The Trickery Behind Keynes's Flippant Remark about the "Long Run"

The Trickery Behind Keynes's Flippant Remark about the "Long Run"

10/08/2018Jim Cox

“In the long run we are all dead.”

This famous retort of the most influential economist of the twentieth century, John Maynard Keynes, was meant as a rebuttal to the views of the classical or free market economists. The entire quote reads:

But the long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again. [A Tract on Monetary Reform, p. 80]

Unfortunately, most rejoinders to this quote from Keynes have focused on the value of long-term thinking in economic analysis, when in fact; the issue is just as surely the nature of the analogy itself. And since most casual readers of Keynes’s quote will be taken with the clever and telling point regarding the thought of economists, it has persuasive power.

But if we are to stop would-be Keynesian propagandists from scoring points with the phrase we must reveal the sleight of hand concealed therein. The nature of this sleight of hand is to take an event occurring in nature, a storm, and treating a depression as if it, too, were an equally and randomly occurring event of nature.

So, while a storm may be a natural occurrence, this is not the case with an economic depression. A depression is caused by intervention into the economy in the form of monetary expansion — hence the boom preceding the bust. With this kept closely in mind we can rephrase Keynes’ quote using an act of human shortsightedness that will render Keynes’ cleverness the thinking of fools:

Economists set themselves too easy, too useless a task if in the case of an extensive drinking binge they can only tell us that once the alcohol’s effect is long past the drinker will feel better again.

It becomes very evident why Keynes chose his particular example for ridiculing long-run thinking economists. By rendering the depression as analogous to a storm at sea, Keynes has taken all focus off the act — artificially increasing the money supply and thus lowering interest rates so that malinvestments accumulate — leading up to the consequences of that act, and thus is relieved of any analysis of the activity which would result in an economic depression.

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Economics 101: More Wealth Means Less Poverty

06/10/2019Per Bylund

Tweeting about poverty and wealth1 is quite instructive. It's obvious that many feel very strongly about it yet know so little.

Consider what wealth is: it is to have the means to satisfy wants. Those means can be anything, including berries or fruits growing in the wild. But the vast majority of means are created. There are no hamburgers, iPhones, or houses growing on trees.

In other words, most means to satisfy wants were created. So wealth, generally speaking, is created.

Many appear confused by this rather obvious fact, or take offense by it being stated.

That is not only ignorant, but counter-productive: whoever does not believe that the means to satisfy wants (wealth) are created surely is not acting to create them. So we are missing out on a lot of wealth because of this ignorant view; our standard of living could be higher.

It should also be obvious that the creation of one means does not makes anyone poorer or, as some claim, that the creation of any means to satisfy a want "creates poverty."

Imagine two people living without any created means to satisfy wants: they are naked and without any wealth other than the occasional berry or fruit provided by nature. If Person One spends her day creating a shelter, this provides a means to satisfy a want. She is thus richer. Does that make Person Two poorer? No. That person's situation has not changed. If anything, there is now a shelter that could potentially be shared, and the knowledge of how to create one is now available. So if anything, Person Two is (slightly) richer too.

Sure, there is now inequality because person one has a shelter and person two does not. You may have the opinion that Person One must share this wealth or think it is okay for Person Two to use force to take that shelter away from Person One. But neither changes the fact that this wealth – the shelter – was created and that, as a result, there is now more wealth in the world.

More wealth means less poverty.

The distribution of wealth is an important issue that needs to be properly discussed, but it is separate from the fact that wealth is created. And it must be created before it can be "distributed." Anything else is nonsense.

Sure, critics may claim shelters are different from the things people want today. That, for example, iPhones etc. do not satisfy "real" wants. But that's also an issue that is separate from the creation of wealth, and it is not really for them to make such judgments. The only thing that matters is that people who use – and choose to use – those means do so because their use satisfy some want that they have. It thus creates value in their lives.  Your opinion does change this fact; it does not decide the wealth or standard of living of someone else.

It's actually beautiful that we do want different things and have different skills, which means we can cooperate through specializing and exchanging and help everyone satisfy more wants than we would be able to on our own. So we're richer as a result (perhaps despite your opinion of people's choices).

Formatted from Twitter: @PerBylund.
  • 1. Link added by the editor.
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Are Roads Really a Natural Monopoly?

