The Canadian Red Ensign

The Canadian Red Ensign

Saturday, May 19, 2012

GTN Tory Classics No. 9: To Admit or Not To Admit: Who is the Hypocrite?

When I began writing political essays to distribute to my friends in the spring of 2009 they were initially quite different from the essays that I would later post after starting Throne, Altar, Liberty. I do not mean different in terms of positions taken and ideas expressed. I mean that they were shorter essays and that they focused upon topics that were in the news at the time. When I started Throne, Altar, Liberty, I decided to write essays that were less a commentary on the news than an exploration and expounding of basic conservative political, philosophical, ethical, and theological concepts. This meant that I would abandon the self-imposed page limit that I had more or less stuck to n my 2009 essays.

I did intend to eventually re-post most of my 2009 essays here but the following essay but I did not think the following essay would be one of them for the simple reason that the subject matter is quite dated. The essay comments on two stories that were in the news in early 2009 – South Africa’s refusal to grant a visa to the Dalai Lama and our own government’s decision to ban British MP George Galloway from the country.

The reason I have decided to repost this essay, commenting on a couple of three-year old news stories, is because the question of who the government lets into the country is back in the news. Of course the issues and individuals are quite different than in 2009. In this essay, I expressed contempt for the decisions made by our own government and that of South Africa to exclude Galloway and the Dalai Lama, but also expressed contempt for the nonsense being spouted by self-righteous pundits around the globe that these decisions were violations of rights. A country has the right to deny entry to people. That does not always mean that it uses that right in a wise manner.

Today, the question of who the government lets in is back in the news in a rather different way. Thomas Mulcair, who has recently taken over leadership of the New Democratic Party, has been quite vocal in his opposition to the government’s decision to allow Conrad Black to return to Canada. Yet the NDP have also loudly insisted that Omar Khadr be allowed to return to Canada. Black and Khadr were both born in Canada. Both were imprisoned by the Americans. Black verbally renounced his citizenship in 2001, when, after he was offered the title of baron by the Queen, the humunculus who was our Prime Minister at the time declared that as a Canadian citizen, Black could not accept the honour. He was charged with “fraud” in the United States because he accepted large payments from Hollinger, at the time the company was falling apart, in return for non-compete agreements with the companies who were buying up Hollinger’s assets, and with “obstruction of justice” because he cleaned out his office after being told by the company to do so. Khadr did not verbally renounce his citizenship. He was captured by the Americans in Afghanistan, where he had taken up arms against the Americans and their allies, including Canada, on behalf of the Taliban and al-Qaeda, was put in Guantanamo Bay and was tried and convicted for war crimes.

How would a normal, sane Canadian, answer the question which of the two should be re-admitted to Canada? He would say that there is simply no contest. Black was born here, raised here, and lived here most of his life. Khadr was born here, but was largely raised in Pakistan. Black verbally renounced his citizenship but Khadr took up arms against our country and its allies in war, in acts which speak much louder than Black’s words. Black’s business ethics may be highly questionable, but even if his actions did cross the line from unethical over to criminal, it was fraud at the worst, which is hardly comparable to Khadr’s violent actions.

Yet the party which is now Her Majesty’s “Loyal” Opposition in Ottawa would appear to be giving the exact opposite of the normal, sane, answer to the question.

Stephen Harper and Jason Kenney have made stupid decisions in the past as to who they should let into the country. It was foolish to ban George Galloway and, more recently, it was foolish to ban Srdja Trifkovic.

Their foolishness, however, pales in comparison to that of the socialist opposition.

To Admit or Not To Admit: Who is the Hypocrite?

By Gerry T. Neal,
March 27, 2009

The Republic of South Africa is in the news again and just like in the good old days it is inflaming world opinion against itself. What is it all about this time? Have the nationalists returned to power? Have they brought back apartheid? Have they thrown Nelson Mandela back in prison? No, no, and no. The source of the outrage this time around, is the decision of the South African government to deny a visa to the Dalai Lama who had been invited to attend a peace conference in Johannesburg.

It is difficult to decide, after reviewing the uproar, who appears the more foolish. Is it the South African government, which recently admitted that its decision was made in an attempt to please the Communist government of China, after initially giving the amusing excuse that they did not want the Dalai Lama to take attention away from the World Cup which is scheduled to take place in South Africa next summer? Or is it the countless self-righteous opinion-makers, in newspapers and on the internet, the world over who are decrying the Republic's decision as a "violation of human rights"?

Lets make the erroneous assumption, for the sake of discussion, that there are such things as "human rights", i.e., rights that belong to every human being by virtue of their humanity, rather than from prescription via membership in a particular society. Whose rights have been violated here? The Dalai Lama's? Does he have an unlimited right to visit South Africa whenever he wishes regardless of whether the South Africans want him there or not? If he has such a right, and that right is a "human right", does that not mean that the same right is also possessed by every other human being on the planet? Would there be such an outcry if Mahmoud Ahmadinejad had been the one denied entrance? How about Osama Bin Laden?

Recently, the Canadian government received a lot of flak over a decision to deny access to British MP George Galloway. Now, I don't like Galloway and his socialist politics very much. Nevertheless, I found the reason for his being denied entrance to be imbecilic. Galloway, had following the latest Israeli-Gaza conflict, raised humanitarian relief for the Palestinians, and delivered this relief in the form of ambulances and medical supplies to Gaza a few weeks ago. A couple of years ago, however, the terrorist organization Hamas was elected to form the government in Gaza. Thus, the Canadian government reasoned, Galloway, in bringing these supplies to Gaza, was providing support for Hamas a terrorist organization, making him a security risk for this country. The idiocy of that conclusion should be obvious to everyone. If we denied visas to everyone who provided financial and humanitarian relief to governments headed by terrorists, we would pretty much have to issue a blanket visa denial to all Western politicians. For that matter, we would have to deny access to quite a few rock stars and Hollywood actors as well. That, I suppose, is the bright side. We have set a precedent for banning Bono and Bob Geldof from Canada.

