Were Nazi's left wing?

Nazi and fascist are just insults implying that your politics are evil. It is predominantly used by the left against the right. This is not a modern phenomenon, it was done by the communists decades ago.

The problem is that insults often carry meaning. When a man calls another stupid, or a fool, it is an insult that his opponent lacks intelligence. If man calls another a hater it means his opponent lacks love, or kindness. Now there is plenty of inconsistency such that idiots call others idiots, and that "hater" is predominantly used by those sold out to vitriol. Even so, "stupid" and "hate" carry their meaning. But Nazi implies that you have a bad ideology that will lead to murder and genocide. This is concerning because if ideology leads to genocide, which it can, then it matters what that ideology is.

I have read that the Nazi's were not socialist, that there was nothing left-wing about Nazism at all, that fascism is right-wing and right-wing ideologues use this term self referentially.

False rhetoric benefits from lack of clarity and misuse of terms. But if fascism was left-wing and we convince right leaning people to abandon right leaning ideas because they are fascist, then they may adopt ideas that are more fascist than those which they already hold. It seems counter productive to hate a position while increasingly adopting it.

There seems to be several concepts that are traditionally left and right though various groups have adopted them over time. Eugenics was taken up by the left decades ago but has since been rejected by them in the main. To broadly categorise, concepts could be divided into left and right economics, left and right social policy, and nationalism versus globalism. Whereas economics and social policy has more definitively divided along the left and the right, nationalism and globalism are  not clearly divided along those lines.

Fascists were clearly nationalists compared with the communists of yore. But being expansionist does not seem to be particularly a nationalist or globalist position as can be seen by the Soviets and the Nazis.

The categorisation of a party can be seen by both their policies and (especially) their behaviour. In as much as what they enforce, or attempt to enforce, their policies are reliable. In as much as their policies are not enforced, or the party acts contrary to such policy, the positions are a sham (or propaganda).

Below are the 25 policies of the Nazi Party from 1920 until the end of World War 2. I will categorise the positions and the reader can see how fascism (at least the Nazi variant) is best described.

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The Party Program of the National Socialist German Workers' Party summarised in 25 points.

1. We demand the unification of all Germans in the Greater Germany on the basis of the right of self-determination of peoples.

Nationalist. Expansionist.

2. We demand equality of rights for the German people in respect to the other nations; abrogation of the peace treaties of Versailles and St. Germain.

Not clearly left or right.

3. We demand land and territory (colonies) for the sustenance of our people, and colonization for our surplus population.

Economic left. Possibly expansionist.

4. Only a member of the race can be a citizen. A member of the race can only be one who is of German blood, without consideration of creed. Consequently no Jew can be a member of the race.

Nationalist. Specifically anti-Semitic.

5. Whoever has no citizenship is to be able to live in Germany only as a guest, and must be under the authority of legislation for foreigners.

Nationalist.

6. The right to determine matters concerning administration and law belongs only to the citizen. Therefore we demand that every public office, of any sort whatsoever, whether in the Reich, the county or municipality, be filled only by citizens. We combat the corrupting parliamentary economy, office-holding only according to party inclinations without consideration of character or abilities.

Nationalist.

7. We demand that the state be charged first with providing the opportunity for a livelihood and way of life for the citizens. If it is impossible to sustain the total population of the State, then the members of foreign nations (non-citizens) are to be expelled from the Reich.

Social left. Nationalist.

8. Any further immigration of non-citizens is to be prevented. We demand that all non-Germans, who have immigrated to Germany since the 2 August 1914, be forced immediately to leave the Reich.

Nationalist.

9. All citizens must have equal rights and obligations.

Not clearly left or right. Depends what is meant by this statement.

10. The first obligation of every citizen must be to work both spiritually and physically. The activity of individuals is not to counteract the interests of the universality, but must have its result within the framework of the whole for the benefit of all Consequently we demand:

Social left.

11. Abolition of unearned (work and labour) incomes. Breaking of rent-slavery.

Economic left.

12. In consideration of the monstrous sacrifice in property and blood that each war demands of the people personal enrichment through a war must be designated as a crime against the people. Therefore we demand the total confiscation of all war profits.

Not clearly left or right.

13. We demand the nationalization of all (previous) associated industries (trusts).

Economic left.

14. We demand a division of profits of all heavy industries.

Economic left.

15. We demand an expansion on a large scale of old age welfare.

Social left.

16. We demand the creation of a healthy middle class and its conservation, immediate communalization of the great warehouses and their being leased at low cost to small firms, the utmost consideration of all small firms in contracts with the State, county or municipality.

Economic left.

17. We demand a land reform suitable to our needs, provision of a law for the free expropriation of land for the purposes of public utility, abolition of taxes on land and prevention of all speculation in land.

Economic left excepting taxes.

Abolition of land tax economic right.

18. We demand struggle without consideration against those whose activity is injurious to the general interest. Common national criminals, usurers, profiteers and so forth are to be punished with death, without consideration of confession or race.

Possibly social left

19. We demand substitution of a German common law in place of the Roman Law serving a materialistic world-order.

Possibly nationalist.

20. The state is to be responsible for a fundamental reconstruction of our whole national education program, to enable every capable and industrious German to obtain higher education and subsequently introduction into leading positions. The plans of instruction of all educational institutions are to conform with the experiences of practical life. The comprehension of the concept of the State must be striven for by the school [Staatsbuergerkunde] as early as the beginning of understanding. We demand the education at the expense of the State of outstanding intellectually gifted children of poor parents without consideration of position or profession.

Social left.

21. The State is to care for the elevating national health by protecting the mother and child, by outlawing child-labor, by the encouragement of physical fitness, by means of the legal establishment of a gymnastic and sport obligation, by the utmost support of all organizations concerned with the physical instruction of the young.

Social left.

22. We demand abolition of the mercenary troops and formation of a national army.

Nationalist.

