Tuesday, March 30, 2010

It's coming...2016


So what about the massive leaps in innovation that occur during the fat times of a Keynesians bender? I would be hesitant to say the leaps forward made during a boom are artificial; the abundance may represent a temporary glut, but the economy will grow into these new innovations. So long as there is a bust, the poor ideas will get culled, while the good ones remain. However, I wonder wether an artificially volatile boom and bust cycle is efficient? Furthermore, should I be concerned when the down cycle gets interrupted by a central power acting on the economy?

As the lecturer commented (about min. 32), booms spur a rapid surge in innovation. And innovation, like ideas are synergistic, when they combine their sum is much greater then their parts. Now in a much more prudent and rational economy, like the one proposed by the Austrians, would innovation be a much more subdued affair? Would the internet have taken twice as long to reach the same level of penetration and usability in an Austrian dominated world?

http://en.wikipedia.org/wiki/File:Mubarakal-Kabir-001.jpg

(I am a little scattered on this post.) I enjoyed the lecture, and though the speaker had some compelling ideas. Tall buildings, as with most mega scale projects, usually equate to a very outsized projection of economic viability. Economic realities are so much less glamorous than infinitely appreciating returns. Yet, Richard is right, don't trust anyone who says they can predict economic cycles with near certainty.

If Mr. Thorton is correct, the next tallest skyscraper will correlate, within a year or two, to the economic devastation of the host country. So here is the next contender. It is in Kuwait and it not only tops out at 1001 meters (alarm bells), but it has triple decker elevators (flashing lights), and it's own Olympic stadium (people in orange vests and hardhats running around in general panic), and the coupe de grace, the tower will have ailerons that provide stability in high winds: utter global economic implosion. If this economy crushing megalith does not sink Kuwait into an economic black hole culminating in a lost century, then I would call Mr. Thorton's theory bunk. The tower is scheduled to be completed in 20016 and ground has already been broken on the construction.



Undecided

This should be an interesting discussion. I think the concept is intriguing, whether or not it has merit. Mr. Thornton certainly presented a fair amount of evidence and looking further into Mr. Lawrence's research would doubtless turn up more evidence. I'm not sure what I think about the idea yet.

I don't feel like I am on the same level as people like Rich who are econ majors and actually understand how the Fed and the business cycle work and are related so I'm hesitant to give my opinion just yet. I downloaded the lecture onto my iPod and plan to listen to it a couple times more before Thursday and hopefully will do some more research on the subject so I can be prepared on Thursday.

Until then......here's to Laser-Powered robots!

Is the Business Cycle a Result of Economic Napoleon Syndrome?

There is a well known reasoning to why some young men* insist on driving REALLY big trucks (this I won't further explain for obvious reasons). However, the point of this illustration is to compare this occurrence to Thornton's theory so play along here. Have you ever found your self screaming, biting off your tongue, or saying some thing way out of character along with matching hand gestures because you found your self cut off or nearly ran over by the stereo-typical young dude with a heme. As angry as you are in the moment you fail to think about the long term effects that this individual will face due to the fact that they think they are bullet proof. This individual most likely pays more than you do for their car (BIG truck) insurance and they are more likely to have a shorter life span as well. If anything the delusional assumption that they are on top of the world will serve to be their tragic flaw and there status will tumble and fall. Like the Greek master playwrights wove into their tales it's typically a charters hubris which serve to be the reasoning for their very demise.

But, can this apply to Economic systems? Can the modern towers of babble give us a hint to the next economic down turn? As far fetched as this seems if you look at it as a logic problem it seems to make sense. After all this what many grandmas and Disney movies warn us about and this humility stuff is supposed to be rather important. The golden rule of Karma would also validate Thornton's "Skyscrapers and Business Cycles" theory. However for me the "gut feeling" response to this thesis is skepticism this source of skepticism comes from the reasoning as to why Economists are often compared to Nostradamus; the whole well "the guy is right but he's made so many predictions he had to be right sometime thing". For Thorton this lies in the fact that his thesis seems to be one that is subjective sounding. To put it simply I refuse to fall down Thorton's rabbit hole without looking at his data, but at the sametime my life experience with the human nature and the consequences of dudes with big trucks makes me want to think his theory is true.

