Mourn for the Lost Penny

Every Canadian hated pennies. Even homeless street beggars hated getting pennies. If someone dropped a penny, they wouldn’t even bother to pick it up. Every Canadian seems happy that the penny is gone.

Sadly, Canadians do not realize how this loss is truly a tragedy, because it unequivocally shows how the government and the Bank of Canada have abused the monopoly over money. If you go to the BoC website, you can see that since 1914 the Canadian dollar has lost 95% of its value.

This is the inevitable result of the age-old credo of monetary cranks and inflationists. Mises wrote:

A very popular doctrine maintains that progressive lowering of the monetary unit’s purchasing power played a decisive role in historical evolution. It is asserted that mankind would not have reached its present state of well-being if the supply of money had not increased to a greater extent than the demand for money. The resulting fall in purchasing power, it is said, was a necessary condition of economic progress. The intensification of the division of labor and the continuous growth of capital accumulation, which have centupled the productivity of labor, could ensue only in a world of progressive price rises. Inflation creates prosperity and wealth; deflation distress and economic decay.

All this time, rather than having pennies lose value until they must be eliminated, pennies should have been increasing in value. We should have been able to buy more stuff with pennies today than 50 years ago. That is how a free economy with a stable money supply works. Money is saved and invested into more production. Workers create more goods, and so the monetary unit can purchase more stuff. Instead, the Canadian government and its central bank have distorted the economy and redistributed wealth by means of monetary policy. Monopolies are always bad, and a monopolization of money is the most dangerous of all.

The death of the penny should be a blaring wake-up call to Canadians. The Bank of Canada should be shut down, the government should abolish legal tender laws, and Canadians themselves should decide what their money should be. Otherwise, expect to someday bid farewell to nickels, dimes, and even loonies as the government continues its destruction of our currency.

— Read more at the Mises.ca

Harper: Free Trade is a Tax Break for China

Harper was criticized the other day for wanting to increase taxes on various imported consumer goods.

There is no defense for raising taxes ever. This is even more important when Canada will be soon in recession. So what is Harper thinking? He rightly pointed out that the Liberals had voted against budgets in which there were some tiny tax cuts. Okay, sure, the Liberals lack any principled objection to higher taxes. What was his rebuttal to their criticism on the tariff issue?

“What the Liberal Party seems to stand for, Mr. Speaker, is that somehow we should give tax breaks to emerging economies like China.”

OMG, my brain just exploded from the unbelievable stupidity of that statement. I love a good cheap shot at a Canadian political party as much as the next guy, but Harper’s statement is just dumb.

So not taxing imports is a tax break to the countries from which we are buying those imports. So a free trade policy is a tax break for our trading partners.

That is incoherent, protectionist nonsense. First of all, the importer pays the tax, not the exporter. So China is not getting the tax break, per se. It is the one importing Chinese stuff.

But then this is kind of like saying it’s a “tax break” if the government taxes anything less than 100% of your income. The meaning of “tax break” is clearly being twisted. A “tax break” is meant to be a means of reducing a tax liability that already exists. The absence of a tax is not a tax break. Adding new taxes is not the same as taking away tax breaks. The underlying philosophy revealed in Harper’s words is that the government rightfully owns everyone else’s wealth, and letting people keep anything is a tax break. The whole notion is economically utterly perverse.

The case against protectionism is logically irrefutable. Harper, like virtually all politicians, is a mercantilist who thinks protectionism is good (for his friends), meaning he is no ally of capitalism and free trade. He is a classic Canadian crony prime minister.

— Read more at CBC News. —

Thatcher Was No Friend of Capitalism and Freedom

After a week of Thatcher worship, it’s not too late to insulate ourselves against all the post-death propaganda.

Rothbard on Thatcher:

Thatcherism is all too similar to Reaganism: free-market rhetoric masking statist content. While Thatcher has engaged in some privatization, the percentage of government spending and taxation to GNP has increased over the course of her regime, and monetary inflation has now led to price inflation. Basic discontent, then, has risen, and the increase in local tax levels has come as the vital last straw. It seems to me that a minimum criterion for a regime receiving the accolade of “pro-free-market” would require it to cut total spending, cut overall tax rates, and revenues, and put a stop to its own inflationary creation of money. Even by this surely modest yardstick, no British or American administration in decades has come close to qualifying.

