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A Critique of “The Grapes of Wrath:” Causes of Poverty Then and Now

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The “Grapes of Wrath” is a fictional account inspired by terrible plight of Oklahoma Sharecroppers during the “dust bowl” period that also coincided with America’s “Great Depression.” The actual causes of the circumstances, outside of the natural (drought, wind, crop failure), are barely hinted at in the film which instead presents the bewildered outlook of the tenant farmers who have no idea why the events of the movie are occurring, while implying the culprits are the rich and “well to do”, and also simultaneously presenting government as both co-conspirator and savior. The one-sided nature of the film and its contradictions regarding government are merely symptoms of it being fiction and presenting the image its author, or director, desired and while it is excellent in helping us understand the personal trials of the sharecroppers and highlighted an obvious failure in the system it did not provide clear understanding of what the failure was or why it happened. The best way to understand the hardships of the “Okies” and apply those lessons today, then, is to look at the actual history of that time period. After a brief study of the history it becomes apparent that the events depicted in “The Grapes of Wrath” are the result of ill-conceived government enforced property rights, government distortion of the markets, and corporatism, which can all be applied to current poverty issues. In addition to the causes of poverty that effected the “Okies” today we also have inflationary monetary policy, heavy regulatory burdens for entrepreneurship, and the drastic expansion of the size of the federal government that has led to its ever growing consumption of otherwise productive resources.

Terry Anderson and Peter Hill in “The Not So Wild, Wild West: Property Rights on the Frontier” describe how in the late 1800s, the federal government pursued an aggressive homesteading policy in the west. Advertising “free land” was politically popular and it was a way to quickly secure the nations expanding territory. However, in doing this the federal government ignored privately established property rights negotiated between Indians and ranchers or amongst early settlers of the lands and redistributed arbitrary plot sizes with residency and improvement requirements that were not market based. The result of this was a “race for property rights” that led to both land owners with insufficient capital to successfully use the land, they could only afford the “free land” and not the equipment, seed, etc. to profit from it, and to the landowner-tenant farmer system. Landowners from other regions and around the state of Oklahoma claimed stakes during homesteading land races and then rented the land to tenant farmers. Since the land was “free” and did not constitute the landowner’s primary residence or income he had less incentive in the maintenance or improvement of the land and the tenants often could not afford to make improvements or did not think of the land as their own and thus could not justify extra expenses to improve the landowner’s property.

This is in contrast to the three ways to acquire property according Murray Rothbard in “Man, Economy, and State,” which itself has a firm basis in Lockean principles: The first way that unused land or resources may be converted to private property is through the mixing of an individual’s labor with those natural resources. Second an individuals may voluntary exchange or gift property, that they either gained by mixing their labor with unused natural resources or through previous voluntary exchanges. Third individuals may inherit property from their ancestors that previously acquired the property through mixing their labor with unused natural resources or through voluntary exchange. In this case, either the ranchers who voluntarily exchanged with the Indians with the property or possibly the tenant farmers who mixed their labor, if the land was otherwise not in use, would be the actual property owners. Approaching property rights from this perspective would have prevented arbitrary homesteading by the government, premature settling, misallocation of capital, and increased investment by the eventual settlers of the land due to a sense of ownership. This applies today because much of the accumulation of current wealth began with the unjustified appropriation and redistribution of property rights in ways contrary to these principles that have protected and ensured continued growth of wealth for the few against the rightful claims of the many. Also, eminent domain, zoning, and regulations of “private property” continue to erode our sense of ownership and undermine the benefits of a system based on property rights.

In “The Grapes of Wrath,” a representative from the Shawnee Land and Cattle Co. informs a sharecropper that he has to leave his land. The sharecropper inquires into who has made the decision. The representative informs him that it would be no use to talk to the Company as it is not a person, not that it would matter because it is following orders of the bank which itself is answering to auditors in the East. He also mentions the benefits the landowner will receive in hiring wage earners instead of splitting the crops with tenant farmers. However, the movie does not give the context to all of these aforementioned parts working against the interest of the sharecropper. In article titled, “Boom, Bust, Dust” by Doug French, he explains that from 1917 to 1919 “the government guaranteed $2 per bushel” for wheat to help win World War I. As a result, “the number of acres put into wheat production increased 70 percent…But when the war ended, the price collapse…The debts incurred to buy equipment and property still had to be paid…But farmers could only sell the wheat for half of what it cost to produce…if they could find buyers at all.” This distortion in the market created by war and government price intervention led to an artificial boom in the wheat industry followed by a disastrous bust that left farmers and landowners with debt they could not repay and many lost their property. Government further distorted the markets with legislation such as the Agricultural Adjustment Acts of 1933 and 1938 and the Soil Conservation and Domestic Allotment Act of 1935. They allowed landowners to receive federal dollars for not growing on their land in order to lower supply and raise prices of crops. The landowners were supposed to provide a percentage of these funds to the tenant farmers but instead found it in their interest to hire wage earners and kick the tenant farmers from the property so they could receive all federal funds and the full yield of the crop. This legislation probably explains much of the beginning of “The Grapes of Wrath” and why the farmers were being removed from the property.

Government distortion of the markets is a very big player in modern poverty as well. The whole boom-bust cycle is the result of the Federal Reserve Fractional Banking system that allows for continuous credit expansion. The most obvious recent catastrophe this has caused is the Housing Crisis. The quasi-public Fannie mae and Freddie mac corporations guaranteeing home loans severely distorted the markets, as well as legislation that provided incentives to make sub-prime mortgages. The subsidies and hard push towards ethanol in 2007 that pushed the price of corn from “$2 per bushel in January 2005 to over $6” in 2008. (Boom, Bust, Dust) This also resulted in a world wide food shortage as farmers shifted their resources towards the guaranteed money, corn, and sold it for fuel instead of food.

Another prevalent them throughout “The Grapes of Wrath” was law enforcement working on behalf of corporations to ensure their profits and snuff out any “agitators.” However, many confuse this with being a symptom of capitalism when it is truly the nature of corporatism. A system can no longer be called capitalism and a market can no longer be called free when coercion, which government usually maintains a monopoly on, is used to choose winners and losers. The direct coercion to achieve desired ends for favored groups, classes, or companies is only the most obvious form of corporatism. The plethora of regulations, advertised as reigning in corporations, actually remove their competition as small business and individual entrepreneurs can not afford to comply, leaving only the large corporations as the only ones who can afford to do business. This is still very much the nature of our current economic system and that is why people’s distrust or criticisms of capitalism are misplaced since the government has used their monopoly on coercion to influence the market since the very beginning.

Finally, in addition to the causes of poverty for the “Okies” in the late 1930s there are additional factors causing poverty today. The federal government has instituted a much more interventionist monetary policy where during recessions they intentionally create inflation through lower interest rates and printing money. This increases prices at the worst time, when there is high unemployment. Their hope is to lower the real wages of workers while maintaining the same or higher nominal wages, in other words keep the dollar amount the same but make the dollar worth less so they are actually getting paid less with the illusion they are getting paid the same. Also, since the early 1900s government spending has gone from less than 10 percent of GDP to 35-40 percent of GDP over the last 30 years. (USgovernmentspending.com) As the government consumes more of the nation’s resources there is less left to grow the economy.

1. Anderson, Terry L. (2004). “The Not So Wild, Wild West: Property Rights on the Frontier.” Stanford, California: Stanford University Press
2. French, Doug. Mises Daily Article, April 07, 2008. “Boom, Bust, Dust.” http://mises.org/daily/3181. Accessed on 16 October 2011.
3. Rothbard, Murray N. (2004). “Man, Economy, and State, Third Edition, Scholar’s Edition.” Auburn, Alabama: Ludwig von Mises Institute.
4. Usgovernmentspending.com. “Spending as a Percent of GDP from 1900-2010.” http://www.usgovernmentspending.com/downchart_gs.php?year=1900_2010&units=p&title=Spending%20as%20percent%20of%20GDP. Accessed on 16 October 2011.

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Oct 16, 2011

Keynesian v Austrian View of the Business Cycle

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Following World War I and during the Great Depression, John Maynard Keynes, often referred to as the “father of Modern Macroeconomics,” put forward a monetarist theory that claimed that government should take action, by controlling interest rates, to stabilize price levels. For example, the government’s central bank should “lower interest rates when prices tend to rise and raise them [interest rates] when prices tend to fall.”1 This is still the practice of the Federal Reserve to this day. As unemployment continued in the west up until World War II, Keynes expanded his theory to include government intervention to stimulate aggregate demand, a combination of “consumption, investment, and government spending,”2 by providing incentives for spending, investing, and higher wages while trying to create disincentives for saving or lowering wage rates. The theory also encouraged deficit spending in times of crisis since it would be the most direct way for government to quickly boost aggregate demand and revive the economy. These ideas were adopted by most Western governments from the 30s until the 60s when stagflation, high inflation and high unemployment, appeared to disprove the core of Keynes interventionary tactics. During this time the Austrian School of Economics, primarily Ludwig von Mises and F. A. Hayek repudiated the theories of Keynes, as well as Chicago School economist Milton Friedman. They ideas of the Austrians to some degree and the Chicago School influence the American government from the 80s all the way until our latest recession when both President George W. Bush, President Barack Obama and the Federal Reserve have re-instituted Keynesian ideas of deficit spending, intentional inflation by lowering interest rates and printing money, and trying to absorb unemployment in the public sector. However, similar to the 70s, we seem to again be facing stagflation as the dollar is continuously weakened and unemployment remains high. This has led to increased support for austerity measures in the United States, a more free market approach.

