ALS: thoughts on freedom

Australian Libertarian Society Blog

Negative Income Tax – An alternative to the welfare system?

I’m currently on holidays and have decided to spend my time productively, watching Milton Friedman’s hit 1980s series Free to Choose. http://www.freetochoose.tv/ About two years ago, I stumbled across a copy of the companion book for this series in an OP shop. I quickly grabbed hold of the book and guarded it in case someone else wanted to buy it. Surprisingly, the book looked like it had been on the shelf for a while and it did not create the kind of excitement used copies of Harry Potter can cause. The bewildered shopkeeper seemed surprised at my excitement. On another another occasion a staff member at an op shop seemed amazed when I was clearly excited buying a TI-84 programmable calculator for only $10.

Anyway, Friedman in an episode about the welfare state raised the prospect of a negative income tax. http://en.wikipedia.org/wiki/Negative_income_tax I have provided a link to information on this idea but basically instead of having welfare payments and a massive welfare bureaucracy to administer it, you would instead get paid the equivalent of your tax free threshold and the low income offset in cash if you weren’t working and this would be phased out the more income one earns. The idea is that this would remove many of the perverse barriers to work that the interaction between the welfare system and the tax system currently produce. It would also be dramatically cheaper, Centrelink and the Employment Services industry would be largely abolished leaving only minimal paperwork to confirm how much income one earned.

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January 14, 2012 Posted by | Economics | , , , | 22 Comments

Iceland: The Forgotten Country

I was thinking the other day, whatever happened to Iceland? At the beginning of the global financial crisis Iceland’s three banks collapsed leveraged beyond the small nations GDP. Total debt reached 9.553 trillion Icelandic krónur (€50 billion) compared to Iceland’s GDP in 2007 of 1.293 trillion krónur (€8.5 billion). Iceland went cap in hand to the IMF, its currency collapsed to about half its previous value compared with the USD. The world for the most part wrote off Iceland and the IMF required a significant austerity package in condition for their support.

So what has been the experience of Iceland since 2008?

GDP Growth: 2008 1.4, 2009 -6.9, 2010 -3.5, 2011 2.2, 2012 2.9.

Unemployment: 2009 7.2%,2010 7.5%, 2011 7.0%, 2012 6.2%, 2013 5.3%

Government Debt (% of GDP): 2008 102%,2009 120%,2010 120.2%

Government Fiscal Condition: 2008, -13.5, 2009 -10.0, 2010 -7.8 (Expected to return to surplus 2013)
(Source OECD, http://www.oecd.org/document/62/0,3746,en_33873108_33873476_45269950_1_1_1_1,00.html)

So what can be learnt from Iceland? First Iceland did not bailout its banks, choosing only to bail out its depositors and not the investors. Second, Iceland has managed to stage a slow recovery despite the ongoing crisis amongst its European neighbors. Thirdly, having a national currency that can respond to crises may help other industries stage a recovering. Large energy intensive investment projects and a residential construction boom has led economic growth. Finally, austerity measures that led to sustainable government debt levels may play a role in supporting the economic recovery.

While I can’t claim to know enough about Iceland’s unique situation or how it impacts on the sovereign debt crisis, I suspect that there has been little effort to learn any lessons from Iceland and instead the Government’s in Europe continue to look for a painless recovery.

December 23, 2011 Posted by | Economics | , | 2 Comments

Creative Destruction and How it impacts on our lives.

So often in the news we hear of some formerly successful industry going bust. Trade unions and industry groups lobby hard for their industry to be saved through government intervention. A recent example in Australia and globally has been bookstores. I remember my excitement when the first Borders opened in the Brisbane CBD. I could buy a mocha caramel-latte at Gloria Jeans, choose from a range of specialty books that were never offered in Brisbane before. Having an interest in management literature, it wasn’t long before a had a large library of business titles and career development books.

Books would cost between $20-30 and textbooks could be up to the cost up $100. Now ten years on, Borders has gone bust and rumor has it that the building will become one of those ghastly Apple stores. Sorry, couldn’t resist. This is where creative destruction comes in. The Oxford economic dictionary describes creative destruction as, “A model of economic growth driven by quality-improving innovations that make old technologies or products obsolete.”

That pretty much describes my once beloved Borders, obsolete. I now have two new superior ways of buying books, first, Better World Books and second Amazon kindle. For my studies I have only bought one new textbook in 2 years. Others, I have bought secondhand on Better World books. Technology has allowed me to connect with bookstore all over America where slack students have foolishly sold their old textbooks allowing me to buy them for between $10-$20. Amazon Kindle has allowed me to purchase new books at a fraction of the price I would have paid at Borders.

This technological innovation has dramatically increased my consumer surplus. Not only in quantity but in quality. I recently was preparing for a job interview as a Business Analyst and realised I didn’t have sufficient skills using Microsoft Excel. In the bad old days, I would have driven to the bookstore, not found a book that really covered what I wanted and would have settled for some more basic book about Excel with a few accounting formulas in it. Instead, I went to the Amazon Kindle store, within five minutes I had a book called Business Analysis in Microsoft Excel 2010. I could read reviews about the book confirming the books quality and ensuring the author handled the topic well. This book covered everything I needed, there would have been almost no chance of me finding such a book in a bookstore in Australia.