On a whole other thread ("hand signal raised hand") this podcast lead me on my own search and this also is probably another reason as to why I am reluctant to fully accept Thorton's presented thesis. This exploration involved a Wikipedia search (oh, how academic I know ;-) of the individual Irving Fisher. Thorton mentions Fisher and his name stuck out in my mind as if you take upper division ECON you are presented with the Fisher Equation. He mentions Fisher and his view of "perpetual prosperity" and how most economists like Fisher were totally unaware of the upcoming Great Depression except our Austrian friend Hayek. He presented the situation like ok there were the Keynesians in 1929 who were like "the Economy is fly!!! rock on!!!! Party like it's 1929!!!! invest in the stock market and build large buildings!!!!" and the lone Austrian who was trying to check in to a hotel but no one knew his name however he was right in the end. Basically the presentation that these are the only two groups and it almost works but...FISHER WASN'T KEYNESIAN (like former presidents Bush I and Bush II he was a member of the Skull and Bones but that's another story...) he is considered to be one of the first Neoclassical American Economics and much of his work was ignored while Keynes's stuff was getting praised. In fact even though Fisher was discredited by his lack observance in predicting the Great Depression he came up with a lot of theories which must be important as I recognize them from my Macroecon class (involving the quat. theory of money MV=PT and yep that it's related to the equation of exchange not to mention the Fisher equation which recognizes the diff. between real and nominal interest rates). Not that Fisher's views were always on par besides the GD mess up (he was in favor of Prohibition and thought that he could rid his daughter of schizophrenia by having sections of her bowel and colon removed (in anything I can come to the conclusion that people believe in very strange things)).

The point is that as far as schools of economics go it's not always the way we paint the picture. There are more different views and schools of thought in the Economics world than just the Keynesian and the Austrian. Sure, these can be closer or further to one of these ideologies but it's not black and white of course there's always shades of gray and perhaps this is why my gut feeling is reluctant to agree that yes the Business Cycle is simply a result of a Napoleon syndrome between countries and it can be measured by how tall they build their buildings.

IN EFFECT ONE OF THE MOST IMPORTANT THINGS YOU LEARN IN SCHOOL: CORRELATION DOES NOT IMPLY CAUSATION!!!

remember :-) it's handy and keeps out the riff raff.

(*My Dad is very good at picking these guys out of a crowd and telling me "Camilla never date a guy like that, you see what he's doing...no respect...sigh"

Laser Powered Robot Signals Future Economic Crisis

New Scientist
November 6th 2009
Mojave, California

Last Wednesday, a laser powered robot strongly signaled a future global recession by ascending 900 meters up a cable suspended from a helicopter at Edwards Air Force Base. The robot climber reached the top of its prognostication in slightly more than 4 minutes, averaging 3.7 meters per second. When asked if it was sure about its predictions it repeated its dire warning concerning the future global economic crisis by ascending the cable again on Thursday at a speed of 3.9 meters.

NASA, not to be outdone by the fed, subsidized this bold malinvestment by awarding the robot's parent company with a $900,000 prize. The Seattle based company, LaserMotive, installed solar cells on its robotic creation and fired ground based infrared lasers at them in attempt to motivate this mechanical oracle to as to the possible timing of a future global economic meltdown.

