Better Sold

You say goodbye right now
I'll still survive somehow
Why should we let this drag on?
--Tom Petty

The wedge pattern forming in the major indexes went the way of the banks--lower.

Until proven otherwise, rallies (such as today's morning lift) are better sold than bought.

position in SPX

HBD Mises

"Scientific criticism has no nobler task than to shatter false beliefs."
--Ludwig von Mises

On this day in 1881, one of the greatest economic and social science minds in history was born.

 

HBD Ludwig von Mises.

Watermelon Socialism

Another promise fallen through
Another season passes by you
--Big Country

In the previously discussed article by Tom DiLorenzo, TD also observes that, after the collapse of socialist states in the 1980s, many socialists took the advice of ecologist and one-time presidential candidate Barry Commoner.

Commoner suggested that socialists no longer advocate central planning in the name of "the people." Few people would likely climb aboard to support a vision that was falling apart in the Soviet Union and elsewhere. Instead, he advocated central planning in the name of "saving the planet" from capitalism.

Good idea, said the socialists. We can change our stated means to obtain the same ends. That will get people on board.

And watermelon socialism was born. Green on the outside. Red on the inside.

Paradox of Common Good

In violent times
You shouldn't have to sell your soul
In black and white
They really, really ought to know
--Tears for Fears

Tom DiLorenzo discusses the farce of 'the common good' in lieu of recent dicta from Pope Francis. In the political context, the common good implies unanimity. There is no such thing as unanimity in politics--or in life for that matter where diversity is axiomatic. If everyone agreed on a course of action, then there would be no need for government coercion. There would be no need for government to enforce the common good.

Politics is better viewed as activities seeking to benefit some at the expense of others--of using force rather than personal effort and voluntary cooperation to get what one wants.

DiLorenzo observed that the common good concept can be traced to Jean-Jacques Rousseau, whose The Social Contract (1762) and other works provided a foundation for the intellectual development of communism. Rousseau argued that the common good was something that only the elite in society could recognize. This special knowledge gave the elite the right to impose their will on all others.

So, the common good is known only to a few. And it requires force in order to implement.

Quite the paradox.

Capitalism and Environment

I need to laugh
And when the sun is out
I've got something I can laugh about
--The Beatles

As observed here, the notion that capitalism destroys the environment is mistaken. In dirt poor countries, people scratch out enough resources each day to survive. If that means dirtying the environment to do so, then it will occur.

As affluence increases via capitalism, more resources are available for environmental quality. Moreover, buyers in the market will demand cleaner water, air, etc. as they become more prosperous.

The relationship between wealth and environmental quality is straightforward to explain in theory and overwhelming in empirical evidence.

Threat to Liberty

"Why should I trade one tyrant 3000 miles away for three thousand tyrants one mile away? An elected legislature can trample a man's rights as easily as a king can."
--Benjamin Martin (The Patriot)

Gallup poll reinforces 10+ year trend in concerns among Americans that government poses "an immediate threat to the rights and freedoms of ordinary citizens. Currently about half share that view, up from less than 1/3 in 2003.

Not surprisingly, political party affiliation influences perception here.

Too bad this survey has not been conducted since the founding the United States. Viewing levels and trends over a longer time period would prove even more interesting.

Empty Promises

Second time around
I'm still believing
Words that you said
--Naked Eyes

Annual family health insurance premiums have increased nearly $5000 on average since 2008. In 2008, President Obama promised, "We will start by reducing premiums by as much as $2500 per family."

Another completely predictable empty promise. Initiated by Medicare and Medicaid, Government spending as a percent of total health care spending has increased from about 10% in 1960 to nearly 50% today.

An axiom that reveals itself on the road to truth: Increased government involvement in a market always raises prices.

The natural tendency of unhampered markets is just the opposite.

Ditch Zero

Stretched by fewer thoughts that leave me
Chasing after my dreams disown me
Loaded with danger
--The Fixx

Bill Gross argues that central bankers should ditch zero interest rate policy (ZIRP) but quick. Why? "Because zero bound interest rates destroy the savings function of capitalism."

Indeed, it should be obvious that without savings to provide capital for investment, there is no capitalism.

ZIRP is hurting mainstream Americans. People are less prone to save and invest in their future when interest rates are low. As Gross observes, "They are not so much in a pickle barrel as they are on a revolving spit, being slowly cooked alive while central bankers focus on their Taylor models and fight non-existent inflation."

Gross is wrong about inflation. Thru ZIRP policies, central banks have increased money supply by trillions--the essence of inflation. This inflation has increased wealth disparity as it has promoted higher security prices while slowly devaluing dollars in the wallets of the masses.

Ditching ZIRP increases savings and economic growth and reduces inflation.

Helping the Poor

Feed the babies that don't have enough to eat
Shoe the children with no shoes on their feet
House the people livin' in the streets
Oh, oh, there's a solution
--Steve Miller Band

Related to the previous post, nice comparison of the force vs freedom alternatives for helping the poor.

To improve the accuracy of the Big Government panel, the pic should show guns being pointed at people up top being forced to produce food for those below.

Why Prosperity?

"Your grandfather scratched the mill out of the naked earth."
--Mary Rafferty (The Valley of Decision)

The dicta of Pope Francis includes blaming capitalism for many problems of the poor. Capitalism is seen as creating or extending conditions of poverty among "the poor."

Thomas Sowell observes that review of history shows that it is not poverty that needs explaining. We know why poverty exists. It is the default condition of the human species due to axiomatic scarcity.

Instead, what needs explaining is prosperity. Prosperity stems from production--the combination of labor with other factors of production to generate goods and services that, through their consumption, alleviate scarcity.

But how to determine which goods to produce and how to get them to market? In socialistic systems bureaucrats make those decisions for consumers. In capitalistic systems it is the consumers themselves who guide production and distribution decisions. It should be apparent that people making their own choices and voluntarily cooperating with others are superior to central planners when determining what production enhances prosperity.

It is capitalism that explains man's climb out of poverty into more prosperous conditions. Capitalism enlarges the economic pie much more effectively than alternative designs.

The Pope suggests that the best way to help the less fortunate is to forcibly cut them a bigger slice of pie. But which has a better track record of helping the less fortunate over time: fighting for a bigger slice of pie, or producing a bigger pie?