Macroeconomic theory could be considered a self-fulfilling prophecy. As policy shaped and applied to “aggregates” the repercussions will also be felt by the “aggregate.” However, in reality the aggregate, or any other amorphous entity, does not act, only individuals act. In “America’s Great Depression” by Murray Rothbard he explains that “this view holds that business cycles and depressions stem from disturbances generated in the market by monetary intervention. The monetary theory holds that money and credit-expansion, launched by the banking system, causes booms and busts.”3 Rothbard further explains that is absurd to assume that all entrepreneurs simultaneously make the same decisions leading to booms and busts that extend to all industries and areas of the economy, he says, “in the purely free and unhampered market, there will be no cluster of errors, since trained entrepreneurs will not all make errors at the same time…In considering general movements in business, then, it is immediately evident that such movements must be transmitted through the general medium of exchange—money. Money forges the connecting link between all economic activities. If one price goes up and another down, we may conclude that demand has shifted from one industry to another; but if all prices move up or down together, some change must have occurred in the monetary sphere.”4

Further, Keynes in the introduction to “The General Theory of Employment, Interest, and Money,” makes the strong claim that “classical” or free market economic theory only applies in special cases while his own theory, which he boldly labels “general,” applies generally in all cases.5 However, throughout history the ideas of Keynes and his advocacy for strong government intervention only gain real support during times of crisis. It is during times of recession, depression, or natural disasters, such as the dust bowl that affected the “Okies,” famously portrayed in “The Grapes of Wrath.” The plight of those most affected by such disasters always tug at the heart strings of their fellow countrymen, and rightly so. However, our emotional response and desire to help those in need should not be used to justify a “general” theory. Those who suffered the most in “The Grapes of Wrath” were not suffering due to capitalism or greed, though the case can be made when the circumstances are created in a work of fiction, but were due to an “act of God” that made previous resources and land quickly lose their value and created a shift in labor that was difficult to absorb by the market due to abrupt and unpredictable nature of the disaster.


1. The Concise Encyclopedia of Economics. John Maynard Keynes. http://www.econlib.org/library/Enc/bios/Keynes.html. Accessed on 15 October 2011.
2. Ibid.
3. Rothbard, Murray. (2005). America’s Great Depression Fifth Edition. Auburn, Alabama: Ludwig von Mises Institute. pp. xxxvii
4. Ibid. pp. 6-9
5. Keynes, John M. (1997). The General Theory of Employment, Interest, and Money. Amherst, New York: Promethius Books. pp. 3

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Oct 15, 2011

“Measuring” the Welfare State: The Dangers of Econometrics in Determining Policy

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In a 2003 article in the Journal called Social Forces, titled “Public Employment, Welfare Transfers, and Economic Well-Being across Local Populations: Does a Lean and Mean Government Benefit the Masses?,” Linda Lobao and Gregory Hooks set out to answer the question presented in the title of their article. They set out to examine whether “a larger public sector and more generous social welfare transfers help or harm local populations,” (519) and they use the US county level to examine statistics and make their case. They compare the decades 1970 – 1980 and 1980 – 1990 since these are two decades that are recognized as Keynesian, big government, and Post-Keynesian, minimalist government, respectively. Observing the impacts of the policies of these two decades, they argue, should provide empirical evidence as to which is most successful in promoting the “economic well-being of local populations.” However, as is always the case with econometrics and observing complex human interaction with statistical abstraction, causal factors for the trends observed are not established a priori and even the slight correlations that may be perceived in the presented data are not really strong enough to make a judgment, pro or con, regarding the authors arguments.

The authors present two schools of thought regarding public employment, welfare transfers, and size of government: the “neoliberal school, whose inspiration is neo-classical economics and liberal political philosophy, contends that where the state offers citizens minimalist social protection from [engages in minimalist intervention against] private market forces, economic development flourishes and general incomes will be higher;” the “Marxist…radical political economy schools,” interject “that in regions and periods where the state was more interventionist on behalf of citizens, incomes were higher and income inequality lower.” (520) The authors’ “neoliberal school” closely reflect the “liberal” welfare regime (they do not argue that this school seeks to abolish the welfare state just minimize it) as described by Esping-Andersen, who attributes include: “a limited array of governmental obligations, generally modest social benefit levels, strict criteria for eligibility, a preference for targeting public money very narrowly to the “needy” rather than the citizenry at large, and active encouragement of market solutions” for achieving economic well-being. (Hicks and Esping-Andersen, 2005, 512) The competing view presented by the authors fits Esping-Andersen’s “Institutional” Welfare State “by defining the scope of public welfare responsibilities extremely broadly, by giving high priority to social equality and redistribution, by actively attempting to secure citizen’s welfare ‘from cradle to grave,’ and by striving toward universalism in coverage and eligibility. (512)

The authors, very competently, present the neoliberal argument that “private market mechanisms, even when imperfect perform better than state planning. Government [intervention] inherently distorts competitive market processes operating among populations; the market interference is at best ineffective, and at worst counterproductive.” (523) They present four reasons that neoliberals say cause the negative effects of the welfare state: reduces labor supply by employing citizens in government or by allowing them to choose leisure over work due to welfare transfers; perverts business incentives by rewarding certain businesses or by increasing the cost of business by bidding up labor costs or raising costs through other egalitarian regulations; misallocates resources “toward undeserving and under performing populations,” regions, and businesses; and finally by pitting the interests of the poor, receivers of redistributive and egalitarian policies, and the non-poor, the providers of the resources that are being redistributed. (524-526) The consequences will be lower overall income, the atrophy of cultural and familial relationships, and an ever growing state that becomes more and more unchallengeable as dependency on it grows.

When presenting the contrary schools argument, Lobao and Hooks put forward very little effort to contradict the neoliberal schools arguments a priori. They a make a few ad hoc pleas, without much evidence or reasoning, that the conclusions of the neoliberal school are misguided but they mostly argue that the goals of the radical political economy schools are simply different: equality of outcomes through redistribution and increased overall income. (527-528)

The authors then set out to statistically show through econometrics how effectively the policies of both schools achieve the welfare state goal of reducing inequality and the shared goal of increasing overall income, the neoliberal is satisfied if all classes or individuals increase their wealth and do not concern themselves if certain groups or individuals gain wealth at a faster rate, thus increasing inequality while also increasing overall income. The authors focus their study on the county level econometrics of aggregate population since both schools have both done extensive research that “extrapolate[d] from national trends to anticipate sub-national shifts” in income and inequality. (528) The authors go into great detail on their methods of viewing the data, weighting variables, and testing hypothesis in an honest and rigorous effort to validate their analysis.

The authors analysis of the data indicates that in “counties with greater federal employment and where income transfers better cover the needy population…[there is] significantly higher median family income. Higher AFDC (Aid to Family with Dependent Children) benefits and a larger public adminstrative sector have no significant relationship to median family income. Only state/local government employment is significantly related to lower family income.” (537) The authors also found that “the state’s effect on income growth and redistribution showed no strong differences between Keynesian and post-Keynesian decades.” (538)

The Weakness in Lobao and Hooks’ Argument and in Econometrics in General

In the introduction to the first edition of his book, “America’s Great Depression,” Murray Rothbard describes the inherent flaws of econometrics:

“…economic theories cannot be “tested” by historical or statistical fact. These historical facts are complex and cannot, like the controlled and isolable physical facts of the scientific laboratory, be used to test theory. There are always many causal factors impinging on each other to form historical facts. Only causal theories a priori to these facts can be used to isolate and identify causal strands.” (xxxviii)

In other words, due to the complexity of society and human interaction the facts of given events, and especially the facts of general periods in history, cannot be isolated to test for causal relationships. Instead causal theory must be developed by tracing the logical connections from axiomatic principles, or self-evident truths. Also, due to the complexity of historical fact, the statistics that numerically represent these facts can be interpreted many ways and manipulated, sometime unintentionally or through neglect, to present an inaccurate picture, usually biased towards whatever the presenter is advocating. Many of these pitfalls, or techniques, can be quickly perused or understood from Darrell Huff’s, “How to Lie with Statistics.” Huff and others note that biased sampling, using the best looking average (mean, median, mode, and several other techniques exist), excluding relevant data (intentionally or because its existence is unknown), the correlation vs causation and post hoc fallacies(“b” comes after “a:, therefore “a” must cause “b”), incomparable or vague measures, etc. will lead to faulty analysis and unfortunately encountering some of the aforementioned problems to some degree is inevitable in all statistics. Rothbard goes on to explain how policy formulation plays out when based on econometrics:

“Suppose a theory asserts that a certain policy will cure a depression. The government, obedient to the theory, puts the policy in effect. The depression is not cured. The critics and advocates of the theory now leap to the fore with interpretations. The critics say that failure proves the theory incorrect. The advocates say that the government erred in not pursuing the theory boldly enough, and that what is needed is stronger measures in the same direction. Now the point is that empirically there is no possible way of deciding between them. Where is the empirical “test” to resolve the debate? How can government rationally decide upon its next step? Clearly, the only possible way of resolving the issue is in the realm of pure theory—by examining the conflicting premises and chains of reasoning.” (xxxix-xl)

In the case of the data presented by Lobao and Hooks, proponents of the neoliberal school could argue that neoliberal policies were not taken far enough and that is why they did not to have much, if any, impact on overall income growth, and they would have plenty of their own statistics to back it up. For example, Tax levels, as a percent of GDP, was unchanged in the 80s compared to the 70s (Even though the income tax was reduced, social insurance taxes were increased).(www.usgovernmentrevenue.com) Federal spending actually increased from 18-20 percent of GDP in the 70s to 21-23 percent in the 80s. (www.usgovernmentspending.com) Comparatively low prime interest rates for most of the 1970s and record high prime interest rates through the first half of the 1980s could also explain the expansion and contraction of the US economy during these time periods. Economic lag of decisions made in the previous decade, such as the dissolution of the Bretton-Woods agreement, which was the dollars last attachment to the gold standard, and a many many more reasons could be provided to explain overall income or even wage inequality differences between the two sampled decades. The authors themselves declare in their conclusion that there is “no strong differences between Keynesian and post-Keynesian decades.” (538) If there is no strong difference between decades, that seems to invalidate the rest of their analysis that one policy performed better than the other based on comparing the supposedly representative decades.

