The Adventure Ends

“Two years” I thought as walked across the wide river, high upon the broad familiar bridge as large sports utility vehicles inched forward in turns to my left in the stop and start traffic. The afternoon sun suddenly appeared under a wall of dark clouds as it reddened and fell rapidly towards the horizon.

I let out a long silent yawn. My stress had gotten the better of me lately and I was sleeping little and lightly. Stress, and excitement. There were many things that had to be sorted out and lots of travel coming up before I left. As I passed the halfway point on the bridge I opened the inbox on my phone and found the itinerary of my one-way ticket, it won’t be long now.

“What about your little blog?” I mused once I passed the far side of the bridge. It had started almost exactly two years ago when I was leaving somewhere else. An adventure in a new world told in random disjoint episodes interspersed with libertarian rantings and literary experiments. I had no audience, but never wanted one. It was a vehicle to practice writing, to get used to doing it regularly. To learn how to write opinions and tell stories. To document in episodes what was itself a rather short episode in the larger narrative of my own life.

“Mission accomplished, then” I thought as I pictured George W smiling on an aircraft carrier. The picture of the hopelessly premature celebration mocked me in my self-congratulation. But yes, this little blog’s mission was over. The journey was ending, I was leaving. I had practiced and improved, and I did keep it up. One could improve endlessly, and besides, ending this on its anniversary was just too tempting.

"I'll start another blog", I thought to myself as I walked through the damp streets of the city I called home. Would you have time, what with all the travel and hassle you have until February? What about the topic, concept and style? Write more opinions to vent my frustration at the decline of freedom and capitalism? Focus on telling the story of my next adventure, maybe, and try out some other writing styles. Maybe even mention actual place names this time.

Yes. New city, new country, new blog. I’ll start as soon as I’m settled. I’ll decide what to write about and how as I’m on that long one-way plane ride to my next adventure. To my current home, I say goodbye, nice knowing you. It’s been terrible and great, as life always is. After all, as you’ve taught me, it’s not the city that makes it your home, but something elusive within oneself.

Alas, cat, we must part ways. Don't look at me like that. Argh! He bit me!

The Price of Money

“It’s a lock” is the consensus on Wall Street, referring to the Federal Reserve raising interest rates for the first time in a decade in their upcoming December meeting. But in fact, it is not a lock, the Fed will continue to kick the can down the road and just like in 1999 and 2007, the consensus is wrong, blinded by the exuberance of years monetary interventionism.

“Who cares, anyway?” you might ask. Why do interest rates even matter? The central bank’s interest rate matters greatly. It is this rate that ultimately determines the base for all interest rates of all debt in the economy. Low rates encourage borrowing while high rates discourage it. Of course, that is a simplification, but the general effect of the central bank’s interest rates is not contentious. They are essentially setting the price of money.

Before central banks usurped the power to control the price of money, the free market set the rate of interest based on the availability of capital in hundreds of independent banks. Yes, there were bank runs and panics, but that messy and imperfect system was far stronger than the systemically flawed system we have now. The disaster that is baked into this cake will show that we have converted small distributed risk and failure into a giant centralised catastrophe.

So the central bank price fixes the rate of interest. What carefully deliberated number do you suppose the economy needs? What balance between creditors and debtors should be reached? Zero. Zero is the rate we have had for the last 8 years. Zero is the rate that minimises the burden for debtors. Zero is the most politically expedient number that can fuel the rampant speculation that replaces genuine economic growth. That rampant speculation keeps incumbents in power as it masquerades as a genuine economic recovery.

“So will they move in December?”. With the stock market near record highs, and the unemployment rate hitting a new low for the move, it seems like it might be the right time to start normalising rates and reloading the monetary policy ammunition. However, unless the Fed is completely clueless and not just dishonest, it knows it cannot raise interest rates. The whole expansion since 2008, fueled by zero rates depends on those rates staying zero. As soon as the first quarter-point rise comes in, and with the anticipation of full normalisation, the bad news will start coming in fast. The stock market, auto loans, student loans, the mortgage market, oil loans and credit card debt are now extremely sensitive to interest rates.

