By Jonathan Russell,
As many as 20,000 City jobs are likely to be wiped out by the financial crisis, according to one of the first comprehensive forecasts of the toll on London's economy.
READ THE REST
Sunday, January 27, 2008
Paul vs. Obama
By Anthony Gregory,
Anyone serious about foreign policy, civil liberties, and the war on drugs — issues on which the left is typically, if however marginally, better than the right (at least today) — has got to hand it to Ron Paul for being so principled and correct. Tom Woods points out Paul's superiority here. And let's keep in mind that Ron Paul has been a unique voice on all these crucial issues – issues on which his own party tends to be nearly uniformly terrible – quite consistently, at times when all popular sentiment was going in the opposite direction.
Check out Ron Paul's warning in October of 2001, at a time when most Democrats were firmly behind the war on terror. Paul was prescient then in saying the war on terror could easily become as deadly and disastrous as the war on drugs.
Another One Bites the Dust
Over the past half-century, the United States has seen its global dominance in dozens of industries slip away. One plum that we have maintained is our gargantuan financial services industry, whose contribution to total GDP more than tripled between 1947 and 2005.
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for nineteen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services.
However, the current global financial crisis, manufactured on Wall Street and exported to the entire world, may result in the U.S. losing its financial crown as well.Once upon a time America owned the automobile industry. But after several decades of excessive taxation, onerous government regulation, union extortion, and a crushing lack of foresight and innovation, we no longer dominate an industry that we practically invented.
Just as Detroit no longer claims center stage in the world automobile marketplace, soon New York will lose its position at the center of global capital markets.In the first place, the center of finance tends to go where the money is. Right now all the money is coming from Asia and the Middle East. When the United States was the world’s greatest creditor nation and its largest supplier of capital it made prefect sense for that capital to be allocated here.
But why should the Chinese send their savings to New York only to have it re-invested back in China? Wouldn’t it make more sense for the Chinese to allocate their capital locally rather then out-sourcing the job to us?In the second place, when the strength of the dollar was widely regarded it made sense for global savers to allocate substantial percentages of their savings to U.S. dollar denominated investments.
This preference gave Wall Street a competitive advantage in attracting capital. However, now that confidence in the dollar has evaporated, perhaps permanently, this advantage has been lost. Further, investment in the U.S. was encouraged by America’s respect for private property, low taxes, and minimal government regulation.
However, this advantage has been lost as other nations have strengthened their private property laws, deregulated, and lowered taxes, while we have done the opposite. As a result, thus far this century, the returns on U.S.-based investments have far underperformed those achieved in every other major market.Most importantly, Wall Street’s reputation, once its greatest asset, is also in jeopardy. Just as Detroit lost its reputation for high quality cars, bankrupted dotcoms and worthless subprime debt are creating similar problems for Wall Street.
You can’t expect to keep your customers if you continually sell them shoddy merchandise. Wall Street has spread hundred of billions of dollars in losses around the world and in so doing shattered its reputation with some of its best customers.However, in the last few years Wall Street has not only screwed customers but their own shareholders as well. At one time all of our major investment banks, such as Goldman Sachs, Lehman Brothers, Morgan Stanley, Bear Stearns, Smith Barney, Shearson, E.F. Hutton, Kidder Peabody and Solomon Brothers, were private partnerships.
However, during the 1990’s they all went public (of course many merged first so they no longer exist as independent firms). Goldman Sachs was the last to go public in 1999. The transition allowed Wall Street partners to cash out, transferring future risks to new shareholders. In so doing they were able to capitalize on bubble valuations, yet through lavish bonus compensation packages, still keep the lion’s share of the profits for themselves. In other words they got to have their cake and eat it too.
As a result of this transfer of risks, the business models of America’s leading financial institutions shifted, with profits coming from riskier sources such as proprietary trading and structured finance. To line their own pockets, Wall Street willingly exposed its shareholders to risks that it would never have assumed with its own capital. This moral hazard set the stage for the enormous losses shareholders are now suffering, and are a direct consequence of the phony profits booked in prior years.
