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TGIF: Libertarianism in Emergencies

TGIF: Libertarianism in Emergencies

Libertarians have always acknowledged that emergencies — severe extraordinary conditions of limited duration — can justify actions that would be unacceptable under normal circumstances. This doesn’t mean that all the rights-based rules disappear, only that some measures are deemed permissible that otherwise would be beyond the pale. Danger, however, lurks in this principle, requiring eternal vigilance.

For example, if someone collapses unconscious in the street, you may do things intended to help him without his consent. This does not justify a general policy of paternalism. Another common hypothetical is that of the person caught in a life-threatening blizzard in the wilderness who happens on a cabin (which, let us say for simplicity’s sake, is unoccupied at the time). To save his life, the stranger breaks in, builds a fire, and eats the food. No reasonable person would fault him for not first seeking permission of the owner. What happens after the emergency passes is an interesting topic for discussion — should he offer compensation? should the property owner demand and accept it? — but let’s not get into that now. (Yes, the hypothetical could be made far more complicated than mine, but that’s also for another time.) Yet this cannot justify the abolition of property rights.

We might call those situations micro emergencies. They affect one individual or a few, while other people may experience nothing extraordinary at all. So what about a macro — society-wide or global — emergency — a widespread epidemic, let’s say? I can’t see why the principle of emergencies would not hold. The aim of ethics (politics being a subset) is human flourishing, not blind slavishness to duty.

Unfortunately this might mean that in today’s world — where a dangerous communicable disease threatens to overwhelm the medical system — governments would reasonably have freer rein to do things than they have in normal times. Most people would expect that to be the case and, moreover, would want it that way. I say unfortunately not only for reasons obvious to libertarians but also because the existence of the state has over a long period impeded and even forbidden the gradual spontaneous emergence of alternative, protean, voluntary public-health and mutual-aid institutions that would be better suited to responding to pandemics (and other disasters) than the centralized collection of politicians and bureaucrats we call the state. To see the point, you need only meditate on the leading government public-health agencies’ prolonged botching of the matter of coronavirus testing. (Although it’s been stretched nearly beyond recognition for obvious public-choice reasons, public health is a legitimate concept in light of the existence of serious communicable diseases.)

That we must regretfully do without those alternative institutions in the present emergency (although not entirely) should teach everyone a lesson for the future. But what can we do now? A libertarian who says he would “push the button” and at once abolish the state (or in the case of a limited-government libertarian, merely eliminate the welfare state) has little of value to say today. Does he think that alternative voluntary institutions would spring into existence? Institutions — and the constellation of customs and expectations they embody — need time to grow. I’m not saying that people working together consensually wouldn’t do much good on their own in the meantime — they are doing so now — but the limits in the short term would be significant.

Besides, no such button exists, so why would we even talk about it? A radical scaling back of the state at this time would not find widespread support, so even if it could be pulled off, it would quickly be reversed because, like it or not, most people regard the (welfare) state as legitimate, even if they have objections to various parts of it.

So we’re stuck with the state as it is in this emergency. Where does that leave us? Some restrictions on normal activities will be regarded as reasonable, targeted quarantines, for example. That doesn’t mean we should suspend judgment and accept every restriction the politicians or bureaucrats come up with. (What’s with the curfew? Where’s the necessary connection with banning gatherings?) An emergency is no time to abandon one’s critical faculties. Nevertheless, things that would and should be condemned in normal times will reasonably be deemed acceptable — with regrets — even by libertarians for the duration of the emergency. Exactly what all those things might be I’m in no position to say with any confidence. A reasonable restriction could certainly be pushed too far. How far is too far? It’s not always clear, although we’ll often know it when we see it. We will be in an improvisational mode for some time to come — which is why decentralization, competition, and openness to information from far and wide should be the rule of the day. (See this.)

Of course, libertarians have a critical public role at this time. First, we should never cease to point out that much of what the government has done to mitigate the COVID-19 pandemic has been in the nature of suspending restrictions on private conduct essential to responding in this emergency. The loosening of restrictions regarding trade, medical practice (including testing and tele-medicine), vaccine development, occupational licensing, and more demonstrates how routine and commonly accepted government activity has dangerously hampered the private sector’s ability to anticipate and react to the pandemic. (Unfortunately restrictions on the price system, specifically, anti-price-gouging laws, are still in force. Trump has reinforced this.) When this is all over we must not let society forget how government stood in the way. What grounds could possibly exist for reinstating those restrictions that threatened our lives during the pandemic? They and others should be permanently repealed.

Second, we ought to be showing people that markets work in emergencies and that we need them more than ever. When hand sanitizer (which was not in common use a few decades ago) ran short, distilleries started making it. Hanes turned from making underwear to making masks. I’m sure other examples could be found. What if the whiskey and underwear industries had been shut down as nonessential? No bureaucrat can know all of the “nonessential” production required to support “essential” production. F. A. Hayek’s insights about the market solution to the ubiquitous “knowledge problem” are more important than ever.

Our very lives depend on entrepreneurship, which is alertness to overlooked opportunities to improve people’s well-being by transforming scarce resources from a less-valued to a more-valued form. Profit is not the only thing that motivates entrepreneurship, particularly in emergencies, but we must not discount its vital role. Thus “people before profits” is a false dichotomy that has devastating consequences, especially for the most vulnerable. (Profits from rent-seeking, that is, government favoritism, is what we should condemn.) When markets are free, serving others is profitable. Thus Trump should not use the Defense Production Act to command manufacturing. The price system is a faithful guide to action that helps others. Let it work. A corollary: globalization, the kind that is unguided by governments, is good and is saving lives now. The welfare-enhancing division of labor is limited by the extent of the market, Adam Smith wrote.

Besides suppression of the coronavirus we need the production of wealth, but only savings and investment through markets can produce new wealth for everyone (as opposed to special interests only). Government produces only the illusion of wealth by conjuring up apparent purchasing power through money creation — raising the price of what’s already been produced — and moving existing resources around — inevitably creating fertile ground for cronyism, pork-barrelism, and electioneering — while consuming a large share in the process. Everyone will pay a huge price for the government’s promiscuous fiscal and monetary “stimulus” — which could conceivably be far worse than the coronavirus.

To state the obvious, we must find the best balance of mitigation of the spread of the virus and economic activity, which itself is required to conquer the disease. We have no grounds for confidence that politicians and bureaucrats can find this balance. Decentralization, with many information-generating centers, is indispensable. And let’s not forget that “the vulnerable” include not only the medically vulnerable but also the economically vulnerable. (Also see this.)

Unfortunately, American governments have shut down much market activity. (Strangely, “socialist” Sweden has not shuttered businesses and prohibited gatherings.) So what can we do now? I’m persuaded that mass testing would pave the way for the resumption of more or less normal market activities, for it would identify those who have the virus antibodies and thus constitute no danger to others. (See this and this.)

Third, advocates of liberty and respect for people should demand that the U.S. government end all economic sanctions against other countries. In normal times, economic warfare is crueler than cruel since it deprives blameless people — not rulers — of food, medicines, and other necessities. Can you imagine what sanctions are doing now?

Fourth, libertarians should demand that any government emergency spending ought to come first from the so-called national-security budget, which, if you count everything, comes to over a trillion dollars a year. Liquidating the empire should be the order of the day. It’s always been bad for Americans’ and other people’s health.

Fifth, we libertarians must teach our fellow men and women about what Robert Higgs has named the “ratchet effect.” This is the well-documented phenomenon that extraordinary, intrusive government measures adopted during a crisis do not go away entirely once the crisis ends. (For details, see Higgs’s classic, Crisis and Leviathan: Critic Episodes in the Growth of American Government.) We can’t let the extraordinary become ordinary.

Sixth and related, libertarians must help people to understand that measures adopted during a bona fide emergency are unacceptable in other circumstances. Politicians and bureaucrats might enjoy their expanded powers in a crisis and so might try to invoke them under more typical conditions — but we cannot let the bar be lowered.

We must not let our society come to see restrictions on individual liberty as the new normal. This is an emergency, and we must not forget it.

 

States Lifting Regulations to Help Business During COVID-19 Shows How Useless These Laws Are

States Lifting Regulations to Help Business During COVID-19 Shows How Useless These Laws Are

From the start of the COVID-19 outbreak in the United States, state and local governments responded in various ways from issuing emergency orders⁠—citywide shutdowns⁠ to school closures and beyond⁠—but it’s the suspension of various laws and regulations that is exposing the unnecessary regulatory web that burdens businesses.

As often happens during emergencies, governors and mayors across the country have used executive power to waive laws and bypass regulations. This allows goods to get to the public quicker at lower cost, more service providers to enter struggling industries, and the market to respond to the crisis in countless other ways.

Lifting these regulations does not put public health or safety in jeopardy; if that were the case, they wouldn’t be lifted with such ease. But this should lead the public to question why the regulatory burdens exist at all.

In Texas, Gov. Greg Abbott waived oversize and overweight restrictions for commercial trucks and suspended requirements to register under the International Registration Plan or to obtain temporary registration, as long as the truck is registered in one US state.

Gov. Abbott also waived regulations allowing doctors to receive the same payment for over-the-phone telemedicine visits that they would for in-person visits for patients on state-regulated insurance plans.

Most notably, he waived state laws that prohibit alcohol industry trucks from delivering supplies to grocery stores saying, “by removing these regulations, we are streamlining the process to replenish the shelves in grocery stores across the state.” All of these moves allowed for the market to identify the needs of the public and fill them as quickly as possible.

In Boston, restaurants typically need a specific permit to provide carry-out service, but Mayor Marty Walsh lifted that requirement to allow for every restaurant to offer the service. Even New York City suspended its enforcement of illegal e-bikes during the crisis to accommodate for the influx of delivery orders, the state also moved to allow liquor-to-go.

Due to the increased demand, and ability for the supply chain to keep up with that demand, supermarket companies like H-E-B, Kroger, and Randall’s announced they’d be hiring thousands of additional staff. The newfound flexibility on trucking regulations means that grocers like H-E-B are deploying 1,300 trucks a day to continuously supply their stores.

In New Jersey, Bayonne ended enforcement of expired Resident and Driveway Parking permits. They also suspended issuing permits for what they consider “minor work,” like plumbing, electrical, mechanical, fire, and building. As long as contractors alert the city of the work they intend to do, the city will inspect it at a later date.

The ability to suspend these laws without fear of endangering the public opens the door to questioning their purpose. Many of these regulations appear to serve as no more than impediments to free exchange. If these measures exist simply to generate additional government revenue, the public should ask themselves, once the crisis has abated: should they exist at all?

Reprinted from the Free Thought Project

The Deep State’s Demolition of Democracy

The Deep State’s Demolition of Democracy

“Thank God for the Deep State,” declared former acting CIA chief John McLaughlin while appearing on a panel at the National Press Club last October. In 2018, the New York Times asserted that Trump’s use of the term “Deep State” and similar rhetoric “fanned fears that he is eroding public trust in institutions, undermining the idea of objective truth and sowing widespread suspicions about the government and news media.”

But barely a year later, the Deep State had gone from a figment of paranoid right-wingers’ imagination to the great hope for the salvation of American democracy. Much of the media is now conferring the same exulted status on the Deep State that was previously bestowed on Special Counsel Robert Mueller. Almost immediately after its existence was no longer denied, the Deep State became the incarnation of virtue in Washington.

The Deep State commonly refers to officials who secretly wield power permanently in Washington, often in federal agencies with vast sway and little accountability. A New York Times article in October gushed that “over the last three weeks, the deep state has emerged from the shadows in the form of real live government officials, past and present … and provided evidence that largely backs up the still-anonymous whistle-blower” on Donald Trump’s phone call to the president of Ukraine. New York Times columnist James Stewart declared, “There is a Deep State, there is a bureaucracy in our country who has pledged to respect the Constitution, respect the rule of law…. They work for the American people.” New York Times editorial writer Michelle Cottle proclaimed, “The deep state is alive and well” and hailed it as “a collection of patriotic public servants.” They were echoing earlier declarations by Washington Post columnist Eugene Roberts and former top Justice Department official Preet Bharar: “God bless the ‘Deep State.’”

Former CIA Director John Brennan, appearing on the same panel as McLaughlin in October, declared, “The reason why Mr. Trump has this very contentious relationship with CIA and FBI and the deep state people is because they tell the truth.” Much of the media coverage of the Trump impeachment is following that dubious storyline.

“We lied, we cheated, we stole.”

Five years ago, John Brennan’s CIA ignited what should have been a constitutional crisis when it was caught illegally spying on the Senate Intelligence Committee, which was compiling a massive report on the CIA torture program. After 9/11, the CIA constructed an interrogation regime by “consulting Egyptian and Saudi intelligence officials and copying Soviet interrogation methods,” the New York Times reported in 2007. Secret Bush administration torture memos “set the C.I.A. loose to slam suspects’ heads into walls up to 30 times in a row, to deprive suspects of sleep for more than a week straight, to confine them to small dark boxes for hours at a time … and to suffocate them with water to induce the perception that they are drowning,” Georgetown University law professor David Cole noted. But the only official who went to prison was John Kirakou, a former CIA analyst who publicly admitted that the CIA was waterboarding.

Is the Deep State more trustworthy when it is killing than when it is torturing? Brennan declared in 2016 that “the president requires near-certainty of no collateral damage” before approving a drone strike. Confidential CIA documents revealed that the CIA had little or no idea whom it was killing most of the time with its drone attacks in Pakistan, Somalia, Afghanistan, Yemen, and other nations. Salon.com summarized an NBC News report: “Even while admitting that the identities of many killed by drones were not known, the CIA documents asserted that all those dead were enemy combatants. The logic is twisted: If we kill you, then you were an enemy combatant.” Lying about drone killings quickly became institutionalized throughout the Deep State. The New York Times reported in 2015, “Every independent investigation of the [drone] strikes has found far more civilian casualties than administration officials admit.”

The Deep State is practically designed to destroy privacy while enabling government officials to deny sweeping abuses. Former National Security Agency analyst Edward Snowden declared in 2014, “There’s definitely a deep state. Trust me, I’ve been there.” The NSA’s credibility was obliterated in 2013 when Snowden revealed the NSA can tap almost any cell phone in the world, access anyone’s email and web-browsing history, and crack the vast majority of computer encryption. But the NSA’s definition of “terrorist suspect” was ludicrously broad, including “someone searching the web for suspicious stuff.” Snowden also revealed that each day phone companies turned over tens of millions of phone records of average Americans to the feds. A few months before Snowden’s revelations, National Intelligence director James Clapper lied to Congress when he denied that the NSA collects “any type of data at all on millions, or hundreds of millions of Americans.” The fact that Clapper was not charged with perjury did nothing to burnish the credibility of the Justice Department.

Impeachment proceedings have been spurred in large part by disputes over Donald Trump’s phone call to the president of Ukraine. The House Intelligence Committee heard testimony from Lt. Col. Alexander Vindman, the Ukrainian-born officer who listened in to the call while serving on the National Security Council. Vindman was “deeply troubled by what he interpreted as an attempt by the president to subvert U.S. foreign policy,” the Washington Post reported. Which provision of the Constitution gives junior military officers sway over foreign policy? Because Vindman objected to Trump’s efforts to decrease tension with Russia, the Washington establishment quickly hailed him and thus encouraged other military officers and government officials to pull strings to subvert policies of which the media disapprove.

It is naive to expect the Deep State to provide an antidote to the sordidness of American politics. The Friends of the Deep State talk of certain federal agencies as if they exist far above the sordid details of political life — or even of human nature. Former CIA boss McLaughlin declared, “This is the institution within the U.S. government that … is institutionally committed to objectivity and to telling the truth. It’s whole job is to speak the truth — it is engraved in marble in the lobby.” But historically, atrium engravings have proven a weak surety for bureaucratic candor. In reality, the CIA and other Deep State agencies are notorious for suppressing convicting truths about themselves. Secretary of State Mike Pompeo recently described the CIA’s modus operandi when he was director: “We lied, we cheated, we stole. It’s like we had entire training courses.”

Power and truth

Promises that the chiefs of the CIA and other intelligence agencies will “speak truth to power” have become a Washington ritual in the years since the 9/11 attacks. No matter how brazenly political appointees lie, members of Congress assure the media and constituents that the next nominee will be as honest as George Washington. The “speak truth to power” bromide was recited after Trump nominated Gina Haspel as CIA chief. At her confirmation hearings, the public heard plenty about Haspel’s meeting with Mother Teresa but almost nothing about her key role in the CIA torture scandal — including the illegal destruction of recordings of torture sessions.

Another reason to distrust the Deep State is that its arch practitioners are honored regardless of their iniquities. Former CIA bosses McLaughlin and Brennan were speaking on a panel sponsored by the Michael V. Hayden Center for Intelligence, Policy, and International Security, named after the former chief of the National Security Agency and the CIA. As Trevor Timm noted in the Columbia Journalism Review in 2017, “Hayden has a long history of making misleading and outright false statements, and by the estimation of many lawyers, likely committed countless felonies during the Bush administration.” Hayden set up the illegal, unconstitutional wiretapping program after 9/11 that the New York Times exposed in late 2005. When the Senate Intelligence Committee released its report on CIA torture in 2014, it included a 36-page appendix filled with Hayden’s “testimony to Congress, next to the actual facts showing statement after statement he made was inaccurate, misleading, false, or outright lies,” Timm noted.  At least George Mason University did not call it the Torquemada Institute, after the Grand Inquisitor of the Spanish Inquisition. Naming that Center after Hayden simply reflects the prevailing Deep State aggrandizement in the Greater Washington Metropolitan area.

