Tuesday 19 March 2024

Reporting news, or manufacturing propaganda?



"If people in the media cannot decide whether they are in the business of reporting news or manufacturing propaganda, it is all the more important that the public understand that difference, and choose their news sources accordingly."
~ Thomas Sowell, from his 2012 column 'Mixing news and propaganda' [hat tip Thomas Sowell quotes]

Separating Information from Disinformation: Threats from the AI Revolution




In part one of this three-part series on so-called Artificial Intelligence (AI), our guest poster Per Bylund explained that AI's so-called large language models will not (cannot) evolve into artificial general intelligence as there is nothing therein that will give rise to consciousness. In part two he explained that neither is there any economic threat from AI —which doesn’t mean that AI will have no impact on the economy.
In part three, this final part, he distinguishes between what you should know, what you should ignore, and what real threats do exist ...

Separating Information from Disinformation: Threats from the AI Revolution

by Per Bylund

Artificial intelligence (AI) cannot distinguish fact from fiction. It also isn’t creative or can create novel content but repeats, repackages, and reformulates what has already been said (but perhaps in new ways).

I am sure someone will disagree with the latter, perhaps pointing to the fact that AI can clearly generate, for example, new songs and lyrics. I agree with this, but it misses the point. AI produces a “new” song lyric only by drawing from the data of previous song lyrics and then uses that information (the inductively uncovered patterns in it) to generate what to us appears to be a new song (and may very well be one). However, there is no artistry in it, no creativity. It’s only a structural rehashing of what exists.

Of course, we can debate to what extent humans can think truly novel thoughts and whether human learning may be based solely or primarily on mimicry. However, even if we would—for the sake of argument—agree that all we know and do is mere reproduction, humans have limited capacity to remember exactly and will make errors. We also fill in gaps with what subjectively (not objectively) makes sense to us (Rorschach test, anyone?). Even in this very limited scenario, which I disagree with, humans generate novelty beyond what AI is able to do.

Both the inability to distinguish fact from fiction and the inductive tether to existent data patterns are problems that can be alleviated programmatically—but are open for manipulation.


Manipulation and Propaganda


When Google launched its Gemini AI in February, it immediately became clear that the AI had a woke agenda. Among other things, the AI pushed woke diversity ideals into every conceivable response and, among other things, refused to show images of white people (including when asked to produce images of the Founding Fathers).

Tech guru and Silicon Valley investor Marc Andreessen summarised it on X (formerly Twitter): 
“I know it’s hard to believe, but Big Tech AI generates the output it does because it is precisely executing the specific ideological, radical, biased agenda of its creators. The apparently bizarre output is 100% intended. It is working as designed.”
What this demonstrates is that there is indeed a design to these AIs beyond the basic categorisation and generation engines. The responses are neither perfectly inductive nor generative. In part, this is necessary in order to make the AI useful: filters and rules are applied to make sure that the responses that the AI generates are appropriate, fit with user expectations, and are accurate and respectful. Given the legal situation, creators of AI must also make sure that the AI does not, for example, violate intellectual property laws or engage in hate speech. AI is also designed (directed) so that it does not go haywire or offend its users (remember Tay?).

However, because such filters are applied and the “behaviour” of the AI is already directed, it is easy to take it a little further. After all, when is a response too offensive versus offensive but within the limits of allowable discourse? It is a fine and difficult line that must be specified programmatically.

It also opens the possibility for steering the generated responses beyond mere quality assurance. With filters already in place, it is easy to make the AI make statements of a specific type or that nudges the user in a certain direction (in terms of selected facts, interpretations, and worldviews). It can also be used to give the AI an agenda, as Andreessen suggests, such as making it relentlessly woke.

Thus, AI can be used as an effective propaganda tool, which both the corporations creating them and the governments and agencies regulating them have recognised.

Misinformation and Error


States have long refused to admit that they benefit from and use propaganda to steer and control their subjects. This is in part because they want to maintain a veneer of legitimacy as democratic governments that govern based on (rather than shape) people’s opinions. Propaganda has a bad ring to it; it’s a means of control.

However, the state’s enemies—both domestic and foreign—are said to understand the power of propaganda and do not hesitate to use it to cause chaos in our otherwise untainted democratic society. The government must save us from such manipulation, they claim. Of course, rarely does it stop at mere defence. We saw this clearly during the covid pandemic, in which the government together with social media companies in effect outlawed expressing opinions that were not the official line (see Murthy v. Missouri).

AI is just as easy to manipulate for propaganda purposes as social media algorithms but with the added bonus that it isn’t only people’s opinions, and that users tend to trust that what the AI reports is true. As we saw in the previous article on the AI revolution, this is not a valid assumption, but it is nevertheless a widely held view.

If the AI then can be instructed to not comment on certain things that the creators (or regulators) do not want people to see or learn, then it is effectively “memory holed.” This type of “unwanted” information will not spread as people will not be exposed to it—such as showing only diverse representations of the Founding Fathers (as Google’s Gemini) or presenting, for example, only Keynesian macroeconomic truths to make it appear like there is no other perspective. People don’t know what they don’t know.

Of course, nothing is to say that what is presented to the user is true. In fact, the AI itself cannot distinguish fact from truth but only generates responses according to direction and only based on whatever the AI has been fed. This leaves plenty of scope for the misrepresentation of the truth and can make the world believe outright lies. AI, therefore, can easily be used to impose control, whether it is upon a state, the subjects under its rule, or even a foreign power.

The Real Threat of AI


What, then, is the real threat of AI? As we saw in the first article, large language models will not (cannot) evolve into artificial general intelligence as there is nothing about inductive sifting through large troves of (humanly) created information that will give rise to consciousness. To be frank, we haven’t even figured out what consciousness is, so to think that we will create it (or that it will somehow emerge from algorithms discovering statistical language correlations in existing texts) is quite hyperbolic. Artificial general intelligence is still hypothetical.

As we saw in the second article, there is also no economic threat from AI. It will not make humans economically superfluous and cause mass unemployment. AI is productive capital, which therefore has value to the extent that it serves consumers by contributing to the satisfaction of their wants. Misused AI is as valuable as a misused factory—it will tend to its scrap value. However, this doesn’t mean that AI will have no impact on the economy. It will, and already has, but it is not as big in the short-term as some fear, and it is likely bigger in the long-term than we expect.

No, the real threat is AI’s impact on information. This is in part because induction is an inappropriate source of knowledge—truth and fact are not a matter of frequency or statistical probabilities. The evidence and theories of Nicolaus Copernicus and Galileo Galilei would get weeded out as improbable (false) by an AI trained on all the (best and brightest) writings on geocentrism at the time. There is no progress and no learning of new truths if we trust only historical theories and presentations of fact.

However, this problem can probably be overcome by clever programming (meaning implementing rules—and fact-based limitations—to the induction problem), at least to some extent. The greater problem is the corruption of what AI presents: the misinformation, disinformation, and malinformation that its creators and administrators, as well as governments and pressure groups, direct it to create as a means of controlling or steering public opinion or knowledge.

This is the real danger that the now-famous open letter, signed by Elon Musk, Steve Wozniak, and others, pointed to: “Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilisation?”

