Is it immoral to use food crops for fuel?

The recent surge in production of bio-fuels (fuel derived from food crops such as corn, soy, and sugarcane) both in the U.S. and around the world has sparked a debate about whether such production should be promoted or even permitted. Aside from arguments about the energy efficiency of bio-fuels, the latest criticisms have arisen from the recent rise in prices of staple foods, such as the corn used to make tortillas in Mexico. Far away from the corn fields in Iowa, yet linked by the global economy, some have expressed anger over the rapid increase in cost of a commodity they purchase daily for their sustenance. In many third-world countries, citizens have been shielded from the full effects of these cost increases through government price controls and subsidies – but these programs are straining to maintain the illusion of cheap food in the midst of a worldwide jump in food prices. Ironically, in many industrialized nations, governments have been pressured to use tax dollars to “stimulate” the production of bio-fuels through grants for bio-fuel factories, infrastructure, and subsidies for farmers – with the intent of reducing our dependence on petroleum fuels.

Key Points

• Increased use of food crops for fuel production has reduced the amount sold for human consumption, resulting in price increases (supply & demand).
• Where bio-fuels have been more profitable than selling crops for food, some farmers have chosen to sell their crops to the fuel producers.
• Government price controls on food commodities have limited the profit possible to farmers, incentivizing them to seek other markets for their product.
• Government subsidies for bio-fuel production have distorted the economic value of food crops by creating an artificial demand (using tax dollars to stimulate production in the place of buyer dollars, which would demonstrate true demand).
• Acute shortages of subsidized bread, which is sold at less than one U.S. cent a loaf, have caused hours-long lines and violence at some sites in poor neighborhoods in Egypt in recent weeks.
• The supply of subsidized bread has been decreasing. Many people in Egypt believe subsidized bakeries sell some of their flour on the black market rather than make bread.
• Egypt has long been one of the top importers of U.S. wheat, but its U.S. purchases have been falling as it searches for cheaper sellers on the world market, where prices have tripled in the last 10 months.
• Some have criticized the use of food crops for fuel as “uncaring” and an example of “lopsided priorities”, due to the effect it has had on food prices, making it more difficult for poorer people to purchase basic foodstuffs.

Commentary

Not surprisingly, those who are suffering the consequences of government manipulation of the free market are the first to cry for the government to manipulate it further. This mentality believes that all costs are determined by the power of huge corporations, greedy middlemen, and government regulators – thus creating the illusion that the economy is simply a constant struggle between greedy businessmen and “the public” (represented by government protectors), waging price wars, with both sides continually seeking the upper hand. This illusion, during times of economic hardship, leads to the cry for government to be given greater powers to control commerce and trade, and to set “fair” prices.

What is not seen or heard in this debate is the fact that in a free exchange, the price of the product is decided mutually by the buyer and seller. Absent force, neither party can demand the other buy or sell the product – they must mutually agree. Thus, a general rise in the price of a commodity would indicate that someone is willing to pay more for it, and is doing so. Attempts to manipulate such an exchange through force will always result in its collapse, for the buyer will refuse to sell (reducing the amount of product available) and the seller will refuse to buy (creating a surplus in product available). These forces cannot be changed by government edict, and those who clamor for the force of government to be exercised to impose their opinions on what should be sold for what purpose and for how much will reap the consequences of history – shortages, recession, and general economic collapse.

In a real sense, what is being demanded by those who condemn the use of food crops for bio-fuel, is that each individual farmer should not be allowed to sell the fruits of his labor for the best price he can ask. He should be constrained to use his crops only for the benefit of those determined to be “in need” – by selling it only for food use and only at a price that is deemed “fair” by those who are demanding it from him. Such a policy can only be implemented through force, and has only one possible outcome. Eventually, the farmer will cease to produce when it is no longer profitable for him to do so under the coercive terms of the “public good” – and when that happens, there will be no food to buy at any price, no matter how great the need.

In the case of food crops and bio-fuels, both sides of the equation have been manipulated by tyrants – those who wish to control the direction of the fuel industry, and those who wish to mandate the value of a simple food product. Both distortions have aggravated what might have a been a simpler development in our modern economy. When men are free to exchange, temporary disruptions like those created by the invention of bio-fuels are quickly adjusted to, and self-interested people are quick to fill the needs and desires of others, for a profit. And that motivation, whether you revile it or not, is truly what fuels the economic activity of every person on the planet.