23. We demand legal opposition to known lies and their promulgation through the press. In order to enable the provision of a German press, we demand, that: a. All writers and employees of the newspapers appearing in the German language be members of the race: b. Non-German newspapers be required to have the express permission of the State to be published. They may not be printed in the German language: c. Non-Germans are forbidden by law any financial interest in German publications, or any influence on them, and as punishment for violations the closing of such a publication as well as the immediate expulsion from the Reich of the non-German concerned. Publications which are counter to the general good are to be forbidden. We demand legal prosecution of artistic and literary forms which exert a destructive influence on our national life, and the closure of organizations opposing the above made demands.

Social left.

24. We demand freedom of religion for all religious denominations within the state so long as they do not endanger its existence or oppose the moral senses of the Germanic race. The Party as such advocates the standpoint of a positive Christianity without binding itself confessionally to any one denomination. It combats the Jewish-materialistic spirit within and around us, and is convinced that a lasting recovery of our nation can only succeed from within on the framework: common utility precedes individual utility.

Social right. Anti-Semitic.

25. For the execution of all of this we demand the formation of a strong central power in the Reich. Unlimited authority of the central parliament over the whole Reich and its organizations in general. The forming of state and profession chambers for the execution of the laws made by the Reich within the various states of the confederation. The leaders of the Party promise, if necessary by sacrificing their own lives, to support by the execution of the points set forth above without consideration.

Social left.

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So of 25 statements, with some overlap, we have

• Not clearly left or right: 2
• Economic left: 6
• Social left: 8
• Economic right: 1
• Social right: 1
• Nationalist: 8
• Expansionist: 2
• Anti-Semitic: 2

Unless one considers nationalism specifically a right-wing phenomenon, the policies of the Nazi party cannot be considered right-wing, let alone extreme right-wing.

This is a little more complicated in that item #17 was subsequently explained as allowing private ownership with the provision of expropriation if necessary, and also preventing speculation by Jews. This would increase the number of anti-Semitic points and make the sole economic right point unlikely. Further, item #24 is likely to be predominantly anti-Semitic and the subsequent opposition of the Nazis to churches who spoke against them makes the sole social right item also unlikely.

Income inequality

Joe Carter has written a useful article about income equality that I think Christians from both sides of the political spectrum it should read.

Carter's points

1. Incomes are measured in money—and money is not wealth.
2. The existence of income inequality is generally a sign of a fair distribution of incomes.
3. Both low and high rates of income inequality can be signs of unfairness.
4. Income inequality is not the same as economic inequality
5. Measures of income inequality are meaningless because incomes are not zero-sum
6. Income inequality and poverty are separate issues.
7. No one in America is really concerned about absolute income inequality.
8. Discussions of income inequality are almost always about redistribution of income.
9. The only real threat caused by income inequality are problems caused by envy
10. The focus on income inequality is at best, useless, and, at worst, immoral.

A few thoughts from myself

1. Note that the essay is about income inequality and not poverty.
2. One can be concerned about poverty but not income inequality.
3. It makes a difference if your money is a result of creating wealth or just taking it, especially if you take it directly from the poor. This may include aspects of the finance industry.

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What Every Christian Should Know About Income Inequality

Here are ten points about income inequality that every Christian should understand:

1. Incomes are measured in money — and money is not wealth.

Income inequality is not in itself an economic problem. The simplest way to illustrate this point is to provide a simple “solution”, for there is a simple method that would lead to perfect income equality.

The first step is to calculate the number of earners and rank their incomes from lowest to highest. For example, let’s say a country has 100 million workers, with the lowest workers paid $10,000 a year and the highest earning an annual salary of $1 million a year.

The second step would be for the government to print enough money to equalize all the incomes. For instance, a worker who was making $10,000 a year would get a check from the government for $990,000 while the person making $1 million would get no check at all. Everyone else would get a check for the difference between their income and $1 million dollars.

The result is that all 100 million workers would then have an income of $1 million – the problem of income inequality would be solved!

If that seems a bit too easy, it’s because (a) income inequality is not in itself an economic problem, and (b) incomes are measured in money, and money is not wealth. A country’s primary economic goal is not to make sure everyone has an equal amount of money, but to improve people’s standards of living.

“The money itself is not wealth,” says Don Boudreaux, “Otherwise the government could make us all rich just by printing more of it. From the standpoint of a society as a whole, money is just an artificial device to give us incentives to produce real things — goods and services.”

The rest here.

The invisible hand and central planning

I have not read Adam Smith and it may be that his metaphor has been extended beyond the original intention; yet the invisible hand is frequently used in the context of free trade, with the suggestion that government leave alone.

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

Freedom of trade in general leads to greater economic prosperity than that of a centralised economy: the invisible hand guides better than the economic planner.

I agree with this is general. It seems, however, that the metaphor implies that a less informative process is more productive than a more informative one; that a planner is less productive than no planner.

The thing is that there is planning, it is just that it is extended to all the buyers and sellers in a marketplace. All those minds making decisions about their economic options contain a vast wealth of information; more information than any group of planners could have. It is not an invisible hand that guides, it is an invisible collective knowledge that decides.

Artificial land scarcity

The median multiple house price is the median house price divided by median annual (household) income. This is a reasonable approach to assessing house prices. Problems with it are that it ignores different tax rates, household income may range from 1 to 2 persons, and people's expectations of what they are prepared to live in.

Countries and cites can be rated for median multiple house prices to assess housing affordability, an important contributor to standard of living as it is usually a family's largest asset expense.

Rating	Median Multiple
Affordable	0–3.0
Moderately Unaffordable	3.1–4.0
Seriously Unaffordable	4.1–5.0
Severely Unaffordable	5.1+

A recent international survey states that historically house price

has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices having generally been from 2.0 to 3.0 times median household incomes (historical data has not been identified for Hong Kong), with 3.0 being the outer bound of affordability.

Yet this is now much higher especially outside North America. Of the 8 large cities surveyed in New Zealand, 3 had a multiple median house price of 4.1–5.0 and 5 were 5.1+.

And what is one of the major contributors to this? Land prices. Specifically the refusal to designate more urban zoning.

