Triple-A reality check

Today stock markets around the world resembled that ship over there, and that was after last week, a bad week. Standard and Poor's downgraded US credit on Friday after the markets closed, and all weekend media types were waiting for the other shoe to drop. Well, it's dropping, but maybe not yet completely dropped.
The media are portraying this as a debt crisis, POTUS Obama calls it a crisis in political will. No matter, things won't start improving until and unless everyone agrees that this is actually a spending crisis. It didn't start with Obama, or Bush 2, the problem  is chronic and widespread across the planet at all levels of government. Spending at a greater rate than income creates debt, its very simple, any household is aware of this reality. Why governments have the right to spend more than they have, is a great question, maybe for another time.
Canada lost its Aaa rating in 1992, and it was not reinstated until years later, after the Chretien-Martin Liberals actually downsized the Canadian Federal government. This downsize, that began about 15 years ago, is the reason most commentators say that Canada is doing so much better than the US and the other G7 economies at the moment.
So the reality is that a country functions better when it's spending is under control, and when its government shrinks giving the population more of its own discretionary income. Job creation is better, the monetary system is better and the future is brighter. That is the reality. 

Hyperinflation by fiat

Fiat currency or money, is money that has value only because of government regulation or law. That means there is no tangible commodity that the money can exchanged for, except its equivalent value in other denominations. So, one American dollar will get you four quarters made of some base metal combination, which at least has some heft to it. That is the law in the U. S., but once an American dollar was worth a pre-determined amount of gold, and then things changed.
The bill pictured is 1 x 10 to the 14th Zimbabwean dollars - one hundred trillion Zim dollars. Today, that bill is worth about $5.00 Canadian/US, as a collectors item. In 2008 that amount would purchase a cart of groceries, while 700 Billion Zim Dollars bought a loaf of bread. That's what happens when a currency collapses and hyperinflation ensues.
As posted here, the average life expectancy of a fiat currency is 27 years and as Stefan Molyneux explains in a recent posting below, the world's current reserve currency, the U. S. dollar, may be nearing the end of its life expectancy.

"Our genes talking"

Humans are successful because we have developed "social learning" and have used language to impart that learning to others.
Language is used to unite us, and divide us, and it has transformed humanity more than anything we possess.

Your government = your mommy

Don't touch those potato chips! Put down that can of soda pop! The government KNOWS whats best for you, trust them.
Seems to me, with all the things government is expected to do, chastising people for bad habits is one less thing it should be doing. Come to think of it, with the huge debts being accumulated by all levels of government on our behalf, there are too many things governments are doing. People should be responsible for themselves as much as possible, don't you think?

Rent Control, Race, and Sowell

Uncommon Knowledge is a video series produced by the Hoover Institution. Need your preconceived ideas shaken up? Then give a listen to Thomas Sowell (pictured), and hear what is meant by uncommon knowledge.

  

Warning, this posting is not politically correct and there is swearing too....

How many recycling containers do you use in your home? Here in my corner of the Great White North we have just a couple that we put out, and think we are doing our bit. But are we?
On garbage day a man on a bike, laden with bags and carriers, cycles through my neighbourhood in suburbia, rain or shine, summer or winter, and picks through the recycling "blue boxes" looking for anything of value. What could there be of value? Well, I can watch this guy through my office window as he picks out beer, wine and liquor bottles because the Provincial government beer store, returns a deposit on them and the man also picks up aluminium cans. Why aluminum? Good question, I'll leave that explanation for Penn Jillette and his colleague Teller. Enjoy, but be warned, there is swearing and it might shake your belief in recycling.

A libertarian tangles with statists on TV

Bill Maher frequently makes me angry and almost as frequently makes me laugh so I watch his weekly Real Time show on HBO. Last week he had as a guest Nick Gillespie of Reason TV, who was hawking his new book The Declaration of Independents: How Libertarian Politics Can Fix What's Wrong with America. 
Opposite Nick were, Bill Maher, and several traditional political types - all statists. The fireworks that ensued exposed the weakness of the statist arguments that support the status quo.....or should I say statist quo? Anyway, its interesting to hear all sides in the lively debate:

The curse of the spendthrift legislators

"Democracy at its finest," those were the words used by one City of Toronto councillor yesterday in a deputation marathon that lasted 22 hours. The City of Toronto needs to find $775 Million in savings in next years budget (2012), or it will need to raise taxes or cut services or both. Yesterday 334 people had registered to speak in front of City council to plead their case for saving their particular pet service (see picture) or support the cuts. In the end just under 200 got to speak (many just left during the night) and only one of those spoke in favour of cuts to spending. That is a sobering statistic.

