Mob Rule in Europe

Jonathan Hoenig's latest piece in Smart Money is well-worth reading. I particularly like this paragraph:

The conflicts are the inevitable consequences of entitlement spending and a society geared towards the “common good," not individual rights. Turns out the much-heralded “safety net” isn’t safe at all: When bureaucrats decide how long you work, what type of benefits you receive and which industries or sectors receive privileged treatment, the economy quickly turns into mob rule.

Steyn on Free Speech and Burning the Koran

I seldom agree with the deeper arguments and premises of Mark Steyn's work, but boy do I wish I could write half as well as he does! And this editorial, I submit, has one of the best titles ever.

Summer Reading

I enjoyed this article on a father and son reading Atlas Shrugged this summer. And the comments are so much more interesting and literate than anything over at CNN.

An Apt Analogy

I like this analogy from a crossfit journal article on the "nutrition wars". To me it's a good representation of what it means "to have reality on your side". There's no guarantee you'll win, and there's work to be done to publicize and explain your position, but at least you have a constant pressure working for you. (Another analogy would be that you have the wind at your back.)

We write here today in 2003 gloating. Gloating, because it is our perception that we are decisively winning the diet war. In the public square, the realization that carbs, not fat, make you sick and fat is spreading rapidly. Spreading like truth unobstructed. The position that carbohydrate is essentially toxic at common consumption levels was a truth suppressed by political and industrial corruption of science and journalism. Suppressing truth is like holding a beach ball under water; it takes constant work against a tireless resistance. They have slipped and our position sits like the beach ball on top of the water, where everyone can see it.

We interpret our position of being clearly visible, as winning the diet wars because our diet better models human nutrition and will always trump the opposition’s model if tested. Ours works, theirs doesn’t. Where theirs does work, ours works better. Their success required our being kept out of the marketplace. Underwater preferably.

By the way, the whole article is worth reading for an example of how a paradigm can change.

Individual Rights

I highly recommend this talk which Onk gave at UCLA last year. (He gave a second talk at that same conference which was also excellent, I assume it too will eventually be made available to the public.)

The Consequences of True Monopoly

Contrary to academics and politicians alike, there's no meaning to the term "monopoly" except when it's established by (government) force. That's the principle underlying this observation by the WSJ:

Government pension systems are inherently flawed because the politicians who bestow benefits upon state workers are the same politicians who seek votes and campaign contributions from the unions representing these workers. When it's time to negotiate the benefits, the politicians and unions are often sitting on the same side of the table, facing no one representing the taxpayers.

The Guilt Pledge

Watkins and Brook have another great editorial out at Forbes. I really like this paragraph, but be sure to read the whole thing:

But your wealth was not an undeserved gift. Every dollar in your bank account came from some individual who voluntarily gave it to you--who gave it to you in exchange for a product he judged to be more valuable than his dollar. You have no moral obligation to "give back," because you didn't take anything in the first place.

Hot Air Polls Objectivists

This is a very welcome development: a major political website is specifically asking Objectivists to weigh in on a topic. (I think though, that you have to be registered to comment.) I'm at a crossfit seminar this weekend, so don't have time to provide my thoughts, but I'll try to update this post at some time with at least an indication of my thinking.

How Socialism Destroys

While I disagree with most of his deeper analyses, this (way too) long piece on Greece by author Michael Lewis has some interesting observations. Most importantly it illustrates how the tenets of socialism literally make life in society impossible. As I'd noted in this piece it starts with everyone (and therefore no one) controlling property:

Yet achieving justice isn’t capitalism’s only virtue. It also fosters social harmony. To see this, contrast it to socialism where, perforce, we’re each concerned with every decision anyone else makes. The result is a nation of intruding, whining, Monday-morning quarterbacks. Did GM overspend on advertising? Are doctors prescribing too many pain meds? Is Fannie Mae’s CEO paid too much? The list of potential affronts to redress (via government intervention) is endless.

Not so under capitalism. Here each person’s concern is exclusively with their own property. For instance, if I’m not a shareholder of a firm, I really don’t care what the CEO is paid. Indeed, if I think a particular company is overpaying its CEO, rather than it being a grievance — it’s an opportunity. Namely for me to start a business where I save money by offering reasonable compensation — thereby winning market share due to my lower costs. The beauty of capitalism is that it works by free competition; there’s no need to lobby the government to forcibly intervene in anyone else’s business.

