Last month, I mentioned America’s first individualist anarchist, Anne Hutchinson. She’s a hero of mine, for obvious reasons, despite my not sharing her religious beliefs.

One of the several reasons I’m enjoying Sarah Vowell’s The Wordy Shipmates is that I’m learning more about Hutchinson. For example, I love this detail:

The daughter of a persecuted Puritan minister who helped her cobble together the best education possible for female children (who were denied university attendance), Anne Hutchinson is one of the brainiest English-women of the seventeenth century. Yet she is no stranger to the goopy fluids of female biology. Besides birthing her own litter [of 15 children, by the way!], she works as a midwife, delivering babies and no doubt serving the brew imbibed before and after labor, the wonderfully named “groaning beer.”

Here’s my favorite detail within the detail:

By aiding Boston’s new mothers, Hutchinson quickly befriends a lot of women. She starts leading the women in a regular Bible study in her large, fine home.

These Bible-study group became the seedbed of antinomianism: a new religious individualism (and heresy) within New England Puritanism. It also became the basis of political and philosophical individualism more generally, thus Murray Rothbard’s description of Hutchinson in Conceived in Liberty as America’s first individualist anarchist.

She preached the necessity for an inner light to come to any individual chosen as one of God’s elect. Such talk marked her as far more of a religious individualist than the Massachusetts leaders. Salvation came only through a covenant of grace emerging from the inner light, and was not at all revealed in a covenant of works, the essence of which is good works on earth. This meant that the fanatically ascetic sanctification imposed by the Puritans was no evidence whatever that one was of the elect. Furthermore, Anne Hutchinson made it plain that she regarded many Puritan leaders as not of the elect.

The Massachusetts powers that be understood that Hutchinson’s Bible-study sessions were central to the dissemination of her religious and political heresies and so, as Sarah Vowell relates,

In September of 1637 … [t]hey resolve, writes Winthrop, “That though women might meet (some few together) to pray and edify one another,” assemblies of “sixty or more” as were then taking place in Boston at the home of “one woman” who had had the gall to go about “resolving questions of doctrine and expounding scripture” are not allowed.

"The Bill of Rights," Vowell comments, "with its allowance for freedom of assembly, is a long way off."

Rothbard again:

Winthrop then called for a vote that Mrs. Hutchinson “is unfit for our society — and … that she shall be banished out of our liberties and imprisoned till she be sent away.…” Only two members voted against her banishment.

When Winthrop pronounced the sentence of banishment Anne Hutchinson courageously asked: “I desire to know wherefore I am banished.”

Winthrop refused to answer: “Say no more. The court knows wherefore, and is satisfied.” It was apparently enough for the court to be satisfied; no justification before the bar of reason, natural justice, or the public was deemed necessary.

As good as Rothbard’s account is, I find Vowell’s even better:

“What law have I broken?” she asks.

“Why the fifth commandment,” answers Winthrop. This is of course the favorite commandment of all ministers and magistrates, the one demanding a person should honor his father and mother, which for Winthrop includes all authority figures. Wheelwright’s sermon was an affront to the fathers of the church and the fathers of the commonwealth.…

When she presses him once again to point out the Scripture that contradicts the Scripture she has quoted calling for elders to mentor younger women, Winthrop, flustered, barks, “We are your judges, and not you ours.”

Winthrop really is no match for Hutchinson’s logic. Most of his answers to her challenges boil down to “Because I said so.”

In fact, before this trial started, the colony’s elders had agreed to raise four hundred pounds to build a college but hadn’t gotten around to doing anything about it. After Hutchinson’s trial, they got cracking immediately and founded Harvard so as to prevent random, home-schooled female maniacs from outwitting magistrates in open court and seducing colonists, even male ones, into strange opinions. Thanks in part to Hutchinson, the young men of Massachusetts will receive a proper, orthodox theological education grounded in the rigorous study of Hebrew and Greek.

The US attorney general recently announced that homeschooling is not a fundamental right, thereby denying asylum to a German family that had fled their home country, where the 1938 Nazi-introduced ban on home education is still enforced. The American homeschooling community is understandably outraged at the current presidential administration’s position on the question, but we shouldn’t be at all surprised. Why would any government willingly relinquish the authority to indoctrinate? The need to prevent random, homeschooled maniacs from outwitting political leaders and seducing citizens into strange opinions — such as individual freedom and responsibility — is essential to the health of the state. And if we question too vociferously the logic of their decision, they may well reply in essence that they are our judges and not we theirs.

I recently came across the website and podcast ”Complete Liberty,” by Wes Bertrand, also featuring Bertrand’s 2007 book Complete Liberty: The Demise of the State and the Rise of Voluntary America (print; PDF). The podcast has some excellent episodes, including a whole series on IP—episodes 89–99.

Jeffrey A. Tucker

Jeff Tucker of Laissez Faire Books is giving a free Webinar this afternoon: “Commerce and the Commons: How Enterprise Will Survive and Thrive the Death of Intellectual Property“. This event is sponsored by European Students For Liberty, and appears to be open to anyone. Info below:

Tuesday, January 29, at 20:00-21:00 CET/2:00PM-3:00PM EDT

Where? On your Computer!

Speaker:  Jeffrey Tucker

Topic: Commerce and the Commons: How Enterprise Will Survive and Thrive the Death of Intellectual Property

Register here: https://www2.gotomeeting.com/register/882656282

Intellectual Property Rights have always been a hot topic among libertarians. One of the main arguments in favor is the belief that these rights are essential for entrepreneurship. Businesses wouldn’t be able to innovate without the financial fruits of their intellectual labor. But exactly how essential is intellectual property in this regard? Would an end of these rights mean an end of commerce? Or the reverse? Find out during this upcoming webinar!

Jeffrey Tucker is executive editor of the newly refurbished Laissez Faire Books, a leading publisher of libertarian books, and founder and head of the Laissez Faire Club. He also author of Bourbon for Breakfast (2010), It’s a Jetsons World (2011), and Beautiful Anarchy (2012).

