Category Archives: Crony capitalism

GDPR: End of the World

“It’s the end of the world as we know it, and I feel fine.”

This sentiment from the well known R.E.M song encapsulates most succinctly the state of affairs with the E.U.’s “General Data Protection Regulation” (or GDPR). Like you, I too received an onslaught of (promptly deleted) “updated privacy policy notice” emails last week. We all scratched our heads at the oddly timed confluence of these emails but soon went back about the business of life. In short, we felt fine, nothing to see here, move right along. In reality these email notices were the harbinger of the end of human civilization as we have enjoyed it (that is, relatively free liberal western democracies with some semblance of local autonomous governance). GDPR is the first step on the road back to serfdom, albeit a rather different path then the one foreseen by F.A. Hayek. This path follows the same instinct toward fascism (fascism=state control of otherwise putatively private interests, in short a fascism is the façade of socialism dressed up in a cloak of capitalism).

“Oh, c’mon now, I think you’re overstating things here just a bit!” you’re probably thinking by now. Sadly, I’m not. This is the first time that any law or regulation has had GLOBAL reach.

“There is nowhere to run to, no where to hide.”

It does not merely pertain to companies operating in Europe, no, it governs any company anywhere in the world that may at any time count an EU citizen as a customer or even merely a website visitor. That might be all well and good if it were merely a recitation of privacy best practices. But no, this regulation has teeth – velociraptor sharp and deep. The fines for violation of this regulation are specifically designed to put all small to midsize businesses into bankruptcy overnight. The fines range from 10 – 20 million Euro (12 – 24 million dollars) at a minimum! And that is for a single offence! To put that into perspective, according to IRS figures (2013 latest year available) 99.685% of all US business make less than 12 million a year in profit. Or stated differently only about 18,000 US businesses out of approximately 6 million could conceivably withstand such a fine. That is the recipe for serfdom. That is the recipe for what all regulations do to some extent (favor large businesses at the expense of the small) but at a scale that would all but ensure no one could ever again rise above the station they were born into by starting their own business. The least little misstep in following every little dot and tittle of this (and most assuredly future) regulation would leave the nascent entrepreneur crushed like a bug under the heel of Paul Bunyan. “But I’m in the US, they can’t touch us!” you say. Unfortunately our government will be all too willing to help out their EU cronies just in the same way that the EU has been complicit in enforcing the absurd US tax law known as FACTA (which basically treats any US citizen with an overseas bank account like a criminal). GDPR fines are the equivalent of the death penalty for jay walking.

The premise behind this regulation is itself flawed as well. When even someone’s name is considered “private” information I think we can say that privacy regulations have “jumped the shark” and entered full on SJW territory of head spinning absurdity. In short, there is no right to privacy. You do not have the right to walk through the public park and then insist that everyone who saw you must be beat over the head until they have no memory of you walking through the park. That is what this regulation does. It substitutes state violence for personal responsibility. If you don’t want some website to have your information, then don’t use the website, it’s that simple. If you don’t want some company to know where you live because they had to ship product to your house, then don’t buy from them. Don’t ruin society and the internet for the other 99% of us who don’t give a crap if some website stored a cookie in the web cache about the last visit there.

Privacy is a negative right  – it is up to you protect it. Using the state to point guns at people to make them do what you want doesn’t count as you doing something – unless you think violence is the best way to solve problems.

Ostrich policies delay the inevitable

Following in the wake of the recent school shooting in Florida, corporations all across this great land of ours are falling all over themselves to virtue signal their adherence to right-thought by distancing themselves from an organization (the NRA) that had zero culpability in the recent shooting. Brilliant. Supposedly the NRA stands as some bulwark against “common sense” gun control being passed – even though such “common sense” laws already exist and would have thrown a roadblock at the shooter’s attempt to obtain a weapon had the federal government minded their own business. The irony is that a fair portion of culpability falls at the feet of leftist “do-gooders” and not the NRA.

