Fiatch

“Senator Edward Kennedy” via The Austrian Economists includes (emphasis added):

Americans like heroes and to many people Senator Kennedy was one. It is not the place to judge the deep motives for his actions, I leave that to others. The reaction to his death is telling, however, of the situation in which the country stands – I mean as far as the battle of ideas is concerned. For a country that was founded on the precept that political power is dangerous as it can lead to corruption and totalitarianism, it is strange that its politicians are often revered as gods. I do not know if Senator Kennedy was ignorant of the teachings of economics, but his lifelong fight in favor of universal health care and various other socialistic legislations paved the way to impoverishment and social disaster. Like many in politics, he stood for ideas that seemed noble and beautiful to the ignorant mind, but were truly destructive of the social order.

Instead of worshiping politicians, we should wake up to the current situation.

And closes with:

With all this said, I pray that Senator Kennedy’s soul may rest in peace.

Listen to Robert Higgs’ “The Welfare State and the Promise of Protection” via Mises.org.

Dr. Ron Paul spoke with Lew Rockwell on the ever-advancing federal power.

“More people died from the innoculation than they did from the flu” is both a direct tragedy and also a sadly apt metaphor for all this corporatist government intrusion.

HT C4L

What builds trust? What destroys it?  Why do we still pretend?

Congressman David Scott’s high-profile fail yesterday is but the tip of an iceberg.  These officials are only beginning to feel the strain.  They are, by design, setting themselves (and us) up for inevitable, ceaseless FAIL.

His response is almost understandable.  Given that government cannot fairly (so-called) allocate scarce resources across the entire health-care system, of course it would make his life easier to:

• shout people down;
• loudly proclaim his own position of power;
• hide behind bureaucracy to disguise accountability;
• attack the decency of anyone who dares to disagree;
• falsely imply openness and benevolence while actually embodying their opposites;
• deny the legitimacy of opposition by counting only those who agree with him as constituents; and
• avoid answering the press.

The Fatal Conceit is real and unavoidable.  This tiny group of government bureaucrats cannot possibly hope to manage the health-care economy.  Clearly, some things that should not have been forgotten were lost.  They are going to fail, and it is going to hurt.

Also understand — health-care reform characterized by market allocation instead of central command would bring many benefits.  Within such an effort, there would naturally be many failures.  Competition and free trade, though, would sift among alternatives to uncover successes, further innovations, and yield progress.

That’s how it works.

Listen to “The Canadian Health Care Experience” with Sally Pipes.

Health-care reform under President Obama will bring painful taxes, rationing of care, misallocation of resources, and diminished outcomes throughout the system primarily because it will also transfer yet more power to a central federal authority.

The good news is bad ideas such as these, if enacted, cannot remain in effect for long without eroding liberty and harming economy.  Maybe folks will notice, eventually.

“Many health-care reformers want to pattern reform after Medicare, a program riddled with waste that will take tens of trillions of dollars from taxpayers in the coming decades.”

“What’s not to love?”

Listen to “Medicare: A Model for Reform?”

Entrepreneurship is hope and change that yields an open tomorrow.  Centralized power is an old, sad, terrible road that leads to a dead end.

Please read “F. A. Hayek and the Fatal Conceit of [President] Barack Obama:”

BY STEVEN HORWITZ

The headlines blare that President Obama will “restructure the financial services industry” and “fix the health care crisis.” A 31-year-old with no experience in the business world, but a lot of experience in politics, has been put in charge of dismantling General Motors.

Members of Congress lecture car manufacturers and mortgage lenders on how to do their jobs. Politicians keep taking on more and more responsibility for the U.S. economy, as each industry appears to be getting its own “czar.” Unfortunately, more czars will not produce better cars, or health care, or mortgages, or much of anything else.

The belief that one person or group, no matter how smart, can know how best to allocate resources is a classic example of what the Nobel Laureate economist F. A. Hayek called “the fatal conceit.”

In Hayek’s view, what enables businesspeople to make good decisions about the allocation of resources is not that they are smarter than other people. Instead, two other factors are key.

First, businesspeople have very detailed knowledge of their particular corners of the world. They know where resources are, where their customers are and what they want, and have the experience of knowing how to deliver it. This is not about being “smarter,” but about having local and contextual knowledge that others don’t have.

Second, entrepreneurs develop this knowledge by making use of the signals provided by prices, profits, and losses. Prices guide entrepreneurial decision-making by enabling them to formulate budgets and estimate the profitability of the various choices they might make.

