Movie: The White Rose

Last night I watched the subtitled movie "Sophie Scholl: The Last Days" about the young and courageous members of the secret resistance group in 1942-3 Germany, The White Rose. The group members, mostly students at the university of Munich, distributed thousands of leaflets denouncing the Nazi programme of war and murder. A few days after they were caught, the leaders (including Sophie Scholl, who was 21) were guillotined; many others were imprisoned. As a movie I don't recommend it, it is very depressing, one is better off to just read about The White Rose on the Internet (the Wikipedia article seems to give a decent overview). But the story depicts, negatively, the grand power of intellectual activism: besides brute force, irrationality has no defense against voices of reason. It may be a fictitious line, but in the movie Hans defiantly tells the judge that he and Hitler must be afraid of -- and thus morally inferior to -- the members of The White Rose, otherwise there wouldn't even be a trial.

From The White Rose leaflet #3:

[W]hy do you allow these men who are in power to rob you step by step, openly and in secret, of one domain of your rights after another, until one day nothing, nothing at all will be left but a mechanised state system presided over by criminals and drunks? Is your spirit already so crushed by abuse that you forget it is your right - or rather, your moral duty - to eliminate this system?

Ghate on political philosophy

On Constitution Day 2009, Dr. Ghate of ARI/ARC clarifies the meaning of checks and balances in the Constitution, the Founding Fathers, Locke, Rousseau, Hobbes, their notions of man in a "state of nature", Adam Smith, Ayn Rand, and the morality of selfishness as supporting the objectivity of liberty ... in 8 minutes.

The political philosophy question

Commerce or coercion, price tags or guns -- which are compatible with morality, i.e., every individual's rational pursuit of his or her own happiness?

Moral Health Care vs. "Universal Health Care"

I finally read this long article, which gives the history of why there are now 47 million Americans with no health insurance. The popular myth is that a free market of profit-seeking big businesses is, for some malevolent reason, purposefully excluding these tens of millions of potentially-paying customers. This is absurd on its face. The truth is there hasn't been a free market in health care for decades.

Moral Health Care vs. "Universal Health Care"

Do we all work for Goldman Sachs?

Here's a link to a conspiracy-type article about Goldman Sachs. Of course, I can't vouch for its accuracy, but in general I consider beyond dispute that there are corrupt "businessmen" pulling giant levers in Washington, defrauding the rest of us of enormous sums of the wealth we create, in just the kind of "crony capitalism" that statists use as an excuse for more government controls in the economy.

It is important to remember that some state oppression is direct, both politically and philosophically, i.e., taxes and regulations restrict your freedom and are meant to restrict your freedom; -- but a great deal of injustice is the indirect consequence of the non-capitalistic government's parceling out of favors to the "well-connected", i.e., to those who are willing and able to buy men of political power.

Atlas Shrugged gives timeless characterizations of both manifestations of statism.

Defenders of individual rights must communicate clearly the polar-opposite difference between those corrupt "businessmen" of today who are able to "do whatever they want" by trafficking in government favors -- versus the individuals in a system of true capitalism, who would be free to make any business arrangements, but would be unable to purchase economic favors from the government, since a capitalistic government would have none to sell.

Protest in Tehran

Now that's a protest, and without a First Amendment. If only we had SOMETHING worth protesting in the US, we'd fill the streets too, right?

The Austrian business cycle in one image

[T]he only way 45% of the world's wealth could vanish in a year is if it was a mirage in the first place. - Mish Shedlock

Sacramento, California: Inflationary malinvestment in the background; deflationary bust in the foreground.

"As many as 50 people a week are turning up and the authorities estimate that the tent city is now home to more than 1,200 people." Daily Mail

A government-caused period of massive inflation of credit money has just ended. We are now sliding down the backside of that unsustainable mountain of credit and debt, in a deflationary reset, something not seen since the 1930's:

Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and attitudes have changed.