Policy regarding the welfare state is best considered by elaborating on the “basic axiom of the ‘right to self-ownership,’” which “asserts the absolute right of each man, by virtue of his (or her) being a human being, to ‘own’ his or her own body…[and] since each individual must think, learn, value, and choose his or her ends and means in order to survive and flourish, the right to self-ownership gives man the right to perform these vital activities without being hampered and restricted by coercive molestation. (Rothbard, 2006, 33-34) The next logical step is that if man owns himself, to include his will and his physical body, then he must own his labor which is their result. Further, once his labor is used to transform unclaimed, or unused, resources found in nature, the product is now also owned by that individual. This is the same idea expressed by English philosopher John Locke, who was a main source of inspiration for the founding fathers of the United States:

“…every man has property in his own person….the labour of his body and the work of his hands…are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with it, and joined it to something that is his own, and thereby makes it property.” (Locke, 1948, 17-18)

If the above principles regarding “self-ownership” and basic property rights are accepted as true then there are only three ways to acquire property ethically. 1) Mix one’s labor with resources in their natural state. 2) Inheritance or gift, absent coercion. 3)Free exchange between consenting parties. Any other method would violate the basic axiom of self-ownership and the logical extensions of that axiom. The welfare state is the understood not as an answer of “Who gets what from government?” but instead as an answer to “Who gets what from whom through the coercive proxy known as government?” Government has to violate the self-ownership principle, and therefore either partially or wholly enslave individuals, in order to confiscate and then redistribute their property. This makes the welfare state and all other forms of coercion unethical simply to their assault on the natural right of self-ownership.

Works Cited

Lobao, Linda. (2003). Public Employment, Welfare Transfers, and Economic Well-Being across Local Populations: Does a Lean and Mean Government Benefit the Masses?. Social Forces, 82(2), 519-556.

Locke, John. (1948). An Essay Concerning the True Original Extent and End of Civil Government. In E. Barker (Ed.), Social Contract (17-18). New York: Oxford University Press.

Hicks, Alexander & Esping-Andersen, Gosta. (2005). Regimes and Contention. In T.A. Janoski, A.M.
Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (509-525). Cambridge, UK: Cambridge University Press.

Huff, Darrell. (1993). How to Lie with Statistics. New York: Norton and Company, Inc.

Rothbard, Murray N. (2005). America’s Great Depression. (5th ed.) Auburn, Alabama: Ludwig von Mises Institute.

Rothbad, Murray N. (2006). For a New Liberty: The Libertarian Manifesto (2nd Ed.) Auburn, Alabama: Ludwig von Mises Institute.

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Apr 29, 2011

Corporate Power and Democracy

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Since the American Revolution, Democracy has become the dominant political system in Western and large capitalist societies.  The driving factor is that democratic governments are thought to derive their legitimacy from popular sovereignty, as opposed to divine sovereignty.  However, the states and their people recognized the impracticality of actual direct democracy and opted instead for republicanism, or representative government.  Since this form of governance is still based in popular sovereignty and the theoretical rule “of,” “by,” and “for” the people, it is still often referred to as “democracy.”  As democracy has been observed over time, political scientists have redefined it”as a system whereby elites competed for the votes of a largely passive electorate.”  This position became known as “elite pluralism,” and its success rests on the idea that “as long as one group of elites was without power, its members could appeal to the public to replace the incumbents with those presumably more favorable to their interests.” (Mizruchi and Bey, 2005,311)  Since the success of this type of democracy requires competition, or division, of the elites, many detractors of democracy in capitalist states claim that the elites are, in fact, unified due to “common interests in maintaining their privileges” as well as “common socialization experiences (including attendance at elite prep schools and universities), common membership in social clubs and policy-making organizations, and social and kinship ties.” (Mizruchi and Bey, 2005,311)  Many also believe that these unifying traits are not only shared by the political elites, that are symptomatic of representative democracy, but also in the capitalist class.  If this were to be proved the case, then the elites meet the full requirements for a group to be powerful, “resources and unity,” and would threaten the effectiveness or success of democracy.  The extent that this threat, based on the possible causes and perceived “degree of business unity” the topic of four contemporary theories regarding corporate power and democracy, highlighted by Mark S. Mizruchi and Deborah M. Bey and discussed below. (Mizruchi and Bey, 2005,312)

The “Elite Theory,” by G. William Domhoff, posited “that a power elite, drawn from the social upper class, corporate leaders, and officials of policy-making organizations, collectively dominates American politics,” and that all of the unifying traits mentioned earlier are, in fact, present.  However, despite many revisions and the sophistication in Domhoff’s theories, he points to actions by the state that are opposed by business and those that they advocate as both being in the interest of business, and neither, according to Domhoff, detract from the “view that the elite perpetually dominates” and “thus raises questions about nonfalsifiability” and the overall legitimacy of this theory.(Mizruchi and Bey, 2005, 323)

The next two theories are best understood in the context of the “Berle and Means Thesis,” which basically states that “because of the large and increasing size of corporations, and because of the consequent difficulty of maintaining substantial family holdings in individual firms, stock holdings in large U.S. corporations gradually dispersed.  The consequence of this dispersal…was the usurpation..of power by the firm’s managers.  These managers…were viewed as a self-perpetuating oligarchy, unaccountable to the owners who had elected them.” (Mizruchi and Bey, 2005, 312)  With this in mind, Michael Useem, found that since the “largest single block of stockholders by the 1990s was not individuals,…but institutional investors,” they were the dominant power holders in business.(Mizruchi and Bey, 2005, 324)  Useem, however, made no claim to their unity and so his theory mostly contradicts that the managers are unaccountable, at least in recent decades, due to the influence of institutional investors.  The third theory, proposed by Gerald Davis, also attempts to negate the Berle and Means thesis by claiming that it makes no difference if a corporation is owner or manager run since they both must conform to “pressure from an amorphous, but no less real, source,” the “capital market.” (Mizruchi and Bey, 2005, 324-325)  The elites are “compelled to vow allegiance to ‘shareholder value’” and their “structures and policies are driven by anticipations of their economic consequences.” (Mizruchi and Bey, 2005, 325)  However, while Davis tries to use this observation to show a unity of purpose and political domination by the anonymous members of the “capital market,” but the very nature of this group, where no individuals, elite or otherwise, or their interests can be specified indicates that Davis’s theory simply creates a generalization so broad that almost anyone could be a part of it.  If that is the case, then the dispersal and division of interests that would exist in the “capital market” would actually be a boon to democracy if they were the truly the dominating force.

The fourth theory is conceptually different than the previous theories due to its international scale.  “Several scholars have suggested that with the increasing globalization of economic activity” and “the extent to which corporations have the ability to move capital outside their borders” giving “them leverage over their host states…national governments have lost the ability to regulate their own business communities.” (Mizruchi and Bey, 2005, 329)  This would certainly appear to diminish the power of national governments, but it does not necessarily mean an increase in corporate power, or the general business community, since that would still require unity in effort, which faces all of the difficulties present in the earlier theories.

I would like to close with my theory on corporate power and politics.  The first part explains why corporate interests seem to be advanced, overall, in spite of real conflicting interests within the corporate community. The state holds a monopoly over “legal” coercion and this is its only real service it has to offer on the marketplace.  The “passive electorate” is not as concerned, or as dependent a customer, of government coercion; whereas, corporations are interested in using state coercion to prevent or reduce competition and to advance its interests.  So overall, the government responds to the market for coercion, acting in the interests of various corporate entities who are most able to afford it, in means of resources and influence to protect the political elites’ privileges.  This does not require unity from the various corporate interests and the inconsistency of the policies enforced through state coercion seem to support that there is no need for unity from the corporate community in order for the state to act generally in their favor.  This on its own is destructive to society and damaging to the democratic ideal but does not cause a complete collapse of they system because of the lack of unity.  However, this trend may very likely lead to the second part of this theory which will lead to the collapse of democracy.  As the state continues to use coercion to choose the “winners” and “losers”, whether among the corporate community or between the corporate community and the rest of the electorate, there will be fewer and fewer parties competing or seeking the state’s coercive service.  Common sense dictates that it is easier for a few to coalesce, than the many, and so this increased centralization of both political and corporate elites will make it much more likely that complete unity, and the destruction of democracy will occur.

Mizruchi, M.S., & Bey, D.M. (2005). Rule Making, Rule Breaking, and Power. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (310-330). Cambridge, UK: Cambridge University Press.

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Mar 30, 2011

Monopoly and Competition: Government Intervention and its Effects on the Free Market

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One of the roles of government, debated even among those of a libertarian or small government perspective, is that of regulating monopolies and ensuring competition. On a larger political scale, the debate may focus on how free or how socialized should a market be, but among those that believe the markets should be as free as possible there is still concern over monopoly practices and how the government could be used as a tool to respond to them. The first step in understanding and forming conclusions in this debate is to determine a definition of monopoly. The three offered here are: One seller or producer of a good or service; the establishment of a monopoly price; and a firm or corporation that has been granted market power and special status by the government, either directly or indirectly. Also, the requirements for competition must be established, which economic textbooks may point to as: many small buyers and sellers; standardized product; and no barriers to entry or exit.1 After close inspection of the definitions of monopoly and the textbook requirements for competition, I hope to demonstrate that “barriers to entry or exit” are the only true requirement to competition and that all barriers are due to coercion, either from government or criminal activity among businesses and individuals.

