Posts Tagged Individual liberty
Good news about private enterprise. Despite fervent attempts to have it destroyed it will survive. Not only that but it will win in the long run. Some may not see it now due to, what it may seem to be, incompetence and lack of efficiency at the public sector level. Some, whose views are still blurred, continue to be convinced the private enterprise brought the economy down to its knees. Nevertheless, private enterprise will triumph. It always did even under repressive systems whether known as the black market or the underground market.
I often shop at Walmart. I have always been satisfied with my local Walmart’s customer service. It’s not just the prices or convenience that draw me back there often but their recent addition of chic clothing lines, variety of cosmetics, and (so far) qualified electronics advise. I even bought a pair of cross-trainers for $19.99 which I found myself wearing just about everywhere not just at the gym. Yes, they are made in China, but what isn’t made in China nowadays? We ought to give big thanks to the national government and its policies of destroying manufacturing in our country but that’s another story.
Walmart has certainly come a long way. Once in a while I even use their money services such as a couple of weeks ago when I purchased a money order. As you may be aware many public entities don’t accept personal checks for payment of services so this was my case when dealing with a government office. My situation was simple. I made the money order payable to the wrong government office and it was sent back to me along with a rejection of the service I was in need of. Never mind I got the instructions directly from their website.
So I needed my problem solved. I needed to cancel the money order with the wrong name, get a credit for the dollar amount, and have a new money order issued. Never had to deal with anything like this before so I thought it would be a tough one to solve. I went back to Walmart for help. Sure, I had to wait in line about 15 minutes and I know that for someone who is in a hurry that may not be that convenient. However 15 minutes was worth the wait to accomplish my mission.
When I wait I usually have the habit to observe, whether it’s people or events. Donuts, soda pop, and processed foods in a shopping basket are not the emblem of healthy aging, for example. I see it as a direct ticket to the hospital. Store cleanliness invites me back to the store. Watching elderly couples gives me hope that wisdom has meaningful purpose in our world. I then proceeded to watch the employee who was going to help me. Blond, blue eyed, and young; about 27 years of age in my estimation. He helped four people who were ahead of me in line. He helped his manager who needed his help. He multi tasked. He kept his calm no matter how overwhelming his responsibilities were becoming. By the time my turn came I expected to see a sign of a break down. His face was like I was his first customer for the day, no sign of distress. I explained my concern with the money order. I did not have a receipt with me. If I did I would have made his life easier because he would have been able to track down the transaction faster. My mistake. But he did find a way to help me. It took longer time and most importantly knowledge how to do it. He went the extra mile, no commission, no bonus as incentive, he just did the right thing. He had all this and more yet how many people take the time today to recognize such values from a Walmart employee?
In my case the Walmart employee was better qualified to solve problems than the government office which had wrong information on their website. The government office employs people, just as Walmart does. What is then the difference between the two of them? Hiring qualification guidelines. To a private enterprise, an employer’s requirement is that an employee knows how to solve problems. For a private enterprise, the customer is always right.
Not so with a government entity. Their guidelines come from a higher level. Their positions are secure as long as there are tax payer money to “fund” them. Their positions are not based on productivity or efficiency. Bureaucrats punch in and punch out. Just as in the former centralized systems like the communist countries of the Eastern Block or China, we have seen that such a system is not sustainable and thus its lifespan is limited.
There is a battle between the public system and the private enterprise. The good news is that it is the people of private enterprise who will assure the victory. Whether it’s Walmart or any other business whose people are competent to solve your problem be sure to let him know you appreciate it. I did and he blushed with humility.
By Ron Paul
If it’s not accepted that big government, fiat money, ignoring liberty, central economic planning, welfarism, and warfarism caused our crisis we can expect a continuous and dangerous march toward corporatism and even fascism with even more loss of our liberties. Prosperity for a large middle class though will become an abstract dream.
This continuous move is no different than what we have seen in how our financial crisis of 2008 was handled. Congress first directed, with bipartisan support, bailouts for the wealthy. Then it was the Federal Reserve with its endless quantitative easing. If at first it doesn’t succeed try again; QE1, QE2, and QE3 and with no results we try QE indefinitely — that is until it too fails. There’s a cost to all of this and let me assure you delaying the payment is no longer an option. The rules of the market will extract its pound of flesh and it won’t be pretty.
The current crisis elicits a lot of pessimism. And the pessimism adds to less confidence in the future. The two feed on themselves, making our situation worse.
If the underlying cause of the crisis is not understood we cannot solve our problems. The issues of warfare, welfare, deficits, inflationism, corporatism, bailouts and authoritarianism cannot be ignored. By only expanding these policies we cannot expect good results.
Everyone claims support for freedom. But too often it’s for one’s own freedom and not for others. Too many believe that there must be limits on freedom. They argue that freedom must be directed and managed to achieve fairness and equality thus making it acceptable to curtail, through force, certain liberties.
Some decide what and whose freedoms are to be limited. These are the politicians whose goal in life is power. Their success depends on gaining support from special interests.
