Monday, September 29, 2008
A Conversation (sort of)
(paraphrased because I can’t remember his exacts words)
So, Mom. Today in history, my teacher said mercantilism has nothing to do with balance of trade. It has to do with colonialism. Balance of trade is just balance of trade. And what we have now isn’t mercantilism, it’s capitalism.
(what I would have liked to say, only conversations with my teenager tend to occur in short sentences, not paragraphs)
Whew! That’s a bunch of claims all at once. Let’s look at them one at a time.
Your teacher is partly right – mercantilism can be about colonies. More generally, mercantilism is about government controlling the economy in attempt to benefit its own country and businesses. You can think of it as a kind of "economic nationalism." One way to do it is through colonialism, as when Great Britain tried to use the colonies in North America to provide raw materials and customers for its home merchants. The king didn't want gold leaving Great Britain when her citizens purchased goods from other countries. He wanted to keep it as as taxes in order to pay for soldiers and other royal prerogatives. In other words, the government (the king and Parliament) wanted a positive balance in gold!
Today, people still talk about needing to keep a “positive balance of trade,” meaning; our country should sell more than it buys to avoid loosing dollars and jobs to other nations. The government enacts laws which restrict trade in the attempt to protect domestic businesses and workers from foreign competition. That, too, is economic nationalism, or mercantilism.
There's a lot of problems with the current concern over “balance of trade.” (In a free market there never can be an imbalance of trade because you can’t buy unless you also sell. That’s why it’s call trade.) But that's off track right now. If you think about what mercantilism means --the government using its political power to restrict trade in favor of its home country—then you can see how colonialism and current protectionist policies are both types of mercantilism.
(what I actually did say)
We don’t have capitalism today. Capitalism means a market free from government intervention. We have a mixed economy- some free trade and a lot of government intervention in the form of tariffs, regulation, minimum wage laws, trade quotas, most of which is done in the name of creating a positive balance of trade. That's mercantilism!
But we are mostly capitalist because you can’t have total free trade anyway or you would have to let North Korea trade nuclear weapons with Iran. You think its ok for government to interfere there, so you really aren't for completely free trade either!
Whoa. Now that’s an interesting point, but something's not right about that argument. Let me get back to you after I give it some thought.
(That last point was moot because, by that time, we had arrived home and he was already out of the car and half way up the drive way to the house.)
Monday, September 22, 2008
The Missing Ingredient
A central organizing purpose. I like that idea. Set a goal or a principle which then serves as a fundamental guide to setting priorities and directing action. At this stage in my life, my personal central organizing purpose is the health and well-being of my family, each member individually and all of us together as a functioning unit.
What about a civilization? Can it have a central organizing purpose?
Our country originally had a central organizing purpose: securing unalienable rights, among which are the rights of life, liberty and the pursuit of happiness. The Declaration of Independence states unequivocally the securing of these rights is why governments are formed. Subsequently, the Constitution was written with the express goal of creating the institutions which would protect these rights from violation by fellow citizens, foreign interlopers, and most importantly, by government itself.
How far we have travelled from this original purpose of government is sadly evident in the political platforms of both major parties for this election. Individual rights and freedom are rarely mentioned. Instead, we hear speech after speech telling us how government power will be used to achieve some specific policy: development of alternative fuels, affordable health care, retirement security, limits on CO2 production.
What has been lost is that none of these programs “for the greater good” can be implemented by government without violating the rights of individuals. Yet, protection of the rights of individuals is the sole legitimate function of any government! Somewhere along the way, we got off track. Instead of working to protect the individual, allowing each of us the freedom to set our own goals and priorities, and pursue them as we best see fit, government has become a behemoth of power and programs assuring that we are each others keepers (Obama), living not for our own sake, but for the sake of a “cause greater than self” (McCain)
Steve Chapman’s excellent editorial, recently published in the Chicago Tribune, addresses this issue by asking “When did the idea of freedom become a political orphan?” He points out that placing the needs of the community above the rights of the individual is not the fundamental principle of the United States, but of socialism. Putting country first, does not promote individual rights, but nationalism. And nationalism and socialism have not brought peace or prosperity to the world, but the opposite. Socialism and nationalism have brought concentration camps and the KGB, war and environmental destruction, impoverishment and famine. Neither current presidential candidate makes this connection. Both call for the subordination of the individual to the collective, one for the sake of the country, the other for the sake of the “poor.”