The first definition of monopoly is that of one seller or producer of a good or service. This is the most literal definition (“monos” means “only and “polein” means “to sell”) and the most common understanding of the word monopoly. While this is a very clear cut and precise definition of monopoly its application is much less so and its use to justify government intervention is even more hazy. The application of this definition becomes difficult when one has to determine what constitutes a single product or service. Since there will be some sort of differentiation between every product offered by different people one could rationally claim that everyone is a monopolist. For example, while Hershey’s Chocolate company may not be a monopolist of chocolate they are monopolists of “Hershey’s Kisses” and John’s doctor is a monopolist of medical services to John. This is further complicated if we accept that fact that the point that the differentiation is substantial to lead to a product being categorized by a different product is solely in the mind of the consumer and can not be defined by any specific attributes or by committee. The second flaw with the use of this definition is when it is used to justify government intervention in the markets based on misconceptions of individual rights and freedom. While individuals do have the freedom to act on available choices they are not entitled to any certain number of choices. If there truly was only the choice of purchasing a product or service from one producer or not purchasing it at all then the individual is free to act on that choice, not require more choices be made available to him. Murray Rothbard uses the example of “Crusoe and Friday bargaining on a desert island” where they “have very little range or power of choice; their power of substitution is limited. Yet if neither man interferes with the other’s person or property, each one is absolutely free. To argue otherwise is to adopt the fallacy of confusing freedom with abundance or range of choice. No individual producer is or can be responsible for other people’s power to substitute.”2

The second definition, achieving monopoly price is explained best by Ludwig von Mises: “If conditions are such that the monopolist can secure higher net proceeds by selling a smaller quantity of his product at a higher price than by selling a greater quantity of his supply at a lower price, there emerges a monopoly price higher than the potential market price would have been in the absence of monopoly.”3 The concerns raised by the proponents of this defintion are that a single producer or a cartel made up of a few producers will restrict supply in order to gain increased profit margins at a higher price point on the supply-demand curve. However, this will only be profitable for products or services whose prices are inelastic above the “theoretical” competitive price. The flaw in this defintion is determining “competitive price” versus “monopoly price.” Since in the free, or unhampered, market every seller will “absolute control…over the price he will attempt to charge for any particular good…the question is whether he can find any buyer at that price. Similarly,…any buyer can set any price at which he will purchase a certain good; the question is whther he can find a seller at that price.”4 Naturally, sellers will seek the highest price and consumers will seek the lowest price and whatever price they agree on, absent coercion, is the competitive price. Along the same line, how would one determine if the producer was moving from a “sub competitive price” to the competitive price for their goods as opposed to moving from the competitive price to a monopoly price. The “demand curve is not simply ‘given’ to a producer, but must be estimated and discovered” and any restriction may simply be a correction of past supply to demand errors by the producer.5 These flaws lead to the conclusion that there can be no definable monopoly price on the free market since all prices are based on free-exchange between buyer and seller and whatever terms they come to are by definition the competitive price.

The third definition of monopoly is the original definition of government granted, direct or indirect, market power or protected status. Lord Coke, a definitive source of Common Law in 17th Century England, defined monopoly as “an institution or allowance by the king, by his grant, commission, or otherwise . . . to any person or persons, bodies politic or corporate, for the sole buying, selling, making, working, or using of anything, whereby any person or persons, bodies politic or corporate, are sought to be restrained of any freedom or liberty that they had before, or hindered in their lawful trade.”6 The formation of monopolies and the negative consequences of monopoly power is made possible only due to government intervention and it is therefore ironic that one of the few areas where limited government advocates tolerate government intervention is in the regulation of monopolies. Monopolies are created through barriers to entry into their market and government is the creator of these barriers, which include explicit grants of monopoly status, in industries deemed “public utilities” or “natural monopolies”, patents, license requirements, and economies of scale.7 Another barrier is the entire system of corporatism, the alliance between big business and government to create regulations and other burdens on new entrants into the market in order to hamper competition.

The most obvious, and accepted as necessary by some, way the government creates monopolies is by granting exclusive franchises to industries deemed “public utilities.” Some common examples have been energy providers (gas and electric), telephone service providers, and cable tv. The rationalization used is that certain industries, due to high fixed costs, economies of scale, and land usage limitations, are better served by having a single provider. The conclusion is that government should choose a single provider and protect them from competition while at the same time heavily regulating the selected monopoly to prevent monopoly pricing and pass the savings of the increased efficiency on to the customer. However, history does not seem to support this theory. Many industries that claim they are “public utilities” were competitive in the past or became competitive after time spent with protected monopoly status and the customer did not see great advantage in the monopoly years, especially when taxes used to subsidize the utilities are taken into account and other government intervention is not present in the competitive years. “In one of the first statistical studies of the effects of rate regulation in the electric utilities industry, published in 1962, George Stigler and Claire Friedland found no significant differences in prices and profits of utilities with and without regulatory commissions from 1917 to 1932.”8 Also, substitutes or alternative technology prevents the formation of “natural monopolies” on the free market. For example, when three competing gas companies tried to merge in 1888, an inventor named Thomas Edison “introduced the electric light which threatened the existence of all gas companies” and while all had “heavy fixed costs which led to economies of scale…no free-market or ‘natural’ monopoly ever materialized.”9 In 1940, economist Horace M. Gray noted that “public utility status was to be the haven of refuge for all aspiring monopolists,” to include, “radio, real estate, milk, air transport, coal, oil, and agricultural industries…who found it too difficult, too costly, or too precarious” otherwise. The label of “public utility” is arbitrary and history has shown that government designated monopolies to do serve the public well and stifle innovation and technological progress as well as violate the rights of entrepreneurs who wish to enter protected industries.

One of the first industries to be deemed a “natural monopoly” or “public utility” was the telecommunications industry, led by AT&T. Initially the monopoly was due to patents that Alexander Graham Bell held from 1876 to 1894. During this time period AT&T held between 85-100 percent of the market power for telephone systems and adoption was slow with average daily calls per 1,000 people increasing from 4.8 in 1880 to only 37 in 1895; the number of telephones per 1,000 people also increased slowly from 1.1 in 1880 to 4.8 in 1895. However, after the patents expired and competition was able to set in daily calls per 1,000 jumped from 37 in 1895 to 391.4 in 1910 and telephones per 1,000 people also increased much more rapidly, going from 4.8 in 1895 to 82 in 1910.10 The government, however, did not see this competition and rapid expansion of services and options as a good thing, instead they saw it as “duplicative,” “destructive,” and “wasteful” and during a Senate Commerce Committee hearing in 1921 it was stated that “telephoning is a natural monopoly.”11 This was in spite of the apparent boom in competitors and service. AT&T lobbied for this “natural” monopolization and put itself “squarely behind government regulation, as the quid pro quo for avoiding competition.”12

From the AT&T case we can see that it was able to form its original monopoly, before the government explicitly granted it monopoly status, through another government barrier to competition, patents. Patents are probably the most common and most accepted, among capitalists, form of government barriers to competition since they supposedly protect the innovations of individuals and allow them to reap the benefits of research, investment and ingenuity without someone else profiting from an idea they did not share the costs in discovering. However, there is strong evidence that patents are unnecessary and in fact stifle innovation instead of promoting it as intended. The telephone industry demonstrated this earlier but another example would be in the field of steam engines and steam power. In 1768, James Watts patented the steam engine and used his political clout to extend the patents until 1800. He aggressively pursued his competitors with patent violations and prevented many innovations from taking place in the area of steam power or improvements in the steam engine. As a result, “during the period of Watt’s patents, the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt’s patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt’s patent; however between 1810 and 1835 it is estimated to have increased by a factor of five.”13 The book, Against Intellectual Monopoly, documents many examples like this in almost all fields. Without patents, the original innovators will still find advantage since people are only likely to imitate successful innovations that would mean the original innovators would have time to establish themselves and gain market power and brand name recognition before competitors really started entering the market.

The requirement of Licenses to conduct a particular type of business or to work in a particular field are another widely accepted form of government intervention that creates a barrier to entry for potential competition. One of the reasons for this is that licenses are not sold to the public as protection for existing businesses from potential competitors or as a restriction on the supply of labor to artificially raise wages above market level for favored professions, but instead is billed as a means to protect the consumer by ensuring quality service. However, just like the other barriers to competition, licenses, when required by law, do more harm to the consumer by reducing available options when there is a strict quota on the number of licenses available or when smaller competitors can not afford licensing fees; monopoly pricing due to cartelization since “the governmental administration of licensing is almost invariably in the hands of members of the trade”14 who have an obvious interest in limiting entry into their field to individuals who are of similar mind to keep prices higher.

All of the barriers mentioned so far and others have become part of the system of corporatism that is actually the dominant force in US and western markets, not capitalism. The high fixed price that leads to economies of scale and prevents smaller businesses from competing is government. “It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus–including those regulations widely misperceived as restraints on corporate power–were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.”15 In this essay we have mostly focused on the direct barriers to competition placed by the government but there are also many less obvious ways that government intervention helps favored corporations such as inflationary credit expansion, where the first to receive the new dollars will get to use them before the inflationary effects kick in and corporate law itself that allows the individuals who act, or make decisions, in a business to separate themselves from the liabilities involved with those decisions causing a serious accountability issue in our markets today. A “corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law.”16 This arbitrary grant of artificial personhood status to businesses is yet another barrier to free competition and a fraud is committed when corporate law is presented as part of capitalism and the free market or as advantageous to consumers.

In conclusion, monopolies, oligopolies, unnaturally high market concentrations all stem from government intervention into the free market placing various barriers to the entry and exit of competing businesses. This is done in the guise of regulating or promoting capitalism but is actually within a system of corporatism, the alliance of big business and big government. Big business works with big government to “socialize costs in exchange for a share of profits.”17 Big business also likes big government because “it has a competitive advantage over small business in doing business with it and negotiating favors. Big government, in turn, likes big business because it is manageable; it does what it is told.”18 This alliance has distorted our markets and increased the power of both partners at the expense of competition, consumers, and citizens.

1Jacqueline Brux, Economics Issues and Policy Fourth Edition, (Ohio: Cengage Learning, 2008), 246.

2Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 653.

3Ludwig von Mises, Human Action: A Treatise on Economics (Alabama: Ludwig von Mises Institute, 2008), 278

4Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 662.

5Ibid., 690

6 Quoted in Richard T. Ely and others, Outlines of Economics (3rd ed.; New York: Macmillan & Co., 1917), pp. 190–91.

7Jacqueline Brux, Economics Issues and Policy Fourth Edition, (Ohio: Cengage Learning, 2008), 251-253.

8Thomas DiLorenzo, “The Myth of Natural Monopoly”, The Review of Austrian Economics Vol.9, No.2 (1996), 49-50.

9Ibid., 48

10Adam Thierer, “Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly”, The Cato Journal Vol. 14 No. 2 (Fall, 1994)

11Ibid.

12Ibid.

13Michele Boldrin, David Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 1.

14Murray Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Alabama: Ludwing von Mises Institute, 2004), 1095.

15Roderick Long, “Corporations Versus the Market; Or, Whip Conflation Now”, Cato Unbound, 10 November 2008.

