Leading the Revival of Individualism & Self Reliance

Young People Can Get A Great Start On Entrepreneurship Around The Family Dinner Table.

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While you were young, did you gain knowledge and learn skills that gave you the human capital necessary to become an entrepreneur or a small business owner? Human capital consists of the knowledge and habits developed as a youngster that form skillsets that later in life can be used in the business world. These skills are developed either through the family unit, culture, or regional location and determine the success or failure of entrepreneurial pursuits and performance. In the young, the development of skills and knowledge are applicable to future ventures in entrepreneurship or small business ownership.

Everything you learned from family dinner conversations and your culture served to build your human capital. Across the globe, the people of various regions cultivate certain skills that enable individuals to consider entrepreneurship as a viable choice of work. Some of you never had the social or family setting that gave you entrepreneurial insights. Some people get this while they are young, and some do not. Acquiring human capital at a certain age bolsters the chance of entering entrepreneurship or small business ownership. If human capital or business insights are not embedded culturally or acquired at a certain point, some individuals will never consider entrepreneurship or be successful at it.

We cannot all become successful entrepreneurs, especially if only a few of us come from a cultural background that rewards an ethic of hard work and related values versus a cultural background in which achieving entrepreneurial success is never even thought of.1 What is valued in the family unit and what is rewarded or praised contributes to our future entrepreneurial skills. Ludwig von Mises noted, “the inequality of men, which is due to differences both in their inborn qualities and in the vicissitudes of their lives, manifests itself.”2 The region of the world in which one lives and the context of the acquired human capital skills are equally vital to having an entrepreneurial skillset.

We hear from many entrepreneurs, and those who are not entrepreneurs per se, that much of their education occurred around the family dinner table, or that they lived in a place where small business activity was plentiful.3 Human capital that is based on family, culture, and regional differences has consequential effects for many considering entrepreneurship.

Cultural factors are critical in developing entrepreneurship. Often these cultural factors are overshadowed by the technical aspects of operating a business—the seen versus the unseen. Parents and the elderly pass on their values to their children, values such as taking risks, being independent, challenging uncertainty, etc. Children who are rewarded or not rewarded will either be encouraged or discouraged to pursue entrepreneurial activities in the marketplace. If a child is never taught to be independent, how is he or she able to systemically think of and identify potential profit opportunities and bring opportunities to fruition?

Habits form over time, and many are culturally based. In some cultures, some children spend up to twelve hours a day playing videogames and entertaining themselves on social media. In other cultures, children are expected to work long hours helping mom and dad with their business or studying to earn the best grade. These youths may work at an uncle’s garage learning all about vehicles or attend college to gain business knowledge. In either situation, these youths are learning about private property, e-commerce, revenues, profit and loss, bookkeeping, and so on—gaining skillsets and knowledge in order to run a business of their own in the future.

Generally, whatever is cultivated in the family unit and culture will manifest and have consequences in the marketplace. Children who acquire a work ethic and values related to entrepreneurial success will have an advantage over their peers who have not had the same experience. The children who have not learned these things will have a much later start or never acquire the skills and the know-how needed to pursue entrepreneurship or small business ownership.

Not everyone has an equal opportunity to become an entrepreneur, as some must acquire a collection of basic skills, knowledge, and habits that may take decades to develop. Taking risks, working longer hours, and making critical decisions require a certain upbringing. Entrepreneurs are not created overnight but over time. However, ten years of working with mom, dad, or an uncle as a youth, gaining practical knowledge, surely provides advantages later in life.

We cannot disregard the location and region in which we lived during the time of our early human capital acquisition. Being located in one region of the earth versus another can surely impact our ability to develop a predisposition or entrepreneurial insights needed for entrepreneurial behavior. Perhaps we live in an area where several industries exist. Being surrounded by these industries allows us to either work for or start a business in a vein that is familiar to us.

As with any location or local market, our human capital can be stymied in a region or location where a product or service is not valued or not supported although it might be highly valued in another market (i.e., if one has to take their product knowledge to another region where the consumers have higher subjective valuations of their productive goods or services).

Unfortunately, the opportunity to attain the same human capital at the same time and place that leads to entrepreneurship is not equally available to everyone. Without the requisite human capital, one can only dream of becoming a successful entrepreneur or business owner. Families and family cultures vary among peoples across the globe, and so does the dissemination of knowledge at the family dinner table. We all come from backgrounds that either reward or punish certain behaviors that later transform into predispositions and values that underpin our ability to, at a minimum, think like and be an entrepreneur. Ludwig von Mises said that entrepreneurs “owe their position exclusively to the fact that they are a better fit for the performance of the functions incumbent upon them than other people are.”4 An interpretation of Mises on this point is that the skills and knowledge develop over time that enable entrepreneurs to uniquely perform the production of products and services for the consumer.

  • 1.See Thomas Sowell’s The Quest for Cosmic Justice. In the section titled “Freedom versus Equality,” he discusses equal performance and social barriers.
  • 2.See Ludwig von Mises’ Planning for Freedom.
  • 3.See Ryan McMaken’s article “Three Economics Lessons I Learned from My Dad.” For example, three lessons that he learned were: lower the cost of doing business, politicians drive up the cost, and the world is always changing.
  • 4.See Ludwig von Mises’s Human Action on the Entrepreneurial Function.

Raushan Gross is an Associate Professor of Business Management at Pfeiffer University and writes frequently at mises.org.

Can We Americans Remember Our Common Objective, As George Washington Advised Us To Do?

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The ratification of the Constitution in 1788 ushered in a new era in the United States. The times were not without discord—domestic, foreign, and within the government itself—as the nation implemented a new structure that inevitably brought forth many opinions on how best to govern the nation.

Among the most dramatic changes in the new Constitution was the presidency, first held by George Washington. Noted for many accomplishments, Washington is the only president to have swept the Electoral College as he was elevated to the office. Despite his stature and popularity, he was beset by conflict within his Cabinet and in the nation.

In letters to members of his Cabinet (Secretary of the Treasury Alexander Hamilton, Secretary of State Thomas Jefferson, and Attorney General Edmund Randolph) in 1792, Washington described the trials and the dangers that the new nation faced and proposed remedies. The similarity to modern times is striking, but more importantly, we would do well to remind ourselves of his counsel on this 288th anniversary of his birth.

The president expressed to Jefferson his regret “that whilst we are encompassed on all sides with avowed enemies and insidious friends, that internal dissensions should be harrowing and tearing our vitals.” To Hamilton he observed that “differences in political opinions are as unavoidable as, to a certain point, they may perhaps be necessary; but it is exceedingly to be regretted that subjects cannot be discussed with temper on the one hand, or decisions submitted to without having the motives which led to them improperly implicated on the other.”

