Recommended Reads: The Paper Wealth Bezzle and Frebezzle, The Human Cost of Socialism and the Menace of Egalitarianism

The first link deals with paper stock market wealth as 'Bezzle' and 'Frebezzle'. 

Professor London School of Economics John Kay at the Project Syndicate explains: (hat tip Zero Hedge) [bold mine]

More than a half-century ago, John Kenneth Galbraith presented a definitive depiction of the Wall Street Crash of 1929 in a slim, elegantly written volume. Embezzlement, Galbraith observed, has the property that “weeks, months, or years elapse between the commission of the crime and its discovery. This is the period, incidentally, when the embezzler has his gain and the man who has been embezzled feels no loss. There is a net increase in psychic wealth.” Galbraith described that increase in wealth as “the bezzle.”

In a delightful essay, Warren Buffett’s business partner, Charlie Munger, pointed out that the concept can be extended much more widely. This psychic wealth can be created without illegality: mistake or self-delusion is enough. Munger coined the term “febezzle,” or “functionally equivalent bezzle,” to describe the wealth that exists in the interval between the creation and the destruction of the illusion.

Applying Bezzle and Frebezzle

There are numerous routes to bezzle and febezzle. In a Ponzi scheme, early investors are handsomely rewarded at the expense of latecomers until the supply of participants is exhausted. Such practices, illegal as practiced by Bernard Madoff, are functionally equivalent to what happens during an asset-price bubble.

Tailgating, or picking up dimes in front of a steamroller, is another source of febezzle. Investors search for regular small gains punctuated by occasional large losses, an approach exemplified by the carry trade by which investors borrowed euros in Germany and France to lend in Greece and Portugal.

The “martingale” doubles up on losing bets until the trader wins – or the money runs out. The “rogue traders” escorted from their desks by security guards are typically unsuccessful exponents of the martingale. And the opportunity to switch between the trading book and the banking book creates ready opportunities for financial institutions to realize gains and park losses.

Rings a bell? 

Read the terse article here

Next link, Austrian economist Dr. Richard Ebeling on the death, terror and destruction from applied socialism: The Human Cost of Socialism in Power

From the concluding section (Epic Times): [bold mine, italics original]

The significance of these accounts is not their uniqueness but, rather, their monotonous repetition in every country in which socialism was imposed upon a society. In country after country, death, destruction, and privation followed in the wake of socialism’s triumph. Socialism’s history is an unending story of crushing tyranny and oceans of blood.

Socialism as the Ideology of Death and Destruction

As the Soviet mathematician and dissident, Igor Shafarevich, who spent many years in the GULAG slave labor camps for his opposition to the communist regime, said in his book, The Socialist Phenomenon (1980):

“Most socialist doctrines and movements are literally saturated with the mood of death, catastrophe, and destruction . . . One could regard the death of mankind as the final result to which the development of socialism leads.”

That twentieth century socialism would lead to nothing but this outcome was understood at the time of the Bolshevik victory in Russia. It was clearly expressed by the greatest intellectual opponent of socialism during the last one hundred years, the Austrian economist, Ludwig von Mises.

Near the end of his famous 1922 treatise, Socialism: An Economic and Sociological Analysis, Mises warned that:

“Socialism is not in the least what is pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build, it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production has created . . . Each step leading towards Socialism must exhaust itself in the destruction of what already exists.”

Read the entire article here

Last, the path to towards socialism via egalitarian policies. 

Here is a slice of Ludwig von Mises Institute Llewellyn H. Rockwell’s The Menace of Egalitarianism speech. (bold mine) 

What are we to understand by the word equality? The answer is, we don’t really know. Its proponents make precious little effort to disclose to us precisely what they have in mind. All we know is that we’d better believe it.

It is precisely this lack of clarity that makes the idea of equality so advantageous for the state. No one is entirely sure what the principle of equality commits him to. And keeping up with its ever-changing demands is more difficult still. What were two obviously different things yesterday can become precisely equal today, and you’d better believe they are equal if you don’t want your reputation destroyed and your career ruined.

This was the heart of the celebrated dispute between the neoconservative Harry Jaffa and the paleoconservative M.E. Bradford, carried out in the pages of Modern Age in the 1970s. Equality is a concept that cannot and will not be kept restrained or nailed down. Bradford tried in vain to make Jaffa understand that Equality with a capital E was a recipe for permanent revolution….

Now, do egalitarians mean we are committed to the proposition that anyone is potentially an astrophysicist, as long as he is raised in the proper environment? Maybe, maybe not. Some of them certainly do believe such a thing, though. In 1930, the Encyclopaedia of the Social Sciences claimed that “at birth human infants, regardless of their heredity, are as equal as Fords.” Ludwig von Mises, by contrast, held that “the fact that men are born unequal in regard to physical and mental capabilities cannot be argued away. Some surpass their fellow men in health and vigor, in brain and aptitudes, in energy and resolution and are therefore better fitted for the pursuit of earthly affairs than the rest of mankind.” Did Mises commit a hate crime there, by the standards of the egalitarians? Again, we don’t really know.

Then there’s “equality of opportunity,” but even this common conservative slogan is fraught with problems. The obvious retort is that in order to have true equality of opportunity, sweeping government intervention is necessary. For how can someone in a poor household with indifferent parents seriously be said to have “equality of opportunity” with the children of wealthy parents who are deeply engaged in their lives?

Then there is equality in a cultural sense, whereby everyone is expected to ratify everyone else’s personal choices. The cultural egalitarians don’t really mean that, of course: none of them demand that people who dislike Christians sit down and learn Scholastic theology in order to understand them better. And here we discover something important about the whole egalitarian program: it’s not really about equality. It’s about some people exercising power over others.

