The Virus of Imperialism (Part 1)

Endless Wars for Endless Peace

by Thomas J. DiLorenzo

In his famous 1898 essay, “The Conquest of the United States by Spain,” the great Yale University libertarian scholar William Graham Sumner argued that America had crossed the Rubicon, so to speak, and had become an imperialistic empire. It had become the Spanish empire. But Sumner was only half right. The conquest of Cubawas an imperialistic war, but so were all other American military adventures since the American Revolution. Apparently, even a man as brilliant and astute as Sumner was somewhat befogged by the endless and pervasive drumbeat of war propaganda.

“War is the health of the state,” Randolph Bourne explained in his famous essay of that title. But to the average citizen war means heavy taxation, conscription, censorship, dictatorship, and death. War enriches the state like nothing else can, while impoverishing, enslaving, and ending the lives of many of its citizens. Hence lies, myths, superstitions, and propaganda have always been the essential ingredient of the warfare state. Without them, the public would never acquiesce in the never-ending wars of conquest and imperialism that have long characterized the American state.

The War of 1812

Barely twenty years after the U.S. Constitution was ratified there arose quite a few American politicians who believed it was their “manifest destiny” to invade and conquer Canada. One of the congressional leaders of the early nineteenth-century war party, Henry Clay, celebrated the declaration of war against Great Britain on June 4, 1812, by declaring that “Every patriot bosom must throb with anxious solicitude for the result. Every patriot arm will assist in making that result conducive to the glory of our beloved country” (David and Jeane Heidler, Henry Clay: The Essential American, p. 98).

Among the “official reasons” for the invasion of Canada in 1812 were the alleged “impressment” of American sailors by the British government, but that had been going on for decades, as Justin Raimondo has pointed out. The tall tale was also broadcast that the “evil” British were encouraging Indians to attack American settlers. The real reason for the War of 1812, however, was an impulse to grow the state with an imperialistic war of conquest. The result of the war was a disaster — the British burned down the White House, the Library of Congress, and much of Washington, D.C. Americans were saddled with a huge war debt that was used as an excuse to resurrect the corrupt and economically destabilizing Bank of the United States, a precursor of the Fed.

The Mexican-American War

When James K. Polk became president in 1845 he announced to his cabinet that one of his chief objectives was to acquire California, which was then a part of Mexico. As he wrote in his diary, “I stated to the cabinet that up to this time as they knew, we had herd of no open act of aggression by the Mexican army, but that the danger was imminent that such acts would be committed. I said that in my opinion we had ample cause of war.”

A fear of Free and Frank Discussion

Branding one's political opponents as 'phobic' is a sly and illiberal tactic

By FRANK FUREDI

Poor Stephen Fry. Over the years he has been cavalier about condemning certain people as homophobic. As a consummate practitioner of the art of emotional correctness, he knows that the charge of phobia – whether homophobia, Islamophobia, Judaeophobia, xenophobia and even Europhobia (hatred of the EU) – rings all the right bells.

Yet now he finds himself on the receiving end of the phobia slur - and he isn’t happy about it. He’s been accused of being nothing less than an ‘Islamophobe’, after he defended the anti-religious crusader Richard Dawkins’ stupid remarks on Twitter regarding Islam’s undistinguished historical role.

‘Am I an Islamophobe?’, asked Fry in his cringing defence of the right to criticise what he called ‘Islamofascism’. Depicting himself as a lonely liberal valiantly fighting for unpopular causes, he lamented that the ‘squeezed liberal finds himself in the position that cannot criticise Islamofascism because it’s somehow “racist”’.

Unfortunately, Fry is very selective indeed in his defence of the right to criticise beliefs and practices that one abhors. For this squeezed liberal has no inhibitions about denouncing critics of gay marriage as homophobes. Just as some dogmatic commentators insist on equating the questioning of Islam with Islamophobia, so many defenders of the gay-marriage consensus cannot imagine that their opponents might just have some genuine intellectual or moral criticisms of gay marriage.

Allegations and counter-allegations of ‘phobia!’ point to a disturbing development in the public life of Western societies. The ascendancy of the metaphor of phobia is inversely proportional to the depoliticisation of certain views and outlooks. For example, the displacement of the term anti-Semitism by Judaeophobia represents the supplanting of a political category (hatred of Jews) with a psychological one (irrational fear of Jewish stuff). Similarly, through the narrative of Islamophobia, prejudice against Muslim people is depoliticised and turned into a medical problem. 

As is the case with all medical diagnoses, accusing someone of being phobic is really to make a statement about that person’s mental and moral condition. So the diagnosis of homophobia or Islamophobia is not so much a comment on the content of what has been said, as it is a verdict about the psychological deficits of the guilty, phobia-suffering party. When Fry protested his innocence of the charge of Islamophobia, he was in effect rejecting its implied psychological slur.

