Category Archives: Philosophical and speculative

Mises discusses government regulation

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Mises’ Human Action is an austere no frills explanation of not just how a market economy works, but also why only a market economy can work. There are the members of a community who have material desires they would like satisfied and personal services they would like to engage. Most of what individuals want is dependent on what has already been produced and sold in the past, although of those desires are for goods and services that have only just been made available.

There are also individuals who earn their own living by running businesses that produce these goods and services in the hope that others will buy them, and in so doing pay enough in total amongst all purchasers to cover the costs of production.

There are also entrepreneurs who run businesses that produce inputs that are used within other businesses. Ultimately, however, all production is focused on satisfying the demands of final consumers. It is in this sense that consumers call the shots. What people are willing to pay for determines what will be produced since only those enterprises that produce goods and services that earn a profit can stay in business.

But what people will be willing to pay for is an unknown that can only be discovered if an entrepreneur makes the decision to produce some good or service and put it on the market. Only then can it be discovered whether whatever has been produced can be sold at a profit. Once it has been determined that a profitable enterprise can be established to produce these particular goods and services, many other firms may then follow along and try to produce the same product or even better versions.

This is how the market works through the trial and error efforts of entrepreneurs to find products that can be sold at a profit. If a community is content never to change any of the products it chooses to buy, and there are never any interruptions or changes in the supply conditions for the inputs used in production, the economy can enter a steady state which can repeat endlessly the same routine. But since in the real world there are new innovations taking place all the time, and changes in the supply conditions for inputs, a steady state outcome is an impossibility.

Therefore to ensure an economy continually improves the products produced, and can adjust to new conditions in the supply of inputs, a market mechanism is essential. No other mechanism will work if a community is intent on improving its standard of living or wishes to accommodate changes in the conditions of supply.

The question then is whether there is any role for government oversight and regulation in such an economy. And while it is clear that Mises is reluctant to state that there is such a role for governments because of the principle of give-them-an-inch-and-they-will-take-a-mile, nevertheless, he does accept that government does indeed have such a role. This is from Human Action:

There are certainly cases in which people may consider definite restrictive measures as justified. Regulations concerning fire prevention are restrictive and raise the cost of production. But the curtailment of total output they bring about is the price to be paid for avoidance of greater disaster. The decision about each restrictive measure is to be made on the ground of meticulous weighing of the costs to be incurred and the prize to be obtained. No reasonable man could possibly question this rule. (Mises [1949] 1963: 748)

There ought to be no doubt from this passage that there are circumstances for which government regulation is warranted. It is a cost-benefit calculation in which regulations are laid down, which have a cost in lost production, but in which there is a positive return in the prevention of an even more costly outcome whose probability of occurrence has been reduced.

His reluctance to state in a more fulsome way that such regulations have a role in economic management is based on his no doubt correct judgement that from the example of this unquestionable use of government regulations to diminish the possibility of a much more costly outcome has been a thin edge of the wedge to justify an enormous and monstrous regulatory regime across all the economies of the world. If anything has occurred, the meticulous examinations that now occur are to determine if there is absolutely no possible harm that might occur if some regulation is not introduced and enforced. The weight of evidence has now been placed on those who wish to reduce such regulations where outcomes with a small probability of occurrence are not made the basis for such rules.

The principle should therefore not be seen as a blanket ban on government regulation per se, but as the need for those who wish to impose such regulations to demonstrate that the potential risk is large and that the market would not be expected to provide its own cure if left on its own to work things out.

If, for example, individuals who wish to built houses in the middle of flood planes that are expected to flood only once in fifty years should be permitted to do so, but also told that if they do, they must cover the cost of insurance themselves and not expect a government to make good any losses they might endure because of flood damage.

And while there is need for licensing for doctors and electricians, since no consumer can be expected to research into the competencies of individuals who declare themselves a doctor or electrician, there is no need for regulation in endless other occupations, with hairdressers as the most notorious example of regulatory overkill.

But there is a further issue in relation to regulation. Within political debate, to argue that no regulations are ever justified will instantaneously lose the public debate. No one will accept that the market can be left to itself without oversight and regulation. Finding the balance is important, but not to recognise an important social function of regulation by governments, specially by governments under popular control, is to throw the baby of good economic management out with the bathwater of heavy-handed control.

Mises, Ludwig von. [1949] 1963. Human Action: A Treatise on Economics. Fourth Revised Edition. San Francisco: Fox and Wilkes.

