Walter Williams: Self Ownership is the Foundation of Freedom

The great economist Walter Williams explains the ethics of private property: (courtesy of lewrockwell.com) [bold added]

My initial premise, when looking at all human issues, is that each of us owns himself. I am my private property, and you are your private property. If you agree with that premise, then certain human actions are moral and others immoral. The reason murder is immoral is that it violates private property. Similarly, rape and theft are immoral, for them, too, violate private property. Most Americans will agree that murder and rape violate people’s property rights and are hence immoral. But there may not be so much agreement about theft. Let’s look at it.

Theft is when a person’s property is taken from him — through stealth, force, intimidation, threats or coercion — and given to another to whom it does not belong. If a person took your property — even to help another person who is in need — it would be called theft. Suppose three people agreed to that taking. Would it be deemed theft? What if 100,000 or several hundred million people agreed to do so? Would that be deemed theft? Another way to ask these questions is: Does a consensus establish morality?

Self-ownership can offer solutions to many seemingly moral/ethical dilemmas. One is the sale of human organs. There is a severe shortage of organs for transplantation. Most people in need of an organdie or become very ill while they await an organ donation. Many more organs would become available if there were a market for them. Through the National Organ Transplant Act of 1984, Congress has made organ sales illegal. Congress clearly has the power to prevent organ sales, but does it have a right? The answer to that question comes by asking: Who owns your organs? One test of ownership is whether you have the right to sell something. In the case of organs, if it is Congress that owns our organs, then we have no right to sell them. That would be stealing from Congress.

People have the right to take chances with their own lives. People do not have a right to take chances with the lives of others. That is why laws that mandate that cars have brakes are consistent with liberty and seat belt laws are not. You might say, “Aha, Williams, we’ve got you there because if you don’t wear a seatbelt and you have an accident and turn into a vegetable, society is burdened with taking care of you!” That’s not a problem of liberty. It’s a problem of socialism. Nobody should be forced to take care of me for any reason. If government assumes the job of taking care of us, then Congress can control just about every aspect of our lives. When I was a rebellious teenager, my mother frequently told me, “As long as you’re living in my house and I’m paying the bills, you’re going to do as I say.” That kind of thinking is OK for children, but not for emancipated adults.

I have only touched the surface of ideas of self-ownership. The immorality associated with violation of the principle of self-ownership lies at the root of problems that could lead to our doom as a great nation. In fiscal 2015, total government spending — federal, state and local — was about $6.41 trillion. That’s about 36 percent of our gross domestic product. The federal government spent $3.69 trillion. At least two-thirds of that spending can be described as the government’s taking the property of one American and giving it to another. That’s our moral tragedy: We’ve become a nation of people endeavoring to live at the expense of others — in a word, a nation of thieves.

This applies universally and not just to the Americans.

The Socialist Illusions of "Change": Ludwig von Mises on the Ethics of Capitalism

The election byword for any aspiring political candidate has always been about “CHANGE”.

Yet the problem of populist clamor for C-H-A-N-G-E has hardly been about the moral component of the individual, but rather such springs from INCENTIVES. In particular, the incentives generated by institutions/governance or political economic conditions: capitalism versus socialism or the market economy versus the welfare-warfare and bureaucratic state.

The great Austrian Economist Ludwig von Mises debunked the popular narrative of "change" via socialism (from Mises Wire) [bold mine]

In the expositions of Ethical Socialism one constantly finds the assertion that it presupposes the moral purification of men. As long as we do not succeed in elevating the masses morally we shall be unable to transfer the socialist order of society from the sphere of ideas to that of reality. The difficulties in the way of Socialism lie exclusively, or predominantly, in men's moral shortcomings. Some writers doubt whether this obstacle will ever be overcome; others are content to say that the world will not be able to achieve Socialism for the present or in the immediate future.

We have been able to show why the socialist economy is impracticable: not because men are morally too base, but because the problems that a socialist order would have to solve present insuperable intellectual difficulties. The impracticability of Socialism is the result of intellectual, not moral, incapacity. Socialism could not achieve its end, because a socialist economy could not calculate value. Even angels, if they were endowed only with human reason, could not form a socialistic community.

If a socialist community were capable of economic calculation, it could be set up without any change in men's moral character. In a socialist society different ethical standards would prevail from those of a society based on private ownership in the means of production. The temporary sacrifices demanded of the individual by society would be different. Yet it would be no more difficult to enforce the code of socialist morals than it is to enforce the code of capitalist morals, if there were any possibility of making objective computations within the socialist society. If a socialist society could ascertain separately the product of the labour of each single member of the society, his share in the social product could be calculated and his reward fixed proportionately to his productive contribution. Under such circumstances the socialist order would have no cause to fear that a comrade would fail to work with the maximum of energy for lack of any incentive to sweeten the toil of labour. Only because this condition is lacking, Socialism will have to construct for its Utopia a type of human being totally different from the race which now walks the earth, one to whom labour is not toil and pain, but joy and pleasure. Because such a calculus is out of the question, the Utopian socialist is obliged to make demands on men which are diametrically opposed to nature. This inadequacy of the human type which would cause the breakdown of Socialism, may appear to be of a moral order; on closer examination it turns out to be a question of intellect.

