Blogroll Category: Current Affairs

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Why do people want to reduce the tax on landlords?

Adam Smith Institute - Fri, 07/02/2020 - 07:01

The campaign to reduce business rates trundles on. The question we’re asking ourselves is why does anyone - other than landlords of course - want to reduce the tax upon landlords?

While competition in Britain's retail sector is strong, bricks-and-mortar retailers say they are subject to an unfairly high burden from business rates, which are based on a property's estimated value on the rental market and can run to millions of pounds a year for department stores in prominent spots.

Internet-only rivals such as Amazon rely instead on vast out-of-town warehouses in low-cost areas and pay much lower rates as a result.

It’s true that business rates are incident upon the cashflow of those retailers. But in the end it is rents which are lowered, not retailers’ profits or gross margins.

The entire campaign therefore is an attempt to lower the taxation rate of landlords. Why is this something that anyone at all, other than those landlords, wishes to achieve?

All of which is an interesting example of why politics is such a lousy manner of running things. Decisions are made not just as a result of who has the political power to male them but on the basis of clear and evident untruths. Retailers don’t carry the burden of business rates yet they are to be cut to alleviate the burden upon those retailers.

Categories: Current Affairs

Anglican churches in Macau close over coronavirus fears

Anglican Ink - Fri, 07/02/2020 - 01:32
[5 Feb 2020] In response to the latest situation of the Novel Coronavirus Epidemic and in order to cooperate with public protection and disease prevention measures, the Missionary Area of Macau has now announced the following arrangements:

(1) All worship services and public events are suspended from 6th to 16th February 2020 in all Anglican Churches. The faithful are advised not to go out unless necessary.(2) Marriage and Funeral services may be celebrated by special arrangement between Parish Priests, the parties concerned and their families.

(3) All churches will provide live Sunday Services online on 9th and 16th February. For more information, please visit the Church Websites. Sheng Kung Hui Missionary Area of Macau 5th February 2020

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Hong Kong bishops pastoral letter on the Coronavirus epidemic

Anglican Ink - Fri, 07/02/2020 - 01:26
[2 Feb 2020] Dear Brothers and Sisters in Christ,

God is our refuge and strength, a very present help in trouble. (Psalm 46:1)

As the novel coronavirus spreads through Hong Kong, Macau, mainland China and across the world at an alarming rate, our hearts are filled with worries and anxiety. Our daily lives have been affected and we are forced to make all sorts of inconvenient adjustments to our routines. A sense of frustration, helplessness and even panic has enveloped us.

During this trying time, on the one hand, we need to pay attention to our personal and community hygiene by following the guidelines given by the medical personnel and the authorities. On the other hand, more importantly we need to lift up our trust to that faithful and unchanging Heavenly Father. We are not fighting this battle alone. Jesus Christ, who cares for us and walks with us, is the ultimate strength in whom we can put our trust.

At this time, let us pray more, especially for those who have been infected and for the frontline medical personnel. Let us be more attentive in extending our care and love for each other. Let our faith in Christ be even more strengthened during this time. The peace and grace from above will sustain us through this difficult journey. Each trial in life is an opportunity of growing and moulding for us. Allow our trust in God to become that powerful witness of love and faith. After going through this we shall become an even stronger community to the glory of God and for the love of people.

May God bless and protect us all.

Archbishop Paul Kwong  Bishop Andrew Chan  Bishop Timothy Kwok 

The post Hong Kong bishops pastoral letter on the Coronavirus epidemic appeared first on Anglican Ink © 2020.

General Synod motion to address clergy abuse ruled out of order

Anglican Ink - Fri, 07/02/2020 - 00:55

A motion presented by David Lamming and Peter Adams to next week’s meeting of General Synod was ruled “out of order” today, and will not be discussed by the Church of England’s parliament. The text of the motion stated:

GENERAL SYNOD FEBRUARY 2020 GROUP OF SESSIONS WEDNESDAY 12 FEBRUARY 2020

AGENDA ITEM 9 Safeguarding: Response to recommendations in IICSA May 2019 Investigation Report (GS 2158)

COMPOSITE DRAFT OF THE MOTION AS IT WOULD BE IF AMENDED BY THE AMENDMENTS PROPOSED BY DAVID LAMMING (GS 399) AND PETER ADAMS (GS 392)

That this Synod:

(a) lament the Church of England’s abject failures in dealing with reports of abuse, as revealed during the hearings of the Independent Inquiry into Child Sexual Abuse (IICSA) and documented in its interim report, Anglican Church Case Studies: Diocese of Chichester and The response to allegations against Peter Ball (May 2019), and accordingly welcome the terms of the Diocese of Blackburn ‘Ad Clerum’ letter dated 17th June 2019, reflecting on the IICSA report and commend its victim-centred approach to all in authority within the Church as a suitable model for developing reconciliation with those who have been wronged by our sins of commission and omission;

(b) affirm (in the words of the National Director of Safeguarding at para 4.1 of paper GS 2158) that the Church of England “remains committed to ensuring that words of apology are followed by concrete actions to improve how all worshipping communities across the whole Church in its many forms – across its parishes, dioceses, cathedrals, religious communities, national church institutions and other church bodies – respond to concerns and allegations of abuse and to all victims and survivors of abuse and others affected by this, whilst at the same time working to prevent such abuse from occurring in the first place.”

(c) endorse the Archbishops’ Council’s response, set out in paper GS 2158, to the five recommendations made by IICSA at pages 206 to 207 of its said report;

(d) request the Archbishops’ Council, National Safeguarding Steering Group (NSSG), National Safeguarding Team, and House of Bishops to respond immediately to the recommendations of the final IICSA report on the Anglican Church when it is published, and bring their response to General Synod for debate no later than July 2021; and

(e) request the Archbishops’ Council, NSSG and House of Bishops, working in conjunction with the Church Commissioners, to bring forward proposals for an appropriate and properly resourced compensation and redress scheme, so that words of apology are matched by actions that truly reflect the justice and righteousness of God’s kingdom.

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Clergy abuse survivors ask General Synod for redress

Anglican Ink - Fri, 07/02/2020 - 00:48

An open letter to all members of the Church of England General Synod, from victims and survivors of abuse in the Church of England

At your meeting next week, you will once again debate safeguarding in the Church of England. In February 2018 and February 2019, we sent you booklets called We asked for bread, but you gave us stones. In them, we spoke to you about the experience that victims of abuse face in dealing with your church. We also spoke to you in our book Letters to a Broken Church. We haven’t produced a booklet this year, because we have nothing new to add. For all the TV documentaries and shocking headlines, all the money wasted on undelivered schemes, and all the synod motions, not to mention the handwringing of archbishops, almost nothing has changed during this synod for victims of church abuse. The church still treats us as if we are a problem to be fixed. The restorative approach suggested by last year’s helpful ‘Ad Clerum’ from Blackburn Diocese (which you were prevented from discussing last time you met) is nowhere to be seen. 

The motion that you will be asked to approve at this synod simply says that you will endorse the Archbishops’ Council’s response to the five recommendations made by the Independent Inquiry into Child Sexual Abuse. Our response is – is that all? IICSA has been a traumatic and costly experience for many of us. The minimum we would expect is that you will accept its recommendations wholeheartedly and without hesitation. And we expect and demand that you accept whatever further recommendations come from IICSA in the report they will publish this Summer. Shame alone ought to be enough for you to do that.

We believe that you should go much further. 

We hear repeatedly that the church is spending more and more money on safeguarding. Of course, we agree that preventative safeguarding should be given a high priority. But you also need to give attention to what happens when safeguarding has failed. You need to know that as far as we can see, the church has made no progress at all in caring for victims and survivors of clergy and church-related abuse. The much-vaunted “Safe Spaces” initiative has swallowed hundreds of thousands of pounds, and five years on nothing has been delivered.  Without the dogged and costly work that survivors do in caring for each other, there would be even greater tragedies to report.

Synod members, please don’t issue another apology. Please don’t tell us how important it is to “listen to survivors.” Please don’t set up another half-baked inquiry or a working group. Your apologies are hollow, and your promises are empty because nothing changes. Please don’t leave this to the House of Bishops either. We don’t trust them. Too often our experience is that a small group of men at the heart of the church deploy their power, with the help of the church’s lawyers and insurers, to cover up wrong-doing and avoid caring for victims.  We find ourselves constantly re-abused by the church’s responses to us.

We need you to acknowledge that you do not have the competence or the right to clear up your own mess.  We need independent people we can go to to report abuse and find support; people who are not part of the church, and don’t wear the same uniform that our abusers wore. We need you to use your power as a synod to establish a properly funded scheme for support, compensation and redress for victims of church abuse. This is not because we want your money. It is because being abused in church (or anywhere else) not only steals the victim’s dignity and self-respect. It also robs them of their livelihood, their security, their future, their health. More than half of all victims of abuse suffer long-term illness. We need you to pay for counselling; we need you to help us with living costs; we need you to fill in the gaps in our pensions. These are debts you as a church have incurred.  Why should we routinely have to go cap in hand to bishops for help, only to be told you have no money and no resources? Why should we have to worry about housing costs, while our abusers live securely in vicarages and palaces? Why should so many of us find ourselves worse off as a direct result of disclosing our abuse to the church? A properly-funded redress scheme will cost many millions of pounds. But please don’t say that you have no money. It hasn’t escaped our attention that before they have attended to the needs of victims, the Church Commissioners have found £21million for a new library at Lambeth Palace.  

