Somalis now have Hope even though they Skip Meals to Make Ends Meet

Posted by PITHOCRATES - October 20th, 2012

Week in Review

Life in Somalia has been exceptionally hard.  Sadly, it’s a recurring theme in some African nations.  Who are ruled more by the gun than the law.  And during near constant warfare there has been little chance for the Rule of Law and capitalism to take root and flourish.  To develop a middle class where people can go to work while their kids go to school.  And then come home at the end of their day to share a family meal and pursue some family activities.  Or simply watch television in the peace and comfort of their living rooms.  Things we take for granted in nations under the Rule of Law and capitalism.  Now there is another change of political leadership in Somalia.  And people are returning home after years of exile.  People have hope.  Even if they have to skip meals to help make ends meet (see Somalis ‘free’ but have no food, water by SARA MOJTEHEDZADEH posted 10/13/2012 on The East African).

But as confidence marks a new era of political leadership in Somalia, experts are warning that over two million Somalis continue to survive on a knife edge.

According to a recent study by Oxfam, many regions of Somalia are confronting severe food and water shortfalls as a result of poor rains.

The survey of 1,800 households found that 72 per cent were worried about their food supply in coming months as a result of this year’s poor “Gu” rains — the season between April and June that supplies Somalia with the rainfall vital for its September harvest. Nearly half of those surveyed habitually skipped meals to make ends meet…

“Any further shocks without proper assistance could take Somalia back to previous conditions, but that’s very unlikely now due to weakening anti-government forces and as more and more areas come under the control of the current government,” said Tamara Nanitashvili, the acting head of FSNAU…

“Many of those who have been displaced or who lost everything during the famine and conflict and want to return will need to be assisted to resume their farming or herding. Greater security can help tremendously to achieve these things,” she said.

In America the Democrats have attacked Mitt Romney about his ‘47%’ remark.  Saying that he believes nearly have the population are just lazy people living off of government benefits.  (Which he didn’t mean.  What he meant was that it was going to be virtually impossible to get people receiving government benefits to vote for the guy NOT promising to increase them.  As once people receive some benefit they are not happy to lose it.  As demonstrated throughout Europe with all of those austerity riots.)  That he would cut these benefits.  Hurting the people that need them most.  While at the same time President Obama’s wife is leading a drive to fight childhood obesity.  And attacking fat people in general.  The mayor of New York City has restricted the size of sodas people can buy because we are too fat.  Our health care costs are out of control because people are too fat.  Yet we need more government benefits, not fewer.  Because people would starve without them.  Even though we have an obesity problem.  Unlike the Somalis.  Who have to skip meals to make ends meet.

So on the one hand we are too fat.  While on the other we’re going to bed hungry.  Which is what we call a paradox.  Because both statements cannot be true.  If we are too fat then we can’t be going to bed hungry.  And if we’re going to bed hungry we can’t be too fat.  If both statements cannot be true then the political left must be lying about one of them.

In Somalia there is no paradox.  They’re going to bed hungry.  Because they’re skipping meals to make ends meet.  And because they are skipping meals they don’t have an obesity problem.  Somalis know true poverty.  And true hunger.  They would probably love to have the chance to suffer hunger the way they do in America.  For at least they could go to bed without the gnawing hunger in their stomachs.

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Hong Kong Protests their New Unelected Beijing-Approved Leader

Posted by PITHOCRATES - July 1st, 2012

Week in Review

The British returned Hong Kong to Chinese rule in 1997.  After more than a glorious century of British colonial rule.  And even though the people in Hong Kong were a colony of a distant power it turns out they were on the winning side of that deal.  For Hong Kong prospered while China got Chairman Mao.  Today the people of Hong Kong are proud of their British colonial past.  And much prefer it to the present Chinese communist rule (see Hong Kong holds big protest as new leader sworn in by the Associated Press posted 7/1/2012 on the Los Angeles Times).

The outpouring of discontent underscored rising tensions between the Communist mainland and the vibrant city of 7 million that was returned to China in 1997 after more than a century of British colonial rule. While much of the discontent revolves around growing economic inequality and stunted democratic development, Hong Kongers are also upset over what they see as arrogant Chinese behavior – wealthy mainlanders taking over retail outlets during flashy Hong Kong shopping trips, for example, or even the choice of language during Sunday’s swearing-in ceremony, Beijing-accented Mandarin instead of the Cantonese dialect spoken locally…

Leung was chosen as chief executive in March, winning 689 votes from a 1,200-seat committee of business elites who mostly voted according to Beijing’s wishes. Hong Kong’s 3.4 million registered voters, who can vote for neighborhood councilors and half of all lawmakers, had no say.

In mid-afternoon, tens of thousands of protesters began marching toward the newly built government headquarters complex on Hong Kong Island in sweltering heat, beating drums and waving British colonial flags in a gesture of nostalgia for an era during which democratic rights were limited but the rule of law was firmly in place…

In his speech, Hu said Hong Kong residents now have more democratic rights and freedoms than ever before – a reminder that China has largely kept the promise it made when it regained the territory from Britain to keep Hong Kong’s relatively open political system in place for 50 years.

But that did little to assuage the feelings of the protesters, who see China’sCommunist Party rule as strongly at odds with the values that many inherited from a British-influenced education, and the continuing spread of democracy to Asian neighbors like South Korea and Chinese-speaking Taiwan.

