Germans are losing patience with being cast as the euro zone’s scapegoats

The biggest risk for the euro right now is not that Greece leaves, it’s that Germany leaves

The Economist

HITLER moustaches and swastikas defiling pictures of Germany’s chancellor, Angela Merkel, have become a recurring motif in the iconography of the euro crisis, most recently in Cyprus. Scapegoating is inevitable during financial upheavals, says Marcel Fratzscher, president of DIW Berlin, a think-tank. Germany, he suggests, has taken the place of the IMF during the Asian crisis of the late 1990s, with Mrs Merkel playing the role of Michel Camdessus, the then IMF boss who was pictured in 1997 with folded arms, standing over a humbled Indonesian president signing up to harsh austerity measures. But scapegoating can be dangerous if the goat is powerful and it begins to feel victimised.

The Germans are not yet openly angry. That would be out of character in a people who have, since the second world war, been eager to atone for the past and be good European partners. In one recent poll, 34% of Germans even said they empathised with the wrath of the southern Europeans. But the mood is shifting. The southerners may see Germany as forcing excessive austerity on them and showing insufficient solidarity, but Germans have a different view.

First, they feel they have already shown solidarity. Almost a quarter of a century after the fall of the Berlin Wall they still pay a solidarity tax to eastern Germany. Some also transfer taxes to weaker German states such as Bremen. Many conclude that, once in place, solidarity ceases being voluntary and instead becomes a yoke. They also bear much of the risk of euro bail-outs, even though a study released this week by the European Central Bank showed that the average German household has less wealth than the average Spanish, Italian and Cypriot one (though this is partly because German households tend to contain fewer adults and are more likely to be in rented accommodation).

Second, they argue that Germany recognised a decade ago that it was not competitive and undertook painful reforms that are now paying off. The crisis countries should follow suit. And third, Germans think the euro crisis was largely caused by rule-breaking (even by Germany itself), which must not be repeated. As one diplomat puts it, “solidarity is important, but it should follow rules. It is not just ad hoc giving.”

Together, these attitudes often have the sound of a morality tale. Indeed, the English term “moral hazard”, which has no direct German translation, has become a staple of discourse in Berlin. Originating in the economics of insurance, it refers to the incentives to take risks when other people stand to pay for any damage. The fear is that German rescue money could cause the crisis countries to duck their reforms.

The Germans are not alone in these views. The Dutch, Finns and Slovaks broadly share them. What makes Germany different is that it is big and central. To historians such as Brendan Simms of Cambridge University, author of a new book, “Europe: the Struggle for Supremacy”, this sounds eerily familiar. Europe has long grappled with the “German question”. Sometimes Germany was too weak, sometimes too strong. Or, as Henry Kissinger, a former American secretary of state, put it, referring to Germany just after unification in 1871, it was “too big for Europe, but too small for the world”. Today, Mr Simms argues, “it sits uneasily at the heart of an EU that was conceived largely to constrain German power but which has served instead to increase it, and whose design flaws have unintentionally deprived many other Europeans of sovereignty.”

The question is whether Germany can use its power by unapologetically leading. Given Germany’s past, its political culture militates against even trying. As Joschka Fischer, a former foreign minister, jokes, “it’s nice to go to a conference of ‘young leaders’, but you don’t want a conference of ‘junge Führer’.” Most Germans worry that others might again come to hate or fear them. Their neighbours are less concerned. As Poland’s foreign minister, Radek Sikorski, put it in a speech in Berlin in 2011, “I fear German power less than I am beginning to fear German inactivity.”

Family Meltdown

Two can live more cheaply than one

By Robert Samuelson 

The discouraging March employment report, with a job increase of only 88,000, raises questions well beyond the dreary state of today's labor market. Prolonged high unemployment may be silently shredding the social fabric in ways that last for decades. Even before the Great Recession, men with a high-school diploma or less faced lower wages and a harder time finding work. This made them less attractive as husbands, contributing to the growth of single-parent families. Stubbornly high unemployment almost certainly aggravates these destructive trends.

It's hard to overstate the breakdown of marriage and the rise of single-parent families. Consider out-of-wedlock births. In 1980, about 18 percent of births were to unmarried women; by 2009, the proportion was 41 percent. Among whites, the increase was from 11 percent to 36 percent; among African-Americans, from 56 percent to 72 percent; among Hispanics, from 37 percent (1990) to 53 percent. Or look at the share of children living with two parents. Since 1970, that's dropped from 82 percent to 63 percent. Among whites, the decline is from 87 percent to 73 percent; among African-Americans, from 57 percent to 31 percent; among Hispanics, from 78 percent to 57 percent.

