Changes in the Relative GDPs of the G20 Nations over the Last 25 Years

The American Enterprise Institute has an interesting graphic on the relative GDPs of the G20 nations over the last 25 years.  Who's GDPs increased as a relative percentage of the total GDPs of the G20 nations and who's fell over that time?

Note that the European Union as a whole has a membership in G20, but not being a nation is excluded from the chart above.

What I am interested in is the change in the relative percentage of the GDP of the G20 nations over the past 25 years.  Let us look at the fraction of the 2018 percentage divided by the 1992 percentage beginning with the nations that had the highest percentages 25 years ago:

USA, 30.90/31.96 = 0.9668
Japan, 7.77/19.11 =  0.4066
Germany, 5.86/10.38 = 0.5645
France, 4.12/6.85 = 0.6015
Italy, 3.08/6.43 = 0.4790
United Kingdom, 4.18/5.77 = 0.7244
Canada, 2.63/2.90 = 0.9069
Russia, 2.51/2.25 = 1.1156
China, 19.50/2.09 = 9.3301
Brazil, 3.28/1.96 = 1.6735
Mexico, 1.83/1.78 = 1.0281
South Korea, 2.44/1.71 = 1.4269
Australia, 2.11/1.59 = 1.3270
India, 4.14/1.39 = 2.9784
Argentina, 1.02/1.12 = 0.9107
Turkey, 1.36/0.77 = 1.7662
Saudi Arabia, 1.09/0.67 = 1.6269
South Africa, 0.56/0.66 = 0.8485
Indonesia, 1.62/0.63 = 2.5714

If an underdeveloped nation is not determined to shoot itself in the foot, it can commonly make easy gains on its share of the world's GDP over time.  Similarly, the lesser developed nations of the G20 could easily have done so over the last 25 years.  Some of them have, the most remarkable one being China.  India has had the second greatest GDP surge among the G20 nations.  Third place belongs to Indonesia.  Turkey, Brazil, Saudi Arabia, South Korea, Australia, Russia, and Mexico have improved their relative positions in that order from more to less.  The gains of Russia and Mexico are actually very unimpressive.  The losers among the smaller economies of the G20 nations from biggest loser to smaller loser are South Africa and Argentina, though both were at one time relatively leading economies in the world.

Japan and the major nations of the European Union have suffered huge reductions in their significance, while the USA and Canada have seen relatively minor reductions in their relative economic significance.  The least bad performer of the major European Union nations has been the United Kingdom.  France has been the distant second least bad.  The former Axis nations of WWII have done relatively poorly with Germany being only 0.5645 as significant and Italy becoming only 0.4790 as significant.  Japan has many anti-competitive restrictions in its home economy and has a rapidly aging and shrinking population among its problems.

Both Canada and Australia have done far better than the United Kingdom, which I believe has been held back by its membership in the European Union.  If the United Kingdom simply makes a break from all of the European Union's collectivist requirements and bureaucracy, while it will likely do worse for a while as it adjusts to the new reality, it will do much better in the long run.  The United Kingdom should aim to be more like the USA as a dynamic economic power in the world and increase its trade with the USA, Canada, Australia, and India especially.  These are all nations doing comparative well, while France, Germany, and Italy are sinking rapidly.

The EU has smothered itself with many largely irrational safety and quality control policies, which I can see as such from the standpoint of being active in materials analysis and testing.  They are using these policies to suppress goods and services from outside the EU, but the effect is to increase costs and to make local companies lazy and unresponsive in an anti-competitive environment.  In addition, the EU has been following very foolish energy policies and has swallowed the catastrophic man-made global warming fraud hook, line, and sinker, with disastrous economic results.  The inability of the bigger economies of the EU to keep up in economic growth is the result.  The USA, for all of its increased regulations and the many anti-business policies of the Obama regime, has performed much better in comparison.  With Trump decreasing the burden of unreasonable regulations and following rational energy policies, the USA is improving its relative position in the world economy.  We can do even better to the extent that we can arrange truly free trade agreements with nations around the world.

US Postal Service Subsidizes Chinese Package Delivery

Edward Hudgins, Ph.D., Research Director of the Heartland Institute, has written a very interesting article on how the Universal Postal Union (UPU) agreement forces the US Postal Service to subsidize the delivery of small packages sent from China to American addresses.  The USPS lost about $75 million in 2014 due to it having to deliver small packages from China.  It costs less for a Chinese business to send a package thousands of miles across the Pacific Ocean to most American addresses than it costs an American business to send a similar package 600 miles to an American address.  This is an unfair trade practice.  The Trump administration tried to get the UPU to change its archaic rules, but the US gets only one vote among 192 nations in the UPU.  The UPU basically shrugged the US off.  The Trump administration has responded with a termination of our membership in one year if the problem is not corrected.

Cummins on Ayn Rand's View of Human Nature

Dr. Denise Cummins wrote an article entitled This is what happens when you take Ayn Rand seriously, on which I commented extensively.  She has followed that article up with another in which she takes exception to one of my comments and generally finds fault with Ayn Rand for not embracing altruism.  Her second article is entitled What Ayn Rand got wrong about human nature.  She starts her article by saying that the complaints of Rand's followers "primarily objected to my assertion that Rand celebrated unbridled self-interest."

