism at home also breeds protectionism abroad, as foreign nations try to cope with lower productivity through their own regulations designed to counter “unfair” competition on the world market. As economic conditions worsen in those countries where migration is prevented by the state, conflict becomes inevitable:

[People in these countries] will certainly still have just as much cause to complain as before — not over the unequal distribution of raw materials, but over the erection of migration barriers around the lands with more favorable conditions of production. And it may be that one day they will reach the conclusion that only weapons can change this unsatisfactory situation. Thus, we may face a great coalition of the lands of would-be emigrants standing in opposition to the lands that erect barricades to shut out would-be immigrants. … Without the reestablishment of freedom of migration throughout the world, there can be no lasting peace. (1935)

In this way, protectionist policies inevitably lead to conflict and the destruction of human life and welfare. In fact, Mises even hints that government policies aiming to control the movement and employment of individuals suffer from the same problems socialist central planning does (1919, p. 85). At the same time, entrepreneurship and the division of labor are the foundations of a rational social order, and neither is possible without free labor markets.

The main threat facing society then is illiberal ideology, and the only solution to this “principle of violence” is to develop a consistent liberal philosophy to serve as the basis for a peaceful society (1951, p. 49).

Mises believed that any society that rejected the values of liberalism was doomed. In an age of nationalism, protectionism, and war, it’s easy to see what he meant.

Matt McCaffrey is assistant professor of enterprise at the University of Manchester.

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.