Teaching is not a crime

Because people who don’t have thousands of dollars and dozens of hours to waste should go to jail for being teachers. I think this is a great example of legislation that entrenches existing medium to large businesses, at the expense of smaller business. And then the government has the nerve to go about with bullshit like anti-trust laws, pretending like they care about competition existing in the market, when clearly they don’t, because they’re being inconsistent. If they really cared about promoting competition, they wouldn’t have all these laws that make it harder for small business to survive vs the existing players in the market.

Mandated Health Insurance

The Goal is Freedom: The Mandated Health Insurance Outrage by Sheldon Richman

It’s a great read, here is some stuff I want to highlight:

• Ostensibly the bill exists because of “shared responsibility” to have insurance. This is just a nice way of saying you’re being made to do it by force.
• The ‘authority’ being used for this bill is the US Consitution’s Commerce Clause – which is typically used against barriers to free flow of trade amongst states. But in this case, that doesn’t apply because you actually aren’t allowed to shop interstate for insurance policies in the US! So supposedly, forcing everyone to buy insurance qualifies as regulating interstate commerce. Go figure.
• This policy cannot correctly be called insurance. Insurance involves concepts like risk and uncertainty. But in a world where insurance companies are not allowed to discriminate against people with pre-existing conditions, they are effectively subsidising health care for some at the expense of others. It is akin to waiting until your house gets burnt down and then going and getting home and contents insurance, and still expecting to get an insurance payout for it. Now sure, it’s true that bad things can happen to people through no fault of their own, but the point here is, it would be entirely dishonest and downright deceptive to call such a policy “insurance”. After the event has occurred, there is no longer any uncertainty.
• The system before this was nothing like an actual free market in health care. It was highly regulated and made people have strange incentives. One example of this is the way that consumers who got health care insurance didn’t really have to think about how much it costs to do certain things like visit the doctor. This in turn meant that they would use it more often rather than economising and only getting the things that they really needed. Also, the US government regulations would prohibit shopping interstate for insurance policies, which also hindered the ability of consumers to economise on their insurance and only insure the things they need. This pushed up the costs because consumers were forced to insure themselves for very obscure things that they would have chosen not to insure.

This current policy will lead to more and more government control over the system. They create the problem, and then pretend to solve it for you – while actually creating more problems in the process. Rinse and repeat. Don’t believe me? Wait and see.

Is Limited Government an Oxymoron?

Insider Trading should be legal

“But if insider trading is legal, then that would be unfair to all the regular people in the market who don’t have the same access to information that insiders do.”

This is a commonly held view, but it ignores the way the economy works. Some people have specialised knowledge in certain industries and they use this to be able to produce goods more efficiently than others. Would you say that this is unfair? Does it really make sense to say that someone who’s been in the mining industry for 10 years shouldn’t use their increased knowledge so that a mining newcomer may ‘fairly’ compete with them? If anything, people with increased knowledge or information should be encouraged to use that information, and I’ll elaborate on this.

Here are some (brief) arguments for Insider Trading being legal:

1. Equity prices would disclose relevant information more accurately/quickly

What does this mean? It means the share price for a stock should reflect the sum of information relating to that stock’s value. If there is good news for the company, we should expect the price of the stock to rise as people buy it.  If there’s bad news coming up, then we should expect the stock price to fall as people sell.

Why is this important? Equity prices function as a price signal to groups such as investors and shareholders. Investment decisions turn on these things, and it makes the difference whether or not somebody wants to go for a takeover or decide to undertake new investment etc. Insider trading prohibitions slow the flow of trading and information, which means that the equity price is not as accurate as it could be.

2. It reduces the need for corporate whistle blowers

It’s not easy to be a corporate whistle blower when a firm is committing accounting fraud, but it is easier to effectively achieve a similar result by selling/shortselling stocks based on this inside information – because if you know that something’s not right, then you’ll make money by doing this. As a person with knowledge of company fraud, your profit incentive to sell or short sell stocks helps everybody else because it functions to tip off the rest of the market to the problem. So this is why we actually want people to act on the improved information/knowledge that they have, rather than trying to live under this facade that nobody ever trades on information that is not publicly available.

3. Insider Trading prohibitions never catch people who refrain from taking an action because of inside information

Insider Trading laws are unbalanced in a sense. If you have access to inside information and trade based on this information, then you are in trouble with the law. But, if you have access to inside information and this information encourages you not to take any action (where you would have otherwise taken action), you are not in trouble with the law. To give you an example of this, let’s say you hold stocks in company Z, and you were going to sell them – until you learn (before everybody else does) that company Z has just invented a revolutionary new technology that would vastly increase its market value. Given this information, of course you would choose to not to sell the stocks in company Z and gain from the upcoming price rise. So this is the disparity between action and non-action with Insider Trading prohibition and it demonstrates an inconsistency with the Insider Trading prohibitions.

“What if you’re wrong about all this and Insider Trading is detrimental?”

At the end of the day, even if Insider Trading turns out to be detrimental, it wouldn’t be very costly – all that is required is for companies to put the restriction against insider trading in their employment contracts.  If this is truly what shareholders want, then corporations would do this. However, it’s more likely that things would function better with Insider Trading permitted because fundamentally as a shareholder you don’t want to lose your investment. So therefore you should favour measures that keep firms honest.

Defending the Undefendable by Walter Block

Defending the Undefendable by Walter Block (PDF)

Defending the Undefendable by Walter Block is an interesting book because it looks at professions that are typically reviled or scorned – and tries to show that they actually do have economic merit. By going to the extremes, it allows Block to demonstrate that the ideas behind libertarianism are able to be consistently applied – and don’t just apply to “respectable” industries. I’m not saying I agree with everything he says, but it is at least thought provoking.

