Quote of the Day: The vision of the left is a vision of themselves

The vision of the left is not just a vision of the world. For many, it is also a vision of themselves -- a very flattering vision of people trying to save the planet, rescue the exploited, create "social justice" and otherwise be on the side of the angels. This is an exalting vision that few are ready to give up, or to risk on a roll of the dice, which is what submitting it to the test of factual evidence amounts to. Maybe that is why there are so many fact-free arguments on the left, whether on gun control, minimum wages, or innumerable other issues -- and why they react so viscerally to those who challenge their vision

This is from economist, author and political philosopher Thomas Sowell at the Townhall.com. 

Quotation of the Day: Which is more dangerous, inequalities of wealth or concentrations of power?

Those who want to "spread the wealth" almost invariably seek to concentrate the power. It happens too often, and in too many different countries around the world, to be a coincidence. Which is more dangerous, inequalities of wealth or concentrations of power?

This is from American economist, philosopher and author Thomas Sowell in his "Random Thoughts" article at the Townhall.com. 

Thomas Sowell on the Yellen’s Keynesianism

Thomas Sowell addresses the prospective Keynesian economic policies from incoming Fed chief Janet Yellen.

Writes Mr. Sowell at the Townhall.com

Ms. Yellen asks: "Do policy-makers have the knowledge and ability to improve macroeconomic outcomes rather than making matters worse?" And she answers: "Yes."

The former economics professor is certainly asking the right questions -- and giving the wrong answers.

Her first question, whether free market economies can achieve full employment without government intervention, is a purely factual question that can be answered from history. For the first 150 years of the United States, there was no policy of federal intervention when the economy turned down.

No depression during all that time was as catastrophic as the Great Depression of the 1930s, when both the Federal Reserve System and Presidents Herbert Hoover and Franklin D. Roosevelt intervened in the economy on a massive and unprecedented scale.

Despite the myth that it was the stock market crash of 1929 that caused the double-digit unemployment of the 1930s, unemployment never reached double digits in any of the 12 months that followed the 1929 stock market crash.

Unemployment peaked at 9 percent in December 1929 and was back down to 6.3 percent by June 1930, when the first major federal intervention took place under Herbert Hoover. The unemployment decline then reversed, rising to hit double digits six months later. As Hoover and then FDR continued to intervene, double-digit unemployment persisted throughout the remainder of the 1930s.

Conversely, when President Warren G. Harding faced an annual unemployment rate of 11.7 percent in 1921, he did absolutely nothing, except for cutting government spending.

Keynesian economists would say that this was exactly the wrong thing to do. History, however, says that unemployment the following year went down to 6.7 percent -- and, in the year after that, 2.4 percent.

Under Calvin Coolidge, the ultimate in non-interventionist government, the annual unemployment rate got down to 1.8 percent. How does the track record of Keynesian intervention compare to that?

So expect more bubbles, a build up of systemic fragility from a pileup of debt and more Wall Street friendly policies such as implicit guarantees and (explicit) bailouts at the expense of main street.

Thomas Sowell: Why the minimum wage isn’t compassion for the poor

Snippets from economist Thomas Sowell’s article entitled Minimum Wage Madness  at the lewrockwell.com

Minimum wage hurt the young and the minority:

Unemployed young people lose not only the pay they could have earned but, at least equally important, the work experience that would enable them to earn higher rates of pay later on.

Minorities, like young people, can also be priced out of jobs. In the United States, the last year in which the black unemployment rate was lower than the white unemployment rate — 1930 — was also the last year when there was no federal minimum wage law. Inflation in the 1940s raised the pay of even unskilled workers above the minimum wage set in 1938. Economically, it was the same as if there were no minimum wage law by the late 1940s.

In 1948 the unemployment rate of black 16-year-old and 17-year-old males was 9.4 percent. This was a fraction of what it would become in even the most prosperous years from 1958 on, as the minimum wage was raised repeatedly to keep up with inflation.

Some “compassion” for “the poor”!

Minimum wages as instruments for racial discrimination

Minimum wage laws can even affect the level of racial discrimination. In an earlier era, when racial discrimination was both legally and socially accepted, minimum wage laws were often used openly to price minorities out of the job market.

In 1925, a minimum wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry.

A well regarded Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less….

People whose wages are raised by law do not necessarily benefit, because they are often less likely to be hired at the imposed minimum wage rate.

Minimum wage discriminates non labor union workers and promotes the interests of union members

Labor unions have been supporters of minimum wage laws in countries around the world, since these laws price non-union workers out of jobs, leaving more jobs for union members.

