The Ethics of Robin Hood

The story of Robin Hood is a good one. Robin of Locksley, a disenfranchised noble, “steals” wealth from those who have, themselves, robbed it (the government) from the productive elements of society (private individuals pursuing their own self--interest), and returns it to those who actually created that wealth through their labor. Rare is it to find a more libertarian, or pro-capitalist hero than the original Robin Hood. He recognizes not just that taxation is undesirable from a utilitarian standpoint, but that it is profoundly immoral, and is in no particular way different from common robbery. As such, he takes proper action in attacking the aggressors of the state, taking from them their stolen property, and returning it to its proper owners.

However, in recent years, the story has changed. Instead of taking wealth from thieves and returning it to its owners, Robin Hood “robbed the rich” and “gave to the poor” as if this was somehow an acceptable thing to do. The fact of the matter is, the original Robin Hood did not actually steal. That was the entire point of the story, he was simply taking what had been stolen and returning it to those who produced it. It is not thievery to take what has been unjustly acquired. However, the moral implications of the idea that “Stealing from the rich to give to the poor” is an acceptable, even an admirable action, are deeply disturbing. The first notion it introduces is that the rights of man are tied to his financial standing. If this is the case, than the villains of the story of Robin Hood, Prince John and the Sheriff are Nottingham, are fundamentally no different from its heroes. Both believe, simply in reverse orders, that the level of wealth which a person has acquired effects the amount of legal and moral rights which they are to be afforded. In order to justify these actions on the part of our “hero”, we must also believe, fundamentally, that the suffering, or the “need’ of some men is, as Ayn Rand would say, “a mortgage on the lives of others”. This ethic of slavery, for that is what it is when the fruits of some men’s labor are taken from them by force, to be attributed to the ends of others, if truly and fully accepted, will sound the death knell of the west. What has always made the west great, what has given it cause to rise above the huddled masses of the impoverished east, is the belief that man belongs to himself, and that, as such, his dreams are his to achieve, if he may find the means. This belief gave birth to capitalism, which is the greatest social achievement of western civilization (not democracy, which is, taken on its own and without a capitalist, individualistic ethic, no less tyrannical than despotism) or, indeed, of any human society.

This ideal, of man as an end in himself, free to pursue his own self-interest and his own happiness without being ruled by others, found its zenith in the founding of the United States of America. It is now at its greatest nadir since the Dark Ages which immediately followed the fall of the Western Roman Empire. The shifting ethic of Robin Hood betrays a larger, and far more worrying trend. If we continue to follow the moral monstrosity of collectivized ethics, we will find ourselves just as impoverished as those in the third world, in spirit first, and, eventually, in body.

The Top 5 Teams in the NFL?

According to Joe Theismann's column on EPSN, the Top 5 run NFL franchises today are as follows.

1.) New England Patriots

2.) Denver Broncos

3.) Dallas Cowboys

4.) Indianapolis Colts

5.) Baltimore Ravens


I think this list is totally ridiculous. Number one and number four are the only ones I can say I fully agree with. The Cowboys? They haven't had a consistently winning teams since Jimmy Johnson was Head Coach. Losing one man and losing everything with him is not a mark of a well run franchise. The Ravens? Why. They have a good defense, and for season after season they have done nothing to improve their mediocre as hell offense. Finally they picked up Steve McNair. Not a huge improvement really. The Colts I agree with. The Broncos? I'm not quite sure about the Broncos. Here are mine.

1.) New England Patriots

This choice is obvious. In ten years, the Kraft administration has taken the team from being the biggest joke in the NFL to five AFC Championship games, winning four of them, and four Super Bowls, winning three of them. They have done it with no huge stars, other than Tom Brady (and Corey Dillon in 2004) but instead by taking a business-first approach and building a solid team of good players on every position, who know their role and can execute it well. They also have been tough dealers, never paying too much for a player, and letting even the best ones go when they start to demand a lot of money. Despite this, they have built an NFL dynasty. An amazing achievement.

2.) Pittsburgh Steelers

Two coaches in 35 years, just now finally replacing Bill Cowher, a great coach. They have managed to avoid nearly ever having a bad season (this past year being an exception) and have remained almost constantly a consistent playoff contender.

