MCViewPoint

Opinion from a Libertarian ViewPoint

Posts Tagged ‘market’

Doug Casey on Anarchy and Voluntaryism – International Man

Posted by M. C. on June 25, 2020

It’s always been a battle between the individual and the collective. I’m on the side of the individual.

I simply don’t believe anyone has a right to initiate aggression against anyone else. Is that an unreasonable belief?

Let me put it this way. Since government is institutionalized coercion—a very dangerous thing—it should do nothing but protect people in its bailiwick from physical coercion.

https://internationalman.com/articles/doug-casey-on-anarchy-and-voluntaryism/

by Doug Casey

You’re likely aware that I’m a libertarian. But I’m actually more than a libertarian. I don’t believe in the right of the State to exist. The reason is that anything that has a monopoly of force is extremely dangerous. As Mao Tse-tung, lately one of the world’s leading experts on government, said: “The power of the state comes out of a barrel of a gun.”

There are two possible ways for people to relate to each other, either voluntarily or coercively. And the State is pure institutionalized coercion. It’s not just unnecessary, but antithetical, for a civilized society. And that’s increasingly true as technology advances. It was never moral, but at least it was possible, in oxcart days, for bureaucrats to order things around. Today it’s ridiculous.

Everything that needs doing can and will be done by the market, by entrepreneurs who fill the needs of other people for a profit. The State is a dead hand that imposes itself on society. That belief makes me, of course, an anarchist.

People have a misconception about anarchists. That they’re these violent people, running around in black capes with little round bombs. This is nonsense. Of course there are violent anarchists. There are violent dentists. There are violent Christians. Violence, however, has nothing to do with anarchism. Anarchism is simply a belief that a ruler isn’t necessary, that society organizes itself, that individuals own themselves, and the State is actually counterproductive.

It’s always been a battle between the individual and the collective. I’m on the side of the individual.

I simply don’t believe anyone has a right to initiate aggression against anyone else. Is that an unreasonable belief?

Let me put it this way. Since government is institutionalized coercion—a very dangerous thing—it should do nothing but protect people in its bailiwick from physical coercion.

What does that imply? It implies a police force to protect you from coercion within its boundaries, an army to protect you from coercion from outsiders, and a court system to allow you to adjudicate disputes without resorting to coercion.

I could live happily with a government that did just those things. Unfortunately the US Government is only marginally competent in providing services in those three areas. Instead, it tries to do everything else.

The argument can be made that the largest criminal entity today is not some Colombian cocaine gang, it’s the US Government. And they’re far more dangerous. They have a legal monopoly to do anything they want with you. Don’t conflate the government with America—it’s a separate entity, with its own interests, as distinct as General Motors or the Mafia. I’d rather deal with the Mafia than I would with any agency of the US Government.

Even under the worst circumstances, even if the Mafia controlled the United States, I can’t believe Tony Soprano or Al Capone would try to steal 40% of people’s income from them every year. They couldn’t get away with it. But—perhaps because we’re said to be a democracy—the US Government is able to masquerade as “We the People.” That’s an anachronism, at best. The US has mutated into a domestic multicultural empire.

The average person has been propagandized into believing that it’s patriotic to do as he’s told. “We have to obey libraries of regulations, and I’m happy to pay my taxes. It’s the price we pay for civilization.” No, that’s just the opposite of the fact. Those things are a sign that civilization is degrading, that the society is becoming less individually responsible, and has to be held together by force.

It’s all about control. Power corrupts, absolute power corrupts absolutely. The type of people that gravitate to government like to control other people. Contrary to what we’re told to think, that’s why you get the worst people—not the best—who want to get into government.

What about voting? Can that change and improve things? Unlikely. I can give you five reasons why you should not vote in an election (see this article). See if you agree.

Hark back to the ’60s when they said, “Suppose they gave a war and nobody came?” But let’s take it further: Suppose they gave a tax and nobody paid? Suppose they gave an election and nobody voted? What that would do is delegitimize government.