The rise of the narrative of phobia reflects the increasing influence of the therapeutic culture, which tends to interpret conflict and troublesome behaviour through the medium of psychology. In our therapeutic era, emotional dysfunctions are frequently depicted as the cause of social problems. Unprocessed or unmanaged emotions are said to be the source of many of the ills that afflict society. Even wars between nations are now attributed to some emotional or psychological defect on the part of a group or leader. The early twentieth-century term xenophobia is no longer simply a descriptive term; rather, it is a therapeutic diagnosis.

The irrational fears associated with all these so-called phobias are said to be just a few of the many emotional disorders that dominate life today. The diagnosis of phobia is a central part of a therapeutic worldview which looks upon stress, rage, trauma, low self-esteem and addiction as dominant features of the human experience.

The therapeutic worldview is not just about medicalising individuals and our behaviour. It also tries to provide a system of meaning through which human experience might be interpreted and understood. In the twenty-first century, meaning is increasingly sought in the realm and idiom of emotions. Through the policing of emotions, some attitudes are condemned as negative and others held up as positive. So hate is a negative and happiness a positive emotion. The range of emotions which fuel a ‘phobia’ are all diagnosed as negative, which is why this sentiment can be so readily pathologised.

Today’s meshing together of moral and medical categories makes it very difficult to have a mature and tolerant exchange of opinions. The labelling of someone’s speech, attitudes or behaviour as a phobia shuts down discussion. It is not possible to have a genuine, substantive debate or disagreement with someone who is diagnosed as phobic - after all, there is little point in taking the arguments of irrational and psychologically disturbed individuals seriously. Apparently, such people don’t have rational political views; they are simply possessed of an irrational mental condition.

So the narrative of phobia absolves people of the tough task of defending their views through debate, by inviting them to medicalise their opponents and in the process close down discussion. The medicalisation of political opponents represents a kind of existential annihilation of those we disagree with. Diagnosed as irrational or ill, they can be safely ignored; their opinions can be treated as symptoms of a mental disorder, which we don’t have to take seriously.

The authoritarian implications of this resorting to psychological demonisation are clear if we think back to Stalin’s Russia. There, dissidents were sometimes incarcerated in mental-health institutions. Today in the West, phobic individuals are not incarcerated, of course. But they do face cultural and institutional stigmatisation. How long before ‘phobics’ are encouraged to participate in anger-management classes or pressurised to have their awareness raised?

The dehumanising premise behind the narrative of phobia, the systematic refusal to take seriously the mental capacities of one’s opponents, is the apotheosis of closed-mindedness. When people refuse to submit their arguments to full public scrutiny, on the basis that anyone who tries to knock them down is a ‘hater’ or ‘phobic’, then issues are rarely clarified and truth remains obscured. What we end up with is debatephobia.

No, Stephen Fry and his mate Richard Dawkins do not suffer from Islamophobia. They are, to use an old-fashioned political expression, just utterly wrong.

Australia's Rejection Of Kevin Rudd May Foretell Political Change In The U.S.

The English speaking peoples tend to move in a sort of partial political sync with one another

By Jerry Bowyer

With the victory of the Tony Abbott led conservatives in Australia, we can see that the Anglosphere is now post progressive. The English speaking nations of the world: England, New Zealand, Canada and now Australia are governed by conservatives. America stands apart from them as the sole remaining major leftist-governed power in the Anglo world.

If you’d like to throw India into the mix too, you find Manmohan Singh, who is pushing to deregulate foreign investment markets and has just appointed a monetary hawk, Raghuram Rajan, as the new head of the Reserve Bank of India. Canada entirely skipped the recent wave of progressivism which swept the Anglosphere, and under PM Stephen Harper has surpassed the United States in economic freedom. Our northern neighbor is now listed by both the Heritage Foundation’s Index of Economic Freedom and the Fraser Institute’s Economic Freedom of the World as the most economically free nation in North America. Harper has been particularly diligent in cutting corporate taxes while the U.S. now has the highest corporate tax rates in the developed world.

England rejected the hard-core labourite policies of Gordon Brown, putting the Tory David Cameron in power. New Zealand has a center right government in power as well. The English speaking peoples (to borrow Winston’s Churchill’s evocative phrase) tend to move in a sort of partial political sync with one another. Thatcher paved the way for Reagan, preceding him, anticipating him and inspiring him. Then we see the near simultaneous rise of Blair and Clinton, then the later hawkish Blair corresponds with Bush. Brown and Obama moved both their countries hard left in step with one another. And as of last year, England moved right under Cameron. In Australia, John Howard allied with and paralleled with his friend Bush, Russ/Gilliard tracked with Obama.

And in what could herald yet another political shift, this time back to the right, Australia just handed a decisive victory to the Liberal National Party (the Australian conservative party), and a decisive defeat to the incumbent Labour Party under Kevin Rudd. Why?

