Leading the Revival of Individualism & Self Reliance

An Entrepreneurial Pastor Preaches The Virtues Of Economic Liberty, The Guarantor Of Religious Liberty.

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Like most parish priests, the pastor of Sacred Heart of Jesus Catholic Church has plenty to do keeping the pews full and his school afloat. But as co-founder and president of the Acton Institute for the Study of Religion and Liberty, the Rev. Robert A. Sirico has another, equally demanding ministry: preaching the virtues of economic freedom.

Father Sirico, 68, co-founded the think tank in 1990 with Kris Mauren. This was an era when liberation theology was in vogue, and the U.S. Catholic bishops were issuing pastoral letters heavy on government but light on liberty. The institute is named for Lord Acton (1834-1902), a towering British Catholic intellect whose two great causes were liberty and religion.

“It’s not just rah-rah for markets—or freedom,” Father Sirico says. “It’s to ask: What’s freedom for? And to answer that question, you have to understand what man is for.”

Like Acton in his day, Father Sirico and his merry band argue that political liberty and economic liberty are the guarantors of religious liberty. Markets are by definition social, Father Sirico says, and to succeed in the market requires being attuned to your customers’ needs.

As Adam Smith observed, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” It’s not exactly “Love thy neighbor,” but it does have the effect of helping others. Further, “people need jobs,” Father Sirico notes. “Jobs come from businesses. And businesses need the economic freedom and opportunity if they are to create them.”

This appreciation for what markets contribute is more than intellectual. As shepherd of Sacred Heart, he sees up close what economic liberty means for his mostly working-class parishioners. “It grounds me,” he says of his pastoral work. Today his congregation is more diverse than the Polish immigrants who worked the local gypsum mines and founded the parish a century ago, and Father Sirico appreciates that only a few will ever be entrepreneurs. But when businesses are thriving and his parishioners can get good jobs, their dreams become reality, whether it is buying a home or sending their children to college.

When he became pastor in 2013, he says, the school was dying. In his own burst of entrepreneurship, he refounded it as a classical Catholic academy. Today enrollment at his school has more than quadrupled since he took over, growing faster than other schools in the diocese over the past few years. He adds that a market-oriented reform such as school choice would be a “game-changer” for the working families in his neighborhood.

Hostility to markets, of course, is not new. Intellectuals like the idea of a society rationally organized by centralized planners rather than left to individuals who lack expertise. Many on the left believe capitalism is rooted in greed and exploitation. But these days critiques of free markets also come from the right.

Some conservative critics see capitalism, and especially international trade, as devastating for once-prosperous American communities. Others echo the worries of liberal sociologists such as Daniel Bell (1919-2011), who argued that capitalism carried the seeds of its own destruction, because prosperity stimulates appetites and undermines virtues on which capitalism itself depends.

The latest complaint concerns “woke capitalism,” in which business—especially big tech—uses its market power to stifle traditional views. Examples include Mozilla’s ousting of executive Brendan Eich for having opposed same-sex marriage, Disney and Netflix ’s threats to boycott Georgia for its tough antiabortion law, and Nike ’s yielding to Colin Kaepernick and discontinuing an American flag sneaker.

Father Sirico answers each critique. On the idea that international trade destroys prosperous manufacturing towns, the Brooklyn-bred priest points to his adopted hometown as a counterexample. For most of the 20th century, Grand Rapids was the furniture capital of the world. Then came new competition, first from woodworkers in North Carolina, then from China.

“Of course markets can have disruptive effects,” Father Sirico says. “But that disruption can be positive or negative. It can also be disruptive in a positive sense when people are successful in providing a higher standard of living for a broader group of people.”

Grand Rapids and the surrounding area remain headquarters for several leading steel-furniture makers, its economy has diversified, and Forbes ranks it one of the 10 fastest-growing metropolitan areas in the U.S. Downtown is filled with cranes and nary a boarded-up store, and its industries range from craft beer to the international multilevel-marketing giant Amway.

As for the argument that foreigners “steal” jobs from Americans, Father Sirico points to the other side of the equation. “It’s good for peasants who are living at subsistence wages and breaking them out and letting them to begin to have more choices in their lives,” he says. “The pastors in these provinces in China are looking at their people prospering from trade and they are saying, ‘Thank God for this.’ ” To Father Sirico’s ear, the complaint that desperate people are “stealing” jobs from Americans is an odd thing to hear from Christians.

What about the view that wealth is morally corrosive? “For so much of the world’s history, people struggled just to survive,” Father Sirico says. “Now the moral question is what to do in the midst of abundance. I suppose one answer is to eviscerate abundance.”

He thinks market critics make a fundamental mistake in understanding capitalism in purely materialistic terms. Start with the caricature of the self-maximizing individual concerned only with profit: “It seems that the minute you’re prosperous, you’ve sold out.” He concedes that markets have to be about more than making money and expanding choices. They require a “telos,” a sense of higher purpose—of how human beings should use their freedom. That depends on the realization that not all choices are morally equal.

On the flip side, he laments what he calls the “timidity” of businesspeople when it comes to defending themselves morally. But he says they’re not entirely to blame. “Businesspeople are alienated from the moral voice. They don’t have a moral understanding of what it is they are doing,” he says. “So then when they act just on what they do know—business—they get hammered for not having this moral sense. But who created that alienation? I think a lot of the religious leadership.” Clergymen often fail to appreciate the good commerce does for society—then, after denouncing business as greedy, put out their hands for donations when they have a project that needs funding.

He sees woke capitalism as an overreaction to the ridicule and intolerance that sexual and other minorities endured when the dominant culture was more traditional. If he’s right about this, he says, eventually there will be another, opposite reaction: “Woke capitalism is a trend that will ultimately immolate itself because of its increasingly obvious intolerance.“

He acknowledges the problem of large social media platforms banning or otherwise suppressing conservative voices. Critics see this as market failure. Ordinarily, if you don’t like how a company treats you, you simply take your business elsewhere. But what’s a realistic alternative to Facebook ?

Father Sirico isn’t prepared to give up on market solutions. He notes the history of companies and industries that looked monolithic and invincible—the Big Three television networks, IBM , local taxi monopolies—only to have their entire businesses upended by upstart rivals, seemingly from nowhere. “Market innovations before they are made always seem impractical,” he says, “and after they’re made they seem like, ‘Oh, I could have done it.’ ”

Above all, he worries that government would be an even worse instrument than corporations for promoting traditional values. He cites a 2017 debate hosted by the King’s College in New York. His opponent, First Things editor R.R. Reno, was outlining the ways he would use the state to promote the values he and Father Sirico shared. Father Sirico told Mr. Reno his big mistake was to assume that if the government ever were to set up a panel to define the common good, he’d be on it.

“He thinks it would be run by people like us,” Father Sirico says. “I think it’s going to be Nancy Pelosi.”

His broader answer to the challenge of woke capitalism echoes Pope John Paul II. In his famously pro-market 1991 encyclical, “Centesimus Annus,” John Paul wrote of three spheres of human endeavor—political, economic and cultural—and said that if we are to have a moral economy, it would have to be tempered less by government than by a healthy moral culture. In other words, while laws are necessary, societies cannot be regulated into preferred social outcomes. These depend more on a healthy culture.

Many corporations, Father Sirico acknowledges, now promote values antithetical to Christianity. But why wouldn’t we expect business to reflect society’s dominant values? That’s the challenge conservatives, especially religious conservatives, need to address. “It’s a tall order,” he says, “but we are culture builders. And one of the tools in the toolbox is capitalism—to form our people to compete well in the market, and to execute, to have confidence in what they are doing.”