Just what caused these changes remains controversial. In his 2012 book "Coming Apart," Charles Murray of the American Enterprise Institute cited shifts in cultural norms. Having a child out of wedlock became more common and acceptable; the sexual revolution enabled men to get sex without marriage. The waning power of religion undermined the importance of family. Feminism and expanding welfare programs made it easier for women to survive -- through jobs or aid -- on their own. Liberalized divorce led to more breakups.

But there's also a more strictly economic case. In a paper for Third Way, a liberal think tank, economists David Autor and Melanie Wasserman of the Massachusetts Institute of Technology attribute the decline of marriage -- which, like Murray, they say is concentrated among the poorly educated -- to the eroding economic heft of men compared with women. Women are more independent economically; men are weaker. Marriage has lost much of its pecuniary pull.

One cheer for Labour’s new welfare policy

Calculating welfare entitlements on an individual's work history is a good idea. 

by Rob Lyons 

It’s an uncomfortable fact for Labour Party supporters and Guardianistas everywhere that, as Guardian columnist Jonathan Freedland noted last week, ‘on welfare, the voters are on the Tories’ side’. Which may be the reason why, last weekend, Labour politicians did something shocking: in a bid to connect with voters, they actually said something sensible about the welfare state.

According to Sunday’s Observer, ‘detailed work is underway in the party’s policy review on how to revolutionise the way the system works and address concerns that it promotes a “something-for-nothing” culture. One central idea under consideration is the creation of a flexible payments system offering higher benefits to those who have been employed for longer and have therefore made more National Insurance contributions.’ It’s ‘about linking what you take out to what you have put in’, according to a ‘senior party source’.

Of course, it is pretty woolly stuff. For example, Labour’s shadow work and pensions secretary, Liam Byrne, wrote elsewhere in the Observer that ‘we must do more to strengthen the old principle of contribution’, but then he could only offer the example of prioritising social housing for those ‘who work and contribute to their community’.

Yet while Labour’s proposals currently lack clarity, the principle of welfare entitlements flowing from a contributions scheme - something that was at the heart of the original vision for welfare - makes a good deal more sense than what the state does at the moment: hand out small amounts of money to people regardless of their work history.

We still worship at the altar of funny money

The Correlation Between The Gold Standard And Stupendous Growth Is Clear

Campaign poster showing William McKinley holding U.S. flag and standing on gold coin “sound money”.  Between 1870 and 1912, a period of forty-two years, industrial production in the United States rose by 682%.

By Nathan Lewis

For some reason, it is conventional wisdom today that the years 1870-1914, the era of the Most Perfect Monetary System Ever Created, was a time of chronic recession and disaster.

But how could that be? The United States was the world’s greatest economic success story of the last two centuries. When did that happen? It didn’t happen during the Civil War and the Great Depression. It must have happened — logically — during times of peace and prosperity.

That’s why Professor Brian Domitrovic says the usual story you hear about the gold standard years is completely wrong.

The United States actually did not return to a gold standard until 1879. However, by 1870, most of the rubble of the Civil War, including the floating “greenback” dollar, had been cleared up. Between 1870 and 1912, a period of forty-two years, industrial production in the United States rose by 682%.

Freedom can never be ‘granted’ to us

Keeping our eyes peeled for ‘phony freedoms’

by Brendan O’Neill 

I was doing my weekly shopping recently, when I saw there was a brand of toilet paper called ‘Freedom’. I started wondering, what kind of freedom is being offered by this toilet paper? Is it a ‘freedom to’ or is it a ‘freedom from’?

I thought it could possibly be a ‘freedom to’, in the sense that purchasing and using this toilet paper would give a person the freedom to wipe their bottoms, something they would not be at liberty to do if they did not own toilet paper.

But then I thought the toilet paper could also be providing a ‘freedom from’ – most obviously a freedom from stains. A freedom from uncleanliness, and also from the social ostracism that often accompanies that particular form of uncleanliness.

Now, of course, that’s ridiculous. This is really hygiene we’re talking about, not freedom. Cleanliness might be next to godliness, but it is not next to freedom of speech or freedom of association as one of the great liberties of the modern age. The Chartists did not demand freedom from skidmarks.

Only a crazy toilet paper company, desperate to catch people’s attention, would denigrate freedom in this way, right? Actually, you’d be surprised. These days, even in the upper echelons of the political classes, people talk seriously about the ‘freedom’ to have a hygienic bottom.

So the UN has made access to sanitation into a human right. Last year, on something called World Toilet Day, it declared: ‘Eliminating inequality can start in the most unlikely of places: a toilet.’ Apparently, ‘the humble toilet can be a stepping stone to… greater human dignity, freedom and equality’.

Now, I am all in favour of more toilets, of everyone in the world having access to a clean, flushing, preferably Gaddafi-style gold-plated toilet. And making that happen will involve further industrialising vast swathes of the earth. But I doubt very much that having a toilet will set people free – cleaner, yes, but freer?