However, while shareholders are left holding the bag, Wall Street’s former partners now turned employees have already walked away with huge IPO and stock option windfalls, as well as lavish bonuses paid on phantom profits.The coming crash will plainly expose these conflicts of interest, and the reaction will be severe. In the end, finance and banking, like manufacturing, will be yet another industry lost to foreign competition.
The new financial capitals will likely be in Asia, the Middle East, and Europe. New York will certainly still have a role to play, but much like Detroit, it will be but a shadow of its former self.For a more in depth analysis of the tenuous position of the Americana economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”
**************
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for nineteen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services. Where does most of that money go?
By Tim Swanson,
While the report cited is several months old, Declan McCullagh recently wrote about how nearly all government-to-government foreign aid to Africa ends up in Swiss bank accounts.
For instance, in 2004 $94 billion was desposited into the accounts, most originating from African politicos. The following year the amount increased to $150 billion. In all, about 80% of all aid given to Africa was "stolen by corrupt leaders and transferred back into Western bank accounts."
Bureaucratic governmental projects also have a dismal track record of working as "World Bank's aid projects failed 55 to 60 percent of the time." Furthermore, "transfer payments have failed to stimulate economic growth in Africa where the average income per person is 11 percent lower today than it was in 1960."
In addition, despite receiving fistfulls of "free" capital, productivity levels did not increase:
The productivity increase that resulted from $187 billion's worth of aid going on "public investment" in 22 African countries between 1970 and 1994 is a very precise figure: zero. The Ajaojuta steel mill in Nigeria helps to explain why so much produced so little. The Ajaojuta project began in 1979. Nearly 30 years and more than $5 billion later, it has yet to produce a single bar of steel.
McCullagh was writing in response to WEF speakers in Davos, Bill Gates in particular, who call for more foreign aid to African countries.
A couple years ago Walter Williams pointed out why this free-aid policy is foolhardy,
Nearly every sub-Saharan African nation is poorer now than when they became independent during the '60s and '70s. Since that time, food production has fallen by roughly 20 percent. Since 1975, per capita GDP has fallen at a rate of half of one percent annually. Nigerian President Olusegun Obasanjo estimated, "Corrupt African leaders have stolen at least $140 billion from their people in the [four] decades since independence."
Be sure to also read Will More Foreign Aid End Global Poverty? and the Spiegel interview with economist James Shikwati -- in a nutshell, free trade not free aid.
Ludwig von Mises Institute
While the report cited is several months old, Declan McCullagh recently wrote about how nearly all government-to-government foreign aid to Africa ends up in Swiss bank accounts.
For instance, in 2004 $94 billion was desposited into the accounts, most originating from African politicos. The following year the amount increased to $150 billion. In all, about 80% of all aid given to Africa was "stolen by corrupt leaders and transferred back into Western bank accounts."
Bureaucratic governmental projects also have a dismal track record of working as "World Bank's aid projects failed 55 to 60 percent of the time." Furthermore, "transfer payments have failed to stimulate economic growth in Africa where the average income per person is 11 percent lower today than it was in 1960."
In addition, despite receiving fistfulls of "free" capital, productivity levels did not increase:
The productivity increase that resulted from $187 billion's worth of aid going on "public investment" in 22 African countries between 1970 and 1994 is a very precise figure: zero. The Ajaojuta steel mill in Nigeria helps to explain why so much produced so little. The Ajaojuta project began in 1979. Nearly 30 years and more than $5 billion later, it has yet to produce a single bar of steel.
McCullagh was writing in response to WEF speakers in Davos, Bill Gates in particular, who call for more foreign aid to African countries.
A couple years ago Walter Williams pointed out why this free-aid policy is foolhardy,
Nearly every sub-Saharan African nation is poorer now than when they became independent during the '60s and '70s. Since that time, food production has fallen by roughly 20 percent. Since 1975, per capita GDP has fallen at a rate of half of one percent annually. Nigerian President Olusegun Obasanjo estimated, "Corrupt African leaders have stolen at least $140 billion from their people in the [four] decades since independence."