06/10/2019Gor Mkrtchian

Private roads shine in their ability to smooth and reduce traffic, and as a result, save our time, save billions of dollars of labor and leisure hours, and reduce pollution from cars.1 Moreover, they would save the lives of a portion of the tens of thousands of annual victims of fatal crashes by making roads safer. This cornucopia of benefits is made possible by introducing currently government-run roads to market prices, allowing consumers to coordinate who drives when and how much, and signaling to entrepreneurs to enlarge road systems and design them to be smoother-flowing and safer to capture profits from consumers who demand these services. However, skeptics criticize the viability of private roads on the grounds, among others, that roads are natural monopolies. The might of the market overcomes this concern.

Natural monopolies in neoclassical economics are characterized by services with high fixed-costs and low additional marginal costs per customer once the expensive, fixed infrastructure is finished. Examples of alleged natural monopolies include electricity grids, telephone lines, gas pipelines, and roads. Given the high cost and inefficiency of having two competing roads that both go from A to B running parallel to one another, not enough of such competition will exist because roads are a natural monopoly, the argument goes. As a result, road owners can abuse their leverage as the owners of the only road from A to B to force consumers to pay high prices and offer low-quality roads, or even blockade individuals. There are several issues with this objection. First, we currently face not only supposed natural monopolies at the scale of individual roads, we face a legal monopoly on the highways from sea to sea, and municipal monopolies on all of the roads in entire cities. The state has immensely greater power to abuse than any private road owner would.

Returning now to private roads, the longer the distance one is traveling, the more possible routes there are to get to the destination. Even if Jones has no choice but to use road X to get to the local grocery store, because people traveling long distances do have a choice in whether they take road X as part of their longer trip or not, the owner of road X will face pressure to make road X more appealing in quality and price to long-distance travelers, benefiting local drivers as well.2

Even if Jones is forced to use road X when he drives to certain locations, he has flexibility in the upper bound of how often and to what extent he uses road X. If road X is high-quality and reasonably priced, Jones won’t just use it when he absolutely has to, but rather he will choose to go out more often and stay home less. When he does go out, he will be more willing to go to locations that require staying on road X for a greater distance, such as going to a far away movie theater rather than the nearby bowling alley, which is relevant if a road or highway charges by distance traveled. Thus, even when road X has no other roads to compete with, which it does indeed in the case of long-distance travelers, it competes against Jones’ phone, TV, computer, video game console, board games, books, etc.

Any road providers who make part or all of their income via billboards and other advertisements, vendor stands, stores, or pit stops on property on or adjacent to their roads have an incentive to maintain a smooth and constant flow of traffic to constantly draw new eyes and wallets, which would increase the amount they could charge for advertisement and vendor space.3

The question of an abusive proprietor of a road in a residential area would seldom even be raised, as networks of residential roads would be owned by the homeowner associations, covenant communities, or simply residents of the neighborhoods in which they are located, and have predetermined contracts guaranteeing road use to those buying homes in those neighborhoods. No one buys a house without also buying legal ownership of something as essential as the roof or driveway of the house. Likewise, in the future of more widespread privatized roads, road access rights will almost certainly be bundled into home purchases as much as the roofs or driveways of homes are now. As an example, a network of neighborhood streets with two hundred homes might be 1/200th owned by each homeowner, including a contract guaranteeing permanent road access to each homeowner.

Finally, with the matter of the roads immediately connected to people’s homes and in their neighborhoods solved, this provides breathing space (the longer the distance traveled, the more possible routes) such that this larger unit, the neighborhood, would likely possess multiple competing options for roads connecting it to the rest of the world from the north, south, east, and west.

Small is the gate and narrow the road that is centrally planned, but wide is the gate and broad is the road that is privately owned.

  • 1. Robert P. Murphy, “A Gas Tax Hike is the Wrong Way to Fund Highways,” Mises Wire, 2018.
  • 2. Price discrimination against local drivers could admittedly complicate this issue, but it would be costly to enforce and draw public contempt.
  • 3. If road owners attempted to increase revenue the opposite way, by intentionally causing traffic jams to force drivers to view advertisements for longer periods of time, or purchase food from the road owners’ stores, this may work in the very short term until consumers learned of this tactic, and then ceased to patronize the road altogether. Only perpetual good service can secure perpetual profits.
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Tucker Carlson's Broadside Against Austrian Economics

06/06/2019Jeff Deist

Listen to the Audio Mises Wire version of this article.

Fox News host Tucker Carlson took to the airwaves of this popular show last night to lambaste Austrian economics and libertarianism, which he views as twin pillars of a failed ideology that doesn't protect American workers and their interests.

