This post was published at George Gammon
The reproach of individualism is commonly leveled against economics on the basis of an alleged irreconcilable conflict between the interests of society and those of the individual.
Classical and subjectivist economics, it is said, give an undue priority to the interests of the individual over those of society and generally contend, in conscious denial of the facts, that a harmony of interests prevails between them. It would be the task of genuine science to show that the whole is superior to the parts and that the individual has to subordinate himself to, and conduct himself for, the benefit of society and to sacrifice his selfish private interests to the common good.
In the eyes of those who hold this point of view society must appear as a means designed by Providence to attain ends that are hidden from us. The individual must bow to the will of Providence and must sacrifice his own interests so that its will may be done. His greatest duty is obedience. He must subordinate himself to the leaders and live just as they command.
This post was published at Ludwig von Mises Institute on 12/30/2017.
In most cultures, profit is seen as the outcome of exploitation of some individuals by some other individuals.
Hence, anyone who is seen as striving to make profits is regarded as bad news and the enemy of society and must be stopped in time from inflicting damage.
Profit however, has nothing to do with exploitation – it is about the most efficient use of real funding or real savings.
Profit as such should be seen as an indicator as it were, with respect to whether real savings are employed in the best possible way, as far as promoting people’s life and wellbeing is concerned.
If the employment of real savings results in the expansion of the pool of real savings, this could be seen as indicative that this employment was done in a profitable manner.
Conversely, if there is a decline in the pool of real savings as a result of the particular actions of individuals then this could be seen as indicative of a loss. These actions caused the squandering of real savings.
Obviously, an expansion in the pool of real savings, which is the heart of economic growth and is manifested through profits, should be regarded as the key factor for raising individuals’ living standards.
Rather than being condemned, individuals that are instrumental in the expansion of the pool of real wealth, which is manifested in terms of profits, should be praised.
This post was published at Ludwig von Mises Institute on Dec 27, 2017.
“While everyone enjoys an economic party the long-term costs of a bubble to the economy and society are potentially great. They include a reduction in the long-term saving rate, a seemingly random distribution of wealth, and the diversion of financial human capital into the acquisition of wealth.
As in the United States in the late 1920s and Japan in the late 1980s, the case for a central bank ultimately to burst that bubble becomes overwhelming. I think it is far better that we do so while the bubble still resembles surface froth and before the bubble carries the economy to stratospheric heights. Whenever we do it, it is going to be painful, however.’
Larry Lindsey, Federal Reserve Governor, September 24, 1996 FOMC Minutes
‘I recognise that there is a stock market bubble problem at this point, and I agree with Governor Lindsey that this is a problem that we should keep an eye on…. We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it.’
Alan Greenspan, September 24, 1996 FOMC Minutes
“Where a bubble becomes so large as to pose a threat the entire economic system, the central bank may appropriately decide to use monetary policy to counteract a bubble, notwithstanding the effects that monetary tightening might have elsewhere in the economy.
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financi
This post was published at Jesses Crossroads Cafe on 27 DECEMBER 2017.
Whether it’s for cheap steel or cheap tires, Americans are supposed to be afraid of trade with China because it provides us with products we want at low prices. But to the damage allegedly inflicted on our economy by those who would save us money, must we now add…artificial Christmas trees?
According to a November 27 story in Breitbart News, Chinese companies dominate the domestic market, and their fake trees are ‘driving’ Christmas tree-growers in Oregon out of business. The number of fake trees sold in the U. S. ‘more than doubled’ from 2010 to 2016 (my wife and I contributed to that statistic, purchasing our beloved tree in 2014) while the number of Christmas trees cut and sold dropped by twenty-six percent. The number of ‘active growers’ dropped by thirty percent. All of which is supposed to alarm us.
There’s no reason to be concerned. Demand for real trees is declining in favor of artificial trees because more consumers prefer their convenience, quality, and price. Breitbart claims this is a ‘vicious cycle,’ but it’s just a reflection of consumer desire.
Consumers in the U. S. are buying fake trees because they are cheaper, and because they believe fake trees to be healthier and safer. In a market economy we each decide to the best of our ability which products and services we require; that’s an important part of life in a free society. Oregon tree-growers will suffer the ill-effects of this trend, but players in the market voluntarily take that risk (for which they rightly deserve any reward). Consumers save money, which can then be spent on other things we desire, and our homes have fewer allergens. Perhaps even fewer fires.
This post was published at Ludwig von Mises Institute on December 26, 2017.
At the heart of the Christmas story rests some important lessons concerning free enterprise, government, and the role of wealth in society.
Let’s begin with one of the most famous phrases: ‘There’s no room at the inn.’ This phrase is often invoked as if it were a cruel and heartless dismissal of the tired travelers Joseph and Mary. Many renditions of the story conjure up images of the couple going from inn to inn only to have the owner barking at them to go away and slamming the door.
