Leading the Revival of Individualism & Self Reliance

Economics Everywhere, Politics Nowhere: Switzerland’s Six Pointers Towards Hope For Western Civilization.

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Is there any hope in the Western World that individual citizens can win some release from the relentless and imprisoning growth of government? In the US, government spending, a reasonable proxy for their power over us, increases every year, except for a few minor blips. The citizens’ situation becomes more and more dire. We have precious little say and little influence over our taxes, our health care, our energy and water supplies and costs, not to mention the social rules with which the government constrains us. The number of rules and regulations, using the proxy of pages in the Federal Register, also increases every year, and very few rules are removed. The government closes in on us more and more every day.

There is one western country that we might look at to see a glimpse of hope. That country is Switzerland. In a small landlocked country with precious little in the way of natural resources except water, the people have created a high level of prosperity based on innovation and creative capitalism.

100% Economics, Zero % Politics.

Prior to its 1848 constitution, Switzerland was a confederation of states, each of which was sovereign and independent, bound together by a treaty of mutual defense from external aggression. As a country, it was the most economically developed in Europe. It was religiously and ethnically diverse, highly innovative and highly productive. Huguenots expelled from France in religious wars started the Swiss watch industry, and German protestants escaping Catholic oppression founded major industrial companies. There was a focus on knowledge and education to compensate for the lack of natural resources, and the Swiss were globally networked and energetic traders.

“Economics was everywhere and politics nowhere” was a phrase used to describe this productive, energetic, innovative, decentralized trading nation in the mid nineteenth century. What a wonderful picture of economic freedom unencumbered by political extraction is conjured up by that description.

Switzerland has been able to retain some of these characteristics despite the predations of the twentieth century. It stayed on a gold standard until 1999, and resisted internationalization until it joined the UN in 2002. In fact, internationalization is what has eroded Switzerland’s uniqueness as a nation. The influx of internationally-oriented MBA’s and the McKinsey mafia is dragging Switzerland down towards the lowest common denominator of statism and interventionism. The EU aims to get Switzerland to sign a bilateral agreement which will inevitably lead to Brussels gradually imposing its multicultural socialism, just as it did on the UK.

Nevertheless, Switzerland has at least six structural advantages which will keep it ahead of its mediocre peers for a while longer.

1) Decentralization.

Switzerland remains a confederation of 26 cantons. Its more centralized than prior to 1848, but the functions of the central government are limited. There’s a national constitution, a national military and security force, a single currency and a central bank, and a national foreign policy. But the people have been able to keep the powers of the central government enchained to a greater extent than in the US. James Madison promised, but his Constitution was unable to deliver. The Swiss have done better.

2)   Subsidiarity

Subsidiarity is the principle of resolving all problems and issues at the lowest level. Most taxes are imposed at the municipal and canton level. The federal take is limited to about 20% of total tax payments. This starves the central government beast. Citizens are more engaged around their local governments and their taxing and spending decisions. And they can vote with their feet, moving to another town or canton if they feel it will improve their circumstances.

3)   Direct Democracy

In Switzerland, the people are sovereign. One way their sovereignty is maintained is through regular referenda, in which the people vote on matters of national policy, laws, and proposed constitutional changes. There is typically a high voter turnout for these referenda, and the people take direct democratic control of their government seriously.

4)   Free Trade

There is little debate about free trade in Switzerland. It’s an imperative. It’s a country heavily dependent on imports of basics – energy, food, commodities. It therefore developed a strategic exporting industry strategy: unique high value products and services meeting global demand. Watches are the famous example. Today, it’s biotech and other technologies. Always, free trade has been the binding condition to Switzerland’s prosperity.

5)   Neutrality

In foreign policy and diplomacy, Switzerland is famously neutral and non-aggressive. It goes with global free trade – creating enemies would be counterproductive. Switzerland has a military, and compulsory military service, but for defense against external invaders only. War is the number one barrier to economic progress, and political reconstruction after war is often a worse disaster than the physical destruction of war itself. Switzerland has avoided all this.

6)   Entrepreneurial innovation

Switzerland ranks fairly high in the list of countries for ease of doing business, although its ranking has deteriorated in the 21stCentury. It’s easy to start a company, taxation is relatively low and laws are transparent. Numerous international companies choose Switzerland for their headquarters. Innovation is embedded in education and in a network of research centers, representing investments in people and knowledge. It’s in the individual psyche and the nation’s institutions.

Not perfect, but better.

Switzerland is by no means perfect as a nation state. The whole concept of nation states is detrimental to the individual lives of the people who live in them and form them, and the concept calls for a lot of disruptive innovation. Maybe it’s the Swiss, with their tradition of decentralization, subsidiarity, individual initiative and a free trade in ideas who will be the ones to implement the innovation. That is, if they’re not overwhelmed by the internationalists at the EU, UN, IMF and McKinsey before they can break out. It’s economics versus politics. We hope for economics everywhere and politics nowhere, but it’s proven impossible to maintain. The fact that economics once prevailed in Switzerland gives us hope to believe they could re-establish its primacy.

Jim Carrey Should Think Twice before Advocating for Socialism.

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Jim Carrey doesn’t understand socialism or at least let us hope he doesn’t. Otherwise, his recent comments to Bill Maher are even more disturbing than many initially thought. The fears over socialism seemed to have died down after Bernie Sanders failed to win the Democratic Presidential nomination in 2016. But unfortunately, Alexandria Ocasio-Cortez’ securing her party’s nomination during the New York’s congressional primaries has reignited the left’s obsession with socialism.

Ocasio-Cortez’ is a self-proclaimed democratic socialist and, it would seem, that her willingness to publicly adopt this label has made others feel comfortable doing the same. As is evidenced by Carrey’s comments. But before the left starts embracing this ideology, they should look at what socialized medicine has done to Canada.

