The Logical Anarchy Today Show Episode 210 – Personal Property vs Private Property


Logical Anarchy Today – Logical Anarchy Today Episode 210 – Personal Property vs Private Property

Well, I’m back! Or atleast I’m attempting a comeback. On this episode, I try and detail, through rambling, the Left Libertarian Position on personal and private property and how it is an arbitrary distinction used in sophistry.

An Anarcho-Socialist Explains Personal and Private Property

Logical Anarchy Merchandise

Tom Woods Liberty Classroom

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The Logical Anarchy Podcast EP 57 – Vault 7 and Some Thoughts on Left Libertarianism


The Logical Anarchy Podcast – Vault7 Leaks and Some Thoughts on Left Libertarianism

Joe and Jon come at you to talk about the Vault7 leaks and some other topics like left libertarianis, taxation, and property.

Vault7 and the Choice Before Us by Jon Torres

The Vault 7 Leaks

Logical Anarchy Merchandise

Find us on Stitcher!

Tom Woods Liberty Classroom

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The NAP (The Non-Aggression Principle)

This is a video about the ethical principle at the heart of anarcho-capitalism, voluntaryism, and consistent libertarianism. The Non-Aggression Principle.

Walter Block on the NAP
Mises Wiki

 

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Child Labor and the Third World

I have seen the above video making the rounds on Facebook. I have seen people calling for boycotts, regulations, and other methods of “combating” situations like this for children in the third world. I think all of those solutions, while they mean well, are absolutely the wrong way to go about this. Situations like the one in the video above are used by those ignorant of economics with giant bleeding hearts to further some wrong-headed solution they think will save these children. I have written about child labor in the past, but since this video is making the rounds, I figured that I should cover the topic again 1.

Is Child Labor Really Bad?

For many, such a question seems pointless. “Of course it’s bad! That’s why we abolished it here in the United States!” they say. My retort is usually, “Did outlawing child labor actually end child labor?”. “Of course!” is usually the reply. I think such a reply outs such a person as both ignorant of economics and history. So lets delve into why such a common “fact” isn’t actually fact at all. Austrian Economist Ludwig Von Mises noted that, “in the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested… …Consequently, the marginal productivity of labor, wage rates, and the wager earners’ standard of living tend to rise continually” 2. Such a statement seems like a bold claim, particularly in such a climate as we have now where the average person has a relative skepticism of capitalism due to socialist and statist propaganda. “Capitalism” is a dirty word these days. But as the data has shown, free markets and economic freedom are directly correlated with a higher standard of living 3. The graphs below show how those in nations with more economic freedom (who more closely resemble a truly unhampered market), enjoy many other benefits associated with a higher standard of living.

We can see that government taking a step back from the economy creates more economic freedom which means those that live within a country are able to more easily accumulate capital. Accumulating capital raises the standard of living which lowers the amount of full-time hours required to survive and also means things like child labor become unnecessary. Thomas DiLorenzo notes that in 1870, the average number of hours considered “full-time” were 61. Today, it’s only 34 4. And if the data shows that less regulation, not more, creates a higher standard of living, that means regulations like abolishing child labor either do nothing to improve the standard of living or actively make the rise in the standard of living more difficult.

Bangladesh is a perfect example of this. In the 1990s, Bangladesh was faced with the United States and other western nations banning imports from the poor country because of its use of child labor. The Bangladesh government passed laws banning child labor which forced factory owners to fire around 30,000 children 5. No doubt those with bleeding hearts suffering from economic ignorance would count such an outcome as a victory. Unfortunately, it was not. Those that think such an outcome was ideal (hooray! We ended child labor!), are blind to the unforeseen consequences that occurred. I want to ask such people who may have cheered at this outcome, what they think happened to those children? Did they just magically go to school? No, of course not. Those kids took the sweatshop jobs because it was better than any other option open to them. “According to the British charity Oxfam, these kids didn’t go back to school or find better lives. Most of them took worse jobs or ended up on the streets. Thousands of children went into prostitution” 6. Those ignorant of the economic realities of the world don’t seem to grasp the fact that ignorance has consequences. Whether they realized it or not, their preference for ending child labor in Bangladesh was a preference that said, “I would rather you kids become prostitutes and sleep on the street than work in the ‘terrible conditions’ of the sweatshop”.

