Tuesday, May 5

"He had been going down a bad path and then he found Islam" [update 2]

Cartoonists are still in the front line in the War Begun By Islam.

As you’ve probably heard, two Muslim shooters trying to murder people at a Draw Mohammed competition in Garland, Texas, were shot dead by a police officer before they began.

If only it had happened that way at the Charlie Hebdo offices.

The difference between Paris and Texas? Guns. “People are alive today because Garland not only allows guns, but was prepared.”   The would-be murders had assault rifles. The officer used his duty pistol. He was wounded, but okay.

They were not.

Apparently the shooting has begun another “debate” about free speech – a debate among the only people in the US who apparently don’t understand free speech. Academics. Media. Government. Muslims.

As one person said on Twitter:


What made them violently bonkers? Contemplate this quote from one shooter’s lawyer: “He had been going down a bad path and then he found Islam.” Let that sink in.

So if you’re wondering what drawing won the competition – a drawing good enough to kill for, it was this, by cartoonist  Bosch Fawstin—which will now get way, way, way more circulation than it ever would have before.

Embedded image permalink
Cartoon by Bosch Fawstin.

Here he is receiving his cheque:


[Hat tips and credits CounterMoonbat, David Burge, CBSDFW, Laura A Lorenzo, Jackie, A Libertarian Rebel, Ali A. Rizvi, J.T., Ross McLean, Will Cain, Mehdi Hasan]


  • “Freedom of speech; separation of church and state. These are principles to cherish, not to denigrate. The true ‘haters’ out there are the ones who shout the label of ‘hater’ at anyone who dares to take a moment to stand up for them.”
    Hatred of Mohammad … Or Love of Liberty? – Michael Hurd,  CAPITALISM MAGAZINE

UPDATE 2:  “"

'Once Free Speech Goes, It's Over': 'Draw Muhammad' Contest Winner Sounds Off
Bosch Fawstin said that the contest was important to him because it's about freedom of speech, which he asserted is "under siege."
    "I understand the threat that we face and that's why I do what I do," Fawstin said. "I do it because we're being threatened. This has to be fought head-on."
    "As artists, as writers, as thinkers, as Americans, as people who love freedom, and the entire West, we need to hit back. Not with violence, with the truth, with our art, with our writing," Fawstin said. "Once free speech goes, it's over."
    Watch the interview below...

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We’re done for!

Yes, it’s true.

Yesterday was the last day left to stop catastrophic global warming, and as every warmist would tell you, we failed!

That's right!


On May 4, 2007, the UN warned that we had only 8 years left to stop global warming. And we didn’t listen!!

Governments are running out of time to address climate change and to avoid the worst effects of rising temperatures, an influential UN panel warned yesterday [4 May, 2007].
    Greater energy efficiency, renewable electricity sources and new technology to dump carbon dioxide underground can all help to reduce greenhouse gas emissions, the experts said. But there could be as little as eight years left to avoid a dangerous global average rise of 2C or more.
    The warning came in a report from the Intergovernmental Panel on Climate Change (IPCC) published yesterday in Bangkok ….
    David Miliband, the [then UK] environment secretary, said, “ … We simply can't afford any other option but to act.”

But we didn’t act.

AND NOW HERE WE ARE …. facing disaster fiddling figures.


Because catastrophic global warming would be so much easier to get scared about if temperatures were actually rising  …

[Hat tip Robert Zubrin]


Monday, May 4

The most exciting UK election in ages? But who on earth to vote FOR???

In this most confusing of exciting UK elections (or vice versa), Liberty Scott does his now-patented running-the-rule over who you might want to vote for in the UK elections, if you were in the UK and wanted to leave the house to vote for liberty and freedom. (And unlike me, Scott is someone who likes to vote.)

It looks like your chances in that regard are not good. But how about even trying to understand the whole bugger’s muddle …

  • Most exciting UK election in ages? In one sense... (Part One)
    That's the line being taken by the UK media, of course every election is presented as a "once in a lifetime" chance, when it rarely ever is.
    What is deemed exciting is that the polls for the past few years have indicated that neither major party is likely to win a majority of seats.  There are two reasons for that….
    My suspicion is that there will be another election later this year.
    However, in terms of the variety of what is on offer, it is more nomenclature than substance….
  • Most exciting UK election in ages? Philosophical commitment vs. capitulation (Part Two)
    I was wrong.
    When I first envisaged this blog post, the UK election campaign looked like a lot of "me-too" ism, which moved away from the early rhetoric of Labour Leader Ed Miliband, to a middle muddle ground of mediocrity, where both major parties campaign on different versions of the same policies. Although  both main parties are not too far apart on most policies, the truth is there is a yawning gap, and it is one based upon not simply political philosophy, but the very notion of having a political philosophy and set of principles upon which to base policies.
    In that sense, the Labour Party has got both.  The Conservative Party, has almost neither….
  • Most exciting UK election in ages? What small government option? (Part Three)
    What do the Conservatives offer?  Rebuttal of the Labour narrative?
  • Most exciting UK election in ages? No to UKIP (Part Four)
    UKIP is not a libertarian party.  It is not a free market party. It is not the UK equivalent of ACT.  It is a populist party with some good policies, and an outspoken leader who, sometimes, is rather good… [and] the manifesto is a very mixed bag .…



Quote of the day: On producing the antibodies that ward off socialism

“[Classical] liberalism is not a simple political choice. It is a way of life. Businesses are the lifeblood of a [classical] liberal economy, but they are much more than that. They also
produce the antibodies that help entrepreneurs ward off socialism and other forms of
political predation. CEOs who abandon that role — by, for example, promoting their environmental awareness rather than their role in providing jobs and the goods and services that people want and need — have fallen into a trap where their actual economic function is
seen as secondary to whatever external costs they admit to imposing on the commons.”
- Iain Murray, on ‘The UK’s Return to Socialism,’ THE FREEMAN

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George Orwell on the *real* political spectrum

[Pic by Jim Rose. Quote from a letter to Malcolm Muggeridge (4 December 1948), quoted in Malcolm Muggeridge: A Life (1980) by Ian Hunter.