Carrey’s Public Blunder

While discussing the future of the Democratic Party with Bill Maher on an episode of his HBO series, Real Time with Bill Maher Carrey said, “We have to say yes to socialism, to the word and everything. We have to stop apologizing.” The actor continued to defend this dangerous political ideology by commenting that Republicans were merely trying to scare people by casting socialism in a negative light. He even scoffed at claims that socialism results in the same horrors currently being experienced in Venezuela and praised Canada’s use of socialized medicine.

He said:

“I grew up in Canada, okay? We have socialized medicine. I’m here to tell you that this bulls— line that you get on all of the political shows is that it is a failure; the system is a failure in Canada. It is not a failure in Canada,” Carrey said. “I never waited for anything in my life. I chose my own doctors. My mother never paid for a prescription. It was fantastic.”

But his praise for Canada did not end there. He then proceeded to say that Canadians were nice people because they had such a benevolent government that cared for them:

“They can be nice because they have health care. Because they have a government that cares about them. There are certain people in our society that need to be taken care of. There are people without as many opportunities that need to be helped toward those opportunities. There are people who are sick. You shouldn’t have to lose your home because your mother got sick.”

Anyone who knows anything about socialism and its ugly and violent history understands how ridiculous these statements truly are. While Carrey may have reconstructed fond memories of using socialized medicine in his youth, the reality of the situation is not as rosy.

Socialized Medicine Doesn’t Work

Forget, for a moment, that socialism has most certainly been the reason that Venezuela’s economy is crumbling, and let us focus primarily on Canada and its system of socialized health care.

Manhattan Institute’s David Gratzer grew up in Canada and had such high hopes for socialized medicine, he decided to become a doctor himself. But it was during his training that he began to see the murkier side of things. He recalls:

“My health-care prejudices crumbled not in the classroom but on the way to one. On a subzero Winnipeg morning in 1997, I cut across the hospital emergency room to shave a few minutes off my frigid commute. Swinging open the door, I stepped into a nightmare: the ER overflowed with elderly people on stretchers, waiting for admission. Some, it turned out, had waited five days. The air stank with sweat and urine. Right then, I began to reconsider everything that I thought I knew about Canadian health care. I soon discovered that the problems went well beyond overcrowded ERs. Patients had to wait for practically any diagnostic test or procedure, such as the man with persistent pain from a hernia operation whom we referred to a pain clinic—with a three-year wait list; or the woman needing a sleep study to diagnose what seemed like sleep apnea, who faced a two-year delay; or the woman with breast cancer who needed to wait four months for radiation therapy, when the standard of care was four weeks.”

Gratzer was so terrified by what he saw, he decided to write a book about it. But the interesting thing was, no one seemed willing to go on the record publicly criticizing the system. When a family member was diagnosed with cancer and was then told to wait for lifesaving treatment, Gratzer asked if he could document the story. The relative was so worried that the state might further penalize him for speaking out, that he demanded that his name, gender, and the town he lived in be changed. Can you imagine being so afraid of your government restricting your care that you are scared to tell your own story? This perfectly demonstrates how truly terrifying socialism can be. When the government is in charge of giving you everything, they are also able to take it all away.

Eventually, his book Code Blue was released revealing the horrors of socialized medicine in Canada. He described his work as, “My book’s thesis was simple: to contain rising costs, government-run health-care systems invariably restrict the health-care supply.” And therein lies the real reason socialized health care simply doesn’t work. But his book was not all doom and gloom. In fact, Gratzer determined that the only way to save Canada’s health care system was to move away from socialized medicine and instead adopt a market-oriented approach.

For young, healthy Carrey, the system may have worked great. But for those who are seen as being less of a priority for the state, the situation is not so great. Any system that allows the state to determine whose life is more valuable than others should be avoided at all costs. Carrey would do well to think twice before praising a socialized medicine in the future.

Alexandria Ocasio-Cortez Keeps Proving Why Socialism Doesn’t Work

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Everytime Congressional candidate and poster child for democratic socialism, Alexandria Ocasio-Cortez, opens her mouth to speak, she reminds us why socialism doesn’t work. Proudly assuming the role as spokesperson for the “rising” American democratic socialist movement after grabbing the Democratic Party’s nomination earlier this year, she has wasted no time commenting on current events. The only problem is, every time she attempts to stand up for working-class Americans, she either proves her economic illiteracy or makes a strong case for capitalism.

Minimum Wage Hikes Destroy Jobs

Recently, Ocasio-Cortez crafted a sentimental tweet, lamenting the closing of a local establishment where she used to work. Her tweet read:

“The restaurant I used to work at is closing its doors. I swung by today to say hi one last time, and kid around with friends like old times.”

After drawing attention to the closing of the restaurant, which is a popular coffee shop in Union Square in New York City, reporters made an interesting discovery. When the co-owner of “The Coffee Shop,” Charles Milite, was asked why his establishment was closing he explained that it was a result of the increased minimum wage.

Milite told the New York Post, “the minimum wage is going up and we have a huge number of employees.” Ocasio-Cortez is, of course, an outspoken advocate for raising the minimum wage. When she was interviewed by the Daily Show’s Trevor Noah, she commented:

“Raising the minimum wage to a living wage will expand the economy. It will create wealth in our economy. And it will increase economic activity in this country.”

Unfortunately, this just isn’t the case. A few years ago, a new minimum wage law was passed, incrementally increasing the wage rate to $15 per hour over the course of a few years. While the full implementation is still two years away, the current minimum wage rate has reached $13 per hour. And as a result, many Manhattan businesses have been struggling to stay financially afloat now that they are forced to pay their employees so much more. The Coffee Shop has over 150 workers who will soon be out of a job because the owners cannot afford to pay the 36 percent increase in costs to their employees.

This situation may have slid under the radar, but Ocasio-Cortez ’s tweet helped shed light on the situation and prove that raising the minimum wage, a policy she supports, simply doesn’t work. In fact, The American Action Forum estimates that 261,000 jobs will be lost this year as a result of minimum wage hikes. But this is not the only time Ocasio-Cortez has been caught with her foot in her mouth.

