Fun with Numbers

I like the BFP posts on how much $ the DoD is spending on military contracts. BFP sums up the DoD‘s daily numbers and releases them in a post, each month. Take a look, if you like.

Jan: $15,530,647,963
Feb: $32,625,578,305
Mar: $34,742,395,713
April: $29,177,364,278
May: $13,443,306,335
June: $34,247,537,088
July: $15,136,162,557
Aug: $24,843,125,595

2014: $199,746,117,834

There are about 319 million people in the US. Of course, some of us are paying higher extortion fees than others, but if we assume it’s distributed evenly, then:

$199,746m / 319m people = $626 / person

And we still have 3.5 months of the year left to go. Pretty crazy to think about how much of our “money” is being spent on stuff that, at least, I didn’t consent to.

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Fun with Euphemisms!

If “theft” is when Person A takes something from Person B without Person B’s permission and presumably keeps it for himself, what is it called when Person A does the same thing and gives it to Person C?  Civilized people like us know that it’s called… “giving to the needy.”  General Motors, J.P. Morgan, Bank of America, Citibank, Monsanto, Lockheed Martin, Northrop Grumman, Boeing, and masses of “uneducated, poor people” are all in desperate need and are entitled to that stolen redistribution of wealth, and it’s up to us to ensure that they receive it, no matter what.

[Sarcasm Disengaged]

People with morals and the ability to see through the sleight-of-hand understand that this is really theft, no matter how many parties are involved, and no matter where the money ends up.  Taking something that belongs to another, without their consent, is stealing.  “Taxation,” “spreading the wealth around,” “fulfilling our duty to help those in need,” etc. are just euphemisms for stealing, and if someone thinks it’s acceptable under any circumstances, then he is condoning it.  We could be told that we’re being taxed to save the “too big to fail,” “those who have fallen on hard times,” “the needy,” or “the starving,” and it could all be true, but it is still theft, and saying that it’s ok is still condoning theft.

Maybe someone likes theft.  Maybe the same someone likes murder and thinks it should be legitimized in the eyes of society too.  He and his friends could come up with a great story about how the herd must be thinned for the good of the many to spare scare resources, and then they could then turn it all into an entertainment extravaganza.

Maybe they could take a more subtle approach.  After all, something like this couldn’t be done all at once, because people would realize how immoral it is.  It’d have to be done gradually and given a nice name like “ethnic cleansing”, or the “war on terror,” and they’d have to find a group of people to dehumanize so that the rest of society would go along with it.

What I’m saying, or asking, is: if you support state-sponsored theft, then why not support state-sponsored murder or state-sponsored rape?  They could be given a nice names, like “sunset date” and “genetic diversification.”  In any case, if you think it’s a necessary trade-off, then you’re saying that the ends justify the means.  Then you would have to wonder, is it always true that the ends justify the means?  Under which circumstances is it true and under which circumstances is it not true?  How does one determine when the ends justify the means and when they do not?  Have you honestly considered all options so that you could avoid this concession or do you accept it because it’s mainstream opinion and that’s how things are?  Is it right to accept things because that’s how they are?

The problem is that instead of even getting to the point of rational thinking and being courageous enough to stand by their principles and suffer being different or unpopular, good people are bamboozled and complacent, following the crowd, and aren’t breaking through the mental distortion to see that the state is an unnecessary cancer, destructive by its very nature.  Even when intended for the purpose of good, it is ultimately a force of evil.  We must become fully aware of this and the net goodness of people (or else would humanity still exist?), and opt for liberty and freedom, instead of allowing and using the state to control the actions of others that do not infringe upon anyone’s natural rights.

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Alloys

$> Minimum Wage helps the poor, less skilled, and less fortunate people, right?  If you read the Austrians, you don’t need empirical evidence to conclude that that’s not true.  Here’s Henry Hazlitt in ‘Economics in One Lesson:’

The first thing that happens, for example, when a law is passed that no one shall be paid less than $30 for a forty-hour week is that no one who is not worth $30 a week to an employer will be employed at all.  You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less.  You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering.  In brief, for a low wage you substitute unemployment.  You do harm all around, with no comparable compensation.

So, stories like Jeffrey Tucker’s should come as no surprise.

$> I dug this one up from the 2012 presidential primaries.  Looks like someone made a pro-Ron Paul / anti-everyone else video set to the tune of a song about having flexible values.  (The lyrics are in the description and match up pretty well with the video.)