Lord Acton is best known for an aphorism: “Power tends to corrupt, and absolute power tends to corrupt absolutely.” Father Sirico says his own favorite line from Acton is his description of liberty as a “delicate fruit of a mature civilization.” It needs constant cultivation, and that requires culture thick with free institutions, including religious ones, that understand man in all his human dimensions.

“The answer isn’t to head to the hills,” Father Sirico says. “The answer is a simultaneous liberality in our economy and vigor in our moral stances.”

Mr. McGurn is a Wall Street Journal columnist and member of the editorial board.

 

Big Business’s Hypocritical Lurch To The Left Causes Them To Lose Trust, The One Loss They Can’t Afford.

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Business credibility is in the tank. Results of a recent Pew Research survey depict a society-wide erosion of trust — especially for business leaders and elected officials. Only 46% of adults categorized as “medium trusters” (respondents were divided into low, medium, and high “trusters”) had “a great deal” or “fair amount of confidence” that business leaders would “act in the best interests of the public.” For a group that wants to sell to everyone, these poll numbers are a disaster.

By contrast, over 80% of “medium trusters” trust scientists, the military, police officers, and public school principals. Out of all the leadership groups studied, respondents expressed the second-lowest confidence in business leaders; only elected officials scored lower (they had the confidence of 39% of “medium trusters”). Even with the rise of “fake news,” journalists beat out business leaders by double-digits.

It didn’t start this way. All things being equal, no one, not even a business leader, wants to be mistrusted by others. Instead, like many ill-fated, well-intentioned movements, corporate America actually started out trying to boost their credibility with consumers. How did it all go wrong?

About 10 years ago, something called “Corporate Social Responsibility,” or CSR, became all the rage in the business community. Opinion surveys and contemporary wisdom inspired commentary like, “Consumers Overwhelmingly Want CSR.”

Corporate social responsibility is when a business acts like a good neighbor instead of an Ebenezer Scrooge. For instance, last October a Waffle House food truck offered free meals to victims of Hurricane Michael in the Florida Panhandle. Other good examples would include cutting pollution, raising local property values, and paying employees well. Consumers like that stuff.

Here’s what not to do: force explicit, obnoxious, and controversial political messages into areas that are not inherently political. If you sell kids’ clothing like Gap, a full court press to applaud homosexuality or transgenderism only serves to alienate a portion of your customers. If you make kids’ movies like Disney, pressuring states to not adopt anti-abortion laws is actively trying to kill off your own target demographic. If you sell coffee, pizza, or burgers, then getting in customers’ faces about your support for pride month is really unnecessary and will only serve to alienate rather than unify.

It’s no accident that business leaders took a nose-dive in credibility just when their marketing took a lurch to the left.

Instead of true social responsibility, big corporations have turned to virtue signaling. The other piece of “wisdom” these profit-motivated institutions learned 10 years ago: “It’s all about marketing.”

In exploiting today’s dominant rhetoric on contentious social issues, it’s almost as if big businesses are like actors playing a part, poorly hiding their true profit motive behind a mask. That, by the way, is the origin of the word “hypocrite.”

Perhaps the most egregious hypocrite is Netflix. Last month, the company threatened to boycott the state of Georgia, a new hotbed of film production, over a law that would protect unborn babies with a detectable heartbeat. Apparently, companies thought this bluff would be interpreted as righteous anger. Meanwhile, Netflix has been cowering to the regime’s censorship as it worms its way into the vast market of China. The company appears to be unmoved by the authoritarian regime’s vast concentration camps, organ harvesting of political prisoners, or religious persecution. But Georgia is somehow much worse, in their eyes.

At the same time, Netflix lost 126,000 domestic subscribers from March to June, instead of a predicted gain of 352,000. Even though this is its first quarterly U.S. subscriber loss since 2011, Netflix seems oblivious. It has blamed the loss on everything but its tone-deaf political activism.

Big business has failed spectacularly in its gambit to boost its credibility through taking far-left policy stances. Another nationwide opinion poll by Gallup shows public confidence in big business in 2019 (as opposed to all business leaders measured in the Pew poll) is at 23% — about where it was in 2003.

Why hasn’t their tactic worked? Because people can smell a phony. Big business isn’t winning any friends with their rampant hypocrisy.

They’ve just alienated social conservatives by swallowing the rhetoric of the abortion and LGBT lobbies hook, line, and sinker.

Today’s economy functions according to the same principles it did 10 years ago. Absent a radical reimagining of our economy, that’s not going to change. It’s these principles of free-market exchange that ensure that businesses’ only moral compass will always point toward maximum profit. That’s called survival. That’s also why it so unbelievable when big business claims to suddenly discover an enlightened, radically progressive moral compass.

Big business should stop the charade. If they want to exercise real social responsibility, that’s fine, but their political virtue signaling is see-through, hypocritical, and roundly condemned by all sides.

Joshua Arnold is the media coordinator at the Family Research Council.

The Hungarian Jewish Immigrant Who Provided the Critical Mass That Inspires People Everywhere

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As legend has it, the Statue of Liberty was a gift from the people of France to the American people as a gesture of friendship and admiration. Its sculptor, Frederic Auguste Bartholdi, designed it after the classical Roman goddess Libertas in order to proclaim the statue’s given name, “Liberty Enlightening the World.” However, Bartholdi originally wanted a commission from the Ottoman Viceroy to Egypt commemorating the completion of the Suez Canal. Its proposed title might have been “Egypt Enlightening the World” featuring a woman draped in a burqa overlooking a leading commerce center for the international slave trade from northern Africa to Asia.

As poetic justice would have it this idea was rejected as too expensive, and Bartholdi had a friend who was a poet, anti-slavery activist and devotee of American history. His name was Édouard René de Laboulaye and he had a much better idea. But it took an immigrant to America, a self-made man, to create the vision for the American people who were living the American dream of self-creation, and knew from whence their parents came. It took an entrepreneur to create the marketing plan that anticipated the desires of his customer base and finance the pedestal that put the Statue of Liberty in its rightful place – New York Harbor. That Poetic Justice Warrior is Joseph Pulitzer.

Crowd Funding for Liberty

While the neoclassical beauty of Lady Liberty and her pedestal is unquestioned, the network structure of its promoters and benefactors is also a thing of beauty. Other than the contribution of the land, the French and American governments contributed nothing to this work of fine art. All great ideas germinate in the mind of an individual, in this case it was René de Laboulaye’s – a fitting monument to America’s centennial and its abolition of slavery. Because of its scale, Liberty was going to need money, and the French American Union was formed. A French copper company donated the material and French gamblers raised most of the money for the sculpture by buying lottery tickets. Americans were solicited to raise money for the pedestal, the interior framework and the final assembly.

The engineering and financing challenges were daunting, and at first there was opposition to the project from wealthy New Yorkers and the New York Times who considered it a frivolous stunt, and potential donors from throughout the country who weren’t interested in financing something for the benefit of New York. By 1880 the copper sculpture’s funding was finalized in France, and in 1883 Pulitzer, who had just acquired the New York World newspapers, dedicated himself to an aggressive campaign to complete the remaining $100,000 of funding needed for the pedestal. He saw that America had created something unique in human history, the middle class, and over one hundred thousand donations, in very small amounts, were received in exchange for the notoriety of having their names printed in Pulitzer’s papers.

Pulitzer understood something that can only be appreciated in a country whose name is analogous to an idea – liberty – and whose ideology, the pursuit of happiness, has a corollary – to make money. America discovered that wealth must be earned, not looted, that money is a tool, and that money is the indispensable lubricant for free people creating and exchanging values. In this case, the value to Pulitzer’s donors was the concretization of one of their highest values – liberty, integrated in to a work of great art that lights the way to a future as it could and should be.