The Currency of Power

America’s Food-for-Votes Program

by WENDY MCELROY

During his 2012 bid to become the Republican nominee for President, Newt Gingrich repeatedly called Barack Obama “the food-stamp President.” From the time Obama assumed office in January 2009 through October 2012, the number of people on food stamps spiked from 31.9 million to 47.5 million, according to the U.S. government’s own data. That is a rise of nearly 50 percent to a peak of 1 in 7 Americans and 1 in 4 children participating. The program's cost has more than doubled in four years, from $30 billion to $72 billion. So, it seems, there was plenty of bread to go with the electoral circus.

The food stamp program's new name is Supplemental Nutrition Assistance Program (SNAP). Critics claim it is economically unsustainable, widely abused, and the harbinger of a colossal welfare state. Advocates insist SNAP is the result of recession—a humanitarian necessity—and that food is a human right. But it is difficult to square food-stamp humanitarianism with other policies issuing from the White House, which add up to an attempt to make people dependent. 

Ulterior Motives?

The recession—which was largely caused and is continued by the government—itself is an inadequate explanation for the surge in food stamp recipients. The Obama administration has been recruiting people for its food stamps program with a zeal that outstrips simple humanitarian concern. In an article entitled “Obama Encouraging Americans to Get on Welfare,” Michael Tanner of the Cato Institute commented, “The Obama administration clearly doesn’t believe that enough Americans are receiving welfare.” He continued,

Health and Human Services Secretary Kathleen Sebelius last week issued an order giving the Obama administration greater authority to waive work requirements included in the 1998 welfare reform law. This comes on top of a new ad campaign, using Spanish-language soap operas, to encourage more Latinos to sign up for food stamps. The administration even gave a special award to an Agriculture Department worker who found ways to combat the “mountain pride” discouraging Appalachian residents from taking full advantage of food stamps and other welfare programs. One message was loud and clear: More Americans should be getting welfare.

And that’s not all.

The State and Civil Society

The Attack on Tax Havens

by Pater Tenebrarum

Ever since the 2008 crisis, there has been an intensifying attack on so-called tax havens. We recall that one of the instigators of this debate was former UK prime minister Gordon Brown. Brown is a socialist who has often been conspicuous for his inimical stance toward gold. Not only did he sell the bulk of the UK's gold at the very bottom of a 20 year bear market, he later urged the IMF several times to sell its gold as well. Nothing seemed to qualify him for this self-appointment to the role of international gold reserves adviser, but there it was anyway. His reasoning was denounced by the very countries he was ostensibly trying to help. Officially, the IMF was supposed to sell gold so it could forgive loans made to poor countries by means of the profits that it was going to book (due to the difference between the valuation of gold on its balance sheet and its market price). Unfortunately most of the countries concerned are major gold producers and are therefore not at all interested in any activities that might pressure the gold price. And yet, even knowing that, Brown carried on and on, which suggests that there were ulterior motives. We were not at all surprised when Brown of all politicians was at the forefront of those vehemently denouncing tax havens after 2008 – which happened out of the blue, and apropos of nothing (what do tax havens have to do with 'crisis prevention'? Nothing at all). The connection between Brown's hostility toward gold and toward tax havens can however be easily established by considering the closing paragraph of Alan Greenspan's late 1960's essay entitled 'Gold and Economic Freedom': 

“This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” 

Egypt Is Too Big to Save

The funds required to jumpstart the economy as is would be similar to those needed for the reconstruction of Iraq

By Mahmoud Salem

Two years after the popular revolt that toppled Hosni Mubarak, Egypt appears headed toward a "failed state" scenario. While Cairo has not yet defaulted on its debts -- an economic hallmark of nearly all erstwhile states -- it already meets many of the other political conditions associated with comprehensive failure. In Washington, the discussion is narrowly focused on the implications of the rapidly deteriorating economic situation, with little appreciation that the financial morass is inextricably linked to the government's increasingly authoritarian politics. If the ruling Islamist party does not change its approach, the economy will not improve, and the state will move closer to collapse.

THE POLITICAL CRISIS

Since the Muslim Brotherhood (MB) came to power, governance in Egypt has exhibited several classic characteristics of failed states:

Inconsistent and selective application of law. On March 27, an Egyptian court overturned President Muhammad Morsi's November 2012 decision to replace the sitting prosecutor-general with Talaat Abdullah, a crony who has since focused investigations solely on the MB's political opponents. The ruling renders all of Abdullah's investigations illegal. By ignoring the verdict and going after activists even more aggressively, the state -- personified in the president, his government, and the prosecutor-general -- has shown its willingness to undermine rule of law.

