Leading the Revival of Individualism & Self Reliance

Nozick Explains Why so Many Intellectuals Are Opposed to Capitalism

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Intellectuals these days seem almost inherently opposed to capitalism. And while we may view this negative perception as a relatively new phenomenon, the intellectual revolt against the free market is really nothing new.

In 1998, the brilliant philosopher and author Robert Nozick wrote an essay entitled, Why Do Intellectuals Oppose Capitalism? In his essay, he attempts to explain why it is that intellectuals, even right-leaning intellectuals, tend to resent the free market system. And the answer might surprise many, as his argument rests heavily on our education system.

The Wordsmiths

Before Nozick can dive in and properly explain why so many intellectuals stand in opposition to capitalism, he must first define what he means when he uses the term “intellectual.” Intellectuals and academics come in many different forms, but when Nozick speaks of them, he is referring to one particular group of people.

He writes:

“By intellectuals, I do not mean all people of intelligence or of a certain level of education, but those who, in their vocation, deal with ideas as expressed in words, shaping the word flow others receive. These wordsmiths include poets, novelists, literary critics, newspaper and magazine journalists, and many professors.”

He continues:

“The opposition of wordsmith intellectuals to capitalism is a fact of social significance. They shape our ideas and images of society; they state the policy alternatives bureaucracies consider. From treatises to slogans, they give us the sentences to express ourselves. Their opposition matters, especially in a society that depends increasingly upon the explicit formulation and dissemination of information.”

The wordsmiths, as Nozick calls them, are used to being held in high esteem in society. Since they hold the keys to communication and expression, they have been looked up to and revered by society and have become accustomed to recognizing and admiring their own importance. Of course, wordsmiths are not the only form of intellectual out there. They are, however, the group most commonly opposed to capitalism.

Nozick highlights how these intellectual “wordsmiths” are different than their “numbersmith” counterparts.

“Why do the numbersmiths not develop the same attitudes as these wordsmiths? I conjecture that these quantitatively bright children, although they get good grades on the relevant examinations, do not receive the same face-to-face attention and approval from the teachers as do the verbally bright children.”

When you are dealing with a field as black and white as math, you are either right or you are wrong. But when it comes to communication, the victor is not always the individual with the soundest logic. Instead, to he who can construct the most poetic sentences or appeal to the strongest emotions goes the spoils. And many wordsmiths are used to being praised for the construct of their words, rather than the content of their ideas.

Unfortunately, our education system has reinforced the belief that being a wordsmith guarantees your value in society. And unfortunately for the intellectuals, the market does operate in this manner. To succeed in the market you must create real value for people that goes beyond your intellect. And this is something that irks the academic class.

Nozick points out:

“Intellectuals now expect to be the most highly valued people in a society, those with the most prestige and power, those with the greatest rewards. Intellectuals feel entitled to this. But, by and large, a capitalist society does not honor its intellectuals.”

Schools, Intellectuals, and Central Planning

Many intellectuals foolishly believe that their intellect has bestowed upon them an inherent value and merit that all should recognize. And in a centrally planned society, this may be true. But in a capitalist system, this is not how we operate. As Nozick says, “The wider market society, however, taught a different lesson. There the greatest rewards did not go to the verbally brightest. There the intellectual skills were not most highly valued.”

Nozick writes:

“But a capitalist society does not satisfy the principle of distribution ‘to each according to his merit or value.’ Apart from the gifts, inheritances, and gambling winnings that occur in a free society, the market distributes to those who satisfy the perceived market-expressed demands of others, and how much it so distributes depends on how much is demanded and how great the alternative supply is.”

Meeting market demand has very little to do with intellect. You do not need a degree or years of schooling to be successful in the free market, and this on its own is enough to disenchant the wordsmiths. In the market, everyone has equal access to success so long as they are willing to work for it and have an idea or product that is wanted by others.

Unfortunately, our schooling system has not taught this principle well. In the classroom, the intellectual is praised and held up as a standard of excellence by the instructors. In this centrally planned environment, the intellectual thrives and builds on his or her feeling of intellectual superiority. But on the playground or in the halls, where, like the market, spontaneous order is everpresent, the wordsmith find himself out of place and unable to control their circumstances with their intellect.

As Nozick writes:

“For distribution in a centrally planned socialist society stands to distribution in a capitalist society as distribution by the teacher stands to distribution by the schoolyard and hallway.”

He continues:

“It is not surprising that those successful by the norms of a school system should resent a society, adhering to different norms, which does not grant them the same success.”

The market doesn’t care how smart you are. It doesn’t care where you went to school or how often you were praised by your teachers and professors. Instead, the market rewards individuals based on their ability to serve consumers and meet demand.

Nozick says:

“Despite the created expectation, a capitalist society rewards people only insofar as they serve the market-expressed desires of others; it rewards in accordance with economic contribution, not in accordance with personal value.”

He later continues:

“Capitalist societies reward individual accomplishment or announce they do, and so they leave the intellectual, who considers himself most accomplished, particularly bitter.”

In short, many intellectuals, both right and left, despise capitalism because it does not play by their arbitrary rules. An “A” on a test will get you praise from a teacher, but it will not put bread on your table or make you successful in the broader world. But since so many in the academic world have instilled in students this belief that they are superior to others, it is no surprise that many lose themselves in bitterness as they see those who are intellectually beneath them achieve higher levels of success.

Nozick hits the nail on the head when he writes:

“The intellectual wants the whole society to be a school writ large, to be like the environment where he did so well and was so well appreciated.”