Other than the economically illiterate reference to “automat[ing] away all the jobs,” the warning is well-taken. AI will not Terminator-like start to hate us and attempt to exterminate mankind. It will not make us all into biological batteries, as in The Matrix. However, it will—especially when corrupted—misinform and mislead us, create chaos, and potentially make our lives “solitary, poor, nasty, brutish and short.”
Per Bylund is the Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University. 
He is the author of three full-length books: How to Think about the Economy: A PrimerThe Seen, the Unseen, and the Unrealized: How Regulations Affect our Everyday Lives; and The Problem of Production: A New Theory of the Firm. He has edited The Modern Guide to Austrian Economics and The Next Generation of Austrian Economics: Essays In Honor of Joseph T. Salerno.
His article first appeared at the Mises Institute blog.

Monday 18 March 2024

"The real bosses, in the capitalist system of market economy, are the consumers."


"The real bosses, in the capitalist system of market economy, are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser. They make poor men rich and rich men poor.
    "The consumers are merciless. They never buy in order to benefit a less efficient producer and to protect him against the consequences of his failure to manage better. They want to be served as well as possible. And the working of the capitalist system forces the entrepreneur to obey the orders issued by the consumers.
    "The consumers are no easy bosses. They are full of whims and fancies, changeable and unpredictable. They do not care a whit for past merit. As soon as something is offered to them that they like better or that is cheaper, they desert their old purveyors. With them nothing counts more than their own satisfaction. They bother neither about the vested interests of capitalists nor about the fate of the workers who lose their jobs if as consumers they no longer buy what they used to buy."
~ Ludwig Von Mises from his 1944 publication Bureaucracy

Sunday 17 March 2024

The Economics of the AI Revolution



In part two of this three-part series on so-called Artificial Intelligence (AI), our guest poster Per Bylynd acknowledges that even though AI is arguably not an intelligence—at least not in the sci-fi sense—it does not mean that it is unimportant or lacks implications. The technological advance that it represents is nothing short of revolutionary and will have far-reaching implications for both the economy and society.

The Economics of the AI Revolution

by Per Bylund

In a recent article, we briefly summarised what it is that we today call artificial intelligence (AI). Whereas these technologies are certainly impressive and may even pass the Turing test, they are not beings and have no consciousness. Thus, this is neither the time nor the place to discuss philosophical issues of how to define a true or full AI—an artificial general intelligence—and whether we should recognize AI software legally as a person (after all, corporations are).

Economically speaking, AI as technology, whether it is used for entertainment or in production, is a good. As Carl Menger taught, what makes something a good is that it (whatever it may be) has the ability to satisfy a human need, that it must be recognised as such, and that a person—the consumer—has or can gain command over it to satisfy those actual needs. In other words, it must be scarce (there is less of it than we can use to satisfy wants) and understood as valuable (because we believe it can satisfy wants). AI certainly fits the criteria.

The economic system's stages of production form a 'production structure':
increasingly higher order of capital goods producing consumer goods, over time ...

AI as a Consumption Good


When people entertain themselves by “discussing” with AI (try, for example, Windows Copilot) or generating quirky images using DALL-E (try it here), it is a good of the lowest order—a consumption good. As such, the economic consequences are limited to the effect this has on consumer behavior. But this may in turn have a significant impact on production.

Some consumption goods revolutionise the economy and society. Examples of such goods include the automobile (from the introduction of Ford’s Model-T) and the smartphone (starting with Apple’s iPhone). The former disrupted transportation and infrastructure and facilitated just-in-time manufacturing and urban sprawl, just to mention a few effects. The latter changed everything from how we bank to how we travel.

The point here is that as consumer behaviour changes, the production structure follows along. For example, with the broad adoption of the smartphone, paper map production has all but disappeared; whereas, digital location services and intelligent logistics have seen enormous growth and development. And change leads to more change because entrepreneurs build on, add to, and challenge the new discoveries.

AI has the potential to change consumer behaviour well beyond its designed functionality. Exactly how and in what ways remains to be seen. But it is safe to say that it has potential. (On the other hand, many goods have had potential to disrupt but didn’t leave a mark.) For example, we may see people produce their own stories, songs, images, and even movies. So perhaps, instead of relying on television or Netflix and Hollywood producers, we’ll make movie night into a make-a-movie night where we watch content we have generated and that fits us perfectly.

AI as a Higher-Order Good


As a tool and thus a good of a higher order, AI has already had an effect and promises to disrupt several trades. Because it is very effective at producing and presenting content, including translating and editing texts, content-related professions are threatened by AI. This includes journalists and copyeditors, as AI programs can write and edit faster than humans. After all, anyone can ask AI to produce or edit a text. Students already use AI to spice up or improve their papers—or let AI write them from scratch.

AI is similarly affecting photographers and illustrators. It only takes a minute to have DALL-E produce a new image exactly as directed, or to have an AI algorithm remove or add things in a picture you snapped. Whereas, having an illustrator create something takes much longer (not to mention the cost).

Programmers and system developers are also seeing the effects of AI, which has no problem both generating new code (without bugs!) or checking already written code. Legacy software written in dated and ineffective programming languages can be run through an AI to make the coding more efficient—and converted into a modern language.

AI is also affecting academia. Why have an instructor tell students about some subject matter instead of letting AI do it? After all, the AI can easily present content in a way that the student prefers. For example, make a movie to explain, say, biology or chemistry in an entertaining way. And it can answer all kinds of questions without ever getting bothered or cranky—and it has nowhere else to be. In research, AI can analyse data more effectively and run thousands of different regressions on data to find something that is significant and important (so-called HARKing, which is very poor research practice—but who will know?). It can write up the paper too, with citations and everything, in just seconds.

AI as Production Capital


All of this means AI can and will be used in production. In fact, it already is and we have only started to see the effects.

AI is best categorised as capital, which is used to make labor more productive (more value output per hour of labor invested) through facilitating more roundabout (but more effective) production structures. Capital goods in general have one (or both) of two functions: it makes existing production processes more effective by increasing productivity, or it makes possible types of production that were not previously possible. AI checks both boxes.

We have already seen how people working in several types of content-based professions can easily be made more productive or replaced entirely by AI. It can also do things that people may have been unable to do—or never thought of doing. This of course can cause so-called technological unemployment as people lose their jobs because AI can do them better (and cheaper). But this is a dystopian way of describing something quite normal and highly useful: that we relieve people, with all their ingenuity, from comparatively simple tasks so that they can create much more value elsewhere.

It is of course problematic for any person losing their source of income, but it is highly beneficial to consumers (and therefore society at large) that these (and other) professions are “creatively destroyed.” The economic point of employment is not to provide people with an income so they can pay taxes (although politicians seem to think so) but to produce goods that can satisfy consumer wants—to make our lives better. Just like there are very few stable boys or buggy-whip producers since the automobile revolution, the future will see fewer people doing news reporting, copyediting, or coding.

Note also that this revolution is not nearly as sudden and disruptive as it may at first seem: the news media, for example, have for many years reduced the number of journalists doing reporting (most outlets nowadays merely republishing standard articles from AP or Reuters). And software development already uses increasingly effective development environments that correct and predict commands, allow for WYSIWYG and drag-and-drop development, and can debug code and suggest solutions to bugs.

AI is only another step in this process. But the threat is greatly exaggerated. We tend to overestimate the impact of technology in the short term but underestimate it in the long term.

Limitations to Overcome


There is a problem, however, and it has to do with how large language models work and what responses they generate. When used in a setting that is strictly rules-based, such as in computer programming, the AI “understanding” of code can greatly improve the productivity of coders (or replace them). AI will not introduce bugs in software unless the specifications are incomplete or contradictory, and it will not make errors.

