How Political Discrimination Kills

George Mason University professor and author of Myth of the Rational Voter Bryan Caplan has a concise but insightful narrative about how the diminutive Joseph Schmidt (1904-1942) overcame his physical shortcomings and became a famous opera singer but unfortunately political discrimination did him in.

Professor Caplan concludes:

As every opera fan knows, life is full of tragedy.  Sometimes people laugh at you for being short.  Sometimes people hate you for being a Jew.  Tragedy, however, is more than a matter of intentions.  Markets muffle the effects of bad intentions.  Governments amplify the effects of bad intentions to their logical conclusion.  Market discrimination gave Joseph Schmidt an ugly hurdle to overcome - but with some ingenuity, he overcome it.  Government discrimination, in contrast, deliberately walled off his every option.  He tried to escape, but there was no escape.  Governments driven by prejudice stripped Joseph Schmidt of his livelihood, then took his life.

How Economic Freedom Erodes India’s Caste System

From Economic Times India, (bold emphasis mine)

On the face of it, entrepreneur Ashok Khade is just another one of India's growing wealthy, heading a successful $27 million infrastructure and oil and gas business group that employs 4,500 people.

But the 56-year-old is a rarity, as he belongs to India's dalit, or "untouchable" classes, who for centuries have been anchored at the bottom of Hinduism's caste system and remain among the most exploited and despised.

The opening up of India's economy has helped bring in some mobility in the rigid social hierarchy, leading to a gradual rise in jobs and opportunities for India's poorest and even created a new breed -- the dalit millionaire.

Khade, a first-generation businessman who now drives a BMW, battled poverty and discrimination as a child in a village near Sangli in Maharashtra state, about 400 kilometres (250 miles) from India's financial hub, Mumbai.

Not only has economic freedom been expanding people’s choice—to avail of or harness more economic opportunities—for them to advance (unless they are mentally resigned to comply with local customs), but has also been instrumental in reducing class discrimination or class inequalities by providing “some mobility in the rigid social hierarchy”. In short, economic freedom and free trade changes culture.

Fat Taxes and the Road to Serfdom

From Yahoo

On Oct. 1, consumers in Denmark saw a sudden jump in the cost of many of their favorite bread-friendly products. The average price of a half-pound package of butter increased by 2.5 krone (or 45 U.S. cents). A pound of cheese rose from 34.5 krone ($6) to 36 krone ($6.50). And don't even think about lard. In a single day, the cost of a half-pound block of pork fat skyrocketed from 12 krone ($2.15) to 16 krone ($2.85) — a 35% increase. Thanks to a new fat tax, Danes are paying more for just about anything they might want to slather on a piece of bread.

Other countries have imposed tariffs on food and drink considered unhealthy, but Denmark is taking the "fat tax" appellation literally. In the name of reducing cardiovascular disease, obesity, and diabetes, the law that went into effect on Saturday specifically targets saturated fats — the fats found most commonly in animal products like butter, cream, and meat. But few outside the government seem to think it's a good idea — or even a healthy one.

Social engineering policies like the above, which attempts to “nudge” people’s behavior, are expressions of how political leaders think of us. They see as incorrigible idiots who don’t know what is the best interest for ourselves. They essentially are imposing their value preferences on us.

While waging war against the 'fat' or 'obese' seems noble sounding, the unintended consequence is to politically stigmatize people who are ‘fat’ or ‘obese’. In short, such paternal nudging policies promote discrimination and societal divisiveness. Shouldn’t we also tax skinny people too who may also signify as health hazards?

The other unintended effect has been to raise consumer prices which affects not only the fat but even the non obese. So the social costs of rectifying such aberrations will unfortunately befall to everyone.

Social engineering policies signify as slippery slope or incremental steps towards total control of people—a totalitarian state.

As Ludwig von Mises wrote,

The "social engineer" is the reformer who is prepared to
"liquidate" all those who do not fit into his plan for the arrangement of human affairs.

On the other hand, the welfare state, whom have increasingly been burdened by financial strains as a result of the ballooning of the unsustainable system, has been using such ‘sin taxes’ as pretext or as propaganda to raise funds in order to maintain or preserve on the privileges of the political class.

Emerging Labor Protectionism In Japan

In 1850 Frederic Bastiat wrote in his prologue the magnificent must read essay, That Which is Seen, and That Which is Not Seen

``In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil."

In other words, laws always constitute an economic trade off between the present and the future. Policymakers are usually predisposed to respond to short term visible effects arising from crops of present concerns but ignoring the larger costs from unforeseen consequences.

We have a very good example of this phenomenon unfolding in today's crisis laden environment.

In Japan, the current deep recession has compelled policymakers to repatriate its migrant workers as reaction to widening unemployment.