So what we have learned here is two-fold: (1) Free markets and economic freedom are directly connected to a continually rising standard of living. It becomes easier to gain capital and lowers the required number of hours of labor to live, which means longer work days and work weeks are no longer needed and children eventually no longer need to work in order to help support the family. (2) People will always seek the maximum value. In the case of job selection, they want the best pay and the best conditions and how these things are balanced are going to be subjective to each individual (that’s why here in the states, someone becomes a crab fisherman and someone else, a chef). Which means when even a child selects a job in a mine or factory, it’s because that was probably the best option available to them. So limiting that choice of that child is probably the worst thing those with bleeding hearts can do (as made clear by the Bangladesh example).

Back to the Congo and What to Do

So let us go back to the Congo. What are the options for this kid in the video? Well, prostitution is probably his last option after this mine since prostitution, and child prostitution in particular, are still a huge problem in the Democratic Republic of Congo 7. Either prostitution or child soldiering seem to be the only other viable job opportunities to these kids 8. UNICEF reported in 2011 that 30,000 kids lived on the streets 9. Really, given the nature of this data, that kid is probably a lucky one to even have a job mining. The fact that Sky News and those sharing the video are not talking about the lesser options available to kids in this country is a giant red flag that they want to push anti-capitalist propaganda at the expense of children rather than actually help said children.

So what is the solution then? Pressure, but of a different kind. Instead or pressuring bans and government regulation, pressure should be placed on the Congo government to liberalize markets. Currently, The Democratic Republic of Congo is ranked 117 in economic freedom, placing it in the “mostly unfree” category 10. Given the data already presented here, the solution is quite clear, free up the market and let that liberalization of the market allow that observation Mises had in a rising standard of living to occur naturally in the country. This would easily phase out the need for child labor. For those who want to do something, they should put their money where their bleeding hearts are and provide economic opportunities to people there by investing in businesses that will treat their workers kindly and fairly (or starting their own business there that will do just that). Create a demand, and there will be an entrepreneur there to provide it.

As a final thought I would like to point something out. Child labor has been around since before the idea of “capitalism” was even coined. Children had to work because, as I have already noted, their was not enough capital accumulated to phase it out. It wasn’t until the advancements brought about by capitalism that created efficiency and reduced the needed number of hours spent laboring, that children no longer needed to work. Simply put, those that want to place the laurels on government for ending child labor are doing so on false claims. The data provided here, hopefully, clearly illustrates that point.


Why Tariffs are Terrible

“Government does not have the power to encourage one branch of production except by curtailing other branches. It withdraws the factors of production from those branches in which the unhampered market would employ them and directs them into other branches.”

-Ludwig Von Mises, Human Action p. 737; p. 734 1

How supposed “pro free market” people are supportive of a tariff is beyond me. It seems to show how people that proclaim to have faith in capitalism and the free market only do so with lip service; for the act of supporting a tariff is just one of many actions that shows a profound lack of belief in voluntary exchange and free market economics. So for the sake of consistency, these people should refrain from saying they are advocates of the free market and tariffs at the same time… Unless they enjoy being thoroughly debunked like they are about to be right now in this article. The above quote by Austrian Economist Ludwig Von Mises, from his treatise on economics Human Action, perfectly explains the problem with a tariff (which is a government market regulation and tax enforced by threats of violence, that’s not “free” so it’s not “free market”). There are many undesirable implications of tariffs which I will outline on this article. But before that, I want to talk about it through this meme I created the other day which seems to have triggered some statists who don’t understand economics.