While the robot was silent on the actual date of the coming financial crisis, its clear signals of the impending disaster were downplayed by an anonymous NASA official who called the catastrophe a 'distant prospect'

http://tinyurl.com/ykeyfyw

Sunday, March 28, 2010

The ABC You Never Learned in Kindergarten

If ever you meet an economist who claims that their latest model can accurately describe the ebb and flow of the business cycle do not be alarmed should you start to hear a high pitched alarm in the back of your head or see flashing lights appear before your eyes. This is merely your finely honed bullshit detector, and it has been triggered. Economist Joan Robinson once remarked that one of the best reasons to study economics is simply to avoid being deceived by economists. Sounder advice is rare. An economist with a model to predict the future is like a traveling salesman with a tonic to cure erectile dysfunction. Don't buy it.

Economists are not, nor have ever been, particularly renowned for their skill in predicting fluctuations in the business cycle. For good reason, we're not very good at it. Most recognize the limitations of our highly stylized macroeconomic models and the dangers of naively applying them to the dynamic complexities of the real world. The Austrians should know this better than most, being one of the best and most devastating critics of mainstream economics in general and macroeconomics in particular.

This is why I'm sorely disapointed with the poor choice of title Mark Thornton  selected for his podcast, promising readers that the secret to predicting the next economic crisis lay a mere podcast away. An Austrian should know better.

Andrew Lawrence's "Skyscraper Index" and other research documenting the correlation between construction and the business cycle is well established. I don't doubt that a strong correlation between high-rise construction projects and economic booms exists. But that is not really the argument Thornton is trying to make here (which is a much easier read than it is a listen, I'd recommend just reading the article his lecture is based off instead of the sitting through the podcast.).

Thornton goes beyond correlation by trying to argue that the Fed plays a causal factor in this relationship and that this validates the Austrian theory of the Business Cycle. For those unfamiliar with the ABC, well, there's a reason. It doesn't held up very well to empirical scrutiny. The literature on the ABC and its failures is vast, technical, complicated and beyond summary in this short post. Suffice it to say that I think it's mostly wrong and Thornton, like other ABC theorists, fails to establish a causal relationship between government manipulation of the interest rate, economic expansion or the subsequent busts.

He even seems to contradict his own thesis that the Skyscraper Index/Business Cycle correlation is a validation of the ABC when he admits that the relationship holds during periods in American history when the Fed didn't even exist. How a central bank can trigger malinvestments through artificially low interest rates before it exists is beyond me.

Of course the Austrians have never been ones to let contradictory evidence stand in the way of their theories.

Thursday, March 25, 2010

Here is what we have really been up to


This is an aggregate of every word we have written this semester. I thought it was interesting to see our mild obsession with, “system, market, just, people, think, know order”.

Marx- what a hypocrite! !

I enjoyed reading this article, and for once I could actually see some validity in the austrian' s view point. Feudalism vs Marxisim, was a very interesting concept. The irony of marxism was that when put in practice, marxism resulted in a mess very like that of feudalism. What is really the difference between a serf working on a lords land and a peasent working on the state's land. In both cases there is no incentive to work efficiently, and in both instances the individual does not have any incentive to improvise. It is very ironic how marxism brought about a devastatingly similar scenario to feudalism. I have to agree with Mises when he says that people must be allowed to own property on their own. However, this make me think about my views concerning government owning special pieces of land such as preserves etc. Would Mises be against this? My guess is he probably will.
This article also brings about the issue of cosmos vs taxis. It exemplfies how the free market system takes a more cosmos approach to fixing a problem or making a profit than marxism or feudalism. This once again proves that maybe a more cosmos method of thinking and organizing leads to better incentives and better products.

