Showing posts with label rule of law. Show all posts
Showing posts with label rule of law. Show all posts

Tuesday, August 31, 2010

Is Sound Money Incompatible With Democracy?

One of the recent feedbacks I received is the attribution that sound money can’t be compatible with democracy. The implication is that inflationism is an indispensable instrument for democratic survival.

Of course, this assertion accounts no less than an arrant bunk (nonsense) for the following reasons:

One, this serves as an example of argumentum ad populum (appeal to popularity), where the belief of the many holds that the argument is true.

Just because many seek to live off at the expense of the others this doesn’t mean that their demands are necessarily justifiable or valid and should be provided for.

This is similar to the unwisdom of the crowds which we have recently critiqued. Moreover, these proponents seem oblivious to the fact that populist policies tend to self-destruct overtime. What is unsustainable won’t last.

Second, the alleged incompatibility is also misleading because this operates on the premises of the 'tyranny of the majority' or the rule of the mob.

Say for example, 10 persons get stuck in a remote island where only one of them is a woman. Yet 6 of the male elected to force themselves on her. Is the majority’s action justified? The answer is obviously NO. The means to an end isn’t justified by mere numbers.

What is needed is the rule of law, of which inflationism chafes at.

As Friedrich A. von Hayek wrote in the Decline of the Rule of Law, Part 1

The main point is that, in the use of its coercive powers, the discretion of the authorities should be so strictly bound by laws laid down beforehand that the individual can foresee with fair certainty how these powers will be used in particular instances; and that the laws themselves are truly general and create no privileges for class or person because they are made in view of their long-run effects and therefore in necessary ignorance of who will be the particular individuals who will be benefited or harmed by them. That the law should be an instrument to be used by the individuals for their ends and not an instrument used upon the people by the legislators is the ultimate meaning of the Rule of Law.

Three, the collectivist charade is to sell popular wisdom to the economic ignoramus. The collectivists forget to tell everyone that inflationism is a redistribution scheme which benefits the minority at the expense of society.

As Jörg Guido Hülsmann wrote in Deflation and Liberty (emphasis added)

``Inflation is an unjustifiable redistribution of income in favor of those who receive the new money and money titles first, and to the detriment of those who receive them last. In practice the redistribution always works out in favor of the fiat-money producers themselves (whom we misleadingly call central banks) and of their partners in the banking sector and at the stock exchange. And of course inflation works out to the advantage of governments and their closest allies in the business world. Inflation is the vehicle through which these individuals and groups enrich themselves, unjustifiably, at the expense of the citizenry at large. If there is any truth to the socialist caricature of capitalism—an economic system that exploits the poor to the benefit of the rich—then this caricature holds true for a capitalist system strangulated by inflation. The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens. And because it shields the political and economic establishment of the country from the competition emanating from the rest of society, inflation puts a brake on social mobility. The rich stay rich (longer) and the poor stay poor (longer) than they would in a free society.”

Fourth, what collectivists see as essential is actually the opposite. History reveals that democracy and sound money has had and can have a symbiotic relationship.

In The Gold Standard, Indirect Exchange section of the epic Human Action, Ludwig von Mises wrote, (bold emphasis mine)

``The gold standard was the world standard of the age of capitalism, increasing welfare, liberty, and democracy, both political and economic. In the eyes of the free traders its main eminence was precisely the fact that it was an international standard as required by international trade and the transactions of the international money and capital market. It was the medium of exchange by means of which Western industrialism and Western capital had borne Western civilization into the remotest parts of the earth's surface, everywhere destroying the fetters of age-old prejudices and superstitions, sowing the seeds of new life and new well-being, freeing minds and souls, and creating riches unheard of before. It accompanied the triumphal unprecedented progress of Western liberalism ready to unite all nations into a community of free nations peacefully cooperating with one another.”

Finally, the hucksters of false promises of inflationism are no less than blinded by economic dogma whose foundations seem to operate outside the realm of the law of scarcity—yes fantasyland.

As Ron Paul wrote on Why Governments Hate Gold, (bold emphasis mine)

``Time and again it has been proven that the Keynesian system of big government and fiat paper money are abject failures in the long run. However, the nature of government is to ignore reality when there is an avenue that allows growth in power and control. Thus, most politicians and economists will ignore the long-term damage of Keynesianism in the early stage of a bubble when there is the illusion of prosperity, suggesting that the basic laws of economics had been repealed.”

Hardly does any of these fanatics have ever explained why throughout the centuries, experiments with paper money has ALWAYS failed.

Of course if one believes redistribution is a way or a path to prosperity, then apparently they are merely deluding themselves.

As Henry Hazlitt once wrote,

Any attempt to equalize wealth or income by forced redistribution must only tend to destroy wealth and income. Historically the best the would-be equalizers have ever succeeded in doing is to equalize downward. This has even been caustically described as their intention.

The collectivists amuse us with their logical fallacies, incoherent theories, misleading definitions, short term nostrums, and misinterpretation and deliberate twisting of facts.

For them it’s not about being right, but about blind faith.

Beware of false prophets.

Friday, July 30, 2010

Graphic: Obamacare And The Law

This is how the Obamacare is supposedly structured...

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chart from Joint Economic Committee (Republican) /hat tip Daniel Mitchell of Cato

According to Frederic Bastiat, [The Law (p.69)] (all bold emphasis mine, italic original)

The mission of the law is not to oppress persons and plunder them of their property, even though the law may be acting in a philanthropic spirit. Its mission is to protect persons and property. Furthermore, it must not be said that the law may be philanthropic if, in the process, it refrains from oppressing persons and plundering them of their property; this would be a contradiction.

The law cannot avoid having an effect upon persons and property; and if the law acts in any manner except to protect them, its actions then necessarily violate the liberty of persons and their right to own property.

The law is justice--simple and clear, precise and bounded. Every eye can see it, and every mind can grasp it; for justice is measurable, immutable, and unchangeable. Justice is neither more than this nor less than this.

A law that is perplexing in complexity like the Obamacare exemplifies or embodies what we call as arbitrary law--a law opposed to the fundamental concept of clear, precise and bounded (observable), of protecting property rights and of equal treatment of application (enforceability). Hence, Obamacare is unlikely a law that would serve to promote its mission--social justice.