This did illicit many responses from people. Some moronic and some just innocently misinformed. The responses ranged from, “well, if they can raise the price from $5 to $6, then what stops a Mexican exporter from raising the price even higher without a tariff?” to, “Well, we have things called ‘economic substitutes’ which can take the place of Mexican goods here in the state.” The first response is without any merit, since such a person who says something like that has probably never seen a demand curve. A person who makes such a claim doesn’t seem to understand how marginal utility works or that value is imputed to goods and services by economic actors. “The value of an object is merely the importance that we ascribe to its possession for the purpose of gratifying our wants. This importance varies according to the extent of the range of those wants which, beginning with the most urgent, have already secured their gratification.” 2 This means that value is derived from the subjective valuations and utility people like you and I judge we can attain by consuming a particular good or service. So the reason a producer cannot sell at any arbitrary price is because his price is set up by a number of factors. The cost of production, competitors selling a similar product, and consumer demand. A Mexican exporter could only sell his avocados for say, $1 million a pound, if someone is willing to pay that price. And since people already complain about paying the current price of avocados 3, market pressures even in this hampered market keeps the prices at fairly reasonable level.

The second response, that of economic substitutes, does not answer the problem fully. Yes, economic substitutes are awesome, but in the case of avocados, Mexican avocados make up 60% of the avocados consumed in the US 4. They can grow avocados year round south of the border, which means that they are more efficient at avocado production than the US. And since a tariff raises the cost of avocados in the US, that means a tax on Mexican imports is a tax on US consumption (so the Americans end up paying the tax, not the Mexicans).

Henry Hazlitt debunked the concept of tariffs rather nicely in his book, “Economics in One Lesson“.

“What possible point can there be, he is likely to ask, in discussing refinements and advances in economic theory, when popular thought and the actual policies of governments, certainly in everything connected with international relations, have not yet caught up with Adam Smith? For present day tariff and trade policies are not only as bad as those in the seventeenth and eighteenth centuries, but incomparably worse. The real reasons for those tariffs and other trade barriers are the same, and the pretended reasons are also the same… ‘In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.’ ‘The proposition is so very manifest,’ Smith continued, ‘that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the commonsense
of mankind.'” 5

Tariffs are a limitation on the division of labor. Plain and simple. And the division of labor is the major contributing factor to economic development and the increase in the standard of living we enjoy today. On the topic of the division of labor, Mises notes, “Within the framework of social cooperation every citizen depends on the services rendered by all his fellow citizens.” 6 Mises also notes that the division of labor started, originally, between immediate neighbors until it circled out into the grand world economy that we have today. 7 The reason the division of labor is so desirable is that it allows certain individuals to focus on one or a few production lines while relying on the expertise of someone else to provide a good or service they are not expert in. So for example, the baker can focus on baking bread while the shoemaker can focus on shoes. The shoemaker can trade the shoes for bread so that the baker is clothed and the shoemaker is fed. And the quality of both the shoes and the bread increases for both since the baker doesn’t have to worry about producing shoes and the shoemaker doesn’t have to worry about making his own bread.

Both are better off.

Imagine if the government instituted a regulation where the baker had to trade 20% more bread in exchange for shoes from this particular shoemaker. This arbitrary law distorts the market and invariably means the standard of living for both the baker and the shoe maker decrease. Hazlitt refutes tariffs and protectionism better than I ever could with sweaters:

“An American manufacturer of woolen sweaters goes to Congress or to the State Department and tells the committee or officials concerned that it would be a national disaster for them to remove or reduce the tariff on British sweaters. He now sells his sweaters for $15 each, but English manufacturers could sell there sweaters of the same quality for $10. A duty of $5, therefore, is needed to keep him in business. He is not thinking of himself, of course, but of the thousand men and women he employs, and of the people to whom their spending in turn gives employment. Throw them out of work, and you create unemployment and a fall in purchasing power, which would spread in ever-widening circles. And if he can prove that he really would be forced out of business if the tariff were removed or reduced, his argument against that action is regarded by Congress as conclusive.