Yes, it was the British Empire that made Hong Kong the jewel it is.  Not the Chinese communists.  It was the British institutions of democracy, rule of law, free market capitalism and free trade that made Hong Kong the destination for the wealthy Chinese mainlanders when they really want to enjoy life.  And even though the Chinese suffered under British colonial rule today the best part of China would appear to be Hong Kong.  And in Hong Kong people wave British colonial flags in protest of Chinese rule.  Imagine that.

China has a long history.  Most of it remarkable.  But it reached a nadir under Chairman Mao and his People’s Republic of China.  And the spread of the deadliest contagion known to mankind.  Communism.  For as an ideology nothing killed more people.  And while China was suffering the great famines of the Great Leap Forward there was Hong Kong across the water.  Prosperous as ever.  An embarrassment to the communist rulers.  China is a lot better today.  As they let capitalism flourish.  Albeit under the heavy hand of the state.  But it’s one of the BRICS economies.  And may soon be the number one economy in the world.  But it’s still not quite Hong Kong.

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FT114: “One of the most effective ways to get privilege is to force fairness on others.” -Old Pithy

Posted by PITHOCRATES - April 20th, 2012

Fundamental Truth

Voters are so Greedy and Selfish with their Hard-Earned Money that they’re not going to Vote to be Subjugated

History is strewn with people oppressing others to gain privilege for themselves.  Kings, emperors and nobles were always a small minority of civilizations.  But they had the power.  And the wealth.  While the masses suffered abject poverty and went hungry.  Or suffered through famines.    And died.  With early civilizations this was just the way of life.  Because there was no middle class.  No free market capitalism.  And no rule of law.  Life was for the most part subsistence farming.  Where most ate only what they grew.  While the kings, emperors and nobles enjoyed lots of food and drink.  Even enjoyed having a little fun.  Unlike the impoverished masses.  Having privilege made life better.  Which is why the privileged worked hard to keep it.  By forcing others to work hard to provide that better life for them.

But times change.  Privileged ruling classes fall.  And middle classes rise.  Creating vibrant economies.  And representative government.  Then one day the privileged find that they are no longer privileged.  That wealth isn’t automatically theirs.  Instead it belongs to the people who earn that wealth.  And if the once-privileged want wealth then they, too, have to work to get it.  So they, too, can have nice things.  And that they can only have these things if they earned enough to afford them.  Which is a great problem if you don’t want to work.  Don’t have any ability to earn a high income.  Or if you have a feeling of entitlement.  Like in days of yore.  Where you didn’t need anything but a good last name to live the good life.  On the backs of those who didn’t live the good life.

Feelings of entitlement don’t die, though.  They don’t go away once the middle class starts sharing the wealth.  Well, not so much sharing it but earning it.  And keeping it.  Instead of giving it to a privileged ruling class.  Which poses a problem for those who aspire to join a ruling class.  Especially now that we have those pesky elections.  Because voters are so greedy and selfish with their hard-earned money that they’re not going to vote to be subjugated.  They’re not going to vote in a privileged ruling class so they can live like royalty.  While those who pay for that royal lifestyle don’t.  ‘Vote for me so I can live better than you’ is just not a winning political platform.  So that’s why politicians lie.

The Privileged Elite uses Class Warfare to take other People’s Wealth

What do you need to live a privileged life?  Lots of money.  No secret here.  But the secret is how to get that money.  In particular, how do those who don’t want to work or have no talent or have no ability create wealth?  Here’s the secret.  They don’t create wealth.  They take wealth.  By going into government.

Only government has the power to tax.  Which can be a great source of wealth.  Other people’s wealth.  Which is any privileged class’ second favorite kind of wealth.  Second only to the wealth they already took from others.  Because that’s what they want.  Other people’s wealth.  And they’ve found a clever way of taking it.  By making the world a fairer place.  And who’s against fairness?  They’re going to make sure that the poor and children have access to food and affordable housing.  And who’s against the poor?  The children?  You’d have to be a pretty vicious, heartless bastard to be against the children.  And the poor.  They’re going to make sure that women have access to reproductive health care.  For who hates women?  I’ll tell you who.  Anyone that opposes raising taxes.  They hate women.  Children.  The poor.  For the world is full of haters.  And just who are these haters?  Aanyone that earns a lot of money and doesn’t want to pay higher taxes.  These people hate anyone not as wealthy as they are.  Because they hate fairness.  And paying their fair share.  Because they’re greedy.  And hate women and children.  And puppies, too.

This is the way the privileged take other people’s wealth.  Class warfare.  And it’s very effective.  By being the party of the poor, disadvantaged, children, women and puppies, they’re kind and benevolent.  With other people’s money, of course.  But those people are evil so it’s okay.  People hate them.  But they like their kind government benefactors.  Who are looking out for their best interests.  Not rich people.  Or corporate profits.  No, our kind government benefactors make sure those greedy rich people and corporations pay their fair share.  Because that’s all that they want.  It’s all anyone wants.  To be fair.

North Korea is pretty much at the End of the Fairness Road

Later incarnations of the privileged ruling class used the fairness approach to give themselves a better life.  While oppressing their people.  Even killing them.  Through famine.  Or deliberate acts of violence.  All in the name of fairness.  And nothing better epitomizes this than communism.  Where everyone was equal.  Brothers.  Comrades.  There were no profits.  No capitalism.  No competitiveness.  No.  Everyone was equal.  They paid everyone the same.  They dressed everyone the same.  They housed everyone the same.  They fed everyone the same.  Very little.  For one thing you never saw in a communist country was obesity.  Instead you probably heard the rumbling of tummies as most people were hungry all of the time.  There was no income inequality.  No gender inequality.  No.  In communism they had nothing but equality.  Life was fair.  Because no one had anything more than anyone else.  As they perfectly distributed the misery and poverty equally among the impoverished masses.