Overwhelming economic evidence indicates that urban containment policies, especially urban growth boundaries raise the price of housing relative to income. This inevitably leads to a reduced standard of living and increases poverty rates, because the unnecessarily higher costs of housing leave households with less discretionary income to spend on other goods and services. The higher costs ripple into rental markets, tightening the budgets of lower income households, who already suffer from lower discretionary incomes.

The principal problem is the failure to maintain a "competitive land supply." Brookings Institution economist Anthony Downs describes the process, noting that more urban growth boundaries can convey monopolistic pricing power on sellers of land if sufficient supply is not available, which, all things being equal, is likely to raise the price of land and housing that is built on it.

Urban containment policy has been associated with greater price volatility and greater speculation. Investors and speculators are drawn to metropolitan areas where "quick" money is to be made, because of the inflexibility of the supply market. Econometric research also identifies an association between slower economic growth and urban containment regulation.

In the Introduction, Bill English states as much,

Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply unresponsive to demand. When demand shocks occur, as they did in the mid-2000s in New Zealand and around the world, much of that shock translates to higher prices rather than more houses. It simply takes too long to make new land available for development.

This is something I have been saying for years. If houses sell for approximately the cost they are to build then when demand goes up more houses get built. There seems no good reason to me why housing should have significant capital gain over inflation. Most assets decrease in value. New Zealand does not lack land, its population is less than 5 million, its land area is 268,021 km² (larger than the United Kingdom). It is amongst the least densely populated countries in the world and most of the land suitable for human habitation. Yet less than 2% of the land is designated urban/residential.

High house prices impact the poor the most. They are less likely to buy, more likely to rent. Rents are higher when housing is higher. And a higher percentage of their income goes toward house cost. New Zealand needs to drastically expand residential zones and open up land for housing

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Question
If you add together the floor area of all the houses in New Zealand, the total area would be what compared to Lake Taupo?

A. About a quarter of Lake Taupo.
B. About half.
C. About the same.
D. Twice the size of Lake Taupo.
E. Ten times the size of Lake Taupo.

Patents and price setting

A conversation with my pastor got me thinking about how we treat patents. He is more socialist minded than I. In defence of his position he used a patented medical product as an example of what he considered excessive markup within the market. The problem as he saw it was that people would mortgage their homes to purchase medications if it would potentially cure them, or stave off death for some time.

Now one could argue for the market based on the fact that the company has invented a cure that was not previously available; without the company the cure would not exist. So perhaps they should be allowed to charge what they will. And people are willing to pay large sums of money for medical promises that are known to provide no benefit. Health is a difficult area. One could argue for some federal involvement or oversight because health is an area that people are forced into (sickness is not usually a choice), and they often make decisions in a vulnerable state. Perhaps an issue for another time.

Nevertheless, the discussion got me thinking. Arguing for the free market using patented products has one on the back foot. Competition and productivity allow for low prices for consumers and wealth creation. Patents interfere with this mechanism.

Patents apply to intellectual property, which is not property at all. A better argument for patents (and copyright) is that the government allows a temporary monopoly to sell in acknowledgement that the person created the concept. Such reasoning for patents has some merit. If we accept this however, we are appealing to the government to enforce our monopoly. This raises the question as to whether the government can also have a say on the conditions of monopoly.

I think an argument can be made that allows the government to set minimum sales figures and maximum prices. The first is to prevent artificial scarcity, driving demand by intentionally limiting supply, a supply that cannot be made up by competitors. The second to limit profiteering, especially of a product that is excessively desirable such as a cure for cancer.

Now one could argue (as above) that these products would not exist if it were not for their inventors, and people are no worse off if such an item does not come to the market than they were prior to the invention. This is not necessarily the case however. People are creative. It is likely that several people would occasionally invent similar things to solve a problem. Here are a couple of situations.

The first is software. There seem endless patents in software for ideas that many programmers would solve given a problem. It seems that many patents are little more than a race to state (code) the obvious. There is true innovation, but not all of it is. If several programmers come up with a solution independent of each other and are hit with patent infringement, perhaps it wasn't that innovative.

The second is biomimetics. Many ideas arise from imitating an idea derived from the living world. Think velcro, though there are many others. Copying design from the living world has led to a plethora of new creations. Of course such activity still requires much research and subsequent experimentation. But again this is a race to copy more than be innovative. If several researchers copy the same part of an organism to create a similar machine or product, the first there gets all the benefit.

Some ideas arise from a single person and may be unlikely to arise in the near future otherwise. Our situation is not really different after such a product becomes available but prohibitive to acquire than what it was before that person invented it. However consider when similar ideas arise frequently. Our situation may improve as useful products become available and competition lowers price. But if the right to production limited to the first person to register it then the consumer fails to gain these benefits because other creators who are prepared to make and sell the product are prohibited from doing so. The monopolist may price the product significantly above production cost and outside the price range of many people, yet others who arrived at the idea independently and who are prepared to sell marginally above cost are prevented from doing so by law.

If we are to have a state enforced private monopoly for creativity via patent and copyright law then perhaps the state can dictate the conditions of the monopoly. Such a position would mean that creators could either patent or not patent a concept. If they choose not to patent they can sell the quantity they wish and charge what they will with the benefit of being the first to the market and the ability to maintain secrecy. Competitors would need to reverse engineer a product then copy it as best they can. If the creators choose instead to patent their concept then they gain a temporary monopoly enforced by the state but must sell a minimum number of products at a fixed price (or markup), both set by the state.

American civic liberties quiz

I took the [American] Civic Literacy Exam. 33 questions on a range of issues concerning history, politics and economics.

Most of the questions were reasonable, though a couple may have been disputed based on theory versus fact. Definitions are reasonable, as are historical facts; but observations in line with theory may be disputable. For example,

International trade and specialization most often lead to which of the following?

• an increase in a nation’s productivity
• a decrease in a nation’s economic growth in the long term
• an increase in a nation’s import tariffs
• a decrease in a nation’s standard of living

While I agree with the answer, and it could be argued that observations have confirmed this, economists of other schools may dispute it.

