Wednesday, July 31, 2013

What if the government is wrong?

What if the government is wrong? Governments try to control many aspects of our lives from regulating the goods and services we buy to setting price controls. But what if the government is wrong.

In setting a minimum wage, supporter claim that employers are under paying their workers and should be forced to pay a higher wage. So the government set a minimum wage. But what if that wage is too high? An employer who over pays get a profit and loss signal if they over pay incentivizing them to lower the wage. What incentive does the government have to ensure the minimum wage is not set too high?

In regulating drugs, the FDA has to set an acceptable level of risk. What if they set this level too low? Life saving drugs may be denied to people who need them. In a free market, people set their own level of risk. Third party safety groups can review and assess the risk but they cannot prohibit someone from taking the drug because of a low risk threshold.

What about other regulations? What if government tells businesses to behave in ways that are not in the people's interest? If businesses try to act in a way counter to the interests of their customers they lose business. In this way the profit and loss mechanism insures businesses behave appropriately. But if government tells all businesses to perform certain tasks that do not maximize the customer's value, government has no incentive to change its demands. Since resources have to be reallocated to pleasing the government, these resources are no longer available for increasing consumer value.

Markets provide incentives for businesses to meet the customer needs. However, government gets no signals when trying to redirect resources away from the consumer's ends to its ends. In this way, government controls will always tend to reduce consumer welfare.

Monday, July 29, 2013

Government vs markets: propaganda

One may be tempted to claim that a difference between governments and the market is that in markets businesses use advertising to lie to customers and propagandize. This assumes that people are mindless zombies, easily misled by a well done ad. 

This is not true. Even a well done ad cannot make up for a lousy product or poor service. In the short run, businesses could make money by tricking people, but to make any real money companies have to offer a product or service that meets the needs of their consumers.

How do we deal with one time purchases? While most companies produce multiple products and will want your business in the future for new products, how do we deal with those one off situations? The market has a solution. Companies exist that review products and/or give recommendations. These companies want you to continue to use their services so they want to be accurate.

In these ways the effects of propaganda by market participants is short lived. But what about government propaganda? Governments claim a monopoly on the school system. What incentives do they have not to propagandize? They control the media through the FCC. What incentive do they have not to abuse this power? The only incentives seems to be that if the people hear about it, they may complain. But they are garnering support for campaign finance controls, so that only the government can decide who can and cannot speak out during elections.

I think the evidence is pretty clear. If we should be concerned about propaganda it is from the government not the market.

Saturday, July 27, 2013

Government vs the market: resources

How does the government know how to allocate scarce resources? In the market, Prices and profits signals indicate where scarce resources need to be allocated. With government, however, there are nonon-arbitrary  signals for where resources should be allocated.

In the market resources are allocated in a way so as to maximize social welfare. Goods that are most highly valued have their prices bid up which then gives direction to reduce consumption of that particular good while also inducing additional resources to be allocated to that good. As prices are bid up, profits in the creation of that good increase. These profits signals induce companies to allocate resources to that highest valued good. The end result is that resources are allocated to their highest valued end. This is economic efficiency. In this manner the free-market maximizes social welfare.

The government does not have these same signals as to where they should allocate resources. Take for instance law-enforcement. How much resources should be allocated to law enforcement? The only signal they have is how successful law enforcement is. But what they can't determine is how highly valued that end is.

This is essentially the socialist calculation debate. When ever the government acts in the economy, that is socialism. As Mises and Hayek showed, socialism cannot work better than capitalism because it cannot allocate resources efficiently.

Friday, July 26, 2013

Busting the mythicists

Some people claim that Jesus of Nazareth is just a myth. They claim he was created as a god man. worshiped by the early believers. This claim is not supportable.

The earliest sources we have for Jesus are the epistles of Paul and the Gospel of Mark. Neither Paul nor Mark indicate that Jesus is the same as God. In fact, neither believes Jesus was born as the son of God. For Paul, Jesus became the messiah, the king of the Jews and the son of God (another title for the earthly king) at his resurrection. For Mark, Jesus was named son of God at his baptism.

Mark clearly does not think Jesus was God. Jesus was baptized, meaning he went to have his sins cleansed.

There are many reasons to think the mythicists are wrong. While my evidence here does not prove that Jesus exists, it does show that the claim for why this supposed myth was created is obviously wrong.

Wednesday, July 24, 2013

The gold compromise

The monetary standard we have, one ruled controlled by politicians and manipulated by banks, is the worse standard to have, none. The optimal option would be a free market in currency.

However, I have been accused of being unable to compromise, since I advocate for what is best instead of slightly better than the worst. I will support any effort to increase freedom and justice even if it is not the best option. Any tax reduction, even a small one I support, any reduction in government control of people's live, I support and any move towards a better currency.

There seems to be 4 options for our currency. We have the worst option, where money is not determined by the desires of people but the desires of government.

A better option is a gold standard, a standard that many libertarian leaning individuals support. This is not ideal since it forces gold alone to be split between its uses  in consumption and production. But it takes control of the money supply away from government and politicians making it more optimal than the current fiat standard.

Milton Friedman was originally a supporter of a gold standard but eventually advocated for a bimetallic standard, i.e. gold and silver. This is the standard the US had through much of its history. A multi-metallic standard, where 2 or 3 or more metals are used as currency, is better. If the additional metals have uses that are valued less than the value of gold as a currency, these metals can be substituted as currency increasing total welfare.

Lastly, the optimal standard would be a free market standard. A free market standard and is floating which allows any item whose value in exchange is greater than its value in use to be used as currency. Only this standard, that chosen by voluntary and peaceful interactions, will maximize social welfare.

In theory, a paper standard could be optimal. How ever, if the standard can be manipulated to benefit one group at the expense of others, such a standard cannot be shown to be optimal. As such, I would support efforts to change our money to a gold based standard even though such an option is not optimal.

Tuesday, July 23, 2013

We do not need more healthcare

One of the claims made is that we need more healthcare or health insurance. However, if we allocate resources to healthcare, we much allocate resources from other ends. What ends should we remove resources from? The people are choosing to allocate resources away from healthcare and towards different ends. This means if you care about people's welfare, more resources should not be allocated to healthcare. If you do not care about people's welfare, why would you want to allocate resources to healthcare?