Sunday, September 19, 2010

Bastiat Reference in Chicago Tribune

"[In Chicago] the 5 percent sales tax forgiveness on back-to-school purchases last month, as study after study confirms, only shifts spending from other time frames with no net gain in sales. Ditto for last year's dollop — cash for clunkers — and this year's homebuyer tax credit.

In each of these examples, a politician or legislative body was either seeking to do good — reduce energy consumption, make something more affordable or put more money in workers' pockets — or was perhaps duped by, or just pandering to, a special-interest group or constituency.

As 19th century French economist Frederic Bastiat put it, "There is only one difference between a bad economist and a good one: The bad economist confines himself to the 'visible' effect; the good economist takes into account both the effect that can be seen and those effects that must be 'foreseen.'

The same bad vs. good demarcation holds for political candidates, city halls, lawmakers and public agencies."

Allen R. Sanderson of the University of Chicago, Chicago Tribune

Sunday, September 5, 2010

Labor (verb):

1a : expenditure of physical or mental effort especially when difficult or compulsory

b (1) : human activity that provides the goods or services in an economy (2) : the services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits

A thought on labor:

Your labor is your most valuable asset: Capitalism compensates you for it, and socialism steals it from you.

Enemies of freedom and liberty often accuse entrepreneurs and capitalists of "exploiting" the working-class. Profits and greed, they argue, inevitably pit the employer and employee against each other. Nothing could be farther from the truth. Yet, contempt for the employer and fear are the tools socialists use to spread their own ideals. Once the workers are convinced that capitalism is evil, they then look to the government for the wealth and security that capitalism once provided.

Below are some various quotes regarding labor, wages, and profit. As you read them, ask yourself which group (capitalists or socialists) truly value the worker, the product of their labor, and the entrepreneurial spirit:

"On the basis of political economy itself, in its own words, we have shown that the worker sinks to the level of a commodity and becomes indeed the most wretched of commodities; that the wretchedness of the worker is in inverse proportion to the power and magnitude of his production..."
- Karl Marx (1844) on the Political Economy

"We have stopped thinking in terms of a minimum wage. That belongs to yesterday, before we quite knew what paying high wages meant. Now so few people get the minimum wage that we do not bother about it at all. We try to pay a man what he is worth and we are not inclined to keep a man who is not worth more than the minimum wage."
- Henry Ford (1912) on Minimum Wages

"To establish, that in cases of even one unexcused day's absence from work, the worker should be fired from the enterprise or establishment, with loss of the right to use ration and commodity cards issued to him as a worker in said enterprise or establishment, and likewise with loss of the right to use an apartment given him in the housing of said enterprise or establishment."
- Resolution of the Central Executive Committee and the Council of People's Commissars of the USSR (1932)

“We do want more, and when it becomes more, we shall still want more. And we shall never cease to demand more until we have received the results of our labor.”
- Samuel Gompers, leader and first President of the American Federation of Labor (AFL) (1850-1924)

"Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long rugged path towards prosperity and freedom."
- Barrak Obama (Jan 8th, 2009)

"Reckless greed and risk taking … must never endanger our prosperity again"
- Barrak Obama (Jan 20th, 2009) (Notice the contradiction...?)

"I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious."
- Thomas Jefferson (1743-1826) on the role of government

"These capitalists generally act harmoniously and in concert, to fleece the people."
- Abraham Lincoln (1809-1865)

"Opportunity is missed by most people because it is dressed in overalls and looks like work."
- Thomas Edison (1847-1931) on hard work and commitment

"The people who are doing the work are the moving force behind the Macintosh. My job is to create a space for them, to clear out the rest of the organization and keep it at bay.
- Steve Jobs, CEO of Apple (1955- )

"Particular obstructive workers who refuse to submit to disciplinary measures will be subject, as non-workers, to discharge and confinement in concentration camps."
- Article 9 of a decree, signed by Lenin (14 November 1919)

"No one would have any argument with government, provided that his person was respected, his labor was free, and the fruits of his labor were protected against all unjust attack. When successful, we would not have to thank the state for our success. "
- Frederic Bastiat (1850) The Law

Saturday, September 4, 2010

Trade Makes Us Less Likely to Kill

Michael Shermer writes in the Huffington Post:

"Trade makes us less likely to kill our potential trading partners. As Jared Diamond once told me about his research on Papua New Guinea hunter-gatherers: "Should you happen to meet an unfamiliar person in the forest, of course you try to kill him or else to run away. Our modern custom of just saying hello and starting a friendly chat would be suicidal." And yet something happened in the 1960s to bring about more peaceful interactions. Initially, peace was imposed upon the native New Guineans by fiat from the Western colonial government that ruled over the territory, but officials then insured continued peace by providing goods that the people needed, as well as the technologies to enable them to continue producing more resources on their own. In less than one generation, New Guinean hunter-gatherers who were fighting each other with stone tools were suddenly New Guinean consumer-traders operating computers, flying planes, and running their own small businesses. Where goods crossed New Guinea frontiers, New Guinea armies did not.

This is an example from my book of what I call Bastiat's Principle, from an observation by the 19th-century French economist Frédéric Bastiat: "Where goods do not cross frontiers, armies will." Although trade is not a sure-fire prophylactic against between-group conflict (there are exceptions to Thomas Friedman's observation that two countries with MacDonalds don't fight, but as a first order approximation it is accurate), it is an integral component to establishing trust between strangers that lessens the potential volatility that naturally exists whenever groups come into contact with one another, especially over the allocation of scare resources that have alternative uses, the very definition of economics.

And that brings us back full circle to trade, markets, and morality."