Deterioration of services. Basic public services such as electricity and gas are falling apart, with most Egyptians experiencing daily power cuts.

Unaccountable security apparatus. The interior minister, a Brotherhood loyalist, deploys the police to clash with opposition protesters while protecting the MB thugs who beat and torture demonstrators.

Delegitimization of the state. Due to a legally faulty election law issued by the Morsi-appointed upper house of parliament, the legislative elections originally slated for this month have been delayed until November. Meanwhile, the opposition is now refusing to participate in elections because Egyptian institutions cannot guarantee the fairness of the process. When Secretary of State John Kerry tried to mediate last month, the MB undercut his efforts by publicly calling for elections without any of the promised changes to the electoral law, which were the basis of his mediation. The situation is pushing Egypt toward failure, and the MB government shows no sign of seeking a solution.

The "Unseen" Genocide

What I saw at the Gosnell trial

Three rows of seats reserved for the media remained empty Thursday morning April 11, 2013 in courtroom 304 at the Justice Center in Philadelphia where abortionist Dr. Kermit Gosnell is on trial. Gosnell is charged with seven counts of murder for killing seven born-alive children, and also a patient. The man at the rear of the courtroom is David P. Williams, of Delaware Right to Life, who covered the trial for his pro-life blog.

By J.D. Mullane

It is hard to decide the most appalling images to emerge Thursday at the murder trial of Philadelphia abortion doctor Kermit Gosnell. What happened in his abortion clinic is beyond any morbid Hollywood horror.

Tiny severed feet and hands stored in jars over a sink in the “procedure” room.

Digitalis injected into the stomachs of pregnant women to stop the beating hearts of their unborn babies so that they would be born dead.

Survivor babies whose spinal cords were severed, whose brains were removed with suction, whose tiny bodies were placed in a waste bin for disposal.

Then there is commonwealth exhibit C-147, depicting a large baby balled in the fetal position, bloody, stuffed in a bin. “Big enough to walk me home,” joked Gosnell when he saw the child’s remains, testified Ashly Baldwin, a clinic employee.

Gosnell, 72, is charged with killing seven born-alive babies and causing the death of Karnamaya Mongar, 41, an immigrant from Nepal who had sought an abortion at his West Philadelphia clinic. The clinic was busy, doing brisk cash business, catering not only to local women in West Philadelphia, but also women from the affluent surrounding suburbs of Bucks and Montgomery counties. Gosnell’s reputation for no-wait abortions was so well known, women would fly in from other states.

The Gosnell silence

Murder, abortion and the media

In Philadelphia, a doctor is on trial for the gruesome murders of eight people inside his low-rent office. A former assistant testified that she personally witnessed the physician commit at least 30 murders. Most of the patients were "beheaded," another assistant said, adding that there was "blood all over the place." If you have not heard of this doctor's trial for committing a terrifying, decades-long string of serial killings, there is a reason. He is an abortionist.

His name is Kermit Gosnell. He was arrested after a 2010 FBI raid at his offices, which were described this way in the grand jury report: "There was blood on the floor. A stench of urine filled the air. A flea-infested cat was wandering through the facility, and there were cat feces on the stairs."

The sensational nature of this case alone justifies massive media coverage. The doctor ran a filthy, uninspected clinic for decades as state regulators looked the other way. He infected women with diseases by using unsterile equipment. Two of the women who came to him for abortions died. But Kermit Gosnell is not a household name for one reason: His crimes raise uncomfortable questions for supporters of unlimited abortion on demand.

Gosnell delivered babies who were more than 24 weeks old. He then severed their spines at the neck. He called this "ensured fetal demise." Really, he beheaded them. The world of the abortionist is governed by euphemisms. 

Gosnell's trial is about more than a blood-soaked house of horrors. That the media would cover. Its real news value lies in what it says about the artificial lines we draw in the name of protecting a woman's "right to privacy." It is OK to forcibly, brutally end one baby's life, but not another's. This trial provokes the obvious question: Why? For too many reporters, it is a question they don't want to think about.

Abortion, The Mainstream Media, And The Limits Of Shaming

House of Horrors

The "Women's Health Society" abortion clinic at 3801 Lancaster Avenue in Philadelphia was operated by Dr. Kermit Gosnell for 30 years. Gosnell is on trial for allegedly murdering viable babies whose mothers had come to him seeking abortions.

by Pete Spiliakos 

We seem to be in a moment when the national mainstream media either has, or is about to prominently cover the Gosnell horrors. The week-long prolife campaign to increase coverage seems to have finally broken down resistance to covering the Gosnell trial in the most prominent forums of the most popular outlets. The New York Times hasn’t put the trial on its front page yet, but that might well be coming.CNN led off with the story yesterday. Conor Friedersdorf (in a wonderful essay) is correct to wonder how the Gosnell story hasn’t become a prominent national story earlier given all the story’s many horrible news hooks. Megan McArdle admits that her own pro-choice sympathies might have inclined her to shy away from the story. I would like to think that most journalists at mainstream outlets are similarly rethinking their coverage of abortion, but I doubt it. Friedersdorf and McArdle are pro-choice on abortion, but they are also libertarians rather than liberals. While most mainstream media outlets will surrender to the pressure and cover this story more, I think that most of their liberal staff members will consider this a defeat at the hands of their enemies rather than a lesson on how to do their jobs better.

