Free Markets and Europe

Free Markets and EuropeBy Alex Merced
 When you hear left wing politicians like Bernie Sander and Hillary Clinton argue for policies that require forced transfers of wealth (high taxes with generous welfare programs), they often site European nations as country who have succeeded with these types of policies?
Do these countries truly combines the level of regulations, taxes and welfare that many people think or do they have a more broader mix of these policies with free market friendly stances that many give them credit for. (Which makes the source of their alleged prosperity less clear)
In this new episode of the contra krugman podcast, Tom Woods and Robert Murphy spend time focusing on Denmark which is regarded as the happiest country in the world. The results is a very insightful discussion that makes you question much of the lefts rhetoric which you can listen here:
Here are some other good articles on Europe and economic policy:


Libertarian 101

So over the last few political seasons you’ve had a few questions about this term you’ve kept hearing people mention, “Libertarian”.
Essentially libertarians are those who look at all questions regarding government and policy from the perspective of the golden rule (do unto others as you’d have done unto yourself). Although, libertarian philosophy and tradition runs much deeper.
To understand what is a libertarian and the different categories of libertarianism watch this video:

Now below I’ll link to several videos to address different issues regarding libertarianism:

(Watch all the videos below, I’ll be surprised if you don’t find yourself thinking more libertarian when you done)

The Great Depression


Central Banking


Minimum Wage

Debunking Donald Trump and Bernie Sanders on Trade and Immigration

The Dark Horse candidates for the republican and democrat primaries (Donald Trump & Bernie Sanders respectively) have both expressed skepticism of Immigration and Trade in regard to U.S. Wages and Wealth. To me the ignorance that this exemplifies results in promoting a xenophobic sentiment with hostility towards globalization that I find well… offensive. So below I’ve collected many articles on the topic of Immigration and Trade the benefits they bring the U.S. Economy to settle this debate.
(For those who havn’t noticed Sanders tone on immigration, read this)
(For the record I support Rand Paul for the republican nomination and in the case he does not get the nomination I support Gary Johnson for the Libertarian Party nomination.)









Congrats on Marriage Equality

congrats to all my LGBT friends on what is a momentous day with the Supreme Court striking down the state bans on gay marriage. this not purely an issue of individuals being discriminated against but a bigger issue of what the power of government should be (state or federal).
Should the government be able to control the kind of contract consenting individuals can enter voluntarily?
As I imagine most fellow libertarians would agree, the obvious answer is no. Any argument for government power would be for it to protect people’s rights and property. In no way does allowing states to ban voluntary association protect anyones rights or their property (considering estate tax law it can be seen as quite the opposite).
so overall no matter how you look at it, this is a solid precedent made in the name of liberty, love, and contract rights.
Alex Merced


Why Taxing Wealth is a bad idea?

by Alex Merced

In his new book, “Capital in the 21st Century“, Piketty advocates for a global tax on wealth as a way to curb growing income inequality. Of course, as a libertarian you can probably guess I think this is a bad idea but for good reason. I have discussed income inequality in previous articles I’ve written, and disagree with Piketty that the correlation between the return on capital and income inequality means the capital growth is cause of the inequality (thus taxing it the cure). Instead, I believe my other article on how monetary policy and inflation increase income inequality not only explains the correlation (inflation increases returns to capital and decreases return on wages) but also just makes more sense in explaining the trends discussed by Piketty.

Although in this article I’m less concerned with what is the true cause and cure for income inequality, but with how bad a solution a global tax on wealth would be. Taxing wealth would not only have the effect of reducing and confiscating wealth which of course is abhorrent from a libertarian perspective, but it will also make capital gravitate to more risky investments than they otherwise would, destabilizing the capital structure of the economy.

So why would higher taxes mean riskier investments?

From an investors point of view, you are generally not just looking for a high % return but generally a return after you adjust for inflation and taxes. The higher the taxes and the higher the rate of inflation the higher return needed to survive both.

For example:

Let’s say you have a 10% (which is pretty good) with a tax rate of 35% and inflation rate of 3%

After taxes you will have a 7.5% return (10 – 35%)

Adjust that for 3% inflation (7.5 – 3)

your at a 4.5% return (and this ignores state and other taxes, also ignoring any issues in measuring inflation)

The point being is that as the hazards of inflation and taxes build up, one must seek more return and the name of the game is “more risk, more reward” meaning that higher returns will be found in increasingly risky investments.

Why do riskier investments return more?

Imagine a world where investments of all levels of risk gave you a 10% return, which one would you choose to put your money in?