The Alleged Defects of Capitalist Ethics

To act reasonably means to sacrifice the less important to the more important. We make temporary sacrifices when we give up small things to obtain bigger things, as when we cease to indulge in alcohol to avoid its physiological after-effects. Men submit to the effort of labor in order that they may not starve.

Moral behavior is the name we give to the temporary sacrifices made in the interests of social co-operation, which is the chief means by which human wants and human life generally may be supplied. All ethics are social ethics. (If it be claimed that rational behavior, directed solely towards one's own good, should be called ethical too, and that we had to deal with individual ethics and with duties to oneself, we could not dispute it; indeed this mode of expression emphasizes perhaps better than ours, that in the last analysis the hygiene of the individual and social ethics are based on the same reasoning.) To behave morally, means to sacrifice the less important to the more important by making social co-operation possible.

The fundamental defect of most of the anti-utilitarian systems of ethics lies in the misconstruction of the meaning of the temporary sacrifices which duty demands. They do not see the purpose of sacrifice and foregoing of pleasure, and they construct the absurd hypothesis that sacrifice and renunciation are morally valuable in themselves. They elevate unselfishness and self-sacrifice and the love of compassion, which lead to them, to absolute moral values. The pain that at first accompanies the sacrifice is defined as moral because it is painful—which is very near asserting that all action painful to the performer is moral.

From the discovery of this confusion we can see why various sentiments and actions which are socially neutral or even harmful come to be called moral. Of course, even reasoning of this sort cannot avoid returning furtively to utilitarian ideas. If we are unwilling to praise the compassion of a doctor who hesitates to undertake a life-saving operation on the ground that he thereby saves the patient pain, and distinguish, therefore, between true and false compassion, we re-introduce the teleological consideration of purpose which we tried to avoid. If we praise unselfish action, then human welfare, as a purpose, cannot be excluded. There thus arises a negative utilitarianism: we are to regard as moral that which benefits, not the person acting, but others. An ethical ideal has been set up which cannot be fitted into the world we live in. Therefore, having condemned the society built up on "self-interest" the moralist proceeds to construct a society in which human beings are to be what his ideal requires. He begins by misunderstanding the world and laws; he then wishes to construct a world corresponding to his false theories, and he calls this the setting up of a moral ideal.

Man is not evil merely because he wants to enjoy pleasure and avoid pain—in other words, to live. Renunciation, abnegation, and self-sacrifice are not good in themselves. To condemn the ethics demanded by social life under Capitalism and to set up in their place standards for moral behavior which—it is thought—might be adopted under Socialism is a purely arbitrary procedure.

Quote of the Day: Why Health Care Is Not a Right

The problem with his statement is that rights aren't the government's to give. John Locke, the 17th century English philosopher, wrote about inalienable rights: God-given rights that can't be taken away. (Agnostics and atheists may prefer to think of these rights as inherent in nature.) Locke considered life, liberty and property to be among such natural rights.

A century later, Thomas Jefferson adopted Locke's definition when he drafted the U.S. Declaration of Independence, citing "life, liberty and the pursuit of happiness" as inalienable rights. Government's role is "to secure these Rights," Jefferson wrote, not to create new ones.

The Bill of Rights, the first 10 amendments to the U.S. Constitution, enumerates some of these natural rights: freedom of speech and religion; a free press and free assembly; and freedom from unreasonable search and seizure. Even more important, the Bill of Rights prohibits Congress from enacting any law interfering with the exercise of these freedoms. (I'll leave the interpretation of the 2nd Amendment's right to bear arms to Constitutional scholars.)

That hasn't stopped Progressives from creating all kinds of new rights: a right to a job, a right to a minimum wage, a right to health care.

These aren't rights as conceived by the Founding Fathers. A right is something we can all exercise simultaneously without imposing a burden on someone else. The only obligation, in fact, is that others not interfere with an individual's exercise of his rights.

That concise concept of rights, sometimes referred to as negative rights, comes from the book, Clichés of Politics, a collection of essays published by the Foundation for Economic Education. It provides a simple basis for determining what constitutes a right.

Many politicians insist on transforming every privilege or benefit or entitlement into a right.

(bold added) 

This excerpt is from an article by mainstream commentator, former Bloomberg analyst, Caroline Baum at EC21.org on first presidential debate of the Democratic Party

Quote of the Day: Differentiating Self Interest from Greed

Charles de Montesquieu (1689-1755) was the first major figure during the Enlightenment to maintain that commercial activity restrains greed and other passions. In his classic work, The Spirit of the Laws (1748), Montesquieu expressed the novel view that the business of moneymaking serves as a countervailing bridle against the violent passions of war and abusive political power. “Commerce cures destructive prejudices,” he declared. “It polishes and softens barbarous mores . . . . The natural effect of commerce is to lead to peace.” Commerce improves society: “The spirit of commerce brings with it the spirit of frugality, of economy, of moderation, of work, of wisdom, of tranquility, of order, and of regularity.”

Adam Smith (1723-90) held similar views. He wrote eloquently of the public benefits of pursuing one’s private self-interest, but he was no apologist for unbridled greed. Smith disapproved of private gain if it meant defrauding or deceiving someone in business. To quote Smith: “But man has almost constant occasion for the help of his brethren . . . . He will be more likely to prevail if he can interest their self-love in his favour . . . . Give me that which I want, and you shall have this which you want, is the meaning of every such offer.” In other words, all legitimate exchanges must benefit both the buyer and the seller, not one at the expense of the other. Smith’s model of natural liberty reflects this essential attribute: “Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men.”

