It is popular to blame the current economic crisis on the free market, and to turn to government for the solution. However, I believe that the opposite is true: the root cause of the crisis is government policies, and more government intervention is likely to exacerbate our problems in the long term, rather than to solve them.
Let me be clear that I do not think that financial markets should be entirely unregulated. Some regulations are appropriate. But I do not think that any sort of regulations would have completely prevented this crisis, nor was lack of them the cause.
There was a huge bubble in real estate. The bubble burst. The existence of the bubble was the problem.
Sub prime mortgages, credit default swaps, and all that may have been the straw that broke the camel's back, or the manner in which more fundamental problems manifested, but they were not the root cause of our trouble.
The root cause of our trouble, the reason why there was a bubble in the first place, is the Federal Reserve system, fiat money, and to a lesser extent, our system of fractional reserve banking.
Since its creation in 1913, the Fed has continually inflated the money supply, creating new money which enables government to spend more without directly taxing people, but taxing them indirectly through inflation. Inflationary monetary policy is also the cause of economic boom-bust cycles. In the most recent case, the Fed pushed interest rates down to an artificially low level from 2002-2005. This caused excess liquidity to flow into our economy, and all that money had to go somewhere. Much of it went into real estate, creating a bubble which, as all bubbles, would eventually burst.
The Japanese government contributed to this as well. For nearly a decade, they pushed real interest rates to near zero. Investors borrowed billions of dollars for nearly no cost from Japanese banks, and invested the money in US markets, where they could earn a reasonable rate of return, and pocket the difference in interest as profit. Outcome: bubble.
All of this is possible for one reason: fiat money. Before the creation of the Fed, US money was tied to gold. The government could not arbitrarily create more of it, because it could not create more gold. This kept the money supply in check, and prevented government manipulation of interest rates. While on the gold standard, there were few booms and busts; growth was steadier, and inflation was very low. Since then, our money is not tied to anything of intrinsic value; there are no limits on how much of it government can print. And since then, we have suffered from one depression/recession after another, with bubbles in between, and constant inflation which saps money from the middle class and transfers it to government and those who suckle from its tit.
I can name perhaps a dozen other factors which led or contributed to the financial crisis, and government is to blame for many of them as well. But we will never stop this from happening again as long as we ignore the root of the problem. The idea that government should control our money supply, should have a monopoly on legal tender, and should be allowed to manipulate interest rates, is the fundamental flaw in our thinking. Until we correct it, we will continue to lurch from bubble to crisis.
These are not my ideas. These are the ideas of the Austrian school of economists. They are widely ignored by the media, but actively promoted by leaders such as Ron Paul, the Cato institute, the Meises institute, Lew Rockwell, and others. And they not only explain, but actually predicted our economic crisis.
http://mises.org/
http://www.lewrockwell.com/
http://www.campaignforliberty.com/
http://cato.org/
Monday, November 24, 2008
The Essence of Spirituality
As a word, it has more baggage than American Airlines. People sometimes ask if I am “spiritual”, and am I tongue tied. I want to say no, because I think that what it means to them is different from what it means to me, and if say yes it will mislead them. My true answer is complicated and difficult to explain. Yet some think me a spiritual person. So here is what I think spirituality is really about; the essence of spirituality.
First, let me say that I do not believe in god, the soul, afterlife, or any sort of mysterious life force, cosmic consciousness, reincarnation, karma, etc. There is simply no convincing (to me) evidence for these things, no plausible theory to explain their existence, and nothing to be gained by belief in them. That’s not to say I am certain that they do not exist, for that is impossible to prove. But I can see no reason to believe in them, because in my view and experience, all observable phenomena can be explained more simply and clearly without them. These ideas were formed as an early attempt at science, to explain the world around us, to comfort us, to guide us, and (in the case of many religions) to manipulate and control us. But in the thousands of years since, we have come up with better theories, just as we have come up with better theories to explain the workings of the solar system (Galileo) or the diversity of life forms (Darwin). The primary purpose of theories is to make predictions, and in my view these old theories are no longer useful, and can be replaced by simpler, more elegant theories which make better predictions and correlate more closely with observed reality.