[C4SIF]

As many of my readers know, I often lecture and speak and give podcast or radio interviews on various libertarian topics and issues, such as intellectual property (IP), anarcho-libertarians, Austrian law and economic, contract theory, rights and punishment theory, and so on. I also blog and comment regularly on such matters in various blogs (primarily The Libertarian Standard, on general libertarian matters, and C4SIF, on IP-related matters), Facebook, and so on—often posting my take on a given issue in response to a question emailed to me or posted online.

This month I am launching a new podcast, Kinsella on Liberty. I expect to post episodes once or twice a week. The podcast will include new episodes covering  answers to questions emailed to me (feel free to ask me to address any issue of libertarian theory or application) as well as interviews or discussions I conduct with other libertarians. I’ll also include in the feed any new speeches or interviews of mine that appear on other podcasts or fora, as well as older speeches, interviews, and audio versions  of my articles, which  are collected for now on my media page). Audio and slides for several of my Mises Academy courses may also be found on my media page, and will also be included in the podcast feed later this year. Feel free to Subscribe in iTunes or Follow with RSS, and spread the word to your libertarian friends. I welcome questions for possible coverage in the podcast, as well as any criticism, suggestions for improvement, or other feedback. My general approach to libertarian matters is Austrian, anarchist, and propertarian, influenced heavily by the thought of Ludwig von Mises, Murray N. Rothbard, and Hans-Hermann Hoppe. My writing can be found in articles here and blog posts at The Libertarian Standard and C4SIF, such as:

• How I Became A Libertarian, December 18, 2002, LewRockwell.com (published as “Being a Libertarian” in I Chose Liberty: Autobiographies of Contemporary Libertarians (compiled by Walter Block; Mises Institute 2010))
• “What Libertarianism Is,” Mises Daily (August 21, 2009)
• What It Means To Be an Anarcho-Capitalist, January 20, 2004, LewRockwell.com
• How We Come To Own Ourselves, Mises Daily (Sep. 7, 2006)
• Causation and Aggression, The Quarterly Journal of Austrian Economics, vol. 7, no. 4 (Winter 2004)
• A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability, Journal of Libertarian Studies 17, no. 2 (Spring 2003)
• Inalienability and Punishment: A Reply to George Smith, Winter 1998-99, Journal of Libertarian Studies
• Argumentation Ethics and Liberty: A Concise Guide, Mises Daily (May 27, 2011)
• New Rationalist Directions in Libertarian Rights Theory, 12:2 Journal of Libertarian Studies (Fall 1996)
• Punishment and Proportionality: The Estoppel Approach, 12:1 Journal of Libertarian Studies (Spring 1996).
• Defending Argumentation Ethics: Reply to Murphy & Callahan, Anti-state.com (Sept. 19, 2002)
• Montessori, Peace, and Libertarianism, LewRockwell.com (April 28, 2011)

On IP in particular, which I’ll also cover from time to time in the podcast, see:

• C4SIF Resources page;
• The Case Against IP: A Concise Guide
• Against Intellectual Property
• Selected Supplementary Material for Against Intellectual Property

[C4SIF; SK; PFS]

Well, technically, Anarchy 100, a seminar at Lebanon Valley College. I was alerted by a friend to this interesting course by Michael Kitchens, an Assistant Professor of Psychology. The reading materials include many articles and books from Austro-anarchists such as Roderick Long, Bob Murphy, Hans-Hermann Hoppe, Walter Block, Anthony Gregory, Tom DiLorenzo, Lew Rockwell, Rothbard, and myself. This is cool. The reading list would make a good book. From the course page:

SELECT RESOURCES/INFORMATION

Books

• Bourbon for Breakfast by Jeffrey Tucker
• Economics in One Lesson by Henry Hazlitt
• Ethics of Liberty by Murray N. Rothbard
• For a New Liberty by Murray N. Rothbard
• The Left, The Right, & The State by Llewellyn H. Rockwell, Jr.
• No Treason by Lysander Spooner
• Defending the Undefendable by Walter block

Introductory Essays on Anarchy

• “What it Means to be an Anarcho-Capitalist” by N. Stephan Kinsella
• “What Libertarianism Is” by N. Stephan Kinsella
• “The Injustice of Social Justice” by Ben O’Neill
• “But Wouldn’t Warlords Take Over?” by Robert Murphy

The State & Anarchy 

• Anderson, T. L. & Hill, P. J. An American Experiment in Anarcho-Capitalism…
• Block, W. Libertarianism is Unique… Journal of Libertarian Studies 
• Dilorenzo, T. J. The Culture of Violence in the American West. The Independent Review 
• Rothbard, M. “Society Without a State” 
• Mises, L. Liberalism (book)
• Murphy, R. P. “What are You Calling Anarchy?”
• Murphy, R. P. “Anarchy in Somalia”
• Long, R. T. Toward a Libertarian Theory of Class  

Market Anarchy

• Hayek, F. A. The Use of Knowledge in Society The American Economic Review 
• Taylor, T. C. An Introduction to Austrian Economics (book)
• Tucker, J. “Does Favoring Free Enterprise Mean Favoring Business?”

Justice Anarchy

• Kinsella, N. S. “Introduction to Libertarian Legal Theory” 
  • (A series of resources are listed at the end of this article)
• Kinsella, N. S. “Legislation and Law in a Free Society” 
• Murphy, R. P. “The Possibility of Private Law”
• Murphy, R. P. “Law and Appeals in a Free Society”
• Murphy, R. P. “The Possibility of Private Law”
• Gregory, A. “Abolish the Police”

Defense  & Security

• Hoppe, H. H. The Myth of National Defense (book) 
• Murphy, R. P. “Policing for Profit”
• Murphy, R. P. Chaos Theory (book/monograph)
• Murphy, R. P. “Private Defense is No Laughing Matter”

Roads & Highways

• Block, W. “A Future of Private Roads and Highways”
• Block, W. The Privitization of Roads and Highways (book)

Civilization, Culture, & Life

• Kinsella, N. S. Against Intellectual Property (book/monograph)
• Kinsella, N. S. & Tucker, J. Goods, Scarce & NonScarce
• Kinsella, N. S. Intellectual Property and Libertarianism
• Tucker, J. How Blessed is the State that Thus Destroyeth the Car
• Tucker, J. McDonald’s as the Paradigm for Progress
• Tucker, J. Pushing Buttons Like the Jetsons

“Institutions will try to preserve the problem to which they are the solution.” ~ Clay Shirky

You know the slavery Kool-Aid is working well when those who are oppressed petition their oppressors for more of that which helps keep them oppressed.