Smith favored enlightened self-interest and even self-restraint. Indeed, he firmly believed that a free commercial society moderated the passions and prevented a descent into a Hobbesian jungle, a theme echoing Montesquieu. He taught that commerce encourages people to defer gratification and to become educated, industrious, and self-disciplined. It is the fear of losing customers “which retrains his frauds and corrects his negligence.’

Finally, Smith supported social institutions—the competitive marketplace, religious communities, and the law—to foster self-control, self-discipline, and benevolence.

In sum, no system can eliminate greed, fraud, or violence. Socialism and communitarian organizations promise paradise, but seldom deliver. Oddly enough, it may be a freely competitive capitalist economy that can best foster self-discipline and control of the passions.

This is from economist and author Mark Skousen from a 2000 article published at the Freeman

Guest Post: Wendy McElroy on the Power of the Powerless

One of my favorite anarchist, Wendy McElroy writes a stirring and inspirational piece on how to live the truth and reclaim individual freedom.

Thanks to Janice Matthews and the Daily Bell for the permission to republish. (bold mine, italics original)

In the sixth century BC, the Chinese philosopher Lao Tzu identified the world's biggest problem. Individuals viewed themselves as powerless. The burden of impotence made them resent others and fear life, which, in turn, led them to seek power through controlling others. The quest was not an expression of authority, but one of aggression. Lao Tzu rooted most of social problems in the individual's sense of paralysis.

The extraordinary power of the individual can be declared in many ways.

The Power of Living in Truth

In 1978, a 42-year-old Czech playwright named Vaclav Havel (1936-2011) made an observation similar to that of Lao Tzu. He wrote what became one of the most influential essays in the Cold War era: The Power of the Powerless. It was published in samizdat form; that is, it was reproduced by hand and distributed from individual to individual to avoid censorship.

The Power of the Powerless was written in the wake of the "Prague Spring" (1968) during which Czechoslovakia liberalized freedom of speech and freedom of travel. The Soviet Union responded with brutal force that crushed the flicker of liberty. Havel was targeted for his prominent role in the reach for Czech independence. Arrested and imprisoned, he achieved an epiphany: the most powerful weapon against guns was the truth. The Power of the Powerless was a blistering attack on the communist regime. It was also a call for individuals to understand their own power not merely when they dissent but also when they comply with a system that is a lie. 

Havel illustrated the impact of compliance – denying the truth – by pointing to "the manager of a fruit-and-vegetable shop" who places a "Workers of the world, unite!" poster among his onions and carrots. He does so because not placing it would make him appear disloyal to the regime. "He does it because these things must be done if one is to get along in life." Thus, the grocer and others who obey without question "must live within a lie. They need not accept the lie. It is enough for them to have accepted their life with it and in it. For by this very fact, individuals confirm the system, fulfill the system, make the system, are the system." The strength of communism or any oppressive regime rests upon the obedience of individuals.

Havel argued that individuals have "within themselves the power to remedy their own powerlessness" simply by living the truth. If the grocer realized that the slogan was actually saying, "I am afraid and therefore unquestioningly obedient," he would be ashamed to display it. By realizing the meaning of their actions, people are led toward "living in truth," which is the source of freedom. The truth need not be screamed from a rooftop; it can be manifested in small daily acts through which the individual reclaims his own power, such as the 'act' of not posting a sign. The individual must defy unreality and refuse to be complicit in a delusion. Havel observed, "The principle here is that the center of power is identical with the center of truth."

Havel concluded by asking, "the real question is whether the brighter future is really always so distant. What if, on the contrary, it has been here for a long time already, and only our own blindness and weakness has prevented us from seeing it around us and within us, and kept us from developing it?"

The Difference One Individual Can Make

Chiune Sugihara expressed another way in which an individual can express his own power. Sugihara exercised what is called "positional power." That's the impact a person possesses due to his position in an organization.

During World War II, Sugihara (1900-1986) served as Vice-Consul at the Japanese Consulate in Lithuania. Japan and Germany were allies. The Japanese government issued visas only to those who had gone through an immigration process and had sufficient funds. Few Jews qualified, especially since the Japanese Foreign Ministry required everyone who received a visa to be cleared for a third destination that ensured they would leave Japan.

Against orders from his superiors and against German interests, Sugihara acted on his own initiative. In July 1940, he began to grant ten-day visas that sidestepped the requirement of a third destination by listing one of two obscure venues that did not require their own visas for entry. He negotiated with officials in the Soviet Union to allow Jews to travel through their territory at five times the normal price of a ticket on the Trans-Siberian Railway. He reportedly spent 18 to 20 hours a day arranging visas; his wife assisted him with the paperwork. For 29 days, Sugihara issued the documents that meant life. In September 1940, when the Japanese Consulate was closed and Sugihara was forced to leave, he reportedly threw blank sheets of paper with the consulate seal and his signature out of a train window to a gathered crowd of people still appealing for visas. He gave the consul stamp itself to a refugee who used it to save more Jews.

