Tom Woods on the Economics of the Minimum Wage

With Los Angeles this week raising the minimum wage to $15 by 2020, and protesters at the McDonald’s headquarters demanding the same pay, the topic has been front and center over the past week. What many people seem to love to ignore are the potentially disastrous effects a minimum wage would impose on a population. Politicians and activists who advocate for one don’t put much thought into the fact that if a floor is mandated on the price of anything, including labor, demand for that will correspondingly decrease. Thomas E. Woods in August of 2013 wrote what is, in my opinion, one of the best analyses I have yet to read about this topic. It started in response to a meme displaying enough economic fallacy to deserve a more general treatment of the subject:

Who Needs Economics: Double Everyone’s Wages by Paying 17 Cents More!
by Tom Woods

That’s what this ridiculous graphic tells us:

Even the Huffington Post refuted this one. The price increase would be much more substantial. (Though even here, HuffPo’s analysis is suspect. It doesn’t consider the effects of the price increases on the demand for the product: people would buy fewer burgers at the considerably higher prices, which means there would be less demand for fast-food workers’ labor.)

Incidentally, if you want to help poor people, why not just go ahead and do it? Why go the absurdly circuitous route of trying to make food more expensive (which in turn hurts other poor people)? Why not just seek out the working poor directly and help them? And why castigate the only institution in society that has lifted a finger to improve their material condition?

Answer: these people are all talk. They’d love to help everyone in the world, as long as someone else pays the price. These critics pay McDonald’s employees zero, but they are upset at McDonald’s, which gives them a paycheck. (Once again, I remind readers that the merits of fast food are not the issue here.)

A week or so ago I posted about how utterly wrongheaded the force-wages-up-by-wishful-thinking crowd is, and I explained how in fact wages rise. Click here for that post.

Let me add a few more thoughts to what I wrote at that link. Once wages are raised to $10 or $15 an hour, why would the critics stop? Isn’t it also tough to live on $10 or $15 an hour? Can’t we wish $50/hr wages into existence? And if we can do that, why not $100/hr?

The kind of thinking reflected in the graphic is that wage rates are really just arbitrary things, and that they can be increased without any real inconvenience to anyone. Plus, they say, it will help the economy (by stimulating consumption) if people get paid more, etc.

To give a sense of the problem with this latter claim, let’s be sports and set aside the disemployment effects of the wage increase. Let’s consider just the claim that spending more on consumer goods is what an economy needs. (So to be clear, we’re leaving out the point that higher wages don’t necessarily increase the overall spending of workers if fewer workers have jobs in the first place because the higher wages threw them out of work.)

So consider: if it’s “good for the economy” for unskilled labor to be given an arbitrary, coercively levied wage increase, would it also be good for the economy if employers quit shopping around for low prices for steel and just paid more for steel, so the steel manufacturers would have more money to spend on consumption? Would it be even better if they went out of their way to pay more for lumber than the going price? Then the lumber people would have more to spend. Would it be still better if employers paid extra for lumber, steel, labor — and everything else they needed? If it’s “good for the economy” for business firms to pay artificially high wages, why not demand that they pay artificially high prices for everything? Then the economy would be super!

You see the problem. The firm becomes less and less profitable, and less able to support employment, the more it needs to pay for inputs. And the more it pays for some inputs, the less it has on hand to pay for others. Extra money paid in wages over here means less spent on intermediate goods — and thus lower wages for other workers — over there. And the firm is less able to invest in capital equipment, which is what makes all of society wealthier.

A word, too, on the misplaced emphasis on consumption, as if that’s all an economy was about. If all we did was consume, and no one saved and productively expended any resources, the entire structure of production would grind to a halt. Just to maintain the structure of production involves saving enough to support the existing capital structure: all the stages and production processes from raw materials down to the finished product that constitute the intermediate stages of production that are left out of GDP. (For more on this, see my resource page on GDP.)

So if we were determined to “stimulate consumption,” we should be happy at the following outcome. Suppose we have a lucky person (lucky because the doubling of his wages at McDonald’s did not force him out of a job through layoffs or through the suddenly hastened automation of his job, or did not force him to do extra work, or did not take away his fringe benefits, etc). This lucky person takes some of his extra pay and buys five gallons of milk. The milk seller takes the money he earns from this sale and buys a new shirt. The shirt seller takes the money from selling the shirt and buys a few gallons of gas. And so on. All consumption. Nothing is saved or productively expended.

This means: no wages are paid (since making payroll is not consumption), no business-related bills are paid (again, not consumption), no intermediate goods are ordered by later-stage production (again, not consumption), etc. The result of all this spending: inventories of consumer goods would dwindle, and, the gross saving necessary to keep the production structure up and running not having occurred, the productive capacity of the economy would collapse. There’s your utopia of consumption.

Obviously, then, “the economy” is more than just money passing from hand to hand in exchange for consumer goods. To say that “consumption” needs artificial stimulus is a morally and economically arbitrary value judgment. Only the voluntary decisions of all market actors, based on their own preferences and coupled with a market price system, can give rise to a structure of production that balances our desires to consume with the enormously complex latticework of capital and stages of production that make our preferred level of consumption possible.

One more thing: we are faced with impossible obstacles anytime we think in terms of a “fair wage” that differs from the wage that emerges on the market.

Consider: economist George Stigler noted decades ago that in order to meet the nutritional standards of the U.S. government in 1943 least expensively, a man of 154 pounds could consume, in a year, 370 pounds of wheat flour, 57 cans of evaporated milk, 111 pounds of cabbage, 23 pounds of spinach, and 285 pounds of dried navy beans.

For a wage to be “fair,” would it have to allow only this for food? What kind of variety would be “fair”? Are movie rentals part of “fair” compensation? If so, how many per month? How many cigarettes are “fair”?

This is ridiculous. If you want wages to rise, abandon the juvenile insistence that protests and demands make economic sense. This is how wages rise.