For instance, public education is a tool that was designed–specifically and directly–as a means of controlling the hoi polloi.  The educational system of compulsory public education championed by Horace Mann, chock-full of multiple-choice testing perfected by Frederick J. Kelly, feeding into statistical models based upon the work of (eugenicist) Sir Francis Galton, was (and is) designed to fulfill the need for employees who are primed and ready to inhabit factories where efficiency can be measured in ways developed by Frederick Winslow Taylor. (The fact that so few of such factories currently exist in America should also be telling, but that’s a different discussion.) Mann believed “universal public education was the best way to turn the nation’s unruly children into disciplined, judicious republican citizens.” The whole thing was designed to produce a seething throng of people ready to take orders, stand in line, ask few questions, and install bumpers all day–accepting the interminable boredom of such a life–while their over-lords made a ton of money.  Free and compulsory public education was never intended to create inquisitive, risk-taking, leaders. Or entrepreneurs and/or business owners.  Or frankly, owners of anything! Yet, people clamor that “education is a right” and “we need more funding for our schools” despite the inescapable fact that these same crap holes are doing their best at producing children incapable of independent thought and unable to read a book (or a blueprint), solve a simple mathematics problem, or devise a new strategy.  It’s damned sad, really.

A similar conclusion can be drawn regarding government job creation. Throughout the current election season, you’ll hear people clamoring that Obama will do all he can to create jobs while Romney won’t, or some such simplistic foolishness. Any president who claims to create jobs, uses tax dollars and government debt to pay people wages that are too high, for work that otherwise likely would not be done. In other words, the money is wasted on boondoggles. This action has at least two negative side-effects.  One, it takes money from those who produce it and gives it to someone else. (That’s the taxation piece.) That might sound good to the recipient unless he realizes that he is only getting the proverbial fish that feeds him for a day, if that long. Secondly, this stolen–they call it stimulus nowadays–money results in those at the top having more real income than the supposed beneficiaries of those government-created jobs. (That’s the inflation piece.) The people who think they benefit from the government-created-jobs are worse off in the long term, despite all appearances to the contrary in the short term. Ludwig von Mises spoke of this phenomenon in, “On Current Monetary Problems” with:

The advocates of annual increases in the quantity of money never mention the fact that for all those who do not get a share of the newly created additional quantity of money, the government’s action means a drop in their purchasing power which forces them to restrict their consumption. It is ignorance of this fundamental fact that induces various authors of economic books and articles to suggest a yearly increase of money without realizing that such a measure necessarily brings about an undesirable impoverishment of a great part, even the majority, of the population.

An injection of money into the economy by the government generally results in a transfer of wealth towards the top—real income transferred from those who can least afford it to those who already have plenty. (I already noted some time ago that this phenomenon seemed to get rolling in 1980.  The chart below is instructive.) One might even suppose this state-facilitated income transfer is the reason why statists in power so strongly support government control of the money supply, but that’s another discussion. Bottom Line:  Those who clamor for a president who cares about them get the same treatment and results as they would from some random bastard who openly scorned them. (No offense to the random bastard you support!)

And yet, here we are at election time, and the clarion calls continue to go up, from both sides of the ostensible aisle.

Cross-Posted at LRCBlog.

You have heard of Pascal’s wager and the atheist wager.

Based on the comments from my last post and this Reddit thread, I have formulated two new wagers.

The first is the typical sky-is-falling-bernanke-will-eat-your-babies-carbs-kill-unicorns-i-hate-the-verizon-can-you-hear-me-now-guy-and-flouride-is-destroying-our-precious-bodily-fluids-!!!!111oneone.

If you believe a financial apocalypse will occur and/or there is a “revolution” that somehow magically “restarts” civilization, this is your wager:

The second wager below is an illustrative rebuttal to the above self-delusional, self-defeating, borderline-anti-capitalistic, eschatological fantasy.  The hero of this story is the entrepreneur who tries either way.

Go get ‘em tiger:

The point of this carnal, non-supernatural exercise is clear, that no matter what happens,there is no net negative consequences for promoting entrepreneurship or partaking in it yourself.

To use a sport analogy, why be a fair weather capitalist?

If capitalism and markets can outproduce state consumption, why not promote libertarianism and entrepreneurship?  Why wait around until “just the perfect political atmosphere” is created?  Why wait until there is no more government debt?  Why wait until the stars are aligned just right?  Why wait until after a collapse or after a “revolution?”

Parlez-vous Français

Voltaire had a germane quote, “Le mieux est l’ennemi du bien” or in English, the best is the enemy of the good.

To counter some of the comments noted above, regular readers know how bearish I can be about the tech sector and capital formation, but that does not mean there are still no growth opportunities.  You just have to be open to new ways of doing business, even if the conditions are not ideal, perfect or “the best.”

Every country has lots of debt — even China (1 2 3 4) — how does that preclude you from being a good, small time entrepreneur or finding good SME’s to invest in?  Angel investors like Ron Conway manage to keep on trucking in this environment.  He must be a state-monger right?

Also, think for a moment, how many RSS feeds and websites you visit each week that solely focus on doom, reckoning and gloom?  Don’t you think these contribute to overall incestuous-depression-the-end-is-nigh-groupthink?  Do you read as many hours about how to start your own company as you do on how to cure your apocaholic habit?  Do you drown your emo sorrows with misery, the loving companion?

While I have distanced myself over the past several years from most aspects of the libertarian “movement” — from recent top stories on thought-leader blogs and websites it seems as if the libertarian movement has almost become a poverty movement.  Where are the motivational stories to become another Peter Thiel?

