When does the war on terror end?

.......and how will we know?

Unintended Consequences - Schiff Radio

Why does post-secondary education cost so much? Why is poverty increasing if it is always being so actively fought? Why is there so much unemployment despite so many attempts to reduce it? Why do disabled people have difficulty finding jobs?

There is a common thread here, and Peter Schiff does a pretty good job of explaining the 'whys'. Have a look....

Jolly Green Gouging

There are few things more annoying than being billed for services or items never ordered or never wanted. The hassle of calling the biller, claiming ignorance of the charge, then asking for it to be removed always feels a bit like claiming innocence in a courtroom.

This past week consumers of electricity and taxpayers in Ontario, were told by the provicial Auditor General, that they are being gouged for services that very few of them would have chosen voluntarily. Unfortunately, there is no biller to call, the corrective 'fix' will not be simple, and the rip-off of Ontario's consumers will continue into the foreseeable future.

"Billions of dollars of new wind and solar power projects were approved without many of the usual planning, regulatory, and oversight processes....While this helped these projects get off the ground quickly, their high cost will add significantly to rate-payers’ electricity bills in the future.” That is from a media release by Auditor General Jim McCarter from his 2011 Annual Report.

In another media release, Jim McCarter points out that:“Because we all use electricity, and because the sector operates in a near monopoly, effective oversight...........has historically been crucial.” No kidding, and of course the Auditor's office is the last resort for oversight. You might wonder why the haste in getting these projects going, why skip over planning, consultation etc.? Never does McCarter suggest a reason for the haste and lack of oversight, because at the heart of his report he really does support and depend the government.

So what drives the decision making of the Ontario government because they will ignore this report? I suggest you spend a few moments listening and watching this short video. In it, David Suzuki hero of environmental concerns, clues us all in to whom he has been talking to about Ontario's new green energy future. What's most interesting is Suzuki's concern for sound economics, and how he uses Europe as the model for our green future; the video is slightly dated. Well, we all can see what's happening to Europe today, and the McGuinty Liberals are doing the same sorts of things right here in Ontario.

McGuinty and his Liberals have swallowed hook-line-and-sinker, the idea that humans are the cause of global warming, and Ontarian's in particular. Under the direction of the Premier, cheap coal fired thermal generation stations have been, and are being closed across the province and replaced with costly and uneconomic wind and solar power. Programs like the FIT and MicroFIT are being used to prop up these alternative sources of energy, all at huge cost, according to the Auditor's report.

In an editorial this week, the National Post pulls no punches in lambasting the McGuinty Liberals for its failed energy and environmental policy. Libertarians are frequently criticized for their ideological bias in politics and economics. This of course is a bit like criticizing a tiger for eating meat. No one in the media dares call the Liberal government ideologically driven, no-siree, but of course it is no less ideological than are Libertarians. Spend a few minutes listening to McGuinty's mentor Suzuki, then tell me there is no ideology there.

Strangely, on the same day as the Auditor's report, our Federal Conservative government has decided that it will not renew its commitment to the Kyoto Protocol. Ontario seems to be going one way, while the Feds are going the other. Why is Ontario being burdened with huge costs from a monopoly service determined to cut carbon emissions, while the rest of the country seems to be ignoring the issue? Why are the citizens of Ontario being gouged in their monthly electricity bills? Why has McGuinty not yet resigned for incompetence? It's not too late.  

Auditor-General vs. Government / Wolf vs. Sheepdog

The 2011 Ontario Auditor-General's annual report was released yesterday, two months after the Oct. 6th election when it actually might have had an impact on government. The timing of this report also serves government interests, because Christmas is coming, and soon the report details will be overwhelmed by good cheer and tinsel, and then ultimately ignored. Nothing will kill a conversation at a Holiday Party quicker than: "So what did-ja think of the A-G's report, eh?"

