Consulting by RPM || Free Advice Blog

Thoughts on the Austin Plane Attack

[UPDATE below.]

A couple of readers have asked for my thoughts about the suicide note of the guy who flew his plane into an IRS building. For the purposes of this post, I’m going to assume the basic news reporting is accurate, and that this is really the guy’s suicide note. Apparently the guy had had repeated troubles with his business for various reasons, and he ended the note on these terms:

I know I’m hardly the first one to decide I have had all I can stand. It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants. I know there have been countless before me and there are sure to be as many after. But I also know that by not adding my body to the count, I insure nothing will change. I choose to not keep looking over my shoulder at “big brother” while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won’t continue; I have just had enough.

I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less. I would only hope that by striking a nerve that stimulates the inevitable double standard, knee-jerk government reaction that results in more stupid draconian restrictions people wake up and begin to see the pompous political thugs and their mindless minions for what they are. Sadly, though I spent my entire life trying to believe it wasn’t so, but violence not only is the answer, it is the only answer. The cruel joke is that the really big chunks of shit at the top have known this all along and have been laughing, at and using this awareness against, fools like me all along.

I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different. I am finally ready to stop this insanity. Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well.

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Here are my thoughts:

(1) This guy should not be (secretly) applauded by libertarians. There could have been a bunch of little kids who died in the fire, and they needn’t even have been the kids of the IRS agents (as if that would make it acceptable “collateral damage”). There could have been delinquent taxpayers in the building pleading their cases, who brought their kids along. Since this guy doesn’t know know the difference between “principal” and “principle” I’m not confident that he scoped the building out beforehand to be exactly sure of his target. This guy’s justification is the same as George Bush’s: There are bad people out there I don’t like, so I’m going to lash out and hopefully I’ll kill some of the bad people. (BTW if any of you are planning on attacking DC, don’t do it when I’m testifying please. I’ll post my schedule.)

(2) OK let’s put aside the moral objections. From a PR perspective this was a disaster. This guy has singlehandedly discredited the Tea Party movement and other, peaceful Resistance efforts more than Sarah Palin’s single hand (with notes written on it). Can you imagine how much we’re going to hear about the hateful rhetoric of talk radio, angry online rants against the government, blah blah blah?

(3) Finally, let’s put aside the moral objections, and let’s forget winning hearts and minds because we’ve written off the “sheeple.” It’s just the hardcore dude with his plane, and a few thousand other people, stacked up against the might of the US federal government. Was that a good use of his life? What exactly will this accomplish? Is the IRS not going to be able to recruit people? Of course not, it will (if anything) just mean that the IRS has to lower the bar further. I suppose it’s possible some agents will be less likely to really harass somebody on a fuzzy case, but that is hardly worth sacrificing your life for.

It is foolish to try to fight the government on their terms, using violence. They are professionals; they thrive on it. You will never be as ruthless as the people employed by the government. That is a good thing; it’s to your credit. Don’t be ashamed of your timidity in causing death and destruction on innocent bystanders when you are in conflict with another group.

The only way to restore liberty in the United States is to convince far more Americans that they have foolishly forfeited their freedoms, in exchange for promises of economic and military security that lying politicians cannot possibly fulfill. If we convince enough Americans, there will be no need for bloodshed. If we cannot convince enough Americans, no amount of violent rebellion will work. Violence is neither necessary nor sufficient to restore liberty.

We must convince others of the justness of our cause.

You don’t persuade people by flying planes into buildings.

UPDATE: In addition to the pro-Obama people saying this just shows how awful talk radio is blah blah blah, I expect to be equally disgusted by Rush Limbaugh et al. not condoning the attack but trying to understand the motives. And for sure they won’t recommend that we stop letting white people into the country. Why, I bet they would even be OK with the government investigating this as a criminal act, as opposed to an act of war.

(For newcomers, my point is that the right wing talk show guys will not treat this the same way they treated Muslims flying planes into buildings because they oppose evil actions by the US government.)

Producer Prices Rise at 18.2% Annualized Rate in January, 4.6% year/year

Now that I’ve got your attention… Yes the BLS reports that after seasonal adjustment, the Producer Price Index for finished goods was up 1.4% just from December to January, which works out to an 18.2% annualized rate. From January 2009 to January 2010, the PPI was up 4.6%.