Uber vs. Cabs

In March, when a former Uber driver had fallen on hard times financially and chose to end his own life, Ocasio-Cortez tweeted:

“NYC’s fourth driver suicide. Yellow cab drivers are in financial ruin due to the unregulated expansion of Uber. What was a living wage job now pays under minimum.”

Of course, the tragic situation is in no way Uber’s fault, Ocasio-Cortez wasted no time casting blame. Neither did the cab industry, who used this tragedy to launch a campaign that would inevitably result in a city-wide cap on Uber vehicles.

Capitalizing on the situation as a means of furthering her agenda, Ocasio-Cortez backed the taxi unions and commented:

“We need:

– to call Uber drivers what they are: EMPLOYEES, not contractors

– Fed jobs guarantee

– Prep for automation”

 

Not only are her views on a “living wage” wrong, as we saw previously, but Ocasio-Cortez’s actions seem to tell a much different story than her passionate tweet.

During the course of her campaign, Ocasio-Cortez spent over $4,000 on 160 Uber rides from April-June 2006. And those number only account for her Uber use in California alone. It should be noted that she is not running in California, but she has a huge donor base there, which, considering the political climate of the Golden State, should be of no surprise.

It was also discovered that an additional $2,500 was spent on another ridesharing company, Juno. But Ocasio-Cortez is hardly alone in this hypocrisy. Mr. American Democratic Socialist himself, Bernie Sanders, met the same public criticism after it was discovered that he preferred Uber to taxicabs. This, of course, came after he had publicly condemned the company for being “unregulated.”

It would seem that socialism continues to be better in theory than it is in practice, which is evidenced by the ideologies own followers. While Ocasio-Cortez might be a better spokesperson than Sanders, that is not saying much. Democratic socialism will never fully catch on in America because the free market is too convenient. It is what has given employees competitive wages and bestowed the sharing economy upon consumers.

Ocasio-Cortez can complain about capitalism all she wants, but until she is willing to give up her Uber rides, it is unlikely that she will be taken seriously.

The Internet Sales Tax Spells Danger for Small Business Owners

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The American entrepreneur is overburdened more so than at any other point in our history. Before even one cent can be earned, an individual with a great idea has to jump through an obstacle course of hoops and regulatory red tape. And while some may think that these standards are surely reasonable and perhaps even essential to protecting the consumer, most of these burdens have nothing to do with safety and everything to do with control. Any doubt of this can be cured by the mere fact that in many states, casket makers cannot sell, or even construct, a coffin until they have first obtained a license.

And yet, many advocates of these types of business restrictions assert that things could be worse, after all the United States is the freest country in the entire world. But when looked at in terms of economic freedom, this is simply not the case. In fact, according to the Heritage Foundation’s 2018 Index of Economic Freedom, America is not number one. The U.S. isn’t even in the top ten. Instead, the country founded on entrepreneurial freedom sits at number 18, right in between the Netherlands and Lithuania.

In addition to other qualifiers, the rankings are partially based on the size of the government in each of these countries, this includes the tax burdens each places on small business owners. Considering this, it is a good thing this economic freedom index came out prior to the Supreme Court’s recent ruling in the case of South Dakota v. Wayfair, Inc. just a few weeks ago. Had the new ruling been considered on the 2018 Index of Economic Freedom, the U.S. may have found itself further down on the list.

Internet Sales Tax and Small Business Owners

In a 5-4 decision, the Supreme Court dealt a blow to small business owners all around the country just a few weeks ago. Prior to the South Dakota v. Wayfair, Inc. ruling, states were prohibited from collecting taxes from companies that did not have a physical location therein. This new ruling overturns the 1992 case of Quill Corp. v. North Dakota, which, in the earlier days of the internet, had protected online retailers without physical brick and mortar establishments. But all this has changed now.

The new ruling states that even if a business has no physical location, inventory, or employees in a given state, that state can still collect taxes if a company does over $100,000 in sales, or at least 200 transactions. So what does this mean for smaller business owners? In reality, this means having to understand and comply with the sales tax laws in more than 10,000 different jurisdictions. While this number seems daunting on its own, this doesn’t even account for the fact that each of these jurisdictions has their own unique tax rates, different legal definitions dictating product specifications, and different laws specifying tax exemptions.

Highlighting how truly daunting it is to keep up with all the different jurisdictions’ laws, a local Kansas City outlet reports:

“▪ New Jersey knitters pay sales tax on yarn purchased for art projects, but not on yarn earmarked for sweaters.

▪ Texas taxes sales of plain deodorant at 6.25 percent, but imposes no tax on deodorant with antiperspirant.

▪ Illinois categorizes Twix as food but Snickers as candy, because Twix has flour and Snickers does not.”

This places a large burden on businesses because complying with all the different laws of various jurisdictions means having to understand each one. This means having to spend a large portion of their budgets hiring accountants and attorneys just to understand the new requirements— a costly burden to place on companies that are already having to pay to maintain their businesses licenses and other arbitrary state requirements.

Even before the ruling was made, small business owners were concerned.

“It’s just not fair for the heavy burdens that it places on small businesses like us to have to reach out to 9,600 different jurisdictions to file tax. It would really be devastating,” Michael Swoape, the owner of One4Silver told CNSNews.com.

To make matters worse, this gives an unfair advantage to bigger companies. Businesses like Amazon can afford to pay to comply with all these new tax requirements, giving them an unfair advantage. And while we all love Amazon, if it were truly as great a company as we all assume it is, its quality would speak for itself. Yet, even Amazon, who has been targeted by other government policies, has supported this expansion of the internet sales tax because they know it will benefit them. Its competitors simply cannot afford to comply.

