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Posts Tagged ‘free markets’

The Other Immigration Question: Should People from Wealthy Countries Migrate to Poorer Ones?

Posted by M. C. on September 28, 2022

The problem is not that people from poorer countries are migrating to the West, but that few Westerners relocate to poor countries with their know-how and institutions.

The immigration debate has polarized societies across the Western world. Objectors assert that the influx of migrants has corroded social relations, and defenders argue that immigrants release a dose of entrepreneurial dynamism. Debates will persist because it’s unlikely that people can be discouraged from migrating to rich countries in the West. Migrants will continuously flock to places like America and Canada, since they provide better opportunities.

Besides offering immigrants more options to build wealth, rich countries in Europe and North America also attract many through their well-endowed welfare systems. Researchers contend that welfare acts as a magnet that lures migrants to prosperous countries. The allure of welfare is so potent that limiting benefits can reduce the net flow of immigrants to host countries. Also, benefitting from higher incomes in developed countries affords immigrants the opportunity to experience a superior quality of life.

Economist Michael Clemens has opined that migration to the United States is the best strategy to lift Haitians out of poverty. For many in the developing world, migrating to a stable country with effective institutions is the most plausible avenue for self-advancement. Migrating can also lead to favorable health outcomes and improved well-being because developing countries have inferior health systems. Not only is healthcare better in rich countries, but in Europe and North America people are more likely to receive subsidized healthcare.

Living standards are substantially better in Western countries, so it’s understandable why people would endanger their safety to enter America or Europe. But perhaps the current debate is misguided. Instead, policy makers should be making the case for people in Western countries to migrate to the developing world. Human capital is pivotal to economic growth, and poorer countries suffer from lower levels of human capital.

However, human capital is not the accumulation of information but rather the application of expertise.

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Africa’s Path to Energy Prosperity Is with Free Markets, Not Eco-Colonialism

Posted by M. C. on September 6, 2022

If California and Germany did not succeed at their solar and wind experiments, no rational person would expect underdeveloped countries to succeed at it. So, it is malicious to coerce African countries into an energy “transition” that the developed world is failing to achieve.

Manuel Tacanho

The ongoing energy crunch has revealed the hypocritical, if not duplicitous, nature of the Western imposition of climate and energy transition goals on other nations. Of course, we care about environmental protection, but the current arrangement amounts to eco-colonialism, is wildly detached from local realities, and severely hurts African economies and lives. For these and other reasons, African leaders should assert energy policy independence if they intend to serve and protect Africa’s socioeconomic well-being.

Africa must finally and truly develop. Access to dense, dispatchable, reliable, abundant, and cheap energy goods and services is crucial. Fossil fuels, which Africa has enormous quantities of, are best positioned to meet present and future demand. Today’s energy crisis conclusively shows that solar panels and wind turbines are not economically, materially, and ecologically viable alternatives.

If California and Germany did not succeed at their solar and wind experiments, no rational person would expect underdeveloped countries to succeed at it. So, it is malicious to coerce African countries into an energy “transition” that the developed world is failing to achieve.

Severe Energy Poverty

There is energy poverty everywhere, even in Western countries. But countries and regions are not equally energy poor. Africa, the least developed region, is, of course, the most energy poor. No need to turn this part of the article into a poverty porn session by presenting numerous statistics about the severity of energy poverty that plagues and cripples Africa. Still, some facts are worth pointing out.

N.J. Ayuk, chairman of the African Energy Chamber, notes that:

It is not an exaggeration to say energy poverty is one of our continent’s most pressing problems: Only 56% of Africa’s population has access to electricity today, and in many places, that power is still inadequate and unreliable at best. We address this topic in our recently released report, The State of African Energy 2022.

“Comprehensive energy access across the continent remains a central target, with some 600 million people without access to electricity today,” says the report. “Moreover, households themselves, facing low and inadequate supply of electricity, often rely on highly polluting traditional energy sources such as hard biomass, which constitutes 45% of total primary energy demand in Africa.”