But then it begins to infect all social interactions. Here's how Lewis describes Greek society:

The Greek state was not just corrupt but also corrupting. Once you saw how it worked you could understand a phenomenon which otherwise made no sense at all: the difficulty Greek people have saying a kind word about one another. Individual Greeks are delightful: funny, warm, smart, and good company. I left two dozen interviews saying to myself, “What great people!” They do not share the sentiment about one another: the hardest thing to do in Greece is to get one Greek to compliment another behind his back. No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating, and stealing. Lacking faith in one another, they fall back on themselves and their families.

Economically the result is exactly as Ayn Rand portrays at the Twentieth Century Motor Company:

In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.” The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland’s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses. The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.

And then comes the violence:

Thousands upon thousands of government employees take to the streets to protest the bill. Here is Greece’s version of the Tea Party: tax collectors on the take, public-school teachers who don’t really teach, well-paid employees of bankrupt state railroads whose trains never run on time, state hospital workers bribed to buy overpriced supplies. Here they are, and here we are: a nation of people looking for anyone to blame but themselves. The Greek public-sector employees assemble themselves into units that resemble army platoons. In the middle of each unit are two or three rows of young men wielding truncheons disguised as flagpoles. Ski masks and gas masks dangle from their belts so that they can still fight after the inevitable tear gas. “The deputy prime minister has told us that they are looking to have at least one death,” a prominent former Greek minister had told me. “They want some blood.” Two months earlier, on May 5, during the first of these protest marches, the mob offered a glimpse of what it was capable of. Seeing people working at a branch of the Marfin Bank, young men hurled Molotov cocktails inside and tossed gasoline on top of the flames, barring the exit. Most of the Marfin Bank’s employees escaped from the roof, but the fire killed three workers, including a young woman four months pregnant. As they died, Greeks in the streets screamed at them that it served them right, for having the audacity to work. The events took place in full view of the Greek police, and yet the police made no arrests.

As on other days, the protesters have effectively shut down the country. The air-traffic controllers have also gone on strike and closed the airport. At the port of Piraeus, the mob prevents cruise-ship passengers from going ashore and shopping. At the height of the tourist season the tourist dollars this place so desperately needs are effectively blocked from getting into the country. Any private-sector employee who does not skip work in sympathy is in danger. All over Athens shops and restaurants close; so, for that matter, does the Acropolis.

If we don't reverse the ideological trend here in the US, this may be what's in store for us too.

Hoenig on the "Common Good"

Jonathan Hoenig has a good editorial out at SmartMoney. I particularly liked this section (links omitted):

From Zimbabwe to Venezuela, we’ve often noted how a philosophy makes or breaks an economy, not its natural resources. The most prosperous countries have always been those in which each individual is left free to pursue their own self interest, not be compelled to serve the so-called “public good”. “Life, liberty and the pursuit of happiness” refers to your life, your liberty and your happiness. Is self-sacrifice and an unwavering pledge to serve the “common good” really as central to the American ethos as the president always suggests?

There’s no question that the relentless call to put the “common good” ahead of greedy self-interest runs directly contrary to the to the rugged individualism and rational self-interest on which the country was founded. The “pursuit of happiness” protects the right of every man to live for his own happiness, not be made a means to an end for the “common good.”

An Antiquated Moral Code

Congrats to Yaron and Onkar for having their editorial published at CNN.com. (And check out the comments to see how much work we still have to do.)

Update: For more on this topic I highly recommend these two talks:
Religion and Morality
Atlas Shrugged—America’s Second Declaration of Independence

Debunking a Common View of Business

I enjoyed this Forbes column debunking the idea that businesses can succeed and profit by skimping, cheating or disregarding the customer.

Indoctrination Nation

Congrats to Paul Hsieh for having another excellent editorial published. This one examines a tactic much used by socialists and other totalitarians: engaging in state-sponsored indoctrination (aka re-education) when facts aren't to their liking.

Risk and Regulation

My latest editorial is now available at PJM. Thanks to Gus Van Horn and Lucy Hugel for valuable editorial feedback on this one.

9/11 Reading

Last year the Objective Standard pointed out four articles that were well worth reading on this infamous anniversary. Unfortunately they're still as relevant today as they would have been five years ago.

An Historical Example

This WSJ article does a nice job of looking at the issue of price controls using a specific historical example, viz. West Germany after WWII. A few excerpts:

Unfortunately, occupation policy makers actually perpetuated the shortages by retaining the price controls the Nazi government had imposed before and during the war. Consumers and businessmen battled against the bureaucratic regime of controls and rationing in what the German economist Ludwig Erhard described as Der Papierkrieg—the paper war. Black markets were pervasive.