But in reality there is one main reason that the Fed is stuck. Actually, make that eighteen trillion reasons on a very short maturity. Low interest rates help debtors, and the biggest debtor in the history of the world cannot afford a rate higher than zero. Janet, though nominally independent, knows which side of her bread is buttered. If Barack is going to successfully hand over the baton to Hillary, there will be no rate hike this year, or next. They will talk about it though, a lot.

Although the Fed will never want to raise interest rates, ultimately it will have to. When the market wakes up to this charade, the realisation will be that the Dollar is not the cleanest shirt in the hamper. Once it starts on its road down, the only thing that will stop the Dollar’s free-fall will be Fed action. Once that action comes, there will be a lot of pain as the debt-fueled speculation will have to unwind. Ultimately, zero rates will lead to zero confidence in the currency and the Fed will have spoil the party. Either that, or the Fed sticks to its guns and it’s back to barter.

Winter is coming

The Cold Whispered

“Are you lost?” came the growl from a raggedy woman sitting outside the train station as I waited. “No, I’m fine, thank you”. “Are your toes cold?” she insisted, pointing at my sandals. “No, I’m perfectly fine. Thanks”, I replied, trying hard not to encourage the conversation. “Do you want to get high?” she finally said after about half a minute of silence. “No. I’m fine, but thanks anyway.” I said as I walked to wait at the other end of the station. The cold air pinched my hands as I pushed my bike along.

A whole year without setting foot on my home fast approaching, my third year on the other side of the Atlantic already started. It’ll soon be my sixth year gone, but who’s counting anyway? The visions of familiar shores, fields of green grass, yellow flowers and shades of blue everywhere. Fog fills the scene, I bike over an old bridge through a crowded market by a canal. Busses and scooters drive past me as I go past the rubble field walls and large cactus plants. The messy dream comes to an abrupt end at a traffic light, I’m back on the distant, unfamiliar shores of reality.

“Could I really go back?” I ask myself. They say the past is a foreign country, how could I think I even belong there anymore? What would I do, who would I meet? Do I still know my way around? I guess it would all come flooding back. After some years, you would never know I was any different, except if in conversation it came up that yes, I too lived abroad for a time.

Is that it then? Was that what it was all about. To say “Here am I. I left and was gone for many years. Then I came back”. Back with a fistful of cash and some good stories. Those neglected people, missed weddings and funerals. Growing nephews and aging parents. A decade lost, for what? Do I not owe it everyone to return with more than that?

Maybe going home is something you have to earn. When you set forth to seek your fortune, you return once you have found it. Or is that a trap? A mental vice to keep you away, like a reflexive self-defense mechanism guarding against some deeply repressed pain. Should I not face this fear? What exactly is it I’m afraid of?

And yet, I know I am destined to return. I could stay away another thirty years and still know it. The sea calls me back. In the guise of a city river or the wide and sandy shore of a big lake. Even if my next step takes me further away, in my heart I know I am actually getting closer.

Isn't it pretty?

Hello Operator

“So it only works on Windows and Mac? Uh, no, sure, it’s not problem, there’s a spare Mac lying around here. I’ll install the token client and install a JDK on it right away.” I said with a sense of dread and foreboding. I had recently been subjected to Apple software when I dropped my Android and was given a spare iPhone by the office. Times have changed, I told myself, plenty of people are using Macs these days. Besides, I’m a technical professional, how bad can this be?

It wasn’t as bad as I thought. It was much, much worse. At first I thought OS X might have been poorly designed through incompetence, after all, I know all too well that even good developers can create a poor result if the planning and design is shoddy. But as the hours with the MacBook Pro wore on it became increasingly clear that this was a system designed by Satan himself.

This is not a rant by a Windows fanboy. I haven’t used Windows in years, and it’s got it’s fair share of problems too. I’ve been using computers (and therefore operating systems) since the 80s. Things were pretty bad back then, but if we're to measure by the standard of our times, OS X is truly amazing. Amazingly bad.