16Frank van Dun, “Is the Corporation a Free-Market Institution?,” Ideas on Liberty, March 2003.

17Robert Locke, “What is American Corporatism?,”, Front Page Magazine, 13 September 2002.

18Ibid.

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Mar 29, 2010

Flaws of Equal Employment Opportunity

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The Civil Rights Act of 1964 and the many following bills that modified and added to it has been a great affront to property rights and by extension individual sovereignty. Whether we examine the impacts of “equality of outcome” the Civil Rights Act strives to implement or we examine how the act contradicts core principles, such as an individual’s right to their own person and the fruits of their labor, we will find that the government intervention required by the Civil Rights Act faces serious challenges on both sides of the equation, principles and practical effects.

The Civil Rights Act of 1964, specifically Title VII, prohibited discrimination by employers, with over 15 employees, on the basis of race, color, religion, sex, national origin, or by association with an individual of those factors. In 1967, persons over the age became a protected group; in 1990, persons with disabilities gained protected status; the Genetic Information Nondiscrimination Act of 2008 prohibited discrimination based on genetic information; and all of these bills protect individuals from retaliatory discrimination. (1)

If one accepts that an individual has the right to his own person and the fruits of his labor then one can not be in agreement with this legislation and remain consistent in their principles. The concept of this right is a “negative” one or a right to be free from coercion in regards to your person and the fruits of your labor which creates a situation where no one has the “right” to “compel someone to do a positive act, for in that case the compulsion violates the right of person or property of the individual being coerced.” (2) Many recognize the impracticality of violating this principle when it is not applied to employers. For example, while many find racism to be abhorrent they would not necessarily advocate that individuals be forced to patronize minority owned businesses equally and an ardent feminist would find it difficult that men looking for jobs should be forced by threat of law to submit their resumes to equally qualified female employers. In the first case, many recognize that the consumer has the right to spend his money where he pleases regardless of motivations or character flaws and in the second instance most would see the flaw in coercing a person to apply or accept a job against their will. However, segments of our population choose to ignore these principles when it comes to employers. Is an employer’s person any less their own or is their money, representative of their property and the fruits of their labor, different than the property of the individuals seeking employment. I do not see how one can claim one and not the other without being disingenuous.

Milton Friedman argues that anti-discrimination laws are not necessary to achieve the goal. He states that, “a businessman or an entrepreneur who expresses preferences in his business activities that are not related to productive efficiency is at a disadvantage compared to other individuals who do not. Such an individual is an effect imposing higher costs on himself than are other individuals who do not have such preferences. Hence, in a free market they will tend to drive him out.”(3) Another practical issue with this legislation is that it uses often arbitrary standards in order to designate certain groups “oppressed” or of “minority” status. Our text points out that numbers are of little significance when designating a group a minority but instead their level of “access to positions of power, prestige, and status in society” should be the deciding factor. (4) What this will lead to is endless lobbying from all groups in an attempt to shred the label of “oppressor” in exchange for the benefits of being labeled “oppressed.” Rothbard points out that the different ways to categorize or class people is infinite and research can be done to demonstrate how they all face various barriers to the “access” mentioned above. He also note the impossible task of parodying this movement as a friend of his tried to do by arguing that short people, suffering from “heightism”, should be designated a minority or “oppressed class.” Unfortunately, he was beat by a serious undertaking to do just that by “a sociologist at Case-Western Reserve,” Professor Saul D. Feldman, who provided plenty of convincing research and evidence to back up his case. (5)

The principles of Title VII of the Civil Rights Act are perfectly acceptable from a moral standpoint. Employers are unwise to discriminate based on race, color, sex, religion, or national origin, but that does not give anyone the right to coerce them to act against their will or to release their property to individual’s not of their choosing. Consumers, employees, peers, etc. are free to boycott, ostracize, or shame employers who act reprehensibly but not coerce with threat of law/violence to act morally.

  1. Equal Employment Opportunity Commission,”Equal Employment Opportunity is The Law”; available from http://www.eeoc.gov/employers/upload/eeoc_self_print_poster.pdf; Internet; accessed 23 March 2010.
  2. Murray Rothbard, The Ethics of Liberty (New Jersey: New York University Press, 1998), 100.
  3. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 2002), 109-110.
  4. Jacqueline M. Brux, Economic Issues & Policy (Ohio: Thomson Higher Education, 2008), 114
  5. Murray Rothbard, “Freedom, Inequality, primitivism and the Division of Labor”, available from http://mises.org/fipandol.asp; Internet; accessed 23 March 2010.
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Mar 24, 2010

Flaws of Social Security

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Here is an essay I recently wrote for one of my classes regarding Social Security.  The majority of my research and sources was through the book “The Roots of the Social Security Myth” which can be found here.

Social Securirity will likely be insolvent in the next couple of decades if it remains as is and some have suggested allowing individuals to invest some or all of their payroll taxes into private investment accounts or put another way, to stop coercing individuals to pay into a government run programs that uses the revenues collected from “new investors” to pay the benefits of “old investors”, a ponzi scheme of sorts. Social Security is an example of one of the many ways the government expanded its powers and intrusive nature after the great depression. It is also an example of government “double-speak” as it was sold to the public as one thing and actually legislated as another. The two contradicting narratives still continue today as most of the public tend to view social security the way its proponents want them to, as an inherent right earned through investment of their money that individuals can lay claim to in their retirement years. The reality of social security is starkly different and as long as we are operating under that fallacy no reform will be effective. The real answer is to give responsibility and their own money back to the individual and let them do as they wish.

The common view of social security is that is a type of insurance, where people pay in a certain amount and then receive their investment returned with interest when they retire. This is how it was sold to the public and we bought it. However, Roosevelt himself said the following about the payroll taxes and the motivations behind this public marketing scheme:

…those taxes were never a problem of economics.
They were politics all the way through.
We put those payroll contributions there so
as to give the contributors a legal, moral, and
political right to collect their pensions and
their unemployment benefits. With those taxes
in there, no damn politician can ever scrap my
Social Security program. (1)

However, the “legal, moral, and political right” were only marketing and not fact. This was made clear by Assistant Attorney General Robert Jackson arguing before the court in 1937:

…these benefits are in the nature of pensions or
gratuities. There is no contract created by
which any person becomes entitled as a matter
of right to sue the United States or to maintain
a claim for any particular sum of money. Not
only is there no contract implied but it is
expressly negated, because it is provided in
the Act, Section 1104, that it may be repealed,
altered, or amended in any of its provisions at
any time. This Court has held that a pension
granted by the Government is a matter of
bounty, that the pensioner has no legal right to
his pension, and that they may be given, withheld,
distributed, or recalled at the discretion
of Congress. (2)

The practical implications were also expressed in this letter from an individual who lost his social security when Congress changed the law to deny benefits to those who were self-employed making over a certain amoung:

My position is that Congress has violated the
sanctity of a contract, to which I am a party, . .
. and it is a well-established principle of law
that no valid contract can be altered or
amended without the consent of both contracting
parties. . . .
Since the inception of the plan I have paid
my premiums by payroll deductions until
April 1947, when it became necessary for me
to retire . . . from that time until January 1951 I
received the benefits to which I was entitled. I
engaged in business promptly thereafter as a
self-employed person . . . as self-employed
persons were not covered by the then existing
statute. I continued to receive my social-security
benefits until the new act.
The people who get social security paid for
it. It is their money, they invested it during all
the years to the social-security fund. The social
security is not a charity. It is a form of insurance.
How has the Government the right to
take the money away or to say how much
these people can or cannot earn? (3)

Social Security is a welfare program paid for in current taxes and a redistribution of wealth. The idea that it is a retirement insurance or account in any way owned or controlled or inherently due to the financiers, taxpayers, is a facade that makes it politically untouchable. This lie is compounded by the claim that payroll taxes are kept in a trust fund earning interest to pay beneficiaries. The books are cooked. The funds are used as general funds and replaced with government bonds. In other words, the government borrows money from itself promising to pay itself back with interest. How does the government pay interest…well since all of its money comes from taxpayers, the taxpayers pay the interest and pay back the government bonds or IOUs. All smoke and mirrors in order to protect this coercive and government expanding program.

The answer is not reform but to scrap Social Security altogether. It is not the federal governments place to ensure retirement for all. The private accounts would give the government a huge stake in the markets, where there political capital as well as individuals payroll taxes will be at risk. This will encourage further regulation and manipulation of industry to produce positive results for government retirement accounts. Also, the government will have $1 trillion plus dollars to influence the markets and the people involved in the markets. People should be responsible for themselves or suffer the consequences. Charities, friends and families can help pick up the slack.

1. Arthur M. Schlesinger, Jr., The Age of Roosevelt, vol. 2,
The Coming of the New Deal (Boston: Houghton Mifflin,
1958), p. 308.

2. 73U.S., Congress, Senate, Oral Arguments in Helvering et
al. v. Davis involving the Old-Age Benefit Provisions of the Social
Security Act Before the Supreme Court of the United States, May
5, 1937, S. Doc. 71, 75th Cong., 1st sess., 1937 qtd in “The Roots of the Social Security Myth” by John Attarian

3. Analysis of the Social Security System: Hearings
before a Subcommittee of the House Committee on Ways and
Means, 83rd Cong., 1st sess., 1953 qtd in “The Roots of the Social Security Myth.”

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Filed under Economics, Politics
Feb 21, 2010

Political Survey November 27, 2009

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The Most up to date Political Survey can always be found at <http://damienmanier.com/political-survey/>

In order for this site to be an accurate metric of how my views may change over time as I continue researching and studying ideas, I have created a political survey on myself. I have tried to include most major issues and provided my views in short answer form. I intend to provide full essay attention to each of these topics over time, but readers should be able to see where I am coming from. Requests for issues to be added to the survey can be sent to me using the Contact button on the menu bar, as well as requests for which issues to focus on first when I am writing essays for the blog. Whenever I change, nuance, or feel the need to add clarification to the short answers in the survey I will post the updates to the blog as well as to this page which will also contain past answers to compare with.