No, George Galloway is an obnoxious, left-wing nutter, but he is no threat to Canadian security, and we should have admitted him if for no other reason than that that is the proper respect officials of Her Majesty's government in Ottawa ought to show for someone serving their Queen in Her Majesty's Westminster Parliament. However, that decision as to who gets a visa and who doesn’t, lies in the hands of the Canadian government, and it should be made on the basis of what is in Canada’s interests, not on the basis of world opinion.

Likewise, South Africa's decision to grant or deny a visa to the Dalai Lama, is South Africa's decision. If they prefer to kiss the arse of Red China and keep the spiritual leader of Tibetan Buddhism and head of Tibet's government-in-exile out, that is their prerogative, and it is nobody's business but their own. It is certainly not a matter of "human rights".

But, someone might say, human rights enters the question in another way. By siding with the government of China against the Dalai Lama and the Tibetan separatists is the South African government not siding with an oppressor against the oppressed? Yes. And is that not hypocritical in the extreme, on the part of an ANC government, which fought against oppression themselves for so many years?

The outraged commentators who are asking the latter question are ill-informed as to the true nature of the ANC. The African National Congress, was and is, a Communist party. That it would side with Red China against the Tibetan separatists is natural. Prior to its 1994 rise to power, the ANC waged a terrorist war against the government of South Africa for 30 years, with their military wing the Umkhonto we Sizwe (Spear of the Nation). The Mk (as it is usually abbreviated) started out by sabotaging infrastructure and progressed into car bombings and other acts of urban violence. It committed numerous gruesome executions (often of South African blacks that refused to jump on the ANC bandwagon). The commander of the Mk was Nelson Mandela. He was responsible for the early sabotages and for the long term plan that produced the bombings and executions. It was for the sabotages he was responsible for that he was justly arrested, convicted, and imprisoned. He was not a political prisoner like Aleksandr Solzhenitsyn, imprisoned only for his words or beliefs. Just because the World Council of Churches, Joe Clark, and countless Hollywood celebrities and humanitarian organizations claimed he was, does not make it so. Following the ANC's 1994 rise to power, the Republic of South Africa was transformed from a prosperous, self-sufficient nation, into a country that can no longer feed its own people, where violent crime runs rampant in the streets of Johannesburg and Pretoria, and where guerilla armies roam the countryside waging war on Afrikaner farmers, the new government of South Africa being unable or unwilling to stop them.

No, hypocrisy does not lie in one Communist government supporting the oppression of another Communist government. The hypocrisy lies in the self-righteous outrage of liberal commentators who allowed themselves to be blinded to the true nature of the ANC by the fact that it was fighting apartheid. While injustices and repression were undoubtedly committed by the old Nationalist government of South Africa, it was the least oppressive government in Africa at the time, apart from Ian Smith’s government in Rhodesia. Black Africans were fleeing to South Africa from all over the continent. In contrast, for the past 15 years since the ANC took control, Afrikaners have been fleeing South Africa in droves. As Ronald Reagan pointed out to Mikhail Gorbachev over 20 years ago, the oppressive country, is the one people are trying to get out of, not the one people are trying to get into.

The facts about the ANC, both during the apartheid era and today, are there for anyone to look at. Liberals have no excuse for not knowing them. Further, they have no reason to be indignant that a Marxist party whose rise to power they demanded the world force upon South Africa 15 years ago, is acting like the Marxist party it is, today. Particularly when that indignation is expressed only about the relatively minor matter of the refusal of a visa to the Dalai Lama, and not about the way the ANC has withdrawn the protection of the rule of law from citizens of South Africa.

Friday, May 11, 2012

GTN Tory Classics No. 8: First They Came for the White Supremacists...

The essay that follows was originally shared through e-mail and Facebook on May 27, 2009. This should be kept in mind in reading the essay because there are many time references such as “this week” and “last year” which mean “this week” and “last year” as of the day the essay was written.

In 2008 a young couple here in Winnipeg had their children seized by the Child and Family Services after a teacher called CFS to report that the couple’s daughter had come to school with a swastika inked on her arm. The case finally made it to the courts in May of 2009. I wrote this essay the week the case opened. I had been disgusted although not surprised, earlier that week, with the commentary that had appeared about this case in the Winnipeg Free Press. The newspaper’s progressive columnists seemed to have been having a contest to see who could call the loudest for the cruficixion of the couple in question.

Child and Family Services is a government agency that I have long detested. It exists for no purpose other than to undermine parental authority within the family. Yes, I know that on paper their raison d'être is to deal with cases of child abuse. They are notoriously incompetent at handling this task however. There are clear cut cases of child abuse where all sane people would agree the government must step in to protect children from abusive parents – cases of sexual abuse and cases where the parents deliberately injure their children. This sort of thing the police can handle without the help of an agency staffed with arrogant social workers.

CFS, like similar agencies elsewhere, was not created out of a need for a special agency to deal with such cases. It was created because the increasingly totalitarian state wants to control our lives from cradle to grave and to do so it requires control over the raising of children. Thus the creation of agencies like the CFS, which exist to let parents know that it is by permission of the state that they are allowed to raise their children, that the state will be monitoring them, and that they will lose their parental privileges if they step out of line.

In this instance, where the CFS intervened because of a complaint about the family’s political views, it was a clear cut case of political persecution. This is something that we all should have been outraged over. It does not matter that the swastika is the symbol of an ideology, National Socialism, that all sane people consider to be repugnant. All sane people also consider Communism to be repugnant. If, however, a child were to show up in school with a hammer and sickle inked on their skin, does anyone seriously think a teacher would have called the CFS to complain? In the extremely unlikely event that happened, and the even more unlikely event that the CFS, staffed with people who were spoon-fed Marxism in their social “sciences” classes in university, actually took children out of a home because its parents were Communists, how do you think the columnists in papers like the Winnipeg Free Press would respond? Would they demonize the parents in print the way they did with the parents in this case? Of course not. The moment they got wind of such a thing happening they would be screaming “McCarthyism” as loud as they possibly could.

