The Greatest Thinker You've Never Read: Ludwig von Mises

The greatest social thinker of the twentieth century

“The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.”

                                                                         - Human Action
By Art Carden

Had he not passed away at the tender age of 92 in 1973, Ludwig von Mises would have turned 131 years old today. In my humble opinion, he was the greatest social thinker of the twentieth century. In a series of breakthrough contributions like The Theory of Money and Credit, Socialism: An Economic And Sociological Analysis, Human Action (his magnum opus), and Theory and History–to say nothing of a series of smaller and no-less-insightful works like Bureaucracy and Omnipotent Government–Mises developed theories of economic growth and business cycles that are relevant today. One of the wonders of the modern world is that his major contributions are available to be perused or downloaded from the institute bearing his name or from the Liberty Fund. Today, anyone with access to an internet connection can access his works with little or no trouble. Anyone with a USB drive can carry his greatest works on a keychain.

The progress that made this possible wasn’t an accident, and it wasn’t random. Indeed, this brings us to Mises’s greatest contribution: his demonstration that socialism cannot function as a rational economic system and that private ownership of the means of production is necessary if value is going to be maximized and waste is going to be minimized in the production process.

Mises started–and in my humble opinion, ended–the debate over whether an economic system based on common or social ownership of the means of production could function with his essay “Economic Calculation in the Socialist Commonwealth.” He demonstrated that it was impossible to know whether a particular production process was wise (resource-optimizing) or unwise (resource-wasting) in the absence of prices for the means of production. His socialist critics accepted this, and Oskar Lange suggested that a statue of Mises be given a place of honor by the socialist Central Planning Board (here is Murray Rothbard with more).

Mises carried his argument step further, though: he argued that these prices cannot emerge without exchange, and exchange in turn cannot happen without private ownership of the means of production. Many economists laud the market for its efficiency properties as free markets generally direct resources to their highest-valued ends while minimizing costs of production. In the Misesian tradition, however, the market plays a much more essential role. It is not merely one of a number of possible allocative mechanisms. Exchange in a free market is an information- and knowledge-generating process. To adapt the title of one of Hayek’s essays, competition in the free market is “a discovery procedure.” This emphasis on the coordinating and knowledge-generating properties of exchange in a free market with secure private property rights is one of the distinctive features of the modern Misesian tradition, which is discussed in a three-part series by my occasional co-author Steven Horwitz (1,2, 3).

Mises’s arguments, and the arguments of those who have followed him, do not merely undermine arguments for pure, global socialism. They also undermine arguments for interventionism more generally. Economists take a lot of heat for focusing on market exchange and material prosperity, and it is fashionable in some circles to say that “there is more to life than economic efficiency” as if that decides an argument in favor of intervention. Not so: people respond to incentives, even when you don’t want them to, and the knowledge-destroying and incentive-distorting effects of interventionism all too often bring with them unintended consequences that not only reduce economic efficiency but also harm precisely the intended beneficiaries of the intervention.

It is for this reason that I urge my students to consider the consequences of different interventionist schemes–to count the cost, as it were. In his introduction to the new edition of Socialism from Laissez-Faire Books, Peter J. Boettke makes an important point:

“Critics of economics say that economists know the price of everything but the value of nothing. Nothing, perhaps, is so dangerous intellectually in the policy sciences as an economist who knows only economics, except, I would add, a moral philosopher who knows no economics at all.”

Ludwig von Mises can no longer teach us economics in person. His astounding intellectual contributions live on, though, in his writings and in the passion for truth that shines through almost every word. Unfortunately, the people who most need to read Mises probably won’t. In this light, I can close with nothing better than the sober warning Mises offers in the last few sentences of Human Action:

“The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.”

Venezuela food shortages: 'No one can explain why a rich country has no food'

No one? Really?

Venezuelans queue for food at a state-run market in Caracas. Photograph: Reuters

By Virginia Lopez, The Guardian

"Toilet paper, rice and coffee have long been missing from stores, as Venezuelan president blames CIA plot for chronic shortages"

It's the rainy season in Venezuela and Pedro Rodríguez has had to battle upturned manhole lids, flooded avenues and infernal traffic jams in his quest for sugar, oil and milk in Caracas.