Tuesday, March 23, 2010

An Historical Approach to Marxism; Rightly So

Generally I dislike exclamation points in all writing, but in “Marx and Austrian Class Analysis” I kind of loved the sense of drama it created as it leapt from one thrilling conclusion to the next. I am not being sarcastic here; Mr. Hoppe gave Marxism a very sound thrashing, and basically upended the entire foundation on which the ideals of Marxism are built. A job well done indeed. Yet, one thought that kept slipping into my head as I read this essay was, “why does this matter?”. I don't mean to sound like a disinterested adolescent, but rather I find it interesting that myself, as well as the majority of my generation generally view Marxism as dead. In fact, my initial feeling is that Marxism is deader than dead, it is dead like those early American utopian colonies that failed just as spectacularly, and now only contain an historical significance. And so far as historical significance goes, Marxism was only successful as an opposition to the free market, and since the free market is perhaps the most successful 'idea' of the past 500 years, Marxism had a pretty good run. Marxism was a failure, as oppositional movements inevitably are, while the free market moved inexorably forward. So I enjoy the historical approach that Hoppe uses in his essay, it places communism in the right context, a peculiarity of the past that holds some very valuable lessons, yet in itself, an idea whose time has long since past. So the next time a student says, “why does this matter” during the discussion on Marxism, the Economics professor should swell with pride and kindly delegate the question to a history professor.

That said, i'm still a little shocked that Marx and Engels managed to completely miss the entire concept of risk and reward, that 'future goods will only exchange with present goods at a discount'.

Is there any Hoppe for Austrian Marxism?

I found myself surprised by the points that Hoppe makes in his analysis as they differ extensively from what I hypothesized they would be as I first started to read the article. Hoppe finds himself agreeing with some elements of Marxist thought and states that these fit in to the Austrian model. He states that the increased productivity laborers that Marx speaks of is indeed one of exploitation this is because is a sense it wasn’t voluntary like it should be in a proper free market (as the expense is externalized to the slave/serf).

He accuses Marx of “engaging in historical investigations and arousing the reader’s indignation at the brutalities underling the formation of many capitalist fortunes, actually sidesteps at hand, evading the fact that his thesis is really an entirely different one: namely, that even under “clean” capitalism.” This I thought as interesting.

I however thought that his view of time preference is a bit stretched in his explanation of lower wages.

I was most interested in Hoppe’s thoughts on collectivity owned resources. Mr. O’Toole had an interesting view on them himself that he shared during his presentation last week. He thought that there is nothing wrong with the part of communism that focuses collectivity owned resources. This is due to the reasoning that all parties involved have the incentive to use these resources wisely (Like mutual funds). What he was against in these systems is the central planning. Currently, in northern history class we are focusing on Russia and this is interesting in the sense that Stalin’s 5 year plans (at first increased production than productivity fell) a lot if infrastructure was built at this time but it is easy to argue that the infrastructure didn’t reflect the people’s needs.

Overall this article presented very interesting viewpoint of the Communist system through an Austrian’s eyes and I can’t wait to discuss it this next Thursday.

Still Wrong, Just From The Opposite Direction

The distinction Hoppe makes between the so-called "clean" capitalism where the laborer and capitalist enjoy a mutually beneficial, symbiotic relationship, and the parasitic, exploitative capitalism that Marx critiques is a valid and important  contribution. Marx's straw man of capitalism, in which exploitative laborer practices or corporatist conspiracies between state and firm, provide evidence to support the false thesis that the free market is somehow inherently orientated towards corruption continues to exist in the popular imagination of the Left to this day.

However Hoppe's article also repeats a lot of the same fallacies as Marx's Manifesto, namely its insistence on characterizing the history of all of civilization in the reductionist terms of some black and white, epic, cyclical class war. I don't agree with Hoppe's assertion that Marxist class theory is more or less true, just arrived at from a false starting point. I'm still not convinced that it was ever true to begin with, regardless of the logical steps taken to reach the conclusion.

Marxist class distinction is far too fuzzy a social construct to be the unifying theory behind history, economics, or any other social science that it wants to be. Hoppe's insistence on working from within the same flawed framework as Marx frustrated me and only seemed to lend credence to the cynical idea that the Austrian school is simply the Marxism of the Right.

State versus Economic System


At last it makes sense. Marxist theory has enough truth in it that it was plausible to millions of people. Our foray into the Communist Manifesto revealed some of its inconsistencies but this article completes the work laying it out very clearly for its readers.