To Randolph, he lamented “the Seeds of discontent, distrust, and irritations which are so plentifully sown, can scarcely fail to produce this effect.” He continued with a comment on the ensuing result of such conduct: “to Mar that prospect of happiness which perhaps never beamed with more effulgence upon any people under the Sun; and this too at a time when all Europe are gazing with admiration at the brightness of our prospects. And for what is all this?”

Washington not only attributed to political figures the conditions that filled him with “painful sensations,” he recognized that gazettes and newspapers exacerbated the tensions. He wrote to Randolph, “I shall be happy in the mean time to see a cessation of the abuses of public Officers, and of those attacks upon almost every measure of government with which some of the Gazettes are so strongly impregnated.” He added that “the constant theme for News-paper abuse” is carried out “without condescending to investigate the motives or the facts.” The charge recurs in the letter to Hamilton. “I would fain hope that liberal allowances will be made for the political opinions of one another; and instead of those wounding suspicions, and irritating charges with which some of our Gazettes are so strongly impregnated, & cannot fail if persevered in, of pushing matters to extremity, & thereby tare the Machine asunder . . . ”

The dangers of the internal dissension and the external attacks were real to Washington. Should they not heed his call for “mutual forbearances and temporizing yieldings on all sides,” he wrote to Hamilton, he feared for the governance of the country: “Without these I do not see how the Reins of Government are to be managed, or how the Union of the States can be much longer preserved.”

Washington offered counsel on the posture that he wished all should adopt in response to the “wounding suspicions and irritating charges” as the gazettes risked “pushing matters to extremity.” To Hamilton he expressed his earnest wish “that balsam may be poured into all the wounds which have been given, to prevent them from gangrening.”

Washington also invoked the theme of charity to the recipients of his letters. He lamented on the one hand “that men of abilities, zealous patriots, having the same general objects in view, and the same upright intentions to prosecute them, will not exercise more charity in deciding on the opinions and actions of one another” and on the other hand that their ideas risk being forejudged “without more charity for the opinions & acts of one another in Governmental matters . . . before they have undergone the test of experience.”

A call for charity toward the opinions and actions of one another may seem wanting in a politically charged climate, but instead of exacerbating tensions, Washington aimed to encourage the deliberation that must be present in the representative democracy that America embraced only years before.

The French phrase plus ça change, plus c’est la mȇme chose (“the more things change the more they stay the same”) may well be applicable to Washington’s times and ours, but his counsel points us to a necessary correction for the good of the country:

How unfortunate would it be, if a fabric so goodly, erected under so many Providential circumstances, and in its first stages, having acquired such respectability, should, from diversity of sentiments or internal obstructions to some of the acts of Government . . .  should be harrowing our vitals in such a manner as to have brought us to the verge of dissolution. Melancholy thought! But one, at the same time that it shows the consequences of diversified opinions, when pushed with too much tenacity; it exhibits evidence also of the necessity of accommodation; and of the propriety of adopting such healing measures as may restore harmony to the discordant members of the Union, and the Governing powers of it.
This article by Elizabeth Eastman was first published at American Greatness

The Bigger The Government, The Greater The Corruption. Bernie Sanders Is Looking To Double It.

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Front-runner Bernie Sanders portrays himself as the antidote to corruption in Washington. But his own policies guarantee it will vastly increase.

“We will transform our political system by rejecting the influence of big corporate money,” Sanders said when he released his sweeping anti-corruption plan last fall. It includes such things as bans on lobbying, mandatory taxpayer financing of elections and a constitutional amendment restricting free speech.

But at the same time, Sanders’ spending spree would more than double the size of the federal government. He’s proposed free health care, free college, free daycare, guaranteed jobs, a “green new deal.”

When we added up the proposals he’d made, it came to almost $6 trillion in new spending each year. That was as of last August. Sanders has added to his spending plans since then.

Sanders would more than double the size of the federal government when it comes to spending. On Monday, he released some details on where he’d get the money, which include gargantuan tax hikes on everyone, including the middle class. There’s no telling what he’d do to expand the federal government’s regulatory state, but his ambitions there seem limitless.

The result would be to strip Americans of many of the freedoms we currently enjoy in the name of “fairness,” while turning millions into wards of the state.

His policies would also explode the amount of corruption in this country, no matter how many new rules he tries to impose on lobbyists or how many free speech rights he takes away from campaign contributors.

If there’s one thing that should be clear to clean government zealots, it’s that the bigger the government, the greater the corruption.

As we noted in this space recently, there are a number of studies making this connection. One found that the size of government “does indeed have a strong positive influence on corruption.”

Harvard law professor Matthew Stephenson looked at several others and found that “Within the U.S., when controlling for a number of other economic and demographic factors, states with larger public sectors seem to have higher corruption.”

We also pointed out that there is a nearly exact correlation between spending by the federal government and spending by lobbyists. (See the chart below.)

You simply can’t have more spending without generating more lobbying, for the simple reason that the bigger the government, the bigger the return for lobbyists who win government favors.

Conversely, the more economic freedom a country enjoys, the less corruption exists.

Writing in Forbes, Alejandro Chafuen plotted countries in the Heritage Foundation’s Index of Economic Freedom, which measures 180 countries across several measures of economic freedom, from labor laws, tax rates, trade, property rights, national debt, and so on. Chafuen then did the same with Transparency International’s Corruption Perception Index, which ranks countries based on “perceived levels of public sector corruption, as determined by expert assessments and opinion surveys.”

Chafuen found that the correlation between freedom and corruption is “strong and significant.” The greater the economic freedom, the lower the corruption. Less economic freedom – the kind that Sanders is eager to impose in the U.S. – the greater the corruption.

“Economic freedom is a major deterrent to corruption,” says Chafuen, who has been studying this relationship for decades.

“Based on the study results over the last 25 years, I feel confident concluding that leaders who fight corruption with more regulations rather than with true economic freedom are comparable to those who want to fight fires with gasoline: purposefully ignorant or willful accomplices.”

Sanders should know this connection exists from personal experience. As Peter Schweizer details in his new book – “Profiles in Corruption” – Sanders has been using his position as a “public servant” to funnel money to his family and friends.

“There are various ways taxpayer money, school money, other things that have flowed to the family and have made the Sanders family very, very wealthy,” he told Fox News.

The Heritage index meanwhile, shows a direct correlation between economic freedom and prosperity.

“The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination,” the report says.