The GOP, he argues, is in thrall to free-market corporate interests and esoteric economic theories from dusty textbooks. Republicans remain wedded to unbridled libertarian political philosophy, tax cuts, deregulation, and unilateral free trade, all of which enrich elites but hurt average people. Meanwhile, presidential aspirants like Elizabeth Warren and Bernie Sanders offer the American electorate real-world solutions to economic insecurity, jobs, and healthcare.

It's a compelling story, but untrue. Does Carlson honestly think Republican members of Congress are overly theoretical and ideological? And here we thought they were a bunch of unprincipled and poorly-read hacks!1

Does he honestly think the budget-busting GOP of recent political memory, from Bush II (Iraq War, Medicare Part D, Department of Homeland Security, Patriot Act), John McCain, Mitt Romney are ideological libertarians? Why did Ron Paul and Rand Paul fare poorly among Republican primary voters, if in fact free-market ideology and its donor class dominate the party? And hasn't the party been overtaken by Trumpist protectionists?

Of course we're pleased when Right populists recognize the influence of the Austrian school, just as we're pleased when Left-liberals at the New Republic convince themselves that Misesean "neoliberalism" has taken over the world. We note that Mises and Rothbard continue to receive criticism decades after their respective deaths, a testament to their deep (and apparently nefarious!) influence and an honor given to few economists.

Carlson, a onetime Cato Institute staffer and Weekly Standard writer, understands both Republican politics and the DC world of think tanks and punditry. When he references the Austrian school or libertarianism, it's shorthand for "Koch money and influence" rather than any real ideology. It's his shorthand for the "self-interests of rich guys," interests given an intellectual veneer by academics and writers who are happy to accept billionaire crumbs in exchange for cozy non-profit sinecures. "Conservatism, Inc." (or "Libertarianism, Inc.") has become an self-serving industry unto itself, sclerotic and ripe for criticism.  

There is truth to this. But it's not an ideological truth. Tucker Carlson knows better. He knows full well how tariffs make society overall worse off, how markets make poor Americans far better off than the poor in many countries, why government medicine doesn't work, and how minimum wage laws hurt the least-skilled workers. His argument is about priorities and strategy (and TV ratings), not ideology. And it accepts a fundamental tenet of the Left: self-interest for me is noble and warranted, self-interest for others (especially the rich) is suspicious if not sinister.

In other words, Carlson presents a fundamentally zero-sum perspective, which is to say a fundamentally political perspective. 

That said, his populism—particularly his antiwar stance—should not be dismissed. Populism per se is not an ideology, but rather a strategy. It can be imbued with any political philosophy, and thus can be equally dangerous or beneficial. At its core populism questions not only the competence of elites, but also their worthiness. It asks whether elite interests comport with those of average people, and in most cases correctly concludes that political elites have interests at odds with those people. 

When elites are state-connected or state-protected, i.e., when they maintain or even derive their wealth and influence through their relationship with the state, libertarians have every obligation to object. Elites in the West—from politicians and bureaucrats to central bankers and media figures to defense contractors and patent-coddled pharmaceutical execs—richly deserve our ire. They screwed things up, and ought to be held accountable.  

Tucker Carlson is right about that.

Read more: Rothbard on Libertarian Populism

  • 1. As I write this, I'm privileged to sit in a conference room at the epicenter of Austrian economics. A group of graduate students from around the world is in residence at the Mises Institute this summer, and this week they're discussing (chapter by chapter) Rothbard's Man, Economy, and State.Apparently the GOP forgot to send its congressional delegation to attend.
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Trump's Cuba Travel Ban Is A Wall Against Americans

06/06/2019Alice Salles

Governments have too much power over people. But most of us can’t truly grasp how deep this power goes until our lives are completely changed by a new policy.

Three years after President Obama lessened travel restraints to Cuba, the Trump administration imposed new restrictions for American tourists. This new policy impacts private and corporate planes and boats, cruise ship tours, and other group trips to the island nation.

In a statement to the press, Treasury Secretary Steven Mnuchin said that the travel ban was reinstated because of the “destabilizing role in the Western Hemisphere, providing a communist foothold in the region and propping up U.S. adversaries in places like Venezuela and Nicaragua by fomenting instability, undermining the rule of law, and suppressing democratic processes.”

