Sunday, 4 October 2015

Sunday Quote of the Day: Religion & philosophy

Philosophy is the science that studies the fundamental aspects of the nature of existence. The task of philosophy is to provide man with a comprehensive view of life. This view serves as a base, a frame of reference, for all his actions, mental or physical, psychological or existential. This view tells him the nature of the universe with which he has to deal (metaphysics); the means by which he is to deal with it, i.e., the means of acquiring knowledge (epistemology); the standards by which he is to choose his goals and values, in regard to his own life and character (ethics)—and in regard to society (politics); the means of concretizing this view is given to him by aesthetics.
It is not a question of whether man chooses to be guided by a comprehensive view: he is not equipped to survive without it. The nature of his consciousness does not permit him an animal's percept-guided, range-of-the-moment form of existence. No matter how primitive his actions, he needs to project them into the future and to weigh their consequences; this requires a conceptual process, and a conceptual process cannot take place in a vacuum: it requires a context. Man's choice is not whether he needs a comprehensive view of life, but only whether his view is true or false. If it is false, it leads him to act as his own destroyer.
    “In the early stages of mankind's development, that view was provided by religion, i.e., by mystic fantasy. Man's psycho-epistemological need is the reason why even the most primitively savage tribes always clung to some form of religious belief; the mystic (i.e., anti-reality) nature of their view was the cause of mankind's incalculably long stagnation.
    “Man came into his own in Greece, some two-and-a-half thousand years ago. The birth of philosophy marked his adulthood; not the content of any particular system of philosophy, but deeper: the concept of philosophy—the realization that a comprehensive view of existence is to be reached by man's mind.
    “Philosophy is the goal toward which religion was only a helplessly blind groping. The grandeur, the reverence, the exalted purity, the austere dedication to the pursuit of truth, which are commonly associated with religion, should properly belong to the field of philosophy. Aristotle lived up to it and, in part, so did Plato, Aquinas, Spinoza—but how many others? It is earlier than we think…
    “The task of philosophy requires the total best of a mind's capacity; the responsibility is commensurate. Most men are unable to form a comprehensive view of life: some, because their ability is devoted to other professions; a great many, because they lack the ability. But all need that view and, consciously or subconsciously, directly or indirectly, they accept what philosophy offers them.”
                      ~ Ayn Rand, from "The Chicken's Homecoming" in The Anti-Industrial Revolution 
                                         [hat tip Anoop Verma]

Friday, 2 October 2015

Friday Morning Ramble, 2.10.15

Auckland drivers shut out by new builds, new council projects. Drivers can get stuffed, says council.
Aucklanders told to ditch cars as huge CBD build nears – STUFF

“’But I believe being a Maori in Enzed is a more negative experience. All that compulsion to live by the myth of whanau, hapu and iwi. Ask many Maori who have moved to Australia; they'll tell you living as an individual is infinitely better. If I was a benign dictator I'd pack every Maori off out of the country so they could realise what a wonderful thing it can be to be Maori and Kiwi and individualistic at the same time. Many of our Maori leaders have to invest in this potential and step away from the Champagne tap.’”
Alan Duff rides again – LINDSAY MITCHELL

“It looks like New Zealand's version of three-strikes for criminal offending is working. Here's Graeme Edgeler's analysis…”
3 Strikes – Eric Crampton, OFFSETTING BEHAVIOUR 

“The rest of the world seems to be trying to ignore it, but slowly and surely the United States of America, until recently leading the charge in the war on drugs, is legalising marijuana possession. Twenty states, from Alaska to Vermont, have already decriminalised adult cultivation and use of cannabis.
    “If Kaikohe businesswoman, community leader and mother Kelly van Gaalen knows about this, I'm sure she would have had a wry chuckle to herself about the irony of it all as she was taken away to begin her two-year sentence for possession of cannabis for supply...
    “Meanwhile, back in the US, guess what hasn't fallen in? That's right - the sky.”
Our weed ban is simply dopey – Paul Little, NZ HERALD

“Is Council’s position really that pool owners should have fewer rights than criminals?”
Swim – Eric Crampton, THE SAND PIT

“Those damn Chinese. Coming over here. Taking our jobs. Driving up house prices. And... you know... donating $10 million to cancer research!”
$10 million gift for cancer research in Auckland – AUCKLAND UNIVERSITY

“Recent data prompt economists to warn Australia may be ripe for first recession in 24 years.”
Is Australia Sliding Into Recession? – WSJ

“The early weeks of a world cup are like a Monkees album. There’s some classics all right, but plenty of filler too. Before it gets better, here’s what’s happened in the first fortnight… The hosts were as tentative as an Englishman trying to get a French waiters’ attention … and South Africa looked as organised as Alan Donald running a quick single.”
Rugby’s coming home, and potentially leaving again quite quickly - SPORTREVIEW.NET.NZ

“An error in the promotional materials means the All Blacks will have to perform a haiku before each of their remaining matches in the Rugby World Cup. Cup organisers apologised for the mix-up, but said consumer protection rules meant their hands were tied.”
Typing error means All Blacks will perform pre-game haiku – EVENING HAROLD

Immigrants breeding more kids who will soon take over the country!!!! Well, not in Sweden at least.
Childbearing among foreign born – before and after migration to Sweden – SCB STATISTICS SWEDEN

Top country of origin by state and year.” And now, with interactive map!
From Ireland to Germany to Italy to Mexico: How America’s Source of Immigrants Has Changed in the States, 1850 – 2013 - PEW RESEARCH CENTER

He’s wet, he’s not funny, but with “millions of migrants seeking asylum in Europe face hostility, racism, and red tape. John Oliver does one admittedly tiny thing for one of them.”
Last Week Tonight with John Oliver - Migrants and Refugees – DAILY MOTION


West Berlin policemen and East German soldiers face each other after a young girl made it across the border, 1955. By conservative logic, she should've been forced back to East Germany because she could've been a communist…

Humans without borders …

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“Irrational regulation and green posturing are the real causes of the Volkswagen debacle.”
VW: a panto of green politics - Paul Seaman and James Woudhuysen, SPIKED

Fake markets are easy to scam, because no one really wants or cares about “the product”.
“Green” cars cause real pollution, and now scamming fuel economy too. Half the CO2 “cuts” are imaginary. – JO NOVA