—

Originally posted at TomWoods.com

Stockman: The Colossal Waste of Taxpayer Money That is Amtrak

In the wake of Amtrak’s horrifying disaster in Philadelphia, politicians are blaming the tragedy on lack of funding for the railroad service and infrastructure projects in general. Unfortunately, that sort of thinking ignores the real problem. David Stockman writes at his Contra Corner site:

Amtrak–A National Hazard At Any Speed
By David Stockman

This week’s tragic accident in Philadelphia should be a reminder. The real train wreck is Amtrak itself—–a colossal waste of taxpayer money and the very embodiment of what is wrong with state intervention in the free market economy. Worse still, the pork barrel politics which drive its handouts from Uncle Sam virtually guarantee that as time goes on Amtrak will become an increasing hazard to public safety, as well.

It seems like only yesterday, but one of my first assignments as a junior staffer on Capitol Hill was to analyze the enabling legislation that created Amtrak in the early 1970s. I was working for an old fashioned conservative Congressman and his first question was “how will it ever make a profit when we are running the trains from the Rayburn Building?”.

He couldn’t have been more clairvoyant. While it sponsors claimed Amtrak would be spewing black ink by 1974, the answer to my boss’ question was simple: never!

But you didn’t need to wait 43 years to prove it. There is not even a remote case that subsidizing intercity rail travel is a proper or necessary function of the state. Amtrak accounts for well less than 1% of intercity passenger miles. On every one of its 44 routes there are bus and air travel alternatives, and that is to say nothing of automobile travel —-  in cars with drivers today or in the driverless kind tomorrow.

Moreover, the evidence overwhelmingly shows that passenger trains will never be economically competitive outside of a handful of densely populated corridors. By contrast, what was absolutely guaranteed from day one back in 1970 is that a government controlled passenger rail system crisscrossing the United States would become a monumental Congressional pork barrel—–an endless rebuke to rational economics.

And that it has. The cumulative taxpayer subsidy since 1972 totals more than $75 billion in dollars of today’s purchasing power. During the span of nearly a half century, Amtrak has operated upwards of 40 routes that have never, ever made even an “operating profit”.

Yet the operating profit test is itself a red herring. Like its aviation competitor, Amtrak is massively capital intensive.  It maintains 21,000 miles of track, 100 rail stations, operates around 2,500 locomotives and passenger cars, and requires an extensive, costly infrastructure of communications and signaling systems, electric traction networks and a huge array of bridges, tunnels, switching yards, repair facilities, fencing and other right-of-way improvements and ancillary buildings. On a replacement basis, its entire capital asset base would easily amount to $50 billion (about $40 billion of track and infrastructure and $10 billion of rolling stock).

And that giant figure underscores the economic part of the Amtrak hazard. Even with a generous assumption that the useful lives of its equipment, rolling stock and infrastructure would average 25 years, Amtrak’s economic depreciation would amount to $2.0 billion per year. Since it generates roughly 8 billion passenger miles annually, this means that its capital consumption expense amounts to about 25 cents per passenger mile.

So here’s the thing. The average airline fare in the US is about 15 cents per passenger mile and the average bus fare is about 11 cents per mile. Now how in the world does it make sense to operate a lumbering passenger rail system in which the true economic cost of its capital assets alone is 65% to 130% higher than the profitable fares charged by the perfectly adequate and available alternative modes of transportation?

Stated differently, you are deep in the hole before you start  even one Acela train on its route between Washington and Boston or one long distance train, for example, on its 1,750 mile route between Chicago and Los Angeles. But in the operations department it goes without saying that Amtrak —– burdened as it is with its endless array of Congressional mandates and directives —– is not exactly a model of efficiency or financial discipline.

Thus, Amtrak’s fully loaded wage and benefits tab is about $2 billion per year and is spread over 20,000 employees. Needless to say, at $100,000 per employee Amtrak’s costs are not even in the same zip code as its far more efficient for-profit competitors in the airline and bus transit industries.

On top of its massively bloated and featherbedded payroll, Amtrak also generates another $1.3 billion of expense for fuel, power, utilities, supplies, repair parts and operational and management overheads. Accordingly, its total operating budget at $3.3 billion amounts to about 40 cents of expense per passenger mile. That is, its operating costs are 3-4X the ticket price of its air and bus competitors!

The economic arithmetic is thus insuperable. On a system-wide basis, Amtrak’s combined capital and operating expense would amount to about 65 cents per passenger mile if it were honestly reckoned. That is, in the absence of Federal and state subsidies and the implicit subsidies that private railroad companies transfer to Amtrak via deeply below-market fees for utilization of their tracks and facilities. Indeed, 95% of Amtrak’s route-miles and 70% of its passenger-miles are generated on lines leased from freight railroads, which—-owing to regulatory mandates—-Amtrak pays only a trivial 2 cents per passenger mile. This figure is not remotely reflective of the real economic costs.

By contrast, Amtrak’s ticket revenues amount to hardly 30 cents per passenger mile. So contrary to Amtrak’s claim that it has nearly reached break-even, its true economics reflect the very opposite. Namely, a giant political pork barrel in which system revenues cover less than 45% of its all-in economic costs to society.

Nor can this disability be remedied by reforming the system and paring back its routes to just the profitable corridors. Even the northeast corridor generates only 10 cents of “operating profits” per passenger mile. Throw-in the capital costs and even Amtrak’s so-called profitable lines are still deeply underwater.

To wit, a recent inspector general report estimated that the replacement cost of the northeast corridor infrastructure alone was about $15 billion, which would amount to $400 million per year on an amortized basis or 20 cents per passenger-mile. Add in another 5 cents per passenger-mile for locomotives and rail cars and you have 25 cents of capital costs.