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Political Paternalism, Not Free Markets, Cause Economic Shocks

Posted by M. C. on May 2, 2022

by Richard M. Ebeling

One of the political paternalist tricks is to insist that any economic policy failure is more “proof” of the bankruptcy of the market economy. Once again, this worn-out device is employed by Columbia University professor and Nobel Prize-winning economist Joseph E. Stiglitz. Any and all such presumed market “failures” are placed by Stiglitz under the umbrella term, “neoliberalism.”We are facing the consequences of the interventionist and regulatory state.
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Neoliberalism has become one of the most elastic terms in the political paternalist lexicon. It amounts to whatever the paternalist dislikes or to any interventionist welfare-state policy that has turned out badly from his own point-of-view, but which cannot be admitted to have been caused by some aspect of his own policy agenda. Never having to say you are sorry for your own social engineering failures is central to this mindset.

In a recent article at Project Syndicate, Stiglitz calls for “Shock Therapy for Neoliberals.”(April 5, 2022). He insists that for the last several decades. America and indeed the world have been caught in the mesmerizing grip of the idea that free markets work. And even worse, the free-market ideology has guided and directed U.S. economic policy from Ronald Reagan to the present.

This may come as a surprise to some who lived through the Bill Clinton and Barack Obama administrations and considered especially Obama’s to be committed to a fairly “progressive” agenda, a capstone of which was the (un)Affordable Care Act and its many false promises. In addition, for many limited-government conservatives and classical liberals, the two Bush administrations, along with Donald Trump’s, seemed far from any noticeable free-market agenda as well.

Stiglitz says recent crises all caused by neoliberalism

Stiglitz points, in particular, to the financial crisis of 2008-2009, the coronavirus crisis of the last two years, and now the war in Ukraine as all examples of the failure of free market-based neoliberalism to be able to steer clear of instability and to restore and maintain economic balance. In Stiglitz’s reading of 21st-century history, you would never know that for the five years before the financial crisis of 2008, the Federal Reserve had artificially manipulated key interest rates down to near zero and, when adjusted for inflation, were actually in the negative range for most of that time. This had been made possible with a nearly 50 percent increase in the money supply (M-2) during this half-decade.

Matching this had been a heavily government-created housing boom. Two federal agencies, Fannie Mae and Freddie Mac, had guaranteed and bought up huge portions of the home-mortgage market. The private sector home-mortgage lenders were told by Fannie Mae and Freddie Mac that they could loan with reckless abandon, with these agencies bearing most or even all the risk if any home loans went delinquent or general bad times were to set in. Fannie Mae and Freddie Mac ended up “covering” about half of all the outstanding mortgages in the United States.

The financial and housing crisis of 2008-2009 had been made in Washington, D.C. The instability and discovered imbalances in the financial and housing markets had on them the fingerprints of the Federal Reserve System and the federal agencies that created the “moral hazard” of unsustainable home mortgages once the bubble burst. A free market had nothing to do with it because these markets were (and remain) hostages of governmental control and manipulation. (See my article, “Ten Years On: Recession, Recovery and the Regulatory State”.)

Coronavirus crisis was made by restrictive government planning

Turning to the Covid-19 disaster of 2020, Stiglitz refers to the U.S “economies’ lack of resilience. America, the superpower, could not even produce simple products like masks and other protective gear, let alone more sophisticated items like tests and ventilators.” I fear that Stiglitz is starting to suffer from short-term memory loss, at least when it comes to economic policy. It is only two years since the federal and state governments decided to follow the Chinese totalitarian model of extensive lockdowns and shutdowns in the attempt to stop the spread of the virus. This brought production and employment to a grinding halt over many parts of the American economy. It was a perverse system of government central planning designed to bring society to an intentional standstill to assure no one came closer than six feet from any other human being.