Jordan Peterson discusses the Nazis in comparison with communists

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How does one make the moral distinction, he asks, between the Nazis and the comms with the speaker actually using the term “socialism”? The video shows his answer. But here’s a hint about his answer: I really really like what he says.

Which brings to mind this quote from John Stuart Mill which I ran across today:

Apart from the peculiar tenets of individual thinkers, there is also in the world at large an increasing inclination to stretch unduly the powers of society over the individual, both by the force of opinion and even by that of legislation. And as the tendency of all the changes taking place in the world is to strengthen society, and diminish the power of the individual, this encroachment is not one of the evils which tend spontaneously to disappear, but on the contrary, to grow more and more formidable. This disposition of mankind, whether as rulers or as fellow-citizens, to impose their own opinions and inclinations as a rule of conduct on others, is so energetically supported by some of the best and by some of the worst feelings incident to human nature, that it is hardly ever kept under restraint by anything but want of power; and as the power is not declining, but growing, unless a stronger barrier of moral conviction can be raised against the mischief, we must expect, in the present circumstances of the world, to see it increase.

He wrote that 150 years ago. Just think how much more applicable and terrifying all that is today. If you haven’t read On Liberty, you really should.

The whole world is watching

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From George Weigel at First Things: The Pell Affair: Australia is now on trial. He begins:

Has it occurred to anyone else debating the perverse verdict rendered against Cardinal George Pell, which convicted him of “historic sexual abuse,” that the cardinal did not have to return to his native Australia to face trial? As a member of the College of Cardinals of the Holy Roman Church and a Vatican official, Pell holds a Vatican diplomatic passport and citizenship of Vatican City State. Were he guilty, he could have stayed put in the extraterritorial safety of the Vatican enclave, untouchable by the Australian authorities. But because Cardinal Pell knows he is innocent, he was determined to go home to defend his honor—and, in a broader sense, to defend his decades of work rebuilding the Catholic Church in Australia, the living parts of which owe a great deal to his leadership and courage.

In defence of the welfare state

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Picked up at Neil’s Economics Blog and of much interest to me at the moment. I have been criticised for seeing public-sector-provided welfare in a positive light. This seems to be the core of such criticism:

The Supporters of the Welfare State Are Utterly Anti-Social and Intolerant Zealots; They Advocate Enlightened Despotism

It is customary to call the point of view of the advocates of the welfare state the “social” point of view as distinguished from the “individualistic” and “selfish” point of view of the champions of the rule of law. In fact, however, the supporters of the welfare state are utterly anti-social and intolerant zealots. For their ideology tacitly implies that the government will exactly execute what they themselves deem right and beneficial. They entirely disregard the possibility that there could arise disagreement with regard to the question of what is right and expedient and what is not. They advocate enlightened despotism, but they are convinced that the enlightened despot will in every detail comply with their own opinion concerning the measures to be adopted. They favour planning, but what they have in mind is exclusively their own plan, not those of other people. They want to exterminate all opponents, that is, all those who disagree with them. They are utterly intolerant and are not prepared to allow any discussion. Every advocate of the welfare state and of planning is a potential dictator. What he plans is to deprive all other men of all their rights, and to establish his own and his friends’ unrestricted omnipotence. He refuses to convince his fellow-citizens. He prefers to “liquidate” them. He scorns the “bourgeois” society that worships law and legal procedure. He himself worships violence and bloodshed.

–Ludwig von Mises, epilogue to Socialism: An Economic and Sociological Analysis, trans. J. Kahane (Indianapolis: Liberty Fund, 1981), 520-521.

Let me bring this out of the pack:

Every advocate of the welfare state and of planning is a potential dictator.

It is that kind of statement that hands the debate to the left. If the defence of the free market is based on never advocating or providing social assistance to those in need, however that may be defined, then socialism will roll through and upend the capitalist order in no time flat. It is the conflation of welfare with central planning, and then indicting everyone who wishes to help the aged and the sick as a potential dictator really does lose the debate. I am still looking for a statement from Mises delineating the role of government. If all it does is defend property rights and our national borders, no one will ever sign up, other than those who already feel fully protected by whatever system we already have in place.