If you answered the safest, that would be quite rational and would be what many others would do as well. The result is, that everyone wanting the safest investment will bid up the price which in turn reduces the return on investment (your giving up more for the same thing) and the return will continue to go down until the return goes so low it’s not worth it to investors to bid it any higher.

These investors would then do the same with the next safest investment, etc. By the time you start getting to the riskier investments there will be less potential buyers so they won’t be bid as high, and when you get the riskiest of investments they may be bid down (because maybe 10% return is not worth the risk) so a lower price would give you a higher return (giving up less for the same thing).

Bottom line, investments are generally priced heavily based on risk and reward. So more taxes and inflation will just lead to an increased demand for risk, which at some point will create a scenario that bad investments may outweigh good investments and growth turn into a slump.

The Mechanics of the Minimum Wage [Video]

by Alex Merced

Often times when you try to create protections or regulations of the market, the result is to create an undue burden on those least able to bear them. The result is those at the very bottom can seem stuck there, and those who are somewhat to very well off find themselves relieved of a lot of competition, allowing them to take a bigger participation in the ever changing economic pie. The minimum wage is one of the policies that have these results. Although due to the amount of labor that may already be working at bottom of the income ladder can be limited, the result of this policy for good or worse can be hard to truly measured or seen. Yet, understanding the impacts of market intervention on economic disparities and in turn economic tolerance needs to be more part of the economic discussion.

Why Economics, Choice and Tolerance are Inseperable

by Alex Merced

Often times people define issues into two categories, economic and social, as if there is no influence these have on each other. I contend a world with a more robust competitive economy would also be a world of greater tolerance. Many social and caste divides are born out of economic scarcity, out of a demand for a reason to justify taking more of the economic pie for “us” and leave less for “them” because the sentiment is that there isn’t enough for everyone. If anything history, I think, shows pretty clearly that wealth is more abundant when more of us cooperate and compete with each other to provide value (aka the FREE market) instead of competing over limiting market access to others (protectionism/regulated markets/no markets). Although these divisions over time get ingrained in the culture of these arbitrary groups and can lead to generations of resentment, hostility, and sometimes violence which is why a focus on robust free market policy is an imperative for wealth building but also social cohesion (if you are prosperous you’re less likely to resent other people for being prosperous, or try to prevent them from being so).

So, essentially, economic performance will make people more tolerant of each other, which in turn improves economic scale. So, essentially, any discussion of promoting tolerance can’t be separated from people’s quality of life (which is partly determined by the wealth, and in other part determined by internal factors which often come from peoples ability to pursue their interests and attain property). As people’s quality of life drops, whether from losing their economic (wealth) or autonomous (choice) means to pursue their ends (goals), they begin to look for scapegoats to blame.

Bottom line: A libertarian world view which focuses on empowering peoples economic opportunities and individual choices, is the formula to having a more tolerant socially cohesive society.

A Landscape of Liberty Friendly Institutions

by Alex Merced

In every libertarian evolution, we go through a lot of different phases as we discover our core convictions and views. At different points in my ideological journey I’ve identified with labels such as classical liberal, conservative, minarchist, and anarcho-capitalist, and then I got to the point where I stopped worrying about all these nuances and labels and just said, “I’m a libertarian concerned more with promoting libertarian thought and libertarian means than focusing on any particular ideal power structure.” (Is there any ideal anything? If there was, would it always remain ideal?) At the end of the day, looking at issues from the perspective of, “Is there government intervention (bad), or not (good),” while totally agreeable in its implications, I feel it overlooks a great point. It’s a point which I think many more cutting edge libertarian philosophers and economists are starting to see. Our individual lives and ability to make choices regarding that life, and the property we’ve accumulated in that life, are affected by much more than just government. Institutions such as family, religion, etc. all play a role in our ability to make choices regarding our lives, property, and ability to pursue happiness. Appreciating this reality doesn’t imply any consent for the use of force, instead it just recognizes another dimension of the battle for liberty.

This dimension is molding institutions (social norms, laws, family, etc.) in ways that are conducive to a  view that respects an ability for an individual to make choices about their life and property.  This goal does not need force, but instead participation in social discourse through participation in these institutions so they can be reformed from the inside, through education, so others may make voluntary choices that reform these institutions, and through research so that we can learn more about how these institutions can be improved. (Are there better governance or management systems we can voluntarily adopt? What dynamics make successful families work that other families can adopt?)