In other words, everything that Sanders says he wants to achieve would be undermined by his socialist policies. There would be less prosperity, more poverty, a worse environment, less democracy … and far more corruption. Don’t believe so? Take a trip to Venezuela and see for yourself.

— Written by John Merline for Issues and Insights

Hate The One Who Is Better Off than You. It’s The Animating Force Of Socialism, Of Marxism, And Now Of MMT.

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Modern Monetary Theory, or “MMT”, has been getting a lot of attention lately, often celebrated as a revolutionary breakthrough. However, there is absolutely nothing new about it. The very basis of the theory, the idea that governments can finance their expenditures themselves and therefore deficits don’t matter, actually goes back to the Polish Marxist economist, Michael Kalecki (1899 – 1970).

MMT as a centralization tool

MMT says that the national debt means that we owe the money to ourselves, so the central bank in combination with the approval and blessings of the political branch can now together spend as much as they want without facing any consequences. In other words, we can print our way to prosperity. The only real problem according to the theory is that there is not enough money and not that resources are scarce and therefore limited. To understand the basic idea behind this, let’s use the game “Monopoly” as an example. If players decide to double the amount of monopoly-money to play with, the logical outcome will be that people start to pay much higher prices e.g. for the same amount of locations. Whenever more money is chasing the same amount of goods, prices will rise. Another lesson is that the bank will always win, especially when it has the power to change the rules at any time during the game.

The main cause for most of the problems of our days is the current central banking system. But how many people have ever thought about what money is, or how did it came into existence? How many know whether it was always used a debt security by government declaration or if it once was a property title, as it still pretends to be? Well, I can tell you that over the past decades, I haven’t met a lot of people who really thought about these questions. At the same time, our public education system and the mass media ensure that the next generation won’t think about them either. Meaningless distractions, alternative facts and daily doses of fear effectively crush most inquisitive instincts. It’s a process that Immanuel Kant recognized a long time ago and described in the following way: “First, these guardians make their domestic cattle stupid and carefully prevent the docile creatures from taking a single step without the leading strings to which they have fastened them. Then, they show them the danger that would threaten them if they should try to walk by themselves. Now this danger is really not very great; after stumbling a few times they would, at last, learn to walk.” However, examples of such failures intimidate and generally discourage all further attempts.”

With MMT, a massive shift in terms of centralization of power will take place. Drastic changes in our current system would be possible, with a massive push away from the private sector and from individual freedom towards more government control. This is extremely dangerous. History is our witness that centralization in the hands of government, particularly when coming from a so-called “morally superior” ideology, never had a good outcome for the people. State officials, institutional actors and those closest to the top of the power pyramid were the only ones to ever benefit from such systems.

MMT essentially gives carte blanche to those interest groups to boost government spending to astronomical levels. At the same, it allows within a very short period of time a government-enforced, massive redistribution of wealth and a gigantic misallocation of capital.

Over the next few years, the biggest growth potential anywhere in the market, besides the military-industrial complex, will be found in everything that is related to climate change. You can be sure that governments will just print massive amounts of money and flood this sector with it, where you will find a tremendous number of formal politicians and bureaucrats creating artificial and well paid government-sponsored jobs. The European Union alone wants to spend EUR1 trillion until 2030 on this new sector. If Trump loses the next election, Americans can also be sure that MMT will finance the same moves over there too, most likely with the “New Green Deal”.

Let me quote Joan Robinson, who used to be a friend of Kalecki, MMT’s inspirer, during his days at Cambridge University. She summarized his theory as follows: “the workers spend what they earn and the capitalists earn what they spend”. Interesting, isn’t it? This is how the original Marxist thinkers defined capitalism. You might have understood that in their eyes the individual is the worker and when everything is under government control, the politicians and bureaucrats become the real capitalist. This is exactly the opposite of my understanding of capitalism, which is also only possible in a free and decentralized society. Of course, it is important to understand that the term “capitalism” has been purposefully misdefined and hijacked from the beginning by Marxist thinkers.

Far-reaching consequences 

MMT, also conveniently facilitates other dangerous policies and ideas, that so far seemed unrealistic, like Universal Basic Income and “helicopter money” that have been particularly propagated by government-sponsored economists for the past few years. It sounds pretty cool that people will not have to work to make a living – they can lay back and enjoy money for free provided by the government. But as we all know every coin has two sides, and to me as a fan of history, and monetary history in particular, an old saying comes to my mind: “Gold is the money of kings, silver is the money of the bourgeoisie, barter is the money of peasants – and debt is the money of slaves.”

It would seem that the only thing history actually teaches us is that we learn nothing from it. Nevertheless, there is hope, due to the decentralized and open-source internet and the increasing connectivity and access to knowledge. These ensure the competition of ideas, the emergence and evolution of different schools of thought, and the means for millions of people to learn about the world and to become conscious individuals with their own opinions. In addition to that, our financial system is also being challenged and pushed towards a more positive and healthy direction, as hard assets, blockchain applications and cryptocurrencies are laying the foundation for a decentralized approach, where financial sovereignty is key and privacy is respected.

For now, however, we still live in a two-class society, divided between those who have to pay taxes and those who live off them. As you can imagine, the above-mentioned changes and shifts are not welcome by government and its servants. They see a return to a culture of public debate, based on respect and on the premise that we can “agree to disagree”, with the humble understanding that no one knows the truth, as a threat. Therefore they enforce a de-industrialization agenda in combination with mass-migration, using the climate hoax as an excuse to speed up a cultural suicide. They prefer to have a monoculture and are against the amazing beauty that lies in complexity, in different cultures, in different regions, with different languages and beliefs. By splicing it all together, they destroy all of them at once.

At the end of the day, what MMT, the Green New Deal, QE, NIRP, Helicopter Money or any other sort of government promise or intervention have in common is that they are all collectivistic by definition, aimed against the individual and based on the crazy findings of the “Economic School of Zimbabwe” – where everyone became a trillionaire. Henry Hazlitt described it best, in his “Marxism in One Minute“:

“The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others.

Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects — his laziness, incompetence, improvidence or stupidity. Never believe in the honesty or disinterestedness of anyone who disagrees with you.

This basic hatred is the heart of Marxism. This is its animating force.”

Claudio Grass, Hünenberg See, Switzerland

Originally published under www.executive-global.com

Bernie Sanders Ascendant. Stock Markets Plunge.

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The great Ken Fisher routinely makes a crucial point in speeches that investors would be wise to heed: your information is already priced. Whatever you think you know, or whatever you think looms as a huge catalyst for a stock-market correction or surge is, if real information, already priced into stocks. So don’t let what you know, or what you think you know, inform your investment decisions.