Action Steps

• Read “Capitalism and Freedom” by Milton Friedman (available in the F.C. Primer)
• Ask a local farmer what determines the sale price and use of the crops he produces
• Research the recent trends in the commodity markets – do you know the cost of the sources of your food?
• Write your congressman and ask his/her opinion about the U.S. Farm Bill
• Read “The Law” by Frederic Bastiat – How does the concept of “legal plunder” apply to the issues of production, free exchange, government subsidies, price controls, and other economic manipulation?

Principles: 6, 7, 8, 9, 11


References

Indian minister attacks biofuels
BBC - March 26, 2008
http://news.bbc.co.uk/2/hi/south_asia/7315308.stm

Egypt tries to tackle deadly bread crisis
CNN - March 4, 2008
http://www.cnn.com/2008/WORLD/africa/03/24/egypt.bread.riot.ap/index.html?eref=rss_world

Socialism vs. Capitalism: Which is the Moral System?

http://www.ashbrook.org/publicat/onprin/v1n3/thompson.html

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.

The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.

Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.

The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Bennito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: "Common good comes before private good." Fascism, said Mussolini, is "a life in which the individual, through the sacrifice of his own private interests…realizes that completely spiritual existence in which his value as a man lies."

Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.

Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.

This is one of the clearest, simplest, and most thorough essays on the difference between Capitalism and Socialism I have ever read. It also is an excellent defense of the morality of Capitalism - a defense that few intellectuals have ever proposed (other than Ayn Rand).

The legacy of Milton Friedman, a giant among economists

http://www.economist.com/business/displaystory.cfm?story_id=8313925

Directly or indirectly, Mr Friedman brought about profound changes in the way his profession, politicians and the public thought of economic questions, in at least three enormously important and connected areas. In all of them his thinking was widely regarded at the outset as eccentric or worse.

The first of those areas is summed up by “Capitalism and Freedom”, the title of a book published in 1962 (see our review). To Mr Friedman, the two were inextricably intertwined: without economic freedom—capitalism—there could be no political freedom. Governments, he argued, should do little more than enforce contracts, promote competition, “provide a monetary framework” (of which more below) and protect the “irresponsible, whether madman or child”.

To show where Mr Friedman thought the limit of the state should lie, the book lists 14 activities, then undertaken by government in America, “that cannot...validly be justified” by the principles it lays out. These include price supports for farming; tariffs and import quotas; rent control; minimum wages; “detailed regulation of industries”, including banks; forcing pensioners to buy annuities; military conscription in time of peace; national parks; and the ban on carrying mail for profit.

Celebrating Income Inequality

http://capmag.com/article.asp?ID=5005

Democrat and Republican candidates for President are debating one another on nearly every issue--but nearly all are united on one thing: America faces a crisis of "income inequality." The rich are getting richer, the refrain goes, while the poor and middle class are held back by stagnating wages, lousy schools, and growing healthcare costs. The solution, we are told, is more government intervention: spend more on education, provide "universal healthcare," and force employers to raise wages through minimum-wage increases and union protection legislation.

But all of this outcry is based on a false premise--that income inequality is bad. While some of the problems critics point to are legitimate concerns, income inequality is not. Income inequality is a natural and desirable part of a free, prosperous society.

In America, equality should mean only one thing: freedom for all. If business and wages were deregulated, we would see a dramatic rise in economic opportunity. If education and medicine were left free, with America's businessmen, doctors, and educators liberated to offer education and medicine at all different price points, we would see quality and price improvements like those for computers or flat-panel television sets. But these benefits of freedom require that we recognize the moral right of each individual to enjoy whatever he produces--and recognize that none of us has a right to something for nothing.

Great essay from Alex Epstein of the Ayn Rand Institute. I love topics like this that catch people in the contradiction of their thoughts. Most people instinctively condemn "inequality", but in this case, when they apply their minds to why that inequality exists and what is being proposed to "fix it", they find some difficult pills to swallow. This is yet another example of the two paradigms: one that is risk averse, wanting protection from one's own weakness, and the other that embraces risk and the responsibility that comes with it (and its ensuing rewards).

Too many people see only the rewards gained by some, and covet them. Not understanding why they have those rewards (e.g. proof of their profitable actions), they take on the mentality of the victim, saying that they were unfairly gained, either by unfair competitive circumstances or at the expense (exploitation) of the poor victim.