As the case progressed in the courts, further allegations of a different nature were made against the parents. Surely, however, such allegations cannot be considered credible coming from the CFS. It had taken children out of a home because of the political views of the parents and was now trying to cover its tracks.

The title of this essay is, of course, an allusion to Martin Niemöller’s famous poem “First they came…” Niemöller was a Lutheran pastor in Germany who ended up in Dachau in WWII. The poem describes how the Nazis came for the communists, trade unionists, and Jews, and he kept silent being none of those things, and then when they finally came for him there was nobody to speak out for him. The reference to this poem struck me as an appropriate title for two reasons.

First of all, the act of the government taking children from a home because of the political views of the parents is far closer to the evil of the Third Reich than the mere use of the swastika symbol.

Secondly, progressives have devoted much effort over the last several decades to instilling anti-racism in us. This effort has been largely successful and one of the results is that now most of us turn a blind eye to evil when the victim can be shown to be a “racist”. Marxist thugs prevented a controversial speaker from giving a lecture at a university where he was invited to speak to people who wanted to hear him speak by blocking access to the lecture hall, shouting him down and intimidating his would-be audience? Ah, but he is a “scientific racist”, so that means the anti-racist thugs were just expressing their “freedom of speech” rather than denying the lecturer his. The owner of a website is brought before the Canadian Human Rights Tribunal and charged with violating Section 13 of the Canadian Human Rights Act for something that was posted on his website, and he now faces a hefty fine, legal bills, and a gag order? Ah, but it was racist material that posted on his website, so it doesn’t matter. Children are taken away from their parents because of the opinions of their parents? Ah, but their parents hold racist opinions so it doesn’t matter.

So long as we continue to think this way, government agencies and thugs will continue to be able to do whatever they want to people, so long as they label them “racist”.

“But the parents really were racists, in this case,” someone who misses the point completely will object, “they identify themselves as white nationalists and drew a swastika on their daughter’s arm.”

Christopher Lasch, the “social conservative of the Left” who was professor of history at the University of Rochester until his death in 1994, wrote the following about such people:

The problem of racial intolerance is closely linked to fanaticism. Here again there is a good deal of complacency and self-righteousness mixed up in the fear of intolerance. The thinking classes seem to labor under the delusion that they alone have overcome racial prejudice. The rest of the country, in their view, remains incorrigibly racist. Their eagerness to drag every conversation back to race is enough in itself to invite the suspicion that their investment in this issue exceeds anything that is justified by the actual state of race relations. Monomania is not a sign of good judgment. But whether it spring from self-righteousness or panic or a mixture of the two, the assumption that most Americans remain racists at heart cannot stand up to close examination. The improvement of racial attitudes is one of the few positive developments of recent decades. Not that racial conflict has subsided, but it is a serious mistake to interpret every conflict as evidence of the retrograde outlook of ordinary Americans, as a revival of the historical intolerance that has played so large a part in our country’s history. The new racism is reactive rather than residual, let alone resurgent. It is a response, however inappropriate and offensive, to a double standard of racial justice that strikes most Americans as unreasonable and unfair. Since opposition to an “affirmative” double standard is routinely dismissed as racist, one reaction to this insult, from working- and lower-middle-class people harassed by affirmative action and busing and now from college students harassed by attempts to enforce politically correct language and thought, is to accept “racism” as a badge of honor, to flaunt it, with studied provocation, in the face of those who want to make racism and minority rights the only subject of public discussion. (Christopher Lasch, The Revolt of the Elites: And the Betrayal of Democray, New York: W. W. Norton and Company, 1995, pp. 90-91)

Here, in his last work, Prof. Lasch demonstrated far more insight into what makes these people tick than most typical leftists.

Canada and the USA, and virtually every other Western country have, after WWII, introduced:

1) Anti-discrimination laws. These forbid racial discrimination on the part of private businesses and property owners in certain situations. In practice they tend to be only enforced against whites.
2) Affirmative action policies, in which schools and employers discriminate in favour of non-whites against whites. These can either be imposed by the government or actions taken by companies themselves to ward off the threat of lawsuits under anti-discrimination laws.
3) Forced racial integration for lower and lower-middle class whites.
4) Liberal immigration policies that seem to be designed to deliberately alter the racial demographics of the countries that practice them.

These policies were all introduced by progressives. Conservatives should be the effective voice of opposition to these policies and the injustices contained within them. We have failed to be such and as long as we continue to fail those who are not willing to suffer in silence under such injustices will find other, less wholesome, movements and ideologies to speak for them.

First They Came For The White Supremacists…

By Gerry T. Neal
May 27, 2009

The big news this week, is the opening of the child-custody case that started last year here in Winnipeg, when Child and Family Services took a girl and boy into custody after the girl’s teacher reported that she had been sent to school with swastikas and racist words drawn on her skin. Following the seizure a debate arose over whether or not the state has any business taking children out of their homes because they don’t like the views of the parents. Now the legal answer to that question in Canada is going to be settled by the courts. The moral and just answer to the question, however, lies in hands other than those of the Canadian legal system.

That answer is clear, and that answer is a resounding no. When the government says that you cannot think a certain way, that you cannot hold a certain opinion, or that you cannot convey your thoughts and opinions to others, they are engaging in something called thought control. Thought control is the mark, not of a legitimate and just government, but of a totalitarian and tyrannical one. The most oppressive regimes of the 20th Century, the Communist governments of the USSR, Red China, Cuba, North Vietnam, Cambodia, etc. all engaged in thought control.

So, for that matter, did the Third Reich.