So there is a reason why even the northeast corridor has never been privatized. It would lose at least 15 cents on each of the 2 billion passenger miles that Amtrak/northeast corridor generates annually in the absence of much higher fares.

And those are the baleful facts regarding the Acela and regional routes in the Washington-Boston corridor. The rest of the system embodies just plain economic waste. The aforementioned Chicago-Los Angeles route, for example, has operating costs of 35 cents per passenger mile; and total costs with capital consumption would be at least 50 cents per mile–even giving allowance for the lower capital intensity of long distance routes.

The problem is that you can get an airline coach fare today between the Chicago-Los Angeles pair for $200 or 11 cents per mile. And you don’t need to spend 22 hours on the train, either.

As it is, Amtrak’s current fare on this route is about 15 cents per passenger mile and apparently it cannot go much higher if it wishes to remain competitive with air. Yet why in the world should bus drivers in Minneapolis pay Federal taxes in order to provide what amounts to a $600 subsidy per ticket on the 180,000 tickets that are sold annually on the Chicago-Los Angeles route? And the latter is only typical of most of the other routes outside the northeast corridor.

Obviously, there is no means test to get a $600 subsidy from Amtrak, or any other plausible criterion of public need. Like so much else which emanates from Washington, these Amtrak subsidies are distributed willy-nilly——in this case to retirees with enough time and money to see the country at leisure or to people with fear of flying who don’t wish to drive.

So Amtrak is a white elephant as a matter of economics, but when it comes to public safety it is actually a wounded one. That’s because when push comes to shove and Congress is faced with limited budget headroom, it always elects to short change the capital budget rather than reduce the scope of Amtrak’s far-flung operations and eliminate any of the 44 routes which crisscross the nation’s congressional districts.

I actually learned that lesson during the so-called Reagan Revolution. My original plan was to eliminate Amtrak entirely, and it would have saved upwards of $60 billion in the decades to come. At the get-go, the Gipper was all for it. Not a proper function of government, he nodded.

Then his Secretary of Transportation and previously chief GOP fundraiser and governor of Pennsylvania explained that the Gipper was right—but not quite. The northeast corridor (NEC) routes were an exception. They provided a valuable economic function——so by paring the system back to these high density routes the Amtrak budget could be cut in half. Moreover, after some up-front capital spending, the NEC could be transformed into a profitable business and eventually sold to the private sector in an IPO. That’s just the thing, said President Reagan.

Then it got to Capitol Hill and the Republican politicians said we are all for cutting the Amtrak budget by 50%, but to get the votes we need to do it “our way”. Upon which the Gipper replied, yes, we are here first and foremost to shrink the runaway Federal budget——so do what you must to get those savings.

They did. They drastically pared back the capital budget and kept virtually all of the routes and operating subsidy costs in place. When Uncle Sam came up short, capital investment could be deferred, but the pork barrel had to be fed.

In the bye and bye, of course, Amtrak’s budget was restored  all the way back to Jimmy Carter’s “wasteful” levels and actually hit record amounts during the Republican government of 2001-2008. But even then there was never enough appropriations to keep this giant white elephant properly fed——so capital investment was perennially short-changed and the system’s fixed assets steadily deteriorated.

Whether this week’s disaster was human error or not, the larger certainty is that the system has been chronically starved of capital. But the solution is not for a bankrupt government in Washington to pour more money down the Amtrak rat hole in the name of “infrastructure investment”, as the big spenders are now braying in the wake of this week’s disaster in Philadelphia.

Instead, Amtrak should be put out of its misery once and for all. Otherwise its longstanding hazard to the taxpayers is likely to be compounded by even more public safety disasters like this week’s tragic event.

—

Originally posted at David Stockman’s Contra Corner.

The Root Causes of Police Brutality

News stories abound on the national press about cases of police officers killing unarmed citizens, with media focus on white officers killing black men, leading to marches and protests in cities across the country with the purpose of fighting a system whose injustices stem from “institutionalized racism.” But is racism the cause of these killings, if they are unjustified in the first place? Is it inequality? Or is there a more fundamental reason? Are inefficiencies a result of “soft on crime” policies? Or is that missing the point entirely? As we’ll see below, the problem is much more elementary and structural than what’s diagnosed in media discussions. The real cause has little, if anything to do with the problems mentioned above, and has everything to do with an unaccountable, state-granted monopoly on the provision of protection services that is above the law.

In a Mises Daily article titled “Law Enforcement Socialism,” Anthony Gregory writes about the fundamental problems that lead to police inefficiencies, lack of accountability, and cases of brutality. He notes that the reasons government law enforcement agencies fail to achieve their stated goals are the same reasons many people reject any notion of government control of the means of production in most industries today. Whenever a government monopolizes the provision of a good or service, we see the same characteristics typical of any monopoly: namely, inefficient use of resources, unaccountability, high prices, poor-quality service, and a virtually unlimited source of income such as tax revenue. This is the inevitable result of an agency providing a good or service without having to worry about competition and hence losing their customers, especially when their funds are coercively obtained, as is the case with government. The state has no incentive to give to its “customers” a superior service because no competitors are allowed, and the “customers” must pay for the service regardless, to avoid being thrown in jail or even killed, were they to defend themselves from such aggression. In effect, what we’re left with is an agency that is above the law without regard for any consequences if it breaks any of the same laws it enforces on its subjects. That’s a situation that surely leads to all types of other problems, including harassment, theft, even murder.

Gregory goes on to explain why the free market system is superior in providing services such as police protection, and why the same incentives that allow privately run industries to prosper are the same incentives that exist to foster an environment for higher-quality, lower-cost protection services:

Law Enforcement Socialism

by Anthony Gregory

Every year, more prisons are built, more money is funneled to police departments, more criminal law is written and yet domestic crime remains a major problem.

Explanations abound as to why this is. The Left blames the economic system for fostering inequality, which supposedly causes crime. The Right says the police have their hands tied by political correctness. Libertarians typically argue that the government wastes precious time and resources on victimless crime and has insufficient tools remaining to deal with the genuine predators.