Introduction to Radical Capitalism - Part III

http://zambia.co.zm/articles/radical_capitalism3.html

There are so many people today who just invoke arbitrary rights without such recourse to logic and reality, which is why we have great confusion in society today, with rights being randomly granted to anything, from animals to trees to God and to just about anything else. Without integrating the factors that make the whole concept of rights viable, such irrational arbitrariness is inevitable.

In our upcoming constitution, we can already see this evidence of divorcing rights from an irrefutable foundation (property rights) which can be derived from common sense, as we have shown. We have had people suggesting all kinds of special rights based purely on their feelings of sympathy. Thus we are going to have special rights for the poor people, for example, which government will be obliged to meet by forcefully taking some property from those who are less poor.

There are no special rights that anyone can claim. Every human being has certain inalienable rights and these are built on the foundation of the principle of property ownership and not on whim or sympathy. This is why the dichotomy of “individual rights versus societal rights” is a false one based on a similarly false reification of society. And it is why the acceptance of property rights leads logically to the absolute acceptance of capitalism and the absolute rejection of socialism and all its variant or resultant forms that reject the sovereignty of the individual in his own life and over his own property (communism, fascism, etc).

This is currently the last of the series - I truly hope Mr. Chisala will continue this particular series of essays, as I have found them very approachable and useful in sharing with people who are misinformed about Capitalism. Chanda brings up the issue of rights in this essay - a crucial topic for any debate on government and the philosophical basis for any moral society. He demonstrates the relationship between rights and property, and shows how a philosophy's definition of rights shapes its entire societal system.

Introduction to Radical Capitalism - Part II

http://zambia.co.zm/articles/radical_capitalism2.html

You suggest that a better method is to simply be “pragmatic”. By this, I believe you mean that we should simply look at what works (or has worked) in practice, for our economic ends, and to follow that path. But pragmatism is a very poor way of guidance in life. Why? Let’s say we discover that corruption is actually good for the economy. Should we encourage corruption in the nation so that we could have economic growth? Your answer, I am sure is no. But why not? From pragmatism, it is not possible for you to simply reject corruption as a way to economic growth if statistics show that it is good for the economy.

The same can be said about slavery. One can possibly argue that some nations have had economic success as a result of using forced free labour (slavery). If pragmatism had had its way in this debate on slavery many years ago, the West would still be practicing it. Indeed there were pragmatists who saw nothing wrong with slavery since the slaves were foreigners and the human trade was helping their economy. But it was banned because a rational moral argument triumphed over mere pragmatism, as it always should. My argument against slavery is simply that you do not have the right to own or control someone else’s property – their mind and their body – and this is the same argument I use for capitalism. Pragmatism does not have a similar moral foundation to be a useful guide.

Bwana says that I should show how capitalism achieves the things that socialism wants to achieve, but in a better way, and so on. But why should I do that? Why should anyone, for example, spend time trying to show why freedom is better than dictatorship, or than slavery? That would be the pragmatic paradigm route, which we have already shown to be morally invalid. Since no one really needs to be convinced that freedom is better than slavery, or that theft is wrong, my responsibility is only to show how socialism is essentially equal to these vices (slavery or theft) – which infringe on property rights - and someone will easily make up their mind after they see this. If this is shown, there is no need to investigate whether it even has any advantages. The discussion simply closes there. Granted, some economists have shown that socialism is actually even counter-productive, but that’s just a wonderful coincidence of the nature of our benevolent universe or our good Lord – the important fact is that it’s immoral, just as slavery is immoral. Corruption has also been allegedly shown to be counter-productive from empirical evidence, but the issue still is that it is immoral, even if it was not shown to be counter-productive, and therefore it is not a valid option for a rational person or society to even investigate.

In Part II of his essays on Radical Capitalism, Chanda Chisala answers his reader's critical comments, particularly an argument for a more pragmatic approach to deciding their society's government. I am impressed with his clear, logical responses. These essays are a very good introduction to what Capitalism entails for those who are unclear or misguided on the subject.

Introduction to Radical Capitalism - Part I

http://zambia.co.zm/articles/radical_capitalism1.html

One of the most common comments one hears whenever there is a discussion on how Africa can solve its problems is this: “we have tried socialism and we have tried capitalism; neither of them have worked. It is time for us to try out a new system of economics, something invented by ourselves.”