Be sure to also read Will More Foreign Aid End Global Poverty? and the Spiegel interview with economist James Shikwati -- in a nutshell, free trade not free aid.
Ludwig von Mises Institute
Ron Paul Campaign Announces Two Additions to Leadership Team
FOR IMMEDIATE RELEASE
January 26, 2008
ARLINGTON, VIRGINIA – The Ron Paul Presidential Campaign today announced two key additions. John Tate is now national political director and Mark Elam has joined the team as national media director.
John Tate is a 25-year veteran of Republican politics. He has worked on dozens of local, state and national campaigns, was a key organizer in Pat Robertson’s 1988 presidential bid, and ran for Congress in 1986. Mr. Tate was instrumental in the Paul campaign’s top tier finishes in Nevada and Louisiana.
Mark Elam is a veteran Texas political consultant and a long-time aid to Dr. Paul. Mr. Elam serves as campaign manager to Dr. Paul’s congressional re-election campaign. In 1996, Mr. Elam directed Dr. Paul’s historic victory of Democrat-turned Republican Greg Laughlin in the district 14 congressional race.
“John Tate and Mark Elam bring tremendous leadership and expertise to our campaign,” said Dr. Paul. “Their addition to our management team will help catapult us to even greater heights of success.”
Ron Paul 2008
January 26, 2008
ARLINGTON, VIRGINIA – The Ron Paul Presidential Campaign today announced two key additions. John Tate is now national political director and Mark Elam has joined the team as national media director.
John Tate is a 25-year veteran of Republican politics. He has worked on dozens of local, state and national campaigns, was a key organizer in Pat Robertson’s 1988 presidential bid, and ran for Congress in 1986. Mr. Tate was instrumental in the Paul campaign’s top tier finishes in Nevada and Louisiana.
Mark Elam is a veteran Texas political consultant and a long-time aid to Dr. Paul. Mr. Elam serves as campaign manager to Dr. Paul’s congressional re-election campaign. In 1996, Mr. Elam directed Dr. Paul’s historic victory of Democrat-turned Republican Greg Laughlin in the district 14 congressional race.
“John Tate and Mark Elam bring tremendous leadership and expertise to our campaign,” said Dr. Paul. “Their addition to our management team will help catapult us to even greater heights of success.”
Ron Paul 2008
Clinton endorses McCain?
By Jonathan Martin
Stumping for his wife in South Carolina, Bill Clinton said Hillary and McCain got along just famously.
"She and John McCain are very close," Clinton said, according to CNN. "They always laugh that if they wound up being the nominees of their party, it would be the most civilized election in American history, and they're afraid they'd put the voters to sleep because they like and respect each other."
READ THE REST
Stumping for his wife in South Carolina, Bill Clinton said Hillary and McCain got along just famously.
"She and John McCain are very close," Clinton said, according to CNN. "They always laugh that if they wound up being the nominees of their party, it would be the most civilized election in American history, and they're afraid they'd put the voters to sleep because they like and respect each other."
READ THE REST
Ron Paul Endorsed By Alabama Republican Assembly
Texas Congressman also wins organization’s public straw poll
BIRMINGHAM, January 26—The Alabama Republican Assembly today announced the winner of its Presidential Endorsing Convention held on January 26, 2008 at the Birmingham Marriott.
Delegates from ALRA clubs around the state attended the endorsing convention to select their choice for the Republican nomination. The ALRA requires a 2/3rds majority to endorse a candidate, otherwise no endorsement is made.
Republican Ron Paul succeeded in winning the ALRA endorsement on the 1st round of voting. Former Arkansas Governor Mike Huckabee came in second.
“We congratulate Ron Paul on winning the ALRA endorsement,” said Elaine Little, Chairman of the Endorsing Convention. “It’s evident that the overwhelming majority of delegates determined that Congressman Paul best represents the Republican platform and the conservative values of limited government and personal freedom.”
