The myth of a democratic socialist society funded by capitalism is finished

This is the defining political problem of the early 21st century

By Janet Daley

Whatever the outcome of the American presidential election, one thing is certain: the fighting of it will be the most significant political event of the decade. Last week’s Republican national convention sharpened what had been until then only a vague, inchoate theme: this campaign is going to consist of the debate that all Western democratic countries should be engaging in, but which only the United States has the nerve to undertake. The question that will demand an answer lies at the heart of the economic crisis from which the West seems unable to recover. It is so profoundly threatening to the governing consensus of Britain and Europe as to be virtually unutterable here, so we shall have to rely on the robustness of the US political class to make the running.

What is being challenged is nothing less than the most basic premise of the politics of the centre ground: that you can have free market economics and a democratic socialist welfare system at the same time. The magic formula in which the wealth produced by the market economy is redistributed by the state – from those who produce it to those whom the government believes deserve it – has gone bust. The crash of 2008 exposed a devastating truth that went much deeper than the discovery of a generation of delinquent bankers, or a transitory property bubble. 

Thugs Win Again

And when thugs win, that provides more incentive for thuggery

From The Jerusalem Post:

Egged [the largest bus company in Israel] and the company in charge of bus advertisements have decided that rather than be forced to put up ads with women in Jerusalem due to court action claiming discrimination against the gender, they will remove all people — both men and women — from the bus advertisements.

Starting August 1, Cnaan Advertising quietly removed all persons from their bus advertisements in the capital. The policy was clearly laid out in a letter from Egged to Cnaan obtained by The Jerusalem Post: “In the Jerusalem area there will be no images of people at all, though in other parts of the country it will be possible to use such images,” the letter from July 31 stated.

Cnaan, the company responsible for the bus ads, claims that haredi [ultra-Orthodox-Jewish -EV] extremists have defaced buses with paint and stones and even set an empty bus on fire because of ads featuring images of women they deemed “immodest.” Cnaan refused to run any advertisements with women, claiming that it will cause the company financial damage, and activists accused the company of discrimination against women. After the Transportation Ministry said it would refuse to work with any companies that discriminate based on gender on July 11, legal advisers from Egged and Cnaan decided the best course of action would be to remove any people from bus advertisements....

Whether the government was right in refusing to work with the company unless it treated ads depicting men and ads depicting women equally is a separate question. But while the company decided not to run ads depicting men because of the threat of government action, it’s clear that the company decided not to run ads depicting women because of the fear of thuggery by religious extremists. I sympathize with the company’s predicament, but the bottom line is that the thugs won: Their threat of vandalism and arson has led to the suppression of speech that they dislike.

And when thugs win, that provides more incentive for thuggery, not just by thugs of this ideological stripe but by others as well. It seems that there is serious peril for Israeli democracy and liberty here, and a serious need to do something about this sort of religious extremism that is willing to enforce its censorship schemes not just by social pressure but by criminal attack.

The Rulers And The Ruled

It is impossible to free a serf 

By Bill Buckler

The truth that without property rights, no other rights are possible has been known for millennia. In the formalised study of politics, it is more than 300 years old, having been articulated with great care by John Locke in the late 17th century. The modern study of economics is well over 200 years old. Adam Smith’s Wealth Of Nations was published in 1776 - the same year as Thomas Jefferson’s Declaration Of Independence. The great work which finally integrated money with politics and economics celebrates its centennial this year. Ludwig von Mises published his Theory Of Money And Credit in 1912 - the year before the US inaugurated an income tax and a central bank. Ten years after that in 1922, von Mises published Socialism - a book which established beyond refutation the fundamental truth that any form of central planning and/or government control of the means of production cannot work because it makes economic calculation impossible. Picture if you will the state of ANY other branch of human endeavour if ALL the knowledge about it gained over the past three centuries had been summarily dismissed.

Property rights are a prerequisite for any kind of exchange - direct or indirect. The ability to exchange is fundamental to any type of viable economic activity. The efficiency of exchange is fundamental to the success of that economic activity and the resultant prosperity of the nation that engages in it. Indirect exchange using a MEDIUM of exchange or money is hugely more efficient than direct exchange or barter. That makes money the most important economic good in existence. The tragedy of our present global plight is the simple fact that money is also the least understood economic good in existence.