Furthermore, I do not think these beliefs equate with spirituality. There are plenty of people who believe in god, afterlife, and all that, but who are anything but what I would consider spiritual.
The essence of my idea of spirituality is understanding one’s self at a deep level – what makes one happy or unhappy, what are one’s goals and values and why one has them, and what sort of actions and interactions with others will lead one toward those goals and values. The better one understands these things, at a detailed, deep, and intuitive level, the more successful one is likely to be at life.
This sort of wisdom and understanding comes from introspection and, to a lesser extent, the study of philosophy. Self reflection also leads to identification and resolution of internal conflicts, which we are all full of, as well as a deeper understanding of the true sources of happiness and unhappiness. The study of philosophy can also help us clarify our goals and values, and put ideas into practice.
Understanding one’s self is necessary in order to make accurate predictions about the effect of different actions we might take. Will eating this ice cream make me happy? Or will not getting fat make me happier? Will taking this high paying job make me happy? Or would I be happier with the lower paying job that gives me more free time? Will I be happier if I beat the crap out of the guy who scratched my car, or will I be happier if I let it slide?
People tend to be bad at making these kinds of decisions because we suffer from “cognitive biases” – our brains tell us we want option A, but in fact option B will make us happier. Our brains are riddled with these systematic errors; many books have been written about them. People are often unaware of them because our brains are like a black box to us. In order to overcome them, we must become aware of them and learn how to think our way around them. We need a deeper level of understanding of ourselves, how our minds works, and what really makes us happy. This sort of understanding can only come from introspection, often aided by study of philosophy.
So, to recap, I think that what most people really mean when they talk about spirituality is a sophisticated understanding of one’s own mind, a high level of self awareness, coupled with the ability to use that knowledge in order to achieve what we all want, which is happiness. And this has little to do with the nature or existence of a soul, or afterlife, or god; those are merely outdated models for understanding the nature of life.
First, let me say that I do not believe in god, the soul, afterlife, or any sort of mysterious life force, cosmic consciousness, reincarnation, karma, etc. There is simply no convincing (to me) evidence for these things, no plausible theory to explain their existence, and nothing to be gained by belief in them. That’s not to say I am certain that they do not exist, for that is impossible to prove. But I can see no reason to believe in them, because in my view and experience, all observable phenomena can be explained more simply and clearly without them. These ideas were formed as an early attempt at science, to explain the world around us, to comfort us, to guide us, and (in the case of many religions) to manipulate and control us. But in the thousands of years since, we have come up with better theories, just as we have come up with better theories to explain the workings of the solar system (Galileo) or the diversity of life forms (Darwin). The primary purpose of theories is to make predictions, and in my view these old theories are no longer useful, and can be replaced by simpler, more elegant theories which make better predictions and correlate more closely with observed reality.
Furthermore, I do not think these beliefs equate with spirituality. There are plenty of people who believe in god, afterlife, and all that, but who are anything but what I would consider spiritual.
The essence of my idea of spirituality is understanding one’s self at a deep level – what makes one happy or unhappy, what are one’s goals and values and why one has them, and what sort of actions and interactions with others will lead one toward those goals and values. The better one understands these things, at a detailed, deep, and intuitive level, the more successful one is likely to be at life.
This sort of wisdom and understanding comes from introspection and, to a lesser extent, the study of philosophy. Self reflection also leads to identification and resolution of internal conflicts, which we are all full of, as well as a deeper understanding of the true sources of happiness and unhappiness. The study of philosophy can also help us clarify our goals and values, and put ideas into practice.
Understanding one’s self is necessary in order to make accurate predictions about the effect of different actions we might take. Will eating this ice cream make me happy? Or will not getting fat make me happier? Will taking this high paying job make me happy? Or would I be happier with the lower paying job that gives me more free time? Will I be happier if I beat the crap out of the guy who scratched my car, or will I be happier if I let it slide?
People tend to be bad at making these kinds of decisions because we suffer from “cognitive biases” – our brains tell us we want option A, but in fact option B will make us happier. Our brains are riddled with these systematic errors; many books have been written about them. People are often unaware of them because our brains are like a black box to us. In order to overcome them, we must become aware of them and learn how to think our way around them. We need a deeper level of understanding of ourselves, how our minds works, and what really makes us happy. This sort of understanding can only come from introspection, often aided by study of philosophy.