Her first quote and the only quote of such a "follower" was taken from one of my comments.  This is that quote:

Rand’s good people do care about others. They do not care to be forced to give away the fruits of their invested time to others, but they are delighted to trade what they produce to others and delighted to see those trades improve the lives of others.

To which her only direct comment is "Such objections are without merit." Oddly enough, she then quoted Ayn Rand

Man gains enormous values from dealing with other men; living in a human society is his proper way of life — but only on certain conditions. Man is not a lone wolf and he is not a social animal. He is a contractual animal. He has to plan his life long-range, make his own choices, and deal with other men by voluntary agreement (and he has to be able to rely on their observance of the agreements they entered). The choice is not self-sacrifice or domination.

showing that she also believed in goodwill towards others provided our associations and trades are of a voluntary nature.  She introduces this quote of Rand's by saying that she acknowledged that human beings are social animals who should "look beyond their own immediate self-interest in order to function."  Looking beyond "immediate self-interest" is consistent with Rand's general philosophy and with my comment that Cummins claimed had no merit.  Note the sleight of hand by Cummins in claiming that Rand believed in "unbridled self-interest" in the first paragraph of her article even as she now acknowledges that Rand looks beyond "immediate self-interest."  Actually, Rand and I believe that rational man pursues his rational self-interest, not an "unbridled self-interest."  An unbridled self-interest is an emotion-driven and short-range viewpoint of others and one's relations with them which is not bridled by rational assessment and long-range planning of one's life.

Cummins then claims:

Despite embracing sociality, Rand saw more evil than good in this kind of interdependence between people. As she wrote in “The Fountainhead,” “The choice is independence or dependence. All that which proceeds from man’s independent ego is good. All that which proceeds from man’s dependence upon men is evil.”

Note that in the quote she gives here, Rand is discussing man's independent ego.  She is not discussing an independence from the trade of values with others.  Rand is saying that one's ego should not be dependent upon what others think of you or that you should not let others tell you what to think or whether you have self-value.  The contradiction Cummins claims is not supported by this quote.

Cummins then claims that Ayn Rand somewhat embraces altruism:

Perhaps the key to understanding this contradiction lies in a journal entry in which she writes, “Selfishness does not mean only to do things for one’s self. One may do things, affecting others, for his own pleasure and benefit. This is not immoral, but the highest of morality.”

Seen in this light, altruistic acts are sanctioned insofar as they bring pleasure or other benefit to the giver, who has no moral obligation to offer help to those who are suffering.

 Ayn Rand defines altruism as the act of sacrificing one's own self-interest for the sake of the interest of others.  Cummins appears to believe that any act done for the sake of others is an act of altruism.  There are certainly many situations in which a rational man will act to enhance the interest of others without sacrificing his own interest and indeed by enhancing his own self-interest as well.  Cummins wants to provide legitimacy for altruism by claiming it subsumes both the sacrificial and the self-interested acts that help others.  For strong moral reasons, Ayn Rand wants to separate these very different actions with respect to relations and associations with others.  Cummins wants to muddle them together.

Cummins next takes exception to Rand's claims that socialism does not work.  Cummins says that socialism can lead to abuse and poverty, but it can also lead to wealth, health, and happiness superior to capitalism.  So, she proves this by stating that a certain Prosperity Index lists the United States as the 11th most "prosperous" nation after a number of nations she calls socialist nations.  The criteria for this ranking are not given by her link and that link does not link to the criteria either.  But in any case, one critical assumption in her "proof" is that the USA is an example of an unadulterated capitalist country.  In fact the Cato Institute 2015 Economic Freedom of the World report ranked the USA as only the 16th country in economic freedoms.  The Heritage Foundation Economic Freedom Index of 2016 lists the USA as #11 in economic freedom.  So, it should not be a surprising result of an index of prosperity to rank the USA #11.  According to the Cato Economic Freedom of the World report, New Zealand, Switzerland, Ireland and Canada are economically more free than the USA.  According to the Heritage Foundation Economic Freedom Index, New Zealand, Switzerland, Australia, Canada, and Ireland all have more economic freedom than does the USA.  Apparently, Cummins is unaware of the many socialist programs and economic controls that American governments have saddled our business sector with.

Oddly, Cummins claims that

while a given individual can benefit from cooperating, he or she can usually do better by reneging.  The end result is that altruists go extinct.  But Trivers showed that altruists can survive if one simple condition is satisfied: Those who fail to reciprocate must be punished through exclusion from subsequent cooperative ventures.

Once again, Cummins is implicitly claiming that one who cooperates and does their part is an altruist, while the rational self-interested person will renege.  But, she says the altruist can do well in cooperative transactions if the reneger is not allowed to enter into future cooperative ventures.  So, the long-range rational self-interest of a person is not to renege, which takes us right back to Ayn Rand's self-interest -- one of rational thought and long-range planning!  Cummins then tries to make a strong contrast between future exclusion and the enforcement of contracts.  The enforcement of contracts as advocated by Ayn Rand does help to prevent harm to the partner in a cooperative endeavor who will live up to the spirit of the endeavor.  The one who does not is subject to legal action to recover damages and also to future exclusion from cooperative endeavors.