During the Obama administration a new policy was established that had the goal of reducing racial “disparities” in suspensions and expulsions from school, part of Obama’s overall “School Leniency Policy”. Basically the policy was this: don’t report serious crimes to the cops, try to solve the issue “in house.” That’s a laudable goal perhaps, but not when the crime is extremely violent or the incidents are persistent. After the first year of implementing this policy more than 30,000 incidents of students physically assaulting teachers went unpunished and unreported to police. The shooter, Cruz, benefited from this system of see no evil, hear no evil. His repeated misbehavior and violent threats were quietly swept under the rug in order to achieve the goals of this federal program. Indeed, Broward county went quickly from leading Florida in student arrests to having one of the lowest arrest rates in the state. Pay attention here: this is exactly the same technique by which Cuba is able to report ultra low infant mortality (ignore the problem by killing preemies or aborting anything suspect) or that the UK can show very low homicide rates (only count homicides in which someone is caught and convicted… unsolved cases are ignored in the statistic). Very easy to get the result you want if you just ignore the problem.

In any event, because Cruz managed to evade getting caught up in the criminal justice system, he had no criminal record and thus easily passed the legally mandated federal criminal background check when he purchased his AR-15 in February 2017. In other words, President Obama is far more culpable in this particular case than is the NRA. If he had merely kept the Federal government’s nose out of how local schools manage their discipline problems Cruz would have been arrested many times and never passed a criminal background check. As an aside, it has been put forth that this is why the FBI did nothing with the tips about him; he wasn’t “in the system” so was not thought to be a credible threat.

One of the companies involved in the NRA tie cutting (discount loss for members) is the Georgia based Delta Airlines. In response, the fascist/cronyist Georgia legislature decided to swat them on the nose with a rolled up newspaper. A tax bill that was wending its way through the legislature had some juicy sales-tax breaks for jet fuel that would have greatly benefited Delta. The legislature threatened Delta with the loss of those breaks unless they restored the NRA discount. Delta did not, and the legislature made good on their threat. As a private company Delta has the right to associate or not associate with whomever they please (unless they make wedding cakes, then they have to associate with everyone) so it is a glaring failure of democracy that it is possible for those in power to abuse it so. But it is also a failure that such corporate favoritism (i.e. cronyist direct tax breaks) can take place. Sometimes two wrongs do make a right.

Riding the brakes?

Do you remember when those hurricanes hit Texas and Florida last month and since some people couldn’t access their money to buy food and other supplies the government just waived the law against theft so people could get what they needed more quickly? Yeah, me neither. But in fact the government did waive one law last month: the Jones Act. This waiver applied to affected ports in Texas, Florida, and Puerto Rico.  But I thought laws were the very immovable bedrock upon which society was based. How can such pillars of civilization be summarily set aside? The answer is that such “laws” are not really law at all. They are but mere whims and cronyist preferences of those with the power to rule over we mere peasants. These “laws” rather than preventing victimization they instead create victims by benefiting one party at the expense of another.

The Jones Act of 1920 artificially restricts the transport of goods between US ports to only those vessels owned, operated and principally manned by US citizens. In other words no “ferners” can move goods from US port to US port. It was established for putative national security interests post World War I, predicated (as all such protectionist measures are) on a fear of the big “what if” nightmarish scenario of US goods being transported mainly by foreigners….shudder. Of course such a policy is amenable to the autarkist interests of any nation eager to engage in war.

So while the Act has benefited the US merchant marine industry, it has been at the expense of consumers, principally those on US protectorate islands (like Puerto Rico) who by necessity must have nearly all goods brought in by ocean. A 2012 study showed that it cost nearly twice as much to ship to Puerto Rico from the US as it would were a non-US vessel permitted to make such shipments. Another study showed it costs Puerto Rico $537 million per year. In other words $537 million more goes to US vessels (seen benefit) and $537 million fewer dollars goes to those businesses and industries (unseen harm) where that money would have been spent had it stayed in the pockets of the Puerto Rican people.

If a law becomes an obstacle in times of distress then think of what it does in normal times. Although one can get from point A to B while riding the brakes on a full tank, does it really require running on fumes to realize perhaps this constant braking is not a good idea? It is time to remove all such artificial drags on the economy. The role of government is to protect our rights, not to benefit one group at the expense of another.