The report itself is written by bureaucrats whose job depends entirely on the foibles of big government. Sure the Auditor and staff must have some integrity, because their report is invariably critical of government and its excesses, and there is so much to be critical about. But it's really just a game. The actors in this report reminds me of the Looney Tunes cartoon where the apparent arch rivals, Ralph E. Wolf, and Sam Sheepdog, punch-in every morning at the same time-clock with friendly greetings. While on the job they are brutal adversaries, but outside of work they actually live together. So it is with the Office of the Auditor-General and its partner the Government, both are sucking from the same taxpayer's teat. To push my imperfect metaphor to its limits, someone is getting fleeced, can you guess who?

 

The report itself is 460 pages long, and is replete with the major boondoggles that the Ontario Provincial government considers part of its mandate and purview. Government waste and ineptitude are everywhere, and people like me, have ammunition for months and months. Where to start? Here are a few issues from the report:

-  Ontario's electricity monopoly, prices have risen 65% since 1999 and are expected to rise another 46% over the next five years,

- Billions of dollars of wind and solar power projects were approved without the usual planning, regulatory, and oversight processes

- Ontario drivers, particularly those in the GTA, generally pay much higher auto insurance premiums than other Canadian drivers

- Ontarians have been paying a special charge to retire an electricity debt, though the remaining debt is never disclosed

- LCBO is one of the biggest purchasers of alcohol in the world is more concerned with restricting the use of alcohol than getting the best price for Ontarians

As critical of the government as these issues seem to be, the Auditor offers pathetically poor suggestions to repair to the problems, always suggesting that somehow government can become more efficient, more responsible, more accountable, and never considering that the size and scope of government itself, is the problem. Why would he? He is part of the game and he will punch-in next year at the same time, happy in his work.

We are left with a report, which I believe is truthful, that should send citizens running into the streets screaming because they are literally being robbed, but that won't happen, not yet anyway. I will have more to say. 

One hundred watt ban - Stossel

ReasonTV Nanny of the Month - November 2011

Capitalism is required to pay for a communist government

"All governments are communist....... What I mean is that all governments expect to be recompensed, not according to the value of their contributions to society, but according to their needs." That's George Jonas in an op-ed piece in today's National Post called The McGuinty paradox. Mr. Jonas goes on to explain: "Wealth that hasn't been created cannot be redistributed, no matter how much a government needs it."  

Of course like all Western governments, in order to stay in power for as long as possible, they buy your votes, they spend "future wealth," wealth that has yet to be created. They assume, things will go merrily on as before, and their over spending will somehow have no effect on the wealth creators.  

As Mr. Jonas points out, the McGuinty Liberals in Ontario are a quarter-trillion dollars in the hole. How can that continue without consequences? Will they be held to account? Most importantly, how did we let that happen and can we prevent it from happening again?

Mr. Jonas doesn't say it, but the implication is there, its time to change the way we do government. Government should be there to protect citizens, not to protect the jobs of politicians.

Canada's bloated health care monopoly

"When countries with smaller workforces accomplish what those with larger ones struggle to achieve, we need to know the reasons," says Matthew Lister in a National Post article Health care needs to get lean. Mr. Lister was comparing the ratio of healthcare administration employees (federal and provincial) in Canada to that in Germany. It turns out that the Germans are remarkably more efficient. One healthcare administrative employee services about 1,415 Canadians. In Germany, with a similar system organized in states (provinces in Canada), it takes one healthcare administrative employee to service 15,545 Germans, more than ten times the Canadian ratio! Furthermore Mr. Lister compared Berlin's State healthcare employees to Alberta's, both have about the same population. Berlin's State has 104 employees compared to Alberta's Ministry of Health with 708 people. Yes, Alberta is huge in comparison to the German State, but it's the populations that are similar and that use the healthcare - not even close.

The chart above is from a comparison of healthcare outcomes for seven OECD countries. Canada is 6th, and Germany is 4th, but Canada is dead last in quality care, effective care and timeliness of care, while spending more money per capita.

Canadians most frequently compare our healthcare system to that of the US. According to the chart, they are similar, but only in outcomes. Canada is 6th, the US is 7th, but look at the difference in per capita cost. According to that chart, US costs are almost double Canada's per capita cost. Based on that, Canada should properly be compared to the other countries because the systems are more similar and so are the costs.