The missing ingredient today is individual rights and the liberty which flows from them. If applied consistently to each individual, then person and property are respected, and interactions are peaceful and voluntary. The “central organizing purpose” of civilization arises out of the sum total of all the actions and interactions which occur as individuals go about their lives, pursuing their own personal goals.
Only when a “central organizing purpose” respects the life and rights of each and every person can peace and prosperity be achieved. Anything less attempts to attain a “greater good” while sacrificing some individuals for others. Human sacrifice never has and never will preserve peace or create wealth. The missing ingredient for solutions to today’s challenges, whether it is hunger, political or economic inequality, national security, or environmental quality, is respect for human life and individual rights--as an absolute. No “solution" which violates individual rights can take us to a place worth going.
1. Al Gore, The Earth in Balance, Rodale, 2006, pg 269 (originally published 1992. )
Monday, September 15, 2008
The Scandinavian Myth-Busters
--James E. Thorold Rogers, Six Centuries of Work and Wages, pub. 1901; quoted in Julian Simon's The Ultimate Resource 2, pub. 1996
For twenty minutes of your most precious and scarce resource (time) and with the express goal of testing your convictions against the facts, check out the lecture Hans Rosling presented at the 2006 TED talks. He is one of three prominent Scandinavians currently presenting essential data and analysis on the true state of the world. Their completed works and on-going research effectively show the immense gains the world has made and provide a foundation of principles, thoroughly backed by empirical evidence, for how to promote continued improvement.
Here is a chart from Rosling's Gapminder site illustrating the correlation between wealth and health:
The chart is great, but really, take the time to listen to his talk. He's entertaining, funny and inspiring! Rosling has developed software that gives his presentation of statistics the excitement of the 100 yard dash.
The other two Scandinavians worth reading are Bjorn Lomberg and Johan Norberg. I don't agree with them on all their points, but what they bring to the discussion is superb and much needed.
Here is a sample from Lomberg in The Skeptical Environmentalist:
I will…challenge our usual conception of the collapse of ecosystems, because this conception is simply not in keeping with reality.
We are not running out of energy or natural resources. There will be more and more food per head of the world’s population. Fewer and fewer people are starving. In 1900 we lived for an average of 30 years; today we live for 67. According to the UN we have reduced poverty more in the last 50 years than we did in the preceding 500…
[E]ver fewer people in the world are starving. In 1970, 35 percent of all people in developing countries were starving. In 1996 the figure was 18 percent…
The constant repetition of …often heard environmental exaggerations has serious consequences. It makes us scared and it makes us more likely to spend our resources and attention solving phantom problems while ignoring real and pressing…issues…
The point here is to give us the best evidence to allow us to make the most informed decision as to where we need to place our efforts. What I will show throughout the book is that our problems are often getting smaller not bigger, and that frequently the offered solutions are grossly inefficient.1
Lomberg then follows with 500 pages of data on trends in key areas of human well-being: health, hunger, education, pollution, crowding, environmental quality. Knowing the true state of the world and the direction of trends is a crucial. Setting priorities and choosing which problems to tackle requires a debate over values. That entails an entirely different conversation, but first, we must get the facts right.
And here's a recent one from Norberg:
MORE POVERTY - THE SAME POVERTY REDUCTION:
It took some time, but now the World Bank’s revised poverty figures 1981-2005 have been published, taking better purchasing power statistics into consideration - and introducing a new and higher poverty line, $1.25 a day instead of $1.
The bad news is that the world is poorer than we thought, but the good news is that the world has been no less successful in reducing poverty than we thought. In other words, we had more people in poverty in 1981 than previously estimated but that number has been reduced by as much as previously estimated. Another way of putting this is that the decades before the 1980s were worse than we thought, but the decades since were just as good as we thought - and that’s important to keep in mind since at least Swedish radio presented this as if the number of poor increased dramatically right now.
The proportion in absolute poverty in developing countries 1981-2005 was reduced by half, from 52% to 26%. And despite an increase in world population by 2 billion, the number in absolute poverty was reduced by 500 million, from 1.9 to 1.4 billion. This means that 57,000 people have left extreme poverty every day since 1981. And the last decade has been the best one.