Saturday, May 22, 2010

Hernando De Soto: Unclear Property Rights And Complex Rules Led To Market Crashes

In a recent interview, the illustrious economist Hernando De Soto, author of The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, suggests that complicated and opaque laws, which muddles up the property rights issue, has prompted for the latest market crashes.

On the rule of law...

"when it comes to property rights: most of the world is still in the 19th century. During that time period, the US put all their property information on paper. These "rule of law" standards identified who owned what property - this system is still viable today...

"when independence, solidarity and individuality function under the "Rule of Law, all players are on the same playing field; that is the rules apply the same to all [but note, this concept is non-existent in many parts of the world]. South American and African nations borrowed their laws from their colonizers. In contrast, anarchy has many laws within the same territory.

my comment: In an earlier post Are People Inherently Nihilistic?, we said that the term "anarchy" comes with different references. Here, Mr. De Soto appears to imply that anarchy (or perhaps defined as market turmoil) was caused by the many intricate laws within the same territory, which brings us to the next topic...

De Soto's view on property rights and rule of law's role in today's market crash...

``The basic problem with the financial meltdown today is that with all the convoluted derivatives, trades, bundling, etc. the US does not know where its financial paper is. Thus, the US cannot define who is solvent and who is not. The "Rule of Law" comes into play because property ownership is based on a paper trail. Since the paper trail is incomplete regarding detailed ownership of the property underlying the complex derivatives that were sold in the financial industry, no one knows who owns exactly what and what it is worth. As a result, trust plummets."

my comment: so the questionable application of the "rules" which has led to the ambiguous stance on ownership rights has prompted for a lost of trust or "anarchy".

Besides, excess and poorly defined regulations have prompted for regulatory arbitrage, regulatory capture, administrative lapses by regulators (because of sheer volume of laws, enforceability issues and possible confusion) and amplifies conflict of interest among participants or agency problems. And all these get to be reflected on distorted price signals. I'd like to add that inflation, as a hidden tax, is a major contributor to De Soto's property rights-rule of law dilemma.

In Greg Ransom's Hayek Center (where I sourced this, thanks Greg...) adds that... (bold highlight mine)

``My ancestors recorded property right claims with a central registrar in the no-mans land of Oregon when the region had no legitimately recognized government. The people of the region followed customs of law and governance share among the English and Americans, with the anticipation that their property rights claims would later be recognized by the U. S. government when the region became part of the United States. The story is recounted in Nimrod: Courts, Claims and Killing on the Oregon Frontier by Ronald Lansing of the Lewis & Clark School of Law. Yes, remarkably enough, the story is a murder mystery."

my comment: more evidence that property rights had been observed outside of the realm of government.

Tuesday, May 18, 2010

Are People Inherently Nihilistic?

For proponents of government the answer yes.

This means that if a group of people gets stuck in a remote island outside of the ambit of civilization and government, the immediate reaction by the concerned is to instinctively go for each other’s throats.

In other words, since people are inherently nihilistic, chaos is the default response for everyone, whereby rules do NOT and CANNOT ever exist. You can picture this scene from the Mad Max movie series.

And for this camp, government is the only entity that can provide lasting peace and order among people.

The Hobbes Doctrine

This position has long been argued by English philosopher Thomas Hobbes in his book the Leviathan where he sees man’s innate “state of nature” is to resort to war for three reasons: competition, diffidence and glory

According to Wikipedia.org, ``Beginning from a mechanistic understanding of human beings and the passions, Hobbes postulates what life would be like without government, a condition which he calls the state of nature. In that state, each person would have a right, or license, to everything in the world. This, Hobbes argues, would lead to a "war of all against all" (bellum omnium contra omnes), and thus lives that are "solitary, poor, nasty, brutish, and short" (xiii).

Overtime, many philosophers, including the illustrious John Locke and David Hume, challenged the validity of the Hobbes "state of nature" doctrine.

Although it would probably take a book to respond to such philosophical themes, below are my simplified objections to the man-is-evil doctrine as an excuse for government.

Granted that man’s default nature is indeed nihilistic; since government is an organization composed by men, then obviously government will not last.

This is for the simple reason that leader-subordinate relationship will perpetually be in a state of turmoil, as government will be subjected to coups and counter coups or repeated upheavals. This, in effect, would be a Machiavellian utopia.

In short, if man is truly evil or barbaric, no amount of organization will stop him from revealing his chaotic nature.

And the same reasoning can be applied to the justification where man is inherently good. At the extreme where people are all angelic like in virtue then government will probably not be required.

But the propositions here doesn’t escape the fact that the real matter about the debate of the need for government or anarchism (defined in this statement as no government) isn’t because of good or evil, which is nothing but a floating abstraction, but because of scarcity.

It is the allocation of scare resources which serves as the foundation for a majority of politics.

Man As Social Animal

People are neither inherently good nor evil, but we certainly are social creatures.

And such social tendencies aren’t even limited to men, they can be observed in mammals, according to Wikipedia,

``All mammals (and birds) are social to the extent that mothers and offspring bond. The term "social animal" is usually only applied when there is a level of social organization that goes beyond this, with permanent groups of adults living together, and relationships between individuals that endure from one encounter to another.”

Wikipedia adds, ``A chief debate among ethologists studying animal societies is whether non-human primates and other animals can be said to have culture.” [As a side note, if non-human animals can have a culture, then obviously man with vastly more intelligence is likely to be more intuitively organized, formally or informally.]

And since we are the supreme specie in the animal kingdom, then the penchant is for more social cooperation and not militancy, as alleged by Hobbes, given the right environment.

Proof?




Hobbes wrote that people’s lives are “solitary, poor, nasty, brutish, and short”, which is obviously, as shown in the above charts from Google on life expectancy and population trends and Allyunintuitive also on populaton trends, is dead wrong.

Global population keeps growing while life expectancy has been expanding.

Think of it, if man’s genesis from a few thousand years ago emanated from 2 persons (Adam and Eve) or from a Darwinian evolution of primates (probably a few hundreds), then the explosion of population growth came amidst a transition of social arrangements, notably from tribal to feudal to the modern forms of government.

In short government or no government people’s population have continually grown.

So what has allowed man such expansive growth in population and life expectancy trends amidst scarce resources?

The obvious answer is the deepening trends of division of labor, comparative advantage and technology.

In short, real wealth has allowed society to grow in spite of government.