It took nearly 80 years for people to get as reckless as they did in 1929. 80 years! Few are still alive that went through the great depression. No one listened to them. That is the nature of the game. The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none. - Mish

Incredibly, the government's solution is to try to inflate more, through "stimulus" spending and through printing. Are these actions about to stop the bust?

Based on what house prices and equity valuation have been doing this quarter, we are likely in for a total loss of household net worth approximating $7 trillion this quarter alone, which would bring the cumulative decline in consumer wealth to $20 trillion. This wealth loss exceeds the combined expansion of the Fed’s and government balance sheet by a factor of ten. That should put the reflation-deflation debate into perspective. - David Rosenberg, North American Economist at Merrill Lynch, quoted by Mish

In other words: we have deflation right now because the shrinking of (and from) credit money matters more than the increasing of "base money" -- because most money is credit money.

If we are in deflation -- the payback for government-caused inflation -- and governmental printing and spending won't stop it (until it stops), isn't everything just going to get cheaper?

If economic recovery is to be achieved, the first thing that must be done is to stop “stimulus packages” and undo as far as possible any that are already in progress. This is because their effect is to worsen the problem of loss of capital that is the underlying cause of the economic crisis in the first place.

Unfortunately, they are not likely to be stopped. If they are implemented, especially on the scale already approved by Congress, the effect will be a decumulation of capital up to the point where scarcities of capital goods, including inventories of consumers’ goods in the possession of business firms, start to drive up prices.

Higher prices of consumers’ goods will result not only from scarcities of consumers’ goods (which, of course, are capital goods so long as they are in the hands of business firms), but also from scarcities of capital goods further back in the process of production. - George Reisman

What's the big picture here?

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved. - Ludwig von Mises

What would Ayn Rand say? Luckily she already said it. Besides Atlas Shrugged, there's the speech "Egalitarianism and Inflation," the original speech is available here and reprinted in Philosophy: Who Needs It. She gave this speech decades ago, during a time of "stagflation," but you can judge if it is relevant today. In part:

While the government struggles to save one crumbling enterprise at the expense of the crumbling of another, it accelerates the process of juggling debts, switching losses, piling loans on loans, mortgaging the future and the future’s future. As things grow worse, the government protects itself not by contracting this process, but by expanding it. ...

Do you think a spending orgy of this kind could be paid for out of current production? No, the situation is much worse than that. The government is consuming this country’s stock seed—the stock seed of industrial production: investment capital, i.e., the savings needed to keep production going. These savings were not paper, but actual goods. Under all the complexities of private credit, the economy was kept going by the fact that, in one form or another, in one place or another, somewhere within it, actual material goods existed to back its financial transactions. It kept going long after that protection was breached. Today, the goods are almost gone. ...

The value of the total tangible assets of the United States at present, was estimated—in terms of 1968 dollars—at 3.1 trillion dollars. If government spending continues, that incredible wealth will not save you. You may be left with all the magnificent skyscrapers, the giant factories, the rich farmlands—but without fuel, without electricity, without transportation, without steel, without paper, without seeds to plant the next harvest.

If that time comes, the government will declare explicitly the premise on which it has been acting implicitly: that its only “capital asset” is you. Since you will not be able to work any longer, the government will take over and will make you work—on a slope descending to sub-industrial production. The only substitute for technological energy is the muscular labor of slaves. This is the way an economic collapse leads to dictatorship—as it did in Germany and in Russia. ...

A dictatorship would find it impossible to rule this country in the foreseeable future. What is possible is the blind chaos of a civil war. ...

Is there any hope for the future of this country? Yes, there is. This country has one asset left: the matchless productive ability of its people. If, and to the extent that, this ability is liberated, we might still have a chance to avoid a collapse. We cannot expect to reach the ideal overnight, but we must at least reveal its name. We must reveal to this country the secret which all those posturing intellectuals of any political denomination, who clamor for openness and truth, are trying so hard to cover up: that the name of that miraculous productive system is Capitalism.