3.) Philadelphia Eagles

Again, with a smart coach and good players, they have appeared in the playoffs time and time again, going to four NFC Championship games straight, culminating in a Super Bowl appearance in the 2004-05 season. Even this past year, having lost their star QB Donovan McNabb, they had a good enough guy at second string (Jeff Garcia) that they were able to rally and get to the Divisional Round of the playoffs, losing to the extremely hot #2 seed Saints. It is not the only big name loss the Eagles have shown they can handle (TO?). A very well run team.

4.) Indianapolis Colts

With the Dungy doctrine, this team has managed to shore up its defense and make it all the way, currently sitting as the reigning Super Bowl Champions. Meanwhile, while their O-Line leaves something to be desired, they have a stellar offense with Manning at QB. They can do anything, whether it be run the ball or throw it. But getting to the Super Bowl was not easy, and it took much longer than most would have suggested. Indy gets kudos for sticking to Dungy's plan and allowing him to do what he wanted to do with the team. It was not an easy decision, to be sure. Colts are not just packed with stars, they are a well run franchise. Would I be saying the same if they hadn't won the Super Bowl this year? I don't know, maybe not.

5.) Green Bay Packers.

I know, I know, this is an extremely controversial call. But they have, quietly, built a young, good, football team in Green Bay. They have traded away players when it was time to do so, and not taken the bait on grabbing big names that are over the hill (Corey Dillon, Randy Moss) or in other ways dangerous (Moss!). All that is holding this team back from really challenging the Bears over domination of the NFC North wears number 4. His name starts with "Brett Favre" and ends with an E.However, I cannot really blame them for not cutting the guy. He is an NFL legend, and their fan base would tear them apart. At some point, an NFL franchise is a business that needs to keep its customers happy. Nevertheless, in one or two seasons when Favre is gone, look for the Packers to be neck in neck with the Bears (last season's NFC Champs, who also went into the playoffs at the #1 conference seed with a 13-3 record) for domination of that division.

Keep track of what they are doing with your money

Cool new site here that allows you to investigate and keep track of spending by the U.S. government.

Hat Tip: The American Thinker

Picture of the Week: Uhhh....

A Convenient Falsehood: Al Gore and the Cult of Global Warming

As of late, global warming has been all the rage. Especially here in New England, where much of our unusually warm winter was attributed by folks to "global warming" (the actual culprit was the El Nino cycle we are in). As the global warming canard goes, the phenomena is being caused by Co2 (carbon dioxide) emissions being released into the air by humans via our industrial growth, beginning in the 18th century and continuing on thereafter. Global warming even has its own big budget movie, Al Gore's An Inconvenient Truth.

The solution, then, it is argued by Gore and his allies, is to curb growth. By carbon credits, stop consuming so much, deny the third world its large scale development until technologies can be found to create "sustainable energy" and thereby "sustainable growth". How many people will unnecessarily die while we wait for that crucial development is, of course, never mentioned. The fact of the matter is that, undoubtedly, global warming is, undoubtedly, occurring. And undoubtedly, human beings are playing some role in encouraging it. But the idea, put forth by the global warming lobby, that industrialization and human economic growth is causally linked with the phenomena of climate change in a major way is truly ridiculous.

The fact of the matter is that the current warming period we are in began before the invention of cars and airplanes, and that most of the actual climate change occurred even before 1940, when industrialization was still confined and (relatively) small in scale. Some studies have even shown that Co2 emissions in nature lag behind changes in temperature by as much as 800 years. That is to say, changes in Co2 are symptoms, not causes, of global warming. Certainly there have been many fluctuations in the earth's temperature in the past that have not been caused by humans. The medieval warm period and the little ice age that followed are common knowledge. And indeed, it would not be false to suggest that the scientific consensus has been wrong before. In the 20th century, we were warned of the impending ice age, the population bomb, acid rain, and DDT poisoning, just to name a few. None turned out to have much substance. This is not because of some broad conspiracy or widespread stupidity in the scientific field. It is inherent to the nature of empiricism; if you lack all of the proper data, you can end up with conclusions that are wildly inaccurate.