Feel good policies are likely to backfire

People who are content to advocate policies that sound good, whether for political reasons or just to feel good about themselves, often do not bother to think through the consequences beforehand or to check the results afterwards.

Read the rest here

As a proverb says “the road to hell is paved with good intentions”

Quote of the Day: The Intelligencia pay no price for being wrong

Well, if you come up with a lot of wrong ideas and pay a price for it, you’re forced to think about it and to change your ways or else get eliminated. But there is no such test. The only test for most intellectuals is whether other intellectuals go along with them. And if they all have a wrong idea, then it becomes invincible.

This is from economic professor, author and political philosopher Thomas Sowell expounding a passage “The Intelligencia pay no price for being wrong” from his latest book Intellectuals and Race in a video interview with Wall Street Journal’s Peter Robinson. (hat tip Mises Blog)

Paying no price for being wrong can be seen in the same light as Nassim Taleb's “skin in the game”, the stakeholder’s dilemma or the principal agent problem—conflict of interests shaped by diverse incentives

This is very relevant not only to the participants of the financial markets but especially pronounced in public opinion arena where social policies are shaped. The crux: Bad ideas have consequences. And people with little “skin in the game” or “pay no price for being wrong” are the most notorious promoters of ‘noble sounding’ deceptive ideas.

Quote of the Day: The Fallacy of Redistribution

Those who talk glibly about redistribution often act as if people are just inert objects that can be placed here and there, like pieces on a chess board, to carry out some grand design. But if human beings have their own responses to government policies, then we cannot blithely assume that government policies will have the effect intended.

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. The communist nations were a classic example, but by no means the only example.

In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler's Holocaust in the 1940s.

How can that be? It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth -- and that future wealth is less likely to be produced when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops, when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally keep tending and feeding while raising them to maturity.

People in industry are not inert objects either. Moreover, unlike farmers, industrialists are not tied to the land in a particular country.

Russian aviation pioneer Igor Sikorsky could take his expertise to America and produce his planes and helicopters thousands of miles away from his native land. Financiers are even less tied down, especially today, when vast sums of money can be dispatched electronically to any part of the world.

If confiscatory policies can produce counterproductive repercussions in a dictatorship, they are even harder to carry out in a democracy. A dictatorship can suddenly swoop down and grab whatever it wants. But a democracy must first have public discussions and debates. Those who are targeted for confiscation can see the handwriting on the wall, and act accordingly.

Among the most valuable assets in any nation are the knowledge, skills and productive experience that economists call "human capital." When successful people with much human capital leave the country, either voluntarily or because of hostile governments or hostile mobs whipped up by demagogues exploiting envy, lasting damage can be done to the economy they leave behind.

 This is from author Thomas Sowell. Read the rest here

What the Political Rhetoric “You Didn't Get There on Your Own” Means

When a politician preaches that “you didn't get there on your own” they may only be half right. That’s because our world operates on the principle of division of labor where no one really produces things on their own.

No one, on his own, even knows how to make a simple product like the pencil, as Milton Friedman explained

But what the politicians really mean is that every entrepreneurial success (wealth) has been owed to the government.

The distinguished Thomas Sowell exposes such myth or deception {bold emphasis mine]

Let's stop and think, even though the whole purpose of much political rhetoric is to keep us from thinking, and stir our emotions instead.

Even if we were to assume, just for the sake of argument, that 90 percent of what a successful person has achieved was due to the government, what follows from that? That politicians will make better decisions than individual citizens, that politicians will spend the wealth of the country better than those who created it? That doesn't follow logically -- and certainly not empirically.

Does anyone doubt that most people owe a lot to the parents who raised them? But what follows from that? That they should never become adults who make their own decisions?

The whole point of the collectivist mindset is to concentrate power in the hands of the collectivists -- which is to say, to take away our freedom. They do this in stages, starting with some group that others envy or resent -- Jews in Nazi Germany, capitalists in the Soviet Union, foreign investors in Third World countries that confiscate their investments and call this theft "nationalization."

Freedom is seldom destroyed all at once. More often it is eroded, bit by bit, until it is gone. This can happen so gradually that there is no sudden change that would alert people to the danger. By the time everybody realizes what has happened, it can be too late, because their freedom is gone.

All the high-flown talk about how people who are successful in business should "give back" to the community that created the things that facilitated their success is, again, something that sounds plausible to people who do not stop and think through what is being said. After years of dumbed-down education, that apparently includes a lot of people.

Take Obama's example of the business that benefits from being able to ship their products on roads that the government built. How does that create a need to "give back"?