If there is any good news, it is that an increasing number of General Synod Members in all three Houses know that radical change is necessary. Perhaps the best thing you could do for us is to set a clear and purposeful direction of travel for the next Safeguarding Bishop, and for members of the Synod to be elected later this year. The motion before you is anodyne, but the amendments we have seen seem to have some teeth. Perhaps, if enacted, they could lay the groundwork for progress. We urge you to adopt these amendments and begin the task of reconciliation with those who have been wronged.

Signed by victims of abuse by

Rt Revd Peter Ball

Rt Revd Victor Whitsey

Rt Revd Michael Fisher

The Venerable Tom Walker

The Very Revd ******* ******* (action ongoing)

Revd Roy Cotton

Revd Colin Pritchard

Revd Chancellor Garth Moore

Revd Jonathan Fletcher

Revd Trevor Devamannikam 

John Smyth QC

Revd ***** ******* (name withheld at victim’s request)

The post Clergy abuse survivors ask General Synod for redress appeared first on Anglican Ink © 2020.

Why Progressives Are Anti-Vaxxers When It Comes to the Alt Right

Mises Institute - Thu, 06/02/2020 - 20:00

Bob Murphy first explains a standard progressive viewpoint when it comes to dealing with issues like virus outbreaks, underage drinking, and prostitution. Yet, when it comes to dealing with people whose views they abhor, the progressives suddenly are “zero tolerance” and ignore the mechanisms they point to for the other issues.

For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.

Categories: Current Affairs

What’s Next for the Virginia Sanctuary Movement?

Mises Institute - Thu, 06/02/2020 - 17:00

Despite the media’s fearmongering, the Virginia Citizens Defense League Lobby Day 2020, which took place on January 20, turned out to be a normal event.

The pro-gun demonstration drew twenty-two thousand people, who peacefully protested several gun control measures that Virginia governor Ralph Northam was proposing for the 2020 session of the Virginia General Assembly. The conclusion of this rally now has Virginia gun owners pondering where to go from there. The path to bringing about pro-gun policy at the state level appears to be at a dead end, at least in the short term, after Democrats secured control over all branches of government in the 2019 general elections.

Although there was tremendous euphoria right after Lobby Day concluded, Virginia Democrats did not waste time in showcasing their newly held political power, quickly passing a red flag gun-confiscation bill. Red flag laws are in vogue with gun control boosters, and Virginia is looking to be the eighteenth state that will implement it. In all likelihood, gun owners will have a rough time during the 2020 session of the Virginia General Assembly based on this political reality. There are tons of doomsday predictions of a demographic shift taking place in Virginia and the possibility that Republicans may never be able to take control of all branches of the state government again.

Virginia Could be Sailing in Uncharted Waters

Nonetheless, the highly publicized Second Amendment “sanctuary” movement has created a new set of opportunities for gun owners in Virginia to exploit. Recent developments indicate that gun politics could create a political realignment in Virginia.

First off, the president of Liberty University Jerry Falwell Jr. boldly called for Virginians to exercise civil disobedience in the case that the Virginia state government passes gun control this year. Falwell took it a step further, even suggesting that the limits of the District of Columbia be extended to include the entire DC metro region, which has effectively sprawled out into northern Virginia. “That’s what the founders intended, was for the federal district to be separate from any state because they have a conflict of interest and they never anticipated it would sprawl out as far as it has,” Falwell argued.

A similar jurisdictional shake-up could possibly take place, thanks to several West Virginia house delegates putting a resolution forward, HCR 8, which would allow Virginia sanctuary counties to join the state. These delegates believe that Virginia sanctuary counties' rights would be better protected under West Virginia’s jurisdiction. West Virginia governor Jim Justice is also on record as being in support of these counties joining his state: “If you’re not truly happy where you are,” Justice said, “we stand with open arms to take you from Virginia.” The lawmakers do raise a good point about West Virginia’s pro-gun environment.

In 2016, West Virginia became a constitutional carry state—where law-abiding citizens are allowed to carry a firearm without having to obtain a permit. This, along with other pro-gun policies it has implemented during the last few years, has allowed West Virginia to build a solid reputation as a gun-friendly state. In 2019, Guns and Ammo ranked West Virginia the fifteenth best state for gun owners, whereas Virginia occupied a mediocre thirty-first place—a ranking that will likely fall steeply if anti-gun Democrats have their way during the 2020 session of the Virginia General Assembly. But it doesn’t have to end this way.

Are Sanctuary Counties the Way to Go?

Michael Boldin of the Tenth Amendment Center brought up some valid concerns about how so-called Second Amendment sanctuary resolutions employ a misleading term given that they don’t have legal force behind them. On the other hand, sanctuary cities dealing with immigration enforcement—where local law enforcement does not cooperate with federal immigration enforcers—involve a more decisive political action that is not symbolic in nature. We may need to cut the Second Amendment movement some slack, however. This is relatively new territory for Second Amendment proponents, who have traditionally operated under the premise that federal lobbying or petitioning of the courts will save them. There will be learning curves through this process, but gun owners will have to start somewhere.

Even politicians at the federal level, such as Kentucky senator Rand Paul and Congressman Thomas Massie, are throwing their support behind Second Amendment sanctuaries. They recognize that there is only so much they can do politically in DC. Should any type of roll call vote come up on pro-gun legislation, they would almost assuredly be in the minority. That’s the political reality on Capitol Hill, and gradually more and more constitutionalists are starting to recognize where the winds are blowing. Hence their forays into more local and state-level forms of activism.

Second Amendment Activists Would Be Wise Not to Fall for the Federal Court Trap

Based on personal experience working within the gun lobby, I have noticed a tendency among activists to think that conventional methods of politics will bring constitutionalism back to America. Many envision repealing numerous infringements at the federal level, such as the National Firearms Act of 1934, as a first step in reversing decades of government overreach. Although well intentioned, this kind of mindset is outdated and ignores how detached both political parties at the federal level have become from upholding traditional American civil liberties. Further, it disregards how unreliable the Supreme Court has been, both in upholding Second Amendment rights and striking down unconstitutional measures that have been established through federal law or bureaucratic mandates.

Sure, DC v. Heller and McDonald v. Chicago expanded the Second Amendment to state and local policy. The result was an expansion of legal protections for gun owners, for now. But it would behoove us to look at the bigger picture. The same federal courts that might “restore” positive freedoms on occasion are just as capable of reverting to their managerial tendencies by legislating from the bench and nullifying gun rights. These court cases make for great fundraising opportunities and public relations stunts, showing how a gun organization is sticking it to the gun control crowd, but they don’t do much to curb state growth. Litigation consumes time, talent, and treasure that could otherwise be allocated to more grassroots activities such as full-fledged nullification measures or even bolder efforts involving plebiscites in which certain jurisdictions break away from their oppressive state governments.

As the days go by, the School House Rock version of politics that Americans have been accustomed to has increasingly become a distant memory, thanks to DC’s thorough embrace of managerial politics. So, no matter who’s in charge, politics is business as usual, which means more government growth at the expense of local jurisdictions and civil society. However, politics is the art of the possible, especially when people appreciate the value of American federalism and all of its implications. The opportunities are endless, provided that people break free from the conventional wisdom they’ve been fed about political action and start acting locally. Gun rights issues could be the catalyst that kicks off a decentralization revolution America desperately needs.

Categories: Current Affairs

Intellectual Property: Innovation Should Serve Consumers, Not Producers

Mises Institute - Thu, 06/02/2020 - 12:00

Proponents of intellectual property rights often rely on one of two lines of reasoning. The first is based on the misunderstanding that the frequency or volume of innovations determine economic growth. The second is captured by the question, “So if I spend $1 billion on R&D (research and development) to bring a new drug to market, anyone should be able to copy my drug without compensation?” Both are based on the same fundamental error: assuming that innovation is a matter of production. It is not. Innovation is all about entrepreneurship, and that’s why intellectual property rights do not and cannot help.

The economic growth argument appears to be in line with empirical observation. After all, it is the introduction of and change caused by valuable innovations that make us better off and raise our standard of living. But as is so often the case, observations in economics tend to lead to problematic if not false conclusions. The market is a trial-and-error process under uncertainty, in which entrepreneurs and businesses compete by offering goods and services anticipated to satisfy consumers at a future point in time better than the offerings of others. Then, obviously, innovations are important.

But it is not the number of innovations attempted that matters. There is also scarcity, meaning that a market process that generates a huge number of innovations may in effect produce less value than a process that generates only a few. Quality is more important than quantity, just like aiming the one arrow will produce a better result than shooting a great number of arrows in random directions. Although entrepreneurs hardly have a visible target to aim for, their “division of intellectual labor” places boundaries on what attempts are made. Innovations are uncertain, but not undirected or random.