$> Here are some videos to get you thinking about statelessness and non-aggression.

$> Tom Woods gives a speech on how socialist / centrally-planned economies have trouble maintaining themselves without the signals (like prices) that naturally exist in a free market (i.e. the economic calculation problem).

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Principles

What is the purpose of principles and what happens when people don’t follow them?  I believe that people who don’t follow principles drown in the complications of whatever issue is at hand and tend to defer their thinking to others and to their own feelings and opinions that are not based on reason.

What exactly is a principle?  Merriam-Webster defines it as:

a : a comprehensive and fundamental law, doctrine, or assumption
b (1): a rule or code of conduct (2): habitual devotion to right principles <a man of principle>
c : the laws or facts of nature underlying the working of an artificial device

Wiktionary defines it as:

  1. A fundamental assumption.
  2. A rule used to choose among solutions to a problem.
  3. (usually plural) Moral rule or aspect.

Various sets of principles apply to different aspects of life, including social interactions, engineering, sports, gaming, etc.  Their purpose is to help guide people when making decisions in those areas, especially when they would otherwise be complicated or stressful ones.  Unfortunately, it seems that during these moments, people are most tempted to abandon their guide and think they know better.  It is true that principles aren’t all known by everyone at all times and must be discovered through the teachings of others, study, reflection, and execution and refinement.  However, this doesn’t justify why a person might hold contradictory beliefs when it comes to the initiation of force.

Let’s take a look at what happens when Jan Helfeld asks Reuters reporter Alexandra Goncalves de Oliveira about her principles regarding the redistribution of wealth.

 

Immediately, she is confused, even after Jan repeats the question.  This isn’t damning, but it indicates that she might not spend her spare time thinking about when it is appropriate or not appropriate for people to use force against others.  They then lay out a simple scenario to which she says it is wrong for someone to hold a gun to another person’s head and take their money.  When Jan tries to extend the idea to another scenario, she falls apart and eventually admits (which is rare, so good for her) that she has contradictory beliefs.

Throughout the interview, she says that the issue is “more complicated,” “not so black and white,” not “clear-cut”,  and not “that simple.”  Why is it not so simple?  How does one determine that it is not so simple?  Was the knowledge of its complexity gained empirically or through deduction?  Which assumptions and deductive chains were combined to acquire this knowledge?  Maybe it is so simple, but she and people who agree with her just don’t want to think about it.  I believe people take this “not so simple” approach because they get confused, are intellectually lazy, are trying to shut down your thinking so we can all let the “experts” do the thinking for us, or want to embrace some kind of philosophy where everything that should be falsifiable through critical thinking is only a matter of perspective.  Jan has tons more interview clips like this.

Those of us who hold strongly onto our principles of any kind know that they are not chains to restrict our thinking or actions, but instead are means to silence the distortions that attempt to cloud our judgment and prevent us from understanding the truth or succeeding.  If people don’t hold true to their principles, they are giving themselves wiggle room to believe or disbelieve in whatever they want.  When interacting with these people on the topics of political ideology and economics, even when we disagree with them, we should help them follow through their principles and beliefs until they see that they are untenable and contradictory.  Then, we must offer the alternative of non-aggression, liberty, and free markets.

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Alloys

$> “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.” – Nobel Laureate, Dr. Paul Krugman.  Amazon?  Paypal?  eBay?  Being able to talk, share data, or play the same computer game with people half way across the world, instantaneously? Being able to watch or listen to almost anything you want, at anytime?  Meh.  Fax machine.

$> Group of people kidnaps 46-year-old-man and threatens to hold him hostage for 25 years for engaging with said group’s under-cover informant / rat in the voluntary exchange of prescription medication for counterfeit currency assumed to be “Federal Reserve Notes.”  Group presumably justifies action by claiming it was for the protection of the people (especially “the children”) who reside within the 3,536,294 mile2 area over which it asserts authority.

$> Given this week’s mega-drama regarding the Bob Wenzel and Stephan Kinsella IP debate, I thought my discovery of this clip of Karl Bartos (formerly of the very influential band, Kraftwerk) saying that musicians should “copy” others’ music, was great timing and pleasantly surprising.  The melody he’s referring to is the main melody in the song “Computer Love,” (1981) which you may recognize from the Coldplay song “Talk.”