That was for the masses.  It was quite a different thing for the privileged ruling elite.  Those in the party apparatchik.  And the inner party members themselves.  Who were more equal than others.  These people dressed better.  They had better housing.  Even cars.  They ate better.  Some so well that they grew obese.  North Korea suffers from recurring famines to this day but Kim Jong IL had a bit of a weight problem.  As his son does.  Kim Jong-un.  No, life is very good for the privileged ruling elite.  And hell for those living under them.  Who the ruling elite let die of hunger.  And send to concentration camps if they dare speak of their displeasure.  For only under communism is life fair.  And they just can’t risk the unhappy masses to spoil it for the privileged few.

North Korea is pretty much at the end of the fairness road.  The country is so poor and impoverished and hungry that people will risk their lives to try and escape this land of fairness.  To get somewhere that isn’t so fair.  Like South Korea.  Where they have capitalism.  And inequality.  Where someone can come with nothing, work hard and earn a better life.  Allowing them to pay for housing.  And put food in their rumbling bellies.  For a fair and oppressive government surely cannot.  All they can do is create great inequality between the people and the ruling class.  Far greater than that between the rich and poor in any capitalist country.  For the poor in countries like the UK, Canada and the United States are living far better than anyone outside the ruling elite in North Korea.  This is where the fairness road ends.  But it starts with class warfare.  Where a privileged few live the good life through high taxes.  Taxes they use to force fairness on others.  While those at the top manage that fairness.  Skimming a lot off the top of those taxes for themselves.  And what’s left they spend on the poor, disadvantaged, children, women and puppies.  Just enough to make sure the people love their very rich and wealthy government benefactors.  So they can win the next election.  At least while they still have to deal with those pesky elections.

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Energy Absorption and Conversion, Vibration Isolation, Dampening, Oscillation, Advanced Building Technologies, Building Codes and Code Enforcement

Posted by PITHOCRATES - March 7th, 2012

Technology 101

Springs and Shock Absorbers on a Car provides Vibration Isolation from the Shocks of the Road

Roads aren’t perfect.  They have their bumps.  And their potholes.  Especially in the north.  Where they use salt to melt snow and ice.  Which get to the reinforcing steel within the concrete.  Causing it to corrode.  Further stressing and cracking the concrete.  Allowing water to get underneath the concrete.  Where it expands as it freezes, heaving and cracking the road.  Then there’s the normal heating and cooling.  That can buckle and crack blacktop.  Heavy truck traffic that stresses and hammers our roads.  Even sinking slightly into our asphalt roads making tire ruts.  And then there are railroad crossings.  Sewers and manholes that aren’t flush with the surface.  There’s a lot out there to make for a rough ride.  Yet in a new car you barely feel any of this.  And you can drink a cup of coffee while driving without it splashing out of the cup.  Why?

Because the shocks from the rode are isolated from the passenger compartment.  Air-inflated rubber tires smooth out much of that rough ride.  By compressing to absorb some bumps.  Then expanding back to their original shape.  Springs handle the larger bumps.  Which compress underneath the car as the tires hit a large bump.  Absorbing the energy from that impact before it reaches the passenger compartment.  By using it to compress a spring.  Then the energy in that compressed spring releases and the spring expands until it can expand no longer.  Placing the stretched spring into tension.  The stored energy in the tensioned spring compresses it again.  And this continues back and forth until the energy fully dissipates.  Or is absorbed in a shock absorber.  That dampens the oscillation of the spring.  Bringing it back to a steady-state quickly.  Further smoothing out the ride.

A car is a magnificent piece of engineering.  From converting a fuel into motive power.  To brakes slowing a car down by converting kinetic energy into heat via the friction of brake pads or shoes on rotors or drums.  To the isolation and dampening of the road forces imparted to the car.  It’s a remarkable control and conversion of energy.  That provides for a comfortable ride.  And a smooth ride.  Smooth enough to enjoy a cup of coffee while driving.  Without being too distracted from the business of driving.

Tuned Mass Dampers prevent Dangerous Oscillations in Buildings that can lead to Structural Failures

But a car moving over a road is not the only way energy transfers between the earth and something manmade.  Sometimes the earth moves.  And energy is transferred into something stationary.  Manmade structures like buildings and bridges.  During earthquakes.  And some of these stationary things get damaged.  Some even collapse.  Depending on how we constructed them.  And how similar they are to a car.

Tectonic plates are trying to move.  But the friction between these plates as they jam into each other holds them in place.  Until the pressure builds so much that the plates shift.  Causing an earthquake.  Sending seismic waves through the earth.  In active seismic regions structures need to be like cars.  They need isolation and dampening from the shockwaves caused by shifting tectonic plates.  For during a seismic event these shockwaves ‘grab’ these structures by their foundations and shake them.  This energy applying great forces on these buildings.  Energy that needs to go somewhere.  Because of the conservation of energy principle.  We can’t create it.  Nor we can destroy it.  At best we can redirect it.  Absorb it.  Or convert it.  Like converting the forward movement of a car (kinetic energy) into heat (created during braking).  Or the conversion of kinetic and potential energy of moving springs into heat (via shock absorbers). 