In helping understand what reforms and institutions are liberty friendly, I’ve defined four characteristics of institutions that are liberty friendly and liberty hostile (notice how government often encompasses many of these features in the latter category):

Open (Friendly) vs. Closed (hostile): an open institution has very low barriers to participation. Due to this, the market/choice mechanism allows the institution to evolve. A closed institution has high barriers to entry which limits participation, giving the participants an over sized share of power in the institution which they often use to keep others out, slowing down its ability to evolve with other institutions.

Dynamic (Friendly) vs. Static (hostile): a dynamic institution has the flexibility to evolve with changing situations and circumstances while a static institution does not. This eventually will lead to its fighting liberty to protect itself from becoming obsolete.

Transparent (friendly) vs. Opaque (hostile): An institution that is transparent and allows a more free flow of information will enable people to make better choices. While an opaque institution hides information, often not allowing individuals to make proper assessments and choices of different situations (think the NSA).

Voluntary (Friendly) vs. Compulsory (hostile): A voluntary institution has a better feedback mechanism in peoples choices to determine if it’s providing value. A compulsory does not have this mechanism at all, which often leads to the development of the other three hostile characteristics.

So, to make the world more liberty friendly, as libertarians we should discuss how to make institutions more libertarian friendly and take the appropriate non-coercive methods to achieve these reforms.

A Discussion of the Civil Right Act of 1964

by Alex Merced

Having started an organization dedicated to building tolerance in a libertarian framework, I might as well go ahead an attack the elephant in the room when it comes to libertarians and issues like these. Often times when libertarians take on the mantle of social progress absent of government by discussing things like marriage equality or ending the drug war, progressives attempt to dismiss us libertarians by arbitrarily bringing up the Civil Rights Act of 1964 and its public accommodations clause. In order to show why this dismissive argument is unfair and a distraction from modern discussions, let’s first learn about the contents of the 11 articles of the civil right act and see what libertarian reservations would be.

Article I – Banned unequal application of voting laws. I can’t imagine any libertarian having a problem with this particular clause. It’s the epitome of “equality under the law.” Although, all this did was end unequal application of current laws, it didn’t end other forms of voting disenfranchisement. This was later done in the Voting Rights Act of 1965, which was weakened in 2013 by the Supreme Court. I personally think the voting rights act was a reasonable law. It’s not about state or federal rights but preventing oppression by government and any tool that can prevent any oppression is fine with me. (From my understanding the VRA doesn’t violate any property rights, instead it restrains state governments from limiting the participation of it’s citizens in democratic elections.)

Article II – Often referred to as the public accommodations clause, it prohibits discrimination in hotels, restaurants, etc. engaging in interstate commerce (exempting private clubs, so essentially you can create an establishment only open to private members if you really want to be discriminatory). I will discuss the controversy over this particular clause and my take on it after I finish all the articles of the CRA.

Article III – This banned discrimination in public institutions like public parks and restrooms. While libertarians are generally for privatizing most public property, anything that is publicly owned should be open to well, the public. In other words, this is a no brainer for libertarians. It’s like marriage. While many libertarians don’t think a marriage license should exist, as long as it does it should be available to everyone.

Article IV – This enabled the desegregation of public schools. For libertarianism this is perfectly fine by the same logic as Article III.

Article V – Strengthened the Civil Rights Commission that was created in 1957, which only investigates and makes recommendations. From a libertarian perspective this is mild since it can’t really compel anything but it costs taxpayer money to maintain such a commission. I understand the need of a feedback mechanism for issues like these, but like them or not, don’t organizations like the NAACP and ACLU kind of serve this purpose with mostly voluntary donations?

Article VI – Bans discrimination by agencies that receive federal funds. While libertarians aren’t really big on public funds in the first place, I don’t see why regulating the use of public funds and public institutions would bother any libertarians. You’re not messing with anyone’s property that wasn’t already confiscated via taxation.

Article VII – Bans discrimination by employers of 15 or more (also exempts business where the trait you’re discriminating against is vital to the job). Myself along with most libertarians don’t think people should segregate their business or be discriminatory in hiring based on things like race. But, it’s always uneasy with libertarians when you set a precedent for telling people what do with their property (for many their business is their property). So this along with clause II is what usually gets us libertarians in trouble with the orthodoxy.

Article VIII – required the collection of race and gender data in voting. Aside from the cost to the taxpayer, I can’t think of anything to really complain about here. The data can be useful. Although when you collect data like this, you make people think of data in terms of race and gender vs. other traits and characteristics that may highlight other trends. (You can’t measure everything, but what one measures does shape how people think about things, which is worth thinking about)

Article IX – This article made it easier to take a state case ruled on by a segregationist judge and move it to the federal courts. I don’t see any problems with this, if someone is in a situation where they can’t receive a trial from an impartial judge there should be recourse.