Anti-semitism, Jews and the modern left

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FROM THE AMERICAN THINKER BY KAREN MCQUILLAN- THE LINK IS AT THE END

My father was a combat photographer in World War II, who filmed our frontline troops in Europe from Omaha Beach through the liberation of Paris and the Battle of the Bulge to Berlin in ruins.  He also filmed the liberation of Dachau, an experience so painful he never spoke about it to me until the last year of his life, at age ninety-eight.  He could hardly speak.  He was crying so hard his frail body was shaking, as he gasped out, “I’m sorry to be so weak.”

Battle of the Bulge

In my father’s last years, many things fell away, but he always gave charity to one group, the Anti-Defamation League, the voice of conscience of American Jews fighting to purge our society of the scourge of anti-Semitism.

No more.  Now the ADL is just one more left-wing group, “a radical extension of the Democratic Party,” according to  Isi Leibler, a prominent worldwide Jewish leader writing in the Jerusalem Post.  The only anti-Semitism that it will fight is that of the tiny fringe group of white supremacists.  The greater danger of the radical left and Muslim activists gets a pass.  The Boycott Divestment Sanctions (BDS) movement, declared anti-Semitic by the American government, is supported by Democratic politicians and so ADL won’t fight it.  ADL actively supports the Marxist anti-Semitic group Black Lives Matter, which “incorporates anti-Israel passages in its platform and campaigns against anti-boycott legislation.”

ADL’s moral collapse is even greater than Leibler had space to enumerate.  ADL won’t fight anti-Semitism, even violence against Jewish youngsters on campus, organized by Muslim Brotherhood front groups, because progressive multiculturism privileges Muslims over Jews.  And it utterly refuses to confront the Democrat party mainstreaming anti-Semitism from three out of its four main voting blocs – blacks, new Hispanics, and leftists.

Today in America, Leibler writes, Jews and Israel’s biggest supporters are Evangelicals.  American Jewish leaders are betraying the trust of their community, putting their liberal agenda ahead of protecting Jews at home and Israel abroad.

Jewish identity has become submerged by progressivism. Indeed, left-wing Jews wishing to be regarded as “progressive” are discovering that a prerequisite to their acceptance requires a hostile attitude to Israel.

It all began with Obama, says Leibler. Before Obama, Jewish leaders were not intimidated.  Their job was to speak out in defense of Israel.  No more.

Read it all: Progressive Jews and Anti-Semitism. It only gets worse from there. And then when you have read that, you can go on with Tony Blair’s HOW IS ANTISEMITISM IN LABOUR PARTY TOLERATED?.

Former UK Prime Minister and Labour Party Leader Tony Blair criticized the party for its heavy use of antisemitic rhetoric in a Sky News interview on Sunday, asking, “How can we say it’s tolerable to have a certain level of antisemitism?”

After being asked by the interviewer about the heavy criticism of antisemitism in the party, Blair responded that they “should eradicate antisemitism for the Labour Party.”

“We’re supposed to be a progressive political party,” Blair explained. “Yes, there are parts of the left, not the whole of the left, that have a problem with antisemitism, and you see this in their attitudes to the State of Israel.”

Blair was referring to the current Labour Party Leader Jeremy Corbyn, who has on numerous occasions spoken and acted in an antisemitic manner: Laying a wreath for one of the 1972 Munich Olympics terrorists, claiming the EU only supports Israel because of the Holocaust, repeatedly supporting and later denying support for the Boycott, Divestment and Sanctions movement, to name a few.

Blair clarified that people may criticize Israel how they like. However, “their continual focusing on Israel all the time, over a long period… you’re left with the feeling that they’re in a sense targeting it because it is a Jewish state.”

And that too you can read on at the link. A real problem and a serious worry for the future, and not just for Jews. But do the majority of the Jewish population get it? Not yet, but I fear for what must happen before they do.

The economics of envy

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Here’s a typical bit of leftist rubbish: Wealth concentration near ‘levels last seen during the Roaring Twenties,’ study finds. Such studies, and no doubt accurate to the third decimal. But suppose we just change the heading a bit:

Wealth levels near ‘levels last seen during the Roaring Twenties,’ study finds

Take the bottom ten percent today and their standard of living is much much higher than the top ten percent was then. They eat better, have better transportation (say cars and roads), improved entertainment (and right in their own living room) and live in larger, more spacious homes with an endless increase in labour-saving gadgetry.

The level of income inequality is invisible. It requires someone to try to measure two entirely different populations in entirely different periods of time, when in neither there are statistics that will actually measure what they are trying to find. But even if you could measure income inequality, so what? There will always be rich and there will always be poor. The rich today undoubtedly have more goods and services at their command than did the rich in the 1920s. But so do the poor.