Waves have an amplitude and a frequency.  They oscillate.  That is, they vibrate.  And have energy.  Which is why we build buildings and bridges to move.  To bend and sway.  To dissipate this energy.  For if they were too rigid the forces could instead lead to a structural failure.  However, if they move too much and the external force is in ‘resonance’ with the building’s natural frequency of movement, this oscillation can grow.  Producing great vibrations.  (Like a car driving without any shock absorbers.)  And great forces on the structural integrity of the building.  Itself leading to a structural failure.  That’s why high rises include dampening systems.  Such as tuned mass dampers.  A great mass suspended within a building and restrained by hydraulic cylinders.  Such as the tuned mass damper atop Taipei 101 in Taiwan.  So when the building sways in one direction the mass swings in the opposite direction.  Thus dampening the oscillation of the building.

Free Market Capitalism allows a Higher Standard of Living and Creates the Kind of Wealth that can build Safe Houses and Buildings

Smaller buildings may use springs-with-damper base isolators.  Which does the same thing springs and shocks do for a car.  Isolates the structure from vibrations.  But using the proper building materials to allow a building to move or withstand destructive forces without structural failure provides most seismic protection.  And this is nothing new.  The Machu Picchu Temple of the Sun in Peru is an early example of good seismic engineering.  Peru sits on the Ring of Fire.  A highly seismic region that circles the Pacific Ocean.  The Inca were highly skilled stone cutters.  They built the Machu Picchu Temple of the Sun without mortar.  Because of this the stone can move during seismic events.  Which has let it stand through the millennia.  Today we use mortar.  And reinforcing steel to strengthen our masonry construction (these blocks can’t move but when the walls they make crack the steel inside keeps them from collapsing).  As well as other advanced building technologies.  And ever evolving building codes and code enforcement to make sure builders meet the exacting standards of these technologies.  To keep these buildings from collapsing and killing hundreds of thousands of people.  Which is why in the most modern and advanced cities in seismic regions survive some of the worst seismic events with minimal loss of life.  Where they count deaths in the hundreds instead of the hundreds of thousands.  As they did before we used these advanced building technologies.

The countries and regions sitting on the Ring of Fire (New Zealand, Indonesia, the Philippines, Japan, Alaska, California, Mexico, Peru and Chile) use some of the most advanced building technologies.  And can withstand some of the most severe earthquakes.  With little loss of life.  Now compare that to the impoverished country of Haiti.  Their 2010 earthquake was devastating, claiming 230,000 lives.  Because they have no such building codes or code enforcement.  Or advanced building technology.  Because Haiti is not a nation of free market capitalism.  Or the rule of law.  But one of political corruption.  And abject poverty.  Are they predisposed to be impoverished?  No.  Because countries can change.  If they embrace free market capitalism.  And the rule of law.

Chile was one such country at one time.  Corrupt.  And anti-capitalistic.  During the heyday of Keynesian economics.  Where nations said goodbye to the gold standard.  And ramped up their printing presses.  Igniting hyperinflation.  Including the Chileans.  But they changed.  Thanks to the Chicago Boys.  Chilean economists schooled in the Chicago school of economics.  With a little help from Milton Friedman.  Perhaps the most esteemed member of the Chicago school. Economic reforms produced solid economic growth.  A prosperous middle class.  And advanced building technologies, building codes and code enforcement.  So when Chile suffered a more powerful earthquake than Haiti did that same year Chile measured their death toll in the hundreds.  Not the hundreds of thousands as they did in Haiti.  And the major difference between these two nations?  Chile has a higher standard of living than Haiti.  And has less poverty.  Because Chile embraces free market capitalism.  Which creates the kind of wealth that can build safe houses.  And safe buildings.  For everyone.  Not just the ruling elite.

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Monetarism, Laissez-Faire Capitalism, Augusto Pinochet, Chile, Hyperinflation, El Ladrillo, Chicago Boys, Milton Friedman and Miracle of Chile

Posted by PITHOCRATES - March 6th, 2012

History 101

During the 19th Century Mercantilism gave way to Laissez-Faire Capitalism and Free Trade

Portugal and Spain were superpowers around the 16th and 17th centuries.  Great monarchies with mercantilist economic policies.  Which was all about trade.  Maximize exports.  Minimize imports.  Settle colonies to mine/harvest raw material.  To ship back to the mother country.  Where they manufactured goods from the raw materials.  And exported them to other countries.  Selling them for gold and silver.  Which was key.  Maximizing the trade surplus in the balance of trade.  Finished goods going out.  Gold and silver coming in.  For the nation that gathered the most gold and silver won in the zero-sum game of mercantilism.  Where the monarchy works with business.  Picking winners and losers.  And rewarding the winners who help enrich the monarchy.

Of course, these policies force a kingdom’s subjects to pay higher prices.  By keeping out lower-priced imports.  And with special deals favoring some domestic industries so they can sell at monopoly prices.  They nationalized their Industries.  Creating an aristocratic class.  Composed of government officials.  And their partners in the nationalized industries.  Living the good life on the backs of the poor.  Who paid high taxes.  And high prices.  To support those mercantilist policies.  And it was these policies that settled South America.  Taking all of their gold and silver (bullion).  Shipping it back to the mother country.  The surge in bullion in Europe made it less scarce.  And less valuable.  Meaning it took more of it to buy the same things it once did before this surge.  Resulting in higher prices.  And inflation.  Hurting the consumer more.  And leading to the development of the quantity theory of money.  And monetarism.  Which held that the amount of money in circulation had a direct impact on prices.  The more money the higher the prices.