“The Turing Pharmaceuticals scandal tells us very little about capitalism, but it does tell us a lot about the perverse incentives that regulation can create.”
Bad Regulations Create Inequality, Hurt the Poor, and Reward Unethical Business – Will Wilkinson, ANYTHING PEACEFUL

“Ann Coulter, twit.”
She Said What? – P.J. O’Rourke, WEEKLY STANDARD

“One of America's greatest novelists predicted Trump 80 years ago .”
It really can happen here: The novel that foreshadowed Donald Trump’s authoritarian appeal – Malcolm Harris, SALON

"It is the power of the human mind, especially in science and engineering, that has brought about the benefits of our modern world. Yet where are the parades, the speeches before Congress, and the celebrations that recognize the sources of such benefits and encourage reason and achievement as foundational values in our culture? Why do so many seek hope in faith and otherworldly miracles when real achievements—“miracles” of the human mind—are all around us? Why do so few understand that training minds and encouraging entrepreneurship is the best way to ensure a healthy, prosperous future? With all the enthusiasm we see for the Pope, where is the enthusiasm for the actual creators and achievers in our world?"
Pope Francis vs. the Cure of Reason – Ed Hudgins, SOLO

“Few Latin Americans have enjoyed the economic freedom that Pope Francis prefers to denounce.”
Show Me the Way to Poverty – Dylan Pahman, OIKONOMIA

“The power of market transactions makes all the difference in lifting people out of poverty.”
Putting a human face on economic freedom in South Africa – ATLAS NETWORK

"There is increasing speculation that Uber’s long-anticipated initial public offering could be valued at $100 billion, a value that has been created by undercutting the prices of traditional taxis and offering more and better service. If that’s how much wealth can be generated just by rediscovering the laws of economics in this one narrow area, think what could be accomplished if we do it for the economy as a whole.”
The Free Market: It's Like Uber, But for Everything – Robert Tracincski, THE FEDERALIST

“Barriers like these make it harder for people to find jobs and build new businesses that create jobs, particularly minorities, those of lesser means and those with less education.”
License to Work: A National Study of Burdens from Occupational Licensing – I.J.

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Yes, this is what history demonstrates.
Technology has created more jobs than it has destroyed, says 140 years of data – GUARDIAN

All too frequently forgotten.
The Human Cost of Socialism – Richard Ebeling, GUS VAN HORN

““Many people, without thinking about it, like the corporate tax because they think it is a tax on greedy billionaires. In fact, the corporate tax is paid by consumers in the form of higher prices and by workers in the form of lower wages and fewer jobs. It results in less investment in new plants and equipment and fewer new goods and services — which is why most tax economists view it as a bad tax. Investors are also hit by the corporate tax, but they have many options, including investing elsewhere or just consuming their savings, which hurts economic growth and future job creation.”
Global Tax Bullies – Richard Rahn, CATO

F. A. Hayek and the peculiar problem connected with what we call capital…
Pure Theory of Capital (excerpt) – F.A. Hayek, GOOGLE BOOKS

The Drip, Drip, Drip of Human Progress – Marian Tupy, CATO

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“My love of fossil fuels comes from a very deep love of human achievement and human life.” Alex Epstein talks to Stefan Molyneux:

“For the true believer, it is too awful to even consider that the Australian Bureau of Meteorology could be exaggerating global warming by adjusting figures. This doesn't mean though, that it's not true.”
You don't know the half of it: temperature adjustments and the Australian Bureau of Meteorology – Jennifer Marohasy

"The science is in…"
Updated NASA Data: Global Warming Not Causing Any Polar Ice Retreat – James Taylor, FORBES

“Paul Ehrlich’s apocalyptic rhetoric was dealt a crushing blow by economist Julian Simon who argued that humans are not only mouths to feed, but also hands to work and brains to think up new solutions. Prior to the emergence of humanity, Simon and others had long pointed out, the Earth was replete with fertile soils and hydrocarbon and mineral deposits, but there were no resources. It was human action that turned otherwise useless physical stuff into valuable things, a process that could go on forever as it was ultimately powered by the always renewable and expanding human intellect. Creative and entrepreneurial populations could thus grow almost indefinitely as, building on past advances to which they added new ideas, they would find ever better ways to feed themselves and improve overall standards of living. Any notion of natural limits or “carrying capacity” was therefore nonsensical.”
No limits to growth – Pierre Desrochers & Vincent Geloso, FINANCIAL POST

"... what if there were a dataset of temperature that was so well done, so scientifically accurate, and so completely free of bias that by its design, there would never be any need nor justification for any adjustments to the data?
Such a temperature record exists, it is called the U.S. Climate Reference Network, (USCRN) and it is also operated by NOAA/NCDC’s (NCEI) head administrator.
”But while publicly accessible, this data is never promoted by NOAA or any other government organization, never mind the IPCC.
All datasets used to "prove" man-made global warming ignore this data completely and 99% of the data they are based on have been "adjusted" and "homogenised" repeatedly, each adjustment further showing increased warming trend.”

Hank Rearden is Korean. His name is Hansoo Kim.
Scientists Invent a New Steel as Strong as Titanium – POPULAR MECHANICS

“With a troubled past, Cambodia’s bustling capital is today a naturally occurring marvel.”
Phnom Penh, City Interrupted – Kris Hartley, THE DIPLOMAT

On its face, sounds worryingly like Conrad Black's disgraceful love note to FDR. Review however suggests this book has real meat.
Niall Ferguson’s ‘Kissinger. Volume I. 1923-1968: The Ideal­ist’ – NEW YORK TIMES

“This week marks the 10 year anniversary of the publication of the Danish cartoons that sparked a crisis and a discussion on the importance of free speech. ARI champions the unconditional right to the freedom of speech. Read more about this crucial right …”
Freedom of Speech: We Will Not Cower – Onkhar Ghate, VOICES FOR REASON

“Saudis are active at every level of the terror chain: planners to financiers, cadres to foot soldiers, ideologists to cheerleaders.”
The evil empire of Saudi Arabia is the West’s real enemy – Yasmin Alibhai-Brown, INDEPENDENT (UK)

“At the United Nations two days ago, Obama said waging war against such terrorist groups won’t accomplish anything. “Ideologies are not defeated with guns,” Obama told UN delegates. “They are defeated by better ideas — a more attractive and compelling vision.” What happens if the ideology is openly and consistently committed to violent actions against others who do not agree?”
Peace Through Weakness Will Never Work – Michael Hurd, DR HURD.COM

“Dear anarchists,
Please stop asking me to go the Mises Institute to learn about anarchism.
Justin Templer”

image“The driving force of the market is not material; it is a product of the individual human mind.”
Mises in the Digital Age – Jeffrey Tucker, F.E.E.