Little went on to explain that in a crowded field of several candidates, it’s unusual that an endorsement would be won on the first ballot.
The ALRA hosted a corresponding straw poll that was open to the public while the endorsing convention was taking place. The winner of the straw poll, with 81% of total votes cast was Ron Paul, with Mike Huckabee coming in second with 13% and Mitt Romney in third with 6%.
“Ron Paul’s grassroots support is second to none among all other republican campaigns this cycle,” stated attorney Tom Davis, Vice President of the ALRA and delegate to the endorsing convention. “The results of our straw poll parallel the results in most straw polls throughout the country. Ron Paul has clearly excited many new people and energized them to get involved in the political process. The Republican Party should be grateful for all the ‘new blood’ coming in as a result of Congressman Paul’s message of freedom and returning to the Constitution.”
The Alabama Republican Assembly is a grass-roots volunteer organization chartered by the National Federation of Republican Assemblies. The NFRA was founded in 1997 to promote conservative values and principles in the Republican Party.
Ronald Reagan referred to the NFRA as “the conscience if the Republican Party.”
Stephen Gordon at Third Party Watch.
BIRMINGHAM, January 26—The Alabama Republican Assembly today announced the winner of its Presidential Endorsing Convention held on January 26, 2008 at the Birmingham Marriott.
Delegates from ALRA clubs around the state attended the endorsing convention to select their choice for the Republican nomination. The ALRA requires a 2/3rds majority to endorse a candidate, otherwise no endorsement is made.
Republican Ron Paul succeeded in winning the ALRA endorsement on the 1st round of voting. Former Arkansas Governor Mike Huckabee came in second.
“We congratulate Ron Paul on winning the ALRA endorsement,” said Elaine Little, Chairman of the Endorsing Convention. “It’s evident that the overwhelming majority of delegates determined that Congressman Paul best represents the Republican platform and the conservative values of limited government and personal freedom.”
Little went on to explain that in a crowded field of several candidates, it’s unusual that an endorsement would be won on the first ballot.
The ALRA hosted a corresponding straw poll that was open to the public while the endorsing convention was taking place. The winner of the straw poll, with 81% of total votes cast was Ron Paul, with Mike Huckabee coming in second with 13% and Mitt Romney in third with 6%.
“Ron Paul’s grassroots support is second to none among all other republican campaigns this cycle,” stated attorney Tom Davis, Vice President of the ALRA and delegate to the endorsing convention. “The results of our straw poll parallel the results in most straw polls throughout the country. Ron Paul has clearly excited many new people and energized them to get involved in the political process. The Republican Party should be grateful for all the ‘new blood’ coming in as a result of Congressman Paul’s message of freedom and returning to the Constitution.”
The Alabama Republican Assembly is a grass-roots volunteer organization chartered by the National Federation of Republican Assemblies. The NFRA was founded in 1997 to promote conservative values and principles in the Republican Party.
Ronald Reagan referred to the NFRA as “the conscience if the Republican Party.”
Stephen Gordon at Third Party Watch.
The Consumer as the Deciding Factor in Production
Extract from Socialism: An Economic and Sociological Analysis
By Ludwig von Mises
Chapter 31: Economic Democracy
People sometimes maintain that in guarding their own interests entrepreneurs force production in a direction opposed to the interests of consumers. The entrepreneurs have no scruples about "creating or intensifying the public's need for things which provide for merely sensual gratification but inflict harm on health or spiritual welfare." For instance the fight against alcoholism, the dread menace to national health and welfare, is said to be made more difficult because of the opposition "of the vested interests of alcohol capitalism to all attempts to combat it." The habit of smoking would not be "so widespread and so greatly on the increase among the young if economic interests played no role in promoting it." "Luxury articles, baubles and tinsel of all kinds, trashy and obscene publications" are today "forced upon the public because the producers profit by them or hope to do so."[4] It is common knowledge that the large-scale arming of the Powers and therefore, indirectly, war itself are ascribed to the machinations of "armament-capital."