His daily battle to find food is not new, but it's getting worse. "There is something about finally having enough to make ends meet and being unable to buy what I need because it's gone missing. It leaves me feeling indignant," says Rodríguez, a 55-year-old removal man who makes an average of £500 a month. "I haven't lost hope that things will get better, but sometimes the end seems nowhere in sight."

Venezuelans have faced shortages before, so rehashing old strategies such as substituting rice for manioc or going to informal street vendors who re-sell oil, milk or flour at a higher price, comes easy. For many here, finding food is not the problem – it is the lengths one has to go to that are hard to reconcile.

In Avenida Victoria, a low-income sector of Caracas, Zeneida Caballero complains about waiting in endless queues for a sack of low-quality rice. "It fills me with rage to have to spend the one free day I have wasting my time for a bag of rice," she says. "I end up paying more at the re-sellers. In the end, all these price controls proved useless."

In 2008, when there was another serious wave of food scarcity, most people blamed shop owners for hoarding food as a mechanism to exert pressure on the government's price controls, a measure that former president Hugo Chávez adopted as part of his self-styled socialist revolution.

This time, however, food shortages have gone on for almost a year and certain items long gone from the shelves are hitting a particular nerve with Venezuelans. Toilet paper, rice, coffee, and cornflour, used to make arepas, Venezuela's national dish, have become emblematic of more than just an economic crisis.

"We used to produce rice and we had excellent coffee; now we produce nothing. With the situation here people abandoned the fields," says Jesús López, in reference to government-seized land that sits idle. "Empty shelves and no one to explain why a rich country has no food. It's unacceptable," adds the 90-year-old farmer from San Cristóbal, on the western state of Táchira, bordering Colombia.

For Asdrubal Oliveros, an economist at Ecoanalítica, one of the country's leading consulting firms, this recent bout of food shortages is the result of a series of elements coming to a head. From an over-reliance on imports to price controls and, quite simply, a lack of funds, food shortages in Venezuela have not only peaked but they have lasted longer than ever.

"Other than oil, we produce close to nothing, and even oil production has decreased. There is a lack of hard currency, and, in a country that imports everything, this becomes more evident with food scarcity," says Oliveros.

Neville Chamberlain Was Right

The maligned British prime minister did what we would want any responsible leader to do

By Nick Baumann

Seventy-five years ago, on Sept. 30, 1938, British Prime Minister Neville Chamberlain signed the Munich Pact, handing portions of Czechoslovakia to Adolf Hitler's Germany. Chamberlain returned to Britain to popular acclaim, declaring that he had secured "peace for our time." Today the prime minister is generally portrayed as a foolish man who was wrong to try to "appease" Hitler—a cautionary tale for any leader silly enough to prefer negotiation to confrontation.

But among historians, that view changed in the late 1950s, when the British government began making Chamberlain-era records available to researchers. "The result of this was the discovery of all sorts of factors that narrowed the options of the British government in general and narrowed the options of Neville Chamberlain in particular," explains David Dutton, a British historian who wrote a recent biographyof the prime minister. "The evidence was so overwhelming," he says, that many historians came to believe that Chamberlain "couldn't do anything other than what he did" at Munich. Over time, Dutton says, "the weight of the historiography began to shift to a much more sympathetic appreciation" of Chamberlain.

First, a look at the military situation. Most historians agree that the British army was not ready for war with Germany in September 1938. If war had broken out over the Czechoslovak crisis, Britain would only have been able to send two divisions to the continent—and ill-equipped divisions, at that. Between 1919 and March 1932, Britain had based its military planning on a “10-year rule,” which assumed Britain would face no major war in the next decade. Rearmament only began in 1934—and only on a limited basis. The British army, as it existed in September 1938, was simply not intended for continental warfare. Nor was the rearmament of the Navy or the Royal Air Force complete. British naval rearmament had recommenced in 1936 as part of a five-year program. And although Hitler’s Luftwaffe had repeatedly doubled in size in the late 1930s, it wasn't until April 1938 that the British government decided that its air force could purchase as many aircraft as could be produced.

