laissez-faire Archives

The Self-Referential Awakening – Heeding the Warrior’s Call

submitted by jwithrow.
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Journal of a Wayward Philosopher
The Self-Referential Awakening – Heeding the Warrior’s Call

January 4, 2016
Hot Springs, VA

The S&P closed out Friday at $2,044. Gold closed at $1,060 per ounce. Crude Oil closed at $37.07 per barrel, and the 10-year Treasury rate closed at 2.27%. Bitcoin is trading around $431 per BTC today.

Dear Journal,

Happy New Year! As I touched on in my last journal entry, I expect 2016 to be a very interesting year in the financial markets. Credit has been expanding and interest rates have been falling for more than three decades now, but 2016 may be the year those trends reverse.

The “authorities” will fight such a trend reversal with everything they have, but Mr. Market will eventually assert himself. Trees don’t grow to the sky, as they say. For a more detailed look at the prominent macroeconomic trends of our time, as well as how to position your finances accordingly, please see our online course Finance for Freedom: Master Your Finances in 30 Days.

Moving from finance to philosophy…

Socrates: Everyone wants to tell you what to do and what’s good for you. They don’t want you to find your own answers, they want you to believe theirs.

Dan: Let me guess, and you want me to believe yours.

Socrates: No, I want you to stop gathering information from the outside and start gathering it from the inside.

Continue reading “The Self-Referential Awakening – Heeding the Warrior’s Call”

Disintermediate the State

submitted by jwithrow.

Journal of a Wayward Philosopher
Disintermediate the State

July 15, 2015
Hot Springs, VA

The S&P closed out Tuesday at $2,109. Gold closed at $1,155 per ounce. Oil checked out above $53 per barrel, and the 10-year Treasury rate closed at 2.399%. Bitcoin is trading around $293 per BTC.

Dear Journal,

The Greek banks are still closed as I write to you today. Let’s revisit the timeline real quick:

Saturday, June 27: The head of the government’s coalition ally in Greece advised “Citizens should not be scared, there is no blackmail. The banks won’t shut, the ATMs will (have cash). All this is exaggeration.”

Sunday, June 28: Prime Minister Alexis Tsipras announced that Greek banks would be closed until Monday, July 6. “The bank deposits of the Greek people are fully secure”, he added.

Sunday, July 5: The national referendum on the EU’s proposed bail-out is held. Greek citizens vote “no” emphatically.

Monday, July 15: Prime Minister Alexis Tsipras conceded to a bail-out agreement with the EU consisting of terms very similar to the bail-out Greek citizens voted against ten days prior.

Wednesday, July 15: Greek banks are still closed and there has been talk of a 30% haircut on all deposit accounts in excess of €8,000.

As we can clearly see, the Greek people have been mislead and lied to throughout this entire process. The Greek political class threw the people a bone with the referendum on July 5 to ease some of the discontent and then they proceeded to ignore the results of the referendum entirely. Those of us familiar with laissez-faire philosophy are not surprised by this in the least. Such is the nature of the relationship that exists between governments and citizens everywhere. Continue reading “Disintermediate the State”

Private Enterprise versus Free Enterprise

by Logan Albright– Mises Daily:

The United States Export-Import Bank is scheduled to expire at the end of June 2015, and the elected representatives of both parties are tripping over themselves to reauthorize it, citing the importance of exports and strong private enterprise to the American economy.

“I’m a very strong supporter of the Ex-Im Bank, because it is a tool for us to be competitive in order to support our businesses exporting,” said Hillary Clinton. “[F]ailure to reauthorize Ex-Im would amount to unilateral disarmament and cost tens of thousands of American jobs,” commented Harry Reid. It would seem that Democrats are eager to claim the mantle traditionally applied to Republicans of “The Party of Business.” But there is a difference between being pro-business and being pro-markets.

In his book, Reassessing the Presidency: The Rise of the Executive State and the Decline of Freedom, libertarian attorney and historian John V. Denson observes, “Many businessmen and bankers believe in private enterprise but do not believe in free enterprise” (emphasis in the original).

It’s an important distinction to make. Free enterprise is the laissez-faire, free-market ideal, with the peaceful interactions between individuals being wholly unregulated by government. Under free enterprise, anyone can trade with anyone else on mutually agreeable terms. Since all interactions are voluntary, all traders necessarily benefit, and both wealth and welfare are free to increase without the imposition of artificial limits.

Private enterprise, in contrast, means merely that business and the means of production are held in private hands, although the government may make any number of demands on how these individuals go about their business. The fascist governments of Europe in the past century maintained a system of private enterprise, while simultaneously exercising near complete control over business operations. Similarly, the Roosevelt economy during World War II was marked by extensive private enterprise serving at the pleasure of government.