But the fallacy comes from looking merely at this manufacturer and his employees, or merely at the American sweater industry. It comes from noticing only the results that are immediately seen, and neglecting the results that are not seen because they are prevented from coming into existence.

The lobbyists for tariff protection are continually putting forward arguments that are not factually correct. But let us assume that the facts in this case are precisely as the sweater manufacturer has stated them. Let us assume that a tariff of $5 a sweater is necessary for him to stay in business and provide employment at sweater making for his workers.

We have deliberately chosen the most unfavorable example of any for the removal of a tariff. We have not taken an argument for the imposition of a new tariff in order to bring a new industry into existence, but an argument for the retention of a tariff that has already brought an industry into existence, and cannot be repealed without hurting somebody.

The tariff is repealed; the manufacturer goes out of business; a thousand workers are laid off; the particular tradesmen whom they patronized are hurt. This is the immediate result that is seen. But there are also results which, while much more difficult to trace, are no less immediate and no less real. For now sweaters that formerly cost $15 apiece can be bought for $10. Consumers can now buy the same quality of sweater for less money, or a much better one for the same money. If they buy the same quality of sweater, they not only get the sweater, but they have $5 left over, which they would not have had under the previous conditions, to buy something else. With the $10 that they pay for the imported sweater they help employment—as the American manufacturer no doubt predicted—in the sweater industry in England. With the $5 left over they help employment in any number of other industries in the United States.

But the results do not end there. By buying English sweaters they furnish the English with dollars to buy American goods here. This, in fact (if I may here disregard such complications as multilateral exchange, loans, credits, gold movements, etc. which do not alter the end result) is the only way in which the British can eventually make use of these dollars. Because we have permitted the British to sell more to us, they are now able to buy more from us. They are, in fact, eventually forced to buy more from us if their dollar balances are not to remain perpetually unused. So, as a result of letting in more British goods, we must export more American goods. And though fewer people are now employed in the American sweater industry, more people are employed—and much more efficiently employed—in, say, the American automobile or washing-machine business. American employment on net balance has not gone down, but American and British production on net balance has gone up. Labor in each country is more fully employed in doing just those things that it does best, instead of being forced to do things that it does inefficiently or badly. Consumers in both countries are better off. They are able to buy what they want where they can get it cheapest. American consumers are better provided with sweaters, and British consumers are better provided with motor cars and washing machines.” 8

What Hazlitt is highlighting here is the division of labor. The US specializes in one area while someone else specializes in another. This is no different than you specializing in growing vegetables in your backyard and your neighbor specializing in raising chickens. An exchange can occur between the two of you and both benefit. So both Trump (and Sanders) are wrong in their economic understanding of the problem. They see MORE government bureaucracy as the solution when the REAL solution is quite the opposite. We need less government involvement in the economy, not more. And tariffs are indeed, quite a bit more. A tariff on Mexican goods, as an example, will affect the areas noted here:

“In 2015, some of the top manufactured goods included:

  • Vehicles ($74 billion)
  • Electrical machinery ($63 billion)
  • Machinery ($49 billion)
  • Optical and medical instruments ($12 billion)

America also imported a great deal of agricultural, food and beverage goods including:

  • Fresh vegetables ($4.8 billion)
  • Fresh fruit ($4.3 billion)
  • Wine and beer ($2.7 billion)
  • Snack foods ($1.7 billion)
  • Processed fruit & vegetables ($1.4 billion)” 9

So this should not come as a surprise. Trump is a politician in a lot of ways and a tariff on Mexico, or anyone else, is an attempt at obfuscating the fact that Americans are the one’s getting a tax increase. Anyone who thinks otherwise simply does not understand the points I’ve raised and cited here and therefore, should be ignored as an economic illiterate. To bring it back around to that first Mises quote at the beginning of this article: When the government attempts to diminish production in a certain area that is in demand, it can only do so through force (which is not a “free market”) and by encouraging inefficiencies at the expense of the division of labor. This hurts everyone and most assuredly will not “make America great again.”