This statement always sounds very attractive to many unsuspecting intellectuals and yet it is quite a meaningless statement. To break it down to essentials, what it actually means is this: “we have tried taking the rights of individuals to own their property from them, and we have tried letting individuals keep their rights of owning their property; neither has worked. It is time for us to try out a new system, something invented by ourselves.”

Unfortunately, there is no “third way”. This is a question of very basic logic. Either you allow a person to be an owner of his property or you forcefully assume ownership and control of his property (through government). The former is the essence of capitalism and the latter is the essence of socialism, whether you like those two terms or not.

This is part of an excellent series of essays on Radical Capitalism, written by an editor in Zambia. I stumbled upon these writings by accident, and quickly realized they were very articulate arguments in favor of capitalism. I was further surprised to find out that they were written in the context of a public debate happening right now in Zambia concerning the organization of their society and government! It seems they are in the process of creating a new Constitution, and this writer is advocating the adoption of capitalism as the moral basis of government for Zambia.

AMA is Wrong About Medicare

http://capmag.com/article.asp?ID=4793

Under current restrictions, it is illegal for the doctor to accept a patient's payment for any amount over the government's approved reimbursement for a service covered by Medicare.
The government also prohibits the patient from being reimbursed by Medicare if the patient chooses to privately contract for services with a doctor who does not accept Medicare.

This is a textbook example of why it's wrong for the government to be the middleman for your dollars. If you were freely exchanging your dollars for medical services, you would be within your right to choose which services, which provider (and thereby, what cost) you prefer. But it's not your dollar anymore, it's a dollar that has passed through the hand of government, somehow "sanctifying" it from the taint of profit or greed before being handed to the provider of services you desire.

Unfortunately for you, because you are not the one exchanging the dollar for services anymore, you no longer have the power to negotiate the terms of that exchange (unlike your ability to choose which breakfast cereal you purchase - ironically a real factor in your health). Your options for exchange consist of trying to game the tax system to your benefit, and punching a ballot every now and then to decide who will be your personal benevolent tyrant for a season.

Also working against you is the fact that since your money has been pooled together with everyone else's before reaching this point of medical services, it falls upon the representatives of the People to make sure your best interests (as they define it) are served in this exchange. Unsurprisingly, every incident that brings harm to one becomes a reason to legislate for all - since the only way, in this situation, to keep harm from coming to the one again is to codify the incident into preventative law, transferring the effects of that exchange from one to all. How else could a victim be protected if the terms of their exchanges are dictated by government?

The thousands of pages of directives and regulations dictating the use of what has now become "public money" on your behalf is no different than a hypothetical "government-sanctioned grocery list", posted on the doors of every store, specifying the items you may buy, at what price, and from whom. It would also be illegal in this bizarro world for the grocer to accept any of your personal dollars for his business with you would be funded by the state. Only a selfish, greedy rich person would ever need or want more than the benevolent tyrants had provided.

Would you be surprised to see the shelves eventually sparse and then empty for lack of products to sell? (as all the producers of products chose to do business elsewhere where they could set their own prices with the buyers) Would you be surprised to see lines of disgruntled shoppers, each carrying their apportioned groceries through the "free checkout line"?

We can't forget that medical products and services are not intrinsically different from any other product or service. They must to be bought and sold, and replacing personal choice with government fiat doesn't "wash the (supposed) stain of profit" from the product one buys. That doctor must choose to provide a service, just like the hairdresser - or he is a slave. Those drugs must be manufactured by human beings, who, devoid of the right to choose their incentive, will cease to do so and seek other means of providing for themselves. Treating medical care any different than "food care" results in a world where food is cheap (for the poor), plentiful (for the multitudes), and profitable (for the producers) - while medicine is expensive, scarce, and undesirable to produce.

And don't tell me health care is different because we need it to survive. Starvation is worse than dying from cancer on my list...

Economists on the Loose

http://www.CapMag.com/article.asp?ID=4991

First, let's establish a working definition of free markets; it's really simple. Free markets are simply millions upon millions of individual decision-makers, engaged in peaceable, voluntary exchange pursuing what they see in their best interests. People who denounce the free market and voluntary exchange, and are for control and coercion, believe they have more intelligence and superior wisdom to the masses. What's more, they believe they've been ordained to forcibly impose that wisdom on the rest of us. Of course, they have what they consider good reasons for doing so, but every tyrant that has ever existed has had what he believed were good reasons for restricting the liberty of others.