If you could wave a magic wand and make one or two policy or institutional changes to brighten the U.S. economy’s long-term growth prospects, what would you change and why? That was the question asked to the 51 contributors to this volume.”
Reviving Economic Growth: Policy Proposals from 51 Leading Experts – CATO STORE

“At this point 15 years ought to count for something. After all, we have now used up one-seventh of this century. So you can’t say its too early to tell what’s going on or to identify the underlying trends.”
15 Years Of Stimulus—–Nothing To Show – David Stockman, CONTRA CORNER

“The recent debate surrounding Fed policy is whether or not they will start to ‘normalise’ interest rates by beginning with a rate increase ...  I contend that this debate is somewhat moot, especially once the market has initialled a waterfall selloff.”
Why the Fed can’t stop the next market crash – Gregg Jamke, TAO MACRO

“[The debt load] is not manageable at all, because thanks to Yellen and her merry band of money printers, we are not paying the true cost of the debt. This year, it’s $230 billion on $13 trillion of public [debt]. That’s 1.75%. That’s ridiculous. When it normalizes – which it will someday – we’ll be paying $400-500 billion more at a minimum. So I blame the Fed. The Fed is the number one culprit in this whole fiscal paralysis, because it’s told all the politicians, ‘You can kick the can, you can dodge the bullet.’”
The US Is a “Fiscal Titanic” with the Fed as Captain (Video) – SCHIFF GOLD

“Newly printed money. Of course. When isn’t that the answer? Adding water to milk does not produce more milk. It only produces the illusion of more milk.”

Time for a recap …
Who caused the global financial crisis? An inconvenient truth. – Vinay Kolhatkar, NOT PC
Why The Glass-Steagall Myth Persists – Yaron Brook & Don Watkins, FORBES
“We didn’t see the economic collapse coming.” Yeah right. – NOT PC
The Governor resigns. Not before time. – NOT PC
The Global Financial/Economic Crisis: The True Causes And Only Long Term Solution – David McGregor, NOT PC
The Illusion of Wealth: Ludwig von Mises on the Business Cycle – NOT PC
As good as gold? Or as bad as paper – NOT PC
“Let Me School You in My Austrian Perspective” – NOT PC
What You Must Read About the Great Depression – David Gordon, MISES DAILY

“The natural rate of interest is a rate that emerges in the market as a result of borrowing and lending activity and governs the allocation of the economy's resources over time. The neutral rate of interest is a rate that is imposed on the market by wisely chosen monetary policy and is intended to govern the overall level of economic activity at each point in time. Exploring this distinction and its implications can go a long way toward understanding the current state of Federal Reserve policymaking and the difficulties that a central bank creates for the market economy.”
Natural and Neutral Rates of Interest in Theory and Policy Formulation – Roger Garrison, MISES DAILY

“In the more heavily regulated industries, costs are skyrocketing. In other industries, costs are falling, sometimes at ridiculous paces: Think USB drives. Technology naturally pushes costs down, while the Federal Reserve pushes them up.”

Surveys the ills of government-run schools, shows the general superiority of private schools, and zeros in on the reason for the difference.
The Educational Bonanza in Privatizing Government Schools – Andrew Bernstein, THEOBJECTIVESTANDARD.COM

“I choose a Montessori school for my son almost as an act of faith. At that time my knowledge of the method was null, besides having heard of small chairs and colored beads. But seeing my son happy day after day encouraged me to study and deepen the Montessori’s ideas. What I had discovered astonished me as a father and as a scientist. As a father, I found how children are really respected and prepared for the future. As a scientist, I found solid scientific foundations for everything Maria Montessori proposed.”
Montessori, why not? – MARIO VALLE

Frank Lloyd Wright’s Organic Architecture: Green Design Before Its Time

“The Building Grows Out Of The Landscape As Naturally As Any Plant; Its Relationship To The Site Is So Unique That It Would Be Out Of Place Elsewhere." —Frank Lloyd Wright
Frank Lloyd Wright's Organic Architecture: Green Design Before its Time – Casey Neal, BRITTON BLOG

“Find out more about Frank Lloyd Wright with these additional resources…”
Modern Home Designs by Frank Lloyd Wright – INTERIOR-DELUXE

“In a world full of turmoil and uncertainty such as ours, fine art can provide emotional fuel to sustain positive, life-affirming, universal, humanistic values. Because all art acts as a shortcut to our most fundamental premises (whether good, bad, rational, or irrational), it possess irresistible vitality and puissance for both immediate “gut” impact and lasting resonance.”
Romantic Realism: Ideas and Emotions in Art – Alexandra York, NEWSMAX

“Every town has a dozen guitarists or bass players that could play in a top group, but circumstances didn’t work that way. You're better off engaging with the thing for the reason you want to do it, because the universe will give you what it wants. You better be putting your belief into something that’s meaningful and sustainable, which is your relationship with yourself."
"Talent Is Vastly Overrated": Billy Childish's Anti-Guide to Succeeding in the Art World – ARTSPACE

Summer is here! From eating hamburgers to getting rid of pesky ants, this video will make you smack your forehead wondering why you didn’t know these things before.
Ants Ruining Your Summer? Watch How EASY It Is To Get Rid Of Them!  - METASPOON

Philosopher Leonard Peikoff presents the essentials of Ayn Rand’s philosophy to a group of students, then answers their questions. Peikoff, who was Rand’s friend and associate for three decades, is the author of Objectivism: The Philosophy of Ayn Rand -- 42-minute lecture followed by a 33-minute Q&A session.
Questions and Answers:
0:45:21 Q&A#1: How can selfishness be compatible with respecting other people's rights?
0:48:09 Q&A#2: Does the term "objective" have different meanings?
0:50:17 Q&A#3: Who would regulate the economy under laissez-faire capitalism?
0:54:53 Q&A#4: Are people programmed by the culture they are raised in?
0:57:57 Q&A#5: What will happen to the needy under capitalism?
1:02:55 Q&A#6: Does government have a role in disease control and education?
1:06:11 Q&A#7: Who would fund medical research if government didn't?
1:08:35 Q&A#8: How do you know that reason is the only means of knowledge?
1:11:27 Q&A#9: In what sense is religion opposed to morality?
1:14:05 Q&A#10: Can our senses fool us, as in the case of optical illusions?
1:15:15 Q&A#11: Why do virtues have to be practiced consistently?