The Boxed In Fed

Narayana Havenstein is for turning

by Pater Tenebrarum

Exit, shmexit…as our readers know, we have always been among those who have argued that the Federal Reserve will never truly 'exit' from its 'unconventional policies'. At least not for any appreciable period of time – which is to say, we have occasionally held that it might try to reduce or stop 'QE' or similar programs due to a misguided impression that the recovery has become 'self-sustaining' (we are using all these quote marks because we think the entire mainstream phraseology in this context either makes no sense or is slightly Orwellian). However, it would then immediately be forced to reinstate the policy again, as the long-delayed liquidation of malinvested capital would undoubtedly commence with little delay. This continues to be the situation, so we were only moderately surprised that 'QE to Infinity' was not even 'tapered'.

We sometimes discuss individual Fed board members in these pages, as there is a variety of views represented, especially among the district presidents. Of course the money printers have a huge majority, so that the handful of doubters regularly gets outvoted when it is their turn to have a vote. In addition it should be noted that their protests are usually of a token nature: they may dissent once or twice, and then they become quiet again. The sole exceptions to this rule are currently Jeffrey Lacker and Esther George, whereby Lacker is holding views that make one wonder why he even wants to be part of this abominable central planning organization. Over the past decade or so he seems to have gradually realized what enormous economic damage it is doing.

One of the regional presidents we once held in comparatively higher regard is Narayana Kocherlakota. It may be recalled that Kocherlakota once was among those dissenting with the Fed's incessant money printing due to his analysis of the labor market. We commented favorably on his views at the time – contrary to most of his colleagues he seemed to have realized that there is no such thing as 'the labor market', i.e., he acknowledged that labor isn't a homogeneous blob.

He was quite correct of course: when a major bubble unwinds, very particular problems will emerge while the economy restructures to better reflect the actual state of consumer demand and the available pool of real savings. Many workers will lose their jobs and it will be found that there are numerous mismatches between the types of labor actually demanded in the market and the skill sets on offer. Obviously, following the collapse housing bubble, all sorts of labor connected to the building industry, the mortgage credit industry, real estate agent services and so forth were surplus to requirements. In the meantime however, demand for specific labor in other sectors of the economy could not be met (for instance, railway equipment makers could not find enough skilled welders for a time). Kocherlakota concluded that money printing could do nothing about this skills mismatch. It simply takes time for these imbalances to be absorbed.

However, it did not take long for him to make a complete U-turn. We have never understood what made him change his mind, but he moved from being a 'token hawk' to becoming the most vocal supporter of more money printing.

The Lunatics Take Over the Asylum

Yesterday, Kocherlakota once again made his new views known and this time he went completely overboard. It is quite ironic that the political left – the people who allegedly speak for the working class, the poor and the downtrodden – immediately came out judging Kocherlakota's call for massive additional monetary inflation 'brilliant'.

Of course the people that continue to be hurt the most by the Fed's crazy inflationism are precisely those the political left purportedly speaks for. It is testament to the fact that decades of propaganda have put erroneous economic theories almost beyond the pale of debate – it is simply taken for granted that central planning and inflationism will 'work'.

What is so amazing about this is that even if one has little idea of the theoretical debate, the people making these assumptions are completely unswayed by the evidence to the contrary that has amassed after decades of ever greater boom-bust cycles. After all, they have have finally landed us in the 'worst economic environment since the Great Depression'. Do they believe this situation just fell from the sky, unbidden? Why are they unable to  recognize the glaringly obvious: namely that it is the end result of the very interventionism they are pining for?

How to Enrich or Impoverish a Nation

Without creation, there can be no distribution.

by Selwyn Duke

What has lifted more people out of poverty, charity or economic freedom? It’s not even close.

Charity is wonderful, and I’ll be the first to say we have an obligation to share our gifts, be they material, intellectual or talent oriented. Yet whether our redistributionist endeavor is charity — and charity is voluntary redistribution — or the less noble, coercive, outsourcing of charity known as government programs, there first must be wealth to redistribute. But where does wealth come from?

If we go back to biblical times and beyond, a man might be considered wealthy if he had 70 goats. In point of fact, the standard for wealth was so different that the US’s average middle-class person today — with his car, TVs, computer, refrigerator and many other luxuries — would have been considered wealthy for most of history. And our average “poor” man, who also usually has an old car and various creature comforts, likewise has a material lifestyle that would have been the envy of our forebears. The reason for this is simple: there is far, far more wealth in the world now than in ages past.