Greenwald on Thatcher:

Whatever else may be true of her, Thatcher engaged in incredibly consequential acts that affected millions of people around the world. She played a key role not only in bringing about the first Gulf War but also using her influence to publicly advocate for the 2003 attack on Iraq. She denounced Nelson Mandela and his ANC as “terrorists”, something even David Cameron ultimately admitted was wrong. She was a steadfast friend to brutal tyrants such as Augusto Pinochet, Saddam Hussein andIndonesian dictator General Suharto (“One of our very best and most valuable friends”).

Raimondo on Thatcher:

Thatcher’s effect on the British right seems, in retrospect, to have been minimal: she wanted to bring off a “free market” revolution in the British welfare state, but instead wound up merely speeding the country down the road to serfdom. Paradoxically, where she had her greatest effect was on the Labor Party: her greatest success was cementing the “Atlanticist” foreign policy consensus presently shared by all the mainstream parties.

Ron Paul in Calgary

Last Friday, I attended the Ron Paul speech at the “Making Alberta Safe for Capitalism” summit.  This was at the Westin Ballroom in downtown Calgary. I was among approximately 300 attendees, which included financial professionals, publishers, IT nerds, engineers, students, neocons, and more.

I would like to note how this attracted virtually NO media attention. I do not think there is any “conspiracy” here — rather, it is simply due to Ralph Klein’s memorial service being held at the same time. We all know how the media loves to fill its time with the glorification dead politicians whenever the opportunity presents itself. This week, they’ve got Thatcher.

Besides, Ron Paul’s ideas make Canadians uncomfortable. Most people don’t want to talk about such things.

Ron Paul’s speech was basically what you would expect if you’ve been following him for the last few years. I’ve been watching Ron Paul’s political career since 1998, so I was very familiar with all the themes: personal responsibility, free markets, small government, anti-war, and anti-central banking. Still, it was great to pay respects to someone who is more than just an honorable statesman (a contradiction in terms when applied to anyone else), but a man whose efforts have done more for the liberty movement than anyone else in the modern era.

Having retired from politics, this was Ron Paul without any filter that might have previously been imposed by the realities of being in political office. Yet since his message has always been fundamentally radical, there was no difference with post-politics Ron Paul. The message is just as unfavorable to economic, social, and imperial intervention as ever.

At various points throughout the speech, I would look around to gauge the response to certain statements. How delightful to see various attending neocons squirm uneasily when Paul declared there should be no income tax. Some folks scowled at the suggestion to replace government welfare entirely with private charity. Otherwise, the ideas of less spending, less tax, less regulation, and more civil liberties were received favorably. Paul age and manner makes is a kind, wise grandfatherly figure — part of his great success is due to his ability to convey radical arguments in favor of liberty while making them seem completely non-controversial.

The biggest opportunity that was missed in Dr Paul’s speech was HEALTHCARE. If there is a sacred cow in Canadian politics, it’s definitely government healthcare. Without a doubt, government healthcare is a disaster, and Canadians need to learn why it will always be awful regardless of the huge piles of money thrown at it. Unfortunately, healthcare was not covered at all in Dr Paul’s remarks. Too bad. Huge missed opportunity, I think.

He is a medical doctor and an economist who can speak with authority on the failings of public healthcare. He is also old enough to speak about American healthcare system before the government became heavily involved. Before Medicaid, Medicare, the HMO Act of ’73, and so on, there was relatively little government intervention with the provision of healthcare. Basic medical services were cheap and plentiful, and a greater portion of the population had health insurance compared with now. The audience would have greatly benefited from hearing his insights on this subject. He has effectively explained the necessity of free markets in medical care — it is a message Canadians desperately need to hear from somewhere. Virtually no one will touch the issue of public healthcare in this country. We will all be worse off as long as this condition persists.

I would have also liked to hear more war-related remarks. Essentially, anything that applies to the US wasting lives and money on Afghanistan applies to Canada as well. Paul spoke about Iraq more than Afghanistan — which is fine in and of itself, but Canada was not seriously involved in Iraq. Our participation in Afghanistan is another story. Sadly, Afghanistan is an issue that people barely seem to care much about. If they do, it’s because they are dumb enough to think we have Canadian forces there “fighting for our freedom.” Yuck. The lack of interest is even more critical now, because Obama has declared he is “bringing the troops home” in 2014. This is typical government strategy: declare “victory!” and suddenly no one cares anymore. Just like Iraq, where there was never any “victory”, and as I write this the country continues tearing itself apart.

