Friday, July 09, 2010

FRIDAY MORNING RAMBLE: “I know a man with a shed…”

As the oil still spills and the Taleban remain undefeated, the news slowly dawns around the world that economic recovery will not be achieved simply by stiff doses of confident talk and stimulus packages,in New Zealand however we’re talking about two sheds.  And Andy Haden. Which in many ways sums up New Zealand.
On with this week’s ramble then, which will cast its eyes a little further. But first, those sheds…

  • …on which the two best comments comes from master speech-writer David Slack:
            ”Mr Key, Mr McCully. Embarrassing to see you couldn’t organise one on a wharf. Might
        still look OK if you can manage one in a brewery.”
    And:
            ”About this ‘evil genius’ reputation McCully enjoys. Is it a part of the trick that we cannot see it?”
  • There are many candidates, but on the basis of her recent comments, Jeff Perren reckons Nancy Pelosi must be the  Baghdad Bob of Economics.
    Nancy Pelosi = Baghdad Bob of Economics – SHAVING LEVIATHAN
  • In NZ, we’ve seen it all before. If Australian PM Julia Gillard is just Helen Clark with sex appeal, then is US Supreme Court nominee Elena Kagan just Margaret Wilson with both legs?
    Elena Kagan and Margaret WilsonSTEPHEN FRANKS
  • Mark Hubbard is getting that “head for the hills” feeling.
    ”With the heavy handedness of this NZ government: the destruction of the reputation of Allan Hubbard …); with the abolition of a widely used business structure … at the stroke of a pen; with Peter the Persecutor Dunne bragging at how he has got so much money from the taxpayer to persecute the taxpayer with; the ETS foisted on us; increases in GST; increases in ACC; even the cynical move of the Double Dipper from Dipton announcing a 28% corporate tax rate, in the knowledge that from the tax law created from Case W33 through to Penny and Hooper, the IRD will take most companies trying to actually use this tax rate for anti-avoidance - with all this, I have been viewing Aunty Helen and Papa Michael with some nostalgia…”
    Heresy? Or reality.
    Very, very good Linz. I've… – Mark Hubbard, SOLO
  • I love it when economists say that “[economic'] forecasters are off with the fairies.” Rodney Dickens reckons the predictions of “the Reserve Bank and the 10 forecasters surveyed by NZIER in June … predicting robust economic growth over the next two years and robust growth in residential building activity … are dubious.” I’d say he’s being too kind.
    A rift between housing market and economic growth prospects [pdf]– RODNEY’S RAVINGS
  • “[America’s] fiscal position has deteriorated appreciably since the onset of the financial crisis and the recession.”  The origin of that observation: Chairman of of the US Fed, Ben Bernanke. 
    But he’s still missing something, says Money Morning Australia, “No mention, of course, of the crucial role of the Federal Reserve, which was to create the money to create the boom, which created the bust, and now to create the money to bail everybody out so that we, as a nation, would have time to leisurely wait for some miracle to happen, sort of like at the end of old Grecian dramas where the plot has become so impossibly and hopelessly tangled up that the only solution was to resort to a
    deus ex machina
    …”
    Government and Economy Decline In TandemMONEY MORNING AUSTRALIA
  • “The current fiscal and monetary crisis in Europe should be viewed as an opportunity to reverse course -- to do away with the Euro, and return to national currencies in a setting in which the citizens of all the European countries would have the freedom to choose and use which ever currency in which they have the most confidence.”
    Competitive Currencies Instead of the Euro Monopoly – Richard Ebeling,  IN DEFENSE OF CAPITALISM
  • He’s not entirely versed in sound economics, and I suspect CNN secretly just likes the Princeton vs Harvard schtick, but historian Niall Ferguson once again does his best to  tear down Paul Krugman’s vainglorious “let’s print money” solution to economic depression.
  • Meanwhile, George Soros plans to invest $200m to oust “free market economics” from academia.  (Free market economics? In academia!? But where would he find it?)
    Converting the Preachers – NEWSWEEK
  • And look! Here’s an “amusing 1933 propaganda film trumpeting government inflation as the cure for depression and hailing FDR as a great visionary. Yousa, yousa, happy days are here again!"
    "And Then Kiddies, We'll All Have Noodles in our Soup" – Doug Reich, THE RATIONAL CAPITALIST
  • Arizona's "Papers, please" anti-immigrant law is showing signs of unintended consequences even before it goes into effect.
    "We are getting to see more empty houses as the Mexican population is starting to leave. Not all of course, but quite a lot. I see it here in Surprise," says agent Sylvia Rivera.
    Unexpected Economic Consequences in Arizona's Immigration Law – PBS NEWS HOUR
  • John Stossell takes on Parasitic Tort Lawyers. And yes, there does appear to be a redundant word in that last sentence.
    Parasitic Tort Lawyers  - John Stossell, TOWN HALL
  • What value do speculators bring to financial markets? Tim Worstall offers Johann Hari a lesson: [hat tip Stephen Hicks]
    Please, someone teach Johann Hari some economics! – TIM WORSTALL
  • What is the real lesson and future for the tea party movement? And how large an impact will they have on the upcoming elections? The guy who kicked off the tea party movement with an onscreen rant against bailouts, Rick Santelli, is asked to opine.