True, we had episodes of nasty wars and vicious political experiments that have led to massive losses in life and wealth, aside from pandemics, but apparently this hasn’t stop people’s realization that trade makes for social cooperation.

Of course, social acceptance has been reflected on politics or governance, where the ensuing policies has accommodated more trade and integration as shown in the above chart.

Yet it is misleading to argue that governments has prompted for such a progress considering that government does not produce anything but to tax only her constitutes and engage in redistribution of wealth.

Anarchy In Different Perspectives

My other major objection is the use of the same false “Hobbes” doctrine to argue that anarchism (defined as no government in this statement) is even a worse alternative than communism.

It’s fundamentally a strawman fallacy.

First of all, I’m not committed to the anarchy position, but having followed the Austrian school of Economics, I have seen some of the merits of their theory. Besides not all Austrians are anarchists.

Second, there are four mainstream definitions to the word anarchy, according to dictionary.com:

1. a state of society without government or law.

2. political and social disorder due to the absence of governmental control: The death of the king was followed by a year of anarchy.

3. a theory that regards the absence of all direct or coercive government as a political ideal and that proposes the cooperative and voluntary association of individuals and groups as the principal mode of organized society.

4. confusion; chaos; disorder: Intellectual and moral anarchy followed his loss of faith.

It is important to distinguish between the carrying definition of the term anarchy or the reference of the word, so as not to lead to confusion and to wrong interpretations.

The commonly held impression of anarchy is the fourth definition; chaos and disorder.

And many have argued strictly from this sense of the word, without considering the other definitions, which is arrantly fallacious or misleading.

Example, the statement where property rights or rules of law cannot exist in anarchy as defined in chaos and disorder is perceptibly correct strictly under such assumptive parameters. Whereas property rights that cannot exist in anarchy as defined by no government is incorrect, as the Somalia’s experience will show.

Nevertheless, the communist experiment in the last century left a wave of horror with an astounding estimated 94 million lives lost, according to the Black Book of Communism.

In addition, the other grand big government experiment which resulted to 2 major world wars at the cost of some 50-100 million lives had been extreme or Ultra nationalism.

We can observe that the repeated attempts to concentrate political and economic power through government leads to only more deaths and societal decadence.

For me, this exemplifies as systematized anarchy (as defined by organized chaos and disorder-in this statement) which led to a massive loss of lives, rampant poverty and general suffering. It’s even worse than having no government.

While there is NO existing society where a model based on libertarian anarchy [defined here as a society based on private institutions] can be made to make an adequate comparison with, the only country we see today which operates under an anarchic system [defined here as stateless society] is Somalia.

That’s because the Somalian military dictatorship government collapsed in 1991.

Somalia has a provisional government, the Transitional Federal Government (TFG), albeit this is more nominal, as the country operates free from formal government institutions. In short, Somalia’s anarchy [statelessness] emerged from its being a failed state [population threw out government and have yet to replace it].

True, there have been repeated violence in the country, but this has been due to attempts by foreign groups as the Islamic Courts Union (ICU) to foist a government on her. ICU’s splinter group, the Al-Shabaab, continues to harass Somalia today.

However, the death toll from these violent episodes in Somalia seems to be a mere fraction when compared to even the Pol Pot regime of communist Cambodia, where nearly a quarter of the population have been killed, considering that it has been more than a decade where Somalia has had a formal government.

If we go by the argument where people are inherently nihilistic then obviously Somalia would already have been non-existent today. This proves the fallacy of the assumption.

Yet the failed state-anarchy has reportedly a thriving economy, according to Wikipedia.org,

``Despite civil unrest, Somalia has maintained a healthy informal economy, based mainly on livestock, remittance/money transfer companies, and telecommunications. According to a 2003 World Bank study, the private sector grew impressively, particularly in the areas of trade, commerce, transport, remittance and infrastructure services, in addition to the primary sectors, notably livestock, agriculture and fisheries. In 2007, the United Nations reported that the country's service industry is also thriving. Anthropologist Spencer Heath MacCallum attributes this increased economic activity to the Somali customary law, which provides a stable environment to conduct business in.” (bold emphasis mine)

So a stateless society thrives amidst its own community based rules and regulations outside a formal government. In short, it simply is misguided to argue that societies cannot exist without government.

Somalia may not be prosperous on a relative scale when compared to the world but they seem to be better off than they were during a military dictatorship or compared to a systematized anarchy [defined as organized chaos] via a communist regime.

In addition, Somalia continues to survive for the simple reason that people, as a social creature, as shown above, will default to the fundamental laws of the land, which on the part of Somalis, has been the customary law, the XEER.

Based on the definition of Wikipedia.org, Xeer “is the polycentric legal system of Somalia. Under this system, elders serve as judges and help mediate cases using precedents. It is a good example of how customary law works within a stateless society and is a fair approximation of what is thought of as natural law. Several scholars have noted that even though Xeer may be centuries old, it has the potential to serve as the legal system of a modern, well-functioning economy.” (bold highlights mine)

Essentially this serves as the rule of law, where as we have quoted F. A. Hayek in Mainstream’s Three “Wise” Monkey Solution To Social Problems ``Political wisdom, dearly bought by the bitter experience of generations, is often lost through the gradual change in the meaning of the words which express its maxims...Stripped of all technicalities, this means that government in all its actions is bound by rules fixed and announced beforehand.”

Of course the major difference why violence would have less incidence and casualties even in a nihilistic ‘Mad Max’ anarchy [defined here as complete chaos and disorder] compared to a frenzied communist or totalitarian states is because armaments are unilaterally held or that the coercive powers are strictly monopolized by the government. Hence, the conduct of violence is systemic, organized or wholesale as compared “Mad Max” anarchy where everyone fights to save his skin. Yet to remind you, nihilistic anarchy is different from libertarian anarchy.

Yet, if anarchy from a failed state did not wipe out Somalia from the face of earth, the same nihilistic Mad Max anarchy is not what comprises as libertarian anarchy.

This from Hans Hermann Hoppe,

``Rothbard's anarchism was not the sort of anarchism that his teacher and mentor Mises had rejected as hopelessly naive, of course. "The anarchists," Mises had written,

“contend that a social order in which nobody enjoys privileges at the expense of his fellow-citizens could exist without any compulsion and coercion for the prevention of action detrimental to society … The anarchists overlook the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life. An anarchistic society would be exposed to the mercy of every individual. Society cannot exist if the majority is not ready to hinder, by the application or threat of violent action, minorities from destroying the social order.”