There is a more fundamental explanation, however, which makes logic out of the entire mess but is almost never voiced: Socialism. Law enforcement agencies, courts, prisons, legislative bodies — all of the key institutions that are supposed to produce justice are owned and maintained by the state.

Outside of some small academic and activist circles, most Americans reject the radical ideology of socialism as it pertains to the economy as a whole. Hardly anyone believes that the state should maintain the means of production and that private enterprise should be abolished. Most people understand the folly of divorcing all industry from private property ownership and running an economic sector completely through central management.

It is interesting, then, that most people still believe in total socialism when in comes to providing services of security and justice.

There is a considerable literature exploring how the market might handle law, but rarely are people exposed to it. Murray Rothbard, Bruce Benson, David Friedman, Robert Murphy, Samuel Konkin and others have made insightful contributions to such theory. However, we do not need to know how exactly the market would deal with this to know that socialism has institutional limitations that prevent it from achieving its advertised goals; and there is no reason not to apply this understanding to the question of law enforcement.

Just as when the means of production of any good or service are monopolized by the state, the result is havoc, we see similar problems when the state owns the means of production of the service of protecting the innocent and going after the guilty.

Mises identified the inability to engage in economic calculation as the key practical limitation of socialism that rendered it unworkable. This incapacity to divert resources to their most urgent use is one of the most conspicuous results of a socialist criminal justice system. Thus do we see police expending hundreds of thousands of dollars arresting, prosecuting, and punishing an individual for a victimless crime, when it is hard to imagine a private institution finding such a witch hunt economically viable.

The state, unlike a participant in the free market, gains its market share and resources through violence. The more it spends, the more it expands and the more it is able to spend. It sees spending money not as a cost to be balanced against income it brings in. Rather, the state’s resources are not its own and its very success as an institution is determined largely by how much it spends. It is eager to spend money, to expand its operations and to reward its privileged class of individuals with jobs and other benefits.

Whatever it has spent, it has already effectively extracted from the productive sector, for it has already redirected resources in the economy. The state is not leery of debt, since it’s not responsible for its own solubility; instead, one way or another, it burdens the taxpayer with its spending habits.

The state has every incentive to expand its activity into nearly any area that the people will tolerate, regardless of whether such activity makes economic or moral sense. Since it monopolizes conflict resolution — and acting in this capacity is another opportunity to expand its size and reach — the state actually has an interest in fomenting conflict, thereby maximizing its role in society. The more crime and punishment, no matter their effect on the innocent, and the more laws, no matter how outrageous or contradictory, the more business for the state, which, in a supreme conflict of interest, gets to determine what the laws are.

The state consequently attacks a thousand kinds of behavior that a market law enforcer would likely never dream of going after, since doing so would be unprofitable on the free market. Market institutions, unlike the state, could and would weigh costs and benefits and profits and loss and make careful decisions about using scarce resources. When customers actually have to pay on an individual basis for their security, they are far less likely to want their rights protector to go around waging expensive, unwinnable wars on vice and impropriety.

Under a free market, property rights would be liberated from their greatest nemesis — the constant encroachment of the state — and so people would have the means to better protect their own values within the context of private property and free association. But they likely wouldn’t want to spend thousands of dollars a year to have their hired rights protector hunt down and lock peaceful people in jail for drugs or prostitution.

Moreover, without the state monopoly, it would be nearly impossible to get all judicial and law enforcement bodies to agree that such peaceful people should no longer be seen as potential customers, but rather as targets of their violence. Violence, after all, is expensive.

Under law-enforcement socialism, on the other hand, market disincentives against such waste and counterproductive endeavors are discarded. Public choice theorists should especially expect state involvement in law enforcement to foster incentives for logrolling — in this case, for ever more laws and law-enforcement spending that most people would probably not elect to pay for on an individual basis, but that certain powerful economic and ideological interests willingly lobby hard to secure at other people’s expense.

The socialization of the cost of law enforcement, just as with any other industry, has led to shortages and shoddy products. In this case, it is justice that is shoddy and in short supply. We get a war on drugs that has imprisoned millions and squandered billions and encouraged homicide and corruption. We get a policy of disarming the civilian population of private weapons, which deter crime far more effectively than government police do. We get a prison system in which innocent and guilty are locked together to be beaten, raped, tortured, shot, and ruled by sadistic prison guards and the worst of the  inmates.

We get a standing army of crime-prevention agents with militarized weaponry, sovereign immunity to shoot to kill, and the arbitrary power to stop practically anyone at any time and destroy his life. None of this actually reduces crime overall, and none of it makes the victims of crime whole. It only victimizes them further by forcing them to foot the bill and endure the police state’s tyranny along with everyone else.

This shouldn’t surprise those who understand the failings of socialism. Socialism in any sector will misallocate resources. When we’re talking not just about redistributing money, but the enterprise of administering legal coercion and violence, the miscalculations inherent in socialist central planning translate into grand violations of millions of people’s rights.

Just as those who advocate socialism for public schools, or for health care, or for the economy generally, tend to argue that under a free market, there will be at least two classes of people — the exploited who can’t afford to meet their human needs and the predatory exploiters who get fat off the system — defenders of law-enforcement socialism argue that there would be chaos and class conflict without state provision of law and order. Without a monopoly provider, some people won’t be able to afford services of rights protection and some will disregard the rights of others and will unleash their criminality on society, whether as individuals in a chaotic and violent anarchy, or as gangs. Under a free market in law enforcement, the justice agencies themselves, we are told, will also likely become criminal.