The first pre-requisite of the establishment of a “society” of the rulers and the ruled has always been the same. The rulers must gain control over the medium of exchange. For obvious reasons, no nation can ever progress to a state of advanced economic activity until a medium of exchange is established. Once it is established, there is no going back. An advanced economy cannot operate by means of barter. The problem is that once the government or the rulers gain control of money, it progressively ceases to be a medium of exchange and becomes a medium of control. That impinges on the functioning of markets which in turn impinges on the maintenance of property rights. Thus, we come full circle from a free society to a command society. There has never been any shortage of those who want to rule. The problem has always been with the vast majority who are content to be ruled. Today’s global outcry for the manufacturing of more and more “money” out of thin air is an eloquent testimony. It shows that most people have no understanding of freedom, markets or money. Lacking such understanding - and having no desire to gain it - most people have accepted government as their masters.

As Robert Heinlein stated the problem - it is impossible to free a serf or a slave. He or she must free themselves and most are much more terrified of that prospect than they are resentful of being ruled.

Why Our Pets Have Better Health Care Than Us

Stem cell therapy for dogs!

By JULIA SZABO

Why can’t doctors be more like vets? With medical breakthroughs quietly taking place in the field of animal medicine, it’s a question more Americans should be asking — whether or not they have pets.

Thanks to advances in veterinary medicine, pets have access to more superior medical care than humans do. Dogs that suffer from arthritis may undergo stem cell regeneration therapy, in which their own autologous (adult) stem cells are harvested from their own fatty tissue and then injected into their joints. The healing benefit is remarkable, as I have witnessed myself with two of my own dogs. Unfortunately, this particular therapy is not yet available for humans in the United States.

Meanwhile, in Florida late last year, a Yorkshire terrier underwent a routine spay procedure, but something went very wrong during the anesthesia process and the dog emerged from resuscitation with cortical blindness. Veterinarians advised the dog’s owner that euthanasia might be the kindest option in this case. Then, a quick-thinking vet at Calusa Veterinary Center in Boca Raton suggested hyperbaric oxygen therapy; with nothing to lose, the dog’s heartbroken owner consented. Thirty-five HBO2 treatments later, the dog’s blindness was reversed.

Counsel of Despair?

Liquidating malinvestments

By Robert Higgs

Over the years, I have heard many people say that the government’s adoption of a laissez-faire stance during a business recession or depression amounts to “do-nothing government”—the unstated assumption always being that it is better for the government to “do something” than to do nothing. Recommending such a hands-off stance is often described as a “counsel of despair.” Moreover, it is frequently added, in a democratic polity, the electorate will not tolerate such a policy.

Implicit in such criticism is the assumption that the government knows how to improve the situation and has an incentive to do so. If only it will take the known remedial action, people’s suffering will be relieved, and the economy will return more quickly to full employment and rapid economic growth. All that blocks such remedial action, it would seem, are outdated ideas about the proper role of government and, perhaps, the opposition of certain selfish special interests. Government need only step on the gas pedal, by means of expansionary fiscal and monetary policies, and the economic engine will accelerate. If the government is already taking such actions, it need only press down harder on the gas pedal.

A Politics of Knowledge

The capacity of a society for learning must match its capacity for change

by JOHN O. MCGINNIS

Over the past few decades, the rise of information technology has dramatically recast Americans' everyday experiences. Cell phones suddenly allowed us to stay in touch anytime, anywhere, only to be replaced by Blackberries, iPhones, and ever smarter devices. The internet and its search engines have given us instant access to unprecedented amounts of information, opening doors to a virtual reality that has become nearly as important to many of us as the tangible, physical world. From doctors accessing patient records on their laptops during examinations to university professors using meeting software to instruct students three time zones away, these new technologies are continuously transforming how we work, play, and live.