How did we get here? Small businesses are the backbone of our American economy. But instead of rewarding these companies, or even helping to ease their financial burdens, the Supreme Court has sought to make it even harder to earn a living and create value.

But this doesn’t just hurt businesses owners; consumers will also be impacted. These companies are going to have to either choose to close up shop or find a way to meet the new financial requirements being asked of them. For many, this will mean passing some of this cost to the consumer, which means prices on online goods are bound to go up.

But not all is lost, Congress could help pass laws that ease some of these regulatory burdens.

Jonathan Johnson, who sits on the board of Overstock.com said:

“To lessen the potential impact of today’s ruling on internet innovation Congress can, and should, pass sound legislation allowing states to accomplish their aims while still permitting small internet business to thrive.”

That being said, Justice Kennedy disagreed with the sentiment expressed by Johnson. As CNN reports:

“Justice Kennedy said it was ‘inconsistent’ for the Supreme Court to ask Congress to ‘address a false constitutional premise of this Court’s own creation.’

It is a sad state of affairs when our government has developed a habit of finding every possible way to take money from profitable individuals. To truly honor the individual’s contributions to the economy, our government should be making it easier to conduct business instead of placing more burdens on entrepreneurs. If we want to get a higher ranking on next year’s Economic Freedom Index, those in power would be wise to remember the role the entrepreneur plays in society.

The Progressives Are Wrong. Take-home Pay Has Risen Considerably Thanks To Tax Reform.

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We advocate that every one of us should be our own editor, doing our homework and asking skeptical questions whenever there is a political claim in the realm of social justice that one group is being disadvantaged compared to another. Even when claims appear to be data-based – perhaps especially when they use government data to back them up – it pays to always conduct our own inquiry and not rely on others, and to never take claims at face value. Here’s Andy Puzder with his own data interpretation of real wages trends, diametrically opposed to Senator Bernie Sanders’ claims. You decide which – if either of them – you prefer to believe.

You can find a similar analysis at reason.com by economist Gene Epstein: Are American Workers Getting Shafted?

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Progressives are attempting to discredit the Trump economy by claiming workers aren’t seeing the benefits. Sen. Bernie Sanders recently claimed that the increase in wages last year “nets out to zero” because of inflation and that “the average American worker today, despite the strong economy, is not getting ahead.”

Mr. Sanders has half a point. According to the Bureau of Labor Statistics’ latest report on real earnings, as of July average hourly earnings had increased 2.7% over the preceding year, while inflation was 2.9%, due in large part to a surge in oil prices—a slight decrease in real terms.

But workers have benefited in other ways. The stronger economy has created opportunities to increase earnings by working more hours. Over the past year, the number of people working part time because they were unable to find full-time employment decreased by nearly 700,000 while the number of people working full time increased by more than three million. For those already employed full-time, there are more opportunities to work overtime at 50% higher hourly wages. The BLS credits increased hours with adding 0.3% to weekly earnings, for a combined earnings increase of 3%, slightly more than the 2.9% inflation rate.

None of this takes into account the effect of lower taxes. According to Sentier Research, an economic-research firm founded by former Census Bureau officials, median household income in July 2017 was $60,879. In 2017 a married couple with no children filing jointly with income of $60,879 would have taken a standard deduction of $12,700 plus personal exemptions of $8,100, resulting in taxable income of $40,079. Their tax rate would have been 15%, for a federal income-tax liability of $5,079. After paying payroll taxes of $4,657, this couple would have taken home $51,143.

This year, assuming the BLS’s 3% increase in weekly earnings, the couple’s income would rise to $62,705. Following the tax cuts, their standard deduction would increase to $24,000, for taxable income of $37,705. Their federal income-tax rate would be 12%, for an income-tax liability of $4,264. Their payroll taxes would rise with their income to $4,797.

All told, the couple would take home $53,644. That’s an increase in take-home pay of $2,501, or 4.9%—nearly 70% higher than the 2.9% rate of inflation, assuming the inflation rate holds at around 2.9% for the rest of the year. With the expanded child tax credit, if this couple had one child, their take-home pay would increase 5.5%, or 90% higher than the inflation rate. Since the new withholding tables went into effect on Feb. 15, employees have seen the difference in bigger paychecks. Little wonder the Conference Board recently reported that consumer confidence surged in August to its highest level since October 2000, while the Commerce Department reported that consumer spending increased 0.4% in July, the sixth straight month of healthy gains.

The progressives are wrong. Capitalism is working, for everybody.

Mr. Puzder is a former CEO of CKE Restaurants and author of “The Capitalist Comeback: The Trump Boom and the Left’s Plot to Stop It.”

Bernie Sanders’ Continues His Crusade against Amazon

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Amazon has had a very good year as it has reached $1 trillion in market cap, solidifying the vital role it plays in the global economy. But as can be expected, in light of this exciting news, Bernie Sanders has taken his crusade against Amazon to new levels and has proposed a new bill that is conveniently being called the “Stop BEZOS Act.”

“BEZOS” is, of course, an acronym for the full bill’s name, which is “Stop Bad Employers by Zeroing Out Subsidies Act.” However, either way you look at it, this is a direct hit to Amazon from Sanders. If the bill gains any traction in the Senate, it would essentially force private companies like Amazon and Walmart, to pay for government food stamps, public housing, Medicaid and any other federal assistance program employees may use. This would happen by mandating that companies with 500 or more employees must pay 100% of the cost of federal assistance programs being used by employees.

Sanders has tried to frame his bill as an effort to relieve the taxpayers from having to pay for these welfare programs. That might seem reasonable on its face value, but the reality is anything but.

Sanders has not been shy about accusing Amazon of paying its employees too little, and this bill is an expansion of this narrative. Since be believes that Amazon and Walmart underpay their employees, he is essentially blaming the continued use of welfare assistance programs on the companies themselves, a claim that is absolutely ludicrous. He said:

“In other words, the taxpayers of this country would no longer be subsidizing the wealthiest people in this country who are paying their workers inadequate wages. Despite low unemployment, we end up having tens of millions of Americans working at wages that are just so low that they can’t adequately take care of their families.”

