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Here We Go Again! Recession 2.0 = A New Great Depression

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A couple of years ago the recession struck and everyone were paralyzed. When I say “everyone”, I of course only mean the mainstream nitwits. There were enough of those who warned about the imminent collapse. It was coming, and sure as hell it did.

It didn’t, of course, end there. The same people who warned us first time around also warned that if central authorities would continue what they were doing, we were sure to face something much worse very soon. Of course the wise overlords in Washington didn’t listen, and the FED has been forking out those dollars like never before. Needless to say, it hasn’t been working, and the day the world would realize this were coming at any time.

Well, ladies and gentlemen, that time might be right ahead of us as we speak. People with the Austrian School and people who identify with it are in strong opposition to mainstream economists and the FED, saying the response after the recession was the wrong one, and that we are not at all recovering from the financial crisis. All the measures by Washington merely dulled the pain temporarily, and the phoney recovery will plummet to earth in the near future.

It seems like that near future may very well be very near, indeed. As explained by Goldsilver.com, associated with The Wealth Cycle Principle and Mike Maloney, the decline in the banking sector was setting the stage for the recession. It was an early warning sign that a crash was ahead. Those with a broad and correct understanding of economics saw this pattern fall together with what they see as a system built to fail and warned that we were facing an economic crisis.

Today’s economy is overwhelmingly driven by borrowed money.  Whether it is a home mortgage, car loan or simply a nice dinner put on a credit card, in a credit based economy (like we absolutely have today) this bank credit is what makes the economic wheels turn.  If the banks aren’t doing well enough to loan aggressively, not as many loans are made and the economy slows.  So the banking sector is a very important part of our economy to keep a close eye on.

Apparently, the banking sector is showing the same warning signals as it did many months before the last recession.

Even though the stock market has had a nice bounce, the bank stocks are not keeping up with this stock bounce. Compare the charts above again and notice the bank versus S&P 500 chart has bounced along sideways since summer of 09 and have not confirmed the S&P 500 bounce.  Unless the banks join the party quickly we should be in for another very serious round of stock declines or a crash.

Looking back on the article I wrote on President Obama and the coming ’12 election, I was wondering if the central authorities in Washington would be able to push the coming depression enough ahead of them to secure a victory. Well, the next year will be a very exciting one. Will the markets crash before election day or not? What will the FED do with these glooming warning signals? They were rumored to end QE2 over summer, but how is that even likely when things are starting to take a turn for the worse?

When politicians give us a second recession, one facepalm is not enough.

The false recovery was just that; False. It was doomed from the start, but those who thought “we have to do something” and others who currently think “we have this under control” are all missing the very obvious point: You cannot shape the future by your will alone. You lack the tools to know what’s right at all times. Government can only spend stolen money, and the FED can only print new ones. They know nothing about creating businesses; keeping productivity; meet market demands or dealing with constant government regulations.  What is the ultimate outcome by both these actions? They waste resources and place the burden on those who will inherit the system a few years down the line – ultimately the people, under the pretense of helping them. They can only steal resources, destroy savings and weaken the dollar, all of which are detrimental to economic recovery and the prosperity of the ordinary men and women in America.

What do I think? I think the FED will continue with a QE3 and 4, and it seems like others agree. Gloom and doom is ahead, and there will be more stimulus packages. Will the New New Deal perhaps even nationalize banks and private institutions, as proposed by everyone’s best friend, Paul Krugman? Certainly, if President Obama were to win the next election, I’d say the answer may very well be “yes”. The recession never ended. The depression is upon us. You would do well in securing those silver coins while you still can. If not only securing you current savings, it might even earn you a good deal of money as precious metals shoot towards the sky as everything else fall apart. And it might make life a lot easier too, cause I’ve heard it’s bothersome to fill the backpack with paper money when going to the store to buy a piece of bread. Especially when the price has risen to two backpacks since yesterday. You might want the silver coin at that time; the silver coin that says “1 dollar”, but will end up being worth more than a billion of them if hyperinflation kicks in. Ask some people in Zimbabwe. They can probably testify to that.