I applaud the fact that only half of Americans vote. If that number dropped to 25%, 10%, then 0%, perhaps everybody would look around and say, “Wait a minute, none of us believe in this evil charade. I don’t like Tweedledee from the left wing of the Demopublican Party any more than I like Tweedledum from its right wing…”

Remember you don’t get the best and the brightest going into government. There are two kinds of people. You’ve got people that like to control physical reality—things. And people that like to control other people. That second group, those who like to lord it over their fellows, are drawn to government and politics.

Some might ask: “Aren’t you loyal to America?” and “How can you say these terrible things?” My response is, “Of course I’m loyal to America, but America is an idea, it’s not a place. At least not any longer…”

America was once unique among the world’s countries. Unfortunately that’s no longer the case. The idea is still unique, but the country no longer is.

I’ll go further than that. It’s said that you’re supposed to be loyal to your fellow Americans. Well, here’s a revelation. I have less in common with my average fellow American than I do with friends of mine in the Congo, or Argentina, or China.

The reason is that I share values with my friends; we look at the world the same way, have the same worldview. But what do I have in common with my fellow Americans who live in the trailer parks, barrios, and ghettos? Or even Hollywood, Washington, and Manhattan? Everyone has to be judged as an individual, but probably very little besides residing in the same political jurisdiction. Most of them—about 50% of the US—are welfare recipients, and therefore an active threat. So I have more personal loyalty to the guys in the Congo than I do to most of my fellow Americans. The fact we carry US passports is simply an accident of birth.

Those who find that thought offensive likely suffer from a psychological aberration called “nationalism”; in serious cases it may become “jingoism.” The authorities and the general public prefer to call it “patriotism.” It’s understandable, though. Everyone, including the North Koreans, tends to identify with the place they were born. But these things should be fairly low on any list of virtues.

Nationalism is the belief that my country is the best country in the world just because I happen to have been born there. It’s most virulent during wars and elections. And it’s very scary. It’s like watching a bunch of chimpanzees hooting and panting at another tribe of chimpanzees across the watering hole. I have no interest in being a part of the charade—although that’s dangerous.

And getting more dangerous as the State grows more powerful. The growth of the State is actually destroying society. Over the last 100 years the State has grown at an exponential rate, and it’s the enemy of the individual. I see no reason why this trend, which has been in motion and accelerating for so long, is going to stop. And certainly no reason why it’s going to reverse.

It’s like a giant snowball that’s been rolling downhill from the top of the mountain. It could have been stopped early in its descent, but now the thing is a behemoth. If you stand in its way you’ll get crushed. It will stop only when it smashes the village at the bottom of the valley.

This makes me quite pessimistic about the future of freedom in the US. As I said, it’s been in a downtrend for many decades. But the events of September 11, 2001, turbocharged the acceleration of the loss of liberty in the US. At some point either foreign or domestic enemies will cause another 9/11, either real or imagined. It’s predictable; that’s what sociopaths do.

When there is another 9/11—and we will have another one—they’re going to lock down this country like one of their numerous new prisons.

It’s going to become very unpleasant in the US at some point soon. It seems to me the inevitable is becoming imminent.

Editor’s Note: Unfortunately there’s little any individual can practically do to change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible.

That’s precisely why New York Times bestselling author Doug Casey just released an urgent new video that explains what could come next and what you can do about it. Click here to watch it now.

 

Be seeing you

 

Posted in Uncategorized | Tagged: , , , , , | Leave a Comment »

Three Reasons Why Politicians Must Leave Oil Markets Alone | Mises Wire

Posted by M. C. on April 25, 2020

Any refiner knows that crude quality matters, but most policymakers certainly do not.

Only the market knows which crude grades need to be produced and in what quantities at a given time. Likewise, only the market knows which crude grades need to be exported or imported and in what quantities. Prices along the oil supply chain alone coordinate this process. Now more than ever, the market needs unfettered prices to tell producers which grades to produce and refiners which grades to refine.