``Indeed, Rothbard wholeheartedly agreed with Mises that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat to force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel a person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society.

``Inspired in particular by the nineteenth-century American anarchist political theorists Lysander Spooner and Benjamin Tucker and the Belgian economist Gustave de Molinari, from the outset Rothbard's anarchism took it for granted that there will always be murderers, thieves, thugs, con artists, etc., and that life in society would be impossible if they were not punished by physical force. As a reflection of this fundamental realism — anti-utopianism — of his private-property anarchism, Rothbard, unlike most contemporary political philosophers, accorded central importance to the subject of punishment. For him, private property and the right to physical defense were inseparable.”

In short, a libertarian anarchy isn’t a world predicated on disorder and chaos from a false premise of the evil state of man, but on a system of private based institutions.

I am not here to argue about the merits of these private institutions, but the point is to put into perspective the argument about anarchy [as defined by nihilism], libertarian anarchy [system of private social institutions] and communism and totalitarianism.

The Strawman Fallacy

But one would point out, how about religious zealots, gangsters and other social misfits? Are they not reasons why we need government?

These arguments serve as a strawman for the simple reason of failing to account the cause and effect of why social miscreants emerge.

We do not argue that libertarian anarchism will bring about a society of perfection, as there would always be misfits or non-conformist, but as shown in Somalia, society can compel their constituents to act within traditional rules and regulations.

Religious extremism comprises only a fraction of the world’s population.

To consider, even as the world population growth has been swiftly expanding, where world religions has divergently dispersed as shown above, yet we aren’t seeing an explosion of religious wars.

The other way to see it is that while there are indeed some frictions or conflicts brought about by religious diversity, this hasn’t stopped the world from advancing or from globalizing.

However, as pointed out earlier, many of these religious frictions have not been due to ideologies from religion per se, but from external causes that has amplified a rift in religious standings or some sectors see policies undertaken as having undermined their religious interests.

A major reason of the global religious tensions has been caused by geopolitical interventions, Congressman Ron Paul says,

“According to our own CIA, our meddling in the Middle East was the prime motivation for the horrific attacks on 9/11. But instead of re-evaluating our foreign policy, we have simply escalated it...Shutting down military bases and ceasing to deal with other nations with threats and violence is not isolationism. It is the opposite. Opening ourselves up to friendship, honest trade and diplomacy is the foreign policy of peace and prosperity.” (bold highlights mine)

And we find the same reasons attributed to Osama Bin Laden’s war against America, who incidentally was a former ally.

Whyguide.com enumerates some of these: US Presence in the Middle East, US Support for Israel, Imperialism, Undermining Islam and Acts of Aggression.

In other words, cause and effect tells us that many of the terroristic activities which has been colored by religion, have been political ramifications from geopolitical interventionism or has manifested as retaliatory measures against perceived abuses by the government (the US government as in the above instances).

So government policies seem to be the source of the problem and not from inherent human action.

Besides to consider the diversity of religion or of culture, does this mean that a unified world government should exist to impose a "law among laws" in order to resolve such conflicts?

Yet, for many, only the visible is worth being interpreted. Lacking the reasoning to adequately explain societies’ troubles, they resort to oversimplification.

Many of society’s woes aren’t because of the natural state of man to be evil, in fact, many of society’s miscreants have been a manifestation of the consequences of poor, abusive, unilateral or skewed regulations, policies or government actions.

According to Murray N. Rothbard, ``the institution of the state establishes a socially legitimatized and sanctified channel for bad people to do bad things, to commit regularized theft and to wield dictatorial power. Statism therefore encourages the bad, or at least the criminal elements of human nature. As Frank H. Knight trenchantly put it: “The probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender hearted person would get the job of whipping master in a slave plantation.”’ A free society, by not establishing such a legitimated channel for theft and tyranny, discourages the criminal tendencies of human nature and encourages the peaceful and the voluntary.

``Liberty and the free market discourage aggression and compulsion, and encourage the harmony and mutual benefit of voluntary interpersonal exchanges, economic, social, and cultural. Since a system of liberty would encourage the voluntary and discourage the criminal, and would remove the only legitimated channel for crime and aggression, we could expect that a free society would indeed suffer less from violent crime and aggression than we do now, though there is no warrant for assuming that they would disappear completely. That is not utopianism, but a commonsense implication of the change in what is considered socially legitimate, and in the reward-and-penalty structure in society.”

Summary And Conclusion

To sum up, our point is that people aren’t inherently bad or nihilistic.

The Hobbesean error has fundamentally been based on wrong or misplaced assumptions, where according to Rodney Long, (bold highlights mine)

``Well, Hobbes is assuming several things at once here. First he’s assuming that there can’t be any social cooperation without law. Second, he’s assuming that there can’t be any law unless it’s enforced by physical force. And third, he’s assuming you can’t have law enforced by physical force unless it’s done by a monopoly state.

``But all those assumptions are false. It’s certainly true that cooperation can and does emerge, maybe not as efficiently as it would with law, but without law. There’s Robert Ellickson’s book Order Without Law where he talks about how neighbors manage to resolve disputes. He offers all these examples about what happens if one farmer’s cow wanders onto another farmer’s territory and they solve it through some mutual customary agreements and so forth, and there’s no legal framework for resolving it. Maybe that’s not enough for a complex economy, but it certainly shows that you can have some kind of cooperation without an actual legal framework.”

And it’s a strawman to argue a case for government and against a libertarian anarchy model strictly based on the above premises- man is evil, societal misfits, anarchy equals communism.

So while there are many issues to discuss in the libertarian anarchy model or a society premised on privately held institutions, I guess I am stepping out of my bounds.

Nevertheless, there are tons of literatures that deal with objections to the libertarian anarchy model.

Perhaps when time allows, we can deal with this in the future.

Tuesday, April 27, 2010

Key Drivers To Emerging Market Outperformance: Increasing Trends of Economic Freedom, Trade Openness And Rule of Law

US Global Investor's Frank Holmes enumerates six key drivers in favor of a secular emerging markets outperformance over the coming years.