With the rise of Parliament in Britain power shifted from the king to the people.  Via their representatives in Parliament.  Instead of rule by dictate there was rule by consent.  Which made the business of choosing winners and losers more difficult.  Parliament had the power.  But Parliament was more than one person.  It was full of special interests.  Which made it more and more difficult to choose any one special interest over another.  Unable to curry favor for one’s own interest one didn’t support another’s interest.  At least not when that support came at the expense of your interests.  So there was another power shift in addition from the king to parliament.  There was also one from the king to the markets.  So during the 19th century mercantilism gave way to laissez-faire capitalism.  And free trade.  An economic system that let the British Empire dominate the world during the 19th century.  Making it rich.  And powerful.  Thanks to that vigorous economic activity that could build the world’s most powerful navy.  And pay for an army to garrison an empire.  Meanwhile the old school mercantilist empires fell from superpower status.  And became shadows of their former selves.  Soon the Spanish and Portuguese colonies would gain their independence from these dying empires.

Milton Friedman’s Monetarism turned the Chilean Economy Around

The South American nations may have hated their European masters but they liked one thing about them.  Their mercantilist policies.  Which survived into the 20th century.  Where government partnered with business.  In the worst of crony capitalism.  Where special interests that favored the ruling powers received government favors in return.  Usually protected markets.  And favorable legislation.  That allowed them monopoly prices.  Giving them great profits.  Generous union wages and benefits.  And generous health care and pensions.  At least, for those politically connected.  So the government rigged the game for them.  And they made it worth the government’s while to rig the game.  All of this paid for on the backs of the poor.  Who paid high taxes.  As well as high prices.  And suffered abject poverty.  Which made for an unhappy people.  And a large amount of government turnover through revolution as dictatorships and military juntas overthrew other dictatorships and military juntas.

In 1973 it was Augusto Pinochet’s turn in Chile.  Who came to power in a military coup.  At the time the country wasn’t doing so well.  And in full mercantilism.  The economy was in the toilet.  There was abject poverty.  And hyperinflation (peaking at 1000% or so) as the government printed money to pay for its out of control spending.  To try and bribe the angry mob and keep them from overthrowing the latest dictatorship.  Pinochet was the guy to fix that.  Like everybody that came before him.  And after his military junta failed as the previous military juntas failed, he tried something new.  Thanks to something called El Ladrillo.  And economic plan so thick and heavy they called it ‘the brick’.  A plan prepared by the Chicago Boys.  Chilean economists schooled in the Chicago school of economics.  Pinochet even met with Milton Friedman.  Prominent economist of the Chicago school.  And monetarist.  Who came down to give a speech.  (Interestingly, for the American left roundly criticized Friedman for giving a speech in a right-wing dictatorship.  Though he received no such criticism for giving the same speech in a left-wing dictatorship – communist China.  Showing that the political left was okay with human rights violations as long as they were committed in the left-wing dictatorships they so admired). 

Pinochet asked for some economic advice.  Friedman gave it.  And Pinochet followed it.  He ditched the mercantilist policies.  Embraced laissez-faire capitalism.  Privatized the state industries.  Established free trade.  Cut government spending.  And stopped printing money.  Ending the hyperinflation.  Replacing it with a strict monetary policy.  This didn’t please the politically connected as they lost their privilege.  But Friedman’s monetarism turned the Chilean economy around.  Creating a prosperous market economy.  With a growing middle class.  The strong economic growth led to some healthy tax revenue.  Which in later years funded antipoverty programs.  The Miracle of Chile even replaced the military junta with a democratic government.  Chile now has one of the healthiest and freest economies in the world.  An economy better and stronger than their former colonial master.  Spain.  Who maintained enough of their mercantilist policies to pull them into the Eurozone debt crisis.  And probably could learn a thing or two from their one-time colony.  Who is doing very well these days.  Thanks to the Miracle of Chile.  Milton Friedman.  And the Chicago Boys.  Those great Chilean economists given a chance by of all people a military dictator.

Everyone does Better under Free Market Capitalism, not just the Politically Connected

In 2010 a 7.0 earthquake hit Haiti.  A country rife with political corruption.  With little, if any, free market capitalism.  And even less rule of law.  Where most people live in abject poverty.  In ramshackle housing.  This earthquake claimed 230,000 lives.  A heart-wrenching loss of life.  Especially sad because the impoverished masses suffered the most.  As is often the case in countries with poor economic and political institutions. 

Later that same year, an 8.8 earthquake hit Chile.  Thanks to the economic reforms that rebuilt Chile into a healthy and prosperous democracy, Chileans did not live in ramshackle housing.  The higher standard of living created by the Chicago Boys’ economic reforms created better housing.  And safer cities.  Because of this the far stronger earthquake in Chile killed far fewer people than the lesser earthquake in Haiti.  The death toll in Chile was less than 1,000.  Which is impressive considering that was one of the most powerful earthquakes in recorded history.

Economics matter.  Say what you want about free market capitalism.  Malign it all you will.  But you can’t change some facts.  In particular, everyone does better under free market capitalism.  Including the poor.  For if this wasn’t the case Chile would have seen the loss of life Haiti saw.  But they didn’t.  Because there were no impoverished masses living in ramshackle housing in Chile.  Because those economic reforms improved the standard of living for all Chileans.  Not just the politically connected. 