The first lesson this teaches is that wealth can be created. This happens when people find more efficient ways of raising livestock (so 70 goats becomes small potatoes) and growing crops, and when they extract raw materials from the Earth and use them to create the manifold necessities and luxuries we enjoy. In a word, it happens when people produce, which is why economists and businessmen will measure productivity. And how will people be encouraged to produce?

They must have an incentive, and this is where the profit motive comes into play. Ah, the much maligned profit motive. Let’s talk about that.

There are two extremes with respect to the profit motive. One is typified by some libertarian Ayn Rand acolytes who seem to treat it as the highest motivation; the other is far more prevalent today and is represented by another brand of “libs,” people who behave as if profit is something dirty (at least other people’s profit, anyway). But the balanced view is a bit different.

There is another kind of incentive. In America’s early Christian communes, for instance, residents’ belief that they were doing God’s will — and perhaps winning His favor — served as a great incentive to be productive; thus did the communal Oneida Colony create renowned flatware. And, truth be known, there’d be no need for profit if we lived in a sinless world, for there would be neither covetousness nor laziness. If there was an unfulfilled need — paper products, for example — people would readily volunteer to create them simply to serve others, and no one would be wasteful or undermine the system by taking more of anything than he needed. But in a sinless world we wouldn’t need a military, police or prisons, either.

Sane people live in the real world, however, where different rules apply. One of them is that since the spiritual/moral motive is the highest reason to serve your fellow man, it is also the rarest. And because of this, it cannot be relied upon to motivate people at the level of population. Enter the profit motive. To paraphrase economist Walter Williams, profit encourages your fellow man to serve you even if he doesn’t give a darn about you. After all, Domino’s didn’t start making pizza to relieve hunger; Ivory doesn’t make soap because “Cleanliness is next to godliness.” To have your needs and wants satisfied, would you rather rely on the charity of your fellow man or his profit-driven self-interest? For the answer, just look at all the wonders of science and medicine, all the luxuries around you, and ponder what percentage of them were created based on charitable motives versus the profit motive. Again, charity is wonderful — but it’s also relatively rare.

Save a Forest: Print Your Emails

It's okay to use paper. Trees are renewable, recyclable and sustainable.

By  CHUCK LEAVELL AND CARLTON OWEN

Well-intentioned email taglines inspired by sincere desire to help the planet have become ubiquitous in recent times: "Please don't print this email," "Save trees: Print only when necessary," or "Please consider the environment before printing this email."

However, the World Wildlife Fund has taken this to the extreme with a new nonprintable electronic document. Patterned after the highly successful PDF (Portable Document Format) that has revolutionized electronic document sharing and storage, the WWF format takes the decision away from you.

This tact is sure to frustrate and increase inefficiency, leaving some saying, "Wait a minute, I really needed to print that document!" What many folks don't realize is that it also may indirectly hasten the conversion of forests to other uses like strip malls, parking lots and housing developments—because the nation's forest landowners can't keep growing trees without markets for this natural, organic and renewable product.

Chuck's email tagline reads: "Notice: It's OK to print this email. Paper is a biodegradable, renewable, sustainable product made from trees. Growing and harvesting trees provides jobs for millions of Americans. Working forests are good for the environment and provide clean air and water, wildlife habitat and carbon storage. Thanks to improved forest management, we have more trees in America today than we had 100 years ago."

Now, understand that we don't advocate wanton waste of paper or any other material, but avoiding the print option does absolutely nothing to save the planet or forests. More forests are dying of insect infestation and disease or being paved over across this country right now than could be converted to an email print-out in a thousand years.

Paper is good. Around 105 A.D., man discovered that paper traveled and transcribed better than stone; it became the renewable medium of choice. Frankly, the human eye can only stare at a computer screen for so long.

We appreciate and applaud people who are sensitive to environmental issues. We both love forests and are avid environmentalists. But we are going to continue to print out those necessary emails without guilt.

Honest, it's okay to print. Trees are renewable, recyclable and sustainable.