As I was replacing Apple’s JVM with a real one, I was happy to see the Linux-like Terminal app. It’s almost as good as the Linux terminals from the late 90s. No reverse-i-search, no idea where you are in your file system, no idea what these guys were smoking. Switching to the smiley-faced Finder app is when I realised that I was dealing with some seriously stupid design decisions. Navigating with the arrow keys worked fine, shame there is no home or end key. Once I had my folder selected I hit return and was prompted to rename the folder. I called the folder “assface” and put my hands on the touchpad to open it the slow way, found the log files I wanted to clear and hit delete. Nothing happened. The retard-faced finder just smiled at me.

I alt-tabbed to the ‘terminal’ to get back to a relatively sane environment, opened a new tab and tried to switch back to the first one. Alt-1, control-tab, option-tab, alt-option-tab, fn-control-tab, forget it, back to the touchpad. Alt-tab back to Finder, no not this Finder, the other Finder window.. where is it?? Ah, you have to alt-tab to Finder, then alt-` to the right Finder window! Brilliant! Navigating through windows is so much better this way, I’m not in a hurry anyway. I mean, why do we even need a keyboard? I’ll just select letters from an on-screen keyboard.

This system is built around the touchpad experience, you know that. Stop trying to be fast and efficient with your antiquated keyboard antics, cramp your wrist up in front of your chest and sit on your left hand and you’ll be loving OS X in no time. I clicked my way to the ‘browser’ and scrolled down a page of keyboard shortcuts using a two fingered-scroll. Trouble is, it scrolled in the wrong direction. You can change it back to normal in the settings, where it gives you two options: natural (wrong) scrolling or not. Yes, all of the cursor and scrollbar scrolling in all of the history of computing has been wrong ladies and gentlemen. Finally someone has come to school us about what is natural. Finally.

While I was in the settings I thought I could try to make my life in this OS hell a little better. Let’s see, I need to see hidden files and folders… hmmm… well I guess people who like this steaming pile of crap shouldn’t be trusted with hidden files anyway. Hmm, well at least I’m not going to get lost in the settings, I guess it’s only fair to subject everyone to the same terrible window management equally. Ah, an alert popped up… let’s try and tab to ‘no’ and hit enter… what the hell!?!?! But hey, at least there are multiple desktops now, like we’ve had on good operating systems since literally last century.

I’m sure there are people out there who really like OS X. But forcing users to use the touchpad really slows them down (yes, it really does) and there is no good reason not to also include keyboard shortcuts that aren’t completely stupid. Switching to a Linux kernel was likewise a great move, but then why did they have to smother it in so much crap? I have met so many mac users who have no idea where their files are actually stored. Why should they need to know? Because they are programmers! Yes, programmers are actually using this junk.

Luckily, I found a great workaround for all of the problems I was experiencing with OS X, you can download it here: http://distrowatch.com/dwres.php?resource=major

That ship has sailed

Solidarność

“Do you work here?” a skinny blond bespectacled man asks me as I leave the office. His blue eyes stare at me intently through a thin black frame as his arm holds out a yellow leaflet. A few paces to the side, half a dozen large black women march around in a circle chanting loudly and hold up signs. “It’s about the cleaners in your building”, he continued, “did you know they only make $12 an hour?”.

“Oh?” I said, puzzled, glancing at the pale yellow flyer. “Well that’s not very much is it? Can you imagine trying to live on that??” he offered. “Yeah, crazy. I wonder how they do it. What does this have to do with me?” I said, feigning disinterest as I handed him his leaflet back. “The standard rate in the city is $20 per hour! They’re being ripped off!” he shouted. “Well they don’t seem so upset about it… how come THEY are not protesting?” I said pointing at the circle of women, none of whom were janitors in my building.

“Well they’re not part of our union! If they came out to protest with us, they could get fired! Your building is hiring non-union workers and underpaying them!” he bailed as I was walking away. “Ah, so this is really about growing your union base! Leave those poor janitors alone and stop wasting everybody’s time!” I sneered as I got on my bike. His shouting at me as I rode away informed me that I that I didn’t really get the last word, but I couldn’t quite catch what he was saying anyway.