The bottom line is that wealth is something real in the world: it is not paper, it cannot be printed, and it cannot be increased by being redistributed. When government economic manipulations caused a boom of soaring paper-dollar asset prices, people the whole world over were lured into disastrously wasting their actual savings. Deflation is the economic process in which we are forced to accept this reality. Further governmental printing and spending now will only make things worse, by destroying even more real wealth. Instead we must demand that the government cease all bailouts, stimulus spending, and money printing.

Mish versus Schiff

This is my take on Mish's post explaining that Peter Schiff was wrong (Schiff is a highly visible analyst who predicted the housing bust and recession):

Schiff ruined his own credibility. Even if he's pro-laissez faire, he's not a philosopher: foremost he's supposedly an expert on this economy, but he was dead wrong on the most fundamental economic trend last year which followed the housing bust: global deflation. He will get called out on this because he can be. It is far better the calling out be done by someone who deserves an audience for being right (Mish), than by the "MSM" defenders of statism. (Statism is what nurtures the mass corruption we suffer from among both politicians and their corporate clients, by the way. And if you don't mind a foul-mouthed, emotionalist tirade, this video -- not to be played at work or around children or nuns -- expresses something of the proper attitude towards the powers that be.)

I see nothing personal in the Schiff piece, I judge it to be objective and just. Mish laid out the facts which make the case that he's the real thing, he's what Schiff was supposed to be, both as investment advisor and as outspoken expert on our economic-political reality. Good for him, I hope he gets a lot more readers and customers. I think the post and the attention it gets can only be good for the cause of laissez faire.

This about sums it up

But I think either one of these would have been a more appropriate picture:


Life in Hooverville


Death in Vietnam

Economics and the absurd

Mish Shedlock is the only applied economist or market analyst I listen too. I wish I'd found his blog years ago when he was predicting this recession. Mish is always fact-based and level-headed, he seems to be extremely careful to differentiate between what he knows is probable and what he doesn't know. No crazy predictions, just a few very good ones, based on both fundamentals and technicals. He works 14 hours every day.

He is an analyst at Sitka Pacific, with two hedge funds which make money even today:



Mish may be at his best when concisely showing that the Keynesians and Monetarists -- Krugman, Paulson, Bernanke, Greenspan, Friedman, etc., etc. -- are flat out fools, that 8th graders could know better just by using common sense. Mish is a fan of the Austrian school. He likes to quote von Mises:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

Here's the best place to start with Mish. If one spends an hour reading this and following some of the links to his other posts, it can be very educational.

Those with [Fiscal Insanity Virus] are trapped in academic wonderland with no ability to see anything from a real world logical perspective. Instead they rely on formulas that imply free lunch theories and/or perpetual motion.

Mish's predictions now are for housing to tank to at least 2012, the S&P to hit 600 or possibly 450 in 2009, and unemployment likely to go over 11% (from the 7.2% reported today). Among bears, these numbers are said to be too optimistic, especially that last. He is most "famous" right now for being one of the first to figure out that deflation has arrived. (He notes that deflation is a good thing; inflation was the problem. Most economists and all governments want to inflate some more, right about now.)

Here's today's update, where he notes that unemployment is really 13.5% -- not the more presentable 7.2% that is making headlines:

There is no official definition of depression. Here is mine: When the U-6 unemployment rate rises above 12.5 in conjunction with a stock market that is down close to 50%, the CPI is negative, and nominal wages are stagnant, it's an economic depression. We are in one.
...
The Fed is desperately trying to get you to borrow. I am suggesting you cut all unnecessary spending cold turkey. We cannot spend ourselves to prosperity. It is simply impossible. Job losses are going to mount, few jobs are safe and the best thing to do is to be mentally prepared to be working fewer hours.

My response to all of this mess is: how absurd!

It is absurd that 99% of economists did not see this coming, could not explain what anyone was doing wrong to cause a recession, cannot explain it now, and are recommending exactly the worst government actions possible.

It is absurd that Greenspan, who actually understood economics once upon a time -- thanks to Ayn Rand -- was the latest and greatest cause of this mess.