Cummins claims that Rand's idea of enforceable contracts says Rand expects "government to play a role in maintaining fairness in market transactions."  She may be trying to claim this opens the door to a version of fairness as Cummins would see fairness, not as Rand would see it.  If this is not the case, I do not see why she has brought this up.

Not surprisingly, Cummins claims that laissez-faire capitalism failed in the 2008 financial crisis.  She fails entirely to recognize the many ways in which that crisis was caused by government policies and the many ways that government policies iced a recovery.

Cummins wraps her article up with the Elizabeth Warren quote that every individual has a collectivist debt, which may be extracted by force, because we gain from living in a society in which we exchange values, sometimes voluntarily, sometimes at the point of a gun.  Well, of course, we gain from living in a society in which we are allowed to choose our own values and act, often in cooperation with others, in the pursuit of our values.  That is central to Rand's philosophy.

Warren claims that we gain even from those goods or services delivered by the force of government that provide us some benefit, even if that benefit cost us far more in expense than is the value of the benefit.  We owe the collective for allowing us to use the roads, no matter how badly government builds and maintains roads.  We owe the collective for long-term unemployment insurance, no matter how irresponsible the beneficiary is for not getting another job or creating his own job.  This is Warren's inversion of cause and effect and hers a great way to reduce productive and creative work.  It is also most strange that she is only interested in laying forceful claim to the products of creative and productive work.  There is no compensation to the creative and productive person in the hours others have invested into their entertainments and pleasures of a non-creative and non-productive manner.  Warren is simply a bank-robber, who claims it is moral to be a thief.

Of course we gain by living in a society in which the knowledge gained by others and the produce of others can be freely traded and made available to us.  Most people who act in the private sector do leave a legacy of values behind them which make it easier for others to survive and flourish in the future.  This is a major benefit of a free society.  It is not a benefit if these benefits of a free society are undermined by the claim that the legacy of prior productive people allows a moral right to take by force whatever one wants in the future from that legacy beneficiary.  This claim does nothing but infest with rot the process of productive and creative thinking and the actions needed to turn those thoughts into actual goods and services.  We rightly admire those who have led productive and creative lives, but this does not make us slaves either to them or to others in society who may not be very productive and creative.  To claim that the legacy of other productive and creative people should be a justification for the use of force to steal the fruits of the time and effort that others invest in their productive and creative work is a sacrilege against that legacy and the good people who left it.

Making America Great and Donald Trump

America is great when the American People are free to exercise their broad and sovereign rights to life, liberty, property, self-ownership, and the pursuit of their own happiness.  There is no greater value than that of enjoying these liberties.  Donald Trump is a materialist who does not seem to have any concept of this.

I do not like Donald Trump.  I do not like how he has practiced business.  He has been a crowing crony capitalist who has used subsidies and eminent domain extensively in his business dealings.  Several of his businesses went bankrupt, though this happened just after he sold them to suckers.  His business ethics has been immoral.  His success has substantially come at the expense of others, not often enough in the form of mutually beneficial trades and too often at the expense of unwilling taxpayers.  The state of New Jersey, both under Corzine and Christie, has poured subsidy monies into the gambling industry in Atlantic City, to Trump's great benefit.  That industry is failing badly and at the loss of hundreds of millions of dollars of New Jersey taxpayers.  I do not like the meanness in Donald Trump.  Decent people do not make fun of other people's afflictions.  Now, I am not politically correct, but if you do not like how someone else looks, keep it to yourself.  A man who would be President ought to be a gentleman and one can easily be a gentleman while telling the truth about the many issues that government must deal with and about the tasks it should leave to the private sector.

Trump has been in favor of a universal, government-provided health care system.  That idea is a huge assertion of collective ownership of every individual by the state.  He says he will repeal ObamaCare, but there is no mention of this on his website.

His website says he is interested in the following reforms and provides some information on what he plans to do:

• U.S. - China Trade Reform
• Veterans Administration Reforms
• Tax Reform
• Second Amendment Rights
• Immigration Reform

On U.S. - China trade reforms, what is written is not as bad as the overt trade protectionism Trump advocates on the campaign trail, but it also fails to note that the primary reason the opening of new trade markets around the world has not led to the growth of the American economy is because the American government does not allow American businesses to be competitive.  He notes the importance of corporate tax reductions, but only after implying that bad trade negotiations caused job loses in America.  The job losses in America are due to excessive taxes, paperwork, and regulations that American businesses are hobbled with, thanks to Washington.  Business expenses are very high in America compared to many other countries in the world.  To compete, we need to be free to take full advantage of our design and innovation capabilities, while shedding governmental burdens that provide no or insufficient benefits.  We should be taking advantage of our abundance of inexpensive and reliable energy, not trying to make it more expensive as Obama has done.  We should be taking advantage of our great banking and financial companies, not smothering most of them in disabling requirements under Dodd-Frank so-called reform.  We should not be raising the cost of business with governmental dictates of minimum wages, paid leave benefits, the highest corporate and personal taxes in most of the developed nations, ObamaCare, NLRB rulings favoring forced unionization, and EPA regulations based on exaggerated claims of mercury or catastrophic man-made global warming. 