Estimates on the number of visas issued by Sugihara vary but 6,000 is the most common number. Since families often traveled on a visa granted to a "head of household," the number of lives saved is even more difficult to assess. The Simon Wiesenthal Center believes that about 40,000 descendants of the refugees he saved owe their existence to him.

In 1985, the state of Israel rewarded Sugihara with the title of Righteous Among Nations. The title honors those who risked their lives to save Jews from the Holocaust.

What is Necessary to Assume Your Power

Sugihara claimed his power by acting on his conscience rather than on orders. When asked why he risked so much to help strangers, Sugihara responded: "They were human beings and they needed help. I'm glad I found the strength to make the decision to give it to them. I may have to disobey my government, but if I don't I would be disobeying God." That was the truth within Sugihara.

It was the truth Havel believed every human being should live. Anyone who did so is profoundly free because he has "shattered the world of appearances.... He has demonstrated that living a lie is living a lie. He has broken through the exalted facade of the system and exposed the real, base foundations of power. He has said that the emperor is naked. And because the emperor is in fact naked, something extremely dangerous has happened: by his action, the greengrocer has addressed the world. He has enabled everyone to peer behind the curtain. He has shown everyone that it is possible to live within the truth."

Anyone who dissents by living the the truth is a fundamental threat to the state because a lie cannot coexist with what is true. Anyone who dissents and claims his own power denies the state "in principle and threatens it in its entirety." That is why speaking out against the state is "suppressed more severely than anything else."

What is required to live the truth? First, an individual must realize that truth does not come from outside as an ideology or from other people; it exists within as a realization that comes from experience, reason, and a sense of humanity. Second, freedom rests on a recognition of the inextinguishable dignity of every individual. Third, it requires courage. Each person must stand up and claim their own power even if it is expressed in seemingly small ways. Because there is no such thing as a small step toward freedom. The first step, however small, is the one that matters most .

A journey of a thousand miles begins with a single step--Lao Tzu

The Pope and Populist Politics

Pope Francis plays populist politics by supposedly taking on an economic stand.

Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Francis wrote in the papal statement. “This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system.

Harvard’s Greg Mankiw’s reaction (hat tip Mark Perry)

First, throughout history, free-market capitalism has been a great driver of economic growth, and as my colleague Ben Friedman has written, economic growth has been a great driver of a more moral society.

Second, "trickle-down" is not a theory but a pejorative used by those on the left to describe a viewpoint they oppose.  It is equivalent to those on the right referring to the "soak-the-rich" theories of the left.  It is sad to see the pope using a pejorative, rather than encouraging an open-minded discussion of opposing perspectives.

Third, as far as I know, the pope did not address the tax-exempt status of the church.  I would be eager to hear his views on that issue. Maybe he thinks the tax benefits the church receives do some good when they trickle down.

Wall Street’s Mary O’Grady on Venezuela as example of the Pope’s model.

Heavy state intervention was supposed to produce justice for the poor in the breadbasket of South America. We all know how that turned out.

No Christian can doubt the love expressed in the pope's message, which aims to shepherd the flock away from materialism. But the charge that grinding poverty in the world is the outgrowth of "the absolute autonomy of the marketplace" ignores reality. To be sure, even prosperous economies regulate markets. But those that have a lighter touch do better. Human history clearly demonstrates that when men and women, employing their free will and God-given talents, are able to innovate, produce, accumulate capital and trade even the weakest and most vulnerable are better off.

Instead the pope trusts the state, "charged with vigilance for the common good." Why is it then that the world's most desperate poor are concentrated in places where the state has gained an outsize role in the economy specifically on just such grounds?

…

Venezuelans need a moral authority that defends their rights to run a business, make a living, own property and preserve the purchasing power of what they earn. In short, they need a champion for a rule of law that will limit the power of the state over their person. Mother Church ought to be that voice. In siding with Mr. Maduro, however inadvertently, she harms her cause in the region.

New York Stern Professor Mario Rizzo on the Pope’s omission of the scientific dimensions of social policies.

If we move beyond Jesus’ exhortations to individuals about their moral behavior to papal exhortations about government policies to achieve the goal of eliminating or reducing avoidable human suffering, a scientific dimension is added. Policies have consequences, often unintended. The social interaction of people is more than the acts of people taken individually.  There are complexities in these cases subject to scientific analysis.

The ultimate normative goals of action can be based on a religious insight or commitment. (I prefer to say on ethics.) But the means chosen to attain those goals are in large part a scientific question. Thus the proximate goals of action are largely in the domain of science. (An exception is where the means are considered intrinsically evil.)

The point is that policies are means to ends. They are not decrees about how the world should be. They can succeed or fail to achieve the desired moral ends. They can have consequences more undesirable than the problems they purport to solve. It is hard to see what the Church can authoritatively add to these discussions.  Issues like income redistribution, globalization and financial speculation, however, are either above or below the papal pay grade. As Jeremy Bentham said about the state, the job is basically to “be quiet.”