Letters and secret files reveal the tormented life of Lina Prokofiev

New book on Soviet composer's family will show how his wife was abandoned, tortured by Stalin's police and sent to the gulag

Lina Prokofiev in Moscow in 1936 with her sons Oleg, centre, and Svyatoslav. 

By Dalya Alberge

She endured an abusive husband who likened her to "an infected tooth", and torture by Stalin's secret police, who stuck needles in her, threatened her children and drove her to the brink of madness. The tragic life of the wife of Sergei Prokofiev, one of the 20th century's greatest composers, is now revealed in hundreds of previously unpublished letters, as well as secret Soviet files.

The cruelty suffered by Lina Prokofiev at home paled against her later torture, but she never stopped loving her husband – even when he abandoned her for another woman – and she never spoke publicly of her suffering during eight years in a Siberian prison camp.

Prokofiev (1891-1953) is the composer of masterpieces such as the opera War and Peace, the ballet Romeo and Juliet and the children's fable, Peter and the Wolf. But when Simon Morrison, a British-born music professor at Princeton University and president of the Prokofiev Foundation, was given access to the unpublished documents by Prokofiev's family for a new book, he was shocked by their contents. They revealed "a real indictment of his personality", he told theObserver. "I have a moral question. Prokofiev's music is some of the most emotional of the 20th century, but he was a person of very little feeling. As a biographer, you have responsibilities. As a listener, I don't think I can listen to the music the same way again. It is a harrowing story." Letters from Lina to her children from the gulag are equally poignant, he added.

The 600 letters – whose contents are to be published on 21 March by Harvill Secker in The Love and Wars of Lina Prokofiev – were made available to Morrison by Prokofiev's older son, Svyatoslav, whose "dying wish was for his mother's story to be told in unvarnished guise".

An America In Decline Literally Becomes The 'New' Great Britain

America’s historic emphasis on property rights, sound money and limited government fostered a corporate culture of innovation and growth

By Jerry Bowyer

I’ve argued this point before and often investors intuitively get the point better than money managers. For example, the other day I was talking to my cardiologist, and after the examination we were chatting in the hallway and he asked me for a stock tip. I don’t give stock tips, but I did explain what my research had found: that one of the most important things to look at when one is compiling a portfolio is the country in which a company is domiciled.

Almost all of the discussion on TV and the internet is about which American stock to buy and once in a while, about whether to buy some American bonds. What is ignored is the extremely important question of the environment, does the home country honor wealth creation or not. “…and right now our country does not,” he said finishing my sentence for me. He got it – instantly – partly because he’s smart, but partly because he doesn’t have his mind cluttered with the normal detritus of modern financial-speak.

On the other hand, I hear a lot of objections to the idea of looking at country characteristics from money managers and financial advisors (though thankfully, not from any that I’m working with right now), and the objection which I hear most often is something like this:

“Most companies have operations all over the world. What is an ‘American Company’ today? Apple and Microsoft may be based here in the U.S. but the majority of their operations are in other countries.”

In other words, since we have a global economy, the country of domicile doesn’t matter. The problems with this point of view are numerous. First, it confuses revenues with profits. As a shareholder I don’t own a fractional share of revenues, I own a fractional share of profits. Companies sell goods and services at a price, and all those sales together go into an aggregate number called revenues. Various costs are subtracted from the revenues to calculate various progressively smaller measures of profit and loss: gross income, net income, EBITDA (earnings before interest, taxes, depreciation and amortization), taxable income, etc. Profits are much more important than revenues, and the regulations under which a company must operate can severely impair profits.

Some legal environments leave companies with a great deal more room for agility than others. Some countries, on the other hand, mandate ‘stakeholder capitalism’ which is really not capitalism at all, but a form of guided economy, in which boards of directors are force-fed members whom the shareholders would never have chosen, who represent various special interest groups such as labor or greens. Boards are prevented from setting executive compensation at levels which will promote the greatest profitability and are instead hamstrung in their salary-setting by government edict or convoluted voting processes. Regulations discourage many restructuring and updating actions that might be taken by good management. Anti-takeover laws forbid the dreaded ‘hostile takeover,’ imposed on management by outside investors who purchase controlling shares in order to make companies more lean and profitable. In general, some countries have environments which are conducive to innovation and some do not.

Of the top 500 Multinational Companies as ranked by Fortune Magazine, 133 are headquartered in the United States.

How about China? China houses 61 of the top 500. It housed only 16 of them in 2005. We are 4% of global population with a civilization which started only 300 years ago. They are 19% of global population with a civilization which started 3000 years ago, and yet we have 26% of multination companies and they have only 16%.

Keep the scourge of scientism out of schools

Why evidence-based teaching methods are a bad idea

By Frank Furedi

At a time when society finds it hard to provide compelling answers to the problems that people face, the realm of science is being plundered in search of moral authority. The exhaustion of the old taken-for-granted ideals, values and ideologies has led to a search for new ways for validating views and opinions. Instead of trying to give meaning to the problems we face through reflection and debate, governments now embrace science as the unique source of truth.