 

Blind leading the blind

Last week’s article touched on a defect in humanity that spurs a tiny minority to use violence to achieve their ends. This week the focus will be on a similar defect that spurs a different minority to use deception as their tool of choice. I suppose I’d rather be duped than threatened (at least I have a chance of seeing through the deception and walking away) but it is nevertheless any unsavory side of humanity. The power of the Internet has given rise to a new class of conman, the FUD (fear, uncertainty, doubt) peddler. They are like an Infomercial that doesn’t disclose it’s an Infomercial. These peddlers extend a helping hand, claiming they have access to special, secret knowledge that “they” don’t want you to know about – and they offer it to you all for free! As the saying goes in the Internet era – if the product is free, you’re the product. That’s not always a bad thing (witness Facebook) but it should raise your BS radar when someone is trying to steer you toward or away from certain products. A healthy dose of skepticism is always warranted.

One of the biggest of these Internet phenomenons is the “Food Babe”. Although she has no background in chemistry or biology she speaks and publishes as though she is an authority on those subjects. Her success makes sense: a) we all eat food, b) we all want to be safe and c) nearly none of us has the requisite knowledge base to separate the wheat from the chaff of her information flow (see, I made a food pun there).

By way of example, she recently published an article on the “dangers” of cottonseed oil. Not that hydrogenated oils are particularly healthy in and of themselves (irrespective of their source) but her arguments here are just silly and betray her chemical ignorance. Hydrogenated oil is hydrogenated oil, it doesn’t matter where it comes from. Trying to impugn it because the source in this case is ‘not food’ (cotton) is chemically laughable. It’s like saying mined salt from the ground is dirty because we know there is dirt in the ground but salt extracted from the ocean is pure and clean because water is clean. Her argument is incoherent, jumping back and forth between GMOs are bad to pesticides are bad. Well which is it? GMOs allow fewer pesticides to be used. There are ancillary negatives surrounding GMOs (seed patents, government strong arm tactics on behalf of Monsanto, etc.) but those are merely policy issues. GMOs themselves are biologically a non-issue. Those that fear them just don’t understand how chemistry or biology work…and then they peddle that fear to gain followers and links. This article was simply a formulaic anti-GMO screed with cottonseed oil as the vehicle for that screed, she could have written the same article using any GMO crop.

Unless you have a degree in chemistry or biology you’d be hard pressed to spot the BS she is shoveling. I have a degree (Ph.D.) in chemistry. My BS radar immediately went off reading the article. People like her succeed because the general public does not have the time or skillset to uncover the truth, so rather than take a chance they go along with whoever appears to be an “authority.” It’s the same technique politicians use to get elected; an uninformed electorate goes along with whomever sounds best or seems trustworthy. And so in both cases we end up with bad advice and bad policy. Trusting what our fellow man tells us is an admirable trait, it is unfortunate that it is so often abused by those have figured out how to exploit it.

Mother may I?

You walk outside one morning and witness your neighbor struggling to move a tree that has fallen across his driveway. Do you (a) ask him how you can help or (b) compose a letter to request a hearing before the town council in order to request permission to assist your neighbor? You request contains a detailed outline of your proposed methods of assistance whereupon you dutifully wait 2-3 weeks for a response back from said council. If you’re like 99.999% of people on this planet you go with (a). And that right there is what the free market is all about. People identifying a problem encountered by their fellow man, visualizing a solution, and then offering that solution If the solution is desired then people will show their acceptance by voluntarily engaging in trade in order to obtain said solution. If not desired then no such trade takes place.

But that is not the world we live in. There is no free market in the US or anywhere else in the world. There must be a defect in humanity that inflicts some with the instinct to force their ideas of what is normal or right or fair onto those that happen to be in proximity to them. In other words, we have a “permission market” – if you wish to solve a problem and offer the solution to the world you must first seek out the permission of these self-anointed guardian and kiss their ring on bended knee.