Yes, there are exciting times ahead. Exciting, but frightening too. The coming presidential election just got that much more important. Do me a favor, Americans: please vote Ron Paul, will you? Thanks.

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Is the Austrian School Getting Tired of Being Right, Yet Not Heard?

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Crisis

Government needs to stop wasting all the € toilet paper in Greece (Image by Neil T via Flickr).

Just watched the news here in Norway about how Greece is asking the European Union for another stimulus package to deal with the bust and economic crisis they suffered a while ago, but as usual they offered no questions or investigations and simply mindlessly reported whatever they’re fed.

So what are people missing here? What is the most fundamental and most important question that “TV2 Nyhetskanalen (The Norwegian TV2 News Channel)” completely failed to ask and examine when reporting this case?

There are probably many great questions they could ask, but I would expect this much: “Why did the first stimulus package fail, and why should it follow that another stimulus can do what the first one obviously couldn’t?”

You cannot print yourself to prosperity and economic growth – not real growth in a sound economy in any case. The greek government had taken grossly advantage of the situtation up until their crisis – with a big majority of the nation on the government’s payroll. They were wasting resources and spending themselves to poverty. Yes, that’s right – simply spending all you have would do that. This applies for both individuals and governments, you know. Their government spent loads of money and warped the economy into a disaster. Upon this crisis the European Union with their central bank shipped a bunch of euros down to the old birthplace of the western civilization. Things seemed to quiet down a little. People thought Greece would do what was necessary to restructure their economy and get back to economic austerity, but as many Austrians and economic know-hows explained early on: This had been a great opportunity to do what is right and get rid of some bad government and start becoming responsible again, but it was wasted and things were just business as usual when Germany and the European Union decided to shoot the greeks up on heroine again and delay their long needed rehab.

Now it seems like the greeks have run out of their shipment of heroine and goes begging to their dealer to cut them some slack and give them some more – promising that they’ll soon get things in order, start producing and give something back. Are we at all surprised? Are Austrian economists getting tired of being vindicated by the cold facts of contemporary history yet again, without anyone else noticing what is flashing red right in front of them?

Quite honestly, I think Greece will whine to the European Union about another stimulus package until the Union will listen and provide them with what they think is the correct way of dealing with problem – surely sending their Union currency into oblivion hand in hand with the US dollar. Greece will probably shut up for a while, but only until they’re back to where they left off. Then it’s back to climbing onto the backs of their productive german friends again.

When will the world finally learn? Germany needs to teach Europe some of that economic german discipline, or else they’ll get dragged into the mud along with all the ignorant drug addicts in Europe.

The Exploitation of the Proletariat

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Demonstrations against the G8 summit, Rostock,...

There is a common misconception when it comes to the elite’s exploitation of the working class. We normally think of it as the rich; owners of capital, the capitalists; the bourgeoisie, stepping on the little man. Marxist theory is interesting in its own sense, although I can’t say I hold a sliver of respect for marxists, but it can indeed be said to have a slight supernatural tone to it, as there are elements in marxist thought you cannot truly account for. A weakness in a lot of macro-sociology is exactly this — you can never know everything you need to know to make a proper theory of society. That is not to say it isn’t fruitful to advance our understanding of society. I may be biased to think this, as I enjoy sociology a lot, but I honestly think sociology has a lot of great knowledge to offer us, and that a sociological view point is an important element in understanding human interaction and how society functions.

But that is not the topic I wish to discuss here. As the topic implies, what I would like to talk about is simply the exploitation of the working class – or rather: ordinary people.

Many people – and indeed marxists – tend to refer to capitalism as some sort of evil force that tears down the fabric of society; something we need to overcome and put behind us. We are supposed to make the world a better place, where capitalists cannot exploit the ordinary man. And who are these capitalists? Business owners, CEOs, people in high positions in the corporate structure. Perhaps owners of smaller and middle sized companies as well? Those earning more than $200’000 a year? There are a lot of class theory and standards that will claim to identify these persons, but certainly, they are mostly private business owners who have people working under them.