Our hero is supposed to be the entrepreneur, yet so many of the revolution-addicts are angry bums that believe they are somehow defeating the state, by not participating in the economy.  By dropping out and making a subsistence income.  How is that starving the state?

To use a cliche ’90s phrase, such curmudgeons are a tool.  Don’t be a tool.

So are many of these boisterous paper tigers, continuously talking about “collapse” for years on end.  Talk is cheap.  Excuses are infinite.  Suck it up and go out and walk the walk, create a “revolution” by inventing the physical future.  You don’t have to be Steve Jobs, but think about this: SOPA.  Google was able to help kill it in one day and it doesn’t even “own” a seat in Congress.  It did more in one day than most Congresspersons can do in a decade.  And assuming you don’t buy Bryan Caplan’s irrational voter theory, perhaps you’ll give Ferguson’s investment theory another look.

In contrast, all of this preparation for a financial Armageddon, is akin to believing you are special and the time you live in are special.  Unique, yes, but not special.  The odds of another large-scale peaceful revolution working like the Velvet revolution or the peaceful transition in Apartheid South Africa, in my opinion are low.  The odds that a libertarian-order will rise out of a “revolution,” in my opinion, are even lower.  Why would everyone who used to benefit from state largess magically wake up one day and want to use commodities like gold and immediately cherish libertarian values (e.g., NAP)?

I think it is silly and counterproductive to talk about “revolution” in most contemporary First World political movements.  I think peace should be preached and one of the easiest peaceful ways for change is to educate individuals and/or become so affluent you can invent the future and perhaps build your own homesteads elsewhere (e.g., seasteading, brainsteading).

I think those advocating a Jeffersonian “revolution” have no clue what that would all entail after the first month, plus they would probably lose.

Either way, I think Robert E. Lee’s old quote is also instructive: “It is well that war is so terrible – otherwise we would grow too fond of it.”  Substitute “revolution” for “war” for the 21st century First World analog.  You think “the enemies” guns stop working after a hypothetical financial collapse?  Think your bars of gold will instantly turn sewage into drinkable water?

Why are you choosing to become a martyr?

I think this election cycle – and in particular various vocal members of the Tea Party – have inadvertently inspired a group of martyrs, willing to impart physical harm in some pseudo-religious, fatalistic fantasy for an end-game that would somehow be “freedom” incarnate.  Freedom sounds great on TV, it is like babies — it is the ultimate soundbite (“my opponent hates freedom,” “my opponent hates babies”) — but how can you actually achieve that?

One conceivable way agorism and/or ancapism could come into being peacefully is by literally out-inventing, out-innovating, out-producing the state so much that state intervention is entirely marginalized and/or you physically create a new landmass (… or move to another planet).

Whether or not this is attainable is certainly up for debate.  Though, I think it is a complete waste of time and actually counterproductive to do what some libertarians are try to do via the political process that has achieved little in the way of measurable results in the past four decades.

Instead, if they refocused their energies and capital on physically inventing the future — cryptoanarchy, technological singularity, seasteading — they might actually be able to achieve that goal of agorism and ancapism.

I am also reminded of the old Patton quote as well, “No bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country.”  So why would you want to be a martyr for a nebulous, ill-defined, civil-war-like “revolution” that probably would result in more death and misery?  Close your signed copy of The Politically Incorrect Guide to… and come outside your RDF, this is meat space.   Welcome.

An outline to move from a mixed-economy to libertopia

There is probably no apriori strategy for an effective “revolution” at the level these libertarians are claiming.  It all runs into what Moltke the Elder who said, “no plan of operations extends with any certainty beyond the first contact with the main hostile force.”

And unfortunately, many libertarians, especially those involved in party politics have wanted to fight the equivalent of Kurskian warfare head on with their puny budgets and man power  — a fatal recreation of Krojanty.  You can’t win a conventional war like that.  You have better chances doing it asymmetrically.

And in my opinion, the best way of practicing what you preach is to become an entrepreneur.

1) Decide you want to be an entrepreneur
2) Slowly build up one or more revenue streams
3) Save and become wealthier
4) Do not invest in gimmicky newsletters and get-rich-quick schemes
5) Rinse, wash, repeat

Sure there are lots of gaps and missing steps, but that is what your role of an entrepreneur is: the economic coordinator that uses price signals to figure out what actions or inactions are profitable.  To satiate consumer demand.  Talk to Siri, she can probably tell you more.

In turn you can use your wealth to:

- deconstruct the state via Ferguson’s investment theory
- build a new island (ATNB)
- build an off-shore artificial island (TSI)
- build a giant yacht (FS)
- launch yourself to the GEO/moon/Mars (Brainsteading)
- cryptoanarchy, singularity, Second Realm, etc.

I actually think Matthew Alexander’s book Wĭthûr Wē touches on all of these issues in detail; you don’t have to physically blow up the state “to win.”  There are many of other peaceful solutions.  Apartheid in South Africa ultimately ended without shots fired.  Mandela & Co. didn’t run whitey over with tanks and vice-versa.  Truth and reconciliation and all that.  The Velvet revolution in Europe is another.

Thus entrepreneurship, not prepperism, not only makes everyone materially wealthier (and perhaps even healthier) – but can potentially dismantle the state.  I am not saying you personally should take out a small business loan or mortgage your home tomorrow.  But it certainly wouldn’t hurt to have some more non-poor libertarians running around.

Typical internet forum conversation with revolutionholics:

Bob the tool: “Oh I hate the state, I don’t want to produce anything until the state is gone.”
Guapo: “But can’t you change the state by generating more wealth than it taxes?”
Bob the tool: “I don’t want to give them another red cent.”

[3 months later]

Bob the tool: “Oh for effs sake, why doesn’t the state GTFO and die already?”
Guapo: “You haven’t worked for 3 months and yet the state still exists?”
Bob the tool: “Well at least I helped starve the state!”
Guapo: “You actually just starved your family.”