The average result was 49%, with US college educators (university lecturers) averaging 55%. I managed 88% (29/33) despite its heavy US focus. This seems a little concerning for US education.

My incorrect answers were:

• What part of the [US] government has the power to declare war?
• What was the main issue in the debates between Abraham Lincoln and Stephen A. Douglas in 1858?
• Which of the following fiscal policy combinations has the federal government most often followed to stimulate economic activity when the economy is in a severe recession?
• If taxes equal government spending, then:

I am not convinced that my answer to the taxes question was incorrect. The question is

If taxes equal government spending, then:

1. government debt is zero
2. printing money no longer causes inflation
3. government is not helping anybody
4. tax per person equals government spending per person on average
5. tax loopholes and special-interest spending are absent

I answered 1, zero debt. I was assuming that the government had no debt prior to this. And #1 seems reasonable unless the government has a significant other incomes (such as mines). 2 is incorrect. 3 might happen to be true, but not because of the question. 4 is supposedly correct. 5 is incorrect.

Option 4 doesn't seem to be correct; again if the government has other incomes, but also taxes from companies means that government spending per person may differ from tax per person. I still think (assuming no debt prior) that answer 1 is better, though I am happy to be corrected.

Bookstores on the decline

An Australian politician gets in trouble predicting the decline of bookshops.

I think in five years, other than a few specialist booksellers in capital cities we will not see a bookstore, they will cease to exist.

Mr Sherry may have lacked some prudence here? Though earlier this year an Australian bookstore collapsed and blamed online selling.

The owners of Angus & Robertson and Borders in Australia, REDgroup Retail, collapsed in February with A$118 million ($153 million) in debt, blaming online competition as one reason for the failure

And it it is not just the advent of online buying which affects other retail sectors, but electronic formats including both electronic books and online information sources.

Perhaps his advice could have been welcomed.

Senator Sherry made the comments at a launch of the Driving Business Online campaign, a private sector initiative designed to encourage small business owners to boost their online presence.

It is not like his comments will change the behaviour of Australian buyers. But people seem more attuned to perceived insults than facing reality.

Corporatism is not capitalism

In reading comments around the internet that denounce capitalism, examples of its supposed unfairness are frequently given using corporations. Now there are a variety of things about corporations that may be good or bad. But it is important to note that corporatism is not synonymous with capitalism.

In fact many capitalists and free-marketers think little of corporations.

Now I am not against corporations competing within the marketplace. They can use their capital to be productive and offer low priced goods to consumers. I am not against large companies. It is true that larger amounts of capital potentially allow more efficient production; but it does not ensure it. And I don't think that small companies are unable to compete. Price is an important but not sole consideration for consumers, and smaller companies may have other advantages. Small businesses account for significant proportions of Gross Domestic Product in many countries.

But there are some aspects about corporations as they do exist (not as they have to exist) that are unpalatable and frankly anti-free-market.

The idea of a limited liability company seems questionable from a Christian perspective. Individuals can lose all their money. To run a business that allows you to take a greater risk and thus a potential greater gain, but not a greater, or even a complete loss seems unfair. Although in a system that allows unreasonable settlements in litigation I see the limited liability as the lesser evil.

But what is really irksome is special government favours for corporations. Unequal taxes, subsidies, guaranteed monopolies, separate law. This is not in the spirit of capitalism and annoys true capitalists as much as it does socialists. Perhaps more so as some socialists may justify specific corporations they happen to approve of, whereas capitalists may be competing in the marketplace against such an unfair advantage.

Taking money from once group to benefit another is generally a feature of socialism whether the recipient is poor or wealthy.

So if you despise capitalism and identify questionable practices by corporations as your reason, note that it is unlikely it is capitalist practices that make the corporation unjust, rather its anti-capitalist behaviour.

Increased productivity

I suspect many of the opinions expressed by Tapu Misa in this article are incorrect. I do not wish to discuss them save address this comment on wages:

For the first time in American history, rapid increases in productivity have not been accompanied by corresponding gains in wages; at the same time, the minimum wage has lagged behind increases in the cost of living.

It does not seem to me that increases in productivity should necessarily lead to increases in wages. It does seem that it should lead to an increase in standard of living.

Productivity gains should be sought. If a product at least equivalent in quality can be produced with lower cost in labour hours and source materials this is a good thing. As such the seller could make more profit per item. However in a competitive market the seller has an incentive to price the widget below that of his competitor to increase his market share. As such it may be that the profit per widget is unchanged though the cost of the widget to the consumer is less. Other manufacturers can introduce productivity gains and lower the cost of their widget, or improve the widget and sell a higher quality unit for the previous price.*

What I am suggesting is that increases in productivity should not automatically lead to an increase in profit which the socialists advocate be shared with the workers. Rather, in a competitive environment productivity gains should lead to decreased price.

But note that even though this does not increase wages, the standard of living can increase as these cheaper items cost proportionally less of one's income.

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*I am aware that some productivity gains coexist with a lower quality item, though a significant drop in price may allow a much larger proportion of society to own items previously the domain of the rich. I am not advocating low quality, but some people may prefer a low quality item over the alternative—no item. And price drops are often proportionally greater than quality loss.

Economic future

I was asked my thoughts on this article by Neville Bennett which is his thoughts an the near economic future.

Governments will wrestle with mounting debt-servicing costs and be forced to make severe budget cuts, especially in welfare and education. High structural unemployment will endure in the West and will fall heavily on youth, the unskilled and even mature workers.

High unemployment, higher taxes, foreclosures, and very tight credit will encourage a new frugality to consumers.

The share of consumption in GDP will decline. Savings should increase but savers will find yields low, especially in the deflation prone Japan and the USA.

Bennett goes on to describe the recovery as "L" shaped, which is not a description of the shape of the graph, but shorthand for long. I agree with his assessment, though it is not clear whether he thinks we still on a downward trajectory, or are near the bottom but will be a long time rising? I suspect the former and I concur, we still have a long way to fall.

Interestingly he describes shocking behaviour of consumers, partly due to excessive credit,

More accurately, personal liabilities in 2008 [in the US] exceeded 130% of personal income.