The Deep State has an appalling record of abusing the whistleblowers who are now being acclaimed. A draft Intelligence Community Inspector General report last year found that intelligence agencies refused to recognize retaliation against whistleblowers in 99 percent of cases. A 2017 report by Foreign Policy magazine concluded that “the intelligence community’s central watchdog is in danger of crumbling thanks to mismanagement, bureaucratic battles, clashes among big personalities, and sidelining of whistleblower outreach and training efforts.” After CIA Inspector General John Helgerson compiled a condemnatory report on the CIA’s post–9/11 interrogation program, CIA chief Michael Hayden launched a major investigation of Helgerson in 2007, provoking outrage on Capitol Hill. (The CIA managed to delay the release of Helgerson’s report for five years, thereby keeping both Congress and the American people in the dark regarding shocking abuses.)

The Trump–Deep State clash is a showdown between a presidency that is far too powerful versus federal agencies that have become fiefdoms that enjoy immunity for almost any and all abuses. Most of the partisans of the Deep State are not championing “government under the law.” Instead, this is a dispute over who will be permitted to break the law and dictate the policies to America and the world. Former CIA and NSA boss Hayden proudly proclaimed, “Espionage is not just compatible with American democracy, espionage is essential to American democracy.” And how can we know if the Deep State’s espionage is actually pro-democracy or subversive of democracy? If they told you, they would have to kill you. The Founding Fathers never intended for covert agencies to trumpet a right to correct voters’ verdicts.

Neither the White House nor the CIA, NSA, nor other Deep State agencies should enjoy immunity from the law or deserve blind trust from average Americans or the establishment media. A wayward president (especially a first-term president) can eventually be checked at the ballot box. But who or what can check the Deep State?

Reprinted from The Future of Freedom Foundation

Politicians Have Used This Crisis to Remind Us They’re Mostly Wannabe Dictators

Politicians Have Used This Crisis to Remind Us They’re Mostly Wannabe Dictators

The virus has unleashed petite tyrants to haunt their tiny jurisdictions, using the cover of crisis to arrogate powers belonging to the people.

Witness Robert J. Taylor, mayor of Ostrander, Ohio (population: 643 in the 2010 census), who just declared his village to be in a “state of emergency.” Along with this declaration, the self-righteous mayor instructed constituents to get their news from “trusted sources, which may not include social media in many cases.”

In addition, he admonished them to “Also, please look out for your neighbors and the elderly, in particular.”

Sure, petty nonsense from a petty man. But he also added this, “As warranted, additional measures may be taken until the threat from this virus has subsided.”

So, should our equally petty governor adopt enabling acts and deputize mayors, so to speak, Taylor will gleefully nail decrees on the telephone poles lining either side of main street (really, the only street in his village). And, should those decrees not be given the respect he deems sufficient, he will employ the full force of the apparatus of coercion and compulsion: the state. Measures must always be enforced.

As Hayek showed in his seminal work, Road to Serfdom, “the worst” rise to the top in centrally planned states. However, those trying to move up in a burgeoning centrally planned state can be as evil, given the chance. So, in many ways, the difference between the evil leader on top and those deeper in the nomenklatura is not one of degree, but of opportunity.

I have no idea what drives folks like Taylor—what is truly in their hearts. Nevertheless, the study of human action allows me to assess his actions as means to achieve desired ends. Folks like Taylor use politics as the means to their personal ends. What those ends are, I can only guess, although I do know that he is acting for a reason—a reason, I claim, that does not consider the best interests of his constituents.

Maybe, in an attempt to position himself for the next higher office, he is playing to the media, looking for a guest spot on some local news show—he is already getting local newspaper headlines. Maybe he has aspirations to be county commissioner or governor. Who knows? We do know that he acted, and acted for a reason.

You may object that Taylor really hasn’t instituted some quarantine lockdown or shuttered business, as Ohio governor DeWine has. Taylor is just a shout in the wind. Yet, I believe there is more here. And I fully expect a viral outbreak of similar declarations from other petite officials.

Taylor most certainly read pronouncements from big city mayors. And, if you are in the minors and want to play in the big leagues (should the big leagues ever be allowed to play again), you always need to hit to the fence. Home runs get you noticed, not the odd grounded single. And if each swing further annuls liberty, it’s the old eggs to omelets shrug. Nothing else.

Years ago, I was a petite (possibly petty as well) elected official. I witnessed “the worst” rise to higher office. I always wondered how my fellow school board members would have acted if provided a slightly longer leash. For some, I think, Taylor serves as an example.

Maybe I would have acted the same way with a longer leash, or, better yet, a longer leash and a “crisis” with panicked, loud voices crying for leadership and action.

Yes, Hayek was right, “the worst” rise to the top. However, I believe that there is a codicil as well. Many of “the worst” on their way up are constrained by their current office. Likely, they will not see the top. But that doesn’t mean that, given the opportunity, they would not mimic those who have made it all the way.

The solution, even in a time of “crisis,” is not a haunting state and its officials, petite or otherwise. It is liberty.

Reprinted from The Mises Institute

Amid COVID-19 Outbreak, Arrests Plummet, Departments Close and Chaos Does NOT Ensue

Amid COVID-19 Outbreak, Arrests Plummet, Departments Close and Chaos Does NOT Ensue

As TFTP reported last week, prisons across the country are facing potential massive outbreaks inside their walls and are being forced to make the decision to release non-violent offenders to stave off catastrophe. Thousands of non-violent prisoners have been released and there has not been an uptick in criminal activity. What’s more, according to multiple reports, arrests are plummeting, and a department in Illinois has entirely shut down.

While the typical fearful citizen might read the above actions and lose their mind, thinking it is the end of the world and crime will run rampant, the reality is much different. Crime is in free fall. According to a recent report out of Buffalo, NY, the number of daily arrests before the pandemic typically exceeded 20 a day, including a recent high of 37 on March 6. Arrests since Thursday have ranged from two to eight a day.

The drop in arrests comes as people are told to stay home and businesses are closed. While the crime drop is attributed in part to the stoppage of commerce, police are also changing their roles during this crisis from kicking in doors to arrest people for a plant to patrolling the streets for safety.

What’s more, Buffalo Police department Captain Jeff Rinaldo pointed to the New York State bail reform that went into effect at the beginning of the year. As a result of the reform, police now issue appearance tickets for most minor crimes, resulting in them taking fewer people into custody.

“Because of bail reform and because we have so many people out of custody, they’re able to care for themselves, care for families, be nimble, flexible, respond to this pandemic,” said Kevin Stadelmaier, the chief attorney for Buffalo Legal Aid’s Criminal Defense Unit.

Imagine that!

By allowing people to remain free for committing entirely victimless crimes — instead of ruining their lives through incarceration — the government is able to stave off the potential for future crime, otherwise known as recidivism.

While Buffalo is reducing arrests, other cities, like Blue Island, Il., have disbanded their entire department. After an officer tested positive for COVID-19, Mayor Domingo Vargas made the decision to shut down the department. Naturally, the mayor is receiving backlash from other elected officials.

State Representative Bob Rita criticized Vargas’ action, saying, “At no point did the Mayor’s office contact my office, any member of the City Council or any other local leaders in making this rash decision.”

Despite the backlash, Blue Island has not seen an uptick in crime.

In New York City, crime has fallen as well. According to the NY Daily News, crime dropped 25% in the five boroughs during the coronavirus shutdown last week — with just one person murdered compared to eight the week before, authorities said Monday.

Each of the seven major crimes that determine the overall crime rate — murder, rape, robbery, felony assault, burglary, grand larceny and grand larceny auto — declined compared to the week before, according to NYPD statistics.

This drop in crime was expected given the fact that New Yorkers are on lockdown, but as TFTP has reported before, even when cops simply refused to do make arrests and write tickets when citizens were on the streets, the city did not descend into chaos.

In September, the NYPD threw a temper tantrum after Police Commissioner James O’Neill fired the killer cop who choked the life out of Eric Garner on video in 2014. The temper tantrum resulted in a plunge in arrests, but it did not lead to a spike in crime or violence — illustrating how most of the “policing” done in the US, is little more than revenue generation.

We saw a similar reaction in December 2014 when the NYPD threw their first temper tantrum over the reaction to Eric Garner’s death and simply stopped doing their jobs.

During the work stoppage, the city set a record for the lowest numbers of murders in the history of the NYPD.

As we reported at the time, the numbers were far more drastic than the current slowdown.

Citations for traffic violations fell by 94 percent, from 10,069 to 587, during that time frame.

Summonses for low-level offenses like public drinking and urination also plunged 94 percent — from 4,831 to 300.

Even parking violations are way down, dropping by 92 percent, from 14,699 to 1,241.

Drug arrests by cops assigned to the NYPD’s Organized Crime Control Bureau — which are part of the overall number — dropped by 84 percent, from 382 to 63.

The decline in crime coinciding with the decline in police activity essentially made the case that most policing carried out in the United States is done so for the purpose of revenue collection and not to fight crime.

Drug offenses, parking violations, and traffic citations are not so much crimes, as they are streams of revenue for the city. They are also the reason for the majority of police harassment within particular communities; harassment that is being proven entirely unnecessary as the COVID-19 crisis continues.

Imagine a police force that acted more like firefighters or EMTs. Firefighters don’t have to go door to door looking for fires, in order to be effective. EMTs, just like firefighters wait for a call before reacting and their services are oft proven invaluable contrary to that of police work. Perhaps this recent chaos can be used to channel this notion to the forefront and completely revamp the idea of policing in the land of the free.

Reprinted from The Free Thought Project. 

No Bailouts

No Bailouts

That adroit member of the British Parliament Enoch Powell once said that “the supreme function of statesmanship is to provide against preventable evils.” This duty, incumbent upon politicians endowed with wisdom, is made difficult because “by the very order of things such evils are not demonstrable until they have occurred.” 

Well, the market crash has finally occurred, and laid bare the “evils” of America’s monetary policy. This month saw the worst stock market crash in nearly forty years. The next month will see hundreds of thousands, if not millions, marching into unemployment. Whole industries find themselves on the brink of bankruptcy. 

Those in power, and their court economists, will scapegoat all problems on the coronavirus pandemic. But the virus, the incidental trigger of the market panic, must not be confused with the cause of the economic bust: a broken banking system. 

In healthy economic growth, businessmen borrow the savings of others—the size and existence of which is indicated by an accurate interest rate—and use it to invest in capital goods and workers. Production increases, and the standard of living rises. 

But in our septic central banking system, real savings are substituted by cheap credit that only exists on a banker’s balance sheet. Dials are twisted as the Federal Reserve system manipulates the rate of interest, causing distortions as businessmen are given false signals. This easy money, confused for real loanable funds, is borrowed and put into malinvestments that distort the structure of the economy. 

The story is the same whether you’re describing 1929, 2008, or 2020. The market inevitably hits its tipping point as businessmen realize that the money they’re playing with is nothing but smoke and mirrors. The bubble bursts, and the boom, toxic from the beginning, busts. 

And now that the good times are over, and the promise of false prosperity has crumbled in their hands, politicians have lined up to bail out big business in the most repulsive form of corporate welfare our system has to offer. The airline industry requested fifty billion dollars from the federal government, more than triple what they received in assistance after the September 11 attacks. Boeing, that behemoth of defense contractors, asked for sixty billion all for itself. Then comes the cruise lines, the hotels, and half a dozen other interests ready to get a handout from a half trillion-dollar slush fund.

The right response, both ethically and economically, would be to let them fail. It’s not right for Main Street to bail out Wall Street, allowing insolvent corporations to feed like vampires on the people’s tax money collected by their crony politicians. And saving them is the start of the same process that created our economic catastrophe in the first place.

The harm bailouts cause goes beyond first impressions. Yes, hundreds of billions of dollars are wasted, as our ominous national debt creaks and groans under its own weight. But it’s the secondary effects that produce the real rot. 

Capitalism is about profit and loss. Businesses succeed or fail on their ability to serve the demands of consumers at the cheapest price. But when you have a policy of “too big to fail,” where you bailout inadequate firms and their managers, you destroy both business incentives and the market’s self-regulating mechanism. Bailouts are a function of state capitalism and corrupt corporatist structures. 

And what would happen if the airline industry was allowed to go bankrupt? Their planes wouldn’t be melted down for scrap. The capital structure wouldn’t disappear. Instead, it would be sold off to younger, more capable entrepreneurs who would be more adept at serving the public. Free markets encourage dynamic and creative change, while bailouts and cronyism only encourage the preservation of dinosaurs and legacy brands.

This sort of clearing house ought to take place in every sector of industry. Malinvestments must be allowed to liquidate and free up wasted capital, instead of being kept on life support, a continuous drain on the economy. President Ronald Reagan and Federal Reserve Chairman Paul Volcker understood the wisdom of necessary, short-term pain in exchange for a return to long-term health. The recession of the early 1980s was deep, short, and politically damaging. But the result was real growth, not another series of cheap credit bubbles. 

Our leaders today don’t have the wisdom of Enoch Powell to prevent disaster, or the intrepidness of Reagan and Volcker to see the disaster through once it occurs. Instead, they make blanket promises that a state intervention will fix all that ails you, as if the piper never has to be paid. Donald Trump and senate Republicans could have done the right thing: refuse the bailouts, allow a much-needed market correction, and take the electoral results on the chin in November. 

They didn’t though. Instead they’ll hand billions of dollars to the big businesses that bankroll their campaigns, while simultaneously sinking trillions more in harebrained stimulus packages. That’s because we’re not ruled by statesmen. No, instead we’re overseen by men like Senator Richard Burr, scoundrels who enrich themselves off the public purse while the national interest be damned. 

Men like that, Powell said, who create and perpetuate these preventable evils, “deserve, and not infrequently receive, the curses of those who come after.”

Australian War Criminals

Australian War Criminals

Australia has a proud military history, even before it was a federation in 1901 it had sent men abroad in service of Empire. Still a new nation while the British fought bitterly against the Boers in South Africa, the Australian military identity was slowly forged in incidents of undeniable heroism and controversy. Famously, the Australian soldier Breaker Morant became an Australian hero, elsewhere he was a revenge minded man who executed unarmed Boer prisoners and likely civilians. He was tried and executed, perhaps as an example by the British as such conduct was not rare in an ugly war. Morant’s legacy however would run on in most theatres for over one hundred years of Australian military service.

In the World Wars the Australians were notorious for heroic conduct and fighting with a respected ferocity. They were not above executing prisoners. This was not unique to the Australian soldier, they were not above it either. Intimate savagery was not unlawful it was expected to be found inside the heat of battle and soon after as the fog of war lingered. It is not a statement of good and evil, merely one of fact. Most if not all sides in war have had soldiers that do this to others. It is the disregard and acceptance of such actions that brings into question the society and culture that not only continues to conduct war abroad but condones all its horrible outcomes with pride. That is the Australian character regarding its wars and war fighters. 

The recent emergence of footage of an Australian SASR troops murdering an unarmed man as he prayed in a field somewhere in Afghanistan has not raised much controversy inside of Australia. It has mildly been reported but mostly buried beneath the concerns about COVID-19 and the potential shortages on toilet paper for most Australian voters. The military however, still abroad, still killing are always above reproach. As with most released footage incidents it beckons just how common such events are, given the confidence of those who are being recorded. To kill an unarmed man as shown in the clip is almost routine. 

In June 2019 the Australian Federal Police raided the homes of journalists, most of those raided worked for the state-run ABC network. The raids were a response to a 2018 report about the Australian intelligence agencies using their powers to spy on Australian citizens. For most Australians such a revelation and the frightening response on journalists was met with apathy and an eager trust in the governments wisdom when it comes to their defense. It was assumed by some that such measures taken by the AFP would not only keep Australians alive, the terrorists at bay but most of all save Australian soldiers lives. Australian soldiers still fighting an unwinnable war inside Afghanistan. 

Australians love war. They always have. Every year in April the nation indulges in a ritual to celebrate the lives of martyrs that served the British empire in a brutal war, the date commemorates the invasion of mainland Turkey in 1915. The heroism is never in doubt, the rationale reason for the war is however never truly sought. It assumed as a righteous destiny of the Australian soldier to be overseas in the service of a larger imperial partner. Korea, Vietnam, Iraq or Afghanistan it does not matter, it is the right of the Australian soldier to be there. That is the imbedded belief of the citizen as they stand for dawn service each April 25.  

So as news reports and whistle-blowing soldiers from both Australia and New Zealand share their experiences in Afghanistan with shaky voices they are met with wary ears and sometimes distain. When former defense lawyer David McBride revealed what became known as the “Afghan Papers” much of it revealing unlawful killings by Australian SAS members he was charged for leaking classified materials, though the content was never disputed or denied. The Australian government simply did not want the truth of bloodshed to become exposed to the public but more importantly to foreigners that have a glowing opinion of the Australian nation. 

Now with such graphic footage of an Australian special forces member murdering an unarmed man it is hard to deny the claims of the whistle-blowers. Even if the executed man was a horrible mass murdering terrorist, he was unarmed and vulnerable. His capture could have provided intelligence and many hours of painful debriefing at the hands of coalition interrogators. Instead it is likely this man had nothing to offer alive, so he was executed by the elites of the Australian military. 

What the outcome is, remains uncertain. Perhaps a tighter grip on the release of such footage. It is alleged that the SAS soldier in the clip was stood down, how would we know given the secrecy of the SAS and how precious trained and experienced soldiers at his level are.  With the COVID-19 pandemic it is likely that the Australian government will use the fear and concerns to help widen its already immense powers over the citizenry’s lives. No matter how incompetent it reveals itself in either health or security it is without competition. 

It would take an elite level of mercenary and psychotic mentality to visit upon a land thousands of kilometres away from home and to then execute a man already on his knees as he prays to his God close to his own house. A stranger In shock, frightened and pleading for his life is then killed. This is the war that continues to be waged in many of our names, and this is the horrors that distant strangers face because it is our foreign policy to kill out of our own insecurities and our governments need to rule in any capacity. 