The compensation argument makes the same mistake but clarifies the error. The issue in the market is not about compensation for investment or effort made, but the creation of value for consumers. We are not, and should not be, compensated for the time and effort we put into something, but for our contribution to value. The reason we get paid at our jobs is not that we get up in the morning and spend our days doing tedious tasks and following management’s orders, but because the entrepreneurs, along with their “junior partners” (management), are betting that this type of production will be valuable to consumers and thus generate revenue that more than covers cost.

In other words, that a firm invests in research and development is not primarily a matter of production, but one of attempting to find solutions that consumers will value. It is a means toward generating sales with revenue that exceeds cost. Such revenue is generated, because this effort turns out to be more valuable to consumers relative to other entrepreneurial undertakings. As Mises puts it, “The only source from which an entrepreneur’s profits stem is his ability to anticipate better than other people the future demand of the consumers” (emphasis added).

The entrepreneurial problem, therefore, is one about better figuring out how to serve consumers. Innovation is undoubtedly a means toward that end, but whether an innovation is profitable depends not on the innovation being new or even costing a lot of money to carry out, but on whether it is correctly positioned with respect to (1) consumers’ (future) wants and (2) other entrepreneurs’ (future) offerings. Both aspects are necessary for the market process to progress and thereby improve our standard of living.

Intellectual property rights, imposed on entrepreneurs generally and thus on the market, mean that entrepreneurs are relieved of the second part of the problem—the positioning relative to other entrepreneurs. This is the purpose of this type of regulation, but what it means is that entrepreneurs can and will overinvest in innovations that comply with the regulations’ requirements for protection. And they will do so instead of innovating for the benefit of consumers relative other entrepreneurs’ offerings.

The result is that innovations are pursued for the sake of being innovations, and not for their contribution to consumers’ want satisfaction. In other words, investments in research and development are not directed by the consumer's wants. Consequently, what matters is the investment in R&D rather than the business model—how, when, and in what manner the offering is presented to the consumer.

This is more than an inefficiency in the market system. It is a change of incentives that fundamentally distorts the market process, its direction, and thus the economy’s ability to satisfy actual consumer wants.

The real solution lies in allowing entrepreneurs to be entrepreneurs, and thus, through their imaginative speculative efforts, to figure out how to beat each other in offering goods with value to consumers and be the “driving force” of the economy. Freeing innovation efforts from their entrepreneurial component is not the way to improve the value for consumers or improve the functioning of the market process. It is only a matter of providing some producers with profit at the expense of everyone, as well as the economy and society.

Categories: Current Affairs

The Reality of China's Virus

Adam Smith Institute - Thu, 06/02/2020 - 10:39

Recently on twitter, videos of the Wuhan Coronavirus Hospitals being built in 8 days have been circulating. Of course, when you have a command economy you can complete certain tasks very quickly. There’s no local consultation or planning permission to fill out - if the party wants it, it’s done. While some may hail this a triumph of socialism, it’s important to distinguish between the surface and what lies beneath it. 

Of course a totalitarian state does have its advantages. It is fairly free to quarantine a city the size of London, surrounding it with troops so no-one gets out. Doctors and nurses can be forced to work overtime. Stricter censorship (supposedly) prevents mass panic. 

Of course this is not the case. Speculation through word of mouth fills the void that little official news has left. Internal communication, particularly between doctors restricts the ability to react to the crisis.  

When the SARS epidemic ended there were still a number of people who were not recognised in official statistics. Suppressing the number of cases and deaths makes the government look better. 

China is admittedly less stonewalling than they were in the SARS outbreak. As Cindy Yu reports, back then, keeping face was so crucial that doctors hid patients inside ambulances away from WHO inspectors. This time Xi Jinping has declared any officials caught in a cover up would be ‘nailed on the pillar of shame for eternity’. Of course there is a difference between not reporting accurately to your superiors, and the top down suppression of reports. Performance in dealing with the crisis is not as important as demonstrating loyalty and saving face for the government. 

These priorities both for officials and government itself ensures that the priority of saving lives is sidelined. Of course you could argue, any government in such a situation wants to maintain popularity to stay in power. But in a totalitarian regime, where facts are tweaked and suppressed, the incentives are much worse. The Chinese regime has a deadly calculus put before it, weighing up between suppressing numbers to save face or stopping the pandemic and potentially more deaths. A public choice theory disaster played to the extremes. 

It would be nice to say, “well let’s wait and see how they manage it” as many reporters say. But if we still do not know the whole story about how the government managed SARS there’s no guarantee we will know how they managed this pandemic. Worse still, if another pandemic arrives down the line then we will not be anywhere closer to learning from past mistakes. 

It would be nice to counter the propaganda videos circulating with facts about how well the government is managing the crisis but sadly this is not possible. All this proves to demonstrate the risks of a state that plays by its own rules, and is unaccountable to the very people it is supposed to serve.

Categories: Current Affairs

Over and above the giggles there's an important lesson from Iowa

Adam Smith Institute - Thu, 06/02/2020 - 07:01

That Iowa caucus thing, well, yes. Those who would run the country find themselves incapable of counting a couple of hundred thousand votes. We all look forward to their running the entire economy, right? But past that amusement there’s an important point:

“The sequence of events that led to the failure of this technology is nothing new – it happens in every rollout,” said Meredith Broussard, a professor at NYU and computer scientist. “This was a totally predictable disaster.”

What’s more, the app was not tested at scale and not vetted by any third party agencies, according to reports.

Move up a level of abstraction from a mere app to any new manner of doing something, or any new thing to be done. That testing at scale. This is one of the things that markets do and planned systems don’t.

Sure, planners - competent ones - do at least try to make sure that what they’re doing works. Works in the sense that if it is adding one plus one it gets to two. What planning doesn’t do, because it can’t, is test whether it works in the grander sense.

That grander sense being, well, is it something that is wanted? Is it better than this other method, does anyone want the thing to be done, is there some wildly different solution unthought of?

This all being what markets do actually do. For we float our new method of whatever into that sea of possibilities and allow them to compete with each other. Those that win are those that do what people want done in the manner that people want them done.

Yes, of course, at one scale everything is planned. The person writing the code had better have an idea of what they’re setting out to do for example. But the market is, in the case of the US, those 330 million people doing that widescale testing. Which is why market systems, with their competition, actually work. Only those things which achieve something desired come into widescale use. We thus end up with an economy full of things that have passed that test, doing something people desire well enough.

Rather than, say, things which reach the answer three when adding one and one and which are then imposed by central command.

Categories: Current Affairs

Appointment of the 10th Bishop of Singapore

Anglican Ink - Thu, 06/02/2020 - 03:37

We are pleased to inform you that the Provincial House of Bishops has appointed Rev Canon Dr Titus Chung, aged 55 years, as the tenth Bishop of Singapore.

Canon Titus is currently the Priest-in-charge of St Andrew’s Cathedral Mandarin Congregation. He is also the Convenor of Continuing Ministerial Education for Clergy & Deaconesses in the diocese, and a member of the Senior Clergy Planning Team. Canon Titus was ordained in our Diocese in 1997. He is married to Connie and they have 2 sons in their twenties, Theodore and Thaddeus.

Canon Titus will be consecrated and installed on Sunday 18 October 2020 at St Andrew’s Cathedral. We ask for your prayers for him and his family as they prepare for this new appointment and the taking over of a new role with new responsibilities. Pray fervently with these Scriptures in mind: Num 27:16; Jer 3:15  & 2 Tim 4:1-2.

 Together for God’s glory

The Rt Rennis Ponniah

The post Appointment of the 10th Bishop of Singapore appeared first on Anglican Ink © 2020.

Brexit: Why the Threat of Higher Tariffs Wasn't Enough To Prevent It

Mises Institute - Wed, 05/02/2020 - 20:00

Chris Johns at the Irish Times is dismayed by all the support he sees for Brexit among the Brits. Brexit has always been a divisive issue, with about half the voters supporting it. But Johns is vexed by the fact so many of Brexit's boosters are — in Johns's eyes—rooting against their own economic interests.

Johns notes, for example, that Brexit is likely to take a significant toll on British manufacturing, and will be problematic for incomes and tax revenues. Resigned to Brexit as a fact, Johns suggests trying to make the transition as painless as possible, but insists, "Britain will either be poorer or much poorer." In other words, in the best case the UK will find a way to minimize the damage of Brexit.

That Brexit will be a net loss for British people is a given among Remainers. But that notion, so far, has been a tough sell. The official economic metrics—i.e., the government statistics—have pointed toward continued economic gains for the UK, even in the face of the supposed "uncertainty" triggered by Brexit.

But even if these numbers start to look less good, they still don't tell the whole story. As some honest economists have admitted, there are just too many moving parts here to say with certainty the degree to which the UK economy has been affected by Brexit.

We Can't Put a Number on the Opportunity Cost of EU Membership

The data in itself is problematic, too. Government statistics have been devised to keep track of identifiable and countable events and dollar amounts. This is why numbers such as "unemployment rates" and "median incomes" form the backbone of government stats. They can be identified and counted with relative ease based on survey data or even direct observation.

