Picking Up Where I Left Off

I began this blog with high hopes and good intentions. And - as with a lot of things in life - it just fell by the wayside after my first two blogs.

I've decided to try and start it up again with a little more modest goals. I started thinking a post once a week would be feasible. I got burned out and other obligations took priority. I think about writing quite a bit, and its something I truly long to do. Thus, I'm going to start again and hopefully fulfill that want.

My good buddy from college, Kollin Fields, and I correspond every once in a while via email. We'll fire questions at each other about something we read, and the other will weigh in with his two cents. We always have great discussions. I've decided to post one of our correspondences as my comeback blog. I figure its an easy, simple way to get back into the swing of things and might make for an interesting read.

Please post your comments and thoughts. I'd love for everyone to add to the discussion.

Thanks for taking the time to read what I write. It means a lot to me.

Here it goes:

Kollin:
Did you catch this article?
http://mises.org/daily/6652/Why-There-Should-Be-a-Free-Market-in-Food-Labeling

Do you think this laissez-faire concept would work for all interactions between the government and food or drug companies? The only problem I can think of is that, take for instance, farmers and agricultural industries. If they mislabeled and sold bad meat and poultry and people eventually became sick, which and how many consumers are going to make that connection to the bad meat and then publicize it enough to take demand down?

Similar to the problems written about in The Jungle.

Brad:
I do think it would work in totality. As an answer to your question concerning mislabeling and sickness, I would say: yes, absolutely. There are more forces and interests to consider than just the consumers'.

First off, the distributors. If Brookshires, Wal-Mart, or a local mom-and-pop store got a shipment of bad meat in, and their patrons got ill, you would assume they would cease to order from the infecting company.

Secondly, notice the speed with which a company self-regulates and goes into damage-control mode when a bad product hits the market. Not too long ago, Peter Pan peanut butter put out a few bad jars of PB and within days, they had recalled and refunded the purchase of every jar of PB within the contamination window.

But, you must remember the most important type of "regulation" of the food industry: consumer sovereignty. It is the quest for the consumer’s dollar that creates the most potent incentives to offer safer, tastier, and healthier food. Acting merely in self-interest and self-preservation, companies already take pain-staking measures to insure the safety of their food, often beyond government dictates.

Upton Sinclair's The Jungle has been debunked by most modern scholarship. He spent very little time in a meat packing factory, and his accounts were sheer fantasy - yellow journalism at its finest.

If you want more on Sinclair:
https://play.google.com/store/books/details?id=xGU-AAAAYAAJ&rdid=book-xGU-AAAAYAAJ&rdot=1

http://www.mackinac.org/4084

I see two prominent forces at work in the passing of any regulations or new rules passed by the government.

1) In The Constitution of Liberty, Friedrich Hayek made the point that one of the keystones of socialism is the denial of individual responsibility. Thus, the crusade for socialism always included attacks on individual responsibility. For if individuals do not have free will, and are not responsible for their actions, then their lives must be controlled somehow—preferably by the state—according to the socialists. They must be regulated, regimented and controlled—for their own good. The U.S. government and its appendages operate in this exact vein. By decreasing the responsibility of the consumer to investigate their purchase choices, the government increases dependency on itself, thus increasing its power overall.

2) The FDA is merely a revolving door between large agribusiness and pharmaceutical companies (http://mises.org/daily/6580/). The goal of all regulation passed by the FDA is putting smaller competitors out of business and granting government-mandated monopolies to politicians' largest contributors. Much like minimum wage legislation finding its biggest advocates among labor unions, food and drug regulation's most ardent supporters (and often drafters) are ex-Monsanto CEOs. It is a classic example of crony-capitalism trying to crowd out all competition in favor of a select few companies.

One more thing to consider: imagine a free-market FDA. A company that's sole purpose was to establish acceptable standards for food and drug production, but operates solely on the free market (much like the Better Business Bureau). This company's stamp of approval on all its endorsed goods would provide consumer confidence in quality. Food and drug companies would pay a fee to the endorser to come and inspect their plants, thus providing it with a source of revenue. The more thorough and fair the company in its inspections, the more business it attracts from producers. The more thorough and safe in its inspections, the more confidence it builds with consumers. If this type of company existed, no more tax dollars could be funneled directly from the tax-payer to Monsanto or any other influential Big Pharma or Big Ag company for that matter.