Entrepreneurs and capitalists in search of investments turn towards those branches of production from which they hope to obtain the greatest profit. They try to fathom the future wants of consumers so as to gain a general survey of demand. As Capitalism is constantly creating new wealth for all and extending the satisfaction of wants, consumers are frequently in the position of being able to satisfy wants which formerly remained unsatisfied. Thus it becomes a special task of the capitalist entrepreneur to find out what formerly unsatisfied wants can now be provided for. This is what people have in mind when they say that Capitalism creates wants in order to satisfy them.
The nature of the things demanded by the consumer does not concern the entrepreneur and the capitalist. They are merely the obedient servants of the consumer and it is not their business to prescribe what the consumer shall enjoy. They give him poison and murderous weapons if he wants them. But nothing could be more erroneous than to suppose that products which serve a bad or harmful purpose bring in more than those which serve a good one. The highest profit is obtained from articles for which there is the most urgent demand. The profit-seeker therefore sets about producing those commodities in which there is the greatest disproportion between supply and demand. Of course, once he has invested his capital, it is to his interest to see that the demand for his product increases. He tries to expand sales. But in the long run he cannot prevail against a change of demand. Neither can he obtain much advantage from growth in the demand for his products, for new enterprises turn their attention to his branch of industry and thereby tend to reduce his profits to the average.
Mankind does not drink alcohol because there are breweries, distilleries, and vineyards; men brew beer, distil spirits, and grow grapes because of the demand for alcoholic drinks. "Alcohol-capital" has not created drinking habits any more than it has created drinking songs. The capitalists who own shares in breweries and distilleries would have preferred shares in publishing firms for devotional books, had the demand been for spiritual and not spirituous substance. "Armament capital" did not create wars; wars created "armament capital." It was not Krupp and Schneider who incited the nations to war, but imperialist writers and politicians.
If a man thinks alcohol and nicotine harmful, let him abstain from them. Let him try, if he will, to convert his fellows to his own views on abstinence. What is certain is that he cannot, in a capitalist society, whose basic principle is the self-determination and self-responsibility of each individual, force them against their will to renounce alcohol and nicotine. If this inability to impose his will on others causes him regret, then at least he can console himself with the thought that neither is he at the mercy of the commands of others.
Some socialists reproach the capitalist social order primarily for the rich variety of its goods. Instead of producing uniform products, which could be brought out on the largest scale, people manufacture hundreds and thousands of types of each commodity, and production is made much more expensive thereby. Socialism would put at the comrades' disposal only uniform goods; it would unify production and thereby raise national productivity. Simultaneously Socialism would dissolve separate family households, and in their place provide communal kitchens and hotel-like dwellings; this, too, would increase social wealth by eliminating the waste of labour power in tiny kitchens which serve only a few consumers. Many socialist writings, above all those of Walter Rathenau, have dealt with these ideas in great detail.[5]
Under Capitalism each buyer has to decide whether he prefers the cheaper uniformity of mass production or the greater expense of articles specially manufactured to suit the taste of the individual or the small group. There is unmistakably a tendency towards progressive uniformity of production and consumption through standardization. Commodities used in the productive process itself are daily becoming more standardized. The shrewd entrepreneur soon discovers the advantage of using the standard type—with its lower purchasing cost, its replaceability and adaptability to other productive processes rather than articles produced by a special process. The movement to standardize the implements of production is impeded today by the fact that numerous enterprises are indirectly or directly socialized. As they are not rationally controlled, no stress is laid on the advantage of using standard types. Army administrations, municipal building departments, State railways, and similar authorities resist, with bureaucratic obstinacy, the adoption of types in universal use. The unification of the production of machines, factory equipment and semi-finished products does not require a change to Socialism. On the contrary, Capitalism does this more quickly of its own accord.