Ron Paul’s speech included a few “fanservice” parts for the Calgarian audience:

He said, “Ralph Klein sounds like a guy I might have liked.” Fair enough, given the memorial was that day, and Klein actually did cut spending at one point.  So that’s cool, whether or not Klein was a principled friend of liberty.

He also gave his support to the Keystone XL — with the important qualification that one can get the permission of property owners, the government should not stand in the way of pipeline construction. This is an rather critical proviso, because in reality pipeline construction does involve government takings/expropriations. Remember: in Canada, the Crown owns all the land as a matter of law.

Anyone who attended this event specifically for Ron Paul could be described as “cutting-edge.” Canadians are not generally ready for the radical Paulian message. For many Americans, there is the emotional connection to ideas of independence, revolution and decentralization, even these are not embraced in practice. The Paulian message can get its hooks in that. For Canadians, the state is endlessly glorified in subtle and not-so-subtle ways. There is no element within our culture that reinforces skepticism about state power. The closest thing to this is Albertans’ memories of the NEP, but that is a regional sentiment and it is being gradually overwhelmed with the pleas for more government.

I hope that the mere fact that Ron Paul has visited Canada to give pro-capitalism speeches indicates that there is a growing audience for the message of liberty in this country. Just as the 20th century demonstrated communism was a lie, the 21st century will show us that democracy is a lie. Democracy’s death throes will be earth-shattering. Liberty’s natural elite must spread and shine the light through dark times, so that a better age may yet emerge.

Foreign Aid and First Nations

As always, the ongoing controversy between First Nations and the Canadian government will produce no solutions, because no one seems to understand the problem.

Before we consider this matter, consider a basic principle. By their very nature, governments expropriate wealth from their subjects. Agents of the government allocate this wealth for all kinds of purposes that suits them or it. One of purposes available to wealthier governments is foreign aid.

Foreign aid has been called, “Stealing money from poor people in rich countries, and giving the money to rich people in poor countries.” Essentially, the aid is given to a corrupt foreign governments in backwards nations which are then expected to somehow help the common man in their countries. Usually the aid package involves the stipulation that the aid receiver must purchase stuff from the aid-giver.

The aid-receiver then uses this aid the same way it uses all its resources — reward political interests. This actually displaces real economic activity — i.e. activity that is determined by market participants and not politics. Naturally, the government and its friends benefit. The common man is worse off because their overlords have more wealth at the expense of others.

This also describes how First Nations Reserves work. These reserves are like third-world countries, with the role of crooked dictator and his cronies occupied by the chief, the band council, and their friends. The Indian Band is a legal entity under the Indian Act, and you could say it operates like a corporation that depends on government subsidies to exist. Hence, it is characterized by bad products and capital depreciation. Never forget this: the Indian Band receives its revenue via wealth expropriated from others. The “band” collectively receives aid from the government, but the aid must be administered by the reserve’s own governing body. These folks inevitably enrich themselves, and maybe leave a few crumbs for the decrepit Indians beneath them. The poverty on most Indian Reserves is truly horrifying, and completely expected given the system’s nature.

What of the common First Nations people who qualify as “Indians” under the Indian Act, who do not get to administer the loot? They suffer severe restrictions to their property rights, much more so than Canadians on the “outside”. For instance, they cannot use their land as security in a credit transaction. They cannot transfer their land to other members of the band without the Crown’s approval. They are gravely restricted in how they can appropriate the proceeds of selling or renting their property. This is like Communist Russia. It is incredibly more dysfunctional than the rest of Canada, which is already screwed up to a great degree.

What else do Indian Reserves have in common with Communist Russia? Extremely high rates of suicide, self-incapacitation, family breakups, promiscuity, “illegitimate” births, birth defects, sexually transmitted disease, abortion, alcoholism, and dull or brutish behavior. They have tragically low life-expectancies and their healthcare standards are far below the rest of Canada. See here and here.

People who understand how wealth is created must understand the Reserve system can never be fixed, because it is based not on private property, but on bureaucratic management and political decision-making. No one proposes doing anything about this. Furthermore, theory and experience tells us that people who understand that the groups who receive the most government “aid” are usually those who suffer the most. Therefore, it is critical to apply this to the First Nations issue as well. The more government “aid” received by Indians, the more this group must ultimately suffer.

