Friday, 8 March 2013

"Libertarian Porn”

Guest post by Jeffrey Tucker

    Twitter began by calling it "libertarian porn" -- the longest and most sustained attack on the State leviathan from the U.S. Senate floor in modern history. But then it became more. And more. It went on for 13 hours. It was about halfway through when the junior senator leaned over to an aide and whispered: "Can I get a candy bar?"
    He deserved it. Before the end of the night, the significance of what he was doing was being described as "epic." What began as a surprise political move became a bipartisan cry against all the evils of our times, which somehow all come down to the egregious power of the executive state and its omnipotent power over our lives and property. It became political theatre unlike any we've seen in many years. The target: all terrible things.
In short, it was a beautiful day on Capitol Hill.
    It all came courtesy of Senator Randall Paul, the man who has brought truth, excitement, fun, and the appearance of real-life morality back to the Senate.

    We aren't used to this. What normal person pays attention to politics, much less to the Senate? Here was something that actually happened -- for once. Something important. Something even... epic.
    This is a story about one man who decided to say, "Enough." It's a so-called "talking filibuster," a last-ditch effort that stops legislative action completely. Something undertaken only in an epic case, a time when there is a hinge of history. Is this that hinge?

Alice in Wonderland? Nicely played, Senator.

    Senator Paul's action began just before noon. He started by standing alone against the nomination of John Brennan for the head of the CIA. This Brennan guy is the top advocate of the drone program and the White House's super-creepy claim of the right to kill American citizens on American soil using unmanned aircraft.
    The White House that wants him appointed refuses to rule out killing you and me if dear leader thinks it is necessary. The policy as fact has been in place for a long time, but this administration wants it formalized.
    Are civil liberties at stake? It's a no-brainer. Well, why is there any controversy about this at all? How much despotism can the American people stand? How did we come to this point? How long will the politicians in Washington pretend like this isn't happening?
    There is an elephant in the living room. That elephant has been nominated to head an agency that has been up to no good since its inception after World War II. An agency that operates in secrecy and embodies everything that is wrong with the whole institution of government. And now some guy who favours the right to kill you and me on a whim has been tagged to head the agency.
Something's gotta give.
    Sen. Paul seemed to break the taboo. He finally said it: This winner of the Nobel Peace Prize is asserting the right to kill citizens right here, without any recourse to courts or law or anything related to the dead letter called the Constitution. His appointee is ready to do the deed.
    In his first hours, Sen. Paul said:

When I asked the president, can you kill an American on American soil, it should have been an easy answer. It's an easy question. It should have been a resounding and unequivocal, 'No.' The president's response? He hasn't killed anyone yet. We're supposed to be comforted by that.

    Again, his one question: Why won't the president say that he won't kill non-combatants with drones on American soil? The White House pretended none of this was happening.
    Just before noon yesterday, Rand Paul stood alone. Then others joined him. Still others. Rand talked and talked. He went on and on. The online crowd began to grow. And grow. The tweets grew and grew. Facebook went nuts. It went on all day. The Senate chamber filled up by the evening. The fracas became frenzy and then became a mania. Hashtag #StandWithRand became the Internet meme of the night.
    Here is how the global Twitter map looked a few hours before the filibuster ended, with #StandWithRand as the top hashtag used around the world (the larger the hashtag, reflects a larger number of tweets emanating from that area.)

    Everyone else is talking about what this means for the senator's political career. I have high respect for him, but truly, this is not the point. It is not about who is up and who is down. It is about the power of the government over the individual. It's been growing egregiously for a century. It's become absurd to the point that the "peace president" claims the right to kill us. When do we say no?
    Sen. Paul spoke for the multitudes. And he continued. And continued. It was brilliant. It stopped only once biological needs called.
    It's pathetic that it had to come to this to see some meaningful protest. Still. It's thrilling that this protest has finally come. That The Wall Street Journal and The New York Times heaped disdain on the Senator confirms that he was on the right track.
    I have my own theory about the meaning of all of this. I think it is about the digital revolution finally reaching the most impenetrable apparatus on the planet. Sen. Paul was the instrument, but the tune is made of technology.
I must invoke the memory of the prophet of our age Aaron Swartz. He is dead due to horrible hounding by the government. But before he died, he was working on a new software package that was extremely powerful. It offers a way to apply digital media to the cause of politics. He showed the power of his model with the 2012 attack on SOPA.  Pretty much working alone, he defeated this cursed legislation that would have disabled the Internet.
    Like most people, I long ago lost faith in the political process. It is a waste of time. It is a game for suckers and fools.  The government owns the system, and it will always be so, no matter who is ostensibly in charge.
    Yet... I respect Swartz. He might have been on to something. He posited that there is power when the people can swarm the state apparatus with digital communications: emails, petitions, tweets, memes, digital protests. This is different from regular politics. It is turning the machine upside-down and inside out, bypassing the lobbying, rallies, voting, and electing entirely in favour of direct confrontation between the ruled and the rulers.
    Remember that government is the most paranoid institution on the planet. It is extremely jumpy for that reason.  You know how the petty thief is always watching his back, worried that he is going to get caught? Government is like that. It is always and everywhere engaged in criminal activity. It mainly worries about being found out. It fears discovery. Digital media permit every American to say, "You have been found out!"
    Is that what's going on? It has made a difference in this case. The drone issue has been one that has sent a powerful signal to the power elite.
    Sen. Paul is a great political entrepreneur. He stepped out in front -- alone at first, but with the whole body behind him eventually, and today a large whole of the people too.
    Government should fear the people. Today, at least some sectors of the government are a bit more afraid than they used to be. My friends, that's victory. It is not about who will gain power next. It is about dismantling power completely, one step at a time.
    "Can I get a candy bar?"
    Someday, that candy will be freedom itself. It's coming. It's going to happen -- with or without our political leaders.
Jeffrey Tucker
Laissez Faire Club

Jeffrey Tucker is the publisher and executive editor of Laissez-Faire Books, the Primus inter pares of the Laissez Faire Club, and the author of Bourbon for Breakfast: Living Outside the Statist Quo, It's a Jetsons World: Private Miracles and Public Crimes, and A Beautiful Anarchy: How to Build Your Own Civilization in the Digital Age, among thousands of articles,

Thursday, 7 March 2013

ECONOMICS FOR REAL PEOPLE: First meetup for 2013!


Our friends at the Auckland Uni Economics Group kick off for the year tonight at Auckland Uni Business School with free pizza and book giveaways.

You’d be a fool not to join them. Here’s their invitation:

Hi all,
Hopefully you had a good break and are ready for another great year. We sure are.
With global economies and financial markets still in turmoil, what better time  to discuss the importance of economic ideas.
So, come along tonight to the first Economics Group event of the year and hear economic ideas and economic thinkers kicked around.
We will also be discussing some of the upcoming events taking place this year.
If you have seen us on Facebook, or stopped by our stall at O-week, and would like to find out more, then tomorrow's meeting is definitely a great opportunity.
        Where: Case Room 3, Level Zero, Business School Building
        Date: Thursday, March 7th
        Time: 6pm
We look forward to seeing you there
PS: Did we mention there will be pizza and some book giveaways?

The mystery of China’s “missing province”

There is a “missing province” in China that explodes the myth about China’s strong economic growth.

You see, China’s political leadership is nominally communist, but in every important respect is the same as Chinese political leadership since the time of Confucius: they have the “Mandate from Heaven” to live off the backs of others, just as long as they deliver the national goals, be they national pride, military success, and/or economic growth and prosperity.

Succeed in delivering the goals, with or without bloodshed, and the leadership has a job for generations—the makings of a dynasty. Fail, and the people will be at your throats faster than you can say “peasant uprising.” 

For the last two decades, the national goal has been delivering economic growth and prosperity—blessedly, for the rest of us, but as times get tougher and the populace gets restive, different goals might emerge which will be less of a blessing.

And times are getting tougher—not that you’d know it from Chinese GDP figures, which regularly show growth figures rocketing at over 7% every year, even while manufacturing surpluses pile up and ghost cities abound. But, as Li Keqiang, then-party secretary of Liaoning and now soon-to-be premier, said in 2007: GDP statistics were “for reference only” and “man-made.”  Completely man-made, especially when its imperative to maintain the illusion of continuing prosperity :

Early this year, China found a missing province, one doing very well for itself.  The total GDP for 2012, according to the National Bureau of Statistics, was 51.9 trillion yuan.  The total GDP figures of China’s 31 provinces for 2012 added up to 57.6 trillion yuan, giving the phantom 32nd province an annual GDP of 5.7 trillion yuan.  For many economists, this was just a shining example of what they have believed for years: that China’s GDP numbers are questionable at best, and often exaggerate China’s growth, largely for political reasons.