A recent example of this ring kissing involves a company “VidAngel” – a streaming service brought to market by two brothers who wanted to stream movies to their home with certain profanity or violent acts omitted. They searched high and low and when they couldn’t find anyone offering such a service, they started one! As an aside, this is how many such innovative companies get a start – unable to find a solution to a problem the entrepreneur solves the problem and then markets it to others with the same problem. CEO Neil Harmon recently explained on the Tom Woods Show podcast that when they started out they knew there would be copyright challenges to what they were attempting (witness the fall of Aereo, another innovative problem solving company) so they made sure to strictly follow the letter of the law. Their service, they contend, falls under the Family Movies Act, which gives consumers the right to filter movies they own – on videotape. So in order to comply with that antiquated provision they actually purchase on the consumer’s behalf a DVD or Blu-ray disc that is dedicated to only that consumer. Then their software allows the consumer to selectively remove certain words or content. Don’t like the “f” word – then delete away! Ok with profanity but don’t want violence? No problem! They were not secretive about their business. They requested licensing arrangements from all the studios. Some granted a license, but for those that did not, they followed the disc per consumer route. Then the big three (Disney, Warner Bros and Fox) decided to put an end to their little endeavor – not alone mind you, but with the help of the United States Federal Government. You see government is here to protect our rights, even the imaginary ones (copyright, trademark, patent and before that, slavery). VidAngel has now been shut down due to an injunction issued from U.S. District Court in California.

Even in the permission market it’s not enough to ask and get permission, you are also subject to the mercurial whims of those in power. Almost enough to make one have second thoughts about starting a business…nah… regulatory uncertainty would never have an impact on business starts and job growth.

The Carrier Deal

Donald Trump is an enigma. On the one hand he is not even President yet and he’s already using his legendary (according to him) negotiating skills to make good on his promise of keeping jobs in America. On the other hand this feat was accomplished through a combination of crony-capitalist carrots and sticks whose effectiveness was largely a consequence of Carrier’s parent company (United Technologies) being a cog in the military-industrial fascist apparatus. Dependency fosters control and United Technologies is highly dependent on the federal government for much of its business, therefore this was somewhat of a low-hanging fruit “win” for Trump.

The reaction to this deal has predictably fallen along party lines although there is a bit of cognitive dissonance on both sides as they try to come to terms with balancing fairness with pragmatism. People appreciate that Trump saved those jobs but are troubled by how he did it. Is it fair to bestow tax “giveaways” on one company but not others? Is it fair to reward only those that threaten to leave? Is it fair to invoke a punitive 35% tariff on goods imported from US overseas firms? The answer depends on the framework in which the question is asked. Within the framework of natural rights and individual liberty none of these are legitimate. The actions of any entity that initiates violence (taxation, tariffs) to achieve its ends are illegitimate. But we don’t live in that world. We live in a world literally run by the very warlords we are told would arise absent the state. Every state (i.e. country) is a plantation; some are far worse than others, but a gilded cage is still a cage. So given our condition of servitude to the state is it fair if the master decides to treat one slave more favorably than the others? Should we tell the master “You have no right to lift our brother out of the mud, please, cast him back down here with us!” Thus we have both sides of the political spectrum opposing this but for opposite reasons. The left opposes it because they enjoy being in the mud and believe this is the only way we can all be equal, therefore it is “wrong” for anyone to get out of the mud. The right opposes it for purity reasons. They believe ALL should escape the mud but that it is an either-or proposition; either all escape or none escape. Libertarians will argue for the moral solution but (grudgingly) accept the pragmatic one as a stepping-stone. Better for some to escape than none. Since wholesale emancipation seems to be off the table, then let’s create so many loopholes and deals that all can escape.

So do I wish I could get the kind of tax incentives Carrier got? Sure. It is absolutely unfair that they get them and other businesses like mine do not. However I’ll still applaud their small victory if it means it moves the needle even a bit toward the direction of universal tax relief.

Faith Healing

The current outrage-du-jour over the skyrocketing price of EpiPens is a perfect example of the effectiveness of a societal indoctrination that leaves us blind to the parasitic ills wrought by the state. The credulous media reports with much indignation and finger wagging over yet another example of an evil profiteering corporation charging outrageous sums for a life-sustaining drug. Clearly this fits with the media’s preconceived narrative that capitalism is bad and we need government to right such wrongs. Case closed. No need to scratch the surface and investigate the cause and effect of this phenomenon. Even those media outlets that do ask the right question and get the right answer are still somehow blind to the necessary solution. They recognize that prices are high because of a lack of competition (a result of patents), third party payment distortions, and cronyist-driven increased demand (fueled by FDA mandates). Even the likes of the Journal of the American Medical Association have admitted as much in a recent article.