At Massey University, when they say “free stuff” what they mean is “paid by students to pass the class.”

For those about to party, we salute you.
AFL Grand Final Overseas Party Finder – AFL

Thursday, 1 October 2015

World’s most libertarian sport: Grand Final this Saturday! #AFLFinals

Yes, folks, instead of just watching NZ push around the fatties from Georgia this weekend, you get to enjoy the Grand Final of the world’s most libertarian sport, the culmination of the AFL year!

Watch it live on Skysport, on TVNZ’s Freeview 13, on WatchAFL, or you can get down to one of functions in NZ’s main centres where there’ll be bar tabs, BBQs and drink specials throughout the afternoon.

Wellington: Five Stags, Dixon St, Wellington
Christchurch: Redwood Tavern, Redwood.
Dunedin: The Terrace Bar, 6 The Octagon, Dunedin.

And in Auckland, you can join me and Auckland’s AAFL clubs at The Empire Tavern:

Tickets are available on the door, or through your local AAFL club.

See you at The Empire



West Coast v Hawthorn
Saturday, October 3, 5.30pm NZT at the MCG

TV Coverage begins, 3.00pm on the following channels:

TVNZ POP-UP. Freeview Channel 13

Sky Sport 3

Deluded, deranged, defeated [updated]

If you’re feeling a little aggrieved that I’ve had to apply comment moderation here for only the second time in the blog’s ten-year history, settle back and understand the reason why.

By way of example, and frankly for your own reading amusement, I have to share with you just some of the bleatings of madness—i.e, just a few of the many, many interjections from one particular loon posting from L.A. over the last two weeks who’s been commenting continually, spamming the comments (or trying to), with no hope of the spam ever rising to the surface and being published. (White supremacists can publish their trash elsewhere without me providing them with a megaphone.)

You have to laugh, really. But as entertained as I have been by the bile, it’s still annoying for you lot to have to endure the moderation until the loathsome loon decides to linger no longer. In the meantime be entertained while being simultaneously repelled ….



Similar to Redbaiter’s bile when he came here on a tear a year or so ago, but not even half as entertaining. And that’s just a small part of a couple of week’s worth of lunacy now sitting in my spam filter, most of it emanating from this entity in Irvine, California:


UPDATE: Just some of the droppings from this morning’s sackload of shit . . .


Central Banks Don't Dictate Interest Rates

Guest post by Frank Shostak

According to mainstream thinking, the central bank is the key factor in determining interest rates [and interest rates haven’t been this low since 3000 BC]. By setting short-term interest rates the central bank, it is argued, through expectations about the future course of its interest rate policy influences the entire interest rate structure. (According to expectations theory (ET), the long-term rate is an average of the current and expected short-term interest rates.)

Note that in this way of thinking, interest rates are set by the central bank; individuals have almost nothing to do in all of this and just mechanically form expectations about the future policy of the central bank. (Individuals here are passively responding to the possible policy of the central bank.)

Time Preference Is the Driving Force

But the great Austrian economists Carl Menger and Ludwig von Mises suggested otherwise, concluding that the fundamental driving force of interest rate determination is not the central bank at all, but an individual’s time preferences.

What are time preferences? As a rule, people assign a higher valuation to present goods versus future goods.The degree of this preference for present over future goods is the degree of an individual’s time preference.

The result of this is that present goods are valued at a premium to future goods. It is this valuation that sets natural interest rates[which, as a consequence, are always positive and cannot be negative].

This valuation stems from the fact that a lender or an investor gives up some benefits at present. Hence the essence of the phenomenon of interest is the cost that a lender or an investor endures. On this Mises wrote in Human Action,

That which is abandoned is called the price paid for the attainment of the end sought. The value of the price paid is called cost. Costs are equal to the value attached to the satisfaction which one must forego in order to attain the end aimed at.

For instance, an individual who has just enough resources to keep himself alive is unlikely to lend or invest his paltry means. The cost of lending, or investing, to him is likely to be very high — it might even cost him his life if he were to consider lending part of his means. So under this condition he is unlikely to lend, or invest even if offered a very high interest rate.

Once his wealth starts to expand however, the cost of lending — or investing — starts to diminish. Allocating some of his wealth toward lending or investment is going to undermine, to a lesser extent, our individual’s life and well being at present. From this we can infer that anything that leads to an expansion in the real wealth of individuals gives rise to a decline in the interest rate (i.e., the lowering of the premium of present goods versus future goods). Conversely, factors that undermine real wealth expansion lead to a higher rate of “natural” or originary interest.

Time Preference and the Demand for Money

In the money economy, individuals’ time preferences are realized through the supply and the demand for money. The lowering of time preferences (i.e., lowering the premium of present goods versus future goods) on account of real wealth expansion, will become manifest in a greater eagerness to lend and invest money and thus lowering of the demand for money.

This means that for a given stock of money, there will be now a monetary surplus.

To get rid of this monetary surplus people start buying various assets and in the process raise asset prices and lower their yields. Hence, the increase in the pool of real wealth will be associated with a lowering in the interest rate structure

The converse will take place with a fall in real wealth. People will be less eager to lend and invest, thus raising their demand for money relative to the previous situation. This, for a given money supply, reduces monetary liquidity — a decline in monetary surplus. Consequently, this lowers the demand for assets and thus lowers their prices and raises their yields.