Which makes it all the more ironic the government is using people’s fears of Nazism as the basis for their experiments in thought control. What was it about Hitler’s regime that made it so terrible? I always thought that it was the fact that the Third Reich was a tyrannical regime with secret police and a fanatical leader-worship cult that encouraged people to turn in their parents, neighbors, and friends if they were suspected of disloyalty to the state, in which freedom was non-existent and the state was in the hands of a gang of petty thugs who ruled by fear. But apparently I was wrong. Everyone else seems to think it was because Hitler was a racist.

Stalin, who was our ally in WWII, ran the same kind of totalitarian state as Hitler. In fact Stalin’s regime killed more people, operated more prison camps, and ruled more ruthlessly than Hitler’s did. Communism’s total record of bloodshed, human suffering, and oppression makes Hitler’s look pretty small in comparison.

Yet you can be an avowed Marxist and remain respectable in academic circles. You can hang up the flags of murderous Communist regimes, wear T-shirts glorifying Communist mass-murderer “Che” Guevera, and praise Castro and Mao to high heaven, and nobody will say anything about it. Or, if somebody does say something about it they will be drowned out by the cry “MCCARTHYISM!!!”

The name of Senator Joseph McCarthy has become synonymous with “witch-hunting” but McCarthy never attempted to use the power of the state to persecute people merely for holding Communist views. He was dealing with a legitimate security problem – the infiltration of the American federal government by agents loyal to a hostile power. We now know, since the mid 1990’s declassification of the VENONA Project transcripts, that the problem was worse than he thought.

That is a remarkable contrast with the professional anti-racist “watchdog” groups and their liberal allies in the media and the schools. These people want the government to take action against people, not for violence, not for acts that hurt others, but for holding racist views. They want it to be against the law to express certain opinions. They want the courts to hand out harsher sentences for beating people up because of their skin color than for beating them up because they were being lippy and obnoxious. Now, apparently, they want children removed from their homes and put in the custody of the state, because the parents don’t kowtow to what liberals and the government say everybody is supposed to believe about race.

On Monday, as the custody case began before the Manitoba Court of Queens Bench in Winnipeg, social workers from Manitoba Child and Family Services informed the court that the girl had told them that “black people don’t belong” and that “black people should die” and that she gave a graphic description of how to kill a black person with a chain and spiked ball.

That’s pretty nasty stuff. Is this really what the parents in question were teaching their children, however? Or is this a case where the social workers at Child and Family Services, convinced by their ideology that “those evil racist Nazis” talk that way, interviewed the girl in such a way as to get answers that confirmed their own preconceived ideas. The latter is by far the most likely explanation. So likely that I would call it a certainty.

If you find that to be preposterous then you are obviously unfamiliar with the way social workers and government agencies like CFS think and operate. Ignorant, young idealists, enter social sciences programs in universities where their professors stuff their heads with Marxist ideology, and they emerge to take jobs with government bureaucracies convinced of the righteousness of their mandate to invade the private lives of ordinary people and boss them around for their own good. That is how the social worker is made.

The ideology the social worker is taught, identifies certain ideas and attitudes as pathologies that are harmful to society. These are ideas that are transmitted primarily by families, churches, and small communities, and which until very recently were universally regarded as healthy and normal. This reclassification of normal ideas as mental diseases provides a justification for government agencies to interfere in the workings of other societal institutions. It also allows those doing the state’s dirty work intruding on people in their homes, spying on them, and taking their children away, to feel good about themselves, to think they are doing something for the greater good.

In reality they are just obnoxious busybodies on a power trip.

What are these ideas that are being pathologized?

Do you have feelings of patriotic attachment to the ancestral people from whom you are descended and to the land they live in? Once considered one of the highest of virtues by the poets of our language, this attitude is now condemned as “racism”. Do you think that men and women have different natures leading them to behave differently and take different roles in society? If you do, you are now considered a “sexist”. More recently recognition of the obvious fact that the complementary nature of the sexes makes heterosexual coupling the norm, and same-sex attachments the exception, has been pathologized as “heterosexism” or “homophobia”.

These new ways of looking at old ideas began in the 1940’s and 50’s as part of a deliberate program on the part of neo-Marxists, such as those belonging to the Frankfurt School, to delegitimize the culture they believed was standing in the way of the revolution and the utopia they desired.

Obviously, this tactic is working well for the neo-Marxists. It is truly frightening how many young people are buying into their nonsense. Far more frightening than the thought that somewhere out there some family might be teaching its kids to admire Adolf Hitler.

More frightening yet, though, is the future of society if the government is allowed to take children away from their parents because the parents are “racists”. If it is “white supremacists” who have their children taken away today, whose children will be taken away tomorrow?

Tuesday, May 8, 2012

GTN Tory Classics No. 7: Production, Limits, and Private Property

There are nine words in the following essay, the fourth in the seven-part series of economic essays that I wrote in 2009, that I wish I had not included. Those are the words “The latter is not particularly relevant in this context” in reference to Dr. Garrett Hardin’s “Lifeboat Ethics”. What Dr. Hardin had written in “Lifeboat Ethics” is in fact very relevant to the subject matter of this essay.

This essay is both an economic and an ecological essay. It begins with the basic economic argument for growth – that a company by producing larger quantities of its product can sell its product at a lower cost per unit to the consumer and increase the wages of its employees while increasing its profits. It then moves to the ecological question of the sustainability of growth. The kind of economic growth where consumer and producer, employer and employee, all benefit from increased productivity cannot be sustained forever because we live in a finite world with finite resources. In the final part of the essay, I contrast Ronald Wright’s approach to the subject of limited resources with Garrett Hardin’s as expressed in “The Tragedy of the Commons”.