When Protectionism Jeopardizes the Privacy Rights of Entrepreneurs

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Protectionism just reached new heights in Chicago and it’s jeopardizing the Fourth Amendment rights of entrepreneurs. Following the rise in popularity of food trucks and at the behest of brick and mortar establishments, the city of Chicago enacted new laws that required food trucks to be at least 200 feet from any physical business.

Brick and mortar retail establishments feared having to compete with the food trucks, which is how this entire ordinance came about, to begin with. And to be sure, they should be worried. Food trucks, in addition to online retailers, have completely changed the marketplace with their non-traditional means of conducting business. It’s not uncommon for food trucks to form connections with consumers over social media platforms like Twitter. Not to mention, the “pop-up” culture has made roaming retail all the more exciting for young consumers.

But rather than change their own business models in order to create stiffer competition, Chicago retailers have chosen instead to ask the city government to create silly protectionist policies. In the case of the new “200 feet” ordinance, the city reasoned that if food trucks were forced to keep their distance, consumers might not be “lured” away by physical retailers. 

And as ridiculous as this may sound, the situation actually gets much worse.

In order to enforce this law, city officials need to know exactly where these food trucks are parked. So, in addition to mandating their location, another new ordinance requires food truck owners to allow the government to place GPS tracking devices inside the vehicles. This would help the state keep tabs on the businesses and ensure they are not parked “too close” to physical retail establishments.

Seeing this as not only a blatant act of protectionism but also as a clear violation of their privacy, food truck owners tried to fight the city ordinances in court. But unfortunately, the ordinances were upheld in the lower courts, striking a blow to entrepreneurial freedom.

The lower court held that the GPS requirement did not violate privacy since there was no “physical” intrusion by the hand of the government. It was actually argued that since private companies did the actual installing of the GPS devices, the government was not technically involved with the surveillance. But this is absolutely absurd.

Not to mention, in prior rulings, it has already been established that the government cannot skirt its responsibility by hiring third-party contractors to do their dirty work for them, like installing GPS devices.

To make matters worse, when the court made their ruling, they gave even further power to the state when it came to issuing occupational licenses. Occupational licenses are already a source of contention, as they are routinely used to keep new competitors out of a given sector. But the recent ruling actually allows the state to refuse business licenses to anyone who refuses to wave their Fourth Amendment rights by agreeing to the installment of a GPS device.

This is an extremely dangerous precedent to set. And while it may be business owners today, it could be anyone with a driver’s license tomorrow. As Ilya Shapiro says:

“Carried to its logical conclusion, such judicial indulgence would permit the government to condition issuing driver’s licenses on the installation of GPS trackers, or on standing consent to random searches of the owner’s vehicle.”

Luckily, the fight is not over yet. Cato joined with the National Food Trucks Association and the Illinois Food Truck Owners and filed a brief urging the higher court to reconsider.

If we do not have economic freedom, we do not have freedom period. It is sad that protectionism has reached such an ugly state where entrepreneurs now risk being under constant surveillance from the state.

The Blockchain is Helping to Curb Foodborne Illnesses

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Each year, roughly 48 million Americans fall ill because of foodborne illnesses. Of those who fall ill, 128,000 are hospitalized and 300 die. For most of human history, determining the source of the contamination has been extremely difficult, if not impossible. And even if tracking down the origin of contamination is possible, it is a timely process that can take weeks, in which time many people could potentially be harmed. But thanks to the blockchain technology, contaminated produce that could potentially result in widespread foodborne illness is now easier to trace and thus, easier to prevent than ever before.

By the end of January 2020, California-based produce companies wanting to do business with Walmart and Sam’s Club will be required to incorporate a blockchain-based supply chain into its standard operating procedures. These companies include giants of the produce world like Dole, Taylor Farms, and Fresh Express.

Frank Yiannas, Walmart’s vice president for food safety, said:

“We’re requiring our suppliers of fresh leafy greens to be able to trace back their product to the source, to the farms, in seconds and not days or weeks.”

It makes perfect sense for Walmart to make this move. Just last spring, Arizona-based produce manufacturers were hit hard when romaine lettuce that originated there was found to be tainted with E. coli. The contaminated lettuce impacted 205 people in 36 different states. Ultimately, it ended up claiming the lives of five people. Consumers felt almost powerless in the situation, as they realized just how hard it was to find out where their produce originated.

After a lengthy investigation, only one farm could be traced back to the spread of the illness, though experts know from experience that it is rarely just one farm implicated in contaminations of this magnitude. But without the proper apparatuses in place, it is extremely difficult to get to the bottom of these types of produce scares. It is for this reason that the tainted romaine lettuce went on to harm consumers for several months, lasting from April to July. In fact, it was the deadly produce outbreak that had struck the industry in modern times.

Yiannas continued:

“The time is now for a better way to tackle the issue of food traceability. There’s a strong public health case as well as a business case for doing so.”

In the digital age, where blockchain has made it possible to share information with the public within seconds, there is no reason for contamination on this scale to continue.

The Blockchain and Consumer Safety

For almost two years now, Walmart has been experimenting with blockchain technology to see how it could help prevent future outbreaks of foodborne illness. Big name companies like Nestle, Danone, Unilever and Driscoll’s berries have participated in these pilot programs, and almost all have a vested interest in doing so.

By incorporating blockchain, these companies have almost nothing to lose and everything to gain. Not only does this help prevent being at the forefront of a future contamination crisis, but it also shows that these brands are dedicated to using technology to ensure food excellence—something all consumers can get behind.

As described by the Los Angeles Times, the incorporation of blockchain technology would work by:

“The first block of the chain would come from growers providing information by smartphones, or in some cases via preprinted boxes and labels. Next, packers and shippers would enter information on every lot of produce they process as it passes through their facilities to trucks and enters the Walmart distribution system.