  • (November 27, 2009) My stance hasn’t really changed on this issue. I still find the idea of single payer or government run health care to be a nightmare of an idea because it will lead to overspending, inefficiencies, rationing, and a growing dependence on the government. However, I would like to point out quickly some of the problems government is already causing in health care. I will not explore them much here just give them notice.Licensing- The practice of licensing, when it is required by law and enforced through government coercion, limits the supply of services in all fields, to include medicine, and therefore causes shortages. Many of the more basic medical needs do not require a PHD but the over qualification and shortage of practitioners inflate the cost of health care.FDA- Research has been done (I hope to more fully share and explore this later) that indicates that many of the FDA’s decisions and regulations are political. The FDA also adds on additional costs to the researching and marketing of medicine. Many economists, including Nobel Laureate for Economics Milton Friedman, believe that innovation in medicine, especially for rare diseases, has dramatically decreased since the creation and expansion of the FDA.

    Employer Insurance and HMOs- While my knowledge is still quite limited the research I have done points that government intervention is what has led to our current insurance situation. Wage restrictions and taxes on employment influenced employers to find ways to compensate their employees without being punished by creating employee health plans. The government further pushed this effort by creating tax penalties for individuals purchasing health care thus making them more likely to look for employer provided options. This of course removed internalization of the costs from the actual consumer and with more centrally controlled plans led to less competition.

    Medicare/Medicaid- The government negotiates or forces lower costs on medical providers and they in turn pass these costs on to the rest of their patients.

    This is an issue that I am currently researching. The topic is very complex as there are many player and interconnected parts. I am definitely against a single payer (taxpayer/government) system due to it being a direct threat to freedom and a guarantee of inefficiency. How will people stand up to a government that they depend on for life saving treatments and vaccinations for their children and what government record are people looking to make themselves believe that something as complex as healthcare for a country can be centrally controlled and run by the government.
  • (November 27, 2009)No longer do I believe that Social Security was meant to be a temporary fix. New research has led me to believe that it was unconstitutionally created and deceitfully packaged and sold to create a strong and lasting dependence on the government as well as to swell the governments pockets with new revenue.
    Currently I have to take a pretty unpopular stance on Social Security. I believe that it was intended (right or wrong) as a temporary fix to help the elderly during the great depression. However, that time has come and gone and Social Security has become the greatest example how something sold as a temporary fix to a crisis becomes a permanent entitlement with far reaching consequences and infinite potential for expansion. We can see this in the fact that Social Security not only is used as a retirement supplement for the elderly but is the sole income for some and has been expanded to cover the disabled and children of deceased citizens until they turn 18 (sometimes 21 if the continue going to school.) The government can never be trusted to limit itself and social security displays all that is wrong with entitlements.
  • (November 27, 2009) Previously, I said I was an avid supporter of the Fair Tax. I no longer see the Fair Tax as my goal but as a possible objective towards my goal of “No Coercive Taxes.” Many libertarians, especially on Mises.org, state that replacing the current coercive tax system with a new means of coercive collecting of taxes does not solve the problem. Coercive because people do not willing pay them, but pay them at the point of a gun. (If you don’t pay your taxes you will be fined or jailed–>you only allow your self to be imprisoned or fined because if you resist you will be shot…so in the end you pay at the point of a gun.)I agree that it is not a solution. However, under the current system the government is able to divide and conquer. They can raise taxes on some and not others in order to gain their support, give subsidies or tax breaks to special interest groups and engage in class welfare so that the people fight each other instead of the source of divisiveness and coercion, the State. The Fair Tax, on the other hand, if implemented as its creators intend, will reduce and/or eliminate many of these opportunities for the government to turn the people against each other and hide the true cost of government. Another idea I came up with recently would be to limit the federal government to taxing the states. This would allow the states to collect taxes in a variety of ways and to the degree that they see fit, it would also make it easier for people to vote with their feet since their tax burden would be wholly dependent on their state of residence, and it would give states an incentive to fight the growing behemoth of federal government since they would be the ones turning over its revenues.
    I have been avid supporter of the Fair Tax (all federal taxes, except excise taxes, replaced by a national sales tax) since I first learned about it. Many issues could be helped with this system of taxation and it would bring much needed transparency to the cost of government. It would be good for American business and the American financial system. While I can see the arguments of libertarians about eliminating all taxes (except possible “voluntary taxes”) I don’t believe America is prepared for that bold a step and I would be very pleased with this large step in the right direction.
  • (November 27, 2009) The State can only have the powers delegated to it by the people it serves and the people can not delegate powers they themselves don’t have. With that being said, since aggressive coercion or violence is wrong for individuals it must also be wrong for government. A war may still be justified, but only if it is in response to aggression or the direct threat of aggression and then only in proportionate response or until the aggressor ends their campaign or the direct threat no longer exists. Also, by direct threat I do not mean the potential to conduct aggressive acts or inflict harm but the stated intent or preparations with intent to do harm. However, there are other issues that have direct implications on this issue. So long as people who do not support the wars are the ones fighting and paying for them the wars, even with all other criteria being met, will not truly be just.
    I don’t think anyone would consider themselves pro-war, I am not in favor of war for the sake of war or for the confiscation of resources (land, treasure, people or power). However, I am currently in favor of military action up to and including war for the sake of protecting our National Security, which includes protecting our way of life. I believe that we are still at a point in civilization where military force has to be used to stop tyranny and other forces acting against the interests of the people of the United States. However, I am currently looking into the idea that more is lost than gained by the exercise of military force or projection. If I discover that the Cons outweigh the Pros when it comes to the interests of the people of this country I would whole heartedly change my position of support for military force.
  • (November 27, 2009) Previously this topic was Electoral College and Federalism but those topics were too narrow and has thus been expanded to the more general, “Structure of Government.” This topic also focuses on how I view the current government structure and the changes I propose, while they may seem radical, still maintain the integrity of the current state. The true goal, however, is a sort of libertarian anarchy but these steps should help to move in that direction.There are many inherent problems that arise from our structure of government. One major issue that a majority, or at least plurality, of Americans seem to have a problem with is the two party system More Americans identify themselves as Independent, or some other “third-party” such as Libertarian, than ever before. However, few have thought of why we are still stuck in a two party system in spite of mass discontent with either of the major parties. The most likely place for smaller parties and independents to gain ground is in the House of Representatives. However, the fixed number of seats, 435, since 1929 has created very large districts that give the major parties an advantage since more funds and organization are required to mobilize the vote in that large of a constituency. That is why the House should be reapportioned and greatly expanded. Another barrier is the single-party districts. When a majority of voters leads to a winner takes all contest it promotes support for major candidates who are seen as more likely to win while third parties are viewed as spoilers. This can be partially fixed just by creating smaller districts that smaller parties can compete in but another possible solution would be to assign seats in the House based on percentage of votes gained for each party. This is done in several other countries and allows for many smaller parties and usually prevents a straight majority party from being formed.One of the greatest political tragedies of American history has been the overwhelming centralization of power in the federal government. From the very beginning this was the debate that caused the founders to fracture into parties and it is only natural that the central governing body will always try to grab more and more power but the check against it was supposed to be the states acting in their self interests to protect and cling to that power for themselves. This trend, of centralization, was primarily started when States were no longer allowed to secede after the civil war. Up until the time states were voluntarily a part of the union and their ability to secede kept the federal government in check. However, since the “consent of the governed” is no longer needed the federal government expands more and more all the time, trampling state and individual rights. The idea of “consent of the governed” should be resurrected and states or even individuals should be allowed to secede in order to create a truly free society or societies.

    This is an issue I have not been able to come to a firm conclusion on. Currently I am leaning towards the category of opposing the Electoral College. Most of the original arguments for the Electoral College seem to be outdated and I have found several arguments against. I am actually in favor of fairly radical (in today’s status quo political environment) change in much of the structure of government.