But we rarely pause to consider what such relentless technological progress might mean for our lives as citizens, and for the work of our government. At the core of the information revolution is an explosion of networked computing power, and the great promise of that revolution is therefore the promise of networked information processing. It is the promise not so much of doing more as of knowing more — of turning vast quantities of raw data and diffuse knowledge into manageable, usable, and focused expertise and understanding. The potential of such power for a government like ours is enormous, because the reach of our government constantly exceeds the grasp of our understanding. We lack a clear picture of what our government now does well and what it does poorly: Massive federal programs disburse billions of dollars with no real sense of whether they achieve their purposes; new programs are created based on vague and ill-informed projections of their future effects; and bureaucrats in Washington are expected to know far more than any small group of technocrats ever really could.

Great Moments in Government Overreach

DOJ Accuses San Diego Public Library of Discrimination

by mark perry

The Sacramento Public Library Authority partnered with Barnes and Noble on a trial basis to provide at least one NOOK e-book reader to each of its 28 libraries, pre-loaded with 20 books in a variety of genres.  Sure seems like a sensible,  innovative, market-based, consumer-friendly option now that so many people do their reading using Kindles, NOOKs, and iPads instead of print copies. 

So what's the problem? According to the Department of Justice (DOJ), the pilot e-reader program violates the Americans with Disabilities Act because it discriminates against blind patrons of the library, who can't use NOOK e-readers.  The library reached a costly settlement that requires it to purchase iPod touch and iPad devices, which read e-books aloud with a computerized voice.  DOJ has also directed the library not to buy any additional e-readers that exclude blind or disabled people; and it requires the library system to train its staff on ADA compliance.

Read the  whole story here.

Question: Doesn't the Sacramento Public Library's entire collection of books, magazines, and newspapers in hard copy also discriminate against its blind patrons?

Rediscovering Justice

Justice is the end of civil society

by JOSHUA D. HAWLEY

Americans are in a disagreeable mood. Polls show pessimism about the country's future at record highs, trust in government at record lows, and a deep distaste for political incumbents of both parties. It is tempting to attribute this discontent to the economy, and surely the jobless rate has much to do with Americans' disquiet. But more than unemployment troubles America. Voters have been telling pollsters for years, well before the epic economic collapse, that they believe the country is far off track. It is not just that middle- and working-class Americans cannot seem to move ahead or that too many schools are failing. It is not only that we seem persistently unable to face our ruinous budget deficit or reform our ill-designed entitlement system.

Americans increasingly feel there is a profound and widening distance between our most cherished ideals and the reality of our national life. In some fundamental way, Americans believe, the nation is disordered. Barack Obama's promise to address that disorder — to practice a reformist, even transformative politics — is what got him elected three years ago. Instead, Obama pursued an agenda of government aggrandizement. Americans want that aggrandizement reversed, but they want more. They want to put their country back in order and make society reflect again their deepest moral commitments, to recover a shared sense of belonging and purpose.

Justice, Inequality, and the Poor

We cannot help the sick by injuring the fit

by RYAN MESSMORE

After a financial crisis, a deep recession, and a stalled recovery, it should be no surprise that poverty in America is on the rise. This fall, the Census Bureau reported that a record 46 million Americans — 15% of the population — were living below the poverty line. This is a troubling figure, and it should certainly move us to act to help the poor as we strive to grow the economy.

But efforts to address poverty in America are frequently derailed by misguided ideology — in particular, by the notion that poverty is best understood through the lens of inequality. Far too often, policymakers succumb to the argument that a widening gap between the richest and poorest Americans is the fundamental problem to be solved and that poverty is merely a symptom of that deeper flaw.

Such concerns about inequality are not baseless, of course. They begin from a fact of the modern American economy, which is that, in recent decades, incomes among the poor have risen less quickly than have incomes among the wealthy. And such growing inequality, some critics contend, is both practically and morally dangerous. A growing income divide can foster bitterness and animosity between classes, threaten democracy, and destabilize the economy. Above all, they argue, it violates the cherished moral principle of equality.

Implicit in much of the critique of our income divide is the assumption that inequality per se is inherently unjust, and therefore that the gap between rich and poor is as well. That perceived injustice in turn spurs support for redistributionist policies that are intended to make levels of prosperity more equal across society.