It’s easy for union activists to paint themselves as virtuous crusaders, selflessly sticking up for the little guy. But the charade is a thin veil, they might fool some, and certainly themselves, but I can see the harm they are doing. If they got their way and forced the company that runs my building to pay more for their unionised workers, the current janitors would lose their jobs. Not so? They could just join the union?

Not so. They could join the union and get their raise, but it would be hard for them to keep their job. If they could demand $20 per hour for their labour they would have been working a different job already. Being forced to overpay for its staff, the building will expect higher standards; why should they pay $20 to someone who is providing $12 of value? Those workers will be replaced by more productive workers, or they will make do with fewer workers (fewer man-hours, these are part-time workers).

There is hardship in this world, and there will always be. Progress seems aggravatingly slow sometimes, but we cannot use force to fix it. By using force to come between two parties that have voluntarily come to an agreement, this union is interrupting that engine of prosperity that is the free market. There are no shortcuts to progress. Freedom is the best system for giving poor people a chance to work themselves up. You can shout all you like, but your minimum wage is still $0.

Alas, the summer sun starts to set. Winter is coming!

Free is a Four Letter Word

“If you hate government so much, why don’t you move to Somalia?” an exasperated friend once told me after a heated discussion on free markets. Of course, freedom breeds prosperity; In Somalia people are largely free of government interference, but they are not at all free to pursue their own self-interests. Like most libertarians, I think government has an essential role to play in protecting property rights and enforcing contracts. It seems that anyone who questions the mission-creep of government is automatically branded an anarchist

So why did my friend call me an extremist? Why is it that despite doing more for the betterment of the common man than anything else in history, freedom, industrialisation and capitalism have such a dismal reputation whereas government and socialism, which have done so much to hold us back from progress, largely escape blame?

“Yes, private interests create prosperity. But this has to be controlled, otherwise greedy corporations will bleed us dry. We need more government oversight and regulation, look at what happened in 2008!” goes one of the more common myths and revisionist histories that informs public opinion. Blame for the Great Recession is placed squarely on corporate greed instead of on the bubble-blowing monetary policies of government. The Great Depression too, is blamed on private greed rather than the disastrous policies of Hoover (going against the good advice of Mellon). Even the great nineteenth century is remembered as an era of squalid working conditions, child labour and great poverty instead of the era that inherited these problems and finally addressed them.

Perhaps it is because the engines of prosperity: individual self-interest and freedom contrast with the moralisations of Judeo-Christian myth. We have inherited the medieval notions that avarice and usury are sins and that poverty is virtuous. Concern with the passage of time, with worldly affairs and with money were seen as a profound lack of trust in the divine. To go naked and to be celibate: ultimate resignation from this world, underscored your devotion to the next. It seems that the holy monk and the evil Jewish moneylender are still being projected onto people and institutions.

“Without government, who will feed the hungry? House the homeless and look after us when we are old?”. Generations of socialism has made us forget some fundamental points about welfare, healthcare, education, transportation and dozens of other areas dominated by government. Firstly that there were solutions to these problems before the government got involved and crowded private solutions out. Secondly, that it might well be advantageous to pool our resources together to solve these problems, but governmental organisation is the most wasteful and least effective use of our collective resources: there are alternatives. At the heart of this lies a deep distrust in people; in people’s generosity, kindness and creativity. Those same ingredients that make us materially wealthy also create the greatest flourishings of philanthropy and art. It is no surprise that the RSPCA, the Red Cross, the Olympic Games and all of the greatest non-profit organisations can all trace their founding to that freest of centuries.

The ever-increasing scope of government, the millions of pages of rules and regulations and the insane belief that failed government programs need expansion: this to me is extremism. Pulling back on the reigns and fighting against unbridled government overreach, this is not talking about eliminating government, only restricting it to its proper functions so that it may focus on them. When pointing out the all too numerous and catastrophic failures of government and harping on about the virtues of a free market system, libertarians can come off as idealists who are trying to engineer a government-free utopia - and some of them are. This brand of anarchy should not be confused with the more pragmatic views of limited government, sound money and laissez-faire economics. Though it would be nice to have a clean separation of state and economy, we should prioritise our efforts to focus on the biggest problems: ZIRP and overregulation. And to my friend who sent me to Somalia I say: If you like government so much, why don’t you move to North Korea?

