free market

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

Simple Overview of the Great Depression

Recently I made a blog post where I shared several articles to help dispute characterization sod the free market in history. I figured I’d post a very simplified timeline of the Great Depression. 
step 1 – Andrew Mellon who is the treasury secretary advocates tax and spending cuts under Warren Harding and Calvin Coolidge freeing up capital the of colony begins growing

(keep in mind in 1920-1921 there was a deep recession but with very little government intervention the economy was rebounding a year later)​

step 2 – Fed Chairman Ben Strong in the mid 20’s begins to increase the money supply and cut interest rates creating an artificial increase in credit. 

step 3 – companies which are already doing well issue stock then use the money to buy foreign bonds (lending money abroad so they can keep buying stuff from the U.S.) the return on these bonds make the companies look more profitable than they are and traders begin using the credit created by Fed chairman Ben Strong to speculate and the stock prices went up beyond the actual real profitability of these companies. 
Step 4 – eventually in 1929 valuations hit their ceiling and prices begin to fall, this forces margin calls (people having to sell to pay their loans since their stocks are falling) which causes prices to fall even further. The market crashed
Step 5 – the economy finds it hard to recover as Herbert Hoover signs the Smoot Hawley tariff which taxes many foreign goods but many countries then do the same In retaliation, hurting trade further weakening the economy.
step 6 – US policy influenced by economist Irving Fisher (who failed to predict the crash and lost almost everything cause of it) focuses on policies to prevent the fall of asset prices (which were overvalued… Duh) slowing down the ability for economy to discover what the true value of these assets are so they can be sold and the economy can again move forward
Step 7 – Herbert Hoover raises taxes to 62% in 1932
Step 8​ – FDR becomes president raises taxes to the 90s and continues to fight asset price deflation dragging out the liquidation even further
step 9 – While GDP and Umeployment improve during World War II (building tanks and drafting soldiers will do that) It’s not till post WWII tax and spending cuts does private investment and quality of life truly begin to improve

Libertarianism & Free Exchange

from Alex Merced

I’m Libertarian and I’m for Free Exchange, which are not exactly me saying the same thing twice.

When I say I’m libertarian, I’m just saying I value an individuals right to their property and don’t want me or others to aggress on their property, mainly cause I don’t want anyone to do that to me so it only makes sense I should approach others the way I want them to approach me. Although this does not imply any particular doctrine of what is the optimal property rights framework, economic system, or make up of society… just that I don’t want people to aggress on each others property (which includes you body in just about all property right frameworks)

When I say I’m for free exchange, I am making a normative statement, that a world where the barriers to exchange between individuals are as little as possible will yield better social results. Thus, I do believe in removing barriers that come from aggression (basically government intervention, organized crime and cartelization, etc.) but I also believing in making non-aggressive (so fixing without policy) efforts to remove non-aggressive barriers to exchange (social intolerance, lack of access to information, technological barriers).

Although Libertarianism and Free Exchange line up when it comes removing aggressive barriers to exchange, Libertarianism in it’s purest broadest has nothing to say about what or whether anything should be done about non-aggressive barriers.

Point I’m saying is ones own personal philosophical framework is never made up of one principal or value, but of many.

And honestly, keeping them separate is probably for the better since it makes working through problems and communicating clearer and easier.

Reality Shows, Market Forces, and Tolerance

by Alex Merced

I am admittedly of pretentious cultural tastes enjoying television shows with complex thought provoking writing and production values and enjoying complex and unique musical genres. Although, while my personal aesthetic often finds me raising my nose at mainstream popular culture, there is beauty in its role in the evolution of societies values and its interplay with the laws of economic forces. In particular I’m referring to my belief that the growing proliferation of reality shows has had a role to play in what seems a rapidly increasing proliferation of tolerance of groups and individuals of all types.

The Economics

First of all, the growth in reality tv is a story of economics and scarcity. While the profit margins of television shrank as more alternatives for entertainment came to existence also diluting the supply of prime advertising space driving the cost of ad space down, there was demand to create low cost programming to increase the profit margin on shrinking ad revenue. With the success of shows like The Real World, Survivor, and Big Brother it became clear reality television would fill this gap.

