Tuesday, July 29, 2008

Wish List added to sidebar

I've added my Amazon Wish List to the sidebar. There are many more books I'd like to add, but these would make a great starting point.

Monday, July 28, 2008

Hooray for e-theft !

[Warning - massive this post amounts of sarcasm ]

Thanks to the modern era, I just completed my tax return online via eTax eTheft. Thanks you very much for the 5 hours of my time wasted, Australian Tax Office. Its great to know you've been stealing thousands out of my paycheque every single month without skipping a beat, and that I can perform my civic duty every July, by reporting to you every single financial event in my life so you can assess me !

I feel safe that the government will make society better off with more money to spend. So of course the ATO ought to chase after arrogant celebrities like Paul Hogan who actually thinks he has a right to keep his own property !! What chutzpah ! Why look at this brilliant idea to search traveller's iPods at airports for illegally obtained music.

And we have a super-intelligent federal treasurer Wayne Swan, who is wiser than all those free-markets; he reassured us that our banking system is safe and sound as 2 major Australian bank shares plunge in the wake of exposure to garbage CDOs.

We also have our genius treasurer reassure us that the government will not let go of the revenue collected by the alcopops tax, even if it is blocked in the Senate. And Kevin Rudd and Penny Wong continue to ramp up measures against "carbon pollution".

Yes having a big government is a great thing, just ask Cuba and North Korea. What could go wrong with more departments and more public servants ? Local councils collect record amounts through parking fines, state governments make more than ever on stamp duty, speed cameras and GST on petrol. Its a pretty picture, right ?

Well, violent crime is up for starters, especially robberies and abductions. Shares and assets are down, property prices are following. The general cost of living (food, energy, transport) is about to soar if carbon regulations are introduced.

What should government do to fix these problems ? Nothing. It should UNDO the mess it has created and unwind half of the nonsense it gets involved in. It will have more focus on stopping violent crimes and upholding property rights if it stops messing around with other trivialities.

Wednesday, July 23, 2008

Subscribe to DoubleThink - its free !

On my right sidebar I have added a new feature to subscribe to DoubleThink. You can now have live bookmarks that produce a drop-down list of my posts and let you see when I have written anything new. Choose "atom" from the menu and you can have live bookmarks.

Enjoy !

Inflation out of control

The Australian media has been buzzing with the key theme of "inflation" all year. By inflation, they always blindly refer to the government manufactured figures of CPI, our price index.

News reports swing back and forth between all statements and interest rate movements performed by the Reserve Bank, and between reports on economic indicators, such as credit growth, housing prices, oil prices and unemployment.

Within this focus, commentators have been eager to look for signs of "relief" for consumers. Any chance of interest rate cuts is considered a positive news story, and the media are praying for signs that inflation has started fading away. Unfortunately the latest CPI figures run at 4.5%.

Today's report is headlined "Inflation at highest since early 1990s"

INFLATION rose to its highest levels since the early 1990s today but economists are not tipping an immediate movement on interest rates.

The headline consumer price index (CPI) rose 1.5 per cent in the quarter from the March quarter, taking the annual pace of inflation to 4.5 per cent, the Australian Bureau of Statistics said today.

Further on in the report, Reserve chairman Glen Stevens gazes into his crystal ball and somehow produces a forecast for the media to faithfully echo to the public:

“On the information available at present, we still expect inflation to fall back to 3 per cent by mid 2010, and to continue declining gradually thereafter,” Mr Stevens said.

Let's see how our supreme chief of monetary policy has fared in his past efforts at predicting the future:

Back on July 1st this month, he made a very weak prediction with a lot of qualifications:
Inflation is likely to remain relatively high in the short term, and the CPI will be further boosted in coming quarters by the recent rises in global oil prices. Looking further ahead, inflation in both CPI and underlying terms should decline over time, provided demand continues to evolve as expected.

Its pretty plain to see why he would make such a weak statement - he realises that his past predictions are very inaccurate and that consumer prices are completely out of his control. Take a look at his past predictions:

December 2007:
Inflation on a year ended basis, as measured by the CPI and underlying measures, is likely to be above 3 per cent in the first half of 2008, and to decline somewhat thereafter.