Victory for poutine… for now.

Wanna-be social engineers in a small Quebec town tried to ban poutine and other “unhealthy” food at their arena. But you can’t mess with poutine lovers. I mean, I would fight to the death for a good poutine. Wendy McElroy writes:

A headline in the National Post (07/10) announced, “Hot dogs and poutine stage comeback after Quebec rink’s fans revolt.”

The story revolved around the town of Lac-Etchemin, Quebec that prided itself on being the first Canadian municipality to ban ‘unhealthy’ food from its arena. “Now, in an admission that paninis are outmatched against poutine, the town council has lifted the ban and French fries will return before the end of the month.”

You might chortle at the hubris of a Quebec town trying to ban the delicious French Canadian staple of french fries laden with cheese curds, smothered in gravy. You should applaud the victory of rebellious Canadiens against the Nanny State municipality. In doing so, however, it is important to realize that the attempted ban is neither humorous nor trivial. It is merely one instance of government’s creeping encroachment into what goes onto your dinner plate. In the ’80s, people protested under the slogan “Get government out of the bedroom,” meaning that the state had no proper business monitoring or punishing the consenting sexual choices of adults. Today, the protest should read “Get government out of the kitchen.”

FOOD AS SELF EXPRESSION

The governmental censoring of food choice is often viewed as a trivial matter or even a benevolent one. After all, what is one french fry more or less? And the goal, as stated, seems well-intentioned.

There is nothing benevolent, however, about state imposed control over one of the main ways in which human beings express themselves. Food choices are personal; they define our identity as surely as our choices in attire or reading material. “Food is love” is a hackneyed saying that conveys the basic truth that eating is about far, far more than sustaining life.

Food is an integral aspect of transmitting culture and ethnicity. From Italian pastas to Indian curries, from poutine to falafels,  a rich array of dishes form a part of your family’s history and the background of who you are. Often the mere smell of a dish as you walk by a restaurant can elicit a flood of childhood memories, including how recipes or cooking techniques were passed down from one generation to the next.

Food is also a form of cultural exchange through which diverse ethnic groups can automatically appreciate each other’s heritage. The appreciation happens spontaneously, without tax-funding, laws or government programs. It happens every time someone chooses a Chinese restaurant or expresses preference for a Jewish deli. During World War II, sauerkraut was widely banned in North America as “unpatriotic” because of the deep hostility toward anything German. Equally, the approval of ethnic food is a form of acceptance of a culture or, at least, of one significant aspect of it.

Food is also a moral choice as every vegan knows. It is a religious choice as Orthodox Jews will attest. Food is also a political statement as any farmer who produces raw milk will tell you.

One of the most important functions of food choice returns to the saying, “food is love.” When a spouse or mother celebrates your birthday, it is through making “a favorite meal” or baking a cake. When a man proposes, it is over a romantic meal at an expensive restaurant. When you express sympathy at a post-funeral gathering, you do so while holding a casserole that you’ve brought over. It is commonplace for those who are emotionally distressed to seek ‘comfort food’ that allows them to ‘feed themself’ when the world is not. How many women have recovered from a broken heart over tubs of ice cream?

Precisely because of its strong emotional pull and roots in culture, food choice has become one of the most important rituals in our society. From Thanksgiving to Christmas, from Hallowe’en candy to chocolates on Valentine’s Day, food and ritual are inextricably linked.

Ultimately, food is also one of the main forms of self-control you exercise over your own body. Through these choices, you express a personal judgment on what benefits your body and/or fits your lifestyle; for some, the judgment leads to an Atkins diet, for others it is organic lentils. Even people who make allegedly ‘bad’ choices are expressing themselves.

The bounty and diversity of food available in every grocery store and each passing street corners should cause joy because it demonstrates the richness of society itself – not merely in terms of prosperity but also in terms of choice.

Thus, when government dictates what you may or may not eat, it is restricting your heritage, your religious and political choices, the control over your own body; telling you that a choice every bit as personal as freedom of speech or the art you view is not yours to make. That decision is theirs.

Why? For your own good. Even as an adult, you cannot be trusted with choosing the food that goes into your own mouth at your own expense. That’s what government experts are for.

ARE THE EXPERTS CORRECT?