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Bill English: Oh lord, give me surplus. But not yet.

Being a good Catholic, Bill English should be familiar with St Augustine’s famous prayer as a young man: “Oh Lord … give me chastity and continence, but not yet.” 

In fact, he may not just be familiar with it: he may have adopted it as his own prayer regarding the ever-disappearing surplus – ever-receding in a manner akin to Augustine’s elusive chastity.

They both have excuses but -- like the young hedonistic Augustine -- English is none too resistant to temptation. In his case, the temptation to spend and for that spending to continue to grow*. And, like Augustine, English continually blames others, or fate, or god, for his failure to achieve the goal on which he hung a very loud election promise not so very long ago.

His latest excuse, about which he is once again surprised: inflation:

The Treasury now expects nominal GDP over the next four years through to 2019 to be around 1.5 per cent lower than forecast in Budget 2014 – mainly because of lower inflation.
That is about $15 billion less …
    Consequently, the Government is collecting less tax…

English has now been similarly surprised seven times in a row.

Two things. First: Note the excuse of GDP being affected by inflation?  But GDP is supposed to adjusted to reflect inflation (as measured by the failed CPI), so this doesn’t ring true. Perhaps it is more true that, as inflation leaps rather than gallops, fewer income-earners see the tax-bracket creep associated with more heroic inflation levels that allows the Treasury to surreptitiously steal more from rising wage packets.

Second: Does this mean English plans to spend less this year? No, not a bit of it.

In total,” says English  Treasury now expects the Government will collect $4.5 billion less tax revenue over the next four years than it expected at the last Budget…
    So despite the downturn in revenue, we will stick with the $1 billion annual operating allowances for Budgets 2015 and 2016.

In other words, come election time I will continue to mouth platitudes about surplus, while continuing to borrow several-hundred million a week to keep my party’s addled spending addiction going.

Augustine, for all his many sins, finally found austerity.

I doubt Mr English ever will.

And meanwhile, NZ’s government debt continues to grow ….

* “In 2000, core government expenditure was $34 billion, but 11 years on that has grown to $73 billion. Core government spending now makes up more than a third of the New Zealand economy. Once you add in local government, that pushes the government sector to over 38 per cent of gross domestic product.” – Bruce Wills, NZ HERALD, 2012


How Britain’s papers should have looked this morning

[Hat tip Andrew Bates]


15 Years Of Stimulus—–Nothing To Show

David Stockman summarises the results of 15 years of Keynesian stimulus in the U.S.

At this point 15 years ought to count for something. After all, we have now used up one-seventh of this century. So you can’t say its too early to tell what’s going on or to identify the underlying trends.

Indeed, during that span we have encompassed several business cycles, two financial crises/meltdowns and nearly a non-stop blitz of “extraordinary” policy interventions. To wit, a $700 billion TARP, an $800 billion fiscal stimulus, upwards of $4.0 trillion of money printing and 165 months out of 180 months in which interests rates were being cut or held at rock bottom levels.

You’d think with all that help from Washington that American capitalism would be booming with prosperity. No it’s not. On the measures which count when it comes to sustainable growth and real wealth creation, the trends are slipping backwards—– not leaping higher.

So here’s the tally after another “Jobs Friday.” The number of breadwinner jobs in the US economy is still 2 million below where it was when Bill Clinton still had his hands on matters in the Oval Office. Since then we have had two Presidents boasting about how many millions of jobs the have created and three Fed chairman taking bows for deftly guiding the US economy toward the nirvana of “full employment”.

Say what?

Breadwinner Economy Jobs - Click to enlargeBreadwinner Economy Jobs – Click to enlarge

When you look under the bonnet it’s actually worse. These “breadwinner jobs” are important because its the only sector of the payroll employment report where jobs generate enough annual wage income—about $50k—- to actually support a family without public assistance.

Moreover, within the 70 million ‘'”breadwinner jobs” category, the highest-paying jobs which add the most to national productivity and growth——goods production—-have slipped backwards even more dramatically. As shown below, there were actually 21% fewer payroll jobs in manufacturing, construction and mining/energy production reported last Friday than existed in early 2000.

Goods Producing Jobs - Click to enlarge
Goods Producing Jobs – Click to enlarge

Then take the matter of productivity growth. If you don’t have it, then incomes and living standard gains become a matter of brute labour hours thrown against the economy. In theory, of course, all the business cycle boosting and fine-tuning from fiscal and monetary policy, especially since the September 2008 crisis, should be lifting the actual GDP closer to its “potential” path, and thereby generating a robust rate of measured productivity growth.

Not so. Despite massive policy stimulus since the late 2007 peak, nonfinancial business productivity has grown at just 1.1% per annum. That is just half the 2.2% annual gain from 1953 until 2000.  So Washington engineered demand stimulus is self-evidently not pulling up productivity by its bootstraps.

Indeed, if you go back to the 1953-1973 peak-to-peak period, which also encompassed several business cycles, the annual productivity growth rate averaged 2.7% or two and one-half times the last 15 year outcome.

But here’s the thing. That sterling result occurred during those allegedly benighted times under Eisenhower, who believed in balance budgets, not Keynesian stimulus, and delivered several of them. It also encompassed the “new economics”  era of the Kennedy-Johnson Keynesians, who dismissed a calendar-bound balanced budget approach, but to their credit did believe in balanced budgets over the business cycle. And they made good on that theory by getting LBJ to raise taxes and cut spending when the guns and butter economy got over-heated in 1968.

And most importantly, it was also the time of the “light touch” monetary policies of William McChesney Martin who presided at the Fed during most of this period. Unlike the Bernanke/Yellen Fed that still can’t gets its hand off the stimulus button 70 months after the Great Recession ended, Martin once took the “bunch bowl” away only 4 months after a business recovery commenced because he believed his job was done. Growth was up to capitalism, not the Fed’s FOMC.

The same picture occurs on real median household income. During the earlier 1953-1973 interval, real median family income grew at 3.0% annually, rising from $26k to $46k during the period.

By contrast, over the course of the next 27 years, and after Washington ended both the Bretton Woods gold standard anchor on money and the practice of balanced budgets, real median incomes grew by only 0.8%annually, rising to just  $57k by the year 2000.

Needless to say, its been all downhill since then. Real median income was down to $53k in 2014. That means median living standards of US households have been falling at a 0.5% annual rate since the turn of the century. There is no prior 15 year period that bad, including the years after the 1929 crash.


The argument of the Keynesians is that capitalism is a chronic underperformer. Left to its own devices, they say, it is always leaving idle labour and capital resources on the table, and is even prone to bouts of depressionary collapse absent the counter-cyclical ministrations of the state and its central banking branch.

Well, then, given the monumental size and chronic intensity of policy stimulus during the last 15 years, that particular disability should have been eliminated long ago. The US economy should be surfing near its full potential.

In that regard, one measure of high resource utilisation most surely would be the labour-force participation rate. As shown below, however, after the one-time boost of increased female participation after 1980, the trend has been in a nose-dive…

Read more: 15 Years Of Stimulus—–Nothing To Show – David Stockman, CONTRA CORNER


  • More Bad News for the Keynesian Multiplier – Peter Klein, MISES.ORG
    A new paper by Price Fishback and Valentina Kachanovska in the prestigious Journal of Economic History provides new evidence on the effect of US federal spending on state-level income and employment during the Great Depression. Fishback (a former student of Robert Higgs) and Kachanovska, estimate state-level multipliers of between 0.4 and 0.96 -- in other words, a dollar of federal spending crowded out from 4 to 60 cents of private investment….

What is man?

Sunday, May 3

Song for a Sunday morning

Graham Brazier singing his NZ rebel anthem, Billy Bold, at the Titirangi Memorial Hall, with his late, dear friend Dave McArtney supporting on guitar and vocals.

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Friday, May 1

Quote of the Day: On the TPPA

(Photo: Kim Choe/3 News)

“Why the TPPA is a better trade agreement than you think: In a word, Vietnam. 
… Vietnam will be the biggest gainer from TPP.  Do you get that, progressives? 
Poorest country = biggest gainer.  Isn’t that what we are looking for?”

- Tyler Cowen, “Why the TPP is a better trade agreement than you think

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Baltimore: And the Results of Socialist Intervention Are In


Guest post by Jeffrey Tucker

If you have seen The Wire you know the score. There are consequences to state management of any social order. Baltimore is a paradigmatic case. How long can people continue to evade the obvious lessons?

It began more than 100 years ago with the imposition of state segregation. This was the original sin that created a second-class of citizenship and racial ghettos for the first time since the end of the Civil War. Every policy response follows from there, with one coercive mistake following another. This town became the backyard playground for the ruling-class planners in Washington, D.C.. The intellectuals and policymakers behind these policies cannot reasonably claim to escape responsibility.

Baltimore blew up in riots and fires in the days following the astonishing cruelty of the killing of Freddie Gray. But it is a mistake to focus the blame on this incident alone. What happened in Baltimore is the product of the drug war, a racially punitive policing system, failed public services, segregated public housing, urban renewal, endless rounds of progressive education reform, a highly regulated labour market that cuts off economic opportunity, occupational licensure, gun control, and permanent martial law that makes everyone feel like prisoners.

imageBaltimore got the full brunt of it all, at every stage, decade after decade.

What do all these policies have in common? They represent a fatal error, common for the better part of a century, of believing that policy elites can manage the social order better than the social order can manage itself. Only the ruling class can decide where and how people should live, how they will be educated, what they can buy and sell, the terms of labour contracts, what businesses come and go, and who gets to enter into certain occupations and the terms under which they may do so. The government would do it all: build and maintain the housing, provide the education, make the jobs, enable the security, and administer the justice.

How has this turned out? The results are in. During the riots, there were no dire consequences that were not observable all over the media: social alienation, racial conflict, a war between elites and the people, a loss of respect for property rights, moral desperation and anomie, and a profound loss of hope. That invariably comes with the loss of freedom. How it expresses itself can be unpredictable and confusing, but that bad ideas have bad consequences no one can doubt.

This is why the typical bourgeois response to Baltimore events is so wrong. People look only at the surface and shake their fists. They say lock up these animals. Impose martial law. Unleash the cops. These solutions sell well to the public. But this is how fascism wins. It lives off the failure of socialism, and then we circle back around again, without end.

What is wrong with the police-state solution? Notice how good the cops are at roughing people up when there is no danger and no real threat. But when the time comes when people actually hope that the police will defend person and property against invasion, times of genuine upheaval and fear, suddenly the police retire back and become strangely passive. It happens in every case of “civil unrest,” and it’s always astonishing.

This is when property owners discover that they are on their own. But they are unprepared for the onslaught. So they welcome ever more mighty police forces, only to find out later that martial law makes them prisoners in their own city, and still does not bring the peace that everyone wants.

imageThe persistence of this behaviour should make everyone rethink their presumptions that tax-funded, government-run policing is the right approach to security. Escalation will work no better in Baltimore than it did in Baghdad. That goes for drug policy, education, family policy, and labour markets.

This is not about the failure of one mayor, one police force, or one president. It’s about the failure of an unworkable paradigm of social and economic management.

How many other cities will burn before we admit it? How much longer must we endure pious lectures by left-wing intellectual elites about how “we haven’t done enough” as well as the angry brown-shirted bromides by right-wing pundits about how recalcitrants need more iron-fisted blows to the head?

We are witnessing the terrible costs of a failed worldview that resulted in many failed states. What remains to us is the option to try what we should have done long ago: permit people to work out their problems for themselves, unmolested and unimpeded in the exercise of their human rights. The rest will take care of itself.

Jeffrey Tucker is Director of Digital Development at the Foundation for Economic Education, Fee, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.


  • From inside Baltimore city – Chris Campbell, NOT PC
    Baltimore City has erupted in chaos after the death of Freddie Gray. And Chris Campbell is standing on his roof watching it all go down…
  • Baltimore’s Gangs Fight Back, Win – Chris Campbell, LAISSEZ FAIRE BOOKS
    Baltimore's gangs are fighting back against the police. And they're winning. But it's not what you think…
  • The Silent Coup in Baltimore City and America – Chris Campbell, LAISSEZ FAIRE BOOKS
    The world is talking about Baltimore. But are they focusing on the issues that matter? Not really…
  • South Auckland, again. – Peter Cresswell, NOT PC
    No part of New Zealand has had more government than South Auckland.  And it's no accident that no part of New Zealand is less attractive.

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Len Brown pulls the knife out

Guest post by Stephen Berry

Len Brown has saved his biggest dirty trick for yesterday’s Governing Body meeting with his proposal to add a 2% transport levy on top of the crippling rates increases already inflicted on Aucklanders.

It seems the Mayor has been hatching this trick for quite some time by building public support for an expensive transport plan. Once he has obtained 50% support of submitters for the most expensive option in the Long Term Plan, he has pulled a knife from behind his back in the form of an extra transport levy to fund it.

Essentially what has happened now is that the Mayor has turned his promise for an average 2.5% rate increase, broken when he voted for a 3.5% average increase, into a whopping 5.5% rates increase. This transport proposal is the country’s lamest magic trick.

The 2% transport levy is proposed to remain in place until 2018 when the Government is hoped to allow the Council to implement tolls on Auckland roads. Essentially the Mayor’s plan is to keep hoping the National Government eventually gets voted out of office so he can implement tolls. Considering he has no chance of surviving the 2016 election, this plan isn’t a very good one.

The Council needs to be a bit more open minded in choosing how to fund capital projects rather than taxing and borrowing. With the Government ruling out the possibility of charging tolls, the Council needs to look at options such as obtaining private sector involvement and selling assets that are a lower priority than its proposed transport solutions.

Repeatedly grabbing from property owners can no longer be considered an option.

candidatephoto1Stephen Berry is the leader of Affordable Auckland, and Candidate for Mayor of Auckland and Albany Councillor in 2016. He was third place-getter in the 2103 Auckland mayoralty election.
Like Affordable Cities on Facebook.

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Thursday, April 30

Nepali Montessori

Since the Nepal earthquakes, we’ve been asking Montessorian Susan Stephenson how the Nepali Montessori schools are that she helped set up. ( I featured a while back one she had helped set up in Bhutan, if you recall.)  She has now heard news, she says, about two schools where she has worked, including the Shree Mangel Dvip Boarding school for poor children of Tibetan origin: The children are all okay in both, say the reports, but sleeping outside…

... while the damage is great all around the area, all the children, monks and nuns are alive and safe… the damage to the upper floors of the main shrine hall of Tara Abbey is VERY EXTENSIVE and there is MAJOR DESTRUCTION internally to the main hall, the walls and paintings.
The extent of all the damage to the Abbey, School and Monastery won't be know for a while... Electric power was already a problem in Nepal, and now even more than ever communication is difficult and will take time.
    We will keep you informed with updates and status reports here and on the website and let you know what kind of help is needed.

Here is a site recommended by Susan to help: http://us4.campaign-archive2.com/…

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Saudi u-turn on human rights abuses. PM says: “No drama.”

This just in…


Word is just coming in that internationally popular, highly respected, and super-casual New Zealand Prime Minister, John Key, has just delivered the world an historic diplomatic coup, by persuading the Saudi Royal Family to end it’s centuries long tradition of not having any human rights.
“It wasn’t really a big deal, to be honest,” said Key. “I just said: ‘Look Salman, the people of New Zealand have had enough of this beheading business, and stoning women and stuff. We just don’t like it. At the end of the day, if you want our sheep, you’re going to have to knock beheading on the head. Sorry Salman, but there it is mate."
King Salman, was instantly taken aback (as you can tell from the photo) and issued an on-the-spot proclamation reversing centuries of Wahhabist tradition, law and indoctrination.
“We didn’t realise,” said King Salman bin Abdulaziz Al Saud…
Read more…


The Many Failures of the CPI

Guest post by Mark Thornton

ShoppersEconomists of the Austrian school oppose the whole notion of trying to accurately measure“inflation” which mainstream economists see as a general rise in prices. (Austrians view inflation as a politically engineered increase in the money supply.)

A few years ago, mainstream economists like Paul Krugman chastised the Austrians for the lack of anticipated price inflation in the economy. However, their mistake was a fixation on the Consumer Price Index (CPI). If you looked around at other prices in the economy you could see higher prices in just about every other market, such as commodities, oil, gold, producer goods, real estate, and stocks.

More recently, mainstream economists have returned to fears about there not being enough inflation, and their outsized fear of deflation. For them, their fear justifies Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE), but they fail to explain why we must have rising prices. When it comes to the cost of living, most people prefer falling prices to rising prices, a condition that typically characterises a productive, unhampered, market economy.

The Futility of Price-Inflation Measurements

The practical problems with price indexes such as the Consumer Price Index, or CPI, are the issues of which prices are to be measured and what “weights” will be assigned to what goods. Another problem is deciding what to do about changes in quality. For example, what do you do when Apple introduces a new and improved iPhone at the same price as the previous version?

To deal with this, government statisticians systematically increase the weights for goods that are going down in price and reduce the weights of things are going up in price. If the quality of a good goes up, the statisticians “hedonically” reduce the price of the good.

Those sorts of adjustments do not seem fair to most normal people. If you are eating more ramen noodles and fewer lamb chops you can take little comfort in the fact that that the CPI is staying inside the Fed’s target range. Moreover, under the system of hedonic adjustments, every time entrepreneurs and engineers come up with better products for consumers at lower prices, the Fed takes credit for keeping inflation under control.

A Debate Over Alternative Measures

One economist that takes exception to these adjustments is John Williams, owner of ShadowStats.com. Williams offers alternative measures of government statistics based on older methodologies where the goods, weightings, and quality adjustments play less of a role. His measure of CPI, for example, shows price inflation much higher than government statistics. Whether Williams’s calculations are more accurate than the government statistics is hard to say, however, because both are constructed on the same inherently flawed foundations.

One recent critique of Williams’s statistics comes from Ed Dolan. He criticizes Williams not for his belief that CPI understates the impact of the Fed on the cost of living, but for the way he calculates his alternative measure:

No one really denies that the CPI, as presently calculated, understates the rate of inflation compared to a measure based on a fixed basket of unchanged goods. Rather, what many economists, myself included, find hard to accept is Williams’s estimate of the degree of understatement.

This friendly dispute does not solve the problems of calculating the cost of living or price inflation, but only serves to underscore the futility of such an undertaking, a point first established by Ludwig von Mises.

Furthermore, the whole discussion obscures the real impact of the central bank’s “monetary policy.” In the absence of a central bank, it is generally assumed that the supply of money would grow slowly because real resources have to be expended to create gold and/or silver (or anything else, including Bitcoin) to serve as the monetary base.

In an expanding market economy, improvements in technology, efficiency, and productivity means that you would experience real economic growth per capita of at least 2–4 percent per year. If the supply of money is increasing slower than production, then the economy will experience falling prices and a stronger currency.

What Would the CPI Be With a Fixed Money Supply?

Hiden monetary Debasement  Real Price DeclineThe full impact of the central bank’s monetary policy is better described by adding together consumer price inflation (higher prices) and the foregone price deflation together. The combined amount shows a truer picture of the negative impact the Fed’s monetary policy has on the typical wage or salary earner. Economist Mark Brandly provides an estimate of this damage to an economy that consists largely of workers on fixed wages.

He calculates what the CPI would have been between 1959 and 2005 if the money supply had been fixed. Using data on the actual money supply and actual CPI, he calculates that the actual CPI in 2005 was 6.7 times higher than the CPI in 1959. In the absence of increases in the money supply, however, he calculates that due to increased productivity CPI would have fallen by 80 percent, so that the actual CPI was thirty-four times larger than what the CPI would have been in the absence of the Fed.

What would this mean for the common man? In two words, cheaper stuff. Brandly provides a few estimates about what this world would look like in terms of the prices of goods the consumer would face today:

Let’s put this in everyday terms. Suppose these estimates represent the changes in the prices of goods such as hamburgers, cars, and housing. According to these numbers, a hamburger that cost 60¢ in 1959 would have cost $4 in 2005. If the money supply had been fixed, however, that hamburger would only cost 12¢ today. Similarly, a $20,000 car in 2005 would have cost slightly less than $3,000 in 1959. Again, without the monetary effect on prices, that car would only cost $600 today. The price of a $45,000 house in 1959 would have increased to $300,000 in 2005. With a fixed money supply, that house would cost $9,000 today.

Ultimately, however, “fixing” the money supply to “fix” CPI would accomplish little. The Federal Reserve and the world’s central banks would continue to do significant harm to the working class and enrich the wealthy and the political class. “The Fed” especially has destroyed the incentive to save and turned financial markets into crony casinos. Meanwhile, economic inequality is the worst in American history. The Fed has blown up enormous economic bubbles and they are stuck with seven years of ZIRP and are too afraid to change course for fear of blowing up the world economy. Tinkering with the CPI won’t solve these problems.

Image source: iStockphoto, Gold Standard Institute

Mark Thornton

Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the book review editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition, coauthor of Tariffs, Blockades, and Inflation: The Economics of the Civil War, and the editor of The Quotable Mises,The Bastiat Collection, and An Essay on Economic Theory.
This post first appeared at the Mises Daily.


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The "Living Wage" Mistake

Guest post by Ryan McMaken

cutting billsMuch of the push to raise minimum wages centres on the assumption that each individual worker should be paid an amount allowing a worker to purchase food, health care, transportation, and housing based on that one wage alone. In many cases, the living wage claims extend to the claim that each worker — or two adult workers, in some cases — should be able to support a family of four or more.

Unfortunately, the “solution” to this challenge generally proffered these days is the minimum wage, which as we have seen here, here, here, and here, only serves to place the burden of subsidising a living wage on the shoulders of the least skilled, least experienced, and often most impoverished workers.

Those who advocate for a living wage generally assume that if the cost of living is high, the primary response should be to simply raise wages. This has the political advantage of placing the costs of the “solution” onto a minority group such as employers (with small, poorly capitalised employers being most impacted by these new mandates) and low-skilled employees (whose jobs will be largely replaced by machines or outsourced as a result of the mandate).

Real Wages Matter Most

Moreover, it should always be remembered that there are two sides to the cost of living equation. There are the nominal wages themselves, measured in the dollars in your pay packet, but there is also the cost of living as manifested in the cost of housing, food, health care, and other costs – in other words, how much can your pay packet actually buy.

In other words, if we wish to make things easier for low-income earners, the actual goal needs to be to raise the real wages of low-income households - and to do this, we must look at their costs as well as incomes.

If we look just at incomes, for example (especially if you do not understand how minimum wages condemn many to unemployment), it’s easy to imagine simply mandating higher wages, sitting back, and expecting stones to be turned into bread. They imagine it’s easy, especially since such mandates do not require any new government outlays or new taxes. They do not realise the real costs are borne elsewhere.

When we look at costs, we realise immediately things are more complex. It’s another matter altogether to decree that housing costs shall be lower, or that patients can only be charged some maximum amount for, say, antibiotics. While many persist in believing that a price floor on wages produce no ill effects, virtually everyone today has been forced to admit that price ceilings on goods and services lead to shortages. Many still remember the price controls of the 1970s that led to gas lines and other shortages. And while rent control persists in some older cities, only the most committed economic illiterates advocate for new rent controls in younger, modern cities. Virtually everyone admits that a price ceiling on rents would simply make new housing development wither away, and thus reduce its supply.

From the interventionist perspective, the only other alternative, therefore, is to subsidise the desired goods and services. “We can’t put a price ceiling on retirement care,” they’ll say, “but we can subsidise it.” This is more politically complicated because in order to subsidise, the government must tax and spend. In the case of retirement care, of course, government lowers the cost of retirement care (for some people) with subsidy programs like the Residential Care Subsidy. With housing, we can subsidise through accommodation supplements, or through programmes that subsidise construction of housing units. Governments can also subsidise public transportation that tends to only be economically feasible in dense urban situations.

Of course, there are alternatives to government mandates when seeking to lower the cost of living. But none of these are acceptable to interventionists. These solutions involve making amenities and necessities like housing, retirement care and transportation more plentiful in the marketplace through entrepreneurial activity, and thus more affordable to households at all income levels.

Lowering the Cost of Living

Not just unacceptable to an interventionist, but damned difficult for them even to imagine. But without their ‘help,’ it is possible.

For example, lowering regulatory barriers to the production of housing, such as removing  inclusionary zoning laws, urban growth boundaries, and ordinary zoning laws would contribute to bringing down soaring housing costs. In addition, mandates on building in streets with old houses that are imposed so that higher-income residents don’t have to look at “cheap-looking” housing when they drive by it on their way to work, would certainly be a step in the right direction as well. And of course, there are controls on immigrant labour that drive up the cost of housing construction; consent fees, development levies and delays with council; the increasing cost of monopolistic building products; and a thousand other little regulations that can move a proposed new housing project from the “profitable” column to the “unprofitable” column, which means less housing is built.

Similarly, with retirement and health care, powerful interest groups ensure that the supply of physicians is limited by cronyist politician-appointed state medical boards, and the cartelisation of medical schools. There are government limitations on the importation of affordable drugs, and the FDA ensures that only the wealthiest and most politically powerful pharmaceutical companies can obtain worldwide approval for new drugs. And Obamacare has now made the introduction of innovative new low-cost treatments more difficult as well.

Similarly, government mandates increase the cost of transportation by maintaining monopoly powers for taxi services while clamping down on cheaper options like ridesharing. Government zoning laws and subsidization of highways reduce urban density which is necessary to make transportation options like bus lines and street cars economically viable. Countless government regulations and programs like Cash for Clunkers that encourage the destruction of old cars drives up the price of used automobiles.

But, if we were to really take a hard look at the true sources of the “living wage” problem, we’d soon find ourselves being forced to admit that what is driving so much of the lack of affordability in housing, retirement health care, and more is the interventionist economy itself

For those who tell us repeatedly that it is the government we must thank daily for keeping us safe, for keeping us healthy, and for giving us the goods that the capitalists are too mean and stingy to give us, taking such a hard look would be anathema. So, instead, they’re left with the simple-minded strategy of mandating higher nominal wages, while watching increases in real wages being constantly eliminated or diminished by an endless array of government prohibitions on economic activities that would make goods less expensive and more plentiful for all of us.

Ryan McMaken

Ryan W. McMaken is the editor of Mises Daily and The Free Market. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
This article first appeared at the Mises Daily. It has been altered slightly to fit the local context.


ECONOMICS FOR REAL PEOPLE: From the Education of Cyrus to the Education of Economists


Here’s what’s happening this evening with our friends at the Auckland Uni Economics Group. All welcome!

What's the connection between Cyrus and economics?

In tonight's seminar, we will be looking at an economic idea that has been understood, if only in a rudimentary sense, by economic thinkers since antiquity – all the way back to Xenophon, who talks about it in his Cyropaedia (or The Education of Cyrus). 

Despite this illustrious lineage however, it's an idea that only received its first detailed treatment in the work of an eighteenth-century Scottish moral philosopher. A seemingly simple idea, which economists far too often take for granted, that has huge implications for the whole field of economics.

Indeed, we’ll see that this idea provides the very foundation of society and economic thought, and can be used to help us answer almost all questions related to economics - whether they be questions about Peruvian hill tribes or sophisticated modern economies.

        Date: Thursday, April 30
       Time: 6-7pm
        Location: Room 040C, Level 0, Owen G. Glenn Business
                                (plenty of parking in the Business School basement, entrance off Grafton Rd)

We look forward to seeing you there!

PS: Keep up to date with us on our 2015 Facebook page.


Wednesday, April 29

From inside Baltimore city [updated]

UPDATE: Other commentary I like: 

Let me say at the outset I am in favour of the rule of law. As is this mother giving her son “the smackdown of his life” for throwing rocks at Baltimore police. (No, beating your kid in public isn't good parenting. But ringing them up in such a way that they don't feel the need to go burning down buildings in the first place surely is....*)

Chris Campbell from Laissez Faire Today, who lives in burning Baltimore, files this report on the rioting city, and argues there may be more going on than you realise …

  • Baltimore City is on Fire: Upon writing, rioters are making glass repairmen rich beyond their wildest imaginations…
  • From Inside the Protests: The protests were, for the most part, peaceful. What’s happening now isn’t a protest…
  • Why Baltimore is Under Attack: Look beyond the surface, and it’s no surprise that riots are happening… again… in Baltimore…
  • A Classic Case of Blowback: It’s easy to be dismissive of the underlying issues. But the riots are only a symptom of a much larger problem…

LFTAs I write today’s missive to you, rioters are running up and down the city on a mission to make Baltimore’s glass repair business owners the richest men in Babylon.

By now, you’ve undoubtedly heard the news of 25-year-old Freddie Gray, who died of a severe spinal cord injury after police arrested him. And the news about protests and riots since…

I say protests and riots to note the distinction between the two. Most news sources aren’t making this distinction, but I think it’s important.

I observed the protests on Saturday. Over 2,000 protesters -- from all walks of life -- marched to speak out against rampant police brutality in Baltimore. It’s a message that’s easy to resonate with everywhere in the United States. Many American police are overstepping their bounds. And the militarisation of domestic police officers on top of it is setting a dangerous precedent.

The protest began in an area of Baltimore I, admittedly, up until Saturday had never seen. It’s a part on the West side that has been ravaged by decades of de-industrialization, loss of population, drugs, the War on Drugs, police raids and harassment, and gang violence. Whole blocks are boarded up, with the backs ripped out of many of the rowhouses and trash strewn all over the still fenced-in backyards.

It’s something you see in pictures of the third-world. Not something you would expect to be in your backyard. It’s an eerie sight.

The protest was, by itself, peaceful. This is despite much antagonism from the police and other external forces. For example, many protesters were stopped, given random “verbal warning” tickets, and checked for warrants. For protesting.

Protest citation

And in another bizarre example, one man with a camera seemed hell-bent on getting punched by a protester. He repeatedly ran up to random people in the crowd, stuck his camera in their faces, followed them, rattled off meaningless questions, and then repeated the process with someone else. It was bizarre. After seeing him antagonize several people, I shot the following picture. Note the reactions of the bystanders.

Filming of protesters

Despite setbacks, the protest felt productive. The mood was constructive. Unlike in many of the Occupy Wall Street protests, everyone understood why they were there. And the message was lost of all ambiguity:

Protester signs

LFTYes. Baltimore is angry.
Baltimore’s black community, which makes up two-thirds of the city’s population, has been angry about rampant police abuse -- and, of course, living in what could easily be mistaken for third-world conditions -- for a while now.

Baltimore’s public schools are oversized toilets. Baltimore’s government is deeply corrupted -- and has been for decades. And racial tension, despite some people believing it’s no longer a thing, is as real as the burning building I’m looking at outside my window.

But none of this is a secret within the confines of Baltimore city. It’s just not given much attention. But now, as the chaos closes in… and as it starts to hit a little too close to home for many people normally unaffected by such things… Baltimoreans have no choice but to pay heed.

In fact, now the whole world is watching.

LFTUnfortunately, the world will see mostly the deconstructive aspects of the anger expressed…
The mainstream media latched onto one event in particular on Saturday. And then they let it ride. Here’s what went down:

Click here to read more ... >>


Trading with Saudi Arabia

Moving on from hairpulling yesterday, I’m told that Mike Hosking opined on John Key visiting Saudi Arabia to sign a free trade deal, arguing he should be free to go, that it didn’t stop Phil Goff and Helen Clark signing deals with China – despite their own appalling human rights record and treatment of Tibet – and with Indonesia – despite their own appalling human rights record and penchant for executing folk for victimless crimes.

Hosking argues that trade engages only with the values of the market and should not therefore engage with moral matters.  What goes on in Saudi Arabia is none of our business, he says, and who is little New Zealand to say anything.

Let me engage with that error in a moment. Because David Slack is making what’s seen as the other argument, the argument for Key not going:


Seems fair enough, right? Much of what goes on in Saudi Arabia  is disgusting – executions, the subjugation of women,  an essentially medieval society -- and much of what they promote outside is even worse – especially their export of Sunni and Wahhabi terrorism.

But here’s something that’s strange. Many of the usual suspects noisily opposed to trade with Saudi Arabia because of their barbaric culture are just as noisily opposed to telling other cultures what to do. It’s not our place, they say. Yet they insist Key tell Saudi Arabia what to do.

So the usual apostles of moral equivalence become of a sudden the apostles of moral propriety.

And yet their new doctrine of moral non-equivalence has some strange omissions.

The same folk who oppose a free trade deal with Riyadh for being Islamofascist thugs who sponsor Sunni and Wahhabi terrorists and execute women are generally okay with Tehran having a nuclear bomb, despite Tehran being Islamofascist thugs who sponsor Shia terrorists and execute homosexuals. They'd be okay, I should think, with a free trade deal with Palestine, despite the ruling Hamas training up youngsters to be suicide bombers and executing people for “collaboration.”  And nothing about Indonesian executions this week, or Chinese human rights abuses in general, has raised calls for us not to trade with these places.

So what's the difference? They're not against fascist thugs - they're just against a certain type of fascist thug…  Just a wild stab in the dark here, but my guess is that the type of thug they’re okay with is anti-American, and the type of thug to whom they’re opposed is not.

That’s a very, very strange king of moral non-equivalence to harbour for apostles of moral equivalence.

As is, on a different front, that of Mike Hosking.

Hosking argues that trade does not engage with moral matters; that it engages only with the values of the market place

Read that again: trade does not engage with moral matters; it engages only with the values of the market place. 

This, ironically, is the very opposite argument to that made by the great nineteenth-century free traders, who argued that it is precisely the values of the marketplace that promotes the spread of moral matters.

Richard Cobden, for example, in 1846, advocated for free trade not just because it brings greater prosperity, which it does, but because it is the primary force in spreading peace and real freedom:

I have never taken a limited view of the object or scope of this great principle. I have never advocated this question very much as a trader.
But I have been accused of looking too much to material interests. Nevertheless I can say that I have taken as large and great a view of the effects of this mighty principle as ever did any man who dreamt over it in his own study. I believe that the physical gain will be the smallest gain to humanity from the success of this principle.
    I look farther; 
I see in the Free-Trade Principle that which shall act on the moral world as the principle of gravitation in the universe,—drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace.
    I have looked even farther. I have speculated, and probably dreamt, in the dim future—ay, a thousand years hence—I have speculated on what the effect of the triumph of this principle may be. I believe that the effect will be to change the face of the world, so as to introduce a system of government entirely distinct from that which now prevails.
    I believe that the desire and the motive for large and mighty empires; for gigantic armies and great navies—for those materials which are used for the destruction of life and the desolation of the rewards of labour—will die away; I believe that such things will cease to be necessary, or to be used, when man becomes one family, and freely exchanges the fruits of his labour with his brother man.
    I believe that, if we could be allowed to reappear on this sublunary scene, we should see, at a far distant period, the governing system of this world revert to something like the municipal system; and I believe that the speculative philosopher of a thousand years hence will date the greatest revolution that ever happened in the world’s history from the triumph of the principle which we have met here to advocate.

This is not mere cant. The spread of the Free-Trade Principle following the efforts of Cobden and his colleagues did change the face of the world: the prosperity of the industrial revolution was spread around the globe, and freedom with it; further, and despite occasional eruptions, the late nineteenth century was described as an oasis of peace midst a mountain of war: Wars, saying Cobden, being “another aristocratic mode of plundering and oppressing commerce,” when what commerce most desperately needs is the spread of freedom and the maintenance of peace.

The great difficulty, in the nineteenth-century world -- as in Saudi Arabia today -- is pulling the aristocrats from the levers of power so that peace and real freedom can spread.

But unless you’re selling your enemies the rope with which to hang you, a free trade deal is a start.

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Comments SNAFU

Yes, the list of “recent comments” on which you all rely has turned to pooh, but fear not: work is afoot to make the necessary repairs.

And rest easy that while your new comments aren’t being listed on the front page, they’re still appearing in all their scintillating glory on the posts’ pages. And every one is treasured.

'Your Ridiculous Election': PJ O'Rourke on the UK Campaign Trail, Part 2

To describe the most confusing British election in modern times, the BBC asked a confused American.

PJ O’Rourke takes his second look at what could be the most interesting campaign in decades


Click the pic to head to the player…


Tuesday, April 28

New Element Discovered

This is doing the rounds again. Sadly, it never gets old …

News from the Scientific World: New Element Discovered
Victoria University of Wellington researchers have discovered the heaviest element yet known to science. The new element, Governmentium (symbol=Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons and 198 assistant deputy neutrons, giving it an atomic mass of 312.
These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called pillocks. Since Governmentium has no electrons, it is inert. However, it can be detected, because it impedes every reaction with which it comes into contact.
A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 1 to 3 years (in NZ). It does not decay, but instead undergoes a re-organisation in which a portion of the assistant neutrons and deputy neutrons exchange places.
In fact, Governmentium's mass will actually increase over time, since each reorganisation will cause more morons to become neutrons, forming isodopes.
This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as a critical morass. When catalysed with money, Governmentium becomes Administratium (symbol=Ad), an element that radiates just as much energy as Governmentium, since it has half as many pillocks but twice as many morons.


A villa is not a bungalow

Since I’m such a big fan of what’s called California Bungalows I’ve been meaning since the new Bungalow book (right) came out last year to talk about it, if not talk it up.

Jam-packed with beautiful photographs by Patrick Reynolds (with whom there’s an interview here), unfortunately the text of Bungalow: From Heritage to Contemporary doesn’t always match their quality – and sadly around 250 of its large, glossy pages are filled with text and photos bungalow renovations. I can understand why, don’t worry, but that doesn’t assuage my disappointment at what seems a wasted opportunity.

Anyway, New Zealand cities are filled with bungalows and villas – and with “bungled villas” representing a mongrel mix of the two – yet despite their differences, which are vast, many folk fail to distinguish between the two.

So, to help you, this picture below is an stuffy, upright, formal villa of the general type, usually found with cold, dark boxes opening off a central hallway, many examples of which still litter places like the People’s Republic of Grey Lynn …

imageExample of a Victorian bay villa, from the Auckland Council
Design “Guide” mandating how one should design in a streetful of villas

… and this is a warm, spreading bungalow with few hallways, of the type you might find around the suburbs that exploded out of our cities after WWI:



Can you see the difference?

Why does it matter, you ask?

Because bungalows are almost the only informal, organic house-type built on a large scale in New Zealand – the first designed from the inside-out to impress the occupants rather than passers-by and, (contrary to the text of the book) if you bring out that organic character rather than attempt to suppress it they are easy to renovate, simple to add on to, and richly rewarding if done well.

That’s why I love renovating bungalows – but refuse to renovate villas. Because they are different. A villa is not a bungalow…

  • Villas are constrained and static, with a form, upright appearance; bungalows are dynamic and spreading, stressing the horizontal, the human plane.
  • A villa is the last of the ‘classical’ line, bungalows the first of the modern.
  • A villa stresses the public, a bungalow favours the private
  • A villa has a formal arrangement of rooms, a bungalow an informal arrangement of spaces.
  • Villa floor plans cut up daily life into separate discrete elements; bungalow spaces invite elements of life to flow together.
  • A villa is outside-in; a bungalow is inside-outward.
  • A villa is very much about its relationship to the street; a good bungalow about its relationship to the site.
  • A villa’s verandah is for show; a bungalows decks, porches and terraces are to be used.
  • A bungalow goes out to break the box, a villa to live within it.
  • A bungalow can be as individual as their owners; a villa is produced by a cookie-cutter.
  • Villa windows are spare, small, guillotine windows, one to a room; bungalow’s casement windows appear in horizontal ribbons, and open out to light and air.
  • With its tiny guillotine windows and general demeanour, a villa repels the sun and outdoors; with its wide casements and spreading floor plans, bungalows invite them both in.
  • A villa is intended to impress passersby, a bungalow to please its occupants.
  • Villas value symmetry; bungalows favour balance, or dynamic symmetry.
  • Villa ornament is frou frou and applied; bungalow ornament is integral and organic.
  • A villa has a finial pointing to imaginary heavens; a bungalow has sheltering hands over a welcoming entrance.
  • A villa’s timberwork is cut up by wood butchers and hidden by several coats of paint; a bungalow’s is generally exposed and enjoyed for itself.

And finally …

  • To renovate a villa successfully requires removing or ignoring everything that makes it a villa; to renovate a bungalow easily and well requires only that you enhance it.

As you can see, I despise villas.

Oddly, however, the dark, stiff, formality of the villa is often loved by those who purport to despise the conventional. And then they go out and spend millions buying houses that place an Edwardian straitjacket of formality on daily life – and spend hours writing District Plans enforcing their preservation.

In my opinion, they can keep their straitjackets and Edwardian formality to themselves.

In my opinion, we should harvest all the beautiful timbers locked up and hidden in these dark, damp, hard-to-develop prisons– all that beautiful matai, rimu, totara and kauri used in villas for foundations, wall framing,weatherboards and painted-over timberwork – by demolishing the bastards and doing something better with it.

That’s a kind of recycling I could get right behind.

[Pics from Auckland Council, and from Jeremy Ashford’s 1994 The Bungalow in New Zealand]