Mr. Holmes writes(black bold highlights his, blue mine) :
  1. Rapid Economic Growth: In the coming years, growth in emerging economies is expected to outpace that of the developed world. This growth is fueling an increase in household income in places like China and India where nearly 60 million people—roughly the combined populations of Texas and California—are joining the ranks of the middle class each year.
  2. High Savings Rates in Asia: Despite rising consumption, households in emerging Asia save 17 percent of disposable income—that’s roughly four times what is saved in the U.S. and much higher than the developed world. These high savings rates allow them to meet the higher requirements for home ownership—many require at least 20 percent down—and have larger amounts of funds to invest in capital markets.
  3. Urbanization: The world’s urban population is growing by more than 70 million people each year. China already has over 100 cities with 1 million people and is expected to have over 200 of them by 2025. This urban migration has overwhelmed existing infrastructure like roads, sewers and electrical grids. The buildout of this critical infrastructure will require vast amounts of copper, steel and increase demand for all commodities.
  4. Desire for Social Stability: One main goal of emerging market governments to remain in power is to keep the public happy. They are doing this by increasing personal freedoms for citizens and providing them with opportunities to increase their quality of life. Many governments have found the key to social stability is focusing on job creation which establishes a path of upward mobility for citizens.
  5. Natural Resources Wealth: Many of today’s most promising emerging nations sit atop some of the largest oil, metal and other valuable resource deposits in the world. Many of these nations have teamed up with private and/or foreign enterprises to bring these resources to market. Revenue generated through taxation and direct ownership allows for these governments to build infrastructure, create jobs and pursue other economic opportunities.
  6. Corporate Transparency: A history of corruption and political turmoil has given way to higher standards of corporate governance in today’s globalized world. Though still far from perfect, the improved transparency and oversight has made important information available to investors and reduced uncertainty. By aligning themselves with international business standards and requirements, emerging nations will attract more foreign capital and better integrate themselves into the global marketplace.
I'd like to add three more important variables.

Although Mr. Holmes did mention in passing about the increasing "personal freedom", it must be emphasized that the respect for property rights serves as the root for economic freedom and trade openness which predominates all the above.

Not to mention the legal "rule of law" framework that underpins social institutions from which all these would be operating on.

In short, prosperity or capital accumulation emanates from economic freedom, trade openness and the rule of law, where all the others are simply offshoots or products of these 'sine qua non' underlying drivers.

Outside the incentives brought about by privatize profits and socialize losses, no rational person will invest in any country or markets where they see great risk from governments' arbitrary confiscation of investor's risk capital.

In other words, it isn't much of the issue of return on investments but the return OF investments.

As you can see below, the reason for the explosive growth in emerging markets has been because of the deepening depth of economic freedom and freer trade relative to the past.


chart courtesy of Moody's/ FT Alphaville

While Moody's expects a retreat, as the reason for the orange dot (arrow from FT Alphaville) I don't share the pessimism.

That's because many, among the emerging markets, have been realizing the benefits of trade, which has started to filter into the political process of many EM countries but whose impact comes at a different scale.


Yet much of the perceived pessimism has been due to the financial crisis which caused a dramatic retrenchment in global trade.

But this seems more of a the blip, though. Most of the disruption had been triggered by the Lehman event, which prompted for a near seizure of the US banking industry, which rapidly escalated across the world. To be sure, it hasn't been due to increased signs of protectionism (as pointed out in this space, example see WTO: Little Signs Of Protectionism).

And the swift recovery in global trade (chart courtesy of finfacts) appears to validate our analysis.

Hence, the trend towards greater economic freedom and trade liberalization in key emerging markets are likely to resume as the main trend and provide the framework as to why emerging markets are likely to outperform developed markets.

Monday, April 26, 2010

Mainstream’s Three “Wise” Monkey Solution To Social Problems

Say what you want
Say what you will
'Cos I find you think what makes it easier
And lies spread on lies
We don't care
Belief is our relief
We don't care

-Roland Orzabal, Tears For Fears, Ideas As Opiates

For the mainstream, our social problems can be simplified into three “wise monkey” solutions:

First, speak no evil-throw money at every problem.

Everyone desires a free lunch. Almost everybody believes that they deserve a special place in this world. Since society’s interests are divergent, such sense of entitlement should come at the expense of someone else. It’s usually dignified and justified with the word “right”. One man’s effort is another man’s privilege.

For them, scarcity of resources can only solved by forcible redistribution. It doesn’t really matter if there are limitations to the scale of taxation. It also doesn’t matter if redistribution reduces the incentives to produce and trade. It doesn’t matter if “picking winners” takes away resources meant for productive activities which have been meant to enhance livelihood. The only thing significant is to be at the receiving end. And it’s hardly ever been asked “when is enough, enough”?

Heck, it would even be politically incorrect to argue for prudence. ‘Moral’ justifications demand for immediate gratification. It’s almost always about NOW. Forget the future.

That’s why the intellectual classes long came up with varied theories in support of these political demands.

Importantly that’s why the political classes are enamoured with these concepts. Redistribution enhances only their power, esteem and control over the others. And that’s why “inflation” has long been a part of human nature, since the introduction of government.

For as long as the system is tolerant of such nebulous tradeoff, trouble can be kept at bay, ergo speak no evil.

The other way to see it is that while everyone wants to rule the world, in reality this isn’t feasible. It’s a mass delusion. The universal law of scarcity always prevails. By force of nature, artificially induced imbalances are resolved eventually.

Second, see no evil-elect or put in place a virtuous leader.

The popular redress to most social problems has been premised mostly on hope, cosmetically embellished by “specific” ennobling goals.

In times of frustrations, the next alternative has been to look for a saviour.

Yet hope is mostly anchored on symbolism. And these are what elections are mostly all about. Even if one’s vote doesn’t truly count, everybody believes they do. Elections are reduced to the polemic of self-import.

Hardly has the directions of policies been the context of any meaningful discussion. People’s arguments will always be simplified to what seems “moral” in the popular sense. Yet, a vote on a person to office is a carte blanche vote on the ensuing policies. But it’s hardly about stakes involved and the prospective costs, but mostly about emotions and the feeling of being in the winning camp.

And since the world has been condensed into strictly a “moral” sphere, political leaders are most frequently deemed to have been transformed into demigods.

Once in power, people mistakenly believe that these entities have transcended the laws of scarcity. People have assumed that they possess the superlative knowledge that is needed to effect the exigent balance on a complex and continuously evolving society. These leaders are presumed to know of our needs, our values, our priorities and our preferences, which lay as basis of our actions in response to ever changing conditions.