The same is true for AI’s language generation: it draws from large troves of text data and has a good “understanding” for how humans use language. But there are no rules-based ways by which it can distinguish fact from fiction. Instead, AI draws from what statistically is more likely to be a human-sounding response. For this reason, it produces content that can be entirely wrong.

For example, I asked AI to summarise the content of my 2022 economics primer, How to Think about the Economy. [A highly recommended free book - Ed.] Since it has access to the text, it did a pretty good job summarising what is in the book. But it also added comments on content that is typically in economics books but that is not in the primer (such as equilibrium theory, perfect competition, and mathematical equations). The AI is correct that economics books typically discuss such things and thus it is statistically probable that my primer would do the same. But it doesn’t.

There is a difference between statistical probability and truth. We will look at this problem and the potential threat that AI poses to human society in the next article.

=> CONTINUED IN PART THREE: 'Separating Information from Disinformation'
PART ONE: 'Understanding the AI Revolution'
Per Bylund is the Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University.
He is the author of three full-length books: How to Think about the Economy: A PrimerThe Seen, the Unseen, and the Unrealized: How Regulations Affect our Everyday Lives; and The Problem of Production: A New Theory of the Firm. He has edited The Modern Guide to Austrian Economics and The Next Generation of Austrian Economics: Essays In Honor of Joseph T. Salerno.
His article first appeared at the Mises Institute blog.


Friday 15 March 2024

"There will not be any more generic open-ended Treaty clauses."


Cartoon by Nick Kim 

"The growth of Treaty of Waitangi clauses in legislation caused so much worry that a special oversight group was set up by the last government in a bid to get greater coherence in the public service on Treaty matters.
When ministers first considered the need for tighter oversight in 2021, there were at least 50 known Treaty clauses in legislation with about 14 variations in their description of the Crown’s obligations as a Treaty partner.
    "With a growing number of references to the Treaty in legislation and a growing variety of references, it was clearly becoming a legal quagmire for the constitutional relationship between the Crown and Māori. ...
    "[These will be looked at in] the New Zealand First-driven review of existing Treaty principles in legislation later this term.
But what will be left of any new Treaty clauses to monitor is an open question because of a radical direction the coalition Government is taking already, ahead of the review.
    "It is no longer putting general Treaty clauses in legislation. ...
    "The [new] Fast-Track Approvals Bill ... did not have a general clause. 'But leaving out a general Treaty clause is not a one-off,' says New Zealand First’s Regional Development Minister Shane Jones ... 'There will be no more general Treaty clauses in any new legislation,' he said.
    “'If you look at the sentiment in the coalition agreement, it should come as no surprise to anyone that there is not and will not be any more generic open-ended Treaty clauses.'
    "'That would apply to all [new] legislation'."
~ Audrey Young from her column 'No more Treaty clause 'mission creep''

Understanding the AI Revolution



No, AI is arguably not an intelligence—at least not in the sci-fi sense, as acknowledges Per Bylund in this first part of his three-part Guest Post, but it does not mean that it is unimportant or lacks implications. The technological advance that it represents is nothing short of revolutionary and will have far-reaching implications for both the economy and society.

Understanding the AI Revolution

by Per Bylund

The artificial intelligence (AI) revolution is here, and it is bound to change the world as we know it—or so proclaimed the hype following the release of OpenAI’s ChatGPT version 3.5 in November 2022, which was only the beginning. Indeed, much has happened since then with the release of the much-improved version 4.0, which was integrated into Microsoft’s Bing search engine, and the recent beta release of Google’s Gemini.

Lots has since been written about what AI could mean for humanity and society, from the positive extremes of soon-here Star Trek technologies and the “zero marginal cost” society to the supposedly imminent “AI takeover” that will cause mass unemployment or the enslavement (if not extermination) of mankind. However, how much of this is fiction, and what is real? In this three-part article series, I will briefly discuss the reality and fiction of AI, what it means for economics (and the economy), and what the real dangers and threats are. Is this the beginning of the end or the end of the beginning?

Most people’s prior experience of the term “artificial intelligence” is from science fiction books and movies. The AI in this type of media is a nonbiological conscious being—a machine man, of sorts. The intelligent machine is often portrayed as lacking certain human qualities such as empathy or ethics. However, it is also unencumbered by human limitations such as imperfect calculability and the lack of knowledge. Sometimes the AI is benign and a friend or even servant of mankind, such as the android Data in Star Trek: The Next Generation, but AI is often used to illuminate problems, tensions, or even an existential threat. Examples of such dystopian AI include Skynet in the Terminator movies, the machines in The Matrix, and HAL 9000 in 2001: A Space Odyssey.

The “AI” in our present real-world hype, such as OpenAI’s ChatGPT and Google’s Gemini, is nothing like these sci-fi “creatures”; they are nowhere near conscious beings. In fact, what we have today is so far from what we typically would call an intelligence that a new term has been invented to distinguish the “real thing” from the existing chatbots that are now referred to as “AI”: artificial general intelligence. The conscious, thinking, reasoning, and acting nonbiological creature-machines in sci-fi are artificial general intelligences. This raises the question: What is AI?

Machine Learning and Large Language Models


Present-day AI is an intelligence in the same sense as a library of books is. Both hold loads of information that are categorised in a number of different ways, such as by topic, keyword, author, and publisher. For the regular library, the books are categorised to help users find what they are looking for.

However, imagine if all the books in the library were scanned so that all the letters, words, sentences, and so on were stored together and easily searchable. This mass of content could then be categorised inductively, which means that computer software sifting through all the content would be able to figure out its own new categories based on the data themselves. What are common words and phrases? How are words combined, in what order, and in what contexts are those orders present? What phrases are more frequent in what types of books or chapters? What combinations of words are rare or do not exist? Are there differences between word use and sentence structure between authors, books, and topics?

Such inductive sifting through the content, guided by statistical algorithms, is referred to as “machine learning” and is a powerful tool to find valuable needles in informational haystacks. Note that these needles may not already be known—machine learning finds needles we know exist but can also uncover needles we had no idea existed. For example, using such techniques to go through medical data can find (and has found) correlations and potential causes of diseases that were previously unknown. Similarly, the Mercatus Center at George Mason University has fed regulatory texts through such machine learning algorithms to create RegData, a database that allows users to analyse, compare, and track regulatory burdens in the United States and beyond.

Whereas RegData is intended to support social science research on regulations, machine learning can be used on all kinds of information. When such algorithms are run on enormous amounts of text in order to figure out how language is used, it is called a large language model (LLM). These models thus capture a statistical “understanding” of how a language is used, or as Cambridge Dictionary puts it (explaining the generative pretrained transformer (GPT) LLM, on which ChatGPT is based), “a complex mathematical representation of text or other types of media that allows a computer to perform some tasks, such as interpreting and producing language, recognising or creating images, and solving problems, in a way that seems similar to the way a human brain works.”

Indeed, based on its statistical understanding of language, an LLM chatbot can predictively generate text responses to questions and statements in a way that mimics a real conversation. It thereby gives the appearance of understanding questions and creating relevant responses; it can even “pretend” to have emotions and express empathy or gratitude based on how it understands that words can be used.

In other words, LLM chatbots like ChatGPT can arguably pass the Turing test as they make it very difficult for a human to distinguish their responses from a real human’s. Still, they are statistical prediction engines.

But Is AI Intelligent?