The point I was arguing towards was the goal of the conservation of resources is better served by private rather than collective ownership. Both of the Garrett Hardin essays I mentioned are on the subject of the conservation of resources. “The Tragedy of the Commons” speaks directly to the question of private resources vs. common resources. “Life-boat Ethics” does so in a less direct manner. In the late 1960’s, Kenneth Boulding had written an essay about limited resources and conservation in which he compared people living on this planet to the crew of a spaceship, who must co-operate with each other, and conserve their limited resources, for their voyage to be a success. The “spaceship earth” metaphor caught on and had become popular among ecologists when Hardin’s “Lifeboat Ethics” was published by Psychology Today in 1974. Hardin suggested that a more appropriate metaphor was that of lifeboats, adrift at sea, each with room and resources for a limited number of people. There are people in the sea surrounding the lifeboat, and the compassionate thing to do would seem to be to bring those people onto the lifeboat. If the boat is already at its carrying capacity, however, this will cause the boat to capsize. If that happens, then an act of compassion, intended to take people who are in a place of peril in the sea and put them in a place of safety in the boat, will have the opposite result of putting everyone on the lifeboat into the same perilous situation as those they intended to but failed to rescue.

Hardin applied this metaphor by criticizing liberal immigration and foreign aid policies. While I agree with much of this criticism I did not see it as relevant to the point I was trying to make by referring to Hardin’s other essay. It occurred to me, however, as I re-read my essay in preparation for posting it here, that there is another aspect of Hardin’s lifeboat metaphor which does speak to the matter of the conflict between growth-fuelled prosperity and limited resources. In Boulding’s original “spaceship” metaphor, the entire planet is one spaceship and ecological problems are global problems. In Hardin’s “lifeboat” metaphor there is not one lifeboat but many, every first world country being considered a lifeboat. This suggests that problems which the “Spaceship Earth” metaphor treats as global problems are better thought of as local problems and addressed on a smaller scale.

Economic growth is like biological growth. The division and multiplication of cells is necessary for good health, but only up to a point. When cells multiply past that point they cause harm rather than health. We call this cancer. Likewise, economic growth can be good and necessary or it can be harmful. When economic growth results in lower prices to the consumer, higher wages to the worker, and more profits for the company this is good. At some point, however, growth becomes harmful. Economically, that point is when more of a product is produced than there is demand for. When growth passes this point it ceases to be beneficial to everyone – sales drop off, profits decline, production has to be slowed down or halted and there are massive layoffs. This is also the point where growth necessarily becomes ecologically harmful – to produce more of a product than there is demand for is wasteful, although it is possible for growth to become ecologically harmful at an early point if demand for a product is greater than the available resources.

There is a tendency among ecologists to blame private ownership and freedom for the problems of excessive growth. This is unfortunate because, as Hardin has shown, privately owned resources are better maintained and conserved than publicly owned resources. Or, more accurately, resources are best maintained when the person who profits from their use is also the person who pays the cost for their use. The “tragedy of the commons” occurs because in a commons, people privately profit from their use of commonly owned resources in which the cost of use is divided and spread out. A person or company could try to export the cost of use of his or their privately owned resources, and it is human nature to try and do just this, but it is easier to accomplish this, especially on a large scale, with the collusion of government. Just as a private bank can inflate currency and cause an economic bubble and recession, but a large central bank can do so on a much larger scale, so a company looking to pass its costs off onto other people will find it easier to do so by making use of taxpayer funded public utilities and infrastructure and with the help of the people who make and enforce bylaws. At the heart of most if not all of the economic and ecological problems caused by excessive growth that we experience today you will find a large, heavily centralized, state.

Production, Limits, and Private Property

By Gerry T. Neal
June 21, 2009

Here’s a question: Can a business at the same time a) increase its profits, b) increase its wages/salaries, and c) lower the price of its profits?

The answers that probably spring to mind are either “Yes, if it wants to go broke” or “No, you idiot, where did you learn your math?”. Without information as to how a company would go about doing this these answers are both reasonable. After all, lowering your price lowers your revenue, while increasing wages increases your costs. How can both exist simultaneously with an increase in profit? Something doesn’t add up.

Actually, however, there is a way to do it. Let’s say you have a company that is producing 1000 units of its product an hour and selling them at $5.00 a unit. Your revenue then, after selling an hour’s worth of your product, is $5000. From this you pay the costs of that hour of production (including wages) and after costs what remains of the $5000 is your profit.

Now let’s suppose you take that profit and re-invest it in a capital-improvement project that increases your company’s productivity so that with the same labor force you can now produce 5000 units per hour. Since you are now producing more you decide to lower the price of your product by half to $2.50 a unit. At this lower price, the revenue from selling an hour’s worth of your product is now $12,500. That is 2 ½ times more than you made previously. From that you can increase the wages of your employees, which you should be doing as their productivity has gone up making their labor more valuable to you. You will still be able to make a greater profit than you did before.

When a company improves production, then, it benefits everybody – the owner/shareholders, the employees and customers of the company. They are all better off than before.

What works for a company can also work for a country. If a country’s leaders wish to improve the standard of living of their people what is the best way to do it? Pass minimum wage laws? Set price controls? Create safety nets of social benefits to create a “floor” beneath which your citizens theoretically cannot drop? No. Each of these methods is known to backfire making things worse than they were before.

A government that wishes to increase its people’s standard of living should encourage the improvement of production so that there is more material wealth being generated. Recognizing this fact, governments have attempted to do just that in one of two ways.

Lenin and Stalin in the Soviet Union attempted to increase industrial production with their New Economic Policy and Five Year Plans. Mao in Red China attempted to increase agricultural and industrial production in his “Great Leap Forward”. Both of these experiments in central, state-planned economic development, proved to be catastrophic failures. So has every other attempt to do it this way.

In contrast, in Western countries like the United Kingdom, Canada and the United States, production was left in the hands of privately owned companies that were allowed and encouraged to compete with one another in a free market. This is the method that has always worked. Improved production generated higher profits and wages and lower costs for the consumer increasing the standard of living in general.