New Zealand was worse: Household debt increased six times in dollar terms between 1990 and 2008 to a massive 160% of disposable income.

Debt servicing took 15% of disposable income. The magnitude of debt provoked few concerns until about 2008.

Banks were anxious to provide 100% mortgages, and consumers often enjoyed the “wealth effect” of rising home values and stock investments.

Consumers used their homes like an ATM: taking loans for home improvements, cars, furnishings and even holidays.

Personal savings virtually disappeared. They were about 10% of income in the 1970’s but by 2008, Kiwis spent $1.13 for every dollar earned. Americans behaved similarly.

Overall I think the article reasonable. It appears to specify what he thinks will happen, not what he thinks should. Comments on actions governments and individuals should take would improve the article.

He is likely correct about unemployment rising, and being worse for the unskilled who are frequently the youth, this will be exacerbated by the high minimum wage.

There are some areas where I disagree, or at least would clarify his comments.

I am not certain his reasoning for the rapid rise out of recession in the 1980s is correct.

The US could roar out of some recessions, like that of 1981-2, because the baby-boomers were young (many in their 20’s) and high earners with heavy spending on homes, furnishing and cars.

Consumer spending rose 7.2% in 1982. The demographics are different now with many people scrimping in retirement. Personal debt is US$124,000 per household and that takes a lot of paying off, especially as house values have plunged and stock markets been volatile.

There may be some truth to this, but one has to wonder how accurate the data is over the last 30 years. Not to mention the theory that the bursting stock market bubble was offset by the technology bubble, which was offset by the property bubble, which is the last reasonable bubble. Thus the current doesn't lack solutions, rather the compounding of the recessions of the last few decades. There may have been no true recovery, debt funded spending just hid the true situation.

Bennett mentions tax increases leading to frugality,

High unemployment, higher taxes, foreclosures, and very tight credit will encourage a new frugality to consumers.

It is not clear whether he predicts this or advocates this. I am not too certain that these things will effect a change in behaviour, profligacy being a moral problem. But higher taxes should be avoided; they will do little to address the spendthrift problem but will prolong recovery and exacerbate unemployment. Tax cuts with even greater reduction in government spending would be far better long term for employment the economy.

A minor quibble, he talks about bi-inflation

Bi-inflation. Rising prices for commodities and gold, deflation in much of the economy.

So he is using the term inflation to describe prices, whereas it strictly means monetary supply. Will the monetary supply increase (inflation) or decrease (deflation). Price changes are reflective of the amount of money in circulation all other things being equal (which they may not be). It appears that Bennett thinks there will be deflation of the monetary supply with the prices of most things decreasing but some exceptions. I think the government will try and inflate, the question is will they be able to? I hope there is deflation. Prices will go generally go down as will incomes, but not debts! Some prices may rise because of decreased or unchanged supply combined with increased demand.

Worth a read, food for thought.

Will the UK end fractional reserve banking?

This law would go a long way towards preventing the problem of economic bubbles appearing and bursting.

“Mr Douglas Carswell (Clacton) (Con): I beg to move,

“That leave be given to bring in a Bill to prohibit banks and building societies lending on the basis of demand deposits without the permission of the account holder; and for connected purposes.

I don't hold out much hope it will pass in the United Kingdom, nor do I think the politicians of New Zealand likely to pass such a wise law. Nevertheless, the end of fractional reserve banking would stop the non-productive class extracting wealth from the productive class while they simultaneously retard economic growth.

Clayton makes an eminently sensible observation in his speech

Since the credit crunch hit us, an endless succession of economists, most of whom did not see it coming, have popped up on our TV screens to explain its causes with great authority. Most have tended to see the lack of credit as the problem, rather than as a symptom. Perhaps we should instead begin to listen to those economists who saw the credit glut that preceded the crash as the problem. The Cobden Centre, the Ludwig von Mises Institute and Huerta de Soto all grasped that the overproduction of bogus candy-floss credit before the crunch gave rise to it. It is time to take seriously their ideas on honest money and sound banking.

The Keynesian-monetarist economists might recoil in horror at the idea, because their orthodoxy holds that without these legal privileges for banks, there would be insufficient credit. They say that the oil that keeps the engine of capitalism working would dry up and the machine would grind to a halt, but that is not so. Under my Bill, credit would still exist but it would be credit backed by savings. In other words, it would be credit that could fuel an expansion in economic capacity that was commensurate with savings or deferred consumption. It would be, to use the cliché of our day, sustainable.

The politicians continue to listen to economists who did not see this coming, yet suggest a solution that costs obscene amounts of money, and the failure of the solution is already being seen. It would seem wiser to pay attention to those who predicted the collapse, especially when they are all singing a similar tune.

Teaching children about money

Randy Alcorn gives advice on how to teach your children about money. This is an interesting post in that much of what he talks about is not money management per se (though there is that), but how to get them to think rightly about money. His 10 points cover spending time with your children, teaching them about giving, saying "no" to themselves. I thought this gem was useful.

Take a field trip to a junkyard. How can we teach our children the emptiness of materialism in a memorable way? Take them to a garage sale and show them how things that people spent great amounts of money on are now sold for pennies.

Or, take them to visit a dump or junkyard. Show them all the piles of “treasures” that were formerly Christmas and birthday presents. Point out things costing hundreds of dollars, that children quarreled about, friendships were lost over, honesty was sacrificed for, and marriages broke up over. Show them the remnants of battered dolls, rusted robots, and crashed cars. Let them look at the expensive furniture and electronic gadgets that now lie useless. Point out to them that nearly everything your family owns will one day end up in a junkyard like this.

Then read, or ask them to read, 2 Peter 3:10-14, which says when Christ returns the whole world “will be destroyed by fire” and “the earth and everything in it will be laid bare.” Ask them the ultimate question: “when all that you owned lies abandoned, broken, burned and useless, what will you have done that will last for eternity?”