This outbreak of parsimony is now wide spread in Western Democracies. In Europe, nations are teetering toward default on their financial obligations. Our American neighbours are in danger of defaulting by next week. At the Provincial and State and municipal levels across North America, governments of all stripes are coming to grips with massive debt, all of this in the midst of a weak recovery from a severe recession. Recession part two could be a result. The chickens are coming home to roost, the curse of the spendthrift legislators threatens everyone.

But look at Toronto, mobs of rent-seekers stepping up to ensure that they are cared for in the way they have become accustomed. "We want our services, and we want someone else to pay for them," that is the message of the debate.

Last October the new Mayor was elected to "stop the gravy train," to stop what he presented as the excessive fluff that citizens were forced to subsidize. He also promised not to cut services, perhaps naively. Certainly there was some fluff, and maybe the Mayor was aware that his promise was just that. The Mayor and council hired independent auditors KPMG, to suss out the "core-services," things that are required (by their definition) in a big city so that the $775 million shortfall could be eliminated without much pain. Right.

So here we are, for me the lesson is clear, despite all the evidence that you might think favours our cause, we are still at the bottom of a mountain. For those that hope that the libertarian utopia is just around the corner, give your head a shake, then take a deep breath, and prepare for a generational fight. 

Disastrous Debt - America plays chicken with the world

My letter-to-editor in the National Post July 28, 2011

Imagine using your credit card to purchase an item in a store, and having it refused because you have exceeded your credit limit. Essentially that is what is about to happen to the U. S. government. I doubt it will happen, but having it come so close, less than one week, has already had a negative impact on the American credit rating.
The lesson from this is that no person and no country, should rack up a debt so large that payback is jeopardized. How could this happen to a sovereign nation?
Well, probably not that differently from the debt accumulated by an individual, I would imagine. When spending is greater than income, when wishes are confused with needs, and when the future seems so far off, anyone can get into debt problems.
But countries are managed by intelligent people (we hope), elected to represent the best interests of the population. That of course is an assumption that is debatable.
Americans have long considered themselves the world's policemen. America claims it is defending liberty and its own interests in the many, many military adventures it has launched since the Second World War. In how many countries has the American military deployed troops? Would you believe 150 countries! More than 10% of America's Armed Forces personnel are in other countries, far more than at any time since the WWII. Imagine the expense. Most often war or military occupation is a choice and it invariably causes debt, American legislators and Presidents have chosen war and occupation, many times. Spending is a choice as well, so is borrowing. Just as households can live within their means, so to nations. The problem is not debt, it's spending. Instead of living within one's means, an individual chooses to buy now and pay later, putting off payment to the future.
But nations are different from individuals. An individual can only blame him/herself, presumably no individual was physically forced to accept debt or repay it. Nations of course use force as in almost all aspects of their operations. Legislators are often elected with a plurality of votes, not a majority. Even a majority seems inadequate morally, when so many are forced to pay for government actions that they would not support. Yet that is the morality of gang action, of democracy! Worse, the burden of debt is shared by everyone in the nation at some level whether they supported the government action or not, young, old, the newborn and the aged. The original need for the debt is often dubious. The economic pain to the nation is frequently unequally distributed. But the coercion required to repay the debt is always huge and widely spread.
This debt problem won't be "fixed" by raising the debt ceiling (which will happen). What is required is not going to happen, that is, a full assessment of what the U. S. government should and should not be doing. The Democrats and Republicans are on the same side, and that is not on the side of the American people. People will realize that at some point, but when?

The most hated group in America, Atheists!

Atheists watch this. In America you are the most vilified minority around, even though as a group you are probably the least violent, most tolerant, most thoughtful and intelligent.
From Stefan Molyneux:

Kooks left and right

This morning I described myself to a new acquaintance as a politician. I could have said blogger, since the pay is about the same, but I used politician, an uncomfortable word choice for me. The guy looked at me, and realized he did not recognize me (unsurprisingly). Without much pause, he asked, left or right?
It seems thats how people perceive the world of politics (maybe thats our problem?). So I gave the standard libertarian reply: "we don't fit that description." I then proceeded to run down a list of leftish things that I support: choice in abortion, gay marriage, anti-war in Afghanistan, Libya, etc., then I switched to rightish things: gun rights, diminished role of government, low taxes etc. Of course he had never heard of us. "New," he asked? I smiled.
The reason I bring this up is the incident in Norway, 76 dead at the hands of an "extreme right-wing" terrorist. Personally I think he is nuts, but maybe thats too generous. There  have also been left-wing terrorists that have committed murder on a large scale, although they have had a political agenda and they seem to have disappeared of late. The Norwegian nut-case had an agenda, yes, but to say it was confused is somehow disrespectful of the 76 victims. My point is, right or left, like the cartoon above, are just different words that have the same meaning in libertarian parlance: no choice.