Not of only of knowledge, but people also expect leaders and officials to dispense justice and equity according to our sense of definition. Many see these leaders as reflecting on their values. And that’s why many fall for the dichotomous trappings of the well meaning “motivations”. Yet, motivations barely distinguish the role of “means” and “ends”.

Essentially genuflecting on hope to see one’s moral desires as represented by politics can be construed as refusing to see evil for what it is.

And it’s only when the rubber meets the road, from which people come to realize that their expectations have misaligned with reality-and usually through deepening frustrations or in the aftermath of some horrifying outcome.

Hardly has it been comprehended that politics and bureaucratic activities are merely HUMAN activities.

That leaders and officials are subject to the very same foibles as anyone else. That these people see things and act according to the incentives brought about by their interpretation of events, their existing limited and ‘biased’ knowledge and are swayed by influences brought about by cognitive biases, networks, familiarity, assessment of prevailing conditions, information relayed by the underlings, varying degree of stakes of involved and et. al.

Importantly like everyone else, their actions skewed based on personal values. So when a political or bureaucratic leader forces upon their sense of moral vision to a constituency and which has not well received, the result in some cases has been political upheavals.

Yet in spite of the repeated errors, people never learn from George Santayana’s admonition that those who ignore the past are condemned to repeat it.

The third intuitive recourse to any social problems is to hear no evil by enacting new rules/laws.

Like any “throw the money” and “virtuous leader” syndromes, rules are little seen for its costs but nevertheless oftenly envisaged as preferred nostrums to existing problems as identified from the biased viewpoint of the observer/s.

Causal factors are hardly considered in the appraisal of the existing problems. What seems more important is to automatically blame market forces and unduly impose proscriptions. Never mind if the past ills have been caused by the same underlying dynamic-previous interventionism.

The act of simply “doing something” is meant to be perceptibly seen by the voting public for political purposes (extension of career by vote or by appointment). Thus the “hear no evil” therapy, which is merely adding rules for extant fallibilities, are simply props for more of the same malaise.

Many rules, regulations, edicts or laws are imposed upon the “populist demand of the moment”, without the realization that rules, which tend to realign people’s behaviour, can cause huge unintended consequences and likewise entails costs of enforcement. Hence when new rules create distortions in the political economic order, the instinctive response is to have more of rules or regulations.

Importantly, popular clamor for new rules/laws hardly differentiates “rule of laws” against “rule of men”.

Rule of Law are in effect, the guiding principles or the laws that had been a legacy from our forefathers, as the great Friedrich August von Hayek wrote, ``Political wisdom, dearly bought by the bitter experience of generations, is often lost through the gradual change in the meaning of the words which express its maxims[1]”. (underscore mine)

This means because these laws have been constant, are anticipated by all and easily observed or practiced, they become part of our heritage. Again we quote the Mr. Hayek, ``Stripped of all technicalities, this means that government in all its actions is bound by rules fixed and announced beforehand.[2]

In stateless Somalia, customary laws serve as default laws after her government had been eviscerated,

Benjamin Powell writes[3], ``Somali law is based on custom interpreted and enforced by decentralized clan networks. The Somali customary law, Xeer, has existed since pre-colonial times and continued to operate under colonial rule. The Somali nation-state tried to replace the Xeer with government legislation and enforcement. However, in rural areas and border regions where the Somali government lacked firm control, people continued to apply the common law. When the Somali state collapsed, much of the population returned to their traditional legal system... But Somalia does demonstrate that a reasonable level of law and order can be provided by nonstate customary legal systems and that such systems are capable of providing some basis for economic development. This is particularly true when the alternative is not a limited government but instead a particularly brutal and repressive government such as Somalia had and is likely to have again if a government is reestablished.” [bold highlights mine]

That’s simply proof that “rule of laws” exists even outside of the realm of governments, which also goes to show that society can exist stateless. None of this is meant to say that we should be stateless, but the point is rule of law is what organizes society.

Importantly, “rules of law” have been passed through the ages as a means to protect the citizens from the abuses of the authority, again Mr. Hayek[4],

``The main point is that, in the use of its coercive powers, the discretion of the authorities should be so strictly bound by laws laid down beforehand that the individual can foresee with fair certainty how these powers will be used in particular instances; and that the laws themselves are truly general and create no privileges for class or person because they are made in view of their long-run effects and therefore in necessary ignorance of who will be the particular individuals who will be benefited or harmed by them. That the law should be an instrument to be used by the individuals for their ends and not an instrument used upon the people by the legislators is the ultimate meaning of the Rule of Law.” (emphasis added)

In short, the fundamental characteristics of respected and effective laws are those that to limited, steady or constant, designed for the benefit of everyone and importantly a law that is clearly enforceable.

Of course this doesn’t overrule the occasional use of arbitrary laws, but nevertheless arbitrary rules should compliment and NOT displace the essence of the “rule of law”.

Mr. Hayek quotes David Hume[5], ``No government, at that time, appeared in the world, nor is perhaps found in the records of any history, which subsisted without a mixture of some arbitrary authority, committed to some magistrate; and it might reasonably, beforehand, appear doubtful whether human society could ever arrive at that state of perfection, as to support itself with no other control, than the general and rigid maxims of law and equity.”

In essence, in contrast to mainstream thinking, the rule of law and not simply arbitrary regulations, serves as the central element to well functioning societies.

Former President Ronald Reagan nicely captures part of our “Three Wise Monkey” solution as seen by the mainstream, “The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it”, from which I would add, “if subsidies are not enough, elect one who makes sure it would”.



[1] Hayek, Friedrich August von, Decline of the Rule of Law, Part 1, The Freeman April 20, 1953

[2] Hayek, Friedrich August von, Decline of the Rule of Law, Part 1, The Freeman April 20, 1953

[3] Powell, Benjamin; Somalia: Failed State, Economic Success? The Freeman

[4] Hayek, Friedrich August von, The Road To Serfdom

[5] Hume, David; The history of England, from the invasion of Julius Caesar to the revolution, we earlier quoted this see Graphic: Origin of The Rule of Law

Markets Ignore US SEC-Goldman Sachs Tiff, More Political Dirty Dancing

``Popular opinion ascribes all these evils to the capitalistic system. As a remedy for the undesirable effects of interventionism they ask for still more interventionism. They blame capitalism for the effects of the actions of governments which pursue an anti-capitalistic policy.” Ludwig von Mises, Interventionism an Economic analysis

Adding more arbitrary laws or “regulations”, which are usually founded upon noble goals, have been used as the main pretext for expanding political power by the incumbents.