We don't know for certain whether Co2 is a cause or a symptom of climate change. We don't know for certain whether industrialization is a leading cause of global warming, some would argue it is not a cause at all. We don't even know if we can reverse the effects of it by cutting back our economic development, or whether the effects will even last (that impending ice age of thirty years ago disappeared pretty quickly). What we do know is that people in the third world are dying in vast numbers because they lack access to the proper technology that would allow them to live longer, wealthier, and happier lives. We know that globalization and worldwide capitalism are, for the first time, giving them a chance to pull themselves out of the Hobbesian gutter. And we know that, if we choose now to retreat, to pull back in the face of a speculation, a possibility, they will fall right back down. The evidence ought be a lot harder and a lot more expansive than it is to convince us to to do this.

The sad fact is that (Al Gore excluded, at least I hope) much of the "global warming" movement is really just the same old Neo-Marxism, dressed up in green instead of red. And, just as before, it would send millions to their deaths in a failed attempt to achieve whatever the social justice flavor of the week is this time. We should know better than to be bamboozled again.

Live Blogging Begins

It is now 5:32 PM, Eastern Time. Yes, I am late.

Let the live blog commence! here is the link, again.

I'm staring the clock at 0:00:00. The movie is 75:55 long.

00:00: Hitting play button.

00:42: I like that there is a skeleton on a horse.

03:17: The IPCC is listing dissenters, who actually went so far to resign, on its "author list" for this much touted "global warming consensus"? Surprised that that is even legal.

05:15: Leftists coming together to kill third world development? What a shocker!

07:35: I like that they used Rat Pack music.

09:52: Is there any global warming response to these fluctuations? The Little Ice Age and the Medieval Warm Period are pretty common knowledge.

11:17: This reminds me of something. If global warming is man-made, it is possible that global warming activists may plunge us deeper into its jaws! After all, their suggested policies are nearly always anti-growth, and it is economic growth (see industrialization and post-war economic boom at this point in the video)_that brings about new technologies, often less pollutant technologies. Who knows, if we had had as heavily restricted markets as many warming advocates want now, we may still be using coal.

12:00: Temperatures during the post-war boom, and then grew during the recession? Using the logic of warming advocates, we ought increase our industrial activity to fight warming!

18:34: Al Gore feels that this issue is super cereal.

18:37: Google Video loads too slow, I'm switching to YouTube. Down for a few minutes while I wait for the movie to load there. Use this time to wait with baited breath.

20:48: We're back online. Now blogging the YouTube version of the film.

22:59: Apparently Co2 emissions actually lag behind rises in temperature? Thats pretty huge. How could it possibly be a cause, if that is the case? And not just by a bit. Temperature leads Co2 by a full eight hundred years. Every single ice core survey shows this to be the case, according to the film.

27:53: Staring to get interesting now. I am geniunly intrigued. This information regarding the relationship between Co2 and climate is new to me.

30:12: Ha Ha! How great that the ancients would understand the weather better than the moderns. I always love to see those guilty of chronological snobbery get zinged.

31:14: Interesting about the cosmic rays and the solar winds.

34:41: I think we all remember the "coming ice age". Ah, the doomsdays of yesteryear.

31:41: Technical difficulties. Internet going off and on.

37:17: We're back folks.

39:58: The global warming craze: Brought to you by unions, hippies, and Arab despots! Man, what a team!

41:24: The far left just kills me. Adopting ever more extreme positions just to be anti-establishment. What children.

43:33: If what he is saying here interests you, I recommend you check out something called public choice theory

50:56: Definitely true. If you live in New England, you remember that this past winter the fact that it was exceptionally warm was widely blamed by laypeople on "global warming". In actuality, it was El Nino.

54:21: Didn't know that about the glacier break up. Interesting though.

56:14: Malaria in the Soviet Union? Not something I would normally think of. Arctic mosquitoes would kick my ass though.

1:00:58: Classy kicks.

1:02:24: What they are doing to people in the third world is pretty disgusting.

1:08:01: Horrifying. I wonder how many people have unnecessarily died in order to satisfy these hippies.

1:12:01: Patrick Moore is absolutely right here. He seems like a pretty cool guy.

1:13:32: Quite a cool film. I thought it was a few hours well spent, watching, thinking, and writing about it. Will post my thoughts soon.