How government destroys volunteerism

Why does the State continue to grow ever larger?
It's a good question, and I can't say that I have all the answers but I can point to an example of how this process is nurtured.

In this mornings Globe and Mail appears a headline that I actually hope to see happen someday, but not in the way the author means in the article: "It's time to close Canada's food banks." Indeed it is time. It's long past time to eradicate poverty too. It's long past time to eradicate unemployment as well. These issues are all related and they all result when the State meddles in the economic affairs of businesses and individuals.
It's no coincidence that the first food banks came into existence in Canada in 1981 in the midst of the "Volker Recession" ('81-'82 - caused by the state). A stagnant economy plus inflation = stagflation, a new term invented to describe that economic mess. This is something we, in the present day, may look forward to as the current economic malaise continues. Food banks soon spread across Canada, so that they now exist in every major population centre coming under the umbrella of Food Banks Canada. They are staffed largely by volunteers who are genuinely interested in helping those in need. This is a noble gesture, people at their best who understand that helping others is a selfish act, that helps the helper, and everyone in the community. Just as importantly it is a voluntary act, no one is forced to help, no one is forced to accept the help, and everyone hopes that the help is temporary. So, while I applaud food banks and their workers, I'm dismayed that the food banks continue to grow and spread.
I am not going to launch into an economic discussion about the causes of poverty, unemployment and so on. You may choose to read about the myth of minimum wage here, that will give you a beginning. Mises.org does a far better job explaining all of it than I ever could. But the opinion article in the Globe calls for the end of volunteerism in food banks, and the author states it best in these paragraphs:

Food banks also serve many unintended functions. To start, those of us who donate, volunteer or participate in food drives “feel good” about making a difference in the lives of others. But we need to look beyond this aspect of our volunteer experiences.

Food banks also let governments off the hook from their obligation to ensure income security for all Canadians. They undermine social solidarity and social cohesion by dividing us into “us” (those who give) and “them” (those who receive)..........

Food banks can never solve the problem of poverty. It’s time to hold our governments accountable to their obligation to ensure that all Canadians have a standard of living adequate for health and well-being. (underlining and bolding is my emphasis)


The author manages to impugn the motives of the corporate donors, and the volunteers, while at the same time destroying the idea of volunteerism in favour of government coercion. Her credentials give heft to this line of reasoning, and anyone that disagrees, well, they are open to vilification. That is how it happens folks, tell me I'm wrong.  

Choice is in our genes

That (to the left) is Google's tribute to Gregor Mendel whose 189th birthday is being celebrated today in biological circles.
It is to Mendel, that we attribute our first understandings of the rules of Genetics. By using simple mathematical concepts after observing generations of garden peas, Mendel made Genetics into a science. He showed that his hypotheses could be turned into theories and eventually rules or laws that had predictive value. Good Science, occurs whenever a prediction can be made from a theory and shown to concur with reality. Many of you may recall studying Mendelian Genetics in school.
So it was interesting to me reading the National Post this morning, to learn that a Rutger's University study shows that a human behavioural trait is likely hard-wired in our genes. That's right, genes seem to influence other thing besides physical traits, like eye colour, or hair colour. This behaviour is our (humanity's) apparent desire to have "choices." This of course is interesting to me as a member of The Party of Choice - Ontario Libertarian Party. Choice is something all libertarians would cherish, and as one of the researchers, Lauren Leotti says:
"It makes sense that we would evolve to find choice rewarding, since the perception of control is so adaptive. If we didn't feel that we were capable of effectively acting on our environment to achieve our desired goals, there would be little incentive to face even the slightest challenge."
For me, that explains a lot.

Scam of the Century!

I have never written about the junk mail that I receive, but I couldn't resist in this case. 

Circulating in my neighbourhood this week is the flyer to the left. I've removed names to protect the guilty except for those involved with funding this project, the Ontario government. 

The issue here is one that extends not only to Ontario but across this country and to our American neighbours. The issue is "green jobs." 