It is certainly an impressive feat to have software mimic human conversation to the point of tricking real humans into believing it is a person. However, the question of whether it is intelligent remains. To again refer to the Cambridge Dictionary, intelligence means “the ability to learn, understand, and make judgments or have opinions that are based on reason.” Whereas we sometimes use verbs like “learn” and “understand” for machines, they are figurative not literal uses. A pocket calculator does not “understand” mathematics just because it can present us with answers to mathematical questions or solve equations; it has not “learned” it; it also cannot “make judgments” or “have opinions.”

Certainly, AI is significantly more advanced than calculators. However, this does not take away from the fact that they are logically the same: both present results based on predetermined, prestructured, and precollected rules and data; neither of them has agency nor consciousness, and neither can create anything de novo. This is obvious for the calculator, which is comparatively stupid and only produces outputs according to simple rules of mathematics.

However, the same is true for AI. It is, of course, enormously more complex than a calculator and has the added ability to create its own categories and find relationships inductively, but it does not “have opinions that are based on [its own] reason.” It only predictively generates responses that, based on the texts that it has already processed, are statistically likely to be what a human would (or at least could) produce. This is why AI at times, despite the vast knowledge it has access to, spits out gobbledygook and has a hard time sticking to what is true. It simply cannot tell the difference. (It cannot “tell” at all.)

In other words, AI is logically speaking the very opposite of what we would expect from a human (or alien or artificial) intelligence: it is backward-looking, makes up responses based on already existing language data, and does not add anything that is not statistically (re)producible from past information. It also does not fail, flounder, or forget, and it lacks subjectivity.

An actual intelligence would of course rely on experience too, but it would have the ability to generate novel content and implications. It would be able to think anew and creatively come up with different conclusions based on the same data—an actual intelligence would forget valuable pieces of information, make errors, and use faulty inferences, and it would subjectively weigh and interpret facts—or to choose to disregard the data.

However, even though AI is arguably not an intelligence—at least not in the sci-fi sense—it does not mean that it is unimportant or lacks implications. The technological advance that it represents is nothing short of revolutionary and will have far-reaching implications for both the economy and society.
   
=> CONTINUED IN PART TWO: 'The Economics of the AI Revolution'
Per Bylund is the Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University. 
He is the author of three full-length books: How to Think about the Economy: A PrimerThe Seen, the Unseen, and the Unrealized: How Regulations Affect our Everyday Lives; and The Problem of Production: A New Theory of the Firm. He has edited The Modern Guide to Austrian Economics and The Next Generation of Austrian Economics: Essays In Honor of Joseph T. Salerno.
His article first appeared at the Mises Institute blog.

Thursday 14 March 2024

"Did the West get rich from imperialism?"


"Did nations get rich on the backs of other nations? Did the West get rich from imperialism? ...
    "[W]hen most people think of plunder, they generally think colonial plunder. The problem with that, however, is that the vast majority of enrichment in the world has happened during the last 150 years, well after most colonial empires had collapsed. [But] plunder is not — and never has been — the path to national wealth. While plunder might make a nation (or a person) richer, it won’t make them rich, and that’s an important distinction ..."
~ Amy Willis, summarising Noah Smith's arguments that 'Industrialisation > Imperialism'

"Most people have a superficial conception of happiness...."


"I often tease my cat Harley for her lack of ambition. 
As far as I can tell, she’s content to eat, sleep, and 
collect belly scratches. 'Damnit, Harley. 
You’re sixteen and what have you achieved?' ”

"Most people [have a] superficial conception of happiness. But happiness is deep. It is a reverential attitude toward your life. It is a hard-won, enduring form of joy that can only be achieved through the realisation of your values, including very abstract values like reason, purpose, and self-esteem.
    "Given how superficial the conventional understanding of happiness is, it’s no surprise that the conventional understanding of how to achieve happiness is equally superficial. Tony Robbins’ website lists 17 ways to feel happier, and while much of the advice isn’t awful, claiming that happiness is primarily a matter of spending more time outdoors, listening to upbeat music, and journaling is like saying that a successful marriage is made by buying your partner flowers.
    "What Robbins and almost everyone else ignores is the role of morality in achieving happiness. And to the extent they don’t ignore it, they promote the anti-happiness morality of altruism. 'Remember,' Robbins tells us, 'the secret to living is giving.' I get it. It rhymes. But just because the words fit, don’t make ‘em legit.
    "Even many Effective Egoists, however, don’t appreciate the full implications of a pro-self morality for happiness. There is what I call a hidden art of happiness, which is easy to miss yet indispensable to understand and practice if you want to live a life that you love. ...
    "Your life is a sacred value, but you have to work to make it sacred by living up to a pro-life morality—and you have to work to experience it as sacred by practicing the hidden art of happiness: the art of making your abstract values concrete and real—and of bringing out out the abstract meaning of the concrete.
    "I have explained again and again how the biggest barrier to people adopting the morality of Effective Egoism is their embarrassingly primitive notion of self-interest—a notion nurtured so successfully by altruism’s propagandists. They equate self-interest with empty narcissism and equate the pursuit of happiness with accumulating meaningless pleasures.
    "Few people have the first clue what self-interest means. And who would tell them, when even the motivational speakers and licensed psychologists who make careers out telling you how to be happy are unable to conceive of the heart and soul of seeking joy?
    "The core of self-interest, its actual heart and soul, is conceiving of a vision of who you want to be and the world you want live in, and bringing that into reality. ...
    "That is the hidden art of happiness. It is the art of devoting your days and your thoughts to your highest values and aspirations—to your vision of the life you want to create, and do create with each day that you author."
~ Don Watkins, from his post 'The Hidden Art of Happiness'

Wednesday 13 March 2024

Defending the Slumlord



 

Since landlords are getting it in the neck, again, we figured it's time to post the classic defence of the very worst of them: of the so-called "slumlord" who gouges rent, poisons tenants , and offers decent habitat only to rats and cockroaches.  Can anyone defend that? Walter Block does in this guest post ...

Defending the Slumlord

by Walter Block

"Let's see, I have a nice three-room apartment on the upper West Side … No, no Madam, not a speck of lead paint on the woodwork … it's been all chewed off."

To many people, the slumlord — alias ghetto landlord and rent gouger — is proof that man can, while still alive, attain a satanic image. Recipient of vile curses, pincushion for needle-bearing tenants with a penchant for voodoo, perceived as exploiter of the downtrodden, the slumlord is surely one of the most hated figures of the day.

The indictment is manifold: he charges unconscionably high rents; he allows his buildings to fall into disrepair; his apartments are painted with cheap lead paint, which poisons babies; and he allows junkies, rapists, and drunks to harass the tenants. The falling plaster, the overflowing garbage, the omnipresent cockroaches, the leaky plumbing, the roof cave-ins and the fires, are all integral parts of the slumlord's domain. And the only creatures who thrive in his premises are the rats.

The indictment, highly charged though it is, is spurious. The owner of "ghetto" housing differs little from any other purveyor of low-cost merchandise. In fact, he is no different from any purveyor of any kind of merchandise. They all charge as much as they can.

We all charge as much as we can


First consider the purveyors of cheap, inferior, and secondhand merchandise as a class. One thing above all else stands out about merchandise they buy and sell: it is cheaply built, inferior in quality, or secondhand. A rational person would not expect high quality, exquisite workmanship, or superior new merchandise at bargain rate prices; he would not feel outraged and cheated if bargain rate merchandise proved to have only bargain rate qualities. Our expectations from margarine are not those of butter. We are satisfied with lesser qualities from a used car than from a new car. However, when it comes to housing, especially in the urban setting, people expect, even insist upon, quality housing at bargain prices.