An article by Tom Blackwell in the Post, Look past U.S. for health-care fixes: study, agrees that the US is not a good comparison for us. The other countries have similar systems to Canada's, but with much better outcomes and similar or lower costs. Why?

The answer seems to be related to competition and choice in these other countries, ideas that even last week were squelched by the McGuinty Liberals in Ontario. These countries haved shifted into "a 'consumer-driven' culture that gives patients more choice in medical services." Patients are allowed to pick and choose the services they get through private health insurance companies.

One of the doctors involved in the study said: "What I felt was quite striking across a number of these other countries is the role of consumer choice. As soon as consumers start to select and choose ... then you introduce into those systems some element of competition. Then the providers for those services suddenly need to respond to consumer demand, or lack thereof."

Of course this would be a start, a move in the right direction toward a truly competitive healthcare system. But can it really happen? An article in the Post by Lorne Gunter: We're all addicted to big government, suggests just how difficult this might be.

Mr. Gunter examines a StatsCan report that says:"Fully one-in-five Canadians (20.2%) now work for one level of government or another, for a Crown corporation or for a publicly funded institution such as a school or hospital. That’s more than 3.6 million out of a total of about 18 million working Canadians." Add to that families, and extended families, and people that depend on government largess (from taxpayers), and you start to see how many votes are cast in favour of big government. It's a bit depressing. "We’ve all got our ladles in the pot, which is why it is so difficult to find a constituency for broad cuts to government and significant tax reduction," says Mr. Gunter.

      

More Penn Jillette - Why Libertarianism?

Laissez-faire capitalism — is the ideal economic system

Are you still operating under the delusion that the Occupy Movement is more than just an attempt by the self-identified, downtrodden 99% to redistribute the wealth of the 1%?

As I have suggested before, something is wrong, but the "fix" is so complicated, so knotted-up and entangled with crony capitalism and government regulation, that one needs to be a professor of economics to provide even a smidgeon of clarity. Reprinted below (with permission) is an attempt at providing clarity written by George Reisman, Ph.D., and Professor Emeritus of Economics at Pepperdine University. The article is long because the topic is complex, but well worth the effort of reading. A lively discussion with several opposing views appears here.

How a Highly Productive and Provident One Percent Provides the Standard of Living of a Largely Ignorant and Ungrateful Ninety-Nine Percent

The protesters in the Occupy Wall Street Movement and its numerous clones elsewhere in the country and around the world chant that one percent of the population owns all the wealth and lives at the expense of the remaining ninety-nine percent. The obvious solution that they imply is for the ninety-nine percent to seize the wealth of the one percent and use it for their benefit rather than allowing it to continue to be used for the benefit of the one percent, who are allegedly undeserving greedy capitalist exploiters. In other words, the implicit program of the protesters is that of socialism and the redistribution of wealth.

Putting aside the hyperbole in the movement’s claim, it is true that a relatively small minority of people does own the far greater part of the wealth of the country. The figures “one percent” and “ninety-nine” percent, however exaggerated, serve to place that fact in the strongest possible light.

What the protesters do not realize is that the wealth of the one percent provides the standard of living of the ninety-nine percent.

The protesters have no awareness of this, because they see the world through an intellectual lens that is inappropriate to life under capitalism and its market economy. They see a world, still present in some places, and present everywhere a few centuries ago, of self-sufficient farm families, each producing for its own consumption and having no essential connection to markets.

In such a world, if one sees a farmer’s field, or his barn, or plow, or draft animals, and asks who do these means of production serve, the answer is the farmer and his family, and no one else. In such a world, apart from the receipt of occasional charity from the owners, those who are not owners of means of production cannot benefit from means of production unless and until they themselves somehow become owners of means of production. They cannot benefit from other people’s means of production except by inheriting them or by seizing them.

In the world of the protesters, means of production have the same essential status as consumers’ goods, which as a rule are of benefit only to their owners. It is because of this that those who share the mentality of the protesters typically depict capitalists as fat men, whose plates are heaped high with food, while the masses of wage earners must live near starvation. According to this mentality, the redistribution of wealth is a matter merely of taking from the overflowing plates of the capitalists and giving to the starving workers.