Of course a large part of the benefit of improved production has been eaten up by our governments. They have raised taxes to an obscene level and generated inflation by printing more money to support their projects, most of which are wasteful and useless. Raising taxes takes money out of production in the private sector where it can be more useful. Inflation decreases the value of money which in term decreases the benefits to the consumer of lower costs in the marketplace brought about by improved production.

Now we come to another question. That question is this: Can the improvement of production go on forever?

A lot of people seem to think the answer to this is yes. These people believe that history is marching ever upwards and that human ingenuity will always find newer, better, more efficient ways of making newer and better products, causing today’s luxuries to become tomorrow’s necessities, as the standard of living keeps rising higher and higher. The name for this belief is “progress”. It is what progressives, aka liberals, used to believe before they switched over to believing in the infinite capacity of the state to bring out the natural goodness in people and morally improve society through social programs.

The answer, however, is no. While production can be improved, generating high profits, high wages, low costs and a general improved standard of living, this can only be done within certain limits. For we humans are finite, limited creatures, living in a finite, limited world. We forget this to our own peril.

What are the limits in question? Well, if we wish to have our three-fold benefit of improved production, the obvious first limit to come to mind is that of demand. Demand refers to how much of your product people are willing to buy. It is the other criteria determining market price. Remember that you and your employees only benefit as producers from improved production if you are able to sell enough of your product at the reduced price to generate more in revenue that you did prior to the improvement. Whether you are able to do this or not depends entirely on how much demand there is for your product.

A company that ignores that limit will generally harm only itself. The same cannot be said for the next limit. That limit is the availability and cost of raw materials and energy. These are limited resources. Some raw materials are renewable resources, like wood for lumber and paper companies, but being renewable does not mean being infinite. Trees take a long time to grow after all. Other raw materials, such as metals and useful stone like granite and marble, exist only in set quantities. These may be recyclable or reusable but they are not renewable. Yet other raw materials exist only in set quantities, are not recyclable or reusable, and can be used up. The obvious examples of these are petroleum and coal, which are used both as raw materials and as sources of energy.

Ecologists remind us of these limits, even if economists are often prone to forget them. Unfortunately, their recommendations for conserving resources are generally less than helpful. Ronald Wright, for example, in his 2004 Massey Lectures published as A Short History of Progress, tells of how human societies in the past have got carried away with production and ignored the limits of their resources, falling into “progress traps” that led to tremendous human suffering when the resources were depleted. He warns, in the alarmist fashion of the typical environmentalist, that we are doing the same thing today on a larger, global scale, that we are almost at the point of no return, and that this is our last chance. He is very vague in his recommendations as to how to go about fixing things, however, although one quickly picks up on the fact that he is sympathetic to socialism over the free market.

An ecologist who was helpful, on this subject, was the late Dr. Garrett J. Hardin. Apart from Hardin’s Law – “you cannot do only one thing” - his most famous contributions to ecological thought were the concepts of “The Tragedy of the Commons” and “Lifeboat Ethics”. The latter is not particularly relevant in this context but “The Tragedy of the Commons” deals with the heart of the matter.

“The Tragedy of the Commons” is a story of a medieval commons – a pasture owned collectively by a community in which each member of the community was allowed to keep his sheep. Since the cost of maintaining the commons was shared but the profit from raising the sheep was private, everyone who kept their sheep there had a stronger motive to increasing their own number of sheep at the public expense than to try and conserve the resource. As a result the pasture became overgrazed.

The point of all this, Hardin argued, was that a system where costs were shared, but profits were private, was the worst possible system for preserving limited resources. The other options are to make the profits collective (socialism) or to privatize the costs by privatizing the resources.

The privatization of resources, Hardin argued, was the best way of conserving them. Observation easily bears Hardin out on this. Domesticated animals are never on the endangered species list. Paper and lumber companies make sure that plenty of trees are replanted. If you want to see well kept houses, green lawns, and beautiful gardens, you go to neighborhoods where people own their own homes, not to rental districts.

Conversely, if you want to find litter the best place to look is in ditches and public parks. Pollution is a problem primarily in rivers, lakes, seas, and the air, all of which are resources which are held in common.

To put it simply, people take care of their own property, and are much more likely to take a long-term view of resources which are their own, than resources that are held in common with others.

Private property, then, is the foundation of both true ecology and sound economics. Private property owners competing in a free market are the best producers. They are also the best conservers of resources. The companies that are most likely to deplete resources rather than conserve them are the companies that try keep their profits private while throwing their costs onto the public. That is accomplished through collusion with government.

Saturday, May 5, 2012

GTN Tory Classics No. 6: Boom and Bust

The following essay, “Boom and Bust”, was the second in the seven-part series on economics I wrote in 2009. The year previously the American subprime mortgage crisis which had been brought on by the bursting of the real estate bubble had escalated into a much larger financial collapse. The American economy had begun to tank and it was dragging the global economy down with it. What caused this? Has it happened before? Is there a way out of this crisis? Can this sort of thing be prevented in the future?

These were the questions that were foremost in people’s minds at the time. In February of 2009, Regnery Publishing released a book by Dr. Thomas E. Woods Jr., a paleolibertarian (1) historian on the faculty of the Ludwig von Mises Institute, entitled Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. I had read this book about a month and a half before writing this essay. I thought – and still think – it was the most sensible thing I had read on the subject. I lent my copy out a number of times and bought another copy as a Christmas gift for a relative later that year.

This essay was written not as a review but as a recommendation of Woods book and of the Austrian School’s explanation of the business cycle. I do not agree with the Austrian School about everything, not being a philosophical liberal (2), but of all the free-market economic schools I find myself agreeing the Austrians most often.

(1) A paleolibertarian is someone who is culturally conservative and politically/economically a classical liberal or anarcho-capitalist.

