Archive for November, 2011

The Panic of 1893

Antony — November 16, 2011

As a side-effect of reading our latest book “The Driver”, I have recently been doing some reading on monetary history. In particular, I have been trying to understand the conditions surrounding the Panic of 1893, the period in which the book is set. After a bit of reading, it becomes clear that the history of money is a story of chronic government meddling.

Pre-Fed U.S. monetary history has a very romantic feel, with battles between gold and silver proponents, and gold rushes and silver mining expansions affecting money supplies. But the economic principles are the same as today, with politicians seeking to inflate the money supply battling advocates of sound money. These battles were manifested in debates on bimetalism, whether gold and silver should both be recognized as money, and whether the government should keep their prices in a fixed ratio (a form of price control).

In the aftermath of a previous crisis, the Panic of 1873 (during which silver was de-monetised in favour of gold), proponents of loose money succeeded in introducing the Bland-Allison Act in 1878, which obligated the U.S. treasury to purchase silver at a high prices. Combined with this, large silver discoveries in the west (especially Nevada) resulted in an expanding money supply. This caused a boom in capital investment (in this case railroads) through the 1880s. In 1890, further fuel was added to the fire with the Sherman Silver Purchase Act, which required the US treasure to purchase increasing quantities of silver with notes backed by either silver or gold. Since the silver was purchase at artificial prices, shortages resulted, as with all price controls. Holders of silver rushed to trade in their silver for notes, which could then be redeemed for gold. The good times continued until the treasury ran out of gold in 1893.

This episode is a perfect example of Austrian Business Cycle Theory. A manipulated expansion of money and credit leads to an unsustainable boom in capital markets, which must inevitably crash. The pattern is almost exactly the same as our recent housing bubble, with the booming capital sector being housing rather than railroads. A key difference, however, is the increased degree of control that the state has over money these days, with central banking, fiat money, and the globalised financial institutions. This makes it more difficult to see the manipulation for what is is, gives the state more power to keep the artificial boom going for longer, and makes the unwinding more unpredictable and potentially more devastating.

Of course the solution to these problems is to allow the free market to function without interference, particularly when it comes to money. Advocates of sound money usually favour a return to gold, in some form. But it is worth keeping in mind why gold is valued; it is because that is what free markets have chosen as money historically. And this is what is important, not gold itself as a metal, but the freedom to choose it.

At least we’ll never be alone

Dave Killion — November 15, 2011

 

I recently heard  someone say something to the effect that the poor will always be with us, which I don’t think is true, but I’ve heard variations on the sentiment many times in my life and remember it as a bible quote from my Catholic upbringing. I went to search for the verse, and I was surprised to find two versions. The one I remember best is Mark 14:7 –

“The poor you will always have with you, and you can help them any time you want. But you will not always have me.”

The other verse is Deuteronomy 15:11 –

“There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land.”

While I was researching these verses, a nearby TV broadcast something about Occupy Wall Street. I was amused to think how annoyed the 99% would be to realize that while a day may come that there are no poor people in any meaningful sense of the word, the 1% will always be with us.

So you may not even do your best?

Dave Killion — November 14, 2011

Unintended consequences

Dave Killion — November 13, 2011

This is a crosswalk in Reading, Pennsylvania that was put in place when a local intersection was redesigned for a Target store. The wheelchair ramp encroaches into a nearby slope, necessitating a retaining wall, and the public is protected from falls by a fence on top of the retaining wall. All in all it looks like a job well done, but one has to ask; why is there a crosswalk here? Once you cross, there is nothing to do but turn back and cross again. But this is what you find at the other end of the cross walk –

As Matt Johnson points out at Greater Greater Washington, this is likely the result of adherence to various municipal and federal regulations. I could go on to denounce the relevant bureaucracies for being rigid and uncomprimising, but not only would that be glib, it would be wrong. The bureaucrats in question were likely embarrassed by this turn of events, but they are dealing with laws, and that means they have no discretion in cases such as this. One shudders to think of the resources wasted in this useless construction, but waste is what happens when government reaches beyond its core responsibilities of enforcing prohibitions against force and fraud, and attempts to mandate outcomes that some interest group finds desirable.

Can you hear me now?

Dave Killion — November 12, 2011

Government regulation - the reason you don't own anything this cool.

When it comes to their mobile carriers, Canadians get treated worse than an Occupy Oakland protester. Given that mobile phone service providers manage to thrive in even the most difficult circumstances, how can anyone take seriously arguments that competition must be managed by the state? And as to the benefits of competition, witness

“When it comes to mobile carriers, consumers may have four major choices (for now), but they’re all starting to look the same — and that isn’t a good thing. But a new provider, Republic Wireless, headquartered in North Carolina, is shaking things up with a rather unbelievable $19 a month no-contract plan. That’s $19 not just for unlimited calling and texting, but mobile data too.”