The same goes for every other market and commidity.

https://mises.org/wire/three-reasons-why-politicians-must-leave-oil-markets-alone?utm_source=Mises+Institute+Subscriptions&utm_campaign=a702beee22-EMAIL_CAMPAIGN_9_21_2018_9_59_COPY_01&utm_medium=email&utm_term=0_8b52b2e1c0-a702beee22-228343965

Although the heads of the world’s largest oil-producing nations were quick to claim a diplomatic victory following the latest OPEC+ (Organization of the Petroleum Exporting Countries “plus” non-OPEC oil producers) output-cut agreement, crude prices are telling a different story. Prompt month Brent and WTI futures contracts are now trading nearly 20 percent below their early April highs, both returning to a supercontango forward curve price structure following the conclusion of the OPEC+ meeting. A contango price structure, where near-term prices plummet relative to prices further along the curve, is the market’s way of clearing. But political efforts to support crude prices from around the world continue to muddy the waters for those trying to efficiently and rationally reallocate capital in the industry.

With the long-awaited OPEC+ deal failing to balance the market, some Texas oil producers are hoping to rekindle a largely dormant regulatory body in the Texas Railroad Commission to coordinate output cuts in the heartland of US crude production for the first time since the 1970s. In addition, amid this week’s turn lower in oil prices, US tariffs on crude imports are reportedly still on the table as well as a newfound idea to potentially pay producers to shut in production. Although politicians and regulators are still busy trying to find regulatory cures, this historic moment in oil markets should serve as a lasting reminder of the limitations of political remedies and the need to allow market prices to be the ultimate arbiter of production levels. Efforts by US policymakers to boost crude prices and to throw a lifeline to high-cost US crude producers is the exact opposite of what prices are telling us the market needs at this time. Seeking to prop up the least efficient US oil producers through import penalties or production quotas risks further misallocations in the sector going forward. Let us address a few key points:

1. Higher Crude Prices Are Not What Is Needed Amid Sharp Fuel Demand Contraction

Much of the recent focus for US politicians and other representatives of oil-producing nations has been on getting crude prices higher. But nothing could be more unwarranted at this time. As fuel demand for transportation has ground to a halt globally over the past two months, refining margins have been crushed—particularly for gasoline and jet fuel. It is this record weakness in underlying demand for transportation fuels, and the accompanying weakness in refining margins, that has led to the rapid surplus of crude oil globally as refineries have cut throughput.

Therefore, global political efforts to send crude prices higher risk exacerbating demand contraction for crude oil in the near term as higher crude prices without higher refined fuel demand would further limit a refiner’s incentive to process crude.

2. The Market Is Trying to Do Its Job

Crude prices returned to a state of supercontango early this week, following the conclusion of the OPEC+ meeting. After narrowing to just –$3.96 in early April, the Brent 1–7 month time spread has widened back to –$9.51 as of the April 15 close. Prompt month WTI is at an even wider discount to prices further along the curve than it was prior to the OPEC+ agreement, with the 1–7 month time spread closing at a whopping –$13.54 on April 15. This historically steep discount for near-term crude reflects the market coordinating multiple needed processes simultaneously.

On the one hand, physical crude prices and prompt month futures prices are coordinating the process of shutting in production. With prompt month WTI trading at a $13.54 premium to current prices just six months from now, a steep contango price structure is the strongest signal a US producer can receive to shut off new supply today and reserve that production for a future date. To the extent that production cannot be immediately shut in, this same price structure incentivizes placing crude into storage rather than continuing to push it onto the market, further crushing physical prices.

On the other hand, and to reflect on the first point above, the steep discount in near-term crude prices is needed to begin to stimulate crude demand at refineries once again. Crude prices must drop faster than refined fuel prices or refiners will have no profit motive to begin to process the glut of crude. In order to clear, the crude market needs positive gasoline-refining margins and/or diesel margins high enough that the weak gasoline and jet fuel margins are not overwhelming. This can only be accomplished by allowing for weakness in crude prices.

