The case for more government depends on lies

Here’s an example. This is a meme from the “Women’s Justice Center” decrying the fact that an insulin pen in the US costs $700 while in all other countries it is under $100. But I easily found a coupon that gets you an insulin pen in the USA for $126.

But that’s still too high. And the costs in those other countries is under reported because tax payers pay the difference.

More government is not the solution. Less government is the solution.

End drug patents No one should own an idea. Let anyone who wants to sell, sell and the price will go down to what supply and demand says it should be.

End regulation. Government agents, eager to justify their cushy jobs, take too long and come up with too many obstacles that make it too hard for companies to bring drugs to market at low prices. Without government interference there would still be people who would test and report on drug safety for a fee. The free market would ensure they were as low cost and efficient as possible.

End border controls on drugs. Let people buy from wherever they can get the drugs they need for the lowest cost.

Government is never the answer. People need to grow up, take responsibility for themselves and stop looking for government to solve their problems because governments are in the business of making problems so they can pretend to fix them.

The only thing that protects our rights

Scenario: a would-be tyrant issues executive orders calling for “patriotic” state agents to take “extraordinary measures” to defend the country from [insert your favourite bogeyman here]. As a result, the supreme court suddenly has some vacancies which are filled by similarly “patriotic” judges. Constitutional protections are subject to their rulings and case law quickly develops to permit “reasonable limits” on these protected rights. A careful strategy of jurisdiction and judge shopping quickly expands the limits contained in these binding supreme court decisions. By the end of the tyrant’s first term, your constitution is no better protector of your rights than was the constitution of the Soviet Union or any other dictatorship.

In Canada our constitutionally “protected” rights are already entirely subject to the whim of the Prime Minister. If his party holds a majority of seats in Parliament, which is possible to achieve with as little as about 30% of the vote, which translates into about 20% support from all eligible voters, he can use the “notwithstanding clause” (section 33) to enact whatever he wants, notwithstanding the fact that it violates these rights. Further, section 1 makes all rights subject to “reasonable limits” opening the door our supreme court often walks through to justify limits on basic individual rights to expand the power of the state and the special rights of politically powerful interests.

The idea that the right to bear arms is any protection against the state’s erosion of individual liberty flies in the face of two facts. One, the history of the state’s success in incrementally eroding these rights to the point where it can confiscate almost 50% of our property in taxes and tell us what we can do and not do with the other 50% and people still sing the praises of living in a “free country”. Second, the matchless firepower of the state vs the unorganized and mostly submissive population would (and does) make short work of any rebellion. The US, where this right is most strongly entrenched, falls far down the list of the freest countries in the world giving more support to the argument that this right is not an effective deterrent to the state.

The only effective protection for individual rights is the same as it’s always been, and it is weaker now than at any time in history, although it will not remain that way for long. That is, a frontier, an alternative, an escape. We’ve almost always been able to vote with our feet and simply leave an oppressive state. Europeans did when they migrated to the new world. Oppressed groups in America were able to flee to the west. Offshore tax havens allowed people to protect their property by taking advantage of states jealous of their sovereignty.

Increasingly, technological progress is enabling us to transfer more and more of our lives, economic and social, to the virtual world where the physical coercion upon which political power depends is difficult to exercise. Cyberspace is the new frontier. The state’s fear of a mass migration to cyberspace is the only real protection for our rights. Ultimately it will be our only refuge as history shows that state power only ever increases. But when the level of online economic interaction outside state control inevitably reaches a critical point, the state will collapse. Hopefully when the state system falls it will be like how the iron curtain fell and not in a manner that takes our technological civilization down with it. I am hopeful.

The value of Bitcoin is real

The other day on Fox News there were three panellists discussing the record value of Bitcoin. One confessed that she had known nothing about Bitcoin until she read up about it as preparation for appearing on this panel. While she conveniently confessed her ignorance, that of her fellow panellists could be quickly and easily discerned from their comments. Here’s a short cut. Whenever you hear or read someone whose criticism of Bitcoin is based on it having “no intrinsic value” or not being “based on anything”, the safest thing you can do is to tune out or click on to something else.

All economic value is subjective. If I just drank a litre of water and I have a room full of water bottles, consider how much value one more water bottle would have to me. What would I be willing to give up (pay) for one more bottle of water? Now consider what I would pay for a bottle of water if I were out in the sun all day with nothing to drink and no other prospects for getting a drink other than to buy a bottle of water from you. The fact that our needs and wants change over time and differ from those of others is the fact that makes economic transactions possible.