From a bookstores point of view had they had such a book it would have sat on their shelf for months waiting for an econ nerd like me to come in, if I had come in at all. The price would have been significantly higher to cover the much higher costs of having that inventory sitting on their bookstores shelf for so long. So technological innovation increased the quantity of products I could choose from and lowered the price. Creative destruction.

December 18, 2011 Posted by | Economics | , , , , | 4 Comments

The unforgivable stupidity of the anti-banking “libertarians”

At the recent Mises Seminar in Sydney there was a speech by Chris Leithner that explicitly called for the banning of fractional reserve (FR) banking. Leithner and other Australian libertarians (including Michael Conaghan & Benjamin Marks from Liberty Australia) follow the lead of some American libertarians (Walter Block, HH Hoppe, JG Hulsmann — BHH) and argue that FR-banking is fraud and should be banned, and further that it is economically damaging and causes inflation.

These two issues need to be addressed separately. The first is a deontological issue about whether FR-banking is consistent with a free world. The second is a consequentialist issue about whether FR-banking leads to bad outcomes. It is possible that FR-banking is consistent with freedom and yet leads to bad outcomes, and then those libertarians who accept the “non-aggression principle” would have to tolerate FR-banking even if they don’t like those outcomes. But before delving into that debate, it is worthwhile quickly explaining what we are actually talking about with FR-banking.

Vaults, loans & banks

Anything can be money. In jail (and POW camps) cigarettes have been used as money. In the early years of Australian settlement, rum was used as money. In some small island nations, shells have been used as money. Through much of history, precious metals (especially gold and silver) have been used as money. And today, the most common sort of money is “fiat” paper money that is created by government but is intrinsically worthless (ie it has no value except as money). This is not the place to go into a debate about what should be money or who should decide, but the important point is simply that there is some original supply of money that then becomes the standard “unit of account” and “store of value” and “medium of exchange” in an economy. For the sake of this discussion, this original supply will be called “base money” and in Australia it is created by the Reserve Bank of Australia (RBA).

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December 13, 2011 Posted by | Economics, Law, Philosophy | , , , , , | 136 Comments

Andrew Bolt, Race and Identity Politics

WARNING: VERY LONG POST

In a recent court decision, conservative commentator Andrew Bolt was found guilty of breaching the Racial Vilification Act (Eatock vs. Bolt, see http://www.austlii.edu.au/au/cases/cth/FCA/2011/1103.html ).

From the classical liberal perspective, the good intentions behind the Racial Vilification Act do not justify the existence of the Act; Free Speech is an absolute right which is only bounded by fraud (for example, in the case of actual defamation) and coercion (i.e. making threats of violence or similar forms of extortion).

I am not a viewer of Andrew Bolt, although in full disclosure I did once send him an email which corrected a philosophical mistake of his; he accused Postmodernism of being Metaphysically Subjectivist (i.e. people’s minds literally remake reality). I believe that to be mistaken since Postmodernism is Epistemologically Subjectivist, typically on philosophical grounds derived from German Idealist thought. This has been my only interaction with his work in the past, and I know little about him. Although I was pleasantly surprised when reading his Wikipedia page that he’s an Agnostic rather than a religionist.

But the reason for this post is that I found a specific comment about the Bolt case interesting from the perspective of political philosophy.

Commentator Brian F. McCoy argued that the ultimate issue in the Bolt case wasn’t freedom of speech. He identified the core issue as “freedom of identity” (see http://www.eurekastreet.com.au/article.aspx?aeid=28512).

What a fascinating concept.

“Identity” in the context of the case was referring to social identity or the groups with which one identifies.

The following article is not so much a deliberate argumentative essay per se. Rather, it is a set of commentary on a series of interconnected issues raised by the Bolt affair. In it, I will cover epistemological and philosophical considerations relating to the concept of “social identity” and I will also discuss the various analytical frameworks and assumptions that are used when dealing with the concept. Ultimately I will launch into a discussion of Brian McCoy’s “freedom of identity.”
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December 8, 2011 Posted by | Civil liberties, Economics, Events, General, Indigenous affairs, Law, nanny state, Other blogs, Philosophy, Politics, Pop culture, Religion, The media | 6 Comments

Ron Paul rocks them in debate.

Missed this one but was alerted to it by Angry Exile, who saw it on Trooper Thompson’s blog, where its pointed out that the media seems to have missed it..
Ron performs well under quite aggressive questioning. If he doesn’t get the nomination, perhaps he would be a better Secretary of the Treasury than the current one.

Update: This now seems to play after reloading it.


Trooper also gives links to CNBC cancelling its poll when Ron was well ahead, and how the Guardian avoided mentioning him by name.

All small government people should be outraged at the manipulation of the electoral process by media organizations. The manner in which Governor Gary Johnson has been excluded from the process is bizarre and disgusting. It appears that the ‘mainstream’ press are determined to create a contest between Romney and Obama.

November 12, 2011 Posted by | Economics, International, Politics | 13 Comments

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