Hurricane Sandy's Broken Windows

The Broken Window Fallacy

Last week I was substitute teaching a 7th grade Texas History class. The television automatically clicked on after the bell rang and tuned into Channel One News - a ten minute news program designed for junior high and high school students. Hurricane Sandy had just swept up the east coast and left utter devastation in its wake. The newscasters talked about the people without electricity, the food and gasoline shortages, and all the dangers of flooding. She ended her story with a statement about certain economists forecasting an economic net gain from the destruction. She said jobs will be created for clean-up crews and construction workers that would have never existed outside of Hurricane Sandy's ruination.

Keynesian economist, like Paul Krugman (pictured above), forecasted economic net gains from past events, such as 9/11, Hurricane Katrina, and the Fukushima meltdown. They argue that out of destruction comes prosperity. Wealth is created out of devastation, and, in the long run, we'll be better off after money is spent to repair the billions of dollars in damages.

These Keynesians would be well served by reading Frederic Bastiat's That Which is Seen, and That Which is Not Seen (here), or Henry Hazlitt's Economics in One Lesson (here). Bastiat puts forth a story about a kid breaking windows:

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation: "It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?" 

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions. Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen. 

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen." 

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented.
Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier's trade is encouraged to the amount of six francs: this is that which is seen. 

If the window had not been broken, the shoemaker's trade (or some other) would have been encouraged to the amount of six francs: this is that which is not seen.
And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labor, is affected, whether windows are broken or not.

Now, watch this 3 minute video.

Pretty good stuff, huh? Do you see the correlation between Hurricane Sandy and the Broken Window Fallacy? This economics stuff is easy!

But what about the part of the video about the government creating jobs? Infuriating, I know. In 2009, Obama and Congress drafted and passed a $787,000,000,000 stimulus plan (yes, that's 3/4 of a trillion dollars). That's an expensive window. But Obama, his advisors, and the majority of Congress are all Keynesians - whether they would admit it or not. This type of window smashing makes sense to them. It is the road out of economic depression and the answer for creating jobs. But if confiscating and spending tax-payers money in times of dire need will spark the economy, why not always spend money, creating jobs? If hurricanes bring economic prosperity, shouldn't we hail earthquakes and tornadoes too? Should we prosecute arsonists, or let them burn the whole country to the ground so we can rebuild and be richer and more prosperous? As Ludwig von Mises eloquently put it comparing War to natural disasters:

War prosperity is like the prosperity that an earthquake or a plague brings. The earthquake means good business for construction workers, and cholera improves the business of physicians, pharmacists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest.

When applied to a degree of absurdity, the answer seems clear. Of course, we should never burn the entire country to the ground or purposefully go around breaking windows to spur economic activity. The answer seems obvious, but Obama and his cronies (Republicans and Democrats) in congress fail to understand the implications of the simple Broken Window story.

Here is an article that lists all the best sources for learning about the Broken Window Fallacy and all its applications. In it, you can find this lecture by Lew Rockwell, which I highly recommend listening to. A transcript of the lecture can be found here if you would rather read it than listen to him. Either way, educate yourself on this important principle, so you can take a stand against Keynesians and Big Government.

The Fallacy of False Dichotomy Discovered

The Fallacy of False Dichotomy Discovered

A false dichotomy is a logical fallacy that involves a situation in which only two alternatives are considered, when in fact there is at least one additional option. The options may be a position that is between the two extremes (such as when there are shades of grey) or may be a completely different alternative. A false dichotomy can arise intentionally, when fallacy is used in an attempt to force a choice (such as, in some contexts, the assertion that "if you aren't with us, you're against us").

The game "Would You Rather" is a perfect example. "Would you rather be unable to see for one day or unable to use your phone for one month?" "Would you rather be able to fly or turn invisible?" "Would you rather be able to lie without being caught or always be able to tell when someone is lying?" "Would you rather be a Democrat or a Republican?"