This is not to say that private enterprise is bad — it isn’t — but merely that it is insufficient for economic liberty, and prone to be corrupted by the political process. At first glance, one would think that business owners would favor free enterprise. After all, who wants to be pushed around by the government? But in fact, we see just the opposite. James Buchanan, founder of the Public Choice school of economics, was famous for exposing the incentives for private companies to attempt to manipulate government into playing favorites in the marketplace. A free enterprise system benefits everyone who is willing to be productive. Government controls on business, on the other hand, benefit the few at the expense of the many, which means the few who benefit have every incentive to lobby for, and support such a system. Thus, we see everywhere lip service being paid to free enterprise, but an actual promotion of private, unfree enterprise.

The U.S. Ex-Im Bank is a perfect example of this. Founded as part of FDR’s New Deal eighty years ago, the Bank has been providing taxpayer-backed loans to private companies. We are told by supposedly pro-business politicians that the program is needed to stimulate exports, even though competition unhindered by corporate cronyism has always proved a superior economic stimulant. Especially egregious is the fact that most of the money the Bank hands out goes to huge corporations that certainly do not need the government’s help to export their goods.

While defenders of the Bank like to claim most of the Bank’s activity is devoted to helping small business, in fact, 97 percent of the Bank’s loan guarantees go to just ten corporations, with the top two being Boeing and General Electric — hardly mom and pop enterprises that need handouts to keep running. While these companies are not owned by the government, the fact that they are private entities does not justify this kind of interventionism, which stifles competition and creates perverse incentives.

If it is reauthorized, the Ex-Im Bank is estimated to cost taxpayers $2 billion over the next decade. It wastes millions on self-promotion and PR, and, due to specific mandates handed down from the Obama administration, it disproportionately rewards political interests, such as the green energy boondoggle known as Solyndra and foreign companies mired in corruption like Abengoa. It would be hard to imagine a less free market approach toward supporting business. Meanwhile, government guarantees of loans to companies that could not secure them on the open market ensures that the money will be poorly invested, serving special interests rather than sound economics.

This sort of protectionism is perhaps the most seductive and insidious example of the lure of private enterprise at the expense of free enterprise. Despite being thoroughly debunked as effective or wise by virtually all credible economists, protectionist policies have been among the most entrenched and difficult to dismantle. The Ex-Im Bank remains a drop in the bucket compared to other protectionist policies, such as the mammoth farm subsidies Congress cheerfully votes for every few years. But even this relatively small program has proven remarkably hard to kill. Part of the reason for this is that Republicans and Democrats alike can vote for protectionist measures while simultaneously claiming to be “pro-business.” The distinction between supporting business freedom and supporting business directly through government action is rarely made.

Private enterprise is a subset of free enterprise; All free enterprise is private, but not all private enterprise is free. The failure to bear this distinction in mind is what leads to public support of indefensible programs like the Ex-Im Bank. The support of private enterprise at the expense of free markets results merely in corporatism, where business becomes an extension of government instead of the agents of competition and choice.

Article originally posted at Mises.org.

Non-intervention is Comprehensive

submitted by jwithrow.

Journal of a Wayward Philosopher
Non-intervention is Comprehensive

February 27, 2015
Hot Springs, VA

The S&P opened at $2,110 today. Gold is checking in at $1,216 per ounce. Oil is floating around $49 per barrel. Bitcoin is up to $253 per BTC, and the 10-year Treasury rate opened at 2.02% today.

Yesterday we discussed the merits of the non-intervention philosophy specifically as it relates to natural childbirth. We realized what is true about non-intervention in childbirth is just a true about non-intervention in the rest of health care. Non-intervention is just as applicable to the fields of personal finance, economics, education, and the role of government as well. Let’s examine this in a little more detail today.

To start with, think long and hard about what you value in this life. Clear your mind and think about what’s important to you.

Notice the clutter and the conflict?

We are constantly assaulted with polarized messages on a daily basis competing for our support. Every single advertisement you see or read is designed by very skilled people to convince you that you want that particular product or service. The corporate media constantly inundates you with messages designed to drum up your support for a particular idea, policy, or position. The various institutions you are a part of (school/work/church/community service/political party/etc.) all convey different expectations for how you should live and what you should spend your time doing.

When we accept and identify with these external expectations we shift away from self-reference and end up with a piecemeal system of values and a hodgepodge of beliefs. Then we say things like:

-This religion is absolutely right and that religion is absolutely evil.

-People should spend their time doing these things but they shouldn’t be allowed to do those other things.

-Government should force everyone to comply with these policies and it should stop people from engaging in alternatives.

Why do we say these things? Because that’s what our institutions say; we substitute our own values for the values of our chosen institutions when we identify with external expectations.

The non-intervention philosophy is about getting back to what’s best for you. It’s about a self-referential reawakening. Modern society tells us that self-reference is selfish but nothing could be further from the truth. If we look within and decide it is acceptable to stand on our own values and pursue our own wants regardless of what modern culture says then we necessarily recognize that others are free to do the same. This understanding sparks a respect for non-aggression and tolerance in a world that has seemingly forgotten these ideals.

”Do unto others as you would have them do unto you.” “Love thy neighbor as thyself.” “Hurt not others.” “Live and let live.” “Laissez-faire.” Moral thinkers have come and gone throughout history and they each arrived at some variation of this same message. Let’s apply this message to our world today.