This unfortunately is what people refuse to see yet has been a critical cause of much of today’s ills.

For the political economy, regulations can unilaterally skew the distribution of power from the ruled to the ruler. If there is such a thing as “income or wealth” inequality, the obverse side is the “political inequality”.

Professor Lawrence White[1] on the difference of rule of law and rule of men, ``The contrast between the rule of law and the rule of men is sometimes traced still further back to Plato’s dialogue entitled Laws. In that work the Athenian Stranger declares that a city will enjoy safety and other benefits of the gods where the law “is despot over the rulers, and the rulers are slaves of the law”. In other words, government officials are to be the servants and not the masters of society. The rule of law is vitally important because it allows a society to combine freedom, justice, and a thriving economic order.”

When government officials elect to end up as “masters of society”, one of the main acts to attain such goals is to deliberately trample upon with laws of the land to allow laws to work to their favor.

In short, despots legitimize their power grab by coercively instituting their own set of laws. The Philippines is no stranger to this as seen through former President Ferdinand Marcos’ proclamation 1081, ``Marcos ruled by military power through martial law, altered the 1935 Constitution of the Philippines in the subsequent year, made himself both Head of State as President and Head of Government as Prime Minister, manipulated elections and the political arena in the Philippines, and had his political party--Kilusang Bagong Lipunan (KBL) (English: New Society Movement) control the unicameral legislative branch of government called the "Batasang Pambansa". All these allowed Marcos to remain in power and to plunder.[2]

And since the manipulation of laws tends to rearrange the political economic order according to the whims of those in power by restraining civil liberties and economic freedom, ergo, the benefits or privileges will be partial to those within the ambit of the administration.

Said differently instead of having resources distributed through the marketplace, resources will be allocated politically in accordance to the order of importance as seen by the authorities. Nevertheless when the concentration of power is left to a few to decide, then price signals will be distorted and that lobbying, favouritism, corruption and cronyism will be her common feature.

The Phony War Against The “Cockroaches”

So what has these to do with the current state of the markets?

Alot.

The emergence of proposed regulatory reforms by the Obama administration for Wall Street comes timely with the US SEC-Goldman Sachs brouhaha.

Aside from the noteworthy coincidence[3], the US markets appears to be validating our view by ignoring the impact of the US SEC-Goldman tiff (see figure 1).


Figure 1: Political Act Slowly Unraveling

In contrast to the camp that sees the Goldman controversy as an issue of fraud, by looking at the incentives that drives the actions of political authorities, we have argued otherwise[4].

Besides, it is not within our ambit to comment on juridical merits of any legal case and neither are those who claim that it is about ‘fraud’. Commenting on the legal aspects based on news accounts signifies nothing but “trial by publicity”.

If Goldman had been truly a “cockroach”, then there must be other cockroaches too from which the sudden apostasy of the Obama administration must mean a total “war on cockroaches”.

And true enough, we find that Goldman’s practice hasn’t been isolated but an industry practice especially among the TOO BIG TO FAIL institutions.

According to the New York Times[5], ``Many banks on Wall Street and in Europe were even bigger players in the types of complex investment deals that Goldman is now defending. Merrill Lynch was at the top of the heap, assembling $16.8 billion worth between 2005 and 2008, according to a new report by Credit Suisse.

``UBS put together $15.8 billion worth of similar products, according to the Credit Suisse estimates, while JPMorgan Chase and Citigroup each created more than $9 billion worth. Goldman Sachs was a comparatively small issuer, at $2.2 billion.”

Yet if one looks at the market, except for Goldman Sachs (GS), the SPDR Financial Select Sector (XLF) [where JP Morgan, Citigroup, Merrill and GS is 24.3% of index weighting] and the S&P Bank Index (BIX) has simply shrugged off any “contagion” against a so-called “war on cockroaches”.

Noticeably, the broad based US markets as shown by the S&P 500 (SPX), which includes the Dow Industrials, the Nasdaq and the mid cap Russell 2000 all went to a bullish rampage by breaking to the upside as of Friday’s close.

Oddly too that the so-called aggrieved party in the controversial case was also reported as practicing the same allegedly skulduggery employed by Goldman, this from John Carney[6],

``It was a piece of regulatory arbitrage: In essence, IKB was investing in complex mortgage bonds without having to set aside regulatory capital or report the increase in risky assets to its regulators or auditors.”

``In short order, Rhineland became one of the biggest buyers of the complex investment products puked out by the likes of Lippman at Deutsche Bank, JP Morgan Chase—and Goldman. One banker told Euroweek that IKB—through Rhineland and similar tactics—had become one of the five or six largest investors in Europe. Thus, Goldman found them a willing buyer for the junk piled into Abacus” (underscore mine)

Take note of the word: regulatory arbitrage.(as we will be using this later)

More Dirty Dancing Politics

As the days go by, more and more Goldman-Washington ties are being uncovered.

In contrast to common knowledge that the Democratic Party has been less affiliated with Wall Street, this is turning out to be untrue, according to the Politico, ``The Democratic Party is closer to corporate America — and to Wall Street in particular — than many Democrats would care to admit.” A chart from the New York Times can be seen here.

Moreover, we discovered that there are five former employees of Goldman currently employed in the Obama administration. This perhaps reveals the extent of connection between the two supposed rivals.


In addition, the timing of Friday’s government lawsuit likewise coincided with SEC’s report about its “failure to
investigate alleged fraudster R. Allen Stanford”[7]. This may seem like an effort to possibly dampen media’s impact from regulatory failure by exposing a much bigger news. Apparently this succeeded.

And speaking of regulatory competence, one cannot help but guffaw at news reports where 33 SEC employees, including high ranking officials, spent much time during the crisis in porno browsing!

According to the NY Daily News[8], ``The shocking findings include Securities and Exchange Commission senior staffers using government computers to browse for booty and an accountant who tried to access the raunchy sites 16,000 times in one month.”