Having identified the capitalists, try to “taste” the words “exploitation of the working class”. These business owners are exploiting the ordinary workers. We are made to think that business owners are evil, and that workers are good and innocent.

Yes, workers are good and indeed mostly innocent as well, although some would say that ignorance does not equal innocence, but I feel that this is a somewhat negative way of putting it, as it seems to imply that most people are stupid or cynically ignoring to seek knowledge. Ignorance often means that you are kept away from knowing. Not necessarily intentionally by anyone, but it simply means that you will never hear about the things that you are ignorant about, ’cause how can you know what to look for if you don’t even know it exists? Either way, society needs workers. We all do. Most of us will always have to be workers, or else we will not be able to fulfill the basic materialistic needs we have in society. And exactly because society need workers, we – ordinary people – will always be ignorant of who the exploiters are.

Who are the exploiters? Are they the business owners of the world; the corporate fat cats that will do everything to squeeze the world for another drop of oil to have an even more decadent life style? The sentence “exploitation of the working class” implies this when it goes on to identify the exploiters as the bourgeoisie. This has become common knowledge of sorts.

But is this true? Answer these questions: Who would create jobs if it were not for business owners? Could we create jobs out of thin air? If there weren’t any entrepreneurs around to come up with business opportunities to cash in on, who could really come up with new jobs that people could fill? No one. And if we wouldn’t have any jobs to fill, how the heck would we be able to survive? How could we enjoy this piece of technology that you’re reading this with, if it weren’t for entrepreneurs and business owners? It would be impossible to truly imagine how this could even have come about if it weren’t exactly for those richer of us who placed resources into the field where they would see opportunities to make a profit and create sustainable jobs.

So are they exploiting people? You could make the argument that you are not allowed to keep what you create, and that a job contract is a contract where you are selling your work undervalued, because what you produce is worth more – or else the company wouldn’t make a profit, and that you aren’t given any of the spoils of your hard work. This, however, ignores the broader picture. You are indeed given the right amount of fruits for your labor. To be able to keep up the whole corporate structure, you will always have to sell the product for more than what it cost to produce it, and profits are made so that they can create sustainable jobs and expand their companies. If the company couldn’t do this, you wouldn’t have a job, and no salary, and there would be no labor to enjoy the fruits of. Business owners are the saviors of society. Their eye for opportunities keep up the lifestyle of the ordinary men and women, and the prospect for profit is the only incentive that keeps them looking. Without a profit, no creation of jobs. It’s that simple. The bourgeoisie exploitations of the proletariat is a myth. It simply is not the case.

Yet, there does indeed exist an exploitation of workers today. More properly put: it is an exploitation of all of us, even corporate fat cats. There aren’t many that knows how to avoid the exploitations, although it can be done to a certain point, but we all fall victim to it one way or another. And who are the exploiters?

The State.

Our Enemy, The State. Picture, courtesy of the Mises Institute.

Consider this: What can government create and offer society? Are public sector jobs sustainable? From where does the state collect its income? If you think about these questions and try to answer them, you will see a pattern emerging, and one simple conclusion arise. The government cannot create anything. It can only take resources from the productive sector of the economy and place it in the unproductive sector of the economy. What you’re left with are “meaningless” resource-moving jobs that only survive on taxes and public support – not on profit, productivity or sustainability, and all government has to offer are the same taxes in return to the public in shape of different types of cushy benefits. Taxes it had collected from society through theft in the first place.

If you truly think that government is beneficial to the economy when it takes 40% of what the private sector earns and spends it on things we (and I mean all of us) wouldn’t voluntarily otherwise ask for, how much more beneficial would it be to tax 60%, 80% or even 99%? I assume it must follow that at 99% it would be extremely beneficial? Of course not. No one thinks this. But at the same time, not very many seems to see the connection that 40% taxes means there are 40% fewer resources left to be put into creating productive and sustainable jobs and innovations. Indeed, the public sector only lives at the mercy of the private sector. If there were no business owners and entrepreneurs to create new jobs, there would be no jobs to tax for the public sector, which means there would be no government. But would the people in the public sector be without jobs? Of course not. The private sector always seeks to grow. If it could keep the 40% that government steals, it would be able to create more jobs from these resources; and they would always do it in a much more productive and more sustainable way than government ever could. That is why in a free market society there would always be too few unemployed, because our wants are always greater than our needs, and we will create as much as we possibly could and it would never be enough, always becoming richer and always creating new jobs on the way. It should be clear at this point who the exploiters are and who aren’t.