The Veterans Administration certainly needs reform.  Trump would make a key correction by allowing veterans more treatment in non-Veterans Administration hospitals and doctor offices.  He does not actually note that the many ills of the VA are endemic in government operations and would be propagated to other government attempts to control medical care.

Tax Reform is horribly overdue and the Trump plan is a pretty good one, with the exception that he would exempt single people from paying any income tax if they make less than $25,000 a year and married couples if they make $50,000 or less.  This gives them no skin in the cost of government and I do not think this is a good idea.  They should pay something.  It seemed he was going to outlaw corporation inversions overseas, but upon further reading he is really saying he will make them unnecessary.  He will continue to tax corporation earnings abroad, which I think is bad, but he will give them the credit to paying taxes abroad, so the U.S. tax of 15% will actually only be paid as the difference of the foreign tax and the US 15% should the foreign tax be less than 15%.  That is not bad at all.  His tax reform would allow a great leap of growth in the American economy.

On the Second Amendment:

The Second Amendment guarantees a fundamental right that belongs to all law-abiding Americans. The Constitution doesn’t create that right – it ensures that the government can’t take it away. Our Founding Fathers knew, and our Supreme Court has upheld, that the Second Amendment’s purpose is to guarantee our right to defend ourselves and our families. This is about self-defense, plain and simple.

It’s been said that the Second Amendment is America’s first freedom. That’s because the Right to Keep and Bear Arms protects all our other rights. We are the only country in the world that has a Second Amendment. Protecting that freedom is imperative.

That is excellent and is the only place I know of in which Trump has spoken of individual rights and the need to maintain constitutional law.

On Immigration Reform, he is apparently not going to send the Army into Mexico to make them pay for the wall at the southern border.

Mexico must pay for the wall and, until they do, the United States will, among other things: impound all remittance payments derived from illegal wages; increase fees on all temporary visas issued to Mexican CEOs and diplomats (and if necessary cancel them); increase fees on all border crossing cards – of which we issue about 1 million to Mexican nationals each year (a major source of visa overstays); increase fees on all NAFTA worker visas from Mexico (another major source of overstays); and increase fees at ports of entry to the United States from Mexico [Tariffs and foreign aid cuts are also options].  We will not be taken advantage of anymore.  

But he is going to try to control immigrants seeking jobs that he claims Americans need.  Companies will have less say in who they hire under his plan. Fewer highly skilled foreign workers will be allowed to immigrate.  This is a short-sighted example of populism.

There are too many other issues he has not given a plan to treat.  I do not have great certitude in his keeping his word either, especially given his history of many changes of mind.  He comes out of a primarily Democrat Socialist New York/New Jersey background and he played those Democrat politicians to the hilt.  Perhaps he was just using them.  He does pride himself as a manipulator.  Is he also manipulating those who vote for him?  Will he turn on those who vote for him now as he has turned on the Democrat Socialists he supported a short while ago, perhaps because they were then useful to his businesses?  Perhaps his voters now are only a useful means for him acquiring great power?  Donald Trump is a vapor.  He has no consistency.  He has no substance that one can perceive in his speeches.  Will his website policy statements also become vapor when he has the power he wants?

But these few plans that are given some substance are better than I had expected.  This is good, because it is looking more and more as though this man may be the next President of the United States of America.  I still have concerns that his temperament is much more suited to that of a dictator than to the presidency of a constitutionally limited government in the U.S.A.  I also suspect that these policy positions are written by advisers who understand much more than Trump does and they may be shoved aside once he is in power. After all, he thinks he is better than anyone else, just as Obama does.  We can expect much more arrogance in the extensive use of power should Trump become President.  And how many months will it take for him as President to subject each and every one of us to is childish name-calling?

Capitalism: Freedom to Compete or Freedom to Cooperate?

The enemies of Capitalism and free markets like to describe them as being characterized by dog-eat-dog competition and the survival of the fittest.  Ayn Rand's philosophy of Objectivism provides moral support for Capitalism and hence is subjected to the same criticism.  Before examining the derogatory portions of those claims, let us ask if the free market should be viewed as that part of society in which man has the freedom to cooperate or to associate with others.

Of course, all real freedoms adhere to individuals and each and every individual has the same sovereign rights.  If I have the freedom to cooperate or associate with another person, then I have the right to use my mind to evaluate whether I will enter into a particular cooperation or association with another person and  he has the corresponding right.  If we arrive at a mutual agreement to cooperate or associate, we do so.  If we cannot do so, we go our separate ways and perhaps seek out others with whom we can reach a mutual agreement.  In practice, this means that we seek people out who we can trade values with such that each party believes they are better off because of the trade.  There are innumerable such trades being made in a society and it is perfectly rational for the parties to make such trades in many cases.  The value of living in a society is found in the wealth of such advantageous exchanges.

Such free market trading requires that men be free to use their minds to choose their own values and then to manage their own lives in accordance with their values.  Much of the prejudice against free markets is based on the opinion of elitists that others are not capable of choosing their own values and of managing their own lives.  But let us be frank that if men are not allowed the freedom to choose their own values and manage their own lives, then they are fundamentally enslaved.  There will then be no free market or a very restricted domain will be all that is allowed to the free market.