Each move is known to other parties, who must verify the activity in a system in which no one knows everything, but everyone knows every move. (That has earned blockchain the dual nicknames of the Internet of Trust and the Internet of Distrust.)”

But the industry has more to gain from this than just food safety. Blockchain will help expedite contract payments and also help supply more information to potential buyers.

Foodborne illnesses end up costing $152 billion in health care costs each year, but by utilizing blockchain’s decentralized capabilities, grocery retailers and consumers will be able to know where their food is coming from so that they may be able to avoid any harmful produce. And when an instance of contamination is detected, it can be stopped before causing widespread damage.

The fact that this type of technology can be used to ensure our food safety is just further proof of blockchain’s revolutionary implications. Even though government regulatory agencies have existed to “protect” consumers from these types of instances, the government is not by any means, a foolproof way of protecting consumers. Foodborne illnesses still spread each year in spite of the existence of these regulatory agencies. But by decentralizing information and making consumers more informed about their purchases, the market is becoming a safer place to do business.

The Individual Mind Behind the Swedish Economic Miracle

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No Statesman is yet found capable of stating positively which trade will give us the greatest National gain, and consequently the Legislator must remain irresolute as to what goal he should guide our workmen to by his laws. Who could be so stupid, someone will probably think, as not to know this?

These powerful words are from The National Gain, and its author is the parish priest Anders Chydenius. This pamphlet was published in 1765 in what is now Finland, but at the time it was part of the Swedish empire. And he wrote this before Adam Smith‘s invisible hand, Frederick Bastiat‘s The Law, and F. A. Hayek‘s knowledge problem. Chydenius was an original thinker with radical ideas, and largely unknown, in part because he wrote in Swedish.

In fact, he didn’t know English or French, so he was unaware of the Enlightenment ideas percolating through Europe. So even as a country parson, he is a giant among Enlightenment philosophers, and a self-taught economist in his own right. He visualized a future of natural rights and free markets for the least powerful citizens. He is a man of concrete principles, and a distinguished Poetic Justice Warrior.

Freedom of the Press and Economic Freedom

Anders Chydenius was born into a brief period of time in Nordic history known as the Age of Liberty. It began with the death of King Charles XII in 1718, and the creation of a parliamentary system. But even then, peasant farmers had no property rights, and Sweden was one of the poorest countries in all of Europe. Because of a mercantilist guild system, farmers were required to produce and sell according to the whims of economic central planners. As Chydenius explains in The National Gain:

Man thrives when he enjoys his needs and comforts, which, according to our ordinary way of speaking, are called goods. Nature produces them, but they can never be of use to us without labour.

Chydenius’ goal was to fight for the right of peasant farmers to sell their produce as they saw fit, meaning freedom of labor and property. In order to realize his free market principles in a pragmatic way, he entered politics. In 1765 Chydenius was elected to the Swedish parliament.

And he knew, that to accomplish this amazing feat of economic freedom, all citizens needed to gain political freedom. Because of his leadership, Sweden became the first country in the world to add freedom of the press to its constitution. This was 25 years before America’s Bill of Rights. But as the political hierarchy would have it, Chydenius was forced out of parliament in 1766 for his principled criticism of government monetary policy.

Natural Rights, Freedom of Religion, Immigration, and Identity Groups

In the realm of economics, Anders Chydenius was a firm proponent of peasants being able to choose for themselves how to specialize and what to produce. Even more outrageous, he advocated for employers and employees to be able to negotiate the price of labor among themselves, a man of reason against stupid minimum wage laws. After parliament was dissolved in 1772, Chydenius was recalled to government to assist the king with civil liberties and economic freedom for the king’s new program of Enlightened despotism.

During this time Chydenius also fought for freedom of religion and immigration. He liberalized migration to Sweden by Jews and Catholics, and loosened restrictions on their ability to practice their religion. As an example of the value Chydenius held for each human life, he wrote in his 1778 essay, Thoughts Upon the Natural Rights of Servants and Peasants:

Nature shapes them exactly like us. Their posture in the crib is the same as ours, their souls have the same reason as other peoples’, whereby it is plain to see that the Lord of creation also had intended them to have equal rights with other people.

And he had a similar understanding of modern day identity politics, this from his 1777 essay In Rural Trade:

Petty princes busy themselves with dabbling in matters they do not understand in order to satisfy their own or someone else’s prejudices, or in blindly following some minister’s advice. They gather together a great many of their subjects in separate flocks and bestow favors on them at the cost of the others, and these favors they elevate into fixed privileges.

And Chydenius was willing to fight for small victories. The solution to special interest groups, as proposed by Chydenius to the Swedish parliament for the poor province of Lapland to gain prosperity, reads as follows:

Free state, private ownership and individual freedom. Inhabitants could choose whatever profession, freedom of trade would be complete, there would be no privileges, regulation or taxes. Bureaucracy would be nonexistent, and the only officer would be a judge who would oversee that no-one’s rights would be suppressed.

Poetic Justice Served

When King Gustav reverted to autocratic rule, Chydenius returned to private life. As a peaceful and patient man of reason, Chydenius was also a scientist, inventor, and founder of an orchestra. He inoculated peasant farmers against smallpox, performed cataract eye surgery, and experimented with new breeds of animals and plants. When he died in 1803, at the age of 73, almost none of his economic reforms had taken hold, and Swedes continued to emigrate to other parts of Europe and America to escape regulation and poverty. As Chydenius had observed in his essay, What Are The Reasons for Emigration From Sweden?

Workers yearn for freedom. They would rather settle among people whose speech they do not understand but among whom they may move and act freely, and in their decision one reads this motto: a homeland without freedom and the chance for improvement is a great word with little meaning.