The Australian Police are investigating the allegations in a recent incident of an SAS soldier Ben Robert-Smith who kicked a handcuffed prisoner off a cliff and ordered his killing. Smith is a highly decorated hero of the war. The outcome of such an investigation and trial will be telling. But what it does reveal is the harshness of those elites pressed into long periods of service in a war that few understand other than it must somehow go on. 

So, for the time being, hidden among the news of pandemic the crimes of war will trickle to the screens of those who care. The few watchdogs that exist will limply bark into a mob desperate for their own creature comforts as they face quarantine. The war, those endless epidemics of government cruelty will go on. The futility of Australia’s mission in Afghanistan will most likely continue, even if in secret. And the recent incident so graphically captured on film is just another contact.

Like Freedom? Then You Won’t Like the FREEDOM Act

Like Freedom? Then You Won’t Like the FREEDOM Act

Last Monday, a bipartisan group of Senators and a coalition including libertarian and progressive activists thwarted a scheme to ram through the Senate legislation renewing three provisions of the USA FREEDOM Act (previously known as the USA PATRIOT Act). The bill had already been rushed through the House of Representatives, and most expected it to sail through the Senate. But, instead, Senate leadership had to settle for a 77-day extension.

Senate leadership was also forced to allow consideration of several amendments at a later date. Included is Sen. Rand Paul’s amendment that would forbid the FISA court from issuing warrants targeting American citizens.

Deep state supporters claim the expiring business records provision (which authorizes the collection of our communications and was at the center of Edward Snowden’s 2013 revelations), lone wolf provision (which allows government to subject an individual with no known ties to terrorists to warrantless surveillance), and roving wiretaps provision (which allows government to monitor communications on any device that may be used by a targeted individual) are necessary to keep Americans safe. But, since Congress first passed the PATRIOT Act almost 20 years ago, mass surveillance, warrantless wiretapping, and bulk data collection have not stopped a single terrorist attack.

The legislation does have “reforms” aimed at protecting civil liberties, but these new protections contain loopholes that render the protections meaningless. For example, the bill requires those targeted for surveillance to be notified that the government spied on them. However, this requirement can be waived if the government simply claims — not proves but just clams — that notifying the target would harm “national security.”

The notice provision also only applies to the target of an investigations. So, if you were caught up in a federal investigation because a coworker is being targeted and you shared an office computer, or if a store clerk reported to the government you and others bought pressure cookers, the government could collect your phone records, texts, and social media posts without giving you the chance to challenge the government’s actions.

The bill also makes some reforms to the special FISA court, which serves as a rubber stamp for the intelligence community. These reforms are mainly aimed at protecting political campaigns and candidates. They would not stop the FISA court from rubber-stamping surveillance on organizations that oppose the welfare-warfare-surveillance-fiat money status quo.

Anything limiting warrantless wiretapping and mass surveillance should be supported. However, nothing short of repeal of the USA FREEDOM Act will restore respect for our right to live our lives free of the fear that Big Brother is watching. The path to liberty, peace, and prosperity starts with eliminating all unconstitutional laws and returning to a system of limited government, free markets, individual liberty, sound money, and a foreign policy that seeks peaceful commerce and friendship with all instead of seeking new monsters to destroy.

Reprinted from the Ron Paul Institute for Peace and Prosperity.

The Fed’s Massive Injection of ‘Liquidity’ Also Benefits Uncle Sam

The Fed’s Massive Injection of ‘Liquidity’ Also Benefits Uncle Sam

There’s a lot to be said regarding the Fed’s surprise announcements—including its Sunday surprise of $700 billion in renewed QE and the complete elimination of all reserve requirements for banks—but here let me just focus on one element: the tendency for Fed officials and all the pundits to treat injections of “liquidity” as if they don’t count as much when distorting the economy. I’ve seen some analysts literally call the Fed’s repo operations “free” as opposed to fiscal policy, which they agree actually costs something.

These distinctions are phony. The Fed’s $1.5 trillion was a “handout” in the same way that a Pentagon fighter jet contract is a handout to a defense contractor. However, the defenders of the Fed are correct that financial institutions per se are not reaping extraordinary gains from the new policy. No, the primary beneficiaries of the Fed’s recent announcements are the holders of US Treasury debt (which includesinvestment banks, of course), as well as the US Treasury, which, after all, is the institution that issues new Treasury debt. The Fed’s massive wave of intended dollar-creation is designed to keep the liquidity of US government-issued debt close to par with US government-issued money.

Just think slowly through what the repo market is: it’s a market where firms sell their Treasury (or other very safe collateral) securities in exchange for actual dollars but also agree contractually to “repurchase” (hence the name) these Treasurys after a certain time. Now, there is an inbuilt (slight) difference in the sell/buy price, allowing the implicit lender of money to earn a return on it.

Especially for overnight loans of cash, the short-term repo market seems to be very secure lending. After all, the party advancing cash gets to hold on to the Treasury securities as collateral. Specifically, if the other party that needed the cash ends up being unable to repurchase the Treasurys, then the party that lent the money at least gets to keep them as compensation for the contractual default. So, the lender either (a) gets his cash back with interest or (b) gets to keep the Treasury securities.

Now what the Fed announced last week is that it will itself enter the repo market and be prepared to offer up to $1.5 trillion in (newly created) US dollars in order to allow institutions to pledge their Treasurys as collateral and borrow such vast sums. But these transactions won’t be overnight loans; instead, the $1.5 trillion consists of $500 billion bursts of financing in the one-month and three-month repo contracts.

The whole point of this Fed intervention was to keep the implicit interest rate in the Treasury repo market down to acceptable levels. In other words, if the Fed had not intervened, then repo rates would have soared. Remember, last September the repo rate suddenly jumped from about 2.2 percent to 6 percent in two days. That was deemed a crisis at the time, justifying the Fed’s large (and recently expanded) ongoing intervention in the repo markets.

It’s true that when fear grips the world, investors do look to US government debt as a “safe haven.” That’s why US government bond yields collapsed to record lows recently and stock markets are falling: many portfolio managers are switching from equity to fixed-income assets.

But what the spikes in the repo market reveal is that in the very short term, such as a period of 1–90 days, actual cash is king. Right now, asset managers do not at all view a Treasury security “as almost the same thing” as US dollars issued by the Federal Reserve. One way the market communicates such a change in risk appetites is a “skyrocketing” implicit interest rate in the Treasury repo market. People who control actual US cash right now are not as willing to see that transformed into an “equivalent” amount of Treasurys, and so they demand a higher compensation (interest return) to make the asset swap. This is the market process that the Fed is trying desperately to hammer away.

By announcing that it is willing to throw up to $1.5 trillion in electronically created money in order to give three-month loans to those institutions that have bought Treasury debt, the Fed is bailing out not only the holders of Treasury debt, but also the Treasury itself. The Fed is ensuring a healthy demand—now and in the perceived future—for Treasurys, since now private bond dealers won’t worry about a sudden change in liquidity for their asset.

If the Fed bought $1.5 trillion in military hardware, everybody would instantly recognize it as a gift to the defense contractors and their main suppliers, including assembly workers (who might live in the state of a politician who voted for the spending bill). Likewise, when the Fed announces $1.5 trillion in new financing available for a certain portion of the financial sector, it is a gift to those institutions and their suppliers, such as the Treasury Department which has run up the debt by an additional $1.1 trillion in the last twelve months.

Reprinted from the Independent Institute.

Now, We Get Local. Now The World Gets Real

Now, We Get Local. Now The World Gets Real

“Reality is that which when we stop believing in it doesn’t go away.”    Philip K. Dick

In March of 2003, we broke ground on the first real thing I ever built, the house I currently live in. Then I understood that there was only one way this economic and political system ended, badly.  And I knew then that I was woefully unprepared for the challenge. When I started building my house I could barely drive a nail straight. By the time the first part of it was finished I could lay a square of asphalt shingles with the best of them…. if only until about 10 am or so.  I could now solve logistical problems of much larger scale. I learned that building a house wasn’t one big task but a million little ones, some good and some, well, not so good.  My wife and I had a lot of help, to be sure. We leveraged the skills, labor and knowledge of family and friends.  My house became a kind of community project with some weekends having as many as eight or ten people milling about like semi-competent Amish men setting trusses, digging trenches and installing windows.  And I’m forever in the debt of those who gave up their Saturday to work in the singularly horrific heat of a north central Florida summer, a place I’m sure Dante had in mind when he wrote about the eighth circle of Hell.  I figured then we had about five to eight years before the system would break. During the 2008 crisis I was convinced that, ‘This was it.” It turned out to be bad but the world wasn’t quite ready to give up on the system it had built.  And we allowed the central banks to coordinate a global bailout. But that was granted with the explicit understanding that there would be no next time or there would be hell to pay on both sides of the traditional political aisles.

Welcome to the Coronapocalypse.

Regardless of what you may think about the origins of COVID-19, bio-weapon or not, ‘just the flu’ or the new plague, the reality is that it is here. The response to it is real and the damage it has had on the global economy is real. It doesn’t matter at this point in time whether the response is the right one or the wrong one. Because in an age where perception is more important than reality and has been that way for so long, we have no real frame of reference to guide our conclusions.

Prices and costs have been distorted beyond all recognition to the saved capital they represent. The epic meltdown of markets speaks to just how insanely overvalued the world was once the layers of credit contracted.  In the end, all we have are our observations. And those observations are intensely personal. And most of the the time the conclusions we draw from them are wrong no matter how tightly we believe in them.  Be that as it may, we still have to make choices. We still have to act.  And, if this is truly now a survival-like situation, one that I personally tried to prepare for nearly a generation ago, that means we have to deal with reality.

We have to put away the childish things we’ve been fighting over for the past five years politically. How ridiculous and insipid do the identitarian fights over gender, race, sex and color look now? How dangerous and stupid does all that capital, that time spent, look now in hindsight when today people with skills, humility and high executive function are needed? Do you really care today if the guy behind the meat counter at your local supermarket is a MAGApede or a Bernie Bro, hates gay people or is a closet transsexual? If you do then I suggest you stay home and reassess your priorities and your choices. The reality is that now that the damage to the economy has been done we will need each other more than ever, regardless of what we thought about each other yesterday.

The reality is governments are grabbing for insane levels of power. Martial Law is here in Europe. The U.S. isn’t far behind if we look at how some governors and mayors have acted. The reality is that the more power governments grab the less capable of protecting you, your family and your community it was before that. It will view you as a threat. It will treat you as less than human because your disobedience threatens their control. If the Trump administration is smart it won’t go there. If Trump wants to ensure the U.S. is the destination for global capital in the near term, he won’t go to where Europe goes. Because the way to restore confidence in a currency, a people and a government is to not panic. Lead and show competence and trust.

Those that over-react, enforce one-size-fits-all mandates become incapable of solving problems, only maintaining the current misery. So we have to be strong enough and brave enough for commerce to flow. If you aren’t then stay out of the way of healthy, low-risk people taking real risks necessary to keep the lights on, the sewers functioning and the food supply from collapsing. Celebrate that guy behind the meat counter or restocking the shelves. Because the life he saves may be yours and vice versa. Yes, some people will make the wrong choice, but most won’t. Stop using them as straw men to grind your political axe. Old habits die hard but guess what? You’re not an old dog.

We’re moving into that dangerous area of zero tolerance which implies maximum costs for marginal net benefits. Striking the necessary balance to keep our communities alive is how we best fight back against these threats — the government overreach or the virus itself. It means realizing that bad people will do good things and good people will do bad things.

It means decisions made today may need to be reversed tomorrow. Top down order separates us from our greatest strength, our ability to try new things, solve new problems and turn what is into what will be.

It means keeping your opinions tempered, your humility high and finding ways to solve real problems that alleviate current and potential suffering.

It means realizing you don’t have all the answers, and pretending like you do is literally a matter of life and death.

The economy isn’t some big aggregate thing. That’s the fundamental flaw of all dominant economic thinking, these concepts of aggregate demand and aggregate supply. They don’t exist. They aren’t real. We talk about them like they are but they aren’t. They are pale and unfocused reflection of trillions of small decisions taken by billions of people everyday. And no matter how much you try to model reality by looking at the big numbers, the reality is that you only see things through the densest of fog, near blind and full of hubris. This is the central flaw in all forms of central planning, the lack of specific knowledge to come up with the right policy decisions. That’s not ideology. That is fact. Any guess at my behavior, no matter how educated, carries with it a measurable error which when multiplied by the number of decisions I make per day and the number of people whose actions you are trying to aggregate makes the entire exercise a futile and dangerous attempt to play god. Even God doesn’t play dice with the Universe. And the sooner we give up our grand ideas of top down control through the decisions of wise and insouciant verified smart people the sooner we can deal with the reality of the life in front of us.

Today the world is contracting, not ending. It’s a smaller, tighter world than it was yesterday. That means the closer your relationship to someone, the more valuable they are. The people in charge now if they are competent, if they have a shred of decency and humility, will realize by getting out of our way we can thrive. And if they won’t, then we have to do the other thing humans are really good at, subverting crude attempts at control.

That’s not ideology folks, that’s who we are. And I love people for it.

It’s simply giving up control over what you cannot and staying focused on what you can. It’s the humility to know that I don’t have the answers to the problems of the world but maybe the problems don’t exist as I think I see them.

We’ve been given a huge wake up call that what we’ve built is a house of cards. You’ll hear a lot of cries for people to ‘get local.’ Use the time you have in front of you to build skills you didn’t have yesterday. Find ways to be more valuable to those nearest you that may need you tomorrow.

Forge real relationships with people you never thought you could.

But most importantly, it’s time to stop denying that which is in front of us.

Because, try as we might, it isn’t going away.

Follow Tom Luongo at Gold Goats ‘N Guns

The Unseen Consequences of the Coronavirus Response

The Unseen Consequences of the Coronavirus Response

While sicknesses and death mount from the coronavirus pandemic, the responses by all levels of government have been overwhelming. 

School closings, business closings, cancellations of sporting events and concerts, “stay in place” orders, hysterical panic spread by the corporate press, and massive government “stimulus” and bailout plans have all been justified as a means to save lives and “flatten the curve” of the spread of the virus so the healthcare system isn’t overwhelmed.

These efforts have been made in an attempt to head off what some are predicting would be a historic mass pandemic resulting in hundreds of thousand or possibly a million deaths in the U.S., according to some preliminary, worst-case scenario projections

No doubt such a result would spur sizeable social and economic upheaval. Such a momentous number of deaths and illnesses would cause mass panic and grind the economy to a halt. In strictly economic terms, to the extent that the workforce is reduced (most deaths would be to the elderly population), a supply shock would diminish productivity for a noticeable duration. Supply chains would be disrupted and need to adjust to the new labor market. 

During the outbreak, non-specific capital goods would be converted to the production of medical supplies to address the virus, similar to how factories were converted to producing tanks and guns during WWII. 

There would be at minimum a significant economic downturn during the crisis, and depending on the government’s response, it would take a considerable amount of time for the economy to shift back to normal once the virus subsided. 

The coronavirus’ threat to health and the economy is indeed serious, and the trade-offs of “doing nothing” have been often discussed to justify the unprecedented response.

What seems to be missing from the discussion, however, is the notion of any trade-offs coming from the government’s actual response. The government’s measures are positioned as but temporary inconveniences needed to stave off mass illnesses and save lives. Better to be safe than sorry, goes the justification.

But what if trying to “be safe” comes with dramatic costs as well? Why is nobody talking about those costs?

As Mises Institute Research Fellow Peter G. Klein tweeted:

“I hear ‘lives vs. livelihoods’ as if the cost of shutting down economies to flatten the curve is inconvenience and reduced economic growth. But what about the immediate and long-term public health harms from shutdown?”

To drive the point further home, Mises Institute President Jeff Deist wrote in a Facebook post

“A broken economy, crazed fiscal/monetary responses by Congress and the Fed, not to mention egregious & illegal violations of liberty, are not all justified by this virus. Our actions will kill & impoverish people, perhaps far more people than the virus. The lesson of Bastiat’s seen and unseen remains unlearned.” 

Indeed, it’s easy to see the government’s response and attribute a slowed infection growth rate and lower mortality figures from the virus to those measures.

But what of the negative impacts the government’s response will have? These “unseen” impacts, as Bastiat would frame them because they are much harder to detect, will be numerous and possibly more deadly the coronavirus itself.

Massive job losses may increase suicide, depression, substance abuse

Due to the mass panic being spread by governments and media (not to mention government edicts shuttering the doors of many businesses), many industries are being devastated. Especially harmed is the hospitality industry. Sadly, panic is a result of the government’s response to head off the panic that would result if government failed to act to prevent the spread of the virus.

Some estimates are predicting more than 2 million people will apply for unemployment this week, which would be the highest one-week figure on record. 

The stress and uncertainty of joblessness has numerous negative consequences, some of them deadly. 

A study published by The Lancet found “the relative risk of suicide associated with unemployment was elevated by about 20–30%” in their study period. 

The study further attributed roughly 45,000 suicides per year worldwide to the mental and psychological toll of unemployment.

The hope for many laid-off workers is that their unemployment will be temporary, but there remains great uncertainty just how long this will last. The longer this economic shutdown and its consequences last, the more suicides there will be. 

Moreover, as the substance abuse rehab clinic Recovery Ways notes, “One study from 2017 found that every time unemployment rises by one percentage point in a given county, the rate of opioid deaths increases by 3.6 percent and the rate of emergency room visits increases by seven percent.” 

In sum, research has shown the anxiety of joblessness leads to increased rates of suicide and drug abuse. 

Furthermore, a study published by the National Institute of Health concluded: “Results suggest that unemployment is associated with young adults’ heavy episodic drinking,” This is of particular concern given that the hospitality industry workforce tends to be younger. 

Another NIH study found “Unemployment increases the risk of relapse after alcohol and drug addiction treatment,” and that “Unemployment is a significant risk factor for substance use.”