Obviously, for a Church wanting to be relevant in its growth areas in poor, less developed countries, this might not be enough. And yet there is more it can say about the state’s use of coercion, of its violation of the basic principles of just conduct in the creation of crony “capitalist” economies, of its secrecy and lack of accountability, of the use of torture, of trafficking in slaves, and war. The Church has to its credit tackled many of these. It will be seen, I suggest, that in most of these areas governments or others are violating the fundamental principles of individual just conduct: lying, cheating, stealing, physically harming innocent individuals, failing to aid others in distress (as opposed to failing to coerce people to aid others in distress), and even the use of force where turning the other cheek would be appropriate.

But where social policy is concerned, fundamentally scientific issues are crucially involved and the Church has no greater teaching authority than the rest of us. To confuse matters by combining superficial scientific analysis with strictly moral teaching does neither the Church nor the world much good.

Uttering feel good noble sounding populist political rhetoric with hardly a good understanding of the real social consequences from proposed repressive policies will do little to help society. For me, the Pope's major gaffe has been the failure to understand that the state is run by human beings who shares the same vulnerabilities as the rest.

As the great dean of the Austrian school of economics Murray Rothbard admonished:

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a "dismal science." But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

Example of Agency Problem: Goldman Sach’s Seeming Poop and Scoop on Gold

US financial giant Goldman Sachs announced to the public “a sell on gold” as early as December 2012 and continued to do so as the gold market crash last April.

The Zero hedge reports that what Goldman clients sold, Goldman bought. (bold and italics original)

In early April, the status quo was exuberant when none other than Goldman Sachs issued a "sell" on the barbarous relic that has become so indicative of the exuberance of central planning. At the time, we were skeptical (to say the least) and, just for extra Muppetting, the bank also suggested its clients buy Treasuries. Well, now that the full details of holdings changes have been released for Q2, it is perhaps clearer than ever before that as the bank was telling its clients to "sell, sell, sell" it was itself "buy, buy, buy"-ing the Gold ETF (GLD) with both arms and feet. In Q2, Goldman Sachs added a stunning (and record) 3.7 million 'shares' of GLD. As Paulson dumped his GLD, Goldman lapped it up to become the ETF's 7th largest holder.

Goldman was the largest adding holder for GLD...

buying what its clients were selling in size...

The attempt to drive down prices in order to purchase them at a bargain by spreading false information or rumors is called Poop and Scoop. Though technically illegal this is hard to prove.

But the more important lesson is one of the principal agent dilemma or the agency problem or the conflict of interests between the clients and industry participants as I explained here.

It is imperative for the public to scrutinize and not just accept hook line and sinker on the information sold by industry participants because they can be camouflaged by interests that may run counter to those of investors.

Man of Steel: One heck of an unorthodox Superhero movie

Man of Steel,  for me, signifies as one heck of an unorthodox superhero movie

In stereotyped movies, superheroes have been assumed to possess the politically correct ethical behavior. But not this one.

This movie extends to the shaping of Clark Kent’s values and character mostly by his foster father and mentor, Jonathan Kent.

Like the ethics of good old kung fu movie days, the elder and fatherly Kent, impressed upon his son of the importance of self-discipline, in the fear that his adapted son’s supernatural powers would be spurned and rejected by the human society.

Gosh, this fabulous dialogue—between dad Kent and his extra-terrestrial 13-year old son over the latter’s lifesaving of his schoolmates from a drowning school bus—represents a deontological dilemma something which philosophers from different ideological camps would passionately debate on…

All quotes from the IMDb.

Jonathan Kent: You have to keep this side of yourself a secret.

Clark Kent at 13: What was I supposed to do? Let them die?

[brief pause]

Jonathan Kent: Maybe...

The elder Kent knew that the supernatural powers of son would be put to good use one day, but until then should refrain from exposing himself…

Jonathan Kent: You're not just anyone. One day, you're going to have to make a choice. You have to decide what kind of man you want to grow up to be. Whoever that man is, good character or bad, it's going to change the world.

The sacrificing of the life of Jonathan Kent in order for Clark to realize the importance of self-discipline, in a tornado disaster, served as the climax of Clark’s moral and character training.

The movie importantly depicts of one of the greatest battles of our time: freedom versus collectivism. 

Superman’s nemesis General Zod wanted to resurrect genetically-engineered (and programmed) Kryptonians in earth via a genocide of the human race. General Zod brought into light Jeremy Bentham’s consequentialist “greatest good for the greatest number” utilitarianism

General Zod: No matter how violent, every action I take is for the greater good of my people.

Sounds familiar?

On the other hand, the reason Clark Kent’s biological Krypton father, Jor-el, sent his son Clark Kent/Kal-El (Kryptonian name) to earth was for the latter to steer his own destiny (freedom).

Jor-El: What if a child dreamed of becoming something other than what society had intended? What if a child aspired to something greater?

Such ideological conflict between Jor-el and General Zod, which was carried over by son Clark Kent/Kal-El, represents the crux of the movie.

For all the film’s other minor blemishes, the Man of Steel seems as a refreshing entertainment film against the predominant populist pseudo politically correct themes.

Quote of the Day: Why using moral suasion as a policy tool is a bad thing

When you cast policy issues in moral terms, you degrade the character of public discourse. You lead people to see conflicting priorities as an occasion for battle, rather than an occasion for compromise. You send the message that policy is best decided by appeals to one’s inner conscience (or, more likely, to the polemics of demagogues), rather than by appeals to impersonal cost-benefit analysis. And this is a very bad thing… 

If we’re determined to instill blind moral instincts that make people behave better most of the time, I’d like to nominate a blind moral instinct to respect price signals and the individual choices that underlie them—an instinct, for example, to recoil from judging and undercutting other people’s voluntary arrangements.