Contrary to such beliefs, in the modern world in which we actually live, the wealth of the capitalists is simply not in the form of consumers’ goods to any great extent. Not only is it overwhelmingly in the form of means of production but those means of production are employed in the production of goods and services that are sold in the market. Totally unlike the conditions of self-sufficient farm families, the physical beneficiaries of the capitalists’ means of production are all the members of the general consuming public who buy the capitalists’ products.

For example, without owning so much as a single share of stock in General Motors or Exxon Mobil, everyone in a capitalist economy who buys the products of these firms benefits from their means of production: the buyer of a GM automobile benefits from the GM factory that produced that automobile; the buyer of Exxon’s gasoline benefits from its oil wells, pipelines, and tanker trucks. Furthermore, everyone benefits from their means of production who buys the products of the customers of GM or Exxon, insofar as their means of production indirectly contribute to the products of their customers. For example, the patrons of grocery stores whose goods are delivered in trucks made by GM or fueled by diesel oil produced in Exxon’s refineries are beneficiaries of the existence of GM’s truck factories and Exxon’s refineries. Even everyone who buys the products of the competitors of GM and Exxon, or of the customers of those competitors, benefits from the existence of GM’s and Exxon’s means of production. This is because GM’s and Exxon’s means of production result in a more abundant and thus lower-priced supply of the kind of goods the competitors sell.

In other words, all of us, one hundred percent of us, benefit from the wealth of the hated capitalists. We benefit without ourselves being capitalists, or being capitalists to any great extent. The protesters are literally kept alive on the foundation of the wealth of the capitalists they hate. As just indicated, the oil fields and pipelines of the hated Exxon corporation provide the fuel that powers the tractors and trucks that are essential to the production and delivery of the food the protesters eat. The protesters and all other haters of capitalists hate the foundations of their own existence.

The benefit of the capitalists’ means of production to non-owners of means of production extends not only to the buyers of the products of those means of production but also to the sellers of the labor that is employed to work with those means of production. The wealth of the capitalists, in other words, is the source both of the supply of products that non-owners of the means of production buy and of the demand for the labor that non-owners of the means of production sell. It follows that the larger the number and greater the wealth of the capitalists, the greater is both the supply of products and the demand for labor, and thus the lower are prices and the higher are wages, i.e., the higher is the standard of living of everyone. Nothing is more to the self-interest of the average person than to live in a society that is filled with multi-billionaire capitalists and their corporations, all busy using their vast wealth to produce the products he buys and to compete for the labor he sells.

Nevertheless, the world the protesters yearn for is a world from which the billionaire capitalists and their corporations have been banished, replaced by small, poor producers, who would not be significantly richer than they themselves are, which is to say, impoverished. They expect that in a world of such producers, producers who lack the capital required to produce very much of anything, let alone carry on the mass production of the technologically advanced products of modern capitalism, they will somehow be economically better off than they are now. Obviously, the protesters could not be more deluded.

In addition to not realizing that the wealth of the so-called one percent is the foundation of the standard of living of the so-called ninety-nine percent, what the protesters also do not realize is that the “greed” of those who seek to become part of the one percent, or to enlarge their position within it, is what serves progressively to improve the standard of living of the ninety-nine percent.

Of course, this does not apply to wealth which has been acquired by such means as obtaining government subsidies or preventing competition through protective tariffs and other forms of government intervention. These are methods which are made possible to the extent that the government is permitted to depart from a policy of strict laissez-faire and thereby arbitrarily reward or punish firms.

Apart from such aberrations, the way that business fortunes are accumulated is by means of the high profits generated by the introduction of new and improved products and more efficient, lower-cost methods of production, followed by the heavy saving and reinvestment of those high profits.

For example, the $6 billion fortune of the late Steve Jobs was built on a foundation of Mr. Jobs having made it possible for Apple Computer to introduce such new and improved products as the iPod, the iPhone, and the iPad, and then heavily saving and reinvesting the share of the profits that came to him.