If I go to a store and see a bottle of water priced at $1.99 does that mean that the value of the bottle is $1.99? Do you realize that if it did, no one would ever buy the bottle? If the $1.99 in my pocket was exactly the same value of the water bottle, why would I ever exchange one for the other? I’m not gaining any value so where’s my motivation? It’s only if, to me, the water is more valuable than $1.99 that I will buy it. I will be motivated to give up something of lesser value for something of greater value.

This is true of anything including traditional money, dollar bills, etc. “But these are backed by gold,” someone exclaims. Nonsense. Fifty years ago you you were theoretically (not practically) able to exchange money for gold but that’s long gone. Now it isn’t “backed” by anything. We value this money issued by the state, this fiat currency, because we have faith that other people also value it. I offer my $1.99 to the clerk and I know he will give me the water. Why? Because there’s a sticker price of $1.99 right on the bottle. That’s really an advertisement that the clerk, on behalf of the store owner, will accept an offer of $1.99 in trade for the bottle. He values the $1.99 more than the bottle (usually because he was able to purchase it for less than that and so he can earn a profit). I value the bottle more than the $1.99. So we agree to make the exchange because neither of us hold the value of the bottle to be $1.99 to us. The sales price is actually an arbitrary compromise that does not ever reflect the actual value of the item to either party.

So why do almost all of us almost always assign at least some value to fiat currency? Because it is a convenient way to facilitate other transactions. If I went shopping and all I had was a bottle of water I would need to find someone willing to trade something they had that I wanted to me in exchange for my bottle of water. Good luck, right? But if I had $1.99 I could buy something I wanted from anyone who was selling something for $1.99 or less. Many more possible transactions are open to me because of how widely accepted fiat currency is. Its value is as a convenient medium of exchange, as a facilitator of economic transactions.

That’s all equally true of Bitcoin and other crypto currencies. Bitcoin is what those who make Bitcoin transactions possible get paid for their work. They are called “miners” because with each transaction that their huge computer systems make possible, a tiny bit of new Bitcoin is created and they get it as a reward for making the transaction possible.

That’s how fiat currency works too. The state prints fiat currency and releases it into the economy through the banking system, debt repayments, etc. But it also uses some of the currency it prints to repay its own debts. So Just like the Bitcoin miner gets paid for facilitating the Bitcoin medium of exchange, the state gets paid something for facilitating the fiat currency medium of exchange.

But there’s a huge difference too. The state can print as much fiat currency as it wants. Tomorrow the state could print $100 trillion dollars and use the extra to pay off all its debts with “cheap money”. The only thing preventing the state from doing that is the political pressure not to let everyone’s money suddenly be worth almost nothing which is what would happen if there were so much of it in circulation.

That can’t happen with Bitcoin because there is a built-in mathematical formula that dictates how much new Bitcoin gets mined. In fact, it is an ever-decreasing amount because there is an absolute limit of 21 million Bitcoins. It is the decreasing supply coupled with an increasing demand that is fuelling the increase in the price of Bitcoin. The creation of Bitcoin is based on the objective criteria of actual work done to facilitate the medium of exchange (the blockchain). Whereas the creation of the state currency is at the whim of its central bank managers and politicians. They try to guess the right balance between printing too much and printing too little. Too much and we get inflation. Too little and we get depression. They can’t know all they need to know to make truly informed decisions about this and so we always teeter on the verge of economic dislocation (serious changes in the economy).

My wife quipped that rather than backed by gold, fiat currency is backed by debt, and she’s right. The decision about how much fiat currency to print is driven by the state’s interest in printing enough so that it can repay its massive debts with devalued money, tempered by its interest in avoiding the political consequences of inflation. The value you place in fiat currency represents your faith in the state’s ability to continue to perform this balancing act and avoid severe economic dislocations.

The value of Bitcoin requires no such faith in crystal ball gazing central planners. It is based on your own assessment of the value of a private, secure, anonymous, decentralized medium of exchange in the context of how likely it is that others will share your assessment of value. Sounds like the free market to me. So where do you place your trust? In the state, or in free people trading in a free market?

