Your Questions Answered: Why Can’t Intervention Fix Capitalism’s Flaws?

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Jared Miller May 22, 2017

One of the worst side effects of this conversation is that most often interventionist policies create exactly the conditions which they claim to prevent. One of the other worst is that people begin to assume, at least to some degree, that legal and moral are interchangeable terms. I’ve been studying on my own for several years now, and so far I haven’t seen many examples of capitalism causing more problems than interventionism/crony corporatism.

Of course, interventionism and cronyism do often go by more appealing names, but they are still the same thing. There is a trend in recent years to refer to anything “good” a government does as Socialism. But socialism is not simply the act of paying for services with tax money, nor is it bringing about some broad moral reformation through government intervention. It is something much more specific. Socialism is when the government owns all means of production. There are plenty of examples of government activity that are not socialist in nature. Military and rule of law aren’t socialist. Taxes for national defense and public safety aren’t socialist. Prevention of fraud and exploitation, and even certain kinds of environmental protection, aren’t socialist.

 

What we really have is not socialism, or even capitalism. What we currently have is crony corporatism; a system whereby businesses are able to lobby government for special treatment. This leads to a lack of competition since it keeps new businesses from entering the market. Competition keeps profit margins thinner, often boosts wages (contrary to popular belief), and diminishes the wealth gap while also increasing income mobility (the ability to increase your income over time). Any policy that prevents or hinders competition damages the lower and middle classes. These policies make the very thing they supposedly claim to be trying to prevent into an absolute certainty.

“But depressions!!”
Our depression was caused by a glut of cheap credit, which made it a common practice to borrow money in order to invest it. That cheap credit was caused by intervention; specifically the federal reserve manipulating interest rates. After the recession began, the fed also started shrinking the money supply, further exacerbating the already delicate situation. Even if they had done everything right, just the existence of the Fed caused some damaging distortions. Before the fed, large banks would intervene on behalf of the smaller banks in order to limit the effects of financial panics and protect their own bottom line. After the fed, the large banks no longer saw this as their responsibility. As a result, more small banks failed, causing a snowball effect that eventually harmed the large banks too. Similar causes can be found for our more recent recessions as well. The dot com bubble and the housing market bubble were both at the very least amplified to disastrous proportions by bad monetary policy and interventionist legislation. Without them, that particular market may have hit hard times, but they would not have become national, systemic failures.

 

“But child labor!”
Child labor was already by and large a thing of the past when the legislation outlawing it was passed. Don’t get me wrong, if regulation actually had the power to end that kind of thing, then that’s exactly what it should be doing. But in places where child labor happens, it’s because the entire economy is underdeveloped. It’s not a choice between work and school, it’s a choice between work and prostitution, or worse. Kids don’t work because corporations are greedy. Kids work because avoiding homelessness and starvation is more important than education. No law will change that. It just eliminates their only legal means of helping their families survive. And it’s the same with the rest of the labor market. But don’t take my word for it:

 

Video: “THE UNBELIEVABLE TRUTH ABOUT SWEAT SHOPS.”

https://m.youtube.com/watch?v=O2sW2wt3nLU
(Note: this video isn’t supposed to give the full argument, it’s just an introduction to the topic by someone who has spent most of his career studying this specific subject)

“But Monopolies!”

There are very few, if any, examples of big businesses having that kind of power without getting it from the government. The natural business cycle is such that virtually never does a business accumulate monopolistic power without appealing to organized force to eliminate the competition. Instead, legislators are either manipulated or outright bribed into passing legislation that favors one business over another. Often it is with the best of intentions. Even safety and environmental regulations are often pushed by the industries they are being levied against. Usually, there is some moral or humanitarian motive attached to these new restrictions as a means of gaining support, feeding off of the idea of government as a moral force in order to manipulate the masses into voting against themselves in favor of corporate interest. But here’s the trick: the big guys usually already follow those guidelines, and the startup business has no hope of implementing that kind of infrastructure before they even start production. The manufacturing world is overrun with precisely this style of protectionism. Incidentally this is also one invisible factor that leads to more production overseas, and less domestically. Of course, not all regulation comes from corporate interest or emotional manipulation, but the result is the same nonetheless. We may argue about what level of market distortion we are comfortable with in order to promote the wellbeing of the worker, but we cannot ignore its existence. That is how monopolies happen, and it’s how they stay monopolies.

 

Video: “IDENTIFYING A MONOPOLY: IT’S MORE THAN JUST MARKET SHARE.”

https://www.policyed.org/intellections/identifying-monopoly-its-more-just-market-share/video
(Once again, just a brief introduction to the topic.)