But no matter who you think are the exploiters of the society, there can only be one type of people at the very top, and whoever controls government will always be these people, and they will enact that control in their own self interest. Herein lies the danger, because they want power; that’s why they’re there, and the power they have is over all of us. The State is the master exploiter of society, and workers and business owners are all slaves that are forced to “give” away part of the fruits of their labor, in order to not have all of their fruits taken away from them. 40% taxation equals 40% state-run slavery.

It is therefore in the government’s best interest to scapegoat business owners as the exploiters, when it is indeed government that do all the exploitation. Now of course, that is not to say that our leaders and regulators are willfully and intentionally doing bad things against everyone. They believe they do good, and I would even say they have their best intentions at heart for all of us. They aren’t intentionally misleading people and creating a big charade that we blindly take part of. It is important to understand that it is the system itself that make this the natural outcome. It is tempting to think of the system as its own consciousness, but you shouldn’t. Society is nothing but the individuals that make up the system, after all. It is more accurate to think that the system traps us in a special set of incentives that makes all of society self-delusional. We will not be able to see that the system is at fault, unless we are educated about it, but if people aren’t aware of the true problem, how will they be able to seek the knowledge? It is not easy to break out of the bubble, because we are all players in the system; a system of government control over economic and social questions. Like brainwashed people on the inside of a twisted cult, we are all ignoring the one and only obvious conclusion: the source of all our pains and worries is the system of government itself, and the system is what creates incentives for us to fight each other, rather than peacefully cooperating to better our lives.

What do I think? The only true solution for peaceful human cooperation is true capitalism – the voluntary exchange of goods and services. In the words of Milton Friedman:

“The free market system (…) is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.”

Indeed, the ones who keep us from total exploitation; the ones that try their best to set us free, are the capitalists, and people everywhere should embrace capitalism as our best bet to obtain and secure freedom, prosperity and peace.

The Peculiar Practice of Taxing Public Worker Income

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Income tax. Image by alancleaver_2000 via Flickr

With the demonstrations by public sector trade union workers going on across America, there are several thoughts on the topic that have popped into my mind as of late. While the topic of Wisconsin’s public trade union workers is tempting, it’s not my concern right now.  What caught my attention today is the connection between public sector jobs and income taxation. There are many things you can say about income taxes, and there are many things you can say about public sector jobs. The first is immoral, unjust and disruptive to the productive sector of the economy. The latter is where the taxes are inevitably spent. While a discussion on whether or not taxes should exist or whether or not we need public sector jobs is a fair discussion, we’ll leave that for later.

For now, please think about the following question: Why do people in the public sector pay income taxes?

A silly question, you might think. You may also say it’s obviously easier and also fair not to distinguish between private and public sector jobs when taxing people. That is, however, besides the point. What is the economic benefit of having all people employed in the public sector paying taxes? The endless amounts of administration that goes into keeping the system up is already profound, but the waste of collecting taxes from people payed 100% from previously collected taxes is at best a big drain of resources. If those employed in the public sector payed no taxes, there would be less administration going into collecting taxes from these people. Much less paper work and less public sector jobs needed to be filled.