Furthermore, it was the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) that brought about the delays and hindrances to entrepreneurially innovative responses to the medical crisis. These government agencies prohibited private enterprises from marketing improvised, but no less effective, substitutes for more standard ventilator equipment, face masks, hand sanitizers, and testing kits.

No matter how serious the medical and related healthcare and equipment shortages, nothing could be supplied without the slow-motion approvals of the restrictive regulatory gate-keepers. More lives were put at risk or lost, medical needs were left unsatisfied for a longer period of time, and human suffering and anxiety were increased precisely because resilient and robust competitive market responses to the coronavirus crisis faced the impenetrable and shut doors of the American regulatory bureaucracy for many months in 2020. (See my articles, “To Kill Markets is the Worst Possible Plan” and “Leaving People Alone is the Best Way to Beat the Coronavirus“and “The Conquest of America by Communist China“.)

War and government sanctions are causing new disruptions

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Doug Casey on the Rise of Phyles and Like-Minded Communities… and Why You Need to Find One Right Now

Posted by M. C. on October 11, 2021

What’s really important is your character—that you think rationally and critically and that you follow the two great laws: Do all that you say you’re going to do, and don’t encroach upon other people or their property. I choose to associate with people based on those things, not accidents of birth.

by Doug Casey

International Man: It seems now more than ever that people have less and less in common with others who happen to carry the same government ID.

At the same time, like-minded people are finding each other from across the world.

What’s your take on this trend? What does it mean for the nation-state?

Doug Casey: Once upon a time, like-minded people came to America because of their desire for personal freedom and financial opportunity. That’s part of what made America what it is. Americans were the kind of people that were drawn to the ideals put forth by the country’s Founding Fathers.

But now America is drawing the wrong kind of people. They’re not people who necessarily want freedom. Some do, of course. But many are drawn to the massive welfare benefits, free medical care, and free schooling.

Past migrants may have been dirt poor and ignorant, but they had to make their own way. The State didn’t subsidize them; it gave them absolutely nothing. But that’s not the case today. The character of America has changed, and so have the kind of people who want to migrate here. They don’t want to accept American values. They want to maintain their Somali, Afghan, or Haitian values. Most won’t become Americans; they’ll become United Statesers. America, a republic sharing a common culture, is being washed away and replaced by the US, a multicultural domestic empire.

America used to be totally unique, but now the US is just another nation-state like all the others. Of course, change is a constant in all areas of life. But I’ll miss the America of the before times because it was a refuge for things like free thought, free speech, free markets, and entrepreneurialism. Oh well, nothing lasts forever, and America had a pretty good run.

With that said, the main danger to you is your own government, particularly the US government headquartered in Washington DC, and to a lesser degree, state and local governments. Like other United Statesers, you’re not personally endangered by Iranians, the Chinese, or Russians—they’re on the other side of the world. You are, however, directly threatened by the US government and by other US citizens. They widely, indeed overwhelmingly, now accept socialist and welfare-state principles. Your fellow United Statesers don’t mind turning you into a serf. You’re largely on your own when it comes to trouble.

So at this point, it’s incumbent upon those of us who believe in American principles to find their countrymen wherever they are—not just in this geographical area, not just within the bailiwick of the US government. It’s part of a global trend, actually. It’s happening all over the world in different ways.

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Posted in Uncategorized | Tagged: , , , , , | Leave a Comment » The Biggest Problem With Janet Yellen Might Be Her Husband

Posted by M. C. on December 13, 2020

Yes, Janet Yellen’s husband, despite a claim to favor free markets, hates them. You see, according to Akerlof, free markets influence people and he prefers that he control all the people instead.

Joe Biden’s nominee for Treasury Secretary, Janet Yellen, is a typical over the top Keynesian in favor of mad money printing by the Federal Reserve but a bigger problem might be the influence of her husband, George Akerlof, on her thinking.

You can’t get much more authoritarian in your thinking than Akerlof does.