Liveblogging "The Great Global Warming Swindle".

Starting at 5:30 PM Eastern today, I am going to be viewing "The Great Global Warming Swindle" on Google Video. It is available here

It can also be seen on YouTube here.

I felt like trying something new, so I will also be live blogging my viewing of the documentary. That is to say, I will post my thoughts in real time, while watching it (with helpful tags indicating how many minutes I am into the video). Should be interesting, anyways. So, if you feel like doing so, come on over here at 5:30 and watch the video with me, while reading my erudite and witty commentary on it. Or watch it whenever. In any event, see you at 5:30.

Picture of the Week: Saint Paddy's Day, in Tokyo

The Question of Economic Methodology

What is economics? It is, admittedly, a large question. So those who are not economists, the answer probably seems to be that economics is the study of GDPs, consumer price indices, rates of inflation, exchange, and interest, and countless other dreadfully boring subjects. To others, the textbook definition of economics is the study of how allocate limited resources towards unlimited wants and needs. I vehemently disagree with the former, and feel that it is the shameful fault of that scoundrel Keynes that anyone believes it to be so. With the second, I agree, but would phrase things differently.

With Mises, I believe that economics is the study of Human Action. What this means is that, far from being the mess of sloppy thinking and complex math that the villain Keynes (and, to a lesser extent, the partially misguided hero Friedman) helped create. Economics is the study of how humans allocate scarce resources. For that reason, it has to be couched, first and foremost, in an understanding, and a theory of human nature. With no understanding of the nature of humans, we can have no understanding of how humans will utilize the resources in question. Every curve and model and equation that Keynes was so fond of finds itself completely impotent if the data it has computed cannot be shown to be applicable to its subjects (as is usually the case with Keynesian economics).

If then, in order to understand economics we must first understand humans, it is proper to ask what we can know about them.

The first principle we know to be true is that humans act. This is something inherent to our nature, indeed, any attempt to disprove it must fail, as to do so, the critic must actually engage in argument, which is itself an action. We know then, that humans are acting creatures. They are not ferns, or trees.

Secondly, we know that humans always act towards their greatest perceived happiness. This is proven by the fact that, whenever a human takes an action, he chose that action over any other possible course of action available to him. It must, then, be the course he felt would yield to him the greatest possible happiness. This leads us to a third principle.

Humans arrange their wants and needs in an ordinal manner. While a human may engage in actions in rapid succession, he can still only engage in one action at a time (excepting, of course, for the brain's ability to keep the various parts of the body continuously and simultaneously functioning). So then we know that a human will always act towards his greatest happiness first, his second greatest happiness second, his third greatest happiness third, so on, and so on.

This tells us something important about trade. Namely, that no trade ever occurs which is not beneficial for both parties. The fact that both chose to engage in a trade is proof enough that both believed that they would be better off after the trade than before it, that what they would gain from it would bring to them greater happiness than what they would lose. The only exception to this being swindlers, who deceive people into believing that they offer something other than what they actually do in trade.

This sort of theory can (and does) go on for ages as myriad conclusions are derived from logically derived axioms about the nature of man. It is, by far, the best way to arrive at general principles of economics, because, at its core, economics is fundamentally a study of human nature. It is a humanity, and not a natural science. This theory of economics is laid out in two masterpieces by the great economist of our age, Ludwig von Mises. The first is Theory and History and it can be read here. The second is his 900 page magnum opus, Human Action. Also provided for free on the internet. I encourage you to read the first. Tackling the second is no small undertaking, but it is more than worth the while, if you feel up to it. I myself just recently received my copy of it, and am eagerly starting out on it, though I imagine it will take me some time to complete the greatest achievement of what was, quite possibly, economics' greatest master.

The Question of Anarchy

The following is a transcript of a post I made regarding this question in that hallowed venue of polite and honest intellectual inquiry, an internet debate.

How are we going to get anywhere with this post? It covers so much...I don't even know where to begin.

Alright. I guess first we need to know whether anarchy is something we want before we talk about whether its some place we can get to. Its important to know where you're trying to go before you set off down the road.

The first question is one of pure philosophy. Before we can start applying any doctrines to politics we have to answer one question: Deontology or Utilitarianism?