First let’s be clear what I mean by “mainstream” media. It isn’t MSNBC. Like many (but not all) programs on Fox News, MSNBC exists to make money by making its viewers feel better about being on either the conservative or liberal ideological team. MSNBC has a mutually beneficial relationship with Fox News and conservative talk radio in which each side trolls the other. Most people don’t get their news from either MSNBC, or Fox News or talk radio. The mainstream media like ABC, NBC, CBS, and the New York Times might be called culturally biased news. The vast majority of the journalistic and editorial staff for these outlets have left-of-center staffs, but they don’t think of themselves as partisans. They think of themselves as journalists first and think of advancing their policy preferences second or third or almost never.

The personal and collective biases that come from working in an overwhelmingly left-of-center environment blends into the work, but their self-understanding as journalists places some limits on the impact of those biases. They will write stories about the promised benefits of Obamacare, but if some unflattering information comes out, they will report that too. Bias still shapes the coverage. Positive stories will have a coherence that make the case for Obamacare in a the negative stories won’t make the case for Republican opposition. You can see the reverse on Fox News’s excellent Special Report With Bret Baier (which is an example of conservative culturally biased news.) On Special Report, the benefits of Obamacare are mentioned but not emphasized while the drawbacks of the law are spotlighted. The “mainstream” media won’t connect the anti-Obamacare dots for the reader or viewer, but they will eventually get around to reporting those dots – if only in a scattered and confusing way.

Market and Government failures and solutions

Is Market Failure a Sufficient Condition for Government Intervention?

By Art Carden and Steve Horwitz

1. Introduction

We are unapologetic defenders of the economic way of thinking, not merely because it helps us understand why—as economist Joseph Schumpeter explained—capitalism allows factory girls to buy more and better stockings for progressively decreasing amounts of effort, but because with good economic analysis, some of the great atrocities of human history could have been avoided. For example, the Progressive eugenics movement of the early twentieth century was offensively anti-economic, even though some who were called "economists" encouraged it.1 As Bryan Caplan has pointed out, the Holocaust found some of its roots in Malthusianism, the idea that population growth would outstrip the growth of agricultural output.2 The disasters of central planning in the USSR, China, and elsewhere speak for themselves. We don't exaggerate when we say that sound economic reasoning could have saved tens, if not hundreds, of millions of lives.

But economic knowledge incompletely applied can be dangerous. In introductory economics classes, students learn about several types of "market failure," which occurs when some attributes of the market prevent it from producing an efficient outcome. In the context of twentieth-century neoclassical economics, these represent failures of the actual market to reach the equilibrium of the perfectly competitive model. In this framework, market failures are possible when there are externalities (uncompensated costs or benefits that spill over onto people who are not party to a trade); public goods (goods that are non-rival in consumption and for which it is prohibitively costly to exclude non-payers); asymmetric information; and market power like monopoly (when there is one seller of a good or service), monopsony (when there is one buyer of a good or service), or natural monopoly (when the cost structure of the industry makes it more efficient for a single firm to produce the entire market's output).

Externalities, public goods, asymmetric information, and market power provide necessary—but insufficient—conditions for intervention to be justified. They certainly are not talismans that provide interventionists with carte blanche to tinker with the members of a society as if they were pieces on a chessboard. Too often, critics of markets think that merely invoking these terms destroys the case for free markets.3 Unfortunately, non-economists often do not understand these terms. Indeed, understanding these terms clearly is only a first step toward a clear understanding of social phenomena. Let's consider each of these concepts in turn.

2. Externalities

Critics of the market sometimes invoke externalities, which refer to costs or benefits of economic activity that fall upon people not party to the actions in question. A classic external cost (or "negative externality") is pollution. Suppose that steel firms produce in a way that sends chemicals into the air that dirty people's hanging laundry or cause them to feel ill, even though they did not purchase the steel. If someone who purchases steel bears these costs, we simply recognize it as part of what was purchased—i.e., the cost is "internal" to the exchange. Another classic example is the railroad that cuts through farmland and throws off sparks that occasionally cause fires on the property of nearby farmers. A classic external benefit (or "positive externality") is education. If we pay a university to educate us, some of the benefits of that exchange accrue to the rest of society by virtue of our higher productivity or more virtuous behavior.4 Just as the victim of pollution has borne a cost without a benefit, the rest of society gets a benefit from our education without bearing a cost.