What will survive the coming holocaust of things? The answer is, only God, His Word and people. Explain to your children how life should be invested in the eternal. Read to them Matthew 6:19-25, where Jesus says, “Lay up for yourselves treasures in heaven.” Tell them “you can’t take it with you,” but according to Jesus, you can send it on ahead!

Worth a read.

Gapminder: Resource to compare countries

I have recently become aware of an interesting Swedish site called Gapminder. They have aggregated a large amount of statistics and allow you to plot them in a variety of ways. It covers health, income, disease and mortality, and several other parameters.

What I found of interest was their income and life expectancy graphs on Gapminder World. The basic frame is graph with a variety of options.

Life expectancy is on the left. It is a linear scale, though this can switched to a log scale. Income is on the bottom defaulting to a log scale (adjustable to linear). And the country size is plotted according to population. This can be adjusted to a fixed size, or a host of other variable such as aid received, education, energy use.

The year can be adjusted, or you can watch the changes unfold over the last 200 years. Countries can be highlighted for comparison.

And you can track changes of several countries over time.

What is of some interest is that life expectancy increased before income in many of the countries. I also found it interesting to note the slow economic progress or even regress of countries with poor governance compared to reasonably rapid gains in countries where there is rule of law and economic freedom. Compare Zimbabwe to Botswana and note the rise of Singapore and Hong Kong, neither of which have many natural resources, or even land or water.

Of course one is limited to the accuracy of the data, data from some countries is far more accurate than others.

The change wrought in the moral sentiments of Christendom

I was discussing with a fellow blogger the effect of Christianity on Western culture. It reminded me of a recent post by John C. Wright where he denied that increasing wealth has led to increasing freedoms. He argues that it is not wealth and education, or civility and law, that effects good social change, rather the Christian worldview which is in stark contrast to world it arrived in. It may be tempting to think the West was always like it was but this merely betrays historical ignorance. The West may be in decline now but its height was not a product of the evolution of European culture, it was the transformation of it by Christian belief.

I propose a radically different reading of history from yours. I propose that Christ introduced a view of man so remarkably different from that known in the ancient world, or in the East, as to be without compare or parallel. The change wrought in the moral sentiments of Christendom was so significant and widespread that you and every other scion of Christian philosophy have not even any awareness of it.

The Greeks with their infanticide, divorce, and slavery, held men to be innately unequal. Barbarians were fit only for servitude. The Romans, even worse, held it to be noble to condemn gladiators to fight to death for the amusement of idle crowds. Lavish executions by slow torture were commonplace. The idea of killing a man quickly, painlessly, even offering him a blindfold and cigarette so that he will not die without dignity is as alien to the ancient mind as non-Euclidean geometry. It is literally something from another universe.

The Indians with their caste system and the Chinese with their Confucianism and Legalism held the same view of man. Rulers rule. Servants serve. Slaves slave. Women bear children, which, when unwanted, are killed.

Imagine the scene of Jesus, a man of a conquered people, standing in chains before Pilot, the epitome of Roman power, law, and dignity. In the eyes of the ancient world, by the philosophy of the greatest and noblest sages of East and West, that scene would look like a clown confronting a demigod, with Jesus, the slave, in the role of the slapstick clown, someone whose role was to be hit with a pie or blown up by dynamite, and Pilot, speaking with the divine authority of Caesar, as the voice of heaven. The idea that the slapstick clown, whose mission in life was to die in torment for the amusement of the mob, was somehow greater than the voice of Caesar was inconceivable, radical, paradoxical, and backward by every ancient standard.

The Jewish notion that God was good is radically different from the Greek notion -- in Greek myth, after all, Cyclopes is the child of Neptune, and the gods are not always on the side of humanity -- just ask Ulysses. The Jewish notion that creation is GOOD is a radical defiance of the Greek notion that the world arose from chaos without purpose.

The adoption of the Christian world-view is what led to notions like the separation of church and state, the subordination of kings to the laws they make, the equality of men in the eyes of God, and so on. Without these ideas, the additional ideas of the security of property and the equality of slaves and women could not have surfaced. They are not natural ideas; they are not even rational ideas; they are mystical ideas having roots nowhere but Christendom.

The industrial revolution, the rising capital base, the specialization of labor, the rule of law and all other things you name or might name as sources of the increased felicity of man are products of nothing but Christendom.

Why did the industrial revolution happen in Europe, and nowhere else?

Why did modern science arise in the so called Dark Ages, and not earlier?

Why did the modern university system, with the notions of free inquiry and academic freedom, arise in Christian countries, and no where else?

Why did no one, no one, no one except the Christians ever free slaves, and why does slavery reappear within a few years in any land where Christians powers once ruled and now have withdrawn?

Why is Monogamy the rule, rather than the exception, in Christian lands, and why does the ruthless exploitation of women reappear within a few years in any land where Christians powers once ruled and now have withdrawn? -- We have God Damned HONOR KILLINGS happening in the United Kingdom these days. Is that just a coincidence or happenstance that this arose just when England moved sharply and clearly away from Christianity?

I humbly submit that you are conflating cause and effect. The cause of the improvement of man is the rise of highminded moral sentiments informing the laws and customs of man, producing such minor side effects as respect for reason, rights, and property, and which do not long last in the absence of the underlying moral sentiments.

Proposed tax changes

I have been asked about my thoughts on the proposed tax changes in New Zealand. Currently New Zealand has a progressive income tax structure and a sales tax. Individual income tax is

Income	Rate
Less $14,000	12.5%
$14,001–$48,000	21%
$48,001–$70,000	33%
More $70,000	38%

There is a 1.7% insurance rate that is taken at the same time. Companies are taxed at 30%. Sales tax (Goods and Services Tax) is 12.5%.

The system is actually more complicated than that with student loans being processed by the tax department, other special tax codes for some jobs, year to year income equalisation schemes for fluctuating income such as farmers may experience, charity donation rebates, child care rebates, family support,.... Sales tax is exempt from financial transactions, residential housing, mining precious metals, charities, and some other situations.

The proposal is to keep the tax take the same but alter the structure. Essentially the top tax rate would disappear and sales tax would increase to 15%, though there are other changes concerning property.

