Ironies of ironies.
The outcome of recent elections in Greece, the “Birthplace of Democracy”, provides more tragic evidence of the failings of democracy.
The dominant party, Syriza, utilized raw populism tainted with nationalistic overtones so that emotions & venality triumphed over common sense.
The Greek economy, already smothered by regulations & burdened by overbearing public-sector unions, is likely to face more of the same if Syriza keeps it promises,
As for “democracy”, while media reports noted that this was a “sweeping win” or “unequivocal victory” or “historic victory”, few mentioned that Syriza won with less than 40% of votes cast (i.e., maybe 25% of voting age population. Despite this smallish plurality, Syriza is but a whisker away from an absolute majority.
No doubt public-sector workers & their families as well as others receiving largesse supported this coup against economic realism.
While there are many competing explanations for widespread & persistent poverty (e.g., lack of education, absence of democracy, overpopulation, etc), none of them strikes at the heart of what keeps people from improving their own lives. As it is, no poor person awakes each day with the desire to remain poor. Presumably, if given the chance, they will do what they can to improve their own lives & that of their families.
People are poor because they do not have jobs (or cannot engage in income-earning trades, usually due to regulations).
There are not enough jobs because there are too few new businesses being created to employ more people.
There are too few businesses being created because there is insufficient capital accumulation (or the taxation/regulation regime is too burdensome).
There is insufficient capital accumulation due to government policies.
And so, people are poor because governments make the wrong choices.
I have developed an instinct that whenever there are persistent economic or political or social imbalances, I look for a government policy that stops people from solving problems.
The American government is fighting multiple wars that are both endless & costly. Any sort of government spending tends to provide incenctives for thos groups that prosper from that spending to engage in strong lobbying pressure to maintain or increase spending levels, even if there is evidence that that few, if any, of the objectives are met.
Consider the “War on Poverty”:
America spent $22T on “War on Poverty” (in constant 2012 dollars), when adjusted for inflation, the amount is 3 times more than spent on all wars after 1776
More than 100 million Americans, about 1/3 of the US population, received aid at an average cost of $9,000 per recipient in 2013.
US Census data indicate that 14% of Americans remain poor, i.e., the present poverty rate is about same as in 1967 just after the beginning of the “War on Poverty”.
Global spending for drug law enforcement, i.e., the “War on Drugs”, exceeds $100 billion each year. Drug use continues unabated & has increased over the entire time in the USA.
From FY 2001 – FY 2014, spending on the Overseas Contingency Operations, i.e., the “War on Terror”, to pay for wars in Iraq and Afghanistan was $1.492T
Much of this spending depends on the capacity of the US Federal government to borrow funds at near-zero interest rates to support fiscal deficits that continue to add to a massive amount of public-sector debt.
If you hate wars, military or otherwise, something must be done to rein in monetary mischief undertaken by the US & other central banks.
Japan’s central bank (BOJ) has been fighting a Quixotic battle against an imaginary nemesis: price deflation (data suggests stable prices, NOT a trend for falling prices!!!).
As part of ultra-loose monetary policy, BOJs policy interest rate has not been above 1% for nearly 18 years.
During the 1990s, there were 10 fiscal stimulus packages worth more than 100T yen that aimed to cure recession & fight “deflation” (note to USA: most of the spending was on “shovel-ready” public works!) … .
Stimulus packages (i.e., fiscal deficits) have remained the policy du jour in Japan until now … .
AbeNomics is more of the same old tired Keynesian recipes, including a dose of yen devaluation that did not achieve its desired effect. What happened was that there was no rise in exports while Japan’s trade & current account surplus have decreased … !
Meanwhile, Japan’s economic growth remains far BELOW trend since 1989 … all of the above are consistent with the playbook of conventional, mainstream economic policies … this suggests a fundamental failure of economic models to grasp the nature of recession, bubbles, etc
Central bankers like to invoke Milton Friedman’s views as an excuse for their own monetary mischief.
F.A. Hayek saw that there were problems with Friedman’s claims of the superiority of a fixed rate of growth in the money stock as the basis of macroeconomic stability.