Fisher’s advice came to mind a great deal on Monday and Tuesday of this week, and with stocks deeply in the red. The headlines were nearly uniform about “Coronavirus fears” existing as the cause of the market correction. The headlines didn’t make sense.

To see why, readers might consider Apple Computer. Apple rates strong consideration when it comes to understanding the market correction when it’s remembered how much stock-market advances over the last few years have been a consequence of Apple, Amazon, Alphabet, Facebook and Microsoft. Take those five companies out of the S&P, and the booming market of the last few years isn’t booming nearly as much.

Apple announced last week that the Coronavirus development might limit manufacture and sales of its products. In short, Apple was already priced. Investors already knew the virus might impact one of the world’s most valuable companies negatively. It should be added that it was already in the news last week that Amazon, fearful of supply disruptions, would be increasing its near-term purchases of inventory with these disruptions in mind.

Despite all of this news in the marketplace, there wasn’t a major correction in shares. Without minimizing Coronavirus and its impact on people and production, investors have been pricing it for several weeks. Markets lurch in either direction once again based on surprise, and Coronavirus was no longer that.

Still, stocks declined a fair amount last Thursday and Friday, and then share declines picked up speed on Monday and Tuesday of this week. Something new jolted investors that seemingly wasn’t apparent to them midway through last week. What was it?

In aiming to answer the question, it should be said that doing so is a fool’s errand. That’s why headlines about what caused stocks to go up or down are so ridiculous in real time, and positively preposterous when looked at in hindsight. If headline writers possessed a clue about what moves stocks, or even if they possessed a clue about whom to ask about what moves stocks, they wouldn’t be headline writers.

That’s a long way of saying that the assertion you’re about to read is a speculation. At the same time, it cannot be stressed enough that surprise moves markets. In that case, what was last week’s surprise, and what was the surprise that reached investors over the weekend?

For a clue on the presumed surprise, readers should first look back in time to 2015 and 2016. At the time, Donald Trump was making a big, and rather unexpected political splash. Odd about his polling strength was that he was polling well among Republicans even though his rhetoric was anti-immigration, anti-trade, plus it was in all-too-many ways pro-big government. Markets corrected at varying times amid news about Trump’s strength, and one investor explained what was happening to me rather succinctly: “Market’s probability of Trump as president in June? 0%. Today, say what you will, maybe 10%. At least that is what various prediction markets are saying. So, I need to discount 10%.”

Early on Trump’s candidacy was viewed by all-too-many as a joke until it was no longer a joke. Count yours truly as one of those laughing. Needless to say, Trump’s electoral strength was real, it became progressively more real, and investors had to price this reality.

Which brings us to last week. For weeks media members had been marveling at the hundreds of millions spent by Michael Bloomberg, a wildly successful and economically moderate Democratic candidate for President of the United States. Though Bloomberg hadn’t participated in the Iowa and New Hampshire primaries, it was broadly assumed that he was a major contender for the Democratic nomination, and precisely because he’s worth tens of billions, Bloomberg was seen as a much more than reasonable opponent of Trump.

Capitalist versus capitalist, though in Bloomberg’s case he could buy and sell Trump many, many times over. Better yet, success for Bloomberg in the Democratic primaries would signal that the Democrats had seen semi-socialists in Bernie Sanders and Elizabeth Warren, only to reject their rather expansive vision of government in concert with Sanders’ particular disdain for business and businessmen. In choosing a billionaire businessman, Democratic voters would be saying that while progressive, they recognize the importance of capitalistic achievement to progress, and that they recognize the need to limit government somewhat.

In the debates last week Bloomberg was thoroughly attacked by his opponents precisely because his opponents sensed he was ascending to frontrunner status. The big problem was that Bloomberg allowed himself to be throttled. And he was throttled despite it being known that he had the best, most seasoned advisors preparing him for the attacks that everyone knew were coming. Bloomberg’s performance was roundly panned, and in the estimation of more than a few pundits, Bloomberg’s candidacy was rendered a past tense concept. In short, the lone capitalist on the Democratic side was pushed aside during the Democratic debates; debates from which a rising semi-socialist in Sanders emerged largely unscathed. Keep in mind that Sanders emerged unscathed even though he basically tied Pete Buttigieg in Iowa, and beat the former South Bend mayor in New Hampshire.

Oh well, the crushing of Bloomberg in concert with continued strength for a semi-socialist had to be priced by investors. Some say Sanders has no chance at winning the White House, but they said the same about the current White House occupant. Sanders’s success had to be accounted for, and markets went south last Thursday and Friday. And then on Saturday, investors were confronted with an even bigger surprise: not only was Sanders the frontrunner in the Democratic presidential primary, he was the frontrunner in dominant fashion.

Readers must view Sanders’s Nevada win in the context of national elections. While presidents aren’t dictators, and while they must invariably govern from the center, Sanders would be a big departure from Trump in an economic sense. Trump, for all of his weaknesses, is ultimately quite a bit more free market in actions than his rhetoric would indicate. Sanders? Who knows? While it says here that he would again move to the center, Trump he’s not.

And since he’s not, investors always looking into the future had to price in the possibility of major change in Washington; major change that would have a global impact. This perhaps explains a global rout for shares. Sanders was a big surprise that investors had to price.

Coronavirus? It doesn’t diminish it to point out that investors had long been pricing it. Bernie Sanders was the odd Swan whom investors were forced to reckon with in the past week. That’s the speculation from here.

This piece ran in RealClearMarkets

John Tamny

John Tamny, research fellow of AIER, is editor of RealClearMarkets.

Why Ayn Rand Laughs – Cuba’s Lost Generation Becomes the Vision for America at South Carolina Debate

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In a 1972 edition of the Ayn Rand Letter, Ms. Rand analyzed the Democratic national convention and urged readers not to vote for McGovern: “The worst thing said about Nixon is that he cannot be trusted, which is true: he cannot be trusted to save this country. But one thing is certain: McGovern can destroy it.”

Today’s leading candidate for the Democratic nomination is a staunch defender of Cuban totalitarianism, and Tuesday night he touted their literacy programs, as if they were illiterate. Yet no other candidate or moderator (so-called Americans) had the knowledge or courage to say that Cubans were forced to read Marxist propaganda, and only Marxist propaganda. Below, reposted from a June 2018 article at the Center for Individualism, are some real-time observations about Cuba today.

“Are you allowed to talk about politics” asked a tourist visiting Old Havana. “Oh yes, we can talk about politics – the right kind,” said the tour guide with a wink. And this began a candid and enlightening exchange between a bus load of cruise ship passengers and their Cuban host. During a brief stop he told the group “I am one of Cuba’s Lost Generation. We were born in a time when we were expected to work and deliver the promise of the revolution. Cuba still had wealth. We did not know of the poverty that was to follow.” He was born in the 1960s.