This is giving rise to ‘policy-led science’ - that is, science that has a tendency to mould itself around the needs of policymakers. This strengthens the dogma of scientism, which aims to spread scientific discourse into our personal, cultural and social experiences, where actually other modes of non-scientific reflection are really needed. This is why, today, we have everything from the ‘science of parenting’ to the ‘science of happiness’ and the ‘science of the spiritual life’.

Scientism is now used to legitimate various policies and claims made by all sorts of institutions. Consequently, evidence, or rather evidence-based policy, which enjoys the authority of science, dominates the modern political landscape. Today, policies are judged not on the grounds of whether they are good or bad, but on the question of whether they are evidence-based.

Scientific evidence is, of course, a useful resource for decision-makers. But not every research finding adds up to ‘evidence’ that can directly be used to forge a new policy. Evidence needs to be tested, interpreted and given meaning before it can become a reliable source of action. The use of scientific evidence for political ends is particularly troublesome in the sphere of social policy, where the problems facing people are context-specific and mediated through various different influences and factors. That is why, historically, so-called evidence-based policy has proven to be no more or no less effective than policies driven by a more explicitly political agenda.

Despite the undistinguished record of ‘evidence’-based policy, governments desperate to legitimise their authority have embraced it with unprecedented enthusiasm in recent years. An area where this is most apparent is education. The growth of scientism in education is illustrated by recent calls to introduce randomised control trials (RCTs) into schooling. These calls, outlined by the science writer Ben Goldacre in a paper called Building Evidence into Education, are supported by the UK’s Department of Education.

Youth In Revolt: The Demographics Behind Middle Eastern Uprisings

If the peaceful world of markets as a road to the future is cut off, then the violent world of revolution becomes the answer by default

By Jerry Bowyer

Much has been written about the various uprisings which have been gaining strength and momentum since 2008. Usually it takes the tack of focusing on the abuses of the particular regime in question, because the press tends to see things through the eyes of the official underdog in any story based around conflict. Supply side economists like me have pointed to the ways in which monetary debasement by the United States helped set off a wave of food price spikes and launched an Inflation Intifada. My friend David Goldman has documented the economic problems from a supply side perspective in greater depth here in the Asia Times.

But very little has appeared in the public discussion about the demographic component of this wave of destabilization. That’s a shame because although there are real economic risks in a country which gets out of balance and skews too old, there are also severe consequences to a country which gets out of balance in the opposite direction, at least when that occurs in conjunction with other risk factors. Skew too young and you get a revolution: an analysis of all the countries which have gone through a revolution, coup attempt or civil war in the recent ‘Arab Spring’ shows that every single one of them had a median age of 24 or younger. The story of political revolutions is more often than not the story of starting with a nation which has low life expectancy and high birth rates (hence a young median age) and adding high youth unemployment, one or another radical ideology and a food price spike.

Photo source: census.gov

Photo Source: census.gov

Skew too old and you get a regime of ‘get off my lawn’: perfectly groomed, no change, frozen in time, slow death. A Japan which dreams only of its former glories; thinks any possible future lies with robots; is obsessed with horror movies about the vengeful ghosts of discarded children, and sells more adult diapers per year than it does baby diapers paints a sad but accurate picture of the future of that nation. Interestingly, the Nordic types seem more cinematically captivated by lurid crime films about murdered children who are avenged by girls with dragon tattoos, than they are by waterlogged girl ghosts.

Photo Source : www.census.gov

The traditional remedies prescribed by global elite opinion don’t seem to help much. For example, higher education is not a reliable social stabilizer. The old cliché about universities as schools of revolution seems to match the history better than the newer cliché about how sending them to college keeps them off the streets. In terms of the Arab Spring, Egypt, for example, had perhaps the highest proportion of college grads in the Muslim middle east.

But if a country has a large youth co-hort and a high college matriculation rate and at the same time has high unemployment, then higher education seems to function as an unrest accelerant. It raises expectations, but fails to deliver on a higher standard of living. It exposes young people to revolutionary ideologies, and instills attitudes of condescension and even contempt for the more cautious politics of their elders. And it connects people with these ideas and attitudes and frustrations with other people who share them.  This is a recipe for violence and bloodshed. All of this is rendered even more heartbreaking when one realizes that the pattern is that young people are typically the vanguard of the revolution, not its eventual rulers. Self-sacrificing idealists start revolutions, but self-seeking realists consolidate them.  And if you don’t believe me, than just ask the Egyptian military.

As my friend Reuven Brenner has taught me, capital markets and revolutions are not opposites. They are alternatives, alternative answers to the question which all young people ask, “How can I create the future that I want?” If the peaceful world of markets as a road to the future is cut off, as it has been for decades in the countries under question, then the violent world of revolution becomes the answer by default.

What does a 'two-state solution' mean?