I think all taxation on income should be abolished for everyone, especially for those working in the private sector, but as it stands, the paradox of taxing public sector income baffles me. Why not just pay people in the public sector what they get after tax and not tax them at all? And should these people have tax deductible expenses they today could get back, why not just give these expenses as a bonuses on their salaries if necessary? I don’t like the concept of tax credits – it only creates extra layers of bureaucracy that dabbles in social engineering, but since it already exists, giving bonuses would virtually have the same effect as today’s system. There is to me two very good reasons to why this would make sense to do. First, the administrative costs you’d save by not having to pay attention to taxing public sector employees. Second, if people were given a tax relief, this would only apply to private sector jobs, giving only private sector employees more money in their own pockets. Public sector jobs would never be affected by tax reliefs and this would result in them having received a permanent pay cut. It would also lessen the apparent numbers that make up the excuse by government for receiving smaller tax revenues to use in their spending. Perhaps this would also add another inhibition to increase spending (obviously not the case, since deficit spending rules supreme, but still…). The actual revenues of government would also not be affected, since the only resources they have at hand are what they take from the productive sector of the economy. As mentioned, whatever public sector employees earn is what has already been taxed. There are no real “losses to revenue”, only savings in administrative costs, which should result in more tax cuts for the private sector.

Downsides? Harder to rally public sector employees to the cause of electing politicians that wishes to cut taxes. You would likely also create an even more polarized population dividing the private vs the public sector into more distinct political factions than they are today. Those working in the public sector wouldn’t think twice about raising taxes for their political goals, as higher taxes wouldn’t concern them. The possible good things about these downsides? The enemy is easier to spot and the private sector would be willing to stand more united against government oppression. If supporters of the public sector wished to increase taxes, they would not be able to hide behind the mask of “altruistically suffering from the same taxation”. They would more directly become enemies of the private sector, and unable to portray themselves as servicemen for it. There would be a deadlock between political factions, and raising taxes could become far more unpopular than it is today…

… Or it wouldn’t worry people too much after all. Who knows? It will never become a reality, but I find it a peculiar phenomenon, and the “what if” fascinates me.

Written by Morten Rolland

February 23, 2011 at 2:54 pm

The Most Economicly Sensible Place to Live in America

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In a troubled economy, the worry of many people has increasingly bottled down to the cost of living. It’s easy to understand why more families worry about their personal economy and the cost of living in USA today. As the federal government and states likewise spend more money than they have, there is an increasing demand from government for higher taxes … on everything. Where, then, is the cheapest – or should I say the most economicly sensible place to live in America today? Of course, it’s quite difficult to point out a specific town, as you’d be in a deep ditch of falsification, while working out every little detail in every little part of this vast country. But we need to start somewhere!

For now we’ll limit our search to the different states. This takes down the number of choices to a mere 50. Along which criterias will these 50 states be messured? Taxes, of course, and here we will look at the state income taxes, but there are also some hidden taxes in addition, like sales and property taxes, so we’ll also compare some specific price differences. For this I will make use of numbers from a “cost of living index” put together by MERIC (Missouri Economic Research and Information Center), which are based on values that are reported from different urban areas that participate in the collection of data. This does not give us a proper indication of the rural differences that may exist, but it’s reasonable to think that rural areas in a state with low average urban living costs will have lower living costs than in a state with high average urban living costs, since overall sales and property taxes levels in the states play a part here. It does seem, however, that MERIC do not include income taxes levels into the calculations, although it could be put into consideration for all the different values making up the index, but either way we will take a look at the index numbers and tax levels seperately.

To start off our research we’ll see where in America a married couple sharing an income of $40,000 (as basis for our income  tax levels) will have the greatest opportunity to put off some extra hard earned money for buying affordable precious metals to preserve their precious savings *wink wink*. We are therefore trying to aim this at the regular working class American that wish to focus on affordable quality of life. People more well off would likely live according to similar dimensions, only with a lot more to spend, and truly, that is what we’re all after.

The top states in the MERIC index are situated mostly in the midwestern/southern area of America. We will look at the states that have an average index score under 95, where 100 is the overall USA average. These states are the following (in the order from lowest to highest index score):

Tennessee, Kentucky, Oklahoma, Kansas, Missouri, Texas, Arkansas, Nebraska, Idaho, Georgia, Mississippi, Alabama, Iowa, Indiana, Ohio and Michigan.