Did the taxpayers, including business taxpayers, not pay for that road when it was built? Why should they have to pay for it twice?

What about the workers that businesses hire, whose education is usually created in government-financed schools? The government doesn't have any wealth of its own, except what it takes from taxpayers, whether individuals or businesses. They have already paid for that education. It is not a gift that they have to "give back" by letting politicians take more of their money and freedom.

When businesses hire highly educated people, such as chemists or engineers, competition in the labor market forces them to pay higher salaries for people with longer years of valuable education. That education is not a government gift to the employers. It is paid for while it is being created in schools and universities, and it is paid for in higher salaries when highly educated people are hired.

One of the tricks of professional magicians is to distract the audience's attention from what they are doing while they are creating an illusion of magic. Pious talk about "giving back" distracts our attention from the cold fact that politicians are taking away more and more of our money and our freedom.

Bottom line: Reading between the lines helps to protect one from getting hoodwinked by political glib talkers.

Understanding Political Terminologies 2: Social Justice, Greece, Austerity and Insurance

Political language have been deliberately mangled to suit and promote the interests of political agents and their followers. I have given a few examples earlier.

More examples:

1. SOCIAL JUSTICE

Once again here is the brilliant Thomas Sowell on “Social Justice”

If there were a Hall of Fame for political rhetoric, the phrase "social justice" would deserve a prominent place there. It has the prime virtue of political catchwords: It means many different things to many different people.

In other words, if you are a politician, you can get lots of people, with different concrete ideas, to agree with you when you come out boldly for the vague generality of "social justice."

Justice Oliver Wendell Holmes said that a good catchword can stop thought for 50 years. The phrase "social justice" has stopped many people from thinking, for at least a century -- and counting.

If someone told you that Country A had more "social justice" than Country B, and you had all the statistics in the world available to you, how would you go about determining whether Country A or Country B had more "social justice"? In short, what does the phrase mean in practice -- if it has any concrete meaning?

In political and ideological discussions, the issue is usually whether there is some social injustice. Even if we can agree that there is some injustice, what makes it social?

Surely most of us are repelled by the thought that some people are born into dire poverty, while others are born into extravagant luxury -- each through no fault of their own and no virtue of their own. If this is an injustice, does that make it social?

The baby born into dire poverty might belong to a family in Bangladesh, and the one born to extravagant luxury might belong to a family in America. Whose fault is this disparity or injustice? Is there some specific society that caused this? Or is it just one of those things in the world that we wish was very different?

If it is an injustice, it is unjust from some cosmic perspective, an unjust fate, rather than necessarily an unjust policy, institution or society.

Investing guru Doug Casey also shares more verbal twisting (Greece and Austerity)…

2. GREECE

it's not "Greece" we're talking about, but the Greek government. It's the Greek government that's made the laws that got people used to pensions for retirement at age 55. It's the Greek government that's built up a giant and highly paid bureaucracy that just sits around when it's not actively gumming up the economy. It's the Greek government that's saddled the country with onerous taxes and regulations that make most business more trouble than it's worth. It's the Greek government that borrowed billions that the citizens are arguably responsible for. It's the Greek government that's set the legal and moral tone for the pickle the place is in.

3. AUSTERITY

the term "austerity" is used very loosely by the talking heads on TV. It sounds bad, even though it just means living within one's means… or, for Europeans, not too insanely above them. But who knows what's actually included or excluded from what the EU leaders think of as austerity? Take the Greek pension funds, for example: exactly how are they funded? I'd expect that private companies make payments to a state fund, as Americans do via the Social Security program. I suspect there's no money in the coffers; it's all been frittered on high living and socialist boondoggles. Tough luck for pensioners. Maybe they can convince the Chinese to give them money to keep living high off the hog…

4. I would add INSURANCE as camouflage for the Welfare State

From Murray N. Rothbard,

The answer is the very existence of health-care insurance, which was established or subsidized or promoted by the government to help ease the previous burden of medical care. Medicare, Blue Cross, etc., are also very peculiar forms of "insurance."

If your house burns down and you have fire insurance, you receive (if you can pry the money loose from your friendly insurance company) a compensating fixed money benefit. For this privilege, you pay in advance a fixed annual premium. Only in our system of medical insurance, does the government or Blue Cross pay, not a fixed sum, but whatever the doctor or hospital chooses to charge.

In economic terms, this means that the demand curve for physicians and hospitals can rise without limit. In short, in a form grotesquely different from Say's Law, the suppliers can literally create their own demand through unlimited third-party payments to pick up the tab. If demand curves rise virtually without limit, so too do the prices of the service.