Two closely related points need to be stressed. First, the fortunes that are accumulated in this way generally serve in the larger-scale production of the very sort of products that provided the profits out of which their accumulation took place. Thus, for example, Jobs’ billions serve largely in the production of Apple’s products. Similarly, old Henry Ford’s great personal fortune, earned on the foundation of introducing major improvements in the efficiency of automobile production, which brought down the price of a new automobile from about $10,000 at the beginning of the 20th Century to $300 in the mid 1920s, was used to make possible the production of millions of Ford automobiles.

Second, the high rates of profit earned on new and improved products and methods of production are temporary. As soon as the production of the new product or use of the new method of production becomes the norm in an industry, it no longer provides any exceptional profitability. Indeed, further improvements again and again render earlier improvements downright unprofitable. For example, the first generation of the iPhone, which was highly profitable just a few years ago, is or soon will be unprofitable, because further advances have rendered it obsolete.

As a result, the accumulation of great business fortunes generally requires the introduction of a series of improvements in products or methods of production. This is what is required to maintain a high rate of profit in the face of competition. For example, Intel’s ability to maintain its high rate of profit over the years has depended on its ability to introduce one substantial improvement in its computer chips after another. The net effect has been that computer users have gotten the benefit of improvement after improvement not only at no rise but a drastic decline in the prices of computer chips. Insofar as high profits rest on low costs of production, competition drives prices down to correspond to the lower level of costs, which necessitates the achievement of still further cost reductions to maintain high profits.

The same outcome, of course, applies not only to Intel and microprocessors but also to the rest of the computer industry, where gigabytes of memory and terabytes of hard drive data storage now sell at prices below the prices of megabytes of memory and hard drive data storage just a couple of decades ago. Indeed, if one knows how to look, the principle of ever more and better products for less and less applies throughout the economic system. It is present in the production of food, clothing, and shelter as well as in the high tech industries, and in virtually all industries in between.

It is present in these industries even though the government’s inflation of the money supply has caused the prices of their products to rise sharply over the years. Despite this, when calculated in terms of the amount of labor the average person must expend in order to earn the wages needed to enable him to buy these products, their prices have sharply fallen.

This can be seen in the fact that today, the average worker works 40 hours per week, while a worker of a century or so ago worked 60 hours a week. For the 40 hours he works, the average worker of today receives the goods and services comprising the average standard of living of 2011, which includes such things as an automobile, refrigerator, air conditioner, central heating, more and better living space, more and better food and clothing, modern medicine and dentistry, motion pictures, a computer, cell phone, television set, washer/dryer, microwave oven, and so on. The average worker of 1911 either did not have these things at all or had much less of them and of poorer quality.

If we describe the goods and services received by the average worker of today for his 40 hours of labor as being 10 times as great as those received by the average worker of 1911 for his 60 hours of labor, then it follows that expressed in terms of the amount of labor that needs to be performed today in order to be able to buy goods and services equivalent to the standard of living of 1911, prices have fallen to two-thirds of one-tenth of their level in 1911, i.e., to one-fifteenth of their level in 1911, which is to say, by 93 1/3 percent.

Capitalism—laissez-faire capitalism—is the ideal economic system. It is the embodiment of individual freedom and the pursuit of material self-interest. Its result is the progressive rise in the material well-being of all, manifested in lengthening life spans and ever improving standards of living.

The economic stagnation and decline, the problems of mass unemployment and growing poverty experienced in the United States in recent years, are the result of violations of individual freedom and the pursuit of material self-interest. The government has enmeshed the economic system in a growing web of paralyzing rules and regulations that prohibit the production of goods and services that people want, while compelling the production of goods and services they don’t want, and making the production of virtually everything more and more expensive than it needs to be. For example, prohibitions on the production of atomic power, oil, coal, and natural gas, make the cost of energy higher and in the face of less energy available for use in production, require the performance of more human labor to produce any given quantity of goods. This results in fewer goods being available to remunerate the performance of any given quantity of labor.