President Obama commonly uses the language of justice and equality to advance such an agenda — speaking, for instance, of "the injustice in the growing divide between Main Street and Wall Street." Other left-leaning politicians, commentators, economists, and activists say much the same. Some religious figures have even used their moral concerns about inequality to justify the imposition of specific redistributionist economic policies. For example, Jim Wallis, president of the liberal religious organization Sojourners, has said that inequality in America — "a sin of biblical proportions" — necessitates a higher minimum wage, higher taxes on the rich, and increased welfare spending.

Which Way, George Orwell?

He was a socialist who saw through socialism and its inherent dangers

by Nicholas Farrell

The BBC has just rejected a proposal to erect a statue in honor of George Orwell outside its new London headquarters.

The reason? As the nation’s public broadcaster, the BBC is supposed to be unbiased and objective, so to erect such a statue would be regarded as “far too left-wing.”

That is what the BBC’s Mark Thompson apparently told Lady Joan Bakewell, a former BBC presenter and Labour member of the House of Lords, who had proposed the idea backed by a consortium of her radical-chic friends.

Orwell—too left-wing!

Yes, George Orwell was a socialist, but above all he believed in liberty. He was well aware that the trouble with socialism is that it leads inevitably to tyranny.

If Orwell were alive today he would despise the modern left, especially for its doctrine of political correctness, which denies freedom of speech and via the state inflicts on our lives numerous petty tyrannies.

Income Confusion

Ideology vs Reality

By Thomas Sowell

Anyone who follows the media has probably heard many times that the rich are getting richer, the poor are getting poorer, and incomes of the population in general are stagnating. Moreover, those who say such things can produce many statistics, including data from the Census Bureau, which seem to indicate that.

On the other hand, income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005.

The top one percent -- "the rich" who are supposed to be monopolizing the money, according to the left -- saw their incomes decline by a whopping 26 percent.

Meanwhile, the average taxpayers' real income increased by 24 percent between 1996 and 2005.

How can all this be? How can official statistics from different agencies of the same government -- the Census Bureau and the IRS -- lead to such radically different conclusions?

There are wild cards in such data that need to be kept in mind when you hear income statistics thrown around -- especially when they are thrown around by people who are trying to prove something for political purposes.

The Regulatory State

The Enemy Within

By CHRISTOPHER DEMUTH

Washington is in a regulatory growth spurt. Hundreds of rulemaking proceedings are underway or impending under the Wall Street Reform and Consumer Protection Act (Dodd-Frank) and the Patient Protection and Affordable Care Act (Obamacare), both enacted in 2010. The Environmental Protection Agency is pursuing many hugely expensive pollution-control initiatives. The Federal Communications Commission wants to regulate the internet. Agencies are tightening highway fuel-economy standards and banning the incandescent light bulb. Price controls are making a comeback in health insurance and debit cards.

Congressional Republicans are up in arms, and their charges of over-regulation are justified. The Obama administration's confidence in central planning is as manifest in its regulatory policies as in its taxing and spending policies. The administration is clearly comfortable with executive government, as in its dispensation of waivers from the requirements of the Obamacare and No Child Left Behind statutes, as well as in its $20 billion compensation program for people affected by the BP oil spill (a program that had no statutory basis at all). The administration uses regulatory authorities to pursue unspoken policies, such as hobbling carbon-based energy production (evident in the rejection of the environmentally benign Keystone XL pipeline) and promoting labor unions (demonstrated by its campaigns to stop Boeing from building airplanes in South Carolina and to overrule state constitutions that guarantee the secret ballot in union elections).

Business and the Literati

American literature hates American business for what it has done to the souls of the rich, the poor, and the middling alike

By ALGIS VALIUNAS

For as long as the culture of business has been an integral part of American life, it has also been frowned upon by important sectors of our society. Among our intellectuals especially, the business world has been the subject of many brutal caricatures, portraying corporations large and small, and the people who run them, as heartless, soulless agents of greed. These caricatures have shaped our implicit understanding of the nature of the business world, so much that they have come to pass for conventional wisdom.