You Did Build That

Advocates for freedom will naturally gravitate to people and ideas that promote liberty and justice for all, and the Statue of Liberty project was no exception. Besides Pulitzer, de Laboulaye and the parents and school children in America and France who donated their nickels and dimes, there was a stellar team of engineers and builders who did the dangerous work and dirty jobs that they were free to do.

One such individual was Colonel Charles Stone. In 1884 he was named Chief Engineer for the Statue of Liberty project and planned the construction of the Liberty’s foundation, pedestal, and the reassembly of Liberty after its arrival from France. The pedestal was the largest concrete structure in the world at the time. Another was the highly accomplished civil engineer Joachim Giaever, a Norwegian immigrant who worked from sketches produced by Gustave Eiffel to create the structural framework and detailed fabrications needed to attach the copper shell to a structurally sound feat of engineering. This was the Gilded Age after all, the modern era when thousands of fortunes were built through the power of the human mind, not the brute force of the premodern era. The late 18th and 19th centuries featured the ethics of self-creation, the political economics of capitalism and the aesthetics of romanticism – all to be symbolized in New York Harbor.

It was the greatest period for human flourishing in history, and Joseph Pulitzer was ready for the challenges that freedom offers. Having arrived in America from Hungary at the age of 17, he migrated west in a box car after Civil War service where, he recalled, “The lights of St. Louis looked like a promised land to me.” Fluent in German, Hungarian and French he was able to quickly make connections in the affluent German immigrant community and spend his spare time in the St. Louis Mercantile Library learning English and reading voraciously. After stints as a cavalryman, whaler, mule hostler, waiter and lawyer Pulitzer found his life’s purpose as a journalist in 1868. The rest is history.

Reason, Purpose and Pride

By 1883, Pulitzer was a wealthy self-made man whose reputation was built on fighting political corruption and its crony corporatism. He was also a relentless self-promoter, as was Lady Liberty’s sculptor, and they both appealed to the sentiment of nationalist populism in France and America to raise the money needed to erect the statue atop the pedestal on Bedloe Island in New York Harbor. As poetic justice would have it, Pulitzer’s campaign provided the critical mass needed to trigger a chain reaction for inspiring lives of meaning world-wide.

The Statue of Liberty is a political monument to a higher principle – reason. It does not glorify a soldier or politician. While Liberty is the iconic welcome sign for the world, it is not about immigration, it is about ethics – living lives of purpose. And a compelling case can be made that it was not meant for the American people, but instead Lady Liberty’s colossal image was erected for the people of France. From New York Harbor she gazes east and encourages the people of France, and Europe, and the East to take pride in the fact that you can do this too – through value creating capitalism, as Poetic Justice Warrior Joseph Pulitzer did.

 

The Grocery Store Is A Metaphor For Increasing American Living Standards Experienced By Both Rich And Poor.

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I have written much about the extraordinary increase in living standards1 that Americans have enjoyed over the last century, and especially in the last forty years. For me, one of the best indicators of this incredible progress can be seen in the evolution of the grocery store. A great treatment of this evolution is food writer Michael Ruhlman’s recent book Grocery.

The grocery store is in many ways a metaphor for the increase in American living standards experienced by both rich and poor. Those of us who remember the 1970s have perhaps the best sense of this evolution, as we can remember what even good grocery stores were like back then. Stores were generally small, not well lit, not always clean, limited in the variety of goods they stocked (especially fresh produce), and lacking in the prepared foods we take for granted at most grocery stores today.

The 21st century American grocery store, by contrast, is a marvel of higher quality, lower cost, and expanded variety. There is simply no comparison between the quality of the produce, meats, and bread available at even a large middle-market chain like Kroger today and what was available anywhere in the 1970s. Measured in terms of labor hours required for purchase, food has generally never been cheaper. We see that today, as poverty in America is far more likely to be associated with obesity than with being underweight.

The growth in the variety of products available in the market in general is an excellent, if underappreciated, indicator of economic progress, reflecting as it does the Smithian insight that the division of labor is limited by the extent of the market. With growth comes more wealth and larger markets that enable producers to have a market for more finely differentiated products.

An example from the evolution of the grocery store illustrates this point. In the 1970s, there were maybe five or six kinds of potato chips (regular, barbecue, sour cream and onion, ruffled, tortilla chips, and the stuff in the can). Today, the typical grocery store has a potato chip aisle that offers dozens of differentiated products along numerous dimensions. This increase in variety allows consumers to satisfy their preferences more precisely, increasing their subjective well-being. You want your gluten-free, lactose-free chocolate chip cookies? You can probably find them. You want your throwback taco-flavored Doritos? They’re there. The expansion of variety in the typical grocery store has dramatically increased the subjective well-being of American consumers in ways that macroeconomic measures like GDP cannot capture.

The growth in variety can be seen not only in, but across grocery stores. The grocery market was once largely characterized by a number of regional chains (Kroger and Publix, etc.) along with a mix of very local chains and mom-and-pop stores. Regional chains were similar in their sizes and offerings. However, in the last twenty-five years or so, the variety of stores to choose from has dramatically increased. The market has seen the entry of a variety of higher-end large stores, such as Wegman’s, but also higher-end stores of more modest size such as Whole Foods and Trader Joe’s. More recently, stores like Fresh Thyme and Fresh Market have become players in this market, with similar high-end and environmentally responsible products.

At the other end of the spectrum are stores like Aldi’s, stocking few name brands and trying to capitalize on cheap prices for staple goods. Then there are the big box stores such as Walmart and Target, and regional ones like Meijer. These super stores do not have the grocery selection of even most chain stores like Kroger, but offer the low prices consumers have come to expect plus the convenience of one-stop shopping. There are also warehouse stores like Sam’s Club, Costco, BJ’s, and farmers ‘ markets, artisanal butcher shops, and a whole range of other specialty stores. When we look broadly enough, we also need to include the dollar stores, drug stores, and convenience stores, all of which also compete in the grocery market. And let us not forget Amazon’s purchase of Whole Foods, which might be a big game changer.

The empirical data on where Americans buy their groceries5 are fascinating in this regard. The top five sellers of groceries in the United States in 2016 by market share were:

  1. 1. Walmart/Sam’s Club: 21.4%
  2. 2. Kroger: 10.2%
  3. 3. Albertson’s: 5.2%
  4. 4. Costco: 4.2%
  5. 5. CVS: 3.9%

Also in the top ten are Target (2.7%) and Walgreens (2.4%). Dollar Tree and Dollar General are ranked 11th and 12th, respectively, while Whole Foods is at 13th and Trader Joe’s is 18th with 1.0%. (One note to consider—a good deal of the share of the warehouse stores is likely business, not household, purchases, so we might view those numbers carefully.) The presence of CVS and Walgreens might be surprising. CVS sells more groceries than Publix, Target, H-E-B, Whole Foods, Aldi, and Trader Joe’s, and Walgreens sells as much as Whole Foods and Trader Joe’s combined.

More, better, fresher

I have already suggested the explanation for increasing in-store variety and quality: the generalized increase in wealth has given households the means to purchase more and better products and created larger markets for more specialized products. The gains in technology and food science, along with the widespread reduction in transaction and transportation costs, have enabled producers to increase quality, get better information on what consumers want, and ship those products to stores more quickly, more safely, and all year round. We take for granted the ability to get almost any fruit or vegetable year-round these days, when that was not possible even as recently as the 1970s or ’80s. Some of that is due to food science enabling us to grow things indoors and ship them more cheaply from far away, but it’s also due to the growth of global trade agreements reducing the transaction costs of getting produce from places where it is in season.