So what do I think? My ideas concerning tax are shaped partly by pragmatics, how does the system work in practice and what are the effects of different laws, but also on my perceptions of what is intrinsically fair. The latter takes priority. Some of these ideas are

• High tax leads to avoidance behaviour, both legal and illegal.
• High tax inhibits economic growth.
• Complex laws leave loopholes which are preferentially exploited by those who can afford accountants and lawyers.
• Exemptions for certain companies mean they pay less than others who are taxed more, yet they may still use the infrastructure tax pays for.
• People who earn more money pay more income tax anyway because tax is a percentage rate.
• Progressive tax favours both spouses working over one spouse earning all the income.
• Government should spend less and concern itself less in human affairs.

In light of these ideas I think the proposals are a step in the right direction. It is a move toward a flat rate for income tax. Further, by having the maximum individual rate close to the company rate decreases the incentive to use creative accounting to minimise tax. Sales tax affects all people similarly. Sales tax can be said to be a tax on consumption (partly true), rather than income tax which is more of a tax on production. This may encourage people to save rather than spend their discretionary money, a good thing.

Ideally there would be no tax. If there has to be tax I think the government should slowly divest itself of many of its expenditures and concentrate on core responsibilities, though that is another post. In terms of tax, the maximum rate should be the same as the company rate and be decreased until there is a single rate for all people in all occupations and all companies. An exemption on the first $20,000 income for all would limit the effect of tax on those with low incomes. A rate of about 20% for income tax and sales tax would be a starting point with a plan to decrease both to 10% (or less) over time as economic growth increases tax take and government decreases expenditures.

Such a system would be simple, less likely to be abused by both companies and the tax department, and be generally fair with consideration for the poorer members of society. It would led to economic growth and would mean higher employment. With more take home pay the demand for pay rises may decrease in some occupations.

The improving lot of Somalia

Like many I assumed the situation in Somalia is appalling, with no government, abject poverty, and the frequent mention of Somali pirates in the news reflective of the anarchy thru-out the rest of the country. So I read with some interest Peter Leeson's 2007 article published in the Journal of Comparative Economics, "Better Off Stateless: Somalia Before and After Government Collapse" (doi:10.1016/j.jce.2007.10.001). Now Somalia is no utopia, but Leeson makes the point that it is better than it was, and not as bad as it could be.

While it is important to avoid romanticizing Somalia, the results suggest that statelessness has substantially improved Somali development. I find that on nearly all indicators Somalia is doing significantly better under anarchy than it was under government.

Somalia was ruled by General Barre from 1969 until 1991 after he overthrew the previous government that had obtained independence from Britain and Italy less than a decade earlier. Civil war from 1988 to led to loss of government in 1991 which has continued since then with various groups claiming sovereignty over parts of the country.

Leeson establishes his thesis by comparing the status of several indicators of societal health in the years prior to 1991 and the years prior to 2005 after more than a decade without official government. The markers are limited in scope because of the difficulty obtaining reliable data.

Key development indicators before and after statelessness

	1985–1990	2000–2005	Welfare change
GDP per capita (PPP constant $)	836	600	?
Life expectancy (years)	46.0	48.47	Improved
One year olds fully immunized against measles (%)	30	40	Improved
One year olds fully immunized against TB (%)	31	50	Improved
Physicians (per 100,000)	3.4	4	Improved
Infants with low birth weight (%)	16	0.3	Improved
Infant mortality rate (per 1000)	152	114.89	Improved
Maternal mortality rate (per 100,000)	1600	1100	Improved
Pop. with access to water (%)	29	29	Same
Pop. with access to sanitation (%)	18	26	Improved
Pop. with access to at least one health facility (%)	28	54.8	Improved
Extreme poverty (< $1 per day)	60	43.2	Improved
Radios (per 1000)	4.0	98.5	Improved
Telephones (per 1000)	1.92	14.9	Improved
TVs (per 1000)	1.2	3.7	Improved
Fatality due to measles	8000	5598	Improved
Adult literacy rate (%)	24	19.2	Worse
Combined school enrollment (%)	12.9	7.5	Worse

So of these 18 indicators, 14 show improvement, 1 is stable, and 3 are worse. And Leeson argues that the GDP prior to 1991 is over stated for 3 reasons including that foreign aid contributed to half of that figure.

The article is well worth a read. Leeson discusses the history of Somalia, mentions some examples of recent progress, and addresses potential alternative claims. He acknowledges there is a way for the country to go, and that Somalia may well do better under good, small government; but he makes the point that people may do better without government, than with bad government.

there is a tendency upon observing problems in distressed regions of the world to see only on the “failure” of the current situation, ignoring the quite possibly even worse state of affairs that preceded it.

...Although a properly constrained government may be superior to statelessness, it is not true that any government is superior to no government all.

His conclusion,

A comprehensive view of the data that allow pre- and post-anarchy welfare
comparisons suggest that anarchy has improved overall development. Contrary to the typical case, in Somalia social welfare has improved because of, rather than despite, the absence of a central state. Somalia’s government was oppressive, exploitative, and brutal. The extent of this predation created a situation in which social welfare was depressed below the level it could achieve without any government at all. The emergence of anarchy in 1991 opened up opportunities for advancement not possible before government’s collapse. In particular, economic progress and improved public goods provision in critical areas flourished in the absence of a monopolistic and corrupt state.

Monday quote

The "Austrian" economic insight that money is a claim on resources, and that two people cannot hold the same claim on a resource at the same time, needs to be relentlessly rammed home.

Johnathan Pearce

Source

The means that God shall give

George Muller, famous for orphanages in England, set up an institution for the spread of the gospel which he named, "The Scriptural Knowledge Institution For Home And Abroad." This institution had several principles and objects. What I find inspiring is the refusal to ask men for money. People were aware of this institution, and then subsequent orphanages, which they were welcome to give to. But Muller was at pains to take his requests only to God and not to man.

And while Muller commenced activities he thought the Lord would have him do before all the provision had arrived, he refused to enter into debt for the same.