Educational Freedom

The Role of Coercion in Education

By Arnold Kling

Most of us went to school when we were younger, and we cannot imagine otherwise. However, it may be worth contemplating radical alternatives to the notion of school. The conflict between schooling and libertarian principles appears to me to have widened in the age of the Internet.

On the one hand, the Internet greatly enhances the opportunities for independent learning. As Will Richardson points out in his e-book, Why School?,(1) learners now face an abundance of educational resources, rather than the scarcity that prevailed when schools became the norm. Moreover, new knowledge is being created at remarkable rates, making lifelong learning essential.

When we think of school, we think of learning that has coordinates in time and space. I took algebra in 8th grade in Clayton, Missouri. I attended college in Swarthmore, Pennsylvania from 1971 to 1975. However, outside of school, learning can take place anywhere, at any time. The Internet makes us keenly aware of this fact, and as Richardson points out, traditional classrooms can seem backward and stifling when compared to what we can learn by ourselves using the Web.

On the other hand, the political pressure to prop up the schooling model may be stronger than ever. President Obama, during his 2008 campaign, spoke of making sure that everyone could go to college. In his 2013 State of the Union address, he called for universal pre-school. Meanwhile, the watchword for many conservatives and Republicans is "accountability," which in practice appears to mean top-down control over schools using test scores as a metric.

Notwithstanding these political forces, I predict that within a decade or two, the idea that learning can be located in time and space will no longer seem natural. The essence of the revolution that I foresee will be our embrace of anywhere-anytime learning. It could be that schooling as an institution will adapt to this paradigm, but I would bet against it.

Deschooling Society

The keys to an educational freedom agenda were identified over forty years ago by Ivan Illich, in his book Deschooling Society.(2) The first key is what he calls disestablishment:

...the United States led the world in a movement to disestablish the monopoly of a single church. Now we need the constitutional disestablishment of the monopoly of the school.

However, a second key is also necessary:

To make this disestablishment effective, we need a law forbidding discrimination in hiring, voting, or admission to centers of learning based on previous attendance at some curriculum. This guarantee would not exclude performance tests of competence for a function or role, but would remove the present absurd discrimination in favor of the person who learns a given school with the largest expenditure of public funds or—what is equally likely—has been able to obtain a diploma which has no relation to any useful skill or job.

The Cyprus Case - Looting the wealth out of the banks and the government

The Gloriously Ballooning Bailout Bedlam Of Cyprus

BY WOLF RICHTER

Bailouts start out small. At first, Cyprus just had a funding crisis; the markets had gotten smart, after years of dousing the country with cheap euros. Not that the risks weren’t there before. But markets opened their eyes. So Cyprus went begging to Russia, and got €2.5 billion in November 2011. That money evaporated without a trace. Then last June, the two largest banks were deemed to need €2.3 billion – €500 million for the Bank of Cyprus and €1.8 billion for Laiki Bank – to fill a void in their regulatory capital, the story went. No big deal.

But the banks had been eviscerated by mismanagement and corruption, and their balance sheets were loaded with deteriorating Greek corporate debt; Greek government bonds that had received a 70% haircut; loans to developers extended during the real-estate bubble that had blown up; loans on developments that were never finished or were built so shoddily that they’ve been declared uninhabitable; loans to politicians that were written off as gifts; and mortgages extended to homeowners who were tangled up in a title-deed scandal that the banks themselves had aided and abetted, leaving 130,000 properties (in a country with 838,000 souls) without title deeds, with disputed ownership, and often worthless mortgages.

So by the end of June, as bailout talks with the Troika took off, “sources” mumbled something about €10 billion, including a government bailout, that hadn’t been on the table before. People gasped. But it was just the beginning. In August, Central Bank Governor Panicos Demetriades told parliament that the banks alone would need €12 billion! Plus a government bailout. Rumor consensus settled on €15 billion total. Then in September Russian Finance Minister Anton Siluanov upped the ante: Cyprus would indeed need €15 billion from the Troika, plus €5 billion from Russia, for a total of €20 billion.

Every time someone looked at the cesspool that these banks were, the bailout amount jumped. By March 25, the Troika’s number had risen to €17 billion. But it would be a new way of doing bank bailouts. The EU would contribute €9 billion, the IMF €1 billion, and €7 billion would be extracted from Cypriot uninsured depositors, bank bondholders, public sector workers, pensioners, corporate taxpayers, and others. Laiki Bank would be dismantled. The alternative would have been the collapse of the banks and the default of the government. It was an elegant, finely tuned instrument designed to keep the Eurozone intact – regardless of the price.