Shutdown will have much broader economic impact, exacerbate other health problems

The current shutdowns and mass hysteria are having first order effects largely on the travel and hospitality industries. But the negative financial consequences will not be contained.

As economist and financial advisor Doug Casey said in an interview published at LewRockwell.com:

A restaurant closes down, but the owner still has to pay his mortgage. And the staff mostly lives on tips. How are they going to pay the rent—and if they don’t, then how’s the landlord going to pay his mortgage? The consequences of businesses shutting down, and going bust, are just huge.

The economic contagion and domino effect could indeed be very significant. Recall how the bursting of the housing bubble triggered the Great Recession. We may now be facing similar effects, as small businesses struggle to pay their rents and laid-off workers struggle to make rent and mortgage payments. As debt defaults mount, banks lose their cash flow and become extremely cautious about creating new loans. Liquidity freezes and grinds the economy to a halt.  

There is a very real chance that the orchestrated economic shutdown can trigger a much broader economic collapse. Keep in mind, of course, that prior to the virus outbreak the economy was largely propped up by fiat Fed money printing, and that bubble was bound to burst eventually.

The hysterical response to the virus is serving as the pin to pop that bubble, and make things worse.

We’ve already seen how unemployment leads to severe health consequences. Full-blown recession serves to double down on them, and then some.

One study found that the Great Recession was linked to an additional 260,000 cancer deaths in OECD countries alone, with the authors suggesting “increased joblessness during the economic crisis may have limited people’s access to health care, leading to late-stage diagnoses and poor or delayed treatment.”

Moreover, with the stock market taking a major hit, it’s not just Wall Street fat cats taking a haircut. Thanks to decades of absurdly low interest rates driven down by Federal Reserve policy, average workers can no longer set aside their retirement savings into safe, interest-bearing savings accounts. Instead, they have been driven to invest retirement savings into the stock market. The economic shutdown has caused current retirees and those nearing retirement to lose a significant share of their retirement nest egg. Senior citizens facing such high levels of stress will be more likely to suffer ill health effects, like stroke or heart attack. 

Anxiety from mass hysteria weakens immune systems

Politicians and the corporate media are in 24/7 mass hysteria mode. There is no way to avoid constant chatter about the impending doom of coronavirus. 

The most visible signs of this ginned up mass panic can be found in retail stores across the country with empty shelves. Panic-buying of hand sanitizer and toilet paper has been well publicized.

But there is a more serious consequence of spreading mass panic among the populace. In a very bitter case of irony, the anxiety and stress caused by the reaction to fight the spread of the coronavirus can actually weaken your immune system and make you more vulnerable to the spread of viruses. As reported at Healthline.com

But if you repeatedly feel anxious and stressed or it lasts a long time, your body never gets the signal to return to normal functioning. This can weaken your immune system, leaving you more vulnerable to viral infections and frequent illnesses. Also, your regular vaccines may not work as well if you have anxiety.

Panic can also drive up suicides, while panic-stricken grocery shoppers gather in long lines in close proximity to each other holding shopping cart handles that are likely riddled with germs and bacteria

 

Long-term impacts

The federal government’s fiscal response to the coronavirus pandemic and subsequent economic shutdown has been unprecedented. 

The Federal Reserve has slashed interest rates to near zero, while pumping $1.5 trillion of fiat money in an attempt to prop up the economy. A “stimulus” bill to bail out affected industries and send money to households is being negotiated, and seems to grow by the day, with latest reports indicating it could top $2 trillion. With the federal government already $23 trillion in debt and running trillion-dollar deficits, most – if not all – of this stimulus spending will need to be funding by newly-printed fiat money.

By comparison, President Obama’s stimulus package to combat a global financial meltdown was estimated to be less than $900 billion. 

While households will no doubt welcome the financial relief of government checks, this level of new money printing will have dire effects. The new money may help temporarily prop up some industries, but it will ultimately wreak havoc on the economy and hurt low-income households the hardest.

With so much newly-created money sloshing around the economy, price inflation is sure to follow the current shutdown. Price increases will impact low-skilled, low-income workers and those on fixed incomes the hardest, as they will not be able to keep pace with the rising cost of living. More people will fall further behind, exacerbating the mental and physical health consequences mentioned above.

Finally, the mad money printing by the Fed will at best temporarily re-inflate the economic bubble. But it’s during the bubble that the seeds for the next recession are planted, and the current massive money printing will serve to deepen the next recession.

The deeper the next recession, the more deaths from suicide, anxiety and substance abuse there will be.

Conclusion

Bastiat’s warnings about the seen vs. the unseen continue to be ignored. The negative consequences of the government’s hysterical response to the coronavirus stretch far beyond a temporary economic disruption. Higher rates of suicide and substance abuse, anxiety-induced illnesses, and a deeper recession that worsens these public health issues will be among the steep price we pay. 

It may be time for more to question if the cure will be worse than the disease. 

 

Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics.

Follow him on twitter: Bradley Thomas @erasestate

 

Why We Need Free Markets To Fight Pandemics

Why We Need Free Markets To Fight Pandemics

The natural response in the face of a pandemic like the one we are experiencing today with COVID-19 is to take immediate and direct action to curb the crisis. We are told we need to have extensive quarantines, citywide lockdowns, and shelter-in-place orders. We supposedly need to limit the number of goods people can buy so they don’t hoard them up, and definitely keep prices where they are at so people can afford to get what they need. Hospitals and clinics must cancel surgeries and new treatment plans to ensure that they are prepared for the waves of patients catching the illness. Restaurants need to switch to takeout models! Stores need to switch to online-only, close their retail establishments, and prioritize important shipments! Government needs to make sure everyone does what they should to ensure we all make it out alive!

But what if I told you that none of that was true? What if I told you that all you need in this situation is what you need every day in a free society: prices that can rapidly and easily adjust to changes in supply and demand?

I can almost hear teeth grinding and fists shaking in response, with exclamations that I must not care about my fellow man. But hear me out as I walk through the effects that such prices would have.

Let’s start with what has occurred so far. People have flooded grocery stores to stock up on everything from canned goods to toilet paper, emptying the shelves in the process. Hospitals and clinics have, “in line with CDC guidance” (this phrase is ubiquitous), canceled various appointments and planned treatments or surgeries. Amazon has limited third-party shipments to its warehouses to “high-demand” items. Increased remote work has crashed remote coordination services.  Governments everywhere have engaged in various levels of forced quarantining and shut down numerous businesses or ordinary ways of doing business.

None of these effects or approaches of mitigation and avoidance are a problem per se. Much of this would naturally be done in response to a pandemic and the effects on demand would be similar. But what can be said is that such measures are taken crudely and mostly blindly in the absence of free prices.

The empty shelves would not be so prevalent were prices allowed to rise in contradiction of governmental laws against “price gouging.” Such a result would lead to natural rationing by consumers and would incentivize the ramp-up of production of goods in high demand. At current prices, it is true that some companies could potentially bear a short-term loss to increase production as a charitable endeavor. However, marginal producers (and even nonmarginal ones as the crisis continues) will only be able to ramp up production, even temporarily, if the prices rise.

A rise in prices informs producers of shifts in relative demand. That hypothetically the price of milk does not rise as much as the price of eggs or canned beans is a vitally important piece of information that cannot be conveyed through empty shelves alone. Rising prices would induce makers of the latter goods to expand production much more than producers of the former, and they would also encourage new entrants to prioritize accordingly.

We can observe the same mechanism at work in price drops, which are normally allowed to happen. The decreased demand for certain goods, such as tickets to events, flights, or crowded dine-in restaurants, signals these industries to find alternatives. These may include restaurants shifting to a takeout model, closing their main dining areas for the duration of the crisis, as has occurred in some places, or turning those dining areas into temporary warehouses for needed items (though this option seems foreclosed due to frozen prices disincentivizing the additional production that would make this helpful). Firms may also temporarily shutter their doors and send their workers into the labor force as potential temporary employees in areas that need them to produce vital necessities. (Instead, the government approach has been to propose bailouts and universal income checks while in some cases mandating the clear waste of resources.)

Price changes also differ by location, which naturally encourages the market to focus on the hardest-hit areas. A pandemic will not hit the entire country all at once, and although it may seem obvious (particularly at first) which areas are the worst off, the information that prices convey is vital to determining what the actual needs are. It may be that Seattle and New York City are the worst hit right now, but that alone does not tell you that Seattle is really needing ventilators while New York is short on nurses.

Allowing prices to work in healthcare is of the most vital necessity. Rather than the crude strategy of canceling care not considered “urgent” while stockpiling resources in preparation for the worst, it is better to allow resources to be directed to where they are most needed via the price mechanism. Regulations restricting the supply of care, including the construction of new facilities, the licensing of existing ones, and the number of people allowed to be licensed should be suspended (or, better, repealed). High prices for care, particularly for specialized laborers such as doctors and nurses, would invite the sector to expand its capacity by accepting med school trainees or professionals with lapsed licenses as temporary employees. High prices for emergency coronavirus care, particularly if permitted to be higher in the worst-off regions, would induce medical professionals to temporarily switch specialization and move to areas where they can do the most good. People taken in from shuttered businesses might be able to provide basic care and monitoring with minimal training, allowing those with more specialized training to prioritize the care that needs it most.

Insurance companies facing these high emergency costs would be heavily incentivized to come up with additional ways to mitigate the risk of spreading the illness. Tests that people could take at home and drop off at collection points, for instance, might allow for testing to be done without queues of potentially sick people that will almost certainly be sick when they get done. Even payments (and possibly delivery of necessities) to at-risk patients to incentivize a self-quarantine would be possible. And, most importantly, there are likely very many other possibilities that I, as a single person, have not and might not even be able to come up with. This kind of innovation and adaptation can only be optimally handled by entrepreneurs responding to changing prices, not central planners, no matter how intelligent, knowledgeable, or well intentioned.

The free market price system allows for the rapid and intensive reallocation of resources that is necessary in a crisis scenario like a pandemic. What needs to be done in such a crisis is not to attempt to steer the market to ensure that it provides what is needed (this approach is almost guaranteed to make the situation worse than it has to be), but to let it free to do what it always does: match the goals of entrepreneurial producers with the needs of the populace.

Reprinted from Disinthrallment

No! ‘We’ Are Not the Government

No! ‘We’ Are Not the Government

During a speech in Asheville, North Carolina, in 1902, Theodore Roosevelt proclaimed, “The government is us; we are the government, you and I.” 

Most people believe this.

And it’s a bald-faced lie.

Fernandina Beach, Florida, shut down all of its public beaches this evening in response to the coronavirus pandemic. Anybody caught on the beach is subject to trespassing charges.

So, let’s boil down what’s going on into simplest terms.

Government officials closed “public” beaches. If we go on our “public” beach that “we” ostensibly own as members of “the public” we are subject to trespassing charges enforced by armed government agents.

This should end once and for all the asinine assertion that “we” are the government.

I’m not arguing about whether or not “social distancing” enforced at gunpoint is a necessary policy in light of the pandemic. In fact, I think it’s a good idea to stay at home to minimize the spread of the virus, or at least slow it down. I’m simply pointing out a fallacy that most people unthinkingly embrace. Here’s the truth: “we” are not the government. And furthermore, there is no such thing as “public property.”

These notions are nothing but collectivist claptrap that government officials throw around to justify their sociopathic behavior.

While we’re waxing poetic about democracy and the “will of the people,” government operates as an institution separate and distinct from the people it controls. I can demonstrate the absurdity of this “we are the government” mantra with a personal experience.

When I was living in Lexington, Kentucky, the city sued me over an open records request I made. I simply asked for some documents relating to police surveillance programs. In order to keep those records secret, the government sued me. If “I” am the government, why would I hide documents from myself? And why would I spend my own money to sue myself to stop me from getting documents that are rightfully mine?

Clearly, the government is acting independently and against my interests. If “we” are the government, then “we” should really stop treating “us” this way.

Charging residents with a trespassing crime if they walk onto the public beach further exposes the lie. What we call “public property” is actually government property. The government institution owns and controls it. Most of the time, the government maintains the illusion of “public ownership” by letting you access the property. Of course, even then, you must abide by the government rules. And when the poop hits the proverbial fan, the illusion of public ownership dissipates altogether. The government can ban you from its property and ultimately shoot you if you trespass.

In real life, owners cannot be charged with trespassing on property they own. They certainly can’t be shot for being there. Ownership implies the ability to control and use your property as you see fit. When it comes to public property, the hard truth is you don’t own crap. The government owns it. The government controls it. It’s not “yours” in any sense of the word.

Here’s the red pill. Take it if you dare.

The entire structure of society you’ve embraced your entire life is based on a big, fat lie.

It’s the lie of “the will of the people.”

A group can’t possess a will. Only individuals have a will. Those who assert the “will of the people” really mean the opinion of the majority of individuals within whatever arbitrarily contrived grouping they cobble together to suit their purposes. In reality, this concept of “the people” is nothing more than a political construct. Those in power, and those vying for power, use the “will of the people” to wrap their actions in moral legitimacy. But does the existence of a majority consensus within an artificially constructed group really provide any kind of moral authority?

When I was a kid, I often appealed to such popular will to justify my actions.

“But mom! Everybody’s doing it!”

Without fail, she would reply, “If everybody was jumping off a cliff, would you do it too?”

Those immersed in the political process seem to have forgotten the lesson my mother sought to teach.  The existence of a majority opinion doesn’t make it morally or ethically right. It merely makes it popular.

When push comes to shove, it doesn’t matter anyway. Will of the people or not, when the government decides to do something, it gets done, whether the majority approves or not. Eighty percent of the people in Nassau County could oppose closing the beaches. It wouldn’t matter. The beaches will be closed.

And do you know why the beaches will be closed?

Because government agents have guns and they’re willing to use them.

This Martial Law Will End, and End Badly

This Martial Law Will End, and End Badly

First, let’s get the three principles for the post-COVID-19 world out there:

  1. If you think COVID-19 is fake, or not really scary, you don’t know science and are an ignorant person.
  2. If you post cavalierly about frolicking socially with your friends, you have no empathy for the elderly and other vulnerable populations and are a horrible person.
  3. If you think we only had two options to fight COVID-19 – “A. Destroy the economy, or B. Grandma dies.” – you are sheeple-level stupid, and the media programming has brainwashed you. There were options C, D, E and F.

Now that I’ve offended everyone on social media, let’s talk about that last principle, which also happens to be the one no one in the media or Washington wants you to talk about. Politicians and their media spokesliars call their policy “social distancing,” but that’s just the political marketing angle for an economic and social shutdown we’ve always called martial law. 

The other options could have included a two-stage isolation of the infected and separately isolating the vulnerable elderly and immuno-compromised populations. The latter self-isolate in their own communities in many cases anyway. For those that don’t already self-isolate, all those empty hotel rooms today could have provided sanctuary, or the federal government could have cleared out all those ICE detention centers and welcomed boomers into them. Today’s closed casinos – already famous for feting seniors – could also have become a refuge for the oxygen-tank-and-walker set. 

Moreover, Trump using his bully-pulpit to call for greater ICU capacity to accommodate COVID-19 cases would have been helpful. The pandemics of a century ago – polio, the Spanish flu, smallpox and cholera outbreaks – should have provided historical clues that increasing hospital capacity is key. The data thus far from Italy and China shows COVID-19 has taxed the capacities of hospitals, as the elderly and the younger with pre-existing conditions need hospitalization many multiples more frequently than the regular flu virus. 

The unfolding disaster of martial law

The plebes – to their credit – know intuitively the economic reality which dictates there is no bottom in a market economy based upon closing the markets. Thus, they knew they had better stock up on food, guns and other necessities. And it will be bad: Great Depression-level bad. Last week, Tyler Cowen of George Mason University rather off-handedly posited that if current policy is maintained until August, the result would be 20 percent unemployment – not for months – but for years. 

This false choice of “a new great depression or grandma and two million more dies” has already aged worse than a dead tuna on a hot summer day, so it shouldn’t be a surprise the Trump administration has already pulled lead on suppressing the dire jobs numbers. It will only stink more as time goes on. But that doesn’t mean people with a brain stem no more complex than a box jellyfish won’t defend the martial law status quo. I turned on Fox News the other night to hear that twit Sean Hannity agree with Sen. Lindsay Graham’s call for the federal government to – not end the closure of markets – but reimburse wages for people being prevented by federal and state mandates from producing the goods and services we all want.  Meanwhile, Mitt Romney and Donald Trump have embraced Andrew Yang’s UBI platitude. With what money, neither pair said. Nor did they have to; there isn’t any money in a federal government already running a $1 trillion deficit whose tax revenue income source is about to hit the far slope of K2. So much for “conservative” small government principles. All politicians and mass media corporate whores are Keynesians now.

Democrats never pretended to have small government principles, but Joe Biden and Bernie Sanders likewise opted to cynically lie to the American people in the most recent Democratic debate rather than tell inconvenient truths. Biden claimed of people who have lost income to the virus shutdown: “We can make them whole now, now, and put in process a system whereby they all are made whole.” Sanders also deployed nearly identical language: “We have got to say to the American people, if you lose your job, you will be made whole.” 

There are now two kinds of people in the world: 1. Those who believe the Democratic candidates for President, and 2. Adults. There’s no going back to the old economy or old jobs, and Biden and Sanders are both knowingly lying to you.

But the above at least confirms we will never have any relief from the politicians of either party in Washington or the establishment corporate media. 

If working Americans want an end to the looming great depression, they’ve got to rise up in a revolution and end it themselves. Expect the stock market to lose a minimum of 5-10% per week and the effective unemployment rate (the unemployed plus furloughed employees no longer receiving a check) to increase 2% per week until that revolution happens. Much of that effective unemployment – maybe even half – will be permanent once the shutdowns are lifted, as leveraged or marginal firms shutter after accumulated fixed costs and no revenue make re-openings impossible. 