If there is no free market, what have we lost?  We have lost the ability to manage our own lives according to our own values.  We have also lost the ability to cooperate freely with others in our society or even between societies to trade values for mutual benefit.  We lose the freedom of association which is a freedom to choose with whom we will cooperate or associate and for what reason we will do so.  We lose the freedom to exchange money, goods, services, ideas, friendship, and love.  Of course a restricted society which has begun the process of eliminating the freedom of association tends to do so in the realm of money, goods, and services exchanges if freedom of speech was once well-established.  In many societies freedom of speech has never been well-established and in those societies the exchange of ideas may be among the first exchanges lost.

When it is well-established that the government has control of those exchanges, it can further expand its controls to ideas, friendships, and even love.  In America today, we have some cases in which government already controls ideas.  This is common in government-run schools and colleges, as well as in the workplace.  We have restrictions on friendships in the form of outlawed sexual exchanges, especially if friendship is mixed with the exchange of money.  We have restrictions on love in the form of Don't Ask, Don't Tell and the Defense of Marriage Act.  It is perfectly appropriate to view these restrictions as restrictions on the free market, which is a concept really much broader than the strictly economic concept usually given to it.  The reason is that all of our human relationships are based on an exchange of values and these values need not be economic values.  The values may be friendship, love, and ideas.  In this realm of the free market, it is not competition, as people usually think of it, that most characterizes it.  It is cooperation and willing association.

Returning to the economic marketplace, where goods, services, and ideas are exchanged, the more fundamental action an individual makes a choice about is also one of with whom and for what reason will he cooperate and associate.  His primary motive is not to bury some opponent.  It is to find a way to exchange values with others in such a way that each is made happier by the result.  Of course, he may only be thinking of his own happiness, but then so are those with whom he is trying to arrange the trade.  So, the result is that everyone, to the extent they are rationally using their minds, is better off.

Of course, some people may wish to make trades that others will not choose to make with them and they may be disappointed.  This cannot be helped because everyone has an equal, sovereign right to cooperate or associate with others.  Force cannot then be used to make others enter into exchanges to which they have not agreed.  Those who do not like Capitalism or the free market then proclaim that the disappointed person or persons have been "eaten."  This is a clear exaggeration.  The proposed solution to this disappointment is to have the government use force to make people, who calculated that the disappointed person's proposed trade was bad for them, enter into the exchange nonetheless.  A better alternative to using force would be for the disappointed competitor to establish more reasonable evaluations of his proposed trades with others.  If he is simply not good at arranging certain types of exchanges on a voluntary basis, then he needs to find other types of exchanges which he is better at arranging.  A wealthy free market society is rich in possibilities for many other alternative exchanges.

Government restrictions on free markets take the form of mandates disallowing cooperation between people or forcing unwanted exchanges of values.  Either way, the government is destroying the freedom of association, or we might say the freedom to cooperate, that every sovereign individual has.  I just learned about an example of just such a nefarious government interference upon one of my nieces today.  She is a very good soccer player and a deep-thinking strategist of the game.  She teaches soccer to children in classes operated by a sports store.  The other soccer coaches are paid.  She cannot be paid because of the Child Labor Laws.  She teaches soccer because she loves the game and she likes teaching children.  But, there is clearly no justice in the perhaps well-intentioned law, that keeps her from being paid.  Her freedom to associate with children who want to learn to play soccer well because she might both love teaching it and be remunerated is interfered with by government.  She teaches anyway, but her freedom to choose payment and maximize the values gained is lost.  Of course, she is a child, though a very intelligent and hard-working child.  We have governments which are only too happy to restrict the freedom of adults in very many exchanges as well.  Why not, since our governments think adults are no more able to choose their own values and manage their own lives than they think children can.

Government interferences with the free market always take the form of restrictions on the freedom of association.  It is voluntary cooperation that the government limits to prevent competition or to achieve other goals contrary to the choices made by individuals in the free marketplace.  The reason is that the economic marketplace exists so that people can form partnerships and companies together voluntarily, hire voluntary labor, use capital from voluntary investors, buy equipment, facilities, and supply goods from voluntary venders, acquire knowledge and ideas from cooperating consultants and inventors, buy a technical library, and provide goods, services, and ideas to voluntary clients.  Each of these relationships is characterized by a voluntary exchange of goods, services, or ideas.  Each is an example of the freedom of association.  Each is an example of cooperation.

Of course competition usually occurs in the process.  But, competition in the sense that people usually think of it is not as fundamental as the freedom to cooperate is.  While some people have a surfeit of competitive juices, many are simply seeking out one value after another and care only about the value they gain in any given transaction.  They hope to string together many successful transactions and do very well for themselves.  In many cases, they have no idea with whom or what they are in competition.  For instance, when I quote a material analysis job for a possible client, am I in competition with another materials analysis laboratory, or am I in competition with other alternative uses of the company money?  The company could buy a piece of equipment, pay off a loan costing them interest, or send an employee off for training.  My experience is that most often my real competition is not another materials analysis laboratory.  It is a host of other alternative uses that my possible client has for his money.