The havoc was immediate. So it was tweaked while banks were closed for over a week and draconian capital controls were imposed. The economy froze. But the deal stuck. Until late Wednesday.

The Aerodynamics of Nihilism

We live in a world now which may be described as, "Nothing Matters"
 

"Nothing matters until the day that it does and then everyone asks why it didn't matter before."

                                           -The Wizard

By Mark Grant

The money pours in each month from America, Europe and Japan and overrides anything and everything else. With pre-payments and calls the estimated amount of money provided by the Fed for the world's monetary supply is approximately $100 billion every month. It is not just the American banks that are the recipients of the hand-out but the foreign ones who ship it back to Europe or buy European sovereign debt courtesy of Mr. Bernanke. I suspect that if the American taxpayers were aware of the scheme that the citizens would not be pleased but then what the Fed is doing is not generally part of polite conversation in America and so it is not discussed.

Yields on European sovereign debt are at incredibly low levels given the underlying economies. Europe trumpets the cause as renewed faith in the European Union but that is a highly unlikely conclusion. Again, it is the "Central Banks Effect" that feeds that stove of consumption and lowers yields, raises the stock markets and has created a world-wide bubble in every asset class on earth. The economies in Cyprus, Greece, Spain, Slovenia, Portugal, Ireland and Italy are all in serious decline but; "Nothing Matters."

The "Stalin Axiom" has taken over the world. It is not the data but how the data is counted!

The unemployment rate in America is not 7.7% but 11.6% if all you do is add in the people that have supposedly left the workforce. Did you think these people had retired? Gotten rich in the stock market and were making plans for St. Tropez this summer? Moved to Costa Rico for the winter? No, they have left the workforce because they are now on the public dole and those that are working are picking up their tab.

In Europe sovereign debt ratios do not include guaranteed liabilities, contingent liabilities and every asset under the sun is marked, "Risk Free." The problem, of course, is that many of these liabilities, oft times called "investments" by the Europeans, are now coming around for payment and the "not counted" does not change the "not paid," I can assure you. 

From Harare to Buenos Aires...

The Great Money Migration

By by Bill Bonner

Back in the USA, stocks rose again yesterday. The Dow finished up 128 points. Gold fell $25 per ounce yesterday... and everybody seems to think it will be going down forever. (A word of caution: probably not.)

Last week, we went to São Paulo, Brazil. There, too, we found taxi drivers who knew a lot more about monetary crises than the typical US economist. Said one:

I remember. I was just a kid. But my father would call and tell us to run to the grocery store. He had just been paid. We'd dash for the grocery story, meet him there and buy everything we could. We spent every cent in just a few minutes.

Our friend was recalling what it was like in the late 1980s in Brazil. The government had caused inflation... then hyperinflation. Prices rose so fast that as soon as people got some cash they ran to the grocery store to spend it.

Later, there was no point. In 1990, hyperinflation in Brazil reached 30,000%. What cost 1 real (the Brazilian currency) in 1980 cost 1 trillion in 1997. The hyperinflation wiped out the middle class... and wiped the shelves clean.

"It's hard to run a business when you don't know what your money is going to be worth," said our friend. "Businesses tended to just stop."

And here in Argentina, there came an announcement this week. The government will freeze the price of gasoline for the next six months.

Price controls didn't work for the Romans. They didn't work for the Germans. They didn't work for the Zimbabweans... or any of the other hundreds of governments that have tried them. But who knows? Maybe they'll work for the Argentines...

Or gasoline will begin to disappear from the filling stations.

A magnificent but temporary interlude in a great nation's bizarre, remorseless self-dissolution

Thatcher thought Britain was worth fighting for

A generation on, the Thatcher era seems more and more like a magnificent but temporary interlude in a great nation’s bizarre, remorseless self-dissolution

By mark steyn

A few hours after Margaret Thatcher's death on Monday, the snarling deadbeats of the British underclass were gleefully rampaging through the streets of Brixton in South London, scaling the marquee of the local fleapit and hanging a banner announcing, "THE BITCH IS DEAD." Amazingly, they managed to spell all four words correctly. By Friday, "Ding Dong! The Witch Is Dead," from "The Wizard of Oz," was the No. 1 download at Amazon UK.

Mrs. Thatcher would have enjoyed all this. Her former speechwriter John O'Sullivan recalls how, some years after leaving office, she arrived to address a small group at an English seaside resort to be greeted by enraged lefties chanting "Thatcher Thatcher Thatcher! Fascist Fascist Fascist!" She turned to her aide and cooed, "Oh, doesn't it make you feel nostalgic?" She was said to be delighted to hear that a concession stand at last year's Trades Union Congress was doing a brisk business in "Thatcher Death Party Packs," almost a quarter-century after her departure from office.