But what of the claim that the slumlord overcharges for his decrepit housing? This is erroneous. Everyone tries to obtain the highest price possible for what he produces, and to pay the lowest price possible for what he buys. Landlords operate this way, as do workers, minority group members, socialists, babysitters, and communal farmers. Even widows and pensioners who save their money for an emergency try to get the highest interest rates possible for their savings.

According to the reasoning that finds slumlords contemptible, all these people must also be condemned. For they "exploit" the people to whom they sell or rent their services and capital in the same way when they try to obtain the highest return possible.

But, of course, they are not contemptible — at least not because of their desire to obtain as high a return as possible from their products and services. And neither are slumlords. Landlords of dilapidated houses are singled out for something that is almost a basic part of human nature — the desire to barter and trade and to get the best possible bargain.

The critics of the slumlord fail to distinguish between the desire to charge high prices, which everyone has, and the ability to do so, which not everyone has. Slumlords are distinct, not because they want to charge high prices, but because they can. The question that is therefore central to the issue — and that critics totally disregard — is why this is so.

What usually stops people from charging inordinately high prices is the competition that arises as soon as the price and profit margin of any given product or service begins to rise. If the price of Frisbees, for example, starts to rise, established manufacturers will expand production, new entrepreneurs will enter the industry, used Frisbees will perhaps be sold in secondhand markets, etc. All these activities tend to counter the original rise in price.

If the price of rental apartments suddenly began to rise because of a sudden housing shortage, similar forces would come into play. New housing would be built by established real-estate owners and by new ones who would be drawn into the industry by the price rise. Old housing would tend to be renovated; basements, attics and sleepouts would be pressed into use. All these activities would tend to drive the price of housing down, and cure the housing shortage.

If landlords tried to raise the rents in the absence of a housing shortage, they would find it difficult to keep their apartments rented. For both old and new tenants would be tempted away by the relatively lower rents charged elsewhere.

No.  The problem is not the slumlord — the problem is a lack of competition, which means an inability to build new apartments.

Even if landlords banded together to raise rents, they would not be able to maintain the rise in the absence of a housing shortage. Such an attempt would be countered by new entrepreneurs, not party to the cartel agreement, who would rush in to meet the demand for lower priced housing. They would buy existing housing and build new housing.

Tenants would, of course, flock to the noncartel housing. Those who remained in the high-price buildings would tend to use less space, either by doubling up or by seeking less space than before. As this occurs it would become more difficult for the cartel landlords to keep their buildings fully rented.

Inevitably, the cartel would break up, as the landlords sought to find and keep tenants in the only way possible: by lowering rents. It is, therefore, specious to claim that landlords charge whatever they please. They charge whatever the market will bear, as does everyone else.

An additional reason for calling the claim unwarranted is that there is, at bottom, no really legitimate sense to the concept of overcharging. "Overcharging" can only mean "charging more than the buyer would like to pay." But since we would all really like to pay nothing for our dwelling space (or perhaps minus infinity, which would be equivalent to the landlord paying the tenant an infinite amount of money for living in his building), landlords who charge anything at all can be said to be overcharging. Everyone who sells at any price greater than zero can be said to be overcharging, because we would all like to pay nothing (or minus infinity) for what we buy.

What about a law banning slums?


Disregarding as spurious the claim that the slumlord overcharges, what of the vision of rats, garbage, falling plaster, etc.? Is the slumlord responsible for these conditions?

Although it is fashionable in the extreme to say "yes," this will not do. For the problem of slum housing is not really a problem of slums or of housing at all. It is a problem of poverty — a problem for which the landlord cannot be held responsible. And when it is not the result of poverty, it is not a social problem at all.

Slum housing with all its horrors is not a problem when the inhabitants are people who can afford higher quality housing, but prefer to live in slum housing because of the money they can save thereby.

Such a choice might not be a popular one, but other people's freely made choices that affect only them cannot be classified as a social problem. If that could be done, we would all be in danger of having our most deliberate choices, our most cherished tastes and desires characterised as "social problems" by people whose taste differs from ours.

Slum housing is a problem when the inhabitants live there of necessity — not wishing to remain there, but unable to afford anything better. Their situation is certainly distressing, but the fault does not lie with the landlord. On the contrary, he is providing a necessary service, given the poverty of the tenants.

For proof, consider a law prohibiting the existence of slums, and therefore of slumlords, without making provisions for the slum dwellers in any other way, such as providing decent housing for the poor or an adequate income to buy or rent good housing. The argument is that if the slumlord truly harms the slum dweller, then his elimination, with everything else unchanged, ought to increase the net well-being of the slum tenant.

But the law would not accomplish this. It would greatly harm not only the slumlords but the slum dwellers as well. If anything, it would harm the slum dwellers even more, for the slumlords would lose only one of perhaps many sources of income; the slum dwellers would lose their very homes.

They would be forced to rent more expensive dwelling space, with consequent decreases in the amount of money available for food, medicines, and other necessities. No. The problem is not the slumlord — the problem is poverty. Only if the slumlord were the cause of poverty could he be legitimately blamed for the evils of slum housing.

Why damn the slumlord?


Why is it then, if he is no more guilty of underhandedness than other merchants, that the slumlord has been singled out for vilification? After all, those who sell used clothes to Bowery bums are not reviled, even though their wares are inferior, the prices high, and the purchasers poor and helpless. Instead of blaming the merchants, however, we seem to know where the blame lies — in the poverty and hopeless condition of the Bowery bum.

In like manner, people do not blame the owners of junkyards for the poor condition of their wares or the dire straits of their customers. People do not blame the owners of "day-old bakeries" for the staleness of the bread. They realise, instead, that were it not for junkyards and these bakeries, poor people would be in an even worse condition than they are now in.

Although the answer can only be speculative, it would seem that there is a positive relationship between the amount of governmental interference in an economic arena, and the abuse and invective heaped upon the businessmen serving that arena. There have been few laws interfering with the "day-old bakeries" or junkyards, but many in the housing area. The link between government involvement in the housing market and the plight of the slumlord's public image should, therefore, be pinpointed.

That there is strong and varied government involvement in the housing market cannot be denied. Scatter-site housing projects, "public" housing and urban renewal projects, rental standards and zoning ordinances and building codes, are just a few examples. Each of these has created more problems than it has solved. More housing has been destroyed than created, rental housing has been withdrawn from (or not entered0 the market, racial tensions have been exacerbated, and neighbourhoods and community life have been shattered.

In each case, it seems that the spillover effects of bureaucratic red tape and bungling are visited upon the slumlord. He bears the blame for much of the overcrowding engendered by the urban renewal program. He is blamed for not keeping his buildings up to the standards set forth in unrealistic building codes that, if met, would radically worsen the situation of the slum dweller. 

Compelling "Cadillac housing" can only harm the inhabitants of "Volkswagen housing." It puts all housing out of the financial reach of the poor.

The bad incentives of rent control


Perhaps the most critical link between the government and the disrepute in which the slumlord is held is rent-control law. For rent-control legislation changes the usual profit incentives, which put the entrepreneur in the service of his customers, to incentives that make him the direct enemy of his tenant-customers.

Ordinarily the landlord (or any other businessman) earns money by serving the needs of his tenants. If he fails to meet these needs, then with enough supply in the market the tenants will tend to move out. Vacant apartments mean, of course, a loss of income. Advertising, rental agents, repairs, painting, and other conditions involved in re-renting an apartment mean extra expenditures.