It is very hard to conjure up visions of dog-eat-dog competition in this context!  What does become clear in this context is that competition is fundamental to an economic exchange only in the broader context that everyone rationally is placing a value on his values that can be realized in a trade.  It is very hard to see this as evil.  Indeed, this is exactly what the moral man does and it is why he develops a moral code.  He needs a moral code to place relative values on the many possible values he might pursue and might gain in exchanges with others.  Of course the exchanges in question are all exchanges of values, of which economic exchanges are a subset.

Competition exists in the free market because people act to realize value gains in their exchanges with others.  But, the exchange itself is an act of cooperation or association.  There is no way to interfere with the natural competition without losing acts of cooperation and denying the freedom of association.  The act of competition is the act of the evaluation of values.  It is not stabbing someone in the chest.  It is not throwing them in a dungeon and starving them.  These are the things governments do when they interfere with our voluntary exchanges of values whether in the economic free market or in the broader free market.

You may say I am extreme in this assessment, but no, I am seeing the complete context very well.  If a government interferes with my sovereign right to associate with others, it may place a less severe penalty on me for trying to go ahead with a denied exchange.  If I then assert my sovereign right and refuse to take or accept the penalty, the government will ratchet up the use of force on its part and may well have a SWAT team shoot me or imprison me for life.  The real penalty for asserting my sovereign right may well be death or permanent enslavement.  This is clearly evil.

Rational men do not want their societies to go into these sorts of death spirals.  They understand the need to keep their society as free as possible from the use of force, including government-wielded force.  Capitalism is the form society takes when men are free to associate with one another.  Mixed economies deny the freedom to cooperate with others and trample the right of association.  These principles are readily illustrated in Ayn Rand's ingenious novel Atlas Shrugged and in the excellent movie Atlas Shrugged Part I.

Some Suggested Improvements to the U.S. Constitution

I would like to have seen the following changes made to the Constitution of the United States of America:

Add this sentence to the Preamble of the Constitution:

This Constitution defines the very limited and precisely enumerated powers of the federal government of the United States of America, whose primary purpose, shared with the states, is to protect and preserve the sovereign rights of the individual American citizen to life, liberty, property, and the pursuit of happiness.

Article 1, Section 8:

To regulate Commerce with foreign Nations and with the Indian Tribes and to ensure Free Trade and Commerce among the States.

Article 1, Section 9: 

No Tax or Duty shall be laid on Articles exported from any State and no Limitations upon the Production of Articles within a State shall be made.

Add:  With the exception of bankruptcy laws, no law shall be made impairing the obligation of contracts. [Applies to States, but not Congress now]

The Ninth Amendment should be understood to guarantee the exercise of the People of their right to work, earn a living, choose a profession, trade, property, privacy, sexual expression, civil union contracts, to be unbothered, to own their own bodies, to health care, and much more, all in the context of negative rights with no obligations imposed upon others, except the abstinence of initiated use of force.

The Tenth Amendment should be used vigorously to thwart encroachment of the federal government upon state governments with mandates and regulations imposed upon them for which the federal government was given no clearly enumerated power. Examples would be the regulation of health care beyond seeing that health insurance can be offered across state lines.  The federal government has no power to declare CO2 a pollutant, as another example, though states might do so, if it were, under their police power.

Add to the Sixteenth Amendment:   Income shall be taxed at a constant rate for all citizens of the United States of America.  No obligation shall be imposed to file tax reports, keep records, or make payments of taxes upon some citizens on behalf of other citizens or residents.

Repeal the Seventeenth Amendment, returning the selection of Senators to the legislature of the states.

The Effectiveness of Government Management

I have grown a bit weary of constantly pointing out the nonsensical, idiotic, wrongheaded, uneconomic, unconstitutional, thieving, and brutal aspects of what the Democrats want to do to change our health care system.  I have pointed out that the things they are already doing in medicine are largely unwise.

I have noted that the U.S. government mismanages these functions very badly already:

• Health care as in Medicaid and Medicare
• The U.S. Postal Service
• Amtrak
• Ethanol production as alternative fuel
• Subsidies and mandates for wind and photovoltaic electricity generation
• Crop subsidies
• The identification of pollutants and toxic substances
• The forests and wildlands
• Permitting for oil and gas exploration and field development
• Gas mileage requirements for vehicles
• Medical device testing and quality assurance
• Scientific research and development
• Energy research and development
• Climate research
• Home mortgage lending
• Monopoly identifications
• Business accounting rules
• Business and medical liability torts
• Education (see my next post)
• Defense (largely due to too unfocused attention given diffused meddling in everything)
• Foreign policy
• Constitutional law
• Flight safety and route controls
• Interstate bridge safety and maintenance
• Airwaves licensing
• Drug testing and evaluation
• Anti-discrimination (turning it into discrimination)
• Business destruction by encouraging labor unions
• Immigration and border control
• Taxation and government revenue
  
• Economic growth
• Job creation
• Interstate commerce
• International trade
• Government property
• Government purchasing and acquisitions
• Eminent domain
• Drug use prohibitions
• Wage controls
• Price controls
• Patent controls
• Alcohol controls

It sure is a strange thing that so many Americans are on a constant search to find some other aspect of our lives to turn over to the federal government.