This is from Professor and author Steven Landsburg at the Cato Unbound in a debate over recycling. 

Populist-personality based politics have almost always centered their policy discussions based on the moral "feel good noble sounding" context. The appeal to the moral is practically an appeal to the emotion; no matter how coercive, impractical or how short term oriented policies can lead to long term pain. That's the reason why the use of "moral suasion as a policy tool" signifies as "the polemics of demagogues".

Quote of the Day: Humility—A Disappearing Virtue?

Please note that by humility, I don’t mean self-deprecation. Humility doesn’t mean thinking less of yourself. It means putting yourself in proper perspective. It means you don’t presume to know more than you do. This was the central lesson of the classic essay, “I, Pencil”   by FEE’s esteemed founder Leonard E. Read. If no one person in the world knows how to make a pencil from start to finish, it’s preposterously presumptuous for anyone to think that he can plan an economy or the lives of millions of people.

Pastor Timothy Keller of Redeemer Presbyterian Church in New York City makes this keen observation: “Until the 20^th century, most cultures held that having too high an opinion of oneself was the root of most of the world’s troubles. Misbehavior from drug addiction to wars resulted from pride that needed to be deterred or disciplined. The idea that you were bigger or better, or more self-righteous, or somehow immune from the rules that govern others—the absence of humility, in other words, gave you license to do unto others what you would never allow them to do unto you.”…

“In our midst are people who think that if only they had government power on their side, they could pick tomorrow’s winners and losers in the marketplace, set prices or rents where they ought to be, decide which forms of energy should power our homes and cars, and choose which industries should survive and which should die. They make grandiose promises they can’t possibly keep without bankrupting all of us. They should stop for a few moments and learn a little humility.”

This is from the Foundation for Economic Education president Lawrence Reed at their website, the Fee.org

The opposite side of humility is what the great Austrian F. A. Hayek calls as the “Fatal Conceit”

IRS Investigations: Using Regulations to Persecute Political Foes

I recently pointed out that arbitrary regulations, like electoral liquor ban in the Philippines, can be used to harass the political opposition. 

In the US, the tax agency the IRS will reportedly be investigated for allegedly employing the said maneuver.

According to John Samples at the Cato Blog

Last Friday, a spokeswoman for the Internal Revenue Service (IRS) admitted the agency had targeted various Tea Party and related groups during the 2010 election cycle. Later in the week, an Inspector General’s report will offer an initial look at the facts of this matter. At least two congressional committees also plan investigations. 

Many people recall that the Nixon administration used the IRS to harass political opponents. Surely the IG’s report and subsequent investigations will show whether the IRS has gotten back into the business of protecting an incumbent administration from its critics.

It is not too soon, however, to recall the the campaign finance reform lobby has been calling for a crackdown on political groups since the Citizens United decision. One possibility would be that the IRS gave in pressure from the reform lobby and went after the Tea Party groups.

Was there an intention to chill speech? The timing provokes doubts: the targeting began in the spring of 2010 just as the mid-term campaign season started and ended after the election when the harassment no longer has any rationale. The long delays of approving tax status certainly slowed down the wave coming toward Congress in 2010. 66 House members lost their seats in that election. Do any sitting members owe their offices to the IRS?

Attaining social “equality” must mean equality before the law via the rule of law rather than from arbitrary edicts which picks winners and losers that engenders unintended consequences.

A timely reminder from the great Austrian economist F. A. Hayek once wrote, (bold mine)

It is the rule of law, in the sense of the rule of formal law, the absence of legal privileges of particular people designated by authority, which safeguards that equality before the law which is the opposite of arbitrary government.

A necessary, and only apparently paradoxical, result of this is that formal equality before the law is in conflict, and in fact incompatible, with any activity of the government deliberately aiming at material or substantive equality of different people, and that any policy aiming directly at a substantive ideal of distributive justice must lead to the destruction of the rule of law. To produce the same result for different people, it is necessary to treat them differently. It cannot be denied that the rule of law produces economic inequality - all that can be claimed for it is that this inequality is not designed to affect particular people in a particular way.

It may even be said that for the rule of law to be effective it is more important that there should be a rule applied always without exceptions than what this rule is.... It does not matter whether we all drive on the left- or on the right-hand side of the road so long as we all do the same. The important thing is that the rule enables us to predict other people’s behavior correctly, and this requires that it should apply to all cases - even if in a particular instance we feel it to be unjust.

Why I Will Not Vote; Liquor Ban and No Stock Market Commentary

I will not participate or risk my life and limb or spend scarce time, effort, and resources in the selection process of so-called political leaders, undergirded by a political system that legitimizes the systematic picking of people’s pockets and the progressive curtailment of liberty through organized institutional violence under the guise of the ‘social justice’ sham

I will also not partake on the delusion where individuals have been programmed to believe that they are primarily members of the collective, which the individual is subordinate to, and that people have control over such leaders. In reality, such elections serve no more than a spectator sport or the race to bottom to manipulate the electorate with freedom constricting, “free lunches” tomfoolery themes in order to justify their assumption to office. This quasi mob rule (either by majority or plurality) selection process, of course, serves as the foundation to the system’s legitimacy.