Profits and losses provide information after the fact about how well they chose. Profits signal them to continue, while losses tell them that resources need to be reallocated. By acting on the basis of that information, each entrepreneur contributes to the overall improved allocation of resources.

The lesson from Hayek is that when the rules are right, markets are collectively much smarter than any individual or group within them. This is the lesson that the Obama administration has utterly missed.

The administration evidently believes that experience in policymaking is an effective substitute for the local and contextual knowledge of how to produce goods and services. This is a complete misunderstanding of the way in which markets work and what kinds of knowledge matter.

Much of the same is true with Obama’s supposed fixes for health care and financial services. Imposing a vision of how an industry “should” work and how it should produce and deliver its products from the top down is the height of political hubris.

The conceit behind it is one that dates back to the earliest visions of socialist central planning. Even as belief in that more comprehensive vision has died, the mindset behind it is still manifested in the belief that top-down fixes driven by well-meaning political actors are more rational than letting individuals with their local knowledge coordinate and cooperate via markets.

When politicians such as Barney Frank lecture financial executives on their lending practices, they too are guilty of the sort of hubris Hayek identifies.

How they know better what it takes to run a business is not at all clear, especially since many of them have never done so. This sort of second-guessing of business inevitably gets politicized as there is no other basis for decision-making by politicians who are ignorant of the detailed, contextual knowledge on which effective entrepreneurship relies.

Absent the signals of the marketplace, czars, presidents, and members of Congress are thrashing around in the dark in their attempts to improve upon the outcomes generated in actual markets. Top-down directives forgo the opportunity to learn from the decentralized knowledge of those actually producing the goods and services in question.

Obama’s reliance on experts and czars and top-down restructuring is particularly ironic in light of his promises of change and bringing the spirit of 21st century technology to government.

The clearest lesson of the networked world is that decentralized, bottom-up collaboration works much more effectively than top-down solutions. From Wikipedia, to open source software, to the Internet itself, the 21st century is quickly becoming the century of the “wisdom of crowds.”

Young people understand how contributing their own contextual knowledge to aggregating and signaling processes on the Web make all of us more effective users of information through shared knowledge. Whatever its flaws, Wikipedia could never be written by an Information Czar or Task Force.

Hayek recognized decades ago that markets work in precisely the same way. To think otherwise would be to suffer from the fatal conceit. Czars and second-guessing politicians with grand designs will only frustrate the much more effective decentralized processes of the market.

Even as they communicate constantly through the Internet, probably using open source software in the process, Obama and his administration, in their hubris, continue to believe that industries need czars and that individuals and committees are smarter than collaborating, distributed collectives. We can only hope that conceit will not be as fatal as Hayek feared.

In his excellent book Capitalism, George Reisman stated:

Even if global warming turned out to be a fact, the free citizens of an industrial civilization would have no great difficulty in coping with it—that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.

It would be too great a problem for government bureaucrats to handle … . But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him.

Individuals would decide, on the basis of profit-and-loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. Factories, stores, and houses all need replacement sooner or later. In the face of a change in the relative desirability of different locations, the pattern of replacement would be different. Perhaps some replacements would have to be made sooner than otherwise. To be sure, some land values would fall and others would rise. Whatever happened individuals would respond in a way that minimized their losses and maximized their possible gains. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.

Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system (as many former central planners of Eastern Europe and the former Soviet Union have come to learn). As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved much greater problems, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry (pp. 88-89).

as excerpted in “Environmentalism Refuted” by George Reisman at Mises.org.

This con is not new.  Yet we continue to fall for it.

Michael Crichton’s speech “The Case for Skepticism on Global Warming” reported :

In the first Earth Day in 1970, UC Davis’s Kenneth Watt said, “If present trends continue, the world will be about four degrees colder in 1990, but eleven degrees colder by the year 2000. This is about twice what it would take to put us in an ice age.”  International Wildlife warned “a new ice age must now stand alongside nuclear war” as a threat to mankind. Science Digest said “we must prepare for the next ice age.”  The Christian Science Monitor noted that armadillos had moved out of Nebraska because it was too cold, glaciers had begun to advance, and growing seasons had shortened around the world. Newsweek reported “ominous signs” of a “fundamental change in the world’s weather.”

But in fact, every one of these statements was wrong.