Note that the soon-to-be Chinese Premier did not say this publicly, “rather, his statements (reflecting what many officials surely believe) came to light in 2010 in a U.S. government cable released by Wikileaks.”

There are a number of reasons for doubts about the accuracy of China’s GDP, as Eve Cary notes at’ The Diplomat’:

  • .To begin, there are structural political disincentives to reporting accurate GDP figures at the local level.  Local officials are promoted almost entirely on the basis of their locality’s growth rates, giving them a huge incentive to report increasing GDP figures, no matter if they are or not.
  • At the central level [where the Mandate of Heaven bears most ominously], it is politically imperative that GDP continues to rise, primarily because the central government has erected a system on the promise of economic success, and fears instability should growth decline and unemployment rise.
  • There are also questions about the mechanics of compiling and calculating the GDP figures, including how much inflation is accounted for.
  • Economists also doubt China’s GDP numbers because they seem to be compiled unnaturally fast: the NBS takes 2 weeks to collect its data, compared to 6 weeks for the much, much smaller Hong Kong, and 8 weeks for the United States.  This year, 2012 GDP figures were published on January 18th.
  • Finally, economists are concerned about the sampling methods of the NBS … officials still “rely heavily on an old-fashioned input-output model of industrial value-added derived from the era of Soviet-style central planning” that is able to measure government investment, but not other sectors, such as household spending.

Take Chinese figures with a pinch of salt.  They’re not as inaccurate as Soviet-style figures. But they’re not far off it.

Wednesday, 6 March 2013

Hugo Chavez as dead as Venezuelan freedom [updated]

_ChavezPennHugo Chavez, the socialist who was celebrated by idiots while engineering Venezuela's rapid mass pauperisation, is dead.

The only thing about which to mourn is what he did to his country.

UPDATE: Here’s what Jeff Perren and I wrote for The Free Radical magazine back in 2007:

A challenge for socialists under thirty
by Peter Cresswell

What do you do when reality confronts your most cherished beliefs with unwelcome facts? "When the facts change," said economist John Maynard Keynes, "I change my mind. What do you do, sir?"
clip_image002[4]I ask because any socialist under thirty who is reading this will, if they're honest, be looking at the collapse of petro-socialist Venezuela and asking themselves some serious questions about socialism in practice. Venezuela's agony is not unique -- anyone over forty who's ever seen a news broadcast has seen it all before. Her fate was shared by every single country anywhere that ever adopted the destructive principles of More Socialism, More Government and the demonisation of capitalism and wealth production.
Both the collapse and the spiral into totalitarianism are the inevitable results of those ideals.
Peter Schwartz suggested back in 1995 that anyone over forty who had watched the collapse of the Berlin Wall and didn't draw the necessary conclusions about the abject failure of socialism as an ideology was either deluded, dishonest or braindead.

Those too young then but who share those same ideals now should have been watching current events in Venezuela with the same interest, and hopefully with your brains switched on. Those of us old enough to have watched the crumbling, the penury, the totalitarianism, and the eventual collapse of every socialist regime known to man know what socialism looks like when implemented. This is your generation's opportunity to watch and to learn.
clip_image004    The process is the same everywhere: First they nationalise industry, then they censor all opposition, and then slowly the people starve -- and by that stage there's no one left to speak out. For those with eyes to see, Venezuela is just the latest tragic lesson.
Chavez's nationalisation of Venezuela's energy and telecommunications industries, of oil fields, banks and steel producers, these were just his first steps. His recent ham-fisted closure of the only remaining opposition TV station is the next. In the socialist gulag, free speech is not to be trusted, as Yahoo News reported:

President Hugo Chavez's clampdown on opposition television stations widened Monday as police used rubber bullets and tear gas on demonstrators protesting what they called an attack on free speech. [The protests followed the] shutting-down of the country's oldest television station, the openly anti-government Radio Caracas Television network (RTC). On Monday several people were injured as police in Caracas fired rubber bullets and tear gas to put down a demonstration against the RCTV shutdown, following the fifth straight day of protests... RCTV was replaced by TVes, a state-backed "socialist" station...

Events such as these make the news.. The slow, stale stagnation of life (and death) under Chavez doesn't. Author Jeff Perren describes life under Chavez in the article below.

clip_image006Like I say, to those of who saw the heyday of socialism, we look at the destruction of yet another country by the failed ideology of socialism this with the benefit of hindsight. If we're honest about what we've seen, none of this is either unfamiliar or unpredictable. Those productive Venezuelans, for example, who went on nationwide strike four years ago to protest the imminent liquidation of their property rights and themselves under Chavez's communist revolution knew what they were about, and knew exactly what was afoot. Jonathan Hoenig makes their point:

As Ayn Rand wrote, "without property rights, no other rights are possible." Chavez’s socialism, under which private property does not exist, is bringing this once-promising country back to the third world. He might have called Bush “El Diablo”, but it doesn’t take much to see the effect of Chavez’s benevolent populism.

Simply put, he is leading his people down a pathway to hell.

And note well: It's the same pathway down which every single socialist country before them has gone. Make no mistake: this is socialism's inevitable result. As Jeff Perren sadly concludes, “Given the country’s current trajectory, it’s almost inevitable that many people will have to suffer and die, needlessly, before Chavez’s increasingly harsh and unworkable socialist policies are discarded.”

I urge any young socialist reading this not to let this suffering and despotism happen with your sanction. Socialism is a bacillus as destructive as smallpox. I implore you to learn from the suffering and dying in Venezuela; to refuse to sanction it; and to help wipe the bacillus that caused it from the face of the earth, just as smallpox itself was once eradicated.
    Leo Tolstoy said once that everyone thinks about changing the world, but no one thinks of changing himself. I'd like to turn that around. Changing yourself and your own ideals for the better is precisely where changing the world actually starts. That's where positive change begins. The battle against the destruction and human misery brought about by the ideals of socialism begins by rejecting those same ideals in yourself, and then by ensuring that what's being done to Venezuelans in the name of "people power" isn't done to you, or done in your name.
    "When the facts change, I change my mind. What do you do?"

Venezuela, Your Three Minutes Are Up
by Jeffrey Perren

By now, anyone following the news even slightly is aware that Venezuela has been speeding toward full socialism for the past few years, picking up speed with every passing month. Abstract debates of the value and validity of socialism versus capitalism are worthwhile. But, it's possible for those living under the latter to lose sight of the very real, everyday effects on those suffering under the former. A few words in her second language from a college student in Venezuela should help bring the issue closer to home.

Before I turn 18, I was already went to several manifestations [political demonstrations], run from the military, smell the tear gas..., seen people die not only because of political violence but also for poverty, hungry and common delinquency.
[Posted by ‘Corina’ at

Her English may be flawed, but her thinking is perfect. She goes on to say

Chavez supporters screamed 'larga vida al socialismo' [long life to socialism] know that if the democracy was in danger before, now it was killed for sure... in a very legal way. Of course, people should understand that not all things legal are democratic or fair. The law it’s a tool, [it] depends on how do you use it.

Shades of Atlas Shrugged.

History sometimes repeats itself with depressing similarity. In January 1969, Ayn Rand published an essay in the magazine The Objectivist entitled ‘The 'Inexplicable Personal Alchemy.’ In it, she discussed an editorial in The New York Times that reported on a Soviet trial of several young dissidents. After being sentenced for merely speaking his mind about the then-recent invasion and suppression of Czechoslovakia, a young man stated "For three minutes in Red Square, I felt free. For that, I'm happy to take your three years."

imageDuring the same historical period, pay phones were common around New York City, mobile phones being largely limited to limousines. A user could insert a quarter and receive in exchange three minutes of talk-time. When the time expired a recording would come on the line to inform the caller that "Your three minutes are up." At that point they could deposit more money to continue the conversation.

Sadly, some citizens of Venezuela will not be allowed to deposit another quarter in the near future, nor even to have quarters. President Hugo Chavez and his supporters (which, judging by recent election results there, is a large percentage of the country) will make sure of that. Those who would be willing to pay a quarter — for a phone call, a slice of meat, or other things we take for granted — will simply find that those things are not there.

But goods and services are not the only victim of the Venezuelan government's socialist policies. Chavez and his socialist government has been steadily nationalizing the telecommunications business in Venezuela. Seizing material goods isn't the be all and end all of socialist-inspired tyranny. No one must be allowed to criticize the plan, for that might expose it to uncomfortable facts.

The de facto nationalisation of TV and other media began some time ago. For example, when Chavez gives a speech, all stations are required to interrupt programming to carry it live in its entirety. That entirety sometimes lasts hours.

The recent shutting down of the popular Radio Caracas Television and its replacement by a state-funded channel -- by the simple expedient of refusing to renew its broadcast license -- completes a now-familiar pattern.