  • Iraq is "reverting to its former freedom-less ways", according to Stanford University professor Joel Brinckley. Is this the failure of democracy, wonders Mike "Zemack" LaFerrara, or democracy in action?
    Iraqi Democracy vs. Freedom - Mike "Zemack" LaFerrara, PRINCIPLED PERSPECTIVES

  • And closer to Gitmo…at least in relevance, if not in proximity...
    Yet another former Gitmo inmate returns to the jihad – JIHAD WATCH

  • If you think there is any humor in the BP Oil Spill, check your premises.
    BP and Coffee or “Why I’m Not Laughing” – Kendall J, THE CRUCIBLE

  • 100614_FW_CharlesTN Here’s something for the monarchists. Christopher Hitchens on Prince Charles. “This is what you get when you found a political system on the family values of Henry VIII… This is what you get when you found a political system on the family values of Henry VIII.”
    Charles, Prince of Piffle: A very silly man gives a very sinister speech – Christopher Hitchens, SLATE

  • Here’s a big lesson in ethics.  Give this nun a big hand for forgiveness. Or appeasement.
    Ex-nun forgives men for chopping off hand – NZ HERALD
  • The three words that sum up courageous resistance to Islam are Ayaan Hirsi Ali, the brave and always articulate opponent of Islam’s culture of cruelty. In this wide-ranging interview she talks of western reaction to honour killings and other culturally-based religio-barbarism, saying  it’s not enough just to condemn the repeated acts of cruelty, especially against women, but also important to recognise its source—the source the perpetrators themselves cite.  Which is Islam.
    And I love her comments on the way people use the left-right divide as a way to refuse to listen.
  • Which seems like a good time to show you some of what you’ve been missing if you weren’t at OCON, the Objectivism conference currently being held in Las Vegas, or reading #OCON, the Twitter tag taking comments and updates from the conference. So here’s a brief selection of “tweets” slightly cleaned up—not quotes exactly, but the briefest of tantalising glimpses into the week-long conference:
    • The Enlightenment in 4 words: Nature, Reason, Rights, Constitutionalism – Brad Thompson
    • US Founding Father saw their tax rates raising from 2% to 3-4%... and they considered *that* slavery– Brad Thompson
    • Foreign policy is always an expression of domestic policy – John Lewis
    • The vault of the Vatican is as bankrupt as the church itself. – Eric Daniels
    • A crucial error close to the root of Marx's economic theory is his not understanding marginal utility. – Eric Daniels
    • Daniels on marginal utility: Would you like a beer? How about 2? How about a keg? 60 kegs? 60,000 kegs
    • Modern economists like to differentiate between “positive” and normative economics; they prefer “positive” economics, i.e., “value-free” economics, because its just a whole bunch of mathematics. But the reality is that normative economics addresses the real arguments, centered around the morality,i.e., the value,  of particular behaviours. – Eric Daniels
    • The Egalitarian view on luck : no one is fully in control therefore no one deserves anything. – Diana Hsieh
    • Going forward any PhD candidate at George Mason university in Economics will have to read Atlas Shrugged & OPAR – John Allison
    • If we're serious about changing the culture...there is only one example in modern history: Kant - John Allison
    • Rand is the powerful philosopher with the right ideas (a non-trivial competitive advantage). - John Allison
    • We should think in terms of academic "clusters". e.g. Clemson Uni has 3 objectivists and 2 fellow traveller professors. That's a cluster. The Duke cluster - 11 Objectivists & Fellow travellers... - John Allison
    • John Allison’s new Foundation will take BB&T’s programmes America-wide. Within ten years he can foresee around 200 unis participating…
    • I believe that Oism will be the dominant secular philosophy in 25 yrs. I believe its possible. Committed to make that happen – John Allison
    • There’s no alternative for the culture but for us to be successful in the next 20-25 years. – Yaron Brook
    • In 1985 I was surprised if someone knew [who Ayn Rand is], now I’m surprised when someone doesn’t. – Michael Berliner
    • Patent infringement is an indirect use of force; just like fraud and libel - I'm obtaining from you, without your consent, your property. – Adam Mossoff
    • Not enforcing a patent is allowing someone else to take your intellectual property though indirect force. – Adam Mossoff
    • Scarcity is an invalid concept on which to base property rights; value is the proper concept. – Adam Mossoff
    • Patents protect the material reproduction of an idea, because that is where the value is actually realized. – Adam Mossoff
    • Software patents are very new ... they weren't permitted until 1981... they are legitimate and valid. They recognize that the value of software is in the product (what is produced by the code, not the code itself). – Adam Mossoff
    • "The patent system added the fuel of interest to the fire of genius." Abraham Lincoln
    • “John Allison only wears digital watches because he never wants to be a second hander” - AbsoluteKeenan
    • "The good man is his own best friend" – Aristotle
    • Production=process of accumulation, Wealth=total accumulated, Money=medium of accumulation. – Eric Daniels
    • The biggest victims of welfare are the ambitious poor. – Yaron Brook
    • "Rights" must be reclaimed from the Left and its perversion of the concept. – Yaron Brook
    • "Capitalism" does not poll well. "Free enterprise" polls better. What does it mean? Well, I guess it means whatever polls well. – Yaron Brook
    • I dont believe the tragedy of the commons is valid. Certainly when you create a commons you have a tragedy. The answer: Eliminate the commons. – Yaron Brook
    • When talking about the environment, ask, 'Who's environment? – Yaron Brook
    • Man's environment has has never been better. Ever, ever, ever. – Yaron Brook
    • The role of technology is increasing the conversation. I bet someone is tweeting this right now – Yaron Brook [heh, heh]
    • "My licence plate reads: DIM WIT 1" – Leonard Peikoff
    • When Christian Religionists first heard about Aristotle in the 13th century they were astounded and horrified, it overthrew everything they believed. – Leonard Peikoff
    • Christian Religion first created Totalitarianism. Modern totalitarians stole even the small details from the Christians. I have to say emphatically and without any trace of hyperbole: Christianity invented Totalitarianism. – Leonard Peikoff
    • Conceptual shrinkage is inherent with a disintegrated mode of thinking. One comes to despise ideology altogether because an ideology is an abstract system, and the disintegrated thinker cant function there. -Peikoff
    • The more you cut back on the integrating concepts, the less help the remaining concepts are to you. Ultimate result is a scorn for concepts. – Leonard Peikoff
    • A college education today leads to a student’s (conceptual) shrinkage. – Leonard Peikoff
    • David Harriman's new book 'The Logical Leap' explores what happens to the physics when philosophers abandon reason.
    • "Both the rationalist and skeptic are trapped inside their heads, and they can't find the way out to the real world" - David Harriman