Article X – Created the Community Relations Service, which helps communities resolve disputes over discrimination. Aside from the funding, I don’t see any particular thing to be offended about.

Article XI – Allows placing the violators of the other articles in criminal contempt for up to $1000 fine and up to 6 months in jail. Aside from the enforcement of charges against private property use I don’t see a particular problem with this.

My Personal Opinion

The civil rights act isn’t on anyones radar to repeal for two reasons:

– There are laws that create actual problems that need to be dealt with like Sarbanes Oxley, Affordable Care Act, and Dodd Frank. Usually this half-century old law only comes up as political fodder to entrap libertarians.

– When I look at all the articles I find that I can more often agree with than disagree with the law. (Although, in principle, the clauses that violate private property rights can make me feel slightly uncomfortable. However the clauses preventing local governments from segregating public spaces makes me feel good and makes up for the previously stated discomfort.)

The controversy

Most libertarians probably aren’t fully aware of all the articles in the CRA, but libertarians like myself are very hard pressed to ever express any kind of flexibility on our resolution of private property rights (because they are integral to functioning markets, and we tend to really appreciate how small concessions can lead to large losses of other freedoms over time).

At the end of the day if I was a libertarian congressman in 1964 (probably wouldn’t have been back then considering I’m Latino), I would probably have to cast my vote for the act due to the value of it’s restraints on government power to compel discrimination. While many libertarians are very split on this pointless hypothetical that is often given to us I think it is generally a worthwhile law with fewer flaws than many others.

It’s Ok! Libertarians Can Think Something is Bad or Wrong

by Brian William Waddell

After my last piece, someone questioned whether a “true Libertarian” (this phrase alone begs the question of what a true libertarian is, and whether the size of the “L” matters, but that’s for another post) is allowed to think that having a female-only tavern or Christians only theater is wrong. Sure. Why not? I don’t personally think it’s wrong, I just think it’s bad business. But the idea that holding an anti-segregationist opinion flies in the face of libertarianism is absurd. The key distinction is that I will fight for your right to have that silly segregated business while I tell you it’s a bad idea and you shouldn’t do it. If that makes it so that I’m not a “true Libertarian” I’m okay with that.

Why Limit Your Possibilities?

If you were opening a retail business that had a target demographic of, let’s say, women between the ages of 21 and 35, would you only allow people in that specific group to come in? No, that’s silly. Maybe just limit it to women? That seems like a slightly smarter choice. But what if a man wants to purchase some of your goods for his significant other? Clearly this means the best route for the business is to be open to men and women. I can understand the niche market for a tavern only allowing women, ostensibly for a less meat market-like environment, but there is a reason there are not many of them around. Limiting your audience of your own accord is bad business. Usually the audience that a business serves is limited enough by outside factors without internal silliness.

I’ve run enough businesses over the years to understand that the best policy for building and maintaining a business is one of open arms and friendly smiles. Nobody should be turned away.

Right to Refuse Service

On that note, I’ve already written a piece on my own liberty-centric site regarding a recent event where a bakery declined to make a wedding cake for a wedding between two men. The baker was well within his rights as a business owner. He wasn’t within his legal capabilities as a business owner (according to one judge) in Colorado, however. Therefore, he was ordered that he had to make cakes for same-sex couples. This is the problem, and also the distinction. A business owner should be able to choose to not serve people for any reason. Yes, I said any reason. It’s wrong and ignorant to do it for certain reasons, but it’s still something that must be allowed. The free market dictates that just as the business owner need not serve people, people need not patronize that business.

I‘m Allowed

I think taking adverse action toward people based on the color of their skin is wrong. I think taking adverse action toward people based on their sexual preferences is wrong. I think taking adverse action toward people based on their religion is wrong. I’m allowed to think these things are wrong. I’m also allowed to say, “Yeah, that’s wrong, but he can run his business how he chooses. I’ll just never shop there.” On a philosophical level, at least, I have no problem with the creation of “black only” schools or other institutions. I have no problem with “Asian only” schools. I have no problem with “white only” schools. Frankly, as long as all groups are allowed to have their own institutions I don’t see how anyone is actually left out. Another requirement would be that nobody would be compelled to (they can if they want to, of course) pay for the institution. This would be allowed if we were truly living in a place of liberty. (I think all of the above institutions are silly and run counter to improving society because experiencing diversity is a key to becoming a well rounded individual. But, to each his own.)

Make My Day

Go ahead. Open a business where you only allow redheaded men with handlebar mustaches over the age of 33. Call me when you reach your first anniversary and I’ll throw you a huge party to celebrate.