Similar factors are at work in explaining the increase in the variety of grocery stores, as more Americans can afford higher end produce and meats, and falling costs have made it possible to supply them. They might wish to get their basics at the warehouse or Aldi, or delivered by Amazon, as quality differences are fewer. This fragmentation of the grocery market parallels that of other markets (e.g., recorded music) as technology and falling transaction costs make thinner markets more profitable and thereby enable people to obtain more precise matches for their preferences.

But what explains the rise of the drug stores? The same factors that explain grocery purchases at drug stores explain, at least partially, the success of Target and Walmart and the warehouse clubs at selling groceries. What they all have in common is enabling shoppers to conserve on the most precious resource of all: their time. As Americans have become wealthier, our time has become more valuable. Higher incomes also mean that our time spent doing other things has a higher opportunity cost. And the generalized increase in wealth means that we have money, and perhaps time, to spend on other things that we value highly, including consuming leisure and being more engaged in our children’s activities. More women, especially those with young children, entering the workforce since the 1970s, have accelerated this trend. Time for households to shop, and not just for groceries, is much scarcer than it used to be.

Two other factors help to explain the market share of CVS. First, they have over 10,000 stores, while Kroger has 2,000. Every CVS earns far less in grocery revenue than a single Kroger, but with so many more stores, it is able to have a market share disproportionate to its low per-store sales. Many CVS stores are also located in very walkable urban areas. In those neighborhoods, the convenience of CVS is understandably irresistible when walking home from work or needing a quick item last minute, even given the higher grocery prices at CVS compared to Kroger. They have become a version of the neighborhood bodega. Even a suburbanite driving home from work who just needs milk and bread might find the closer parking, smaller store, and shorter lines at CVS to be worth the higher prices.

The same factors that explain grocery purchases at drug stores also explains, at least partially, the success of big box and warehouse stores in this market. The opportunity to engage in “while you’re there” grocery shopping at drug and big box stores is really valuable to time-constrained people, like when you need some clothing for the kids, or some school supplies or any of the other items those stores carry, including prescriptions! Similarly, the warehouse stores are time savers because one trip can stock you up on dry goods and family-sized food packages for longer, reducing the number of shopping trips you make. Warehouse stores also, to the extent they cut down on the number of automobile trips, are environmentally friendly.

We want to spend less time buying groceries. Technology and lower transaction costs enable us to do that even while shopping at more places than we used to. At the same time, our higher incomes enable us to spend more on both groceries and eating out if we so desire. In 2016, retail sales at restaurants exceeded those at grocery stores for the first time since such data have been tracked, even as both continue to increase.6 Some forms of eating out are time savers, but others are not. With Census data indicating significant growth in households earning above $100,000 per year over the last forty years, it is not surprising that we have seen growth in full-service fine-dining restaurants alongside the growth in fast and fast-casual options. It’s also not surprising that some of our increased wealth is being used to engage in higher-quality cooking when we do cook, as the rise of the high-end grocery stores and high-quality ingredient-delivery services indicates. Indeed, sales of cookware increased 50% between 2006 and 2015,7 with higher-end products like cast-iron going up by 300%. Some of this is surely due to the rise of cable cooking channels and celebrity chefs, not to mention Facebook and Instagram, but their existence is itself a consequence of many of the same underlying changes in technology, transaction costs, and the average level of household real income.

The Best Is Yet to Come

The next steps in the evolution of the grocery market may be driven by Amazon’s purchase of Whole Foods. My own prediction parallels Ruhlman’s in Grocery: we’ll see the center of grocery stores shrink, as dry goods come from Amazon or warehouse stores. The perimeter of grocery stores will remain, as produce, meat, baked goods, dairy, frozen foods, and prepared foods will continue to be demanded in increasing quality and variety. A Fresh Market store offers a preview of that future: gorgeous high-end fresh produce and meat/fish, a wide variety of prepared foods and baked goods, excellent beer and wine options, and a limited selection of high-end nutrition-oriented and environmentally responsible dry goods. Most of their products are more expensive than at Kroger, but the quality is much better and the shopping experience is quieter and more cultured.

As I was writing this piece, my local Kroger announced that it is backing out of its plan to build a new 132,000 square foot Kroger Marketplace.8 Instead, it will renovate the existing store, which is half the size, to expand its ability to offer “services like curbside pickup, Scan, Bag, Go and delivery” as ways to up its online game. This move is consistent with both the importance of timesaving and the rise of alternatives for getting many of the goods traditional grocery stores have offered. And while Kroger didn’t say so, the speculation that this is a response to the Amazon purchase of Whole Foods seems reasonable. The future does not lie in larger stores.

I also expect to see the return of specialty butcher stores and bakeries, and the increase in the number and popularity of farmers markets is evidence of that trend. In some ways, this is a return to the past. Before the rise of the supermarket, Americans bought their produce, baked goods, and meats at different places. But now, the quality and variety will be greater, and competition from everything from Amazon, to high-end grocery stores, to warehouse clubs, to big box retailers will ensure that Americans of all income levels have a variety of options to meet their own ability to tradeoff more precisely on the multiple margins of time, quality, convenience, and price.

We already live in a golden age for grocery shopping and food choices, and the future only looks more yummy.

We Can All Buy Much More With Our Earned Incomes Than Ever Before: The Myth Of American Middle Class Stagnation.

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For a quarter century now there has prevailed the myth of American middle-class economic stagnation. Specifically, this myth holds that ordinary Americans’ living standards hit a peak in the mid-1970s and have remained stagnant ever since.

As with many myths, this one rests on a superficially plausible foundation. Adjusted for inflation using the Consumer Price Index (CPI), the average real hourly wage earned by workers classified by the Bureau of Labor Statistics as “production and nonsupervisory” peaked in January 1973 and did not again hit that height until December 2018. But at the most recent reading, June 2019, this hourly wage is again below, by two cents, its January 1973 level.

On its face, this statistic does indeed seem to reveal economic stagnation for ordinary Americans.

Truthful Statistics Can Easily Mislead

But as careful critics have pointed out, this statistic (and each of the many others used to tell the stagnation myth) is seriously flawed. For example, these wage data do not include fringe benefits.

More fundamentally, these data create a statistical illusion. The average wage can remain unchanged or even fall even though each individual’s wage rises. As women and immigrants have entered the workforce in greater numbers over the past several decades, their doing so pulled down the average wage because the wages of a disproportionately large number of these workers are below the average.

It’s as if you calculate the average height of your children each January 1st and discover, when you include in this year’s calculation the height of your bouncing baby girl born on December 31st, that your children’s average height is lower than it was on January 1st of last year. You obviously don’t call the pediatrician in a panic to report that your children are shrinking. You understand that the average height is pulled down by the addition of a new, below-average-height child to the population for which the average is calculated.

Everyone is taller than they were last year (including, by the way, the newborn), yet the average height is lower. At least some of the apparent stagnation of real wages is a mere statistical illusion of this sort.

An even deeper problem with this statistic is that the CPI overstates inflation. And in overstating inflation, too much of the rise over time in nominal wages is classified as mere inflation rather than recognized as a real increase in pay.

One way to get around this problem is to use a more accurate inflation adjuster. Yet a more radical means of avoiding the problem is to do away altogether with the need to adjust for inflation.

Work-time Costs

Michael Cox and Richard Alm, in their still-relevant 1999 book, Myths of Rich & Poor, reasoned that a good measure of changes in real wages is the amount of time a person must work to earn the income necessary to buy goods and services. If the amount of work time required to earn the income necessary to buy a representative bundle of household goods and services is today the same as it was decades ago, then the stagnationist tale is true. But if the amount of work time required has fallen, then there is very good reason to doubt claims of economic stagnation.