Politically-speaking, it does not matter whether the food ‘experts’ are correct about poutine any more than their opinion on a specific work of literature should matter…at least, politically-speaking. You have an inalienable right to read graphic novels about a dystopian future rather than be force-fed Ibsen’s writings on dysfunctional families. You have a similar right to eat food bought at your own expense.

Nevertheless, almost all discussion of government’s censorship of food choice revolves around whether or not the claims being made are true or false. This would be a fascinating and valuable discussion if it did not always seem to end at the conclusion “there ought to be a law.” Thus, otherwise interesting discussions about the value and risks of raw milk result in farmers being arrested and driven out of business by huge fines. Otherwise interesting discussions about the calorie-count or artery-impact of poutine end in the banning of a cultural choice. This is akin to banning literature because a government book reviewer finds the contents to be ‘unhealthy.’ Society should cease to have discussions that end in such conclusions.

Those who are in the “there ought not to a law” camp often encounter the following argument: we live in a society that offers (to varying degrees) free health care. This means that tax-payers bear the consequences of providing health care to those who are reckless with their bodies through drugs, alcohol, smoking or unhealthy diets. In short, your neighbor has a vested and financial interest in what goes into your body.

This line of reasoning – rather than justifying a Nanny State or a nosy neighbor dictating your personal choices – constitutes a powerful argument against socialized medicine. If socialized medicine had been ‘advertised’ decades ago as a government mandate to control the minutia of your daily life, then it would probably have never been implemented. If socialized medicine had announced itself as the right to usurp parental control over what to feed children, then it would have met the same ‘rink-revolt’ that occurred in Lac-Etchemin.

Tell the government that it is not a welcomed guest in your kitchen. There is no room for bureaucrats at your dinner table.

While this battle has been won, the war is not over. Denmark has passed the first “FAT TAX” which charges 16 kroner per kilogram of saturated fat in food when the saturated fat content exceeds a completely arbitrary number of 2.3%. Mark my words — wanna-be social engineers in Canada are dying to impose this kind of tax in Canada.

First of all, this is incredibly stupid from a health standpoint, as it is not saturated fat that makes you fat. But most importantly, this is terrible for business and the consumer. Making consumers pay more for their goods through government decree is just wrong, especially during a bad economy.  And although this is a form of consumption tax (targeting a certain class of goods), it ultimately taxes production and hurts business. Again, terrible idea anytime but especially when the economy is approaching absolute calamity.

But that’s not all. Once the principle behind these sorts of laws is accepted, nothing can be ruled out. Doug Hornig at Casey Research highlights the absurdity of these kinds of laws:

Why not meter Internet usage, so that addicts who log on more than a certain amount a week are taxed? Same with computer gamers; the number of minutes they play per day could be relayed to a central database in D.C. Obsessive collectors? Just monitor their eBay accounts and if they seem out of control, add a surcharge to PayPal transactions. Those who buy candy bars probably qualify as chocoholics by definition. They should pay extra. And don’t forget Netflix. If you’re ordering more than three movies a week, you’ve got a movie habit that ought to be taxed.

We can allow Hoppe to have the final and most decisive say on this kind of social engineering and its economic consequences:

Once again the effect of such a policy of behavioral controls is, in any case, relative impoverishment. Through the imposition of such controls not only is one group of people hurt by the fact that they are no longer allowed to perform certain nonaggressive forms of behavior but another group benefits from these controls in that they no longer have to tolerate such disliked forms of behavior. More specifically, the losers in this redistribution of property rights are the user-producers of the things whose consumption is now being hampered, and those who gain are nonusers/nonproducers of the consumer goods in question. Thus a new and different incentive structure regarding production or nonproduction is established and applied to a given population. The production of consumer goods has been made more costly since their value has fallen as a consequence of the imposition of controls regarding their use, and mutatis mutandis, the acquisition of consumer satisfaction through nonproductive, noncontractual means has been made relatively less costly. As a consequence, there will be less production, less saving and investing, and a greater tendency instead to gain satisfaction at the expense of others through political, i.e. aggressive, methods. And, in particular, insofar as the restrictions imposed by behavioral controls concern the use that person can make of his own body, the consequence will be a lowered value attached to it, and accordingly, a reduced investment in human capital.

 

So instead of people taking responsibility for themselves, these kinds of taxes and laws systematically cause people to think that they do not own their own bodies. If you don’t own something, you will take poorer care of it. As always, the way to make people more responsible is to make them free.