Come on.. it's not so bad.

Carrotsticks

“You can lead a horse to water, but a pencil must be lead”. We might like to think of ourselves as free thinking agents, unaffected by marketing and spin, wholly original and too clever by far. We are not petty and grasping, we play by the rules when they are fair. We always do our best. The problem is everyone else.

People smoke and drink themselves to death, they gamble away their money and eat themselves fat. Too few are the paragons of virtue that give their money to charity and separate their waste. Too few exercise and enjoy fine art, while too many rent the homes they should be owning. How do we mold this unruly mob into an army of model citizens?

“You can always count on people to put their interest ahead of yours”. By using incentives, we can gently lure and nudge people on to a path that promotes good behaviour and punishes bad behaviour. Extra tariffs on cigarettes, alcohol and burgers. Tax deductions for charitable donations and mortgage payments, rebates for renewable energy and countless other incentive schemes softly encourage and better society.

“I spent a lot of money on booze, birds and fast cars. The rest I just wasted” said the late George Best. There are a couple of problems with governments’ use of incentives. Firstly, the schemes are often very poorly designed and have unintended consequences that run counter to the goals of the program. Perhaps the poor quality of government work, even in this area, is evidence of an altogether different incentive problem. But far worse than that, is that government incentives are inherently immoral and conceited.

“Certain unalienable rights, that among these are life, liberty and the pursuit of happiness”. We are all of us mortals. Destined to die one day, a day likely not of our choosing and for most of us that day will come many years too soon. The problem with government incentives is that they alter and interfere with our pursuit of happiness. What is good behaviour? What is the right amount of charity? What is bad behaviour? Should smokers be punished? Once you accept an incentive scheme we pass judgement on the activity it pertains to. Who are we to interfere with other people’s choices in their own short lives?

I know that fast food is bad for you, I do not know that for a particular person the added health risks outweigh the enjoyment he gets from that chicken wing. I do not know if there are enough hairdressers or homeowners in the economy, but I do know that governments bureaucrats are also clueless, despite their conceit.

Sure, there is behaviour that we can almost universally consider bad, like killing and stealing. But these things fall into a different category, these are hostile actions with an unwilling victim and the law should protect us from those that would do us harm. We use the threat of violence towards those that would harm others to discourage them from doing so. This is not the kind of incentive I am discussing. I am condemning sin taxes and tax breaks (better to cut taxes across the board than to pick winners and losers).

This shallow patriarchism deserves condemnation. Of course, there is nothing wrong with private incentive schemes, they are not allowed to punish us and can only reward us by private means. If a company pays you 5c when you return an empty bottle that is very different than the government taking 5c out of your pocket to give to someone else when they do something ‘good’, or fining you 5c for every bottle not returned on time.

Luckily, incentives are extremely powerful. I say luckily because politicians and bureaucrats are also people, people who respond to incentives. Once we the people reject this sort of government meddling, it will become profitable for them to put this bad behaviour to an end.

Yes friends, a school bus being towed by a truck; the eternal
symbol of the private sector's burden that is the state

Lord Potato

“Vazi ni-bwana wangu, eytow”, chants the man as he strikes the ground. All life long he toils for lord potato. Rhythmically working he digs a mound, and lays him in the soil. “Vasi bwana eytow. Hide in here until the fall comes round. Vazi ni-bwana wangu, eytow. Then master, will you be found? To keep me as your slave next year? Or leave me hungry without a sound, and send me to my grave, I fear”.

Can such a lowly, misshapen vegetable really be one’s master? For millennia most people on earth subsided in drudgery on a single staple. Of course, there were some who never joined in the agricultural revolution and continue in their hunter-gatherer lifestyle even to this day. Indeed, skeletal evidence shows that the hunters were initially much healthier than the farmers, due to their diverse diet and adaptability.

Still to this day, in some forgotten corners of the world, people continue to scratch a living onto the dry surface of the earth. Just one failed harvest away from death, working all day to extract their nourishment from dawn to dusk, cradle to grave. It was this way in Africa, in Asia, in the Americas and even in Europe. Only in the fertile river deltas, those naturally plentiful areas that need no human irrigation were harvests plentiful and reliable enough to sustain those early cities.