But much of the concern over EU membership has focused on issues that are far harder to quantify, such as government regulations and lost opportunities. How exactly does one quantify a new regulation on British businesses handed down by EU bureaucrats? An individual business might be able to hazard a guess, but aggregate data is far less reliable and far less available.

Even harder to count is the opportunity cost of EU membership. As noted by EU critics, membership in the EU has limited the ability of the UK to expand trade outside the EU bloc. There's no way to put a number on how much these lost opportunities have cost British households. Certainly some researchers have tried. But we end up debating the accuracy and relevance of the research. Ultimately, it all requires a judgment call as to whether or not EU membership is "worth it" to a specific person.

The "Psychic Profit" of Leaving the EU

Other things are even harder to quantify than lost opportunities. These are what many voters perceive as the cultural benefits of leaving the EU.

For example, a pro-Brexit voter might argue that British laws should be decided in Britain—even if this means paying a higher tariff to trade with France. This voter is saying that political independence is more valuable than selling goods to France at a lower tariff rate. Obviously, there's no way to determine exactly how many dollars or pounds or euros "political independence" produces.

We're now in the realm of "psychic profit," which is the profit that a person perceives in his own mind from a certain action or state of affairs. The problem with psychic profits is that they are not quantifiable as money profits are. As economist Ludwig von Mises noted, "psychic qualities and not reducible to any interpersonal description in quantitative terms." Moreover, Mises notes that the "psychic phenomena" from which these valuations derive involve "incalculable intensive magnitudes." Even if a person values Brexit more than low-tariff trade, it's impossible to put a number on how much more.

A similar accounting problem arises with the immigration issue. Some voters support Brexit because they suspect or hope that it will reduce immigration. In this case, some have concluded that their psychic profits are improved by being surrounded by people of similar language and culture. 

Faced with the idea that greater controls on migrant labor could push up the cost of living, some may conclude the psychic cost of immigration is greater than the cost of an increased price for groceries.

All of this should illustrate that when we're talking about a voter's decision to support a certain policy, we're not exactly employing an exact science. By supporting policies that might ultimately produce higher prices or higher foreign tariffs, one is not necessarily falling victim to economic illiteracy. One is simply taking a position that, in one's mind, something that can't be measured in pounds is more valuable than something that can be measured in pounds. There is a rational—and possibly well-informed—process of calculation going on here. It's just a calculation that's impossible to quantify.

Some economists find this sort of thing quite irksome, however. Johns, for instance, bemoans the fact that the "culture war" behind Brexit has led to " the economy tak[ing] acceptable collateral damage." He apparently means that voters have abandoned what he considers to be sound economic thinking in favor of "benefits" that can't be counted on any ledger.

And this is the problem we so often run into with economists who continue to wallow in notions like "homo economicus" or the idea that things only matter if they can be quantified in an economic model. In the minds of pundits like Johns, people are irrational if they chose a policy that might reduce their incomes as measured in dollars or pounds. The reasonable thing to do, it is assumed, is to weigh every policy by its benefits, measured by countable jobs or income units.

The Real Problem: Majorities Forcing Policies on Minorities

This sort of analysis is helpful in political activism. It allows economists and pundits to say, "Look at how irrational these pro-Brexit crazies are! They'd rather impoverish themselves in the name of 'self-government' than be part of the European Union!" The implication is that knowledge of economics, rational thinking, and common sense all point toward EU membership as the "correct" choice.  This sort of analysis relies on discounting the psychic profit many believe they gain from a certain policy change.  Johns himself slips this into his column by emphasizing that Brexit voters are relatively old, white, have "low educational attainment" and engage in "infrequent use of smartphones." Translation: Brexit voters are unsophisticated, uneducated, and probably racist and senile.

The fact that pro-Brexit voters are more rational than their opponents give them credit for doesn't mean that everything is fine, though.

There is a political problem here that the economists often miss. But the problem doesn't stem from the fact that people are taking positions based on ideological values rather than "hard numbers."

The problem comes from the democratic majority's ability to impose a preferred policy on the losing minority. In the case of Brexit, for example, nearly half the population appears to be either indifferent to membership in the EU or actively in support of it. And just as statistical economic data can't tell us whether or not pro-Brexit supporters are "right," it can't make a judgment about EU supporters. Many EU advocates simply like the fact the EU hands down lots of environmental regulations to all member states. Supporters may like that EU membership (presumably) increases total immigration for reasons totally unrelated to economic factors. Some gain psychic profit just from supporting the idea of a politically united Europe.

But this doesn't mean that this minority of voters ought to be forced into leaving the EU because 51 percent of the population says so.

The ideology underlying democracy offers no answer to this. We have a situation in which about half of the population believes that it profits (psychically or otherwise) from one policy. But about half of the population believes it profits from the opposite policy. This problem becomes even worse when reduced to a regional level. An outright majority of residents in Scotland, for example, opposes Brexit, and now that Brexit is a reality, a slim majority of Scots support independence. It would seem to violate basic notions of justice to insist that Scotland be held to the dictates of the English majority forever.

Scottish Separatists Are Now the "Crazy" Ones?

In spite of years of being told how economically inept they are for supporting Brexit, some are are now turning the same arguments on the Scots. This pundit, for example, might as well be saying  "look at those crazy Scots. They want to cut themselves off from their best trading partner (England)!" In the minds of those opposing independence, the dictates of economic good sense mean that Scotland should stay in the UK. But the anti-independence pundits may be making the same mistake the anti-Brexit pundits were making. It could be pro-independence Scots feel that they would gain more from independence than from unity—even if government stats say otherwise. If many Scots truly believe this strongly, it will be very hard to convince them otherwise, no matter how many studies by economists are trotted out.

Ultimately, we're still left with a political problem that can't be solved by insisting all the intelligent people agree with us because our spreadsheets and bean counters tell us which political position is "best" for us.

None of this should be construed to suggest that sound economics is wrong. Of course low tariffs are better than high tariffs. Of course business owners ought to be free to hire workers regardless of what country those workers are from. Of course government regulations on businesses are a destructive burden, whether imposed by London or by Brussels. But the Brexit debate wasn't really about whether high tariffs are better than low tariffs. It was about who should decide tariffs, and where and how. It was about issues far beyond whether or not an additional 1 percent growth could be wrung out of GDP. Many have tried to turn Brexit into just a debate about economic policy. But economics has never been a reliable guide as to what the right position on Brexit is.

Categories: Current Affairs

What Year Did Healthcare Become a Natural Right?

Mises Institute - Wed, 05/02/2020 - 17:00

Bernie Sanders declares with piety, “Healthcare is a human right.” His statement may sound reasonable, because when we think about someone without healthcare what comes to mind is pain, suffering, and the loss of hope and dignity.

Bernie is correct that no one in a country as prosperous as ours should be without some form of healthcare. However, is healthcare truly a right? It may sound terrible to some, but the answer is no. Healthcare is not a right nor can it ever be, for very sound reasons.

What Exactly Is Healthcare?

Before we delve into what are actual rights, I have a simple question for Bernie: exactly when did healthcare become a right?

Healthcare cannot possibly be a natural right since healthcare—as we tend to define it today—was not in existence when humans first roamed the planet. Until healthcare was invented, it could never have been a right. So, if it wasn’t a right from the dawn of time, when did it become a right in Bernie’s mind? Whichever date he picked, it would be an arbitrary number.

Let’s say Bernie’s magic date when healthcare became a right was 1900. All the available knowledge about medicine, medical devices such as x-ray machines, and drugs such as cocaine would be considered rights available to all as needed under Bernie’s mandate. But what about all the inventions yet to come? Are those somehow “grandchilded” in? Since 1900, many significant developments have occurred in the medical field, and almost all of them were very expensive when first brought to market. A new drug called Zolgensma, for example, costs patients $2.125 million per patient.  Zolegensma was not available to the public until the FDA approved it in 2019. If healthcare had been a right in 2018, then presumably Zolgensma would have also been a right, although in 2018 it would have been illegal to sell it to the public. By 2019, however, it might have been transformed into something we all have a "right" to use. Was the FDA approval the transformative event?  If not, what exactly turned Zolgensma from an illegal-to-sell substance into something to which one has a right? This is unclear. Of course, it may be that the administrators of Bernie-care would have decided to not fund Zolgensma under the Bernie-care system. Cost controls of this sort are necessary under any healthcare system.  The United Kingdom's National Health Service (NHS), for example, employs bureaucrats to determine what health treatments are to be funded and which are not. But if the use of Zolgensma—or any substance purported to be medicine—is not allowed under Bernie-care, it implies that not all healthcare is actually a right.

This brings us to the next question: even if we all agree that healthcare should be a right, what does Bernie mean by “healthcare”? Healthcare comprises many different services, procedures, and medicines. Are all those products and services considered healthcare as of the date that Sanders deems it became a right? If so, there is a big problem with that reasoning.

Notice that these sorts of rights are not truly rights at all—they are subject to the whims of politicians and to budgetary constraints. In practice, these whims extend far beyond just approving certain drugs. For example, the NHS supposedly provided healthcare as a right—until they started running out of other people’s money. Now, if a patient smokes or is obese he or she will be refused treatment—or at least be moved to the back of the line until s/he stops smoking or loses weight. Some people apparently have more rights than others under the NHS.