It is absurd that there is such a thing as "fractional reserve banking." It is absurd that many Objectivists either don't know what it is or think it could be okay in a capitalist system. It took me two months to figure it out -- I'm very slow -- but make no mistake: FRB is fraud. When a bank cannot pay back its "on demand" deposits on demand, the deposit notes it issued are fraudulent. How hard is that to understand? It would not even matter if there existed (as there can't; ask Iceland) some magical guarantee that depositors would never demand their money at the same time, FRB is legalized counterfeiting all of the time. How much counterfeiting? Try 1000% -- since 10-1 ratios are the norm at American banks. And that is inflation, massive inflation. Inflation causes price bubbles. And bubbles pop when reality crashes the party, sending prices back in line with actual wealth.

It is absurd that popular Objectivist blogs haven't been all over this for years, that there seems to be little sense of how bad the economy is going to get still, and that it hasn't been common knowledge among Objectivists since at least 2005 that housing was going to crash. Sadly I read about Objectivists who bought a house in the last two years, apparently thinking the worst was over.

It's absurd that I haven't seen a single comment by another Objectivist (I mean a real Objectivist, not some libertarian dork) on Mish's posts.

It's absurd that Atlas Shrugged has been out for over 50 years and this is still happening.

But my first point is the most important. How can the entire profession of economics be such a colossal failure? How can the very professionals tasked with understanding the economy be its worst enemy? We can blame politicians, Wall Street, sub-prime flippers, and "bankstas" all we want, but the bottom line is that none of this would have been possible if the economists hadn't been on board, i.e., if the vast majority of professional economists weren't incompetent or corrupt or both. (Most are both: not only do they not understand that a country can't consume its way to prosperity, they are collectivist statists anyway.)

Of course the blame goes back one more step -- to the philosophers and other intellectuals who allow and make possible such irrational economics. Why is your IRA or 401K a bad dream? Because philosophy PhD's couldn't care less about reality.

And with that final insight, I realize none of this is really absurd; it is ugly but it makes sense: social collapse is the only thing that can follow -- sooner or later -- the intellectual collapse of the 19th and 20th centuries, which was fueled by the philosophical collapse that began, ironically, in the Enlightenment, by the arch-enemy of reason: Kant -- and the monster he unleashed on Germany and the world: Hegel.

I end with a quote:

Inflation is a man-made scourge, made possible by the fact that most men do not understand it. It is a crime committed on so large a scale that its size is its protection: the integrating capacity of the victims' minds breaks down before the magnitude -- and the seeming complexity -- of the crime, which permits it to be committed openly, in public. For centuries, inflation has been wrecking one country after another, yet men learn nothing, offer no resistance, and perish -- not like animals driven to a slaughter, but worse: like animals stampeding in search of a butcher.

Ayn Rand, "Egalitarianism and Inflation", 1974, in Philosophy: Who Needs It

Bailouts: impractical and immoral

Sent to my congressmen today. Find yours here.

Do not bail out any more failing companies with tax receipts.

Bailouts are not practical, they are financially destructive. Bankruptcy is a normal part of a free economy, because it allows capital to move from malinvestments to successful enterprises. Giving life-support to a failing company wastes money on a non-productive venture -- money that could be put to productive use, including the creation of viable jobs, at companies chosen by the free market for their ability to create the most valuable goods and services.

But more importantly, bailouts are immoral and statist. Appropriating taxpayer money to a private company is simply the road to fascism, in which the government controls the fundamentals of the economy, thereby violating every individual's right to freely pursue happiness.

Sincerely,

Brad Williams
North Portland

The beginning

When was he elected, like three days ago, right? I admit I was actually relieved, because I think there would have been actual riots had the equally-repulsive McCain pulled it off. But already reality has set in, because on the change.gov website which supposedly speaks for "The Office of the President-Elect" -- an "Office" which doesn't exist, mind you -- the president-elect doesn't think it's too soon for this:

Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year.

Actually, my kids won't be compelled to do jack fracking squat hours of "community service", thank you very much. If America doesn't just say "no" (or something a bit more colorful) to this, it will be more evidence of, let's say, those ominous parallels.