And so Cox and Alm went to work. They, for example, divided the nominal price of a pair of jeans in 1973 by the nominal wage earned by an ordinary worker in 1973 to determine how much time that worker had to toil back then to earn enough money to buy a pair of jeans. Then making the same calculation for a pair of jeans today, Cox and Alm determined if jeans became more expensive or less expensive when measured by the amount of work time a typical worker must work in order to acquire a pair of jeans.

Doing this calculation for a number of ordinary consumer goods and services, Cox and Alm found that the typical American worker in 1999 earned real wages much higher than were earned by his or her counterpart a quarter-century earlier.

Impressed by this simple but brilliant method of measuring changes in real wages, a few years ago I purchased – using eBay – a Fall/Winter 1975 Sears catalog. (Readers who, like me, were born before the mid-1970s will remember that Sears back then was the great retailer to middle America. Its motto was “Sears has everything!” which wasn’t much of an exaggeration.) Using the nominal average hourly wage of production and nonsupervisory workers in 1975 – $4.73 – I divided the price of each of hundreds of the products offered for sale in the 1975 Sears catalog by this wage.

While I didn’t perform this calculation for all of the thousands of goods listed in the catalog, I did do so for a sample of over 400 goods. In my large sample I found only one good that costs more work time today than in 1975: men’s work boots. For all of the other goods in my sample – including, but not limited to, clothing, household appliances and furniture, recreational equipment, and auto supplies – the amount of time that a typical American worker today must work to earn enough income to buy those goods is less than in 1975, and in most cases it is much less.

Here’s a small sampling of my findings done a few years ago (which you can explore in more detail here). I have since updated these findings to 2019; the trend of falling work-time costs continues.

– In 1975 a ten-cup drip coffee maker cost the ordinary American worker almost 8 hours of work time; today it costs that worker only 45 minutes.

– In 1975 a pair of all-cotton jeans cost 1.5 hours of work time; today it costs 20 minutes.

– In 1975 a car battery cost 9 hours of work time; today it costs 3.6 hours.

– In 1975 a microwave oven cost 93 hours of work time; today a microwave oven of similar size and power costs 6 hours.

– In 1975 an automatic dishwasher cost nearly 50 hours of work time; today a dishwasher costs 12 hours.

– In 1975 an exercise bike cost 16 hours; today it costs 5 hours.

– In 1975 a low-priced standard-size electric washer-dryer combo cost 70 hours of work time; today this combo costs about half that, at 36 hours.

What’s even more revealing about browsing today the 1975 Sears catalog is what is not in it – such as, for example, a television with a remote control. there are lessons to be drawn from what that catalog from middle-class Americans’ alleged golden age does not contain.

Donald J. Boudreaux is a senior fellow with American Institute for Economic Research

It’s Not Capitalism That Makes Us Pursue Consumption, It’s Governments.

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Many critics of capitalism have given up trying to claim capitalism makes people poorer. Faced with so many obvious gains in the standard of living, and in reducing poverty worldwide, markets have won the economic debate over whether or not capitalism is the path to material riches.

But the doctrinaire anti-capitalists have other strategies. They’ve now branched out into blaming capitalism for a host of other social, ecological, and psychological ills.

Sometimes, the tactic is to blame capitalism for destroying the earth. Other times, it’s to claim that capitalism, in spite of the material plenty it delivers, makes us miserable.

For example, George Monbiot, columnist at The Guardian blames pro-capitalist ideology for making people, sad, lonely, and unhealthy. Writers cite polls claiming people in richer countries — i.e., more capitalistic ones — are more miserable than people elsewhere. Holly Baxter at The Independent suggests capitalism is the reason elderly people are now so lonely and isolated: capitalism makes us more concerned with buying things than with visiting poor, dying Aunt Ethel.

Claim: Capitalism Wants Us to Be Sad, Needy Consumers

And it’s all by design, it seems. According to Monbiot and other critics of “neoliberalism” — by which they just mean anything resembling a market system — the capitalist ideology is designed to isolate us, and turn us into soulless consumers. This then paves the way for an endless cycle of misery and consumption.

For a more academic phrasing of this idea, we could consult Ankita Singh’s article “Capitalism, Consumerism, and Popular Culture” which examines how capitalism creates a downward cycle of despair. This persistent unhappiness, Singh explains, “is caused [by] the sense of alienation one feels in today’s urban corporate culture.” Consequently, consumers attempt to “compensate” for their capitalism-caused “emptiness” by “indulg[ing] in inanimate objects offered by the consumerist culture.”

At this point, all that is left for the capitalists to do is to tell us what products to buy. And fortunately for the capitalists, Singh tells us: “The power of advertising is such that it can create a demand where none exists, of a commodity which is not needed.”1

Much of this general concept can be traced back to Marxist psychologist Erich Fromm, who in Escape from Freedom (1941) wrote:

In capitalism economic activity, success, material gains, become ends in themselves. It becomes man’s fate to contribute to the growth of the economic system, to amass capital, not for purposes of his own happiness or salvation, but as an end in itself.

That is, through capitalism and its propagandists (i.e., advertisers) human beings are reduced to “a cog in the vast economic machine” who no longer pursues his own happiness, but only serves the interests of “capitalism.”

There are a couple of problems with this theory, though.

One is that a capitalist economy does not rely on endless consumption to sustain itself. The second is that advertising doesn’t work the way many assume it does.

Capitalism Doesn’t Cause Consumerism

For starters, it is not the case that the capitalist system is built on consumption or that it requires us to mortgage our future in order to buy ever-larger amounts of consumer goods. After all, it is for a good reason that capitalism has historically been much associated with misers — the quintessential literary example being Ebenezer Scrooge — who shunned consumerism. Saving (i.e., deferred spending) is every bit as essential to capitalism as is consumption. It is governments and their central banks, not markets, that seek to maximize consumption always and everywhere.

Moreover, saving and investment are key ingredients in increasing wages, growing the capital stock, and increasing future consumption. In a market economy, many firms, such as retirement funds and banks, directly profit from more saving and investment.

Spending every last dime on another trinket or bauble is not a recipe for robust capitalism.

How Advertisers Are Supposedly Making Us Miserable

At this point, the purveyor of the capitalism-makes-you-sad theory could still insist: “sure, maybe capitalism overall doesn’t require us to relentlessly consume. But certainly there’s a portion of the capitalist system, such as toy sellers and auto makers, who need us to consume. And to get us to do so, they use advertising designed to keep us hoping we can fill that hole in our souls with just one more trip to the mall.”

There’s a (small) kernel of truth to this. Many capitalists do indeed want us to buy consumer goods, without much regard to the consequences to each consumer personally. In hopes of getting us to spend, they employ advertising. And advertising often promotes feelings of inadequacy to get us to consume more.

This particular kind of advertising was developed at least as early as the nineteenth century. It was then perfected in the 1920s.

Typical examples of the formula include:

  • Why be ugly … when you can use Zenith Cold Cream?
  • Why be fat … when you can take Acme Diet Pills?

This formula was so widespread by the 1920s and 1930s, in fact, that Sigmund Freud joked the “boldest and most successful piece of American publicity” would be an ad using the phrase “Why live if you can be buried for ten dollars?”2

Nowadays, a lot of modern advertising is more nuanced and less in-your-face than this formula. Modern advertising often appeals to humor. Nevertheless, advertisers nowadays still rely on the strategy of presenting consumption as a sort of self-improvement. They offer a glimpse of a life of better looking people, more luxurious cars, and more fulfilling friendships. It’s the life you might have if you only consume the right products and services.