This isn't how real rights work.

What Real Rights Look Like

John Locke summarized natural human rights in 1689, in his Second Treatise of Government. He stated that all humans have three inalienable rights from nature: the right to exist, the right to live free, and the right to property. These rights are natural because no one is forced to comply with them, nor do they require one to do anything. The fact that these laws are trampled on by other people and governments repeatedly does not mean they don’t exist.

The nature of these rights does not change over time as technology changes. We do not need government administrators to determine what new technologies will be approved for the purposes of not stealing and not murdering others.

These are negative rights that do not require any funding or action beyond refraining from violating the rights of others.  Most other types of "rights" are actually infringements on real rights.

That is, for Sanders to make healthcare a human right, he could only do so by forcing that “right” on all of us. Bernie could argue that this law would enhance everyone’s natural rights to life, liberty, and property (curing a disease, keeping one healthy enough to continue working and saving monies that would have otherwise gone to pay for healthcare). The new right, however, would violate the rights to freedom and property enjoyed by others.

For example, if one is required by law to participate in a Medicare for All plan—to provide for the "right" to healthcare—one has no choice in the matter (loss of liberty) and one must contribute money to the plan (loss of property). Almost any right provided by government will cost somebody something. And that “something” is taxes and the “somebody” is the taxpayer.

If healthcare is a right, then it can be argued that almost anything else is a right as well. Toothbrushes and toothpaste? Everyone needs to brush his or her teeth; those should be rights. Everyone needs to communicate, therefore, ownership of cell phones—and all future communication technologies—must be a right as well.

It's easy to see where this sort of thinking leads.

Categories: Current Affairs

Shhhh: Repo Operation in Process

Mises Institute - Wed, 05/02/2020 - 12:00

In a bit of holiday news no one will care about, the Treasury announced it would return to selling twenty-year treasury bonds to aid in funding the nation’s trillion-dollar deficit. It was 1986 when the Treasury last issued twenty-year paper. Of course the question is: who or what will be the buyers?

Daniel R. Amerman, CFA, is keeping a steady eye on the Treasury and Fed’s operations and has come to the conclusion,

In just the last four months, the U.S. government has spent $457 billion—almost half a trillion dollars—more than it has taken in. In that same time and using monetary creation, the Federal Reserve has created and put $457 billion in new cash into the financial system, either buying U.S. Treasuries or funding the ownership of those Treasuries by others.

A few folks are aware of the repo tantrum which occurred last September. Overnite rates for money secured by US debt popped to 10 percent, signaling a collateral crises or at least a financial plumbing problem due to the financial mandarins trying to sneak away from the party with $100 billion that was in the Fed’s bottomless punch bowl.

But, the markets were (and are) still thirsty, so to speak. Murray Rothbard in The Mystery of Banking explains the logistics of Fed-created inflation, at least as it was prior to the book’s first printing in 1983. For instance, he makes no mention of repurchase agreements (repos) in the book. Instead, Rothbard writes,

There is another form of financing deficits which is now obsolete in the modern Western world but which was formerly the standard method of finance. That was for the central government to simply print money (Treasury cash) and spend it. This, of course, was highly inflationary…

Rothbard goes on:

If the Fed were to finance new Treasury bond issues directly, as it was only allowed by law to do for a while during World War II, this step would be wildly inflationary. For the Treasury would now have an increased $100 billion not just of newly-created bank money, but of “high-powered” bank money—demand deposits at the Fed.

These days, the commercial banking system isn’t where the action is. Instead, it’s the shadow banking system that needs direct feeding to goose inflation—at least inflation in asset prices, and also to keep the debt service on the nation’s debt as low as possible. Not low as in print-money low, but, as Amerman writes,

the Federal Reserve is doing what no responsible central bank is supposed to do, and effectively funding the growth in the debt at well below free market interest rates via monetary creation on a massive scale—without admitting that it is doing so.

Amerman echos Rothbard, pointing out that

this funding is not through direct purchases from the U.S. Treasury but through the markets, which is actually far more effective for what the Federal Reserve desires. The Fed does not just want to fund the national debt, but to control interest rates in the markets in the process, and this means they need to go through the markets to buy the Treasury debt. (There is also a current legal prohibition against direct purchases, but that law could be changed in a day if the government wanted to use that much less effective means of funding the debt).

Repo rates between 1.52 and 1.55 percent are the next best thing to what Rothbard described as “wildly inflationary.” Amerman explains,

This is all about funding the fast growing national debt at lower rates than what rational investors would accept in a free market, and the repo crisis was a symptom of that problem, not the cause.

What’s old is new again, and Amerman says that the Fed used the same weapon in 2019 that it did in 2008: mo’ money.

After almost 11 years of comparative calm and without repo market interventions, the Federal Reserve stopped the crisis in 2019 much as it had stopped the last major crisis in 2008, by creating new money on a massive scale and lending it to the banks and other financial entities that were at risk. In the process—the Federal Reserve effectively funded the growth in the United States national debt that week.

Many people believe this economy is rockin’ and rollin’. Look at the stock market. Look at the real estate market. Interest rates are low; unemployment is low. What’s not to like?

Wall Street and Washington, DC, want to be happy, so the economists at the Eccles Building, while decreasing total repo loans, have doubled the total funding of the national debt. “It is the Fed's purchase of Treasury obligations that is now that dominant source of cumulative deficit financing,” writes Amerman.

Retirees, receiving scant interest on their savings, are banking on living off the proceeds of selling financial assets. Amerman concludes,

The rapid growth of the national debt is also likely to become one of the biggest future threats to standards of living in retirement.

Central bank monetary magic won’t work forever.

Categories: Current Affairs

Polly wishes to know - Do you sincerely want to be rich?

Adam Smith Institute - Wed, 05/02/2020 - 07:01

Polly Toynbee wouldn’t like the answer most of us would give to this question if we were directly asked it. For quite a large portion - we’d bet a majority rather than just a plurality - would indeed like to have a 50% pay rise. Which isn’t what Polly thinks we ought to want given the horror with which she regards this possible future:

Charles Grant of the Centre for European Reform says the EU is genuinely alarmed that Britain may develop into a deregulated Singapore on its border, unfairly competing by undercutting on standards and social conditions while subsidising our key industries to destroy those of its member states.

It’s worth pondering whether Singapore competes unfairly, subsidises and all that. Not so that anyone has noticed is the correct answer. But it’s also true that the place is about 50% richer than the UK. Or, to put it into more domestic terms, about as much richer than the UK average as London is of that same average. It often being said that we should be trying to get the non-London parts up to that London standard, no?

What’s much more interesting is that the EU, Polly and the CER all agree that this possibility is within our grasp through deregulation. We can be 50% richer simply by having less government and waiting a bit. Sure, we agree, but it is rather fun that they are making that same claim. For if that weren’t possible then there would be no fear of outperformance from deregulation, would there?

Categories: Current Affairs

Do People Really Seek to Maximize Profit?

Mises Institute - Tue, 04/02/2020 - 20:00

[This article is excerpted from chapter 14 of Human Action.]

It is generally believed that economists, in dealing with the problems of a market economy, are quite unrealistic in assuming that all men are always eager to gain the highest attainable advantage. They construct, it is said, the image of a perfectly selfish and rationalistic being for whom nothing counts but profit. Such a homo economicus may be a likeness of stock jobbers and speculators. But the immense majority are very different. Nothing for the cognition of reality can be learned from the study of the conduct of this delusive image.

It is not necessary to enter again into a refutation of all the confusion, error, and distortion inherent in this contention. The first two parts of this book have unmasked the fallacies implied. At this point it is enough to deal with the problem of the maximization of profits.

Praxeology in general and economics in its special field assume with regard to the springs of human action nothing other than that acting man wants to remove uneasiness. Under the particular conditions of dealing on the market, action means buying and selling. Everything that economics asserts about demand and supply refers to every instance of demand and supply and not only to demand and supply brought about by some special circumstances requiring a particular description or definition.

To assert that a man, faced with the alternative of getting more or less for a commodity he wants to sell, ceteris paribus chooses the high price, does not require any further assumption. A higher price means for the seller a better satisfaction of his wants. The same applies mutatis mutandis to the buyer. The amount saved in buying the commodity concerned enables him to spend more for the satisfaction of other needs. To buy in the cheapest market and to sell in the dearest market is, other things being equal, not conduct which would presuppose any special assumptions concerning the actor's motives and morality. It is merely the necessary offshoot of any action under the conditions of market exchange.

In his capacity as a businessman, a man is a servant of the consumers, bound to comply with their wishes. He cannot indulge in his own whims and fancies. But his customers' whims and fancies are for him ultimate law, provided these customers are ready to pay for them. He is under the necessity of adjusting his conduct to the demand of the consumers. If the consumers, without a taste for the beautiful, prefer things ugly and vulgar, he must, contrary to his own convictions, supply them with such things.1

If consumers do not want to pay a higher price for domestic products than for those produced abroad, he must buy the foreign product, provided it is cheaper. An employer cannot grant favors at the expense of his customers. He cannot pay wage rates higher than those determined by the market if the buyers are not ready to pay proportionately higher prices for commodities produced in plants in which wage rates are higher than in other plants.