Free markets maximally employ knowledge disbursed among all individuals whereas central planners can only work with a fraction of that knowledge. The value you assign to fiat currency is a measure of your faith in the whim of the state’s central planners. The value you assign to Bitcoin is a measure of your trust in the free market. Whether it goes up or down, the value of Bitcoin represents something a lot more “real”.

Edit: This post was inspired by this discussion.

Freedom is Inevitable

I wrote this in response to this article: I’ll never bring my phone on an international flight again. Neither should you.

It’s not that Trump is a fascist. It’s that they are all fascists, or at least corporatists (but that’s essentially the same thing). The ideal behind the original version of the US constitution, that the ultimate political values are respect for each INDIVIDUAL person’s right to his/her own life, liberty, and property, have been replaced with the ideals of the corporatist state – that we are all mere elements of a single body (corpus) which that body (the corporate state) can utilize or dispose of as it sees fit to further its interests. The individual per se is not valued and his/her rights are not respected expect when it serves the state’s higher purpose to do so – which is becoming increasingly less frequent.

In this slide toward corporatism it is not Trump that is the problem, nor trigger happy cops, or terrorists – it is YOU if and when you support ANY erosion of the individual’s right to life, liberty, or property. That means any time you undertake or advocate the initiation of violence, or the threat thereof, against another, you violate his/her individual rights. Essentially you declare war on an innocent person and make yourself the enemy of all who respect individual rights and oppose violence.

I say “declare war” but war has already been declared. It was declared millennia ago when the first advocate of force declared his opposition to the concept of the free moral agency of the individual. What we are witnessing now is the last, desperate assault of the side that started that war. They fight a losing battle against two forces: 1) the individual empowerment that inevitably results from technological progress and 2) the relative efficiency of free (unregulated) markets. As more and more of us can, more and more of us will disengage the state, incentivized not by accepting a libertarian philosophy but simply by the greater economic returns in doing so. For the vast majority money (material security) matters more than philosophical truth. When they see that the statism actually threatens, rather than preserves, that security, they will reject it.

The war is on but it is very asymmetrical. The statist’s weapons are force, violence, aggression, guns, bombs, detention, borders, barriers, taxes, etc. The individualist’s weapons are simply to disengage from the corrupt statist body, to live as freely and peacefully as s/he can, and wait for the rest to do the same. When enough of us disengage, the state will collapse because there will be too few under its control for it to conscript, control, and confiscate what it needs to sustain itself.

Freedom, liberty, is inevitable.

“Render unto Caesar”

Give the state what belongs to the state, i.e. squat. The author of this article makes a great point. If Jesus wanted to advocate paying taxes he could have answered the question plainly. The Pharisees wanted and expected Jesus to counsel against paying tax so they could have him arrested. There was no need for Jesus to be “crafty” with his answer is the answer was “pay your taxes”. The craftiness was only required by His need to avoid compromising His principle of non-violence (which taxation necessarily violates) without giving his enemies the excuse they were looking for to arrest Him.

Protectionism? Get a Grip!

Protectionism is when the government protects or creates jobs in our country by imposing taxes on imports from other countries. What could be wrong with that?

To answer that I am going to use US statistics for 3 reasons: 1) they are more readily available; 2) the argument against protectionism in Canada is the same as in the US even though the figures differ slightly; 3) right now its Americans who are most in danger of being taken in by the protectionist nonsense from con men like Trump and Sanders. So here goes. What’s wrong with protectionism.

First: taxation is theft. The government has no moral right to interfere with an agreement between a person in this country and a person in another country and tell them they can’t do business with each other unless the government gets a cut. That’s something a criminal gang does. The government is a criminal gang. Taxation is wrong.

Second: protectionism hurts all the people involved. Why aren’t the people in the other countries important to us? They seem to be important enough to send them charity. Even the government sends them foreign aid. So we care about them too? We want them to have what they need to survive? But we just don’t want them to get to earn it by making things and selling it to us. We only want them to get what they need by receiving it as charity. Wow, we are really good people aren’t we? We’d rather impose taxes on someone, put them out of work, and make them dependent on handouts then reward them for their efforts by being honest and paying them for their stuff. We can blame it on supposedly unfair policies of their government but it’s not their government that we’re hurting, its the productive workers and businesses in these other countries that suffer from tariffs. And we say we love people all over the world. How hypocritical!