Tyrants are against the free market because it implies voluntary exchange. Tyrants do not trust that people acting voluntarily will do what the tyrant thinks they ought to do. Therefore, they want to replace the market with economic planning, or as Professor Blinder calls it — industrial policy.

A short and simple essay on the basic philosophy of the free market economy vs. central planning/industrial policy. I love Walter Williams ability to concisely demonstrate the mindset that inspires both the capitalist and socialist movements.

Where Michael Moore is Wrong

http://www.realclearpolitics.com/articles/2007/07/where_michael_moore_is_wrong.html

America's medical system has problems, but profit is the least of it. Government mandates, overregulation and a tax code that pushes employer-paid health insurance prevent the free market from performing its efficient miracles. Six out of seven health-care dollars are spent by third parties. That kills the market. Patients rarely shop around, and doctors rarely compete on price or service.

Private competitors innovate or die. Government workers do what they did last year. That's why I want the private sector to provide my health care. Pursuit of profit will give us our best medicines and medical devices.

I'll pay you $1,000 if you can name one thing government does more efficiently than the private sector.

Third in a series on articles by John Stossel on his interaction with Michael Moore. In it he disputes more claims of how government does a better job of providing services than the private sector. Moore's popular belief that certain services shouldn't be "tainted" by profit is deceptive - and attractive to those who don't understand what profit truly is.

Bill Gates Needs an Econ Course

http://www.realclearpolitics.com/articles/2007/06/bill_gates_needs_an_econ_cours.html

At Harvard, Gates said, "We can make market forces work better for the poor if we can develop a more creative capitalism -- if we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities."

He misses the point. Gates faults the free market for problems caused by governments. What constricts the reach of the free market is the state. Gates seems oblivious to all the ways that governments here and abroad cripple enterprise. In poor countries, corrupt bureaucracies smother entrepreneurship while enriching cronies. The lack of formal property rights and stable law keeps average people from accumulating capital. So the poor stay poor. That's what causes "scarcity of clean water" and kills "children who die from diseases we can cure."

John Stossel takes Gates to task for confusing the root causes of poverty. Once again, the only-somewhat-informed public debate looks at free markets, looks at suffering, and then determines that the free market has failed, and therefore the State should intervene (or more accurately, since it has been intervening already, it should improve its intervention).

Gates' statement at the end of this article, "We also can press governments around the world to spend taxpayer money in ways that better reflect the values of the people who pay the taxes" is especially telling. The idea that somehow problems would be solved if we just did the wrong thing in a better way is futile. Ignoring the underlying truth that individuals know best how to spend their money does the poor a disservice. The arrogant assumption that the poor - or anyone - would be better off if a benevolent dictator would take their resources and then wisely dispose of them for the greatest benefit of their former owner is a gross deception. I'm baffled that such an idea is so widely accepted...

Cartels: Economists and Central Bankers

http://www.lewrockwell.com/north/north546.html

Economics as a science is seen by its practitioners as having progressed by identifying more and more institutions as governed by personal self-interest. Yet when economists come to banking and education, they refuse to extend this traditional analysis. They either remain silent or invoke the mantra of public interest.

You will search in vain for a chapter on education as an oligopoly within the context of tax-funding, laws mandating education up to age 16, and government licensing of college-accreditation agencies. Somehow, economics textbook authors skip over any analytical discussion of this, the largest sector of the American economy.

Gary North asks some pointed questions in this essay, where he reveals the lack of critical examination on the part of economists when it comes to things like the Federal Reserve. He outlines the obvious contradictions and deceptions being practiced that for some reason, no one ever bothers to question (don't ask, don't tell).

The Romantic Illusion of Universal Health Care

I found all these short essays on CapMag on the same day - so it seemed appropriate to bundle them together and share them here to counter the ignorance I hear every day about Universal Health Care. It's gotten to where the phrase is used as a litmus test - you're either for it or against it (like the abortion issue). Even more perversely, the public consensus has judged that UHC is inherently good (who could possibly be against caring for people?), it is inevitable (everyone else is doing it!), and it is only being held up by selfish, heartless, greedy people (if you're not in favor of the Patriot Act, you must be a traitor!).

Universal Health Care Freedom on the Fourth of July
http://capmag.com/article.asp?ID=4983

The talk about a "right" to health care really means that no one should have the right to any health care at all except through the government. As we celebrate the Fourth of July this year we must remember that our right to manage our own health care as we see fit is as vital to our liberty as freedom of speech or freedom of the press.