November 2006
This combination of forces has contributed to an increase in inflation. In the September quarter the underlying inflation rate was around 3 per cent, up from 2½ per cent at the end of last year, and it is likely to remain around that rate in the near term. The headline CPI increase has been noticeably larger than this recently, though this reflects some temporary influences which will be reversed in the quarters ahead.

Back in August 2006, under former governor Ian McFarlane, after raising interest rates, he announced:

Given these circumstances, the Board judged that an increase in the cash rate was warranted in order to contain inflation in the medium term.

So the last couple of years has involved the Reserve Bank making general predictions that have not really come to pass, as they slowly raise rates, and predict that inflation will be a little bit high but will be contained in the medium term.

This whole circus is utter nonsense. Their predictions are vague, cautious and never hit the mark. Their actions have little or no effect, other than to slow down the growth of the supply of money as interest rates are pushed up.

  • Why do we need to authorise and empower central banks to set the price of money for the entire economy ?
  • Why do we discuss consumer prices instead of something far more relevant - the actual supply of money (which is the true meaning of inflation)?
  • Why do we need a central bank in a free market ?
You won't ever hear these questions discussed by the pundits. A rare TV moment occurred when John Stewart asked Alan Greenspan, considered by these same pundits as the greatest central banker of our era, why we need a central bank at all.

Alan Greenspan didn't have a meaningful answer to that question. But like all central bankers, he knows that its about protecting the privileges of the banking cartel, enforcing the use of only one legal tender, and never allowing our big banks to fail.

Wednesday, July 16, 2008

Moochers and looters

Ayn Rand surely had these people in mind when she wrote about the moochers and the looters. (hat tip: ALS Blog)

In the early 1960s, 3% of Australians relied on the government for most of their income. By 1980 that had increased to 14%. And now, despite a decade of strong economic growth and increased employment opportunities, 17.5% of Australians rely on the government for most their income — including 5% of Australians who are apparently disabled and 5% who are carers (mostly single parents).

Friday, July 11, 2008

Consumer protection is a myth

Every government around the world has setup its own bureau of consumer protection. Australia has the ACCC which is charged with pursuing businesses who engage in .....

  • anti-competitive behaviour (= trying to outcompete your competitors ?!)
  • Price gouging (setting your prices too high)
  • Predatory pricing (setting your prices too low)
  • Collusion (making agreements with other firms about your pricing)
  • Monopolistic behaviour (setting your prices too high)
  • False advertising
The last point, False Advertising, seems like a reasonable thing for government to oppose and punish. But under a system of common law, the courts can already punish businesses that make false claims and thus break their contract with the customer.

What the ACCC and industry ombudsman groups are about, is actually restricting the freedom of speech of businesses. Even if the customers completely agree with what they say, and no customers have complained, the ACCC can prosecute a business for "unsubstantiated claims".

Even in semi-socialist America, they've seen what a mess this can lead to:


On April Fool's Day of this year, New Mexico resident Mark Hershiser received a letter from Erika Wodinsky, a San Francisco attorney, demanding Hershiser turn over all revenue from Native Essence Herb Company, a small business co-owned by Hershiser and his wife Marianne. The letter was not a joke or a mistake. It was a premeditated act of extortion by Ms. Wodinsky. She had never met or spoken with Hershiser; her staff discovered Native Essence through its modest website.

Internet scams and predators are commonplace. What distinguishes Erika Wodinsky from a Nigerian banker or a pedophile is that she's the assistant director of the Federal Trade Commission's San Francisco office. Her staff spends their days trolling the Internet for small business owners, like the Hershisers, who sell herbs and herbal remedies to willing customers. The FTC routinely targets such businesses as part of its "consumer protection" mission — which in practice has nothing to do with actual consumers.