These have the cheapest living costs, but what are the income tax level in these states? This is important, since taxes can take up such a substantial portion of your pay check. This can weed out some states that are more likely candidates than others. Not bothering with federal taxes, as these are the same everywhere, we instantly take notice of the states without a state income tax:

Map of USA showing states with no state income...

States without personal income tax (Wikipedia)

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

We see that Tennessee and Texas instantly stick out as states with both low costs and no taxes. Indeed, Texas has always been known to be a cheap “tax haven”, but Tennessee is a surprise. After all, it has the highest minimum sales tax of most states, and likely on an average to have the highest of them all. When adding the level of taxes we’d have to pay in the other 14 states, this is the list we end up with:

Alabama 5%, Arkansas 7%, Georgia 6%, Idaho 7.4%, Indiana 3.4%, Iowa 6.8%, Kansas 6.25%, Kentucky 5.8%, Michigan 4.35%, Mississippi 5%, Missouri 6%, Nebraska 5.12%, Ohio 4.109%, Oklahoma 5.5%, Tennessee 0% and Texas 0%.

Certainly, these levels are all quite affordable. Simply depending on the housing prices or food prices you could save much more during a year than what you’d pay in taxes. Idaho, with the highest tax of the mentioned states, will cost you $2,960 a year, but with the third lowest rating for housing costs it could potentially make up for it manyfolds. What we see about Idaho is that transportation costs are above average, likely because of a low population spread out on a large area. Kansas, placed in the very center of the country, and with a close proximity to Kansas City in the east, can boast of fairly low scores all over, with groceries, housing and utilities well under 90 and health care at only 91.65, which should make up for its income tax. It is no wonder why MERIC lists it as the 4th cheapest state in the country. Important to note is that Kansas is also one of the leading agricultural states in the nation, which will arguably be a huge strength in the future of the overall American economy. In addition, Kansas – even now after the recession began – has an unemployment rate of 6.6%. This is of course the Department of Labor’s own numbers, which frankly can be somewhat understated, but it still gives us a number we can compare with. It’s substantially better than Idaho’s 9%, for instance, and adds a level of social safety and stability to your cheap living. Also better than Idaho are Oklahoma and Arkansas, with 6.9% and 7.7% respectively. Worse off is Missouri with 9.3%.

The zero tax states are also under 10%, but still substantially higher than Kansas. Tennessee has 9.4% and Texas 8.1%. Tennessee is overall pretty much the same kind of state as Kansas, but with higher unemployment rate and a slightly lower cost index. It’s important to note that the cost index difference is only by a margin of 1.44 points, which is caused by the difference in housing costs, however both are far lower than the national average.

Texas, however, is unique in the grand scheme of things. It’s known to be among the most business friendly states in America and it’s also the second biggest economy in America, being among the biggest producers of agricultural and mining goods, while also having a very strong industry in energy and technology. With the 6th lowest overall living costs, no income tax and a fairly low unemployment rate Texas comes out as a remarkably good choice. It is, however, the second most populous state, and with a lot of open desertlands in the west the population density is quite high around the urban areas to the east. This doesn’t have to matter at all, but when one would make the choice of where to live it could be a deciding factor. Needless to say, Texas would leave you with the choice of both extremes and little inbetween, but that might be perfect for you.

Cost of Living Index (MERIC)

So what should you choose? Indeed, any of the low value states is a good choice, but it is important to take into consideration future economic and social stability. You’d do well in staying away from the rust belt, which would steer you away from the north eastern “green states”, as shown on the Cost of Living Index map. The unemployment rate there is currently quite high, as it is among all the states east of Arkansas. Iowa, like Texas, comes out of it in a different way than most other states. As a mostly manufacturing state, with a notable addition of agruculture, it has so far weathered the economic downturns a lot better than most other states. It can with an unemployment rate of 6.8% also offer something in terms of social stability. Nebraska with its agrictultural economy has matched Iowa’s ability to weather the economic turmoil, but with likely the lowest unemployment rate in America with 4.6%.