What will happen to natural interest rates as a result of an increase in the money supply? An increase in the supply of money means that those individuals whose money stock has increased are now much wealthier, or feel so.

Hence this sets in motion a greater willingness to invest and lend money. The increase in lending and investment means the lowering of the demand for money by the lender and by the investor. Consequently, an increase in the supply of money coupled with a fall in the demand for money leads to a monetary surplus, which in turn bids the prices of assets higher and lowers their yields.

As time goes by the rise in price inflation on account of the increase in the money supply starts to undermine the well being of individuals and this leads to a general rise in time preferences. This lowers an individuals’ tendency for investments and lending, i.e., raises the demand for money and works to lower the monetary surplus — this puts an upward pressure on interest rates.

Monetary Policy and Real Wealth

In a market economy within the framework of a central bank, the key factor that undermines the pace of real wealth expansion is the monetary policy of the central bank.

imageIt is loose monetary policy that undermines the stock of real wealth and the purchasing power of money. We can thus conclude that a general increase in price inflation — resulting from an increase in the money supply and a consequent fall in real wealth — is a factor that sets in motion a general rise in interest rates. Meanwhile, a general fall in price inflation — in response to a fall in the money supply and a rise in real wealth — sets in motion a general fall in interest rates.

Furthermore, an increase in the growth momentum of the money supply sets in motion a temporary fall in interest rates, while a fall in the growth momentum of the money supply sets in motion a temporary increase in interest rates.

The Invisible Natural Rate of Interest

The main problem here is that the natural interest rate can't be observed. How can one tell whether the market interest rate is above or below the natural rate?

Important news: There is no downside to coffee!

When the sweet poison of the Treacherous Grape
Had acted on the world a general rape; …
Coffee arrives, that grave and wholesome Liquor
That heals the stomach and makes the genius quicker.

Had your second cup of coffee yet this morning? Don’t worry, I’ll wait, because it (that cup) is important . . .

All set? Then here’s your news: Every cup of coffee is good for you.

Even better: There’s very little evidence that any cup is bad for you.

Harvard researchers have been putting the hot drink brewed from the noble bean under the microscope, and have confirmed it to be one of humanity’s greatest boons, and confirmed “no link between higher blood pressure and coffee and … some suggestion that it improved blood pressure.”

The work at Harvard is just part of an emerging picture of coffee consumption as a potentially powerful elixir against a range of ailments, from cancer to cavities….

  • lowers levels of liver enzymes and protects the liver against cancer and cirrhosis
  • protects against Parkinson’s disease…  four or five cups of coffee daily cut disease risk nearly in half compared with little or no caffeine.
  • reduced risk of suicide
  • lower risk of basal cell carcinoma
  • reduced type 2 diabetes risk
  • lower risk of a deadly form of prostate cancer for men
  • drinking four or more cups a day lowered the rate of depression among women; and
  • even heavy coffee consumption did not increase the risk of cardiovascular disease and that three to five cups of coffee daily provided the most protection against cardiovascular disease.

In short, for “a coffee-drinker compared to non-drinker there is about a 10-15% lower mortality rate.”

Not only that, but coffee helps you think better. What’s not to love!

Yes, these data are mainly correlative rather than causative -- “though the links between coffee and better health have become considerably clearer, what exactly confers the benefit remains murky,” although researchers have “traced coffee’s fingerprints to the human genome, discovering six new genes related to coffee consumption and reconfirming two others found earlier”—but they are compelling.

And one result you can test immediately all on your own: “That first cup of coffee in the morning is happiness,” says one researcher. “It’s a real joy.”

Your third isn’t so bad either.


[Hat tip Anoop Verma & Paul Hsieh]

“Price-to-income ratio the key issue for housing affordability,” says council economist [updated]

Auckland council’s chief economist has written a personal report on Auckland’s housing bubble burgeoning problem with unaffordable housing.

The good: identifying that median house price as compared to the city’s median income is a key measure of how affordable or unaffordable housing is in this big little city. Auckland’s present price-to-income ratio is approaching ten-to-one. He argues that by 2030 that should be nearer five-to-one.

The risible: the fellow speaks a foreign language. “The report identifies a range of levers … that could be considered … employing a multi-layered collaborative approach that uses the best mix of the available tools we have.”

The bad: as his talk about “tools” tends to indicate, he’s still of the top-down school, his many “levers” revealing him to be another timid tinkerer who’s part of the central-planning persuasion, the unintended consequences of all those tools with their “unified approach” and “joined-up thinking” having delivered us the present rather pressing problem. One looks in vain from any of them for the simplest solution of all: recognise property rights and then get the hell out of the way. But I shall scour the present report more thoroughly in case I missed that ringing phrase amidst all the buzzwords.

UPDATE:  The Property Council likes the report:

Property Council strongly urges Auckland Council to adopt:

  1. Explore the greater use of targeted rates to fund and finance infrastructure growth.
  2. Collaboratively review transport policy, legislation, planning to ensure it supports Auckland’s housing surge.
  3. Omit excessive restrictions on urban design unless benefits exceed costs.
  4. An advocacy plan to consider replacing joint and several liability with proportionate liability…

We call on Auckland Council to embrace the report’s findings… Auckland desperately needs integrated infrastructure and urban planning that complements and supports residential development.

What Auckland and this country actually does need is a Property Council that would tell the urban planners to go to hell—not one that would meekly accept non-excessive restrictions on design and development, or who would applaud yet another layer of bureaucracy in Christchurch.

Wednesday, 30 September 2015

Let Chris Brown in town [updated]

As Voltaire might have sung, “I disagree with what you auto-tune, but I defend to the death your right to do it in Auckland.” (If Auckland is where he’s booked to play; I have no idea, and even less interest.)

Anyway, Mark Hubbard makes the case “for letting Chris Brown in to perform his execrable music”:

It has nothing to do with Chris Brown.
    He has ‘done his time’ for his crimes. End of.
    After that, I don’t want politicians and bureaucrats deciding who can, and cannot, come into New Zealand. It has to be left up to the choice of the individuals of New Zealand whether they want to see, buy tickets, or whatever interaction they desire, with people such as Brown when they are in-country…
    Chris Brown must be free to bring his shite show to New Zealand, because if politicians [and, you know, the commentariat] get to choose who crosses our borders, New Zealand is not a free land and we all are living in Progressivestan.