As Poetic Justice would have it, the very poor Swedes were very literate – 75% of Swedes could read and write, and in 1840 a non-violent revolution for classical liberalism began. Anders Chydenius’ common sense radicalism fueled a century of free markets, innovation and prosperity. So much so that by 1950 Sweden was one the wealthiest societies in the world. Infant mortality fell 85%, GDP per capita increased seven fold, and life expectancy increased by 26 years because Sweden had the lowest regulatory and tax burden in the developed western world. This had unleashed the power of the individual as our greatest natural resource, as Chydenius insisted it would.

The Road from Serfdom

The catalyst for the widespread adoption of Chydenius’ recipes for economic and political freedom was a newspaper – Aftonbladet, and its publisher, Lars Johan Hierta. Eventually the Swedish government had to back off its resistance against reform, and in 1848 King Oscar I appointed the entrepreneur and free trade advocate Johan August Gripenstedt to be his Finance Minister. Perhaps historian Charles Evans describes Chydenius’ economic philosophy best:

Peasants left to their own devices could run the economic activity of the nation better the nation’s best and brightest in positions of authority.

The printing press was the megaphone, Chydenius was the voice, and the political power of kings was replaced with the economic power of peasants turned entrepreneurs. Anders Chydenius was the Poetic Justice Warrior that inspired generations of new ones, and it is they who engineered the Swedish economic miracle. They are the individualists at the core of western civilization’s ideals. To learn more, please visit www.centerforindividualism.org/pjw.

 

 

 

How The Brookings Institute Is Politicizing Gross Domestic Product To Undermine Liberty.

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According to Mark Muro and Jacob Whiton of the Brookings Institution, the recent midterm elections “reaffirmed that America’s stark and massive economic divides—which align with and inform cultural fractures—are alive and well.” For evidence of this economic divide, they partnered with CNBC and used a study they conducted after the 2016 presidential election. The purpose was to survey the counties that Hillary Clinton won versus the counties that Donald Trump won. Obviously Clinton won very few counties, less than 500, but according to the research, those counties produced 64% of the total economic output. Trump won over 2600 counties which accounted for 34% of total economic output. The measure used for total output is Gross Domestic Product (GDP).

The GDP Fallacy

In the first place, Gross Domestic Product as a measure of total economic output is terribly flawed. The fact is that GDP only measures total consumption, meaning it ignores all of the economic activity that is necessary for consumption to occur in the first place. A good analogy would be that GDP is like the bottom line profit on a Statement of Income and Expense. The top line of the Income Statement, total revenue, is best represented by another measure of economic activity, Gross Output (GO). The gross output measure includes all of the supply chain economic activity that is necessary before finished product is available for final purchase.

Essentially, GO focuses on producers and GDP focuses on consumers. And it is consumers that government economic central planners, including Brookings, pander to. So it is no coincidence that they prefer GDP, which tells us that consumer spending is 70% of all economic activity. Conversely, GO tells us that consumer spending is 30% of economic activity, and for that reason it is ignored by the authoritarian intelligentsia.

Another fallacy about GDP is that it is the sum of three primary inputs – consumer, business, and government spending. So even though private sector economic activity always suffers when government spending increases, GDP can be used to mask the deleterious effects of government fiscal policy. But even more insidious is that GDP dismisses the foundational element of all economic structures, the role of the producer, the supply side. As Hunter Hastings has taught us, consumers are the demand side of economics, and government sponsored economic theory is strictly focused on goosing aggregate demand while denigrating the only side that matters, the supply side.

High Output America and Low Output America

According to the Brookings analysis, with the help of another reliable ally, the New York Times:

The sharp political divide that surfaced in 2016 between the densest, most productive and future-oriented portions of the economy and the rest of it—between what Jim Tankersley of the New York Times has called “high-output” and “low-output” America—remains a revealing, disconcerting fact of modern economic and political life.

Their point is that the Congressional districts won by Republicans in the 2018 midterms are low-output communities, and the districts won by Democrats are high-output. The data in the article says that Democratic districts (the elites) were 61% of national GDP, their GDP per worker was 25% higher, and they had a higher percentage of college degreed and technology workers. Republican districts (the deplorables) only had a higher percentage of non-advanced manufacturing jobs.

The implications of this are insidious, and the conclusions are insane: “as economic growth is concentrating in thriving urban and suburban communities, Republicans rooted in non-urban places remote from those future-leaning ecosystems continue to wield disproportionate power in Washington.” While it is true that population centers naturally enhance collaboration, and therefore innovation and wealth creation, the article totally ignores the obvious. Besides GDP being a horribly flawed yardstick, these so-called high output regions also have high budget deficits, massive debt, corrupt politics, and large populations living in despair.

False Premises and Their Contradictions

For example California, the poster child for innovation and wealth creation, is now the most heavily taxed, regulated, and poverty stricken state in America. It can be easily be compared to a feudal manor – gated communities surrounded by a much greater number of people engaged in subsistence living due to a very high cost of living. And those are the lucky ones; it’s much worse than that in certain parts of San Francisco and Los Angeles.

What Brookings is telling us is that people with a Bachelors degree are naturally more well informed and productive. This is a false premise that is easily refuted. For example, most bachelors degrees are worthless, except for creating massive student debt and short-sighted, resentful social justice warriors. Yet they have the gall to tell us that the denizens of these urban areas are more future oriented. But what kind of future? One of unsustainable debt, authoritarian government, and a nihilistic postmodern philosophy of identity group victimhood?

Brookings is also telling us that the lower cost of living, lower wage economies are holding back their omniscient wealth producers because of an antiquated political structure known as American style federalism, especially the Electoral College and the distribution of US Senators.