The end of martial law will come, as the status quo becomes increasingly unbearable and a new Great Depression emerges. I’m convinced the workers will rise up, even if “social distancing” does make protests and riots more difficult. And the riots will come once the peaceful protests are inevitably ignored by Washington.

This end was known, or at least should have been obvious, owing to the likelihood that Trump had no clue. America is not just ruled by fascists; we are governed by dumb fascists. 

If Trump had possessed the stones, and even a whiff of economic sense, he would have called out Italian President Sergio Mattarella as a lunatic for ruining his country by putting the entire nation on lockdown. He would have quipped that Mattarella is really “Stupid Mussolini”: Mussolini made the trains run on time, but Mattarella is dedicated to making sure the trains don’t run. Trump could have then recommended the voluntary isolation of the elderly in the US, and encouraged the markets to provide spaces for sanctuary to seniors. Instead, America’s Mango Mussolini decided to show solidarity with the Eurocratic democratic socialists ruining their nations by aping their stupid fascist policy of economic suicide. 

This shutdown was probably the inevitable result of letting scientists set government policy: What else would one expect from a socially awkward group of pencil-necks with no knowledge of regular human social interaction, or, for that matter, economics? Of course scientists were going to suggest ruining society; these dweebs never understood human society in the first place. All that mattered was their “human social interaction” computer models about how the virus might spread. Scientists are like Bill Murray in the movie “Caddyshack,” blowing up the whole golf course in order to stop a gopher infestation. But it’s emblematic of any government by so-called “experts,” who will “solve” the problem but inevitably show shortcomings in areas in which they are not experts, creating greater overall misery.

Even Wall Street has also been slow on the uptake; it has certainly been behind the prols mobbing the grocery stores. If you happened to turn on CNBC, Bloomberg or any other financial network last week (or even yesterday), you were treated to the highly-paid and delusional chattering class telling us that the bottom is near. Yes, I’m talking about you, Jim Kramer. All they see are percentages and profit margins, and the directives of their corporate masters. But the plebes knew there is no bottom to a market when nobody is making things or providing services and everybody is still consuming them. The bottom won’t happen until the shutdowns end. 

If there’s a “sheeple,” it’s the media class. Sure, there were lots of people who stupidly accepted the incremental state-based martial law in reaction to the COVID-19 virus, and blindly repeated the political talking points. But most workers intuitively know that’s not true, even when they’re repeating those same talking points. It’s actually the people who are America’s greatest chance for ending the  madness. It’s time those workers lead, and demand an end to the charade and reopen the markets. The longer they wait, the greater the economic damage.

Workers of the world, unite … to reinstate capitalism!

 

Thomas R. Eddlem is a freelance writer, a graduate of Stonehill College, and is enrolled in the applied economics master’s program at Boston College. 

To Kill Markets Is the Worst Possible Plan

To Kill Markets Is the Worst Possible Plan

Momentous events usually leave strong memories on those who have lived through them, and those memories often become passed on to later generations in the form of historical interpretations of why and what had happened in the past. This has certainly been so in the cases of the Great Depression, the Second World War, the Civil Rights Movement, the Vietnam War, the terrorist attack of September 11, 2001, the financial crisis of 2008-2009, and now, no doubt, in the face of the Coronavirus pandemic of 2020.

One very important aspect to many of the interpretations of these past events is the lessons drawn in terms of the role of government in the free society. The dust is very far from settling in this latest health crisis that is, truly, enveloping the world. But even in the urgency of finding and implementing ways of minimizing the impact on human life and well-being from the Coronavirus, the outlines of how this crisis may be interpreted in the future is already showing its outline in the present.

Wrong Lessons That May Be Learned from the Coronavirus Crisis

One lesson that will, no doubt, be claimed is that this has once again demonstrated the limits of free markets and the need for activist and centralized governmental oversight, control and command. Dealing with a health issue like the Coronavirus cannot be left up to the decisions or discretion of individuals or even local governments. There has to be designed and directed health-management through central planning by government “experts” and agencies in this type of crisis, it will be said.

As part of this lesson will be the additional claim, as happened in many previous national disasters, of the need to prevent the greed of those in the private sector who try to take personal advantage of a human disaster by “price gouging” and grasping at unwarranted profits at their neighbor’s expense. Price controls in the form of price ceilings and possibly government-organized rationing of essential goods in short supply must be placed outside the everyday arena of ordinary market supply and demand, it will be insisted.

A second lesson that will be suggested by some will be the “dangers” and undesirability of international interdependency for many of the goods and services needed by communities and countries, the supplies of which can become limited or completely lost during a world health crisis such as the Coronavirus due to the supply chains of production that criss-cross national boundaries under the current global system of division of labor.

Better that some essential and vital resource supplies and manufacturing of such goods be “homespun;” that is, produced and supplied domestically in the name of the “national interest.” Some conservatives who have long been wary of “American” industries and employments being “lost” to producers and workers abroad are already saying that the current health crisis shows the need for greater economic self-sufficient “independence.”

And, third, voices are being heard along a wide range of the political and ideological spectrum for the need and necessity for “activist” fiscal and monetary policies to temper and stabilize the negative financial, production, and employment recession-like effects that the Coronavirus is spreading around the world. Markets cannot be left on their own without even more dire consequences for societies beyond the tragic physical hardships and losses to human life from the pandemic.

It is said that even lower interest rates and greater amounts of money and credit are needed to bolster investment and production, while fiscal “ease” in the form of government spending and general or targeted tax breaks are essential to keep small, medium and too-big-to-fail larger businesses afloat. Investment stimulus and aggregate demand-management are once again shown to be the tried and true Keynesian spending cures to the economic ills of society, by the macroeconomic policy managers.

Government Failures in China and America in Fighting the Virus

Given these likely and emerging interpretations of the Coronavirus pandemic, it is, first of all, important to appreciate that delays in effective communication about the existence and potential dangers from the virus, and then the failure of more widely spread testing in the United States are, in fact, failures not of a free marketplace but of government central planning and control.

The press has been full of stories of how early indications about the virus and its potential dangers were suppressed by the Chinese communist government. The reality of this went “viral” even on China’s highly censored and controlled social media platforms when news got out that one of the physicians attempting to inform and publicize what was being discovered was ordered by the Chinese government to keep quiet, and then ended up dying from the Coronavirus himself.

And in typical political form, the Chinese government has attempted to shield President Xi Jinping from any criticism of being responsible for policies that delayed an earlier response by making up factitious stories about how President Xi was “ahead of the curve,” guiding and directing the nationwide lockdown and medical commands that have “saved” the country. And that it was really all due to the U.S. military whose personnel visiting the epicenter city of Wuhan brought the virus to China to keep that proud nation “in its place,” in a world of American “hegemony.”

The media in America, including “The New York Times,” have chronicled how America’s own health care central planning system prevented many of the more early responses to the virus due to the rigid top-down rules and procedures imposed by the Pure Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) in hamstringing local and decentralized development and use of Coronavirus testing tools, since nothing could be done without approval and permission of the American government’s health and drug planners.

Furthermore, when some “rogue” healthcare providers around the country attempted to disobey the health care overseers and social engineers by utilizing their own testing methods and equipment to determine who and to what extent the virus may have spread in their area of the U.S., they were told to cease and desist, and wait for whatever and whenever the testing devices were made available to them by and according to the standards of the federal regulators. (See, Adam Thierer’s article, “How the US Botched Coronavirus Testing”.)

However, rather than questioning the centralized process of permitting the development and use of methods for disease testing, the lesson to be learned, it is presumed, is that the government merely needs to introduce more “flexible” rules and procedures to better team up with state and local health and medical treatment agencies to deal with the current and future crises of this type.

Government Regulation vs. Market Discovery

The idea that virtually all such matters might better be left up to the private, competitive marketplace seems to not even be considered in the arena of debate. Potential “market failures” are seen everywhere, and possible “government failures” are brushed aside as incidental errors and omissions on the pathway to better political oversight of the health and medicine.

But as Austrian economist Friedrich A. Hayek (1899-1992) argued more than half a century ago, “Competition is a Discovery Procedure” (1969) through which individuals and enterprises have the opportunity and the incentives to not only discover the new and better and improved, but to find out what might be possible. Not only can we not know until a competitive process has been allowed to play out who may be the “winner,” but it is only in an arena of competition that individuals have the motive and ability to find out what they are capable of; something that they, themselves, cannot fully know the answer to until they are at liberty to try and have a reason to want to.

The hoops and hurdles that pharmaceutical companies and other manufacturers of medical and health related products must make their way through under the rules, procedures and permissions of federal agencies such as the FDA and the CDC only succeed in reducing the incentives, raising the costs, and narrowing the field of those who otherwise might be willing and able to undertake research, experimentation and marketing of those medicines and medical-related products that could save or improve lives.

A common and reasonable response is, of course, but what about standards and experimental procedures to assure consumer safety from poorly tested and hastily marketed health-related products in the pursuit of profit? Is that not the reasonable rationale for government to centrally approve and oversee regulatory methods over all such marketed products?

The Incentives of Self-Regulating Markets

The word “regulate” is defined by Webster’s dictionary as meaning “to govern or direct according to rule,” or “to bring order, method, or uniformity to . . .” The Oxford Dictionary says to, “control (something, especially a business activity) by means of rules and regulations.” Understood in this way, there is little if anything that any of us do that is not according to “regulation,” both as individuals and in association with others, even without government.

We each have our time schedules and procedures that we follow in various ways and to varying detail. Even when what a person does does not seem to make much sense, do we not sometimes say such things as, just look beneath the surface and you’ll “discover the method to the madness?” Private sector clubs, associations, business enterprises and arenas of market interaction all have their own participant-generated regulations to facilitate and coordinate how and for what the participants interact with each other for smoother and more predictable pathways to mutual success; and to reinforce confidence on the part of any participant about how his interlocutor has acted and what procedures they may have followed leading up to the transaction and trade.

Many of those rules and procedures that “regularize” how people do things, for whatever purposes, and with whatever degree of surety of reliability and confidence in the conduct of those with whom we buy and sell have, historically, emerged before the modern era of government regulation, and often continues parallel to or independently of any such regulatory rules and procedure imposed by government.

No pharmaceutical or medical equipment company concerned with its long-term viability as a profit-making enterprise can count on staying the course in the marketplace by killing their customers, adulterating their products, or making intentional false promises or guarantees. Hollywood movies may make their millions by portraying every drug company as a murderous monster in its pursuit of more profitable market shares, but that is not how real, market-based companies can afford to operate. Possible lawsuits, sky-high insurance premiums and the loss of brand-name reputation always dog any company thinking of cutting corners to any extent. (See my review of “Regulation Without the State”.)

Regulations Serving Vested Interests

Economists have long emphasized what is sometimes called the “capture” theory of government regulation. That is, the industry being regulated by the government often has lobbied for that political intervention, or when this is not the case, has come to see it as an opportunity to use the regulatory intervention as means of raising the “barriers to entry” to any would-be new entrants and enterprises that might want to compete against the existing and established firms in that corner of the market.

Therefore, one of the central purposes of leaving markets free of government control is precisely to not block the way to potential rivals and to force the current firms in that industry to more effectively compete and innovate to maintain any profitable position in the market; and to permit the flexibility and adaptability to changing market conditions. It is open competition that assures consumer-oriented production and pricing, and it is government regulation that tends to foster rules and restrictions designed to shelter existing firms from new and creative competition.

If any such firms may be clothed with a “black hat,” it is those who wish to use the government’s regulatory power to, therefore, stymy market competition. The fault is not with a free market, but from the introduction of government interventions and regulatory agencies manned by those who presume to know what is better for people than those people themselves, and whose activities almost inescapably always fall victim to the designs of the larger companies those agencies are set up to regulate.

In addition, sight should not be lost of the self-interested purposes of those who live on and off government agencies such as the FDA and the CDC. Their recent responses to attempts to introduce methods and procedures outside of their straitjacket of regulatory control demonstrates their desire not to permit the weakening of the institutional structures by which they justify their power, positions, and incomes within the government maze of bureaucracies.

Price Controls Only Make Supply Situations Worse

The other ingredient in the regulatory mix is that when a crisis occurs such as the latest one in the form of the Coronavirus, concerns and even “panic” break out among many people in an attempt to obtain supplies of those goods viewed as essential or desirable to meet the real and imagined circumstances now facing them in the impacted communities. Around the United States, most recently, fears of mandated lockdowns and voluntary quarantining to reduce spreading of the Coronavirus may reduce or stop the availability of such essential products as toilet paper or bacterial and virus-reducing cleaning products.

Retail store shelves normally filled with such products are either empty or low in inventory. People have been scurrying from store to store in search of any brand name and type of toilet paper, for instance, even if they are not sure whether it might not “rub them the wrong way!” In the face of normal production levels and shipment schedules, quantities in the supply line to the retail stores have been lacking due to the unusual and unexpected increase in immediate demand.

To prevent “price gouging” 34 states currently have laws on the books making it illegal to “excessively” increase prices on high demand goods during a declared or generally considered “emergency.” This is meant to prevent those selling these products from “unfairly” taking advantage of people needing and wanting such products.

After forty centuries of price controls, it would be hoped that, finally, the counterproductive and disastrous effects of all such systems of government-imposed price controls would have been learned by now. But, alas, not. Market prices have work to do, including in times of social crises such as the one with the Coronavirus. But the government price controllers seem to never learn.

Price flexibility enables the coordination and balancing of market supplies and demands at moments in time and across time, given the degree of demand for goods and the existing supplies of them in the same time frames. Market-generated prices create the incentives for consumers to economize in the face of increased demands or reduced supply, and they create incentives for sellers to find ways to increase production and availability when there is a decrease in existing supply or an increase in consumer demands to buy.

Prices Convey Knowledge and Coordinate Markets

As F. A. Hayek also emphasized, all of the knowledge in society exists in no one place or in any one mind or group of minds, no matter how knowledgeable and well-informed those individuals may consider themselves to be. Knowledge, in its many facets and forms, is dispersed and decentralized among all the minds of all the people in society in their, respective, corners of the world.

The “social problem,” Hayek argued, is to have some means and method to bring to bear what others know that can serve the purposes and needs we may have in mind when we are inescapably separated from each other by time and space. That is the communication role of a competitive and unrestricted price system. People in different parts of the country or the globe are able to inform each other about what they want or what they can supply through the medium of market prices. It is like a shorthand or Morse Code of supplying to others the relevant minimum of information about what and where and at what value people somewhere want and would be willing to buy what those others might have available or could produce to fill the demand.

While the concern has recently been expressed about the general availability of Coronavirus testing kits, effective face masks, respiratory equipment, and related medical supplies, the fact is that there are different intensities of demand for them, given where the higher clusters of reported or feared cases of infected people are located around the country. Allowing the price system to openly and competitively function, with no government rationing scheme preventing or delaying supply-shifting from less to more urgent areas, would rapidly assure that the existing supplies of these things were more efficiently and effectively reallocated to where prices indicated they were most in demand to meet the medical needs for them.

But not only will a functioning price system for these and other goods bring about a more “rational” allocation of the scarce and given quantities of these goods in the present, but rising and unrestrained prices for the various goods, with no penalty for profits earned from their current and future sale, would also serve as the essential method and mechanism to generate the incentives to increase their supplies over time and work to improve their effectiveness in fighting the virus. That is part of the advantage, dare I say, beauty, of setting creative minds free with the liberty to reap the benefits from applying their talents to solve a social problem like the current one.

The Coronavirus crisis has been compared to the seriousness of war against a life-threatening enemy. It is perhaps interesting to note that in September 1939, as Great Britain just entered into its war against Nazi Germany and the British economy needed to gear up for the conflict through new patterns for using resources and goods away from civilian uses to military production, Hayek wrote an article making the case for leaving market prices free from government controls:

“The required quantities of the urgently needed factors of production ought to be released from those uses in which they can be dispensed with at the least sacrifice of other necessary things. But this is just what will happen if the scarce factor rises in price, since producers will dispense with it precisely for those purposes where it costs least to do without it . . . A little consideration will show that a rise in price is incomparably more efficient a method of bringing forth the additional supplies than alternative methods of achieving the same result [through price controls and rationing].”

Price controls only succeed in short-circuiting the means of people to converse and communicate with each other so they can share vital information in the simplest and most adaptable form to constantly and continuously bring about the short-term and longer-term adjustments of goods and resources to meet the needs of people, including at a moment of a crisis like the present one. (See my article, “Price Controls Attack the Freedom of Speech”.)

Using the Coronavirus as a Rationale for Economic Nationalism

The Coronavirus crisis began in China, and the world soon saw the Chinese government’s draconian locking down and shutting in of areas of the country containing tens of millions of people in the attempt to stop or slow down the spread of the virus. The supply chains of raw materials, component parts, and manufacturing and product assembly that interdependently link China with the economies of many other countries around the world were suddenly disrupted and thrown into disarray.

Companies in countries not yet significantly affected by the Coronavirus searched around for possible substitute supplies and warned of the unavailability of various goods due to the production stoppages in the Chinese stages of numerous production processes.

In this setting, voices are being heard calling for a turn to greater economic nationalism, with government limiting a continuing dependency on, for instance, the Chinese market. For example, conservative writer Patrick Buchanan said in his March 13 column: “In retrospect, was it wise to have relied on China to produce essential parts for the supply chains of goods vital to our national security? Does it appear wise to have moved the production of pharmaceuticals and lifesaving drugs for heart disease, strokes and diabetes to China?”

The implication being that the U.S. government should manipulate the market through taxes, protectionism, and regulations to bring these productions back to America.

Economic nationalists like Buchanan seem to be applying Rahm Emanuel’s now famous phrase of never letting a serious crisis go to waste in the service of a political agenda that might be harder to push in calmer social and economic times. Supply chain stoppages and shortages that could and would easily be reversed once the virus finishes running its course, and if governments kept out of the way and allowed production relationships between companies and countries to restore and rebalance themselves, are being used as rationales for restricting a market-based global network of specialization and division of labor.