Through the meager surpluses and warmer years, technology did improve; wind and water mills, metal ploughs, crop rotation, ash fertilisation and irrigation techniques freed up labour and improved yields above subsistence to create the ancient and modern civilisations. And even though millions could now live beyond agricultural subsistence, still, even as late as the 18th century, and in the most developed parts of the world, the vast majority of people were busied with agriculture. 200 years ago, 90% of Americans were farmers. Today, it is only 2%.

The benefits of this second agricultural revolution cannot be understated. Not only do even the poorest and most destitute now no longer know hunger, they eat better than most people have ever been able to before. This bountiful plenty freed people up to pursue other needs and interests. A flourishing of art and science, ordinary people retiring and taking vacations. The miracle from the field and pasture that turned a newly-independent rural backwater into the world’s foremost industrial superpower.

They had plenty of fields in the old world, paddies in China, pastures on the Russian steppes and vast plantations in Brazil, but none of those could launch the second agricultural revolution. Only the small, independent farmsteads of the USA had the crucial ingredient to unleash this tidal wave of progress and prosperity. That ingredient was freedom. Freedom to innovate, free from burdensome meddling regulation. Freedom to keep the fruits and profits of their labour, a most crucial incentive. Freedom to buy the best tools and equipment at the cheapest price and to sell their produce to the highest bidder with virtually no tariffs or quotas.

The tyrants and despots in the rest of the world could only scratch their heads in wonder as cheap, high quality American manufactured goods flooded the markets. Assembled by the freed up labour in the factories paid for by the profits on exported agricultural produce. What then should be done for those poor earth scratchers, still hunched over and singing to their potatoes? Give them peace and give them freedom, and let them be. They will do the rest.

Damn those capitalist fat cats!

The Great Schmoozola

“A free tablet computer for every child in year six” the candidate said to the crowd as he paused for the cheers and applause. “Apart from this investment in our childrens' future, we also pledge to reduce electricity bills by 20%”. As one promise is laid on top of another, the huge crowd throngs the streets with their coloured banners.

I’m paraphrasing real electoral promises made in a recent election. The campaign was dominated by politicians desperately trying to outbid each other and offer more free goodies to the voting public. Of course this is what they must do, for we have taught them that the most generous program will get elected - provided the electorate maintains it’s suspension of disbelief and the promises seem remotely feasible.

Therein lies the incentive for the candidate, who might be well-intentioned and might believe he can deliver on his promises, without burdening society with the cost. Buy them out. Politics is all about principles; you have to forget you have any. We are all in business and politicians are in the business of getting elected. Unfortunately, these gifts we are promised are gifts bought with our own ends. The government doesn't have any money, it can only spend what it takes from us.

The centrist, centre-left and centre-right parties all play the same game. Some run a huge deficit, others run deficits of astronomic proportions. Responsibility lasts until the next election. A week is a long time in politics, four years, an eternity. As the differences between the center parties disappears, voters turn apathetic and turn to the fringe parties whose fanatical members offer a real, and often terrifyingly bad alternative.

This is a serious flaw in the current implementation of our democracy. Elections increasingly become popularity contests and everyone with a plan to reign in the gravy train has no chance of getting into office.

“You won’t get anything done by electing the right people. The way you get things done is by making it profitable for the wrong people to do the right things” Friedman teaches us. After all, we only get the government we ask for, the one we deserve. If enough people understand the dangers of populism they will reject it. The same politicians would scramble to cut spending and lower taxes.

This can be done. The electorate is not a mass of unthinking sheep. After all, there have been times, though admittedly few, when progress in this area has been made. Ultimately, the best safeguard would be real constitutional limits on the power of government. Limits that would prevent irresponsible spending and populist promises. But in the end, even such legal limits are only as good as the people they preside over.

It's not the size of the monument that counts...