He also tweeted:

“Thousands of Amazon workers have to rely on food stamps, Medicaid and public housing to survive. That is what a rigged economy looks like.”

But, like many things Sanders says, the facts don’t add up.

Fact or Fiction?

Sanders’ claims that many of Amazon’s employees are struggling to get by are simply untrue. Not only did he include global employees in his initial allegations, but he also included temporary employees who are not actually full-time with the company. In response to his allegations, Amazon published a blog addressing his inaccurate statements.

The post says:

“…Senator Sanders continues to spread misleading statements about pay and benefits. Amazon is proud to have created over 130,000 new jobs last year alone. In the U.S., the average hourly wage for a full-time associate in our fulfillment centers, including cash, stock, and incentive bonuses, is over $15/hour before overtime. (Sen. Sanders claims that Amazon’s median U.S. salary is $28,446, despite the fact that we’ve made clear that this number is global and includes part-time employees. In fact, the median U.S. salary for full-time Amazon employees is $34,123). We encourage anyone to compare our pay and benefits to other retailers.”

Amazon’s blog post also addressed the inaccurate picture Sanders painted of Amazon employees being the recipients of food stamps. Many of the workers who were on food stamps were temporary employees without full salaries and benefits. And many had taken temp work because they were already experiencing financial setbacks unrelated to Amazon. So to blame Amazon for this, and then force them to pay for government programs is absurd.

Of course, this isn’t the first time progressives have gone after Amazon in an attempt to force the company to pay for welfare assistance programs. Seattle’s City Council voted to force Amazon to subsidize housing for the homeless because they believe it is paying its employees too much, thus driving up the costs of homes. This is actually hilarious in light of Sanders’ new bill which claims Amazon is paying its employees too little. It seems like the real problem here is that Amazon success has made many progressives feel as if they are entitled to some of its profits. But these types of policies serve only to hurt employees.

What is Unseen

If Amazon is forced to pay for welfare programs, in addition to other attempts to squeeze money from the company like in Seattle, it will have to make cutbacks somewhere. So, either consumers will see a rise in the cost of consumer goods or employees will see a decrease in their pay. Of course, there is still another option on the table. If Amazon is forced to pay for these programs and chooses not to lower employee wages to make up the difference, it may be forced to lay off employees.

Long story short: no one wins in this situation except for Sanders, who gets to have a false feeling of moral superiority. There is no logical reason behind making Amazon pay for food stamps and public housing. Hopefully, the rest of the U.S. Senate understands this and shoots down this bill before it goes anywhere.

Computing Technology Mines Freedom, Choice and Cost, Altering the Investment Management Landscape.

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As our modern technological revolution expands geometrically, it creates an existential challenge and opportunity to traditional industries. In a recent advertising video, a global investment management firm embraces this progress by saying “In our pockets, we now hold the ability to summon a car, monitor our health, and make a restaurant reservation. Advances in data and technology are driving innovation, bringing scale to reduce costs, and transforming our lives.”

As is our good fortune, the technology transformation boils down to greater choice and lower costs. Of course that’s how human ingenuity always works, investing money is no exception. In the 1970s, we saw the creation of low-cost index mutual funds. In the 1990s the internet brought us online, do-it-yourself stock trading platforms. The industry has seen a downward spiral in its commissions and fee structures, and a great expansion in the variety of services it offers to consumers. So what is happening now that is so transformational?

Appealing to the Technology Savvy Consumer

To be expected, it comes down to data and computing power delivering ease and reliability. At its core, the financial data scientists study the price fluctuations of millions of transactions in heavily traded securities markets. As economist and analyst Richard Salsman explains it:

We only use prices, not government and corporate accounting data or surveys. Only prices are established by the combined intelligence of all buyers and sellers at each point in time. Only prices represent forward-looking money on the line. By using only the hard-evidence of market prices, we uncover the most reliable, signaling price relationships amid markets and cycles.

This newfound respect for the price mechanism is, at least in part, a result of the economic and financial crises of 2008. Investors lost confidence in traditional investment management; and worse, they lost confidence in markets. According to this recent advertising video “We need a new way; factor investing can help. Powered by data and technology, coupled with fundamental investment ideas, that new way of investing may be here. But what are factors?”

An even better question is, why should I trust advertising? The tricky part is the use of the word new. It’s only new to the broader investment management industry. The ad goes on to explain. “Factors aren’t new, they’ve been around for decades. And are grounded in rigorous, Nobel Prize winning research.  The innovation is not the investment ideas themselves, it’s in the way we access those investment ideas.”

Old Price Signals Uncovered by New Technology

To access the factors that drive investment performance requires a great deal of computing power. It also requires a massive amount of data about securities pricing, their volatility, and how they react to each other. For any asset manager to do this efficiently, they need the hardware and software that will allow them to create their factor based “smart beta” portfolios.

With the recent gains in computing power, and the rising demand for low-cost and reliable investment solutions, factor-based investing is finally gaining wide acceptance. According to the original Nobel prize winning research, the factors that deliver most of the market-wide returns are the market itself (stocks outperform bonds), price (stocks with low valuations), and size (small companies).  Other factors include profitability, volatility, and momentum. According to the advertising video, factors are like nutrients to food – which nutrients to include depend on an investor’s financial well-being and spending goals.

One advantage of smart beta funds is to reduce an investor’s focus on beating some arbitrary stock or bond index. Another is to avoid the expense and underperformance risk of active managers whose only goal is to beat an arbitrary index that may not help their investors with their future cash flow needs. And for those of us who are not venture capital specialists, it helps us shift our focus to what really matters, living the one life we have.