    • Methods of difference and agreement are the basic methods by which we identify causal relationships, and we use them continuously.– David Harriman
    • Today physics is lost. There has been no progress in physics in a generation. The problem is epistemological. – David Harriman
    • The Hypothetical Deduction account of science basically states that scientists just guess and hope they're right. – David Harriman
    • [By contrast] the inductive approach to the acquisition of scientific knowledge has the simple solution to all the problems facing science education.– David Harriman A random presentation of facts is not an education.– David Harriman 
    • The way science is taught today teaches children to blindly accept floating abstractions, instead of thinking for themselves. – David Harriman
    • An intimate connection between mathematics and physical science is one of the key things missing in K-12 education today– David Harriman
    • Harriman says students with a full science education from his Falling Apple Science Institute would laugh if presented with global warming theory… (Falling Apple is a non profit working to revolutionize science education, created by Tom VanDamme and David Harriman).
  • So here’s how the Ayn Rand Institute summarises its first twenty-five years.
    Staying the Course: ARI 25 Years Later – DANIELLE MORRILL
  • “The right to private property was one of the central issues involved in the American Revolution. The colonists’ cries of “taxation without representation” were but protests of what they saw as an unjust taking of private property.”
    Independence and the Right to Private Property – Joseph, C. Phillips, BIG HOLLOYWOOD
  • B956Hayek’s Road to Serfdom is doing an Atlas Shrugged. After it shot to number one on Amazon’s lists, it’s now still hovering in the top ten.  And you can buy an original Australian first edition on TradeMe—bidding is currently a snip, at $499. (Bidding closes on Sunday.)
    THE ROAD TO SERFDOM. 1st Australian edition 1944 – TRADE ME
  • Eric Crampton highlights two ways of looking at Hayek’s Road to Serfdom. Was he talking about the inevitability of serfdom attendant on central planning, or the incompatibility of central planning and freedom?
    Stopping points on the Road to Serfdom – OFFSETTING BEHAVIOUR
  • Here’s a new book on my favourite conspiracy theory, written by a chap who was (in his first life) main counsel for the Republican minority on the Joint Congressional Committee that investigated Pearl Harbor from 1945 to 1946, and who became a close confidant of Ludwig Von Mises.  “Published for the first time in 2010, it blows the top off a 70-year cover-up,” say the publicists, “reporting for the first time on long-suppressed interviews, documents, and corroborated evidence.” I certainly intend to test out its claims.
    Pearl Harbor: The Seeds and Fruits of Infamy by Percy Greaves, Jr. – MISES STORE
  • Wondering what’s going on with  that Russian spy story? Isn’t it great how comedy can sometimes illuminate an issue. Especially when the correspondents are as cutely illuminating as Olivia Munn. So, why is everybody so excited about a few Russian spies…? Because this is something we can understand.
  • The leitmotif of the Climategate emails was the eradication from the academic literature of the medieval warming period. Yet not one of the recent
    inquiries discussed that. Go figure. At least one inquiry into Climategate by a non-skeptic was not a total whitewash, however.
    The Pearce “Inquiry” – Steve McIntyre, CLIMATE AUDIT
  • But were the conclusions based on science?
    Muir Russell: IPCC Conclusions Not Based on Science – CLAES JOHNSON ON MATHEMATICS & SCIENCE
  • Muir Russell says that they “have seen no evidence of any attempt to delete information in respect of a request already made”!
    You Can’t Be Serious! - TOM NELSON’S BLOG
  • “Those using human induced global warming for political and economic ends could not allow anyone to find there was something wrong with the data or the method. Instead they laugh in our faces with the most transparent, manipulated brazen cover up possible.” – Dr Tim Ball
    Climategate Investigations Are Arrogant Insults – Dr Tim Ball, CANADA FREE PRESS
  • New Chinese study disputes Mann's hockey stick : "current warm period we live in is neither unique nor unprecedented"
    New Chinese study in GRL disputes the hockey stick conclusions – WATTS UP WITH THAT
  • As the third Climategate report is published, even computer models turn against AGW alarmists. See:
    As third Climategate report is published, even computer models turn against AGW alarmists – Gerald Warner, TELEGRAPH
  • “"In the run-up to Copenhagen, we often heard the phrase 'the science dictates' - that we need a 40% cut in rich-country emissions by 2020, for example - when in fact only a very specific, and politically loaded, interpretation of the science implied any such thing.” - Dr Myles Allen, head of the climate dynamics group at University of Oxford's Atmospheric, Oceanic and Planetary Physics Department
    US climate scientists receive hate mail barrage in wake of UEA scandal - GRAUNIAD
  • If you thought that climate alarmism would die out after the revelations of the ClimateGate enails, then those three whitewashed reports released after three circumscribed inquiries into the revelations of those emails should leave you in no doubt that the roots of climate alarmism are much deeper than that—and, as Keith Lockitch points out, will require philosophical fumigation to expunge. (To view the video, follow this link, then scroll down to find the title slide for Keith’s talk.)
  • lockitchclimatechangeconf41
  • Despite a worldwide campaign against this high-yielding oil, does palm oil - a high-saturated fat tropical oil - protect against heart disease?
    Tropical Plant Fats: Palm Oil: A Fatal Case of NutritionismWHOLE HEALTH
  • I wonder if you, like me, had never seen a cardboard bridge before…
     Gallery: CARDBOARD BRIDGE by Shigeru Ban – INHABITAT
  • Paul McKeever 's short film "The Principle of Pot," “starring: Marc Emery, Ayn Rand and others,” scores a great review in California’s 'Culture magazine .
    Online Documentary Review: The Principle of Pot, Parts I and II – CULTURE
  • After the parliamentarians’ resounding rejection of medical marijuana treatment for NZers, here’s a commentary on Colorado's treatment of its nascent medical marijuana industry.
    Pot Microcosm Of Wider Markets – Jeff Montgomery, FUN WITH GRAVITY
  • About this time in a post, I always like to look at a picture of an elephant on waterskis. Well, doesn’t everyone?
    An elephant on waterskis – QUOTE UNQUOTE
  • Speaking of songs you can’t get out of your head, as someone was, this song sung by the The Who’s Keith Moon has been in mine for weeks—and I only heard it once!  I warn you, whatever you do, not to touch it.  It’s a virus, I tell you.
  • So as an emetic, here’s the first part of Ernest Bloch’s Concerto Grosso [hat tip T. Shoebotham]
  • And this? Well, this is probably just the finest piece of music ever written—the “Love Death” from Wagner’s Tristan & Isolde. And Waltraud Meier’s not bad either. (Psst: This Sunday, the Auckland Wagner Society are showing on the big screen at the Auckland Uni Music School, 6 Symonds St, a recent production of Tristan & Isolde. Come along and join us. Starts at 4:30pm, and it goes for hours.  :-)  )