America’s financial system, Norcini says, is now completely corrupt, just as the Roman empire’s financial system became corrupt on the eve of its decline and fall. An excerpt from the interview is posted at the King World News blog here: Our financial corruption resembles ancient Rome’s, Norcini tells KWN
Do you find the subject of economics to be…boring? If your answer is yes, I have to admit that it wasn’t that long ago when I, too, felt the same way. I couldn’t care less. It wasn’t because I was lazy or I didn’t care. It’s just that every time the talking heads on my TV screen would bring it up they made it appear like it was rocket science. It seemed so complicated, so hard to digest, so above my level of intellect. But to be honest I wasn’t a bit worried that I knew little to nothing about inflation or the intricacies behind the interest rate movements because surely the government and the reputable economists were on top of things. After all they really care about us and they have our best interest at heart, right?
Well, not so it seems! It didn’t take me long to figure out that something just didn’t seem right in 2008, when real estate went bust and our politicians were scrambling idea after idea on how to implement more regulations and bail out the entire collapsing financial system. I knew I wasn’t educated with a PhD in economics but my common sense was rather alert to the wrongdoings of the government’s plan to rescue the collapsed economy even if they acted like they knew what they were doing.
The first writings that made me curious about economics were described in Ron Paul’s phenomenal little book “The Revolution, a Manifesto”. In it there is a chapter titled The Forbidden Issue in American Politics in which Mr. Paul describes with easiness and clarity our monetary policy, our banking system, and the free market that we don’t have. I marveled reading how a sound dollar that was once backed by gold had been debased by the printing of so much paper and electronic money (there isn’t enough gold in the world to back it up.) I also got intrigued by the perverse system of credit and money creation out of thin air known today as the fractional reserve banking system.
But most importantly it helped me answer the question of “Why did the economy collapsed?” And it was this little chapter that introduced me to the Austrian School of Economics, www.mises.org, and the Boom-Bust Cycle, probably the most essential economic event so easily explained by the Austrian scholars. I was thrilled. I was starting to shed light on previously ambiguous economic events. I was escaping the intellectual darkness with such a wonderful feeling of relief and a newly formed thirst for even more knowledge.
So what is the Austrian business cycle?
The following is a short and very simplified version. Artificial expansion of money and credit (inflation) leads to suppression of the interest rate. Such expansion is not the result of people’s savings but an artificial addition – by the central bank – to the already existing money supply. It is created through the printing of paper money and electronic ledger input. Creation of new money does not create a natural demand, instead it leads to creation of an artificial demand.
The low rates entice people and businesses into long term unsound investments, investments which would have not been undertaken if the money supply would have not been tampered with and the rates were dictated by the free market. The newly created money and credit distributed via bank loans find their way into various sectors of the economy causing a rise in the price of certain assets. Buyers of such assets ultimately bid up prices thus creating an artificial demand and inviting speculation from additional investors, many of which are unqualified. Businesses engage in long term production as a direct result of the low rates and the newly created artificial demand.
But such monetary expansion cannot last indefinitely. When the central bank stops the process the interest rate begins to rise while asset prices are brought to a halt. The first round of investors and borrowers – typically the weakest and most marginal ones – fail. The assets in the artificially inflated economic sectors are now in larger supply than there is demand for. There are no more buyers to bid up their prices. As a matter of fact a reversal process is now triggered. As more borrowers default there are more buyers/speculators looking to sell (discard) causing a deflationary event. In the meantime, businesses that have engaged in long term production find themselves with goods for which there is little to no more demand for and loans which are now harder to be repaid. These businesses are forced to restructure their activities with layoffs being among the first to occur.
What is the cure and can it be prevented?
In Austrian terms the cure to the boom is to allow market forces to freely adjust without government or central bank intervention. Prices would adjust to natural levels, malinvestments would be discarded, unsuccessful businesses – that produce goods that are no longer in high demand – would be allowed to fail thus allowing resources to be used in sectors that are in higher demand. Under such circumstance the depression – or recession – would be short-lived and the economy can get a fresh new start.
Of course, this is not exactly what happened with the most recent real estate boom-bust cycle. The Keynesian formula was – and still is – to keep unsuccessful ventures alive, new resources still directed (squandered) in malinvestments, and asset prices still kept artificially at higher than market levels (stocks and real estate). Newly created money – by the Federal Reserve – is being used to sustain such detrimental (to the people) activities at the taxpayer expense. This is moral hazard, an event in which businesses are engaging in risky (and wasteful) ventures knowing that the government will be there to save them from collapsing.
Can such a calamity be prevented? Absolutely, and all it takes is for the central bank to stop the expansion of the credit and money supply, for the government to not engage in moral hazard activities, and for the banking system to stop lending money they don’t have (full reserve banking system). May I recommend Thomas Woods’s excellent easy to read Meltdown? “Austrians” understand that economies have seasons. There are seasons when people save and their consumption is minimal at which times businesses engage in long term production. And there are seasons when people engage in high consumption while savings are minimized, a trend that the free market reverses via the natural rise in the interest rate. All it takes is for the government and the central bank (Federal Reserve) to not interfere.
Those who understand the morality and ethics of the free market have no doubt that the Austrian school is the best equipped to handle the largest economy in the world. They also recognize the direct relationship between a free economy and the individual freedom. Because if we are to live in a free society we should then appreciate such correlation and vote for the free and unhampered market.