The two parties even more this fall represent “what America has been and what it is becoming”—and they are at a standoff. Going forward, the question is whether a nation that fails to support the needs of its core, high-value economy can truly thrive.

This is akin to the language of the Bolshevik Revolution: the bourgeoisie was to be sacrificed for the visionaries of the new Communist party. But instead of violent revolution, their weapon is GDP backed by academic elitism and contradictions.

The Economic Way

In reality, there is a large swath of America that understands that the best government is local government. The larger the number of viable political entities there are, and the more they compete with each other to attract producers, the more peace and prosperity there will be for everyone to thrive. It doesn’t take a worthless bachelors degree to understand this. And while technological innovation is collaborative and wealth producing, how can it be life-fulfilling if your senior management team has sold out to authoritarianism?

What Brookings is advocating, under the guise of a statistical survey based on faulty assumptions, is that the US Constitution must be erased and replaced with an even stronger and more centralized system to give more political power to their cherished “high-output” population centers. The false premise is that political power, not economic freedom, is the source of wealth. To Brookings discredit, the wealth created over the last two years because of deregulation and tax cuts led to a larger percentage (34% in 2018 vs. 31% in 2016) of their “economic output” voting to continue on the Road to Liberty.

 

 

 

 

 

 

 

This Central Banker Is Certain That All Other Central Bankers Are Deluded, Dangerous, And Wrong.

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Central Bankers know less than they think they do, and their ignorance imposes huge costs on the rest of us. Their economic theories offer little meaningful guidance for how to sustain growth and they actively undermine financial stability.

Says who? Claudio Borio, who heads the economic-research department at the Bank for International Settlements. The BIS is an informational clearinghouse for the world’s central banks, in possession of more data and more analytics than any other single Central Bank. Since Mr. Borio is not tied to any nation, political viewpoint or policy dogma, he can be a producer of objective and practical insights – giving him a distinct advantage over all the academic economists who work, directly or indirectly, for nation-based Central Banks.

What does he think of the standard of knowledge at all the Central Banks, universities and think tanks. They are, he says, “all struggling!” In other words, they don’t know much.

Here’s what mainstream monetary economists think they know: Inflation, employment and economic growth change in relation to each other in predictable ways. As unemployment falls, inflation rises. Deflation – which the Central Bankers have defined as a “bad thing”, since they seek 2% inflation every year – is a result of economic slack.

Central Banks can’t tolerate deflation because, in their minds, it signifies slower-than-natural growth in which too few people have jobs. When it occurs Central Banks have only one simple tool at their disposal: to provide limited jolts by tweaking short-term interest rates. Mr. Borio describe this thinking as “very, very simple”.

Economists need to go back to the drawing board, says Mr. Borio. The financial system is much more complicated than Central Bankers can appreciate, and much less amenable than they think when using their simplistic models and tools. “One needs to examine how resources are allocated across different sectors in ways that may not be optimal.” It’s very different from the simple-minded orthodox view that a rising tide of new money lifts all boats.

First, they need to realize that deflation is a good thing- it typically brings lower prices to both consumers and producers, and it is associated with economic growth.

“The main drivers of deflation at the moment are good forces,” Mr. Borio says. “They improve the capacity of the economy to produce and boost growth. Think of it as a benign increase in supply.”

In a 2015 paper Mr. Borio and colleagues examined 140 years of data from 38 countries and concluded that consumer-price deflation frequently coincides with healthy economic growth. If he’s right, central banks have spent years fighting disinflation or deflation when they shouldn’t have, and in the process they’ve endangered the economy more than they realize.

“By keeping interest rates very, very, very low,” he warns, “you are contributing to the buildup of risks in the financial system through excessive credit growth, through excessive increases in asset prices, that at some point have to correct themselves. So what you have is a financial boom that necessarily at some point will turn into a bust because things have to adjust.”

By slashing rates in pursuit of that hard-to-attain inflation target, Central Bankers create imbalances in the financial system that lead to crises like the one in 2008. They actually know this, but they’re just strangely unconcerned about it. They believe that Central Banks must set ultralow short-term rates to support economic growth—and if that destabilizes the financial system, it’s the will of the economic gods. In this way, they unleash financial crises deliberately. (Emphasis added.)

Central Bankers were able to observe the effects of their delusion in the global crash of 2008. Central Bankers, says Mr. Borio, actively create macroeconomic instability and financial market instability inevitably follows.

Mr. Borio, in contrast, can explain exactly where dangerous financial imbalances come from: the incentives policy makers  create for bad decisions on Main Street about borrowing and investment. The misallocation of resources during the booms requires a prolonged and miserable process of reallocation during and after a recession.

“You know, in many of these models, how do they explain the Great Financial Crisis? They explain it as a meteorite coming from nowhere—it’s an exogenous shock, it’s productivity that all of a sudden for some unexplained reason collapsed, or people all of a sudden decided to save more, but without an explanation. I say ‘shocks’ are a measure of our ignorance, not a measure of our knowledge.”

“95% of the time Central Bankers carry out their policy as if these factors didn’t matter, and then when they see that the economy is running red hot and they see obvious signs of financial imbalances, they start moving.”

Mr. Borio’s work amounts to an argument that Central Bankers and monetary economists need to acknowledge how little they know about the economies they seek to manage, and how weak their models are. They need to become more modest, and appreciate the limitations of the current simplistic theories and the need to rethink them.

Based on The Weekend Interview that appeared in the November 17, 2018, print edition of the Wall Street Journal. Illustration by Ken Fallin.