In order to stanch the flow of taxes or subsidies, in recent years the government and other third party insurers have felt obliged to restrict somewhat the flow of goodies: by increasing deductibles, or by putting caps on Medicare payments. All this has been met by howls of anguish from medical customers who have come to think of unlimited third-party payments as some sort of divine right, and from physicians and hospitals who charge the government with "socialistic price controls" — for trying to stem its own largesse to the health-care industry!

In addition to artificial raising of the demand curve, there is another deep flaw in the medical insurance concept. Theft is theft, and fire is fire, so that fire or theft insurance is fairly clear-cut the only problem being the "moral hazard" of insurees succumbing to the temptation of burning down their own unprofitable store or apartment house, or staging a fake theft, in order to collect the insurance.

In the world of politics,lies, distortions and equivocations are the norm.

Don't fall for them

Understanding Political Terminologies

The following are excerpts from the splendid article of the distinguished economist Thomas Sowell. Here are the meaning of some popular political terms:

1. FAIRNESS

One of the most versatile terms in the political vocabulary is “fairness.” It has been used over a vast range of issues, from “fair trade” laws to the Fair Labor Standards Act. And recently we have heard that the rich don’t pay their “fair share” of taxes.

Some of us may want to see a definition of what is “fair.” But a concrete definition would destroy the versatility of the word, which is what makes it so useful politically.

If you said, for example, that 46.7 percent of their income — or any other number — is the “fair share” of their income that the rich should have to pay in taxes, then once they paid that amount, there would be no basis for politicians to come back to them for more — and “more” is what “fair share” means in practice.

Life in general has never been even close to fair, so the pretense that the government can make it fair is a valuable and inexhaustible asset to politicians who want to expand government.

2. GREEDY, COMPASSION and HUNGRY

A more positive term that is likely to be heard a lot, during election years especially, is “compassion.” But what does it mean concretely? More often than not, in practice it means a willingness to spend the taxpayers’ money in ways that will increase the spender’s chances of getting reelected.

In the political language of today, people who want to keep what they have earned are said to be “greedy,” while those who wish to take their earnings from them and give it to others (who will vote for them in return) show “compassion.”

A political term that had me baffled for a long time was “the hungry.” Since we all get hungry, it was not obvious to me how you single out some particular segment of the population to refer to as “the hungry.”

Eventually, over the years, it finally dawned on me what the distinction was. People who make no provision to feed themselves, but expect others to provide food for them, are those whom politicians and the media refer to as “the hungry.”

Those who meet this definition may have money for alcohol, drugs or even various electronic devices. And many of them are overweight. But, if they look to voluntary donations, or money taken from the taxpayers, to provide them with something to eat, then they are “the hungry”.

Beware of the Orwellian doublespeak

Quote of the Day: Omniscient Social Justice

The question is not what anybody deserves. The question is who is to take on the God-like role of deciding what anyone else deserves. You can talk about 'social justice' all you want. But what death taxes boil down to is letting politicians take money from widows and orphans to pay for goodies that they will hand out to others, in order to buy votes to get reelected. That is not social justice or any other kind of justice

That’s from the brilliant Professor Thomas Sowell who defends inherited wealth from charges of inequality in his book the Controversial Essays. The equally profound David Gordon of the Mises Institute has a review of the book from which the above quote has been sourced.

Quote of the Day: Why Intellectuals Promote Statism

Intellectuals have all too often promoted these envy and resentment ideologies. There are both psychic and material rewards for the intelligentsia in doing so, even when the supposed beneficiaries of these ideologies end up worse off. When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear.

That’s from Professor and author Thomas Sowell writing about the selective focusing by mainstream intellectuals in dealing with disparities, where their major thrust has been to promote the politics of class warfare.

[Gosh, this resonates much to the Philippine setting]

Quote of the Day: The Real Egalitarians

The real egalitarians are not the people who want to redistribute wealth to the poor, but those who want to extend to the poor the ability to create their own wealth, to lift themselves up, instead of trying to tear others down. Earning respect, including self-respect, is better than being a parasite.

That’s from Thomas Sowell

Enervate Crony Capitalism: Cut Their Financing

Speaking of crony capitalism, Professor and author Thomas Sowell suggests how to enervate them—cut their financing!

Here is Professor Sowell, (townhall.com) [bold emphasis mine]

Trying to reduce the deficit by cutting spending runs into an old familiar counter-attack. There will be all kinds of claims by politicians and sad stories in the media about how these cuts will cause the poor to go hungry, the sick to be left to die, etc.