For the time being, these words lack any meaning in today's Middle East

By Reuven Brenner 

In light of what is going on the Middle East, and the efforts of US Secretary of State John Kerry to restart negotiations to reach a ''two-state'' solution to the Israel-Palestinian conflict, it is worth briefly summarizing solutions I write about 30 years ago.

The efforts of the United States and Europe to bring about a "two-state" solution in the Middle East are incomprehensible.

A stable "state" must have one army - in Israel, that was Ben-Gurion's, the country's first prime minister - correct - and painfully delivered message when firing on Altalena in June 1948. He ordered the newly created Israel Defence Forces (IDF) to fire on the ship by that name, when fractions of the Irgun, a para-military organization, were unwilling to put down the arms and be absorbed into the IDF. Following that painful episode in Israel's history - the idea of Jews shooting Jews few years after 6 million perished still shocks - the fractions of the Irgun put down the arms. The new state's monopoly on force has not been challenged since.

Somehow this lesson has not sunk in elsewhere, the spread of failing states around the world notwithstanding: and they began failing when, rationalized one way or another, states started to tolerate military groups within their borders, in the Middle East in particular. At one time it was Jordan for a while (until the king's army pushed out Fattah), Lebanon, and now Syria - to name just two.

How does then the current push toward a two state-solution (for Israel and Palestinians) in the Middle East look today through this prism? The Palestinians have many armies, and no leader in sight is willing and be able to do what Ben-Gurion did.

It is not clear with whom to then even negotiate or about what, since nothing would be enforceable. What type of "state" is anyone talking about? What can one negotiate about, when one side cannot enforce anything? It is not even clear whether there is such a thing as a "Palestinian tribe": There appear four rather distinct ones, with only one represented in the negotiation.

Some 60% of Jordan's population is Palestinian, and they may represent one group. The present "two-state" discussion does not even refer to them. Then there are the Palestinians living in the West Bank, who have representation in the present negotiations.

The third group includes the about 1,400,000 Arabs within Israel's 1967 borders - who prefer to be living within a prosperous, stable Israel; this is what one can infer from the fact that they have been "voting with their feet" and have stayed - though they were free to migrate, as many discontented people throughout history have done. After all, that is what created the US, Canada, Australia, Singapore, Latin American countries - the list is long).

Drunks, fools and the United States of America

The Constitution, the Sour Spot, and the Great Syria Train Wreck

by WALTER RUSSELL MEAD

There’s a tough issue that humanitarian interventionists need to take into account when it comes to Syria. There is really no good way to read the Constitution that gives the president an unlimited unilateral power to order US forces into combat for humanitarian missions, and it is even harder to find justification for a unilateral power to order retaliatory strikes.

As commander in chief the president has a widely recognized and long established power to take emergency action to deal with military and security threats. And the president also has the power to deploy the US military on non-combat operations for humanitarian purposes—for example, when the US Navy responded to the Indian Ocean tsunami. But acts of war against an enemy that does not directly threaten the United States of America or its treaty allies must pass a tougher test.

If the president really can launch discretionary military attacks on humanitarian grounds around the world at will, we have an elected dictatorship, not a system of limited powers. Is the President of the United States to be the judge, jury and enforcer of international law even when nothing in either US or international law gives him these powers?

As a practical matter, one can see circumstances (a fast moving wave of genocidal violence while Congress is out of session, for example) in which a president could responsibly substitute consultation with Congressional leaders for a full and formal vote. But what President Obama wants in Syria is a retaliatory strike. He is not intervening rapidly to stop a wave of chemical attacks. He is acting at leisure, with reviews of evidence, international consultation, reports from observers. It seems to make little difference whether he acts on it today or tomorrow or next week. There is, evidently, no practical reason for failing to consult Congress; the President himself has chosen to postpone any military action until Congress acts on the matter. In such a case it seems very hard to create a sound constitutional argument justifying presidential action if Congress rejects his proposal.

Sorry Economists, Politicians Do Not Invest, They Just Spend

In short, there is nothing more opposed to true investment than government spending

By J.T. Young

Despite liberal rhetoric to the contrary, government does not invest, it simply spends. With another fiscal showdown looming expect to hear a litany from the left labeling federal spending as “investment” and as the reason why it cannot be cut. Don’t believe it. At no stage of the process does public sector spending resemble private sector investment.

First, the private sector differentiates its expenditures. Neither necessities nor discretionary spending are expected to return a profit. Only investments are expected to and they make up a relatively small amount for most individuals.

These investments are expected to return at least market-based returns, if not more. Of course, they may not, but the intent is clear and the defining reason for these resources.

Such investment money is freely given – either by a single individual or many individuals giving it to others to invest. Throughout its life, investment money must conform to market rules. When it ceases to, losses accumulate and investors flee.

If successful, profit is returned to the investors and, if unsuccessful, these investors absorb losses. In both cases, the results advance the economy – concentrating resources in the hands of those making good decisions and shifting them away from those making bad ones.