But do people actually believe what advertisers tell them?

Clearly, people don’t buy everything advertisers tell them to. If they did, as Ludwig von Mises noted, candle makers could convince us to abandon light bulbs with a few ad campaigns.

Indeed, studies conducted to determine the effectiveness of ads have never been conclusive. A 1931 consumer survey revealed the “only 5 percent of the public believed any of the more obviously outrageous claims made by ads.” Only 37 percent believed any ads at all.3

A 2013 survey concluded only 21 percent of consumers agreed “ads are somewhat accurate.” 21 percent also said they will even “refuse to purchase products due to brand advertising.”

Some might claim this is only survey data, and thus questionable. But then there are countless cases in which ad campaigns failed to achieve results. A 2015 study from the University of Texas, for example, showed alcohol ads have increased 400 percent over the past forty years. Meanwhile, per capita alcohol consumption has gone down. Yes, advertising can be helpful in promoting a certain brand. But it hasn’t been shown to increase a person’s overall spending.

So, it seems people don’t spend more just because capitalists tell them to. And its unclear that many even believe what ads have to say. If this is the case, it’s hard to see how “capitalism” has succeeded in its nefarious plan to make us miserable consumers, assuaging our loneliness with another round of mindless spending.

Are We More Miserable than Our Forebears?

In spite of the unconvincing reasoning behind the capitalism-makes-you-sad narrative, many continue to find it plausible. This is largely because many people remain convinced that people were happier — or at least had an easier time — in the past.

Certainly, there’s no statistical data to support this. Those happiness measurements we sometimes read about in the popular media (such as this one) are usually based on totally subjective self-reported survey data and offer absolutely no means of comparing the present with the past. Attempts to systematically asses “happiness” in the past were virtually nonexistent.

Quality-of-life indicators reconstructed from the past (such as working hours, living space, life expectancy, and homicide rates) don’t often make the era of our grandparents or great-grandparents look especially wonderful. The nineteenth century — an era before modern methods of mass marketing and mass consumption — wasn’t an era of carefree indifference to the requirements of daily work and toil. The poverty of the “good old days” was not exactly a source of personal fulfillment and contentment.

But perhaps we need to look deeper into the past?

On this, Murray Rothbard suggests the imagined Golden Age before capitalism existed. It was, according to the myth, an era of “Happy Craftsmen and Happy Peasants” who had a “sense of belonging” and all were “sure of his station in life.” No one suspected he ought to be buying a new car or a new bedroom set. No such options were available at all.

Was living in poverty with no access to advertisements or capitalism the real key to happiness? Rothbard is skeptical and notes that people — should they really want to flee capitalism — are largely free to pursue this supposedly happier type of living in communes like the utopians or hippies of old. He concludes:

Not only has almost no one abandoned modern society to return to a happy, integrated life of fixed poverty, but those few intellectuals who did form communal Utopias of one sort or another during the nineteenth century abandoned these attempts very quickly. And perhaps the most conspicuous nonwithdrawers from society are those very critics who use our modern “alienated” mass communications to denounce modern society.

It’s comforting to think there is some time or place in which human beings were not troubled by feelings of unhappiness, emptiness, or inadequacy. It’s unclear, however, where or when this place has existed. In the meantime, few seem willing to give up their modern amenities to investigate first-hand.

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute.

 

 

  • 1.Singh calls to mind a line from the 1999 film Fight Club in which a main character declares modern workers in a capitalistic system are “slaves with white collars. Advertising has us chasing cars and clothes. Working jobs we hate so that we can buy sh-t we don’t need.”
  • 2.Ann Douglas, Terrible Honesty:Mongrel Manhattan in the 1920s (New York: The Noonday Press, 1995), p. 144.
  • 3.Ibid., p. 68.

 

Rejoice! The World Is Becoming Greener. (It’s Because Of All That CO2.)

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Amid all the talk of an imminent planetary catastrophe caused by emissions of carbon dioxide, another fact is often ignored: global greening is happening faster than climate change. The amount of vegetation growing on the earth has been increasing every year for at least 30 years. The evidence comes from the growth rate of plants and from satellite data.

In 2016, a paper was published by 32 authors from 24 institutions in eight countries that analyzed satellite data and concluded that there had been a roughly 14 percent increase in green vegetation over 30 years. The study attributed 70 percent of this increase to the extra carbon dioxide in the atmosphere. The lead author on the study, Zaichun Zhu of Beijing University, says this is equivalent to adding a new continent of green vegetation twice the size of the mainland United States.

Global greening has affected all ecosystems—from arctic tundra to coral reefs to plankton to tropical rain forests—but shows up most strongly in arid places like the Sahel region of Africa, where desertification has largely now reversed. This is because plants lose less water in the process of absorbing carbon dioxide if the concentration of carbon dioxide is higher. Ecosystems and farms will be less water-stressed at the end of this century than they are today during periods of low rainfall.

So less land is needed to feed the human population and more can be spared for wildlife instead.

There should have been no surprise about this news. Thousands of experiments have been conducted over many years in which levels of CO2 had been increased over crops or wild ecosystems and boosted their growth. The owners of commercial greenhouses usually pump CO2 into the air to speed up the growth of plants. CO2 is plant food.

This greening is good news. It means more food for insects and deer, for elephants and mice, for fish and whales. It means higher yields for farmers; indeed, the effect has probably added about $3 trillion to farm incomes over the last 30 years. So less land is needed to feed the human population and more can be spared for wildlife instead.

Yet this never gets mentioned. In their desperation to keep the fearmongering on track, the activists who make a living off the climate change scare do their best to ignore this inconvenient truth. When they cannot avoid the subject, they say that greening is a temporary phenomenon that will reverse in the latter part of this century. The evidence for this claim comes from a few models fed with extreme assumptions, so it cannot be trusted.

This biological phenomenon can also help to explain the coming and going of ice ages. It has always been a puzzle that ice ages grow gradually colder for tens of thousands of years, then suddenly warmer again in the space of a few thousand years, at which point the huge ice caps of Eurasia and North America collapse and the world enters a warmer interlude, such as the one we have been enjoying for 10,000 years.

Attempts to explain this cyclical pattern have mostly failed so far. Carbon dioxide levels track the change, but these rise after the world starts to warm and fall after the world starts to cool, so they are not the cause. Changes in the shape of the earth’s orbit play a role, with ice sheets collapsing when the northern summers are especially warm, but only some of these so-called “great summers” result in deglaciation.

Enjoy the lush greenery of the current world and enjoy the fact that green vegetation is changing faster than global average temperatures.

Recent ice cores from the Antarctic appear to have fingered the culprit at last: it’s all about plants. During ice ages, the level of carbon dioxide in the atmosphere steadily drops, because colder oceans absorb more of the gas. Eventually, it reaches such a low level—about 0.018 percent at the peak of the last ice age—that plants struggle to grow at all, especially in dry areas or at high altitudes.

As a result, gigantic dust storms blanket the entire planet, reaching even Antarctica, where the amount of dust in the ice spikes dramatically upward. These dust storms blacken the northern ice sheets, in particular, making them highly vulnerable to rapid melting when the next great summer arrives. The ice age was a horrible time to be alive even in the tropics: cold, dry, dusty, and far less plant life than today.

As Svante Arrhenius, the Swede who first measured the greenhouse effect, said:

By the influence of the increasing percentage of carbonic acid in the atmosphere, we may hope to enjoy ages with more equable and better climates.

Enjoy the lush greenery of the current world and enjoy the fact that green vegetation is changing faster than global average temperatures.

This article first appeared at Human Progress.