Ms. Wodinsky's demand letter said that her office had conducted a "non-public investigation" of Native Essence and determined that the company's website contained "false and/or unsubstantiated claims" that "induced" customers to buy certain herbal products. This itself was a false statement. Ms. Wodinsky and her staff never interviewed any of Native Essence's customers. Indeed, many of the website statements deemed illegal by Ms. Wodinsky offered firsthand customer testimony praising Native Essence's products and customer service.

But in "consumer protection" cases, the FTC does not have to allege or prove any actual consumer injury. Instead, midlevel bureaucrats like Ms. Wodinsky merely substitute their own judgment for that of a business's customers. Since she wouldn't buy Native Essence's products based on the company's website, neither should anyone else. Anytime an FTC official disagrees with the content of a commercial website, it logically follows that the website operator is making "false and/or unsubstantiated claims" in violation of the Federal Trade Commission Act of 1917.

Having made a unilateral determination that the Native Essence website should be censored, Ms. Wodinsky offered the Hershisers a simple choice: sign an enclosed "negotiated settlement," where she had already decided the terms, or face an FTC-controlled administrative litigation process. Of course, if they opted for litigation, Ms. Wodinsky would ask a federal judge to place Native Essence under a government receiver and freeze all of the couple's personal assets to ensure they couldn't afford to defend themselves.

"Ultimately, Hershiser v. FTC is about the free-speech rights of businesses and their customers."

The "negotiated settlement" was hardly a better option, however. Under its terms, Native Essence and the Hershisers individually would be under FTC control for the next ten years. This would mean, among other things, that all of the couple's business records — for any business they own now or in the future — would be subject to FTC search and seizure without a court order: accounting records, personnel records, customer files (including names, addresses, dollar amounts paid, and products purchased), advertisements, and promotional materials would all be under the FTC's control.

The "settlement" would also require the Hershisers and Native Essence to turn over all money earned through the sale of their products to the US Treasury. In theory, the FTC would administer refunds to "injured" customers, but since there are no injured customers, the money will simply remain in the Treasury "as disgorgement." And since the FTC didn't know how much money the Hershisers earned, detailed financial disclosure forms accompanied the proposed "settlement" for Native Essence and the Hershisers individually.

Most recipients of extortion letters from Ms. Wodinsky and other FTC regional bureaucrats simply sign the "settlement agreement" and pray for mercy. The Hershisers took the opposite approach — they filed a preemptive lawsuit against the FTC in US District Court in Albuquerque. They have asked the court to enjoin the FTC from proceeding against them, primarily on the grounds that the First Amendment protects their website from government censorship.

Ultimately, Hershiser v. FTC is about the free-speech rights of businesses and their customers. The FTC is actively preventing individuals from seeking information about products that they might find useful. If you read the feedback on one of the Hershisers' websites — posted after news of Ms. Wodinsky's extortion letter became public — you'll find dozens of satisfied customers who don't want or need the FTC's interference.

Here's a particularly eloquent explanation of what the Hershisers really do, from a customer identified as "V.M.":

I have been buying herbal products from Native Essence Herb Co. for nearly 14 years. I have engaged in extensive conversations with Native Essence Herb Co. owner, Mark Hershiser, and I have read the data on his website.

At no time has Mark, his literature, or his web site claimed anything could prevent, treat, or cure disease. Period! All information we discussed was clearly indicated to be based on research on traditional uses of herbs.

Not only is Mark's traditional information and practice NOT deceptive, it isn't even different from data that I've found from other sources when I cross reference the information. In fact, Mark has even suggested books so I could do my own research.

Mark is one of the kindest and most caring people I know. Many times he didn't even charge me for an item. He is not mercenary, but instead truly intends to help improve people's lives and the world we live in.

By providing high quality herbal products that we, as his customers, can rely on, Mark is filling a genuine need in our society. Vast amounts of traditional healing information and knowledge are being lost. Mark is helping us by researching the data, bringing it together, and offering some excellent traditional herbal products for those of us who prefer to follow tradition.