“The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration approval and by patents. “

But the universal answer to solve these woes? More of the same: state intervention. If we can’t even imagine a world without state-driven influences in the market then there is only one option that remains – more state intervention. The state is entirely responsible for the current quagmire that is our health care system, but hey, maybe more regulations can fix the problem the first, second, and third set of regulations caused. As they say, if all you have is a hammer, then every problem looks like a nail.

There is no quick fix. The foundation is built upon the sand of wishes and emotion rather than the stone of the unwavering principle of liberty. To solve the problems in the health care market we must dismantle the framework of rules, laws, and regulations that can do nothing but produce this distorted market.

Step 1: Eliminate the patent system entirely. Without patents competitors can instantly respond to prices that get out of control. Novel inventions have a natural period of protection because of secrecy and first-to-market advantages. The more obvious the invention, the more easily it could be copied. Praising the patent system for rewarding inventors with monopoly pricing while simultaneously pining for the low price of generics is the height of cognitive dissonance.

Step 2: End the FDA’s monopoly privilege of being the ONLY agency allowed to review the safety and efficacy of drugs. If the FDA is going to take years to approve a drug or device (resulting in countless needless deaths and higher costs) then perhaps it is time to let competitors help them out.

Step 3: The FDA and its competitors should be financially responsible for their mistakes just like any other company. Presently the FDA bears zero responsibility if they approve a flawed drug. If there existed in any other sector of the economy such a lack of competition and accountability we would be outraged. Yet somehow this state of affairs exists with the FDA and no one bats an eye. Most curious.

It’s almost like society has been brainwashed into the credulous narrative that those in government are not mere mortals but rather angels who are immune to normal human foibles. This blind faith in the supremacy and righteousness of the state has closed our eyes to the truth no less than medieval faith in the Church blinded men to the truth of heliocentrism. Time to question that faith. Our very lives depend on it.

How do libertarians think they can prevent the rich from appointing people which will serve them and not the rest of the country?

Another Quora question I answered.

 

You mean like how the (insert region) government eliminates all competitors for the services it provides by using its connections with armed thugs who are willing to do whatever they ask as long as they get paid?

It always strikes me as amusing that the assumed worst case scenario of a wholly free-market/libertarian society is exactly the scenario we live under today: one monopolistic centralized group controlling nearly everything.

Yes, people with many resources (wealth, friends, connections, etc) can wield that power for underhanded reasons. But people do that in government today (witness the rampant corruption and cronyism that is perenially uncovered by the media). If that is a reason to indict a free system then it must be equally leveled against the system we have today.

The key point is that in a free system no one is the “ruler” over everyone else, so without a lot of the artificial barriers to entry that the government/state create there will be more, not fewer competitors for various goods and services. If you want to start a business no one is going to stop you, you don’t need permission, you don’t need a license, all you need to do is provide a product the customer wants to stay in business.

Ultimately if someone tries to buy all these new competitors out or off or what have you, there is a limit to how far that will go – at some point you run out of money or reach a point where more buy offs don’t make sense. Witness the US government, as wealthy and powerful as it is, it can’t buy off every country in the world to allow them to dictate policy everywhere. Granted, they try, but there is a limit even for an entity that large. So I don’t suppose in a free system where the “rich” companies would have to compete for customers first by providing products they want vs a state that can simply take (tax) the money they need that any company would rise to a size or level anywhere approaching the power of any state or national government, hence the risk of such concentrated power should be accordingly that many orders of magnitude smaller relative to the same concern one would have about a regional government over stepping its bounds of authority in the same way.

The Freedom Illusion

Today I write this article on Memorial Day while visiting a country (Germany) that those we honor today arguably did fight to bring freedom to. Although to be precise that was only an indirect consequence of the war. They were actually fighting to stop the military encroachment of Germany on its neighbors. Had Germany been content to stay within its borders and continue on with the fascist policies of the National Socialists it is no doubt certain Americans would have not gone there to “fight for freedom.” I have often heard the phrase “as the world watched in horror” concerning the atrocities of World War II. But that is not entirely true. Some may have watched in horror, but the vast majority of people both inside and outside those countries run by fascist regimes (Germany, Italy, Spain) simply watched and shrugged their shoulders. Nothing to see here, after all, the law is the law.