In fact, the inns were full to overflowing in the entire Holy Land because of the Roman emperor’s decree that everyone be counted and taxed. Inns are private businesses, and customers are their lifeblood. There would have been no reason to turn away this man of royal lineage and his beautiful, expecting bride. In any case, the second chapter of St. Luke doesn’t say that they were continually rejected at place after place. It tells of the charity of a single inn owner, perhaps the first person they encountered, who, after all, was a businessman. His inn was full, but he offered them what he had: the stable. There is no mention that the innkeeper charged the couple even one copper coin, though given his rights as a property owner, he certainly could have.
This post was published at Mises Canada on DECEMBER 25, 2017.
As the homeless crisis on America’s West Coast forces many cities to the financial brink, one innovative animal shelter in San Francisco is using a low cost, high-tech robot security guard to shoo away the homeless outside its facilities, the San Francisco Business Times reported.
The San Francisco branch of the SPCA (the Society for the Prevention of Cruelty to Animals) contracted Knightscope to provide a k5 robot (the same model which in July commited suicide at a mall fountain) for securing the outdoor spaces of the animal shelter. Knightscope’s business model allows the SPCA to rent the robot for around $7 an hour, which is about $3 less than the minimum wage in California. According to San Francisco Business Times, the robot was deployed as a ‘way to try dealing with the growing number of needles, car break-ins and crime that seemed to emanate from nearby tent encampments of homeless people.
This post was published at Zero Hedge on Dec 14, 2017.
Until now, Canada’s soaring housing prices were just another innocent asset bubble spawned by low interest rates and an endless supply of Chinese cash that needed to get laundered. That said, massive bubbles are almost always followed by severe unintended consequences that can have a crippling impact on society as a whole…and in Toronto those unintended consequences are now manifesting themselves in the form of a rapidly deteriorating supply of strip clubs.
As Bloomberg points out today, the soaring value of Toronto real estate has made it all but impossible for strip club owners to turn down multi-million offers from condo developers leaving only a dozen strip clubs in a city whose purple neon lights used to be easily visible from the distant fringes of our solar system.
Condos are killing the Toronto strip club. In a city that once had more than 60 bars with nude dancers, only a dozen remain, the rest replaced by condominiums, restaurants, and housewares stores. Demand for homes downtown and for the retailers that serve them is driving land prices to records, tempting owners of the clubs, most of which are family-run, to sell at a time when business is slowing.
‘Sometimes I feel like the last living dinosaur along Yonge Street,’ says Allen Cooper, the second-generation owner of the famous – or infamous – Zanzibar Tavern. The former divorce lawyer says he has been approached by at least 30 suitors for his property in the past few years but is holding out for a ‘blow my socks off’ offer. ‘I don’t know how many condos we’re going to get, but it seems like just a wall’ of them, Cooper says.
This post was published at Zero Hedge on Dec 12, 2017.
In a bombshell report that has rattled the food world, several former employees of restaurant impresario Ken Friedman shared chilling details of the sexual harassment and abuse they suffered at Friedman’s hands with the New York Times, describing the omerta that existed among staffers at his restaurant, who inevitably accepted the harassment as part of a job that offered many perks, including great pay and bonuses in the form of concert tickets and other in-demand items.
In addition to Friedman, the story also includes many lewd anecdotes of the egregiously inappropriate sexual misconduct perpetrated by renowned chef Mario Batali, who yesterday admitted that salacious depictions of his past behavior were accurate.
Together, the two men are possibly the most high-profile restaurateurs to be tarnished by the national reckoning with sexual harassment in the workplace that has effectively led many famous and powerful men in a range of industries to be expelled from polite society.
This post was published at Zero Hedge on Dec 12, 2017.
This critique reveals the unintended consequences of UBI.
Readers have been asking me what I thought of Universal Basic Income (UBI) as the solution to the systemic problem of jobs being replaced by automation. To answer this question, I realized I had to start by taking a fresh look at work and its role in human life and society. And since UBI is fundamentally a distribution of money, I also needed to take a fresh look at our system of money. That led to a radical critique of Universal Basic Income (UBI) and an outline for a much more sustainable and just system of money and work than we have now. To adequately explore these critical topics, I ended up writing a 50,000 word book, Money and Work Unchained. Universal Basic Income (UBI) is increasingly being held up as the solution to automation’s displacement of human labor. UBI combines two powerful incentives: self-interest (who couldn’t use an extra $1,000 per month) and an idealistic commitment to guaranteeing everyone material security and reducing the rising income inequality that threatens our social contract–a topic I’ve addressed many times over the past decade.
This post was published at Charles Hugh Smith on TUESDAY, DECEMBER 05, 2017.
Capitalism is a wondrous human institution for the mutual betterment for all in society. Yet, critics often insist that market systems enable sellers to take advantage of buyers, because those on the demand-side often lack the specialized knowledge that suppliers possess, thus, enabling a possible exaggerated misrepresentation of what is being offered for sale. What is missed is that market competition generates the incentives and opportunities to earn profits precisely by not misinforming or cheating the buyer.
A number of economists, among the most notable being the 2001 co-recipient of the Nobel Prize, Joseph Stiglitz, a professor of economics at Columbia University, have argued that market economies suffer from an inherent inefficiency and potential injustice due to the existence of ‘asymmetric information.’ A core element in his theory is that individuals in the marketplace do not all possess the same type or degree of knowledge concerning the goods and services being bought and sold.