In addition, the landlord who fails to meet the needs of the tenants may have to charge lower rents than he otherwise could. As in other businesses, the customer is "always right," and the merchant ignores this dictum only at his own peril.

But with rent control, the incentive system is turned around. Here the landlord can earn the greatest return not by serving his tenants well, but by mistreating them, by malingering, by refusing to make repairs, by insulting them. When the rents are legally controlled at rates below their market value, the landlord earns the greatest return not by serving his tenants, but by getting rid of them. For then he can replace them with higher-paying non-rent-controlled tenants.

If the incentive system is turned around under rent control, it is the self-selection process through which entry to the landlord "industry" is determined. The types of people attracted to an occupation are influenced by the type of work that must be done in the industry.

If the occupation calls (financially) for service to consumers, one type of landlord will be attracted. If the occupation calls (financially) for harassment of consumers, then quite a different type of landlord will be attracted. In other words, in many cases the reputation of the slumlord as cunning, avaricious, etc., might be well-deserved, but it is the rent control program in the first place that encourages people of this type to become landlords.

If the slumlord were prohibited from lording over slums, and if this prohibition were actively enforced, the welfare of the poor slum dweller would be immeasurably worsened, as we have seen. It is the prohibition of high rents by rent control and similar legislation that causes the deterioration of housing. It is the prohibition of low-quality housing by housing codes and the like that causes landlords to leave the field of housing.

The result is that tenants have fewer choices, and the choices they have are of low quality. If landlords cannot make as much profit in supplying housing to the poor as they can in other endeavors, they will leave the field. Attempts to lower rents and maintain high quality through prohibitions only lower profits and drive slumlords out of the field, leaving poor tenants immeasurably worse off.

The slumlord does make a positive contribution to society; without him, the economy would be worse off. That he continues in his thankless task, amidst all the abuse and vilification, can only be evidence of his basically heroic nature.

* * * * * 

Walter Block is an American Austrian School economist and anarcho-capitalist theorist. 
He was the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the School of Business at Loyola University New Orleans and a senior fellow of the non-profit think-tank Ludwig von Mises Institute in Auburn, Alabama.
This post is an excerpt from his 1976 book 'Defending the Undefendable [free download here]. It previously appeared at the Mises Wire.

Just pop in


"The ‘pop in’ is now it appears, confined to history.
    "These days you have to make an appointment to see friends and family. Have we reduced them to the same level as a dentist?
    "What are we afraid of? Provided we’re clothed, surely allowing a loved one or friend into your home isn’t difficult regardless of how time poor you think you might be? ...
    "What on earth has happened to us?
    "Well, I think if you look at the past, there was constant face-to-face communication and people were home more, which enabled a lot more trust within the community.
    "Social media, texting etc was non-existent. Our worlds were smaller then ... 
    "So can the ‘pop in’ re-invent itself?
    "I certainly hope so."
~ Ian Wilson from his post 'When Was The Last Time You Popped In?' Here's Giles, Giles, and Fripp:

 


"Christchurch’s Captain James Cook statue survived the earthquakes largely unscathed" – but not the vandals


Cook statue by William Trethewey (1892-1956),
defaced and partially repaired

"Christchurch’s Captain James Cook statue ... survived the earthquakes largely unscathed ... [but last week] his eyes were gouged out, his nose was ground off and a red cross daubed on him. To the great credit of Christchurch City Council, facial repairs have already been made, though the cross is still very visible. ...
    "[H]is voyages – and tragic death – preceded any significant European settlement by decades. Therefore, holding him to any personal, adverse responsibility here is both silly and misplaced. The same goes for a North Island tribal chief executive’s characterisation of Cook as ‘a barbarian’ when the whole ethos behind Cook’s voyages was specifically not imperial conquest but that noble Enlightenment goal (trashed by postcolonial academics in recent years), ‘dare to know’....
    "It is the vandals, not Captain Cook, who are blind. Their defacement of his statue is an emotionally immature and ill-educated act of copycat vandalism ... Smashing Cook’s face helps no one’s understanding of history and does nothing to allay the suffering of indigenous peoples as a consequence of the arrival of Europeans. ...
    "Cook must be repaired, retained and explained, otherwise our heritage is trash."
~ Mark Stocker, from his post 'Captain Cook’s Loss of Face in Christchurch'

Tuesday 12 March 2024

"The majority of British Muslims are neither downtrodden victims nor Britain-hating extremists."


"Debates about British Muslims tend to be based on crude caricatures. Identitarians on the left see Muslims as a victimised and disaffected bloc, marginalised by a supposedly bigoted society. Meanwhile, identitarians on the right tend to see them as disloyal and anti-British – a potential enemy within. My latest report, co-authored by Dr Jake Scott and published last week by the Institute for the Impact of Faith in Life, shatters these myths and misconceptions about British Muslims.
    "Our polling shows that the overwhelming majority of British Muslims feel positively towards Britain. We found that 86 per cent believe Britain is a good place to live and that there are opportunities here for people to make progress and excel in life. This is actually higher than the general population, where the proportion drops to 70 per cent.
    "This optimism towards Britain stands in stark contrast to the left’s view of Muslims as a helpless and downtrodden minority. It also debunks the myth among the right that Muslims are poorly integrated and uniquely hostile to the UK. But this finding shouldn’t actually be a surprise. Not least as many British Muslims are born outside the UK. Generally, they tend to come from underdeveloped countries with relatively high levels of social unrest, political instability and institutional corruption. This is why, for many Muslim migrants, Britain represents opportunity, not oppression. ...
    "[A]ll too often, ordinary Muslims are ignored, while the state panders to vocal, assertive and self-selected ‘community representatives’, who tend to prioritise tribal interests over the wider common good. This mode of multicultural policymaking is not welcomed by most fair and civic-minded Muslims.
    "When we let British Muslims speak for themselves, it turns out they actually have lots of positive things to say about life in the UK. We must not allow radical activists on the fringes to shape the national conversation on British Muslims and their place in society. It’s high time we left the caricatures behind."

~ Rakib Ehsan, from his post 'What the left and the right get wrong about Muslims'

"Wellington's consultancy-industrial complex is in a funk." Good.


"[Wellington's] consultancy-industrial complex [is] in a funk, because philosophically and culturally, the change in government has shown up the gulf between them and the government. It has also demonstrated two major issues: The dearth of strategic and intellectual grunt in much of the public sector; and the ideological chasm between many of the ... public servants [sic], and the Government ...
    "[Ten years ago] there was a significant cohort of senior and leadership talent in parts of the public service [sic] that were formidable in their intellectual capability, commitment to ideological neutrality, and interest in an evidence-based approached to public policy.... [along with] a deep understanding of what they did and did not know, and what they could not know. ... They all knew that, by and large, they had no idea how much of the economy worked in any detail. ...
    "The beginning of change in that culture happened under the Clark Government, which was much more pro-active and wanted to 'do more.' ... the Ardern/Hipkins Government put it into overdrive, and the Luxon Government will be seeing the signs of it. ...
    "The elections of [Tory Whanu as mayor], Tamatha Paul as MP of Wellington Central and Julie Anne Genter as MP for Rongotai provides a sign of what has happened to the Wellington public service [sic] over that time. ... The Wellington public service [sic] grew enormously in the past six years, drawing upon enthusiastic graduates, predominantly coming with ... left-wing enthusiasm for state intervention, regulation, spending and taxation, with suspicion around ... the views of significant portions of the public, including those of more senior civil servants, because of identity factors (e.g. race, sex, gender &c.) ...
    "None of that would matter one iota if they could put that to one side and be highly-competent public-policy analysts, but that competence is wanting ... lacking historical knowledge and being weak on analytical capability.
    "As a result the mood today in many government departments ... is one of fear and depression, as a workforce of relatively young public servants [sic], most of whom did not vote for this government, struggle to cope with being asked to implement policies they don’t agree with. ...
    "[T]here is significant scope to scale down the numbers of people doing policy in government in Wellington ... because there is a distinct lack of talented, capable and clever people, who put aside their personal political biases in favour of evidence-based policy advice. Most importantly, there are few who will admit to Ministers 'we don’t really know how to do that' or 'we don’t know how that part of the economy works' or 'we don’t have the knowledge or experience on that issue ... '
    "[T]he government appears willing to lean down on the state sector (albeit not enough), which should provide ample opportunities to send blinkered ideologues with mediocre intellectual grunt to a new life not serving a government they hate."