To fine or threaten to sue Native Essence Herb Co. and its owners in an effort to "redress injury to consumers" is to threaten and cause injury to those very consumers the FTC is imagining it is redressing. I will not be as well off without the web site and other data from Mark. All sources of data about traditional healing practices are available. Any threat which inhibits the free flow of information and knowledge about traditional healing practices undermines our constitutionally guaranteed freedom of speech.

In my case, it could stand in the way of following traditional health practices I have chosen to follow and which work well for my family. Mark's knowledge and information have played a major role in keeping my husband (66) and me (63) healthy through traditional knowledge and trustworthy products based on that knowledge. Neither of us are on any prescription drugs nor do we have any major internal diseases.

Mark has never prescribed any of his products for us. The choice is completely mine based on traditional knowledge and contemporary research which I get through, among others, Dr. Andrew Weil, head of the Program of Integrated Medicine at the University of Arizona.

The FTC's ideological position is that any information about herbs and herbal remedies must be censored through the federal government — preferably the FTC. In other words, the government alone will decide what information consumers are allowed to consider. Any information published without state permission is inherently "deceptive" and illegal.

"In 'consumer protection' cases, the FTC does not have to allege or prove any actual consumer injury."

Some libertarians use the phrase "Nanny State" to describe this sort of government intervention. But "nanny" implies an overprotective caretaker who nonetheless has the child's best interests at heart. People like Erika Wodinsky are more akin to abusive, alcoholic parents who beat their spouses and children to enforce strict obedience. Indeed, Ms. Wodinsky's rage seems more directed at Native Essence's customers — how dare they discuss and purchase herbal remedies without my permission — than at the Hershisers themselves.

Hopefully, Mark and Marianne Hershiser's stand against the FTC's abuse will encourage other victims to stand up and be heard. The public rarely hears about the FTC's extortion until after the "settlements" have been signed and approved by FTC leadership. It's too early to know if the Hershisers' First Amendment lawsuit will succeed, but one thing is almost guaranteed: the FTC will fight this case tooth and nail; after all, the power of people like Erika Wodinsky to violate the privacy, property, and due-process rights of all Americans could hang in the balance.

Tuesday, July 08, 2008

Tens of thousands of workers priced out of employment

That should be today's headline.

Instead, the media rejoice at the rise in the minimum wage, with headlines such as "Low paid win $21.66 a week extra" and "Pay hike for lowest earners".

Wow, the government conjurs wealth into existence with its magic wand !

All it has to do is raise the legislated minimum wage, and voila, every single employer magically receives the extra money and is able to pass it on to every single employee who was working for them at the minimum wage.

Every job is maintained at a higher wage, nobody needs to be fired.

Unfortunately, the media will not report a single case where people lost their jobs because of this law. Even where those people were willing to work for a wage below the new minimum. They are being priced out of employment. Government destroys job security with any kind of industrial relations laws. It does not, and can not create job security for a single person.

I'll repeat the definition of this regulation very clearly.

It is not purely a "minimum wage". Only in the sense that it defines a minimum that an employer must offer an employee to form an agreement where the employer gives up money in exchange for the employees labour. This definition ignores the fact that there is always an alternative - not offering employment.

It is more accurately, "a price floor" - i.e A price level below which, any form of employment is illegal. A price level that means any worker whose marginal value of productivity falls below this threshold is not allowed to work. Low skilled workers, migrants, elderly, handicapped, youth are all told that they cannot sell their labour unless they improve their productivity and value towards an employer until it is worth more than the minimum - and sometimes this is not possible.

Friday, July 04, 2008

Money as debt

This 47 minute animation is a cute but informative video on the nature of money, what it is, how it is made, and what it represents.

I completely agree with its straightforward explanation about the entire banking and monetary system being based on credit on issue, instead of the more ancient practice of using money as a store of value.

I don't agree one bit about some of its conclusions and suggestions. It suggests the current monetary system is unsustainable because it will require an economy to consume more and more resources each year.

I don't agree with the suggestions about getting government to stop the charging of interest. The video seems a bit too obsessed with attacking the concept of interest, but there is absolutely no decent reason why a lender cannot charge a borrower a premium for his time preference.