I think it’s almost time for a beer. This week, I think it’ll be a Cooper’s Original Pale Ale, supplies of which are appearing in greater numbers all across this great land.
Coopers Pale Ale 
Have yourself a great weekend,
PC

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‘Pursuit’ – Michael Newberry

Pursuit
Pursuit, 1984
oil on linen, 80 x 60 inches
What a stunning piece of art! Just who is pursuing whom, and for what? Perhaps the artist's explanation might help. . .
_Quote With a passion bordering on insane somnambulism I poured everything I had into pursuing the furthest reaches of my art. It was wild. I worked 16 hours a day for six months, somewhere I remember the crunch of ice outside under my shoes. I worked to integrate: the fantastic dramatic spotlight affect of Rembrandt; the wet-clothe technique of ancient Greek sculptures; the romantic themes of Delacroix; and the pure vibrant contrasting colors of the Impressionists (the painting has no black). I made more studies than I can remember. And it slowly took form. Once, for this piece, I went into Wall Street late at night to make a pastel color study of the granite wall of a skyscraper; got very curious looks from a patrol... Pursuit is the work I am most proud of.”
Visit the artist’s blog here, and tell him how much you love it. He’ll love you for it.

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Thursday, July 08, 2010

Come learn about rational education

presentationYou can’t create real cultural change through a lecture, or just through blogging.  As philosopher Leonard Peikoff said yesterday, “You can only reach the culture through the educational system.”

So if you want to know about the only rational method of education, then listen up.  Here’s your chance. Next week in Mt Eden there is an information afternoon at the Maria Montessori Education Foundation (MMEF) training centre that you can attend, and learn more.

 _Quote This occasion will provide you with an opportunity to find out more about the forthcoming A.M.I. (Association Montessori Internationale) Early Childhood Teacher Education Course, to talk to A.M.I. Montessori teachers and other members of the Montessori community & learn about Montessori Education.

p_redrods The afternoon is primarily for prospective students of the A.M.I. Montessori (3-6) Teacher Education Course to be held in Auckland in 2011-2013, or for those who know someone who they think would like to be a prospective student—or, really, for anyone who’d like to know more about Montessori education and get a hands-on feel for it. Which is everyone with a brain—or should be.

The people at MMEF are folk who love Montessori education and what it can do for young children, and they want you to love it too.

So come along to find out more, and don’t forget to bring a friend.

Date: Tuesday 13th July
Time: 4:30pm – 6:00pm
Venue: The Quakers Meeting House, 113 Mt Eden Road, Mt Eden, Auckland
RSVP: By Friday 9th July to mmef@ihug.co.nz

To find out more about the AMI 3-6 Course visit mmef.org.nz.
To find out more about Montessori in New Zealand visit montessori.org.nz, or watch this brief introduction:

And finally, and on a lighter note … to find out more about what Montessori is not, then visit the new website of the Montessomething School, a website satirising schools that take the name Montessori but disregard the actual methodology.  If you know anything at all about real Montessori schools, this will have you in stitches.

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Stimulus in pictures

From the US, three pictures worth three-thousand words, about 8.4 million jobs:

1278448919-image1 1278448919-image2

Just something else that those promoting further stimulunacy should think about.

This is what economists like Frederic Bastiat and Henry Hazlitt meant when they said that,

_QuoteThe art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Notes the Casey Report,

_Quote Since January of 2008, the private sector has shed 7.9 million jobs, reflecting a decline of 6.8% in total private employment over the past 30 months, while the federal government has added 469,000 jobs, indicating an increase of 17.1% over the same period.”

