Profits Are Bad?

This is socialist indoctrination. Glorifying a man for his charity, yet implicitly criticizing all those that profit from their work. Perhaps if the people charged with the responsibility of educating the world's youth were better equipped with some sound economic understanding they would recognize that profits, or losses, are morally neutral. Profit is neither good nor bad. In fact, a world without capitalism and the market economy would still feature profit and loss. Every person engages in actions that strive to establish a superior state of affairs to whatever exists presently. Whether or not the chosen action achieves the desired result determines if there is a "profit" or a "loss". Profits and losses are psychic qualities that exist wherever human beings employ reason and will in determining particular modes of action. But only in the market economy--in capitalism--can people attribute specific values to the results of their actions and recognize which are more or less profitable. As Mises explained, profits and losses are ubiquitous.

HT: Captain Capitalism

Taxes: McCain vs Obama

Now, I wish I could state that I am completely unbiased and impartial when it comes to politics, but I just can't. Although I do think that both candidates, and more genereally all politicians, will implement poor policies that will undoubtedly have a negative impact on our economy and its prospects for growth, if someone were to point a gun to my head and say "CHOOSE!", I would vote for McCain. (Full disclosure: I have never voted before, nor am I likely to vote this coming November.)

That said, any prospective voter would be doing theirself an extreme disservice if they did not diligently investigate the specifics of each candidates policy proposals. Luckily, the folks at The Tax Foundation have already done much of the work pertaining to taxes for you! They have even produced it in nifty chart form. Ask yourself, which one will make the US a more attractive place to live and do business?

HT: CarpeDiem

Current Economics: Harvard's Larry Summers Perspective

Here's Larry Summers in the Financial Times.

Summers explains the current economic situation and provides context as to how it came about.

I really enjoy reading Summers as he tries to remain unbiased in the more government-less government debate. He simply addresses the problem and then attempts to provide an immensely pragmatic solution using his deep understanding of the effects of certain incentives. Few others who weigh in on these issues can remain as unbiased as Summers. Whether one wishes to admit it or not, our current economic situation is the product of years of complex intertwining of the public and private sectors, and any call for more or less laissez-faire must be conditioned on the potential consequences. Not many other experts--if any--understand that fact as well as Larry Summers.

Ethanol: It's Bad

This short Reason.tv video explains why.

Ethanol advocates claim that the biofuel is a cheap, renewable energy source that reduces pollution and our dependence on foreign oil. It sounds too good to be true—and it is.

Ethanol, especially the corn-based variety, is bad for taxpayers, bad for consumers, bad for the environment, and horrible for the world's poor. In fact, even environmentalists are critical of ethanol subsidies these days. The ethanol craze has distorted markets and increased the price of food worldwide. The only people who still support ethanol subsidies are the ethanol producers—and politicians from both sides of the aisle. Together, they make sure the subsidies keep coming.

In a recent interview about the current food crisis, Sen. Charles Grassley (R-Iowa) said, "If part of our problem is that the Chinese are going to eat meat and you've got to have corn and soybeans to feed the Chinese their meat, then why isn't it just as legitimate for the Chinese to go back and eat rice as it is for us to change our policy on corn to ethanol?"

Let them eat rice? So that American taxpayers can continue to pay people to turn corn into fuel?

Silly senator, corn is for food.

The Definitive Case Against "Energy Independence"

It will make us poorer.

Robert Higgs satirizes the popular idea that we must achieve "energy independence" by comparing it to a need to attain "banana independence". Nobody is naive enough to suggest we must grow our own bananas, rather than ship our money to tropical plantations. It's accepted that our climate is not conducive to banana farming and that any attempt to grow bananas in the US would be a waste of resources. The same holds for energy independence. By substituting our importing of energy from elsewhere, we would have to apply more of our scarce resources in the production of energy instead of in some other form of production.

Resources are finite. Wealth is created and spread throughout the population by using our scare, finite resources in the most effective and efficient manner. Right now oil remains cheaper than most any other energy resource. Some may say this is due to the full costs of its utilization are not being captured by the market price. But any argument that argues we would be wealthier producing our own energy should be viewed with extreme skepticism. As Prof. Higgs stresses in his concluding paragraph: this is a fact that was clearly explained by David Ricardo nearly 200 years ago! Why so many people have yet to recognize it I cannot understand.

A Confession

I have a confession to make. I have developed an unhealthy hatred for all things Barack Obama. Living in Ohio, I've been bombarded with campaign commercials. McCain on how wimpy and inexperienced Obama is, Obama on the need to develop alternative energy and reform healthcare, you the get the drift, standard campaign stuff. But the most recent commercial had to be designed to give me a brain hemorrhage. Though I tried to find a link to the video (and failed), the commercial is roughly a 30 sec clip featuring Obama telling us all how "Speculators are bad, evil people" and that as a solution to the energy crisis he plans to give everyone a $1000 check to cope with the high prices, and to pay for all this he will introduce a "windfall profits tax" as retribution against those greedy oil gougers. Big Oil? Come on!

Now, I want to ignore the headspinning lack of coherent logic employed by the Obama campaign economically. (If you need a few reasons why those policies can be described as moronic at best, follow the links: On Speculation Here, Here, and Here; on "windfall profits" here.) What I want to focus on is my reaction to these commercials. I think it's obvious that Obama is a savvy guy. The man was a law professor at the University of Chicago. He is not stupid! Obama, and the folks running his campaign, make these commercials because it is what they believe the public wishes to hear from their president. The name of the game is to get elected, and rarely is it that a candidate comes onto the scene as a true reformer and driver of an entirely new political paradigm. (Reagan is a glaring example of this.) This is how democracy functions, for better or worse.

I guess what I find most unfortunate and distressing about these commercials is that there is an actual electorate that is eating this up. Barack Obama is the current favorite to be our next president! So these are not marginal ideas but, arguably, mainstream. I remain optimistic for the future, though this optimism is being challenged with each passing day knowing so many of my peers are susceptible to being duped by such contradictory and harmful ideas.

Orwell as Blogger

The people who manage George Orwell's trust had the brilliant idea to start posting Orwell's personal diaries online at their blogsite. The entries begin on Aug 9th, 1939 and each new post will be added on the same day, just nearly 70 years later. It should be interesting to learn more about someone who remains relavant nearly 60 years after his death.