    One of the greatest political tragedies of American history has been the overwhelming centralization of power in the federal government. From the very beginning this was the debate that caused the founders to fracture into parties and it is only natural that the central governing body will always try to grab more and more power but the check against it was supposed to be the states acting in their self interests to protect and cling to that power for themselves. Somewhere along the line the states rolled over or sold out and that is a trend that needs to be reversed. Diversity between the states is what allows people and business to vote with their feet moving where the laws are most friendly to them. When all blurs together and all laws are basically handed down from the federal government there can be no competition between the states or experimentation to find the best new ideas. Each voice of the people also becomes less and less heard as they are drowned out by the larger and larger masses ruled by an ever more centralized government.
  • (November 27, 2009) My previous position as a strict constructionist when it comes to judicial interpretation of the Constitution still holds. However, I also wanted to point out that while I believe the Constitution to have been an ingeniously written political document; I do not find it to be the last word, free from error, divinely inspired, or any more binding on government than being a symbol that acts as a rallying call for the people, who are the actual restrains binding state power. The constitution has been amended several times, not all that I agree with. Law, in the legislative sense, does not make write and just because it is written does not make it so. With that being said, I still stick to a strict constructionist, or literal, interpretation because to do otherwise would be to allow government unbound power.
    I am a strict constructionist when it comes to the Constitution. It should be interpreted as its writers intended to include each amendment. The Constitution can be a living document without judicial activism in its interpretation. The founders included a way for the Constitution to adapt to modern times throughout the amendment process. The difficulty of this process was intentional in order to limit the power of government, since it makes that laws that governs itself a fairly rigid document that needs the concurrence of competing powers is required to provide that limitation and shouldn’t be circumvented by a handful of judges.
  • (March 21, 2009) I support a policy that makes it much easier to come to this country to work, go to school or even live. At the same time I advocate much stricter standards for citizenship. I have not been able to do enough research to see exactly what standards I would ask be required but I am sure that in order to protect the integrity of our political system, to maintain an American culture and promote integration into society stricter standards are absolutely necessary. As to how much easier I believe it should be to enter this country, the only standard I would apply is a direct threat to the security of the country or the residents of the country. I do not mean a perceived threat to jobs or things of that nature but a national security threat or a criminal record. This freer flow of immigration would be much easier for people to support, however, if they did not fear that the influx of immigrants would be added burden due to the ever growing welfare state. Also, my way of dealing with illegal immigrant already in this country would be to grant them permanent status, we would then be aware of who is in our country and the would be recognized and not forced to live in the shadows. However, I would put limits on their status so that they could not become citizens unless they returned to their homecountry, without penalty, and re-entered the US legally behind everyone else who is waiting. They also would not ever be allowed to sponsor family members or other immigrants unless they returned to their home country first and entered legally. This would basically continue the status quo as far as their established lives, they currently can not sponsor relatives or become citizens, with the benefit of giving them basic rights and registering them in our systems so that they are accounted for; and it would alleviate fears of exponential growth in immigrants due to chain immigration after they are legalized and the culture shock of an addition of that number of immigrant citizens.
  • (November 27, 2009) The only thing I would add to my previous statements is that the goal is to remove government from education altogether. However, I still find school vouchers to be a huge step in the right direction and fully support it.(March 21, 2009) I am a strong advocate of school vouchers. I have found that an educated society has many spillover benefits and thus is one of the few items that I believe the government justifiably can fund. However, I do not trust the government to run our education. There is a conflict of iterest there in that young minds being shaped by those in power is a very dangerous thing. Also, the “common experience” “one size fits all” philosophy behind the public school system is a fails to achieve the goals that most citizens and parents see for schools: to instill children with knowledge and skills that will benefit them. Also, when choice is stifled and parents are compelled to send their kids to public school, usually not even able to choose which public school, it creates an environment where parents are either forced to accept someone else’s views, ideas and educating methodology, or to force their views on someone else’s kid. This has led to the great controversies in education that could have been largely avoided if parents had more choice and were able to more freely send their kids to schools they didn’t object to.
  • (March 21, 2009) While I may disagree with Thomas Friedman on many issues, I did find his books “The Lexus and the Olive Tree” and “The World is Flat” pretty useful. The conclusion he came to was that it doesn’t matter if we agree with globalization or because it’s happening. To ask if you agree with globalization would be like asking if you agree with the sun coming up in the morning…it’s going to happen regardless. The question is how do we live and adjust our views to fit that of a globalized world economy. We should recognize the new interconnectedness of not only countries but of issues. The economy is now directly connected to national security and our domestic politics are watched by countries around the world. Individuals can now do what only countries could do decades ago, moving large amounts of goods around the globe, conducting foreign policy, conducting business in several countries from their home or office.
  • (November 27, 2009) The topic of the Death Penalty was too narrow and thus expanded. The best place to find my views on Crime and Punishment more fully explored is in “The Ethics of Liberty” by Murray Rothbard. I will summarize them here. Crimes are committed against individuals by individuals and punishment is a way to seek justice, not to protect society or rehabilitate the criminal. The punishment should be guided by the “proportionality principle,” which will set the maximum for the punishment. The proportionality argument states that the criminal will be deprived of his rights up to the degree that he deprived the victim of their rights, plus restitution. However, instead of an “impartial” judge, who has no stake in the matter, the punishment, up to the maximum dictated by the proportionality principle, will be decided by the victim. The victim may decide to forgive part or all of the punishment for any reason to include personal beliefs, sympathy for the criminal’s situation or understanding of the events that led to the crime, to boost their personal image, or in a settlement with the criminal for money. The victim, or their heirs, was the one deprived of their rights so it should be up to them to decide the fate of the criminal up to the maximum.
    While reserved for heinous crimes like murder I agree with the Death Penalty. Even if I found some philosophical objection to it, it still wouldn’t bother me that a murderer or serial killer gets executed. It weighs zero on my conscience.
  • (March 21, 2009) In my personal life and personal advice I am against abortion. I think the debate is skewed and that I do not think there is a pro-life and a pro-death side of the issue or a pro-choice and anti-choice side of the issue but that there are those who believe that at some point during the pregnancy, some as early as conception, that a person exists. There are others who believe that it is only a clump of cells or some sort of animal or non-person fetus (I admit I am not sure what they classify it as, but I am giving them the benefit of doubt in my mind that they do not believe it is a person they are killing.) If there is a person in the womb then that person has rights including the right to life. If it is not a person then its rights are far less defined but I do not think that anyone can claim that it is not a living organism that is being killed in the abortion process. That is where I think the debate lies, in the personhood of the baby or fetus and when it becomes a person. Not about women’s rights. If it is not a person, I think few would object to a woman’s choice, but if you believe it is a person it can not be expected that you would sacrifice that person’s life for the convenience, career, plans, or even psychological trauma of the mother. Unless the life of the mother is in danger, I do not currently believe abortion is right.
  • (March 21, 2009) Anthropological global warming is a religion loosely veiled in science. The motivation for this fraud is great due to the huge sums of government money pouring in to finance it and the agenda of those pushing the theory is clearly anti-business and anti-capitalist. The deceit and misinformation that I have found prevalent in the science and theories in global warming has led me to believe that this is not just an incorrect theory but intentional misleading of people to make them act against their true self-interests and probably the greatest fraud in my lifetime. This politicized science, when finally exposed, will hurt the credibility of the scientific community for years to come and that is unfortunate.
  • (March 21, 2009) Frankly, if government got out of the marriage business: did not make tax laws, entitlements, legal recognition; then this would be a non-issue. However, gay marriage advocates are naive if they believe they can force acceptance on society or individuals. The government definitely should not prevent gay couples from living together, leaving eachother in their wills, granting eachother medical power of attorney, visiting as family in hosipitals; those should all be individual choices beyond the scope of government control regardless of who is chosen. At the same time, churches who do not recognize gay marriage should not have to perform the ceremony or allow one to take place in their building, employers who do not recognize gay marriage should not have to include the spouse on insurance plans or other benefits and employers who do recognize gay marriage shouldn’t have wait for the government to provide those benefits. If the government is not involved in the issue it will not give everyone what they want but it will provide everyone the choice of acting according to their own conscience.
  • (March 21, 2009) I believe the second ammendment is clear in the right to bear arms as individual citizens. There is little more I can say about the issue because I can not see where the debate is. As to regulations on selling and buying weapons, it does not bother me that there is a holding period, ID verification, and check in a federal registry to prevent the sell of weapons to felons or people with certain mental conditions.
  • (November 27, 2009) It is not the place of government to redistribute wealth within or outside of its borders. Private organizations and charities can help and hold to account, by the withdrawal of funds, foreign persons more efficiently and effectively than government. Especially if they have more of their own money not coercively taken (stolen) from them.
    The idea of the “Millenium Fund” of President Bush and of certain policies in regard to Foreign Aid under Reagan would be acceptable if pursued more strictly and across the board. A country should not just give away money to failing nations. They should tie that aid to reforms or to actions that are in the giving country’s interests. Otherwise nothing changes and the root problems that caused a country to need the aid remain. This does not necessarily apply to emergency aid due to natural disasters like the Tsunami in Indonesia and South Asia or even aid to the victims of genocide or oppression by their governments, but to the “lending” or providing of treasure and aid directly to governments.
  • (November 27, 2009) Adding more bureaucracy and centralizing power at a higher level will not lead to more cooperation or peace. More freedom is gained by empowering the lowest level, the individual, and allowing for free competition of ideas. I would also drop the last sentence of my previous stance because it seems to imply that States have some sort of inherent right to a monopoly of power over a geographic area.(March 21, 2009) The League of Nations and the UN are both failures in much of their goals. This is because most of the participating recognize and act in their own self interests and try to use the body to advance their own agendas. I do not blame them for this because it is the natural and right thing to do. However, we should not kid ourselves that the UN is some higher body trying to do the greater good. The UN is also very ineffectual due to the VERY different and often opposing agendas of the permanent council. It was George Washington who warned against permanent alliances. The US should make foreign policy based on what is in its interests and let those join who agree and consider the consequences of going against those who disagree and then take action with the US government being the one who decides not an international body unelected by the American people. The UN can be a place where ideas are discussed among countries but should have no binding power over sovereign nations.
  • (March 21, 2009) I am too young to have lived through the Civil Rights Era so I will not speak as to whether Affirmative Action was a justified policy at one time or not. However, I do believe that it has outlived any usefulness or justification it might have had. People should be given jobs based on merit, experience, and need not the color of their skin. Not hiring someone because they are white is just as racist as not hiring them because they are a minority. Issues like this do not cause greater acceptance between races but cause greater division and resentment.
  • (November 27, 2009) I have come down more confidently on the side that patents are not necessary and that copyrights should have a very short life if they are necessary at all. I have conducted research and become convinced of this, but I am not knowledgeable enough to really explain the position, yet.
    Recently I have began to look into the idea of IP. Where only a few months ago I would have defended IP as being nearly as sacred as property rights themselves. However, with recent research it would appear that copyright and patents have done considerably more harm than good. This may be simply due to the fact that they are abused and last for much too long a time. Further research is necessary but it would appear that history supports the argument that innovation still thrives with out IP and that in fact copyrights and patents, through the monopolies they create, are what stifle innovation.
  • (November 27, 2009) Eminent Domain for any purpose negates the concept of private property and begins the unravel of fundamental rights and the liberty of individuals. I am now taking a stronger position against any type of eminent domain land seizures.(March 21, 2009) Property rights are one of the foundational cornerstones of a free society. The taking of land from one private citizen and giving it to another private citizen is fundamentally wrong and should never be allowed. Actions of that nature should be met with great outrage from citizens because they could be next. I am not sure if I would make exception for eminent domain for the purpose of building roads and other government infrastructure but that would definitely be more tolerable than current uses of eminent domain laws.
  • (March 21, 2009) Like most issues that involve “personal choice” I do not care if someone uses drugs as long as I am not expected to pay, through taxes, their medical bills from either long term damage or emergency room visits, their food, their rent or their unemployment. It is only when people’s poor choices become a burden on that I find it acceptable to regulate such behavior. However, employers, to include the government, should be allowed to maintain their own standards on drug use and hire and fire based off those standards. The Drug war is a huge waste of money and time from what I can tell.
  • (March 21, 2009) The theoretical union that is usually presented in arguments, that protects workers from unsafe and inhumane working conditions and helps the every day Joe stand up to an abusive employer does not bother me. In fact, if unions were simply the voluntary organizing of workers to negotiate with an employer, based on what they both offer each other, and nothing else I probably would not have a problem with them. However, unions do not focus on negotiating with employers but instead lobby congress and the government to force employers to meet their demands. This is wrong. An employer should be able to hire or fire anyone he wants for any reason…its his money and his business. If an employer is acting unfairly or oppressively it is up to the employees to take a stand on behalf of their coworkers or their own rights and if they offer value to the employer then the employer will have to negotiate or suffer the consequences, or they can be held to account by the consumers of their product or services who do not want to support such practices, which can be used by competitors to draw the market away from bad actors due to a poor public image. The government’s role should be limited to enforcing legal contracts and that is it. If unions would stick to this more fundamental role they actually have a positive effect. Also, there does not need to be an ever present union collecting dues from employees whose survival depends on constantly convincing their members they should not be satisfied with their current status. Unions live in a paradox that if they are successful in implementing good work conditions they are no longer needed and must therefore act against their self interest to fulfill their promises and only a naive person could believe they act against their self interest.
  • (November 27, 2009) I have not put much more thought into this topic; however, the crime and punishment “proportionality principle” could probably apply here as well. So long as the techniques do not exceed the maximum limit set by the principle and the victims accept that punishment then it is not much different than capital punishment in that regard. However, the debate here is using to gain information, as opposed to punishment. In that regard my position is unchanged due to the fact that I have not further considered it.(March 21, 2009) I do not believe we should torture people. However, in the recent debates on torture that term has been applied very loosely. The literature put out by human rights groups claiming that the US is using torture, for example, classify the following into that category: standing for long periods of time; playing loud music; having dogs present at interrogations; females shaving the beards of muslim men; and water-boarding. If these things are going to be classified as torture then I have to rethink my position. I do not find discomfort or cultural insensitivity to be torture. As for water-boarding, if out interrogators can go through it for their training then a few, three reported instances of its use, terrorists with vital information that can save American lives can be exposed to it as well. There has been no reported permanent physical damage from the practice and like the Death Penalty, even if I could find philosophical objections to the rare use of water-boarding it would not bother my conscience that it happened to men like Khalid Sheik Mohammed.
  • (March 21, 2009) I have not firmly decided where I think life begins and could not say for sure if I find the use of embryonic stem cells morally wrong. I do think it is wrong to use stem cells from aborted fetuses or any embryos that were not specifically created in a lab for this purpose. It would also be better to use alternatives such as umbilical stem cells and adult stem cells if possible to avoid the possible ethical challenges. As far as government funding goes, the amount is most likely small compared to the overall budget of the research and if people truly believe in the potential of stemcells there should be plenty of people willing to support its research so that federal funding is not necessary.
  • (March 21, 2009) I support a 100% banking system as opposed to a fractional reserve banking system. There are also great arguments to return to a commodity money as opposed to fiat money. I agree with these arguments in principle but have not yet become convinced of a method of this return that would not have grave short term consequences. Theoretically, the benefits of commodity money could be mostly realized with fiat money if the government was prohibited from artificially growing money by use of the printing press and were only allowed to print money to replace DESTROYED old currency. Another benefit of commodity money is that it was an international standard and so minimized the effects of currency trading and sabotage on nations’ currencies. If an international fiat money was adopted that could not be printed for any reason other than replacing retired currency then I think many of the benefits of commodity money would be realized. At the same time, I do not expect that government, especially international institutions, can live up to the standards or be trusted not to manipulate currency that is under their control.
  • (March 21, 2009) After a long journey looking for what I truly believe, I have found the ideas of Deism. I would consider myself a positive deist and have no reason to disparage the faiths of others if it is providing them happiness, strength and a solid moral ground that does not lead to them harming those around them. I hope to write more in the future on my personal understanding of Deism and the path that led me to it.
  • (March 21, 2009) There is no argument that living things adapt to their environments and that mathematically speaking those that adapt the best are most likely to survive and pass those traits along. However, from the research I’ve done, which admittedly is not extensive but probably more than average, I have not been convinced of Darwinism or Macro-evolution. There appears to be some flawed logic and ample opportunity for logical fallacies and philosophical agendas to drive the conclusions of Darwinism. Currently, I do not believe that life was created by chance in the form of RNA, protein, single celled organism or some even simpler variant of life yet to be discovered that evolved into all the life that exists today. The more we study the more we see that even the most simple organisms are more complex then we could have imagined which makes macro-evolution even more unlikely. I do not have a religious agenda against evolution, if it were proved it would have no effect on beliefs. I just do not find the arguments for it compelling.
  • (March 21, 2009) Individualism, free-will and human reason are probably the cornerstones of my entire philosophy. Free-will is a topic that I waste little time debating, the arguments are usually circular, but accept as inherently true. I am very aware of the limitations of human reason but do not accept the skeptic’s view that we should accept nothing as true because of these limitations. The limitations should be recognized but we should act on what our reason tells us. Individualism and social evolution are what provide the safeguard and advance human reason as poor or incorrect reasoning will be weeded out as more successful reasoning becomes more prevalent. The idea is similar to that of biological evolution that as people adapt the ones who are most successful are most likely to be the ones whose ideas are accepted or spread. The probability of discovering the best ideas is exponentially greater when individuals are free to pursue their own reasoning as opposed to a collective society where new ideas stifled because by their very nature they are not accepted by the majority or only the ideas of one person or organization are tried and so the likelihood of finding the best idea is greatly reduced as only one idea out of infinite ideas are being tried.
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    Nov 27, 2009