“I wish I could share the confidence of my friend Milton Friedman who thinks that one could deprive the monetary authorities, in order to prevent the abuse of their powers for political purposes, of all discretionary powers by prescribing the amount of money they may & should add to circulation in any one year. It seems to me that he regards this as practicable because he has become used for statistical purposes to draw a sharp distinction between what is to be regarded as money & what is not. This distinction does not exist in the real world. I believe that, to ensure the convertibility of all kinds of near-money into real money, which is necessary if we are to avoid severe liquidity crises or panics, the monetary authorities must be given some discretion. But I agree with Friedman that we will have to try and get back to a more or less automatic system for regulating the quantity of money in ordinary times.”
~F.A. Hayek~ “Full Empoyment at Any Price”
The failures of the Drug War to meet its ends & the massive “collateral damage” to civil rights & good governance provide ample evidence that ending this internicine war waged by governments against citizens must end, NOW!
Students for Liberty have begun to focus on resolving the injustices, inefficiencies & stupidities associated with the Drug War. This coincides with the development of a broad & growoing consensus that drug use should not be treated as a criminalized.
When it comes to addiction, drug usage should be viewed as a medical issue NOT a criminal issue. Imagine that the law demanded that alcoholics be jailed because of their consumption. Portugal took the brave step of decriminalizing ALL drugs in 2001.
While medical marijuana use has been approved in at least 23 states of the USA with Washington & Colorado allowing markets to form for recreational use, tragically & amazingly, there has NOT been blanket amnesty in Washington or Colorado for those jailed under Drug War! This is an unjustice that must be remedied!!!
Even some law enforcement officials are part of the movement to decriminalize drugs.
Among the many egregious problems associated with the Drug War:
Rather than allow the emergence of peaceful, open markets for drugs, black markets arose based on violence and force.
Violent cartels or gangs replaced innovative entrepreneurial offerings in transparent markets that were accountable to open competition.
Instead of government agents defending citizens, governments have jailed many nonviolent drug offenders.
The War On Drugs led to an expanding domestic police force within the US that has become increasingly militarized with SWAT teams used on drug raids.
Evidence shows that the War on Drugs failed in its primary purpose & all related purposes. While drug usage has remained at least constant, drug prices have dropped.
Prison populations are higher & about 1 in every 4 prisoners are nonviolent drug offenders that possessed or consumed an arbitrarily illegal substance. Among these, minorities are heavily over-represented relative to their percentage of total population.
End the War on Drugs, NOW!!!
It is amazing that Americans did not rise up in revolt against such a revolting action … It is even more amazing that historians treat it so lightly … but worse, economists seldom mention the absurdity of making ownership of gold a criminal offense, subject to confiscation, fines & imprisonment … !?!
In a word, (well, more than a few words, according to Hayek!): YES!!!
“The preservation of a free system is so difficult precisely because it requires a constant rejection of measures which appear to be required to secure particular results, on no stronger grounds than that they conflict with a general rule [of non-government intervention], and frequently without our knowing what will be the costs of not observing the rule in the particular instance. A successful defense of freedom must therefore be dogmatic & make no concessions to expediency, even where it is not possible to show that, besides the known beneficial effects, some particular harmful result would also follow from its infringement. Freedom will prevail only if it is accepted as a general principle whose application to particular instances requires no justification. It is thus a misunderstanding to blame classical liberalism for having been too doctrinaire. Its defect was not that it adhered too stubbornly to principles, but rather that it lacked principles sufficiently definite to provide clear guidance . . . .”
“People will not refrain from those restrictions on individual liberty that appear to them the simplest & most direct remedy of a recognized evil, if there does not prevail a strong belief in definite principles. The loss of such belief & the preference for expediency is no part the result of the fact that we no longer have any principles that can be rationally defended.”
~F. A. Hayek~
“Law, Legislation, and Liberty,” vol. 1: ‘Rules and Order’ (1973)
Seeking to fulfill one’s own life purpose, guided by purposive self interest, leads to an imperative to cooperate with other individuals that are carrying on in much the same manner.
In turn, this leads us, each & all, to seek out & engage in market exchanges that are an instrument of individual empowerment that tend to lead to a “just” social order given that these outcomes (transfers) emerge out of voluntary consent.
Alas, most social scientists focus on collectivist views that model a forest while failing to grasp the importance of nurturing the (individual) trees.
As such, it is naive & misleading to speak of markets as involving atomistic individuals when markets are the outcome of humans acting to seek cooperative arrangements with other humans.
“The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or 2, all nations & most of humanity will be at or above today’s Western living standards.
I also speculate, however, that many people will continue to think & say that the conditions of life are getting worse.”
~Julian Simon~ (Author of The Ultimate Resource)