Quantitative Investing Isn’t Pretty

Certainly there are risks; they don’t call factor based investing “smart-beta” for nothing. Beta means risk. And there are critics; for example analyst Steven Grey says correctly, “the artificial intelligence and machine learning employed by algorithms are very effective at identifying patterns imbedded in vast data sets. But the patterns ultimately reveal nothing about cause and effect.” And that’s fine, the price mechanism does. It aggregates millions of decisions made by millions of decision makers, all pursuing their own rational self-interest.

Grey also makes the point that “there is a reason why no private equity fund, LBO shop, or corporation has ever made an acquisition decision based on an algorithm.” But so what, that’s not who we are. Entrepreneurs create value with innovation, we create value by trading current consumption for future expected consumption. And the criticism that smart beta managers earn profits on superior trading efficiency ignores their very low volume of transactions, their reliance on efficient markets, and their patience in waiting for the best relative price possible. Another critique is that the only way for a smart beta managers to sustain a competitive advantage is for their data processing scientists to develop ever smarter algorithms. That assumes that a factor based quantitative analyst is only concerned with beating the market in the short-term, which is clearly not the case.

The inspiring development is that technology is able to harness the wonders of economic and political freedom, and the consequent price mechanism of capital markets, for very low cost. Perhaps economist Ludwig von Mises explained it best in his 1954 essay The Anti-Capitalist Mentality:

When modern industry began to provide the masses with the paraphernalia of a better life, their main concern was to produce as cheaply as possible without any regard to aesthetic values.

Regarding risk, an investor only has to abide by the very first factor identified by the financial scientists – the stock market itself. Managing our exposure to risk assets is a matter of freedom and choice.

This City Is Leading the Way in Protecting Entrepreneurial Freedom

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Just like the rest of the country, over the last several years Utah entrepreneurs have had to deal with an increasing amount of hurdles when looking to start their own businesses. These barriers to entry have come in the form of occupational licensing.   

It has become all too common to hear of individuals who are unable to start a business or who have had their businesses shut down because the state requires costly licenses and useless training before someone is free to be industrious. This has become such a widespread problem that Institute for Justice has committed much of its mission of protecting those who have been victims of the government’s war on entrepreneurship. 

But where Utah has had its fair share of anti-business policies, the tides appear to be changing. Over the last couple of years, Utah has been leading the charge for entrepreneurial freedom.

Protecting Home-Based Businesses 

As last summer began, Utah was making history by protecting home-based entrepreneurs from the long arm of the state through legislative action. 

Connor Boyack, a Utah resident and a longtime advocate for liberty has made a full-time job out of protecting the rights of Utah citizens. As president of the burgeoning Utah think tank, Libertas Institute of Utah, Boyack began running his new nonprofit from his home, while he made plans to grow his operation and find a more suitable location. It was during this time that Boyack was alerted by city officials that he was not allowed to run a business out of his home without the proper permits. Of course, as a nonprofit Boyack was not bringing in any money that was not spent directly on Libertas’ initiatives, but the city regulators didn’t seem to care about that vital detail.

Learning the hard way that you can’t fight city hall, Boyack decided to take a different approach against the burden of occupational licensing: focusing on the children. This was a sympathetic move since over the last several years there has been an epidemic of police shutting down child-run lemonade stands for operating without a license. Working with local legislators to draft what would become Senate Bill 81, Boyack was integral in changing the laws in Utah.

As I wrote previously:

“Senate Bill 81  amends existing laws requiring occupational licenses and permits for certain businesses, specifically those run by minors under the age of 18. However, it also helps adults by demolishing any fees associated with the required permits. True, Utah residents over 18 will still have to obtain the government’s permission before operating a home-based business, but they will no longer be forced to pay exorbitant fees.

In fact, by eliminating the fees associated with home-based occupational licensing, the state of Utah stands to lose about a million dollars in annual revenue previously collected from those looking to run their own businesses out of their home.”

This was a huge step in protecting entrepreneurial freedom, but it only applied to “home-based businesses,” which meant it left a lot of people out. And while the state itself has yet to take any action that would further abolish licensing fees, one city is making huge strides in favor of business freedom.

Open For Business

Last week, the city of Riverton, Utah abolished all fees associated with business licenses. This comes as part of the city’s 2018-2019 fiscal budget and fee schedule, which was discussed in Riverton City Council meeting early last week.

As explained by a local news outlet:

“Mayor Trent Staggs first proposed eliminating the city’s business licensing fees in the budget he presented to the city council on May 1. The move, the first of its kind in Salt Lake County, essentially makes it free to do business in the city.”

Mayor Staggs commented on this bold new plan, saying:

“We understand the value our local businesses provide to our city and our residents. By eliminating the business licensing fee, we want to send a clear message that Riverton is open for business.”

While this doesn’t omit the need for a business license, it does take away the burden of having to pay for the “privilege” of earning a living, which is a great start. Prior to this new plan to abolish licensing fees, business licenses cost business owners $200 annually. By eliminating this fee, it is very likely that Riverton will attract entrepreneurs who are fed up with the licensing fees in other cities around Utah.  

Speaking of SB 81, Mayor Staggs said:

“I philosophically agreed with the move by the Utah State Legislature to eliminate business licensing fees for home-based businesses last year. I’m thrilled that we are extending that benefit to our commercial businesses right here in Riverton.”

While the last decade, if not longer, has been defined by red tape and regulatory hurdles in the business sector, it appears that we are on the cusp of something big in this country. The freedom to earn a living is what allows individuals to be self-reliant and prosperous. Thankfully, the winds of change are upon us and it appears that country is moving in the right direction when it comes to entrepreneurial freedom.

No Matter the Job, There Is Dignity to Be Found in Hard Work

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Remember the sense of pride you had when you got hired for your first job? Even if the uniform was silly or the job was far from glamorous, there was such a sense of independence in being able to exchange your time for money and provide for yourself. This is the kind of demeanor that America was founded on, one where hard work and financial independence was held in the highest esteem, regardless of the line of work.