The public sector’s use of resources differs from the private’s at each step.

The public sector does not differentiate its own spending. Everything becomes “necessity” – while individual citizens may label different items differently, government simply absorbs all these verdicts and casts the whole as vital. It is for this reason that government on its own finds it so hard to cut spending.

None of the public sector’s resources are freely given. Governments obtain their resources from taxing. Even when government borrows, it can do so only on its ability to obtain money by fiat.

These resources are therefore not excess or disposable to those from whom they are taken. It is the government, not the individual who determines their amount. As a result, few individuals or businesses have as high a percentage of income that they invest as they pay in taxes.

None of the public sector’s resources are dispersed with the intent of making a profit. Often, just the opposite rationale for public sector spending is given – doing what the private sector does not. As a result, public sector resources are distributed based on politics, with no government program not having powerful political allies supporting it.

The public sector expressly ignores economic criteria when allocating its resources. When by chance its allocations do coincide with economic criteria, it crowds out more efficient private sector investment by subsidization or outright monopoly.

Because its resources are neither allocated based on an expected profit, nor maintained based on competition, government rarely earns a profit, or does so for very long.

As a result there is never a return to “investors” – any return is generally dispersed throughout the citizen body and often expressly directed away from taxpayers as part of intended income redistribution.

Other peoples money are running out.Fast

Taxpayers On the Hook for Trillions in Unfunded State Pension Liabilities

By Eric Boehm

A new assessment of state pension obligations suggests the problem is even worse than it already appears.

How much worse?

Using a more conservative method of accounting for financial gains in the marketplace, there is a $4.1 trillion gap between assets and liabilities — known as the “unfunded liability” — of all state-level pension systems in the United States, according to State Budget Solutions, a fiscally conservative think tank that deals with tax and spending issues at the state level.

On a per-capita basis, each American would have to fork over about $13,100 to fill that gap and fulfill the promises made to current and retired state workers.

The new survey makes the pension crisis look worse than in other reports because of the way State Budget Solutions calculates the plans’ unfunded liabilities.

The group uses a measure called “market value liability,” which assumes that pension funds will earn about 3.22 percent annually — in line with what long-term U.S. treasury bonds pay.  That measure is more accurate than often bloated assumptions that underpin most state pension plans, Eucalitto said.

“They are able to make the unfunded liability seem lower and that means they have to put less money into the pension systems each year,” said Cory Eucalitto, who authored the State Budget Solutions report.

Many states use an assumed return of 7 percent or 8 percent, though some are beginning to adjust those expectations downward.  But every time the investments miss that mark, it widens the gap between the pension fund’s assets and liabilities.

For example, in Pennsylvania the official unfunded liability reported by the state’s two major pension systems is a combined $49 billion. That assumes pension funds will grow at a rate of 7.5 percent every year in perpetuity.

Using the lower, safer growth rate of 3.22 percent, the unfunded liability in Pennsylvania’s two pension plans grows to a combined $156 billion.

This different form of measuring liabilities produces some truly scary results. In five states, State Budget Solutions calculates pension liabilities represent more than 40 percent of the entire state economy. In two states — Ohio and Mississippi — the pension costs are equal to more than half the state’s gross production.

On a per-capita basis, it’s equally worrisome. There are five states where the unfunded pension liability would represent a per-capita cost of more than $20,000, with Alaska leading the way at more than $32,000 per person.

Even Tennessee, on the low end of spectrum, would have to ask each and every resident to pay $5,676 to cover the full cost of its state pension liabilities.

Many states are struggling to find the political will to deal with the tsunami of pension costs poised to wreck budgets for decades to come.

In Illinois, where the state is dealing with the nation’s highest official unfunded liability of $100 billion – State Budget Solutions says it’s really more like $287 billion – Gov. Pat Quinn made an effort at reform this year.

The self-interested society

A dangerous temptation

by Kenneth Minogue
Societies are all imperfect, but self-interested societies fare far better than any of their counterparts.

Here in the Galapagos, the abstraction that must haunt our imaginings is evolution. But the term has two distinct meanings. Here is one genealogy, from Hayek:

Modern biology has borrowed the concept of evolution from studies of culture of older lineage. If this is in a sense well known, it is almost always forgotten.

Of course the theory of cultural evolution [sometimes also described as psycho-social, super-organic, or exsomatic evolution] and the theory of biological evolution are hardly identical.

Here is another, from Matt Ridley:

Thomas Hobbes was Charles Darwin’s direct intellectual ancestor. Hobbes (1651) begat David Hume (1739), who begat Adam Smith (1776), who begat Thomas Robert Malthus (1798), who begat Charles Darwin (1859).