What I am suggesting is that libertarians be encouraged to do something different, earn more, make more, create more wealth.  The only downside is everyone is materially wealthier than before.  Yet for some reason this is not being advocated to the degree prepperism and collapsism are.  Many libertarian sites this past year have been filled with what at times has become vapid counterproductive motivations to push specific political candidates: yet accomplished almost nothing compared with say, Google.

For as good as libertarians are good at quoting Bastiat’s parable of the broken window, let us look at the practical question of: what are the alternative productive uses that could have been done with the millions of dollars that were donated to push specific candidates?  You could have a least bought shares in The World, perhaps even created an offshore Blueseed concept.

The forum conversation continues

One of the comments some libertarians state when you ask them “why don’t you start a new company?”

Bob the tool: “but the state will tax it away!”
Guapo: “but if you’re successful, it won’t matter, you will have much more money in aggregate.”
Bob the tool: “I don’t want to give another cent to the state.”

So they’ll take a menial job or work in the “black” or “shadow” market so they can avoid taxes.  Thus giving them subsistence wages yet having made zero impact to the tax regime or the state purse.  Yet they justify this by telling themselves “yea, the imperialist state has one less cent from me to use, I am starving it!”  And then posts such self-delusions on forums and libertarian websites — filled with other such self-delusioned tools.

Whereas if you acknowledge that sure, the state sucks but griping about non-stop it won’t change it.  You can start a company, build it up — get taxed in the process — and eventually become relatively wealthier.  Then perhaps you can influence the tax rates or whatever your first-strike against statism is.

Again, for all the talk about Bastiat’s lessons on opportunity costs, many libertarians don’t take the same principles and apply it to their careers.

Unplug yourself from the drug of collapsaholicism, apocaholicism, revolutionism, prepperism.  Remove yourself from newsletters and twitter feeds that do not teach you how to be better entrepreneurs and businesspersons.  Just like an alcholic stays sober by not drinking so to can you actually create a better world instead of continuously griping about the one you have.  It could always be worse.  And despite the rhetoric of some libertarian thought-leaders, today’s relative morass is not all the state’s fault.  Government debt isn’t stopping you from creating a new part-time job for yourself in your abode.  Beat the state by out-producing it.

The sound of one hand clapping

Starting right now, don’t be a negative Nancy or a Debbie downer — the state is not going to collapse because you merely want it to.

Check out The 4 Hour Workweek from Tim Ferris, 100 Business ideas from Young Entrepreneur magazine as well as resources from Startup Nation and Entrepreneur magazine.

There are lots of small jobs you can start-up without much investment — maybe after a few months, you can be the 44% that doesn’t fail.

And to help motivate you, let us part with the following neo-proverb.  At the beginning of the reform and opening up in late 1978 when China’s GDP was a mere $10 billion, Deng purportedly said: “to get rich is glorious.”  What he actually probably said was “to gain wealth is glorious” in terms of knowledge and material, but the message is clear: living in Hobbesian subsistence is for the pre-industrial, stone age third world.  And also for preppers, wanna-be revolutionaries and keyboard commandos (like Fatbeard).

If alcoholics go to rehab, then consider this an intervention and your first day of doomsday sobriety.  These guys are your support group.

Go get ‘em tiger.

[Special thanks to Matt Mortellaro for his comments and suggestions.  Recovering collapsaholics are also encouraged to peruse: Apocalypse Not, The NASA Scientist Who Answers Your 2012 Apocalypse Emails, A Year After the Non-Apocalypse, and Why Credit Deflation is More Likely than Mass Inflation]

Quick quiz, name the country:

-  whose farms produce 20% of the world’s calories
-  who is the leading semiconductor manufacturer and exporter (and this country’s top export industry)
-  whose manufacturing base is the world’s largest
-  who is the largest recipient of FDI and the second largest exporter
-  whose entertainment and culture are pirated, siphoned, copied and continuously consumed globally (go to kat.ph/movies, how many of the top 100 are made in China?)
-  whose labor participation rate is at a 30 year low yet still produces the same amount of economic activity as ever before

Why are some misanthropic analysts throwing the baby out with the bath water when it is clear that the US has not collapsed or will collapse in the near future?

For example, not to single this reader out, but the comment from Mangix in yesterday’s blog post touches on a number of myth’s that are currently popular in some corners of the blogsphere:

so if china doesn’t present a particularly strong growth opportunity, what does?

According to Jim Rogers, capital has slowly been moving from the west to the east and since you can’t have capitalism without capital…

It boggles the mind that anything in the west would have any growth opportunity since most western governments are loaded with billions and trillions dollars of debt.

There are at least three problems with this:

1) Jim Rogers may have been correct with his investment strategies in commodities and agriculture, but his calls and timing regarding East Asia, especially China, have been wholly incorrect.  If someone is continually incorrect with their predictions, why continue listening to them and taking their advice in that domain?

No one listens to the Millerites or Harold Camping anymore, so why pay heed to Rogers & Co.?  Because it feels good?  Perhaps you are an apocaholic.

2) China has strict capital controls that prevent capital from flowing East to West.  If these were relaxed, domestic savers would now have alternatives to park their funds.  Currently Chinese savers have few choices: place the funds in state-owned banks whose repressed interest rates sit below CPI and/or purchase investment properties and hope to rent them out (though many of these properties remain dormant for years).  Also, look at China’s FDI.  As an investor why would you risk sending your capital to a country whose means of production is owned by the state?

3)  Presidents, the Supreme Court, drones, OWS, Tea Partiers, carbs, conspiracies, chupacabras and autotune are all easy scapegoats.  But it is also your responsibility as a potential entrepreneur to think of new growth opportunities in whichever country you live in (regardless of “East” or “West”).   Sure 56% of start-ups fail in their first 5 years, sure you might dislike the political environment in whatever domicile you live in, but there are probably still opportunities if you are creative.  Stop blaming the state, stop blaming political parties and “gridlock,” you alone can invent the future and become so rich that tax rates just make you blush.