So, to recap, I think that what most people really mean when they talk about spirituality is a sophisticated understanding of one’s own mind, a high level of self awareness, coupled with the ability to use that knowledge in order to achieve what we all want, which is happiness. And this has little to do with the nature or existence of a soul, or afterlife, or god; those are merely outdated models for understanding the nature of life.
Wednesday, November 12, 2008
Tyrrany of the Majority: Prop 8 protests expose hypocracy
The recent passage of Proposition 8 in California, which revoked the rights of gays to marry, has exposed a degree of hypocrisy among those who support our democratic "majority rules" system of government. Millions of people, both straight and gay, are really pissed off at the fact that 52% of voters had the ability to take away the rights of a minority. And rightly so! They have awakened to one of the faults of our present form of government: tyranny of the majority. Government should exist to protect our rights, not to take them away.
Yet, these same people who are so offended by the 52% of voters who passed Prop 8 seem to see no contradiction when they advocate increasing taxes on the wealthy. I think it is safe to say that the majority of Prop 8's opponents are left-leaning and tend to be Obama supporters. As such, they advocate the involuntary confiscation of wealth from 5% of the population by 52% of voters (the 52% who voted for Obama, in this case).
The top 5% of taxpayers already pay 60% of all income tax, while the bottom 50% pay only 3% of the taxes. So one cannot reasonably argue that taxpayers are proportionally represented among voters. This is clearly tyranny of the majority. This is 52% of voters ganging up on 5% and taking away their money. Sounds a lot like Prop 8 to me! (Don't believe my statistics? Here's the data: summary here and direct from the IRS).
One may argue that taxation and the right to marry are completely different. But I disagree. Taxation is the forced confiscation of the fruits of one's labor by another. It is the moral equivalent of slavery: forcing one man to work for the benefit of another, under threat of violence. It punishes those who have worked very hard, taken risks, and found success. And it is a violation of the right to private property. Government's proper role is to protect our rights, not to violate them.
I can already hear people groaning about how we need taxes to pay for this and that, and without taxation our society would fall apart. Fine, perhaps we do need some taxation. But to the extent that we do, we should be acutely aware of the trouble with tyranny of the majority, and we should not be so quick to heap the burdens of the masses on a minority which is by definition defenseless under our majority-rules system of democracy.
In the long term, we should reconsider the role of government in our society: should it exist to protect our rights, or to "manage" the economy and redistribute wealth. These goals are incompatible.
Yet, these same people who are so offended by the 52% of voters who passed Prop 8 seem to see no contradiction when they advocate increasing taxes on the wealthy. I think it is safe to say that the majority of Prop 8's opponents are left-leaning and tend to be Obama supporters. As such, they advocate the involuntary confiscation of wealth from 5% of the population by 52% of voters (the 52% who voted for Obama, in this case).
The top 5% of taxpayers already pay 60% of all income tax, while the bottom 50% pay only 3% of the taxes. So one cannot reasonably argue that taxpayers are proportionally represented among voters. This is clearly tyranny of the majority. This is 52% of voters ganging up on 5% and taking away their money. Sounds a lot like Prop 8 to me! (Don't believe my statistics? Here's the data: summary here and direct from the IRS).
One may argue that taxation and the right to marry are completely different. But I disagree. Taxation is the forced confiscation of the fruits of one's labor by another. It is the moral equivalent of slavery: forcing one man to work for the benefit of another, under threat of violence. It punishes those who have worked very hard, taken risks, and found success. And it is a violation of the right to private property. Government's proper role is to protect our rights, not to violate them.
I can already hear people groaning about how we need taxes to pay for this and that, and without taxation our society would fall apart. Fine, perhaps we do need some taxation. But to the extent that we do, we should be acutely aware of the trouble with tyranny of the majority, and we should not be so quick to heap the burdens of the masses on a minority which is by definition defenseless under our majority-rules system of democracy.
In the long term, we should reconsider the role of government in our society: should it exist to protect our rights, or to "manage" the economy and redistribute wealth. These goals are incompatible.
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