 John Tamny writes:

In Phishing for Phools, a 2015 book that George Akerlof co-authored with Robert Shiller, the authors wrote without even a hint of irony that people “do not do what is really good for them, they do not choose what they really want.” Please think about the previous bit of absurdity from the two economists. Maybe think a while.

If they’re to be believed, we’re all just a collection of idiots. That’s what their allegedly careful economic analysis concludes…

 In a short book that remarkably took the authors five years to write, Shiller and Akerlof even made time to go after Cinnabon. It’s hard to type this without laughing, but apparently Cinnabon controls us too! If the authors are to be believed, this rather minor shopping mall tenant has long had a knack for making us do what we shouldn’t by expertly placing its stores “in the track of people who would be vulnerable to that smell.”… 

Important about all this is that Akerlof, the co-author of what might be one of the most ridiculous books on “economics” ever written, is married to Treasury secretary nominee Janet Yellen. Much more important, Akerlof recently told the New York Times that he and Yellen have “always been in all but perfect agreement about macroeconomics.” If so, it might be useful for the senators questioning Yellen at her Treasury confirmation if near “perfect agreement” between her and her husband includes admiration for Phishing for Phools?  

Yes, Janet Yellen’s husband, despite a claim to favor free markets, hates them. You see, according to Akerlof, free markets influence people and he prefers that he control all the people instead. 

This is the man Yellen is married to. 


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Do Elections Matter? | Mises Institute

Posted by M. C. on November 14, 2020

Let us continue to preach the truth of Liberty. Ideas have consequences, and unless we spread the ideas of freedom and free markets first, no election or politician will bring about the changes we want.

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Why Do So Many Intellectuals Hate Free Markets? | Mises Institute

Posted by M. C. on August 25, 2020

The key to the hostility of intellectuals to capitalism is the expansion of education, particularly higher education.12 This creates unemployment, or underemployment, of the university-schooled classes; many become “psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work.” The tenuous social position of these intellectuals breeds discontent and resentment, which are often rationalized as objective social criticism. This emotional malaise, Schumpeter asserts,

Ralph Raico

[This article is excerpted from chapter 3 of Classical Liberalism and the Austrian School. Footnote numbering differs from the original.]

Hayek on the Intellectuals and Socialism

F.A. Hayek was acutely concerned with our problem, since he, too, was wholly convinced of the importance of the intellectuals: “They are the organs which modern society has developed for spreading knowledge and ideas,” he declares in his essay “The Intellectuals and Socialism” (Hayek 1967). The intellectuals—whom Hayek characterizes as “the professional secondhand dealers in ideas”1—exercise their power through their domination of public opinion: “There is little that the ordinary man of today learns about events or ideas except through the medium of this class.” Among other things, they often virtually manufacture professional reputations in the minds of the general population; and through their domination of the news media, they color and shape the information that people in each country have of events and trends in foreign nations. Once an idea is adopted by the intellectuals, its acceptance by the masses is “almost automatic and irresistible.” Ultimately, the intellectuals are the legislators of mankind (178–80, 182).

With all this, Hayek’s view of the intellectuals is flatteringly benign: their ideas are determined by and large by “honest convictions and good intentions” (184).2 In “The Intellectuals and Socialism,” Hayek does mention in passing the intellectuals’ egalitarian bias; the analysis, however, is basically in terms of their “scientism.” With his characteristic emphasis on epistemology, Hayek sees the revolt against the market economy as stemming from the methodological errors he identified and investigated at length in his brilliant study of the rise of French positivism, The Counter-Revolution of Science (1955).

