Revolution, democracy, education and gas pains

Ed meets Fidel

About a month ago I posted a comment on the Egyptian Revolution. It was about democracy and the possibility that the Muslim Brotherhood would be involved in a future Egyptian government. Well, that revolution, or should I say coup d'état, seems to have subsided, Mubarak is out, and the Army is still in control as it always had been, no need to worry about the Brotherhood there, not yet anyway. George Jonas commented on that last week in a column Intoxicated by Revolution, where he gets closer to the truth of what is going on in the current Middle Eastern unrest. Jonas points out that Americans in particular are in love with revolution because their own country was born that way. The American and Canadian media got very excited about the Egyptian "peoples revolt" and their demand for freedom and democracy even though those terms have a different meaning for the Egyptians.

I'm old enough to remember a revolution that got North Americans excited more than half a century ago. The picture shows Ed Sullivan, lord of Sunday night television back when I was a kid (in 1959), speaking to a 32-year-old Fidel Castro about his "liberation of Cuba." Some liberation, opinions on that revolution changed soon after that interview was aired.

Mr. Jonas' column discusses democracy as being a goal of the Mid-East unrest. He points out that democracy is really just a "method of succession or power-transfer." In North America we view democracy as a synonym "for individual liberty, fundamental human rights, private enterprise, separation of church and state, an independent judiciary, freedom of expression - in short, for the sum of the best ideals of Western-style societies." That is just our bias and it has never been true. Jonas continues that: "'Democracy' denotes a system in which governments succeed each other by being elected, usually for a fixed term, by a majority of qualified voters. That's all. Rule by majority mandate says nothing, in itself, about the kind of society such an impeccable mandate is going to rule." Jonas also adds that it is very unlikely for democracy to come from this current unrest "it's more likely for wealth, justice and liberty to bring people democracy," like has occurred in the West. In other words there is virtually no chance that we can expect democratic states, as we think of them in North America, to arise in Tunisia, Egypt, Yemen, Bahrain, or Libya. So what is going on there?

Two things are happening and both are related to the way government distorts the marketplace.

In both Tunisia and Egypt a post-secondary education is "free," even though the market for graduates is extremely limited. Tunisia particularly has 57% of its young people entering the labour market with a college degree, compared to the US situation with less than one-third of its young people in that situation. An education bubble fuelled by government policy has created unemployment and underemployment in both Tunisia and Egypt. The value of an education to an individual can only be determined by the price that an employer would pay to employ that individual. If the educated individual is unemployable, than of what value was the education received? That is the distortion created by these governments. Countries with groups of educated unemployables, subjugated by dictators like Gaddafi in Libya,  together with power of the internet, has created a volatile mixture. 

For us in the West the unrest across North Africa has distorted the oil market in southern Europe and as a result everywhere oil is used, "a pain in the gas." A prolonged civil war in Libya threatens to involve the armed forces of NATO and beyond, because it endangers Libyan civilians (no fly zone) and the oil infrastructure of Libya. We are all paying more for gasoline today because the market demands it. Interesting how one government distortion far away can lead to your wallet.         

    

OSCAR robbery and bad medicine

They were robbed. Thats right, the Oscar for Best Picture at the 83rd Annual Academy Awards should have gone to The Social Network. Instead The King's Speech, another very good movie won. The Fighter was also a very good movie, and I'm sure Inception (did not yet see) was as well. My problem is I really don't have much respect for the monarchy or monarchists in general.
Yes, the The King's Speech was about overcoming stuttering, a real problem (especially for a King), and certainly I was sympathetic and even moved by the acting.....I get it. Maybe Colin Firth even deserved Best Actor, but a movie that portrayed how an elitist overcame a problem so that he could fulfil the job which he received by right of inherited entitlement, well, I have a problem with glorifying and celebrating that. So I'm prejudiced against arbitrary rule. What else is new?

The Social Network is a different kind of movie and I remember after watching it that the writing (adapted screenplay) was wonderful, and so was the editing, and each of the actors together did a fabulous and convincing job. It was amazing to me that such a great movie was made about what could be a very dry topic.
A column in the National Post last week said it best for me. Shaun Francis wrote this before Oscar night: "The Facebook story proves that a great idea, combined with good timing and an evangelical founder, can flourish in a system that allows it to quickly attract money, resources and talent. That system is, of course, the free market, capitalist, forprofit economy." He continues by adding: "...I am most struck by what was not part of the Facebook story: government. The Social Network doesn't include a cast credit for "faceless bureaucrat." Nor did the screenplay include any lines about statesponsored venture funds. No science and research tax credits. No federal regulations stipulating who could own Zuckerberg's company, or specifying the language or disclaimers for his home page." Mr. Francis continues by speculating about what would have happened if government were involved (disaster) in creating Facebook and then compares it to the Canadian and Ontario government's "bungled attempts to create electronic medical records."
Mr. Francis adds: "Mainstream political parties and academics claim for-profit medicine will make health care more expensive. Yet despite governments spending bigger and bigger budgets on health care, wait times lengthen and services are delisted. Clearly, taxpayers are not getting value for their money in our monopoly-payer system." 

Facebook has 500-million voluntary users, produces scads of money, and has absolutely nothing to do with government. Mr. Francis concludes that the film The Social Network: "teaches us to value the individual and the free market as agents of change. It proves it's possible to transform the world without a tax credit. It shows that you can make money and make a difference.
"I'm from the government," the man says. "And I'm here to help." When we hear those words, The Social Network suggests we should run in the opposite direction." Absolutely right!

Bringing people to the light

Why is capitalism portrayed as evil by many artists? Because its easy to suspend thought, much easier than thinking. Here are a couple of interesting views:

The case for gold

Some of my libertarian friends will tell me that gold has no intrinsic value, and pays no dividend so why bother owning it? Of course that is true. You can't eat gold, but it makes great jewellery, can be used in the electronics industry in small amounts, is still used by dentists, has a minor role in space exploration, but not much else. The point that is often missed in their argument, is this: for whatever reason gold has been used as a method exchange among people for thousands years. That is indisputable. Gold can, and has been used as money. However dragging around bullion or any other precious metals in your pockets has its downside, literally. The weight of the metal and the problems of storage have created proxies for gold. Once-upon-a-time paper money was a proxy for gold; no longer, too bad. Today if you want to buy gold you can at some banks, or other outlets. The other way to buy gold is through the proxy of an exchange traded fund (ETF), a little more scary but much more convenient. One of the largest ETF's, has the symbol GLD on the New York Stock Exchange. A friend of mine posted an article on the mises.org website today that simply must be read to understand why gold could be important soon. Have a look here.