But our country has undergone a huge cultural shift recently when it comes to valuing the dignity of hard work. And nothing brings this fact to light quite like the latest news involving former Cosby Show actor Geoffrey Owens.  

Recently, a woman checking out at a Trader Joe’s in New Jersey noticed that the man working at the checkout stand next to her looked familiar. Recognizing him as Elvin Tibideaux, the loveable son-in-law of Cliff and Claire Huxtable from the beloved 80s sitcom The Cosby Show, the woman took a picture and posted it to social media. As is typical in our society, it didn’t take long for the picture to make the rounds as social media users “shamed” the actor for working such a “menial” job. But the story took an interesting turn.

While much of the Twittersphere was all too eager to insult Owens, many actors came to his defense. Terry Crews, who is both a former NFL player and a successful actor, tweeted that after his NFL career, he worked as a janitor sweeping floors. Other actors came forward to share their personal stories as well. And instead of the situation turning into yet another example of how our country’s culture has gone astray, it turned out to be a lesson about the dignity and importance of hard work.

All Jobs Matter

When Owen’s first saw the pictures, he was devastated, and rightfully so. In the 80s, The Cosby Show was one of the most popular on the air. But the thing with acting is, it isn’t always consistent. And while you may be a star in a leading role one day, you may be out of work the next. And like all good things, The Cosby Show eventually ended.

Since its departure from the airwaves, Owens has struggled to find consistent acting work. In fact, he says that he has not had an acting job that lasted longer than 10 weeks since the popular show ended. He taught acting at Yale briefly before taking smaller roles here and there. But with kids in college and a household to support, he needed to find something consistent.

Trader Joes was perfect because his supervisors allowed him the flexibility to audition for acting gigs while still holding down a steady job. Sure, it may not have been as glamorous as working on a television show set, but everyone has to support themselves. And there is not, or at least should not be, any shame about taking a job to support yourself.

When the pictures went viral, Owens was devastated. Suddenly, he found himself in the limelight for something as silly as having a job. And as embarrassing as it may have been for him, he didn’t let it get to him for long.

As actors and others began their outpour of support, Owens used this experience as an opportunity to start a national conversation about the way we view work in this country. As he put it, he has used this event to reevaluate, “the idea that some jobs are better than others.”

Owens told Good Morning America:

“There is no job that is better than another job. It might pay better, it might have better benefits, it might look better on a résumé and on paper. But, actually, it’s not better. Every job is worthwhile and valuable.”

Comparative Advantage and Specialization Create a Thriving Economy

Owens’ comments are absolutely correct. While we might all love to have the prestige of being a doctor or a lawyer, not everyone is bound for those careers. And if we did have a society filled with only doctors and lawyers, our society would crumble.

Specialization and comparative advantage have fueled our economy by diversifying it. Imagine if everyone were a doctor, we might have access to health care, but how would we get anything else accomplished? In order to eat, for example, we need farmers to grow crops and harvesters to harvest the crops. We need grocery stores to sell the farmer’s produce, which means we need staff to work at the grocery store. Imagine if farmers decided not to grow crops anymore because they felt that line of work was beneath them? It would matter very little if we had a population of great doctors if everyone was starving.

The same could be said of any number of sectors. We need all kinds of individuals willing to take on all sorts of different roles in order for our economy to thrive. That means that every single job in this economy is just as important as the next.

No Handouts

In the wake of the viral photo, Owens has been offered acting gigs from the likes of Tyler Perry and others. But his response to these opportunities was astounding. He said:

“I wouldn’t feel comfortable getting acting jobs from this event… I wouldn’t mind getting auditions, I don’t mind if people call me in to try out for things due to what has happened, but I actually wouldn’t feel comfortable with someone giving me a job because this happened. I want to get a job because I am the right person for that job.”

Owens’ focus on receiving a role on merit and not out of pity is exactly the message our country needs to hear right now. And while this entire experience may not have been a pleasant one for him, it has taught the entire country to not only stop job shaming but to take pride in their work. It doesn’t matter if you are an artist, a judge, or a cashier. What really matters is that you pour your heart into your work and do the best possible job that you can.

“Out of Poverty” Shows Us How Sweatshops Are Helping the Third-World

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One of the wonders of the free market is the role it plays in alleviating poverty around the globe. Recently, I had the pleasure of reading economist Ben Powell’s book, Out of Poverty, which explains the role sweatshops play in helping third world countries enter the global economy.

While reading the book, I began to wonder how proponents of the free market could best convey our arguments to those who do not understand the role these factories and plants play in helping to bring others out of poverty.

As a result, I compiled a list of common concerns shared by many anti-sweatshop activists. Using Powell’s text, I provide answers that address these concerns and help others understand how these sweatshops are helping those in developing countries.

Sweatshops abuse human rights are inherently evil and we should do everything we can to shut them down.

For those of us living in prosperous, fully-developed countries, it is easy to condemn the use of sweatshops in the developing world. In America, we are so fortunate to enjoy some of the best working conditions in the entire world. So, when we get a glimpse of working conditions in places like Bangladesh, we are understandably concerned.

However, the fact of the matter is that what we refer to as sweatshops are actually helping to bring developing countries out of poverty and into the global economy. And when we actively call for boycotts or for the shutdown of these factories, we actually harm these workers and stall economic development. To demand that these factories shut down would also mean trapping these nations in perpetual poverty.

In order for these nations to raise their own standards of living, they must be free to compete in the global economy. These factory jobs are integral in making this happen.

Okay, I understand that these jobs are important and it’s great that the economies of these countries are growing, but shouldn’t governments at least institute minimum wage laws to ensure that employers can’t take advantage of their employees?

Okay, I understand that these jobs are important, and it’s great that the economies of these countries are growing, but shouldn’t governments at least institute minimum wage laws to ensure that employers can’t take advantage of their employees?