Further he sort to not use people to raise the profile of the institution if they were not Christian, and he refused the help and the employment of non-Christians in the work.

Here are the principles of the institution (appendix D).

1. We consider every believer bound, in one way or another, to help the cause of Christ, and we have scriptural warrant for expecting the Lord's blessing upon our word of faith and labour of love: and although, according to Matt. xiii.24-43, 2 Tim. iii. 1-13, and many other passages, the world will not be converted before the coming of our Lord Jesus, still, while He tarries, all scriptural means ought to be employed for the ingathering of the elect of God.
2. The Lord helping us, we do not mean to seek the patronage of the world; i.e., we never intend to ask unconverted persons of rank or wealth to countenance the Institution, because this, we consider, would be dishonourable to the Lord. In the name of our God we set up our banners, Ps. xx.5; He alone shall be our Patron, and if He helps us we shall prosper, and if He is not on our side, we shall not succeed.
3. We do not mean to ask unbelievers for money (2 Cor. vi.14-18); though we do not feel ourselves warranted to refuse their contributions, if they, of their own accord should offer them. (Acts xxviii. 2-10.)
4. We reject altogether the help of unbelievers in managing or carrying on the affairs of the Institution. (2 Cor. vi.14-18.)
5. We intend never to enlarge the field of labour by contracting debts (Rom. xiii.8), and afterwards appealing to the church of God for help, because this we consider to be opposed both to the letter and the spirit of the New Testament; but in secret prayer, God helping us, we shall carry the wants of the Institution to the Lord, and act according to the means that God shall give.
6. We do not mean to reckon the success of the Institution by the amount of money given, or the number of Bibles distributed, etc., but by the Lord's blessing upon the work (Zech. iv.6); and we expect this, in the proportion in which He shall help us to wait upon Him in prayer.
7. While we would avoid aiming after needless singularity, we desire to go on simply according to Scripture, without compromising the truth; at the same time thankfully receiving any instruction which experienced believers, after prayer, upon scriptural ground, may have to give us concerning the Institution.

While I am not completely against the requesting of funds for a need, Paul asked the Corinthian church to help the Jerusalem church, the idea of only asking God for one's needs has some appeal. In the natural it seems daunting, though our God has the resources of the universe at his disposal—how faltering our faith, but it has the advantage that only programs that God is involved in can prosper. Sure, God is involved in many organisations that appeal for money, but men can sustain efforts even when they abandon God's plans. But when God provides the funds, only his tasks get funded.

Random quote

The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome becomes bankrupt. People must again learn to work, instead of living on public assistance.

Cicero, 106-43 BC

Optimising a health system

It could be argued that the state has no place involving itself in healthcare. And I have sympathy with that view. Government should focus first on its primary responsibilities such as justice and national defence. But many governments are involved in healthcare; and the promise to deliver health will attract votes in a democracy. So here are my thoughts of how I think government involvement could be useful and deliver good, cost contained (for the government) healthcare. This is based on my ideas in the previous post.

1. I think that people should be responsible for their own health care including funding.
2. I think the proportion of people needing reasonable funding at some stage in their life means the concept of sharing risk via insurance for most illness is meaningless.
3. I think if people do not take care of their health, they will likely still get care and others will advocate for them; but there will be costs that someone has to cover.

The second point means that individuals each need to save roughly the average amount of money spent per person in their lifetime. If most people use a moderate amount of money in health and that is say $200,000 on average, then every person should be encouraged to save, say, $400,000 over their lifetime, much of which will be used in their later years.

The third point is important because the situation occurring as the result of people making bad decisions will be used to argue for socialised government in the name of caring.

I think the Singaporean system, or a model based on it, is worth considering.

Here is some reading on the Singaporean system as it is.

• International Health Systems: Singapore
• The Singapore Model
• The Singapore health system—achieving positive health outcomes with low expenditure

My proposal is essentially: government enforced compulsory health saving. Because under this proposed system the government will remove itself from the funding, there will be a decreased requirement for tax monies; and the savings will be cost neutral for the individual. The basic rules would be:

1. All workers are to pay 5% of their income into an individual, managed, low-risk health account.
2. There is a tax cut of the same amount so individuals have the same take home pay.
3. Employers are not required to give any money toward their employees account, nor can unions force this issue. This prevents people being locked into jobs because of the health benefits.
4. The money is yours, it cannot be taken by the government, it can be passed on in a will at death to other healthcare accounts, hospitals or medical research; or possibly as cash to the beneficiaries of the will.
5. Compulsory insurance is paid from the account to cover rare, unexpected, high-cost events (eg. kidney failure requiring life long dialysis).
6. You can use your account to pay healthcare costs. The potential healthcare and the costs are determined by government; that is, both what you can get medically and the maximum amount you can pay. It would include doctor, nurse, hospital visits, etc. It would include prescription and immunisation costs. It would cover dental care.
7. You can only cover your own and your dependants healthcare costs.
   
8. You can purchase a higher level of care, or medical services outside normal practice, but this is unable to come from your healthcare account.
9. All provision is by private providers who can charge what they will, though adequate competition should keep costs down.

This solution intends to do several things. It means that people pay for their own medical care which, while being somewhat unpredictable, is able to be planned for. It intends to minimise government actually paying for individual health. It prevents people making poor decisions from becoming an unsustainable financial burden. It doesn't add to the burden of employers who do not have a responsibility to the personal health of their workers other than the provision of a safe work environment. Of course employers are free to offer benefits as they wish as part of valuing employees, but there is no financial incentive to do so, nor the need to increasingly complicate tax law. It limits other family members from pressuring individuals to pay for their care. It still allows people to purchase any extra healthcare they wish as money allows (unlike the Canadian system).

There are problems. It does not deal to those who are not employed. It does not deal well with congenital conditions. It does not cover visitors to the country such as tourists. And it does not offer a solution as to how a different system can be transitioned to this. But with medical costs increasing rapidly because of new and better diagnostic and treatment modalities, it is impossible for governments to sustain future expenditures. And when individuals see how much an intervention really does cost, then they may consider whether the benefit is worth it.