The Benefits from Trade and Temporary Disruptions

People trade because each participant finds that he is able to obtain from someone else a good or service that would cost them more to obtain in terms of used resources, labor, or time if made through their own efforts than if bought from someone else. If I can buy something that I desire from my neighbor for, say, $10 when if I tried to make it myself it would cost me $15 in resources, time and labor, I am far better off acquiring it from that neighbor, and having $5 left over in my pocket to spend on other things I otherwise could not have afforded.

My neighbor, in turn, sells me his product for that $10 because the $10 that he earns enables him to buy something he desires that would cost him more than the $10 if he were to try to make that product for himself. Each of us gets a bargain; we each get what we want from the other at better terms (lower costs) than if we attempted to do so through autarky; that is, economic self-sufficiency, in some or all the things we might otherwise be able to obtain in exchange from trading partners literally next door or halfway around the world.

A wide variety of political criticisms easily may be made against the communist government in China in terms of both its domestic and foreign policies, and a proponent of a free-market liberal society could easily make that into a very long list. But the Coronavirus fits more in the category of a natural disaster, like an earthquake or a hurricane, that disrupts and destroys lives and property, and reduces economic potentials and possibilities for a period of time.

Again, assuming no undue government interventions getting in the way, the human beings whose actions are behind all the work, savings and investment in society, usually undertake the needed reconstruction and rebuilding within a reasonable period of time, after which “life goes on as before.”

Tragically, several thousands of lives have been and many more may be lost before the Coronavirus runs its course around the world. And in the meantime, production processes are and will be slowed down or temporarily halted. But factory buildings have not collapsed, farmlands have not been swallowed up by the earth, great fires have not destroyed places where people live, and cities still stand just as they did before the virus started making people ill.

In other words, “this too will pass,” and people will go back to work, get back to eating out at restaurants, shopping at their favorite stores, and planning their next vacations at home and abroad. While many in society are experiencing a high degree of anxiety and panic due to the uncertainties surrounding some of the properties of this virus, and while the mass media and governments have helped fuel those fears, the fact is that this virus is just a “cousin” of the serious flus that strike humanity around the globe with almost clockwork annual regularity, and which, unfortunately, take tens of thousands of lives each time.

If a hurricane or a drought wipes out the orange harvest in Florida, we would consider it foolish if the people and government of Alaska decided that it would now be wise to invest in hothouses to have orange “independence” at home due to the uncertainties of Florida weather. Wholesalers and retailers in Alaska search out temporary substitute suppliers of oranges located somewhere else in the world, and then return to buying oranges from Florida next season, if once more Florida farmers offer the better fruit at the more attractive price.

A very bad lesson, therefore, from the Coronavirus episode would be to in any way suggest that the disruptions caused by it to the supply chains of international trade justify severing through deliberate government policy the near universal benefits that all of us everywhere on the planet gain from participating in the worldwide system of division of labor, which now includes China. The citizens of any country whose government attempted to do so would experience losses in their qualities and standards of living that have been and can be theirs only through the collaborative global interdependencies of market-oriented specialization and trade.

A Diarrhea of Dollars and Deficit Spending

The economywide disruptions being caused by the Coronavirus are once again bringing forth all the standard macroeconomic panaceas in the form of “activist” monetary and fiscal policies. On Sunday, March 15, the evening before the Monday morning opening of the U. S stock exchanges, the Federal Reserve announced that it would be buying $500 billion in government treasuries and $200 billion in mortgage-backed securities in the coming weeks and months, basically adding three-quarters of an extra $1 trillion to the American banking system. This is combined with the Federal Reserve’s decision to lower its benchmark discount window interest rate (the rate that the Fed charges member banks for short-term lending) to 0.25 percent, in other words, virtually to zero.

At the same time, Congress has passed, and the president has signed two spending bills as emergency expenditures to counteract negative financial impacts of the Coronavirus, additional government expenditures that come to nearly $60 billion – with possibly even a lot more to come. For the first five months of the federal government’s current fiscal year (October 2019-February 2020), Uncle Sam has already run a budget deficit of $625 billion, with the projection that the deficit for the full fiscal year that will end on September 30, 2020 will be over $1 trillion before these new additions to government spending.

The Federal Reserve’s “easy money” policy is supposed to stimulate additional private sector investment and related borrowing to boost production and employment. The federal government’s additional deficit spending is meant to increase demand to create consumer-end and other sales to increase profit margins as a means to sustain or increase output and jobs.

Successful Production Comes Before Coordinated Consumption

All of these are stereotypical “Keynesian” policies designed to get an economy out of a recession caused by a falling off of “aggregate demand.” But, if anything, the global economy effects from the Coronavirus is demonstrating the logic and reality of Say’s Law, named after the 19th century French economist, Jean-Baptiste Say (1767-1832). At the end of the day, there is no consumption without production, and, therefore, there is nothing to demand and demand with, without supply.

If you want to eat, you must first plant the crop and wait for it to mature for harvesting at some point in the future. If you want a woolen sweater, you must first raise sheep, wait for their wool to grow, and then after shearing the sheep, manufacture it with all the related inputs into the sweater you’d like to wear. If you want to have something to write with . . . well, maybe it would be better to just read Leonard Read’s famous account in his essay, “I, Pencil.” (See my article, “Jean Baptiste Say and the ‘Law of Markets’”. )

If production falls off, then the ability to either consume directly what you have produced or to sell it to others as your demand for what they may have for sale declines as well. In China first, and now in an increasing number of countries in Europe, people have been told or commanded by their governments to stay home to self-distance themselves from others as a means of minimizing spread of the virus.

To the extent that factories slow or shut down due to work forces being instructed by governments or their employers to not come to work to fight the spread of the virus, the individual outputs of those businesses decrease or stop; and, therefore, in the aggregate, supply of output as a whole declines, which is only a statistical adding up of all the individual outputs produced by individual firms and enterprises.

Governments cannot be telling people to both curtail their workplace presence and activities to stop a spreading of the virus and, at the same time, maintain their income-based expenditures on the outputs of their national economies. The panic buying that has been seen in many parts of the United States is clearing out existing inventories of goods currently available in retail stores. Replenishing them each day and every week is dependent upon continuing and redirected production reflecting the greater than usual relative patterns of consumer demand for what are widely defined as “essentials” and “necessities” in the present crisis atmosphere.

Increasing dollar or nominal spending via greater government deficit spending does nothing to “stimulate” the maintenance of production and employment if workers are quarantined, factories are partly or totally idle, and goods cannot, therefore, be forthcoming in their usual or changed patterns of demand reflecting upon on what the government spends those billions of extra dollars.

Likewise, the presumed attractiveness of zero rates of interest cannot generate real additional investment spending when the available supplies of labor and other factors of production are on the sidelines due to “social distancing” that restricts people’s participation in the market. (See my article, “The Myth of Aggregate Demand and Supply”.)

Financial Markets Without an Interest Rate Steering Mechanism

We should also not lose sight of the fact that financial markets, due to Federal Reserve policy in recent years and now reinforced with this latest interest rate and security-buying announcement, are operating without a fully functioning price system. Interest rates are meant to be the intertemporal prices to borrow and invest scarce resources across time from willing lenders forgoing the use of their own savings for a period of time.

Zero or near-zero rates of interest must mean either that no one wants to borrow for anything and therefore investment demand is zero, or the economy is so awash in savings that there is more real savings in the economy than a fully satiated investment demand to use that savings for future-oriented production, and therefore savings trades at a zero price. Neither of these conditions can be presumed to hold; that is, either no investment demand of any type for available real savings or so much savings that no investment demand no matter how unprofitable need go unsatisfied from lack of savings.

Of course, we do not fully know what market interest rates should be in either “normal” circumstances or in a virus-based crisis situation like at the present because monetary and credit expansion and interest rate setting and manipulating by the Federal Reserve has and does prevent us from knowing what is the real savings that there may be in the economy and what are the actual market-based profitable investment demands for borrowing at rates of interest formed and set by the interacting forces of supply and demand freed from central bank intervention.

In Some Uncharted Waters Due to the Coronavirus Crisis

In the current climate of public hysteria, mass media hype, and wide-open fiscal and monetary sluice gates, with the possibility of government anti-gouging price controls and “essential goods” rationing, trying to say what policy “X” must and will bring about is impossible to say with complete confidence. But in a situation of declining production due to quarantining and massive increases in potential purchasing power coming on the market via monetary expansion and deficit spending this would suggest, in “normal” times, highly inflationary problems ahead.

But if political pressures bring about municipal, state-level and/or federal systems of price controls and rationing, the result would then be what German economist Wilhelm Röpke (1899-1966) called “repressed inflation.” You’d have resource and commodity bottlenecks with shortages of a growing number of those “essential” and non-essential goods, at controlled and fixed prices, with government-directed allocations for goods for production and consumption. The end product would be a system of government central planning, regardless of what the president and Congress decided to call it.

This is, of course, a “worst case” scenario. Chances are it would be a hodge-podge of politically driven incoherent and inconsistent policies introduced on the fly to meet the expediencies and emotions of the moment, and especially in a presidential election year when everyone is desperately pandering for campaign contributions and votes on election day in November.

Or, maybe, the Coronavirus crisis in America will not be as bad and as damaging as many in the scientific community honestly fear. The whole business may blow over in a few months, like other harmful and killer flu seasons. If this, hopefully, turns out to be the case, the whole episode will merely be another teaching moment in misguided and damaging government policies that markets, once again, successfully endured and survived.

Reprinted from The Future of Freedom Foundation.

TGIF: Despite Appearances, ‘Price Gouging’ Helps People in Distress

TGIF: Despite Appearances, ‘Price Gouging’ Helps People in Distress

[This article originally appeared on the American Institute for Economic Research website on September 12, 2017.]

Critics of the free economy often complain that the market fails to “behave” as economic theory predicts. Hence the voluminous literature on “market failure” (which sparked a substantial public choice literature on “government failure” and the need for comparative institutional analysis).

But critics also fault the free economy for behaving exactly as the theory predicts. Hence the outcry against “price gouging” during natural and manmade disasters.

The market is damned when it works and damned when it appears not to.

Price gouging is the common pejorative for sharp price increases when, as a disaster looms, the demand for consumer goods — such as gasoline, batteries, and bottled water — rises abruptly. The phenomenon is so widely despised that many states and localities have outlawed or limited such price spikes.

Those spikes are predicted by economic theory. The law of supply and demand anticipates that an increase in demand relative to supply will (other things being equal) cause the price to rise. During Hurricane Harvey, $20 a gallon for gas and $99 a case for water were reported.

What upsets people is that the law kicks in at full force when the demand for gasoline, batteries, and bottled water is especially acute. An impending disaster prompts consumers to stockpile goods for fear that they will not be able to buy them later. Because conditions are abnormal, competition can’t be counted on immediately to limit price increases.

Texas Attorney General Ken Paxton expressed what many people feel: “Unfortunately, in the wake of the damage from storms and flooding, we … see bad actors taking advantage of victims and their circumstances.” As Hurricane Irma was bearing down on Florida, state Attorney General Pam Bondi declared she had “zero tolerance. If you are a bad business going after our citizens, we’re going to go after you with everything we’ve got.” To owners of offending convenience stores, she promised to “pull your franchise.”

Appearances of exploitation can deceive, however. Let’s begin with the obvious: so-called price gouging arises during impending emergencies in which, by definition, no good alternatives exist. People who condemn gouging imply the choice is between plentiful supplies at low prices and plentiful supplies at high prices. But the first alternative is not available. The real choice is between no goods at a low price and some goods at a high price. Government threats do nothing to increase the supply — but they may well keep the supply from increasing, making a bad situation even worse.

Bondi told CNN that charging $30 for water is wrong because “there’s plenty of water throughout this country.” But water in other states could do Texans and Floridians no good unless someone chose to transport it to the hurricane zones. Policy makers need to ask themselves whether people in other states are more or less likely to do so if they risk prosecution for charging too much. The answer is obvious. Why would anyone take extraordinary risks if they couldn’t charge much more than they could charge at home? We may wish that people would risk their lives for strangers, but how many of those who condemn price gouging undertake that risk themselves?

If the objective is to get badly needed supplies to people in need, it would be better to take human nature as we find it and accept that the profit motive is the most powerful inducement we know for getting goods delivered to those who need it. How comforting is the knowledge that, although people will go without those goods, at least no price gouging occurred?

When critics rail against gouging, they often appeal to the virtue of charity and call on everyone to sacrifice for those who face extraordinary hardship because of emergencies. However, those critics fail to understand that the law of supply and demand encourages the very sacrifice they call for. When prices spike, consumers naturally cut back on their purchases, forgoing what they regard as the most trivial uses of goods. By doing so, they leave more for others — which is what the gouging critics say they want. If prices remained at the old, lower level, consumers at the front of the line would buy more than they would have at higher prices, leaving less for those at the back of the line. We have no reason to think the poor have better access to goods when the government imposes price ceilings.

Note also that if profit-seeking entrepreneurs in other states moved goods to afflicted areas, even consumers in unaffected areas would be encouraged to cut back. Thus the sacrifice would be spread throughout the country.

Limited supplies might go further by restricting purchases through an honor system for consumers or through arbitrary limits on purchases, but neither of those alternatives would bring new supplies to the marketplace.

The question remains: do we want to feel good, or do we want people to have the goods they need?

TGIF — The Goal Is Freedom — appears occasionally on Fridays.

Turning the Handle on the Door They Can’t Breach

Turning the Handle on the Door They Can’t Breach

Space monkeys, art exhibits, Operation Latte Thunder – that was the plan anyways.  Nameless members of Project Mayhem set out to destroy a piece of art and a coffee bar.  It was all part of Tyler Durden’s plot to begin, as Caitlin Johnstone aptly puts it, “disintegrating patterns.”  Things were going as planned until a trigger-happy security guard shot a retreating “space monkey” in the head.  His name was Robert Paulson. Back then, that became the rallying cry for the remaining misfits hellbent on sewing discord in our personalized fishbowls as Fight Club climaxed.  Today, his name was Duncan Lemp.  The new name memorialized after the 21-year old became yet another shooting death in the police-pillaged countryside called The Land of the Free.  Lemp’s last tweet hangs eerily prescient, “the constitution is dead.”  Whatever the investigation bears out, freedom has yet again proven to be nothing more than décor for our fishbowl.

The Siege of Internet Freedom

For now, there remains a final bastion against the eroding waves of bureaucratic ink and jackboots.  The world wide web. On the internet, communication and information dissemination has altered the course of human society completely.  Every relevant inch of guard rail on the “superhighway” is encrypted, or functionally digitally impenetrable. That security is becoming increasingly undervalued as both user privacy demands and bad actors multiply.  Amid the collective fever-dream of the novel coronavirus, the Senate was furiously crafting the EARN IT Act to quietly begin removing the last safeguard to American internet privacy: end to end encryption (E2EE).  E2EE is the code that digitally obfuscates data being sent between two parties so that only they can view it, and has been a thorn in the side of federal law enforcement and intelligence agencies for years.  Passage of the EARN IT Act would be the legislative equivalent to siege towers landing on the wall, allowing for an endless stream of lawmen to pore over your digital private life. 

The Communications Decency Act was passed in 1996.  Section 230 of which has served as the legal cornerstone for internet privacy, ensuring that website owners are not held legally liable for the content their users publish.  In 2018, President Trump signed the Fight Online Sex Trafficking Act (FOSTA) into law, making sites liable if their platform facilitated trafficking, even unwittingly.  This forced sites to make drastic adjustments to ensure compliance, most notably seeing Craigslist remove its Personals section and Backpage being shut down just before passage.  This had the unintended consequence of forcing sex workers offline and back to the streets, unprotected from the rampant violence they often endure.  FOSTA met significant resistance from tech and privacy advocates, but a “watershed” testimony secured its passage, surprising the bill’s opponents per Protocol

The EARN IT Act is the brain-trust alternative to issue-based Section 230 carve outs, mandating a compliance checklist for online companies regarding children.  A newly minted 19-member National Commission on Online Sexual Exploitation Prevention would create a list of “best-practices” co-signed by Homeland Security, the Attorney General, and the Federal Trade Commission.  This list would be made available so, “providers of interactive computer services may choose to implement,” them, or lose Section 230 immunity for their users content. The scope includes anything from comment sections to private messaging, meaning companies like Facebook would be forced to monitor otherwise E2EE protected data.  In other words, tech will be forced to forge the “back door” the feds have long waited for or be hauled into court.  

Children as Human Shields

Child sex crimes facilitated or committed online aren’t trivial – which is precisely why we shouldn’t want Lindsey Graham and Joe Biden sniffing around.  As we well know, government has a history of fostering unintended consequences, or achieving precisely the opposite of their stated goals.  We shouldn’t expect anything different with child sex trafficking regulations for online businesses.

The fight to undo encryption isn’t a new one.  When the phone data of Rizwan Farook – the San Bernadino gunman who killed 14 – couldn’t be accessed by the FBI, they asked Apple to assist in unlocking it.  Apple CEO Tim Cook refused, sparking public debate and a federal lawsuit before the FBI eventually dropped the case; they found a shadowy third-party who could open it.  Cook’s argument for E2EE, it turns out, was evergreen, “Our smartphones are loaded with our intimate conversations, our financial data, our health records. They’re also loaded with the location of our kids in many cases. It’s not just about privacy, it’s also about public safety,” Cook said. “No one would want a master key built that would turn hundreds of millions of locks … that key could be stolen.”  What Tim fails to realize – or perhaps wisely omits – is that the most dangerous hands for such a key to fall into belong to our very own government. The EARN IT Act will necessarily does just that, as co-sponsor Lindsey Graham has said, “Facebook is talking about end-to-end encryption which means they go blind,” Sen Graham said, later adding, “We’re not going to go blind and let this abuse go forward in the name of any other freedom.”  The master key would never be palatable without a chorus of weeping eyes, and no shield from criticism has been more tried and true than victimized children

More “Actionable Intel” Means More Violent Action

From embarrassing revelations of “LOVEINT” where NSA contractors were using systems to spy on lovers to the Snowden revelations that saw forgetful intelligence director James Clapper committing perjury before Congress, the public track record of abuse and dishonesty is terrifying.  With transparency only brought to the surface by leaks and painstaking probes, how deep does the rabbit hole go? Without whistleblowers like Snowden, the American public would still be completely in the dark on intelligence secretly shedding light on our private lives.  Any law that even potentially expands their reach should be roundly rejected. 

