Archive for January, 2013

In the past, I have frequently wrote about the disregard of the Constitution of the United States. While watching a recent discussion between Peter Robinson and Thomas Sowell, I came across this brilliant quotation:

When all is said and done, the Constitution of the United States is a set of words on pieces of paper. The only way the Constitution can protect us is if we protect the Constitution. If we rise up and revolt, if we vote out of office people who violate the Constitution, then of course it will mean something. However, if people can do this – say a few pretty words and we say ‘Oh well’ – then the Constitution will erode over time to the point where it will mean absolutely nothing. There will be nice words on paper but people with power will just do what they like.

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John Stossel is not an economist. He studied psychology at Princeton and has been a journalist for the last forty years. But throughout his career, he has done what an economist could not do better: trace and analyze the impact of government intervention.

His discussion with Peter Robinson from Uncommon Knowledge took place about a year ago. Stossel reminds me of my recent post on Jeremy Clarkson, which makes the video all the more worth watching:

The economy is not like an orchestra that a conductor to has to start or a car that needs jump-starting. An economy is people with needs and if you leave them alone they will do amazing, wonderful things to meet those needs. And we take it for granted that a supermarket has thirty thousand products, and they are all cheap, and it is open 24/7, and they rarely poison us.

Robert Hicks said ‘war is the friend of the state’. Well, so is crisis and fear.

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eu referendum

David Cameron, the Prime Minister of the United Kingdom, announced that he wants the British people to have an in-or-out vote on Britain’s membership in the European Union. Not surprisingly, he received harsh criticism from almost all leading politicians in Europe. That leaves me with a question: Why are the European leaders so afraid of a referendum?

As far as I can see, there are three options:

  1. The EU has been a great success and voters appreciate this.
  2. The EU has been a great success but the ordinary voter is too dumb to appreciate this.
  3. The EU has become a bureaucratic mess and voters increasingly dislike their country’s membership.

So, if leading politicians reject the idea of a British referendum they implicitly argue that the first option is false (otherwise a referendum would simply support Britain’s membership). Which leaves me to conclude that either politicians regard voters as sheep or they fear the voters might get the opportunity to judge the mess in Brussels.

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Nobel laureate Milton Friedman brilliantly dissects the pros and cons of drug legalization:

The one negative feature of legalizing drugs is that there might be some additional drug addicts. However, the child who is shot in a pass-by shooting is an innocent victim in every respect of the term. But the person who decides to take drugs for himself is not an innocent victim.

If it is in principle okay for the government to say you must not consume drugs because they do you harm, why isn’t it alright for the government to say must not eat too much because it may do you harm? Why isn’t it alright for the government to say you must not go in for skydiving because you might die? Why isn’t it alright to say “Oh skiing, that is no good, that is a very dangerous sport. You’ll hurt yourself”? Where do you draw the line?

One of the most important reasons to legalize drugs, however, is mentioned only very briefly. If you legally buy something from a shop or restaurant you can always sue the owner if the product is of low quality or even harmful. But if you illegally buy drugs, there is no way you can sue the salesperson. And, of course, the salesperson knows and anticipates this problem.

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The Heritage Foundation recently updated its Index of Economic Freedom. You can find the full country ranking here.

With respect to the United States, however, the authors do not provide good news:

Why Does Economic Freedom Matter?

If America’s commitment to economic freedom – not only by its policies but by its leadership in the world – continues to flag, it neglects its national interests and betrays its core principles. In doing so, it also jeopardizes the security, prosperity and liberty not only of the United States but much of the world as well.

While Switzerland has kept the first spot in Europe, Hong Kong is the overall number one. And the United States now barely makes it into the top ten (it was fifth in 2008). No doubt one can debate whether Chile and Mauritius are a better place to be than America. But one cannot deny the decline in freedom that takes place.

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One hundred years ago, the United States experienced three major changes:

  • The 16th amendment introduced a federal income tax
  • The Federal Reserve (Fed) was created
  • The 17th amendment introduced the popular vote of senators

Some have described these changes by saying that 1913 was the worst year in U.S. history. Let us have a look at the last two changes.

Nobel laureate Milton Friedman on the track record of the Fed:

It has done far more harm than good.

Judge Andrew Napolitano on the 17th amendment:

It may sound like more democracy but it was the death knell of the idea that the federal government is a coming-together of independent, sovereign states.

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When reading Jeremy Clarkson’s latest book Round the Bend, the last thing you might expect is to learn something about economics. But you do. Because instead of reviewing the Audi A4, Clarkson talks about how capitalism benefits the consumers.

Because McDonald’s and Burger King offer tasty snacks in every town in the world, anyone selling inferior burgers made from stale bread and dead horses will go out of business extremely quickly.

That’s the core of capitalism. ‘Better’ will always win the day. And it doesn’t matter what form ‘better’ takes. Better can mean cheaper, more convenient, nicer, prettier, more tasty, more healthy. […] Because the bosses of the giant corporations know this, they strive constantly to make what they sell better, and that’s brilliant for you and me.

When was the last time you had a faulty cigarette? When was the last time your plane crashed? When did you last take a strawberry back to the supermarket because it was all covered in slime? It’s not governments or best-before dates or health and safety that is doing this; it’s capitalism.

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