This question, thankfully, can be answered rather quickly. Group calculation of the utilitarian sort, is impossible because of the economic calculation problem so even if one is a supporter of utilitarian ethics, one must agree that government can't identify what increases utility the the most, therefore a utilitarian government is impossible.

So if we're going to talk about a just social order, we have to place it in deontological terms. For this, we need a philosophy of property rights.

It is clear that property rights are naturally occurring. If nobody had any right to anything, men would sit around and wait to die, since nobody would have a right to utilize nature for his own benefit. Even in the purely communist society, property rights exist. All property rights are simply invested in the soviet, rather than in any individuals. Somebody then, has the right to transform nature for his benefit or the benefit of others. Who?

Well, man was born into the world, or initially appeared in the world, basically naked, with nothing but nature and the tools given him by God to survive. It seems then, to me, that all of the nature around man was virgin land, having never been appropriated, and thus in a state of no-ownership.

Man then, attains property rights by taking nature which previously had not been appropriated, and doing so. Transforming it into things which are useful to him. Doing what John Locke called mixing his labor with the land. Once he has done so then, this property has become his, and he has attained sovereignty over it. It is then the case that, since he is sovereign over his property, it cannot be moral to take it from him by force. The only moral way to transfer this sovereignty is through a mutually voluntary exchange between man and his fellow men. Any other way of taking it requires coercive aggression against the man and the looting of his property, through which he went to the trouble of laboring to transform. This barbaric, and indeed cannibalistic practice can never be considered moral. And, because of the economic calculation problem, we know that no possible end can make it moral. The utilitarian argument has been dispatched because of the impossible nature of the problem it tries to address. So then, we must treat any seizure of man's property as pure theft, regardless of the ends the thief wishes to achieve, and regardless of the special hats or badges that he may wear by which he claims to have a right to this property. All non-voluntary exchange can only be treated as petty theft in our proposed order, if we are serious about establishing a just order.

What then, about theft? Certainly it would arise.

It seems clear to me that if man coerces another, and takes from him the fruits of his labor, he has no claim over this property. It must be immediately returned to his fellow.

What if this man is gone? Perhaps he has died since this property has been stolen from him. If this is the case, it must be any identifiable heir of man who has sovereignty over this property. Still, the property must be taken from the thief and given to the heir.

And if there is no identifiable heir? Well, then, this property passes into a state of no-ownership. Those who were sovereign over it are gone, and the man who has pretended sovereignty has no valid claim, so the property then belongs to whoever comes along (other than the thief himself) and appropriates it towards some end. The thief can never make any claim over it.

This is the same if the thief's heir now controls the property, and the true owner's heir can be identified. If, however, it is the case that no heir of the original owner can be found, and an heir of the thief currently owns the property, it must be the case that this property has become the valid exchange of the thief's heir. This is because, at one point or another, the property passed into a state of no-ownership, and the thief's heir then appropriated it, becoming its valid owner.

So this is what we have established. Property can only be originally attained through original appropriation. It can only be exchanged voluntarily. It can never validly pass into the hands of a thief, but may only pass into a state of no-ownership, to be later appropriated by some other actor.

This of course, means that the only just deontological order that we may establish is one of pure laissez-faire capitalism. Any other proposed system relies upon both thievery (taxation) and the impossible attempt by utilitarians to overcome the economic calculation problem.

Before get to the latter, it is important to address the former. Is taxation thievery? Does not the social contract make taxation by the state morally valid? It does not, for three main reasons.

The first is because any contract must be based upon mutual and voluntary exchange. However, the social contract was not. Rather, it was applied to already existing states, having been assumed to have been signed at some point lost in antiquity. Of course, it never was, and no evidence of the signing of such a contract can be found. All states are born in the fires of war & conquest, and thus have no claim to have ever signed any contract with their people.

The second reason is because, if the social contract was signed in antiquity, it has become invalid since. For no contract may govern a man who did not agree to enter into it. For this reason, the social contract, if it was ever signed, became invalid as soon as the generation that signed it passed from the Earth. The social contract would have to be drawn up anew and re-signed every generation. Clearly, this is not the case.