Remember, this is the period of no price pressures. The Fed will begin its exit strategy big-time once price inflation picks up.

CPI numbers come out Friday morning…

Postponing Production to Increase Capital Base

Blogging will be sparse for the next couple of days, as I’m at the Infinite Banking Concept symposium in Birmingham. I am the after-dinner speaker tonight, here to talk about my forthcoming book (with Carlos Lara) on Austrian economics and IBC.

Also I know something has been screwy with the blog lately. It’s been loading slowly, and someone emailed to see that his work labeled it as a “malicious website.” The latter could be completely appropriate due to the content, but I will look into the slow loading when I get back into town…

Does Economics Require Selfishness?

I am ready to be corrected, but I think Bryan Caplan (and the approving Gene Callahan) have seriously misconstrued economics, at least in the Austrian version. Bryan writes:

applied economists habitually assume that people are selfish in the ordinary language sense of the word. Consider Yoram’s congestion example. Every applied economist says, “Raise the price!” But if drivers were unselfish in the right way, all of the following would be equally economically plausible solutions:

1. Ask everyone to drive less “because they’re inconveniencing others.”

2. Tell people they’re contributing to global warming.

3. Announce that if traffic doesn’t fall by 20%, we’ll abolish foreign aid to Senegal.

4. Denounce materialism so people quit their jobs and stop commuting.

Now you could say that applied economists are being closed-minded. But I think we’re correct to focus on congestion charges. Why? Because the assumption of human selfishness is roughly true. Almost everyone cares a lot about the price they personally have to pay to use a road, and getting their weekly paycheck. Most people don’t care very much about the effect of their driving on other drivers, global temperature, or the people of Senegal.

It’s easy to multiply examples. Rent control leads to shortages and/or declining quality – if landlords are selfish. If they loved their tenants as themselves, it’s a different story. Printing tons of money wouldn’t cause inflation if people were happy to build up unlimited cash balances for the “good of the country.” Yadda yadda yadda.

I’m not going to deal with every example Bryan raised, and I’m not here to deny that a lot of people–perhaps even Americans who are trained in Chicago School or Austrian economics in particular–are selfish in the everyday sense of the term. What I am here to argue is that modern economic theory does not assume people are selfish in this sense of the term. I think Bryan is simply wrong.

I would suggest that most of the problems with Bryan’s alternate suggestions for alleviating road congestion are due to strategic and knowledge/calculation issues, not to the fact that most people don’t really care about global warming, the Senegalese, etc.

To make things apples-to-apples, we should have contrasted those strategies with #5, for every mile reduced, put in $1 into a pot to be divided among all drivers. That wouldn’t work either, and gosh did I just prove that people don’t care about money?!

Of course not. So by the same token, if the government somehow could actually assure me that the number of Afghan civilians killed by a Predator drone would go down by 1, for every fewer mile I drove on the public road, then I definitely would alter my habits. I’m not saying every other American would took, but a lot would. So there, did I just prove people are basically altruistic?

Suppose we look over the books of a hospital or a group set up to send bottled water to Haitians, and we find that they buy the relevant stuff at Wal-Mart or other cheap vendors. Would we be aghast and say, “You selfish scoundrels! Why are you paying attention to price?!” On the contrary, we would salute them. The real scandal with such “non-profits” would be if they wasted their resources by not paying attention to prices.

Whether you had a world of Mother Theresas or Ayn Rands, the laws of supply and demand would still work, and price controls would still lead to shortages.

The law of demand doesn’t say, “People always buy the cheapest thing.” I am not violating the law of demand when I buy a $20 steak instead of a $5 burger.

Economics also doesn’t assume workers go to where they make the most money.

No, all economic laws (properly construed as the Austrians stress) are ceteris paribus. The demand curve holds everything else equal, and then traces the impact of quantity demanded by altering the price.

In the grand scheme, demand curves slope downward because of budget constraints i.e. scarcity. They don’t slope downward because of selfishness.

Like I said at the beginning, I didn’t think this through such that I’d bet my life on it. Maybe Bryan can convince me that the above standard schtick from Austrian economists is wrong. But he has yet to convince me.

Freud in the News: Classic Projection by Secretary Clinton

From CNBC:

The United States believes Iran may be heading toward a military dictatorship and that its Revolutionary Guard Corps is supplanting its government, U.S. Secretary of State Hillary Clinton said on Monday.