Evolution is clearly a powerful word. The problem is that neither of these meanings has much to do with Darwinian natural selection which, by contrast with these meanings, is a blind process in which random mutations constantly generate new versions of a species that deals more successfully with the environment than its fellows. My concern by contrast is with the emergence of our free civilization, which has no blind random processes in it, though it may well be that Adam Smith’s “invisible hand” might be taken to function in the same way.

I am concerned with the evolution of that grand thing called a “free society”—specifically, the only society or civilization that has ever evolved into freedom: our own.

What I mean by this is that our society—namely modern Western Europe and its offshoots in the rest of the world—has evolved into a set of national states, each of which is an association of individualists, managing their own lives and pursuing their own individual projects. That might sound like a description of any kind of human life, so why am I suggesting that it is unique?

The contrast I want to make here is with every other society and civilization because all of them rest, at some level, on legitimation in terms of a comprehensive system of justice. Most such societies are of course largely agricultural, and in them each individual notionally occupies a social status valued according to its supposed contribution to the common good. Human beings living in these just societies live—in principle—the way all human beings ought to live: in castes, or under Sharia, or the Mandate of Heaven, or whatever the hierarchy of belief locally may be, down to and including small tribal groups.

We in Western Europe, however, have taken a different path in which individualists, often identified as town-dwellers or “bourgeoisie,” associate together generally according to their own inclinations rather than in terms of some determinate social status designed to contribute to the good of the community. Individualists (in their very role as individualists) merely associate rather than form a community, though as subjects of a state they may participate in various communities built around specific interests or passions—clubs, religions, industrial enterprises, and so on. But this is incidental to the free lives they lead.

Those who live in just societies have clear functions, and up to a point enjoy the respect appropriate to such a function. Some of these functions are precisely defined: ruler, wife, warrior, priest, etc. But in all cases there will be a well-understood hierarchy governing social life, and its purpose is to preserve the basic aspiration of such comprehensively just societies—namely, social harmony. Thus the Forbidden City in Beijing had a Gate of Supreme Harmony leading to the Hall of Supreme Harmony, passing on to the Hall of Central Harmony and the Hall of Preserving Harmony, all of them clearly issuing from the idea of individual imperial authority.

Individualists in free societies, by contrast, merely have a duty to conform to the laws of their state, which ideally do not distinguish specific functions. In advancing this distinction, I am obviously perilously engaged in an abstract sociological sketch, one at a level comparable to David Riesman’s famous distinction between people living in traditional and modern societies in The Lonely Crowd. In these terms, free individualists are notionally equal under the law, including the ruler himself or herself. But what is it, we may ask, that guides and motivates the lives of these free individualists? The common answer is: self-interest. And my central concern in this paper will be with making sense of this remarkable—and troublesome—term.

In an obvious sense, we all know what “self-interest” means. If a car comes careering towards me, I jump out of the way; it is the basic instinct of self-preservation, and hardly distinguishes an individualist from any other human being. More specifically, as self-interested, I prefer to get a higher rather than a lower wage for the same work. Again, I want my family to prosper and my children to do well at school. Obvious, in fact.

Dogs of war versus the emerging caravan

While the Xi and Putin caravan reenacts the spirit of the Silk Road, the dogs of war keep barking

By Pepe Escobar

The dogs of war bark and the emerging-powers caravan ... keeps on trucking. That's the Group of 20 meeting in St Petersburg in a nutshell. Count on the indispensable (bombing) nation - via US President Barack "Red Line" Obama - to disrupt a summit whose original agenda was to tackle the immense problems afflicting the global economy. 

Economy is for suckers. Get me to my Tomahawk on time. The Obama doctrine - Yes We Scan, Yes We Drone - reached a new low with its Yes We Bomb "solution" to the chemical weapons attack in Ghouta, Syria, presenting world public opinion in the run-up towards the G-20 with the illusionist spectacle of a "debate" in the US Senate about the merits of a new bout of humanitarian bombing. 

What in fact was served was the appalling spectacle of serial wacko Republicans of the John McCain and Lindsey Graham mould squeezing the desperate Obama administration like little lemons. Their Orwellian gambit - "reverse the battlefield momentum" - pushed by the senile McCain, was duly approved by the Senate Foreign Relations Committee. This means bombing the hell out of Damascus during a "window of opportunity" of three months, with a possibility of extension. Red Line Obama is on board, assuring, before leaving to Sweden and the G-20, that his former "slap on the wrist" would "fit in" with regime change. 

Not even the ghost of Machiavelli would come up with an adjective to describe the whole planet waiting in disbelief to see whether the almost universally despised House of Representatives (15% approval rating, according to RealClearPolitics) decides, Roman Empire style, to give the thumbs down and authorize the bombing of one of the oldest cities in humanity (well, they have an illustrious precedent of applauding Shock and Awe over Baghdad, which topped the Mongols going medieval in the 13th century). 

And all this against the will of the "American people" who, according to a Reuters/Ipsos poll support this folly by an overwhelming 9%. 