Thirdly, for the same reason as the second, the social contract could only be valid if voluntarily signed by 100% of society. This would essentially mean that the government would lose its ability to tax, and, in fact, stop being a government altogether, being merely a firm providing goods and services for voluntary exchange. The existence of just one man in the entire society who does not adhere to the contract would make the state's authority over him invalid. For if the state believes that its rule is based off of mutually consenting contracts, it must agree that it has no right to rule a man who does not wish to contract with it.

If this is the case, then we must agree that Anarcho-Capitalism is the location which we want to reach. It is the only system which is fully consistent with the philosophy of property and of contracts that we have found to be just. It is the only system in which people may live freely, knowing that their property will not be stolen by men from the government.

But surely this is not enough? Because people can steal, certainly, even if they don't address themselves with the pomp and majesty of the state. If Anarcho-Capitalism is a philosophy of "Let justice reign, though the heavens fall!" the pertinent question becomes "Will they?"

Nobody who truly commits themselves to this motto believes that they will. In this case, they won't.

The reason is simply, because, law, order, etc, are desired goods and services. Currently, all or nearly all members of society who are specialized in defense protection services are in the employ of the state. From this, we do not conclude that they would simply disappear if the state did. Does anyone seriously believe that if the state stopped delivering mail, mail delivery would cease to exist as a service? Of course not. People would hire private firms like UPS and FedEx to deliver their mail.

We can presume, then, that the same would happen with defense protection services. Indeed, the very nature of marginal utility forces us to conclude that this is the case. Of course, we cannot rule out the existence of murderers, or of terrorists who desire to hurt their fellow men, or of shucksters who do not provide their promised services adequately.

The important point to remember is that neither can the state. What state law provides, its central service, is a promise that should you choose to wrong your fellow man, you will have to pay the costs of the state's justice. A fine, jail, whatever. Obviously depending on what crime it is that you commit. The only time the state provides the direct service of preventing crimes from being committed is in the exceedingly rare circumstance that a crime is committed in the direct and immediate presence of a police officer.

So certainly this service, the fear of consequences, could be adequately provided by a market. Indeed it would be provided more efficiently, for currently, if a man commits a crime, the state spares no expense in hunting him down. It brings the criminal to justice for his crimes regardless of costs. Of course, this will sometimes be inefficient. Because of the nature of marginal utility and of the economic calculation problem, we will never know whether it was even wise to hunt down the criminal, or if the resources invested therein could not have been better used for other ends.

Of course we have one final problem. How do we stop the providers of defense protection from being, themselves, violators of justice? Who watches the watchers?

The answer is, they are kept in line by other defense protection firms, via the market. Nobody will pay for a service they find inadequate or otherwise undesirable.

Clearly, this seems ridiculous, on face. At first glance. But it is the system that all of society already adheres to! For except for those who believe in a one-world total state, everybody believes anarchy works, to some degree. As realists love to say, the international order is anarchical. The only social orders that are respected between states are ones that are essentially voluntary in nature. It is, particularly, voluntary economic treaties that have been the most enduring. The anarchist view then, merely takes the belief that our international order essentially works, and applies to individual societies. And of course, someone who truly believed anarchy did not work would have to be puzzled anytime he saw humans living together without the immediate presence of a police officer. For if the law is not around, it must be the case that humans will immediately tear each other apart. Unless it is truly, as anarchists submit, the fear of consequences, and not the immediate presence of force, that governs men.

Of course, there would be instances of murder, of thievery, of wars of conquest and aggression, of grave injustice. The state, which ostensibly is our shield against these horrors, does not prevent them now. The anarchist society would work at least as well, and likely much better, since it would be based off of rational economic calculation, instead of irrational utilitarian groupthink.

If it is somewhere we want to go, is it somewhere it is possible to arrive at? Who knows. I strongly suspect that the answer is a regrettable no. However, the question is essentially unanswerable. Certainly the potential benefits of trying far outweigh the potential costs. Worst-case scenario, we end up right back where we started.

iRack

MadTV is usually one of the worst shows on television. However, on occasion they have one sketch that is just brilliant. The iRack is one such sketch. Hilarious, and sadly accurate.