Thus, in Hayek’s view, the chief influence on the intellectuals has been the example of the natural sciences and their applications. As man has come to understand and then control the forces of nature, intellectuals have grown infatuated with the idea that an analogous mastery of social forces could produce similar benefits for mankind. They are under the sway of “such beliefs as that deliberate control or conscious organization is also in social affairs always superior to the results of spontaneous processes which are not directed by a human mind, or that any order based on a plan beforehand must be better than one formed by the balancing of opposing forces” (186–87). Hayek even makes the following astonishing statement (187):

That, with the application of engineering techniques, the direction of all forms of human activity according to a single coherent plan should prove to be as successful in society as it has been in innumerable engineering tasks is too plausible a conclusion not to seduce most of those who are elated by the achievements of the natural sciences. It must indeed be admitted both that it would require powerful arguments to counter the strong presumption in favor of such a conclusion and that these arguments have not yet been adequately stated….The argument will not lose its force until it has been conclusively shown why what has proved so eminently successful in producing advances in so many fields should have limits to its usefulness and become positively harmful if extended beyond those limits.

It is exceedingly difficult to follow Hayek’s reasoning here. He appears to be saying that because the natural sciences have made great advances and because innumerable particular engineering projects have succeeded, it is quite understandable that many intellectuals should conclude that “the direction of all forms of human activity according to a single coherent plan” will be similarly successful.

But, in the first place, the advances of the natural sciences were not brought about in accordance with any overall central plan; rather, they were the product of many separate decentralized but coordinated researchers (produced analogously in some respects to the market process; see Baker 1945 and Polanyi 19513). Second, from the fact that many particular engineering projects have succeeded it does not follow that a single vast engineering project, one subsuming all particular projects, is likely to succeed; nor does it seem likely that most people will find such a claim plausible.

Why, then, is it natural, or logical, or easily comprehensible that intellectuals should reason from the triumphs of decentralized scientific research and of individual engineering projects to the success of a plan undertaking to direct “all forms of human activity”?4

In his review of Hayek’s The Road to Serfdom, Joseph Schumpeter (1946: 269) remarks that Hayek was “polite to a fault” towards his opponents, in that he hardly ever attributed to them “anything beyond intellectual error.” But not all the points that must be made can be made without more “plain speaking,” Schumpeter declares.5

Schumpeter here implies an important distinction. Civility in debate, including the formal presumption of good faith on the part of one’s adversaries, is always in order. But there is also a place for the attempt to explain the attitudes, for instance, of anti-market intellectuals (a form of the sociology of knowledge). In this endeavor, “politeness” is not precisely what is most called for. As regards the positivist intellectuals who argued from the successes of natural science to the need for central planning: it may well be that this false inference was no simple intellectual error, but was facilitated by their prejudices and resentments, or perhaps their own will to power.6

In any case, Hayek’s gentlemanly deference to anti-market intellectuals can sometimes be downright misleading. Consider his statement (1967: 193):

Orthodoxy of any kind, any pretense that a system of ideas is final and must be unquestioningly accepted as a whole, is the one view which of necessity antagonizes all intellectuals, whatever their views on particular issues.

This, of a category of persons that in the twentieth century has notoriously included thousands of prominent apologists for Soviet Communism in all western countries, is indeed politeness “to a fault.”7 There was, after all, good reason, as late as the 1950s, for Raymond Aron (1957) to have written on The Opium of the Intellectuals and for H.B. Acton (1955) to have entitled what is probably the best philosophical critique of Marxism-Leninism The Illusion of the Epoch.8

Nor was Communism the only nefarious orthodoxy to claim the loyalty of numerous intellectuals, as is shown by the cases of Martin Heidegger, Robert Brasillach, Giovanni Gentile, Ezra Pound, and many others. For a less complimentary but more realistic view of the integrity of modern intellectuals we may turn to the memoirs of the German historian Golo Mann (1991: 534), who quotes from his diary of 1933: “18 May. [Josef] Goebbels in front of a writers’ meeting in the Hotel Kaiserhof: ‘We [Nazis] have been reproached with not being concerned with the intellectuals. That was not necessary for us. We knew quite well: if we first have power, then the intellectuals will come on their own.’ Thunderous applause—from the intellectuals.”9

Schumpeter on the Intellectual Proletariat

In chiding Hayek, Schumpeter suggested (1946: 269) that he might have learned a useful lesson from Karl Marx. Schumpeter’s own interpretation reflects his lifelong engagement with Marxism. Like Marx, he offered a highly pessimistic prognosis for the capitalist system, though for mainly different reasons (1950: 131–45). But while Schumpeter holds that intellectuals will play a key role in capitalism’s demise, he in no way relies on the scenario set forth in the Communist Manifesto.