RCTV was the only channel still critical of Chavez that had an audience of any significant size. Chavez ripped their broadcast license, claiming that the channel “poisoned” Venezuelans with programming that promoted capitalism. One thing Chavez knows well -- as does many a socialist dictator -- is that socialist ideas can't compete freely with those of capitalism. That is, they can't both compete and at the same time hope to rationally persuade the general public who just wants a better life. Hence, force must be used to shut off debate.

But in at least one instance, there was an opposing voice. As Corina puts it so eloquently:

Suddenly there’s a line in the middle of the TV screen and the rebels’ TV Channels shows in the right side Chávez speaking and in the left side, a familiar street of Caracas downtown, some smoke and confusion and some letters that says "1 muerto..2 muertos" [1 death, 2 death]. And then no TV at all, no Chavez, no streets, like the TV were damaged or something.

Venezuela could use a John Galt to ensure that the opposing voice isn't silenced. But, alas, no such thing is likely there anytime soon. Very soon, no one in Venezuela will be allowed to say anything the government might disapprove of, even were they able to obtain the means. To guarantee that, the National Assembly recently passed by a simple majority the "Law on the Social Responsibility of Radio and Television".

Shades of Soviet Russia. Or, the FCC in the U.S. under JFK circa 1962.

(The title of the Act alone should tell you all you need to know, but if you wish to know the full line-by-line horror, details can be found here: RethinkVenezuela.Com/Downloads/MediaLaw.htm. In any case, legislation of this sort is familiar to those who have paid any attention at all to the actions of the FCC in the United States for the past fifty years. The difference is that Venezuela takes such things more seriously.)

Many people in Venezuela, however, have little time to think about their loss of free speech given the loss of simple food items. Reports are becoming more frequent that, in true 1960s Soviet style, grocery stores are no longer stocking the basic foods normally taken for granted — sugar or black beans, for example.

These have long been staples in the average Venezuelan diet. But because Chavez is so determined to "help the poor" in the socialist way, soon neither rich nor poor will be able to find them in Venezuelan grocery stores, and Chavez will have made everyone poor, and everyone hungry.

Chavez' price controls are having the same effects they've had everywhere else in the past 200 years. The Venezuelan President's moral purity — he excoriates George Bush while cosying up to Iran's glove-puppet dictator Ahmadinejad — apparently is matched by an equal understanding (or lack thereof) of the basics of economics.

The effects have already been felt in economic terms. Compare some statistics for the region. The GDP per capita of Chile is $12,600, that of Argentina $15,000. Even in Mexico, not exactly a rich country as measured by the life of the average person there, it's $10,600. In Venezuela however, the figure is $6,900, behind even the Dominican Republic at $8,000.

This in a country that supplies a full eleven per cent of U.S. oil imports, and who received over $46 billion last year in oil receipts. Of course, as oil production continues to decline, those numbers will worsen. The lack of investment and innovation that is part of the state-dominated Venezuelan oil business will see to that.

But to make matters worse, Chavez has recently completed the takeover of the oil business in Venezuela. Abrogating contracts and ignoring non-Venezuelan company rights is just socialist 'business as usual.’ After all, if individual property rights are chimera, and private properties are anathema why shouldn't he act 'in the name of the people' to take what belongs to 'the people.’ La gente? “Ése es yo.”

All this should come as no surprise to observers of events there of the past few years. Just as Hitler was plain for seven years or more before he was elected, so too Chavez has made no secret of his goals and plans. The comparisons don’t ends there. As the new law granting Chavez sweeping powers was enacted, National Assembly President Cilia Flores declared, "Fatherland, socialism or death. We will prevail!" Citizens of Nazi Germany would have found the rallying cry familiar. The Nazis, fortunately, did not prevail – taking the third of the three options espoused -- but many others died seeing that they did fail. Let's hope Corina in Caracas isn't one of them who dies as part of today’s opposition.

There is a point here that extends beyond Venezuela, and that is this: After decades of real-life experience in dozens of countries all across the world, anyone who still believes that applied socialism can have any other result than what we are now seeing in Venezuela simply doesn't believe in scientific induction. No matter how 'scientific' or 'rational' they may claim Marxism to be, it's the same old fantasy wherever it thrives.

That telephone operator phrase from the 1960s mentioned above rapidly became a euphemism for someone whose life was about to end abruptly. Venezuela's three minutes are just about up.

Jeff Perren is a professional writer with a background in philosophy and physics.

Cartoons by Cox and Forkum

Addicted to Asset Bubbles

Photo of Joseph T.    SalernoGuest post by Joseph Salerno, based on the recent adventures of ‘Helicopter Ben’ Bernanke

Helicopter Ben Runs Out of Ideas for Creating Money
Circle Bastiat, January 15, 2013

U.s. Federal Reserve Board chairman Ben Bernanke confided on January 14 that he is unaware of any new method of stimulating American economic growth. Bernanke said: “As far as I’m aware, there’s no completely new method that we haven’t [already tapped].” So Helicopter Ben has run out of innovative and unconventional ways to create new money.
_bernanke-helicopter    Lest you be tempted to breathe a bit easier, however, rest assured that the now conventional method of quantitative easing, involving the Fed’s monthly purchase of $85 billion worth of mortgage-backed and U.S. government securities, seems to be working just fine according to Bernanke and he foresees its continuation. Noting the stubbornly high unemployment rate combined with the low inflation rate in the U.S. economy, Bernanke stated, “That is the case for being aggressive, which we are trying to do.” Although he is “cautiously optimistic,” he does promise to closely monitor the risks, efficacy, costs, and benefits of this inflationary policy.
    I guess the rapid asset price run-up in stock and commodities markets, which are nearly back to financial bubble levels, and booming farmland prices do not count in Bernanke’s benefit-cost calculus. More likely, Bernanke accounts them as a benefit, which, via the “wealth effect” [whereby folk spend more when they’re wealthier, or think they are], will induce another debt-driven consumption spree on the part of the American public that will stimulate economic growth, i.e., create another bubble economy.

Recreating the Asset Bubble: The Fed’s Plan for Economic Recovery
Circle Bastiat, February 11, 2013

While Keynesians continue to sing that lame old song about insufficient aggregate demand stimulus and the horrors of austerity and “market” monetarists prattle on about deficient growth in nominal GDP, the signs of an incipient American asset bubble become more evident every day. In fact, it would not be overstating the case to say that the U.S.Federal Reserve is deliberately aiming at recreating an asset bubble as a means of rekindling the historically unprecedented consumption booms of the latter half of the 1990s and the first part of the last decade. These consumption manias were driven by the “wealth” or “net worth” effect, pithily described in the metaphor “using one’s home as an ATM machine.”
    As the following graphs show, Fed monetary policy is succeeding in pumping up total net worth, which consists mainly of financial assets plus real estate owned by households (and non-profit organisations) minus household debt.

total net worth

What the above graph shows is that total American net worth peaked at $67.3 trillion in Q3 2007 and fell precipitously to $51.1 trillion in Q1 2009. This $16.1 trillion decline in U.S. household wealth exceeded the combined annual GDP of Great Britain, Germany, and Japan. The Fed has since succeeded in pumping up net worth, to $64.8 trillion by Q3 2012, which is only $2.5 trillion below its level at the peak of the bubble. Although the value of household real estate remained $5.5 trillion below its bubble peak for Q3 2012 and has been slowly increasing, the Fed has been wildly successful in pushing up the value of U.S. financial assets. This is revealed in the the Wilshire 5000 Total Market Index. This index tracks the total dollar value of all U.S.-headquartered equity securities with readily available price data and includes more than 6,000 firms.

Wilshire 5000 TMI

Note in the graph above that the index reached its peak of 15,244 in December 2007, then went crashing to its trough of 6,800 by March 2009. By January 2013 the Fed’s inflationary policies drove it past its previous peak, reflating the index by 2,000 points in 2012 alone. But perhaps the most telling graph is the ratio of household net worth to GDP.

This graph shows that for over 40 years, from 1952 until the dot-com boom began in the mid-1990s, the household net worth to GDP ratio fluctuated in a band between 300 percent and 350 percent. After falling back toward this range after the recession of 2001, the Fed’s monetary expansion interrupted the correction and sharply drove the ratio up by 100 percentage points in a matter of three years. The financial crisis set another needed asset price readjustment in train, but it was once again reversed by the Fed, which was desperate to re-inflate asset prices in order to first prevent a financial collapse and then to start another consumption boom. The ratio now sits at 400 percent—a level it first reached midway through the dot-com bubble—and is headed inexorably upward. Once housing markets in general begin to follow the lead of New York City’s and Washington, D.C.’s overheated residential real estate markets, we will be well on our way to another unsustainable asset bubble.