~ Liberty Scott, from his post 'Wellington is in a funk'

Monday 11 March 2024

Compare and contrast


"When it comes to the TV business," says TV interviewer Jack Tame, "it’s clear the traditional economic models are no longer fit for purpose."

"When it comes to the CD business," says CD maker Jack Vame, "it’s clear the traditional economic models are no longer fit for purpose."

"When it comes to the typewriter business," says typewriter maker Jack Wame, "it’s clear the traditional economic models are no longer fit for purpose."

"When it comes to the horse-drawn carriage business," says horse-drawn carriage manufacturer Jack Xame, "it’s clear the traditional economic models are no longer fit for purpose."

"When it comes to the steam-engine business," says steam-engine manufacturer Jack Yame, "it’s clear the traditional economic models are no longer fit for purpose."

"When it comes to the hand-loom business," says weaver and hand-loom manufacturer Jack Zame, "it’s clear the traditional economic models are no longer fit for purpose."

Getting better homes faster

 

New Zealand needs more houses, and less Resource Management Act.

Fact is, if houses are going to be anywhere near affordable again, New Zealand needs many more houses, and no RMA. 

Instead, we have RMA for several more years, and a housing/RMA minister (Chris Bishop) who's created uncertainty and fewer housing starts by allowing councils to opt out of the (formerly) bipartisan Medium-Density Residential Standards (MDRS).

What can you do now on many sites in New Zealand's major cities? Don't know, because councils haven't decided (or announced) where and how they might relax things. The uncertainty means that on many sites in major cities desperate for housing, nothing gets started at all.


What could you do under the MDRS? In simple terms (see pic above), you could build up to 3 dwellings up to 3 storeys high without having to even think about the Resource Management Act. It was far from perfect, but still the most permissive housing change from government since ... well, before I was born anyway.

But Chris Bishop has "fixed" that, hasn't he. Too permissive for Mr Bloody Bishop. Too many "externalities." Too urban.

Urbanist Malcolm McCracken has a simple solution however that even this housing minister could (should!) get behind. He calls it Graduated Density Zoning, so it's still a bloody zone, but one that allows owners who amalgamate sites to get extra density and height -- and by their amalgamation build better things and ameliorate the effects on neighbours.


By being larger and a more appropriate shape for multiple dwellings, such a site would also encourage better housing typologies to be built than the simple long 3-storey-"sausage"-arranged-along-a-single-driveway that means everyone's window looks into every neighbour's.  Things like perimeter blocks, garden apartments and the like, with better privacy, garden outlooks and less iunmpact on neighbours (so what's not to like?!).



McCracken has details:
I propose that a condition of a council opting out of the MDRS, in whole or just in certain suburbs, should be the requirement to introduce Graduated Density Zoning6(GDZ) to residential land that is zoned below three storeys. GDZ is where, when a developer buys neighbouring sites totaling more than the set threshold, e.g. 1400m2, they can automatically build to a higher density. The details of that can be debated but I believe GDZ should be introduced to enable better housing choice and new supply in every neighbourhood. While resource consent would be required, once the threshold has been met, three-storey apartments and terraced houses would become a permitted activity.

Adopting GDZ could provide several key benefits:
  • Larger sites can make it easier to manage the externalities of greater density, which have been some of the driving reasons behind the backlash towards the MDRS. This should see fewer sausage flats on single sites, which generally have poor design outcomes and interaction with neighbouring sites. Larger amalgamated sites will enable greater master planning that considers the interaction of outlook spaces with neighbouring properties, limiting driveway crossings and the design of open and communal spaces.
  • It enables the market to deliver greater density in areas of high demand and better match this with new supply. While councils can plan through future development strategies for ‘enough’ capacity to meet future demand, this is always based on a range of assumptions, which can never be completely accurate. Amenities and accessibility of an area, along with personal preferences, can change shifting demand greatly. We should design our system to be more responsive and flexible to meet demand. GDZ would be a step towards this.
  • Enabling three storeys, as I have discussed many times previously, can enable greater housing choice to be provided. It also enables ageing in place, where you can find housing suited to your needs at different stages of your life within the same neighbourhood.
  • It’s worth noting that this can also benefit neighbouring landowners, who could choose to sell together to seek greater profit, which is possible as an amalgamated site is generally a better development opportunity. This has occurred previously, including in Te Atatū Peninsula in 2020.
Until or unless the RMA is abolished, this could be a start.

Friday 8 March 2024

"The only way forward is to go back to the concept of 'deserving' and 'undeserving' "


"It has been clear for decades that NZ's approach to welfare has gone awry. The late Roger Kerr, of the NZ Business Roundtable, once said to me, 'The only way forward is to go back to the concept of 'deserving' and 'undeserving'.' ...
    "Between the passage of the Social Security Act in 1938 and the early 1970s the percentage of working-age people on a benefit never exceeded two. Today it stands at almost twelve, with the time people stay dependent growing every year.
    "As a society we have created this level of reliance by believing and acting on a bad idea. That we must not judge others. We must not mention their faults and shortcomings. We must bend over backwards to not blame the person responsible for their own troubles. That's the kindness and compassion we are taught to aspire to. ...
    "I would vouch that the majority of New Zealanders want to help people who, through no fault of their own, need a benefit and public housing. But that willingness does not extend to people who chronically cause their own misfortune."

~ Lindsay Mitchell, from her post 'Is real change on the cards?'

 


Thursday 7 March 2024

The Moment Rose Wilder Lane’s Faith in Communism Was Pierced


March being Women’s History Month, it's a good time to recall how Rose Wilder Lane’s experience with the reality of Russian socialism, as a visitor there with the Red Cross, brought many, like her, to see the paramount importance of freedom.  Rose later wrote that she “came out of the Soviet Union no longer a communist.” She began to realise America enjoyed a degree of freedom no other nation held. “Like all Americans, I took for granted the individual liberty to which I had been born. It seemed as necessary and as inevitable as the air I breathed; it seemed the natural element in which human beings lived.” For Rose, the Soviet Union was “not an extension of human freedom, but the establishment of tyranny on a new, widely extended and deeper base.” Gary Galles give more of the story in this guest post.



The Moment Rose Wilder Lane’s Faith in Communism Was Pierced

by Gary Galles

March is Women’s History Month. Among the women who have been remembered and honoured, however, one has clearly not received enough attention: Rose Wilder Lane (daughter of 'Little House on the Prairy' creator Laura Ingalls Wilder).