Divided We Stand

“I remember the wall”, I said when it was my turn. There was a terrible excitement in the air and everyone stood close to the old wooden television. The fact that people were standing added to the tension and I could sense that all over the country, people were standing and watching the exact same station on the same wooden television. Everybody had the same television, you weren’t allowed to buy any other model back then. There was shock on my parents’ faces, and fear. It was wholly unclear to me if the scenes of young men with mallets and pickaxes hacking away at concrete blocks was good news or bad. The wall is the first thing I can remember watching on the news.

It was the felling of not just a wall, but of an ideology. The rejection of central planning and government control. The unthinkable happened, the East would never be the same. But a barrier divides two halves. The changes to the East were obvious and visible. People born on the wrong side tasted pineapple for the first time in their lives. Across the fields of rubble, the abandoned machine-gun posts and checkpoints, the West was also about to change.

When the sour communist faces stared back at us from behind barbed wire fences, it was easy to remember why we embraced free market capitalism and individualism. As the dust settled and the east adopted free markets, the west began to forget its values. Social safety nets expanded into cradle-to-grave welfare. Millions of pages of rules and regulations were written, dwarfing all of the combined creative genius that had been put on to the written page by western civilisation until that point.

Communism had failed. The central planning of an economy and the suppression of individual will causes poverty and misery. Staring this failure in the face should have vindicated the free market principles of Adam Smith and the liberal philosophy of John Stuart Mill. Instead, capitalism has been vilified as greedy profit-seeking and people talk again of the great plenty that will come, if only government’s hands were not tied by the agents of evil corporations.

Indeed it is now very confusing, that there is more economic freedom in communist China than there is in so-called capitalist America. As Adam and John walked east across the rubble where the wall once stood, Marx and Weber passed them as they were heading west. Of course, I am exaggerating, the United States is not a communist dictatorship and China is not a champion of liberty - but neither is the opposite true.

However, as the Cuban wall starts to crumble and Kin Jung-un gets weaker, the last living examples of the failures of total socialism start to fade. Without these grotesque monuments to human stupidity, we might forget to keep in check our own socialist tendencies as we continue to embrace ever more government control and forsake the heritage that made us free and prosperous.

Sunset. Sunrise. Moon shrugs.

All that is Certain

“What’s it like to have a job?” the son asks his father. “Well son, go clear the snow from the driveway and tidy up your room, and I’ll show you”. When the child returns triumphantly, the father shows him a $10 note, and then gives him $5. Taxation, an idea as old as history itself. “Stealing” people’s money for “important stuff” has been done in a dizzying number of ways for all imaginable purposes.

Feudal tithes often took a quarter of your crops away, or required you to work one day of the week on your lords’ lands. Taxes were also collected to fund specific events like wars, crusades or large construction projects. In many European kingdoms, it is these sort of universal (excepting the clergy) tax drives that eventually became yearly, permanent sources of government income. It is these taxes that eventually became the modern income tax. Such taxes were greatly despised and touched off many revolts and even revolutions.

What a touchy lot! A large war tax would top out at 10%. A feudal tithe of 25% also is not so bad when compared to modern income tax levels. Effective income tax levels of close to 50% are common for many people in the western world. It is amazing that we accept such high levels of taxation. What is even more amazing, is that the income tax is only the beginning.

Sales taxes, VAT and tariffs add to the tax burden when we spend our money instead of when we earn it. This can be as high as a 25% VAT in Europe. That’s not all, wealth taxes, inheritance taxes, property taxes, capital gains taxes and license fees create a complex indecipherable system that attempts to hide how much you are actually being taxed.

Add to this corporate taxes. These are politically popular: don’t tax people, tax those evil corporations. Truth is there is no such thing as a corporate tax. Corporations cannot pay taxes, only people can. Corporate taxes are borne by the owners and shareholders. Instead of paying taxes, the money could have been spent on lowering prices for consumer or hiring more people.

You would think that this would be enough to pad the government coffers. Another, more sinister tax is levied on us: inflation. By creating inflation, governments diminish the real value of their mountainous debts and tax everyone, not by taking our money away from us, but by taking the value away from our money. This tax has a very broad base as it hits everyone, the rich, the poor, the old and the young. It even taxes the hidden money sloshing around the black economy. It’s a politically popular choice as it a tax that doesn’t need to be voted in.