But this is what we have now, under state law enforcement — the results of the state itself enjoying a class distinction of the most fundamental type. There are those who have to follow the law — created, enforced, and judicially presided over by the state — and those who use and depend on aggression as a matter of their job description: agents of the state. The state, by its nature, can categorically do things to people that the people cannot legally do to each other. It can seize wealth, instigate detentions and invasive interrogations and searches of the innocent, and issue systematic coercion with itself as its only institutional oversight.

Those who wish to improve the state’s handling of law and order by petitioning it to repeal some of its laws and redirect its focus should be commended to the degree that they challenge grave injustices by the state, but most reformers ignore the crucial problem — socialism in the area of law and rights protection. A reform that leaves the state intact as a monopoly on criminal justice will be as limited as any reform of education that allows the state to continue its near-complete ownership of the schools.

In practice, law-enforcement socialism is even worse than socialism in most other areas, since it involves a state monopoly on legal violence, and thus is expected to act coercively. Whenever an innocent person is brutalized — which will happen about as often as we could expect any kind of mistake from government work — it is seen as a small price to pay to protect the innocent.

As terrible as it is to allow central planners to decide how and where to produce shoes, cars, or widgets and where to divert them, it is a bigger problem when central planners are given free rein to decide how force is to be used in all of society. Indeed, by capitulating to its monopoly on violence, we accept its very power to monopolize and socialize. Freedom is never secure so long as a ruling class of people is permitted to monopolize the very means of monopolization, from which further abuses of the market and liberty can only follow.

Yet far from seeing the inevitability of the failure of law-enforcement socialism to deliver the goods nearly as efficiently or humanely as the market would, most libertarians, conservatives, and left-liberals continue to assume that law-enforcement socialism is the most essential kind for human progress.

Now, those who desire socialism in any other area must logically support it in the realm of coercive conflict resolution, since the state’s power to monopolize any sector depends on its monopoly on legitimized violence. But what of “free-market” conservatives who  believe not in markets, but rather socialism, in the field of criminal justice? Perversely, “free-market” types are frequently among the greatest defenders of law-enforcement socialism, quick to suggest that it would function fine if only it had more resources, or if the right people were in charge, or if the bureaus had more power, or if only the left-liberals would stop obstructing it with quaint constitutional and statutory limits on its power. Paradoxically, it is often those who most loudly cheer on capitalism who  are most enthusiastic about the state’s maintenance of law and order. When it comes to battling evildoers — which conservatives claim to want more strongly than the liberal Left — there is nearly total faith in the theoretical and practical capacity of socialism to work.

The most notable contradiction is seen in libertarians who adopt law-enforcement socialism. The error made by many libertarians is in thinking that since rights should always be respected, the state should be in charge of ensuring this social goal. When the progressives claim to want decent healthcare for everyone, some libertarians will point out that if this were really the case, the leftists would embrace a free market in medicine. Yet many libertarians, who claim to want justice for everyone, do not embrace the market when it comes to providing justice.

In some ways, the pro-state libertarian is more inconsistent than the left-liberal who concedes his willingness to use the state to achieve his social designs. Favoring centralized aggression to achieve the libertarian goal of a world without aggression is more of a contradiction. It is inconsistent to tell someone, “You have no right to use the state to tax me to create social programs,” if you yourself would use the state to tax others to affirm an absolutist libertarian sense of justice.

Protecting rights is crucial, which is why a monopoly on aggression is the last institution to trust with such an important task. The state claims to protect us with its military and police, but this is at least as much a sham as the state’s protection of us from poisoned pharmaceuticals, tainted spinach, disease, illiteracy, or ignorance. Sure, sometimes a police officer does the right thing — and sometimes, even often, a public school teacher successfully instructs pupils on the multiplication tables or how to diagram a sentence.

But these individual accomplishments would be multiplied and much more encouraged if the market prevailed. Overall, the state is detrimental to both law and education. The Department of Justice brings as few victims justice as the Department of Education teaches students.

Furthermore, while official schooling and official law are both monopolized by the state, education and justice are actually served predominantly by civil society, by family, community, private property, voluntary initiative, commerce and the natural law tradition. Just as in the Soviet Union a disproportionate amount of the food was grown on small lots of privately owned land outside of the socialist farms, so in America most of law and order result from private property and its protection by private individuals and civil culture, outside of the socialist law enforcement establishment. It is no wonder then that the more expansive the state is in law enforcement, the more money it spends, and the more  people in jails, the less safe are our streets.

When a welfare state worker gets it wrong, it is a waste of resources and can create waves of disastrous social repercussions. When a law enforcer gets it wrong — or searches and seizes the innocent in pursuit of the guilty — justice itself has been defiled and liberty attacked.

The spontaneous order of voluntarily acting individuals has given us everything in society that we take for granted. Whenever such free order is suppressed, disorder follows. That’s why we should not be surprised that the criminal justice system is one of the saddest features of our society. In the relatively capitalistic United States, the justice system is pure socialism. Only by getting the government out of the way and letting individuals act voluntarily and cooperatively can we expect the administration of justice to be  as effective and moral as the other sectors where the market, and not the state, dominates.

—

“Law Enforcement Socialism” originally appeared at the Mises Institute.

UC Berkeley: ‘Microaggressions’ are a ‘Public Health’ Issue

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The UC Berkeley School of Public Health ramped up their PC efforts with a town hall meeting discussing an epidemic posing a serious risk to the health of its students and people worldwide: “microaggressions.”

Via National Review:

According to a piece in the Daily Californian by Micha Zheng, soon to be a holder of a master’s in public health, Berkeley “convened a town hall meeting where students, staff, faculty and alumni all gathered to discuss issues concerning racism, white privilege and how the lack of diversity was harming students.” “Many public health undergraduate and graduate students alike brought up their experience with microaggressions, which are a form of unintended discriminatory behavior that still have the same, and sometimes even worse, effect as conscious, intended discrimination,” he writes.

“Many public health undergraduate and graduate students alike brought up their experience with microaggressions, which are a form of unintended discriminatory behavior that still have the same, and sometimes even worse, effect as conscious, intended discrimination,” he writes.