To understand the economics of wage determination in sweatshops, we need to understand how wages are determined to begin with. As economist Ben Powell says in his book, Out of Poverty:

“Wages and working conditions in sweatshops are set by the same process that sets wages and working conditions in wealthier countries: supply and demand. The wages are conditions are determined by bidding between employers and potential employees. Employers can often make the offer, but potential employees are free to accept the offer or reject it. If employees cannot attract enough workers at thh wage they are offering, they will need to raise the wage to convince more workers to choose to work for them.”

As it stands currently, these factory jobs are actually some of the most sought after in the developing world, which means that these employers are not having a hard time finding people to voluntarily agree to come work at the factories. And since these wages are voluntarily agreed upon, it would be unjust for wealthy Americans to intervene and mandate higher wages.

Plus, we already know what happens when minimum wages are legislated, both from theory and from repeated historical experience: unemployment rises. An employer can’t afford to pay a worker more than the revenue his work brings in: doing so will eventually lead to bankruptcy. If employers can only offer a wage higher than that, they will have no choice than to lay workers off or not hire them in the first place. And it is precisely the workers who need the money the most who will find it harder to get work thanks to the minimum wage.

But a couple of dollars an hours is absurdly low!

To an American, sure. But you cannot compare the economy of developing nations to that of the United States. We have a standard of living in this country that far surpasses that of anywhere else in the world. Holding a nation like Bangladesh to the same standards as are our own country is entirely unrealistic. Especially when we compare the wages paid in sweatshops to those in other sectors in the developing world.

In most of these countries, a majority of the workers earn less than $2.00 per day. However, according to Powell’s research, “Out of the eighty-three specific sweatshop jobs for which we could calculate earnings, seventy-seven resulted in workers earning more than $2.00 per day.”

When we compare the average wage paid in these factories, as opposed to other sectors, we find that it is actually well above the national average. These jobs are always filled because they offer the workers opportunity to earn more money than in other sectors and learn new skills. Many of these workers came from rural farms. But factory work has given them the opportunity to leave the farm, learn new skills, and have the ability to break the cycle of poverty that their families have endured for generations. Many of these workers even go on to start their own factories because of the education they receive while working in factories.

But none of this makes up for the fact that the working conditions are so horrible. This type of environment would never stand in America.

We should always strive to foster a culture with the best possible work environment, but holding factories in the third world to American standards is not a realistic goal. Also, if conditions were to be improved, that money would come at the expense of the worker.

Powell says:

“Activists naively assume that demanding better working conditions will improve the lives of workers. Unfortunately, they are wrong. Improving working conditions raises firms’ costs of hiring labor.”

He continues:

“A firm can respond to demands for improved working conditions in three ways. First, just as when higher wages are mandates, the firm can cut back on the number of workers it employs, which throws some workers into worse alternatives. Second, depending on the particular demands, the firm may improve some working conditions, while making other conditions worse. For example, when confronted with demands for increased safety,  the firm may compensate by requiring longer hours. Third, when working conditions improve, the firm can lower the wage necessary to attract employees.”

But since each of these is dependent on employee preference, no firm or factory will be able to please all workers 100 percent of the time. 

What about the rumors that workers are jumping off buildings?

Any loss of human life is dreadful. But when we discuss suicide rates in third-world sweatshops we have to stop comparing the numbers to that in the U.S. In 2010, it was revealed that 18 employees had attempted suicide at the Foxconn plant in China. Almost instantly, Americans were outraged, pointing to the suicide rates as reasons to protest these sweatshops.

Tim Worstall addresses this issues, stating:

“The first is the spate of suicides at the Foxconn plants. Suicides did indeed take place and each and every one an individual tragedy. Both for those who died and for those they left behind to mourn them. However, we are talking about some 18 suicides in 2010. What we actually want to know is whether that is a high or a low number. Suicide does happen in every society and country, so before we start blaming working conditions we’d like to know whether that rate is higher or lower than that in the surrounding society.

The general suicide rate in China is 22 per 100,000 people. That is a high rate by international standards but that is the one that we should be looking at to try and judge the suicide rate at Foxconn.

Foxconn employs some 1 million people in total so, if the Foxconn workforce were to have the same suicide rate as the general Chinese population (which, to be accurate, it won’t for suicide is not equally divided over age groups and the workforce is predominantly young) we would expect to see 220 suicides among such a number each year.”

When we look at sweatshops, and all the concerns that arise from their very mention, we need to ask the question, “compared to what?” Comparing numbers of third-world countries to those in America is not an accurate assessment.

It is one thing to accept an adult’s right to choose where he or she works, but what about child labor? Employing children is immoral and we should definitely ask governments to outlaw this practice.

It is absolutely heartbreaking that some nations are so impoverished, children must work long hours in factories. However, having to work is a necessity. And if these factories did not exist, many of these children would be forced to take jobs that put them in more danger than sweatshops.

Powell writes:

“In 1993, U.S.  Senator Tom Harkin introduced the Child Labor Deterrence Act, which would have banned imports from countries employing children. In response, Bangladeshi garment companies fired approximately 50,000 children that fall.”

But unfortunately for the labor activists supporting these efforts, just because a child is let go from a factory does not mean they will then automatically enroll in school. Children who work in the developing world work because they must; their circumstances require it. Without access to these jobs, children will be forced into other sectors.

Even economist Paul Krugman agrees that regulations will not help:

“The direct result was that Bangladeshi textile factories stopped employing children. But did the children go back to school? Did they return to happy homes? Not according to Oxfam, which found that the displaced child workers ended up in even worse jobs, or on the streets—and that a significant number were forced into prostitution.”

Again, when we are looking at the issue of sweatshops, instead of automatically calling for their demise, we need to ask ourselves if the workers of these factories would be better off without these jobs. And if we wish for those in developing countries to be elevated out of poverty, the answer is a resounding no, banning sweatshops would not benefit workers. It would, however, perpetuate the cycle of poverty.

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