It is different with man in his capacity as spender of his income. He is free to do what he likes best. He can bestow alms. He can, motivated by various doctrines and prejudices, discriminate against goods of a certain origin or source and prefer the worse or more expensive product to the—technologically—better and cheaper one.

As a rule, people in buying do not make gifts to the seller. But nonetheless that happens. The boundaries between buying goods and services needed and giving alms are sometimes difficult to discern. He who buys at a charity sale usually combines a purchase with a donation for a charitable purpose. He who gives a dime to a blind street musician certainly does not pay for the questionable performance; he simply gives alms.

Man in acting is a unity. The businessman who owns the whole firm may sometimes efface the boundaries between business and charity. If he wants to relieve a distressed friend, delicacy of feeling may prompt him to resort to a procedure which spares the latter the embarrassment of living on alms. He gives the friend a job in his office although he does not need his help or could hire an equivalent helper at a lower salary. Then the salary granted appears formally as a part of business outlays. In fact it is the spending of a fraction of the businessman's income. It is, from a correct point of view, consumption and not an expenditure designed to increase the firm's profits.2

Awkward mistakes are due to the tendency to look only upon things tangible, visible, and measurable, and to neglect everything else. What the consumer buys is not simply food or calories. He does not want to feed like a wolf, he wants to eat like a man. Food satisfies the appetite of many people the better the more appetizingly and tastefully it is prepared, the finer the table is set, and the more agreeable the environment is in which the food is consumed. Such things are regarded as of no consequence by a consideration exclusively occupied with the chemical aspects of the process of digestion.3 But the fact that they play an important role in the determination of food prices is perfectly compatible with the assertion that people prefer, ceteris paribus, to buy in the cheapest market. Whenever a buyer, in choosing between two things which chemists and technologists deem perfectly equal, prefers the more expensive, he has a reason.

If he does not err, he pays for services which chemistry and technology cannot comprehend with their specific methods of investigation. If a man prefers an expensive place to a cheaper one because he likes to sip his cocktails in the neighborhood of a duke, we may remark on his ridiculous vanity. But we must not say that the man's conduct does not aim at an improvement of his own state of satisfaction.

What a man does is always aimed at an improvement of his own state of satisfaction. In this sense—and in no other—we are free to use the term selfishness and to emphasize that action is necessarily always selfish. Even an action directly aiming at the improvement of other people's conditions is selfish. The actor considers it as more satisfactory for himself to make other people eat than to eat himself. His uneasiness is caused by the awareness of the fact that other people are in want.

It is a fact that many people behave in another way and prefer to fill their own stomach and not that of their fellow citizens. But this has nothing to do with economics; it is a datum of historical experience. At any rate, economics refers to every kind of action, no matter whether motivated by the urge of a man to eat or to make other people eat.

If maximizing profits means that a man in all market transactions aims at increasing to the utmost the advantage derived, it is a pleonastic and periphrastic circumlocution. It only asserts what is implied in the very category of action. If it means anything else, it is the expression of an erroneous idea.

Some economists believe that it is the task of economics to establish how in the whole of society the greatest possible satisfaction of all people or of the greatest number could be attained. They do not realize that there is no method which would allow us to measure the state of satisfaction attained by various individuals. They misconstrue the character of judgments which are based on the comparison between various people's happiness. While expressing arbitrary value judgments, they believe themselves to be establishing facts. One may call it just to rob the rich in order to make presents to the poor. However, to call something fair or unfair is always a subjective value judgment and as such purely personal and not liable to any verification or falsification. Economics is not intent upon pronouncing value judgments. It aims at a cognition of the consequences of certain modes of acting.

It has been asserted that the physiological needs of all men are of the same kind and that this equality provides a standard for the measurement of the degree of their objective satisfaction. In expressing such opinions and in recommending the use of such criteria to guide the government's policy, one proposes to deal with men as the breeder deals with his cattle. But the reformers fail to realize that there is no universal principle of alimentation valid for all men. Which one of the various principles one chooses depends entirely on the aims one wants to attain. The cattle breeder does not feed his cows in order to make them happy, but in order to attain the ends which he has assigned to them in his own plans. He may prefer more milk or more meat or something else. What type of men do the man breeders want to rear—athletes or mathematicians? Warriors or factory hands? He who would make man the material of a purposeful system of breeding and feeding would arrogate to himself despotic powers and would use his fellow citizens as means for the attainment of his own ends, which differ from those they themselves are aiming at.

The value judgments of an individual differentiate between what makes him more satisfied and what less. The value judgments a man pronounces about another man's satisfaction do not assert anything about this other man's satisfaction. They only assert what condition of this other man better satisfies the man who pronounces the judgment. The reformers searching for the maximum of general satisfaction have told us merely what state of other people's affairs would best suit themselves.

  • 1. A painter is a businessman if he is intent upon making paintings which could be sold at the highest price. A painter who does not compromise with the taste of the buying public and, disdaining all unpleasant consequences, lets himself be guided solely by his own ideals is an artist, a creative genius. Cf. above, pp. 139–40.
  • 2. Such overlapping of the boundaries between business outlays and consumptive spending is often encouraged by institutional conditions. An expenditure debited to the account of trading expenses reduces net profits and thereby the amount of taxes due. If taxes absorb 50 percent of profits, the charitable businessman spends only 50 percent of the gift out of his own pocket. The rest burdens the Department of Internal Revenue.
  • 3. To be sure, a consideration from the point of view of the physiology of nutrition will not regard such things as negligible.
Categories: Current Affairs

<em>And Rightly So</em>: The Wisdon of Neil McCaffrey

Mises Institute - Tue, 04/02/2020 - 17:00

[And Rightly So: Selected Letters and Articles of Neil McCaffrey. Edited by Peter S. Kwasniewski. Roman Catholic Books, 2019. 386 pages.]

Reading this book brought back many memories. It consists mostly of Neil McCaffrey’s letters, several of his articles and memos, and a few letters to him. Neil McCaffrey was an extraordinary man who became my friend and professional mentor on many levels. Neil had founded the Conservative Book Club in 1964, and built a booming market among National Review and Human Events readers. But he soon noted that there were not enough books for people to buy.

That’s why Neil founded Arlington House in 1965 and named it after Robert E. Lee’s ancestral home, stolen by Lincoln for a Union cemetery. (I still hope to see it returned someday.) McCaffrey had hoped to create a major publishing house that would bring conservative classics and contemporary titles to a broad public for the first time in the postwar period.

There was a series of books forecasting the death of the gold standard and its consequences, by Bill Rickenbacker and Harry Browne, preeminently. The only bestseller Arlington ever had was Harry’s How You Can Profit From the Coming Devaluation, and I worked as his editor. I also edited George Roche’s books, and the works of other many conservative leaders. I was peripherally involved in the publication of Henry Hazlitt’s books.

Preeminently, I served as editor for new editions of Mises’s Theory and HistoryBureaucracy, and Omnipotent Government. Reading those books, I became a thoroughgoing Misesian. I was so thrilled to meet him at dinner in 1968. He was already in serious decline, but it was still wonderful. That is also when I got to know his wife, Margit, who later helped me found the Mises Institute.

In economics, Neil’s guide was Mises. One of Neil’s favorite topics was the moral and economic justification of charging interest. He was also a brilliant student of Catholic theology, literature, and history, and a saintly man.

Nothing mattered as much to Neil as his Catholic faith, and this led to a problem. His Catholicism was the church he had grown up in. He loved the old Latin Mass and admired Pope St. Pius X’s battle against modernism. Thus, when under Paul VI in 1970 the “Novus Ordo” replaced the Latin mass, which was almost completely banned, Neil was shocked. “When a Church that subsists on tradition bans this mass, abruptly and even ruthlessly, we are faced with a phenomenon that ought to unsettle a high-grade moron.” (p. 165)

This led to a problem. The pope is head of the church. How could Neil defy his authority? His careful study of theology gave him the answer. The pope was only infallible under extremely demanding conditions, which were almost never met in practice. Otherwise, popes can make mistakes, and many of them have. “Popes can err and often have erred in their existential judgments on concrete temporal situations, which have nothing to do with papal infallibility. One of the alarming developments in the modern Church is the tendency to deify the Popes, and no group is more guilty of this than American Catholics” (p. 230). He thought that John XXIII and Paul VI were the two worst popes in history. We can only imagine what he would have said about Pope Francis. Neil thus thought it was not only his right but his duty to fight against these popes and against the Second Vatican Council.

He followed the same course of action when he defended the free market against so-called “Catholic social teaching.” Neil said, “there is nothing in [Saint] Peter’s mandate that made him or his successors economists” (p. 33). In Neil’s opinion, Mises, Hazlitt, and Murray Rothbard were far better guides to economics. Murray sent Neil a presentation copy of Man, Economy, and State, and in response, Neil said in a letter dated May 29, 1962, “Joan [Neil’s beloved wife, Joan McCaffrey] and I are most grateful, and honored, for the inscribed set of your new opus. We hope and believe that it will come to be regarded as a classic.” (p. 43)

When you work your way through this book, it becomes more and more clear how close Neil was to Murray Rothbard. They were friends for over thirty years, and Arlington House published the first four volumes of Murray’s great Conceived in Liberty series. The two of them shared a love of jazz from the 1930s and ’​40s, and the book includes a section of letters in which they talk about their favorite musicians.