Any questions? Because Mark has probably answered them.

UPDATE: Russell Brown appears for the prosecution.

We should begin by making clear exactly what Chris Brown did to Rihanna in 2009. He has not “been accused of being involved in violence against his partner” as Dame Tariana Turia bizarrely said yesterday. And his actions were not “considered only odious enough to warrant community service” as a hapless post on The Daily Blog claims. . . .

Bill English on price signals, planning and housing affordability

Yes, I’m as surprised as you are: Bill English has been caught making sense. A sentence I never thought I would write.

I blame his advisers.

His speech last week on housing affordability to was so uncommonly good it deserves the small publicity it quickly acquired, and its author (whomever it might might be) deserves credit.

Essentially, his speechwriter(s) pointed out that the market is excellent at delivering price signals, but the government (central and local) has been even more excellent at restricting the housing market’s ability to act on those signals until too late.

It takes around eight years for the housing market to respond to a shock to demand.

In part that is because changes to council plans can take years, in some cases over a decade.

Resource consents on a housing development regularly take 18 months, including pre-application times excluded from the official statistics.

When combined, those very real delays can exceed the length of the house price cycle.

The point is that when the supply of housing is relatively fixed, shocks to demand – like migration flows increasing sharply as they have recently – are absorbed through higher prices rather than the supply of more houses.

Long lead times in the planning process tend to drive prices higher in the upswing of the housing cycle.

And those lead times increase the risk that eight years later, when additional supply arrives, the demand shock that spurred the additional supply has reversed.

The resulting excess supply could produce a price crash. (Emphasis mine.)

It is the warning about a price crash that sat people up. It is the reasoning behind it that makes the whole piece worth reading.

NB: Others comment:

  • Eric Crampton calls the speech “excellent”—not something I’ve heard him say before about anything said by a Finance Minister—and comments on the speech’s point “that policy itself generates external costs that are underappreciated.”
  • Lindsay Mitchell noted the frightening fact that
            60 per cent of all rentals in New Zealand are subsidised by the Government.
            Six out of ten rented homes are subsidised by the taxpayer…
            [T]he rental property market is still heavily subsidised and still not working.

Quote of the day: On the warnings of strippers

“The first line of workers to feel the incoming credit crunch are strippers.”
~ Charles Waterstreet, ‘Art bares city's soul as strippers bear bad news

“Ludwig von Mises, Genius?” [updated]

Yesterday would have been Ludwig Von Mises’s birthday.  There are tributes:

Economist Robert Murphy:
September 29 marks the 134th anniversary of the birth of Ludwig von Mises [], the tallest giant of the “Austrian School” of economics. Although Mises is not a household name, Nobel laureate Friedrich Hayek once referred to him as “the master of us all.” To this day, professional economists and laypeople alike learn from the writings of a man I consider to be the most important economist of the twentieth century.
    One of Mises’s earliest achievements was to bridge the two fields we now call microeconomics and macroeconomics.Originally, the classical economists of the eighteenth and nineteenth centuries had embraced variants of a labour theory of value in their teachings. Then, during the so-called Marginal Revolution of the1870s, economists replaced the labour theory with the modern subjective theory of value [meaning “an individual’s chosen values are personal and therefore subjective and unknowable to the economist”], which sees all market prices as being determined ultimately by the underlying preferences of individual consumers. It doesn’t matter how many labour-hours it takes to manufacture a product, according to subjective value theory; if nobody really wants it, it will fetch a low price.
    Economists gradually recognized the superiority of the new “subjective marginal utility” approach, but by the dawn of the twentieth century they still thought this worked only for “micro” explanations. The theory could explain, for example, how many bananas traded for how many apples, but economists still thought they needed an entirely different, “macro” framework to explain the money prices of goods.
    Enter Ludwig von Mises. In his 1912 book, translated with the title The Theory of Money and Credit, he showed how to apply the theory of marginal utility to explain all market values -- even the value of money itself. In so doing, Mises put individual money prices, and the purchasing power of money, under the umbrella of a unified theory of value.
    In the same book, Mises also unveiled what is nowadays called Austrian business cycle theory. Contrary even to some other free-market thinkers, he did not think that the typical boom-bust pattern in market economies was an intrinsic feature of capitalism. Instead, Mises argued that they originated in unsound banking practices, often instigated by a nation’s central bank. When banks expand credit in order to provide “cheap” loans, this artificially lowers interest rates to below their natural level, sending businesses and entrepreneurs a false signal that encourages unsustainable activity throughout the economy.
    In particular, investment projects that are not justified by market fundamentals now appear profitable at the lower interest rates. The illusion created by the increased investment and spending can generate a period of apparent prosperity, but the economic boom rests on quicksand and eventually leads to a bust. According to Mises, rather than trying to restore the economy by engaging in deficit spending and monetary “stimulus,” the government should prevent the business cycle from getting started in the first place, by abstaining from central bank policies that make credit unnaturally cheap and induce the unsustainable boom….
    But Mises’s most celebrated achievement by far was his critique of central economic planning. First in a 1920 academic paper and later in his 1922 treatise, Socialism: An Economic and Sociological Analysis, Mises explained that the central planners in a socialist commonwealth faced an insurmountable hurdle, one even more fundamental than the problem of poor incentives. . . .
Read the whole piece: Ludwig von Mises: Scholar of Free Markets and Prophet of Liberty.