Officially the inflation tax rate is very low, consumer prices increasing in the western world by less than 1%. Removing all the gimmicky hedonic substitutions, using government formulae from the 80s or earlier put inflation closer to 8%. All this assumes, of course, that consumer prices are the only ones that count. Anyone trying to buy real estate, stocks, fine art or commodities would find that inflation has imposed a very real and very steep tax on investments.

Just when you think the government has taken enough, mandates put their hats out for more. By forcing us to buy health insurance, seatbelts, fire extinguishers and hundreds of other goods and services the government taxes us. Although the government doesn’t receive this money (apart from any sales taxes on our part and income and corporate taxes on the part of the provider of the good or service) and we might well want to have airbags and smoke detectors for their own sakes, we are no less forced to part with our money, money that we could have spent elsewhere. On the corporate side mandates are even worse; standards, regulations and compliance reporting impose a burden on business that must result in lower wages, fewer jobs, pricier products or less investments.

So, what is your tax rate? How much more money (or rather, value) would you have with less government. Sure, you’d have higher expenses. You’d have to pay for all the things that government pays for through your taxes. Well, at least only those things you want to pay for. And let’s be honest, you’re not likely to spend your money quite as wastefully and stupidly as governments do.

Through the myriad of mandates and revenue streams it is completely impossible to calculate one’s tax burden. The easiest way to see how much a government taxes is to look at how much it spends. Governments don’t have any money. They can only spend what they collect in taxes. They can borrow the money, but that can only be repaid through future taxation. Creating inflation is not a substitute for taxation, it is taxation.

During the golden age of Queen Victoria, the British government spent no more than 10% of the national income. That paid for the running of the biggest empire in world history. The bureaucrats, the navy, social programs, everything. The United Kingdom’s government today spends about 40% of GDP. The USA does little better at 37%, up from less than 1% in the middle of the 19th century.

So if a 25% tax on tea in 1773, or a tax of four pence per person in 1377 can lead to the Boston Tea Party or the English Peasant’s Revolt, what is in store for us today? It is hard to draw a direct connection, but along with ever increasing taxation we are witnessing a widespread disenfranchisement in the west. From the Occupy movement to the Tea Party, Syriza to Fidesz. Are we witnessing the inevitable collapse or progression of market socialism?

Are you sure you want to go out Kitty?

Satellite

“One day, all of this will be yours” came the claim with a big smile as an arm slowly waved out horizontally. Up on the mountain, surveying the landscape below, the firm bedrock propping us up as we watched. From these dizzy heights, the people down below were as ants to us.

“I can see my house from here” I joked, “how did we get up here anyway?”. “What do you mean? Weren't you here? We climbed a wall of worry, remember? Three steps forward for every step back. All you need are cojones. Take a big risk to reap a big reward. Truth be told, we were never in any real danger.. the feds had our backs all along. They've put the pedal to the metal on this rocketship, we’re going to the stratosphere!” he said as he stared skyward. “Rocketship?” I mumbled as the firm mountain quivered. Legs turn to jelly and a feeling of terrified inebriation takes hold. The people below disappear and now even the cars are ants at these record heights.

“What’s wrong with you? Isn't this great? Don’t look down!”. Indeed, we are on top of the world, but it is a long way down. And what goes up must come down. "What when we run out of juice? Something's got to give in the end!" I warned with arms flailing. “It’s alright, I have a parachute!” he grinned as he started to don a yellow backpack. “Oh, don’t you have one? Hmm. Here, you can hold my umbrella”. I closed my eyes tight and braced as I felt the engines splutter.

“Something that cannot go on forever will one day come to an end”, but how much longer do we have? This trip cannot end well, but you can spend years gritting your teeth and clutching your opened umbrella, waiting for the fallout that is inevitable in the long run. But as you know, in the long run, we are all dead. Right now, it’s still full speed ahead, but as the turbo booster is tapered down and the long-awaited, much talked about moment, where the foot starts to gingerly, slowly, lift off of the accelerator approaches, we can expect quite a fireworks display. This is the year.

One year in