Of Glasnost and Perestroika

“We can discuss anything you like, but not the source,” was his response to another question aboard the bus. For the purposes of this article his name is Alexis. His glasnost is to be highly respected, as he treated his guests, the way the entrepreneurial way works. Alexis then smiled at another nearby passenger who was fooling with her smartphone and slyly asked, “Are you recording this?” The implication was obvious, yet his demeanor remained loose and friendly. A real pro, as Brittany Hunter describes about the Cuban tourism entrepreneurs and their appreciation of Americans.

And this was the rule. Cruise ship passengers disembarking in Havana must first clear immigration, and then currency exchange. Getting a few thousand people off of two cruise ships arriving in a foreign country at the same time requires patience. And the lines moved. The officers were friendly and the money changers were efficient. There seemed to be a silent affirmation that they were damn glad we were there. The process took about an hour, at least on that day. And while the $75 temporary visa fee is heavy handed, and supports the regime, it also provides the workers a source of earned income. And the opportunity to interact with people who enjoy freedom, even those who are clueless about their dumb luck.

“I learned Russian. When the Russians left in 1990, I learned English. That is when Cuba began to open up. Cuba had been closed to tourism except from allied countries. When they left, the government needed other sources of revenue.” Cuba’s perestroika. Alexis was explaining this to those who weren’t busy marveling at the array of old Baroque and Andalusian architecture during the walking tour. When asked about Cuba’s new president not being a Castro, Alexis replied “that is good, but Raul still runs the Politburo.”

Remnants of Soviet influence also remain, particularly their ugly and pathetic cars. It would make sense for the regime to have them disappear and be rid of a sore reminder of their incompetence and corruption. Instead, they display the reality of socialism by having them travel the streets alongside the beautiful 1950’s American automobiles. Another passenger asked Alexis how these cars have been maintained so well for so long. To Alexis it must have seemed like a rhetorical question, but he replied anyway, “The Cuban people are very creative.”

Cubans’ Mojo Rising

Cuba is well known for its world class cigars, rum, and coffee. And apparently during Havana’s heyday as an international tourist mecca (before darkness fell over the island in 1959) they also offered world class Mojito’s and Daiquiri’s. That hasn’t changed either. Two of Ernest Hemingway’s favorite watering holes have the best ingredients and recipes anywhere. When asked about the Mojito, Alexis explained, “we use a special mint with a mild flavor.” A state secret revealed.

The establishment serving them is La Bodeguita Del Medio. While the group waited outside, Alexis was asked if they sell souvenir cocktail glasses, they could make a lot of money after all. He said “No, it’s not allowed. This place is government owned.” The daiquiri joint was a fine, old restaurant named Floridita. A bronze statue of Hemingway was sitting on a bar stool in the corner under a small bust of Vladimir Lenin. In the opposite corner they were selling souvenir cocktail glasses, coasters, and t-shirts. When a naïve American asked the doorman if this was a privately owned restaurant, with a smirk and a shake of his head he replied “No!” Go figure.

On the other side of town Alexis pointed out the window of the bus to a very long line winding around a building. He told his passengers “they are waiting for permission to emigrate to Spain for a better life.” Alexis ended his walking tour in the courtyard in front of the old stock exchange that has been dormant for 60 years. Nearby was the cruise terminal, recently given new life and breathing hope for the people of Cuba. One working symbol of capitalism had moved in where the previous one had been abandoned.

It was a short walk to the dry goods store recommended by Alexis. It was small, well run, and stocked with two each of the best brands of cigars, coffee, and rum. An average single Monte Cristo or Cohiba was 7 convertible pesos, about equivalent to 7 US dollars, or 17,000 Cuban pesos. A perfect example of  socialist central banks stealing the wealth of their citizens and squandering it by inflating the currency.

The Sun Also Rises

Ayn Rand continued about the 1972 election,

Here is the difference between them: Mr. Nixon, though not a champion of free enterprise, yearns in that direction. It is against statism that we have to vote. It is statism that has to be defeated – and defeated resoundingly.

Upon leaving the fantasy land that is Old Havana’s tourist district, the luxury cruise ship passengers were able to get a glimpse of Cuba’s reality. Ugly low rise and high rise apartment buildings of Soviet realism design filled the shoreline as the ship passed. It was a perfect summer evening, the sun was setting on the Port of Havana, and yet something was missing.

Earlier that afternoon, a passenger on the pool deck expressed admiration for the “the struggle” of the Cuban people against “crass commercialism,” while sipping a frozen margarita. He could not see it. That morning, the economic gurus on the ship’s elevator were complaining about “innovation taking jobs.” They could not see it. Many dining room guests gazing at the harbor could not see it. All of their minds had been dimmed by American socialist literacy programs. Like the passengers on Ayn Rand’s ill-fated train in Atlas Shrugged, they were indirectly contributing to the disaster.

The thousands of windows overlooking the harbor were completely dark. The residents had no electricity, at least not then. Only the headlights of a few cars moving along the shore way exposed signs of life. The reason is obvious, socialist economic planners are in the dark about allocating the resources needed to efficiently operate a complex system. This always leads to a complete breakdown in production. It’s not that the dictators are restricting electricity, it’s that they can’t produce it. This leaves everyone in the dark, literally. However tomorrow’s arriving cruise ships will bring more light, and not just their own. They foretell the approaching light of free markets.

And it turns out Alexis also kept something in the dark. The Lost Generation is a lot more than Cuban children born into a socialist nightmare. The Lost Generation had been made famous in Hemingway’s greatest work, The Sun Also Rises. It described a generation of real people thought to be irreparably damaged by World War I, but proved themselves to be resilient and strong. Creativity and strength also describes Cuba’s Lost Generation, and belies Alexis’ modesty.

AOC Has A Perfectly Good Economics Degree. That Explains Why She Spouts Idiotic Economics.

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It has become something of a tradition in the free market corners of social media to express shock and dismay over the possibility that New York congresswoman Alexandria Ocasio-Cortez (AOC)—an avowed “democratic socialist”—has an economics degree from Boston University.

This is how it works: AOC makes a statement that is notably antimarket, prosocialist, or generally clueless about general concepts from the field of economics.

Her critics then post responses questioning whether she actually has a degree, or saying that she must have not been paying attention in class, etc.

Here are a few examples:

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But why is it so hard to believe that she has a degree in economics? It seems that far too many people have rather inaccurate ideas about what is taught in economics programs nowadays.