Update:

Already, there's more! With GM and Ford predicted to go bankrupt next year, the Senator has this to say:

I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States.

Exactly which laws will the executive branch of the United States government be fulfilling when it helps two companies on the brink of insolvency "weather the crisis"?

In other news, the Federal Reserve's balance sheet just went to $2T, thanks to "bailouts". Meanwhile, unemployment is shooting up, which means tax revenues will plummet. Methinks car companies aren't the only thing insolvent around here.

The march to fascism continues.

Update 2:

Obama has replaced his plan to make students part-time slaves with a plan to make students part-time social workers. Now the site says:

Obama will call on citizens of all ages to serve America, by setting a goal that all middle school and high school students do 50 hours of community service a year and by developing a plan so that all college students who conduct 100 hours of community service receive a universal and fully refundable tax credit ensuring that the first $4,000 of their college education is completely free.

So the "service" won't be required -- but note that $4,000 is a fortune to a college student, especially for 50 hours of "service." This is still government coercion.

The scariest thing here is perhaps not the content, but the political method: float the statist proposal you really want, but if it attracts too much of an outburst replace it with a similar but evolved statist proposal that will silence the first criticism. I assume this is nothing new in politics, and I expect we will see it over and over again from this administration (which isn't even an administration yet). In the years to come, we are going to get every bit of statism that the filters of the left and right let through, and I fear that is going to be a lot.

Peikoff 10/20/2008

On the election:

I have this podcast to discuss ideas, not to choose among the lowest sub-humans.

The second answer in this podcast gives crystal-clear statements on the non-rights of fetuses before birth. The issue: biological dependence. I agree. And notice he does not mention the fact that fetuses have not yet started to exercise their rational faculty, which I've seen a few Objectivists make a big deal about, but I think it's irrelevant.

Economics in one post

Not this post, this one.

Mish Shedlock says of it:

It's a sad state of affairs that Bernanke who fashions himself an "expert" on the great depression knows less about the cause and cure of it than anyone who reads and understands the above article.

Mish's blog is, by the way, must reading for anyone who wants to hear about the economic outlook from a very sharp economist. (The current outlook in one word? Unemployment.)

A couple other good recent articles: one explaining that our Keynesian banking system is guaranteed to melt down regularly, just as it has done every few years or decades; and another which soberly explained the dire situation back in March and what must be done about it. This last is by the brilliant Objectivist George Reisman, who was voraciously reading economic treatises at age 14 before coming to study under both von Mises and Ayn Rand. Read his magnum opus online here.

The common theme of all the above? Shut down the Federal Reserve, cut government spending, and replace fiat money (which is, increasingly, just a bunch of IOU's taken against future tax receipts, i.e, against ourselves) with gold -- that is: get the government out of the economy or risk another depression.

Objectivists Ed Cline and C. August consider just how bad things are about to get, given that the statist deck of cards is stacked against us. Indeed, since Obama and Pelosi and Bernanke and Paulson (and governments around the world) will soon be running the show in unison according to the Marxist-Keynesian script of economic destruction -- the popular contempt for capitalism having reached a new crescendo -- we can no longer rule out as far-fetched that we may experience an economic-political disaster of epic scope in the next few years. Of course, neither can one predict that such is very likely to happen: even if you are an economist and this is your area of expertise, everything still hinges on the unpredictable, arbitrary actions of those in power.

But it is at least time to face the fact that a government-generated wave of unemployment is already on it's way.

Emailing my congressmen

Dear Senator/Representative,

Please take a stand against every version of the "bail out" under consideration. The fundamental cause of the housing boom and bust was government interference in the marketplace; more interference cannot now help. We have to accept that those investments failed -- pushing papers and enacting arbitrary powers in Washington will not bring back the actual wealth that has been lost. I believe the only possible solution to this crisis is for the government to quickly perform an orderly deregulation of the financial and housing markets, so that the free minds of a free market may find and utilize the real wealth that remains in the economy. Please take a courageous stand against those calling for a vast increase in central planning during this time of crisis.