Government failure: bureaucracy consumes money

Public Servants threaten recovery in The Australian

The total number of workers employed by the six states jumped by 28 per cent between 2000 and 2008.

Victoria led the way with a 37 per cent increase in the total number of public servants. NSW, South Australia and Tasmania each recorded growth of about 25 per cent or more.

But frontline services such as health, education and policing have not benefited from the boost in numbers.

Instead, the greatest growth in state public service staffing has been in administration.

The paper finds no clear evidence that the bigger bureaucracies have led to better service delivery.

And public service earnings have grown strongly, with average pay increases outstripping those of private sector workers.

The research warns of an “unsustainable trend” that has seen state general government sector employee expenses rise from $43.3 billion in 2000-01 to $77.1bn in 2007-08, an increase of almost 9 per cent a year in the period.

Surprise surprise!

Banks can read your bills under proposed changes to Privacy Act

According to this article in Herald Sun, there are proposed changes coming that will allow banks to view all your financial affairs going back 2 years, based on missing just one repayment. I’m annoyed because this is a huge impingement on our privacy rights.

Supposedly the government is doing this so that banks can be more “responsible lenders” and adhere to the new lending requirements also being introduced by Financial Services and Superannuation Minister Chris Bowen.

“The proposals would allow somebody who has been through a difficult financial period to demonstrate that they have recovered by meeting all of their repayments in a timely fashion,” Mr Russell Evans of Veda Advantage, the credit information agency.

Huh? If a person wants to demonstrate that they have recovered, why wouldn’t they just voluntarily show that they have met all their repayments by showing the prospective lender all their paid bills? Why does it have to be mandated? Russell Evans decision to use the words ‘would allow’,  is very deceptive. If the individual wants to show their statements, let them do that. Why give the banks power to look without permission?

Besides, if the government really wanted to ensure that financial institutions were being responsible about how they lend funds, there’s a much easier way to do that: Stop artificially dropping interest rates below what they would otherwise be – ie. stop the practice of fiat currency and fractional reserve banking. But they’d never do this because then the state would no longer be able to steal your value/money via inflation (printing money), and that’s no good to them.

Government failure – street beggars face $6500 fine

Street beggars face $6500 fines

The government is retarded on so many levels. Ok, so people who are begging for spare change in the Northern Territory can face a fine of up to $6500. But don’t think people who have houses are getting away with it, they face fines of up to $2600 for not keeping their own yards tidy. Yeah, why not? It’s not like you own your own yard anyway, the government owns everything, including you. Never mind about property rights or freedoms, these are but minuscule obstacles for the all-mighty and all-knowing government, with such farsighted and impartial rulers as these.

NT Attorney-General Delia Lawrie said the penalties were being increased to meet inflation, with the maximum penalties only a guide for the courts.

But don’t worry guys, they’re only only raising the penalties in line with inflation. Too bad it is entirely irrelevant when you consider the simple fact that homeless people have no way of paying this fine.

I’m so tired of people turning a blind eye to all the government failure, and only seeing opportunities for the government to “need” to step in. Clearly governments are not fit to rule over us. There’s an elephant in this room.

Middle-of-the-Road Policy

Ok so you have probably heard of people who claim that they want to find the middle ground between capitalism and socialism. The idea is to ‘restrain the unbridled excesses of the market’ by regulating it and ensuring that some of the profits go to the working class as a half way between solution. This is referred to as Middle-of-the-Road Policy and it is also known as ‘the Third way’. There are many prominent politicians who broadly fit into this category, such as Kevin Rudd, Bill Clinton, Tony Blair and Gordon Brown. I can understand why this would appeal to people because they tend to think things like:

• “It’s not as ‘extreme’ as being entirely in support of either capitalism or socialism.”
• “It’s like a compromise between the two so it’s something that people will find it easier to agree with”
• “It takes the best of both worlds”

I think these ways of thinking are misguided. In Middle-of-the-Road Policy Leads to Socialism, Mises explains the problems with the Middle-of-the-Road approach:

The control is indivisible

The debate between capitalism and socialism is not about how to distribute the booty and to use the Middle-of-the-Road approach is to miss the point. The tension between these two is about which is better for society’s economic organisation or achieving economic ends, such as “the best possible supply of useful commodities and services”. Put simply, it’s not about distributing a fixed amount of goods, it is about the mode of production of goods/services.

As schemes for achieving economic ends, socialism and capitalism are irreconcilable. Either the market (via consumer preferences) determines how much of what is produced and how, and for what purpose, or the government does. To ‘intervene’ in this sense is to take control, and even though a business or asset may be privately owned, government regulation effectively means it is not a privately owned and operated business or asset. So it’s quite clear that it is one or the other, and no in between is possible.

It eventually leads to full blown socialism

Mises takes the example of price controls, demonstrating why they lead to more and more government interference. Say the government wants to fix the price of milk below the market rate, for the purpose of making milk more affordable and available to everybody.

The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market.

So rather than making milk more available, milk is now less available to everybody. So to try and fix this problem, the government would then have to try and fix the price of something that is used to produce milk. It has to fix the price of other factors of production, such as labour or materials. So the exercise gets repeated over and over, and the consumers have less and less say in what gets produced because the government is now making all the decisions.

At the end of the day, it’s really about deciding which system you prefer and being consistent with it all the way through. There is no third solution.

School Sucks podcast

This podcast is interesting and deserves your interest.

School Sucks podcast: The END of Public Education

“How are many things that are good for you, that you will benefit from, need to be imposed on you with force?”