Uncontrolled government spending and its accompanying budget deficits and borrowing, along with the income, estate, and capital gains taxes, all levied on funds that otherwise would have been heavily saved and invested, drain capital from the economic system. They thus serve to prevent the increase in both the supply of goods and the demand for labor that more capital in the hands of business would have made possible. They have now gone far enough to have begun actually to reduce the supply of capital in the economic system in comparison with the past.

Capital accumulation is also impaired and can ultimately be turned into capital decumulation, through the effects of additional government regulation in raising the costs of production and thus reducing its efficiency. This applies to practically all of the regulations imposed by the Environmental Protection Agency, the Occupational Safety and Health Administration, the Consumer Product Safety Commission, the National Labor Relations Board, the Food and Drug Administration, and the various other government agencies. The effect of their regulations is that for any given amount of labor performed in the economic system, there is less product than would otherwise be produced.

Now anything that serves to reduce the ability to produce in general, serves also to reduce the ability to produce capital goods in particular. Because of such government interference, any given amount of labor and capital goods devoted to the production of capital goods results in a smaller output of capital goods, just as any given quantity of labor and capital goods devoted to the production of consumers’ goods results in a smaller output of consumers’ goods. At a minimum, the reduced supply of capital goods produced serves to reduce the rate of economic progress. A reduction in the supply of capital goods produced great enough to prevent the addition of any increment to the previously existing supply of capital goods, and thus to put an end to capital accumulation, brings economic progress to a complete halt. A still greater reduction, one that renders the supply of capital goods produced less than the supply being used up in production, constitutes capital decumulation and thus a decline in the economic system’s ability to produce. As indicated, the United States already appears to be at this point.

The problem of capital decumulation has been greatly compounded as the result of massive credit expansion induced by the Federal Reserve System and its policy of easy money and artificially low interest rates. This policy led first to a great stock market bubble and then a vast housing bubble, as large quantities of newly created money poured into the stock market and later the housing market. Between these two bubbles, trillions of dollars of capital were lost. In both instances, vast overconsumption occurred as people raced to buy such things as new automobiles, major appliances, vacations, and all kinds of luxury goods that they would not have believed they could afford in the absence of the effects of credit expansion, often incurring substantial debt in the process.

In the one case, it was the artificial rise in stock prices that misled people into believing that they could afford these things. In the other, it was the artificial rise in home prices that produced this result. The seeming wealth vanished with the fall in stock prices and then again, later, with the fall in housing prices. In the housing bubble, moreover, millions of homes were constructed for people who could not afford to pay for them. All of this represented a huge loss of capital and thus of the ability of business to produce and to employ labor. It is this loss of capital that is responsible for our present problem of mass unemployment.

Despite this loss of capital, unemployment could be eliminated. But given the loss of capital, what would be required to accomplish this is a fall in wage rates. This fall, however, is made virtually illegal as the result of the existence of minimum-wage laws and pro-union legislation. These laws prevent employers from offering the lower wage rates at which the unemployed would be reemployed.

Thus, however ironic it may be, it turns out that virtually all of the problems the Occupy Wall Street protesters complain about are the result of the enactment of policies that they support and in which they fervently believe. It is their mentality, the Marxism that permeates it, and the government policies that are the result, that are responsible for what they complain about. The protesters are, in effect, in the position of being unwitting flagellants. They are beating themselves left and right and as balm for their wounds they demand more whips and chains. They do not see this, because they have not learned to make the connection that in violating the freedom of businessmen and capitalists and seizing and consuming their wealth, i.e., using weapons of pain and suffering against this small hated group, they are destroying the basis of their own well being.

However much the protesters might deserve to suffer as the result of the injury caused by the enactment of their very own ideas, it would be far better, if they woke up to the modern world and came to understand the actual nature of capitalism, and then directed their ire at the targets that deserve it. In that case, they might make some real contribution to economic well being, including their own.

Copyright © 2011 by George Reisman. Permission is hereby given to reproduce this article via electronic transmission, including republication on other websites.
George Reisman, Ph.D. is Pepperdine University Professor Emeritus of Economics, a Senior Fellow at the Goldwater Institute, and the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996). His website is http://www.capitalism.net/ and his blog is georgereismansblog.blogspot.com.