The Fed is Blowing More Bubbles
Circle Bastiat, February 15, 2013

As if any more evidence were needed that the Fed has succeeded, either through ignorance or design, in igniting new asset bubbles throughout the American economy, the Federal Reserve Bank of Kansas City just released a survey of bankers that confirms a continuing rise in U.S. farmland prices. The following chart shows the stratospheric year-over-year rise in non-irrigated cropland prices for 3Q 2012.

U.S. farmland prices

As reported by TheBlaze, one analyst noted, “If this trend continues . . . these agricultural areas may very well become ‘New Manhattans’ (as far as wealth is concerned).” The chart below from the report by the Kansas City Fed puts this stunning trend in temporal perspective and reveals that it extends across all farmland, including irrigated cropland and ranchland.

all farmland prices

Bernanke the Comedian
Circle Bastiat, February 27, 2013

Dr. Brendan Brown is an eminent financial economist in the City of London and the author of The Global Curse of the Federal Reserve, initially published in 2011 and just released in its second revised edition. In his book, Brown is critical of Milton Friedman and the monetarists for ignoring the effects of monetary expansion on interest rates and asset prices and for assuming that a stable price level indicates an absence of inflation. Brown adopts Rothbard’s view that the 1920s were an inflationary decade, because, despite the rough price-level stability that obtained, asset and commodities markets were “overheated.”
    Brown also rejects the monetarist argument that price-level stabilization is the sine qua non of economic stability. He argues that price stabilization policy is one of the “dangerous features of Friedmanite monetarism” which “Austrian critics have long highlighted” and “which in hindsight may have played a role in the growth in Bernanke-ism.” Finally, and most insightfully, Brown also maintains that deflation is effective—and indeed, necessary—to extricate an economy from the depths of a recession or depression.
    Needless to say, Dr. Brown is no fan of Chairman Bernanke. In fact, in a memo today, Brown perceptively identifies the comedic aspect of Bernanke’s testimony on the first day of his semiannual monetary policy report to Congress. Writes Brown:

Comedy according to the theorists of drama is based on inflexibility of character. The lead role cannot in any way bend his stereotyped behaviour even when this would avoid an accident or disaster which is looming. And so Don Juan byMolière is a comedy. Even when the ghostly statue of his slain victim threatens to take Don Juan on a fiery descent into hell, the lead character cannot show remorse and desist from his life of debauchery. Chekhov listed his Cherry Orchard as a comedy because the lead characters could not shake themselves out of their nonchalance and avoid bankruptcy by selling the cherry orchard of their villa to a property developer on which he would build bungalows.
And so we come to the monetary comedy which played out in Washington yesterday. Professor Bernanke, adamant as always that the road to economic prosperity and stability takes the form of a rigorous targeting of inflation and supremely confident in a good outcome to his massive monetary experimentation tells his Congressional questioners that he sees no signs of asset price inflation which would justify changing his present policies. This is the same professor who largely repudiates any concept of asset price inflation and believes totally that any such dangers can be avoided well ahead of time by skilful action on the part of an army of regulators following the recently expanded book of rules. And this is the same professor who denies that monetary disequilibrium played any role in the giant asset and credit market inflations of the last two decades.
There is another element in the monetary comedy under the title of “Fed chair’s semi-annual testimony to Congress.” This is the failure of congressional questioners to hold the professor to account. When he declared that there is no asset price inflation, there was no follow on question such as “but professor you still say there was no asset price inflation in the last great bubble and bust and deny that the Fed of which you were a leading policy maker was in any way responsible: why should we believe you now?”
    That there should be no such question is part of the comedy, in its literal sense.

* * * *

Joseph Salerno is academic vice president of the Mises Institute, professor of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics. He has been interviewed in the Austrian Economics Newsletter and on

QUOTE OF THE DAY: “Politics is…”

"Politics is an expensive, high-stakes game of favours and bribery."
                                 - David D’Amato, “Economic Fascism & the Power Elite

In Istanbul (and Constantinople):The Rise & Fall of Society


Guest post by Chris Mayer of “Capital and Crisis”

Istanbul, not Constantinople, as the song goes. In this history is an omen for any powerful state (read: the U.S.). A somewhat obscure essayist knew all about it back in 1959. His little book deserves wider circulation. Below, we'll take a look.
     Constantinople was once the seat of a vast, rich empire. As successor to Rome, under the name of Byzantium, it ruled over a land that stretched from the Caucasus to the Adriatic, from the Danube to the Sahara. The Dark Ages were only completely dark if you ignore the flourishing civilization on the Bosporus.
    Historian Merle Severy writes:

Medieval visitors from the rural West, where Rome had shrunk to a cow town, were struck dumb by this resplendent metropolis." There were half a million people here. Its harbours full of ships, "its markets filled with silks, spices, furs, precious stones, perfumed woods, carved ivory, gold and silver and enamelled jewellery.

    This civilization lasted for a thousand years.
Actually, it lasted for 1,123 years and 18 days after Roman Emperor Constantine made the city his new Christian Rome. On May 29, 1453, Constantinople fell to the Turks.

The Hagia Sophia -- once a cathedral, then a mosque,
now a museum -- the bones of a dead civilization.

    The city would serve as the seat of yet another great empire, the Ottoman. And this one would last nearly five centuries. In the 16th and 17th centuries, the Ottoman Empire was perhaps the most powerful state on Earth. It was at least on one heck of a roll. After Constantinople, the Ottomans took Athens in 1458. Then it was on to Tabriz (1514), Damascus (1516), Cairo (1517), Belgrade (1521), Rhodes (1522), Baghdad (1534), Buda (1541), Tripoli (1551) and Cyprus (1571).
    They almost took Vienna. The powers of Western Europe drew the line in the sand there. Just.  Interesting to think what would've happened if the Turks took Vienna. All of Western Europe would have been at their feet. If they had succeeded, perhaps the majority of Europeans would be answering the call to prayer, echoing from the minarets of cathedrals-turned-mosques...

Your author inside the courtyard of the famed Blue Mosque...

    Yet the Ottoman Empire, too, would crumble. It was constantly at war. By one historian's reckoning, the longest period of peace was just 24 years in nearly six centuries of reign.
    In 1923, with the founding of the Republic of Turkey, Ankara became the seat of government, and in 1930 Constantinople was renamed Istanbul. As historian John Freely notes: "For the first time in 16 centuries, the ancient city on the Golden Horn was no longer reigning over a world empire with only the presence of the monuments to remind one of its imperial past."
    It is not hard to think of the U.S. in the context of these great powers.

*** Enter Chodorov

    One of the books I had tucked in my bag that I read while in Turkey was Frank Chodorov's The Rise & Fall of Society. This is a slender 168-page book by a great, if somewhat forgotten, essayist and editor. It gives a tightly reasoned answer to the question "Why do societies rise and fall?"
    Chodorov's thesis is that "every collapse of which we have sufficient evidence was preceded by the same course of events."
   The course of events goes like this:

"The State, in its insatiable lust for power, increasingly intensified its encroachments on the economy of the nation..." and finally gets to the point where the economy can no longer support the state at the level it is accustomed to. Society can't meet the strain, so "society collapsed and drew the State down with it."

The pattern is always the same, regardless of size or ideology. The state can grow only by taking.

Since the State thrives on what it expropriates [Chodorov writes], the general decline in production which it induces by its avarice foretells its own doom.

image    Chodorov bases much of his thesis on what he calls "the Law of Parsimony." In essence, it is simply that people try to get the most satisfaction with the least amount of effort. It is a natural law of human behaviour.
    The law does not say they always achieve this goal, of course. It simply says it is what people try to do. Cooperation with others enhances the ability to satisfy. "Sociability thrives on the mutual profits of cooperation," Chodorov writes, "and when we observe how an acquaintance ripens into friendship as the mutually created wage level rises, it is hard to tell which is cause and which is effect."  The marketplace is the binding of society and coexistent with it. No marketplace, no society. No society, no marketplace.
Now enter the state (whose origins Chodorov covers, but I will pass over here). The state is also made up of men. They, too, are subject to the law of parsimony. So they will make efforts to enlarge and better their position, which they can only do by confiscation (taxes, fines, etc.).

Rome had its make-work programs, its gratuities to the unemployed and its subsidies to industry [Chodorov writes]. These things are necessary to make confiscation palatable and possible.