(2) A philosophical liberal believes that human beings are first and fundamentally individuals and that all social institutions and groups are created by individuals for individuals and should operate on a voluntarily contractual basis. A philosophical conservative believes that society is organic, that the family comes before the individual, that the most important social relationships are permanent rather than voluntary and contractual, and that many if not most social institutions should be modeled after the family rather than the business deal.

Boom and Bust

By Gerry T. Neal
June 2, 2009

Once upon a time, in a land far away, some people discovered the secret to getting rich fast. Their houses, they discovered, had gone up in value since the day they bought them, so they sold them off at a profit, bought a new house, and started the process over again. The idea caught on and pretty soon people had forgotten that the purpose of houses was not to generate money but to provide homes for them and their families.

Not everyone was happy in this land, however. Some people were shut out of the action because they could not afford to buy a house. Furthermore they were not good candidates for bank loans – they had no collateral, worked low-paying jobs at best, and did not have enough for a down payment even if they were granted a mortgage. With the prices of real estate going up, their situation appeared hopeless.

But then someone got the idea that the ruler of their country ought to do something about this. Appointing himself the representative of the poor people he went to the ruler and complained. “Its not fair!” he said. “These people are being discriminated against because they are poor and because of the color of their skin. Everybody has the right to own their own house. You need to make sure these people get their houses – if you don’t I’ll throw a big stink and call you racist. Now what are you going to do about it?”

This threat terrified the ruler who promised to do something about it immediately. So he sat down and thought about what he could do. Then he called a press conference and announced that he was starting a program which would enable the poor to own their own homes. He ordered the banks to give mortgages to poor people from “disadvantaged minority groups” without demanding a down payment. To ensure the banks cooperation he asked his friends Fanny and Freddie to help him out.

Fanny and Freddie had an interesting business. They went to the banks and bought out their mortgages, i.e., they paid the banks the equivalent of the money they had loaned out in mortgages so that the mortgage payments would come to them instead of the banks. They then put all these mortgages together into large funds and sold off shares in these funds on the securities market.

Everybody lived happily ever after, right?

Well, not exactly. One day the prices of houses stopped going up. This not only threw a monkey wrench into people’s get rich schemes, it left many of them with mortgages that were worth more than their house. And so the defaults began. It got so bad that Fanny and Freddie went broke and asked their friend the ruler to help them out. The ruler decided that the best way to help them out was to buy their business from them and cover their losses with tax money.

Then several of Fanny and Freddie’s friends in the financial industry asked for the same consideration.

And after the ruler had bailed them out, everyone else came asking for a handout too.

At this point, the people were so fed up with way the ruler was mishandling things they got rid of him and chose a new leader. They chose a young, charismatic, new leader, who promised that he would give them “change”. And when that young man was secure in office he did exactly the same thing as the old ruler.

So what can we learn from this story?

It was the involvement of government that turned this situation into a major fiasco. It would seem then the obvious lesson to take from this is that government “solutions” to economic problems only make the situation worse.

This is exactly what economists of the Austrian School have been telling us for over a century now. These economists saw the not-so-fictional crisis described above coming in advance. They also saw the Great Depression coming. Perhaps its time we paid more attention to what they are saying.

The Austrian School of Economics began at the University of Vienna in the late 19th Century with economics professor Carl Menger. Its most famous representatives, however, would be 20th Century economists Ludwig von Mises and Friedrick August von Hayek. Mises is the author of, among other books, Human Action the most exhaustive treatise on Austrian economic theory available. Hayek is the Nobel Prize winning author of the best selling and much more readable The Road to Serfdom. In North America their theories have been promoted primarily by libertarians like the late Murray N. Rothbard and Lew Rockwell.

Austrian economists consider themselves to be liberals in the classical (19th Century) sense of the term. Their thinking displays both the strengths and the weaknesses of classical liberal thought. Foremost among those weaknesses is their tendency towards the belief that people matter only as individuals, that the interests of families, communities, and any other “groups” should be subservient to the interests of individuals. Foremost among their strengths is their belief in small, limited, government and maximum personal freedom.

The Austrians developed the best theoretical defense of the free market against state economic planning in all of its various forms that we have. This defense is based on the subjective theory of value, the idea that in a market situation the value of a good or service to both seller and buyer, is not something that can be objectively determined based on the intrinsic quality of the good or service but is based entirely on how much the seller and buyer value the good or service in relation to what they are willing to accept/give up in exchange for it.

But the Austrians’ uncanny ability to predict economic crises like the Great Depression and the current situation is due to their theory of the business cycle.

The conventional explanation of the business cycle, in which a boom period of economic expansion is followed by a bust period of economic contraction, is that it is an inevitable product of the free market.

The Austrians say otherwise. The business cycle, they say, is caused by banks, especially government chartered central banks. Banks lend money to investors and entrepreneurs out of the money people place in savings accounts. The interest rate on these loans is supposed to be an indication of how much people are saving as opposed to spending at a given time, giving investors/entrepreneurs an indication of what kind of ventures are likely to succeed. But when a bank starts lending out of its pay-on-demand reserves, what is known as fractional reserve banking takes place. This artificially lowers the interest rate giving the impression that people are saving more than they are, tricking investors into putting their money into projects appropriate for a period of savings. This leads to economic booms in the areas this money is being invested in – booms that must inevitably give way to busts.

Non-Austrian economists, especially Keynesians, scoff at this theory.

But none of them ever saw an economic disaster coming in advance.

For more on this subject I recommend Dr. Thomas E. Woods Jr.’s excellent book Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (Regnery Publishing: Washington D.C., 2009). It is a small book, brief and written for the economic layman. It is must reading for anyone wishing to understand what is going on in the current economic crisis.

Tuesday, May 1, 2012

GTN Tory Classics No. 5: Basic Economics

The essay that follows was originally the third in a seven part series beginning with “The Economic Age” and ending with “The Free Trade Cult”. The introductory essay to that series was the last essay I re-posted here in my “Tory Classics” series. I wrote that essay as an introduction to the economics series because I wanted to start by placing economics in perspective by arguing that economics is not the most important thing in the world. The following essay is a more typical introduction to the topic of economics and deals with such basics as production, distribution, and consumption.