In Praise Of Selfishness, With A Little Criticism Of Taxation, And A Rejection Of Collectivism.

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Taxation is something that is steeped into the secular consciousness. It is rarely questioned, and to even consider questioning it is often met with a disapproving reaction, as if you are failing or betraying your society by doing so. You’re not fulfilling your civic duty, or your “social contract”, so to speak. I’ve always found this puzzling, this idea that it’s selfish to want to keep all of the fruits of my labor for myself. Or at least if I’m going to redistribute it charitably, I’m the one making the decision to do so.

On face value, this doesn’t seem like something that anyone would disapprove of, but what I have found is more people than not seem to find the idea of not paying taxes to be absurd and preposterous. An individual who wants to keep their wealth as their own is frowned upon as greedy and non-caring to the community that surrounds them, especially if they have a lot of money.

Whether it’s selfish or not itself is just a matter of perspective of being good or bad, however. Being more concerned about what you will do to eat today as opposed to your neighbor is inherently selfish, but it’s a survival instinct. Everyone by nature cares more immediately about their own well-being than all the billions of others on the planet. This isn’t to say that you don’t care about others, whether they’re friends, family members, or complete strangers, and you may even voluntarily choose to sacrifice yourself for them given the circumstances. But what it is saying is that if your own well-being weren’t of the most immediate and intimate concern, then you would have no fight or flight instinct, and no will to live and survive.

This brings us back to overall selfishness. When you live your life “for the society” first and put your own needs second, it’s ultimately toxic for you AND society. This is because one is going against their intrinsic nature. If you aren’t satisfying your own needs first, and pursuing your own happiness and liberty first, your energy and efficiency in contributing to your environment will significantly decrease, if not transform into something purely destructive.

These ideas about selfishness expand into private property and what you own. The car that you drive is more important for you than anyone else’s car, for example. Your house getting flooded will be of a higher concern for you than if another stranger’s house a mile away floods. This is just the stuff of nature. It’s why you would get angry and perhaps worse if someone just came into your room and started taking your belongings.

Of course, theft can also be considered selfish. But the conflict that occurs during theft happens because one person’s will is clashing against another person’s will. So it’s not selfishness per se that is the problem, but the way that one acts upon it. The question is whether one is being honest with themselves about their intrinsic selfishness or not, and then behaving accordingly. Pretending that it’s not there out of some twisted sense of “altruism” is unhealthy, just as using it in a distorted sense to obtain what you want to the exclusion of the will of others is also unhealthy. Free trade leads to a harmony of will, while theft leads to a clash of will.

Back to taxation.

Interestingly, one may realize that taxation is a twisted sense of altruism via obtaining what is wanted (money for public services) by clashing with the will of others. Sure, there are plenty of enthusiastic citizens out there who will gladly pay their taxes while touting, “who will pay for the roads if I don’t?”, but what is important to note is what their personal consequences will be if they don’t. They will be jailed. No contract was signed that was agreed upon that justifies those consequences. It’s just imposed on the populace through coercive force. (Also, it should be noted that privately funded roads do exist. Crazy, I know.)

Essentially, my commentary boils down to individualism vs. collectivism, which has been at center stage of the core of philosophical and political debates all through human history. Perhaps we need to revisit this age-old debate and contemplate a little deeper. I’m certainly not the first to write about it, but I’m writing about it now because collectivism, which utilizes taxation, is so casually accepted in the coarse consciousness of society at the present time, especially for those who politically lean left and consider themselves “liberal”.

Many younger Americans think collectivism is the answer to all of our current problems. Redistribute everything and spread the wealth. End inequality. Tax the rich harshly to help the poor. It sounds nice and liberal on the surface. But it falls apart when dissected. Is it really liberal to use identity politics as a means of judging people about whether they fall under your mental compartmentalization of being part of the “oppressed class” as opposed to the “capitalist class” (as if capitalism is a class at all)? Identity politics is a collectivist movement. Is it really liberal to use mob mentality and demands to pressure policies into place through harassment of lawmakers and creating spectacles, all in the name of “social justice”? Mob mentality is a collectivist mentality. Is it really liberal for a society to not want to create wealth but to rather just evenly distribute it, which will eventually halt all growth? Socialism is a collectivist movement.

The problem is that collectivism is based on an underlying illusion. For, it is the individual who exists and who strives for the pursuit of happiness and liberty, not “the society”, which is nothing more than a phantom concept. It’s a useful concept, but ultimately it’s a ghost with no literal reality to it. How can a philosophy that is based on a phantom concept be the best answer? Individuals, on the other hand, do have a tangible reality, and the liberties of individuals timelessly get eroded by the sweeping attitudes of collectivism.

Gold and silver being treated as currency is something else that has lasted all through human civilization, up until very recently, that is. Since metals are an element of the Earth, they’re not owned by any central authority. This decentralized nature is the brilliance of it. Decentralization should be the default of any legitimate currency because it keeps the power out of the hands of a small minority who create and control the distribution.

We have temporarily strayed into pure centralization and manipulation of fiat currency, as the dollar is no longer backed by anything (such as precious metals). But I see an inevitable return back to the metals being acknowledged as legitimate at some point in the near future. Why? Because the fact of history is that every fiat currency collapses at some point, and one must remember this at all times, especially at this point in our global economy; the dollar is no longer backed by anything and hyperinflation runs rampant. In the course of the remainder of my lifetime, I could very well see the dollar collapse entirely. The precious metals will then make a huge comeback; hence the inevitability. Whether this ‘near future’ is 5 years, 25 years, or 50 years isn’t relevant in the overall bigger picture. It’s the inevitability that matters.

Cryptocurrency entered this world from the cypher punks. Just as with the metals, a unique and key feature of the idea of cryptocurrency is its decentralization. The first attempt at Bitcoin was BitGold, and indeed, its being treated as digital gold is what was aimed for. Although the original intention of it as a peer-to-peer form of electronic payment that completely supersedes any need for a centralized middle man, such as a bank, has remained, I do believe there is another half of the equation.

Many of the other cryptocurrencies out there, the altcoins, have already started forms of centralization. Some use a system called “governance”, where a select chosen few represent the overall project, as well as maintain ultimate control over all funds, to the trust of everyone else. I find it unbelievable not only that this is taking place at all, but that it is ALREADY taking place in the very early stages of cryptocurrency’s development. This seems to completely defeat the point of what cryptocurrency was all about in the first place, as its very nature is meant to be trustless and without centralization.

I also believe that these movements towards “governance” have to do with a larger conspiracy. I think that it’s an overarching movement to invoke a paperless society on a global scale, so that everything can be tracked and watched on a connected grid. What was initially an extremely libertarian, anarchist idea got taken by other forces for their own benefit. This is what I believe is happening, and it is a form of selfishness that clashes with the will of others. Not surprisingly, this globalist drive towards a paperless society is a collectivist movement. There seems to be a huge pool of two different forces at work in the crypto space. Both have radically different intentions on the uses of cryptocurrency.

Taxation on precious metals and cryptocurrency is what stops them from being true contenders with the dollar, and is just yet another form of control from those who want to run the world. Instead of being acknowledged as legitimate secondary options of currency, which is what a healthy free market capitalist society would allow, taxing in the form of sales tax on precious metals and income tax on cryptocurrency is thwarting and undermining them both to the benefit of the dollar. Gold and silver are sound money, used for millennia and truly decentralized, thus having no need to be taxed. Cryptocurrencies are in high demand from consumer interest and speculation, and are their own currency due to peer-to-peer agreement and growing mass adoption. Taxation undermines these facts. The only way to legitimize a competition of currencies is to remove extortion methods imposed on the trading of these currencies.