…

“We needed to act — and act urgently — with respect to the professors who were committing these harmful acts of microaggression toward students,” [Zheng] says.

Add this one to the “Not the Onion” pile. So, we now have people basically calling for a world in which we have to be extremely sensitive about what we say to others, lest we cause serious damage to someone’s emotions. Verbal abuse is one thing. To suggest that we shouldn’t say or do things that imply anything about someone’s gender, race or ethnicity is another thing entirely that creates an environment where people don’t even genuinely communicate with each other for fear of being “offensive.”

But who knows? Maybe pulling out a chair or opening a car door for a woman and asking people about their ethnicities really is a menace to public health. We wouldn’t want to accidentally kill someone, would we?

To make sure you’re not exposing anyone in your proximity to these vicious, high-risk behaviors, watch this PSA by Andrew Klavan, so you can help prevent microaggressions from becoming a full-blown pandemic:

Establishment Media Misleads Amid Concerns Over Military Drills

By Alex Newman
The New American

With preparations being made for the massive Jade Helm 15 military training across the American Southwest —exercises that imagine conservative Texas and Utah as “hostile” and more liberal states as “permissive” — the increasingly discredited establishment media has dishonestly seized on a handful of theories and comments to attack everyone expressing concerns about the drills. It is true that some unproven and in some cases wild claims have been made by a handful of individuals online, such as the notion that closed Walmart stores are involved in a nefarious plot with authorities to detain dissidents. However, in its deceitful efforts to demonize Americans who are suspicious of the Obama administration and the unprecedented Jade Helm 15 program, the mischaracterized “mainstream” press has seized on those claims as if they represented the primary or even only concerns being expressed. In the process, it exposed itself as a propaganda machine.

It is hardly a surprise that many Americans have expressed concerns about Jade Helm 15. Polls show more than two thirds of Americans believe the federal government is “out of control” and a threat to liberty. The other third must not be paying attention. Plus, just the information that is publicly known about the military exercise is enough to raise alarm bells. Special Forces troops, for example, will be wandering through the streets of American towns with military weapons. Elite soldiers dressed in civilian clothes and driving civilian vehicles, in coordination with local law enforcement, will be seeking to “blend in” with local communities without being detected. The fact that multiple conservative U.S. states are being identified as “hostile,” too, is bizarre, to say the least — especially considering the argument that the drill is to train for “overseas” operations.

All of that combined with recent developments — numerous federal reports identifying conservatives and Christians as extremists or even potential terrorists, Obama’s troubling history and background of anti-American extremism, the White House’s dismal track record on honesty, and more — have sparked legitimate concerns across America and especially Texas about Jade Helm 15. The concerns expressed by outraged citizens in town hall meetings and online were so serious and widespread that Republican Texas Governor Greg Abbott ordered the Texas State Guard to monitor the exercise. “During the training operation, it is important that Texans know their safety, constitutional rights, private property rights and civil liberties will not be infringed,” Abbott wrote in the order to the Texas military commander.

In response to the letter, the establishment press again revealed itself to be little more than a deceitful propaganda organ, distorting Abbott’s words and wildly misrepresenting public concerns about Jade Helm expressed by citizens. Special vitriol was reserved for popular radio host Alex Jones, whose audience dwarfs that of many of the establishment media outlets seeking to dismiss and demonize him. Ironically, though, as the host’s Infowars news service pointed out, much of the criticism leveled at Jones was attacking claims he never made, and conflating them with the concerns he did express. More than a few establishment press outlets, for example, sought to link concerns about the training and the federal government’s broader anti-constitutional agenda with fears of shuttered Walmarts supposedly being used to process captured American detainees.

A CBS News report featured a clip of Alex Jones expressing concerns about what the training was for — practice for future civil unrest, which the military has long discussed openly. Then CBS followed up with claims by others of “martial law implementation,” the Walmart theory that Infowars specifically debunked, and “declaration of war on United States soil,” creating a deceptive mental link in the minds of viewers. “The mainstream media is resorting to its usual tactic of building strawman arguments and then attaching them to Infowars and Alex Jones in order to create the perception that we said Jade Helm would bring with it an outright martial law takeover,” Alex Jones and Paul Joseph Watson reported in a recent article exposing the deceitful media attacks. But CBS was hardly alone in misleading its audience.

Perhaps the most dishonest reporting on Jade Helm 15 came from Wade Goodwyn at the tax-funded National Public Radio (NPR). In a bizarre propaganda piece attempting to mock popular Governor Abbott, Goodwyn seizes on the Walmart claims, as well as an alleged “whistleblower” claim of shackles supposedly being present on trains to transport prisoners. Despite writing a long article, though, the rabidly pro-Obama “journalist” never once mentions the single most important fact about the story that has generated so much concern: That military documents list Texas, Utah, and part of California as “hostile” or “insurgent” territory, while liberal states such as Colorado and Nevada are identified as “permissive.” What NPR did is known as “lying by omission.” It is a major violation of journalistic ethics.

In addition to omitting the single most important fact in the story to mislead readers, NPR’s hit piece also deliberately seeks to create a false impression. “You see, there are these Wal-Marts in West Texas that supposedly closed for six months for ‘renovation.’ That’s what they want you to believe,” Goodwyn explains in a mocking tone, presumably seeking to sound humorous, despite the fact that the overwhelming majority of those expressing concerns about Jade Helm have either rejected or ignored the strange allegations surrounding Walmart. “The truth is these Wal-Marts are going to be military guerrilla-warfare staging areas and FEMA processing camps for political prisoners.” Sarcasm was used throughout the deceptive piece to mock those who raise concerns.