Hardly needs further commentary, does it. For more words, however, about why the jobs have disappeared, head to the blog The Economic Collapse.

And if you want to be reminded how Australia’s Stimulus Destroyed 77,000 Manufacturing Jobs …

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“Two sheds” that expose the puerility of political power

You’ve probably read abut the circus-and-a-half now going on down at Queens Wharf, the on-again off-again with-sheds or without location and locus of the politicians’ Party Central and Rugby World Cup “fanzone.” The circus is probably best summarised by David Slack:

“Mr Key, Mr McCully. Embarrassing you couldn't organise one on wharf. Might still look OK if you can manage one in brewery.”

You have to laugh.

But think about this for a moment. Every three years you and your friends troop into the polling booth, and vote to give more power to politicians to plan your life. Maybe every time you do you should think about the circus politicians make about a simple piss-up. If the political process can’t plan that, why would you want it planning your life?

But maybe you think agree they can’t (and shouldn’t) plan your life, and shouldn’t be allowed to try—but you still think they’re the best ones to plan where so much of the country’s money is spent.

Well, quite apart from the morality of that notion (whose money?), hasn’t the revelations of their credit card spending rather exploded that notion for you as well?

So perhaps every time you find yourself thinking to yourself, “we” need to do this and “we” need to do that, just think instead of those two sheds on that windswept wharf and the stuff up they’ve already made trying to organise one down there … and think again.

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So what’s this #Ocon thing, then?

Those people following me on Twitter might both be wondering what all the quoted, re-tweeted material is from something tagged #Ocon. 

To save your confusion, or just because you’re wondering why the tweets sound more cogent that usual, I’m “re-tweeting” lecture updates from the Objectivism conference (OCON) currently being held in Las Vegas. And people posting these updates have tagged them with #Ocon so those of us not in Las Vegas can follow them (these “hash tags” is how Twitter allows you to follow a particular subject.

Just thought you’d like to know.

And you might like to know that at the moment I’m following Adam Mossoff’s lecture on Intellectual Property Rights: Securing the Values of the Mind.  Not bad what you can do from around ten-thousand miles away.  :-)

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CUE CARD ECONOMICS: Demand

The way some alleged economists talk about “demand” and how to boost it, you’d think that  boosting demand was just a matter of wheeling out the printing press and machine-gunning retailers with paper money.

If only reality worked as well as their fantasies!

Sure, in all those Keynes-inspired textbooks boosting demand is all simply a matter of combined fiscal & monetary legerdemain, but as we discovered in the seventies after two decades of this kind of poncing about, the result of this sleight-of-hand is not a medium-term boost to demand, but stagnation, inflation and a long-term dilution of purchasing power of the currency in which the printed paper is denominated.

In reality, i.e., the place where we live and work, demand comes not from the printing press, but from production. The so-called “Classical Economists” understood this perfectly.

They understood that wishing for something doesn’t make it so.  Demand, they said, is not just a pent-up desire; it is “the will combined with the power of purchasing.”

_Quote The will to purchase can be taken for granted [explains George Reisman]. All that is required to enlarge demand is the power of purchasing.  And all that is required to enlarge the power of purchasing ... is an increase in production. In the words of David Ricardo, the desire to consume ‘is implanted in every man’s breast; nothing is required but the means, and nothing can afford the means but production.’”

It’s so simple, it’s no wonder Keynes tried to deny it. When I supply a bunch of stuff, and you offer to exchange it with me for something I value more (the very basis of trade), what I want for the goods I’ve supplied is not just coloured bits of paper but what those coloured bits of paper can buy.  The printing of lots of coloured bits of paper does nothing at all to increase what I can buy, in reality all it does is dilute how much real stuff those bits of paper can command.  The only way to produce more purchasing power is to produce more.

The Keynesian denial of this fundamental fact is not based at all on sound economics, but on the reification of consumer’s wishes as if they constituted the very power to create—on the fantasy of consumptionism “in which one not only can eat one’s cake and have it too, but in which one bakes one’s cake in the very act of eating it.”

_QuoteBut, in fact, consumers qua consumers are not part of anyone’s market; qua consumers, they are irrelevant to economics. Nature does not grant anyone an innate title of “consumer”; it is a title that has to be earned—by production.
    “Only producers constitute a market—only men who trade products or services for products or services. In the role of producers, they represent a market’s ‘supply’; in the role of consumers, they represent a market’s ‘demand.’ The law of supply and demand has an implicit subclause: that it involves the same people in both capacities.
    “When this subclause is forgotten, ignored or evaded—you get the economic situation of today...”
        [Ayn Rand, in ‘Egalitarianism and Inflation’ (1974)]

Demand is not just a pent-up desire; it is “the will combined with the power of purchasing.” In reality, it is something only producers can do.

This is part of a continuing series giving a common sense explanation of economic terms and concepts as used by sane economists. The series as it grows can be accessed through the Cue Card Economics tag.

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GUEST POST: Confusing the Property Right with the Implementation of the Property Right

Guest post by author, patent attorney and entrepreneur, Dale Halling

Many  entrepreneurs, inventors, and economists complain about the Patent System and intellectual property rights.  However, when you examine their complaints they are often concerned about how the patent system is implemented as opposed to the concept of property rights for inventions – patents.  For instance, an extremely successful entrepreneur and angel investor I know complained that patents increase the uncertainty when investing in a start-up company.  Because of the long time that it takes patents to issue, he protested that it is difficult to know when a patent might suddenly issue, affecting the business plan of a start-up in which he has invested.  