Quote of the Day

"The trouble with women is, if they are married, thats the trouble, and if they aren't married, thats the trouble!" - Max Black

The Lessons of Walter Reed

If you have been following the news lately, then it is likely that you have heard about the horrors that were perpetrated at Walter Reed Army Medical Center. Suffice to say, the care provided to injured American soldiers was less than adequate. It is a nightmarish fact that our wounded soldiers were being provided with standards of care that could only be described as ghoulish. Certainly not befitting of heroes returning from fighting the good fight against the Islamic hordes abroad, keeping them at bay, lest we find them on our shores before we can say "Allahu Akhbar" (as the Bush narrative tells it). Walter Reed teaches us a painful lesson, but one that we have been taught many times before. However, no matter how often or how painfully it is beaten into us, the vast majority staunchly refuse to accept it. This is what happens when you let the government handle healthcare.

Looking for the dream of Euro-Canadian public health, provided in government hospitals and paid for on the public dole? Well, here it is! What, not what you were expecting? This is the inevitable result of turning over something as important as the public health to the public sector.

But surely, I doth protest too much, you say. It must be that this had more to do with corrupt officials, with people who deliberately skirted their duties. It was not a systematic error, it is something that we can fix, and then avoid in the future! I agree that heads ought roll over this crime. And with a story of this high publicity, it is thankfully likely that they will. However, I also say that yes, this is systematic! This sort of thing will emerge again, given enough time, regardless of whether it ever gets such large coverage again. Why, you ask? The reason is, no price.

The price mechanism is the one, and the only, method by which data can be transmitted through the market to allow for rational economic calculation. In any instance of a public good, it is impossible to collect data on how best to invest resources, or to know where, when, how, and to what extent to invest. Only through the price mechanism in a free market can consumers effectively tell producers that information, through their decisions to purchase or hold off on certain goods and services. Ludwig von Mises showed in his Economic Calculation in the Socialist Commonwealth that, for this reason, having any kind of socialist economy was literally impossible. This does not apply only to full on state-communism, as promulgated by the Soviet Union. It applies to any and all "social programs" of egalitarian wealth redistribution.

Because public healthcare operates without a price mechanism, it operates with no ability to rationally invest resources so as to maximize welfare. For that reason, substandard care will always and everywhere be the rule, and not the exception, of government-controlled healthcare.

Let's all try to be a little more closed minded

A phrase we hear too often in our society is that we should try to be “open minded”. It is something that is unique to the late 20th, and early 21st century west. If we take a position that is not “open” we will often be charged with that great crime of “Closed mindedness”. Of course, when someone calls you closed minded, usually what they mean is something like; “Why don’t you agree with me? Disagreeing with me is bad”. The idea of being open minded, is, of course, pure silliness. How can we be open minded? The only conditions under which we could achieve this feat are ones in which we have no opinion of any importance. Certainly not one that we wouldn’t be willing to drop at a moment’s notice in the spirit of “openness”. We should, I agree, approach new problems with an open mind. But as William F. Buckley Jr said, “The purpose of an open mind is to close it.” Too often what people mean when they suggest that we should be open minded is that we should keep an open mind, even after we have formulated our opinions. Such a concept is a deadly threat to any serious search for truth, and is endemic to the culturally and morally declining west that we see around us.

If we never form any strong opinions, if we never can get to the point where we are able to passionately hold a proposition to be true, then we have given up the idea that we can even know what is true. I am sure that this concept is pleasing to some of the more leftist, relativistic minds in the debate. However, I find it to be a horrifying idea.

Everything that has driven the west throughout its history, from the ancient Greeks, through the medieval Christian philosophers, and up to the Enlightenment’s various champions of liberty, is a unbending belief that truth is a real concept and that it can be attained. Is there nothing worth preserving in that western tradition? I say that preserving it is the best thing we can do for ourselves and for the preservation of our civilization. And that is one thing I am happily closed minded about.

Free Banking

A cool article today from Mises.org about the inflationary nature of the central bank. As usual, the post-Keynesians have, with some enthusiasm, taken up the task of defending the state from its critics. As usual, they are wrong. I'm going to take the opportunity to talk about my views on the nature of fractional reserve banking and of free banking.

