Unemployment Lingers On

Another day, another few thousands of jobs lost. Austrians generally say that job losses are temporary and that an economy should always rebound to full employment, but why hasn't this happened? Well, if there is something stopping you from investing, then you're going to be less willing to invest.

We have a tax cut that's set to expire in 2 years, monetary inflation (which will eventually be realized), new regulations, etc. It's tough for anyone to try to create new jobs with all of this going on. The fact is, people will only create a job when they expect future profits from it. Cutting into future profits and adding to present costs will only lead to less investment.

And never underestimate the power of unemployment benefits and other welfare benefits. These are making unemployment more attractive than they should be, leading to higher unemployment. I'm not saying that this is the ultimate cause of the unemployment problem, but there is no doubt that it is a significant contributor.

Let's hope that government wises up and frees us all from burdensome regulations and taxation. But who am I kidding? They love it.

Did you receive the city planning flyer?

If so, welcome. You can leave your comments to this post and hopefully a good discussion will get started. Thanks for reading the flyer and for your interest in making this city great again.

My Political Views

All of the political quizzes are insufficient when it comes to my views. Here is, I believe, the only way to summarize one's political views: an item-by-item list of political beliefs.

Strong Political Beliefs:
These are things that I would list as stated goals if I were a politician

End the Federal Reserve
Tie currency to gold and do not manipulate the exchange rate
End social security
End the department of education
Introduce school vouchers
Allow for free immigration (but secure the boarders, keep criminals out)
Make zoning laws unconstitutional
Abolish the federal income tax
Abolish capital gains taxes
End federal welfare spending
Push for tolling of all highways/freeways (or selling them)
End medicare
Abolish all special privileges in the medical industry and allowing non-licensed doctors to practice medicine
Requiring much higher reserve ratios
Ending all aspects of protectionism
Ending the corporate tax
Severely shortening copyright and patent times
Ending farm subsidies
Making affirmative action illegal
Ending FDIC
Ending all business regulations (including anti-trust laws)

Not as strong political beliefs
Things that sound good, but may be implausible as a politician

Allowing anyone to distribute their own currency (free currency)
Ending reserve ratio requirements (free banking)
Pursuing a foreign policy of isolationism
Ending copyright and patent laws

I'll try to post more as I think of them. As of now, though, I'm satisfied with this list.

Asking the Questions that No One Asks about Immigration

Why are illegal immigrants illegal? Why do we cap the number of immigrants coming into this country? Are they bad people? No, they're generally trying to get away from a bad situation. I mean, look at the Statue of Liberty, we're supposed to be sympathetic with the misery of people. So why do we stop them from coming in?

Well for one, because we offer them all of the privileges that we offer to normal Americans. Not that this is bad, I mean, these people could really use a helping hand. The problem is, however, that they don't pay taxes like we do. So it's just a net loss to our economy. I don't want to characterize these people as leeches, they are only doing what is best for them, which is a basic tenet of human action. So they're killing our budget, but is keeping them out the humane answer? Of course not!

Why? Because they're not just coming here for those benefits. They also come for job opportunities that they don't have in their country. And I say, more power to them! They help themselves and they help us by bringing more production to this country, making us all richer. As far as I know, more production is a good thing. But of course, some people see this as a bad thing, and I'll have to address that in another post. In short, it's mercantilist nonsense and should have been dead with the advent of capitalism. It's just too bad that it's populist tripe.

So, are they evil? No. Are they all criminals? No. Do we need more security along the border? Yes. We cannot allow criminals to pass so easily. I'll talk about the economic benefits of immigration which proves that we should allow it in another post, but suffice it to say that there is no moral reason to not let these people in. For these reasons, I support free immigration: letting all those enter the country who want to as long as they don't have communicable diseases and aren't criminals. They should pay taxes and so be eligible for benefits like the rest of us. This is the only way to truly fix the "immigration problem/"

Pink Floyd: not rich enough.

Pink Floyd wants their royalties.

Are you kidding me? Pink Floyd is suing their record label for 10 million pounds in unpaid royalties. 10 million pounds? Come on now. How much money have they made through concerts and original recordings? How much money do they have right now? Do they feel that they are still entitled to be making money for a songs that were produced so long ago? Granted, I love their music, but this is insane. Copyright has gone way too far. This is just a waste of resources.