Towards the end of this essay I argue that production is more important than distribution or consumption because without production there would be nothing to distribute or consume. This is the most important point in the essay. Many are the free market economists who seem to understand everything else about economics except this point.

Basic Economics

By Gerry T. Neal
June 4, 2009

Every country’s economy has three basic parts: production, distribution, and consumption. Production refers to the creation of material wealth and consists of agriculture and manufacturing. Consumption is the use of the material wealth created in production. Distribution is how material wealth gets from the producer to the consumer.

Material wealth is not the same thing as money. Material wealth includes land and buildings, food and clothing, and other goods that people need or want. Money is just one good out of many and its primary function is to simplify the exchange of other kinds of goods.

Goods which are used to produce other goods are called “capital goods” or just “capital”.

Some people believe that the best and fairest economy is one in which capital goods are owned collectively by the public with distribution being in the hands of the state. These people are called socialists. Others believe that capital goods do not have to be publicly owned but that the system – production, distribution, and consumption – entirely or in part, should be under strict government regulation.

These people have been proven wrong time and again. So much so that they should be embarrassed to express their views in public.

What happens when production is controlled by the state? We need look no further than the late USSR and Red China during the days of Mao to find our answer to that. The state proved incompetent in the production of even the simplest of goods and massive poverty, starvation, and misery was the result.

Without state control of production, there can only ever be partial state control of distribution and consumption. This control takes the form of the state confiscating wealth from the private sector through taxation and handing it over to other people.

Some people believe this is the compassionate thing to do. They are mistaken. Only people can be compassionate, not governments. If you are genuinely compassionate you will express that by helping the poor out of your own wealth. To support with your words and votes, a policy in which the state helps the poor from money it takes from people other than yourself, is not a genuine form of compassion. It is, in fact, a way of avoiding being compassionate, by placing the responsibility for helping the poor onto the shoulders of the state and the taxpaying public instead of bearing it yourself.

The government social programs that make up what is called “the welfare state” were sold to voters as initiatives that would eliminate poverty and bring about a general prosperity. Have they done so? Far from it. Instead they created a permanent and growing, privileged, underclass. They created tensions that threaten to rip the social fabric into pieces by fostering a sense of frustrated entitlement in the poor and a sense of resentment in the middle class which is forced to bear most of the tax burden for the upkeep of the poor.

The idea that the production, distribution, and consumption of material wealth should be planned and controlled by the state is simply wrong. It has never worked in the past, it is not working in the present, why would we be so foolish as to think maybe it will work in the future.

No, the production, distribution, and consumption of material wealth are best left in the hands of private property owners, who buy and sell the goods they produce and the services they offer, in a free market.

A market is a situation (not necessarily a place) in which someone trades something they own for something someone else owns. A “free” market is a market where buyer and seller are allowed to come to their own terms as to the exchange. Let us say a dairy farmer goes to the market to sell his milk and his neighbor who keeps chickens goes to the market to sell his eggs. The dairy farmer needs eggs and the chicken keeper needs milk. The dairy farmer is willing to trade a liter of milk for a dozen eggs and the chicken keeper is willing to make this exchange and so they do so. The price they have decided upon is fair and just. What the dairy farmer is willing to accept in exchange for his milk is based on his own calculations of his own needs, and what the chicken keeper is willing to accept in exchange for his eggs is based on his own calculations of his own needs. No set of government experts anywhere would be better qualified to judge these matters than the farmers involved.

If government experts are not competent to come up with a better price for a single exchange than the participants, they are much less competent to set prices for everybody in the country. Their attempts to do so only cause harm.

When the government says “You cannot buy labour for less than so-many dollars an hour” this is not benefiting workers. No one’s work becomes more valuable because the minimum wage rises. All this does is eliminate jobs that are not worth paying someone minimum wage for. The jobs thus eliminated, are generally the jobs that would otherwise be taken by people entering the workforce, trying to get the experience that better paying jobs require. Everyone who ever got frustrated because all available jobs required experience which could not be obtained without getting a job can thank the government – and the bleeding hearts and the unions which demanded minimum wage laws from the government – for it.

Most market transactions do not consist of the direct barter of goods like eggs and milk. The eggs and milk are both sold for money instead. Money is the medium of exchange in an economy and as such it is the single most valuable commodity. Historically, precious metals like gold and silver have made the best moneys. We no longer use them for money today because governments prefer a paper (or electronic) currency that they can control. By controlling the money supply, they are able to devalue it through inflation (increasing the money supply). This allows the government to confiscate the country’s wealth without raising taxes because they get to spend the new money at the old value of money, before the increase in the money supply causes money’s value to drop relative to other goods in the market.

This discourages saving because if your money is going to be worth less in the future than it is today it makes more sense to spend it now than to save it. Saving is important, however, if a person or a country wishes to become wealthy – or even financially independent. Inflation is the path to national poverty.

We don’t notice inflation as much if consumer prices are not rising. If the production of consumer goods has increased the inflation will keep the prices of those goods from dropping rather than causing it to rise. Thus governments have encouraged manufacturing companies to step up production by outsourcing to countries where it can be done cheaper, causing consumer prices to remain relatively stable while they drain the country’s wealth through inflation.

But what happens when a country increases consumption and allows others to do its production?

Production is more important than distribution and consumption (and agricultural production, which produces necessities is more important than manufacturing which produces luxury items). Production creates wealth which is distributed through the market. Without production there would be nothing to distribute. Consumption uses wealth up. Consumption without production leads to poverty.

Those who think that outsourcing their country’s productive capacity will lead to prosperity because it brings consumer prices down would do well to consider that.

A sound national economy requires production on the part of private property owners, who sell their goods in a free market, and a stable money supply that keeps its value thus encouraging people to save.