One word of warning though: This study does not cover the last two years when food prices increased dramatically, and poverty probably increased. We’ll have to wait for those figures. Just like before, we see dramatic regional differences. In globalised East Asia, poverty was reduced from 79 to 17 percent, in marginalised Sub-Saharan Africa it stayed around 50 percent the whole period (even though it has come down from 57.5% in 2006).
What is the state of the world? It isn't perfect. There is still too much suffering because of poverty, war and tyranny. But it is improving, especially when you consider the long-term trends. Humanity is still in its adolescence, stumbling with fits and stops toward maturity. Mistakes are bound to occur. It's all a part of the learning process. Yet, the task is hard enough without shackling ourselves with misinformation. I hope the above scholars find a wide and receptive audience in their efforts to dispel error and correct misconceptions.
As another key myth-buster, Julian Simon, so poignantly wrote:
"Untruth is the ugliest and most dangerous pollution that humans face today. It is just about the only pollution that cannot somehow be transformed into a product of value.”3
“The common assertions that resources are growing more scarce, that environmental conditions are worsening and that the poor suffer from economic freedom are the gravest danger to the poor and the environment.” 4
Let the facts roll in!
1. Lomborg, Bjorn, The Skeptical Environmentalist, pg 4-5
2. from Norberg's blog entry Aug. 28, 2008: 14:07
3. Ultimate Resource 2, pg 527
4. Ultimate Resource 2, xxxvii
Sunday, September 14, 2008
Another Attack on Civilization
September 10, 2008, a British jury acquitted six Greenpeace vandals of $35,000 criminal damage to a coal plant. There is no doubt that the defendants caused the damage. Though much less heinous an act, destruction of someone else's property is also outside the bounds of civilized behavior. But instead of being condemned for endorsing the violation of property rights, the jury's decision was "greeted with cheers from the courtroom."
The jurors had been persuaded that the perpetrators' act was justified under a law which allows property to be damaged in order to prevent even greater damage from occurring. This law, rationally written to protect fire fighters from being sued for breaking down the door of a burning building, has now been perverted into justifying the violation of property rights as long as it is done in the name of global warming.
The foundations of civilization are those principles which, if followed consistently, will lead to moral and peaceful social interaction. The most fundamental of those principles arise from the sanctity of human life: the individual rights of life, liberty and property. To undermine these rights in a court of law is to use the trappings of justice to destroy justice. Until it is understood that property rights are merely the physical expression of the right to life, then peace, prosperity and civilization itself are at risk.
Thursday, September 11, 2008
Wednesday, September 10, 2008
There are countries in Europe that would love to have their unemployment rate fall to the 5.7 percent unemployment rate to which ours has risen. Yet those who seem to want us to imitate European economic and social policies never seem to want to consider the actual consequences of those policies.
--Thomas Sowell "Random Thoughts"
Monday, September 8, 2008
Truth can stand by itself."
-- Thomas Jefferson
from Notes on the State of Virginia, 1782
Sunday, September 7, 2008
After listening to and reading so many uninformative, uninspiring speeches from this season’s political conventions, I went on line and found some from the past. They are worth checking out for yourself: Abraham Lincoln’s “Cooper Union Address” in 1860, William Jennings Bryan’s “Cross of Gold” in 1896, Hubert Humphrey’s 1948 DNC address on civil rights, Ronald Reagan’s 1964 GOP address “A time for choosing.” *
I wonder how these kinds of speeches would be received today. I bet people would love to have more than platitudes and slogans. We need speeches that state fundamental principles and explain why those principles must be used to guide to our actions. We need more than lofty promises unaccompanied by the practical details of how to achieve them. We need informed leaders who are willing to share their knowledge of the facts and their insights on how the challenges are to be met.
Ideals as guiding principles. Facts and analysis as the platform for practical application.
Maybe they will speek more to the specifics and details during the debates.
One can only hope.
*A few other of my favorites which aren't campaign speeches are Douglas MacArthur's Farewell Address to Congress and Winston Churchill's speech, "The Sinews of Peace." Please leave a comments with your favorites!
Tuesday, September 2, 2008
Enough of that picture!!!
"It's been said that when the only tool you have is a hammer, every problem looks like a nail. For politicians, bureaucrats, and many activists, when the only tool you have is coercion, the cause of every problem looks like too much freedom."
from “Too Much Freedom” by Roy Cordato, in The Freeman July/August 2008