The parts on the relation between capitalism and exploitation was especially interesting as that is one of the choice arguments most antagonists of the free market point to when constructing their line of reasoning. As Hoppe says:

"Marxism, contrary to much of the so-called bourgeois social sciences, gets the facts right: There is a indeed a tendency toward imperialism operative in history; and the foremost imperialist powers are indeed the most advanced capitalist nations. Yet the explanation is once again faulty. It is the state as an institution exempt for the capitalist rules of property acquisitions that is by nature aggressive. And the historical evidence of a close correlation between capitalism and imperialsim only seemingly contradicts this. It finds its explanation, easily enough, in the fact that in order to come out successfully from interstate wars, a state must be in command of sufficient (in relative terms) economic resources. Other things being equal the state with more ample resources will win."

Capitalist countries tend to have more "ample resources" because of the productive nature of that system and so the capitalist countries tend to be the won who succeed as imperialist powers. However, that does not imply a connection between capitalism itself and exploitation, but rather that capitalism, like any other economic system, can be used by an exploitive state.

I thought this was an interesting distinction.

Friday, March 5, 2010

Who Says Econ 100 Would Never Come In Handy?

Taken and introductory economics course? Remember the difference between the federal funds rate and the discount rate? Congratulations! You are officially more qualified to serve on the House Committee on Financial Services than a representative with 19 years of prior experience.

Watch in horror as a distraught Ben Bernanke tries to explain the distinction to Rep. Maxine Waters (D-Calif.), a woman who has served on the committee since 1990.


 

This exchange brought to you by the committee tasked with overseeing "all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities."

Sleep tight America.

Wednesday, March 3, 2010

I can't wait until thursday...all this blood in the water

What a treat to have finally read the great Communist Manifesto…I thought it would have been a little longer though. In fact, I thought a lot of things about this little opus magnum that turned out to be quite wrong. Most outstanding was lack of spirited writing or stirring conclusions; I was quite unmoved by the whole affair, but then I’m also warm and well fed. Marx and Engels’ manifesto was more rant then philosophy, but they do have some interesting points. Namely, that expansion for expansion sake is wrong, and that private property is at the root of societies problems. It is wrong to trash this ideology and call it dead wrong, it’s not; Marx and Engels are right about how absolutely important economies are at the individual level, and how interconnected economies are. Yet the two are completely wrong about how economies are run, and by whom, and how they are ordered.

Now, this is still old-world Europe, and it was still pretty much the same framework of class-ism, but with a laisser-faire capitalist bent. If one had been born in the lower class, there were simply too few routes to self-betterment. There was no community college to learn a new skill, no scholarships or grants and no effective system of self-betterment. To move 100 miles from where you were born was a more expensive and difficult undertaking then it is for someone to move half way across the globe today. In short, the bourgeoisie was not necessarily keeping down the masses, more they were being kept down by a lack of opportunities and extremely inflexible labor markets. Was it right for the bourgeoisie to exploit these market inefficiencies? Well in hindsight, no. In 1850? Well maybe. In hindsight, the bourgeoisie should have recognized that a repressed, malnourished and uneducated society benefits no one, in spite of the few cents a day savings in labor costs. However, the rising communists should also have seen the major, and I mean major, pitfalls of collectivism, self-sufficiency and public property on efficiency. Plus they all had a healthy does of over reaction.

So I had always taken Communism to be a completely rational idea, I might have even called it a good idea that just could not work along side human nature. However, today I think it is an absolutely awful idea, it does not work with human nature, and it does not work period. The whole system rests on the notion that one treats 100 million people like they are immediate family, most people struggle to treat their immediate family like family. Furthermore, it cannot work because the system will inevitably collapse under its own inefficiencies, huge, massive and blatant inefficiencies that one would be punished for trying to correct. It is an impossible task to divine what products are being under produced and what are being overproduced without the market using a price system. Collectivism will always encourage people to abuse goods and service because there is immediate consequence for abusing public property, the costs are so evenly dispersed that the entire relationship is lost on a sole individual.