With the new restrictions, Mnuchin said, the administration hopes “to keep U.S. dollars out of the hands of Cuban military, intelligence, and security services.”

On Twitter, Cuba’s Minister of Foreign Affairs Bruno Eduardo Rodríguez Parrilla said the U.S. wants to “[suffocate] the economy & [harm] the living standards of Cubans in order to forcefully obtain political concessions.”

Bruno Eduardo Rodríguez Parrilla, Cuba’s Minister of Foreign Affairs, strongly criticized the new travel sanctions.

“I strongly reject new sanctions announced by #US vs. #Cuba which further restrict #US citizens’ travels to Cuba, aimed at suffocating the economy & harming the living standards of Cubans in order to forcefully obtain political concessions,” Parrilla wrote on Twitter. “Once again they will fail.”

Regardless of how he feels, the conflict between the U.S. government and the Cuban regime shouldn’t impact people who have nothing to do with it. Whether officials of both countries recognize this or not, they have no legitimate authority over people’s lives.

Government Shouldn’t Dictate Travel Policy

This new attack on Cuba, Mnuchin himself admitted in his statement, is due to Cuba’s close association with Venezuela. But because these restrictions impact Cuban citizens directly, as many are only able to make a living thanks to U.S. tourists , Trump’s move might as well be seen as an act of war.

Whether you support the oppressive regimes in both Venezuela and Cuba or not, the nature of the current administration’s policy can’t be ignored, as it puts America, once again, in the role of the world’s police. And as we’ve seen in the past, to play this role means to put innocent people’s lives in jeopardy.

While to some, it might seem OK to punish the entire country for its corrupt government, the reality is that Cubans aren’t in love with communism . Quite the contrary, many agree that their government doesn’t represent them. But when the United States imposes sanctions or travel bans, it ends up fueling Cuban state propaganda while restricting the individual’s right to do what he or she pleases with their own money. In the end, those who hurt the most are the Cuban people, many whose livelihood depend on exchange with foreigners.

Originally published by Advocates for Self Government.

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Bylund: How to Prioritize When Making Decisions as an Entrepreneur

06/05/2019Per Bylund

Life in a startup is fast paced, varied and fun. But it is also a constant and chaotic struggle, a juggling of disparate issues that need attention and decisions to be made at a moment’s notice. There are employees who need directions, tensions that threaten to erupt into personal conflicts, the bank that keeps calling about refinancing the loan, the supplier who suddenly needs the blueprints earlier to be able to deliver on time, and, at the same time, an endless stream of prioritizations that need to be right.

How are entrepreneurs to make order of this chaos? They face a seemingly endless stream of decisions that need to be made.

There is, of course, no simple solution. But there is a way of thinking about all decisions in a startup that can help entrepreneurs quickly figure out what matters more and what matters less: focus on the forest, not the trees.

What I mean by that is not simply to take a holistic approach to decision-making, but to consider the startup’s position in the economy overall. In other words, what a business actually does in the market economy and what function entrepreneurs serve. Sound cryptic? It really isn’t.

Read the full article at Entrepreneur.

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Repeal the Espionage Act

World War I is the gift that just keeps on giving. Although the U.S. government’s intervention into this senseless, immoral, and destructive war occurred 100 years ago, the adverse effects of the war continue to besiege our nation. Among the most notable examples is the Espionage Act, a tyrannical law that was enacted two months after the U.S. entered the war and which, unfortunately, remained on the books after the war came to an end. In fact, it is that World War I relic that U.S. officials are now relying on to secure the criminal indictment of Julian Assange, the WikiLeaks head who released a mountain of evidence disclosing the inner workings and grave wrongdoing on the part of the U.S. national-security establishment, especially with respect to the manner in which it has waged it undeclared forever wars in the Middle East and Afghanistan.

Some news media commentators are finally coming to the realization that if the Espionage Act can be enforced against Assange for what he did, it can be enforced against anyone in the press for revealing damaging inside information about the national-security establishment — i.e., the Pentagon, the CIA, and the NSA. Therefore, they are calling on the Justice Department to cease and desist from its prosecution of Assange.

Of course, they are right, but the problem is that they don’t go far enough. Their mindsets reflect the customary acceptance of the status quo. The mindset is that we Americans simply have to accept the way things are and plead with the government to go easy on us.

That’s just plain nonsense. It is incumbent on the American people to start thinking at a high level, one that doesn’t just accept the existence of tyrannical laws and instead calls for their repeal. After all, isn’t that what our Declaration of Independence says — that when government becomes destructive of the legitimate ends for which it was formed, it is the right of the people to alter or even abolish it and form new government?