Such pretentious virtues can already be seen via the election liquor ban regulation. The edict logically implies that election violence is a direct result of alcoholic intoxication rather than of mainly impassioned electoral competition (among the other many but trivial or coincidental factors). The ban essentially lumps two different variables into one, which is a logical absurdity. Electoral violence will happen with or without alcohol.

The Supreme Court struck down the administration’s extension of such ban. Yet such arbitrary regulations reveals of the priorities of those in power that gives preference to the political—the coercive picking of the pocket of Juan to give or transfer some of Juan’s money to Pedro, as the chosen political leaders keep the rest of the booty for themselves—rather than to the socio-economic system. More signs why today’s economic boom has been a paper tiger.

Of course, every arbitrary rule has beneficiaries. Aside from politicians, the tourism industry is exempted from such prohibition, thus the ban signifies an implicit subsidy to the latter. So there will be a boom in tourism and tourism related establishments at the expense of the sari-sari stores, carinderias, bars, and etc.., where the latter group will theoretically bear the brunt in terms of lost incomes. See how arbitrary rules promote inequality? Under the whims of political agents, those politically blessed get the benefits while the rest are left stuck in a rut. That’s “social justice” for you.

On the other hand, affected consumers, like me, will be displeased as prohibition takes away our satisfactions, and most importantly, limits our freedom of choice.

Also the people who will patronize prohibition exempted tourist and tourist related establishments are most likely the well off. So the “haves” can publicly swill on alcohol while the “non-haves” cannot. Thus prohibition statutes essentially discriminate against the lower segments of the society, which ironically and duplicitously, such supposed “virtuous” institutions proclaim to protect.

Worst, repressive prohibition fiats are imposed on us by people who pretend to know what is best for us. In reality, political paternalism represents a charade which has been used as an excuse to pick on our pockets and expand political control over our actions. As an old saw goes, the road to hell is paved with good intentions.

But the good thing is that because the domestic posse (dictionary.com: a body or force armed with legal authority) will be concentrating much of their efforts in the monitoring of electoral grounds or voting precincts, this means the prohibition will likely be infringed upon or would generally be toothless, but with exceptions. 

As an aside, this doesn’t mean that banned establishments will be serving alcohol but rather transactions will be done underground.

The exclusion is that the liquor ban policies can be or will be used selectively as strong-arm or harassment tactic against political foes.

This can also be used by authorities as pretext to mulct on the hapless consumer which is a source of corruption

In other words, such skewed, unfair and immoral legal restrictions, aside from heated political competition, incentivize electoral violence regardless of the presence of alcohol.

All these reveals how arbitrary statutes debauch on society’s moral fiber. These are things the public does not see and which the political class and media will not tell you. Economics function as a fundamental pillar of ethics.

In view of the senselessness of “feel good” politics, I will take this opportunity to spend precious moments with my family this extended weekend. Thus I will not be publishing my weekly stock market commentary and may limit my blogging activities

And if you want to know more on why I wouldn’t vote, my favorite iconoclast comedian the late George Carlin explains two reasons which I share…

Thank you for your patronage.

Have a great and safe weekend

Yours in truth and in liberty

Benson

The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can't get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.  

-- H. L. Mencken

(1880-1956) American Journalist, Editor, Essayist, Linguist, Lexicographer, and Critic

Quote of the Day: Economics as Foundation of Ethics

Morality is not equivalent to advocating feel-good courses of action when something bad happens. Sure, we can and should be beneficent. It is good to help fire victims. But it is a good thing in the long run to understand economics. As Jean-Baptiste Say said: A good book on economics should be the first volume of a treatise on ethics.

This is from New York University’s Associate Professor of Economics Dr. Mario Rizzo discussing Hayek and the Bangladesh fire at the ThinkMarkets Blog

Cyprus: The Mouse that Roared

Unfolding events in Cyprus may or may not be a factor for the Phisix or for the region over the coming days. 

This will actually depend on how the bailout package will take shape, and importantly, if these will get accepted by the “troika” (IMF, EU and the ECB), whose initial bid to force upon a bank deposit tax indiscriminately on bank depositors had been aborted due to the widespread public opposition.

So far, the Cyprus parliament has reportedly voted on several key measures[1] as nationalization of pensions, capital controls, bad bank and good bank. Reports say that the Cyprus government has repackaged the bank deposit levy to cover accounts with over 100,000 euros with a one-time charge of 20%[2]!

The troika demands that the Cyprus government raise some € 5.8 billion to secure a € 10 billion or US $12.9 billion lifeline.

If there may be no deal reached by the deadline on Monday, then Cyprus may be forced out of the Eurozone. Then here we may see uncertainty unravel across the global financial markets as a Cyprus exit, which will likely be exacerbated by bank runs and or social turmoil, may ripple through the banking system of other nations.

However, if Cyprus gets to be rescued at the nick of time, then problems in the EU will be pushed for another day.

Nonetheless unfolding events in a 1 million populated Cyprus, but whose banking system has been eight times her economy[3] has so far had far reaching effects.