Jury Nullification Empowers the Individual Instead of Arbitrary Laws

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When Javonnie Mondrea McCoy stood before the jury in Laurens County, Georgia, and admitted to growing marijuana in his home, the last thing the prosecution expected was a verdict of “not guilty.” But it was precisely his willingness to be so forthcoming that ultimately left the jury unwilling to sentence him to spend years behind bars. And thanks to the practice of jury nullification, McCoy is now a free man.

On paper, McCoy’s situation appeared to be a fairly open-and-shut case. He was a black man found in possession of marijuana in the South. And like so many cases that came before him, the odds of his trial ending with incarceration were high. But instead of sentencing McCoy to rot in a cage, the jury chose to take his individual circumstances into account.

“Yep, it was mine,” McCoy told the jury, “I use it as medicine.” Years earlier, he had been the victim of a brutal attack, which left him with painful chronic injuries. Well aware of our current opiate crisis inflicting the nation, he chose to medicate with cannabis rather than seek more extensive treatment. And it was this decision to grow his own plant that led to his arrest.  

The police charged McCoy with the manufacture of marijuana and of possession of drug-related objects, both felonies in the state of Georgia. But upon hearing McCoy’s testimony it became clear to the jury that his cultivation of marijuana was not for the purpose of selling it to others. Instead, McCoy grew the plant solely for his own use. And without any substantial evidence that he was a threat to society, the jurors could not, in good conscience, convict him of wrongdoing.

Juror Lizzie Mae Davis commented, “He was believable. He wasn’t trying to make money. He had it to ease his health.” Juror Kenneth Thompson further added, “a lot of us said he wasn’t bothering anybody.” And even though the law made McCoy’s actions illegal by proxy, the juror’s refusal to convict him— a practice most commonly known as jury nullification.

The Power of The Juror

When McCoy’s attorney, Catherine Bernard, first addressed the jury, she reminded them of the wonderful opportunity they had before them in deciding this case. As members of the jury, they play a very important role in our legal system, one that Bernard calls a “powerful and awesome position.”

And while Bernard does not particularly care for the term “Jury Nullification,” she was, more or less, encouraging the jury to exercise this very right. Jury Nullification is a constitutional right and allows jurors to “nullify” a government law if they believe it to be unjust. While it is protected under the United States Constitution, it is also explicitly protected under Georgia law as well. Under Article 1, Section 1, Paragraph XI of Georgia State Constitution, it reads, “the jury shall be the judges of the law and the facts.” However, when Bernard read this aloud to the jury prior to McCoy’s trial, the judge cut her off and tried to say she was misinterpreting the law. But Bernard, who is the Georgia contact for the Fully Informed Jury Association, continued to empower the jury anyway.

At the heart of jury nullification rests the belief that individuals and their unique circumstances should be taken into account before one is sentenced under an arbitrary or unjust law. As Bernard told Reason, “It’s very important to focus on the individual circumstances, to emphasize the defendant’s role in the community.” She likes to do this by asking the jurors to question the laws and ask themselves if they reflect their personal values and the values of the community.

And the overwhelming response from the juries was that McCoy was not harming anyone and therefore, it was the law that was in the wrong, not the defendant.

McCoy commented that:

“We had a jury you could relate to. Truck drivers, mechanics, construction. People who worked. They saw I wasn’t bothering nobody. That’s what I believe they felt.”

And while McCoy was fortunate to have a jury willing to judge him on his own individual merits, this is not the first time Bernard has used this strategy to help bring justice to her client. Last year, Antonio Willis, was caught selling a few marijuana joints after being tricked by an undercover cop. In both Willis’ and McCoy’s respective cases, Bernard asked the jury to remember that each person on trial was a just like them, fallible but generally good people who are just trying to get by like everyone else. And by asking the jury to view her defendants as individuals rather than simply dismissing them as criminals, Bernard was able to spare two souls from having to spend time behind bars.

tuttle twins books

The Entrepeneur Who Is Teaching Today’s Children And Parents The Economic Way.

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In the animal kingdom, there are predators and there are prey. Predators are highly adapted with keen senses, strength and speed. Prey are highly adapted for survival and are masters of their environment. In many cases predators are carnivores and prey are herbivores. In both cases, their survival instincts are highly developed and specialized.

For human beings however, instincts are not enough, the environment is too harsh. Survival requires our capacity for reason. We can either transform nature and acquire property to enhance our quality of life, or we can use force to enhance our quality of life by looting the property of others. How we use our capacity for reason defines us as predators or prey. Murray Rothbard explains the difference in his essay The Anatomy of the State, and the difference between the two is stark. At the Center for Individualism, we call it the economic way vs. the political way, or more simply, persuasion vs. coercion. This could be the most important lesson we teach our children about personal responsibility and ethics.

The Economic Way and the Political Way

In our postmodern world, the economic way is largely ignored in public schools. Thanks to Connor Boyack’s Association for Teaching Kids Economics, Rothbard’s essay has been transformed into an age appropriate (6 -10 year old children) illustrated story book called Fate of the Future. And it is but one of many classics of western civilization that have been translated for parent/child and teacher/student engagement. In Boyack’s The Tuttle Twins series of children’s books, examples include Leonard Read’s classic essay I, Pencil; Frederick Bastiat’s compilation of essays The Law, Ayn Rand’s prophetic novel Atlas Shrugged, and Henry Hazlitt’s Economics in One Lesson, all distilled to their essence.

And this is where the story begins. Not only is a massive hole in today’s public education curriculum being filled, the parents of these children are being introduced to ideas that were denied to them a generation or two earlier. And this is inspiring parents to read the original classics they had never heard of.