Non-intervention in personal finance is about thinking a lot but doing very little. Contrast this with mainstream personal finance which is frantic and disorganized. Jim Cramer epitomizes this on his television show where he runs around screaming “buy, buy, buy” or “sell, sell, sell”. We are sold the idea that a sophisticated financial portfolio involves moving in and out of the right stocks and that this is the key to reaching a retirement “number”. If we don’t want to do the stock picking for ourselves then we can purchase target date mutual funds that are actively managed by professionals who move in and out of stocks for us.

All of this buying and selling churns up commissions and fees and, if we follow mainstream analysis, likely gets us into stocks when they are popular and expensive and out of stocks when they are unpopular and cheap. That is to say we buy high and sell low. The rationale behind this is simple – if a stock is popular enough to warrant coverage on CNBC or in the Wall Street Journal then it is popular enough to draw a lot of attention. It would be far better to buy the stock when it is obscure, hated, and cheap then sell it to someone else if it becomes popular enough for mainstream financial publications.

When it comes to investing in equities, studies suggest it is the beta – the big picture idea – that is more important than the alpha – the individual security. In other words identifying sectors that have been beaten up but are beginning to trend higher, buying those sectors while they are cheap, and then sitting on your hands until the trend changes is the application of non-intervention in personal finance. Of course, stocks should only make up a small percentage of your asset allocation model as we have touched on numerous times here at Zenconomics.

We have also harped on the importance of non-intervention in economics on many occasions. The ‘free market’ is an incredibly complex web of exchanges created by individuals who, by acting of their own free will, engage in production and commerce. The free market sets price levels based on individual activity and these prices fluctuate in response to continued individual activity. This economic system is self-regulating and to intervene in any capacity is to distort the entire free market system.

Simply put, free markets require absolute non-intervention by definition. The moment you intervene is the moment the market ceases to be free. Somehow, however, we have accepted the idea that Ivy League graduates should be pulling strings and pushing levers to manage the economy. We put these “experts” in front of expensive computers in big government buildings and tell them to keep unemployment low and prices stable as if the economy were a simple child’s game of connect the dots. And we pretend like this is still a capitalist system.

I suspect we put up with intervention in our economy largely because our educational system conditions us to accept intervention every step of the way. Public education in the United States very clearly emphasizes invasive authoritarianism. Instead of allowing children to learn naturally by pursuing their interests, discovering their passions, and cooperating with one another, the public school system segregates children by age and lumps them into a classroom where they are told to be quiet and listen to the teacher. In school students are told what they will learn, when they will learn it, and they are permitted very little free time during the day. Then they are loaded with homework that eats up their free time after school and prevents them from pursuing their own interests. Their textbooks are homogenous, boring, and designed to be read and memorized unquestioningly. The textbooks have also been scrubbed by the Department of Education to ensure no politically incorrect material can be found on the pages. In this environment learning is seen as something to be forced on students – such is the interventionist approach.

Intervention in education promotes group-think and dependency. Non-intervention promotes self-education and self-responsibility. There is a reason why many wise and ‘successful’ people prior to the 20th century never went to school at all and it is the same reason that numerous prominent people since the 20th century dropped out of school before becoming ‘successful’ in their own way. Even Albert Einstein loathed the interventionist approach to education: ”Education is what remains after one has forgotten everything he learned in school”, said he.

Which brings us to the role of government. Regulatory democracy works hand in hand with coerced collectivism to convince people that government is some type of benevolent service organization. People have been sold the notion that the U.S. government should take care of everyone from cradle to grave, regulate all aspects of the economy, prohibit immoral or unhealthy behavior, maintain a military empire with 300 bases in 170 countries, and fight wars on poverty, drugs, and terror.

Government is more than happy to oblige by intervening in virtually every aspect of your life and the lives of those living in foreign nations that become a “strategic interest” for the military-industrial complex. The corporate news stations (CNN, MSNBC, Fox News) work diligently to promote public support for all of this government intervention and their success is nothing short of amazing. The corporate media’s marketing genius is the promotion of the left-right paradigm. These stations divide the public into a “blue” team and a “red” team and they promote the idea that the other team is the enemy. The fact is each “team” supports government intervention on a massive scale; they differ only in the prescription and distribution of this intervention.

The predictable result of all this government intervention is poverty and misery as the economy is wrecked and the currency is destroyed. F.A. Hayek pointed this out way back in 1944 in ”The Road to Serfdom” as central planning and government intervention really began to rise in popularity.

How different is this from that which is truly American? The American vision was a divergence from the mercantilist statism and bureaucratic despotism of the ancien régime. The best of the American revolutionaries envisioned a society free from politics and indeed free from any visible signs of government. They called this Liberty.

“Government is not reason; it is not eloquent; it is force”, said Washington. “Like fire, it is a dangerous servant and a fearful master.”

Sure the American experiment wasn’t perfect – there were prejudices and inconsistencies – but there was a vibrant and healthy respect for non-intervention. We would be wise to rekindle this understanding and respect.

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and the paradigm shift underway please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.