Growing up, I never thought of the Democrat/Republican question as a false dichotomy. There were only two options, right? It can't be a false dichotomy if there really are only two options. So which side of the political spectrum did I fall on? Well, my parents loved George H.W. Bush, and despised "Slick Willy," so that was one point for the Right. I loved animals, and Republicans wanted to kill all the puppies and kittens (I can't find the source for this, but I'm pretty sure i learned it on PBS), so I sided with the Liberals on this one. So there I was, at a fork in the road. My choices were go Right or go Left. 

Enter George W. Bush. Ol' W. The Texan that ran for President against the Enviro-nut, inventor of the Internet: Al Gore. Notice it only takes one adjective to describe Bush: Texan. That's all that mattered really. My path was paved in gold to the Right, and Bush was the Goldsmith. I started listening to Sean Hannity, Rush Limbaugh, and G. Gordon Liddy daily. I read Ann Coulter, Michelle Maulkin, and the Drudge Report. And, like any good conservative, I watched Fox News as my exclusive news source. I was a dyed in red Neocon, and I had no idea what that meant. I hated the Left, and I had no idea why. My ideas and thoughts on current events, elections, and national issues were only rehashed versions of what Rush and Sean said earlier that day on the radio. I was drowning in a sea of ignorance, and I didn't even know that I couldn't swim. I thought my head was above water the whole time.

Fast forward to 2012's Republican Primary. I had no idea who I was going to support, so I actually started researching the candidates on my own. I found out Mitt Romney was a flip-flopper, who had supported abortion, anti-gun legislation, and a slew of other abominations to Rightist thinking in the past. But he was a good Republican now that it was politically expedient; now that he wasn't governing one of the most Democratic states in the Union. Newt Gingrich seemed pretty solid. It seemed I could maybe throw my hat in the ring for him. Santorum said a lot of things that made me question his commitment to the separation of Church and State, so I couldn't support him. And then there was this other guy. Dr. Ron Paul: Texan. I had to research him; he's a Texan after all.

The biggest topic of the Republican debates were spending deficits, the economy, and the national debt. I went to Dr. Paul's website and started investigating his monetary policies. The site suggested I watch was this movie on the Federal Reserve. I learned more in this 42 minute movie than I had in all my education. I was immediately intrigued. What else did Dr. Paul have to say about today's issues. After hours of scouring his website, reading every article, blog, and post I could find, I was shocked that none of this stuff lined up with what talk radio and Fox News had taught me, but I actually agreed with all of it! Dr. Paul clearly defined freedom and liberty and made a real, coherent case for smaller government and less intrusion into the citizenry's lives. This is the candidate I had been looking for. End the war in Afghanistan, end the pointless War on Drugs, end the War on Terror, cut wasteful government spending, adhere to the Constitution, and the list goes on and on.

I was excited and talking to everyone I knew about Ron Paul. My friend, Ryan Locker, told me that if I was really interested in what Ron Paul was saying and doing, I should watch a YouTube video about John Maynard Keynes and F.A. Hayek. Then I watched the "Round Two" follow up. Never had I been interested in Economics until I watched these two videos. They were entertaining and packed with information and references that were way over my head, but I had to know more. I kept looking.

My next major discovery was the Mises Institute. This is what has truly shaped my political and economic thoughts over the past year. The writings of great minds such as Ludwig von Mises, Murray N. Rothbard, Lew Rockwell, Tom Woods, Ron Paul, Henry Hazlitt, and Frederic Bastiat - to name a few - have absolutely changed my life. These authors are champions of the Austrian School of economic thought. I have now changed my ideological alignment from a Texan to an Austrian, by the grace of God.

I would encourage anyone that wants to become more knowledgeable about politics and the economy to read as much as they can by any of the aforementioned authors. All of their writings are available, completely free in their entirety at mises.org. As I learn, I want to share with others, and this blog will be my vehicle to do that.

If you think you are being presented with the false dichotomy of Right/Left, Republican/Democrat, Romney/Obama, just remember there is another choice. There is another path to follow. The greatest intellectual minds of the past 100 years have paved the road for us. It is the Libertarian road. Will you walk down it with me?