Like all successful entrepreneurs, Boyack has uncovered a need and created a new market. In this case, he is peeling away decades of educational propaganda from our government monopoly schools who teach the political way. The beauty of Boyack’s new way of teaching the economic way is in its simplicity. It’s family to family, and it’s not threatening like heavy books can be. Not only is Boyack creating a sense of wonder in the children who read his books, he is reaching a new audience in an older generation. He’s offering an optimistic vision for children and their parents of a future that they can create for themselves.

The Father, the Educator, The Activist, The Entrepreneur

Not only did Connor Boyack take personal responsibility for filling a public curriculum gap, he also founded a public policy network in his home state of Utah. The Libertas Institute’s mission is to defend self-reliance, industry, and freedom. He describes it as a do-tank instead of a think-tank, and it has had a great deal of legislative success. This is perfectly aligned with the latest installment in his The Tuttle Twins book series – The Spectacular Show Business. The goal of this book is to teach children the essential elements of what entrepreneurs do and how they think.

This illustrated book teaches children how to look for opportunities, solve problems, and inspire their creativity. In other words, get them to think about their sense of life as unique individuals. The method used by Boyack is known as Effectuation Theory. Because his audience is 6 – 10 year old children who don’t have a broad collection of life experiences and business associates, the idea is to have them think introspectively. Who am I? What do I know? Who do I know? What can I do? What resources do I have? What can I contribute? What is my plan?

How many of us have ever been asked those questions? By teaching values to children, Boyack is nudging them to bring out their talents, offer value to others, and find their creative talents to serve those needs. And it should begin at this age. After all, the economic way is the cornerstone of civilization.

Paying it Forward

Our first Poetic Justice Warrior, the entrepreneur and economist Jean-Baptiste Say, applied reason to reality and proved to the world that it is producers who create markets, consumers, and prosperity. He invented the term entrepreneur. Our second PJW, the entrepreneur and watchmaker John Harrison, solved longitude for the benefit of humanity. By applying modern technology where traditional methods had failed, he invented the maritime clock industry. Our third PJW is the entrepreneur and inventor Nikola Tesla; he took ownership of the future by harnessing the electro-magnetic power of the universe to meet daily human needs, and he invented the wireless electronic communication industry.

Now we celebrate the entrepreneur and dedicated father, Connor Boyack. He saw that the interests of postmodern statists are not aligned with the interests of individuals who are pursuing the ideals of western civilization. His series of children’s books are designed to help each child answer the ultimate questions regarding their relationships with each other, and their relationship with society at large. Boyack is not inventing an industry as much as he is reclaiming childhood education for parents. And this is badly needed. He’s doing it by leveraging the wonders of technology made possible by Tesla, projecting Harrison’s singular purpose against the prevailing wisdom of the state, and reinforcing the doctrine of Say’s Law for human flourishing. God help those who are dissuaded from developing active minds and choose to identify as Social Justice Warriors.

As a 21st century Poetic Justice Warrior, Boyack is teaching children how to identify the predators, avoid becoming prey, and solve the ultimate problem posed by Rothbard – how do we persuade for legitimate government and roll back our coercive state? It’s the Fate of The Future. To learn more about the distinction, please feel free to take our short Poetic Justice Warrior quiz and be sent the analysis of your results.

Economics For Individuals:Four Great Opportunities for Ambitious Teen Entrepreneurs

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Entrepreneurship isn’t just for adults. In fact, for young people, there is nothing more empowering than the ability to buy things for yourself. In many ways, earning money is a rite of passage and gives you hope that you will be fully capable of providing for yourself in the future.

And while many teens find independence through traditional entry-level jobs, like working at fast food restaurants or retail establishments, there are many opportunities for young people to become entrepreneurs even at a young age.

Babysitting

Babysitting is one of the greatest ways for teens to earn money. It is also a great introduction to the world of entrepreneurship. While prices differ from region to region, running your own babysitting business allows you to work with parents to set an hourly wage that is agreeable to both parties. This is a great lesson in starting your own business. Negotiating payment can often be an uncomfortable aspect of entrepreneurship, but allowing teens to practice this skill while they are young will help prepare them for the business world when they are older.

According to ZipRecruiter, today’s teen babysitters earn an average of $18 per hour, well above the national minimum wage. From personal experience, starting my own babysitting business was my introduction into to entrepreneurship and allowed me to gain a sense of financial independence while only 13-years-old

Landscaping

Landscaping used to be one of the most sought-after summer jobs for American teens. In fact, the plot in the classic 1980s film Can’t Buy Me Love focused on a nerdy boy who was able to buy his way to popularity because he earned so much money mowing lawns. And while this used to be a staple of American summers, now only 40 percent of teens actually take summer jobs. But if you are looking for some extra cash and are good with a lawn mower or weed wacker, landscaping may be the perfect job for you.

While not all teens will achieve this type of success, High school students RJ Duarte and Owen Johnson run a landscaping business in Colorado called, Green Worx. The company was able to make over $100,000 in one year, not a bad gig for two 17-year-olds. And since Colorado’s climate only really requires lawn maintenance in the summertime, the two boys decided to add snow removal to the list of services it provides.

The teens have been so successful, they have been able to expand their business and hire other classmates as well, creating job opportunities for even more people. Teens starting their own landscaping business may not all be able to make this much money, but landscaping still provides great opportunities for able-bodied teens.

Tutoring

Tutoring may not be for everyone, after all, it does require that you possess a certain level of expertise in a certain area. However, starting your own tutoring business is a great idea for teens who are academically advanced and are looking to earn extra money. While the pay rate for tutoring differs depending on the subject, it is estimated that teens can earn anywhere from $10-$15 per hour. According to one site, math tends to be in higher demand and can bring in more money than a subject like English.