Neil found much to like in libertarianism. But it had to be a libertarianism based on natural law morality, like Murray’s, not nihilism. In a memo to me dated October 29, 1989, he said,

As you distance yourselves from the barbarians and the libertines, the distance between us narrows. All the better….Bravo for your remarks on egalitarianism, which I regard as an even greater menace to liberty than the state (in our society) because it pervades every institution….We are drugged by the cliché ‘equal before God.’ Of course it’s blasphemous. You and I can see that none of us is equal. We are all different, hence unequal. Is God less perceptive than we?…to hear today’s religious leaders talk, God made a terrible mistake creating men and races so plainly unequal, so they busy themselves trying to make good His cosmic blunder….The same remarks apply, of course, to equality before the law. It is a severely limited equality, and should be. (pp. 119–20)

During the Cold War, Neil and Murray carefully avoided talking about foreign policy. Like Murray, he thought that almost all of America’s wars were unjustified, including the Civil War, World War I, and World War II. But he made a one-time exception for the Cold War, which he regarded as a life and death battle for survival against an insidious enemy.  After the Cold War ended, he and Murray saw eye-to-eye: 

We really did consider Communism and its allies the main enemy, and were therefore more willing than you to tolerate liberal anti-Communists. I still think that this was the correct posture for the period. But now, of course, we are in an entirely new situation and the notion of making common cause with Sidney Hook types is not far from grotesque. And this is doubly true as modern liberalism plunges ahead on its rake’s progress. I now think it represents a greater danger to souls and to civilization than even Communism. (p. 328)

When the Cold War ended, he favored a return to our traditional policy of nonintervention. It came as a shock to him that Bill Buckley did not. Like Neil, Buckley claimed to be a supporter of limited government, the free market, and nonintervention. But this had to be put away for the duration of the Cold War. But after the Cold War, Buckley still wanted to preserve American hegemony. In other words, Neil was honest, and Buckley was a phony.

This mattered to Neil because Buckley had been one of his closest friends. Neil’s extraordinary skill in promotional letters had helped National Review get off the ground, and he constantly promoted Buckley’s causes and interests.

Buckley responded with betrayal. Neil had partners in his business, and he lost control, with Buckley playing a malicious role. The company was sold to Roy Disney in the mid-1970s and eventually phased out.

By the end of his life, Neil recognized what had happened and he penned a devastating analysis of Buckley’s character. Neil, like Murray, liked Pat Buchanan for his opposition to American intervention in the Mideast and for his defense of traditional values. Buckley sought to undermine Buchanan by insinuating that Buchanan was anti-Semitic. Here is what Neil said:

The only effective way to deal with Buckley is not to deal with him at all. To reply is to dignify his attack, to make it respectable and even friendly. His aim: to destroy with a smile. In his peculiar code, this is the behavior of a gentleman….His tactic through the years, whether he has actively destroyed somebody or allowed that person to be destroyed, has been the ‘civilized’ stab in the back. (p. 323)

Neil McCaffrey was one of the greats. If you read this outstanding book, you will get a sense of why he mattered to so many of us. I closed this book with hope that a new generation will profit from Neil’s wisdom, but also with sadness “in thinking of the days that are no more.”

Categories: Current Affairs

China prevents overseas church aid against Coronavirus

Anglican Ink - Tue, 04/02/2020 - 15:15

The Chinese government has rolled out tough new rules on religion, requiring religious leaders to ‘display complete devotion to the Chinese Communist Party’.

Those rules limit communications between churches and overseas organisations, including donations.

But even before the new rules took effect on February 1, there were reports that Chinese officials were confiscating aid intended to help churches fight the coronavirus.

According to International Christian Concern (ICC) a Chinese Christian tweeted on January 27, ‘Some overseas Christians shipped supplies designated to serve local hospitals through local churches. Yet the supplies were confiscated.’

The tweet continued: ‘And the Christian who received the shipment was invited to “have tea” with the police (a common practice to intimidate and threaten citizens).’

A Christian human rights lawyer has also been ordered to delete his posts on the coronavirus. ICC say police warned lawyer Sui Muqing that his posts on the situation in Wuhan were damaging to the Party and ordered him to take them down.

Even so, Christians in Wuhan have been giving out facemasks on the streets and sharing their faith with passers-by.

The limit on church aid to help with the coronavirus comes as China introduces even tougher restrictions on religious freedom.

‘The new rules codify the Chinese Communist Party’s ideological and leadership supremacy over all religious affairs in China,’ says Release Partner  ChinaAid President Bob Fu.

‘From now on, the Chinese Communist Party will become the head of the churches, temples, mosques, and other religious institutions. They will dominate every sphere of religion, from religious doctrines and leadership selection, to financial management.’

In practice, observers say this will require churches to seek state approval for a wide range of activities, including:

·      staff changes

·      training

·      major meetings

·      overseas communications

·      overseas donations over £11,000

·      major meetings and activities, and

·      major building works

The new measures came into effect on February 1, 2020. Says Bob Fu: ‘These regulations will require religious leaders and organisations to display complete devotion to the Chinese Communist Party.

‘There will be little autonomy and independence left for any religious organisations in China.’

He adds: ‘No independent religious institutions, such as house churches, will be legally tolerated or allowed to exist unless they join the state-run church organisations.’

Article 5 of the new regulations reads, ‘Religious organisations must spread the principles and policies of the Chinese Communist Party… educating religious personnel and religious citizens to support the leadership of the Chinese Communist Party… and following the path of socialism with Chinese characteristics…’

It was Chinese President Xi Jinping who introduced this process of Sinicization ­– inserting so-called ‘Chinese characteristics’ into religion.

For decades, China has controlled religious groups by monitoring official religious organisations. But under Xi, the authorities launched a five-year plan to tighten Communist Party control over religion.

Local officials throughout China have been insisting that churches fly the national flag and destroy religious imagery, such as crosses. They have also demolished many church buildings.

In state-run churches, Christians are commanded to sing patriotic songs and listen to pro-Communist Party sermons.

Churches who refuse to comply can be closed and their Christian members arrested.

Adds Release partner, Bob Fu: ‘Since the Chinese Constitution guarantees religious freedom for all in Article 36, they are violating the very law by which they encourage Christians to abide.’

The post China prevents overseas church aid against Coronavirus appeared first on Anglican Ink © 2020.

David Rapp on Harnessing Accounting to Your Purpose

Mises Institute - Tue, 04/02/2020 - 15:00

When we asked international technology entrepreneur Paul Tenney about the pre-requisites to entrepreneurial business success, he said, “Learn accounting”.

Accounting — or economic calculation — is one of the four pillars of entrepreneurship. And when it’s viewed through Austrian eyes, it becomes a more powerful business tool than, perhaps, you might have realized.

Whether we are talking about retrospective accounting (P&L accounting and financial reporting) or commercial pre-calculation to plan future actions (management accounting or cost accounting), how you use the tool makes a difference to the results you get.

Our guest in E4E episode 51, Dr. David Rapp, is an international leader in the field of Accounting and Management Control, a subject he teaches at one of Europe’s top business schools.

Key Takeaways and Actionable Insights

Accounting is a means to help you achieve your desired ends — apply judgment when using the tool.

Austrian economics teaches us to subjectively choose goals and then select the best means to achieve those goals. Accounting is just another tool to help the entrepreneur. There are plenty of explicit and implicit options in how to use it. David calls this attitude “purpose orientation” — one of the most important aspects in the field of accounting. Any computation should be shaped by its underlying purpose.

Financial reporting is subject to local rules — but there are always options in applying them.

If the purpose is to pay as little tax as possible, for example, a firm may apply depreciation or amortization rules in such a way as to reduce taxable profits. If the purpose is to present the firm in the best possible light to secure external funding, the same rules might be applied in a different way to display a different calculation of profit. There are options available for valuation of assets and of inventory that can materially affect the balance sheet.

Entrepreneurs should be rigorous in ensuring that their own managerial accounting does not mislead them.

Some modern finance theories and models are unrealistic — such as the standardized Capital Asset Pricing Model and the Weighted Average Cost of Capital approach. The entrepreneur’s task is to apply real world judgement in deciding on future actions. Austrian Economics guides us towards realism not models, and the insights from Austrian Economics are the best ones to integrate into managerial accounting.

Entrepreneurs should bear in mind core Austrian Economics principles to guide their options in accounting.

Dr. Rapp mentioned these principles:

  • Subjective value
  • The importance of opportunity costs
  • Distinguishing between value and price
  • Understanding that prices determine costs rather than vice versa,
  • Differentiating between uncertainty and risk

Does accounting send reliable signals of business health to the entrepreneur? Not necessarily. Entrepreneurs should be on their guard.

Dr. Rapp advises us that general guidance to the firm’s owners and management is not possible via accounting. Accounting is not neutral and not a perfect tool for measurement or reporting. Again, the choice of reports comes down to the goal the entrepreneur is pursuing.