The truth is that there is little emphasis on understanding markets in economics programs, and little emphasis on the value of markets. The emphasis is now on using economics to justify state action in the economy. And any bias that may have once existed in favor of unhampered markets in these departments is vanishing.

The idea that economics is the dispassionate study of understanding how hiring is affected by an imposed price floor (i.e., a minimum wage) or how opportunity cost affects consumer choices is rapidly becoming hopelessly outdated.

Sure, twenty years ago that sort of thing could still often be observed. But microeconomics of that sort is now about as fashionable as other relics of that time, such as the Backstreet Boys.

Basic principles that were once a given—i.e., the notion that making labor more expensive means that employers buy less of it—are now out the window.

But this trend didn’t start yesterday. For decades now, economics has been moving further and further away from teaching microeconomics and how firms and households work. Instead, by the late 1990s economics was well down the road of constructing elaborate and purely hypothetical mathematical models that had little bearing on everyday life. These model builders claimed they could predict the future, but of course, they completely missed the huge financial crisis of 2008.

Another trend in recent decades has been toward conducting an enormous number of studies that produce statistical correlations. But as the correlations can be interpreted any number of ways, they often end up being used to support whatever policy the researchers prefer. Out of this has come the drive to make economics into a discipline that depends on tinkering and trial and error. Some now insist we can’t really guess what the results of a policy might be until we “test” it using methods from the physical sciences.

This is now what’s fashionable, and a December article at Quartz tells us, “the new era of big data…has led economists to revisit the wisdom of some long held assumptions.”

Those old “assumptions” are what many people wrongly think is a focus of economics instruction. Last year, for example, Vox happily reported that in a new introductory economics course at Harvard “[t]here’s little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concepts.” Moreover, it’s getting easier to get through an economics program without any knowledge of economics because economists are increasingly less interested in economics proper.

As I noted here at mises.org last year, economists nowadays seem to spend a lot of time ripping off the insights of historians, sociologists, psychologists, and political scientists. They then slap some new labels on the research and give it names like “behavioral economics.”

In the sorts of “economics” classes that focus on such topics, one learns that government planning is what gets a poor country out of poverty. They learn that people can’t be trusted to make decisions for themselves. They learn that bailing out billionaires in the financial sector again and again has no real downside, morally or otherwise.

There’s no reason to believe that a student with an economics degree is going to graduate with a deep understanding of how government intervention distorts markets or impoverishes consumers. The theoretical foundations behind such things are mentioned, of course, but at many institutions they are most certainly not emphasized.

Far more likely, one learns in these programs that central banks can be relied upon to fix almost any economic problem faced in the course of a business cycle. And if a certain problem becomes especially difficult, the answer surely lies in giving the central bank even more power.

Moreover, economics students believe all sorts of fantasies that most normal people would easily identify as obvious nonsense were they not told otherwise by “wise” economists. Only economics students, for example, are naive enough to think that central banks are “independent” and nonpolitical institutions. This is why the most revealing research on the Fed as a political institution is conducted primarily by political scientists. (For example, see John T. Woolley’s “The U.S. Federal Reserve and the Politics of Monetary and Financial Regulatory Policy.”)

So, it’s entirely plausible that AOC took any number of economics courses and came out with good grades after learning virtually nothing accurate about entrepreneurship, wages, money, or consumer choice. What she did learn on these topics was likely built on the premise that the state ought to be intervening in and tinkering with all these things.

AOC appears to have the same beliefs that many economics grads do.

Meanwhile, AOC’s critics make fun of her for being a bartender. But they’re getting things backward. Being a bartender is possibly the best thing on her CV. These snide remarks about “the bartender AOC” seem to assume that bartending is some sort of disreputable line of work that only idiots pursue. It’s not. “Serving” in Congress is much less impressive. Besides, tending bar is likely one of the more instructive things AOC has done as far as understanding markets goes. There’s certainly no reason to assume that the economics faculty at BU was any help in this regard.

Economics for Individuals

Certificate Of Need Laws Threaten Entrepreneurial Freedom.

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Entrepreneurship is based on the freedom to compete. But in many states across the country, that freedom is being threatened by Certificate of Need, or “CON” laws.

In states that impose Certificate of Need laws, entrepreneurs are not only forced to seek permission from the government to start a business, they must also get the permission of their potential competitors. After an aspiring business owner applies for a license in the state, the relevant state agency must then notify every single business in the industry—ie. the potential competitors.

Once notified of the application, the existing businesses can protest for any reason, including the bare reason of not wanting new competition. Once lodged, a protest makes the Certificate of Need application process exponentially more burdensome for entrepreneurs. A protest triggers a government hearing where the entrepreneur must prove that his or her business is “necessary.”

But proving in a hearing that one’s products or services are necessary is an uphill climb. How can entrepreneurs prove that their products or services—especially new and innovative ones—are necessary when they can’t offer them in the first place and find out? Only experimentation can help them show that their business is necessary. No amount of government hearings—which tend to be expensive and onerous—can help them “prove” the necessity of their business before they can actually open their doors.

Worse, existing businesses can testify at hearing that a new business is not necessary, because they are able to service any existing demand. Protests almost always end up in the applicant being denied, essentially giving existing businesses a “Competitor’s Veto” over who enters the industry.

When consumers are responsible for picking which businesses win or lose, entrepreneurs are forced to innovate and cater to consumer demand if they want to stay in business. Competitor’s Veto laws allow existing businesses to choose who wins or loses, stifling innovation and trampling on consumer choice.

The purported purpose of Certificate of Need laws is to ensure that the right amount of businesses exist within a given industry, such that “dog eat dog competition” doesn’t force everyone to flee the market, or that “excessive entry” won’t result in too many businesses, over-investment, and higher prices. But in practice, these laws don’t involve some sort of complicated economic analysis. Instead, the government allows existing businesses to determine who should get the privilege of competing.

Because they act as a favor to entrenched industry insiders, Competitor’s Veto laws violate the Constitution’s promise of economic liberty, that is, the right to earn a living free of irrational government interference. Using regulatory power as a handout to established businesses has no relationship to protecting public health or safety; it’s economic favoritism, pure and simple.

Fortunately, states are increasingly recognizing that CON laws raise costs, stifle demand, and burden entrepreneurship. Missouri, Montana, Oregon, West Virginia, Pennsylvania, and Kentucky have eliminated Certificate of Need laws in the transportation industry following lawsuits on behalf of entrepreneurs.

We can only hope that all states with Competitor’s Vote laws do the same.