Mark DeWeaver, who I interviewed here, has found opportunities in the most unlikeliest of places: Iraq.  Here is the official webpage of the Iraq Stock Exchange.  Here is a wiki entry about it.  Here is a story about it on Bloomberg (which is still blocked here in China).

One last note

Just because there have been riots in Greece and Spain in the past year, it does not follow that there will be a future, global societal collapse such as those continuously prophesied by doomsday radio-hosts and the hyperbolic (sic) blogosphere… who make a living off of preaching gloom.

Nor does it follow from such a collapse, that some wise libertarian-minded order will rise from the ashes.  This is a weird teenage eschatological fantasy.  Not once in history have “the masses” - hoi polloi – become instantly enlightened with agorism and libertarian thought following a “collapse.”   In fact, the last time a grand civilization collapsed we had 1000 years of Dark Ages.  Brutish and miserable.  Why would anyone want that to happen again?

And there is little evidence to suggest that gold/silver owners would be kings.  It is all a non sequitur.  More than likely, they would be the first ones <insert morbid death>.  Plus, if you dislike your USD so much, feel free to donate them to TLS.

See also: cryptography realists by XKCD.

Economist Robert Gordon recently uploaded an NBER working paper regarding US economic growth that Mark DeWeaver recently passed to me.  Gordon makes the case that there are a number of headwinds (six by his count) that will prevent the US from growing more than one percent over the foreseeable future.

While I am bearish in some respects, I do not find any of the headwinds presented convincing.  In fact as I explain below, I find most of them simply non-issues and that other unmentioned policies to be much larger culprits in stymieing economic growth.

At the beginning, Gordon notes that this paper is an exercise in what-ifs.  Key to his point is, what-if the financial crisis did not occur after 2007 — what is the best-in-case growth trajectory for the US sans the financial correction?

With that said, if Gordon is going to do a little hand waving regarding “what if the 2007-8 financial crisis didn’t happen” I am sure there are a number of other economists who could pen some papers on “what if the federal budget was $0 in the past five years?”  or if there “had been no war in Iraq or Afghanistan” — I suspect they would come to some alternative conclusions as well.

Another “what if scenario” that springs to mind — what are some trend lines for economic growth numbers if individual savings accounts were not taxed, interest wasn’t taxed, withdrawal of funds were not taxed, etc.  In Japan, individuals can open up multiple savings accounts in Japan Post and the first $13,000 are purportedly tax free.

At any rate, there is an unlimited amount of “what-ifs” that can be imagined.  Let us discuss Gordon’s specifics.  His six headwinds are as follows:  demographic, education, inequality, globalization, energy and debt reversal.  More on these later.

Seen and unseen

I think his 4th point on p.2 is a bit short-sighted as it only looks at what is happening right now in terms of some “seen” technological transformations, yet there is a lot of “unseen” productivity gains behind closed doors such as robotic automation of factories that is allowing manufacturing firms to save on labor costs.  The NY Times had a good piece on this a couple weeks ago — “New Wave of Adept Robots is Changing Global Industry” — which goes into detail regarding new robots that help load and unload parcels as well; and will be a disruptive innovation for those firms (like FedEx and UPS) that rely on large pools of human physical labor.

Another not-so-obvious advancement occurs in the pharmacy as robots replace pharmacists (Salon had a detailed piece on this last year) and in the oil fields, where Zigbee powered devices (a low-powered radio) allows oil pump managers to remotely survey their oil fields without having to drive out to each individual oil field.  While Gordon does mention automated automobiles later on (e.g., the Google driveless car), he also ignores the possibilities of emerging technologies like 3D printers which can decentralize manufacturing and of course 4G smartphones and all of the Swiss-army knife innovations it has cobbled together saving time and space — the average smartphone user today has access to more knowledge than any king or president in the past.  To his credit Gordon attempts to address the smartphone angle specifically later on, but I will explain what he misses below as well.

What are you bearish about?

I think there are more than six headwinds that the US and other developed countries are running into, unfunded entitlement programs are at the top of that list — yet is barely mentioned by Gordon.  At the same time I do not see much of a problem with a “demographic dividend” in the US as he does (p.2) because skilled, youthful immigrants are and will continue to flock to the US and fill in many of those gaps for decades to come.  The same cannot be said for other developed economics like Japan or Germany.

I think there are a number of other headwinds that Gordon doesn’t mention, like healthcare.  If you nationalize it, you not only shift the burden of compensation from one party to another but the capital allocation process is no longer rationed via organic prices but via arbitrary fiat.  Now while I doubt this will immediately result in every hospital turning into a VA like Born on the Fourth of July — it certainly is not going to help anyone in the long-run (except lobbyists and SIGs) as you cannot build hospitals instantaneously by decree and/or train doctors overnight.  Medical resources are scarce and allocating access to them in a centrally planned fashion will apriori lead to planned chaos.

While on p.2 and later on p. 10 he makes a good point about physical transportation speeds reaching a limit in 1958, he misses the fact that starting in the ’60s humanity actually went from sub-Mach 1 to the speed-of-light via fiber optics and lasers.  In fact, a lot of business communication can now be done via telepresence (like telemedicine) and interactive conference calls — saving untold amounts of time that would have otherwise been spent traveling and saved monies that can now be spent on other productive activities.  In fact,  Gordon merely mentions it in passing: the continually evolving internet.  How much productivity has been gained because you no longer have to spend time in a car to get to the Post Office, stand in line at the Post Office with a stack of documents that needs to be sent from one city to another — whereas many of those same documents today can simply be signed, scanned and emailed?  In fact, the productivity gains by internet-based communication is one of the reasons which has decimated the government-managed Post Office, forcing it to the brink of bankruptcy.

Chartism and trend lines

Gordon’s charts (specifically those on p. 6) are very interesting but more illustrative than prescriptive.   However, I don’t see him taking this into account: various agencies (e.g., a government) that malinvest and misallocate capital more than an economy can produce.  Or rather, productivity in an economy can be hampered by inefficient capital allocation.  At some point capital consumption can be so great, cannibalization can take place and if the capital needed to maintain the physical plants runs out, you can run into the productivity vs consumption wall the Soviets did.  I would like to see the 70 years of growth and decline in the Soviet Union — if it is possible to actually measure it — and plot it using the same assumptions that Gordon has.