    Another tourist hot spot, the Topkapi Palace, where the sultans lived decadently... at the expense of the taxpayers, of course.
    How, by various ways of obscurantism and promises, the state is able to grow ever larger and more powerful is the main narrative of the book. Chodorov's writing is honey smooth and his ideas reflect the learning and thought of a lifetime pondering such questions. (He was 72 at the time of publication.)
    Though the book is a slender, easy read, it is packed with ideas. Chodorov, long known as a great teacher, has a gift for stating ideas simply in well-turned phrases. (My copy has plenty of highlighted passages.) And his defence of the network of voluntary exchange that we call a marketplace is downright eloquent.
    One of my favourite chapters is "The Humanity of Trade." There he writes about how the markets make it possible that the fish of the sea reach the miner's table. Northerners enjoy tropical fruits because they can trade for them with goods and services that make life in the tropics easier.

It is by trade that the far-flung warehouses of nature are made accessible to all the peoples of the world, and life on this planet becomes that much more enjoyable. Trade not only improves our material wealth. Trade brings an influx of ideas, stories of interesting people and other cultures that in turn enrich our own literature, arts and 'operatic repertoire.

image    Reading Chodorov, one can't help but marvel at the powers of voluntary social cooperation and exchange. Yet there is this never-ending cycle of the rise and collapse of societies. Can we break this depressing cycle?
Chodorov gives an answer in the last chapter, titled "One Can Always Hope." He writes: "None has as yet been discovered. Nevertheless, the search for a formula for the 'good society' has never been abandoned, hope being what it is, and out of the laboratory of the human mind has come congeries of utopias."
    A bleak ending, perhaps. But Chodorov leaves out the possibility that in the U.S., at least, it may be possible to impede the state. Americans still have "a folklore of freedom." This libertarian tradition may yet be revived. "It is worth a try," Chodorov writes. He ends his book with a sentence that captures the most critical idea of all: "The will for freedom comes before freedom."
    The Rise & Fall of Society is a little treasure of a book.  I have all of Chodorov's books -- The Income Tax: Root of All Evil, One Is a Crowd: Reflections of an Individualist, Out of Step: The Autobiography of an Individualist and the posthumous collection, Fugitive Essays. Chodorov is among my favourite libertarian writers, a list that includes Murray Rothbard, H.L. Mencken, Albert Jay Nock and Lysander Spooner. For whatever reason, I had never read The Rise & Fall, but it is classic Chodorov and worth a read.
You can pick up a copy here.
Or you can get Chodorov's The Rise & Fall of Society free, when you join the Club. Plus, you'll get every e-book ever published by Laissez Faire, as I've done, when you join here.

Istiklal Caddesi on a Tuesday afternoon, a bustling street of shops,
restaurants and plenty of people.

As I walked around Istanbul, admiring the architecture -- the bones of a lost civilization -- I still managed to feel optimistic. Life in Istanbul is, in fact, far better for the typical person than it was at the height of any of the dead empires. In material wealth, people live longer and far healthier lives today. They are literate and technologically more advanced. They have greater leisure and access to a wealth of ideas unimaginable in the old days.
This is despite the ugliness of states. And that, after all, is some consolation for the ideas of human progress and liberty.

Chris Mayer
Editor, Capital & Crisis

Chris Mayer is managing editor of the Capital and Crisis and Mayer’s Special Situations newsletters, a contributor to the Daily Reckoning, and author of Invest Like a Dealmaker, Secrets of a Former Banking Insider.

“How I meteored your Motherland”

A ten-ton meteor exploded over Russian’s heads with the force of an atomic bomb, and most Russians ever even noticed. There are so many more insane things going on down on the ground.

Tuesday, 5 March 2013

Questioning a census taker

The gloriously monickered Census-Taker-in-Chief Carol Slappendel tells you why you should fill out your census instead of filing it in the Osama (Bin Liner). Let’s see if any hold water:

It will bring about sweeping changes to our lives.

“Changes” effected not by our own wishes, but by the wishes of planners and politicians.  Not buying that one.

Some schools will change decile ratings, meaning more or less funding from the Government.

The flawed ranking of schools based on parents’ incomes should be abandoned, not encouraged.

We need your answers so planners can plan.

First off, the only planning I want central planners to plan is how to change careers. The miracle of price signals gives a full daily survey of what people want and where, and they deliver the means by which to meet that demand. “Planners” by contrast try to shoe-horn all of us into plans based on their own values, not ours.  And they work with figures long out of date by the time they’re used: have you noticed, for example, that the motorways now being built around Auckland (and just granted consent on the Kapiti Coast) were actually planned in the sixties, and only just being built now?)

For Christchurch, it means the city will have crucial information as it rebuilds.

It’s not immediately apparent that over the last two years “the city,” i.e., the council’s and government’s planners, have done anything useful with the information they currently have.  There is zero reason to assume anything different for the next five years.

We need your answers to plan electoral boundaries, and the number of Maori seats.

I fail to see why boundaries should be changed so regularly anyway—and in any case, most are primarily changed for political rather than statistical reasons. And if they are to be changed, abundant information is available elsewhere and from smaller voluntary surveys. And race-based seats should be abolished, not encouraged.
(Curiously, it’s also suggested that as census-takers prioritise the “Maori” answer if forms have more than one “ethnicity” box ticked, the census continues to overstate the proportion of Maori in the population, maybe by up to ten percentage points.)

We need your answer on ethnicity to allocate health funding where ethnic communities have settle.

Even if one accepts that “health funding” should be “allocated” by government planners, it’s entirely unclear why this should be done on the basis of ethnicity.
Indeed, in that it reflects a barnyard form of collectivism, this question is probably the most offensive on the whole census form. Ethnicity elevates one’s racial identity and associated cultural traditions to a position of supreme importance – a racist version of collectivism, under-pinned by post-modernism in philosophy.
Defining oneself by one’s race and tradition -- things about which one has no control over -- is utterly incompatible with defining oneself by one’s conscious choices, and deriving pride in one's own achievements rather than just those of one's ancestors -- which is the essence of individualism.
One would have thought that the history of recent centuries might have been sufficient cause for alarm to have governments interested in measuring and elevating the importance of ethnicity.
I was encouraged to hear that in the last census, around 250,000 who inadvisably did complete their census form at least crossed out all the given answers and wrote the words “New Zealander” in this box. That, at least, is a start.

Businesses also use the data to plan where to put new retail outlets - and even what items to stock.

Unlike government planners and statisticians, businessmen are more than capable of reading trends and price signals, which give them lightning-like instant information of the whole market before and as it happens rather than long afterwards.  And if they’re not, let them do their own surveys.

The figures are also used to compile a "deprivation index" which can map the poorer areas of the country right down to small neighbourhoods. This allows for funding and resources by state agencies to closely targeted to where the need is.

Yet if one were to look at these “deprived neighbourhoods” the greatest correlation one can make with them is with the level of government services there. South Auckland has for decades had more government “services” and “agencies” on every street corner than anywhere else, yet “deprivation” levels there have changed not a whit.

When you are looking at something like rheumatic fever for instance, you can target the low income areas where there is the most overcrowding.

It’s not apparent that government planners have done anything to help the construction of affordable housing—the only way overcrowding will be overturned. Instead, they’ve done everything to make it less possible.

Iwi affiliation: As a basis for the allocation of resources and funds to iwi…

Iwi should earn their own funds.

How did you travel to work?: This helps make plans for roads and public transport.

As I said above, the motorways now being built around Auckland (and just granted consent on the Kapiti Coast) were actually planned in the sixties, and only just being built now. And the public transport around Auckland still feels like it was planned in the 1860s. In other words, it’s not apparent that anything the census reveals today is either useful now or will be used any time this half-century—or would contain information that couldn’t be easily obtained elsewhere.

Income? This will help government and councils work out where to put affordable housing.

It’s not apparent that government planners have done anything to help the construction of affordable housing. Instead, they’ve done everything to make it less possible.

It's for the efficiency of the economy and the better of society

Clearly, she never has heard of price signals. Or how society is made better by the reduction in the use of force.

If you don’t fill out your form, we’ll prosecute.

See what I mean? The last resort of the bureaucrat: threats.  Which only encourages the most common response to threats: Calling people like this by the names they deserve.

Putting the ‘Living Wage’ to Death

Guest post by Peter Osborne

In his article titled ‘Bringing the Living Wage to Life,’ Gordon Campbell of Scoop fame shows how bereft New Zealand is of good, insightful journalism.

Along with most other NZ journalists (and alleged economists), he ignores causality completely. In saying that “we” should introduce a “living wage” simply because people need it, he ignores the causal connection between production and consumption (that we can only consume what has first been produced).  He ignores the causal disconnection between production and need (not an ocean of tears nor all the guns in the world will bring even one crust of bread into existence). He ignores completely the real reason wages are barely able to keep up with the cost of living (most of all because of paper-money inflation and restrictive employment law) and has instead reasoned that enforced wealth distribution is the answer.

As is typical of left wing thinking, the only tool he has in his box is a gun.

