Voice For Liberty

Tag: Free markets

  • Efforts to Regulate ‘Wild West’ Markets are Long Overdue

    A Christian Science Monitor article Efforts to regulate ‘Wild West’ markets are long overdue contains a number of misstatements.

    For one thing, characterization of the American West as “wild” in the sense that mayhem prevailed, and that life and property were not safe, is not correct. An article in the Journal of Libertarian Studies titled An American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West tell us this:

    The West during this time often is perceived as a place of great chaos, with little respect for property or life. Our research indicates that this was not the case; property rights were protected and civil order prevailed. Private agencies provided the necessary basis for an orderly society in which property was protected and conflicts were resolved. These agencies often did not qualify as governments because they did not have a legal monopoly on “keeping order.” They soon discovered that “warfare” was a costly way of resolving disputes and lower cost methods of settlement (arbitration, courts, etc.) resulted. In summary, this paper argues that a characterization of the American West as chaotic would appear to be incorrect.

    The article quotes E.J. Dionne as saying “A well-functioning capitalist system relies on clear rules.” Very true, but there are two rules that anyone can understand that are in danger of being overturned. First, if you borrow money, make sure you understand the terms of the loan and are prepared to repay the loan as required. Second, if an institution such as a pension fund buys repackaged securities (like subprime loans) without understanding the risks, they shouldn’t expect others to make good their losses. These two clear principles or rules are in danger of being overturned.

    If they are overturned, then we might ask Mr. Dionne just what rules can be trusted to be clear?

    This article also states: “The oddity of today is that a Republican administration is pushing an expansion of government regulation.” If the author of this article did a little research, he would learn that regulation has increased rapidly in recent years. According to the Heritage Foundation” “Despite the claims of critics — and some supporters — of the Bush Administration, net regulatory burdens have increased in the years since George W. Bush assumed the presidency. Since 2001, the federal government has imposed almost $30 billion in new regulatory costs on Americans. About $11 billion was imposed in fiscal year (FY) 2007 alone.”

    If we look at the root causes of this crises, we would understand that excessive government control in the form of the Federal Reserve is largely responsible for this crisis, such that it is. Now government calls for even more power to solve the problem that it created. These extra powers, pitched to the public as necessary to deal with some current emergency, rarely disappear after the emergency has passed. Instead, they live on as a permanent part of expanded government.

  • Defending the American Dream, or RightOnline in Austin 2008

    I just returned from Austin, Texas, attending a conference put on by Americans For Prosperity partnering with Sam Adams Alliance, Heritage Foundation, Leadership Institute, and Media Research Center. Thank you to my friend Erik Telford for inviting me to this conference.

    We had some great speakers. Robert Novak is a favorite person of mine. I devoured his autobiography The Prince of Darkness: 50 Years Reporting in Washington last year. He told us that he believes the Republicans will lose seats in both houses of Congress, but the presidency can be won. Also: “I like Ron Paul (cheers)…but not for President” (Thanks, Nic Hall, for reminding me of this.)

    I always like listening to Tim Phillips, president of Americans For Prosperity. He told us it’s important to let the few “good guys” in government know that we stand behind them, and conferences like this are one way to do that.

    Stephen Moore of the Wall Street Journal told us, and it is reported today in the opinion piece Their Fair Share that Americans with income above the median paid 97.1% of all income taxes. Barack Obama doesn’t think that’s enough. This reminded me that we have two classes of people in America: tax payers, and tax consumers. Regarding the death tax: “No taxation without respiration.”

    Steve Lonegan of AFP in New Jersey has an inspiring life story about overcoming blindness as a young adult. The state wanted him to become a client and go to vocational training (to be a basket weaver, he said), but instead he earned an MBA degree.

    Grover Norquist: “The left are not friends. The are a band of competing parasites.” Also: “Republicans who raise taxes are rat heads in Coke bottles.”

    Michelle Malkin is an inspiration to me. Did you know, I believe she said, that Gen. Wesley Clark whines about the “right wing freak machine”?

    Bob Barr, the Libertarian party candidate for president, spoke at a reception. One of his topics? How he introduced the articles of impeachment against Bill Clinton. This is inspiring? Although he did say “Libertarianism lies in the heart of every American.”

    It’s always interesting to me to see how these speakers are different in person from when they’re on television. My friend Maggie Thurber at Thurber’s Thoughts has some more good remarks on the speakers.

    A few things that I learned:

    It takes a long time to drive from Wichita to Austin! And, at a time when some are urging a return to the 55 mph speed limit, I saw little observation of the current 70 mph speed limit. Even when I drove for a while at 75 mph, people passed me like I was standing still.

    Why is the term changing from “global warming” to “climate change”?

    Ask readers to take action on your blog. Then, after taking action — maybe making a telephone call or writing an email — have readers write a comment about it so others can learn what happened.

    I learned more about media bias and how to spot it.

    One speaker said that the combined circulation of small newspapers is equal to the circulation of large newspapers.

    Personally, I reconnected with some blogger friends that I first met at Samsphere in Chicago earlier this year, a friend I had met at Mises University last year, plus some Facebook “friends” who I had never met in person.

    I also got a glimpse at the power of Twitter combined with a mobile device like a Blackberry. I may have to get one.

    I had thought I would be able to produce an abbreviated Kansas Blog Roundup on Friday, but with all the activity, I didn’t have time.

  • Defending the American Dream Summit, Austin, Texas

    Later this week I’ll be traveling to Austin, Texas to attend Americans For Prosperity’s Defending the American Dream Summit, also known as RightOnline Summit.

    There will be many excellent speakers, including a favorite person of mine, Robert Novak, whose recent autobiography The Prince of Darkness: 50 Years Reporting in Washington I highly recommend.

    Naturally, I’ll be blogging from this event. It’s possible that the weekly Kansas Blog Roundup might be delayed.

    Also taking place in Austin at the same time is the Netroots Nation Convention (formerly known as YearlyKos), so hopefully this gathering of the “nutroots” will be balanced by the concentration of conservative and libertarian activists at the event I’ll be attending.

  • Drug Runaround: Solved by Universal Health Care?

    A letter writer in the July 12, 2008 Wichita Eagle has issues with his health insurance coverage, and wants us to discard our present system in favor of universal health care coverage.

    Mr. Ronald Voth of Halstead (a candidate for the Democratic party nomination for the U.S. House of Representatives for the fourth district of Kansas in 2006) criticizes the health insurance company he uses. He doesn’t say how he obtained this coverage, but if he’s like most Americans that don’t receive their health care from the government, he and his family probably have an insurance policy selected and paid for by his employer. While many employers let their employees choose from a few variations of coverage, for most employees, they have to take what their employer is willing to provide. There isn’t much of a market for individual health insurance policies in America.

    If there were a large market for private health insurance, customers would have the benefit of companies competing for your business in free markets. This means that if Mr. Voth doesn’t like the coverage he’s getting from his current provider, he can change. But for most people whose policies are provided and largely paid for by their employers, switching insurance carriers is not a realistic option. This employer-provided coverage, a relic from the circumvention of World War II price controls, results in less competition for customers.

    With market-based competition comes innovation. With universal health care provided by government comes the opposite. I wonder if Mr. Voth knows that Canadians come to places like Wichita to get the health care they can’t get under their universal system? See Wichita’s Galichia Provides What Government Health Care Doesn’t.

    Mr. Voth claims that universal care systems in other countries are cheaper than ours, and that’s true. But we should ask why. The article referenced below states: “… because the U.S. is so much wealthier than other countries, it isn’t unreasonable for it to spend more on health care. Take America’s high spending on research and development. M. D. Anderson in Texas, a prominent cancer center, spends more on research than Canada does.”

    (By the way, the high cost of health care can’t be blamed on high-paid CEO’s. If the CEO of a large insurance company that has 10 million customers is paid, say, $100 million a year, that’s only $10 per customer per year.)

    For more information about universal health care in other countries, the article The Ugly Truth About Canadian Health Care provides balanced criticism of the Canadian health care system.

  • Where’s Leadership on Oil Speculation?

    In the July 12, 2008 Wichita Eagle, Kenneth James Crist of Wichita blames oil speculators for ruining the U.S. Economy, writing that politicians should “do something positive to halt the rampant speculation in the stock market and oil futures that is really driving these runaway prices. All it really amounts to is tremendous greed on the part of a few, at the expense of the many.”

    I wish that Mr. Crist had read Futures Markets by the economist Walter E. Williams before writing this letter. In this article we learn this:

    The futures market, which takes into account both the present and the future availability of goods, is a vital part of a smoothly functioning economy. Unfortunately, that fact provides little comfort to people frustrated over the high prices of food and fuel. As such, it provides fodder for political demagogues, charlatans and quacks who rush in with blame and prepare “solutions” for the problems they themselves have created — the high prices for food and fuel are directly linked to the policies of the White House and Congress.

    That’s right. Futures markets — that’s where speculators buy and sell — provide a valuable service by assuming risk that others are not willing to take on, and by smoothing the price of commodities over time. Speculators assume risk. That is their essence. They may make huge profits in their leveraged trades, but they also bear the risk of, and the actual realization of, equally huge losses when their guesses are wrong.

    That illustrates an often overlooked property of futures markets. For one person — the “evil” speculator — to bet on the price of oil going up, someone has to take the opposite position, betting that the price will fall. Both can’t be right. One wins and the other loses. Is there sympathy for these speculators that lose in these trades?

    The action of a speculator taking a “long” position in markets is to buy low and sell high. This benefits consumers in the long run. By buying when prices are low, the speculator does cause prices to rise and be higher that they would be without the speculator’s buying. Then, selling when the price is higher, the speculator causes the prices to be lower than it would be if not for his selling. This is how the speculator smooths prices and assumes risk.

    Speculators can’t wait too long, either. From Greedy Speculators? published at the Cato Institute:

    The current political charge is, “the speculators are driving up the price of oil.” But think about it for a moment. If the price of oil is being driven above the market clearing price where supply equals demand, demand will fall and the speculators will be stuck holding huge, unintended stocks of oil. Holding oil in tanks and ships is costly, and speculators will not incur these costs for long, so the price will drop.

    We need to recognize the valuable role that speculators play in our economy. By focusing on an easy target, we fail to look elsewhere to find the true causes of our problems.

    For more information on the valuable role that speculators play in the economy, see chapter 22 of Walter Block’s book Defending the Undefendable.

  • Wichita Old Town Warren Theater Public Hearing Remarks

    From John Todd.

    Testimony I presented before the Wichita City Council on July 1, 2008 in opposition to the proposed Old Town Warren Theater LLC loan.

    The question before the council today relates to the proper role of government.

    I believe the role of government is that of acting as a non-partial judge from the sidelines, protecting the rights and property of all citizens, through the rule of law, and not acting as a participant in any activity, particularly economic, that places it in a partnership role with one group of citizens to the exclusion of all others. When government becomes an active participant in economic activity or acts as an agent for one party to the exclusion of other citizens, it abdicates its proper role of providing the legal framework and physical security needed for private economic activity.

    The dilemma our city faces today is a result of its participation in an economic activity that it should never have been involved in, in the first place. For starters, our city government needs to divorce itself from further involvement with the Old Town Warren Theater project for a number of reasons.

    Our city is not a bank, and the proposed loan being discussed today is an inappropriate role for city government.

    If the Old Town Theater group is facing financial problems, they need solve those problems without help from the public treasury. Based on what I have read about the principals in this group, I believe they possess the management talent and skills to succeed without public assistance.

    The beautiful thing about the free-market is the freedom for a business enterprise to succeed and enjoy the fruits of that success. By the same token, a business should be allowed the freedom to fail, and suffer whatever consequences that brings. Thousands of other businesses across our city play by those same rules every day without the government parachute or the backing of the public treasury that is being proposed for this private group. The Old Town Theater project owners should be no exception to these rules.

    I talk daily to other people in our city and have found no public support for the Old Town Theater loan, and, in fact, I have been surprised at the high level of outrage people are expressing towards this proposal.

    I request that you vote NO for this project. I believe, by voting NO, you will be exercising the will of your constituents and the public, and will be exercising the stewardship they expect from you as their elected officials.

    P.S. After a strong lecture from Mayor Carl Brewer about the economic advantages of public/private partnerships like Old Town, the council voted 6-0 to grant the Old Town Warren Theater loan with Council Member Jim Skelton abstaining from the vote.

    NOTE: I had the following material ready for presentation, but decided not to be too philosophical with the council so I did not present either.

    I believe a quote by 18th Century French economist Frederic Bastiat, is appropriate for today’s discussion when he was describing the socialism that permeated his native France when he said, and I quote: “The state is that great fiction by which everyone tries to live at the expense of everyone else.” I believe Bastiat would describe the work of today’s city council as legal plunder or the use of political power to redistribute wealth from others what they are unwilling to obtain through the voluntary exchange in the marketplace.

    To paraphrase a statement made by President Cleveland prior to 1900 when he was called upon to save a struggling orphanage in New York City during a severe economic crises. He said something to the effect, that “I cannot be a party to taking money (from the public treasury) from one group of citizens and give it to another group of citizens, no matter how worthy the cause, it is the responsibility of citizens to support their government, it is not governments responsibility to support its citizens.”

  • Price Controls Will Harm Iowa

    In the article Price Controls Create Man-Made Disasters we learn that although the Iowa attorney general has imposed Iowa’s anti-price-gouging rule (Price-gougers beware, Attorney General says), the likely effect will be “shortages of needed supplies, long lines, delayed repairs, and, perhaps, increased incivility.”

    The price system is very good at allocating scarce resources. That’s certainly the case after natural disasters, where things as necessary as drinking water may be in short supply. Allowing the price of even essential items rise to high levels means that hoarding is discouraged, leading to more widespread availability of goods as necessary as drinking water.

    Officials appear humanitarian when they impose anti-price-gouging measures, but this is just another example of the actual effect of something being very different from the intended effect.

  • A Believer in Good Government Programs

    An audio version of this post is available here.

    A Mr. Greg Abbott of Clearwater, Kansas makes the case in the June 13, 2008 Wichita Eagle that there are many good government programs: the interstate highway system, the post office, the air traffic control system, police and fire departments, etc.

    I believe the writer makes a huge error in logic by assuming that because these programs exist and have been provided by government, then they are good things to have, and that these things can only be provided through government. To make this conclusion requires a huge leap and a good measure of misplaced faith in the institution of government.

    Many of the programs the writer cites as examples of good government programs are frequently criticized. The interstate highways in our nation’s cities are often congested to the point where loss of time spent stuck in traffic is a serious problem. Then there is the problem of safety of the nation’s highways, on which some 40,000 people die each year, and many more are seriously injured. Walter Block writes “As far as I am concerned, [these deaths are] taking place in spite of, not so much because of, the actions of the National Highway Traffic Safety Administration, despite their tendency to take credit for anything positive that happens on their watch, as do all statist agencies.” I recommend his article Deaths by Government: Another Missing Chapter.

    The post office? Do many people rely on the post office for delivery of critical shipments when private alternatives such as FedEx and UPS are available?

    As for flood control, the federal government’s flood insurance program, by suppressing signals that would be expressed in the price system as insurance premiums, if there was indeed a free market for such insurance, has lead to numerous deaths. Ask the residents of New Orleans how they feel about government levees and government flood insurance. See How Government Insurance Destroyed New Orleans.

    Need I continue? Each government program Mr. Abbott mentions has severe problems, and most crowd out efforts by private enterprise to provide alternatives.

    There is a truth in the writer’s letter in this sentence: “We need to wake up and realize that we all depend on the government.” That this is true is profoundly sad. Government, Mr. Abbott, operates through force and coercion. Wouldn’t it be better if we could solve problems and provide services through the voluntary cooperation of people?

  • The smoking ban in Wichita

    Some commentary regarding Wichita’s half-passed smoking ban that I received.

    University of Kansas School of Medicine professor Dr. Rick Kellerman is on the front page of the May 30 Wichita Eagle. Kellerman is upset that a complete ban on smoking is not expected to be adopted by the city council at their June 3 meeting.

    Who appointed Dr. Kellerman to be Wichita’s doctor? The doctor’s elitist and authoritarian statement in today’s Wichita Eagle indicates that he is either trying to become the 21st century version of the Prohibition era’s Carrie Nation or the 20th century’s version of the infamous Nurse Ratched (see Ken Kesey’s classic One Flew Over the Cuckoo’s Nest) for improper behavior. The arguments that Kellerman uses could also be used to ban everything from firearms, cars, risky behaviors from hang gliding to bungee jumping, and a host of activities that free people exercising their freedom in a responsible way may decide to engage in performing.

    While it is a common leftist trait to call their political opponents “fascists” it is a historical fact that the most famous anti-tobacco and anti-smoking advocate in the first half of the 20th century was Adolf Hitler, who was happy to use his tyrannical powers to impose his will upon his subjects. This was (and is) part of the authoritarian elitism that underlies all totalitarian ideologies.

    Dr. Kellerman’s desire to follow in these footsteps here in Wichita as part of his campaign to destroy individual liberty, property rights for individuals and business owners, as well as broadly restrict human freedom. Dr. Kellerman knows better than the peasants what is good for us.

    Obviously this arrogant professor has never read Thomas Sowell’s the Vision of the Anointed, a book that describes Kellerman’s ideology and elitist arrogance perfectly. The same issue of The Wichita Eagle has a small story about how California’s state senate has passed a ban on smoking within one’s own apartment. Friendly fascism of the nanny state elitists like Dr. Kellerman are active all across this country.