Expansion for expansion sake? Well, yeah. All improvements, even the ones that involve elimination, require the expansion of something somewhere; a new technique or body of knowledge, least of all a new product or technology. Marx evokes an evil entity that only wants to consume and expand, how he fails to see any benefit is beyond me.

Tuesday, March 2, 2010

Communist Party on Wayne, Party on Garth WAYNES WORLD EXCELLENT WEOWEOWEO

The Communist Manifesto isn't just a great introduction to the doctrine of Marxism, it's also a great collection all the fun contradictions, inconsistencies, and fallacies that Marxist "philosophy" bulges with.

My problems with Communist/Socialist theory in general, and Marxism in particular are too many to list so let me just pose a few questions about the Manifesto that our more, let's say "egalitarian minded" scholars, might have a superior insight into.

1) If "Free Trade" is synonymous in the Communist mind with "exploitation" than what adjective do they associate with "collectivization" or "gulag"? How did a political movement determined to end the capitalist exploitation of labor rationalize the harsh treatment of the Russian peasant class following the October Revolution and Civil War?

2) For an ideology that stressed the transcendence of national political borders in the pursuit of a unified and worldwide workers revolution what do we make of the great deal of skepticism Marx and Engels have concerning not only globalization and international trade, but also the integration of "barbarian nations into civilization"? "Workers of the world unite, unless you happen to work in one of those barbaric parts of the world."?

3) How do we interpret Marx and Engels bizarre appeal to their readers religious sentiments when they criticize the bourgeoisie for drowning "the heavenly ecstasies of religious fervor... in the icy water of egotistical calculation"? That seems like a strange condemnation from ideologues who themselves ultimately sought to eradicate religion and replace church dogma with state dogma.

Labour Merit, Milk and Marx

Reading the Communist manifesto reminded me of Eric Blair's (pseudonym: George Orwell) book "1984". The idea of the lower class, the proletariat arising to overthrow their oppressors and establish a new social order has been around for a long time. As long as human history, I suspect. Throughout history the oppressed lower classes have revolted, sometimes successfully and established new systems of human order. The tendency has almost invariably been for the oppressed to become the oppressor.

It is unfortunate that Carl Marx did not live to see the development of his dreaded bourgeoisie society, he would have then been able to witness the most level playing field in the history of human kind. Even though we have the rich and the poor and some of the rich are very rich, and some of the poor are very poor, never in history has the ever been a large, more comfortable and influential middle class as their exists today. Standards of living have risen across the globe giving people more freedom and luxury than any other group throughout history. The exact opposite of what Mr. Marx feared.

It is hard for us to understand the point of view behind the Communist Manifesto. In a system without individual property where goods are allocated by "need" rather than by what I shall call "labour merit" (deliberately using the British spelling) inefficiencies abound. As much as we'd all like to live in a society where everyone yielded to the needs of others and placed others' priorities above their own, that will not happen with the human state. Man kind needs incentive to motivate him to engage in labour.

The other problem with the communist system is that deciding how to allocate resources on a need-based system is not as straight-forward as it seems on paper. In same cases it might be obvious: if Josh is dying of pneumonia I would agree that he needs the antibiotics more urgently than I do for my petty flu. However, which of us needs more milk is more ambiguous. We could both argue eloquently for increased milk rations, him for his milk and cookies, me for my homemade morning espressos but deciding between those two "needs" is arbitrary.

That is where the price system intervenes to establish who gets the scarce resource of milk. It may seem cold or arbitrary in its own right but it has proven itself to be the most effective and "fair" method. With the readings we have done the past weeks I don't feel I need to elaborate more on why this is so.

It is getting close to midnight and I want my $10, so I will end this rambling post here. Hey, wait. That's the price system in action, isn't it?