In recent years, one of the clearest expressions of the reigning caricature was that offered by the commencement speaker who addressed the graduating class of Arizona State University in May 2009. Warning the students away from what he described as the familiar American formula for success, the speaker put forward what he took to be the ethic of the business world:

You're taught to chase after all the usual brass rings; you try to be on this "who's who" list or that top 100 list; you chase after the big money and you figure out how big your corner office is; you worry about whether you have a fancy enough title or a fancy enough car. That's the message that's sent each and every day, or has been in our culture for far too long — that through material possessions, through a ruthless competition pursued only on your own behalf — that's how you will measure success. Now, you can take that road — and it may work for some. But at this critical juncture in our nation's history, at this difficult time, let me suggest that such an approach won't get you where you want to go; it displays a poverty of ambition.

Cuba is walking a delicate line on health

Cuba campaign takes on 'free' health care

by PETER ORSI

HAVANA (AP) — Cuba's system of free medical care, long considered a birthright by its citizens and trumpeted as one of the communist government's great successes, is not immune to cutbacks under Raul Castro's drive for efficiency.

The health sector has already endured millions of dollars in budget cuts and tens of thousands of layoffs, and it became clear this month that Castro is looking for more ways to save when the newspaper voice of the Communist Party, Granma, published daily details for two weeks on how much the government spends on everything from anesthetics and acupuncture to orthodontics and organ transplants.

It's part of a wider media campaign that seems geared to discourage frivolous use of medical services, to explain or blunt fears of a drop-off in care and to remind Cubans to be grateful that health care is still free despite persistent economic woes. But it's also raising the eyebrows of outside analysts, who predict further cuts or significant changes to what has been a pillar of the socialist system implanted after the 1959 revolution.

"Very often the media has been a leading indicator of where the economic reforms are going," said Phil Peters, a longtime Cuba observer at the Lexington Institute think tank. "My guess is that there's some kind of policy statement to follow, because that's been the pattern."

A wonder of the modern world

The London Underground

Andrew Martin does a fine job in celebrating the history and experience of the Tube, a pioneering railway that embodies all the characteristics - good and bad - of our capital city.

by Neil Davenport 

The closing ceremony of the 2012 London Olympics was notable for its groaning reliance on tourist-shop icons - all black cabs, bowler hats, Houses of Parliament, red pillar-boxes and Mini Coopers. In a dreary way, what could we expect? A tourist-shop portrayal of Britain is still internationally recognisable and, for the organisers, safe enough to avoid party-pooping controversy. Curiously, though, one famous figure of the capital was noticeable by its absence: the London Underground. With its roundel logo, distinctive trains and elegantly functional map, few landmarks of London are as richly iconic as this. Indeed, as a character player in umpteen films, novels and pop songs, no London setting would be complete without the Underground.

Throughout the network’s history, though, Londoners’ relationship with the Tube has often been uneasy and aggravating: overcrowding, delays, cancellations, the fare’s dent on the wallet and, for the middle classes, striking tube workers and their ‘inflated’ salary. Nevertheless, it is only when the Tube is not working properly that we become aware of its magnitude. Unlike Tower Bridge or Beefeaters, the Tube isn’t a remote or mythical symbol of London. It’s the living, working and organic lifeblood of the capital. It is the way in which millions of Londoners are able to work and play and thus, unlike Parliament, has meaning to ordinary people’s lives.

The Unseen Class War that could decide the presidential election

The New Political Geography

by Joel Kotkin

Much is said about class warfare in contemporary America, and there’s justifiable anger at the impoverishment of much of the middle and working classes. The Pew Research Center recently dubbed the 2000s a “lost decade” for middle-income earners — some 85% of Americans in that category feel it’s now more difficult to maintain their standard of living than at the beginning of the millennium, according to a Pew survey.

Blaming a disliked minority — rich business folks — has morphed into a predictable strategy for President Obama’s Democrats, stripped of incumbent success. But all the talk of “one percent” versus “the ninety nine percent” misses new splits developing within both the upper and middle classes.

There is no true solidarity among the rich since no one is yet threatening their status. The “one percent” are splitting their bets. In 2008 President Obama received more Wall Street money than any candidate in history, and he still relies on Wall Street bundlers for his sustenance. For all his class rhetoric, miscreant Wall Streeters, particularly big ones, have evaded big sanctions and the ignominy of jail time.