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British Corn Laws and Empire, the U.S. Free Trade Zone and the Eurozone

Posted by PITHOCRATES - November 29th, 2011

History 101

With the Royal Navy, the Steamship, the Railroad and the Telegraph, Great Britain Peacefully Ruled and Led the World

The British Corn Laws were on the books from 1815 to 1846.  To protect domestic cereal farmers from less expensive food imports.  By adding a tariff to these grain imports.  Increasing their price.  So they weren’t any cheaper than the domestically grown grain.  Interestingly it was the few great landowners who wanted these tariffs.  Not the people who had to buy the food.  For paying more for food meant they had less to spend on clothing and other things.

When it came to consumer prices the people were always for free trade.  Because whatever they earned it never seemed enough.  So paying more in taxes was never a good thing.  These wealthy landowners even put forth the argument that paying higher food prices meant higher wages.  In a feeble attempt to maintain these tariffs.  They said that manufacturers just wanted cheaper food so they could pay cheaper wages.  Because if food wasn’t that expensive their workers wouldn’t need as much pay.  And, of course, the greedy manufacturers would just pocket more profits.  Much like the greedy landowners were doing thanks to the Corn Laws.  But their greed was somehow different.

Well, free trade won out.  Eventually.  And they repealed the Corn Laws in 1846.  And, as expected, food prices plummeted.  Soon they imported more food than they grew.  Because it was cheaper.  And it freed up more money for use elsewhere in the economy.  Stimulating innovation and invention.  Taking the Industrial Revolution to new heights.  And raising the standard of living for all people.  Not just the wealthy landowners.  The British Empire reached its zenith in the 19th century.  After the defeat of Napoleon there was about a century of peace called the Pax Britannica.  Where Great Britain became the global policeman.  With the Royal Navy, the steamship, the railroad and the telegraph, Great Britain peacefully ruled and led the world.

The U.S. was a Large Free Trade Zone with a Common Currency, Language, People and Customs

The British were the most advanced nation in the 19th century world.  And the richest.  Her empire dominated trade.  Her rule of law and common currency made that trade efficient.  It was a giant free trade zone within her empire.  But it couldn’t last.  The cost of maintaining the empire, plus a world war, was just too much.  Her economic might faded.  While another rose.  In a former colony.  The United States.

The sun never set on the British Empire.  Because it was that big.  Reaching around the globe.  Connected by long lines of communication.  And an imperial British culture uniting different peoples.   Who knew different cultures, laws and money.  Whereas as the United States had all the advantages of empire (size and range of resources) without any of the disadvantages.  The U.S. was a large free trade zone with a common currency, language, people and customs.  The states comprising the U.S. were as big as countries in other parts of the world.  But trade could flow between any two states without custom duties, tariffs or even inspections.  It was truly free.

When the Industrial Revolution reached the United States, the economy took off and never looked back.  By the end of the 19th century she was challenging the British Empire.  And rapidly overtook her.  There was another global policeman in town.  All because of a giant free trade zone that was as big as a continent.

The ‘United States’ of Europe created the Eurozone and a Common Currency (the Euro) to Compete with the U.S.

The United States is such the perfect model of free market capitalism that Europe created the Eurozone and a common currency (the Euro) to compete with the U.S.  And it worked.  For awhile.

The ‘united states’ of Europe as a whole has a larger economy than the U.S.  But they have their problems.  For a common currency is only part of America’s success.  The U.S. is a united federation of states with one set of federal laws, language and culture for interstate commerce.  Something Europe doesn’t have.  And probably never will.  European countries have far too much history and culture.  And nationalism.  They will never unite politically.  Like the United States.  Or the British Empire, for that matter.

The key to the British Empire was that it was British.  One currency.  One language.  One set of laws.  One culture.  For interstate trade, at least.  Just like in the country that surpassed her.  The United States.  Still, there’s nothing wrong with being a smaller economic power than the U.S.  As long as you have free trade your people can enjoy a high standard of living.  Without the added responsibility of being the global policeman.

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Free Trade

Posted by PITHOCRATES - November 28th, 2011

Economics 101

When People can Buy and Sell as they Please without Outside Interference we call it Free Trade

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  Religion and the Rule of Law allowed great gatherings of people to live and work together in urban settings.  Thus unleashing human capital.  And creating a great diversity in economic output.  Because all these people with spare time could create new things.  That other people discovered.  And wanted.

The Rule of Law gave us property rights.  And it’s because of property rights that people take chances.  Then.  And now.  To create things.  Invest their labor and capital.  Because they own what they create.  And are free to trade these products of their own labor and capital.  Freely.  With whom they want to.  At the value of exchange they agree to.  Encouraging others to do the same.  So they, too, can enjoy the products of their own labor and capital.

When people can buy and sell as they please without outside interference we call it free trade.  Outside interference can include many things.  But mostly it means government interfering with market forces.  Such as taxing things differently.  Placing tariffs or quotas on imported goods.  Subsidies to certain domestic manufacturers.  Etc.  All things that complicate the exchange of goods and services.  Because you have to consider all of these other things in addition to the goods and services you wish to exchange.  Complicating the economic exchange.  Making it more costly.  Less free.  And simply less of it.