If the Communist Manifesto was a movie.

It'd get half a star.

Commie Cowboys

I completed the majority of this week's reading while working in a Western wear store, this seemed to be a very strange environment to take on such an endeavor. While telling this to the friend I was filling in for she summed it up before I could finish my sentence "I'm reading the Communist Manifesto in a Western wear store it feels very...."switch to Caity "Unpatriotic?" And this was actually very correct, its seems from the day that American children learn in school the term Communist that they face the rest of their lives hearing about how it is a flawed system and would never work and in even in picking up a copy of the Communist Manifesto they should in this action well up in guilt; picking up the Communist Manifesto in an establishment filled with belt-buckles and cowboy boots they enviably will feel like a slimeball who needs to be thrown of the cliff of American justice(reading the Communist Manifesto in the public school system however is a whole different story).

While reading though I thought about the idea of Communist Cowboys and how foreign this seems. I tried to think of what would convince a hypothetical group of Cowboys to go commie...my mind went blank. I realized that this hypothetical situation was doomed and no amount of sheer propaganda and or "common property" icecream would help in achieving the posed objective.

Simply put Communism seems to idealistic for any realist including Cowboys and Economists!

The following passages alone made me shiver at the wealth destruction that are connected to such statements:

"Free Trade, In one word, for exploitation, veiled by religious and political illusions, naked, shameless, direct, brutal exploration"

"the theory of the Communists may be summed up in the single sentence: Abolition of private property"

But listing points that make me gasp or dissing communism over-and-over again is not at all the point of this post (and will probably be the majority length of the discussion this Thursday) my point is this doesn't the whole American capitalist machismo way of treating the topic of Communism fail to get us anywhere on an academic level of study. I was thinking about how many brilliant people stood by Communism in it's hay day (no pun intended) and it would be narcissistic to say that all of these individuals were simply brainwashed.

Timing is everything which is why it is so easy for me to read passages and gasp in horror rather than excitement at Marx and Engels points. If you think about it what the world had known then is very different in the realms of collective knowledge than what it knows now. If you think about the mercantilism(equating wealth with gold and sliver...like Aaron ;-)that was the earlier economic system at this time it is easy to note how the wealthy individuals of the day were indeed taking advantage of other nations in a destructive manner that may have helped these said individuals and wealthy nations stay at the top but did very little in creating real wealth. After this period you get the Industrial Revolution which is the heart of the communist movement. I think experincing life during this time could have a huge impact on how the communist system looks to the individuals and I will try to keep this point in the back of my mind during our next meeting.

PS-I was surprised by the accuracy present in the explanation of the Union Effect in the Manifesto.

Monday, March 1, 2010

Trade and Exchange

Missisippi representative Gene Taylor seems to have jumped on the NAFTA-hate band-wagon, albeit over 15 years late. Word on the Hill is he plans to introduce a bill to withdraw the U.S. from the trade block.

Don Boudreaux pens the congressman with some immodest proposals.
Dear Rep. Taylor:

You propose to remove the U.S. from NAFTA. Your stated reason is that the freer trade made possible by NAFTA destroys jobs in your state.
If you’re correct – that is, if it’s true that preventing people in one political jurisdiction from trading freely with people in other political jurisdictions generates higher-paying jobs and more widespread prosperity for those people who are denied the freedom to trade freely – then your proposal is too modest.  You should instead introduce legislation that permits each of the 50 states to impose high tariffs not only on goods from jurisdictions such as South Korea and Mexico, but also on goods from jurisdictions such as South Carolina and Michigan.

Think of it!  No longer, for example, would Mississippians ship dollars out of state in return for cars imported from Detroit.  You’ll keep those dollars at home, and as a result get a booming, high-tech manufacturing industry – and, to boot, also get rid of the large and growing trade deficit in motor vehicles that has long plagued your state.
The question is - are we sure Mr. Taylor isn't dense enough to take Don seriously?