It is otherwise with goods for use and consumption. If a man satifies his special, personal taste in preference to using the uniform products of mass production and believes that his satisfaction balances the extra cost, then one cannot objectively prove him wrong. If my friend prefers to dress, be housed, and eat as it pleases him and not to do as everyone else does, who can blame him? For his happiness lies in the satisfaction of his wishes; he wants to live as he pleases and not as I or others would live were we in his place. It is his valuation that counts, not mine or other people's. I may be able to prove to him that the judgments on which he bases his values are false. For example I may demonstrate that the foods he consumes have a smaller nutritional value than he assumed. But if his values have been built, not on untenable views about the relation of cause and effect, but on subjective sentiments and feelings, my arguments cannot change his mind. If, notwithstanding the advantages claimed for hotel life and communal kitchens, he still prefers a separate household because such sentiments as "own home" and "own hearth" weigh with him more than arguments in favour of unitary organization, then nothing further remains to be said. If he wishes to furnish his dwelling according to his personal taste and not according to the public taste which guides the furniture manufacturer, there are no arguments with which to refute him. If, knowing the effects of alcohol, he still drinks it, because he is prepared to pay even dearly for the pleasure it gives him, I may certainly, from the standpoint of my values, call him unwise, but it is his will, his valuation that will decide. If I, as a dictator, or as a member of a despotically ruling majority, prohibit the drinking of alcohol, I do not thus raise the productivity of social production. Those who condemn alcohol would have avoided it without prohibition. For all others, the prohibition of an enjoyment which they value above anything they can obtain by renouncing it means a falling-off in satisfaction.
The contrast of productivity and profitableness, which, as we see from arguments explained in a previous chapter, is valueless for the understanding of the working of production directed to given ends, must lead definitely to false conclusions if applied to the ends of economic action.[6] In dealing with means to a given end, one may call this process or that the more practical, that is, capable of a higher yield. But when we ask whether this or that means gives a greater direct increase of welfare to the individual, we have no objective standards that will serve. Here the subjective will of man is the deciding factor. A man's preference for water, milk, or wine does not depend on the physiological effects of these drinks, but on his valuation of the effects. If a man drinks wine and not water I cannot say he is acting irrationally. At most I can say that in his place I would not do so. But his pursuit of happiness is his own business, not mine.
If the socialist community does not supply the comrades with the goods which they themselves want to enjoy, but with those which the rules think they ought to enjoy, the sum of satisfactions is not increased, but diminished. One certainly could not call this violation of the individual will "economic democracy."
For it is an essential difference between capitalist and socialist production that under Capitalism men provide for themselves, while under Socialism they are provided for. The socialist wants to feed and house humanity and cover its nakedness. But men prefer to eat, dwell, dress and generally to seek happiness after their own fashion.
By Ludwig von Mises
Chapter 31: Economic Democracy
People sometimes maintain that in guarding their own interests entrepreneurs force production in a direction opposed to the interests of consumers. The entrepreneurs have no scruples about "creating or intensifying the public's need for things which provide for merely sensual gratification but inflict harm on health or spiritual welfare." For instance the fight against alcoholism, the dread menace to national health and welfare, is said to be made more difficult because of the opposition "of the vested interests of alcohol capitalism to all attempts to combat it." The habit of smoking would not be "so widespread and so greatly on the increase among the young if economic interests played no role in promoting it." "Luxury articles, baubles and tinsel of all kinds, trashy and obscene publications" are today "forced upon the public because the producers profit by them or hope to do so."[4] It is common knowledge that the large-scale arming of the Powers and therefore, indirectly, war itself are ascribed to the machinations of "armament-capital."
Entrepreneurs and capitalists in search of investments turn towards those branches of production from which they hope to obtain the greatest profit. They try to fathom the future wants of consumers so as to gain a general survey of demand. As Capitalism is constantly creating new wealth for all and extending the satisfaction of wants, consumers are frequently in the position of being able to satisfy wants which formerly remained unsatisfied. Thus it becomes a special task of the capitalist entrepreneur to find out what formerly unsatisfied wants can now be provided for. This is what people have in mind when they say that Capitalism creates wants in order to satisfy them.