If the goal is a sale to an external buyer, then an accounting focus on EBIT might be the best channel for the most relevant business health monitoring. If the goal is external financing from a bank, a more appropriate signal might be found in a solvency measure such as debt-to-equity ratio.

Can accounting accommodate the Austrian Economics mandate for dynamic flexibility — continuous adjustment to changing customer preferences in the marketplace?

Yes, says Dr Rapp: by emphasizing the P&L to reflect the profit-and-loss outcomes of entrepreneurial actions and to reflect how well changing allocation of resources serves customers. Sub-dividing accounts into shorter time periods and different lines of business can more accurately reflect the dynamism of a business. And extensive use of notes to accounts in reports can provide a qualitative flexibility in reporting.

Accounting plays a primary and noble role in the advance of civilization.

Our complex market economy could not have evolved without accounting. It’s an important part of the system that allocated capital to its highest and most profitable use. Accounting is not boring, dry or dispensable. Rather, it’s a mainstay of human progress.

Additional Resource

"Accounting From An Austrian (Misesian) Perspective" (PDF): Mises.org/E4E_51_PDF

Categories: Current Affairs

South Korea’s Neo-Mercantilist Growth Engine Has Stalled

Mises Institute - Tue, 04/02/2020 - 12:00

Capital accumulation and productivity growth are the outcome of free market investment and not of government spending. This is well known to Austrian school economists. Rothbard1 argued that only the free market can ensure an efficient allocation of factors of production whereas government sponsored investment is “either malinvestment or not investment at all, but simply waste assets.” Mises2 explained how restricting market competition shifts production to places with less favorable conditions, resulting in lower labor productivity and standards of living. Nevertheless, this point still needs to be understood by countries such as South Korea, whose growth model driven by state-led and export-oriented industrialization appears to have reached its limits.

Remarkable Success Story of Growth at First Sight

Korea grew from one of the poorest economies in the 1960s into an advanced economy while avoiding the middle-income trap. Its GDP per capita in PPP (purchasing power parity) almost reached the OECD (Organisation for Economic Co-operation and Development) average in 2018 after having been less than one-sixth in 1970 (Graph 1). Rapid growth rates of between 7 and 10 percent for several decades until the mid-1990s were propelled by very high investment which peaked at 40 percent of GDP in 1990 and has averaged around 32 percent of GDP since then (Graph 2).

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Rapid industrialization and deep integration in the global value chains helped Korea become the world’s fifth-largest exporter of manufactured goods in 2017. It is most striking that behind this seeming outstanding success lies an active industrial policy. Government support for large business groups, known as chaebols, via subsidies and trade and investment barriers turned the likes of Samsung, Hyundai, LG, Kia, and Daewoo (now defunct) into global champions. But as Ryan McMaken points out, there are a lot of “unseen” missed economic opportunities behind Korea’s government-corporate “cooperation,” which means that centralized decision-making and government favoritism to big businesses obviously come at a price.

Growth Slumping While Productivity and Consumption Lag Behind

Growth typically decelerates when countries grow richer. Yet Korea’s decline in real GDP growth has been very abrupt—from about 7–8 percent in the 1980s and 1990s to below 3 percent currently. Its potential output has also slumped, driven by slowing capital accumulation and total factor productivity despite the very high investment rates. Most importantly, labor productivity has lagged significantly behind the rapid GDP growth. In 2018 Korea’s real GDP per capita was one-third lower than that of the top half of OECD countries, while labor productivity was 46 percent below that of the same sample (Graph 3). The difference is compensated by longer working hours—Koreans work 15 percent more than the OECD average and 30 percent more than the EU average.

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In exchange for the long working hours, Koreans must content themselves with lower wages and private consumption levels relative to GDP performance. From 1990–2018, the Korean GDP per capita in PPP more than doubled from 43 to 94 percent of the OECD average, while the average wage in purchasing power parity grew much slower, from 59 to 85 percent of the OECD average. This is consistent with the weaker labor productivity growth, but also reflects the monopsonic power of chaebols, very rigid labor market conditions, and an inefficient wage model favoring length of service over performance, which keeps wages depressed in exchange for job security. At 53 percent of GDP, the share of labor compensation is among the lowest in the OECD group. Similarly, households’ net disposable income has steadily dropped, reaching around 50 percent of GDP in 2018 compared to US and euro area levels of about 75 and 60 percent of GDP.

In addition to compressed wages, high import tariffs and limited competition among domestic companies has hurt private consumption, which fell to a quite low 48 percent of GDP in 2018 (Graph 4). As household incomes lagged behind GDP growth, consumption and housing purchases were increasingly supported by credit. Household debt peaked at about 92 percent of GDP in 2019, one of the highest among developed economies.

Revealing an Inefficient Resource Allocation

According to the mainstream growth recipe, Korea should be a top-class student with its very high investment ratio, extremely long working hours, and first-rate R&D (research and development) spending (4.6 percent of GDP in 2017). It has obviously excelled in the quantitative utilization of both capital and labor. But the sheer size of resource utilization is not enough to deliver sustainable growth without their efficient combination. Only free markets can ensure an efficient allocation of factors of production to their most productive uses. Unfortunately, in Korea’s case, labor and product markets are heavily regulated and cannot perform their resource optimization task.

Restricted competition on product markets and the government picking winners have always been intrinsic features of Korea’s growth model. The protectionist toolbox has comprised both trade and investment barriers and subsidies. In contrast to its excellent overall ranking in the 2019 Global Competitiveness Index (thirteenth out of 141 countries), Korea ranked only the ninety-first in terms of trade openness for tariffs and seventy-seventh for nontariff barriers. Similarly, its stock of inward foreign direct investment (FDI) was a meager 14 percent of GDP in 2018, compared to 55 percent of GDP for the EU and 36 percent of GDP for the US. With an outward FDI stock of about 22 percent of GDP, Korea has been a net exporter of direct investment. On-budget subsidies for economic activities are almost double the OECD average.

When the chaebol system overstretched and its inefficiencies became too obvious, especially after the 1997 financial crisis, the government pushed for its downsizing and leveling the playing field versus small to medium-sized enterprises (SMEs). As vested interests made market liberalization almost impossible, government support was instead gradually extended to SMEs via credit and other financial subsidies, lower taxation, preferential access to public procurement, and exclusive rights to operate in certain business lines. As a result, both chaebols and SMEs are now operating in segmented and rigorously protected markets while Korea’s product market regulations remain the fourth strictest among the OECD nations.

Labor market regulations are very rigid too, which led to an inefficient dual labor market over time. Korea only ranked close to one hundredth in the 2019 Global Competitiveness Index in terms of labor market flexibility, redundancy costs, and ease of hiring and firing. The labor market is strongly segmented, with a large share of irregular jobs to make up for the tight regulations. Nonregular workers represent about one-third of total employment compared to 11 percent in OECD economies, and earn only 66 percent of regular workers’ wages on average. Well-paid regular jobs in large companies are scarce relative to unattractive jobs in SMEs and services, which suffer from labor shortages. Together with educational mismatches this contributes to a fairly low youth employment rate.

Shift in Growth Strategy Goes in the Wrong Direction

As often is the case with government action, Korea tried to address the symptoms rather than the root causes of its problems of inefficient growth and depressed consumption. In 2017, the newly elected president Moon Jae-in announced a shift towards domestic income–led growth, primarily by redistributing incomes and boosting consumption. The government increased substantially the minimum wage by a cumulated 30 percent during 2018–19, reduced statutory working hours from 68 to 52 hours per week, and promised an increase in public employment of about 40 percent.

It goes without saying that these measures made things worse, especially as they overlapped with a significant decline in external demand following the US-China trade war. Employment growth decelerated notably, driven by job losses in manufacturing and SMEs, and new jobs were created primarily in the public sector and more precarious part-time positions. Despite income redistribution measures, private consumption growth decelerated further in 2019 while private investment declined for six quarters in a row, weakened by FDI outflows and company relocations. All in all, Korea’s real GDP growth declined from 3.2 percent in 2017 to an estimated 2 percent in 2019. On top of that, income-boosting measures have been costly: the budget balance is projected to deteriorate from a surplus of 2.6 percent of GDP in 2018 to a deficit of 1.4 percent in 2020.

A Sensible Way Forward

What Korea needs to achieve a sustainable revival of its potential growth is an efficient allocation of factors of production by free markets, unencumbered by government protection of either dominant chaebols or SMEs. Only this can ensure genuine capital accumulation and higher labor productivity to underpin market-set wages that do not undermine cost competitiveness. As production is only a means for consumption, freedom to choose the preferred consumption schedules would provide Koreans with a better standard of living and work incentives.

The case of Korea justifies in full Mises’s assertion that government interference with businesses makes people poorer and less satisfied. In Mises’s own words: 

government doesn’t have the power to encourage one branch of production except by curtailing other branches….It may subsidize openly or disguise the subsidy in enacting tariffs….What alone counts is the fact that people are forced to forego some satisfactions which they value more highly and are compensated only by satisfactions which they value less (Human Action, p. 737).

Categories: Current Affairs

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