In “Complexity Theory and Environmental Management” Crichton shared these dire predictions:

1972, Meadows et al, The Limits of Growth: “We are unanimously convinced that rapid, radical redressment of the present unbalanced and dangerously detriorating world situation is the primary task facing mankind… Concerted international measures and joint long-term planning will be necessary on a scale and scope without precedent… This supreme effort is… founded on a basic change in values and goals at individual, national, and world levels…”

1968, Paul Ehrlich, The Population Bomb: “The operation will demand many apparently brutal and heartless decisions.  The pain may be intense.  But the disease is so far advanced that only with radical surgery does the patient have a chance of survivial.”

Please note that pattern.  Dire predictions are asserted as a pretext for the massive accumulation of centralized power at the expense of individual liberty. That is always the trade advanced by such cons: give me power and I will give you security; give me power or you face impending disaster arising from capitalism (always scapegoated for government-generated economic calamity), global warming, global cooling, population growth, or technological issues like, e.g., Y2K (per Crichton again):

• 1998, UN Working Group on Informatics: “History offers no example of a parallel threat on a global, national, or even a local scale.  To ‘wait and see’ invites only disaster.  Only the long-term threats of global warming, oxygen loss, exhaustion of other basic resources in the oceans and continents as well as the eventual possibility of an earth-asteroid collision demand worldwide action on a similar scale… A worldwide strategic mobilization… similar to the effort required by World War II must be developed in the weeks ahead.”

As Crichton elaborates:

“What actually happened on January 1, 2000?  Essentially, nothing.

“But once again, notice the urgent language. The situation is desperate, unprecedented action is necessary, ordinary values must be pushed aside, anyone who disagrees is dangerous and reactionary. Terror, fear, and the end of civilization.

“Now you may be thinking, wait a minute, Y2K was a real problem and the concerns, even if exaggerated, nevertheless mobilized people and led to success.  This is a common but erroneous view. Here is the UN again: ‘During the first months of the new century only minor problems were reported… The governments… can congratulate themselves for passing the Y2K challenge.’  (UN website).

“So governments can congratulate themselves! The only problem is, they have no reason to congratulate themselves, because governments didn’t solve this problem. The US government spent 6 billion dollars. But Citibank alone spent nearly 1 billion. And total US expenditures were on the order of 100 billion, which means the government spent 6% of the total needed to fix the problem.

“Would Citibank have spent the money to fix its Y2K problem without government urging? Of course, because not to do so would have put them out of business. The same is true of other banks and businesses around the world. Yet government takes the credit. To encourage what is happening anyway is a common procedure in many areas of advocacy.”

I highly recommend Crichton’s speeches as a small antidote to the constant shilling that characterizes major media, a key perpetrator of this long con.  His talks are great stuff.

The Boston Globe reports on Government Motors:

General Motors Corp. will delay the closing of a Norton parts distribution center it planned to shutter by the end of the year, according to US Representative Barney Frank.

via Greg Mankiw.
[photo source]

Stratfor reported “Argentina: The Latest Nationalization Threat.”

The Argentine government is analyzing the possibility of nationalizing grain commerce, La Nacion reported Feb. 27, citing sources in the Federal Administration of Public Income (AFIP). The nationalization would be carried out by way of presidential decree and would create a single state entity to buy all the country’s grain, flour and oil production.

The announcement comes at a time when the Argentine government is negotiating with the agricultural sector over export taxes and domestic price caps. Commodity export taxes are an important source of revenue for the fiscally overextended Argentine government (total export taxes were about 13 percent of government income in 2008). For the farmers, however, the taxes impede revenue generation. With the domestic market price-regulated, the international market offers the only real profit-making option.

At the same time, Argentina also faces its worst drought in 50 years.  (And their airline industry is no fun either.)

Even before the drought, however, plantings in Argentina were down 25 percent due to the poor investment climate. With nationalization, the government would also pocket the export profits that the farmers used to get.

If Fernandez follows through on the threat to nationalize Argentine grain distribution, the net effect will be of establishing complete control over Argentina’s exports. Depending on where the purchase price is set, it could have the same effect as raising the export tax across the board. In that event, the farmers would lose all incentive to produce. Farmers were already operating at or below their costs, and this could very well put them out of business — which not only ensures more civic protest from the farmers, but also makes the possibility of food shortages increasingly real.

Terrible decisions by state governments around the world endanger us all.  States do not create wealth.  Private interests do.  States can only take wealth through confiscation.  Such heists are getting seriously out of hand.  Expect them to get even worse as states grapple with their deepening moral and financial bankruptcy.

Look out.

[photo source]

If you aren’t frustrated, outraged, and at least a little terrified, you’re doing it wrong.