Green jobs are jobs that many governments prefer because they are high tech, and created to wean populations off fossil fuels. By promoting and funding green jobs, government can engineer the behaviour of populations to reduce their carbon footprint and mitigate the evil global warming. 

It has been a hot few days in these parts and throughout central and eastern North America, but it is July after all, and if it's not going to be hot in July, then when? So I'm not going to rant about global warming, I'm just going to look at this flyer (click to enlarge) and try and understand the economics involved even though I'm not an economist.

The flyer points to an Ontario government program (microFIT - microFeed-in-Tarrif) that offers homeowners and businesses the opportunity to sell electricity from privately owned solar panels or wind mills back to the government electric grid at a "fair return on the initial investment (ROI)." The chart in the flyer shows the ROI for solar panels in this case - 12 to 14% damn good for these times. Of course the red box (my highlight) shows why the ROI is so good:

"Your Local Distribution Company will buy the electricity produced by the Solar System on your rooftop at $0.802/kWh. (Approximately 8 times the price you pay for your consumption)" 

Please read that again just to let it sink in. Ontarian's get electricity for less than 10 cents per kWh at peak periods, but the utility will pay 80 cents  per kWh for your solar electricity, wow, some fair return! So who pays for the additional 70 cents  per kWh between production and consumption? Good question, and I will let you guess the answer.

There you have it, my junk mail is telling me how my Province is creating the conditions for bankruptcy. I didn't make this up, this is where green jobs (producing and installing and servicing the solar systems) come from, and you don't need an economics degree to understand this.      

Libertarian Look-a-likes?

"Those people, they all look alike." That kind of comment is a hackneyed joke among racist types. It references the observation that the people of one race may have difficulty distinguishing differences in the faces and expressions of people of another race. There is actually a psychological term for it: Cross-race or other-race bias. For those who recall the fictional Archie Bunker (picture at left) of All in the Family fame, that is the kind of bias one would expect from him.
Just as racists characterize a particular group as all having similar features and behaviours, so I find that Statists, Leftists, Liberals or collectivists like to lump everyone to the right of them as the same. From that, it sounds like I'm guilty of that very thing, but I try to be more discriminating in my "lumping." I also hate to use the term "to the right," I don't consider myself to the right of anyone, and in libertarian parlance "right" (describing political view) is kind of meaningless.

As proof that I am discriminating when I reference Statists and collectivists, I know there are some who are anti-war, and generally very socially liberal, they tend to be leftists or socialists like NDP supporters in Canada. I am anti-war, and very socially liberal, so we both share those values. They however believe that big government is the solution to virtually all social, environmental and monetary problems that people might have, I don't.
I also recognize that there are Statists who share with me the belief that governments should be smaller, yet those same people would support the war on drugs, deny marriage rights to gays, and support the wars in Iraq, Afghanistan, and the war on terror. I don't.
So you see I do discriminate, what irritates me is that the statist/collectivist types somehow can't discriminate between libertarians and conservatives and like Archie Bunker they say: "those people are all alike."
A case in point: several weeks ago Stephen Metcalf of SLATE the online magazine, wrote an article called The Liberty Scam. That same article popped up in the National Post this week but Canadian-ized, as The Hypocrisy of Libertarians  In it, Metcalf slams libertarians and their philosophy, politics etc., naming several guilty practitioners including: Republican fiscal hawk Paul Ryan, Glenn Beck, the creators of South Park, the founder of Whole Foods, P. J. O'Rourke, David Mamet, and Sarah Palin. Hello what?! Ryan, Beck, Palin are libertarians?! See what I mean? They all look alike to Metcalf, its like other-race bias but political. 
Paul Ryan voted for TARP, the auto bailouts and the Patriot Act, some libertarian he is supposed to be. Glenn Beck, give me a break and Sarah Palin, you have got to be kidding. To the credit of the National Post they also printed right beside Metcalf's mess, a column by Jesse Kline called A narrow view of the libertarian creed. It is critical of Metcalf's column and rightly points out that Palin does not support: "gay marriage, ending the drug war, allowing open immigration, ceasing the wars in Iraq and Afghanistan, cutting the military budget, or any other libertarian cause." She is no libertarian either.
The next day an astute letter writer in the Post pointed out that the "issue is simple (to Him) - if big government was the solution to our problems they all would have been solved already. The idea that we are just one more social program away from utopia, one more regulation from all being safe and one more coerced tax dollar away from social justice is either naive or fascist. I'm not sure which." Neither am I.