With their uncanny ability to pervert virtue, the left are able to dress up force and coercion with the prettier disguise they call “social justice.” The truth remains that the journey to their utopia can only be achieved by using force on other groups by use of the law. It is not difficult to imagine how things would end.

Campbell ignores the fact that paper-money inflation has helped cause real prices to escalate; that restrictive employment laws have raised the cost of having employees, leaving less for the employees themselves; that compulsory compliance costs in work-places already restrict production, and therefore the earnings from which wages are paid; that the constant piling of compliance, taxes, levies and disproportionate wages mean that products are far more expensive than they need be once they hit the shelf, meaning those on low wages can ill afford the essentials. And he ignores completely the consequences for those people his “living wage” would price out of the employment market altogether.

Campbell wishes to use force to avert the consequences of the previous uses of force. He fails to understand that when force is initiated, for whatever reason and to whatever end, the outcome will always bring with it unintended consequences, injustice, and—ultimately—misery.

Unlike Campbell, I call for the removal of  force altogether as a way to remove the misery: to remove the shackles and to take away the gun of compulsion altogether.

It is true that there are plenty of folk prepared to defend the employment of force and coercion as a tool to engineer society.  That it is true is no less a disgrace.

Perhaps the best excuse for those who call for the tool’s employment is that they rely too much for their sources of information on people like Gordon Campbell—who, after all, has only picked up where the government’s factory schools have left off.

Cognitive child abuse in the maths classroom

Leighton Smith has been talking about this on his show, this morning:

imageNew Zealand's foremost mathematician has spoken out against the way maths is taught in schools, saying children need to know basic arithmetic before they try to start problem solving.
    Sir Vaughan Jones, winner of the Fields Medal - the maths equivalent of the Nobel Prize - told the Weekend Herald that children had to do "lots and lots of exercises" to build up familiarity and confidence before they moved on to more advanced concepts.
    His comments follow those of Education Minister Hekia Parata, who said last weekend that she was "extremely concerned" by results from an international survey of Year 5 children in December, which showed half could not add 218 and 191.

This might be the first education minister to be concerned by basic educational failure.

"People are trying to teach kids broad concepts too early [says Jones] when, in fact, the best way to learn is the complete opposite.
    "It is really important that kids learn how to multiply and add, to the point where they are certain they will get the right answer if they do the steps right. Then, and not before, they start to see more aspects of the structure. It is a slow process built on understanding each step…
    He said that since the 1980s New Zealand had slavishly followed California in abandoning perfectly functional maths methods built up over thousands of years.

And so we have.  As Sandra Stotsky explains in an article it’s worth reading thoroughly, what's been abandoned, both here and in the States, is any objectivity at all, or even genuine education. Even of mathematics. Because what’s become more important in the factory schools both here and there is not education of children, but their socialisation:

    Assessment experts, technology salesmen, and math educators—the professors, usually with education degrees, who teach prospective teachers of math from K–12—dominate the development of the content of school curricula and determine the pedagogy used, into which they’ve brought theories lacking any evidence of success and that emphasize political and social ends, not mastery of mathematics. . .
    The underlying goals of [education]—never made clear to the general public—were social, not academic. Some of the [theorists], for example, sought to make mathematics “accessible” to low-achieving students, yet meant by this not, say, recruiting more talented undergraduates into teaching but instead the employment of trendy, though empirically unsupported, pedagogical and organizational methods that essentially dumb down math content.

In striving for “social” standards instead of objective academic standards, the professors are still following the pedagogical trajectory mapped out by progressive educator John Dewey, who saw education primarily as “socialisation.” “Education, in its broadest sense,” said Dewey, “is the means of this social continuity of life.” What this means, notes Stephen Hicks, is that “education is not about equipping individuals for life. It does educate individuals, but its purpose is social continuity.”

Think about that, and you’ll understand why teachers, teacher unions, and the academics who teach teachers are undisturbed by a widespread failure to add 218 and 191.

[These] educational trends . . .  have a long pedigree. During the 1970s and 1980s, educators in reading, English, and history argued that the traditional curriculum needed to be more “engaging” and “relevant” to an increasingly alienated and unmotivated—or so it was claimed—student body. Some influential educators sought to dismiss the traditional curriculum altogether, viewing it as a white, Christian, heterosexual-male product that unjustly valorized rational, abstract, and categorical thinking over the associative, experience-based, and emotion-laden thinking supposedly more congenial to females and certain minorities.
    Those trying to overthrow the traditional curriculum found mathematics a hard nut to crack, however, because of the sequential nature of its content through the grades and its relationship to high school chemistry and physics. Nevertheless, education faculty eventually figured out how to reimagine the mathematics curriculum, too, so that it could march under the banner of social justice. As Alan Schoenfeld . . . put it, “the traditional curriculum was a vehicle for . . . the perpetuation of privilege.” The new approach would change all that.
    Two theories lie behind the educators’ new approach to math teaching: “cultural-historical activity theory” and “constructivism.” According to cultural-historical activity theory, schooling as it exists today reinforces an illegitimate social order.
    Typical of this mindset is Brian Greer. . .  According to Greer, the proper approach to teaching math “now questions whether mathematics as a school subject should continue to be dominated by mathematics as an academic discipline or should reflect more fully the range of mathematical activities in which humans engage.” The primary role of math teachers, constructivists say in turn, shouldn’t be to explain or otherwise try to “transfer” their mathematical knowledge to students; that would be ineffective. Instead, they must help the students construct their own understanding of mathematics and find their own math solutions.”

Yep, sounds like bullshit doesn’t it.  Little Johnny “constructs” his own knowledge; mathematics is about socialisation not education; algebra is more amenable to emotion than to reason; and education is a white, hegemonic, patriarchal practice – at least it is according to alleged educators like Schoenfeld, Greer and his colleagues. 

No wonder Little Johnny from America came “25th out of 30 countries in mathematics achievement on the 2006 Programme for International Student Assessment (PISA), which claims to assess application of the mathematical knowledge and skills needed in adult life through problem-solving test items.”

Brad Thompson calls this whole approach Cognitive Child Abuse in Our Math Classrooms:

America's children are flunking math. In 1996 American high school seniors finished close to the bottom on an international mathematics test. At the end of last year, American eighth-graders ranked below those of Malaysia, Bulgaria, and Latvia.
    As educators scramble to explain America's math meltdown … few are willing to look at the fundamental cause: the new, ‘whole-math’ method for teaching.
    “Inspired by a strain of progressive-education theory called ‘constructivism,’ whole-math proponents claim that all knowledge--including mathematical knowledge--is arbitrarily constructed. They reject the idea that there are objectively demonstrable right and wrong answers, and that, consequently, there are basic skills that students must be taught. Instead, the advocates of whole math believe that each student should invent his or her own math ‘strategies’ by using a ‘guess-and-check’ approach. They create an inability to think beyond immediate concretes.”

The results in their respective fields were the same for “whole math” as they have been for “whole language”: whole generations of children emerging from school functionally illiterate and almost wholly innumerate.

This is cognitive child abuse. Whole-math defenders are shrinking the cognitive capacities of their students to those of infants or even animals.
    Is it any wonder that most college freshman take remedial math courses, that American universities award more than half of their mathematics Ph.D.s to foreign nationals, that for-profit math remediation companies are booming, and that 200 of the nation's leading mathematicians and scientists signed a public letter denouncing whole math? . . .
    The controversy surrounding whole math is not simply about how children are taught to deal with numbers. If we undermine the capacity of our children to learn mathematics, we undercut their ability to think. More and more, our schools are turning out students whose capacity to reason has atrophied. . .
    Now imagine flying on a plane designed by aeronautical engineers who have been trained to concoct their own math schemes and to use a ‘guess-and-check’ method. . . .
   Today's "math wars," like the controversy over how to teach reading, are at root philosophic battles that will have enormous implications for the future of America. If the advocates of whole math are allowed to win, they will be taking us a huge step away from the values of reason and science that once made America [and the western world since the Enlightenment] great.”

Read Brad Thompson’s Cognitive Child Abuse in Our Math Classrooms.

China’s property bubble

It should have been history’s greatest example of a successful exit from years of totalitarian rule. Instead, it might prove to be history's greatest property bubble, ahead of what could well prove to be history’s largest property crash.

This 60 Minutes report on China’s Ghost Cities tells most of the story, and demonstrates what malinvestment looks like, but gives little of the cause and foreshadows only a little of the potential fallout when the bubble bursts.

The main cause the clip ignores is the Chinese government’s role in encouraging these projects and their money printing that has blown up this inflationary bubble—giving new buyers the idea that house prices will rise, will rise, will always rise and will keep rising. It’s like the pyramid scheme in Albania that boomed and burst after the collapse of socialism there, only on a much, much larger and more destructive scale.