Why Health Insurance Should Not Be Universal
http://capmag.com/article.asp?ID=4984

Power-hungry politicians feed off the irrationality of the citizenry. If the citizenry were more rational, there would be no place in the political system for politicians who value power over freedom and justice. Today's problems with medical care are the fault of the people who want the results of capitalism while instructing their leaders to install more socialism.

All Power to the Post Office
http://capmag.com/article.asp?ID=4981

During a recent interview, a talk radio host told me that all private health insurance should be eliminated in order to give us all a reason to work together to make sure the government runs a good health care system.
A better analogy would be that conditions in our prisons might be expected to improve if we were all required to live in them. Socialists and some Liberals would find this level of government-enforced uniformity to be a noble sacrifice to which all citizens must submit. Many Conservatives would reluctantly agree—but suggest a voucher system that would allow us each to select the prison cell of our choice.

Health Care's A Mess--So What's the Solution?
http://capmag.com/article.asp?ID=4980

It's better to consider the possibility that the market didn't fail us in medical care...but it was never allowed to function. If you don't want more of the same, which universal government coverage and control will provide, then consider something radically different: freedom in health care.

Live and Let Live

http://jewishworldreview.com/0707/stossel070507.php3

That same week I happened to interview filmmaker Michael Moore for "20/20." Moore wants government to monopolize health care. His new film, "Sicko," argues that Canada and France approach paradise because their governments provide health care and more. This brought him standing ovations in Cannes.

"But government is force," I said to him. He was incredulous.
Michael Moore: Why do you see it as force?
Me: Because government takes money with force from people and gives it to others.
Moore: No, it doesn't, actually. The government is of, by, and for the people. The people elect the government, and the people determine whether or not they'll allow the government to collect taxes from them.

Is it really necessary to explain that government is force? When the Salvation Army asks you for a donation, you are free to say no, and you suffer no consequences. When the U.S. government demands a tax return and a check on April 15, you can't say no and go about your business. You comply or face fines or imprisonment. Yes, you get to vote for candidates periodically. But having an infinitesimal say in who will coerce you doesn't change that fact that they are using force.

John Stossel is very good at identifying the principles that most people miss when discussing the latest hot-button issues. The universal health care debate is full of misdirection and illusion, and a lot of passionate people championing popular causes while ignoring the foundation of their philosophy. Michael Moore's total absence of awareness about the true nature of any collectivist policy leaves me dumbfounded (yet not totally suprised). When people like him are making sweeping statements in the media that ignore principles, I get worried - it means the public debate is fueled by ignorance.

Socialism, Free Enterprise, and the Common Good

http://www.hillsdale.edu/imprimis/2007/05/

In chapter 21 of St. Matthew’s Gospel, Jesus proposes a moral dilemma in the form of a parable: A man asks his two sons to go to work for him in his vineyard. The first son declines, but later ends up going. The second son tells his father he will go, but never does. “Who,” Jesus asks, “did the will of his father?” Although I am loath to argue that Jesus’s point in this parable was an economic one, we may nonetheless derive from it a moral lesson with which to evaluate economic systems in terms of achieving the common good.

Modern history presents us with two divergent models of economic arrangement: socialism and capitalism. One of these appears preoccupied with the common good and social betterment, the other with profits and production. But let us keep the parable in mind as we take a brief tour of economic history.

This essay is adapted from a speech delivered at Hillsdale College on October 27, 2006, at the first annual Free Market Forum, sponsored by the College’s Center for the Study of Monetary Systems and Free Enterprise.

It makes a thorough argument about what I have often observed in the struggle between capitalism and socialism - that of the difference between the public perception of a philosophy and the actual consequences of the same.

The Best Way to Save the Earth? Capitalism

http://www.lewrockwell.com/murphy/murphy112.html

Although the friends of the planet might disagree on what they’re for – some care most about the quality of the air we breathe, some want to preserve endangered species, and some extremists wish human beings would leave the scene altogether – they all know what they’re against: capitalism.

Whether the alleged solutions are taxes on gasoline, fines for smokestack pollution, or stepped up enforcement of fishing quotas, the common thread is that free individuals cannot be entrusted to make wise decisions with their private property. Benevolent politicians (taking their cue from the environmentalist experts, of course) must use the power of the government to alter people’s behavior.