Some people know things that others do not. This ‘privileged’ information can enable some to ‘exploit’ others. For instance, the producer and marketer is likely to know far more about a product’s qualities, features and characteristics that he is offering on the market than most of the buyers possibly interested in purchasing it.
This post was published at Ludwig von Mises Institute on 12/05/2017.
I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One Percent, or more precisely a fraction of the One Percent wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government.
The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year. The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950.
A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%.
This post was published at Paul Craig Roberts on December 4, 2017.
We like Iceland, we’ve never been there, but that doesn’t matter. Besides the outstanding natural beauty, Iceland, unlike the US, UK and practically everywhere else, holds bankers accountable. Last time we checked, 29 had been jailed. As we discussed, it also holds its leaders accountable (partially – see below) when they are complicit in exonerating convicted child rapists. Such an event brought down Iceland’s government in September.
Last week, it emerged that Prime Minister Bjarni Benediktsson knew of attempts by his father, Benedikt Sveinsson, to have the Ministry of Justice grant ‘restored honor’ to a convicted child rapist. Benediktsson kept this secret as the rapist, a friend of his father’s was essentially exonerated.
Restored honor is the controversial process by which convicted criminals can have their crimes expunged and return to society with all rights and privileges restored. It requires that the convicted person serve between two to five years of their sentence on their best behavior and that they have multiple letters of recommendation. Sveinsson provided one such letter.
This post was published at Zero Hedge on Dec 2, 2017.
Of all the disturbing side-effects of modern monetary policy, the worst might be the way artificially-low interest rates encourage small savers to take outsize risks. Now governments are starting to insist:
How Denmark Is Trying to Get Savers to Invest in Risky Assets
(Bloomberg) – In the country with the longest history of negative interest rates, an experiment is under way. The minister in charge of Denmark’s finance industry wants savers to shift some of the billions of kroner now in bank deposits over to riskier assets.
Danes have about 840 billion kroner ($135 billion) in bank deposits, the latest central bank figures show. Nykredit, the biggest Danish mortgage bank, estimates that number will continue to grow through the end of 2017, marking a record.
But those bank deposits pay no interest. Add the effect of inflation, and savers are actually losing money. For corporate clients, banks charge a fee to hold their deposits, making the loss even bigger.
This post was published at DollarCollapse on NOVEMBER 29, 2017.
In all of the talk about tax reform, nobody is considering the more fundamental problem facing America – the size and scope of the federal government.
Peter Schiff has described the Republican tax plan as ‘tax cuts masquerading as reform.’ When it’s all said and done, Americans aren’t going to get tax relief. They are going to get big government on a credit card. The balance will come due down the road.
The real issue is the total cost of government. In an article originally published on the Mises Wire, Ryan McMaken argues that if Republicans really want to ease the burden of government, they need to cut spending.
Washington, DC is currently in the middle of the ‘tax reform’ process, which as Jeff Deist, points out, is ‘ a con, and a shell game.’ Tax reform proposals, Deist continues ‘always evade and obscure the real issue, which is the total cost – financial, compliance, and human – taxes impose on society.’
Tax reform is really about which interest groups can modify the current tax code to better suit their own parochial interests. The end result is not a lessened tax burden overall, and thus does nothing to boost real savings, real wealth creation, or real economic growth. It’s just yet another government method of rewarding powerful groups while punishing the less powerful ones.
Not surprisingly then, the news that’s coming out of Washington about tax reform demonstrates that the reforms we’re seeing are only shifting around the tax burden without actually lessening it. The central scam at the heart of the matter is that DC politicians are more or less devoted to ‘revenue neutral’ tax reforms. That means if one group sees a tax cut, then another group will lose a deduction, or even see an actual increase in tax rates.
This is why many middle-class families may be looking at a higher tax bill. David Stockman explains:
This post was published at Schiffgold on NOVEMBER 28, 2017.
In a piece recently published at The American Conservative entitled ‘Americans, We Aren’t So Tough, and It Shows’ I discussed the way in which a confluence of factors such as the decay of the intermediary institutions of civil society and economic insecurity leads to individuals being vulnerable and anxious. This vulnerability, I argued, leads to political tribes seeking to control the power of the state in order to prevent its massive power from being used against them, with the end result being increasing civil strife over the institutions of political power. In order to try and reduce such conflict, I argued that power should be disbursed throughout society, rather than concentrated with the state, in part by the revitalization of the institutions of civil society.
While many online commentators agreed with the detrimental effects of the decline of civil society, a somewhat unexpected vein of criticism emerged, arguing that reducing the power of the government will only leave individuals even more vulnerable and at the mercy of powerful mega-corporations than ever before. Given the large role that economic insecurity plays in the anxiety that leads many people to look to political institutions for protection, it makes sense that the power of large corporations would be concerning. However, this fear is based on an incorrect conflation of political and economic power that misunderstands the way in which the state distorts the dispersion of market power.
This post was published at Ludwig von Mises Institute on November 27, 2017.