Anti-Consumerism

One of the favorite complaints of G-20 protesters and of environmentalists is that too many people are consumerists. Now this is just a terrible thing to be. Imagine people making goods and services available to others who will voluntarily pay them money in exchange. This is awful. This is pornographically obscene!

No, it is much, much better if in the name of the planet and to prevent workers from exploitation, we simply hire large numbers of government thugs to keep us from producing goods and services and from going shopping. This is the way for nice people to go.

Down the road, when we are all poor and huddling masses, unplagued by consumerism, we will all be so, so happy.

Egalitarianism vs. Flourishing

One of the great differences between socialism and capitalism is based on the relative values that the socialist and the capitalist put on egalitarianism and flourishing. The socialist is greatly offended by differences in income and wealth among people. He would rather have a system in which the lower quintile in income of workers had, say, $15,000 income per year and the upper quintile had $25,000 per year income, than one in which the lower quintile of workers had an income of $25,000 per year and the upper quintile of workers had an income of $80,000 per year. In his preferred system the upper quintile makes only $10,000 per year more income and it is only two-thirds greater. In the latter case, the difference in income is $55,000 per year and the the upper quintile is making 3.2 times as much per year. The capitalist is very happy with this case with the greater divergence of income. Why?

The result of the capitalist system proposed here has an upper quintile making 3.2 times as much as they would make in the socialists preferred system. This group is certainly better off. The lower income quintile in the capitalist system is making 1.67 times as much as in the socialist system. Of course, the capitalist system has not rewarded the lower quintile as richly as it did the upper quintile, but it sure did make them 1.67 times better off than did the socialist system.

Yet, many, many people prefer the above socialist system outcome to the capitalist system outcome. Why? One can only see this as the result of an overweening envy and/or an equally overweening guilt at being successful in generating income. Both seem to apply in various combinations to socialists. But these same socialists almost always pretend to actually care about whether the lower quintile will flourish in their system. It is some very twisted notion of caring in which you would condemn the poorest quintile to only 60% of the income they might readily have in the capitalist system. Rather than see the lowest quintile in income actually have more means to buy homes or rent decent apartments, have a car of their own, eat well, be able to reasonably entertain themselves, educate themselves, and wear decent clothes, the socialist wishes to indulge his feelings of envy and guilt. Rather than respect the wealthier quintile for its ability to produce goods and services in high demand by others, they choose to hate them. When they are of that highest group, it is often guilt which motivates them to despise the capitalist system and to hate themselves.

The capitalist proponent seeks the means to allow each individual to maximize his own interest without the use of force, but only by means of arranging free trades for values of mutual interest to the trading parties. This allows each individual to decide for himself what he wants and how he wants to go about attaining it. In this system, it has been shown that men are quite effective in acquiring the values they have chosen. In the socialist system, a huge fraction of the people must be thwarted in their pursuit of their values, so that the differences in the degree to which men achieve those values are minimized. This is a very achievable goal, but it always comes with a very high price tag.

The capitalist system does not just allow some people to maximize the amount of money they make. It allows them and it encourages them to maximize their use of energy and their use of their minds. It allows men to be creative and to offer others the products of their creativity. When Henry Ford built the inexpensive Model T, he not only made himself rich, but he made cars that very many people could afford available to them. He was also able to pay his factory workers unheard of high wages. Who was hurt by the great wealth that Ford acquired? Neither the new car owners nor his factory workers were hurt in the least. In fact, they clearly benefited greatly.

With many desirable products being produced by men becoming wealthy in the process, the population has a rich choice of goods to buy. They buy those that they think will make their lives better and richer. The employees who make the various products also have many choices as to where they will work, for whom they will work, and what kind of work they will do. They can go to the factory with the best pay, which will tend to be the one with the greatest need for workers or the one which can put them to the most productive use. They may wish to stay in a given area of the country where they have family and the more factories there to choose from, the better off they are likely to be in choosing work they like or in negotiating for pay. When the socialist is allowed to put roadblocks in the way of the entrepreneur who is becoming wealthy, they hurt everyone. They hurt those who use or would use the products and services of the in-demand entrepreneur and they hurt the employees of the entrepreneur. They also hurt the stockholders and investors, which even in today's mixed economy is more than half of all workers.

All of this is inescapable and it is also a very obvious truth. Yet, in the name of envy and guilt, many people turn a blind eye to this knowledge. Envy and guilt create blindness and it is most debilitating. It is grotesque when this denial of reality and rejection of the good for almost everyone becomes the justification for the brutal use of force to keep men from making voluntary trades in their mutual interest.

Obama Wants 600,000 More Bureaucrats

Daniel J. Mitchell of the Cato Institute listened to President-Elect Obama give his weekly radio address and discovered that Obama wants 600,000 more government bureaucrats to harass the American people. Obama claims these people will help the economy get moving.

Only a fool believes that government workers create anything positive on a scale comparable to what private sector workers produce. Government, when strictly limited to its proper scope, creates an environment as free of the use of force as possible, provides rational and knowable laws, and protects property and enforces contracts. Beyond that, and we are way, way beyond that, it only creates mischief, injustice, time-sinks, high taxes and waste, and barriers to trade and production.