So far I’m saying nothing controversial. The tradeoff between jobs and the spotted owl is familiar to all, and indeed the typical environmentalist relishes the material sacrifice necessary to make amends with Mother Nature. (After all, you can’t properly atone for past sins without a little suffering.) But what most people don’t realize is that unbridled capitalism is the best way to achieve the environmentalists’ objectives.

Why are people so easily lead to believe that the government and all its encumbent bureaucracy can do a better job than the self-interested, ruthlessly efficient free market? Has anyone checked the historical record?

I love the irony in this article - those crying for the protection of nature are at the same time demanding that no one have any vested interest in nature (i.e., private ownership), but somehow they expect other people to value natural resources the same way they value their own property. It just doesn't work. All those good intentions are powerless - which is why those with such intentions look to the power of government to force people to act as their intentions would have others act.

Panama Has No Central Bank

http://www.mises.org/story/2533

For a real-world example of how a system of market-chosen monetary policy would work in the absence of a central bank, one need not look to the past; the example exists in present-day Central America, in the Republic of Panama, a country that has lived without a central bank since its independence, with a very successful and stable macroeconomic environment.

The absence of a central bank in Panama has created a completely market-driven money supply. Panama's market has also chosen the US dollar as its de facto currency. The country must buy or obtain their dollars by producing or exporting real goods or services; it cannot create money out of thin air. In this way, at least, the system is similar to the old gold standard. Annual inflation in the past 20 years has averaged 1% and there have been years with price deflation, as well: 1986, 1989, and 2003.

This is a short essay about the argument that we don't need a "federal reserve" or central bank. It doesn't go into a lot of detail about the pitfalls of a central banking system and fiat currency, but it references them clearly. National financial systems can seem horribly complex - and they usually are, when a government agency, beholden to politicians, instead of shareholders, contols monetary policy. Panama provides a good example of how a free market banking system would work.

Economic Inequality: Process and Results

http://www.capmag.com/article.asp?ID=4803

... many people erroneously use income inequality as a measure of fairness. Income is a result. As such, results cannot establish whether there is fairness or justice.
... For the most part, income is a result of one's productivity and the value that people place on that productivity. Far more important than income inequality, there is productivity inequality. That suggests that if there's anything to be done about income inequality, we should focus on how to give people greater capacity in serving their fellow man, and we should make sure there's a climate of peaceable, voluntary exchange.

A good lesson about the real reasons why some people have a greater income than others (they create more value), and a very plain argument for why redistribution of income is morally unjustifiable.

Losing Sleep over the Trade Deficit?

http://www.capmag.com/article.asp?ID=4897

I'm told to worry about the trade deficit.

Commentators and populist politicians are wringing their hands. The trade deficit is a "malignant tumor in the intestines of the U.S. economy," says Pat Buchanan. Lou Dobbs is very upset that "We're borrowing about $3 billion a day just to pay for our imports"!

Economists had taught me that the trade deficit is not a big deal. (The budget deficit may be a big one, but that's a different issue.) But with all the pundits and politicians alarmed, I began to wonder if I was out of touch.

Then I thought about my local supermarket. I buy stuff from the Food Emporium every week. I spend thousands of dollars a year there. But the supermarket never buys anything from me. Not one thing...

John Stossel teaches a simple principle of economics clearly, and debunks the fearmongering of politicians and pundits.

Who is Gouging Whom?

http://www.capmag.com/article.asp?ID=4929

Last Wednesday 79 members of the House of Representatives introduced a bill instituting criminal and civil penalties on any corporation or individual found guilty of gasoline "price gouging." But the real gouger driving up gasoline prices is not the private sector, it is our government.

To "gouge" means to extort, to take by force--something that oil companies and gas stations have no power to do. Unlike a government, which can forcibly take away its citizens' money and dictate their behavior, an oil company can only make us an offer to buy its products, which we are free to reject.

Because sellers must gain the voluntary consent of buyers, and because the market allows freedom of competition, oil and gasoline prices are set, not by the whim of companies, but by economic factors such as supply and demand. If oil companies could set prices at will, surely they would have charged higher prices in the 1990s, when gasoline was under one dollar a gallon!

I'm constantly amazed at those who cry foul over what they see as "price-gouging". I can't remember the last time someone forced me to buy anything! I can think of quite a few examples, however, of times where the force of government was abused to limit my choices or take my money for the "common good".