Other common complaints include that the patent system is expensive, is time consuming, and involves difficulties in determining the boundaries of a patent. Some people go so far as to suggest that this shows that patents are not a true property right at all—after all, they reason, it is easy to determine the boundaries of real property (i.e., land) and obtaining title to real property is a straightforward process.

Here, the complainers show that their ignorance of history.  Before the advent of title insurance, buyers of land paid an attorney a lot of money to determine if they would receive “good title” if they bought it from the seller.  This title opinion did not come with a guarantee and it was not cheap. In addition, you would have to pay a surveyor to determine the boundaries of your real property.  The survey process was expensive and fraught with problems until the advent of modern technology, such as GPS.  Our ancestors fought each other tooth and nail over the boundaries to their land.  In fact, court battles over land are a great way to trace your ancestry, because these battles were so common.

usptosealWhile the critics are wrong in their comparison between real property and patents, they are correct that we need systems that reduce the cost and uncertainty of determining the boundaries of patents (inventions) and whether the owner has good title (102, 103 issues).  In short, we need the equivalent of title insurance for patents.  I believe that standards committees (e.g., IEEE 802.11 WiFi) are acting like title insurance companies.  They determine which patents are essential to practice the invention.  In effect, they determine the boundaries of patents with respect to the standard and to some extent determine if these patents have good title to an invention.  I also believe that NPEs (Non-Practicing Entities) also act like title insurance companies.  Of course, many of the critics of the patent system do not like NPEs either.

I, too,  agree that the patent system takes too long to issue patents.  However, the problem is not with the concept of a patent system but with a government that has failed to fully fund the Patent Office. 

In the US, the Patent Office has always been funded by user fees, which are the fees that inventors pay to the Patent Office when they file for a patent.  However, when an inventor writes a check to the Patent Office the money is deposited directly to the general treasury account of the federal government.  Congress then appropriates these fees back to the Patent Office.  In the last two decades, about one billion dollars in user fees have been diverted from the Patent Office to Congressional pet projects. When Congress diverts (steals) a billion dollars of user fees from the Patent Office, it is not surprising that the Patent Office will take longer to determine issues of patentability,  increasing uncertainty for start-ups.  If Congress itself was subject to their own Sarbanes Oxley Act, they would all be thrown in jail for this diversion of fees.  In my opinion, the patent process has also become too formalistic and complicated.

These complaints that I have catalogued here are not complaints about patents per se, but complaints about the implementation of the patent system.  I agree that the present patent system is overly cumbersome, too formalistic, too expensive, and takes too long.  As an aside, I will point out that the critics of patents (IP) complain about their complexity but raise just a peep about a tax system that is over 10,000 pages and a new securities law that is over 1400 pages.  There appears to be a disconnect in their thinking.

Some of the solutions to the problems with our patent system will occur if the free market is allowed to create solutions like title insurance for patents.  Fully funding the Patent Office will solve many of the other problems, such as the lengthy pendency times.  Patents are completely consistent with John Locke’s formulation of property.  Patents like real property rights are fundamental to economic progress and human rights.

Dale Halling is an American patent attorney and entrepreneur, and the author of the book The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.
Read his regular thoughts at his
State of Innovation blog. 
(NB: This post originally appeared at the State of Innovation blog. It has been lightly edited and reformatted for clarity.)

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Wednesday, July 07, 2010

This is the way Australia plays the race card… [update 2]

“God damn you if the only two words you can find to put together when
talking about people who leave their homelands to seek a better life for
themselves and their families are ‘illegal aliens.’”

- James Kilbourne

What does an Australian Prime Minister do when she’s in desperate electoral straits?  Bingo! She pulls out John Howard’s “attack the boat people” card—a “flood” of 1500 souls trying to “pour” into a country of 20 million—in an attempt to nullify the third of three pressing Australian electoral issues. Imperator Fish gets it right:

“You know it's election year in Australia when politicians over there start beating up on asylum seekers.”

And on this one she’s looking for John Key’s help.  On that, I’m with the No Right Turn blog:

We should have no part of Australia's racist "Pacific Solution".

This is not an issue of Australia being “flooded” with hordes of refugees it can’t handle. The simple numbers themselves show that to be untrue. This is simply the way that Australia plays the race card—something it still unfortunately does too well.

And Key saying we’ve “got skin in the game” because “all of the intelligence advice that I have been getting as Prime Minister indicates we will be having boats coming to New Zealand”?  Then Prime Minister, you need to be getting better intelligence.  This is simply your own fantasy.

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“I want an iPhone4”

Not just funny, but it shows that you can make videos just by plugging in some text.  (And is it just me, or don’t those heads looks like breasts?)

[Sent in by reader Julian D.]

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Complementary Therapies for Cancer

It sometimes seems there are more quack therapies for cancer treatments than there are cancer patients.  Dr Shaun Holt, one of the good guys, talks to a talking head about his new book Complementary Therapies for Cancer that examines all the quackery, and discovers some useful complementary therapies.

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Robin Bain

I didn’t see last night’s doco on Robin Bain—the one that has David Bain’s lawyer “absolutely disgusted”—so I can’t really comment about what was said, but if you did see it what did you think?

The only comment I’d make is that the Bain murders are a rare example of a “binary” case, one in which the guilty party can only be one of either Party X or Party Y, and therefore proving the guilt or innocence of one has a reciprocal impact on the other.

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Vanity Fair’s ‘Top 22’ most important works of architecture since 1980

Vanity Fair magazine asked 52 of the worlds “starchitects” (.e., folk who design expensive boxes that look good in magazines and treatises) to select the five most important buildings, bridges, or monuments constructed since 1980 and the greatest work of architecture thus far in the 21st century.