You have no price system: of course it is expensive

One day I decided to make some bikes, and I live in a country with bike insurance. This means that if you ever lose the bike that you have or decide that you want another, you can trade it in and get another. I make excellent bikes and many people buy bikes from me. This country has the best bikes in the world and everyone owns them! What a grand and equitable system! Oh, but I forgot to mention one part, I charge $3000 for one of my bikes. To be sure, these are not electric or anything special. These are your typical bikes with a few speeds. But hey, I craft a fine machine and I expect to be compensated. Thanks to the national insurance plan, I have a fine way of life and people have their bikes. What is the problem?

That is a terrible misallocation of resources! Imagine what could have been bought instead of everyone having $3000 bikes. I could have bought a new desk for my office. The street that I live on could have had the potholes filled. There are so many problems with such a system.

Of course, this is just going to beg the question: what if this insurance is paid for mostly by the rich? They won't notice the difference, right? Well, first off, let's just assume that only taxing the rich will be enough to pay for such a system: what are the negative effects of doing this? Well, that will be discussed later.

Bikes and healthcare, they're all goods and they all can have the same economic problems.

Of Course Say's Law still applies

In it's simplest form, Say's Law says that "production creates its own demand." Of course, it is a simple statement of the law and this simple statement of it is easy to demolish. If I go and produce some vacuum tubes, what demand have I created? No one will want my products and so I will not get an income. In fact, I have not created demand, I have destroyed it. I have taken goods which could have made good products that people were willing to pay me for but instead I pretty much destroyed those goods. Say's Law no longer applies! Production does not create its own demand and in fact may even destroy wealth!

Well, not quite. See, this simple statement of Say's Law ignores one of the most important ideas about production: it is not all equal. It's the famous diamond-water paradox. Diamond is very plentiful and easy to extract, much like water. However, diamonds are multiple times more valuable than water. The reason is that people value diamonds more than water. Don't believe me? Then pay $1000 for a karat of water. Yeah, just what I thought. So what really matters is production of things that people value. When someone creates something that people want, people will pay for it and the person who created it will trade it for something he sees as more valuable. He profits, and some of the money he will save and some of it he will spend. Because of that profit, he will spend more than he otherwise would. So, a more accurate (but still simple!) way to state Say's Law is that "production that creates a profit creates its own demand." It is still far too simple, but this statement would do well to help explain why the only way to sustainably grow an economy is through production (and that not all production is equal).

The Life of a Peasant

We have to oppose sweatshops! Look at the working conditions of these people. They work basically every hour that they're awake! They make meager wages! Stop buying from companies that use sweatshop labor!

Or not. This reactionary argument it nonsense. Conveniently the people who make this argument ignore the fact that people voluntarily take these jobs. That's right, people choose to work there. If you pose this response to a person who holds the anti-sweatshop position, you'll most likely get a response that they were forced to work in the sweatshop because they were forced out of their farmland. This view, though, is based on a romanticism of peasant life. Were things really much better for people who were subsistence farmers? Grow what your family needs. If it doesn't grow then you die. Is this the way that people really want to work?

If you oppose sweatshop labor, maybe you need to look at this statue of what peasants really look like. See if this is the glorious labor that you make it out to be.

http://upload.wikimedia.org/wikipedia/commons/7/7c/Peasants_3French_Best.jpg

We need to stop focusing on jobs

It seems lately that the only thing our politicians have been focusing on is jobs. I hate to say it, but this is a waste of time. We only need to go back to the old motto: government cannot create wealth, it can only destroy it.

Our focus on jobs is a waste of time because we need to realize that the value of a job is the wealth that it creates. If you have an economy where everyone works for the government digging holes and you have 1 farmer, you're going to have mass starvation. Yes, everyone will be working, but the government jobs are a drain on the economy. If these people were not working for the government, they could be making tools to help the farmer or become a farmer in order to compete. We have to realize that the only reason that a job naturally comes about is because there is a demand for the wealth created by the job.

And this is why all make-work programs naturally fail. The way out of a recession is to ramp up production. Government cannot do this because it does not operate from the profit motive and as such it does not know what people want. Only the private sector which can know what the demand is. Those companies that stick around and profit will successfully be satisfying the demand of the people Those that go bankrupt are not. This is why those companies that are not making profit should fail. When a company is failing, it means that the resources that they are using are not being put to a good enough use. With the liquidation of that company, those resources will be free to meet the demands of the people.

We have forgotten this old lesson, something that we should have learned from our high school economics classes. If you do not have an economy producing the things that people want, then you do not have a good economy. It is time that we stop these make-work programs and instead let the market correct and get back to making those things that we want.