Despite my criticism I really did enjoy his descriptive overview of the dreary life people lived (such as the manure on p.8) prior to the inventions of the modern world we now live with — especially with in-door plumbing and safe electricity.

And speaking of horse manure and streets, one of the unsung saviors of urban planning in the early 20th century was the automobile because it freed the horrifically disgusting streets of London and New York from diseases, death and decay (Gordon describes some of it, but these two pieces go into more detail).  In fact, last year NYC set a new record low for the safest roads in terms of commuter deaths per year — the safest the city has had in a century thanks to the automobile.

On p. 12 he points to the jocular 1987 quote that “We can see computers everywhere except in the productivity statistics.”  The problem with this is that it would be akin to saying in 1917 “We can see automobiles everywhere except in the productivity statistics.”  It was stated too early.  Instead we are now in an era Kevin Ashton (and subsequently Steve Jobs) called “an Internet of things.”  There are roughly as many always-on, net-connected gadgets today as there are humans.  By 2020 the amount of net-connected gadgets will have more than doubled.  And while it is certainly too early to predict what will happen next, Charles Stross recently put together an interesting hypothetical for what 2032 will look like — although the bear in me disagrees.

What is broken and unequal about it?

In terms of education as a headwind (p. 17) Gordon claims that the education system in the US has a number of unequal aspects that hinder productivity and ultimately creates two-classes of citizens.  Unfortunately he does not cite sources for this and as an aside, if the US education system is so broken as he laments, why would say, affluent Chinese people want to matriculate to it?  Suckers?  For example, a large portion of my current students here in China try hard to get placed and accepted into US grad schools (see a tangential story here).  The older ones want their children to go to US high schools.   In fact, this chart beautifully depicts where affluent Chinese send (“export”) their children for education.

I’m not saying that the numerous US school systems are not “broken” or “disjointed” I just don’t see any objective criteria for what Gordon claims is a huge impending quagmire.  Or perhaps, maybe the school systems here in China are “brokener!”  Brokenest even!  And then we devolve into hyperbole.  With all of this said, I think the move towards free online programs like Khan Academy and Udacity will enable a new generation of self-taught innovators to disrupt the marketplace.  A significant portion of IT and engineers are already self-taught and contribute substantially to aggregate productivity.  I do not see this trend (or the immigration trend) declining and thus disagree with Gordon.

His point 4 on page 17 is a bit short-sighted too.  Sure low-skill, low-end manufacturing jobs have moved from the US to other countries (yet Gordon leaves out the concept of global labor arbitrage — the Brits could have and surely did complain 200 years ago when lowly Americans were “stealing” manufacturing jobs), but as the Chinese lament, high-skilled jobs are not moving to China.

To quote a recent WSJ report, these desirable jobs remain in the developed world:

“High-end jobs that should have been produced by industrialization, including research, marketing and accounting etc., have been left in the West,” said Chen Yuyu, associate professor at Peking University’s Guanghua School of Management. Referencing the trade name of Hon Hai Precision Industry Co.,the Taiwan-based company that makes gadgets for Apple Inc. and others in Chinese factories, he said, “We only have assembly lines in Foxconns.”

Solving the problem is complex, involving a gradual overhaul of China’s education system as well as efforts to add more service-sector jobs. China’s Ministry of Education in 2010 unveiled new guidelines pressing universities to shift away from their traditional focus on increasing enrollment. It is also experimenting with giving faculty greater say over curriculum and school operations, though universities remain tightly controlled by the Communist Party.

Moving along, on p.17 I don’t see a huge push for a carbon tax at the moment.  And while I am not a huge fan of environmental government-based regulation, I don’t see much regulation “uncertainty” in this area — especially since CO2 levels in the US are now at a 20 year low — what can US environmentalists rally around at this point?  Perhaps my own geographical location in Shanghai distorts my view but this is one fight China and India continue to win at places like the WEF and G20 and as a consequence, I don’t think US policy makers will be able to push this through as easily.  Thus I don’t see the US moving in Europe’s carbon tax direction any time soon as Gordon predicts.

Of all his claims, I am most puzzled on p. 20 where he states:

The “revival of American manufacturing” is heralded in the media without recognition that this is part of an ongoing process that erodes the number of high-paying middle-class jobs available to those without a college education.

He is referring to union jobs — or many others that require occupational licensing.  I do not see labor arbitrage as having a negative effect that he does.  It will be negative to those union workers, but because labor costs decrease in those industries and thus the total cost of finished goods decrease, it means consumers will have more money to spend on other economic activities.  Opportunity costs from the diminishing”union tax” have the potential to free up capital that can be allocated elsewhere.

As I mentioned at the beginning, on p. 14 Gordon directly discusses the contribution of smartphones, noting that:

[T]he smartphone replaced the garden-variety “dumb” cellphone with functions that in part replaced desktop and laptop computers; and the iPad provided further competition with traditional personal computers. These innovations were enthusiastically adopted, but they provided new opportunities for consumption on the job and in leisure hours rather than a continuation of the historical tradition of replacing human labor with machines.

The problem with this specifically is that he does not distinguish between the seen and unseen.  You cannot see the opportunity costs in an alternative 2012 world that does not have smartphones.  While a smartphone today may not be very useful for editing and rendering wireframes,  they are incredible time savers and organizational tools.  Imagine all of the round-trips saved going back and forth to your home now that you can access your email anywhere you are or all of those wrong turns that no longer take place due to GPS.  These smartphones have become a just-in-time, jack-of-all-trade in a box.  I would argue that one of the reasons that the current global recession the developed world has experienced over the past 5 years seems to be relatively muted (that the riots in Athens are fortunately so far the exception to the rule) is that technological productivity has managed to keep apace of aggregate malinvestment and unproductive assets.

Unfortunately Gordon doesn’t measure this.