    Corporate Welfare and Corporatism

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    Corporations are firms or companies (private, publicly traded, for profit, and/or non-profit) that agree to be regulated by certain rules, corporate law, that regulates the relationships and interactions of corporate management, shareholders/owners, employees, creditors and the government. Companies agree to these rules because they provided limited liabilities to all actual persons who are a part of the corporation by creating an artificial “person hood” status for the corporation and limiting the liabilities to that entity. The government also uses its state power to protect, from competition through tariffs and regulation, and subsidize these entities. In return, the government is able to manipulate the economy through few points, they can regulate the significantly fewer large corporations easier than they could coordinate and regulate different stores on every corner, and they will be working with voluntary and cooperative participants who want the continued benefits of state power. Understanding “corporate welfare” is a bit more complex since no one wants to claim to support such measures but nearly all political parties and platforms do in some form or another. In fact, the entire concept of the “corporation” is a form of corporate welfare, or redistributing wealth or interfering in the market on behalf of companies or firms. Support for corporate welfare is never described as such but almost the entire political class does support it in its more overt forms or it’s more subtle indirect forms. Libertarians, on the other hand, oppose all forms of corporate welfare when they are not being negligent or inconsistent with their principles.

    The left supports several types of corporate welfare. The recent “Kelo” case involving eminent domain gave private lands to corporate interests and was decided by liberal judges. Also, many of the regulations that are supposedly done to restrict corporate actions are supported by the corporations themselves because it makes it more difficult for new competitors to enter the market. Roderick T. Long in an essay written for the Cato Institute, “Corporations versus the Market” wrote that , “the ability of colossal firms to exploit economies of scale is also limited in a free market…unless the state enables them to socialize these costs by immunizing them from competition- e.g., by imposing fees, licensure requirements, capitalisation requirements, and other regulatory burdens that disproportionately impact newer, poorer entrants as opposed to richer, more established firms.” (1)

    The right also supports several types of corporate welfare, but they may be more dangerous since they shroud their policies in the cloak of the free market. For example, they advocate tax breaks for certain businesses or industries but “when a firm is exempted from taxes to which its competitors are subject, it becomes the beneficiary of state coercion directed against others, and to that extent owes its success to government intervention rather than market forces.” (1) The right’s use of privatization is often of a similar nature. In free market terminology privatization would be the removal of government and its influence from an industry but the right often uses it to mean a transfer of monopoly status over an industry to some contracted firm or corporation. Thus the monopoly status is maintained and the governments involvement and influence is still present.

    The right and left both justify the more overt types of corporate welfare that they end up supporting, such as TARP and the bailouts of the auto and financial industry, as necessary evils. However, necessary evil is a contradiction as if something is necessary than it must be good and not evil. Here we can apply one of Ayn Rand’s famous quotes “Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.” In this case, either the bailouts were necessary and good, having a positive effect, while the principle that labeled them evil must be ill founded or the principle that makes such bailouts evil is correct and they were not in fact necessary. The contradiction should force us to check the two premises “necessary” and “evil” and see which one is wrong.

    Libertarians, and the position I support, holds that all corporate welfare is wrong. The current “conflation” of corporatism and capitalism is especially dangerous since it rallies and multiplies the opponents of free markets who somehow see them tied to pro-corporate policies and also allows statist policies to be sold under the mantle of the free market. The current failures of “capitalism” and the “free market” are really only failures of the current system which is often labeled capitalism but is only one step away from socialism. In socialism, the state owns industry but in our current system, often labeled capitalism, the State offers privatized profits and socialized costs in exchange for regulation and willing “subjects” to form an alliance between government and industry; this corporatism should not be confused with real capitalism or free markets.

    1. http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/

    Another good article I read while doing my research, but did not have room to include in my post was:
    http://97.74.65.51/readArticle.aspx?ARTID=22594
    An article in FrontPageMag.com

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    Nov 27, 2009

    Political Survey March-21-2009

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    The Most up to date Political Survey can always be found at <http://damienmanier.com/political-survey/>

    In order for this site to be an accurate metric of how my views may change over time as I continue researching and studying ideas, I have created a political survey on myself. I have tried to include most major issues and provided my views in short answer form. I intend to provide full essay attention to each of these topics over time, but readers should be able to see where I am coming from. Requests for issues to be added to the survey can be sent to me using the Contact button on the menu bar, as well as requests for which issues to focus on first when I am writing essays for the blog. Whenever I change, nuance, or feel the need to add clarification to the short answers in the survey I will post the updates to the blog as well as link back to the original. After the break is the survey I completed on March 21, 2009.  I recently migrated my blog to wordpress and that is why there is a date discrepancy.

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    Nov 26, 2009