But money, as we know it today, is not a store of wealth, but a claim on the debt of other people.


Checking the Australian Bureau of Statistics figures on the supply of money shows some wild wild inflation (defined as expansion of the supply of money) in recent years:



Money base
38 678
41 278
43 735
678 360
747 280
867 883
Broad money
764 467
841 183
961 046

Source: Reserve Bank of Australia.

Are we supposed to believe inflation is being contained when the government-manufactured CPI figures are roughly 3% each year ? Or do we get a little alarmed when we see the supply of money explode by over 10% each year ?

UPDATE: This gem of a quote from Atlas Shrugged says it all regarding the nature of money. And it was written 50 years ago !

"Destroyers seize gold and leave to its owner a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it."

Thursday, July 03, 2008

Property seized by the state

I'm sorry sir, you were driving inappropriately, I will have to seize tens of thousands of dollars of your property for the public good.

POLICE have seized almost 5000 vehicles, nearly half of them Holdens, since tough anti-hoon legislation came into force two years ago.

Nearly half the motorists whose vehicles have been impounded are P-plate drivers, and a staggering 98% are male.

Under the legislation, drivers who exceed the speed limit by more than 45 km/h, engage in dangerous driving practices or try to drag race other drivers can have their cars confiscated on the spot. Assistant Commissioner (Traffic) Ken Lay said the legislation had helped make the roads much safer for law-abiding drivers.

Tuesday, July 01, 2008

Atlas Shrugged

I've finished reading Ayn Rand's 1070-page tribute to liberty, reason and capitalism this week. I am ranking this as the best book I've ever read. It was written in 1957, but strikingly relevant to today's world. And I have no doubt as to why it is relevant.

The issues of freedom vs government are still with us today as much as any time in history. Even through the turmoil of the Great Depression, and then WW2, our history is filled with examples of socialism destroying an economy and crushing a society.

The book is the most powerful weapon for the cause of liberty and freedom I've come across. We all accept that reason and logic are universally good values. From reading Atlas Shrugged, it should also be accepted that capitalism, free enterprise and social freedom are all goals which are part of humans using reason and logic. Atlas Shrugged is a moral defence of capitalism.

It is an enthralling story, because it gives a practical example of the downfall of society brought about by the great minds, the succesful industrialists, the best talents, all withdrawing their abilities from the world and retreating because they are held back and targetted by the overly oppressive government. The narrative really shows the cause and effect, the destruction of wealth, the illogical reasoning and the conflicting outcomes caused by government regulation and control.

It is a deeply philosophical and moral book, as Ayn Rand strongly puts out her philosophy of objectivism, summarised by the quote "A is A!". The characters who do not accept reality, logic and reason are expertly attacked and cast as stupid, destructive and emotional villains throughout the novel.

The bureaucrats and social progressives who advocate more government control at every crisis, who ignore the effects of their previous laws and regulations in bringing about the crisis, who refuse to use logic but instead use feelings to justify laws and statutes, are the complete villains in the story.

Towards the end, the society totally disintegrates as a direct result of their laws and their philosophy of equality, brotherhood and rewarding need. The committee of head bureaucrats are exposed as nothing more than desperate, violent, thugs who cast aside all pretenses of morality and improving society, and reveal to the world their impulses to steal, murder and establish power for the sake of power.

That is why, throughout the book, the capitalists and the industrialists had always described their philosophy as one of violence and one that relies on the gun. The very idea of taxation makes no mention of acceptance between two parties. The idea of government laws and regulation that restrict speech, commerce and travel make no mention of an individual's circumstances, their right of appeal or their right of recourse. It simply applies and governs human action.

The ruthless thugs who bring about each new law are shown to possess massive cognitive dissonance. To avoid looking at the reality of each situation. To avoid stating their true goals and true aims. To conceal their motives with empty and vague rhetoric about social justice, improving society, getting rid of vicious competition, about brotherhood and helping each other.

You've got to look at the reality of those ideas, as nice as they sound, and what they involve. If ideas involve guns and coercion (police and prison), they should be thrown aside.