Most Armed; Most Free

Machiavelli was right about the Swiss

By Eric Margolis

“Most armed; most free.”  So the renowned Italian thinker and strategist Niccolo Machiavelli described the Swiss five centuries ago.

That was a time when the 30 ft pikes and deadly halbards (pole axes) of Switzerland’s fierce mercenary armies were the terror of Europe.   The “furia Helvetica” ruled the battlefields until 1515 at Marignano when French guns, firing at point-blank range, tore apart the massed Swiss pike phalanxes.

Today, the memory of Swiss military glory is preserved at the Vatican by its colorful Swiss Guard.

Switzerland has long stayed behind its borders and observed armed neutrality, avoiding both world wars.   But on voting days in the Alps, burly farmers come down from the mountains carrying their rifles, axes,  and swords – reminders that Swiss independence was won and remains thanks to her people’s force of arms.

Switzerland is the world’s oldest democracy, dating from 1291. As a former resident, I believe this beautiful nation is the world’s most perfect and sensible democracy.  Citizens vote directly in all major questions. The 26 Swiss cantons manage their own financial, judicial, and administrative affairs, leaving only defense, railroads, post and foreign affairs to a tiny government in Bern.

Last week, Swiss were asked to vote on a key question that keeps recurring every decade: pacifist and leftists put to referendum the proposal of eliminating national military service and disarming the Swiss Confederation.

Most Swiss are keenly aware that as one of the world’s richest nations they are always surrounded by hungry neighbors.   They just watched the US hold up their banks.  They voted no to the foolish referendum.

Switzerland’s independence and horde of gold have been protected by their soldiers,  not by treaties or the Alps.  When I was a student in Switzerland in 1960, the Swiss could mobilize 700,000 soldiers in 48 hours. Each was trained to hit targets with his rifle 300 meters away (the US Army trains at 100 meters).

Every Swiss soldier keeps his semi-automatic rifle and uniform at home in a secure compartment.  Gun violence in law-abiding Switzerland is extremely rare.

Hubris calls for nemesis, and in one form or another it's going to get it

Uttin’ On the Itz

By Ben Hunt, Ph.D.

High hats and arrowed collars, white spats and lots of dollars
Spending every dime, for a wonderful time
If you're blue and you don't know where to go to
Why don't you go where fashion sits,
Puttin' on the Ritz.
– Irving Berlin

Hegel remarks somewhere that all great, world-historical facts and personages occur, as it were, twice. He has forgotten to add: the first time as tragedy, the second as farce.
– Karl Marx

I never could bear the idea of anyone expecting something from me. It always made me want to do just the opposite.
– Jean-Paul Sartre, “No Exit”

Every time I hear a political speech or I read those of our leaders, I am horrified at having, for years, heard nothing which sounded human.
– Albert Camus

The structure of a play is always the story of how the birds came home to roost.
– Arthur Miller

In Young Frankenstein, Mel Brooks and Gene Wilder brilliantly reformulate Mary Shelley’s Frankenstein; or, The Modern Prometheus, a tragedy in the classic sense, as farce. The narrative crux of the Brooks/Wilder movie is Dr. Frankenstein’s demonstration of his creation to an audience of scientists – not with some clinical presentation, but by both Doctor and Monster donning top hats and tuxedos to perform “Puttin’ on the Ritz” in true vaudevillian style. The audience is dazzled at first, but the cheers turn to boos when the Monster is unable to stay in tune, bellowing out “UTTIN ON THE IIIITZ!” and dancing frantically. Pelted with rotten tomatoes, the Monster flees the stage and embarks on a doomed rampage.

Wilder’s Frankenstein accomplishes an amazing feat – he creates life! – but then he uses that fantastic gift to put on a show. So, too, with QE. These policies saved the world in early 2009. Now they are a farce, a show put on by well-meaning scientists who have never worked a day outside government or academia, who have zero intuition for, knowledge of, or experience with the consequences of their experiments.