WTI Crude Oil Forward Curve

vinc

3. Only the Market Knows Which Crudes Should Be Cut and in What Quantities

Any refiner knows that crude quality matters, but most policymakers certainly do not. Crude quality, which is to say the profile of a specific grade of crude based on both its API gravity and sulfur content, is of chief importance to a refiner. A crude refining slate consisting of various grades is chosen carefully, based in large part on a refinery’s physical sophistication (what they can run) and the cost of the crudes compared to their expected revenues (based on their relative yields of the refined products (what they want to run)). For example, with gasoline currently bearing the brunt of the demand-contraction pain, light, sweet crudes that yield high volumes of light distillates, such as the majority of US shale grades, are far less desired by refiners that can run heavy crudes and are optimizing their refining slate to target higher yields of diesel.

Only the market knows which crude grades need to be produced and in what quantities at a given time. Likewise, only the market knows which crude grades need to be exported or imported and in what quantities. Prices along the oil supply chain alone coordinate this process. Now more than ever, the market needs unfettered prices to tell producers which grades to produce and refiners which grades to refine. This is just another reason why blanket production cuts or quotas and penalties on crude imports are both risky and suboptimal. Only refiners and producers themselves are sophisticated enough and can respond in a timely enough fashion to optimize the supply chain. And let us not forget that this market function will be just as important as demand begins to recover in the coming months. Policy interventions risk not only skewing market prices today, but also causing misallocations longer term.

Conclusion

It is often forgotten that market prices are themselves the constant coordinators of commerce. “The market” is not just some amorphous entity in the imaginations of ideologues and traders. Markets are made up of the industrial players that have the most skin in the game and the most to lose from misallocating capital.

In times of high uncertainty and economic risk it is politically difficult to resist the temptation to intervene in markets in an effort to protect specific pieces of domestic industry, but policies enacted in panicked times can also produce large and lasting unintended consequences. As we hope for a slow return to normalcy in refined product demand as COVID-19 quarantines are lifted in the coming months, let us be cautious of policy prescriptions that can wind up further ailing the entire oil industry and consumers in the long run.

Originally published at DTN.com.

Be seeing you

 

 

Posted in Uncategorized | Tagged: , , , , , | Leave a Comment »

Society’s Choice: General Welfare or Equality | Mises Institute

Posted by M. C. on August 1, 2019

https://mises.org/power-market/societys-choice-general-welfare-or-equality

Per Bylund

Imagine a social system in which those contributing to the welfare of others are rewarded for it, and those contributing more get access to more resources—so that they can serve us better. Such a system would generate ever more welfare, and for more people.

Then imagine an alternative system under which we institute a central force in society with the object to make sure resources are always equally distributed regardless of how they are used and whether they contribute to welfare.

These are the two “ideal” but contradictory systems, the eternal conflict between economic and political means, that have generated our current state of affairs: a mixed system of social meritocracy and utter force.

Today, there are only limited rewards for serving others, often combined with a penalty for gaining access to resources, and a parallel system imposed on this order, in which those with influence but without the intention or track record of serving others can gain and retain access to resources.

This access is provided by the central force instituted to take resources used to serve us from those doing it better–to give to those who have little or poor track record in this service. The outcome is unsatisfactory for proponents of both “ideal” systems, both claiming the influence of the other system corrupts the workings and outcome of our present social order. And they are both correct: general welfare is hampered by the distortions of redistribution and regulation; equality is hampered by both the limited meritocracy and the distorted incentives due to the availability of non-welfare based access to resources.

The solution to the problems in our current state of affairs is to move to one of the ideal systems: markets or state.

The choice depends on what we prefer–general welfare or equality.

Either one offers only limited ability to satisfy also the other ideal, which is why these ideals are in eternal conflict.

Be seeing you

 

Posted in Uncategorized | Tagged: , , , | Leave a Comment »