Experience, logic, show government policy prolonging economic woes

That’s the title the Augusta Chronicle gave to my op ed, which ran on Feb. 13. I don’t think it’s available online, so here is the text they ran:

==========

The U.S. economy shed another 85,000 jobs in December, when most analysts had expected no change or even slight job creation.

Meanwhile, the Obama administration continues to push for health-care reform and other measures that will require higher taxes. Ironically, it is the federal government’s policy activism itself that is largely to blame for the prolonged economic slump.

Some politicians speak of “creating jobs” as if they were growing fruit, but in reality the total job creation in the economy during a given period is the cumulative result of millions of decisions by entrepreneurs and business managers. The official tallies reported each month are the net figures.

In October 2009, for example, 3.7 million people were hired in the private sector, which may surprise many readers. The same month, there were 3.9 million job “separations” in the private sector, a category that includes quits, layoffs, discharges, and retirements. That is why the media reported that the private sector shed jobs in October, because on net employers eliminated more positions than they created.

Such monthly losses had been steadily shrinking. In early 2009, net job losses exceeded 600,000 per month, but the figures gradually fell until the gross gains and losses virtually balanced each other by November. It was only natural, then, to assume that there would be decent net job creation in December, as these trends continued.

Yet, that did not happen. Many analysts were taken by surprise that employers remained skittish about adding new employees, even though conventional measures suggest that the recession had officially ended last summer. What’s happening?

To understand fully the net job loss figure for a given month, economists would need to get inside the heads of millions of employers to understand the motivations behind their actions. There is no single explanation for why so many jobs were destroyed, just as there is no single reason why a certain number of car accidents occurred in December. Nonetheless, economics can shed some light on the general trends.

A contributing factor was the changing fortunes of health-care legislation. As details solidified and it became more apparent that a health-care bill would pass the Senate – this was before the upset election of Scott Brown in Massachusetts – many business owners would have calculated a rising cost per employee. Facing a new set of incentives, the predictable reaction would be for such businesses to hire fewer workers, lay off more workers, and/or delay hiring new workers than they otherwise would have done.

To recognize this fact doesn’t mean that health-care legislation is necessarily a bad thing. Many of the proponents of the legislation are being disingenuous, however, when they deny that raising the total cost of an employee will influence a business owner’s decision over how many employees to carry.

The irony is that Obama administration officials and sympathetic pundits understand perfectly well how incentives work in the context of climate change. The “cap and trade” system favored by the administration would artificially raise the price of industrial activities that release greenhouse gases. The whole rationale for this so-called “market-based solution” is to prod businesses to move away from carbon-intensive operations and toward “greener” methods.

If a higher price for carbon causes businesses to use less of it, the same logic applies to increasing the price of employees with related health-insurance expenses – they will use fewer employees.

Regardless of the merits of President Obama’s policy initiatives, it is undeniable that he is casting certain industries as enemies. In such a hostile and uncertain environment, where no owner can know who will face a public dressing down tomorrow- and a massive tax hike – it would be foolish to add employees as if this were a normal economic recovery.

The private economy has recovered from recessions in the past. What distinguishes our present recovery is the incredible amount of government “help.” As the media remind us, not since the Great Depression have the federal government and Federal Reserve meddled so much in the private sector.

So it shouldn’t surprise us if this turns out to be the most sluggish economic recovery since the 1930s.

(The writer is a senior fellow in Business and Economic Studies at the California-based Pacific Research Institute.)

Bursting Eugene Fama’s Bubble

More piling on the Efficient Markets Hypothesis today at Mises.org:

In a recent interview in the New Yorker, Eugene Fama, Chicago School economist and father of the efficient-markets hypothesis (EMH), defended his theory in light of the housing boom and crash. Fama’s views on asset bubbles and business cycles stand in sharp contrast to the standard Austrian position. Although Chicago and Austrian economists are on the same side on many policy questions — particularly in their opposition to Keynesian solutions — Fama’s interview reveals the large differences in their theoretical toolboxes.

Jon Stewart Makes Republicans Look Ridiculous

I don’t see how anybody can vote for Republicans if they watch Jon Stewart. (And I don’t see how anybody can vote for Democrats if they read this blog.) The 2nd half of this clip is so-so (the Hawaii special report), but the first half made me laugh out loud. Star Wars fans get a special treat in the beginning.