The Tolerance

This easy and cheap to produce culture created a rush of finding subjects that would capture the audience in this genre saturated with programming. The result is that may channels sought to display groups and individuals that many would have a  curiosity about such as polygamist, gypsies, drag queens, and more. So while these shows sensationalize and sometimes can be seen as “exploiting” (how I so dislike that word) these groups and individuals for profit, the end result often shows the humanity in these diverse groups of people which in my opinion led sometimes initial curiosity of the audience to turn into empathy and tolerance as they interact with the diverse world around them.

In short, growing scarcity led to decisions for ones own benefit that in my opinion had great social externalities. Yes, the market works, and it works well.

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.

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.

On Equality

by Brian William Waddell

To many libertarian thinkers, speakers, and writers, equality is somewhat of a dirty word. Many don’t like to discuss it because the very word brings forth an image of socialism and equality of outcomes. But that isn’t how equality should be looked at. Equality is important in a libertarian society. Everyone must be treated equally from the start. However, it is not equality of outcomes, but equality of opportunity that is important for society to function in a truly fair and equal manner.

A Metaphor

Imagine the home field of your favorite baseball team. See the grass and dirt, feel the cool breeze, hear the roar of the crowd. Now, think about how the field looks with your team in the field. Finally, think about how the field changes if the other team is in the field. Do artificial barriers suddenly rise up to keep fielders from throwing to first? Does the fence move in so that the home team has a much easier time hitting a home run? Of course not. That wouldn’t be fair. The scoreboard on that field would hopefully show more runs for your team than the other. It’s okay to hope for this because the field itself did not determine the outcome of the game, but the skill and athleticism of the players did.

Now imagine what a field would have to look like to make sure that all contests ended in a tie. The easiest way to do this would be to stop both teams from ever being able to score. Maybe a wall that pops up to stop you as you round third? Even ignoring the uselessness of a contest where neither team has a chance of winning, this would make for a very boring game. Maybe all the games would end in a 3-3 tie instead. This would be more interesting at least. If a team with an excellent pitcher (which wouldn’t be necessary given everyone will score the same amount of runs regardless) faced a team with a poor one the necessity of the field to control the run production could become very entertaining in and of itself.

As the third inning ends, it’s two to nothing in favor of the home team. When they return to bat in the bottom of the fourth, the leadoff batter hits a homerun. The next hitter gets up and takes a mighty swing. The ball flies out toward the wall in left-center. Just as the ball is about to go out of the park, the wall extends itself up four feet to keep the ball in the playing field and the hitter settles for a useless double. The next batter hits a shot in the gap and the runner comes from second, rounds third, and is immediately stopped in his tracks when a snare catches him by the ankle and his face meets the field. He is tagged out as he tries to loosen himself from the snare. The player who hit the ball stops at first because he doesn’t see the point of running to second since he has no chance of scoring.

Now, the field has to find a way to help the trailing team score three runs. After keeping the home team from scoring through the eighth inning the field only has the top of the ninth to get the visitors three runs. The pitcher for the home team strikes out the first two batters. Then, with every pitch, for six straight batters a wall pops up in front of home plate to keep the ball from reaching the strike zone. Three runners score due to the walks issued, and the pitcher strikes out the final batter.

In this scenario, the field becomes the featured player instead of the actual players or the teams. The fields with more inventive traps and ways to make teams score would have the highest ticket sales. Players would just be placeholders rather than valuable assets.

If you haven’t picked up on the metaphor you either know nothing about baseball, or are not a libertarian. So, I’ll spell it out just in case. Government, or the state, is the field. The players are the people. The scoreboard is simply the reflection of what can be accomplished by the players. With the state (field) predetermining outcomes there must be some system to hinder certain people (players) and to help others.

Another Naughty Word

Let’s step away from the metaphor for a minute. In economics and governmental systems a guaranteed equality of outcomes has a name. Anybody know it? Yes, that’s right, socialism. I know for some of you I may as well have just dropped the f-bomb. However, the stigma surrounding socialism doesn’t come from the pursuit of socialistic society. Instead, it comes from the state mandating socialist policy.