Among the past century’s most ardent proponents of liberty, she developed the inseparable connection between life and liberty and the importance of individuals understanding the implications of their freedom. In her honour, especially given the current lack of serious attention to protecting our liberties in current American politics, revisiting her book Give Me Liberty (1936), which traces her evolution from believing in communism to devotion to liberty, seems particularly appropriate. The book has surprisingly clear implications for today.
In 1919 I was a communist.

From this point of view… the Profit System causes the injustice, the inequality, we see. We must eliminate profit; that is to say, we must eliminate the Capitalist. We will take his current profits, distribute his accumulated wealth, and ourselves administer his former affairs…When the Capitalist is gone, who will manage production? The State… It was at this point that the first doubt pierced my Communist faith.

This economic revolution concentrated economic power in the hands of the State… so that the lives, the livelihoods, of common men were once more subject to dictators… Every advance toward personal liberty which had been gained…was lost by the collectivist economic reaction.

Representative government cannot express the will of the mass of the people…the population of a country is a multitude of diverse human beings with an infinite variety of purposes and desires and fluctuating wills…Any government of multitudes of men, anywhere, at any time, must be a man, or few men, in power.

Centralised economic control over multitudes of human beings…must become such minute and rigorous control of details of individual life as no people will accept without compulsion.

What I saw was not an extension of human freedom, but the establishment of tyranny on a new, widely extended and deeper base.

The Soviet government exists to do good to its people, whether they like it or not… To that end they have suppressed personal freedom; freedom of movement, of choice of work, freedom of self-expression in ways of life, freedom of speech, freedom of conscience.

[Coordinating] vast multitudes of human beings are activities so intricately inter-related and inter-dependent that efficient control of any part of them demands control of the whole.

The Communist hope of economic equality… rests … on the death of all men and women who are individuals.

I came out of the Soviet Union no longer a communist, because I believed in personal freedom…I [saw] an essentially medieval, planned and controlled economic order was taking over the fruits of the industrial revolution while destroying its root, the freedom of the individual.

I understood at last that every human being is free; that I am endowed by the Creator with inalienable liberty as I am endowed with life; that my freedom is inseparable from my life, since freedom is the individual’s self-controlling nature.

I hold the truth to be self-evident, that all men are endowed by the Creator with inalienable liberty, with individual self-control and responsibility…The extent to which this natural liberty can be exercised depends upon the amount of external coercion imposed upon the individual.

The men who met in Philadelphia to form a government believed that all men are born free. They founded this government on the principle: All power to the individual…The intent was actually to give the governing power to each common man equally…Common men were to govern themselves…Power was diminished to an irreducible minimum…Never before had the multitudes of men been set free to do as they pleased.

Individualism. In less than a century, it created our America.

American wealth is innumerable streams of power…flowing through the mechanisms that produce the vast quantities of goods consumed by the multitudes, and the men who are called the owners can hardly be said even to control the wealth that stands recorded as theirs, for…in this American chaos business and industry were compelled to serve those desires or perish.

There is no system here…But if this chaos were replaced by a system…functioning for the sole purpose of serving the public good, these men must be replaced by a bureaucracy…controlling in detail, and according to a plan devised by men possessing centralised economic power, all the processes.

[America’s] brief experiment in individualism has not only created great wealth and an unimaginable multiplication of forms of wealth in goods and services, but it has also distributed these forms of wealth to an unprecedented and elsewhere unequalled degree.
As I read Lane’s words, a strong sense that “this is as much about today as it is about when she wrote” began to grow in me. But as I kept reading, I was floored by just how true that was.
I read … that less than 10 percent of our population own more than 90 percent of the wealth. This alarmed me in 1893 … But it seems to me even more alarming that many American minds accept this statement as true upon no better proof than that they have read it, and from it conclude, first, that “something must be done,” and, second, that the proper thing to do is to take ownership away from individuals and have property administered by The State; which means, by autocratic rulers giving orders through an enormous bureaucracy.

There is nothing new in planned and controlled economy. Human beings have lived under various forms … for six thousand years. The new thing is … individualism … the principle that created this country and has, in fact, brought the greatest good to the greatest number.

Can individualism … stand against the determined attack of [those] organised, controlled, and fanatically sure that a strong man in power can give a people better lives than they can create for themselves?

Will [we] defend the Constitutional law that divides, restricts, limits and weakens political-police power, and thus protects every citizen’s personal freedom, his human rights, his exercise of those rights in a free, productive, capitalist economy and a free society? Or … suppressing individual liberty, sacrificing human rights to an imagined “common good,” and substituting for civil laws the edicts, or “directives,” once accurately called tyranny and now called administrative law? This is the choice that every American must make … the present situation puts it before us and requires a decision.

In 1933 a group of sincere and ardent collectivists seized control of the Democratic Party, used it as a means of grasping Federal power, and … began to make America over. The Democratic Party is now a political mechanism having a genuine political principle: national socialism.

Reactionary pseudo-thinkers shifted American thought into reverse … They called it “liberal” to suppress liberty; “progressive” to stop the free initiative that is the source of all human progress; “economic freedom,” to obstruct all freedom, and “economic equality” to make men slaves … We never heard that these United States are a political structure unique in all history, built upon … the fact that individual persons are naturally free, self-controlling and responsible.

These United States stand for a political principle that must conquer and change the whole world, because it is true.

Today, Federal administrative agencies have nearly destroyed those divisions of the political power which alone protect the property, liberty and lives of American citizens … because a state that dictates men’s action in producing and distributing goods must have undivided and absolute power.

Leading statesmen assume that … suppression of liberty is good for mankind, and that these new forms of an old tyranny are here to stay.

Free thought, free speech, free action, and freehold property are the source of the modern world. It cannot exist without them. Its existence depends upon abolishing these reactionary state controls and destroying the socialist State.

The task before Americans is to end these police-controls of peaceful, productive American citizens, to repeal all the reactionary legislation and … executive orders … to abolish the Federal corporations, departments, bureaus and agencies that dictate and enforce these State controls … to require men in public office to recognise again every American’s natural right as a free person.

No politician, yet, has asked American voters to give him the power to strip any State of the powers it has usurped from its citizens, nor to strip the Federal Government of the powers it has usurped from the States; to restore the rights of the citizens, the rights and powers of the States … nor to add …further restrictions that will adequately protect the property, liberty and lives of persons …  and make the United States again the world-champion of human rights and the leader of the world-liberating revolution.
Rose Wilder Lane’s experience with the reality of Russian socialism, expressed insightfully, has brought many to see the paramount importance of freedom (or more often, the tragedy of its absence) in human lives. What we can learn from her Give Me Liberty is also reinforced in her 1943 companion book The Discovery of Freedom. She offers us lessons which need re-learning in each generation, if liberty is to be defended from the erosion that is not just ongoing but accelerating now. And it is very hard to miss just how appropriate her words still are for the political situation Americans face now. That is why it is useful to remember what she wrote in her autobiographical sketch,
I am now a fundamentalist American; give me time and I will tell you why individualism, laissez-faire and … capitalism offer the best opportunities for the development of the human spirit. Also I will tell you why the relative freedom of human spirit is better — and more productive, even in material ways — than … any other rigidity organised for material ends.
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Dr. Gary Galles is a Professor of Economics at Pepperdine University, California. His research focuses on public finance, public choice, the theory of the firm, the organisation of industry and the role of liberty including the views of many classical liberals and America’s founders­. His books include Pathways to Policy Failure; Faulty Premises, Faulty Policies; Apostle of Peace; and Lines of Liberty.

This article was originally published on FEE.org. Read the original article