American policing is a critical lesson in metastasizing practices and power.  SWAT use has increased 15,000% since the late seventies to now, with 80% of the 50,000 annual raids being warrant executions like the one that killed Duncan Lemp.  The transformation of state and local police into soldiers stems, in part, to the distribution of surplus military gear from the global war on terror, allowing for images of “kitted-up” cops patrolling streets and raiding houses that look plucked straight from Fallujah c. 2004.  As local police agencies continue accessing technology spun out of federal research labs, like drones and social-media geolocating, there’s no doubt that weakened encryption will inflate frontline police capabilities and targets. 

Mission Creep to a Home Near You

As the master key dangles before Congress and their army of spies, American’s are faced with a choice.  They can continue to watch with eyes glazed over as an unrestrained militarized bureaucracy turns the handle to the last unbreachable door, or they can “ride out and meet them.”  The war outside our encryption refuge will rage on no matter the outcome of EARN IT.  Lemp was right, “the constitution is dead,” and has been a long time.  His death is the consequence of a perpetually growing state codified by a legal system equipped to make criminals of us all.  Losing the protection of encryption spells the definitive end to privacy and the age of thinkpol.  Tomorrow, our time in quarantine can be used to dream up paths to victory in this intellectual war.  Today, the EARN IT Act must be defeated, and legislative attempts on encryption along with it.  

 

Police Stole $225K in Cash and Coins, and the Court Said “Okay”

Police Stole $225K in Cash and Coins, and the Court Said “Okay”

Arlington, Va.—Seven years ago, police officers in Fresno, California, executed search warrants on the homes and business of Micah Jessop and Brittan Ashjian, who owned a business operating and servicing ATMs. Police were investigating a report of illegal gambling. Although neither was ever charged with a crime, police seized nearly $275,000 in rare coins the men owned and cash they used to restock their business’ ATMs. When the investigation was over, police said they’d seized only approximately $50,000 in cash; they kept the remaining cash and the coins for themselves.

Most Americans would say this was a clear-cut case of theft, but when Jessop and Ashjian sued the police, the federal courts threw out their case, citing a controversial legal doctrine called “qualified immunity.” Now, the U.S. Supreme Court will soon decide whether to hear their case, and the Institute for Justice (IJ), as part of its recently launched Project on Immunity and Accountability, has filed an amicus brief urging the Court to take up the case and put an end to this dangerous doctrine once and for all.

“No one should be above the law, least of all those who are supposed to be enforcing it,” said IJ attorney Patrick Jaicomo. “And yet, according to the federal courts, police officers who steal money from people cannot be held accountable because the courts have never ruled that it is unconstitutional for the police to steal from someone. No one really believes that theft is a reasonable seizure permitted by the Constitution. The Ninth Circuit’s decision shows how absurd qualified immunity has become.”

After the search, Jessop and Ashjian filed a lawsuit, claiming that government theft violates the Fourth Amendment right against unreasonable seizures. But both the trial court and the Ninth Circuit held that they did not need to address the issue because—even if the theft was a constitutional violation—the officers were immune under the qualified immunity doctrine.

Qualified immunity traces back to 1982, when the U.S. Supreme Court announced a rule that government officials would be liable only if their specific actions had already been held unconstitutional in an earlier court case. They called the new rule “qualified immunity.” The Court’s decision was a drastic departure from the historical standards of government accountability. At the founding and throughout the nineteenth and earlier twentieth centuries, courts simply decided whether a government official’s actions were unlawful and, if they were, ordered a remedy. It was up to the other branches of government to decide whether the official should be reimbursed (if he had acted justifiably) or not (if he had acted in bad faith).

Unfortunately, Jessop and Ashjian’s case is not an outlier. It is the result of forty years’ worth of Supreme Court decisions that make it effectively impossible to hold government officials accountable, even when they intentionally break the law. The courts are so concerned with protecting the government that they are willing to shield even those officers who act in bad faith.

“It’s time for the Supreme Court to end the failed experiment of qualified immunity,” said IJ Attorney Anya Bidwell. “The fundamental purpose of the Constitution and the Bill of Rights is to protect Americans from government abuses. But thanks to qualified immunity, police can literally come into your home and steal from you, and the courts will shield them from liability. In the brief we filed today, IJ is urging the Court to reconsider the entire doctrine of qualified immunity and revoke the license to lawless conduct it provides.”

The Institute for Justice’s Project on Immunity and Accountability is devoted to the simple idea that government officials are not above the law; if citizens must follow the law, the government must follow the Constitution. In addition to filing amicus briefs, like this one, IJ has also filed three petitions with the Supreme Court on behalf of Americans whose rights were violated by police but were barred from seeking redress due to governmental immunity. Those cases are all pending with the Court.

Reprinted from The Institute For Justice.

 

Family Who Says They Do Not Have COVID-19 Under ‘Forced Quarantine’ by Police

Family Who Says They Do Not Have COVID-19 Under ‘Forced Quarantine’ by Police

Nelson County, KY — A family has been forcibly quarantined in their home this week with police officers keeping them under 24-hour surveillance because a man in the home is accused of having the COVID-19 virus.

According to multiple news reports and even Kentucky governor Andy Beshear, this man fled the hospital after being diagnosed with the disease and refused to self-quarantine, forcing police to be dispatched to his home.

“It’s a step I hoped that I’d never have to take,” Beshear said in a conference on Saturday. “But I can’t allow one person who we know has this virus to refuse to protect their neighbors.”

Nelson County Judge-Executive Dean Watts echoed the governor’s sentiment when he told CNN affiliate WDRB the measure was necessary to keep the community safe.

“This is about us, not about ‘I,’” Watts said. “So quarantine is a must. If we have to, we’ll do it by force.”

However, according to the family who is currently looking out of their front window at a police officer who is making sure they stay inside, the man was never diagnosed with COVID-19. According to the family, he has COPD, and checked out of the hospital freely, not against anyone’s advice.

The couple does not wish to put their names out there as they have already received countless death threats after media ran the story, so the only newspaper who actually got their side of the story, has referred to them as Jane and John.

Thanks to the Kentucky Standard, this family is able to tell their story and not look like some crazed mass murderers wishing to infect people with the COVID-19 virus, like the rest of the media and the government painted them out to be.

This case appears to have begun because John suffers from COPD and began struggling on March 4. According to the Standard:

Jane said they called his pulmonologist when he started having difficulty, and the doctor prescribed him a steroid and antibiotics after his blood oxygen levels dropped. He had suffered a bout of acute hypoxia lung failure in November, but had been in good health and off his oxygen until then.

By Sunday, March 8, his oxygen levels had dropped to dangerous levels and on Monday his pulmonologist recommended he check himself into the emergency department of University of Louisville Hospital and arranged for his admittance.

When they arrived at the ER in Louisville on Monday his blood oxygen level had dropped to 83. He had gone into acute hypoxia and was admitted to intensive care.

While in the ICU he was tested at least twice for influenza and had two chest x-rays and had blood cultures run, Jane said.

“Everything came back normal,” Jane said. “I know this because I asked the nurse.”

According to Jane, John remained in ICU until 4 p.m. last Thursday before his conditioned improved and he was transferred to an in-patient room. Showing just how unconcerned the hospital was with John’s potential for having COVID-19, he was placed in a room with another patient — not isolated.

Once John felt 100% better, the couple decided to check out of the hospital and go home. Jane explained that at no point during their stay at the hospital was John ever under quarantine.

“If there was any positive results, they would not have let us leave,” Jane said.

After they left the hospital, the next day, the Lincoln Trail District Health Department contacted John by phone and told him he tested positive for COVID-19. Having never been tested at the hospital for COVID-19, John and Jane told the health department that they must be mistaken.

“We told them we know it isn’t true,” she said. “He never even ran a fever at the hospital.”

As the Standard notes, Jane said she has access to John’s medical records online, and as of Saturday night there was nothing in his files that showed any tests for COVID-19. She said the family had obtained legal counsel, and their lawyers also told the couple there was no positive test results in John’s medical files.

“There is no record he was tested. None,” Jane said.

Despite having no record of a test, no symptoms of COVID-19, no quarantine in the hospital, and the fact that he was allowed to leave the hospital, the health department told Jane and John they were now under forced quarantine and if they leave their house before March 26, they would be arrested.

Jane remained steadfast in her insistence that John did not have COVID-19 and was never tested for it.

“We were not going to change our lifestyle, because we know it isn’t true,” she said.

The next day, they get a subpoena signed by Circuit Court Judge Jack Seay at 3:31 p.m. that restricted them from leaving their home until March 26. She said there are six adults in the home who remain under quarantine, according to the Standard.

The health department apparently informed the governor of the family’s statement about not receiving the test. The governor responded by holding a press conference inciting hatred and death threats toward the family. They are now also under 24-hour police surveillance.

Because they were forcibly quarantined with six adults who do not normally live in the home, Jane and John were unable to get enough food and supplies to last through the two-week quarantine.

The good news is that after the Standard told their side of the story, they were inundated with calls from good Samaritans trying to help. Jane also said that the officers who’ve been assigned to watch them in their home “have been sweet as pumpkin pies,” she said. “All of them have been very kind. They have helped so much.”

As for John, as he and his family wait out the quarantine, Jane tells the standard he is just fine, no COPD problems either.

“Healthy as a horse,” she said. “He’s not even on his oxygen.”

Reprinted from the Free Thought Project.

The Money-Printing Gods Have Failed

The Money-Printing Gods Have Failed

Hooray!

Finally even the robo-machines and day traders are puking, not BTFDing. Today’s 3,000 Dow Point Dump says even they have had enough of the craven dolts who occupy the Eccles Building.

You do not need a PhD in economics—or even a night school survey course—to see that COVID-19 is temporary supply side shock which 0.05% money market rates are powerless to combat.

Likewise, you don’t need to be a finance wizard to see that with 10-year USTs at 0.78% and 30-year mortgages at their lowest level in history more QE is a sick joke. Adding another $700 billion of government and GSE debt to the Fed’s already hideously bloated balance sheet can’t possibly drive interest rates meaningfully lower, even if rates were a barrier to activity, which they are not.

In fact, the new barrage of QE5 is nothing more than a blatant financial fraud authorized by the official criminals domiciled in the Eccles Building. Today, and for years in the past, the FOMC has been scurrying about in the dealer markets swapping counterfeit credits plucked from thin air for Treasury and GSE bonds that funded the consumption of real economic resources such as government salaries, purchases and private housing construction.

The traditional argument for central banking, of course, was that a little bit of financial fraud (3% per year balance sheet expansion per Uncle Milton Friedman, for example) could help lubricate the banking system and nudge GDP to steadier performance over time.

But what we have now is epic-scale counterfeiting. That is, upwards of $5 trillion of fiat money liabilities at the Fed and $25 trillion at all the world’s central banks, compared to just $500 billion and $2 trillion, respectively, at the turn of the century; and the latter of which had taken decades, and in some cases, centuries to accumulate.

Moreover, on top of everything else in the last several days, these madmen announced in late morning today a new $500 billion O/N repo to be offered two hours later. Just like that—up to one half-trillion dollars of Fake Credit was to emanate from the Fed’s “buy” key during lunch hour!

Fortunately, only $19 billion got taken down, proving these economic morons and arsonists have absolutely not idea what they are doing.

So not knowing, however, they have succeeded in turning the entire financial system into a cesspool of false prices and destructive gambling rackets, thereby stripping

capitalism of the honest money and capital markets its needs to function and thrive. What lies ahead, therefore, is a no man’s land of statist economic and capital demolition.

Needless to say, you don’t need to be a cynic to understand why the Eccles Building launched this limp baby bazooka last night. The Federal Reserve now, and for many years past, has been the abject handmaid of the Wall Street gamblers, bullies and crybabies.

The Fed heads are deathly afraid of honest stock market prices (i.e. a crash) because they know it will make a mockery of their risible claims that the US economy is in a “good place” or that the consumer is “strong” and that they have delivered the hallowed state of Keynesian full employment, world without end.

In truth, decades of Keynesian central banking have sucked the lifeblood out of main street prosperity, stability and resilience. It has destroyed savers; addicted households to debt-based hand-to-mouth living; eviscerated the purchasing power of wages via its 2.00% inflation obsession; and turned the C-suites of corporate America into stock trading rooms and financial engineering joints in the service of Wall Street speculators, not the construction of resilient, value-creating enterprises.

But now the mask of self-serving rhetoric is being ripped-off the Fed’s (and Wall Street’s) phony narrative about the alleged strength of the main street economy— especially the purported Energizer Bunny of household consumption.

After all, just consider the implications of Nancy Pelosi’s Friday Night Abomination—a mass scale soup line of Washington-ordered handouts that is every bit as insidious as the TARP bailout of September 2008.

That is, anyone on Wall Street back then who was illiquid, deserved to be liquidated; and anyone on main street today who has not had enough common sense to put aside at least two weeks of rainy day funds—which is the amount of sick leave Nancy ordered businesses to pay— might profit from spending 14 days begging, borrowing and scrounging for canned soup.

So let’s be very clear. This isn’t about humanitarian necessity or safety net minimums. There are upwards of 110 million American now receiving welfare, food stamps, Medicaid, subsidized housing etc. and not a dime of it that aid—deserved or not—is imperiled by COVID-19.

For crying out loud, Pelosi’s mandated sick pay covers just 80 hours of work for the minority of American workers who are employed by firms with less than 500 employees and (apparently after the allowed DOL waivers) more than 50.

So consider the median wage earner, who doesn’t work for a Small Business (< 50 workers) or a Big Business (> 500 workers), but got their economic porridge just right, thereby qualifying for Nancy’s bequest.

According to the Social Security Administration, there were 167 million US persons who generated a payroll tax record in the most recent year (2018). Among them, there were 9.29 million workers right around the median wage who generated $330 billion of gross pay or an average of $32,450 each.

That is to say, two weeks’ pay amounted to the grand sum of $1,250. Yet these cats down in the Imperial City insist these workers positively can’t get by for even 14 days by drawing down savings, belt-tightening and selling some excess junk on e-Bay if they get the COVID-19 or the quarantine, as the case may be.

We doubt whether that’s strictly accurate, but are quite sure that Federally mandating employers to provide sick leave—and then paying for it on the other side with a tax credit handout— is just another fatal step down the slippery slope of socialization of economic life that will eventually bankrupt the US Treasury.

The fact is, the entire Keynesian policy regime of the present era encourages households, businesses and governments alike to borrow to the hilt and spend every dollar of income in hand-to-mouth fashion. It has therefore left all economic sectors vulnerable, fragile and, in the metaphor of the day, defenseless against even the short-term dislocations generating by public health measures to contain a strain of flu which is highly contagious but not even remotely a Black Plague scale phenomena.

Indeed, the chart below puts the lie to the “strong” consumer canard. The second set of bars covers households right in the middle of the wage distribution cited above, with annual incomes between $25,000 and $45,000.

At each income interval the bars cover households which actually have savings accounts according to the most recent survey of the Federal Reserve, meaning that even the dark green bars representing median amounts significantly over-state the case.

Accordingly, at best the median wage earning household has cash savings of just $1,400. Yet that is not evidence that households are inherently irresponsible spendthrifts; it’s merely the consequence of central banking policies that positively punish savers and encourage them to shop until they drop.

The evidence for the Fed’s role in leaving large swaths of the working population naked in the face of even a modest interruption of paychecks is dispositive. As shown in the chart below, there have been only 9 months since the eve of the financial crisis in early 2008 during which liquid savings generated a return that even matched the inflation rate.

As it happened, during most of that 12-year period, the liquid savings rate as represented by the 90-day T-bill (purple line) earned well less than 1.0% when the inflation rate was consistently 2.00% or higher.

Moreover, after the brief interlude in 2019 when the T-bill yield crossed above the inflation rate, the positive yield wasn’t even a rounding error, albeit enough for the crybabies of Wall Street and the ignoramus in the Oval Office, respectively, to come down on the Fed with a ton of bricks for daring to raise rates too much, too fast.

Needless to say, these monetary cranks have now gotten their way. Today the 90-day T- bill posted at a ridiculously low yield of just 0.23% at a time when the running core inflation rate (CPI less food and energy) most recently clocked in at 2.37% ( February).

So the real yield on liquid savings is negative -2.14%.

Is it any wonder that households have no savings?

Is it any surprise that the Republican sheeples of the beltway just rolled-over Friday night and voted through the Dems’ latest plank on Bernie’s highway to social democracy?

The fact is, the free market would be more than capable of handling a temporary disruption of the supply side—even in the form of the kind of shutdown hysteria that is now issuing from any and all Federal, state or local officials who can manage to grab and open mike, as we will outline in Part 2. In the meanwhile, Gary Kaltbaum gets the last word:

He’s printing money to buy bonds but bonds are already yielding under 1% on the 10 year and around 1.5% on the 30 year. Mortgage rates are not coming down much more. Loan rates are not coming down much more. But again, Aunt Mary and Uncle Bob are screwed because there goes any return on riskless income investments. You already know what we think of these people. We have highlighted them time and time again. They have done nothing more than distort price and yield, screwed savers, bubbled up asset prices, enabled massive leverage and massive debt and deficits but let’s keep depending on them. What’s next? You deposit money and also have to give them the toaster? Does this compare to 1987? To our eyes, it is worse. In 87,

 

Reprinted from The Future of Freedom Foundation.