What does not change is the level of envy among a large proportion of the population who are made bitter by the success of others. Envy is the worst of the seven deadly sins and there is no known cure. But the envious are everywhere and will take their revenge on the rest of us if they can.

PDT on anti-semitism

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In his State of the Union, the President focused on anti-semitism which is again a force for evil in the world today when one would have hoped it had disappeared into the past. This has been highlighted by Scott Johnson at Powerline in a post on The State of the Union is Good. These are the relevant parts of his post.

I want to highlight one especially important theme. President Trump has taken a lot of unjustified grief for alleged anti-Semitism. What a farce.

Last night the president recognized individual Holocaust survivors among his special guests, but he went beyond gestures. He expressed support of the Jewish people and opposition to anti-Semitism (see, e.g., the case of Iran). He mentioned his support of Israel as well. The Jewish theme made for a powerful motif. Here he knit together Trump foreign policy with recognition of a law enforcement hero:

My Administration has acted decisively to confront the world’s leading state sponsor of terror: the radical regime in Iran.

To ensure this corrupt dictatorship never acquires nuclear weapons, I withdrew the United States from the disastrous Iran nuclear deal. And last fall, we put in place the toughest sanctions ever imposed on a country.

We will not avert our eyes from a regime that chants death to America and threatens genocide against the Jewish people. We must never ignore the vile poison of anti-Semitism, or those who spread its venomous creed. With one voice, we must confront this hatred anywhere and everywhere it occurs.

Just months ago, 11 Jewish-Americans were viciously murdered in an anti-semitic attack on the Tree of Life Synagogue in Pittsburgh. SWAT Officer Timothy Matson raced into the gunfire and was shot seven times chasing down the killer. Timothy has just had his 12th surgery — but he made the trip to be here with us tonight. Officer Matson: we are forever grateful for your courage in the face of evil.

He wasn’t done:

Tonight, we are also joined by Pittsburgh survivor Judah Samet. He arrived at the synagogue as the massacre began. But not only did Judah narrowly escape death last fall — more than seven decades ago, he narrowly survived the Nazi concentration camps. Today is Judah’s 81st birthday. Judah says he can still remember the exact moment, nearly 75 years ago, after 10 months in a concentration camp, when he and his family were put on a train, and told they were going to another camp. Suddenly the train screeched to a halt. A soldier appeared. Judah’s family braced for the worst. Then, his father cried out with joy: “It’s the Americans.”

A second Holocaust survivor who is here tonight, Joshua Kaufman, was a prisoner at Dachau Concentration Camp. He remembers watching through a hole in the wall of a cattle car as American soldiers rolled in with tanks. “To me,” Joshua recalls, “the American soldiers were proof that God exists, and they came down from the sky.”

I began this evening by honoring three soldiers who fought on D-Day in the Second World War. One of them was Herman Zeitchik. But there is more to Herman’s story. A year after he stormed the beaches of Normandy, Herman was one of those American soldiers who helped liberate Dachau. He was one of the Americans who helped rescue Joshua from that hell on earth. Almost 75 years later, Herman and Joshua are both together in the gallery tonight — seated side-by-side, here in the home of American freedom. Herman and Joshua: your presence this evening honors and uplifts our entire Nation.

All in all, an excellent speech with many highlights.

Quotable quote: “Here, in the United States, we are alarmed by new calls to adopt socialism in our country. America was founded on liberty and independence –- not government coercion, domination, and control. We are born free, and we will stay free. Tonight, we renew our resolve that America will never be a socialist country.”

There has never been a moment in all the years since he entered public life, which for me is now four years ago, that I have ever doubted the sincerity of a word he has said. He is the most remarkable man I have ever seen hold high office and we are blessed to have him where he is.

Born yesterday

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To truly appreciate how born yesterday politicians of the left and their followers actually are, you really do have to read Joseph Priestly’s 1791 Of the Prospect of the general Enlargement of Liberty, civil and religious, opened by the Revolution in France which is the last of his Letters to the Right Honourable Edmund Burke. He wrote these letters well before the Reign of Terror commenced, which was then followed by the Napoleonic dictatorship, which in turn led to the Napoleonic Wars which roiled Europe for almost two decades, so perhaps there is some excuse for his naive and inane views. But what excuse is there for anyone to hold similar views today. It is remarkable to read Priestly in the knowledge we have of governments by Nazis, by Communists, by totalitarians of every kind, and yet Priestly-clones continue to populate the world. You still hear the same kinds of arguments from the left to this minute, that is from people whose ignorance of history is matched only by their vicious natures, vacuous minds and lack of common sense. You can read the whole thing for yourself – it’s not particularly long – but let’s pick a few highlights.