The only people protectionism “protects” is businesses and workers in industries who can’t compete fairly with those producing the same things in other parts of the world. These mouchers need the government to step in and save them from those who are willing and able to provide either better quality stuff or cheaper stuff. The mouchers could become more efficient. They could decide to take less profit. They could decide to take less wages or other benefits. They could decide to retool or retrain so they could produce something else better than foreign competitors. But no, they want to keep all their money and benefits and comfortable jobs and force others to pay for their greed. Why actually compete with others fairly when they can just vote in a government that will knock their competitors out of business by imposing tariffs on them.

But hasn’t it been proven that all this free trade has cost us jobs?

Not at all. Technological progress has enabled the manufacturing sector to produce more stuff using fewer workers. Look at this chart. In 1985 it 18 million workers in manufacturing in the US to produce almost half as much stuff as just 12 million workers produce today.

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Also, the manufacturing sector is a much smaller portion of the economy than it once was. The graph below shows how manufacturing jobs have declined from about 40% of the non-farming workforce just after WW2 to less than 10% today. This decline started well before the first of the free trade agreements were signed. The value added to the economy by the manufacturing sector is now only 12% of the US gross domestic product.

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Those talking about imposing tariffs to save or create “our” jobs point to the balance of trade deficit in manufactured good compared to other countries. In other words, we buy more manufactured good from businesses in other countries than from business here. True, but so what? Look at the favourable balance of trade in the more important services sector.

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Do you hear these protectionists talking about how unfair it is for the US to hold such a favourable balance of trade over other countries in the service industry? A sector which is growing bigger and will continue to grow while the manufacturing sector shrinks and will continue to shrink? Do you hear them promising to impose extra taxes on US based services so they service sector in other countries will be able to compete and take jobs away from the US service sector? (I bet you haven’t and you never will.)

By imposing taxes on manufactured imports, those imports will cost more. So the protectionists (Trump and Sanders) want to make 90% of the workers and businesses pay extra for stuff like shoes, clothes, and similar stuff, so that the 10% of workers and businesses who can’t compete fairly with those overseas can stop trying to become more efficient.

And who do you suppose it hurts the most if you increase the cost of shoes and clothes and other stuff? The rich? What does it matter to a rich person if their $100 shoes now cost $115? But it matters a lot to the poor or middle class if the stuff they need now costs an extra 15% – just so 10% of them can keep their jobs a little longer in industries that are quickly being phased out by technological progress.

This graph shows how much more the poor and middle class benefit from being able to buy cheaper foreign products compared to the rich.

By Trump’s own estimates protectionism will add about an extra $1,500 per year to the cost of daily necessities. Protectionism is a tax on the poor and middle class so that politicians can make headlines by bragging about the “saving our jobs” in the 10% of the economy made up of the manufacturing sector. It’s a con. Don’t fall for it.

For the icing on the cake get this: most of the manufacturing sector itself would even be hurt by protectionism. That’s because most of the stuff the US imports goes into the manufacturing of other stuff. For example, Ford imports parts that get used to make cars. If the imported parts cost more, so will the finished car. Not only will made in the USA stuff cost more for Americans, but the higher price will make it harder to sell American made goods to foreigners. So half the stuff protectionism would make more expensive to everyone, would end up helping absolutely no one, not even the 10% of people working in the manufacturing sector.

And we’re not done yet. If anyone for a second actually believes that other countries will let the US get away with imposing tariffs on their imports without retaliating by imposing their own tariffs on US exports, you are really beyond hope. China and other countries will retaliate and even more stuff will cost even more money. This new trade war will spread into other sectors and end up costing jobs. The net effect of all this is that more inefficient businesses and workers will stay in business and more efficient businesses and workers will be unable to compete. Being good at what you do will be less important than whether your particular sector is favoured by the government. It will be the government, politicians and bureaucrats, who will determine which businesses survive instead of the decision being made by consumers.

If people heard Trump and Sanders promising to impose a new tax on everyone that would hurt the poor more than the rich and would only help a tiny portion of the economy, no one would ever think of voting for them. Well, that’s exactly what they are promising.

“Save our jobs”? Seriously, get a grip.

International Trade Agreements

Every decision the state makes is wrong. At least in the sense that it is wrong to presume to have the authority to make decisions that rightfully belong to others and then enforce those decisions. The state, all states, have lost that authority (some never had it to begin with) by exercising power beyond that which was delegated by the consent of those over whom that power is exercised. This is at least almost always to be expected.