Today with our 20/20 hindsight we can clearly see the violations of human liberty that occur under such fascist regimes. Now we beat our chests about how such violations of freedom must be opposed. All the while we remain blind to the violations of liberty occurring in our midst. If we open our eyes what do we see? Well if we can manage to wipe the fog from the lenses of our rose colored glasses we can see most ruling regimes follow that same fascist template we now so heartily decry. Fascism originated in World War I Italy and came to prominence under Mussolini. Others soon followed (Hitler in Germany, Franco in Spain) along with our own FDR. Fortunately we had a Supreme Court that tempered some of FDR’s alphabet soup of new “public-private partnership” agencies, but America was clearly on a fascist path. Today we are on that path yet again. To be clear, Fascism is not Nazism. Fascism is better known today as Corporatism, or Crony-Capitalism. It is a tight alliance between business and the state wherein the state calls the shots and the businesses that are serving the interests of the state collaboratively comply (energy independence, environmentalism, healthcare, education, etc). And everyone cheers the perceived benefits of sacrificed freedom.

So on this Memorial Day honor those that believed they were fighting for our freedom by recognizing the direction the world is headed in. Consider for a moment how much freedom we have already sacrificed in our permission based society. One is not free if one must ask permission to: start a business, get a job, hire employees, drive a cab, sell a product or service, keep their income, cross a border, get married, own a home. One is not free if one is subject to search and seizure in their own home or for merely walking or driving because they might have in their possession that is not approved. And on and on.

Honor the fallen (and those still with us) by fighting to both regain freedoms lost and by not sacrificing any more freedom. What the state gives us in return is either an illusion (safety) or that which we could have achieved on our own as free individuals.

Trading Places

A basic economic principle is the necessity of accounting for both the seen and the unseen (first elucidated by the great French economist Frédéric Bastiat). It provides a basis for understanding how politicians perennially cast themselves in the role of Santa Claus whilst picking our pockets. We are a willing audience to the magician who dazzles us with (for example) public works project (the seen benefit) while remaining unaware of the unseen harms unfolding (those things not done, created, or attempted due to diversion of resources into the political projects). The principal works for any intervention into people’s lives. For example, sanctions or trade embargos are often put in place in order to influence the actions of the leaders of another country. Although there is not a single historical precedent for this ever working, it remains the most popular passive-aggressive tool in the arsenal of the state. The language used to speak of such embargos employs the ruse of anthropomorphization (“America” cuts off trade to “Iran”) in order to hide the underlying reality that rather than the target country being harmed it is the individuals that constitute that country that are harmed. See, it’s not millions of people being made to suffer; it’s just a nebulous non-human “country”. Those who engage in these practices of course understand the reality of weighing human suffering and misery against the greater good of their desired ends. Indeed it was Madeline Albright’s admission that the deaths of approximately half a million Iraqi children during the 1990s sanctions against Iraq were “worth it” in order to achieve their goals (this remark was specifically cited by Osama Bin Laden as one of the many reasons behind the 9/11 attacks).

But that is just the seen harm. There is also an unseen harm levied against US citizens and businesses who are barred from trading with the country embargoed (for example, Iran). Iranians want to buy US made goods. US businesses want to sell those goods. We have a willing buyer and a willing seller being prevented from engaging in trade because of a belligerent busy-body-bully in the middle. Those lost sales for US businesses will not be made up somewhere else – they are simply gone. These missed opportunities lead to more unseen harms – lost jobs, or rather jobs that would have been created but never were.

To the extent US businesses have foreign competitors in countries lacking an embargo against Iran then it is our own government that is pushing sales into the arms of their competitors. Brilliant. Some might say that this loss in sales to US companies is “worth it”, that it is their patriotic duty to suffer through such lost sales in order to help our country battle the existential threat we face from a country… that has never threatened us nor attacked any other country in over two-hundred years. Well that is certainly easy to say when you’re not the one cruising past potential income you are barred from touching. Ask yourself, would you willingly skip annual bonuses if your government told you it would help influence Iran? Yeah, I didn’t think so. And apparently Boeing doesn’t think so either   – this politically well-connected company managed to get itself on a short list of companies exempt from the current trade embargo with Iran. How convenient. Apparently the expediency of pleasing big donors trumps the so-called “national interest” that applies to everyone else. Justice for all indeed.