In a free market, entrepreneurs and consumers are free to make choices for their mutual benefit. We can return to that system by simply by encouraging and embracing competition, and repealing Competitor Veto’s laws.

 

About The Author

Anastasia Boden is a senior attorney in Pacific Legal Foundation’s Economic Liberty Project, where she challenges anti-competitive licensing laws and laws that restrict freedom of speech.

 

Poetic Justice Warrior Coach Herb Brooks Played Chess at Lake Placid to Beat the Soviets at Hockey

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Forty years ago today, the United States Olympic hockey team won gold medals in Lake Placid, New York. The immensity of this achievement cannot be overstated, and only one man in America had the vision and the will to lead the Americans to that infamous victory – Poetic Justice Warrior Herb Brooks. The only game they didn’t win was in the preliminary round with Sweden, a 2 – 2 tie. While the average age of the bronze medal Swedes was 25, the Americans were 21-year-old college kids, literally. Another overlooked fact is that the US team beat Finland for the gold medal.

Its the Miracle on Ice game against the Soviet team that is remembered most, in part because of the 2004 documentary movie titled Miracle, featuring an inspired performance by Kurt Russell as coach Brooks. The Russians were the most well-coached and successful professional team on earth, average age of 26, and boasted the greatest goaltender of the era in Vladislav Tretiak.

One year earlier, the Soviets had defeated the NHL All-Stars (20 future Hall of Famers) in the Challenge Cup series at Madison Square Garden, winning the decisive game three in a 6 – 0 rout. While some of the American Olympic skaters went on to noteworthy NHL careers, their prospects to medal were slim, and comparing them to the NHL All-Stars was not appropriate. Yet Brooks’ sense of justice would not allow him to dismiss their productive virtues.

Mind, Body, and Soul

Between 1972 and 1984, there was little turnover on the Soviet roster, and they won every Olympic gold from 1964 to 1988, except this one. Arguably, this Soviet team was the best ever, anywhere, with a powerhouse starting forward line of Valeri Kharlamov, Vladimir Petrov, and Boris Mikhailov, and amazing young talent that coach and GM Scotty Bowman would later poach for the Detroit Red Wings such as Slava Fetisov, who later remembered –

The 1980 team was probably the best team ever put together in the Soviet Union. We never thought of losing, never thought it could happen. That’s why they call it a miracle.

There are no miracles, and Bowman’s experiment with Fetisov was a bust, until he surrounded Slava with four other players from the Soviet system including Sergei Federov and Igor Larionov. Like all great collective achievements, there is an individualist spark. In the case of the Soviet Red Army team’s international dominance, it was coach Anatoli Tarasov who perfected the Russian style of play; one that featured sharp skating skills, passing artistry, and offense. It was fast, graceful, non-individualistic, and to Tarasov, the essence of Soviet patriotism. Ironically, he claimed,

The ultimate aim of a pass was to get a free player. So if our opponents make 150 passes in a game against our 270, this means we had 120 more playing opportunities.

Tarasov brought the North American game to Russia, and transformed their primitive style into an art form. He introduced training methods borrowed from the artistry and athleticism of Russian ballet. According to Bolshoi trained master Elena Segal,

One of the secrets to the condition of Soviet players was ballet training. Anatoli Tarasov realized that Russian ballet employs precise, incremental, scientific methods for training the body and mind, helping an athlete gain confidence and remain injury-free.

After the Americans won the Olympic gold medal in 1960 at Squaw Valley, California, Tarasov’s Red Army teams proceeded to beat the Canadians and Americans at their own game by refining and redefining it. His hockey players had “the wisdom of a chess player, the accuracy of a sniper, and the rhythm of a musician.” Applying reason to reality, Herb Brooks understood what he was up against – politically, ideologically, and athletically, and it wasn’t funny. He had to become the hockey version of Bobby Fischer against the Soviet Method.

Western Individualism Faces Off With Eastern Collectivism

The Cold War was raging, and the Berlin Wall would not be forced down for another ten years. Regardless, the same egalitarian Olympic Committee that awarded the 1936 Games to Nazi Germany (aiding the Final Solution), was allowing Soviet Bloc professionals (abetting the Great Terror coverup) to compete against Western amateur athletes. Coach Brooks couldn’t do anything about this, but he could control who made his team. The critical first step was to select offensive hockey minds. Then each of the 68 players who tried out was given a 300 question test to evaluate their resilience under prolonged stress.

Brooks knew these 68 were hard-working young men from good, tough blue-collar families, but compared to Russians who only knew poverty and self-sacrifice, they were coddled twenty-somethings. To be sure, there was some amazing American talent; Ken Morrow, Neil Broten, Mark Johnson, Mark Pavelich, and Dave Silk come to mind. For the year preceding the Olympic Games, Brooks’s challenge was to mold prideful individualists into a mature special forces unit.

To catch up with Russian skating grace and power, he hired a figure skating coach. Instead of defending the Russian offensive system, he studied film to select players whose principled action was to attack. For his players to forget animosities from their college days, Brooks got them to hate him instead. He knew how hard to push them, when to back off, and why. To invest themselves for team glory, he appealed to their individualist spirits –

You were born to be hockey players. Every one of you. You were meant to be here tonight. This is your time. Their time is done. It’s over. I’m sick of hearing what a great hockey team the Soviets have. Screw ’em. This is your time. Now go out there and take it.

Herb Brooks already knew what Anatoli Tarasov had learned. To beat the Russians, the Americans had to match their mind and body discipline with the Western souls they shared with the Canadians. As Tarasov explains,

The Canadians battled with the ferocity and intensity of a cornered animal. Our players were better conditioned and stronger in skills than their professionals. But we could not match them in heart and desire, always the strongest part of the Canadian game.

Soviet coach Viktor Tikhonov blinked, pulled Tretiak after the first period, and American goaltender Jim Craig delivered a lights-out performance. As team captain Mike Eruzione remembers about Coach Brooks, “I firmly believed that he loved our hockey team, but we didn’t know it.”

Herb Brooks Legacy Continues

As the game clock wound down to zero, Brooks’ son Dan was watching his dad closely from the arena, “He just went crazy for that one split second moment,” and immediately left the bench to let his players shine in the spotlight, despite the fact that he had missed this moment once before. Brooks was the last player cut from the 1960 US gold medal team. More than anyone, he knew the significance of this heroic victory by his college players, and the lasting impact it would have on the sport and people he loved in America.

Women’s hockey is now a winter Olympic spectacle thanks to the Canadian and American programs, and the USA Hockey director of public relations remembers “We didn’t know what hit us.” Youth hockey membership has since quintupled. As Poetic Justice would have it, college club hockey has also soared, including the University of Kentucky in 1984. The land of bluegrass, thoroughbreds, bourbon, and basketball began throwing body checks and buying Ashley Judd hockey posters by the thousands. Dubbed Midnight Mayhem, hockey is the third most well-attended sport at UK.