I personally believe that socialism is against human nature and cannot be achieved in a massive scale without state influence. The idea that millions of people would willingly pool their resources and talents (or lack thereof) to end up having the same amount to show for it as all of their neighbors is not a likely occurrence. Humans like to have their own stuff. This is more of a primal urge than many like to admit, but we have certainly not evolved past it. Nor are we likely to any time soon.

On the other hand, the free market exists seamlessly without state influence. I suppose that’s why they call it the free market though. It needs nothing, besides being left alone, to guarantee it exists. Millions of people are much more likely to willingly exchange their goods and services for other goods, services, or means to acquire such things.

I’m sure by now you can tell which system I favor. But, let me explain my view on these two systems more completely. I believe both systems to be honorable goals so long as every individual willingly adopts them and there is no governmental interference that compels the use of one system or the other. In theory, a town could decide to live in pure socialism. They could decide that all products that were produced there were the property of the town and not the individual. Even if they all agree initially, what happens if someone who does not agree with the system moves to the town? Can such a system survive without the town government compelling all citizens of the town to surrender their personal property at the town line? Maybe. Sort of? But the system ceases to be pure socialism once one person can have property of his or her own. Many, including (and maybe especially) constitutionalists, would argue that the one who believes in personal property should just move elsewhere. He can, if he wants to. But why can’t beautiful weather or even proximity to a loved one supersede a difference of opinion on personal property? All should be able to live how they choose, so long as it does not interfere with the lives of others, anywhere they choose.

The free market does not suffer a similar breakdown if any number of people willingly decides to share what they produce. No coercion is necessary to keep people freely trading goods and services.

But, I digress. Sort of. Socialism is a prime example of the fallacies that surround equality. If someone can answer this question in a manner that supports socialism, I will consider socialism a valid option for building a society based on equality: How is taking things from people who produce more and giving them to those who produce less actually equal?

The Human Aspect

No more finances, for now. Instead, human equality.  Yes, that’s right, the concept that all humans, regardless of any identifying trait or marker, should have equal opportunity is the most basic form of equality. The very categorizing of people into groups besides human is counter to equality. Allow me, not that you really have a choice, to use another sports analogy. ESPN does something every year before the teams going to the NCAA tournament are announced. The resumes of two bubble teams are put up on the screen without the names of the teams. Basing the decision solely on the merits of who had the better season, it is usually clear who should get into the tournament. Then they reveal the teams involved, and sometimes your mind is blown. “But that’s my team that clearly shouldn’t get in,” you say to the TV. Suddenly, instead of believing that the better team should get in, you pick your team. If you happen to be on the selection committee, then your bias has just kept the better team out of the tournament that they deserve to be in.

I think the implication here is clear, but once again I‘ll spell it out. Having a favorite is fine. You can gravitate toward people who are more like you, less like you, or not at all like you. But when you choose them over better-qualified individuals for jobs you are doing something wrong. Not only does it sometimes hurt the individual, it also hurts the organization when an inferior (due to ability, not any identifying trait) person is hired. We all have prejudices and we all discriminate. Ensuring that we are discriminating based on the quality of the individual, and not a prejudice against an institutionalized group they belong to, is the important part.

Treating people equally is important, but it won’t always happen. Some people will, unfortunately, choose inferior applicants for jobs because of the color of their skin or some other identifying factor. It’s wrong, but inevitable. But, in a free market where this type of discrimination is not institutionalized, the wronged individual can get a job somewhere else. And, as a bonus, the individual can urge people not to utilize the offending employer’s services. Exceptional people come in all forms and there will always be plenty of people out there who recognize that and will give those people the opportunities they deserve without any form of governmental or societal interference.

The Payoff

Equality evokes different images to different people. For many, equality means having all the same chances in life as everyone else if you’re willing to go out and find them. For others, it means having all the same things as everyone else no matter what your lot in life. The question really comes down to whether you value the opportunity to succeed and make something of yourself, or having stuff. I’ll take the opportunity to make something of myself any, and every, day. I can buy the stuff that I want that way, instead of the stuff someone else thinks I should have.