For teens who get into this business early, the more years they spend tutoring other the more they can eventually charge. If, for example, you start tutoring at 16, in a year or two you can raise your prices after you gain more experience. This allows your business to grow with you. This could also be a useful job to have when you start college and are looking for a source of additional income.

Pet Care

Taking care of pets may not be the ideal job for everyone, but teens who are interested in animals may find pet sitting and dog walking to be an excellent source of income. According to Jobs for Teens HQ, teens can make $5-$10 per day, per dog. This can quickly add up, though keep in mind, walking dogs requires a certain amount of stamina and patience.

If walking dogs isn’t your thing, but you love pets, teens might also find that they can make a decent amount of money pet sitting. It is estimated that teens who start their own pet sitting can earn an average of $15-$20 per day, per client. And in most cases, this type of business allows teens the flexibility they need to attend school and tend to the pets.

But if you find pets to be too much of a commitment, there is also a market for plant sitting, though it will not earn you the same amount of money.

Is Income Inequality A Myth? It Sure Looks Like It To Robert Samuelson.

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It’s an important act of individualism to challenge the conventional narratives the establishment feeds us in order to convince us that their policies are right and their preferences should prevail. Income inequality is a cudgel they use to beat us. No matter how hard we work, no matter how dedicated and ingenious we are in devising new and better ways to serve others in economic exchange, we must give up the value we create to government so that they can redistribute it. Why? Because we are morally bankrupt. What’s the evidence? We have failed to achieve equality, which is the ultimate moral purpose of economic activity. But what if the evidence is wrong, or worse still, mis-reported?

We aren’t stagnating, after all.

Unless you’ve been hibernating in the Himalayas, you must know of the recent surge in economic inequality. It’s not just that the rich are getting richer. The rest of us — say politicians, pundits and scholars — are stagnating. The top 1% have grabbed most income gains, while average Americans are stuck in the mud.

Well, it’s not so. That’s the message — perhaps unintended — from the Congressional Budget Office, which reports periodically on the distribution and growth of the nation’s income. It recently found that most Americans had experienced clear-cut income gains since the early 1980s.

CBO Findings On Income Inequality

This conclusion is exceptionally important, because the CBO study is arguably the most comprehensive tabulation of Americans’ incomes.

Most studies of incomes have glaring omissions. Some only examine before-tax income; others, after-tax. Many don’t include some government benefits — for example, food stamps, Medicare or Medicaid (health programs for the elderly and poor). Others exclude employer-paid health insurance, which is a big item. The CBO study covers all these areas.

It confirms that the rich have catapulted ahead of most Americans, including many with six-figure incomes. The richest 1% of U.S. households had average pretax incomes of $1.855 million in 2015. The growth has been astonishing. From 1979 to 2015, pre-tax incomes of the top 1% jumped 233%. That’s more than a tripling. (All figures are corrected for inflation.)

But it’s not true that no one else had gains. If the bottom 99% experienced stagnation, their 2015 incomes would be close to those of 1979, the study’s first year. This is what most people apparently believe.

Is Income Inequality Growing?

The study found otherwise. The poorest fifth of Americans (a fifth is known as a “quintile”) enjoyed a roughly 80% post-tax income increase since 1979. The richest quintile — those just below the top 1% — had a similar gain of nearly 80%. The middle three quintiles achieved less, about a 50% rise in post-tax incomes.

These seem small, but over four decades, they’re meaningful. It’s doubtful that most Americans would prefer to revert to the world as it was in 1979 — a world without smartphones, the Internet, most cable television or laparoscopic surgery.

Why then the belief in stagnation?

One plausible theory is that the gains in any one year are so small that most people don’t recognize them. Instead, they feel they’re marching in place. The demands on their income — for housing, food, college tuition, vacations and much else — swamp tiny gains.

Economic Stagnation?

Certainly, what’s occurring today is less impressive than the great gains of the 1950s and 1960s, when there was a floodtide of new technologies and products: television, modern appliances (washers, driers), jet travel, air-conditioners and antibiotics, to name a few.Some economists legitimize the stagnation thesis by selective studies and their use of language. For example, former Treasury Secretary Larry Summers has used the term “secular stagnation” — which was coined in the late 1930s — to describe today’s economy.

Glance at the table below. It shows that modest income gains were widespread.

For the period 2000 to 2015, it gives the average gain in after-tax and after-transfers (government benefits) income for each quintile, from poorest to richest. The year 2000 was chosen as the base to dispel any notion that income gains occurred in the 1980s or ’90s. Interestingly, the relative gain for the poorest quintile was about twice the increase of other quintiles (again: a quintile represents a fifth of the population).

Reality of Income Inequality

Although higher incomes could — in theory — reflect generous tax cuts, that doesn’t appear to be the case. In 2015, the richest 1% paid an average federal tax rate of 33%, close to the 1979 rate of 35%.

With income inequality rising, it’s not surprising that richer groups have actually provided an increasing share of federal tax revenues. In 2015, the richest quintile of Americans paid 69.5% of revenues, up from 55.1% in 1979. The share of the top 1% (included in the richest quintile) went from 14.1% in 1979 to 26.2% in 2015.

(Note: Because President Trump’s tax bill wasn’t passed until 2017, the CBO study doesn’t include its effect. Neither does this column. Still, it would cut taxes for wealthier Americans.)

All the numbers seem complex and confusing. Piercing the statistical fog is essential to anchor our debates in reality and not in journalistic or political mythology. It may seem that, except for the fortunate few, hardly anyone is getting ahead. That’s convenient rhetoric, but it just ain’t so.

This article was published in Investors Business Daily on 11-19-18. Robert J Samuelson writes about business and economic issues for the Washington Post.

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