Perhaps, Madoff, Standford and Goldman people were trying to arbitrage falling markets with “porno” finance-whatever that means. This resonates clearly of the quality of the bureaucratic mindset.

Moreover, there have been pressures for Goldman to amicably settle with the SEC even if “they’re right on the merits of the case”[9].

And surprisingly, President Obama despite earlier reports to verbally assail Wall Street turned up with a conciliatory voice at a recent speech ``Ultimately, there is no dividing line between Main Street and Wall Street,” Obama said in his speech at Cooper Union, about two miles from the financial district. “We will rise or we will fall together as one nation.”[10]

We read a popular American blogger offer a bet against anyone who thinks Goldman will win the suit. Apparently this perspective is looking at the wrong issue.

Goldman can lose a case and still win the war. In the game of chess, this is called sacrifice or even queen sacrifice. Yet in a staged or scripted dispute, like in wrestling, one party’s loss is just a part of drama to fulfil other goals. A real life example of a staged battle is the US-Spanish “Battle of Manila”[11].

History As Guide To Future Actions

Let us put the issue in historical context.

Rightly or wrongly banks and financial institutions have been in the public “hot seat” from nearly time immemorial[12]. But in contrast to having reduced power from financial reforms, the banking system had even acquired more political clout in spite of these. The Federal Reserve was even stealthily hatched amidst scepticism over the banking industry.

Here is G. Edward Griffin’s speech[13], Author of The Creature from Jekyll Island, on the inception of the Federal Reserve (all bold highlights mine),

``Why not? why the secrecy? what's the big deal about a group of bankers getting together in private and talking about banking or even banking legislation. And the answer is provided by Vanderlip [Frank Vanderlip president of the National City Bank of New York] himself in the same article. He said: "If it were to be exposed publicly that our particular group had gotten together and written a banking bill, that bill would have no chance whatever of passage by Congress." Why not? Because the purpose of the bill was to break the grip of the money trust and it was written by the money trust. And had that fact been known at the get-go, we would never have had a Federal Reserve System because as Vanderlip said it would have had no chance of passage at all by Congress. So it was essential to keep that whole thing a secret as it has remained a secret even to this day. Not exactly a secret that you couldn't discover because anybody can go to the library and dig this out, but it is certainly not taught in textbooks. We don't know any of this in the official literature from the Federal Reserve System because that was like asking the fox to build the henhouse and install the security system.

``That was the reason for the secrecy at the meeting. Now we know something very important about the Federal Reserve that we didn't know before, but there's much more to it than that. Consider the composition of this group. Here we had the Morgans, the Rockefellers, Kuhn, Loeb & Company, the Rothschilds and the Warburgs. Anything strange about that mixture? These were competitors. These were the major competitors in the field of investment and banking in those days; these were the giants. Prior to this period they were beating their heads against each other, blood all over the battlefield fighting for dominance in the financial markets of the world. Not only in New York but London, Paris and everywhere. And here they are sitting around a table coming to an agreement of some kind. What's going on here? We need to ask a few questions.

``This is extremely significant because it happened precisely at that point in American history where business was undergoing a major and fundamental change in ideology. Prior to this point, American business had been operating under the principles of private enterprise--free enterprise competition is what made American great, what caused it to surpass all of the other nations of the world. Once we had achieved that pinnacle of performance, however, this was the point in history where the shift was going away from competition toward monopoly. This has been described in many textbooks as the dawning of the era of the cartel and this was what was happening. For the fifteen year period prior to the meeting on Jekyll Island, the very investment groups about which we are speaking were coming together more and more and engaging in joint ventures rather than competing with each other. The meeting on Jekyll Island was merely the culmination of that trend where they came together completely and decided not to compete--they formed a cartel.”

In other words, the trend towards consolidation of the industry via “financial reforms” has empowered more cartelization than less. And today’s proposed financial reform bill will enhance and not reduce such relationship in contrast to opinion of the reform advocates.

John Paulson And The Survivorship Bias

I’d like to show the relevance of hedge fund manager John Paulson’s reputation during the latest boom-bust cycle (see figure 2).


Figure 2: Google Trend/Wall Street Journal: John Paulson’s Popularity

As we have earlier argued, the SEC-Goldman dispute is a fait accompli argument (Wall Street seems to agree[14]).

That’s because Mr. Paulson, among the 12,400 hedge funds as reported by Hedgefund.net during the 3rd quarter of 2007, only shot to fame in early 2008 (left window) after profits in his fund skyrocketed (in mid 2007) which left the field biting his dust (right window).

In most of 2007, John Paulson, like Manny Pacquiao in the early 90s, was relatively an unknown figure (Mr. Paulson has hardly been searched by anyone)! This means that counterparties when appraised of Mr. Paulson’s participation in early 2007 would have simply ignored him as he was just one among the many “mediocre” aspiring hedge fund managers.

This also reveals that many people tend to read and value information based on today’s account and not during the time when the controversial transactions was developed. This cognitive error is known as the survivorship bias, or the ``the logical error of concentrating on the people or things that "survived" some process and ignoring those that didn't[15].”



[1] White, Lawrence Avoiding and Resolving Financial Crises: The Rule of Law or The Rule of Central Bankers?

[2] Wikipedia.org, Proclamation No. 1081

[3] Norris, Floyd, Fortunate Timing Seals a Deal

[4] See Why The US SEC-Goldman Sachs Hoopla Is Likely A Charade

[5] New York Times, Questions for Banks That Put Together Deals

[6] Carney John, Goldman’s Dirty Customers, The Daily Beast

[7] Wall Street Journal, The SEC's Impeccable Timing The Goldman suit helped to hide the IG report on the Stanford debacle.

[8] NY Daily News; While economy crumbled, top financial watchdogs at SEC surfed for porn on Internet: memo

[9] Bloomberg, Goldman Sachs Should Cut Losses in SEC Standoff, Lawyers Say

[10] Bloomberg, Obama Challenges Financial Industry to Join Regulatory Overhaul

[11] Wikipedia.org, The Battle of Manila (1898)

[12]see Quote of the Day on Wall Street: After Nearly A Century, Hardly Any Change

[13] Bigeye.com; A Talk by G. Edward Griffin Author of The Creature from Jekyll Island

[14] See SEC-Goldman Sachs Row: The Rising Populist Tide Against Big Government

[15] Wikipedia.org, survivorship bias