The Washington Post used similar deception, reporting that “conspiracy theorists claim [Jade Helm is] an attempt to institute martial law, possibly in collusion with Wal-Mart.” It also reported, falsely, that “in response,” Gov. Abbott had ordered the State Guard to monitor the exercise. After that, the Post used the same tactic, reporting on Alex Jones’ comments about Texas being hostile to tyranny and defending the Republic before proceeding to discuss the Walmart theories again. Infowars had released a video the week before dismissing the Walmart theories, dubbed “Walmart Death Camps for Martial Law Takeover? (Debunked).” But nobody who relied exclusively on the manipulative establishment press for information would know it.

Of course, it is true that Walmart has ties to the increasingly lawless “homeland security” bureaucracy — a largely unconstitutional outfit that in recent years has, among other idiocy, used hoax websites to identify military veterans, pro-life activists, and tens of millions of Americans with mainstream political views as potential terrorists and extremists. In 2010, Walmart agreed to host TV screens in their stores featuring then-Homeland Security boss Janet “Big Sis” Napolitano urging shoppers to spy on and report each other to the government as part of the “If you See Something, Say Something” campaign. “I applaud Walmart for joining the ‘If You See Something, Say Something’ campaign,” said Napolitano at the time. “This partnership will help millions of shoppers across the nation identify and report indicators of terrorism, crime and other threats to law enforcement authorities.”

While troubling, none of that suggests that a handful of closed Walmart stores in the Jade Helm area will be used as for “martial law purposes.” In fact, it seems that outside of a few people with YouTube channels, all of the theorizing on Walmart traces back to one radio single host. Yet, from the dishonest establishment press reporting, one could be forgiven for thinking that everyone in America concerned about the Obama administration’s lawlessness and the Jade Helm drill also believes Walmarts will be used to process detainees for concentration camps in the coming months. That was deliberate on the part of the press — yet another reason why less than one in four Americans trusts the national media. Walmart has claimed the store closings are due to “plumbing” issues, while unions suggest the closings may have been a result of labor organizing. Either way, martial law seems unlikely, which is exactly why the establishment press zeroed in on that claim.

Another piece of dishonest propaganda on the issue came from Travis Gettys at the far-left online outlet Raw Story, which at least had the intellectual and journalistic integrity to inform readers early on that “Texas, Utah, and portions of California will stand in for hostile territories” amid the drills. While far better than NPR’s blatant deception, that is where the honesty in Raw Story’s piece ends. In fact, even the headline was false: “Walmart closings ignite conservative fears of martial law and Russian ‘death domes.’” Aside from citing zero conservatives with fears of martial law sparked by Walmart closings, the article similarly takes a few unsubstantiated theories and attempts to paint all concerns about the drill as associated with the theories. Logical fallacies and deception can be found throughout the article.

There are countless other examples of the same sort of dishonesty. Rather than focusing on or at least acknowledging the well-documented concerns expressed by Americans across the political spectrum, or on the reasons why Americans are so suspicious of their federal government, the establishment press would rather cite seemingly outrageous theories and demonize everyone who does not reflexively trust official pronouncements. The irony is that real journalists are supposed to question such pronouncements — not parrot them uncritically and demonize those who do question.

Of course, critics of Jade Helm and the Obama administration should stick to facts that can be proven, rather than speculation. Most have done that, including many of those being dishonestly smeared by the deceitful media. However, the establishment press has an even more serious responsibility and duty to do the same — stick to the facts, do not deceive readers, question those in power, and adhere to basic journalistic ethics. Instead of sticking to the facts and being honest, though, establishment propagandists masquerading as journalists have once again shown the world why they cannot be trusted. As such, it is no surprise that so few Americans trust the “mainstream” press and are flocking to the alternative media by the millions.

—

Originally posted at The New American

Alex Newman is a correspondent for The New American, covering economics, education, politics, and more. Follow him on Twitter @ALEXNEWMAN_JOU. He can be reached at anewman@thenewamerican.com

Number of Americans Not in Labor Force Rises to Record 93,194,000

Bad news is good news. All the more reason for stocks to soar in the faux bubble-economy propped up by the Fed’s massive liquidity injections.

Via ZeroHedge:

In what was an “unambiguously” unpleasant April jobs payrolls report, with a March revision dragging that month’s job gain to the lowest level since June of 2012, the fact that the number of Americans not in the labor force rose once again, this time to 93,194K from 93,175K, with the result being a participation rate of 69.45 or just above the lowest percentage since 1977, will merely catalyze even more upside to the so called “market” which continues to reflect nothing but central bank liquidity, and thus – the accelerating deterioration of the broader economy.

End result: with the civilian employment to population ratio unchanged from last month at 59.3%, one can easily on the chart below why there will be no broad wage growth any time soon, which will merely allow the Fed to engage in its failed policies for a long, long time.

Source: ZeroHedge

Add that piece of news to the fact that the number of women not in the workforce has also surged to a record 56,167,000, and we’ll be able to say President Barack Obama’s and Fed Chairwoman Janet Yellen’s recovery is almost complete.

Yet, amid never-ending cycles of bad economic news, a sense of optimism persists on Wall Street while the Fed is stuck in a corner of its own making as to how they can unwind their balance sheet and raise rates (they won’t) with an “improving” economy, without letting the whole thing implode into another recession. Yellen, meanwhile, has also displayed confidence in the future of the economy, which merely begs the question: if the economy is really on solid footing, why not raise rates already? Yellen can’t do that. She knows she’s in a bind created by her Keynesian predecessors and colleagues at the Fed, because her only recourse up until now is pretending she has everything under control.

Federal Appeals Court Rules NSA Program Illegal

NSA campus in Maryland (Source: AP)

In what presidential candidate Rand Paul deemed a “monumental decision for all lovers of liberty,” a federal appeals court ruled that a National Security Agency program which collected bulk phone records of millions of Americans is illegal, dealing a blow to proponents of mass surveillance in the midst of the so-called war on terror.