The nature of the things demanded by the consumer does not concern the entrepreneur and the capitalist. They are merely the obedient servants of the consumer and it is not their business to prescribe what the consumer shall enjoy. They give him poison and murderous weapons if he wants them. But nothing could be more erroneous than to suppose that products which serve a bad or harmful purpose bring in more than those which serve a good one. The highest profit is obtained from articles for which there is the most urgent demand. The profit-seeker therefore sets about producing those commodities in which there is the greatest disproportion between supply and demand. Of course, once he has invested his capital, it is to his interest to see that the demand for his product increases. He tries to expand sales. But in the long run he cannot prevail against a change of demand. Neither can he obtain much advantage from growth in the demand for his products, for new enterprises turn their attention to his branch of industry and thereby tend to reduce his profits to the average.
Mankind does not drink alcohol because there are breweries, distilleries, and vineyards; men brew beer, distil spirits, and grow grapes because of the demand for alcoholic drinks. "Alcohol-capital" has not created drinking habits any more than it has created drinking songs. The capitalists who own shares in breweries and distilleries would have preferred shares in publishing firms for devotional books, had the demand been for spiritual and not spirituous substance. "Armament capital" did not create wars; wars created "armament capital." It was not Krupp and Schneider who incited the nations to war, but imperialist writers and politicians.
If a man thinks alcohol and nicotine harmful, let him abstain from them. Let him try, if he will, to convert his fellows to his own views on abstinence. What is certain is that he cannot, in a capitalist society, whose basic principle is the self-determination and self-responsibility of each individual, force them against their will to renounce alcohol and nicotine. If this inability to impose his will on others causes him regret, then at least he can console himself with the thought that neither is he at the mercy of the commands of others.
Some socialists reproach the capitalist social order primarily for the rich variety of its goods. Instead of producing uniform products, which could be brought out on the largest scale, people manufacture hundreds and thousands of types of each commodity, and production is made much more expensive thereby. Socialism would put at the comrades' disposal only uniform goods; it would unify production and thereby raise national productivity. Simultaneously Socialism would dissolve separate family households, and in their place provide communal kitchens and hotel-like dwellings; this, too, would increase social wealth by eliminating the waste of labour power in tiny kitchens which serve only a few consumers. Many socialist writings, above all those of Walter Rathenau, have dealt with these ideas in great detail.[5]
Under Capitalism each buyer has to decide whether he prefers the cheaper uniformity of mass production or the greater expense of articles specially manufactured to suit the taste of the individual or the small group. There is unmistakably a tendency towards progressive uniformity of production and consumption through standardization. Commodities used in the productive process itself are daily becoming more standardized. The shrewd entrepreneur soon discovers the advantage of using the standard type—with its lower purchasing cost, its replaceability and adaptability to other productive processes rather than articles produced by a special process. The movement to standardize the implements of production is impeded today by the fact that numerous enterprises are indirectly or directly socialized. As they are not rationally controlled, no stress is laid on the advantage of using standard types. Army administrations, municipal building departments, State railways, and similar authorities resist, with bureaucratic obstinacy, the adoption of types in universal use. The unification of the production of machines, factory equipment and semi-finished products does not require a change to Socialism. On the contrary, Capitalism does this more quickly of its own accord.
It is otherwise with goods for use and consumption. If a man satifies his special, personal taste in preference to using the uniform products of mass production and believes that his satisfaction balances the extra cost, then one cannot objectively prove him wrong. If my friend prefers to dress, be housed, and eat as it pleases him and not to do as everyone else does, who can blame him? For his happiness lies in the satisfaction of his wishes; he wants to live as he pleases and not as I or others would live were we in his place. It is his valuation that counts, not mine or other people's. I may be able to prove to him that the judgments on which he bases his values are false. For example I may demonstrate that the foods he consumes have a smaller nutritional value than he assumed. But if his values have been built, not on untenable views about the relation of cause and effect, but on subjective sentiments and feelings, my arguments cannot change his mind. If, notwithstanding the advantages claimed for hotel life and communal kitchens, he still prefers a separate household because such sentiments as "own home" and "own hearth" weigh with him more than arguments in favour of unitary organization, then nothing further remains to be said. If he wishes to furnish his dwelling according to his personal taste and not according to the public taste which guides the furniture manufacturer, there are no arguments with which to refute him. If, knowing the effects of alcohol, he still drinks it, because he is prepared to pay even dearly for the pleasure it gives him, I may certainly, from the standpoint of my values, call him unwise, but it is his will, his valuation that will decide. If I, as a dictator, or as a member of a despotically ruling majority, prohibit the drinking of alcohol, I do not thus raise the productivity of social production. Those who condemn alcohol would have avoided it without prohibition. For all others, the prohibition of an enjoyment which they value above anything they can obtain by renouncing it means a falling-off in satisfaction.