What they came up with instead was 132 pieces of starchitecture (i.e., expensive boxes that looks good in magazines and treatises), of which these are their top 22. [Hat tip Archinect]

Surprising news from the survey?
Nothing at all by the best architect to to have emerged in recent years, Santiago Calatrava.

Most unsurprising news from the survey? 
Only these four structures out of all the twenty-two are worth a damn.

CLICK FOR STORY Millau Viaduct, France, Michel Virlogeux & Norman Foster

CLICK FOR STORY
Lloyds of London, Richard Rogers

CLICK FOR STORY
Vietnam War Memorial, Washington, D.C., Maya Lin

CLICK HERE FOR STORY Hong Kong Shanghai Bank, Hong Kong, Norman Foster

And the very best news from the whole survey? 
According to Vanity Fair writer Matt Tymaur in his interview with Charlie Rose, “Po-Mo is dead.”

Well, thank Galt for small mercies.

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Tuesday, July 06, 2010

So what happened to all those ‘green shoots,’ fellers? [update 3]

The recovery has stalled. 

Obvious enough to anyone actually on the ground trying to do business, this news would be a surprise only to a mainstream economist, or to anyone who listens to one. Like NZIER’s Principal Economist Shamubeel Eaqub, for example, who is surprised to have to announce that, “The recovery may be stalling. The outlook is still fragile.”

No kidding.

krugman But just imagine how all the mainstream economists must feel. Every economy in the world followed their advice and threw trillions of stimulus dollars against the wall, hoping that some of it would stick--and the result worldwide may be summarised in NZIER’s assessment of NZ’s last quarter: “The recovery may be stalling. The outlook is still fragile.”

So why are the mainstreamers (and those who take their advice) so surprised? Because, according to their lights, throwing out all those trillions to “increase aggregate demand” must have had some effect.  And of course, they’re right, it did.  It lit up some fireworks for a while, but at the cost of delaying any real recovery.

“The problems are not over [summarises Jim Rogers]. If you pump lots of money into an economy, it looks better but essentially it’s artificial. We are going to see more problems in the US over the next year or two.”

Nobel Prize winner and stimulus loon Paul Krugman reckons however that the problem is not too much stimulus, but too little. If we’re going to raise world demand properly, says this modern reincarnation of the Great Idiot Keynes, then Obama and The Fed (and, by extension, everyone else in the G-20 and beyond) needs to be thinking—not about austerity packages—but in terms of trillions of dollars more stimulus. If we’re going to successfully “raise demand,” then the world’s governments needs higher deficits, he says, not lower.

That he says this in the face of the near bankruptcy of several European governments for running the very deficits he applauds should tell you one thing about his favourite nostrum: that it’s really the height of irresponsibility.

But what it won’t tell you is why he wants governments to be so irresponsible.

The answer to that, however, is very simple. At least, I’ll try to make it simple. The reason he wants to boost government spending is because he thinks that will boost demand; and by boosting demand he thinks we can all boost GDP. It’s a simple idea, but it’s wrong as hell. (“If you pump lots of money into an economy, it looks better but essentially it’s artificial.”)

Let me explain why.

_pouring_beer-902 Imagine a very simplified economy consisting of only you and your one-hundred closest friends. An economy based on beer. (I told you it would be simple.) Twenty of you grow the hops and barley. The next twenty brew it into beer. The next twenty package it and sell it. The next twenty are your partners, who like to stay home and drink. And the next twenty work for the government, and they like to use their parliamentary credit cards to buy your beer out of the mini-bar.

So there’s your basic economy. 80 people devoted to making and drinking beer, and 20 devoted to getting the hell in their way. (Oh, did I mention that the first sixty get the pleasure of paying the credit card bill for the annoying bastards consuming the mini-bar?)

Now in the way of conventional economics, the formula for GDP has been cunningly contrived to measure only what the drinkers do, and not what the other sixty get up to. Here’s the formula for GDP (which has here been given the title of ‘Baloney.’)

GDP

C is Consumption, i.e., all the drinking done by all your twenty drinking partners.

G is Government, i.e., all the drinking done by all the twenty grey ones from the mini-bar.

And I … now that’s “Investment.”  And that’s a bit trickier, because it’s not total investment but only nett investment. Essentially this figure measures the difference between the six-packs of beer we sixty producers pay out to get things done, and the six-packs of beer we get back when we do things for others. So (to oversimplify a great deal) if our profit is ten percent, then only the work of six of us are measured in the GDP/Baloney figure.

If that sounds ridiculous, it’s because it is—yet that’s how ridiculous the GDP delusion is. It doesn’t measure production, it measures consumption. Rather than measure economic activity, what it does is bury the bulk of economic activity (i.e., the production of those other fifty-five folk) under this contrived figure of I, and then it contrives to ignore all fifty-five.  (As a measure of just how much it ignores, US GDP in 2006 was $13.4 trillion, whereas total business spending was $31 trillion, meaning businesses were spending $4.30 for every $1 spent on personal consumption. Policy-makers take note.)

It’s by this utterly contrived means then that alleged economists like Mr Krugman can talk about “raising GDP” through the “stimulus” of shopping subsidies (or as his mentor Keynes did, by the “stimulus” of building pyramids)—it’s because all that GDP really measures is what gets spent in the shops, and not hardly at all what goes on in the mines, factories and warehouses that makes all that spending possible.

And it’s the homage paid to this ridiculous economic equation that allows him to get away with it, and is so economically destructive--as you’ll see when we take another look at our simplified economy in recovery mode.