Of course, it would have been asking too much of Britain's torpid Left to rouse themselves to do anything more than sing a few songs and smash a few windows. In "The Wizard of Oz," the witch is struck down at the height of her powers by Dorothy's shack descending from Kansas to relieve the Munchkins of their torments. By comparison, Britain's Moochkins were unable to bring the house down: Mrs. Thatcher died in her bed at the Ritz at a grand old age. Useless as they are, British Socialists were at one point capable of writing their own anti-Thatcher singalongs rather than lazily appropriating Judy Garland blockbusters from MGM's back catalogue. I recall, in the late Eighties, being at the National Theatre in London and watching the crowd go wild over Adrian Mitchell's showstopper, "F**k-Off Friday," a song about union workers getting their redundancy notices at the end of the week, culminating with the lines:

"I can't wait for

That great day when

F**k-Off Friday

Comes to Number Ten."

You should have heard the cheers.

Alas, when F**k-Off Friday did come to 10 Downing Street, it was not the Labour Party's tribunes of the masses who evicted her but the duplicitous scheming twerps of her own Cabinet, who rose up against her in an act of matricide from which the Tory Party has yet to recover. In the preferred euphemism of the American press, Mrs. Thatcher was a "divisive" figure, but that hardly does her justice. She was "divided" not only from the opposition party but from most of her own, and from almost the entire British establishment, including the publicly funded arts panjandrums who ran the likes of the National Theatre and cheerfully commissioned one anti-Thatcher diatribe after another at taxpayer expense. And she was profoundly "divided" from millions and millions of the British people, perhaps a majority.

Nevertheless, she won. In Britain in the Seventies, everything that could be nationalized had been nationalized, into a phalanx of lumpen government monopolies all flying the moth-eaten flag: British Steel, British Coal, British Airways, British Rail ... . The government owned every industry – or, if you prefer, "the British people" owned every industry. And, as a consequence, the unions owned the British people. The top income tax rate was 83 percent, and on investment income, 98 percent. No electorally viable politician now thinks the government should run airlines and car plants and that workers should live their entire lives in government housing. But what seems obvious to all in 2013 was the bipartisan consensus four decades ago, and it required an extraordinary political will for one woman to drag her own party, then the nation, and, subsequently, much of the rest of the world, back from the cliff edge.

The "It Can't Happen Here" Syndrome

Denial is an integral part of atrocity

by Patrice Lewis

Here is a short quiz for you. Ready?

• What’s the current situation with Lindsay Lohan’s rehab?

• Who won the latest “Dancing With the Stars”?

• Name five celebrities with “baby bumps.”

• Explain how the Cypriot banking crisis could impact the European economy.

If you answered the first three questions but are clueless on the fourth, you’re in good company. Estimates are that up to half the population in America is ignorant about the situation in Cyprus. Oh sure, they hear snippets on the evening news, but since it’s far away and happening to other people, they don’t worry about it.

These people are suffering from a Normalcy Bias.

Just what is a Normalcy Bias? Wikipedia defines it as a mental state that “causes people to underestimate both the possibility of a disaster occurring and its possible effects.” It’s sometimes called the “It can’t happen here” syndrome. The assumption is that since a particular disaster has never occurred before, it never will. Any disturbing indications that something bad may happen are dismissed or trivialized.

Originally, the Normalcy Bias referred solely to natural disasters. The scale of devastation and societal disruption from Hurricane Katrina can be attributed in part to a Normalcy Bias – the refusal of the people of New Orleans to believe their beloved city could ever receive a direct hit from a major hurricane, despite its physical vulnerabilities. I distinctly remember seeing a live news report from New Orleans on the evening of Aug. 28, 2005, that showed people partying in the street with a (then) Category 4 hurricane hours away from landfall. Disaster? Nah. It can’t happen here. Gimme another beer.

But the Normalcy Bias has been extended to include political and social disasters as well. The most extreme example is Jews (and to an extent, some Germans) during the reign of the Nazis. Despite all the warning signs, many people remained in denial. Concentration camps? Genocide? Nah. Too crazy. It can’t happen here.

When we hear the mainstream media assuring us in soothing, condescending tones that we’re in an economic “recovery” – despite all evidence to the contrary – we want desperately to believe them. We don’t want anything to disrupt our ordinary, comfortable lives. We genuinely believe that if we cling to our normal way of life and habitual methods of doing things – despite overwhelming proof that something dangerous is looming – then everything will be OK. It can’t happen here.

But the situation in Cyprus is potentially international in scope. North Korea is doing some serious saber-rattling. America’s debt is so out of control that an economic crash is a statistical certainty. Sweeping anti-gun legislation is being enacted in various states even as we speak. As Ayn Rand so memorably put it, “You can ignore reality, but you can’t ignore the consequences of ignoring reality.”