The contrast of productivity and profitableness, which, as we see from arguments explained in a previous chapter, is valueless for the understanding of the working of production directed to given ends, must lead definitely to false conclusions if applied to the ends of economic action.[6] In dealing with means to a given end, one may call this process or that the more practical, that is, capable of a higher yield. But when we ask whether this or that means gives a greater direct increase of welfare to the individual, we have no objective standards that will serve. Here the subjective will of man is the deciding factor. A man's preference for water, milk, or wine does not depend on the physiological effects of these drinks, but on his valuation of the effects. If a man drinks wine and not water I cannot say he is acting irrationally. At most I can say that in his place I would not do so. But his pursuit of happiness is his own business, not mine.
If the socialist community does not supply the comrades with the goods which they themselves want to enjoy, but with those which the rules think they ought to enjoy, the sum of satisfactions is not increased, but diminished. One certainly could not call this violation of the individual will "economic democracy."
For it is an essential difference between capitalist and socialist production that under Capitalism men provide for themselves, while under Socialism they are provided for. The socialist wants to feed and house humanity and cover its nakedness. But men prefer to eat, dwell, dress and generally to seek happiness after their own fashion.
The Keynesian Corner
By Robert Murphy,
Last Tuesday the Fed announced a surprise rate cut of 75 basis points, the biggest cut in 24 years. Even so, the stock market plunged, with the S&P 500 shedding 1.1% during the session, bringing its total losses to over 10% for 2008.
The Fed has now painted itself into a Keynesian corner. According to old-school Keynesianism, the government faces a Phillips Curve tradeoff. It can adopt a loose monetary policy, which spurs output but leads to price inflation. Or, the government can adopt a tight monetary policy, which keeps prices under control but leads to recession.
The sobering experience of the 1970s demonstrated that this Keynesian orthodoxy was nonsense. Ultimately, printing green pieces of paper doesn’t make a society richer, it just causes prices to rise. Once citizens adjust to the constant injections of new money, unemployment returns along with massive price hikes. Thus the term “stagflation”—meaning double-digit rates of unemployment and inflation—was coined.
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Last Tuesday the Fed announced a surprise rate cut of 75 basis points, the biggest cut in 24 years. Even so, the stock market plunged, with the S&P 500 shedding 1.1% during the session, bringing its total losses to over 10% for 2008.
The Fed has now painted itself into a Keynesian corner. According to old-school Keynesianism, the government faces a Phillips Curve tradeoff. It can adopt a loose monetary policy, which spurs output but leads to price inflation. Or, the government can adopt a tight monetary policy, which keeps prices under control but leads to recession.
The sobering experience of the 1970s demonstrated that this Keynesian orthodoxy was nonsense. Ultimately, printing green pieces of paper doesn’t make a society richer, it just causes prices to rise. Once citizens adjust to the constant injections of new money, unemployment returns along with massive price hikes. Thus the term “stagflation”—meaning double-digit rates of unemployment and inflation—was coined.
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Real Estate Auctions Booming
By Mike "Mish" Shedlock,
The real estate auction business is booming. Real Estate Disposition Corp is auctioning 2,000 homes in California and 575 in DC, Maryland, and Virginia. More states are coming up.
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The real estate auction business is booming. Real Estate Disposition Corp is auctioning 2,000 homes in California and 575 in DC, Maryland, and Virginia. More states are coming up.
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