In terms of these findings we are left with the states that are at the very centre of the country: Arkansas, Kansas, Iowa, Missouri, Nebraska, Oklahoma and Texas. Missouri stand as the state in the weakest economic condition in terms of unemployment rate out of these. It is funny to note how the strongest economic base is in the agricultural states farthest away from the most expensive parts of the country, and arguably farthest away from the parts that are currently in the worst shape, where DC and California lead off as the sunken ships with the highest living costs in the country.

What do I think? There are two things that will affect my choice of where to live among these states. Anti-union legislations and “livability”, where social variables create the safest and most stable living conditions. Why? If I wanna look for jobs for myself and my loved ones, I want a fair game, and if I wish to bring up a family I also want the best surroundings and opportunities for myself and my loved ones. To evalute this I take a look at data in the “livability index“, published by Morgan Quitno Press. Not having the numbers from 2010 I’ll have to assume that the 2005 levels are somewhat the same. What we can see is that several of the mentioned states actually come off quite poorly here, ending up at the bottom of the scale, leaving us with only Missouri, Kansas, Nebraska and Iowa above the national livability index average, but Missouri can instantly be counted out lacking a right-to-work law and also having the highest unemployment rate of the four.

What we’re left with is Kansas, Nebraska and Iowa, which are all above average states with among the cheapest living costs in the nation. The states are also neatly placed in the middle of the country with possibilities of both highly populated urban areas and vast rural areas. I also like the central location of the states in terms of vacations and road trips. I’m an avid traveler and enjoy driving on trips if I have the money and opportunity to do so. The weakness of these states basically lies in the income taxes, but the income taxes are along the middle of the spectrum in America, yet the economies are among the strongest as far as these numbers go. They rely on mild and diverse tax revenues, which doesn’t milk the population too much. The less the better, yes, but all things considered it’s not your worst bet. Further research would include proportion of population in public sector jobs and size of government in terms of expenditure compared to the private sector. Lower numbers for the public sector would be better, of course. Another important variable would be how friendly they are to private businesses and entrepreneurship. The friendlier the better. I would of course also want to see where in the individual states I would like to live the most, wanting to live in fairly close proximity to an urban centre, without having to endure the higher costs and lower quality of living in the middle of a city. There would be housing rents (or prices) and local taxes to take into consideration for this. Since I’m personally not yet looking for a long term place to live (lacking a visa and all) I’ll hold it for now, but I hope my current findings will help others in the right direction. Happy huntin’!

Robert Murphy vs Paul Krugman

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I wanted to use Robert Murphy of the Austrian School of Economic vs Paul Krugman the Nobel Laureate King of Keynesianism as the title for this post, but I was afraid that it might be a little bit too long, although it does give you a better idea of what the essence of this is.

Paul Krugman, for anyone who has ever read his pieces in the New York Times or has seen the attempts of Austrians to argue against his positions, will know that he at times has taken some swings after Austrians, for instance calling Austrian Theory “a theory that I regard as being about as worthy of serious study as the phlogiston theory of fire“. While he may very well be right to think so, one could question why he won’t debate anyone of the Austrian School. Peter Schiff has repeatedly challenged Paul Krugman straight out, saying for instance that he should return his Nobel Prize, because he doesn’t understand economics, and Andrew Schiff, Peter’s brother, has even tried to come in contact with Krugman to make arrangements for such a debate. All Krugman would have to do was to meet up and slaughter Peter Schiff in front of everyone, with the world as his witness. Instead, Paul Krugman tries to take easy jabs now and then, with pompous comments like “I do know that I keep being told that Peter Schiff has been right about everything; so, how’s that hyperinflation thing going?

The latest attempt at luring Paul Krugman out of his cave comes from Robert Murphy, a fairly ‘recent addition’ to the long line of scholars in the Austrian School of Economics, one who at several occasions has taken on Paul Krugman’s arguments in his articles and seems to be well acquainted with the content of a possible debate.  What is unique with his attempt is its appeal to emotions and moral conscience. Currently, only 5 days after the challenge has been made, almost 29,000$ has been put into the pot to see a debate between Robert Murphy and Paul Krugman happening.

