Trouble in the Workers’ Paradise

Sweden is regarded by many as the ideal balance between capitalism and socialism.

A lot of people genuinely believe it is a “Workers’ Paradise.” They worship the “Nordic model” as something all Western democracies should emulate.

Recent events show that the model of a lavish welfare statism cannot erase deeper economic and cultural divisions. Right now, Sweden is seeing the worst riots in years as immigrant youths trash everything in sight, and clash with mobs of immigrant-haters. Cars are torched. Rocks are thrown at police and firefighters. Schools have been set ablaze.

Riots in Stockholm, Sweden - 22 May 2013

Sweden has experienced various riots in the last few years. Usually these cool off after a day.

The latest riots have gone on for a week. The situation evokes memories of the 2005 Paris riots, or the 2011 London riots.

But why should anyone want to riot in Sweden? Isn’t everything perfect?

The disturbances erupted in Husby last weekend, after police shot dead an elderly man brandishing a machete inside his house. Angered at what they saw as police heavyhandedness, youths torched cars and buildings and stoned police and firefighters. Police were then forced to draft in extra manpower from outside Stockholm as the trouble spread to other immigrant-dominated suburbs of the capital and towns such as Orebro in central Sweden, where 25 masked youths set fire to a school on Friday night.

According to one rioter:

“In the beginning it was just a bit of fun,” said one young man in his early 20s who did not wish to be named. He was one of a Husby group of 30-40 youths that battled with police.

“But then when I saw the police charging through here with batons, pushing women and children out of the way and swinging their batons, I got so damned angry.”

The Swedes just can’t understand why this is happening.

“We have tried harder than any other European country to integrate, spending billions on a welfare system that is designed to help jobless immigrants and guarantee them a good quality of life,” said Marc Abramsson, leader of the National Democrats Party. “Yet we have areas where there are ethnic groups that just don’t identify with Swedish society. They see the police and even the fire brigade as part of the state, and they attack them. We have tried everything, anything, to improve things, but it hasn’t worked. It’s not about racism, it’s just that multi-culturalism doesn’t recognise how humans actually function.”

It’s fair to wonder, if this can happen in Sweden, why not everywhere?

(Maybe not Canada. Instead, we riot over god damn hockey games.)

Multiculturalism has never worked anywhere, ever, in all of human history. It’s not because different groups of people can’t get along. Trade and peace is natural, even between people of different religion, race, culture, or ethnicity. The blame instead rests on the institution of the state itself.

Rather than erase conflict between different groups, as many like to believe, welfare statism aggravates the conflict between them. This happens because the state encourages not cooperation and respect between people, but rather dependence on its ability to transfer property from one group to another. This always breeds resentment between people who are more or less on the dole than other people.

The state cannot create harmony between people. It creates only discord.

— Read more at The Telegraph and Yahoo News

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Did a Canadian Boxer Help the Boston Bomber Down the Road to Terrorism?

William Plotnikov. Remember him? He was a Russian-Canadian boxer from Toronto who converted to Islam, then went to fight with Islamic militias against the Russians. He was killed by security forces in Dagestan last year.

It appears that he may have been acquainted with Boston Bomber Tamerlan Tsarnaev, who was also an amateur boxer. Plotnikov gave Tsarnaev’s name to Russian agents when he was interrogated in 2010. They had communicated online, and it it highly plausible that the two had met at some point, perhaps when Tsarnaev had attended a boxing event in Toronto (where his aunt also lived).

It has been reported that Tsarnaev traveled overseas to fight in Dagestan, but he fled back to the US immediately after Plotnikov’s death. Did Tsarnaev lose his nerve to be a front-line Jihadist after his buddy had been killed?

Even more scandalous is the possibility that Plotnikov and Tsarnaev may have received support and training from Georgian authorities. This is being investigated in Georgia now. The previous Georgian government, which had fought a war with Russia in 2008, was very interested in contesting Russian influence in Dagestan.

Justin Raimondo says: “The Georgian connection points to a classic case of ‘blowback.’ A covert operation conducted against the Russian government, originally, that got out of hand – and came back to bite the hand that fed it.” No joke. The Tsarnaev family received $100,000 in government welfare.  

— Read more about this at The Telegraph, Time, Daily Mail, and Izvestia — 

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.

Is a minimum income “fairer” than a minimum wage?