The Overregulation of a Free Market Creates a Black Market

The less free and more complicated trade gets something happens.  The overregulation of a free market creates a secondary market.  A black market.  Where economic exchanges occur free from government interference.   The black market then becomes the free market alternative to the overregulated ‘government’ market.

The former Soviet Union is a good example.  Government bureaucrats completely controlled the market.  They set the prices.  And allocated the resources.  Poorly, I might add.  And the result?  Stores full of items no one wanted to buy.  Long lines at stores selling the basic necessities of life (such as soap and toilet paper).  Where people waited to buy their allotted quota because there was so little available to sell.  And a thriving black market where you could buy the latest in Western fashion and electronics.  Which proved very handy in bribing government bureaucrats.  Because even they wanted what the Westerners traded freely.

Another good example are cigarettes.  Stores across certain state lines do very well selling cigarettes.  For these stores can sell cigarettes at steep discounts compared to those on the other side of the border.  Why?  Cigarette taxes.  And some cities and states really pile them on.  Making some people spend more money on gas as well as risking trouble with the law to get these more affordable cigarettes.  Often buying them in bulk.  And then smuggling them back home.

An Overly Regulated Market alters our Economic Decision Making, Resulting in Less Economic Activity

A free market lets us come together freely to buy and sell what we choose.  An overly regulated market alters our economic decision making.  Due to higher prices.  And regulatory costs.  A minimal amount may not affect our purchasing decisions.  Whereas an excessive amount pushes some outside the law.  Into the black market.  Back to a free market.  Which is what we all want.  To freely buy and sell what we choose.

The net effect on the economy?  The less free the market is the less economic activity there is.  Either due to higher prices.  Or higher regulatory costs.  Both of which leave us with less to spend on other economic exchanges.  And less motivation to commit labor and capital to create new things to trade.

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Code of Hammurabi and the Magna Carta

Posted by PITHOCRATES - November 22nd, 2011

History 101

The Code of Hammurabi was a Precursor to a Modern Criminal Justice System

The first civilization was Sumer.  Along the fertile river valleys of the Euphrates and Tigris rivers.  In modern day Iraq.  Prime real estate in the early civilized world.  Good for growing food.  With established city-states throughout.  This land was attractive.  So attractive that many have conquered it.

Here are some who possessed this land.  The Akkadians.  Guitans.  Elamites.  Amorites.  And, of course, the Sumerians.  Who took it back a time or two.  It wasn’t a neat linear transition.  There were many bumps along the way.  And by bumps I mean power changes.  I.e., wars.  But eventually the Amorite Empire founded the city-state of Babylon.  Which brings us to the sixth king of Babylon.  Hammurabi.  And when he expanded his kingdom by conquering other city-states he became the first king of the Babylonian Empire.  And he did something spectacular in 1780 BC.  He gave us the Code of Hammurabi.  One of the first written codes of law in history.   Providing a giant leap forward for the civilized world.

Everyone has heard of “an eye for an eye, a tooth for a tooth.”  That goes back to the Code of Hammurabi.  A precursor to a modern criminal justice system.  Including trials and the presumption of innocence.  It delved into civil law.  And contract law.  Clearly setting the rules of the game for marriage, divorce, inheritance and economic exchange.  It also included rules for the government.  Sort of like a constitution.  And this was all happening in the second millennium BC.

The Magna Carta exploded the Rule of Law, Personal Liberty and Economic Development

Establishing rules for government is rarely easy.  For few welcome restraints on their power.  But there is a problem all despots have who enjoy wielding absolute power.  They are only one person.  They need others.  For food.  And for money.  Because despots like to fight wars.  Which takes a lot of soldiers.  A lot of food.  And a lot of taxes.  All of which the despot has to depend on others to provide.

King John in 13th century England was one such despot.  He fought a lot of costly wars.  Requiring a lot of taxes.  And the people supplying the soldiers and taxes for these wars were the nobility.  His Barons.    And they were getting tired of the King’s behavior as it was proving very costly.  Not to mention that he was pissing off the French who were planning to invade England.  And there were a whole host of oppressive acts against his subjects.   As well as a feud with the Pope.  Suffice it to say something had to be done.  Without having a suitable candidate ready to replace the king, the Barons instead tried to limit the king’s arbitrary power.  In writing.  What history calls the Magna Carta.

The Magna Carta did not make sweeping change at the time.  But it had a profound impact in the English speaking world.  And the development of constitutional law.  It exploded the Rule of Law.  Personal liberty.  And economic development.  It is what allowed the British Empire.  And the Industrial Revolution.  It influenced the United States Constitution.  Under which America became the leader of the free world.  Because the law ruled supreme.  Allowing no man above the law.  Even a king.  Like on the fields of Runnymede.  When King John affixed his Great Seal to the Magna Carta.

The Rule of Law gave us Property Rights and Contract Law which provided Incentive and Security

The British Empire dominated the world in the 18th century.  Her greatness was only surpassed by the United States.  Thanks to the Rule of Law.  Which unleashed human capital.  Allowing people to create great things.  Because there were property rights.  And contract law.  Giving them both incentive.  And security.

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Rule of Law

Posted by PITHOCRATES - November 21st, 2011

Economics 101

To take Civilization to the Next Level required the Rule of Law

Agriculture advances gave us food surpluses.  Food surpluses gave us a division of labor.  The division of labor gave us trade.  Money made that trade more efficient.  And religion allowed great gatherings of people to live together in urban settings.  Which was a start.  But it didn’t solve all the ills of packing a lot of people together in a crowded urban setting.