As Robert Wenzel explains, Chinese politicians have a tiger by the tail:

At present, the Chinese economy is a combination of free markets and bizarre central planning. These ghost cities are heavily financed by local governments and the money that investors use to buy the properties is pumped about by China's central bank, The People's Bank of China. So much money has been pumped out by the People's Bank that price inflation is starting to cause civil unrest. The People's Bank of China and the government of China are trapped, the only way they can prop up the bubble is by more money printing, but that will cause price inflation to accelerate even more. If they stop printing, the real estate market and stock market will crash. It is possible it will result in the greatest crash in economic history...
When this thing crashes, one way or another, it will be blamed on China moving "too fast" in the direction of free markets. It will be a myth…

The fallout will be huge. America is partly financed by Chinese savings, which could well disappear in the bust. Australia has endured the depression only because it has been kept rich selling to China “the most commonly available commodities known to man,” there to be transformed into property no-one lives in. Demand for those commodities will plummet in the bust.

We do live in interesting times.

Monday, 4 March 2013

Yes, tonight, Josephine

German neurologists have now confirmed what men have been telling women for centuries: the best cure for a headache is sex.

In the study at the University of Munster in Germany, neurologists collected data on 400 patients with the two types of headache who had been treated over a two-year period. They found that 33 per cent had made love during a headache. Of those, 60 per cent of migraine patients and 36 per cent of men and women with cluster headaches had an improvement in symptoms…
    Of the migraine patients who saw an improvement in their pain, 19 per cent had complete relief of headache symptoms, 51 per cent experienced moderate relief and 29 per cent reported mild relief.
    "In total, 42.7 per cent of all migraine patients experienced at least 50 per cent relief, a response rate as high as in studies on acute medication," said the researcher.

And those who didn’t experience relief of their headache itself were at least able to mask it with a different kind of relief.

[Hat tip Russell W.]

Start asking questions


DOWN TO THE DOCTOR’S: An important constitutional

_McGrath001This week, Dr Richard McGrath has been sending out submissions…

This afternoon I sent the Libertarianz Party's submission to the Constitutional Advisory Panel, in the hope that its members will be swayed by its themes of limited government, equality and justice for all New Zealanders.

Without further ado, I reproduce it here:

To the Constitutional Advisory Panel

This submission is forwarded on behalf of the Libertarianz Party, a registered New Zealand political party formed in 1995.

The Libertarianz Party says our country should have a written constitution protecting the equal rights of all citizens. Several years ago, a small working group of party members formulated a Constitution loosely based on that of the United States, with the errors fixed. An abridged version of the main parts of that document, its Bill of Rights and a Bill of Due Process, appears below.

But first, we make some general comments about the parliamentary and electoral systems, the Treaty of Waitangi, and our party's proposal for a constitutional republic.

General comments
Libertarianz supports the following changes to the current parliamentary and electoral systems:

  • Parliament should be limited to 100 seats in a House of Representatives, including the Speaker; but there should also be an upper house composed of 30 members.
  • The parliamentary term should be kept at 3 years, with dates fixed in advance and only changed in the event of a no-confidence vote or state of emergency, natural disaster, war or other calamity.
  • There should be a 10-15% tolerance for the size of electorates, with adjustments in electorate boundaries made only every 5 years in the interests of economy, with safeguards put in place to prevent political manipulation of electorate boundaries.
  • There should be no guaranteed minimum number of seats for the South Island; the number of seats should reflect population distribution.
  • There should be no guaranteed minimum number of seats for any race.  All race-based representation at all levels should be abolished, each individual having the same voting power regardless of skin colour or other accidents of birth. Thus, seats reserved for Maori should be dissolved at all levels.
  • Political parties should make their own decisions via their own rules and constitutions regarding members who 'party-hop.'  That is not a matter for the state.
  • All regulation of political-party funding should be abolished, thus respecting the rights to free speech and association.
  • The Treaty of Waitangi should be recognised as the basis for equal citizenship. All Treaty claims should be full and final, settled within a set finite period of time, with all tribunals and committees then disbanded permanently. No Treaty claim should take private property, nor impose any on-going financial burden on taxpayers and ratepayers.
  • The Treaty of Waitangi is neither sufficient nor appropriate nor ever intended to be the supreme law of the country, and the so-called “Principles” of the Treaty of Waitangi should be expunged from the law books as so much made-up manufactured nonsense.
  • The views of individual New Zealanders of Maori or other descent should be aired during any decision-making process through normal democratic means in the same way as New Zealanders of other racial and ethnic ancestry.
  • A written Constitution including a Bill of Rights, similar or identical to that proposed by the Libertarianz Party, should be the supreme law of the land—a constitution clearly delineating the rights to be protected, with all law past, present and future inconsistent with this Constitution struck down.
  • New Zealand should become a constitutional republic with an elected President.  

*    *    *

Proposed Constitution for a Republic of New Zealand

A. Preamble

We, the citizens of New Zealand, hold these truths to be demonstrable in reality: that because the mind is our species' means of survival and full flourishing, human beings are individually possessed of certain inalienable rights, which are the rights to life, liberty, and the pursuit of private property and happiness; that to secure these rights, governments are instituted among people, deriving their just powers - and only such powers - from the consent of the governed; that all laws legislated by governments must be for the purpose of securing these rights; that no laws legislated by government may violate these rights; that all citizens are equal before such laws; and that whenever any government becomes destructive of these rights, it is in rebellion against its citizens, who may then remove it and institute new government.

Therefore, the citizens of New Zealand, in the name of that which is the glory of man - his sovereign, rational mind - do solemnly declare that our country is henceforth free; that we are absolved from all further allegiance to the Dominion of New Zealand and its government, both of which are hereby dissolved; that we do by this and the associated documents presented here establish instead the Republic of New Zealand; that these documents supersede all previous constitutional and quasi-constitutional documents, including the Treaty of Waitangi; that the laws of this country shall be based on a single moral premise, which is the expression of the afore-mentioned rights: no person or group of persons may initiate the use of physical force, or its derivative, fraud, against any other person or group of persons, and the only justification for the use of force is self-defence against those who initiate it; that the government of this country shall have no other function than to formulate, enact and uphold such laws and to secure and glorify the supreme values of reason and freedom in human affairs.

B. The Bill of Rights

Article I - Free Speech and Privacy

The government shall make no law abridging the freedom of speech, of the press, of electronic or optical communication or of any other form of communication or expression; or restricting the right of an individual to petition the government for a redress of grievances; or respecting an establishment of religion or prohibiting the free or non-exercise thereof; or requiring an individual to possess the means of identifying himself, unless he may be employed on the public payroll, or may be casting his vote, whereupon identification shall be required in the polling booth only.

Article II - Right to Self-Defence Against the Initiation of Force or Fraud

The right of an individual to preserve, protect and defend his life, liberty and property, or that of any other party subject to the initiation of public or private force or fraud, and to organise himself into private militia for these purposes, shall not be infringed.

Article III - Right to Repudiate a Government in Rebellion

The right of an individual to organise the overthrow of a government initiating force against its citizens shall not be infringed; and a member of the Armed Forces, private militia, intelligence, or police may disobey any order which conflicts with the rights and liberties eternally enshrined in the Bill of Rights and Bill of Due Process.

Article IV - Property Rights

The right of an individual to be secure in his person, home, papers, effects, reputation, intellectual property and other properties, against unreasonable searches and seizures or arbitrary arrest and detention, shall not be infringed, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the person or things to be seized; and no member of the Armed Forces, militia, intelligence or police shall be quartered in any house or property without the consent of the owner; and no individual shall be deprived of rights, liberties or properties without due process of law; nor shall private property ever be taken compulsorily for public use.

Article V - Right of Self-Ownership

The government shall make no law restricting the right of an individual to take his own life or to have his own life taken, if sufficient evidence of his informed consent has been provided in advance or at that time; and it shall make no law requiring an individual to be medically treated or undergo medical experiments, unless he presents an objective threat to the rights and liberties of other individuals, whereupon he may be confined at home, or if he still presents a threat, confined elsewhere or treated, but not experimented on, in an hospitable place; and government shall make no law restricting the right of an individual to ingest substances or to participate in practices which may or may not cause ill health or injury, provided such actions contravene none of the rights and liberties of other individuals eternally enshrined in the Bill of Rights and Bill of Due Process.

Article VI - Free Association

All interaction between adult individuals shall be voluntary and any voluntary association of individuals shall be deemed to have the rights of the individuals comprising it.