El fin

Overall I think he raises some interesting points but I am not convinced by his six headwinds for a bearish case — I have many other reasons to be bearish (which I made in that tech/debt piece a few months ago).  And I think it is a cheap shot to claim that Canada and Sweden will not face their own problems — “free” health care sounds great until whoever pays for it runs out of money and/or you misallocate capital so poorly that hospitals are no longer properly maintained and/or you don’t have the ability to meet the demand of subsidized visits.

Lastly, I do not think that that private investment and private entrepreneurs always make great decisions and/or profitable ventures — 56% of startups fail within the first 5 years.  And while I think it would be hyperbole to suggest that these entrepreneurs failed because of government intervention (there are plenty of incompetent pointy-haired bosses in the private marketplace) — to ignore the effects government intervention on the marketplace and economic growth as a whole would be myopic.

For roughly three years I had the opportunity to live and work at two colleges out here in China.  I could describe any number of observations but one that sticks out at this time is the role the Communist Party plays in curriculum.

While the days of the Little Red Book (Mao zhuxi yulu) and cult of personality may officially be in the past, the Party still maintains control over what is and is not taught in classes.

For example, at both colleges I taught at, each department had both a nominal civilian leader as well as a de facto  Party leader.  While I had little daily interaction with Party leaders (I did meet them several times a semester at faculty dinners and they were actually very friendly to me — gan bei!), this form of governance  results in both direct overt censorship and self-censorship via “chilling effects.”

And because the faculty was limited to the Party approved curriculum, this hampered the instructors ability to inject new, different and simply foreign ideas into the classroom.  Thus you cannot foster creativity in a classroom without first dealing with the elephant in the room — the entity whose presence currently engenders the status quo.

The WSJ recently published a report noting how new Chinese graduates are having a difficult time finding jobs in part because of a skillset mismatch between what they learned in college and what hiring firms currently demand.

Before quoting the paper, I wanted to share one additional anecdote that involves this skillset mismatch.  While it may be hard to believe, but I never once in all of my teaching out here have espoused my personal opinions about libertarianism to the student body.  Not only do I think it is unprofessional to do so but I think it is short sighted (e.g., I would immediately lose my job and be deported) — and would accomplish nothing because there is no legal opposition group to rally around.  Thus martyrdom for laowai (which I do not encourage anyways) is self-defeating.

With that said, each semester there were always a number of students that would for better and for worse share their thoughts about the material they were studying in other classes.  And a handful of students, those with cajones, would even mention the material by name:  Marx and Mao.

You see, like many Western colleges, Chinese students are required to take specific courses each semester — with very few electives being offered (and none sometimes offered at all).  In addition to studying subjects like Chinese and English, all students (at the colleges I taught at and most others on the mainland) require that their students take several courses on the literature and philosophy of Marx and Mao.

And while they may have been sent on a fishing expedition to get their laowai instructor to divulge (my) personal opinions, several students each semester — those with cajones (because you could be publicly reprimanded for it) — would verbally complain about having to study the works of Marx and Mao.  Or in the words of one student I had two years ago, “if it doesn’t work in practice what good is learning an [anachronistic] theory semester after semester?  How will this help us get a job?” [He tried to say anachronistic but it didn't come out that way]

So while the North American blogosphere might complain about the futility and practicality of Underwater Basket Weaving or Virtual Reality Gender Studies, the fact that 6 million Chinese graduated this past year being indoctrinated with Marx and Mao should give First World bloggers a moment of solace and perspective.

Now back to the comment my student said two years ago, how will this help them find a job?  To quote the WSJ, it does not:

“High-end jobs that should have been produced by industrialization, including research, marketing and accounting etc., have been left in the West,” said Chen Yuyu, associate professor at Peking University’s Guanghua School of Management. Referencing the trade name of Hon Hai Precision Industry Co.,the Taiwan-based company that makes gadgets for Apple Inc. and others in Chinese factories, he said, “We only have assembly lines in Foxconns.”

Solving the problem is complex, involving a gradual overhaul of China’s education system as well as efforts to add more service-sector jobs. China’s Ministry of Education in 2010 unveiled new guidelines pressing universities to shift away from their traditional focus on increasing enrollment. It is also experimenting with giving faculty greater say over curriculum and school operations, though universities remain tightly controlled by the Communist Party.

Oops.  By directly and indirectly interfering with curriculum, the Party planners have unintentionally outsource — re-sourced — high skilled jobs to the developed world (see also tangentially labor arbitrage).  This is not to say that there are not opportunities for say software programmers (I personally have about 10 business Chinese students at this time who work for a very large American semiconductor company as chipset and driver programmers in Shanghai) — but this is the exception rather than the rule.

And as the same WSJ article notes those graduates that do find jobs are not making big yuan:

A survey of more than 6,000 new graduates conducted last year by Tsinghua University in Beijing said that entry-level salaries of 69% of college graduates are lower than those of the migrant workers who come from the countryside to man Chinese factories, a figure that government statistics currently put at about 2,200 yuan ($345) a month. Graduates from lower-level universities make an average of only 1,903 yuan a month, it said.

Thus the next time you hear someone from the the Professional Protesting class such as the Occupy Wall Street movement complain about making a mere $10 an hour at Walmart, kindly explain to them that college graduates in the worlds 2nd largest economy make less than $3 an hour despite increasingly higher costs of living — which is another anecdote I can vouch for (seeing as hundreds of my former students have now graduated and began their sobering careers).

One last note

Chinese students wishing to further their education via graduate school on the mainland are required to take another lengthy entrance examination (akin to the original gaokao) in which a students knowledge of Marx and Mao are again tested.  A foreign colleague of mine has a Chinese wife who bitterly complained about having to take those portions of the test simply to apply to a grad program in translation and interpretation.  Several of her other, talented friends opted out and instead used guanxi to get government jobs.

Which brings me to this slight twist of fortunes: do you know what the #1 desirable job is now in China?  According to a recent survey from ChinaHR: working for the government — for the old fashioned Iron Rice bowl (tie fan wan) once again.