What does that mean with respect to the Espionage Act? It means that the law should simply be repealed and that Americans need to start demanding repeal rather than simply pleading with the Justice Department to enforce it in a more judicious manner.

Let’s keep in mind that the law is the fruit of a rotten foreign intervention. Hardly anyone defends the U.S. intervention into World War I. That war was, quite simply, none of the U.S. government’s business. President Wilson, however, was hell-bent on embroiling the U.S. in the conflict. Wilson believed that if the force of the U.S. government could be used to totally defeat Germany, this would be the war to finally end all wars and to make the world safe for democracy.

Wilson’s mindset, of course, was lunacy. Sure enough, the U.S. intervention resulted in Germany’s total defeat, which was then followed by the vengeful Treaty of Versailles, which Adolf Hitler would use to justify his rise to power. Nazism and World War II soon followed. So much for the war to end all wars and to make the world safe for democracy. Tens of thousands of American men were sacrificed for nothing.

Moreover, Wilson had to force American men to fight in World War I. He conscripted them. Enslaved would be a better word. When a government has to force its citizens to fight a particular war, that’s a good sign that it’s a bad war, one that shouldn’t be waged.

In fact that was one of the reasons for the Espionage Act—not to punish people for spying but rather for criticizing the draft and the war. The law converted anyone who publicly criticized the draft or attempted to persuade American men to resist the draft into felons. And make no mistake about it: U.S. officials went after such people with a vengeance, doing their best to punish Americans for doing nothing more than speaking.

One example was Charles Schenck, who was prosecuted and convicted of violating the law after circulating a flier that opposed the draft. When the case reached the U.S. Supreme Court, the Court upheld the conviction, one of the earliest examples of judicial deferment to the military, a deference that would become virtually complete after the U.S. government was officially converted to a national-security state after World War II.

Another example was Eugen Debs, who got convicted for criticizing the war and for encouraging men to resist the draft. President Wilson called Debs “a traitor to his country.”

How in the world can such prosecutions and convictions possibly be reconciled with the principles of a free society? Freedom necessarily entails the right to criticize government for anything, including its wars, its enslavement of people, its tyranny, and anything else. Perhaps it is worth nothing that both Schenk and Debs were socialists, something that today’s crop of Democrat presidential candidates might want to take note of.

Longtime supporters of FFF know that one of my favorite stories in history is the one about the White Rose, a group of college students in Germany who, in the midst of World War II, began distributing pamphlets calling on Germans to resist their own government and to oppose the troops1.When they were caught and brought to trial, the members of the White Rose were berated by the presiding judge, who accused them of being bad German citizens and traitors, just as Wilson, the Justice Department, and the U.S. Supreme Court had said of Americans who were violating the Espionage Act.

Today, any U.S. official would praise the actions of the White Rose, but that’s just because it was foreign citizens opposing an official enemy of the U.S. government. The fact is that if the White Rose members had done the same thing they did in Germany here in the United States, U.S. officials would have gone after them with the same anger and vengeance as German officials did. And they would have used the Espionage Act to do it.

It’s time to acknowledge that the horror of U.S. intervention into World War I and the horrible consequences of that intervention. It’s also time to rid our nation of the horrific relic of that intervention, the Espionage Act. We need to continue demanding the dismissal of all charges against Assange. But let’s not stop there. Let’s repeal the tyrannical World War I-era Espionage Act under which he is being charged to ensure that this cannot happen to others.

Originally published at the Future of Freedom Foundation
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The Problem with "Assault" Weapons

06/04/2019José Niño

Like no other international mass shooting in recent memory, the Christchurch Mosque massacre in New Zealand is having a resounding impact on gun control discussions in the United States.

In short order, politicians from Bernie Sanders to Alexandria Ocasio-Cortez praised New Zealand for its immediate decision to implement gun control. At the same time, they reiterated that the U.S. follow in New Zealand’s footsteps by passing so-called “assault weapons” bans.

In the American case, there were already several assault weapons ban bills filed in both the U.S. House and Senate before the Christchurch massacre. Although Republican control of the Senate will likely prevent the passage of these bills, these recent filings and the new outrage from the New Zealand tragedy have re-ignited discussions about gun control.

The Origins of the Assault Weapons Ban

AWBs have been a fetish of sorts for gun control proponents during the past three decades. California was one of the first states to pass this policy in 1989 with the Roberti-Roos Act, which banned the ownership and transfer of various brands of assault weapons. The weapons that fell under this ban consisted of rifles and even some pistols and shotguns. This became the inspiration for other assault weapons bans across the nation and eventually led to Bill Clinton’s signing of Federal Assault Weapons Bans of 1994 .

In 2004, the 1994 AWB expired under President George W. Bush’s administration. Many advocates for the AWB warned that expiration would lead to a sudden surge in crime. Not only did murder rates drop from 2003 to 2004, but they have continued falling into the present. Per capita, gun ownership increased by 56 percent from 1993 to 2013, while gun violence plummeted by 49 percent during the same period.

During the past 20 years, lax gun policies like Constitutional Carry, the ability to carry a firearm without a permit, have also become politically relevant. In 2019 alone, states like Kentucky , Oklahoma , and South Dakota embraced Constitutional Carry, which now brings the number of states with this policy to 16. Gun liberalization considered, crimes rates have continued to drop. In 2014, for example, homicide rates reached a 51-year low .

The Obsession over Assault Weapons: Much Ado About Nothing?

Indeed, “assault weapon” is a politically loaded term with no standard definition. They are often confused with assault rifles, weapons with single-shot, burst fire, and fully automatic fire settings, which are employed by militaries around the world. These weapons are not readily available to the civilian populace in America due to stringent regulations from the 1934 National Firearms Act (NFA)and the Hughes Amendment of the 1986 Firearm Owners Protection Act (FOPA). Firearms like the AR-15, a whipping boy for the gun control crowd, only has semi-automatic settings.

Despite these facts, the media have run with the assault weapon canard. Interestingly, research shows that weapons that fall under the arbitrary assault weapon label account for a small percentage of crime. According to Gary Kleck in Targeting Guns, assault weapons were only used in 1.4 percent of gun crimes before any national or state assault weapons bans were implemented in the 1990s. In 2001, the Bureau of Justice found that 8 percent of criminals used assault weapons in firearms-related crimes.

In 2017 alone, only 403 people were killed by all types of rifles. To put this in perspective, this was a year when there were nearly 15,000 total murders, which includes both firearms and non-firearms related deaths. From 2007 to 2017, the much-maligned AR-15 accounted for only 173 deaths in mass shootings.

Assault Weapons Bans Enhance the On-Going Trend of State Control

Crime statistics aside, there is another key reason to be worried about AWBs. These new laws involve conceding more government control over human behavior.

As Ryan McMaken notes , the past century has been one of federal consolidation of power, in which numerous Anglo-Saxon traditions have been subverted by the managerial state. This is most apparent when dealing with the issue of militias. The tradition of a decentralized militia goes back to the libertarian Levellers of 17th century England. This decentralized militia practice did not stay confined to the British Isles as it soon became a part of American colonial culture.

In the early days of the American Republic, Founders like Patrick Henry and George Mason continued that tradition by stressing the importance of the militia instead of centralized standing armies. With the codification of the Second Amendment, both the militia and private firearms ownership aspects became bedrocks of American civic culture up until the early 20th century.

A key component of militia units is their access to military-grade weaponry. However, the militia’s autonomy from the federal government and civilian access to military weapons has been significantly undermined during the past century. David Yassky explains how the Dick Act (the Militia Act) of 1903 and subsequent acts have put the National Guard increasingly under the federal government’s thumb. Yassky points out that “anyone enlisting in a National Guard unit is automatically also enlisted into a "reserve" unit of the U.S. Army (or Air Force), the federal government may use National Guard units for a variety of purposes, and the federal government appoints the commanding officers for these units.”

It also doesn’t help that the passage of the aforementioned 1934 NFA and Hughes Amendment of the 1986 FOPA make it prohibitively expensive for everyday gun owners to acquire military weapons such as machine guns. In the case of the 1986 FOPA, civilians were banned from purchasing machine guns manufactured after the date that this law was enacted.

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Could an Austrian Win the Battle to Replace Theresa May?

05/31/2019Tho Bishop

Following the incredible success of Brexit in 2016, British politics has become a tragedy. Theresa May has been rightfully ridiculed for her remarkable incompetence in striking a Brexit deal, but her greatest sin was her ideological commitment to preserving and growing the very sort of government interventionism that has long hindered the UK.

As George Pickering noted earlier this year:

It would…be tempting for Brexiteers to place the blame entirely on policies inflicted by the EU bureaucracy, but the truth is that harmful post-Brexit policies are equally likely to be imposed by the UK’s own government. This is particularly true for the issue of ‘regulatory harmonization’. Although UK policymakers had initially been considering significant deregulation as a possibility in the case of a no-deal Brexit, this option was taken off the table due to Theresa May’s commitment to transpose the bulk of EU regulations into British law. This would mean that, even in the event of a no-deal Brexit, UK consumers would miss out on the economic boost and quality of life improvements that could otherwise have resulted from abandoning burdensome and unnecessary EU regulations. Again however, the key point is that the true culprit is the policy of regulation itself, not Brexit, and Brexiteers should be no less quick to point this out simply because the source of the harmful policy is the UK government, rather than the EU.

While a Prime Minister with the will to follow through on Brexit would itself be an important blow against political centralism, the UK needs a bold change in ideology to truly take full advantage of the opportunity breaking away from the EU offers its people. Luckily it seems that the Conservative Party will have the option to do just that.

Former Brexit Under-Secretary Steve Baker, a favorite of our friends at Mises UK, has publicly announced he’s considering jumping in to the race to replace May. Baker’s appointment at the time was particularly noteworthy as he was perhaps the strongest EU-skeptic in parliament. His support of Leave, for example, was not simply grounded in the name of British national sovereignty, but correctly identified the EU itself as a dangerous project that should be destroyed entirely.

I think Ukip and the Better Off Out campaign lack ambition. I think the European Union needs to be wholly torn down….It was meant to defeat economic nationalism, it is therefore a failure in its own terms. If we wish to devolve power to the lowest possible level, make it accountable and move on into a free society, then it’s clearly incompatible. What I want is free trade and peace among all the nations of Europe as well as the world and in my view the European Union is an obstacle to that.

While he lacks the same degree of name recognition that is enjoyed by others like former-London Mayor Boris Johnson, Baker has created a strong following of his own among Brexiteers due to his principled stand on Brexit. He has also argued that his distance from May’s past failed deals – which were backed by not just Johnson, but other potential rivals such as Domick Raab – gives him greater credibility.

While Baker’s principled stance on Brexit is itself deserving of praise, what truly makes Baker fascinating is his familiarity with Austrian economics. As I noted when he was originally named Under-Secretary, as a Member of Parliament Baker often referenced economists such as Ludwig von Mises, Jesús Huerta de Soto and F.A. Hayek in the House of Commons. A co-founder of the Cobden Centre (named after the great Richard Cobden), he has long been a vocal opponent of the “monetary socialism” of central banks and the IMF.

As is always the case with any decent politician, Baker remains a longshot in the race to replace May. Still, the fact that his name has emerged in the conversation is a strong sign for his political future. We shall see what emerges in the coming weeks, but if there is one thing we should learn from recent Tory history – one should never rule out an underdog.

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Venezuela's Central Bank Admits the Country's Economy Is a Mess

05/30/2019Ryan McMaken

The Venezuelan central bank has released new data showing just how far the nation's economy has disintegrated in recent years.

MercoPress reports this week (in text that is rather loosely translated from Spanish):

After several years, the Central Bank of Venezuela (BCV) published results of gross domestic product (GDP) until the third quarter of 2018, with which officially confirms the recession that is experienced in the oil country. With the data it is known then that between the third quarter of 2013 to September of last year the economy lost 52.3%. President Nicolás Maduro is on power since 2014.

The BCV report draws a demolished economy. According to the institution, the construction sector fell by 95% between the third quarter of 2013 and the third quarter of 2018, the manufacturing sector by 76%, trade by 79% and financial institutions by 79%. According to the data released on Tuesday, towards the end of 2018 the collapse accelerated.

The official figures of the BCV also confirm the magnitude of the Venezuelan economic recession that has been recorded since the arrival of Nicolás Maduro to the presidency of the country. According to the data, after a slight growth of 1.3% in 2013, as of 2014, the deterioration of the economy begins with a decrease of 3.9%; as well as a fall of 6.2% in 2015.

Among the most striking of the statistics offered by the central bank was 2018's inflation rate of 130,060.2%.

The data release was mandated by the International Monetary Fund which threatened to sanction Venezuela with limitations on its Special Drawing Rights if it did not report updated macroeconomic data.

Given the acceleration of economic decline, it looks like the IMF may need to revise its most recent estimates of Venezuela's economic growth which can be seen in per capita GDP numbers. Here are the IMF's country-by-country estimates of GDP per capita, published using extrapolations from older Venezuelan data:

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Source: International Monetary Fund.

Note the downward trend in Venezuelan GDP (the bottom dark blue line.) It now appears likely Venezuela's growth will need to be adjusted downward.

While the magnitude of the economic decline is remarkable, Venezuela's decline in relation to other South American nations is, by now, a well established trend.

ven2.png

While much of the continent has been undergoing significant growth over the past twenty years — especially in Peru, Uruguay, and Colombia — Venezuela has been moving in the opposite direction. Indeed, according to the estimates published before the release of the Venezuelan central bank's new data, the nation's per capita GDP declined 25 percent from 2008 to 2018.

The relative change has been less dramatic in more recent time frames. Brazil's growth dropped to zero between 2013 and 2018, and Argentina's growth turned negative. Both nations are notable for embracing highs-pending, high-inflation policies over the past decade. It remains to be seen if Brazil's and Argentina's more recent turns toward allegedly pro-market regimes can repair the damage.

ven3.png

Meanwhile, Venezuela has been notable for adopting an especially virulent type of socialism, even when compared to other leftist regimes, such as Bolivia and Ecuador. While Morales in Bolivia and Correa in Ecuador tended to be more pragmatic in their professed "socialism," The Chavista regime in Venezuela has doubled down on enforced "equality" through widespread expropriations and persecution of the productive middle classes.

The results have been disastrous indeed.

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Where in the Developed World Are Average Workers Most Over-Taxed?

periodically explain that a European-sized welfare state can only be financed by huge taxes on lower-income and middle-class taxpayers.

Simply stated, there aren’t enough rich people to prop up big government. Moreover, at the risk of mixing my animal metaphors, those golden geese also have a tendency to fly away if they’re being treated like fatted calves.

I have some additional evidence to share on this issue, thanks to a new reportfrom the Tax Foundation. The research specifically looks at the tax burden on the average worker in developed nations.

The tax burden on labor is referred to as a “tax wedge,” which simply refers to the difference between an employer’s cost of an employee and the employee’s net disposable income.…The OECD calculates the tax burden by adding together the income tax payment, employee-side payroll tax payment, and employer-side payroll tax payment of a worker earning the average wage in a country. …Although payroll taxes are typically split between workers and their employers, economists generally agree that both sides of the payroll tax ultimately fall on workers.

The bad news for workers (and the good news for politicians) is that average workers in the advanced world loses more than one-third of their income to government.

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In some cases, such as the unfortunate Spanish household I wrote about back in February, the government steals two-thirds of a worker’s income.

So which country is best for workers and which is worst?

Here’s a look at a map showing the tax burden for selected European nations.

Suffice to say, it’s not good to be dark red.

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But that map doesn’t provide a complete answer.

To really determine the best and worst countries, the Tax Foundation made an important correction to the OECD data by including the burden of the value-added tax. Here’s why it matters.

The tax burden on labor is broader than personal income taxes and payroll taxes. In many countries individuals also pay a value-added tax (VAT) on their consumption. Because a VAT diminishes the purchasing power of individual earnings, a more complete picture of the tax burden should include the VAT. Although the United States does not have a VAT, state sales taxes also work to diminish the purchasing power of earnings. Accounting for VAT rates and bases in OECD countries increased the tax burden on labor by 5 percentage-points on average in 2018.

And with that important fix, we can confidently state that the worst country for ordinary workers is Belgium, followed by Germany, Austria, France, and Italy.

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The best country, assuming we’re limiting the conversation to rich countries, is Switzerland, followed by New Zealand, South Korea, Israel, and the United States.

By the way, this report just looks at the tax burden on average workers. We would also need estimates of the tax burden on things such as investmentbusiness, and entrepreneurship to judge the overall merit (or lack thereof) of various tax regimes.

Let’s close by looking at the nations that have moved the most in the right direction and wrong direction this century.

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Congratulations to Hungary, Israel, and Sweden.

I’m not surprised to see Mexico galloping in the wrong direction, though I’m disappointed that South Korea and Iceland are also deteriorating.

P.S. The bottom line is that global evidence confirms that ordinary people will be the ones paying the tab if Crazy Bernie and AOC succeed in expanding the burden of government spending in America. Though they’re not honest enough to admit it.

Originally published at International Liberty
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