Mises’s personal assistant, Bettina Bien Greaves:
An advocate of free markets and a critic of government interference, he stood for peaceful and voluntary cooperation. Whenever possible, he spoke out for individual freedom. Yet he grew up in Europe when socialism was on the rise and people wanted government to regulate “profiteering” capitalists who “exploited” workers. How did Mises, schooled in such an environment, acquire free market ideas?
    Mises was born in pre-World War I Austria-Hungary and raised in Vienna. As a young man Ludwig surely had a healthy interest in fun and games, but he was also a conscientious student. At seven, he was already reading newspapers and collecting extra newspaper editions. His early interest was in history. But when he read Carl Menger’s Principles of Economics (1871) and encountered the subjective, marginal utility theory of value, he realized that economics was not history but a science of reason and logic. As Mises wrote later, reading Menger made him an economist.
    While still at the Gymnasium, the equivalent of high school, young Ludwig adopted a motto from Virgil, “Do not give in to evil, but proceed against it ever more strongly.” Menger’s explanation that subjective values guide the actions of individuals enabled Mises to recognize that the “good,” for which he would strive “ever more strongly,” was whatever promoted freedom from individuals to seek their subjective values. And anything that prevented individuals from pursing their personal subjectively-chosen goals was the “bad” to which he would refuse to yield. Thus an understanding of subjective value theory made Mises an advocate of individual freedom…
    I once asked Mises what original idea he had contributed. His reply: “Everything I have written and said I learned from someone else.” True, no doubt. But the genius of Mises, like that of an inventor or entrepreneur, rests on creating something new and original by further developing something already known. By adding something to earlier theories, he made at least three major contributions. First, he developed economics as a logical science and integrated it with all other knowledge. Second, he pointed out that a socialist society, without private property owners competing with one another, would not be able to discover where, when, and how best to use property in production. And third, by reasoning from Knut Wicksell’s theory that a “natural interest rate” prevails on the market among would-be borrowers and lenders, Mises explained the trade cycle as due to interest rates forced down artificially, distorting the “natural interest rate,” disturbing the loan market and causing widespread business ups and downs.
Read the whole piece: Ludwig von Mises, Genius?

Ayn Rand herself thought extremely highly of Mises's work on economics, elements of which underpin her own work.

As late as the fifties, [says B Branden] Von Mises was relatively unknown in the United States - his books not published here before 1944 - until, beginning in the late fifties and continuing for more than ten years, [after being introduced to his work by George Reisman] Ayn began a concerted campaign to have his work read and appreciated: she published reviews, she cited him in articles and in public speeches, she attended some of his seminars at New York University, she recommended him to admirers of her philosophy. A number of economists have said that it was largely as a result of Ayn's efforts that the work of Von Mises began to reach its potential audience.

Hayek was a student of Mises, whose writing he credited with converting him from the socialist tendencies of his youth, and on whose business-cycle theory he based the work that later earned him his Nobel Prize in economics.

Ayn Rand herself placed Von Mises among her own personal pantheon of heroes: “Aristotle in philosophy, von Mises in economics, Montessori in education, Hugo in literature.”And when one of her circle proposed taking Mises to task publicly for such things as she criticised privately in her “marginalia,” she reportedly advised, "Oh, leave him alone. He's done enough." And so he had. And so she admired.

And the admiration was reciprocated. Henry Hazlitt relates that he was walking with Rand one day, and told her that Mises had told him, "Ayn Rand is one of the greatest men in history." "Did he say men?" asked Rand. "Yes," Hazlitt responded. At which point Rand clapped her hands in glee.

Rand attended Mises’s seminars in New York, at which she really began her ‘formal’ education in economics. 'She acknowledged him,’ says Roy Childs, ‘as one of the greatest minds of our time, even while disagreeing with his philosophic base, and as having made a tremendous contribution to liberty.'

That he made such a contribution despite being ignored for his virtues and reviled for his acumen – he was one of the few economists for example to see the Great Depression coming, yet those who helped make it possible refused him admission to their universities when fleeing Nazi Germany – says even more about the man and his chosen motto. Against both evil and errors of thought, he proceeded across the course of his life ever more strongly.

UPDATE: The tributes keep coming …

Jeffery Tucker:
Every year in Silicon Valley, a truly lovely celebration takes place. It is centred on the birthday of Ludwig von Mises, who was born in 1881 and died in 1971. Despite the dark times for human liberty that defined his life, he fought with indefatigable valour.
    For many of the technology giants who gather at this event, Mises remains an inspiration. And so they gather to pay homage to his ideas and his enormous contribution to the intellectual life of his times and ours.
    This year, the seventh year in which it has been organized, I was honoured to be the chosen speaker. We gathered at the offices of Cypress Semiconductor. T.J. Rogers, CEO of the company and a huge fan of Mises, graciously agreed to be the host (and provide all of the awesome wine made in his own vineyards!).
    Most of the people who attended — and there was record attendance — had read something by Mises, and many were truly experts in his work. They were academics, students, technology executives, code slingers, writers, and just general fans of freedom.
    My task was to illustrate Mises’s relevance in the digital age. I chose three ideas that were unique to Mises in his time that translate beautifully to the digital age.
The value of ideas
A key claim shared by the socialist and fascist central planners one hundred years ago was a materialist conception of history. To the Marxists, the course of history was determined by large impersonal forces that push history through stages of evolution, independent of the ideas that people hold. The central planners imagined that the sum total of life quality could be captured in tangibles that were arranged according to a central plan.
    Mises took another direction in pointing to ideas as the “ultimate data of history.” To him, all human action is a manifestation of the mind. That is true of economic value and action but also of political trends. . . .
In his first book on politics, Nation, State, and Economy (1919), Mises wrote: “The idea of liberalism starts with the freedom of the individual; it rejects all rule of some persons over others; it knows no master peoples and no subject peoples, just as within the nation itself it distinguishes between no masters and no serfs.” … Only the individual thinks. Only the individual acts. Only the individual creates value. And only the individual can bring about sustainable social and economic progress. . . .
If there was one feature of the prevailing economic models of Mises’s time to which he objected most strenuously it was their failure to grapple with entrepreneurship as the driving force of economic progress.
    Entrepreneurs begin with ideas. They face an uncertain future. They apply real resources in risky environments in order to realize a dream. Their ideas are tested by the market, and success results in profits. Those profits are an indication of the presence of social progress: finding the best possible use of scarce resources to serve humanity in the best possible way.
    How can you capture entrepreneurship in a model? How can you account for it in an empirical prediction? How can you make it part of a central plan imposed upon society?
    None of this is possible. . . .
Read the whole piece: Mises in the Digital Age: Happy 134th birthday to Ludwig von Mises!

‘Ocean Waves,’ by Hokusai

Hokusai Katsushika (1760-1849), Ocean Waves, Woodblock Print

Tuesday, 29 September 2015

On not driving helicoptered kids to school

How has your driving to work been these last couple of days? I’ll put money it that it’s been way better for you too, now that kids are enjoying their school holidays and, crucially, their mummies aren’t driving them to and from school twice a day!