Yes We Bomb. But what for? The following exchange might have come straight from Monty Python. Unfortunately, it's real.

Chairman of the Joint Chiefs of Staff General Martin Dempsey: "The answer to whether I support additional support for the moderate opposition is yes." 

Senator Bob Corker (R, Tennessee): "And this authorization will support those activities in addition to responding to the weapons of mass destruction." 

Dempsey: "I don't know how the resolution will evolve, but I support - " 

Corker: "What you're seeking. What is it you're seeking?" 

Dempsey: "I can't answer that, what we're seeking ... "

The Pentagon may be clueless - rather, playing clueless. But Bandar Bush, AIPAC/Israel and vast sectors of the industrial-military complex know exactly what they are seeking. And Secretary of State John Kerry knows not only what they are seeking but also who's footing the bill, as in "if the United States is prepared to go do the whole thing the way we've done it previously in other places, they'll carry that cost. That's how dedicated they are to this." 

Lousy game theory in Syria

From the perspective of game theory, the mooted attack on Syria is a colossal failure

By Chan Akya

"Because it's there" - Edmund Hillary on why he climbed Mount Everest 

There are multiple humanitarian considerations to whatever is going on in the Middle East region, be it the military coup in Egypt or the mass murders of citizens in Syria. Then again, one does find it difficult to distinguish between the folks who are supposedly the friends of the West and those that are described as the other side. What, for example is the difference between the repression and killing of Shi'ite protesters in Bahrain and the killings of civilians in Syria? 

If the criterion is that countries cannot be allowed to commit mass murder of their populations, how would the West describe the actions of its allies in Turkey (against the Kurds now and previously the Armenians) or Saudi Arabia? 

So we can easily remove humanitarian concerns as the key motivation of any attack on Syria. 

Regime change is the next potential reason for any action in Syria, but that obviously begs the question of exactly what is in store for the country once the brutal Bashar Al-Assad regime is removed. From whatever the news reports point out, the counterpart of the Syrian regime is now well split between the generic opponents of Assad, while other groups have been bolstered by the presence of al-Qaeda trained militants. Minorities including Syria's long-established Christian community have been brutally targeted by opponents of the Assad regime. 

Without needing to dwell on the ironies of the West intervening on behalf of al-Qaeda and other assorted Christian killers, the question does beg: what's the plan exactly if Assad were to be removed from power. If the fighting to date is any indication, it would be more brutal than the kind of fighting that has marked Libya since its "liberation" from Gaddafi all those months ago.

Creative Destruction—The Best Game in Town

A market economy is a profit-and-loss system

By Robert Higgs  

In his justly famous 1942 book Capitalism, Socialism and Democracy, Joseph A. Schumpeter described the dynamics of a market economy as a process of “creative destruction.” In his view, innovation—“the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates”—drives this process. Its most important result is that for the first time in history, the mass of the population in developed countries enjoys a standard of living that even the aristocrats of past ages could scarcely have imagined, much less have actually had.

Yet, as Schumpeter sought to express by his pithy term, the process is not merely creative, but also destructive. As a market economy develops, it necessarily brings about an immense variety of changes in particular demands and supplies, and hence it results in losses as well as profits. For those who rely on selling goods or services in declining or disappearing demand, for those whose locations no longer fit well into emerging spatial patterns of production, for those whose techniques of production no longer represent a means of maximizing net revenues, for those whose skills and experience no longer attract eager buyers in the labor markets—for them and countless others, the process of economic development brings anxiety, disappointment, loss, and in some cases ruin.

The losers take little solace in the thought that their economic displacement or demotion by more competitive workers and producers constitutes the heart and soul of a process by which the entire society, on average, becomes richer. And their plight has always attracted legions of critics who correctly blame the market system for the wreckage. It is simply impossible for the process of economic development to operate without losers. A market economy is a profit-and-loss system. Profits signal the desirability (to consumers) of moving resources to new employments; losses signal the desirability (to consumers) of removing resources from current employments. On the one hand, people are drawn by the prospect of heightened economic pleasure; on the other hand, they are repelled by the onset of persistent economic pain. In this way the overall system continually reshapes itself to comport more effectively with the prevailing patterns of demand and supply.

For the losers, the perceived remedy of their plight has often been not to make the necessary personal adjustments as well as possible, but to use force, especially state force, to burden or prohibit the more successful competitors in the market. Thus, the market’s critics demand bailouts, subsidies, tax breaks, and corporate and personal welfare of various sorts to soften the blows of the Schumpeterian “perennial gale of creative destruction.” Notice, however, that all such attempts to soften the blows also serve to mute or falsify the messages the market system is sending about where resources can be employed most productively in the prevailing circumstances. Amelioration of the suffering softens the blows, to be sure, but it also slows the process by which wealth is being created and introduces wasteful measures that may, especially if they are state-mandated, become entrenched in the politico-economic system and thereby serve as channels for resource waste and as permanent fetters on real progress.