According to the New York Times, ``But the nation’s manufacturing sector has slumped as demand for Japanese goods evaporates worldwide, prompting job cuts and pushing the jobless rate to a three-year high of 4.4 percent. Japan’s exports plunged 46 percent in March from a year earlier, and industrial production is at its lowest level in 25 years.

``So Japan has been keen to help foreign workers go home, thus easing pressure on domestic labor markets and getting thousands off unemployment rolls.

“Japan’s economy has hit a rainstorm. There won’t be good employment opportunities for a while, so that’s why we’re suggesting that the Nikkei Brazilians go home,” said Jiro Kawasaki, a former health minister and senior lawmaker of the ruling Liberal Democratic Party.

``“Naturally, we don’t want those same people back in Japan after a couple of months,” Mr. Kawasaki said, who led the ruling party task force that devised the repatriation plan, part of a wider emergency strategy to combat rising unemployment in Japan. “Then Japanese taxpayers would ask, ‘What kind of ridiculous policy is this?’ ”

``Under the emergency program, introduced this month, the country’s Brazilian and other Latin American guest workers are offered $3,000 toward air fare, plus $2,000 for each dependent — attractive lump sums for many immigrants here. Workers who leave have been told they can pocket any change.

The idea is, in order to ease statistical unemployment, Japan's policymakers simply decided to send the laborers away! Reduced workers equals low unemployment rates-what genius!

Next, such reactionary program possibly unmasks of Japan policymakers' narrowmindedness and antagonism to global cultural integration.

More from the New York Times, ``But Mr. Kawasaki, the former health minister, said the economic slump was a good opportunity to overhaul Japan’s immigration policy as a whole.

``“We should stop letting unskilled laborers into Japan. We should make sure that even the three-K jobs are paid well, and that they are filled by Japanese,” he said.

``“I do not think that Japan should ever become a multi-ethnic society” like the United States, which “has been a failure on the immigration front,” Mr. Kawasaki added. That failure, he said, was demonstrated by extreme income inequalities between rich Americans and poor immigrants.

Another, Japan's recent actions reflects discrimination and protectionism...

Again from the New York Times, ``Japan’s repatriation offer is limited to the country’s Latin American guest workers, whose Japanese parents and grandparents emigrated to Brazil and neighboring countries a century ago to work on coffee plantations...

``The plan to fly immigrants out of Japan has come as a shock to many here, especially after the Japanese government introduced a number of measures in recent months to help jobless foreigners, including free Japanese-language courses, vocational training and job counseling. Guest workers are eligible for limited cash unemployment benefits, provided they have paid monthly premiums.

``“It’s baffling,” said Angelo Ishi, an associate professor in sociology at Musashi University in Tokyo. “The Japanese government has previously made it clear that they welcome Japanese-Brazilians, but this is an insult to the community.”

Lastly the article showcases Japan's structural long term problems...

``The program comes despite warnings that the aging country needs all the foreign workers it can attract to stave off a impending labor shortage.

``Japan’s population has been falling since 2005, and its working-age population could fall by a third by 2050. Though manufacturers have been laying off workers, sectors like farming and elderly care still face shortages...

``Critics denounce the program as short-sighted and inhumane, and a threat to what little progress Japan has made in opening its economy to foreign workers.

``“It’s a disgrace. It’s cold-hearted,” said Hidenori Sakanaka, director of the Japan Immigration Policy Institute. “And Japan is kicking itself in the foot... we might be in a recession now, but it’s clear it doesn’t have a future without workers from overseas.”

The present recession will not last forever. And as its economy recovers, Japan's dwindling population (see the above chart from japanfocus.org) will endure strains from labor shortages.

While Japan can easily absorb more foreign workers when it is deemed as politically convenient, it would bear additional costs from the "learning curve" to integrate foreign workers to its society.

Moreover, Japan's selective application of repatriation policy will likely incur a political backlash with affected Latin American countries which may lead to policy retaliation and even more protectionism.

Finally, Mr. Kawasaki's bigoted anti "multi-ethnic" society remarks will be faced with harsh reality. The persistence of a dwinding population will lead to societal extinction and economic regression.

Hence without raising its fertility rate, in order for Japan to maintain its status quo "society" means to adopt a culture of multi-ethnicity. (Unless cloning or other artificial scientific means of adding people comes into the script)

This noteworthy remark from Kyohei Morita chief economist at Barclays Capital in an interview with Finance Asia,

``But in Japan, the opposite is happening. Japan’s population has been shrinking since 2006, which will continue to put downward pressure on GDP. In 300 years, at the current rate of decrease, Japan’s population will be extinct." (emphasis mine)

After over a hundred years, Bastiat's message is more than relevant as it is universal.