Field of dreams

Israel’s natural gas

By Tobias Buck

After decades of importing every drop of fuel, Israel has struck it rich, uncovering vast reserves of natural gas in the Mediterranean

The black and yellow helicopter heads north from Tel Aviv, passing over empty beaches, a yacht harbour and a string of sprawling seafront residences that house some of Israel’s wealthiest families. After a few minutes the pilot makes a sharp turn to the left and steers his ageing Bell 412 towards the open sea.

For more than half an hour, all there is to see is the blue waters of the Mediterranean. Then suddenly a hulking mass of brightly painted steel rises from the midday haze. Towering more than 100m above the water, this is the Sedco Express, a drilling rig that has been operating in this stretch of ocean for almost three years. As the helicopter touches down on the landing pad, we see a small blue and white Star of David flag fluttering in the wind. It is the only sign that the Sedco Express sits atop one of the greatest treasures that Israel has ever found. Far below, connected to the rig by a slender steel pipe that runs through 1,700m of ocean and another 4,500m of rock and sand, lies a vast reservoir of natural gas known as the Tamar field.

Ben Bernanke And His Merry Band Of Thieves

The Real Reverse Robin Hood

Away from the stifling media crush, staid Ben Bernanke is dashing Reverse Robin Hood, lackey pawn of the Neofeudalist Financial Lords who shamelessly steals from the poor to give to the parasitic super-rich.

by Charles Hugh-Smith

Amidst electioneering chatter about a "reverse Robin Hood" who steals from the poor to give to the rich, it's important to identify the real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves, a.k.a. the Federal Reserve. It's especially appropriate to reveal Ben as the real Reverse Robin Hood today, as the Chairman is as omnipresent in the media as Big Brother due to the Cargo-Cult confab in Jackson Hole, Wyoming.

Please answer the following questions before launching a rousing defense of the All-Powerful Fed and its chairman:

1. What is the nominal yield on your savings account, thanks to the Fed's zero-interest rate policy (ZIRP)? (Answer: 0.25%)

2. What is the inflation-adjusted yield on your savings account? (Answer: - 2.25%)

3. What is the rate of interest the Fed charges banks for "free money"? (Answer: 0%)

Gold Is A Barbeque Relish

There was nothing wrong with my weight, I just wasn’t tall enough

by Mark McHugh

My Doctor’s an idiot.  A few years ago, he started expressing concerns about my weight, pointing at this chart supposedly showing how much a man of my height should weigh.  One glance at his stupid chart and it was clear to me that he had completely misdiagnosed my condition.  There was nothing wrong with my weight, I just wasn’t tall enough.  Clearly I needed to grow my way out of this. So I went home and googled “how to stimulate growth.”  Once I got past the all the baldness cures and penis pumps (it’s not my bag, baby), I found hundreds of papers so incredibly boring I knew they had to be true.  In no time, I was able to design and implement my own stimulus plan based on the irrefutable scientificky principles of Nobel prize winners and other people so smart they never had to do an honest day’s work in their lives.  Despite the difficulty climbing stairs, I was feeling pretty good about things until my last check-up….

“Hi, Doc.”

“Hi,” he said, examining my file.  He looked up, “You’ve put on twenty pounds since the last time I saw you”

“Thanks for noticing,” I beamed.

He frowned.  “I remember now.  You’re the guy on the diet designed to make you grow.  What’s that called again?”

“The Keynesian Plan.”

“Is that the one where you eat bacon and cheese, but not vegetables?”

The New Endangered Species

Liquidity & Reliable Income Streams

by Charles Hugh-Smith

The causal relationship between scarcity, demand, and price is intuitive.  Whatever is scarce and in demand will rise in price; whatever is abundant and in low demand will decline in price to its cost basis.

The corollary is somewhat less intuitive, but still solidly sensible: the cure for high prices is high prices, meaning that as the price of a commodity or service reaches a threshold of affordability/pain, suppliers and consumers will seek out alternatives or modify their behaviors to lower consumption.

We talk about the demand for commodities being elastic or inelastic, meaning that some commodities such as oil and grain are so essential that the demand for them is less elastic than demand for discretionary goods and services.  Despite its essential role in the global economy, the demand for oil is not fixed; as prices rise, demand falls. Since all commodities are priced at the margin, the price of oil is actually quite volatile, despite the supposed inelasticity of demand for oil.