The Mystery Deepens Over The Pre-Dawn Police Killing Of Duncan Lemp

The Mystery Deepens Over The Pre-Dawn Police Killing Of Duncan Lemp

Five days after shooting 21-year-old Duncan Lemp in a predawn raid, the Montgomery County, Maryland, Police Department announced Tuesday that the killing was immaculate. 

Under pressure by media criticism, the police department issued a detailed statement this afternoon purportedly exonerating itself. But that statement—the third revision of their official account of the fatal raid—is contradicted by multiple eyewitnesses.

Police now say that the raid was spurred by “an anonymous tip at the beginning of the year, indicating that Lemp was in possession of firearms.” A response from the Lemp family, delivered by their lawyer, Rene Sandler, noted, “Using a three-month old ‘anonymous’ tip, the police sought and obtained a no-knock search warrant on March 11, 2020 at 2:38 p.m.” 

The police department states that the warrant “was served in the early morning hours, consistent with Montgomery County Department of Police practice.” So an anonymous tip is all it takes for a SWAT team to launch violent predawn assaults on Montgomery County homes? The press statement declared, “The officers entering the residence announced themselves as police and that they were serving a search warrant.” Why did they obtain a no-knock warrant if they intended to enter the residence and announce themselves?  

Read the entire article at The American Conservative.

Direct Payments From Government is Not the Way to Stimulate the Economy

Direct Payments From Government is Not the Way to Stimulate the Economy

The latest in the Federal government’s response to the coronavirus pandemic is President Trump’s announcement of a “stimulus package” estimated between $850 billion to $1 trillion. The plan reportedly includes $50 to $100 billion bailouts to the airline industry, $200 to $300 billion in small business assistance, and at least half a trillion in “direct payments or tax cuts.” 

On that last option, it is further reported that potentially $250 billion would go toward direct payments to citizens, a form of a “rebate check” of sorts. As cnbc.com reported, “Treasury Secretary Steven Mnuchin said earlier Tuesday that the administration wants to get emergency funds in Americans’ pockets ‘immediately.’” Mnuchin added “Americans need cash now. I mean now in the next two weeks.”

There were few details yet available for Trump’s proposal, and it would still need to be negotiated in Congress.  One idea picking up steam, supported by Sen. Mitt Romney and others, is to send every American adult a check for $1,000.

Naturally, that would provide welcome and needed financial relief during very stressful times, and returning stolen money to the people it was stolen from is a good thing. 

The notion, however, that the government sending money to people will somehow “stimulate” the economy in this, or any other crisis, is wrongheaded.

We do have some fairly recent precedent for this, specifically the 2008 George W. Bush tax rebates of up to $300 in 2008 at the onset of the Great Recession. As Sheldon Richman wrote at the time, however, “Those checks transferred money from the capital markets to consumers, distorting economic decisions and doing nothing to improve the incentives for wealth creation.”

Applying basic economics to today, mailing government checks will be equally impotent in terms of economic stimulus, if not more so. 

For starters, the shock to the economic system is coming from the supply side. Putting government checks into the hands of consumers will do nothing to address the significant hit to production caused by closed factories and companies suffering from high worker absences due to workers staying home.

To the extent that people will spend part of their government check, there will be more money chasing fewer goods and services, the result will be price inflation. 

And that artificial price inflation will interfere with the market’s price system that sends important signals to both producers and input suppliers. Increasingly scarce resources should be allowed to flow to those items that are genuinely in highest demand, not propped up by government checks.

Moreover, as Richman alluded to, is the fact that these government checks aren’t manna from heaven. The money must come from somewhere, be it taxes, borrowing or new money printing.

With the federal government running trillion dollar deficits, the rebate checks will need to come from borrowed funds, and the Federal Reserve stands at the ready to monetize this new debt. But the creation of more fiat dollars does not magically put self-quarantining workers back to work. 

Instead, it just further erodes the purchasing power of the very same dollars the government will be sending you in the mail. And with more money being diverted into consumers’ hands, there is less money in the capital markets for struggling businesses to borrow to help make payroll and otherwise weather the current storm. As Richman noted, “If the government increases some people’s ability to spend by decreasing other people’s ability to spend, where’s the stimulus?”

Naturally, rising prices will impact low-income, low-skilled people the hardest, because they are least equipped to see their wages rise along with the cost of living. 

The government’s policy to mail out checks will not only not stimulate the economy, but in the end may make workers worse off.


Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics.

Follow him on twitter: Bradley Thomas @erasestate

SCARE!

SCARE!

It has arrived, a pandemic. It swept the world, we watched, laughed and ignored it. Memes were made, media excitedly reported and millions speculated. It was fun to tinker inside of our minds what we would do should the zombie hoards arrive. We had seen the movies, but more honestly we had witnessed it on a smaller scale, with Black Friday sales or in localized settings during a storm or a hurricane. Now slowly but surely it is upon us and we have more of what was before.  All you can do in the end is be scared. 

Those with the mandate to protect us and inform lost our trust long ago. But what alternatives do we now have? For many of us we have a monolithic public health system that was already at capacity in the before. No matter how much funding, it would never be enough. The entity is swollen, incoherent and inefficient but most of all it is centralized. None of which work at the best of times, in a crisis it is guaranteed to fail. But all of us no matter how independent we think, are ultimately dependents. 

The media, those corporate, state run and alternative, all meander with truths and sometimes facts. They entertain and seek a social media credit or advertiser friendly output that tends to lose the directness that is often needed. The memes are often deceptive and just for the LOLs or to shock. The censors and social media reviewers mince whatever information comes through and then celebrities and ‘influencers’ are sought as though fame is a verification of enlightenment. The favorite podcaster is suddenly an authority, any voice will do so long as it sounds calm, informed and reasonable. Those official and in authority, they have broken that trust far too many times that even their most ardent supporters and dependents grow weary.

The conspiracy theories and more government controllers all unite in their own self affirmations. They were right all along, they declare. The numbers all coincide, Dean Koontz predicted it, Bill Gates will profit from it, the cabal of Zionist, reptilian, Satanist, central banking, big pharma, etc. all manufactured this simply to (insert reason here). Meanwhile individuals are lost beneath the fog of theories. Those yearning to rule boast that if only they had more control then they would have prevented it, if only they or people like them controlled us all, then none of this would happen. Yet it did and will continue to happen.

Social Media, a mere medium of innocent utility, is now locked in a tug of war between the benevolent availability of direct communication between distant strangers and familiars, a source of immediate information from across the globe and even outer space. Against the menacing idiocy of viral trends, memers of flamboyant idiocracy and self-directed bias ensuring a self-directed algorithm of ignorance. Toilet paper is now a desperate commodity, the run on the banks of the Great Depression is now a run on another disposable paper.

What will the outcome be? It is safe to say that most of us will suffer the COVID-19 virus, how it harms our health will likely be determined by our circumstances. Many who have neglected and lavishly destroyed their health over the years are suddenly concerned with it, and many who have invested great energy in maintaining it may not find medical treatment anytime soon. Human bodies will no doubt survive long after the collective sanity does.

How will the economic rebound take shape? The moment is one of historical interest. To be studied and scoffed generations from now, with hindsight experts will declare an omnipotent answer but here in the moment everyone is self-absorbed and lost in the momentum. Like a piece of snow in the avalanche, individual destiny lost to the chaos as it gains inertia and the inevitable crash. The partisanship of politics ensures that the cure is around the corner next time should you vote in their favor, the left and right idiocy of rule proclaims that they are the answer to it all. In the end, regardless here we are. Perhaps helpless, maybe frightened. Things that do not feed the virus but the infection of tyranny. 

Businesses, individuals of independent means and traders will suffer. While those on pensions, in government will find the incoming stream of fiat, a stimulus will be injected again with the menace of inflation only to prop up the larger businesses who can then pay their employees to take long periods of time away. The self-employed, already drained from the parasites of regulatory toxicity cannot take a hit of such proportion. The slowdown will be murderous for them. But it is likely already too late. But how deep will this go? It will be then with resilience and endurance that those independent individuals will thrive and survive, the entitled will need to adapt or get out of the way. 

The monstrosity of hospitals, mega structures of public health which were already over daunted before the pandemic will become places of further infection. The elites in their field of health will be concentrated in one stew of sickness. What if this virus mutates and becomes worse? What if it is devastating in its re-infection? Events and festivals are to be shut down, schools and universities soon to follow suit. How will the police go about their day-to-day, will revenue raising still be a priority or will it give way to looming uncertainty. 

The massive public health system of ideological righteousness that has been imposed on most nations can barely survive the normal times. Its waste and bureaucratic sludge is a menace to those who truly do want to offer care and treatment to the sick and desperate. Cost is never as important as efficiency. Having such a centralized monstrosity has never been efficient and as the pandemic arises, it will only compound the situation. Should a vaccine be discovered, how effective will it be? Will it play well with the other medications and vaccinations that are already being handed out for the ‘normal’ sicknesses. 

There is already a wariness of vaccine fatigue from within the community. Whether they work or not the long-term effects are not truly known, furthermore not all vaccines are the same. With the cocktail of chemicals already being ingested and injected by most people what are the widespread effects over time on the individual and the future generations? Will individuals be forced to take the vaccine? Whether it is effective or not, has been trialed sufficiently or is being pushed through out of desperation. Already among the more wary there exists an absolute anti-vaccine cabal of zealots, then those who are as just as ardent in their favor. Any in between that look at each with consideration and honest enquiry become lost to the screaming blowhards of both extremes. How much will this influence the treatment in the long run?

China the world’s manufacturer is no longer producing many of the goods that many decried, suddenly the excessive wages, benefits and regulations that killed domestic industry are starving nations. Instead of having a dynamic private sector nations find that the lumbering public sector continues to swell and impose, but the shelves grow empty and the economy shrinks. The offices full of bureaucrats will soon be empty as they are sent home so those truly needed will keep the world going. 

Perhaps in time when the death toll rises, corruption emerges, and extreme measures are sought then those who dare to report on it will suffer the censors wrath. It is after all an international crisis; the truth and facts can be damned in such a situation. Despite the rhetoric of a free press, something that federal police raids on journalists in Australia and the continued mistreatment in custody of Julian Assange have shown us to not really matter in the end. The wars, that sacred ritual of government, will likely continue and in the time of such a desperate crisis the true reporting on them will be lost to the fear mongering of pandemic and greater dependence in the powers that be.

Despite this being a worldwide crisis, the wars go on. With as much lust for murder as the serial killer in a plague the military seeks the blood of the innocent and their enemies with constant enthusiasm. The embargoes on Iran and Yemen will continue. While those in the West waffle on about toilet paper, the already desperate seek clean water and salt. The pressure from the most powerful empire on this planet is not relaxed as the people at the bottom continue to suffer, from foreign bombs and aggression to the domestic tyrants of the homegrown variety. 

Be scared, but don’t be. Trust the authorities but be self-sufficient. Socially isolate but still go to work and school in some situations. Work from home if you can, yet the question beckons in the Global Warming climate why were people not doing that in the first place? Why were offices and city businesses necessary in the first place if the technology already was in place for people to operate from home? Why did activists and political masters not simply Skype conference instead of jet set and enjoy the luxuries of exquisite hotels and restaurants. The new normal is uncertainty and hopefully in months from now it will be a phase as perplexing as the fidget spinner and concerns over Pokémon Go.

It is easy to be pro-liberty in the light of day with sun on our faces but inside the dark cold of uncertainty that deceptive, deadly, incompetent and ever restrictive government becomes a seductive glow of reason. It is a temptation that cowards of principle approach because inside of the scare they cannot imagine a freer alternative to the calamity and crisis. The calculations of the central planners become more coherent than the infinite possibilities of anarchy. It is with the democratic carnage of the mob that the avalanche swallows us all because the voices of individual reason and champions of liberty become silenced, infected at times by the virus of fear. The cure for COVID-19 is unknown currently but the anecdote to the pandemic of human idiocy and destruction is liberty. The monolith that inhibits, prohibits and constricts us all is not only getting in our way but its own self. Central monstrosities are dangerous, their necessity are based on ideology and belief but worst of all the need for jobs, more of their jobs and economy of excessive waste. Less is sometimes best, less of the monster, less constrictions. But always more freedom. 

Could the Coronavirus Be Fatal for the EU?

Could the Coronavirus Be Fatal for the EU?

Since the EU’s debt crisis over Greece in 2009 and the subsequent problems with Italy, Spain, and Portugal, eurozone banks have dedicated their balance sheets to financing government deficits. At a cost to the commercial banks’ own cash flows, negative deposit rates at the ECB have ensured that no material losses have arisen from holding short-term government bonds on their balance sheets. And the only other beneficiaries have been the large corporations which through bond issues have managed to lock in zero or even negative interest rates on their debt.

Officially, this has not been the reason behind the ECB’s monetary policies. The stated objective has been to kick-start the EU’s nonfinancial, nongovernment sector into economic growth, a policy that has not succeeded and has merely increased unproductive debt at the expense of predominantly German savers. But the problem ahead will now be the ECB’s ability to sustain the government bond bubble.

The coronavirus will make this more or less impossible, because productive output in the real economy is now collapsing. The implications for government borrowing are extremely worrying. All those debt problems of eleven years ago will resurface. This time Greece’s debt-to-GDP starts at over 180 percent, compared with 146 percent in 2010; Italy at 135 percent (115 percent); Spain at 95 percent (60 percent); Portugal 122 percent (96 percent); and France 98 percent (85 percent). And that’s what is on balance sheets. The situation is simply unsustainable given the combination of a new systemic crisis and likely shutdowns due to coronavirus.

Not only will banks face a rapid escalation of nonperforming loans and payment failures, but the bland assumption that the Eurosystem with its TARGET2 imbalances guarantees that the debt rating for Italy or Greece is similar to that of Germany is sure to be challenged. That being the case, not only the commercial banks but the ECB itself will have to contend with substantial losses on their bond holdings from widening spreads.

Nor is the eurozone immune to developments elsewhere. US Treasurys are wildly overpriced when a realistic rate of price inflation is taken into account instead of the goal-sought 2 percent approximation of the Consumer Price Index (CPI). With foreigners and the hedge funds liquidating dollar exposure as the Fed begins to lose its grip on the US’s financial markets, US Treasury bond prices are set for a significant derating and eurozone bond markets are sure to be adversely affected.

The scale of banking difficulties already in the pipeline but catalysed by the coronavirus are immense. There are bound to be squabbles over whether to bail in, as the law now requires, or to bail out. The possibility of bail-ins is bound to scare bank bondholders into selling out of all bank-issued bonds and preference shares, spreading a systemic crisis more effectively than traditional bailouts, which protect bondholders, ever could.

Whichever way you analyse these dynamics, the eurozone’s bond bubble with its negative yields has almost no further upside and like Icarus is bound to crash, taking not only the Eurosystem and the TARGET2 settlement system with it, but the currency as well.

The Demise of the EU

The euro is not the only currency whose future is tied to financial asset bubbles. For a brief period, the euro should rally against the dollar, if only because foreigners and speculators are up to their necks in dollars and short of euros, positions that will be reversed as the fx (foreign currency) swap market implodes. It will be after that imbalance has worked its way out that the euro will be in freefall against sound money, which is gold, and to everyone’s surprise its purchasing power, measured in basics, such as food, energy, and commodities, will begin to slide.

For now, the Brussels machine is ploughing on regardless. As the nation-states take the brunt of their economic collapses on the chin, they will begin to realise that the EU superstate is little more than an obstructive and costly irrelevance. Brexit will increasingly be seen as the precedent for others to leave the sinking ship.

One needs to have little sympathy with the spendthrift member states, whose finances will irretrievably collapse. The former members of the Soviet Union which are now EU members will have lost their subsidies and will observe comparative monetary stability in a gold-centric, resource-rich Russia and conclude that for them it has been out of the frying pan and into the fire. But the greatest disappointment will be in Germany, suffering her third currency wipeout in a hundred years.

It is very likely that Germany will seek to restore its own currency, utilising her gold reserves in some way. Doubtless she will attempt to reclaim the gold she reallocated to a failed ECB, but none of it is located in Frankfurt. Even without it, she has sufficient gold reserves at home in Frankfurt to turn a future mark into a proper gold substitute. And importantly, there are a few old-school operators at the Bundesbank who understand the importance of an enduring monetary reset.

That will be primarily for Germany, but some other EU member states in the north that have reasonable fiscal control could join them, establishing a new Hanseatic League based on sound money. But it cannot happen while they remain members of a failed European project.

Reprinted from The Mises Institute.

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Don't Tread on Anyone

Private Law & Defense by Robert P. Murphy – Essay Summary

https://www.youtube.com/watch?v=we2jksUNxtY I give an essay summary and analysis of Chaos Theory by Robert P. Murphy. In short, a stateless society would not be perfect, but all imperfections of the market apply ten fold to the state.  Voluntary funded competition...

Three Arguments EVERY Police Officer Must Hear

https://www.youtube.com/watch?v=SxKDgNBQNRI Part 1: Keith Knight of Don't Tread on Anyone Part 2: Georgetown Professor Jason Brennan and Thomas E. Woods Jr.  (full episode: https://www.youtube.com/watch?v=VPmLMHYHl3Q&t=59s ) Part 3: Mark Passio Natural Law Seminar...

What is Libertarianism? Stephan Kinsella & Keith Knight

https://www.youtube.com/watch?v=HunN6f8XyIc Stephan Kinsella is a practicing patent attorney, a libertarian writer and speaker, Director of the Center for the Study of Innovative Freedom (C4SIF), and Founding and Executive Editor of Libertarian Papers. Find his work...

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