Two things happened this week with the FOMC announcement and subsequent press conferences by Bernanke, Bullard, etc. – one procedural and one structural. The procedural event was the intentional injection of ambiguity into Fed communications. As I’ll describe below, this is an even greater policy mistake that the initial “Puttin’ on the Ritz” show Bernanke produced at the June FOMC meeting when “tapering” first entered our collective vocabulary. The structural event ... which is far more important, far more long-lasting, and just plain sad ... is the culmination of the bureaucratic capture of the Federal Reserve, not by the banking industry which it regulates, but by academic economists and acolytes of government paternalism. These are true-believers in too-clever-by-half academic theories such as management of forward expectations and in the soft authoritarianism of Mandarin rule. They are certain that they have both a duty and an ability to regulate the global economy in the best interests of the rest of us poor benighted souls. Anyone else remember “The Committee to Save the World” (Feb. 1999)? The hubris levels of current Fed and Treasury leaders make Rubin, Greenspan, and Summers seem almost humble in comparison, as hard as that may be to believe. The difference is that the guys on the left operated in the real world, where usually you were right but sometimes you were wrong in a clearly demonstrable fashion. A professional academic like Bernanke or Yellen has never been wrong. Published papers and books are not held accountable because nothing is riding on them, and this internal assumption of intellectual infallibility follows wherever they go. As a former cleric in this Church, I know wherefore I speak.

The Abolition of the Playground

How Regulation Stifles Spontaneous Order and Play

by JEFFREY A. TUCKER

The Bobcat tractor was working its way through a pile of mulch as big as an office building, dragging it from the alley to the playground of a private daycare facility. I asked the crew foreman about the sheer vastness of this mulch pile.

“It’s about the state regulations. There has to be 8 inches of this stuff underneath every play structure.”

“The State regulates even things like this?” I asked. 

“The regulations on playgrounds are 15 miles long,” he said. “They mandate every fastener and bolt, the distance and height of every structure, and, especially, the drainage. Just getting the drainage right takes up most of the time and money.”

“But don’t these regulations inhibit others from opening daycare facilities?” I asked. “You would have to be super-well capitalized just to get one going.”

“I can tell you this. I would never do it.”

Hmm. Maybe stifling regulations partially account for the shortage of childcare facilities, the high prices of tuition to put your child in them, and the constant political pressure for the government to provide more preschool solutions for parents.

But where do these regulations come from? Of course the safety Nazis have never met a regulation they didn’t like, but I’m willing to bet they weren’t responsible for a regulatory panoply that extends way beyond safety concerns. The real origin of these regulations stems from the largest providers, who have every incentive to lock out new entrants and make sure every project they land is pricey. 

The higher the barriers to entry, the easier life is for the established firms. 

The whole scene confirmed all my worst fears. There should be something sacrosanct about the playground. It should be off limits to regimentation and central dictate. And yet the simplified federal manual about every aspect of the playground is 60 pages long, every paragraph presuming that without such guidelines the rest of us would be completely clueless and uncaring about the well-being of children. 

Free Immigrants, Free Capital, Free Markets

Instead of lamenting immigrants we should be welcoming them, especially the low-skilled ones

by David Howden

Early this year, the Saudi Arabian government decided to crack down on foreign workers. Writing for The Globe and Mail, Martin Dokoupil and Marwa Rashad argue that this will lead to a “stronger, more diverse economy.” In particular, they focus on the plethora of businesses open at the moment — more than they think is necessary — and the resultant reduction in both “unnecessary” labor and businesses that would be possible if these foreign workers were forced to leave.

The immigration debate, whether it occurs in Saudi Arabia, the United States, or even Canada, really boils down to answering a simple question: Do we want to import workers or goods?

Like money, workers go (when able) to the place that treats them best. Oftentimes this is where real wages are highest. Real in this sense means “cost-adjusted,” so that a worker making a low wage in a low-cost country (say Mexico) may actually have a higher standard of living than one working at a high-wage job in a high-cost country (perhaps Switzerland).

There is an enduring tendency for profits to equalize across all businesses as entrepreneurs move to exploit opportunities. The same holds true for real wages. As workers move from lower to higher real-wage areas there is the same equilibrating tendency. The relative removal of supply from the low-wage country will place upward pressure on the wages of the remaining workers. The influx of new workers to the higher-wage country functions in the opposite direction — wages begin to depress as a result of the increase in relative labor supply.