Therefore the government shall make no law restricting the right of an individual peaceably to assemble or to join together in marriage or friendly association; or requiring an individual to join, contribute to, be registered or be enrolled with any association; or establishing a monopoly and otherwise restricting the number or nature of businesses; or requiring an individual to join any branch of the Armed Forces, private militia, intelligence or police.

And while the government itself shall discriminate only on the basis of merit, it shall make no law restricting the right of an individual to discriminate on any basis whatsoever.

Article VII - No Compulsory Taxation

The government shall extract no compulsory tax or involuntary contribution of any kind from any citizen for any purpose whatsoever.

Article VIII - Free Trade, Investment and Migration

The government shall make no law regulating commerce, investment or migration; but the government may regulate the immigration of any individual who has aided or given comfort to the enemy in any war or revolution respecting the establishment of the Constitution.

Article IX - Sound Money

The government shall make no law in respect of the establishment of a central bank, monetary authority or currency of exchange, or to otherwise require the coining, printing or use of money; and any action by the government to purchase debt or equity of companies or trusts, or to purchase or speculate in land, buildings and other properties located in the Republic is expressly prohibited.

Article X - Rights Held in Trust

Nothing in this Bill shall be construed as permitting activities which can be shown beyond reasonable doubt to destroy the potential of a child to become an adult with full rights and liberties eternally enshrined in the Bill of Rights and Bill of Due Process. Subject only to this constraint, parents and legal guardians shall have full freedom to raise their children as they see fit; equally, they shall be deemed responsible for the actions of their children.

The age of independence shall be deemed by law, but the courts may deem an earlier age on application of the child, if the child can demonstrate its independence.

C. The Bill of Due Process

Article A - Treason

Treason against the citizens and permanent residents of the Republic shall consist only in levying war against them, or in giving aid and comfort to an enemy which shall pose an objective threat.

Article B - Arrest and Detention

Every individual shall enjoy, and shall be informed of, the right to know the reason for his arrest or detention; to remain silent; to consult and instruct a lawyer of his choice before questioning without delay; to have a lawyer of his choice present with him during questioning; if he cannot afford this lawyer, to have one appointed for him; to the writ of habeas corpus so that a court shall determine the validity of his arrest or detention without delay; to have the assistance of counsel and interpreters for this determination; to be released immediately if his arrest or detention is not valid; and if he is arrested or detained, to be charged promptly or to be released immediately.

Article C - Charge and Depositions

Any individual who is charged with an offence shall enjoy and shall be informed of the right to know in detail the nature and cause of the charge without delay; to consult and instruct a lawyer; to have the assistance of counsel and interpreters for his defence; to have sufficient time and facilities to prepare a defence; and to be brought before a court without delay.

And no individual shall be held to answer for an imprisonable offence unless a High Court judge decides there is a case to answer.

Article D - Criminal and Civil Procedure

In all criminal prosecutions and civil suits, the accused or defendant shall enjoy the right to be presumed innocent until proven guilty or found against; to a fair, speedy and public trial or case, at his election, excepting a trial of impeachment, before either a judge or an impartial jury preferably of the locality wherein the breach, liability or offence shall have been alleged; to be informed in detail of the nature and cause of the allegation; to be presented with the evidence against him; to have the assistance of counsel and interpreters for his defence; to have sufficient time and facilities to prepare and present a defence; and to be present at his own trial or case.

Article E - General Procedure

No individual shall twice face a hearing, inquiry, civil suit or criminal prosecution for the same breach, liability or offence; nor shall face a hearing, inquiry, civil suit or criminal prosecution for a breach, liability or offence which at the time of its alleged commission was not a breach, liability or offence; nor shall be compelled in any hearing, inquiry, suit or trial to be a witness; nor shall be prevented from requesting a witness or examining any witness whose evidence has been brought before the court; nor shall be prevented from appealing a determination, judgement, award, conviction or sentence in a higher court or requesting a judicial review.

And a jury shall be directed that it shall find, in favour of or against and innocent or guilty, the defendant and the accused in accordance with the rights and liberties eternally enshrined in the Bill of Rights and Bill of Due Process; and a judge, jury, commissioner or authority shall be provided with a copy of the Constitution and any supporting documents whatsoever.

Article F - Private Prosecutions and Civil Suits Involving Government

All civil suits involving the government shall be heard in the same manner as civil suits between individuals, and all criminal prosecutions brought by an individual, including a prosecution against the government, shall be heard in the same manner as criminal prosecutions brought by the government; and the right of an individual to bring or defend these proceedings shall not be infringed.

Article G - No Excessive Bail, Excessive Fines or Cruel and Unusual Punishments

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments, including the pain of death, inflicted.

Article H - Asset Forfeiture and Victim Restitution

Private and public property shall not be deemed the proceeds of crime unless the criminal burden of proof is met, nor shall be deemed the award of costs or damages unless the civil burden of proof is met; and the proceeds of crime shall be returned to the victims from whence they came or alternative but equivalent restitution enforced.

Article I - Finding of Fact and Mistake

Judges may repair to the traditional precedents of common law, equity and admiralty law where appropriate and create new precedents, provided all these precedents shall be consistent and shall not conflict with the rights and liberties eternally enshrined in the Bill of Rights and Bill of Due Process; and no fact tried by a judge or jury shall be otherwise re-examined in any court of the Republic than according to these rules; and if an individual shall mistakenly be convicted by an error of fact, he shall speedily and appropriately be either pardoned by a Commission of Inquiry, without restriction on his right to a retrial, be retried or have his conviction overturned, and a Commission of Inquiry shall be established to investigate the miscarriage; and he shall receive public compensation without delay.

Article J - Rights Suspended

Every individual who shall be lawfully incarcerated or declared legally and medically insane shall enjoy only those rights and liberties eternally enshrined in Articles III, IV, V, VII, IX and X of the Bill of Rights and in the Articles of the Bill of Due Process; and in respect of this individual, the government shall make no law requiring the recording or disclosure of the contents of any communication and restricting the right of the individual to encrypt this communication, excepting communication to, from and within his place of incarceration; and no law restricting the right of the individual to petition the government for a redress of grievances; and no law respecting an establishment of religion or prohibiting the free or non- exercise thereof or requiring the observance of any religious custom, including that of any indigenous or local culture; and no law requiring the individual to join any branch of the Armed Forces, private militia, intelligence or police.

And any individual declared legally and medically insane may make a final appeal against this declaration before a panel of experts, which shall be composed of five individuals drawn from reputable institutions.

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Notes on the Libertarianz Party's proposed Constitution
  • It is intended that this document would stand alone as the Constitution for New Zealand. All laws past, present and future incompatible with it could be challenged and struck down, and replaced only by laws compatible with the Constitution (or not replaced at all).
  • The purpose of the Constitution is to protect New Zealanders against encroachment on their rights and liberties by the Government. It limits the functions and roles of the Government and defines its relationship with the citizens it represents and serves.
  • Further to this last point, this Constitution actually empowers New Zealanders to resist Government when it does violate their individual rights and liberties.
  • It permits such actions as assisted suicide, voluntary euthanasia and substance use by adults by upholding the concept of self-ownership.
  • Free speech and action by New Zealanders would be implicitly restricted by the need to respect other people and their property. Fraud, assault, defamation and other crimes would remain illegal.
  • Taxation would be outlawed under this Constitution as a violation of property rights. Voluntary funding of legitimate government activities such as upholding the Rule of Law would, however, be not only possible but - in our view - likely to occur, without any need for the coercive extraction of wealth.
  • Similarly, eminent domain or the confiscation or nationalisation of private property would be expressly forbidden.
  • The Reserve Bank would be dissolved under this Constitution, with no further government manipulation of the currency and no further printing of money tokens (i.e. legal tender not backed by assets such as precious metals). All remaining government-sourced currency would have to be redeemable in gold, silver or some other suitable commodity.
  • The Government would not be allowed to burden current or future generations of New Zealanders with debt; it would have to operate strictly within its budget.
  • Under the freedom of association clause, private discrimination, even on irrational grounds such as skin colour, would be permitted. Government departments would, however, be permitted to discriminate only on the grounds of merit.
  • Many of the clauses in the Bill of Due Process are long standing common law protections that already exist; this document explicitly lists and codifies them.
  • A restorative approach by the justice system is required. The death penalty is explicitly forbidden.
  • Protection for persons imprisoned or declared medically insane, via a robust review process, is strengthened.

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I hasten to add that the Preamble in that submission was a toned-down version of the kick-ass original, which was less restrained in calling out New Zealand governments for their repeated human rights violations.

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PS: There has been much media interest in resistance to tomorrow’s census, and last Thursday night I was interviewed by Vinny Eastwood who runs a radio show and posts his Skype conversations online. Apologies for the ums and ahs, but here it is.

See ya next week!
Richard McGrath
Leader, Libertarianz Party