Subtract those four trips a day from the traffic on our clogged roads—four trips multiplied by a frighteningly large proportion of the 770,000 children who attend school every day—and you get roads that work they way they were designed to.

And the kids are all better off too.

Why can’t stay-at-home mums stay at home and let their children make their own way to school? Fair question. Crime is decreasing, roads are safer, finding their own way to and from school is a great way to encourage and develop independence … but they don’t. Instead, every morning and every afternoon, these helicopter mummies strap their babies in, cocoon them in the safety bubble of their family car, and then head out to fill up the roads and help ensure their babies never fully grow up.

Want safer kids? Send them into traffic.

It would be much better for all of us.

Think about how important it is for your child to learn independence; place the infinitesimally small (and falling) chance that something bad might happen to them while walking against the certainty that something bad will happen to them if they don’t: they will never fully grow up.

Crikey, even the so-called “walking buses” you see—those regimented cocoons boasting hi-vis-vested volunteers guiding children along the street as if fearful they might show an interest in what’s going on around them—even those are more about exercise than they are independence. Yes, they help everyone else using the roads by keeping a few mummy’s cars off it, but they’re a symptom of helicopter childcare rather than a thirst to break out. If independence is your goal and you do have volunteers who want to help, then why not try this for your “walking bus”: instead of having your volunteers walk with the children as little policemen, with the volunteers taking responsibility for behaviour, have them stand only at the trickier street corners to ensure children know what they’re about there, and take their own responsibility for the rest of their journey.

If you want your children to become adults, then letting them learn how to make their own way is crucial.

Lenore Skenazy from the highly-recommended Free-Range Kids blog (a Free-Range Kid being “a kid who gets treated as a smart, young, capable individual, not an invalid who needs constant attention and help”) points out that you have a chance to let them start.

Coming up on Oct. 5 is a great holiday: International Walk to School Day. The only sad thing?
That we need it.

She offers three tips for helping children become streetwise:

1. Teach them to cross the street. Above and beyond the look-both-ways mantra, Skenazy advised her own sons to make eye contact with drivers when possible at intersections, telling her children that while drivers don’t have the right of way, they often take it.
2. Never multitask while crossing the street. No headphones, music, calling or texting at an intersection.
3. Speaking to strangers can be okay, but never follow one. On public transit, such as with her son’s infamous first solo subway ride, children may want to ask for help with directions, which Skenazy encourages. “You can always talk to a stranger, you cannot go off with a stranger,” she says. And teaching children to only speak to mothers with children or police officers is unnecessary, Skenazy says. “The odds that the person you ask for help is a murderous stranger is very small,” she says. “And most people like to help each other.”

Basically, Skenazy says,

giving your child a free-range childhood gives them a place in the world, not just inside our homes.
    But whether you're letting your 8-year-old walk to school on his own or letting your 6-year-old daughter walk up the path by herself, wannabe free- range parents might consider the story of a 10-year-old kid who rode his bike across the George Washington Bridge to New York City on his own.
    He pedalled 30 kilometres down unfamiliar roads and busy streets, past neighbours and strangers, out into the unknown. "I didn't need help from anyone. It took me all day, but I found the way and did it myself," he recalled.
    This free-range kid went to the moon. His name is Buzz Aldrin.


$1,500 Sandwich Illustrates How Exchange Raises Living Standards

“Man stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons… Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in their favour…
     It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. We address ourselves not to their humanity but to their self-love…
…[B]y directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention….
…. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” [Emphasis mine]

~Adam Smith, from The Wealth of Nations

"Here is a worker whose daily wages is four francs. With two of them, he can purchase a pair of stockings. If he alone had to manufacture those stockings completely—from the growing of the cotton to the transporting of it to the factory and to the spinning of the threads into material of the proper quality and shape—I suspect that he would never accomplish the task in a lifetime."
~ Frederic Bastiat, from his Economic Harmonies

$1,500 Sandwich Illustrates How Exchange Raises Living Standards
Guest post by Chelsea German

What would life be like without exchange or trade? Recently, a man decided to make a sandwich from scratch. He grew the vegetables, gathered salt from seawater, milked a cow, turned the milk into cheese, pickled a cucumber in a jar, ground his own flour from wheat to make the bread, collected his own honey, and personally killed a chicken for its meat. This month, he published the results of his endeavour in an enlightening video: making a sandwich entirely by himself cost him 6 months of his life and set him back $1,500.

(It should be noted that he used air transportation to get to the ocean to gather salt. If he had taken it upon himself to learn to build and fly a plane, then his endeavour would have proved impossible).

The inefficiency of making even something as humble as a sandwich by oneself, without the benefits of market exchange, is simply mind-boggling. There was a time when everyone grew their own food and made their own clothes.  It was a time of unimaginable poverty and labour without rest.

The greater the number of people involved in exchange, the more beneficial the process becomes. This morning, thanks to international trade, I am drinking coffee grown in Latin America, viewing a computer screen with eyeglasses made in Europe, and typing this blog post on a keyboard made in Asia. Fortunately, freedom to trade internationally has improved, on average, around the world. Increased trade has helped raise living standards and decrease global poverty.

However, the recent trend in the United States is less positive. If trade protectionist politicians, like Bernie Sanders on the left and Donald Trump on the right, have their way, then U.S. freedom to trade internationally may deteriorate further. They put down trade by claiming that it harms the U.S. economy and destroys jobs. Yet, there is a widespread agreement among economists that free trade is key to prosperity. (Learn more about the relationship between increased trade and jobs here).

This morning, as you drink your coffee, take a moment to consider where it comes from. You probably would not be drinking it right now if it were not for trade. This video elegantly draws attention to the myriad ways in which the exchange of goods and services across national borders touches lives and helps raise living standards. Almost everything you use is the product of a complex web of human cooperation, often extending beyond your country. Even something as simple as a bag of groceries or a pencil is the end result of a “symphony of human activity that spans the globe.”

Chelsea German is the managing editor of, and a researcher at the Cato Institute.

Follow her on Twitter.

Her post was reposted from the Cato at Liberty blog.