Worshipping the Wrong Goddess

Democracy and Liberty Don't Necessarily Go Together

by B.K. MARCUS

The crowd in Tiananmen Square was losing hope. Their mass protest had drawn throngs of students at first, but as the summer of 1989 approached, their numbers were dwindling, their leaders were resigning, and the square itself, according to one historian of China’s democracy movement, "had degenerated into a shantytown, strewn with litter and permeated by the stench of garbage and overflowing portable toilets."

The democracy movement seemed to be dying, not with a bang, but with a whimper.

This was before most of us in the West had ever heard of Tiananmen Square. What turned the protest around? Why did hundreds of thousands of supporters pack the square in the final days of May? What made the government, which had been ignoring the protest and refusing to offer any reforms, suddenly sit up and take notice—and send in tanks?

A lady with a torch.

To American eyes, she looked like a Chinese version of the Statue of Liberty, her torch of freedom held aloft over Tiananmen’s huddled masses. The art students who had quickly assembled the foam statue over a bamboo scaffolding  had deliberately avoided creating something that seemed "too openly pro-American"—even basing the style on the Cold War art of the Soviet socialist realists—but even with her Chinese features and a two-handed grip on the torch, the comparison with Lady Liberty was unavoidable.

But while the statue in New York Harbor represents Libertas, the Roman goddess of freedom, the protestors in Tiananmen Square were worshipping a different deity. They called their statue the Goddess of Democracy. 

The tanks rolled in and crushed the goddess beneath their treads, but her symbolic power remains, and her likeness now appears in the form of commemorative statues throughout the world. 

The authoritarian state may have won the battle, but the war for freedom lasts longer than our history textbooks would have us believe. In England and America, we had more than a century of struggles between liberty and power before anything like a victory could be declared for our cause. It took more than a piece of paper—more than the Declaration of Independence or the Treaty of Paris. And for years the words and symbols of liberty and independence inspired generations of freedom fighters, not just the ones we call the Founding Fathers.

But did the symbols ever unite us? Americans may look at the unifying force of the Goddess of Democracy and long for a time when our own symbols had the power to inspire our passion and our courage, but colonial America was never united on the cause of independence. About a fifth of the white population was loyal to the British Crown, with twice as many keeping their heads down and avoiding any openly held position on the question of independence. That puts the American Revolutionaries in the minority. And even among those who actively supported America’s secession from the empire, there was a deep philosophical divide about the goals of such a fight.

Turkey goes for Chinese take-away defense

Turkey's name on the NATO membership rolls should include an asterisk denoting its special status

By Peter Lee
On September 26, 2013, Turkey made the rather eyebrow-raising decision to put its long range missile defense eggs in a Chinese basket, announcing it had awarded a US$3 billion contract to the People's Republic of China for its truck-mounted "shoot and scoot" FD-2000 system. 

The Chinese FD-2000 is based on the Hong Qi missile, which has been around since the 1990s. The FD-2000 is an export version of the HQ-9 that appeared in 2009 and is marketed as a next-generation improvement on the Russian S-300 system, but whose fire control radar looks more like the radar matching US-based Raytheon's Patriot missile system (with the implication that the PRC filched the technology, maybe with some help from Israel). [1] 

Defense correspondent Wendell Minick relayed the description of the FD-2000 that China provided at a 2010 Asian arms show:

It can target cruise missiles (7-24 km), air-to-ground missiles (7-50 km), aircraft (7-125 km), precision-guided bombs and tactical ballistic missiles (7-25 km). "FD-2000 is mainly provided for air force and air defense force for asset air defense to protect core political, military and economic targets," according to the brochure of China Precision Machinery Import and Export Corporation (CPMIEC), the manufacturer of the system. It can also coordinate with other air defense systems to "form a multi-layer air defense system for regional air defense." [2]

Turkey is procuring 12 of these systems (it had originally requested 20 Patriot systems when Syria heated up and got six for a year, since renewed).

The FD-2000 looks great on paper. However, it appears to be untested in combat - and even the Patriot system is apparently not effective against cruise missiles, implying that the Chinese system isn't going to do any better. Political issues aside - and there were a lot of political issues - the deciding factor for Turkey was probably low price, and China's willingness to do co-production and technology transfer. 