“We have learned by sad experience that it is the nature and disposition of almost all men, as soon as they get a little authority, as they suppose, they will immediately begin to exercise unrighteous dominion.” — DC 121:39

“Power tends to corrupt, and absolute power corrupts absolutely.” — Lord Acton

In at least one case, the founding and fundamental principles of a state were set out clearly and in writing and, had it not been for the truisms quoted above, if adhered to, would have justified the decisions of that state. I refer to the individuals rights to life liberty and property, the protection of which was the only authority granted the original United States in its founding document. But that authority has long since passed away due to its abuse by those charged with its faithful discharge.

That leaves all modern states as no better than rival criminal gangs engaged in a turf war with each other and all of us as complicit lackeys or innocent victims in that war.

But that doesn’t mean that no state decisions can have favourable consequences. When a court makes a ruling that diminishes the power of the state over the individual, or when political exigencies induce political leaders to enter international trade agreements with the effect of reducing or constraining their state’s power over individuals, then one can take some satisfaction in the anticipated increase in personal freedom, despite the illegitimacy of the agencies involved.

So called “free trade agreements” are among those state decisions with some favourable consequences. The reduction and elimination of tariffs and similar barriers to trade between individuals and non-statist corporations is good. It expands personal liberty. It creates wealth and therefore jobs – though not every job in every sector of every state’s economy. But that is not the goal of anyone but a bigot*. It also reduces costs for both businesses and consumers and opens larger markets and opportunities for new and expanding businesses.

By including restrictions on non-tariff trade barriers it also reduces state interference in the economy in ways that are not primarily related to trade such as so-called environmental protection and labour standards. It also curtails corporate handouts and bias in awarding contracts thus allowing a freer market to rationally allocate capital thus maximizing wealth creation and a consequent increase in general prosperity. More dying businesses are allowed to fail without government draining capital from new and thriving businesses just to keep the old ones alive until at least after the next election.

The critique that this all translates into unemployment, pollution, and poor working conditions is just a case of willful blindness as it is the state, not individuals, that has been responsible for unemployment, poor working conditions and pollution.

So to the extent that these agreements reduce the power of the state, we ought to root for them. NAFTA, CETA, and the TPP included. Some of the nefarious aspects of these agreements such as involving the sharing of information among states about their citizens, whether by inclusion in the main agreement or in side deals secret or otherwise, are of less significance as we will always be at war with the state over privacy and personal liberty. We just need to remain aware, act smart, and disengage having as little interaction with the state as possible.

It is unfortunate, though not surprising, that the very signatory states to these agreements, routinely circumvent them. The United States is notoriously non-compliant with its obligations under NAFTA and enforcement mechanisms are woefully inadequate. But what more can be expected from criminal gangs. Surely not that they would obey their own laws. Under statist theory and practice obedience to law is a concept to be used to maintain the state’s power over individuals, not to restrict it.

* A job does not “belong” to anyone. It is a contract between the employer and the employee by which the former pays money to the latter in return for the latter’s services. Both the amount of money and the nature of the services must be mutually agreed upon for the contract to exist. Those who support laws that compel employers to contract only with employees in a specified location are bigots because they are using violence (state laws enforced by the police and judicial system) to favour some people (usually relatively well-off people in developed countries) over others (usually poor people in less developed countries). These same people usually also support sending foreign aid to these other countries to ease their guilt. Some of my best friends are bigots. I wish they’d stop.

The Blockchain is Bigger than Bitcoin

In this recent article, Matthew Sparkes looks at the current status of Bitcoin. He argues that what is much more important is the fate of the blockchain, the decentralized infrastructure upon which Bitcoin is based, but which does not depend upon Bitcoin for its existence. Or does it? He says that if the price of Bitcoin falls far enough, it is possible that a cascade of failing Bitcoin miners will bring the infrastructure to a stand still. With no mining activity, the length of time it takes to confirm transactions, whether of Bitcoin or any other transaction, would grow until finally they might never be confirmed.

This scary possibility is enough to encourage me, as someone who looks forward to the scenario Sparkes described last June in this piece, to continue to hold Bitcoin regardless of the downward trend.

Mises vs Keynes

Nice infographical summary here.