These great events [the French Revolution], in many respects unparalleled in all history, make a totally new, a most wonderful, and important, æra in the history of mankind. It is, to adopt your own rhetorical style, a change from darkness to light, from superstition to sound knowledge, and from a most debasing servitude to a state of the most exalted freedom. It is a liberating of all the powers of man from that variety of fetters, by which they have hitherto been held. So that, in comparison with what has been, now only can we expect to see what men really are, and what they can do….

Together with the general prevalence of the true principles of civil government, we may expect to see the extinction of all national prejudice, and enmity, and the establishment of universal peace and good will among all nations. When the affairs of the various societies of mankind shall be conducted by those who shall truly represent them, who shall feel as they feel, and think as they think; who shall really understand, and consult their interests, they will no more engage in those mutually offensive wars, which the experience of many centuries has shown to be constantly expensive and ruinous. They will no longer covet what belongs to others, which they have found to be of no real service to them, but will content themselves with making the most of their own.

The causes of civil wars, the most distressing of all others, will likewise cease, as well as those of foreign ones. They are chiefly contentions for offices, on account of the power and emoluments annexed to them. But when the nature and uses of all civil offices shall be well understood, the power and emoluments annexed to them, will not be an object sufficient to produce a war. Is it at all probable, that there will ever be a civil war in America, about the presidentship of the United States? And when the chief magistracies in other countries shall be reduced to their proper standard, they will be no more worth contending for, than they are in America. If the actual business of a nation be done as well for the small emolument of that presidentship, as the similar business of other nations, there will be no apparent reason why more should be given for doing it.

If there be a superfluity of public money, it will not be employed to augment the profusion, and increase the undue influence, of individuals, but in works of great public utility, which are always wanted, and which nothing but the enormous expences of government, and of wars, chiefly occasioned by the ambition of kings and courts, have prevented from being carried into execution….

If time be allowed for the discussion of differences, so great a majority will form one opinion, that the minority will see the necessity of giving way. Thus will reason be the umpire in all disputes, and extinguish civil wars as well as foreign ones. The empire of reason will ever be the reign of peace….

There will be magistrates, appointed and paid for the conservation of order, but they will only be considered as the first servants of the people, and accountable to them. Standing armies, those instruments of tyranny, will be unknown, though the people may be trained to the use of arms, for the purpose of repelling the invasion of Barbarians. For no other description of men will have recourse to war, or think of disturbing the repose of others; and till they become civilized, as in the natural progress of things they necessarily must, they will be sufficiently overawed by the superior power of nations that are so….

Government, being thus simple in its objects, will be unspeakably less expensive than it is at present, as well as far more effectual in answering its proper purpose. There will then be little to provide for besides the administration of justice, or the preservation of the peace, which it will be the interest of every man to attend to, in aid of government….

The enormous debts which our present systems of government, and the follies of our governors, have intailed upon us, like all other evils in the plan of providence, promise to be eventually the cause of the greatest good, as necessary means of bringing about the happy state of things above described. And the improvement of Europe may serve as an example to the rest of the world, and be the instrument of other important changes, which I shall not dwell upon in this place….

If the condition of other nations be as much bettered as that of France will probably be, by her improved system of government, this great crisis, dreadful as it appears in prospect, will be a consummation devoutly to be wished for, and though calamitous to many, perhaps to many innocent persons, will be eventually most glorious and happy.

To you, Sir, all this may appear such wild declamation, as your treatise appears to me. But speculations of this kind contribute to exhilerate my mind, as the consideration of the French revolution has contributed to disturb and distress yours; and thus is verified the common proverb, which says, One man’s meat is another man’s poison. If this be a dream, it is, however, a pleasing one, and has nothing in it malignant, or unfriendly to any. All that I look to promises no exclusive advantage to myself, or my friends; but an equal field for every generous exertion to all, and it makes the great object of all our exertions to be the public good.

Burke, the first conservative, was so clearly right and Priestly, and all who follow in his wake so clearly wrong, that you have to wonder whether the world will ever be cured of the madness that comes from the politics of wishing-it-were-true.