The economic argument against the minimum wage is irrefutable. It hurts the most marginal workers by making it illegal to hire them at the market price. It helps larger, more established firms (who tend to pay more than minimum wage) at the expense of smaller, competing firms (who are more likely to pay lower wages).

Andrew Coyne, writing for the Financial Post, concedes the economic argument against the minimum wage. It hurts those it is professedly intended to help, and doesn’t help fight poverty. Yet he remains convinced that wealth must be reallocated with the government’s badges and guns — he just wants a more direct, efficient way of doing it.

He proposes a minimum income paid by the state, instead of a  minimum wage paid by employers.

This is a terrible idea.

First, we should note that nowhere in his article does Mr Coyne give a moral argument as to why the state should take property from some people and give it to those who cannot or will not take care of themselves. Anyone speaking of fairness should be expected to raise the moral issue. Economics is a technical discipline and its laws do not deal with fairness. Instead, fairness is an issue for ethics and moral philosophy.

Nor does Mr Coyne offer any economic reasons as to why charity should not handled by voluntary activities. The best case he can make is based on nothing more than a complete lack of imagination and a silly anti-capitalism cheap shot:

I think it is because people imagine the alternative is… nothing. Let people starve, that is, to sate some sadistic God of Laissez-Faire. But that is not the alternative. The alternative to the minimum wage is a minimum income: paid not by employers, but by the state.

So his only argument, if it can be called that, is that it’s fairer to have a minimum income, because minimum wages instead involve shunting off “our” responsibility for “distributional justice” onto others.

I am not sure how one tallies up the fair score for each side to see which one is fairer. Let us merely note that there is nothing positively fair about this proposal as such. For what is using the state to impose the “collective ideal” of distributional justice, other than completely unfair? Because a government taking money from one group to give to another group is a political issue — by definition, it is determined by who has the most power in a political system. That is always unfair.

A minimum income must be paid by the government, which acquires most revenue through taxation. But in democracy, the amount a person pays through taxation can only be decided with a ballot box and a gun. How is that ever fair? And “need” can never be objectively quantified, so there can never be a “correct” value for the minimum income.

Putting aside the issue of fairness, what would be the economic impact of a state-provided minimum income? It’s amazing that someone like Mr Coyne, clearly capable of following the steps in reasoning which show the failure of minimum wage laws, would yet propose something even worse.

Obviously, a state-provided minimum income is a subsidy to poverty and idleness. Therefore, this effort to combat poverty and idleness will increase poverty and idleness. As Thomas Mackay wrote more than 100 years ago, “the cause of pauperism is relief. . . . we can have exactly as many paupers as the country chooses to pay for.” Unemployment relief accomplishes the same thing by subsidizing unemployment. If you do not accept the law that subsidizing gives you more of it, then you might as well throw all of economics in the garbage.

Providing a minimum income for not working causes the labor market to be smaller than it would otherwise be — this causes the price of labor to rise. But because nothing has changed to increase the marginal productivity of labor, employers will simply hire fewer workers. One of the reasons unions support unemployment aid and minimum wage laws is to preserve their artificially high wage, below which they withhold their labor. So basically, a minimum income still has a distorting effect on wages. However, to benefit from a higher minimum wage you have or get a job at the new minimum wage. With a minimum income, you don’t have to go work — you can sit around with no pants on, playing Xbox instead.

Additionally, these social programs reduce the incentive to be a producer. All taxes imply a decrease in present and future goods, because not only are resources shifted away from the producer, but the producer’s incentive to add more value in the future is diminished . Therefore, as with all government transfer payments, such a minimum income program would systematically depress the utility of productivity and encourage the tendency to be nonproductive.  People will shift from productive, tax-paying efforts, to nonproductive, tax-consuming activities. With a minimum wage law, you still need to get a minimum wage paying job to see any benefit. With a minimum income, you can sit around with no pants playing Xbox all day. Nonproductive bureaucrats must also administer the minimum income. The entire economy would necessarily contract.

There is only one way to create “wealth” in society: to increase the marginal productivity of labor with capital investment. Shuffling existing wealth around with schemes like minimum wages and minimum incomes only aggravates the problem of poverty by encouraging people to be poor and unemployed. Men such as Mr Coyne need to consistently apply the principles that reject the minimum wage to all other forms of social welfare.

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