There, Marx and Engels (1976: 494) announced that as the final revolution approaches, a section of the “bourgeois ideologists” will go over to the side of the proletariat. These will be the ideologists “who have worked their way up to a theoretical understanding of the historical movement as a whole.”10 Such a laughably self-serving description could hardly appeal to an inveterate skeptic like Schumpeter. Instead, his “Marxism” consisted in examining capitalism as a system with certain attendant sociological traits, and exposing the class interests of the intellectuals within that system.11

Compared to previous social orders, capitalism is especially vulnerable to attack:

unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates, and subsidizes a vested interest in social unrest. (1950: 146)

In particular, it brings forth and nurtures a class of secular intellectuals who wield the power of words over the general mind. The capitalist wealth machine makes possible cheap books, pamphlets, newspapers, and the ever-widening public that reads them. Freedom of speech and of the press enshrined in liberal constitutions entails also “freedom to nibble at the foundations of capitalist society”—a constant gnawing away that is promoted by the critical rationalism inherent in that form of society. Moreover, in contrast to earlier regimes, a capitalist state finds it difficult, except under exceptional circumstances, to suppress dissident intellectuals: such a procedure would conflict with the general principles of the rule of law and the limits to the police power dear to the bourgeoisie itself (1950: 148–51).

The key to the hostility of intellectuals to capitalism is the expansion of education, particularly higher education.12 This creates unemployment, or underemployment, of the university-schooled classes; many become “psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work.” The tenuous social position of these intellectuals breeds discontent and resentment, which are often rationalized as objective social criticism. This emotional malaise, Schumpeter asserts,

will much more realistically account for hostility to the capitalist order than could the theory—itself a rationalization in the psychological sense—according to which the intellectual’s righteous indignation about the wrongs of capitalism simply represents the logical inference from outrageous facts… (1950: 152–53)13

A major merit of Schumpeter’s argument is that it elucidates an abiding feature of the sociology of radicalism and revolution: the hunt for government jobs. The interconnection between over-education, an expanding reservoir of unemployable intellectuals, the pressure for more bureaucratic positions, and political turmoil was a commonplace among European observers in the nineteenth century.14 In 1850, the conservative author Wilhelm Heinrich Riehl (1976: 227–38) offered a remarkable analysis, in many ways anticipating Schumpeter, of the “intellectual proletariat” (Geistesproletariat). Even then Germany was producing each year much more “intellectual product” than it could use or pay for, testifying to an “unnatural” division of national labor. This was a general phenomenon in advanced countries, Riehl maintains, resulting from the enormous industrial growth that was taking place. But the impoverished intellectual workers experience a contradiction between their income and their perceived needs, between their own haughty conception of their rightful social position and the true one, a contradiction which is far more irreconcilable than in the case of the manual laborers. Because they cannot “reform” their own meager salaries, they try to reform society. It is these intellectual proletarians who have taken the lead in social revolutionary movements in Germany. “These literati see the world’s salvation in the gospel of socialism and communism, because it contains their own salvation,” through domination of the masses.15 Later revolutionary movements, whether of the left or the right, can be understood to a large extent as the ideologically camouflaged raid on the great state employment office. Carl Levy (1987: 180) has linked the expansion of the state from the later nineteenth century on to the growth in the numbers of the university-educated, who sought government jobs and utilized positivism as a facilitating ideology. Positivism

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