Read the rest here

Lew Rockwell: What Libertarianism is and isn’t

From the founder and chairman of Mises Institute Llewellyn Rockwell, Jr. at the LewRockwell.com (bold mine)

Libertarianism is concerned with the use of violence in society. That is all. It is not anything else. It is not feminism. It is not egalitarianism (except in a functional sense: everyone equally lacks the authority to aggress against anyone else). It has nothing to say about aesthetics. It has nothing to say about race or nationality. It has nothing to do with left-wing campaigns against “white privilege,” unless that privilege is state-supplied.

Let me repeat: the only “privilege” that matters to a libertarian qua libertarian is the kind that comes from the barrel of the state’s gun. Disagree with this statement if you like, but in that case you will have to substitute some word other than libertarian to describe your philosophy.

Libertarians are of course free to concern themselves with issues like feminism and egalitarianism. But their interest in those issues has nothing to do with, and is not required by or a necessary feature of, their libertarianism. Accordingly, they may not impose these preferences on other libertarians, or portray themselves as fuller, more consistent, or more complete libertarians. We have seen enough of our words twisted and appropriated by others. We do not mean to let them have libertarian.

As Rothbard put it:

“There are libertarians who are indeed hedonists and devotees of alternative lifestyles, and that there are also libertarians who are firm adherents of “bourgeois” conventional or religious morality. There are libertarian libertines and there are libertarians who cleave firmly to the disciplines of natural or religious law. There are other libertarians who have no moral theory at all apart from the imperative of non-violation of rights. That is because libertarianism per se has no general or personal moral theory.

Libertarianism does not offer a way of life; it offers liberty, so that each person is free to adopt and act upon his own values and moral principles. Libertarians agree with Lord Acton that “liberty is the highest political end” – not necessarily the highest end on everyone’s personal scale of values.

Libertarians are unsuited to the thought-control business. It’s difficult enough trying to persuade people to adopt views dramatically opposed to what they have been taught throughout their lives. If we can persuade them of the nonaggression principle, we should be delighted. There is no need to complicate things by arbitrarily imposing a slate of regime-approved opinions on top of the core teaching of our philosophy.

Libertarianism is a beautiful and elegant edifice of thought and practice. It begins with and logically builds upon the principle of self-ownership. In the society it calls for, no one may initiate physical force against anyone else. What this says about the libertarian’s view of moral enormities ranging from slavery to war should be obvious, but the libertarian commitment to freedom extends well beyond the clear and obvious scourges of mankind.

Our position is not merely that the state is a moral evil, but that human liberty is a tremendous moral good. Human beings ought to interact with each other on the basis of reason – their distinguishing characteristic – rather than with hangmen and guns. And when they do so, the results, by a welcome happenstance, are rising living standards, an explosion in creativity and technological advance, and peace. Even in the world’s partially capitalist societies, hundreds of millions if not billions of people have been liberated from the miserable, soul-crushing conditions of hand-to-mouth existence in exchange for far more meaningful and fulfilling lives.

Libertarianism, in other words, in its pure and undiluted form, is intellectually rigorous, morally consistent, and altogether exciting and thrilling. It need not and should not be fused with any extraneous ideology. This can lead only to confusion, and to watering down the central moral claims, and the overall appeal, of the message of liberty.

Cheers!

Quote of the Day: The Benefit of Not Voting

we do have the freedom not to vote. No one has yet drafted us into the voting booth. I suggest that we exercise this right not to participate. It is one of the few rights we have left. Nonparticipation sends a message that we no longer believe in the racket they have cooked up for us, and we want no part of it.

You might say that this is ineffective. But what effect does voting have? It gives them what they need most: a mandate. Nonparticipation helps deny that to them. It makes them, just on the margin, a bit more fearful that they are ruling us without our consent. This is all to the good. The government should fear the people. Not voting is a good beginning toward instilling that fear

This is from Llewellyn H. Rockwell, Jr. founder and chairman of the Mises Institute, at the LewRockwell.com

Lew Rockwell on Video: Abolish the Euro and the EU

Ludwig von Mises Institute Chairman Llewellyn Rockwell Jr. says that the Euro and EU (and the US) operates to survive politically privileged banks

we live in some sort of bank-ocracy (2:17)

Lew Rockwell on the REAL Evil 1%

Mises Institute Founder and Chairman Llewellyn H. Rockwell, Jr. eloquently writes,

In the end, we end up with about 3 million people who constitute what is commonly called the State. For short, we can just call these people the 1%.

The 1% do not generate any wealth of their own. Everything they have they get by taking from others under the cover of law. They live at our expense. Without us, the State as an institution would die….

The State is the institution that essentially redefines criminal wrongdoing to make itself exempt from the law that governs everyone else.

It is the same with every tax, every regulation, every mandate, and every single word of the federal code. It all represents coercion. Even in the area of money and banking, it is the State that created and sustains the Fed and the dollar because it forcibly limits competition in money and banking, preventing people from making gold or silver money, or innovating in other ways. And in some ways, this is the most dreadful intervention of all, because it allows the State to destroy our money on a whim.

The State is everybody’s enemy. Why don’t the protesters get this? Because they are victims of propaganda by the State, doled out in public school, that attempts to blame all human suffering on private parties and free enterprise. They do not comprehend that the real enemy is the institution that brainwashes them to think they way they do.

They are right that society is rife with conflicts, and that the contest is wildly lopsided. It is indeed the 99% vs. the 1%. They’re just wrong about the identity of the enemy.

Parasites thrive on hosts and at the latter's expense. That’s how the causal relationship works (even in biology).