My plan would start by cutting off all government transfer payments to billionaires. Many, if not most, people are probably unaware that the government is handing out the taxpayers' money to billionaires. But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer.

Big corporations also get big bucks from the government, not only in agricultural subsidies but also in the name of "green" policies, in the name of "alternative energy" policies, and in the name of whatever else will rationalize shoveling the taxpayers' money out the door to whomever the administration designates, for its own political reasons.

The usual political counter-attacks against spending cuts will not work against this new kind of spending cut approach. How many heart-rending stories can the media run about billionaires who have lost their handouts from the taxpayers? How many tears will be shed if General Motors gets dumped off the gravy train?

It would also be eye-opening to many people to discover how much government money is going into subsidizing all sorts of things that have nothing to do with helping "the poor" or protecting the public. This would include government-subsidized insurance for posh and pricey coastal resorts, located too dangerously close to the ocean for a private insurance company to risk insuring them.

Below is a timely example (hat tip Filipino libertarian colleague Jep Chu) of what Mr. Sowell calls as ‘sad stories in the media’ which projects the image of government as ‘helping the poor and protecting the public’.

The fact is that “subsidizing all sorts of things” signify no less than political propaganda for the benefit of the politically privileged vested interest groups that feeds on government revenues forcibly extracted from the public.

Unfortunately, sad stories sell to irrational voters.

Halili Kho Sex Video Scandal: A Case of Political Opportunism

A short commentary on the Katrina Halili-Dr. Hayden Kho Sex video scandal.

It is quite dumbfounding how media and politicians have turned in haste an isolated problem into some sort of a collective spectacle or "national" crisis-as Senators and the Palace has joined the fray. And some of them have used the opportunity to scream for new legislation/s to curb so called abuses.

This isn't about "offensive to public morals" - the cyberspace has hundreds if not thousands of sites that cater to pornography, sex videos or "voyeurism". And these include some locals.

Moreover, through the years police enforcement hasn't been able to contain the sale of lewd "illegal" DVDs as scandals upon scandals have emerged.

Besides, this problem isn't anything new-anyone remember the Betamax scandal of a local politician and a sexy movie star?

This only goes to show how our officials have little understanding of the cyberspace or they are not being forthright or have other latent interests.

The main difference in this scandal is that those involved have been public personalities, if not celebrities. And given the proximity of the national elections, the sensationalism surrounding the incident seem like an egregious opportunity to generate broad publicity mileage.

Going back to the case, the issue again is NOT about morality but about the violation of the aggrieved party's private property.

If it can be established that the perpetrator willfully deceived the other party to broadcast their private tryst in breach of trust then there should be an indictment.

And it can also be seen from the context of client-confidentiality if such circumstances have existed.

For instance, the recent sex scandal in Hong Kong saw the arrest of a computer technician who spread the private videos he illicitly obtained when his actor client brought the computer for repair; where the so called "voyeurism" or sex video wasn't disseminated by the participants but by a third party.

In any case, passing fickle laws to curb "this" and "that" has only worsened the problems by creating legal loopholes, fostering bureaucratic inefficiencies, opened opportunities to extortion, bribery and corruption, and has increased profit margins for politically backed operators which sustains the business of "illegality".

Moreover, the proposed law is a form of state expansion which could be utilized as an instrument to suppress the freedom of speech and expression.

Don't forget that each new law comes with attendant expenses that funds the bureacracy for its implementation-all at the expense of the taxpayer and the costs to do business here.

In short, people pay for the mischiefs, profligacy, grandstanding and wrong policies by politicians through higher consumer prices, lack of jobs and poverty.

What may be seen as a popular may in fact be an illusion, learning from Thomas Sowell, ``Televised congressional hearings are not just broadcasts of what happens to be going on in Congress. They are staged events to create a prepackaged impression.

``Politically, they are millions of dollars’ worth of free advertising for incumbents, while campaign-finance laws impede their challengers from being able even to buy name recognition or to present their cases to the public nearly as often.

``The real work of Congress gets done where there are no cameras and no microphones — and where politicians can talk turkey with one another to make deals that could not be made with the public listening in.

``To be a fly on the wall, able to listen in while these talks were going on, would no doubt be very enlightening, even if painfully disillusioning. But that is not what you are getting in video footage on the evening news.

``Some might argue that, in the absence of the cameras, many people might not know what is going on in Congress or in the courts. But being uninformed is not nearly as bad as being misled.

``For one thing, it is much easier to know that you are uninformed than to know that you are being misled."

Don't be misled.