Religion did bring people together.  But organized civilization needs leadership.  And having a leadership position over the masses gives one great powers.  For good.  As well as bad.  And all too often leaders have become intoxicated on that power.  Especially if that leader was also the god that the people worshipped.  Who felt they could do anything they wanted.  To anyone they wanted.  And often did.

But it’s just not leaders who failed to choose good.  A lot of the people did, too.  Some people cheated each other.  Stole from each other.  Didn’t honor their agreements.  Fights broke out.  Some harmed others.  Even killed people.  Clearly, religion alone wasn’t enough to get everyone to live in peace and harmony.  They needed something more.  Some basic ground rules.  Rules of the game.  The game being living together in a crowded urban setting.  Working together.  And entering into economic transactions.  What they needed to take civilization to the next level was the Rule of Law.

We use the Rule of Law to Clearly Identify and Protect our Private Property

The key for economic development rested on the principle of private property.  Economic activity is based on trade.  To trade you need first to create things to trade.  Often requiring costs and great personal effort to create these things.  Which people will gladly undertake.  As long as if they own what they create.  And are free to do whatever they wish with it.  Keep it.  Use it.  Or trade it.

We use the Rule of Law to clearly identify and protect our private property.  We define what is ours.  And forbid others to take what is ours without our consent.  If they do they will be punished under the law.  Which will deter some.  And those undeterred will face the consequences.  Thus producing a safer environment to live in.  Where we are safe in our persons and property.  Especially in crowded urban settings.

This encouraged greater economic activity.  With more opportunity to trade.  Sometimes we didn’t exchange things after concluding our negotiations.  Instead entering into a contract for an economic exchange.  Such as summarizing the terms for the exchange of a piece of land.  Or for a future farm crop.  Agreements we freely and consensually enter into.  Because we trust the Rule of Law to protect and enforce these agreements.

Private Property Rights and Contracts are the Indispensible Requirements of any Free Market Economy

The Rule of Law picked up where religion left off.  For those who did not wish to choose good behavior.  Whether it be people in the masses.  Or the leaders.  The Rule of Law became supreme.  Everyone was answerable to the laws of the land.  Today, government leaders often swear an oath to support and defend these laws.

And by clearly setting the ground rules for economic exchange, the Rule of Law unleashed economic activity.  Perhaps more so than any other thing.  By establishing private property rights.  And creating contracts.  The indispensible requirements of any free market economy.

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Conservative (kən-sûr’və-tĭv), n., One who adheres to the political philosophy of conservatism.

Posted by PITHOCRATES - October 20th, 2011

Politics 101

Conservatives tend to be Responsible Adults with Jobs in the Private Sector who Pay Taxes Instead of Consuming Them

What is a conservative?  For a start, it’s probably not what you’ve heard.

There is this perception that conservatives are just a bunch of old white guys.  Bankers.  Corporate fat cats.  And out of touch Republicans (in the U.S., at least).  The perception continues that they are rich, hate the poor and are both closeted racists.  And open racists.  These perceptions are wrong.

Conservatives tend to be grownups.  Responsible adults.  Parents.  And they typically have jobs.  Real jobs.  In the private sector.  They don’t consume tax dollars.  They pay tax dollars.  And they tend to pay their own way.  Who want to raise their children their way.  And live their lives their way.  Without government telling them what’s best for them.

Conservatives believe in Limited Government, the Rule of Law, Individual Liberty and Personal Responsibility

Conservatives believe in limited government.  And they respect the Constitution.  They don’t believe it’s a living document.  Open to broad interpretation.  Or that it is merely a suggestion.  They don’t believe the courts should be used to make law that can’t be legislated in Congress.  The courts interpret law; they don’t write it.  Per the Constitution.  And they don’t like radical, populist change.  That are all theory.  With no track record of success.  They know their history.  Their heritage.  Their traditions.  And are very cautious when it comes to changing the old ways.  Especially when the old ways have been proven by time.

Conservatives believe in the Rule of Law.  Individual liberty.  And personal responsibility.  Where everybody plays by the same set of rules.  Regardless of race, color, sex, creed, etc.  And cheaters shouldn’t prosper.  They favor true capitalism.  And abhor crony capitalism.  Which isn’t capitalism.  But government favoritism.

They favor the Austrian School of economics over the tax and spend Keynesian school.  They believe in sound money and would lean towards reinstating the gold standard.  So government can’t inflate the currency at will to pay for more Keynesian spending.  They also believe that free trade benefits the consumer.  By providing more competition, lower prices and higher quality.

Conservatives typically Go to Church, Believe in the Golden Rule and Love & Respect their Fellow Man

Conservatives tend to be older on average than liberals.  That’s because they have grown up.  And left the ignorant ways of their youth behind.  They have worked and paid taxes.  Been part of the free market economy.  They know how wealth and jobs are created.  And have learned how to think for themselves.

They carefully budget their money.  Scrimp and save to raise a family.  Which is why they are very sensitive to taxes.  They struggled to get by.  And sacrificed for their children.  So they can have a better life.  So they oppose higher taxes now.  And higher taxes later.  For their children.  And their grandchildren.

But they don’t hate the poor.  Or those in need.  Conservatives typically go to church.  Believe in the Golden Rule.  And love and respect their fellow man.  Which is why conservatives are among the most charitable of people.  Many tithe their church.  Donate their time in their communities.  And make great neighbors.

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