Thank you,
Brad Williams
Portland, Oregon

I'm out

The god-awful Charlie Gibson interview of Sarah Palin has disabused me of any notion that there is anyone or anything worth voting for anymore. That such conceited ignorance (figure that one out) and unblinking spinelessness could create, not just a tenable candidate for VP, but an instantaneous national celebrity, says all I need to know about the hopelessness of our culture. Obama and Palin are two halves of a very bad joke, and our lives are the butt.

As I watch these creatures spit up word salads designed to appeal to everyone except themselves, I don't think about them -- they don't actually exist in the way that matters; I think about Roark and how absurd the rest of the world is compared to an individual with a soul, that is, with an absolute love of his own life.

Speeches

All three of the convention speeches I've seen have made me laugh: the Obamas', for their promises of the impossible, e.g., health care for all while lowering the tax burden on the middle class; and Palin's, for pointing out how laughable the liberal views on the economy and foreign policy really are. After Palin's speech last night, I think the democrats will be surprised to lose again in November. Six months ago I would have considered this virtually impossible, but it seems McCain will be able to distance himself from the Bush Establishment just enough, and things in Iraq are looking up just enough.

Still, I can't vote for anyone who opposes legal abortion, a fundamentally evil position. No matter what else their views: no vote. Those embracing such an absolute and absolutely clear rejection of individual rights -- and of reason in preference of faith -- must be granted no shred of support.

Conservationism versus environmentalism

We've become real conservationists at our house. We recycle or compost almost everything possible, shun toxic cleaners, and feel funny if a light is on in an empty room. The net is that our weekly garbage is about a quarter what it was a few months ago, there's not much that is poisonous on our property, and all our utility bills are lower. But we aren't environmentalists.

Here's a fine article that describes how conservationism is not environmentalism.

I didn't know Al Gore has said "the climate crisis is not a political issue; it is a moral and spiritual challenge to all of humanity." That's exactly wrong. If there really were human-caused global warming and it really were a bad thing and there really were something we could do about it, it would be primarily an engineering problem, not a moral issue.

Obama

We forgot to take a camera to Portland's Obama rally today, but fortunately the press took a picture of us -- see, there we are finding a little bit of shade. We stayed for 20 minutes, catching very-occasional glimpses between strangers' heads of a small blue shirt which seemed to be about a mile away. They say that with 75,000 attendees this was more than double the size of any previous Obama rally. (An interesting fact to juxtapose is that Portland is supposedly the whitest major U.S. city.)



Although I think this man will probably become president even though his platform is almost entirely toxic, I didn't feel anything about the rally. The ominous thing to me is not that the pendulum is swinging to the left (it's gotta swing somewhere), but that popular politics are so a-rational. "Belief", "hope", and "change" are just plain vacuous. Is this intellectual void rooted in some aversion to cognition in politics? Why not depict a campaign with catchwords related to socialism, pacifism, environmentalism, and abortion rights if that's what you're itchin' for? (If the issue is just that such words don't fit on hand-held signs and bumper stickers, I have an idea: make an acronym out of them, then have seventy-five thousand people chanting "SPEAR! SPEAR! SPEAR!" under Portland's long-lost sun.)

Or are campaigns so vague because superficiality is the only way to amass majority support? Because everyone disagrees about any position much less watered-down than "war is bad" or "health care is good"? Perhaps this contentiousness explains why W turned out to be exactly what he said he was, yet somehow three-quarters of voters now disapprove of him.

Either way, it seems to me the euphoria of Obama's rallys evidence not so much a change in national politics, but the disintegration of culture as it stands circa 2008.

Political economy

Yaron Brook makes it plain for Forbes readers how crashes and recessions are not a necessary part of society, but are the result of the most popular political opinions.

So what's someone of unpopular political opinions to do in the age of McCain versus Obama? Despite the looming recession, I sent $4 to CafePress -- now I'm participating: