Quote of the Day: Tenets of Individualism

Metaphysically, individualism holds that the person is unique, not a sample of the mass, owing his peculiar composition and his allegiance to his Creator, not his environment. Because of his origin and existence, he is endowed with inalienable rights, which it is the duty of all others to respect, even as it is his duty to respect theirs; among these rights are life, liberty, and property. Following from this premise, society has no warrant for invading these rights, even under the pretext of improving his circumstances; and government can render him no service other than that of protecting him against his fellow man in the enjoyment of these rights. In the field of economics (with which libertarians are rightly concerned because it is there that government begins its infringement), the government has no competence; and the best it can do is to maintain a condition of order, so that the individual may carry on his business with the assurance that he will keep what he produces. That is all.

This is from libertarian editor and author Frank Chodorov at the Mises Institute
 

Bonus quote from the same article regarding the difference between self interest and selfishness... 

But self-interest is not selfishness. Self-interest will impel the manufacturer to improve upon his output so as to attract trade, while selfishness will prompt him to seek the special privileges and state favor that in the end destroy the very system of economic freedom on which he depends. The worker who tries to improve his lot by rendering better service could hardly be called selfish; the description rather fits the worker who demands that he be paid for not working. The subsidy seeker is selfish, and so is every citizen who uses the law to enrich himself at the expense of other citizens.

Quote of the Day: Trade Spreads Culture

Every increase in trade facilities aids in the spreading of cultural values; and, contrariwise, every interference with trade results in a corresponding retardation of cultural progress. In other words, the freer the trade, the greater the advance in civilization, and the more restrictions there are on trade, the surer will be the retrogression of civilization.

That’s from the great Frank Chodorov in the 1940 essay “Civilization or Caveman Economy?” (source Café Hayek’s Don Boudreaux)

NO Such Thing as Risk Free: S&P Downgrades US

The United States has lost its coveted top AAA credit rating.

Credit rating agency Standard & Poor's on Friday downgraded the nation's rating for the first time since the U.S. won the top ranking in 1917. The move came after Congress haggled over budget cuts and the nation's borrowing limit — and failed to cut enough government spending to satisfy S&P. The issue has contributed to convulsions in financial markets.

The drop in the rating by one notch to AA-plus was expected. The three main credit agencies, which also include Moody's Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade. S&P said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation. Moody's said Friday it was keeping its AAA rating on the nation's debt, but that it might still lower it.

That’s from the Associated Press.

Governments have painted bonds to be sacramental, which the public has worshipped for all these years. Now that the tide has began to ebb, this illusion has been exposed.

As the great Frank Chodorov wrote

The use of the word investment in connection with a bond issued by the State is a treacherous euphemism. When you buy an industrial bond you lend your money to a corporation so that it can buy a machine with which to increase its output of things wanted by the market. The interest paid you is part of the increased production made possible by your loan. That is an investment. The State, however, does not put your money into production. The State spends it — that is all the State is capable of doing — and your savings disappear. The interest you get comes out of the tax fund, to which you contribute your share, and your share is increased by the cost of servicing your bond. In effect, you are paying yourself. Is that an investment?

Government bonds represent as key instruments of financial repression. They signify as redistribution mechanism of scarce and economically valuable resources from the taxpayers (productive sector of society) to the benefit of the politicians, bureaucrats and vested interest groups (unproductive sectors). Yet this arrangement has limits. Apparently we have reached it.

Now even the politically connected major credit rating agencies have obviously bowed to the forces of the marketplace. Risk-free cannot be attained by fiat or legislation (such as the Basel Accords on the banking system).

Risk-free is thus a myth.

North Korea: The Geopolitics of Blackmail

Forbes columnist Gady Epstein writes, (bold emphasis mine)

North Korea’s shelling today of a South Korean island has reminded the world again of the perennial problem of what to do about the nuclear-armed state. This comes just days after we hear that North Korea has shown off an advanced uranium-enrichment facility, a reminder, too, of how dangerously resourceful this regime can be even as its people face another winter of food and electricity shortages.

In totalitarian states where society have been enslaved by the ruling political class and the bureaucracy, the state can only survive by predation.

Lacking the resources to plunder from its own, totalitarian states resort to expanding the sphere of the politics of predation, through belligerent actions, with its more prosperous neighbors.

As libertarian journalist Frank Chodorov once wrote,

But, since the State thrives on what it expropriates, the general decline in production that it induces by its avarice foretells its own doom. Its source of income dries up. Thus, in pulling Society down it pulls itself down. Its ultimate collapse is usually occasioned by a disastrous war, but preceding that event is a history of increasing and discouraging levies on the marketplace, causing a decline in the aspirations, hopes, and self-esteem of its victims.

North Korea simply fits the bill. She simply wants to live off on a free lunch through the politics of blackmail even if the desperately poor nation knowingly can’t win a full scale war.

And only through poltical brinkmanship can she be able to extract concessions.

As the Wall Street Journal writes,

The purpose is transparently to frighten the West into concluding that there is no alternative to paying off Pyongyang, lest it sell a bomb to al Qaeda or Iran. A far better policy would be a united international effort to further isolate the Kim dynasty with a goal of regime change. Only changing the government will end the North's nuclear threat and liberate its citizens from that prison state.

Of course desperate situations can lead to desperate outcomes, something which Mr. Chodorov predicted.

Nonetheless, Bastiat was right, if goods don’t cross borders armies will. Totalitarian (or despotic) states who do not respect property rights and the rule of law will eventually collapse either from internal political strife (as a consequence of economic cataclysm) or through war.

Bottom line: North Korea is a great example how closed economies (protectionism and mercantilism) through an absolutist predatory state (totalitarianism, communism and fascism) can lead to societal failure or dystopia.

The Silent Revolution: Election Boycotts

In reading Frank Chodorov’s fantastic article, it dawned upon me that I have been an unwitting 6-year practitioner of Mr. Chodorov’s ‘silent revolution’: I haven’t exercised my rights to suffrage in protest to what I perceive as the current farcical ‘social democracy’ which hallmarks the Philippines’ political system.

Here are some rudimentary reasons how and why election boycotts could be utilized as one avenue to institute political change.

These great excerpts from Mr. Chodorov: (all bold highlights mine):

Why should a self-respecting citizen endorse an institution grounded in thievery? For that is what one does when one votes.

In the quiet of his conscience each citizen pledges himself, to himself, not to give moral support to an unmoral institution, and on election day he remains at home.

the fact that every election is a seizure of power. The balloting system has been defined as a battle between opposing forces, each armed with proposals for the public good, for a grant of power to put these proposals into practice. As far as it goes, this definition is correct; but when the successful contestant acquires the grant of power toward what end does he use it — not theoretically but practically? Does he not, with an eye to the next campaign, and with the citizens' money, go in for purchasing support from pressure groups? Whether it is by catering to a monopoly interest whose campaign contribution is necessary to his purpose, or to a privilege-seeking labor group, or to a hungry army of unemployed or of veterans, the over-the-barrel method of seizing and maintaining political power is standard practice

Remember that the proposal to quit voting is basically revolutionary; it amounts to a shifting of power from one group to another, which is the essence of revolution.

All this would change if we quit voting. Such abstinence would be tantamount to this notice to politicians: since we as individuals have decided to look after our affairs, your services are no longer needed. Having assumed social power we must, as individuals, assume social responsibility — provided, of course, the politicians accept their discharge.

Revolutions starts with the individual.

By refusing to exercise our rights to suffrage we should put notice to the everyone, especially to the power hungry politicians, that we expect genuine “change” by fundamentally allowing individuals to assume greater social power and not some pretentious cycles of ‘personality based welfare-free goodies based politics’.

All it takes is to stay home.

Professions of Politicians

The Economist came up with an unusual observation about the stereotyped professions of politicians in different countries.

From the Economist, ``WHEN Barack Obama met Hu Jintao, his Chinese counterpart, it was an encounter not just between two presidents, but also between two professions. A lawyer, trained to argue from first principles and haggle over words, was speaking to an engineer, who knew how to build physical structures and keep them intact. To find out why some professions are prevalent among politicians The Economist trawled through a sample of almost 5,000 politicians in “International Who’s Who”, a reference book, to examine their backgrounds. Some findings are predictable. Africa is full of military men, while lawyers dominate in democracies such as Germany, France and, of course, America. China has a fondness for engineers. But other countries have their own peculiarities. Egypt likes academics; South Korea, civil servants; Brazil, doctors."

Military leaders in Africa reflects on the despotic state of national governance, while "law" in democracies are representative of the prominence of argumentation and debate characteristics which are almost always designed to win the appeal of voters.

Here in the Philippines, many past and present politicos have "law" as background. 8 of the 14 Philippine Presidents were law graduates, namely Ferdinand Marcos, Diosdado Macapagal, Carlos Garcia, Elpidio Quirino, Manuel Roxas, Sergio Osmenia, Jose Laurel, Manuel Quezon. Even Corazon Aquino had an unfinished post graduate studies in law.

Interestingly, since President Marcos, the succeeding presidents have had diverse credentials: Asia's first female President Corazon Aquino had been known as "plain housewife", President Fidel V. Ramos had been a top ranking military officer, President Joseph Estrada a prestigous film actor and the incumbent President Gloria Macapagal Arroyo had been an academic economist and a civil servant.

Nonetheless going back to the commentary by the Economist, we can't explain the quirks of China (fondness for engineers), South Korea (civil servants), Egypt (academics) or Brazil (doctors).

But all these reminds me of two signficant commentaries from Frank Chodorov (1887–1966) in Economics versus Politics, The Rise and Fall of the Society where he says (bold highlight mine)...

``The intrusion of politics into the field of economics is simply an evidence of human ignorance or arrogance, and is as fatuous as an attempt to control the rise and fall of tides. Since the beginning of political institutions, there have been attempts to fix wages, control prices, and create capital, all resulting in failure. Such undertakings must fail because the only competence of politics is in compelling men to do what they do not want to do or to refrain from doing what they are inclined to do, and the laws of economics do not come within that scope. They are impervious to coercion. Wages and prices and capital accumulations have laws of their own, laws which are beyond the purview of the policeman."

and secondly...

``The assumption that economics is subservient to politics stems from a logical fallacy. Since the state (the machinery of politics) can and does control human behavior, and since men are always engaged in the making of a living, in which the laws of economics operate, it seems to follow that in controlling men the state can also bend these laws to its will. The reasoning is erroneous because it overlooks consequences. It is an invariable principle that men labor in order to satisfy their desires, or that the motive power of production is the prospect of consumption; in fact, a thing is not produced until it reaches the consumer."

The underlying moral: regardless of the politician's experience or background, the law of economics must dominate society's needs.