Maybe the Chinese government are eager to put the FD-2000 in some foreign hot spot in the hopes of getting some real, battlefield data and make some upgrades before the cruise missiles start flying toward Beijing. [3] 

Press reports from June already implied that Turkey was leaning toward the Chinese system. However, Turkey's announcement in the midst of the Syrian chemical weapons negotiations still looks like a slap at the United States, which makes the Patriot missile system, and the North Atlantic Treaty Organization, which is now manning six Patriot batteries at present installed in Turkey. [4] 

Worse Is the New Normal

No turbulence left in America

By Mark Steyn

A few years ago, after the publication of my book America Alone, an exasperated reader wrote to advise me to lighten up, on the grounds that “we’re rich enough to be stupid.” That’s to say, Western democracies and their citizens are the wealthiest societies ever known, and no matter how much of our energies are wasted on pointless hyper-regulation for the business class and multigenerational welfare for the dependency class and Transgender and Colonialism Studies for our glittering youth, we can afford it, and the central fact of our wealth will ensure that our fortunes do not change. Since the collapse of Lehman Brothers in 2008, we have been less rich, and our stupidity ought in theory to be less affordable. Instead, it’s been supersized. To take only the most obvious example, President Obama has added six-and-a-half trillion bucks to the national debt, and has nothing to show for it. As Churchill would say, had his bust not been bounced from the Oval Office, never in the field of human spending has so much been owed by so many for so little.

The West’s rivals do not think like this. China is now the second-biggest economy on the planet, but it has immense structural problems: As I’ve been saying for years, it will get old before it gets rich. Thanks to its grotesque “one-child” policy, it has the most male-heavy demographic cohort in history — no chicks and millions of guys who can’t get any action, which is not normally a recipe for social stability. Despite being extremely large, the country is resource-poor. But you can’t say it’s not thinking outside the box. The Daily Telegraph in London reported this week that the Chinese have just signed a deal to lease five percent of Ukraine (or an area about the size of Belgium) to grow crops and raise pigs on. And I’d doubt it will stop with post-Soviet republics on the Euro-fringe: It’s not impossible to imagine China buying, say, the Greek islands. Beijing thinks the half-millennium blip of Euro-American dominance is coming to an end and the world is returning to its natural state of Chinese preeminence. The West assumes it can endure as a kind of upscale boutique unaffected by the changes beyond. Like, say, the frozen-yogurt shop at the Westgate mall in Nairobi — until last weekend.

China’s Ukraine deal may sound kinda wacky, but the People’s Republic consumes about 20 percent of the world’s food yet has (thanks to rapid industrialization) only 9 percent of its farmland. As Big Government solutions go, renting 5 percent of a sovereign nation to use as your vegetable garden and pig farm is a comparatively straightforward answer to the problem at hand. By contrast, try explaining American “health” “care” “reform” to the Chinese: You could rent the entire Ukraine for about 3 percent of the cost of Obamacare, and what does it solve? My colleague Michelle Malkin revealed this week that her family has now joined the massed ranks of Obamacare victims: Anthem Blue Cross Blue Shield sent her a “Dear John” letter explaining why they’d be seeing less of each other. “To meet the requirements of the new laws, your current plan can no longer be continued beyond your 2014 renewal date.”

Beyond the president’s characteristically breezy lie that “if you like your health-care plan, you will be able to keep your health-care plan” is the sheer nuttiness of what’s happening. For years, Europeans and “progressive” Americans have raged at the immorality of the U.S. medical system: All those millions with no health coverage! But Michelle Malkin had coverage and suddenly, under what Obama calls “universal health care,” she doesn’t. The CBO’s most recent calculations estimate that in 2023, a decade after the implementation of Obamacare, there will still be over 30 million people uninsured — or about the population of Canada. That doesn’t sound terribly “universal,” and I would bet it’s something of a low-ball figure: As many employers are discovering, one of the simplest ways “to meet the requirements of the new laws” and still stay just about solvent is to shift your workers from family plans to individual plans, and tell their spouses and children to go look elsewhere. Does it achieve its other goal of “containing costs,” already higher than anywhere else? No. Avik Roy reports in Forbes that Obamacare will increase individual-market premiums by 62 percent for women, 99 percent for men. In America, “insuring” against disaster now costs more than you’d pay in most countries for disaster.