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Book Review: What Has Government Done to Our Money?

What has Government Done to Our Money?’ by Murray N. Rothbard is a brilliant, to-the-point book that lays out the basics of exchange, from barter to money, and how the members of government, from monarchies to democracies, have repeatedly seized control of its supply and debased it for their own purposes throughout history.  He pays special attention to the Western transition from the classical gold standard to the fiat currencies of today.

Having read parts of this book before, the sections that intrigued me the most this time were related to the “price of money” and how changes in supply via specie debasement or fractional reserve and central banking affect the prices of goods in the market.  The term “price of money” may seem confusing, but it becomes clear if instead of thinking about prices as the amount of money that will exchange for one unit of a particular good, you think about the amount of goods that will exchange for one unit of money.  In other words, if the price of a cup of coffee is $4, a board game is $40, and a book is $20, etc., you could say that one dollar is equal to 1/4 a cup of coffee, 1/40 a board game, or 1/20 a book, etc.  As Rothbard puts it, the price of money is an “array of the infinite number of exchange-ratios for all the various goods on the market.”  Rothbard continues by stating that the price of money is determined in the same way as all other goods – by supply and demand:

What determines the price of money?  The same forces that determine all prices on the market – that venerable but eternally true law: “supply and demand.” … In the case of money, “demand” means the various goods offered in exchange for money, plus the money retained in cash and not spent over a certain time period.  … “Supply” may refer to the total stock of the good on the market.

Using the standard supply and demand curves, we can see graphically (haha) what it means to increase the money supply and butcher the purchasing power (equilibrium) of money.

Supply Shift of Money

When the supply of money is increased, the purchasing power is decreased.

This clearly shows how an increase in supply (S1 to S2) decreases the purchasing power of money.  It shouldn’t be hard to visualize that an increase in demand results in an increase in the purchasing power.  Here’s Rothbard on supply, demand, and inflation:

… while a change in the price of money stemming from changes in supply merely alters the effectiveness of the money-unit and confers no social benefit, a fall or rise caused by a change in the demand for cash balances [savings] does yield a social benefit – for it satisfies a public desire for either a higher or lower proportion of cash balances to the work done by cash. … People will almost always say, if asked, that they want as much money as they can get!  But what they really want is not more units of money – more gold ounces or “dollars” – but more effective units, i.e., greater command of goods and services bought by money.

What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital.  Multiplying coin will not whisk these resources into being.

Inflation has other disastrous effects.  It distorts that keystone of our economy: business calculation.  … Almost all firms will seemingly prosper.  The general atmosphere of a “sellers’ market” will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality. … Inflation also penalizes thrift and encourages debt…  Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of “prosperity.”

Here are a few more quotes of interest regarding government involvement in the money supply.

Governments, in contrast to all other organizations, do not obtain their revenue as payment for their services.  Consequently, governments face an economic problem different from that of everyone else.  Private individuals who want to acquire more goods and services from others must produce and sell more of what others want.  Governments need only find some method of expropriating more goods without the owner’s consent.

If government cannot be trusted to ferret out the occasional villain in the free market in coin, why can government be trusted when it finds itself in a position of total control over money and may debase coin, counterfeit coin, or otherwise with full legal sanction perform as the sole villain in the market place?  It is surely folly to say that government must socialize all property in order to prevent anyone from stealing property.  Yet the reasoning behind abolition of private coinage is the same.

The sections on the monetary breakdown of the West, and in particular the classical gold standard, are enlightening as well.  A key thing to keep in mind when learning about the classical gold standard is that Western currencies were defined as particular weights of gold.  In the same sense that 1 inch is 2.54 cm or 1 mile is 1.60963 km, 1 dollar was defined as 1/20 an ounce of gold and the pound sterling was defined as about 1/4 an ounce of gold.  Governments’ promises to pay people in gold for their currency bound their hands and prevented them from going nuts with inflation (or else gold would flow out of the country as trade deficits developed), as long as they stayed on the gold standard.  (As a side note, the gold standard did not fail.  Members of government are the ones who failed because they did not live up to their promises of honoring the gold standard.)

‘What Has Government Done to Our Money?’ is a great starter for a newbie Austrian and anyone interested in taking a step back from the confusion generated by mainstream pundits and getting a logical perspective of what money is and what happens when governments get control of the money supply.  It’s free in .pdf and .ebook at mises.org.

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