 

This article originally appeared on Medium: https://medium.com/@cosmosaic/taxation-on-precious-metals-and-cryptocurrency-is-toxic-collectivism-ae24cf1d5267

 

Road To Serfdom

Venezuela On The Road To Serfdom: Part 2.

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Inflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.”

Ludwig von Mises, On the Manipulation of Money and Credit, p. 48

Claudio Grass continues his interview with José Niño.

Claudio Grass (CG): We have all seen the striking photos of basic necessities and groceries next to the mountains of cash needed to purchase them and the devastating effects of hyperinflation in the economy are well documented. A rise in physical gold hoarding has also been documented among the citizens. Was gold always part of the culture or did it just recently become a necessity, as the Bolívar collapsed? 

José Niño (JN):  Venezuela had a gold standard and didn’t get into the central banking game until the late 1930s. In fact, the Bolívar was one of Latin America’s most stable currencies for quite a while, up until the 1980s. Since then, it’s been devalued and it has now become worthless due to the current hyperinflation.

Gold possession has been on the rise for those in the upper middle class and higher, especially for those with international connections. We’ve also seen the emergence of cryptocurrencies like Bitcoin become somewhat popular due to the hyperinflationary crisis and Venezuela possessing a surprisingly high number of tech savvy young professionals.

However, a lot of people go straight to dollars, because of how powerful the dollar remains relative to the Bolívar and the fact that so much of the Venezuelan economy, economic crisis notwithstanding, still depends on U.S. commerce. Venezuela is effectively going through a de facto dollarization in the black market.

 

CG: Staying on the topic of gold, the gold reserves of the Venezuelan central bank have been dropping steadily, with more massive sales earlier this year despite the sanctions. Meanwhile, we saw the Bank of England block the withdrawal of Venezuela’s gold holdings, as Nicolas Maduro tried to repatriate about $550 million in gold from the bank. Given the multiple pressure points suffocating the nation’s economy, what do you think of its central bank’s capacity to provide any relief? 

JN: Monetary policy in Venezuela has been quite loose for the past three decades. The government bought a majority stake in its Central Bank during the 1970s, so it has been effectively politicized. I personally don’t see any changes coming internally. With how much Venezuela has floated into Russia’s and China’s geopolitical orbits, it’s probably going to receive certain “pragmatic” pieces of advice from these actors to reform its economy and at least give it some breathing room in the short-term. In summary, the future looks bleak for Venezuela.

 

CG: The current troubles of Venezuela and the daily struggle of its people might be distressing to watch and absolutely tragic, but it can be argued that they were largely predictable, as yet another failure of socialism. Is that a fair assessment or might it be that “this wasn’t real socialism”?

JN: Venezuela might not be as hardcore socialist as say Cuba, North Korea, and the Soviet Union, but it does feature many of the planks of the Communist Manifesto. Its controls, expropriations, and central banking policies have been utterly destructive—which are all features of oligarchical collectivist economic systems. Venezuela is definitely the current poster child of interventionist failure.

 

CG: Given the recent rise in popularity of hard-left policies and economic proposals in Europe and also in the US, from the Green New Deal to Modern Monetary Theory applications, do you think there are lessons to be learned or warnings to be heeded from Venezuela’s case?

JN: I think that the old school garrison state model of socialism largely died with the collapse of the Soviet Union. You have a few holdouts like Cuba, North Korea, and Venezuela. On the other hand, the West is mostly threatened by globalism and the managerial state. These policies include Third World mass migration, the politicization of all facets of civic society, hate speech laws, destruction of freedom of association, Big Tech thought-policing, and mass surveillance.

This kind of social engineering will obviously have central banking and bureaucracy buttressing it. These policies, in tandem with the welfare state, will gradually neuter non-state institutions like the church and the family unit, thus leaving powerful entities like politically-collected corporations and the government in a strong position to lord over our lives. Central banking will definitely be playing a role in fomenting high time preference consumption activities in the midst of all this.

But this whole process is definitively under a boiling frog approach. It’s not like the accelerationist industry expropriations we’ve seen in countries like Cuba or Venezuela. Demographics (aging population and mass migration drawn by welfare magnets) will likely collapse the U.S. and the rest of the West for that matter.

I think this process will definitely be drawn out and it’s best that we recognize the threats we face and confront them right off the bat. Failure to act in time could prove fatal in the long term.

Claudio Grass, Hünenberg See, Switzerland

www.claudiograss.ch

Freedom’s Radicals Are Wonderful Teachers Who Promote Independent Thinking, Choices and Action.

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Freedom’s Radicals are two powerful words. Individually they mean different things to different people. For example, the old saying goes that “your terrorists are my freedom fighters.” This is an irrational package deal, an egalitarian moral equivalency. It conflates humankind’s historic struggle for personal liberty with the age-old tactic of terrorism used by tyrants. Only a society mired in ignorance would give it credence, and this is our postmodern state of affairs.

Download Freedom's Radicals, part 3 of 4 in our Poetic Justice Warrior Society series.

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Combining Freedom’s Radicals into one term brings clarity. It says that personal liberty is a radical idea, but radical compared to what? Before answering that, it is important to understand the virtue of radicalism and differentiate it from its opposite vices. One definition of radical is to pursue root causes, origins and fundamentals. In other words, reason. Another definition is a thoroughgoing divergence from accepted and traditional norms. In other words, independence. So what are the opposite vices? Faith, forced subservience and mindless conformity. And what else should we expect in a society that has little understanding of great virtue and little knowledge of great depravity, and instead pays inordinate respect to politicians, entertainers and athletes?

One comparison to Freedom’s Radicals is the illiteracy, mysticism and anarchy of the Dark Ages. In the modern and postmodern eras the comparisons include the human disasters known as the French Revolution, the Bolshevik Revolution and the Cuban Revolution. They all shared the philosophy of collectivism and always begin with appeals to envy, speech codes and guilt. The French Revolution proclaimed liberty endowed by the state and the destruction of society’s institutions. The Bolshevik Revolution proclaimed justice for the working class and the destruction of society’s institutions. The Cuban Revolution proclaimed a communist utopia and the destruction of society’s institutions.

Freedom’s Radicals destroyed no institution except the subservience of the previous millennia or so. Their moral foundations were built on the idea that we own our lives, that no one is born to be ruled, that no one is born to rule others. Their philosophical foundations were built on the idea that reason is our only tool for survival and that cognitive development is essential for this. Each of them gave purpose to their lives, and in turn made it possible for untold numbers of others to live lives of meaning. And they had confidence in their ability to inspire peaceful human progress. They were individualists who believed that government’s only moral duty was to protect each person’s right to their earned aspirations and get out of the way.

This kind of radicalism is not the dominant philosophy in our postmodern world, but its foundations are strong and it is spreading at the grassroots level. The former director of the American Enterprise Institute, Arthur Brooks, is talking about the “Radical Equality of Dignity.” It is the idea that each individual can live a life of meaning and purpose through their productive work, the ultimate self-governance. This is what should unite us as Americans. In Austrian economics there is the idea of “Radical Entrepreneurship” that respects the fact that creative minds have no interest in the state’s economic equilibrium. They prefer individual action that creates disequilibrium.

Equilibrium preserves and expands the power of the state and nurtures their scandal of ignorance. After World War II, government monopoly schools replaced the teaching of virtue and cognitive development with social adjustment while ignoring the greatest terrors of the 20th century – Soviet and Chinese communism. Freedom’s Radicals create disequilibrium, innovation, value, trade and markets. The characters we honor in the Freedom’s Radicals eBook are an eclectic group of pioneers whose principles and life stories are as relevant and necessary as ever.

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