As Poetic Justice should have it, ‘Do you remember where you were when the Americans won the 1980 Miracle on Ice?’ is part of American culture. Thank you Coach Brooks!

We Ordinary Americans Are Fabulously Rich And Getting Richer. We Take It For Granted (And Sometimes Complain).

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Because its denial is incessantly repeated, the following truth must be incessantly restated: we ordinary Americans are fabulously rich and getting richer. The irony is that we are so very materially prosperous – with a prosperity that is shared by nearly all Americans – that we take our happy condition for granted.

Most of us don’t see this prosperity, at least not for what it is. Our material prosperity, although historically unprecedented, is now so commonplace that, for us Americans in 2020, this prosperity appears to be the natural state of the world. It appears simply to exist – to happen like rainfall happens in the tropics. But of course, widespread material prosperity doesn’t just happen. It didn’t happen for 99.9 percent – literally 99.9 percent – of human existence. The prosperity that we all today enjoy must be not only created but, also, continually recreated.

Entrepreneurs must be inspired to innovate. Investors must be motivated to take risks. Countless individuals must have incentives to save, to work hard, to daily cooperate productively with people whom they do not know, and to avoid using scarce resources wastefully. Yet it is only in the past two or three centuries that most of us have been led most of the time to mostly act in these ways that generate the tremendous shared material bounty that most of us take for granted.

Be More Amazed…

The ‘Wow!’ factor of a tiny fraction of this bounty becomes obvious immediately when pointed out. In 2020 it’s not difficult to inspire someone to marvel at relatively recent innovations such as smart-speakers, GPS, streaming music, and hip-replacement surgery. But these new marvels are hardly the whole story.

The real measure of our prosperity is in what, for us, is mundane: running drinkable water over a wide range of temperatures, hard roofs and floors, refrigeration, artificial lighting, inexpensive garments and bedding made with machine-woven cloth that withstands being cleaned with powerful inexpensive detergents in powerful affordable machines, widespread literacy, mastery at using the electromagnetic spectrum, liability insurance for drivers and for homeowners, well-stocked supermarkets, fresh blueberries in New York in January, ice cream in New Orleans in July, air travel, automobiles, air-conditioning, aspirin, antibiotics…. You, Mr. or Ms. Reader, will have no trouble extending this list for pages.

Each and every one of these seemingly humdrum features of our everyday lives will inspire you to exclaim “Wow!” if you ponder the almost incredible amount of human effort and undesigned coordination that takes place regularly to make these almost-miraculous goods and services so routine that they seem humdrum.

Accustomed to constant access to an abundance of such marvels, we fail to recognize them for the marvels that they are. Instead, we focus only on the failure of this marvelous reality of ours to be even more marvelous. With our glass 99 percent full – and with this fullness seemingly produced and guaranteed by some mysterious laws of nature – many of us are apoplectic both that the “distribution” of this bounty isn’t as ideal as we can imagine, and that our glass has yet to be filled even further.

Such complaints would be more tolerable if those who issue them were to reveal some appreciation for just how minor are today’s economic problems relative to the enormous good that economic growth has already brought about and continues to bring about. But no such appreciation is apparent.

Just once, I want to hear someone who worries about climate change acknowledge that we today are fortunate to be able to worry about climate change. Just once, I’d love to encounter a politician or professor who wags his finger angrily at the “uneven distribution” of income or wealth note that any randomly chosen ordinary person in the United States today is likely to be materially far richer – in very many ways – than was the richest American of a mere century ago.

And just once, I long to be surprised by a “social-justice warrior” conceding that at least some of today’s alleged problems might actually be mirages conjured by the market economy’s successes.

… But Don’t Be Shocked

Consider, for example, the much-noted reduction over recent decades in Americans’ geographic mobility. This reduced mobility is said to be a major reason why increased trade with China inflicted on Americans what is now known as the “China shock” – namely, a slower than expected adjustment of American workers to increased imports of goods from China. (There is, by the way, some confusion about exactly what the “China shock” finding is. Some people interpret this finding in the manner in which I describe it in the previous sentence. Yet other people interpret it to be a finding that increased trade with China caused a permanent reduction in net American employment. The “China shock” researchers themselves are unclear on this matter. For purposes of my essay here, however, nothing much turns on which interpretation is correct.)

While Americans’ reduced geographic mobility might reflect real problems – such as housing costs in booming cities made artificially high by land-use restrictions – it might also, at least in part, reflect increased prosperity.

Most people prefer to live in some locations over other locations, but to satisfy such ‘locational preferences’ is costly. And so just as when we become richer we are more likely to satisfy our preferences for nicer automobiles and larger homes, as we become richer we also are more likely to satisfy our preferences for living in our favorite locations.

A blue-collar resident 50 years ago of Allentown, PA, might have had a strong attachment to that locale but, having lost his job, couldn’t afford to keep living there. His best economic option was to move. But suppose that today we see a blue-collar worker remain in Allentown despite being unemployed. What should we conclude? The conclusion leapt to by many pundits is that today’s unemployed worker is so much less likely than was the typical worker in the past of finding a new job elsewhere that today’s unemployed worker sees no point in moving. Out of despair, today’s unemployed worker simply stays put.

Perhaps. But given that there’s been no long-term uptick in the national rate of unemployment, this pessimistic conclusion is likely mistaken. A more plausible conclusion is that unemployed Americans today can better afford to stay put in their preferred locales and wait for new jobs to come to them rather than them move to different locales in search of new jobs.

This increased affordability of staying put might come in the form of greater purchasing power of workers’ savings, or in the form of more generous family, private, and public assistance for unemployed workers. Regardless of the source of this increased affordability of locational preferences, such increased satisfaction of locational preferences is evidence that ordinary Americans are today richer than were ordinary Americans in the past.

No sensible observer argues that the American economy is free of problems and flaws, or that ordinary Americans face no real economic challenges, some of which are daunting. But the incessant drumbeat of negativity about the U.S. economy and about globalization – and the blinkered focus on problems (real and only apparent) divorced from the larger context of the economy’s successes and of Americans’ stupendous prosperity – gives us a dangerously inaccurate sense of the state of the economy and of ordinary men’s and women’s relationship to it. And this inaccurate sense, in turn, will fuel policies that destroy rather than promote our ability to continue to prosper.

Donald J. Boudreaux is a senior fellow with American Institute for Economic Research and with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.
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