When we say markets are self regulating, we don’t mean that abuse cannot happen. What we mean is that in a free market those who do abuse people are not protected from the consequences of that abuse. As long as there is a law or regulation, there will be someone with deep pockets and great lawyers looking for ways to exploit it or modify it to their advantage. There will always be a politician to bribe who can find ways to prevent a corporation’s competition from ever existing. Without organized force to hide behind, having piles of cash can’t make people buy your product, or use your service. It can’t prevent someone else from starting their own business to do it better.

By putting the economy in the hands of government, we are not preventing people from being exploited. We are ensuring it. That is why communist and socialist countries always develop a wealthy ruling class, and the rest of their citizens suffer. We don’t have to debate that fact. It is what has historically happened every single time.

The interventionists are half right though… free markets don’t make people more moral, and they don’t keep rich people from being assholes. But neither does government. It just gives them hired guns (law is force imposed at the point of a gun), and the power and authority to use them. Only with the backing of the law also comes the assumption that their actions are somehow right or just simply because they are executed through the mechanism of the law.

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Your Questions Answered: Should You Bake the Cake?

 

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Emily Miller Jocham, April 24, 2017

To say the 2016 presidential election season was ugly is a vast understatement. Democrats were self destructing; Republicans had 67 candidates (at least it seemed); Libertarians were at odds over…cake. And other things, but mostly cake.

There was a spirited debate among libertarians over this question: If someone wants you to bake their cake, do you have to bake it? The context for this question was provided mostly by the Oregon bakery Sweet Cakes by Melissa and their refusal to bake a cake for a lesbian couple in 2013, citing their religious beliefs as support for their refusal to bake the cake. Ultimately, their decision led to the bakery’s closure later that year. A legal battle ensued, and in 2015–while all 96 presidential campaigns for the 2016 election were in full swing–Sweet Cakes’ owners were ordered to pay $135,000.00 in damages to the lesbian couple whose cake they did not want to bake. This spurred the debate among libertarians about who should have to bake whose cake. At the time, two Libertarian Party candidates–Austin Petersen and Gary Johnson–issued two conflicting opinions. Petersen believed bakers should not be forced to bake cakes for customers whom they do not want to bake cakes. Johnson, on the other hand, made statements in support of the couple seeking the cake, stating in part that businesses should not be able to discriminate against their customers.

The masses continue to debate this issue, and it remains a controversial topic among libertarians. You will see at times that we apply the principles of libertarianism differently, which results in more than one perspective in situations such as these, like we saw with Austin Petersen and Gary Johnson. But on this issue, this writer has pitched her tent in Austin Petersen’s camp (and is roasting marshmallows by the fire, discussing Libertarian Utopia and how we will build the roads). But there is a good explanation.

As controversial as it may sound, a baker should be able to refuse service to anyone he wants for any reason he wants without governmental interference with his decision, even in the most reprehensible situations. Libertarians generally believe that people have a right to choose with whom they associate, and as a result, people have a right to choose with whom they do business. Therefore, if a Jewish baker wants to deny a neo-Nazi’s non-Kosher swastika cookie order (yep, I went full cliché), then he should be able to do that without punitive repercussions from the government. That freedom should be afforded to every business owner.

Now, in the same respect, a consumer also has every right to observe a business’s behavior and decide whether that business is entitled to his money. Enter now, the free market. If a business owner decides to discriminate against customers based upon their race, gender, religion, sexual orientation, or any other reason with which other consumers disagree, then those consumers have the right to object to that business owner’s behavior and act accordingly by refusing to solicit the services of that business. Among other things, you could organize a peaceful protest against the business or even chastise the business on Yelp (or using any other means via the Internet to spread the word of that business’s actions). So although consumers should not have the right to dictate how a business owner runs his business by invoking Daddy Government’s powers, they do have the right to protest the business and refuse to solicit that business’s services, as well as influence others to do the same. These recourses have the potential to shut down the business in question or severely negatively affect that business’s income. This is how the free market resolves these issues, without the need for government punishments and/or burdensome, unnecessary regulations. (If you don’t believe the free market works, see the recent United Airlines debacle as an example. It works.) Moreover, once you give the government an inch, it takes 500 miles. So when we allow the government an opportunity to restrict freedoms of individuals—even in their capacities as business owners—the sky’s the limit for what is next, and it puts every single business owner in the nation at risk for undue influence in his business operations, which ultimately puts our economy at risk. The free market eliminates the need for such interference by the government.

Finally, it’s generally accepted among libertarians that as long as you are not depriving someone’s rights or causing actual harm to someone, then you are free to act as you wish. People do not have an inherent right to a business’s services by forcing that business to accomplish their demands. But, a business owner does have an inherent right to refuse his services to anyone he wishes, based upon the principle of freedom of association. By forcing business owners to act against their will, their individual rights are not only ignored and violated, but in essence, they become indentured servants to consumers and are therefore subject to consumers’ whims du jour. This creates the slippery slope situation with the Jewish baker, described above.

Is it upsetting to see a business owner refuse service to a person based upon that person’s race, gender, religion, sexual orientation, or otherwise? Absolutely. Would this writer support the protest against a business that refuses service to a person based upon his race, gender, religion, sexual orientation, or otherwise and actively engage in any boycott of said business and refuse to give it a penny? You better believe it. But, should personal opinions influence how a business owner conducts himself in that capacity, and should the government involve itself in such situations at consumers’ behest? Absolutely not. Business owners are free to act however they wish, but always at their own peril. The free market offers natural rewards and natural consequences, and business owners have to accept both.

 

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Are Libertarians Against Helping the Poor and Underprivileged?

is4slfgDonnie Davis, Feb 26, 2017

A common argument used against libertarianism or libertarian ideas, this particular topic is one that is based in the false notion that we as a political party do not care for the little guy or those who are living in poor economic conditions. Many a times we scoff at this approach to discredit our political viewpoints and simply state that the freedom to fail is just that and that we are not fiscally responsible for other people’s misfortune. As that is the main reasoning for our ideas, a lot of people will still see this as a heartless approach to dealing with this issue.

So, to throw some intellectual reasoning with no emotions involved:

Fiscally conservative = less government spending = minimal taxes = more money in “poor people’s” pockets.

Socially liberal = personal freedom = everyone is free to do as they will unless they violate someone else’s life, liberty, or property = no jail/criminalization for people living their lives = more freedom for “poor people”.

Free markets = no government hoops = more businesses = more competition = lower costs = more opportunity = more jobs and lower cost for “poor people”.

Libertarianism and free markets are the best systems for the poor and wealthy as everyone keeps more of their money and has less restrictions on how they want to live their lives.

Socialism, or more specifically socialist programs, rob from Peter to pay Paul for services provided to Sally. Theft is theft and should be treated as such. Taxation is legalized theft and is a necessary evil that needs to be minimized and recognized as such.

Any regulation, law, or requirement by any governing body may not be permitted to violate rights of any citizen to benefit others; as this is tyranny and should be met with opposition, up to and including violence if necessary. The same goes with any unchecked corruption of governing bodies, monopolized marketplaces and corporations, and etc. The second amendment is a guarantee to the people that they may use deadly force to protect themselves, their rights, and anyone who they choose to assist that is being victimized.

Proper venues currently exist for providing care and welfare for those who are impoverished. Charities, homeless shelters (if approved by the community), food drives/banks, clothing donations, and many other forms of donations exist nationwide and are completely voluntary forms of social welfare. We as libertarians urge everyone to care for their fellow citizens but WILL NOT FORCE you to pay for their care by means of legalized extortion also known as taxation.

Large, powerful, and over reaching government is never the resolution. An open heart, compassion, and empathy is what is needed and passing laws to force people to open their pockets to fund federal welfare programs is wrong. Allow the people to choose whether or not they wish to donate or be charitable. Freedom of choice is a necessary requirement in the idea of a free nation.

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Wasted Paper

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“End the lies! Give responsibility back to the people. The government was not founded to regulate life… only to represent the minorities across this nation on an international scale and to secure freedom for all with limitations to none.”

Donnie Davis, Feb 10, 2017

The American dollar is worth nothing, more or less, when compared to the silver certificates of yesteryear. Our currency is inflated, to this we can all agree, yes?

Ok, so our currency is inflated exponentially over time, during which, we have seen more and more government control of our markets. Since the birth of “controlled monopolization” as I like to call it, or government assured markets, our jobs have been shipped overseas, “minimum wage” has fallen way below where it needs to be (matter of opinion), the price of goods skyrocketed, stock markets crashed, too big to exist corporations falter and fail then are bailed out by our government who now owns them more or less, corrupt bankers give loans, and crashed marketplaces for profit, etc etc etc….. all while under the strict eye of big brother government.

We have seen that more regulations bring about cronyism, the controlled monopolies I was speaking about earlier. This is where lobbyist and politicians band together to not give business licenses to new businesses because it will threaten the profit margins of the already established monopoly that is secured through “law”. Not ending there, we have lobbyist. People that are paid to “persuade” politicians to vote in corporate interest by any means possible, the literal definition of corruption. Yet it’s legalized and nobody’s doing anything about it. We [libertarians] are one of the only parties who have this as a main issue of concern. Moving on, we have the mis-informed public, who have never seen what a free market actually is, that has to suffer the checks and balances of social justice. Meaning that if a corporation is immoral in its business practices that it will suffer profit loss. The common idea that monopolies will be rampant and take over the nation are a fallacy. Child labor is a fallacy. People need to stand up and take responsibility for their society. Personal responsibility goes a long way in libertarian ideas. If someone is willing to shorthand themselves, good for them. Hopefully they will learn that through pride in oneself that they can demand their employer to raise their wage to an acceptable level or find a new occupation. It is literally that easy.

If you wouldn’t send your kids to go work in sweatshops, take a wage that is not worth the job, or support monopolization…. why do you think anyone else will? Probably because they have been lied to their entire lives to believe that this is the best that it can ever be.

 

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Money vs Wealth

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Eliyahu Neiman-Jan 23, 2017

Do the wealthy accumulate their riches at the expense of the poor? Some believe that wealth inequality means that the poor must be losing out – because, after all, there is only so much money to go around. However, this is not exactly true. To see why, it is important to understand the difference between money and wealth.

Consider a case focusing on only two people: a tool manufacturer and a contractor. Say that the manufacturer pays the contractor $100,000 to build a production facility. Over the course of a year, the contractor buys $100,000 in tools from the manufacturer. Having paid off his initial investment, the manufacturer now pays $100,000 to the contractor to expand his facility.

How much money has changed hands? Apparently, only $100,000 – three times. But how much wealth has been created? The tool manufacturer has produced $100,000 worth of tools for the contractor. The contractor has built $200,000 worth of construction for the manufacturer. Our two-person economy now contains $400,000 in wealth. It is richer by $300,000. In fact, that would be its GDP if it were a country.

How is it possible that only $100,000 of money has created $300,000 of wealth? The secret is that money is not actually worth anything – other than as a means of exchange. Money represents a collective IOU that can be collected from anyone at all. This allows anyone to use their skill set to create wealth on behalf of anyone else,  requiring nothing in return but an anonymous IOU. Those who find ways to create wealth for consumers accumulate money, which they can exchange for other forms of wealth. This is the reward that the free market delivers for serving consumers. If Bill Gates and Warren Buffet have more money than anyone else, it is because they have created real wealth for consumers, and used their initial profits to create more wealth for consumers to purchase.

Two government activities are particularly harmful to this process:

1. High taxes. By confiscating the IOUs, government becomes the new recipient of the wealth owed in exchange for creative activity. This reduces the reward for wealth creation. (Equivalently, it diminishes the purchasing power of consumers). If government then spends this money on activities which don’t create wealth (i.e. goods or services that don’t improve people’s lives), then it has wasted resources, making them unavailable for real wealth creation.

2. Overregulation. If a small business owner cannot afford to spend the time and energy, or to purchase the additional equipment, required by government regulations, they may not have enough remaining resources to create wealth at a price that consumers are willing to pay. Overregulation can shut down the means of wealth production entirely.

In short, money is just an IOU, or stand-in for real wealth. Anyone, rich or poor, who can sell their services to a consumer has not only earned a share of their own wealth – they have contributed more wealth to the whole economy. Taxing the creation of wealth harms everyone; this is because everyone benefits from being able to purchase the goods and services that wealth creators produce. Policies that benefit poor people most are those that encourage and enable them to create valuable goods and services. When more people are able to create and contribute to the economy, we all become richer.

 

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Legal Theft

 

legal-theft  Donnie Davis- Jan 11, 2017

Legal theft: The passage of laws that their sole purpose is to extort the citizens for creating revenue in the community in which the laws apply. This style of criminalization is done by making an action illegal that has no victim and does not harm property under the guise of protecting the community or protecting people from themselves.

Taylor Trupiano, who left his car running with the keys in the ignition, has been labeled a criminal by his community, or better yet, the politicians who passed this legislation have labeled him a criminal for using his property as he willed with no harm being done to anyone or anything.

Again, he was ticketed for a misdemeanor crime of leaving HIS car, his own property, running with the keys in the ignition with it not affecting anyone except his own pocket.

Frederick Mercado, the Libertarian candidate for Michigan State Representative in the 57th district, who will be taking on rogue legislation come 2018 aimed at reducing or eliminating victimless crimes or infractions which do nothing further to protect our community other than scheme at revenue building, was appalled at the actions of local law enforcement, and that laws have been passed which criminalized non-criminal behavior had this to say:

“No harm had come to anyone, and this is not what Michigan needs as something counter to common sense legislation. We need to be able to trust people to make their own decisions as adults, whether it involves risk. Honestly, it’s wasteful spending on behalf of our government and resources to cite people for these types of offenses, wasting officer and judicial time. Citizens should feel secure in their person and property, while trusting law enforcement to apprehend those who intend on harming us.”

There are many instances of this in modern American life; food distribution licenses that are needed to serve food as a charity to the homeless; drivers licenses that do not keep the roads safer by keeping unsafe drivers off the road;  gun laws, drug laws, traffic laws, and any other form of social control legislation that is geared towards protecting people from others through oppression of their freedom or to protect people from themselves.

The idea of protectionism is defined as the passing of laws to keep citizens from performing any action that society does not condone aside from the already illegal acts of violating someone’s life/health, liberty, and property. Our society has become so attuned to using a protectionism train of thought that people want to control other people by passing laws so they may not be able to do that thing that they don’t like. This is a real issue that this nation has and this train of thought/law making is violating everyone’s freedoms.

Benjamin Franklin said it best when he engraved our first national coinage, “Mind Your Business.” If it does not affect you or society, it is their liberty to do as they please.

Be a good neighbor. Allow your neighbors the freedom to do as they please as you would like the freedom to do the same.

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UNIVERSAL BASIC INCOME

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Melissa Davis – Contributing Editor – 11/17/16

The discussion on Universal Basic Income (UBI) is becoming more prevalent across the globe. Countries including Canada, the Netherlands, as well as the Dutch city of Utrecht are developing pilot programs to test its effectiveness. FinlandIndia, and France are considering UBI as an option to streamline government welfare programs. Though there are still many unknown variables, an incremental approach may prove to be a viable solution to resolving the disastrous mess that is our welfare system here in the United States.

According to an article posted by FiveThirtyEight: What Would Happen If We Just Gave People Money?  The “U.S. government spends nearly $1 trillion across dozens of separate programs at the state and federal level…This all requires enormous administrative oversight on the part of the government, and it requires the ability to navigate multiple agencies on the part of recipients.” “In the U.S., we’re left with a patchwork benefits system, an indecipherable alphabet soup of programs: SNAP, TANF, CHIP, Section 8, EITC, WIC, SSDI.” “The problems with this system go beyond its complicated structure. Because eligibility for most social assistance is based on income (or is “means-tested”), recipients lose their benefits as they earn more income — this is often labeled the “welfare trap” or “poverty trap.”

We are all aware of the “poverty trap” where recipients on such programs cannot earn income in addition to the assistance they receive from the government, discouraging work even if one is capable in slight capacity. This leads to either hiding extra income through “under the table” cash payments or non-efforts by the recipient to seek extra income elsewhere. With UBI, these limitations would not be relevant. Therefore, if one chose to seek extra income, to better their life through education, and so on, they would not be penalized by losing the safety net their families rely on for basic living expenses.

Switzerland rejected the idea of UBI earlier this year citing fears that “disconnecting the link between work done and money earned would have been bad for society.” However, so far, studies have shown the opposite to be the case. One Study led by Johannes Haushofer (Princeton) and Jeremy Shapiro (Princeton) “documented large, positive, and sustainable impacts across a wide range of outcomes including assets, earnings (from sources other than our transfers), food security, mental health, and domestic violence, after on average four months. The study found no evidence of impacts on alcohol or tobacco use, crime, or inflation.”  Another U.K. based program, the Universal Credit Pathfinder Evaluation, cited by Cato Institute claims that “recipients of the cash payment were more likely to look for work and believed that the program offered a “better reward for small amounts of work“.

In an interview with CNBC Elon Musk of Tesla Motors says “there is a pretty good chance we end up with a universal basic income, or something like that, due to automation. He based his assessment on the prospect of increased automation in society. Given that his companies use robots and automation extensively in their products and that he has started a non-profit to explore judicious uses for artificial intelligence, Musk should know a thing or two about such matters.”

Silicon Valley agrees, “If technology eliminates jobs or jobs continue to become less secure, an increasing number of people will be unable to make ends meet with earnings from employment. UBI becomes a consolation prize for those whose lives are disrupted. Benefits still accrue to the designers and owners of the technologies, but now with less guilt and pushback about the collateral damage.”

While factors still need to be considered, including the counter argument from a libertarian perspective that it would be a form of socialism, perpetuating the “slave to the system” mentality, a slippery slope to communism; the overall concept of providing a universal basic income implementation gets complicated. How would it be distributed fairly across states with varying costs of living?

While It would eliminate the current complex government welfare system which has proven to be a dramatic failure, it would provide opportunity to those who wish to better themselves sans penalty for their efforts.

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