FRACTIONAL RESERVE BANKING:

Most people are aware of the basics of the current system of banking that we have in place. Joe Average takes his savings to Steve's Bank, and gives it to them as a deposit. They credit his account with the amount of money he has given them. They then take the majority of that money, we'll say 60% as an example, and loan it out to borrowers, charging an interest rate. If Joe should return to collect on his deposit before the bank collects on the loan, they will pay it out to him either through their takings from interest rates on other loans or from the accounts of other customers of the bank. This system is why economists say that savings and investment are so closely linked. Without savings, placed in the hands of fractional reserve banks, there could be no loans, and without loans, there could be no large scale investment.

This system does not work too badly (we'll get to that later) in the absence of a federal bank and fiat currency. However, in our current system, it is an inherently inflationary process that serves to distort the structure of production and cause what economists call the business cycle.

Suppose that there is a sudden increase in the demand for loans in our current system. Banks, of course, oblige this desire for loans. However, since the supply of money has remained the same, they react by raising interest rates. Interest rates, are, essentially, the price of borrowing money. So, of course, they obey the laws of supply and demand like any other price mechanism. However, the government has in place a price control on interest rates. It takes the form of the federal reserve, which will respond to rising interest rates through pumping money into the economy, in an attempt to keep rates at what the fed has set as its target. The result of this, is of course, inflation. Anytime the demand for loans is increased, money is simply taken out of thin air and placed into the economy by the fed!

Like any policy that refuses to let markets clear, the fed's policy of trying to control the interest rate is misguided and has ill effects. By refusing to allow interests rates to function properly, and keeping them artificially low via the creation of new money, the fed encourages malinvestment. Investors who believe that interest rates will be always be (relatively) low have much less reason to invest carefully. Why not take big risks? After all, you can always take out more loans, its not as if the price of loanable funds is liable to change just like the price of anything else in a market. Of course, eventually this malinvestment boils over, and the demand for loanable funds begins to skyrocket. Sometimes, the fed responds by bailing out banks (remember that they keep only a fraction of actual savings) through loaning them large amounts of money. The result is large scale inflation. Sometimes it chooses not to, believing it is best to stick to a tight money policy. The result is bank runs. With the federal reserve in charge, you are damned if you do and damned if you don't!

FREE BANKING:

So, clearly, this is a problem. It traps us in a constant state of boom-bust capitalism, the business cycle always nipping at our heels. Is there nothing we can do? There is an answer, however politically infeasible it seems currently. The answer is a complete end to government monopoly on the money supply. We should instead institute a system of free banking, whereby banks print and compete with their own notes.

Before we discuss this, it is important to understand the nature of money, and what it really is. Everybody knows how a primitive, barter based economy works. If I have wheat, and I want meat, I take my wheat and I find someone who A.) Has meat in the quantity I want, and B.) Wants wheat in the quantity I have. We can then trade. For obvious reasons, this gets very inconvenient very fast, especially when more complex trade enters the scenario. The result is that some good appears in the barter economy, which is widely traded enough, that it actually becomes the standard of trade itself. Everyone is confident that everyone else will be willing to accept it in trade. In the history of the west, and indeed of all advanced economies, this has near universally been gold. So let us assume that, in the absence of the dollar, gold becomes our standard of trade (though really it could be anything). Of course, just as nobody wants to lug all of their dollars around with them in cash, nobody wants to lug all of their gold around with them. That would be even more inconvenient!

So people pay to have the gold deposited in banks, and are issued receipts, in the form of bank notes, to use as trade. Now, obviously, banks are going to want to compete to have the best notes. After all, banks want to get the most deposits. The result will be that banks will try to minimize the risk a consumer takes by depositing with them of a run on the bank. This could either spell the end of fractional reserve banking altogether, and the creation of a seperate market for loanable funds independent of banks. It could also mean that fractional reserve banking will continue, but, in the absence of a price control (federal reserve) interest rates will set themselves according to the actual demand for loanable funds. It will likely be some mix of the two, with some banks engaging in fractional reserve, but using other perks to get savers to deposit with them instead of with other banks. In any event, it is the end of inflation, and it minimizes the risk of bank runs (since investors will be much less likely to malinvest if they know that interest rates might change rapidly). Fractional reserve banking with a central bank structure is the cause of the business cycle and of boom-bust capitalism. Free banking is the cure.