Economic Freedom Ratings - U.S. Out of the Medals

The 2008 report on Economic Freedom of the World, 2006 by James Gwartney, Robert Lawson, and Joshua Hall, with contributions by Seth Norton is periodically published by the Fraser Institute and provides an evaluation of the economic freedom of 141 countries around the world in the latest report. In this latest report, the United States of America has continued to lose ground relative to the top performing nations of the world, though it is tied for 8th place with Australia. The U.S. summary score is 8.04 out of 10, while Canada edged it out for 7th place with a score of 8.05. Chile beat Canada with a score of 8.06, but was in turn beaten by the United Kingdom with a score of 8.07. It can be argued that these scores are all essentially equal, but the scores of Hong Kong at 8.94, Singapore at 8.57, New Zealand at 8.28, and Switzerland at 8.20 are significantly better than that of the United States. Ireland finished in 10th place.

Since we Americans think of ourselves as the Land of the Free, as self-sufficient, and independent, this is a very deplorable state we have sunk into. Being surpassed by Hong Kong, Singapore, New Zealand, and Switzerland should shame us mightily. Being essentially tied by the United Kingdom, against whom we rebelled with the claim that we were throwing off the chains of oppression, is ignoble. Being in a near dead heat with Canada and Australia, other longer term colonies of the United Kingdom is rubbing our noses in it. Finally, being edged out by Chile, is near unspeakable. For the Coup de Grace, number 1 Hong Kong is part of China, though administered by very different rules than the rest of China. Why is the United States not number 1?

We certainly have the opportunity to exert a much greater political freedom than that in Hong Kong, Singapore, or Chile to choose to beat those countries out to claim the most economic freedom in the world. Unfortunately, our simple-minded mob-ruled people have chosen to put shackles on their economic freedoms by ignoring the rights of the individual guaranteed by our Constitution. Obama has correctly noted that our Constitution does not allow the redistribution of income and wealth, though he intends to follow such a course with a vengeance.

What does this study of economic freedom in the world measure? First, it believes economic freedom consists of:

• Personal choice
• Voluntary exchange coordinated by markets
• Freedom to enter and compete in markets
• Protection of persons and their property from aggression by others

In light of this, a country receives a high rating if it

• Protects privately owned property
• Even-handedly enforces contracts
• Provides stable money
• Has low taxes
• Does not use barriers to restrain domestic and international trade
• Relies on markets rather than the political process to allocate goods and services
• Allows individuals the right to decide how they will use their time and talents, with the necessary recognition that this means that they do not have the right to the time, talent, and resources of others

The Economic Freedom Index measures economic freedom in five major areas:

1. Size of Government: Expenditures, Taxes, and Enterprises
2. Legal Structure and Security of Property Rights
3. Access to Sound Money
4. Freedom to Trade Internationally
5. Regulation of Credit, Labor, and Business

The first ranking was for the year 1980, when the U.S. was ranked 4th. In 1985, we were 5th, in 1990, we were 3rd, and in 1995 we were 4th. Our highwater year was 2000, when we were 2nd with a score of 8.55. By 2004, we were 6th with a score of 8.07. Our score of 8.04 in 2006 leaves us in a tie with Australia in 8th position.

In 1980, the average score was 5.46 and that has risen to 6.65 in 2006. 89 of the 102 nations with scores back to 1980 have improved their scores. Ghana, Uganda, Israel, Peru, Jamaica, Iran, Hungary, El Salvador, Nicaragua, and Turkey have the most improved scores. Zimbabwe, Venezuela, and Myanmar have the most reduced scores. Nine of the bottom eleven nations are African, with Venezuela and Myanmar being the other two.

Nations in the top quartile in economic freedom have an average per capita GDP of $31,480 in 2006 compared to an average of $3,882 in the bottom quartile. The top quartile nations average per capita economic growth rates of 2.31%, compared to 0.50% for the bottom quartile nations. The average income of the poorest 10% of the population in the highest quartile is $8,730, compared to $961 for the lowest quartile, averaging over the time from 1990 to 2006.

Life expectancy is 79 years in the top quartile, but only 58 years in the bottom quartile. Nations in the top quartile have an average score of 1.68 for political rights on a scale from 1 to 7 with 1 the best. The bottom quartile have a political rights index of 4.39. On a 1 to 7 civil liberties scale, the nations of the top quartile average 1.68, while the bottom quartile averages 4.06. Nations in the top quartile average 84.7 out of 100 for environmental performance, where 100 is perfect. The lowest quartile nations average 63.8 on the environment.

So, what is happening to the U.S. since its highwater rating of 2 in 2000?

• Size of government, degraded from 7.53 to 7.13 in 2006.
• Legal structure and security of property rights, degraded greatly from 9.23 to 7.58!
• Access to sound money, 9.78, which degraded in 2006 to 9.66.
• Freedom to trade internationally, degraded from 8.01 to 7.53.
• Regulation of credit, labor, and business, improved from 8.19 to 8.31.

The U.S. improved only on regulation of credit, labor, and business. Our worst losses were with respect to our legal structure and security of property rights. Loss of freedom to trade internationally and an increase in the size of government also hurt substantially. The recent bailouts will only diminish our economic freedom further. Under the rule of Obama, Polosi, and Reid, we can expect our economic freedoms to continue to degrade.