Let’s imagine our simplified consumers have all just had a party. A big blow-out. A boom. And now it’s the morning after. (What a bust.) There’s still hops a’pickin’ and still beer a-brewin’ in the vats, but your packaging and production cycle has got a bit out of whack, and the livers of your drinking partners are all feeling a bit tender.  Demand has gone down (and they’re starting to beg for the invention of some basic pain-killers), but in a short time production will be back on track and things ticking along again.

Then along comes Mr Krugman, and all he sees is calamity!  “Look!” he cries.  “Your “C” is way down. And your GDP/Baloney/Spending figure is flat! We’ve got to boost demand!”  And of course, he’s right. It is.  But it wouldn’t be right simply to print drinking vouchers so the twenty parliamentarians can raise “G” at the mini-bar, while ignoring the sixty producers who were trying to get things back on track, and whose production would have to pay for it (but whose total production has been “netted out,” i.e., minimised, in that figure for “I”.

Because their spending has to be paid for.  That demand must come from production. And if you start “stimulating” the economy simply by overstocking the mini-bar, without ever getting anything back for it, then you’ll wake up one day soon and find you’ve got no more six-packs set aside to pay for more hops and more barley. Which means no more beer at all.

And just because that bogus GDP equation allows alleged economists like Paul Krugman to ignore that, it doesn’t mean that you should.

Because as the great economist Ludwig Von Mises used to say, it’s not just the next generation who pays for deficits, it’s this one.  And the way we pay is by having our resources diverted today from all the good productive activity that the GDP equation ignores, into all the unproductive consumption that it picks up.

Which helps explain why the Paul Krugmans of this world (and their sophistic, simplistic equations) have helped make the recovery less likely, rather than more.

So to end this wee post, here’s economist Bob Murphy’s tribute to his favourite Keynesian moron, Paul Krugman (sung very badly to the tune of The Buckinghams’s Susan).

UPDATE 1: More good, related reading at The Cobden Centre: “Short sharp shock –'the Irish Route' or Keynesian Malaise?

UPDATE 2: I’ve rewritten an old Q&A (from January ‘09) to help explain the point:

Stimulus: Because all economies have performance issues

Q: What is the point of running deficits?
A: Because it’s demand that drives an economy, and we have to keep demand up to keep the economy going.  So when consumer demand drops, the government has to pick up the slack. That’s it’s job.

Q: By borrowing?
A: By borrowing, by printing money, by any way you can do it.

Q: But aren’t most business-to-business payments paid for out of real savings, not faked up demand?
A: Well, yes…but we can try to fool them for a while.

Q: For how long?
A: Long enough. Another three years if we need to.

Q: Until we turn into Greece?
A: Um…

Q: So does borrowing or printing money bring any new resources into existence?
A:  Well, no. In the first case it transfers existing resources, and in the second it just dilutes existing savings. But it does create new demand.

Q: But doesn’t your demand have to be paid for with real resources?
A: Well …

Q: So what you’re relying on is using your new bits of paper to redistribute existing resources in ways the original owners wouldn’t have otherwise agreed to.
A: They need to spend!!

Q: And at the same time you’re denuding the existing pool of real savings.
A: They need to stop saving and start spending!!  We need to run deficits to make up for the money that savers have withdrawn from the economy by their hoarding. 

Q: But how can you say savings are being hoarded when most business-to-business payments are paid for out of real savings?
A: Well…

Q: How is running deficits going to rebuild that shattered pool of real savings?
A: Um…

Q. Okay, let’s move on. What is an Economic Stimulus Payment?
A. It is money the government distributes to some taxpayers to boost demand, and stimulate economic activity.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. Only a smidgen.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a High definition TV set or a new computer, thus stimulating the economy.

Q. But isn't that stimulating the economy of China?
A. Um.

Q: Well, how on earth does it stimulate the one whose taxpayers are paying to be stimulated?
A: It's all about the "multiplier."

Q: The "multiplier"?
A: Yes, the "multiplier." Every dollar the government "injects" into the economy creates an even larger increase in national output -- a multiple up to one-and-a-half times the original spend-up. The money the government is giving away goes to retailers, which then goes to producers, which then goes to other producers and so on. The net result of the spend-up, as the theory goes, will be new jobs and an overall increase in the nation's income.

Q: So the government is giving me back a smidgen of my own money, and this smidgen is multiplied several times to create a "stimulus?
A. You've got it.

Q: And it keeps prices up?
A: We hope so.

Q: But don't the prices  that producers pay need to fall in a recession to get real production going again?
A: Well, yes.

Q: And it's not even backed by real demand, is it?
A: Well, no.

Q: So how long can such an artificial stimulus last, then?
A: Um, the theory is that it's only temporary at best.

Q: But you’ve been advocating running deficits and printing shopping subsidies to fix the economy now for nearly three years!
A: They haven’t been over-spending enough!!

Q: Well, what sort of stimulus would it have created if you hadn’t taken it off me, abd I'd been able to keep that money myself, and either spend it or save it?
A: Well . . .

Q: Or if producers had been able to keep their own money?
A: Um . . .

Q: So it would be fair to argue that "not only does the increase in government outlays not raise overall output by a positive multiple; but, on the contrary, [it actually] leads to the weakening in the process of wealth generation in general.”
A: But . . .

Q: And this is the whole theory? This is all you economists can come up with?
A: Well, that's about it, yes.

Q: So it's a bit like when "a carnival magician produces a quarter from behind a child's ear," isn't it. "The 'magic' of the multiplier is mere illusion."
A: Hush your mouth. People are listening.

Q: No answer?
A: Sorry, we're a bit busy right now shovelling money out the door.

* * * * Stimulus: Because all economies have performance issues * * * *

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