Germany's new Social Democratic Party wanted to continue the controls and rationing, and some American advisers agreed, particularly John Kenneth Galbraith. Galbraith, an official of the U.S. State Department overseeing economic policy for occupied Germany and Japan, had been the U.S. price-control czar from 1941-1943; he completely dismissed the idea of reviving the German economy through decontrol.

...

It was not a big mistake. In the following weeks Erhard removed most of the Bizone's remaining price controls, wage controls, allocation edicts and rationing directives. The effects of decontrol were dramatic.

The shortages ended, black markets disappeared, and Germany's recovery began. Buying and selling with Deutsche marks replaced barter. Observers remarked that almost overnight the factories began to belch smoke, delivery trucks crowded the streets, and the noise of construction crews clattered throughout the cities.

The remarkable success of the reforms made them irreversible. A few months later the French zone followed suit. The Allied authorities went on to lower tax rates substantially.

Writing Tips

Thanks to Gus Van Horn for linking to this article on how to improve your writing. Tip #1 is of course the most important: practice by writing more. I hope that this will serve as encouragement for some of you to begin writing letters to the editor, leaving comments on websites, etc.

Public Sector Swamps Private Sector in California

A nice graph summariziing California's economic woes. I wonder how long it will be before the state decides that it will only pay pensions to those who file income tax returns in the state -- since that may be the only way to keep a few taxpayers in the state? (I'm guessing California's fiercely anti-business climate and anti-man environmental regulations will have long driven out any remaining productive businesses and individuals.)

It should be about rights, not total tax yield

It's a shame that these amazing statistics are lost in the WSJ's typical pragmatic and utilitarian commentary. In 2008, 3% of the population paid more in federal income taxes than did the other 97% combined. If the focus were on justice and individual rights, these statistics would be seen for the abomination they truly are. Instead, thanks to conservative ideology, the question is only, "how do we maximize societal yield?" No wonder the left keeps winning...

LC Purple Cascade 'Fragrance Princess'

Very fragrant with a great aroma

Stop Distorting the Housing Market

By removing subsidies and other market distortions, not only will a given market sector move more in line with its economic value, but justice will prevail. Indeed one of the reasons the virtue of justice is so important is that it allows good men to live together harmoniously.

This is particularly true with respect to the housing market, where government programs like artificially low interest rates, tax subsidies and now forgiveness and below-market refinancings have rewarded the reckless and the irresponsible at the expense of the prudent and responsible. Though the NY Times probably will never make the moral point, it's encouraging to see it finally publish stories making the economic point.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”

See also these ARI pieces 1, 2.

Stop Pushing Home-Ownership

Don Watkins and Yaron Brook have a good piece in Forbes.com. An excerpt:

Here's the real lesson: The American Dream is not some government-subsidized house foisted on you by George W. Bush or Barney Frank. It's the undiluted freedom to decide how you want to live--and, if you want to own a home, it's the freedom to work, save, establish credit, and earn one. In America, the government's job is to protect our freedom to pursue our values, not to dictate what our values are. Its homeownership policy should be the same as its toaster oven policy: laissez-faire.

Docs4PatientCare

I'm not familiar with this group, but the letter they're circulating, and the coverage they've received in the WSJ are positive. Here's an excerpt from a letter participating doctors are posting in their waiting rooms:

Dear Patient: Section 1311 of the new health care legislation gives the U.S. Secretary of Health and Human Services and her appointees the power to establish care guidelines that your doctor must abide by or face penalties and fines. In making doctors answerable in the federal bureaucracy this bill effectively makes them government employees and means that you and your doctor are no longer in charge of your health care decisions. This new law politicizes medicine and in my opinion destroys the sanctity of the doctor-patient relationship that makes the American health care system the best in the world.

Oust and Repeal

I hope this galvanizes people to call for a repeal of Obamacare, not just to oust those who voted for it.

Faced with that bad news, the pollsters came up with several recommendations for Democratic candidates. When talking about Obamacare, Democrats should "keep claims small and credible." They should promise to "improve" the law. They should avoid talking about policy and stick to "personal stories" of people who will benefit from Obamacare. And above all, the pollsters advise, "don't say the law will reduce costs and deficit."

It's a stunning about-face for a party that saw national health care as its signature accomplishment. "This is the first time we've seen from Democrats that they clearly understand they have a serious problem in terms of selling this legislation," says Republican pollster David Winston.

The reluctance to defend Obamacare as a cost-cutter and deficit-reducer is particularly telling. Wasn't that the No. 1 reason for passing the bill in the first place? "This legislation will ... lower costs for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades," President Obama said when he signed the bill into law on March 23. Now, Democrats are throwing that argument out the window.