The Cyprus “bail in” has already ruffled geopolitical feathers.

Germans are said to been reluctant to provide backstop to Cyprus due to nation’s heavy exposure to the Russians, where the latter comprises about a third of deposits of the Cyprus banking system. Much of illegal money from Russia has allegedly sought safehaven in Cyprus.

The Cyprus-Russia link goes more than deposits. They are linked via cross-investments too.

Some say that the Germans had intended to “stick it to the Russians”[4].

On the other hand, Russians have felt provoked by what they perceive as discrimination.

Meanwhile events in Cyprus have also opened up fresh wounds between Greeks and the Turkish over territorial claims[5].

The other more important fresh development is of the bank deposit taxes.

Where a tax is defined[6] as “a fee levied by a government on income, a product or an activity”, deposit taxes are really not taxes, but confiscation.

Some argue that this should herald a positive development where private sector involvement takes over the taxpayers. Others say that filing for bankruptcy would also translate to the same loss of depositor’s money.

Confiscation is confiscation no matter how it is dressed. It is immoral. Private sector involvement is forced participation.

Bankruptcy proceedings will determine how losses will partitioned across secured and unsecured creditors and equity holders. Not all banks will need to undergo the same bankruptcy process. Yet confiscation will be applied unilaterally to all. For whose benefit? The banksters and the politicians.

And one reason bondholders have been eluded from such discussion has been because Cyprus banks have already been pledged them as collateral for target2 programs at the ECB[7].

The more important part is that events in Cyprus have essentially paved way for politicians of other nations, such as Spain and New Zealand[8], to consider or reckon deposits as optional funding sources for future bailouts.

With declining deposits in the Eurozone[9], the assault on savers and depositors can only exacerbate their financial conditions and incite systemic bankruns.

So confidence and security of keeping one’s money in the banking system will likely ebb once the Cyprus’ deposits grab policies will become a precedent.

This is why panic over bank deposits have led to resurgent interest on gold and strikingly even on the virtual currency the bitcoin[10]. The growing public interest in bitcoin comes despite the US treasury’s recently issued regulations in the name of money laundering[11].

Such confiscatory policies will also redefine or put to question the governments’ deposit insurance guarantees. Not that guarantees are dependable, they are not; as they tend increase the moral hazard in the banking system as even alleged by the IMF[12]. 

Deposit guarantees are merely symbolical, as they cannot guarantee all the depositors. Given the fractional reserve nature of the contemporary banking system, if the public awakens to simultaneously demand cash, there won’t be enough to handle them. And obliging them would mean hyperinflation. That’s the reason the dean of the Austrian economics, Murray Rothbard calls deposit insurance a “swindle”[13].

The banks would be instantly insolvent, since they could only muster 10 percent of the cash they owe their befuddled customers. Neither would the enormous tax increase needed to bail everyone out be at all palatable. No: the only thing the Fed could do — and this would be in their power — would be to print enough money to pay off all the bank depositors. Unfortunately, in the present state of the banking system, the result would be an immediate plunge into the horrors of hyperinflation.

So governments will not only resort to taxing people’s savings implicitly (by inflation), they seem now eager to consider a more direct route: confiscation of one’s savings or private property. Note there is a difference between the two: direct confiscation means outright loss. Inflation means you can buy less.

Finally, losses from deposit confiscation, and its sibling, capital controls will lead to deflation.

Confiscatory deflation, as defined by Austrian economist Joseph Salerno, is inflicted on the economy by the political authorities as a means of obstructing an ongoing bank credit deflation that threatens to liquidate an unsound financial system built on fractional reserve banking.  Its essence is an abrogation of bank depositors' property titles to their cash stored in immediately redeemable checking and savings deposits[14]. 

The result should be a contraction of money supply and bank credit deflation and its subsequent symptoms. This will be vented on the markets if other bigger nations deploy the same policies as Cyprus.

That’s why events in Cyprus bear watching.

---

[1] See Cyprus President Warned Friends of Crisis March 23, 2013

[2] New York Times Cyprus Makes Plan to Seize Portion of High-Level Deposits, March 23, 2013

[3] Constantinos Stephanou The Banking System in Cyprus: Time to Rethink the Business Model? 2011 World Bank

[4] Investopedia.com The Cyprus Crisis 101 March 19, 2013

[5] See Will Events in Cyprus Trigger a War? March 22, 2013

[6] Investorwords.com Tax

[7] Mark J Grant Why Cyprus Matters (And The ECB Knows It) Zero Hedge March 23, 2013

[8] John Aziz Guest Post: Whose Insured Deposits Will Be Plundered Next? Zero Hedge March 21, 2013

[9] The Economist Infographics March 23, 2013

[10] See Bitcoins: Safehaven from Cyprus Debacle and Officially Recognized by the US Treasury March 21, 2013

[11] International Business Times, US Treasury Department: Virtual Currencies (Read: Bitcoins) Need Real Rules To Curb Money Laundering March 22, 2013

[12] Buttonwood What does a guarantee mean? The Economist March 19, 2013

[13] Murray N. Rothbard Taking Money Back January 14, 2008 Mises.org

[14] Joseph Salerno Confiscatory Deflation: The Case of Argentina, February 12, 2002 Mises.org