“Why is there money involved?” I hear you ask. The idea is to raise as much money as possible that will be donated to the Fresh Food Program of FoodBankNYC.org.

Food Bank For New York City works to end hunger and increase access to affordable, nutritious food for low-income New Yorkers through a comprehensive group of programs that combat hunger and its causes.

There is a hunch, however: The money will only be donated if and when Paul Krugman accepts to debate Robert Murphy for one hour. These are the terms:

See Paul Krugman debate Robert Murphy on Keynesian versus Austrian business cycle theory! Moderated by Ezra Klein, or another moderator of mutual choosing.

If this objective is met, then the money (after 5% to The Point) will go to the Fresh Food Program at FoodBankNYC.org.

Why the Food Bank For New York City? Well, why not? It’s as good a cause as anything else, and since Krugman just happens to write in the opinion pages for The New York Times it probably just fits the occasion, not to mention that this would be a very nice present in the upcoming holiday season for the hungry men, women and children of New York. If 100,000$ were to be raised, that means 95,000$ cash in food for the hungry, and all Paul Krugman would have to do is meet up at the Mises Institute in Alabama, skewer Robert Murphy like a sow at the buffet, cash the money for FoodBankNYC and get back on his plane home. Even his supporters and academic equals would hound on him to accept.

That is why it will be quite hard to see how Paul Krugman could ignore this offer if it becomes big enough. Think about it, how could anyone ever say “No, I will not be ‘tricked’ into doing something I have regarded as too easy for all these years, because I do not care enough to do something that could feed the hungry of New York”? Unless, of course, it is an awful (or even evil) person, or at the very least wishes to be regarded as one by everyone else.

What do I think? It’s quite unique and it could get huge. I urge everyone to put down some money, even if it’s just a small amount. Everyone can afford 10$, and for Americans it’ll even be tax deductible. Remember, you will not lose the money unless Paul Krugman accepts the challenge. But will he? While it might be hard to see how he can ignore this, I’m quite certain the odds for you keeping your money is high. No matter how big it gets, he’ll act like this doesn’t exist, that he hasn’t had the time to read all the comments and mails he receives that urges him to accept, because he’s such an important person and hasn’t had time for that, or he’ll disregard it as some kind of hoax/set-up/scam if he ever actually gets faced with it. Let’s be frank, he’s somewhat of a coward when it comes to debating Austrians.

So I do not keep my hopes up high, but I’m as hopeful as ever. Let me make it clear that I’m not necessarily thinking this is gonna be some kinda “blood-fest” where “my Austrian guy” will shred the “Keynesian fool” to pieces. While I may think Paul Krugman is a fool, he’s also a smart one, even if he doesn’t know economics – like his “Princeton brother” over at the Federal Reserve. I’m actually hoping for an informative, educational and interesting debate where you would truly see two different ways of understanding the world try to make their cases and reveal weaknesses in each others sides, and perhaps give the audience something to think about. I for one enjoy listening to a spoken debate much more than seeing two sides battle each other over blog posts in a chaotic fashion. It’s much more dynamic and real, even if it might be viewed as unfair to some, since a lack of charisma will shine through a lot easier and will appear to weaken the power of the argument. I do have to admit my opinion that I do not find Robert Murphy to necessarily be the most charismatic of speakers, at least not compared to a person like Peter Schiff, who with his many comedic metaphors and stories would render Paul Krugman a dull zombie, but he is a genius, and while he may not have the speechcraft of a politician, it should be noted that Paul Krugman really isn’t the most eloquent speaker around either, at least not from what I’ve seen of him, so I think it’s much more fair and honest this way (not to mention more likely to happen). They’re not embarking on any political campaigns after all. Sadly, though, it will not gather the same publicity as it would with Peter Schiff, but you give some and take some.

I nonetheless think Robert Murphy is more than well up for the task, and he has at the very least found a very interesting and powerful way of making this happen. Time will tell if it will ever become a reality.