The Wall Street Journal reports:

A three-judge panel of the Second U.S. Circuit Court of Appeals in New York eviscerated many of the legal theories under which the U.S. government has expanded surveillance since the Sept. 11, 2001, terror attacks. The judges didn’t address whether the NSA program violates constitutional privacy rights, as some groups allege, but found the Patriot Act language used by the Bush and Obama administrations to justify the program wasn’t meant to allow such mass data gathering.

…

The NSA has used Section 215 of the Patriot Act—a 2001 law that expanded the government’s authority to search for terror suspects—to justify collecting records of nearly every call made in the U.S. The program gathers metadata—the number called, the time and the duration of the call—but not the content of the conversation. The intent is to look for possible contacts among terror suspects.

In an interview with Breitbart News, Paul also said:

Now, they’re saying it’s illegal in that Section 215 of the PATRIOT Act doesn’t authorize that—that the government has gone too far—I think that’s a good first step. We want the Supreme Court to eventually rule on whether this is Constitutional or not. Our main complaint, or one of our main arguments is, the Fourth Amendment says you have to name the person who you want to get a warrant—but not naming anyone and putting “Mr. Verizon” down and saying you can get the records of millions of people, you’re not writing a specific warrant.

You’re writing a generalized warrant. This is one of the things that we fought against that the British were doing to us. James Otis famously argued in court that the writs of assistance that the British were using were non-specific and didn’t use the person’s name—and so we wrote the Fourth Amendment to try to stop this kind of stuff. I guess it’s gratifying that the courts are beginning to recognize the problem. We are anticipating and eager for this to get to the Supreme Court.

Among Millionaire Voters, Hillary is the Favorite

Image by Getty

Hillary Clinton has never had a reputation for championing — at least in practice — your everyday American. After all, she fully supported the Wall Street bailout in the midst of the 2008 financial crisis, further cementing the financiers’ backing for her presidential run in 2016. She is cozy with Goldman Sachs’ Gary Gensler, and is reportedly preparing to choose him as the country’s next treasury secretary if she gets elected.

Now we have a report from CNBC on a survey showing that Mrs. Clinton is the favorite candidate among millionaire voters, surpassing even Jeb Bush for the top spot:

“The survey, which polls 750 Americans with a net worth of $1 million or more, found that 53 percent of millionaires would vote for the Democratic ex-Secretary of State, compared with 47 percent for the GOP presidential hopeful, in a hypothetical general-election match-up. Clinton had the support of 91 percent of Democratic millionaires, 13 percent of Republican millionaires and 57 percent of Independent millionaires.

…

“The CNBC Millionaire Survey skews more Republican than the broader voting population, which makes the support for Hillary even more notable. Of the millionaires polled, 34 percent were Independent, 31 percent were Republican and 34 percent were Democrats (a few didn’t give an affiliation).”

There’s nothing wrong with having millionaire support per se, but this is yet another indicator of Mrs. Clinton’s crony agenda to benefit the politically connected few. It also comes with the usual dose of irony, considering her campaign is framing her as an enemy of the 1% who is fighting hard for the middle class and the poor. Many Americans already know whose interests she really has in mind, but it’s time for her liberal supporters to dig a little deeper as to why the banks have been pouring cash into her campaign.

American Deaths by Knives Outnumber Those by Rifles and Shotguns Combined

Robert Wenzel at the Economic Policy Journal points us to some informative statistics done by the FBI about how people are murdered in the United States.

He writes:

“Despite news media impressions to the contrary, there are not many murders in the United States that are committed with rifles or shotguns. Combined, it is under 1,000 per year—more people are murdered with knives.”

If we were to swallow everything the national news said every time they reported on a shooting, we’d be under the impression that assault rifles and shotguns are the biggest threat to the livelihood of Americans today, and, seeing the government as our benevolent protector, we’d probably clamor for our overlords to strip the citizenry of such weapons. But another look at the numbers shows us that the situation is not what we might have expected it to be.

Source: FBI (Click to view enlarged image.)

Another Day, Another Dishonest Slander on Ron Paul

The progressive news site Addicting Info is once again predictably attacking Ron Paul, this time for a recent interview he did with Lew Rockwell in which he stated that the Congressional Black Caucus opposes wars because they would rather have the money spent domestically on food stamps.

His point was that the CBC is not principled in consistently opposing sanctions or wars. The sad thing about leftist propaganda outlets like this one is that a statement that has zero to do with claiming one race is inferior to another is now considered “racist.” The CBC historically has strongly favored high welfare spending. Is anyone denying that? Ron has proposed reducing both military and welfare spending, regardless of the fact that most recipients are white or black. How does that make him racist?

Just look at how far Addicting Info is reaching to try to smear this man, showing a “newsletter under his name” without providing any proof whatsoever that he actually wrote it. A newsletter which he has disavowed time and time again after being hounded by the mainstream media. Meanwhile, Barack Obama, who illegally bombed the living daylights out of Libya in 2011, is let off the hook whenever his policies have deadly effects on everyone including black people. Let’s see, what’s worse? A man who supposedly wrote a racist newsletter (though we have zero proof he was the one who wrote it) about 30 years ago? Or a man who militarily invaded a nation and, hence, murdered tens of thousands of Africans in the process, not to mention the ongoing disaster resulting from that progressive “humanitarian” intervention? Never mind that Ron Paul has always opposed the War on Drugs, while Obama continues to support a policy that has put countless people in cages for victimless “crimes.” “But who cares what what Ron Paul actually proposed? He said something about food stamps? Ignorant racist crank!”

The writers at Addicting Info really could not care less about black people, shouting “racism!” only when it furthers their manipulative, opportunistic political agenda.

Ron Paul doesn’t have a shred of racism in his body, and we can tell simply by looking at the lengths to which the mainstream media and its progressive, “alternative” outlet lap-dogs try to slander him, while failing to substantively prove their deceptive declarations.