My goodness. Is this what the Canadian Feds are protecting us from? I think it’s past time mobile carrier service regulation was taken out of the inefficient and corrupt hands of the state, and handed over to the private sector.

Shake it off

Dave Killion — November 11, 2011

Giddyup

I recently came across this image, having not seen it since 2009, when it was installed near the famous Little Mermaid sculpture in the city harbour of Copenhagen during the climate conference. It was called ‘Survival of the Fattest’, and came with an inscription –

I’m sitting on the back of a man.
He is sinking under the burden.
I would do anything to help him.
Except stepping down from his back.

At the time of the installation, artist Jens Galschiot said the piece symbolized the unwillingness of the West to scale back its consumptive way of life. However,  Jesse Walker discussed the piece for Reason in December 2009, and points out the piece was originally conceived as a protest against the industrial world’s hesitation to walk the walk on its free-trade rhetoric.

I can’t give the piece high marks for subtlety, but the artist is right that there is one group of people hampering another. In my mind, I think of this piece as ‘The Burden of the State’.

Considering self-defence

Dave Killion — November 10, 2011

Sam Harris (about whom I know nothing other than he is an author) has a fascinating blog post called “The Truth about Violence“, in which he lists and explains three principals of self-defense –

Principle #1: Avoid dangerous people and dangerous places.

Principle #2: Do not defend your property.

Principle #3: Respond immediately and escape.

These may read like principles well-suited to a chickenshit, but Harris is not arguing against self-defense. Rather, he wishes us to understand the dynamics of violence, and to recognize that there is more to self-defense than mastering a martial art, or getting trained in the use of firearms –

“It may seem onerous to prepare yourself and your family to respond to violence, but not doing so is also a form of preparation. Failing to prepare is, generally speaking, preparing very well to do the wrong thing. Although most of us are good at recognizing danger, our instincts often lead us to behave in ways that increase our chances of being injured or killed once a threat emerges.”

On the whole, I think Harris is a little too quick to dismiss stand-and-fight, but I feel much better about that conviction now that I’ve read his post.

Wrong about rights

Dave Killion — November 9, 2011

On the other hand, I think this guy has a point.

Steps are being taken to remove “Occupy” protesters from public parks in Toronto, Victoria, Vancouver, London and Calgary. Where ever I find articles on this topic, I find commenters arguing against the legitimacy of these attempts on the grounds that Canadians have a right to protest. Libertarians know that this conveys a fundamental misunderstanding of rights. I have a right to free speech, but no one is obliged to provide me a printing press. I have a right to worship the god of my choice, but no one is obliged to provide me a church. And I have a right to protest, but no one is obliged to provide me a public park to use as a forum.  So pack up those tents, folks. You got no right!

 

 

A tragedy of the commons

Dave Killion — November 8, 2011

How about saving some crappie for the rest of us?

My membership in the Victoria Fish and Game Protective Association includes a subscription to The Outdoor Edge. I was saddened to see this letter to the editor in the most recent edition –

“A few years ago, you published an article on local fishing spots in the lower mainland of BC. One of the lakes you mentioned was Hatzic Lake, just east of Mission City, and indicated that it was noted for its large number and size of black crappies.  The following spring and every year since (and all year long) certain people have fished the lake from early morning until late in the evening and kept everything they caught. There are now few fish left in the lake.

There are no plans to restock Hatzic Lake for various reasons and to see a good spot totally ruined by a small group is rather disheartening. Please don’t tell where the good areas are – let people find them on their own and possibly we will be able to keep some of the good areas good for a little longer.”

In response, here is a letter I have written to the Outdoor Edge –

“I don’t do a lot of fishing, but I know from experience there are few things as exciting in a person’s life as catching that first fish. Because of that, I am especially fond of places where catching a fish isn’t too, too difficult for a novice, and like the author of the above letter, my heart aches over the loss of such spots. However, the writer does Outdoor Edge a disservice by holding the magazine responsible for this particular tragedy. The overfishing of Hatzic Lake is clearly yet another failure of government stewardship. Had the lake been privately owned and the owners permitted to profit from it, black crappie would continue to provide exciting sport for many, rather than briefly filling the freezers of a selfish few. So long as resources are left in the commons to be managed by politicians driven principally by their pursuit of office, such incidents will occur over, and over, and over again.”

Preface to atrocity

Dave Killion — November 7, 2011

Stormcloudsgathering has posted a video on Youtube called ‘Gun Toting Liberals‘ –

The focus of his message is that gun ownership is important chiefly as a means for society to defend itself against tyrannical government. The videographer supports his thesis by pointing out historical examples of populaces being disarmed by their own governments prior to being brutalized. What occurs to me is that in all these examples, citizens submit to being disarmed. Does this mean that an armed citizenry presents merely an inconvenience to aspirational tyrants, or are there numerous examples of the people resisting gun control? It seems to me that being armed is a necessary, but not sufficient, prerequisite of a free nation.