There He Goes Again

George II said recently in regard to his policy toward Iran, "I made it clear, and I'll make it clear again, that we will use military might to protect our ally Israel." Translation: I and my ruling elite will send American servicemen and women to kill--and be killed by--Iranians for the sake of Israel's ruling elite. This comment elicited little if any reaction. Why was no one outraged? Are the American people so saturated with the secular religion of statism that they can hear such words without even flinching? How many Americans would join the armed forces consciously to "protect Israel," which in practice includes protecting the regime that subjugates the Palestinians, whose property rights have been trashed with U.S. sponsorship for two generations? Does the corruption of the American people run that deep? Have they lost all capacity to question their (mis)leaders?

Read more here.

The New Mercantilism

[N]ew-fashioned mercantilism also entails a lopsided trade imposed by the industrial nations on the developing world. In this case, the industrial nations get low-priced finished goods and the societies of the developing world get “our” ideas, for a price — a high price. In other words, if they want access to “our” markets, they must adopt a tough minimum patent and copyright regime; that is, they have to pay a hefty tribute to American and other western companies.

Read the rest of my op-ed "The New Mercantilism" at the site of The Future of Freedom Foundation.

Just the Facts

Thanks to an anonymous commenter to my previous post on the French situation, we can see some of the details of the labor controversy, which the American news media have been covering like a bunch of ignoramuses.

This is from the BBC:

Q. What does the controversial law say?

The law creating the First Employment Contract (Contrat Premiere Embauche or CPE) was passed by parliament as part of a broader bill on equal opportunities which will come into effect in April.

The CPE is a new work contract for under-26s with a two-year trial period. In that period, employers can terminate the contract without having to offer an explanation or give prior warning. For other employees, the trial period is usually 1-3 months.

After the two-year trial period, the contract reverts to a standard full-time contract. (Emphasis added.)

Thus the controversy is about a government-written labor contract that is to be imposed on all employers and under-26 workers. The government is not repealing a restriction; it is merely tweaking the restrictions it imposes on all. Freedom of contract be damned! The new uniform contract may have some benefits for young people who cannot find jobs and for upstart firms that had a tougher time than large incumbent firms coping with the earlier, less-flexible contract. But nevertheless, this is no retrenchment of French fascism. (And that's what the French system is.) It is a continuation of corporativist social engineering. I can see nothing for a libertarian to do but to condemn the blasted system root and branch.

I'm Not Getting It

Okay, I was wrong. It wasn't my last post on the French protests. Kevin Carson's post prompted this from me:

Kevin, you write, "But the decision of what aspects of statism to dismantle first should be guided by an overall strategy of dismantling state capitalism as a system." This assumes we will control the agenda for dismantling. But we won't. Rothbard may have supported the French students in 1968, but he also said often that we should take anything we can get when it comes to peeling back state power. Rather than opposing the CPE, the anti-corporativists should use it to emphasize the need to really dismantle the corporate state. If CPE is junked, I don't expect to see attention turned to the overall system; things will just go on as they were. Hard as I try, I don't really see the strategic vision here.

Another thing: it stands to reason that a law prohibiting the firing of young workers would be a heavier burden on an upstart competitor than on an large incumbent firm. If so, then ending that law would be a relative benefit to the challenger. In other words, the new French law, regardless of intentions, does to a small degree roll back the corporate state by giving new competitors a shot they did not have before.

Who Cares?

From all the attention given the story on cable news this morning, you'd think it actually matters who is the White House chief of staff. It barely matters who's president!

Final Thoughts (Maybe) on the French Situation

If I were a young would-be worker in France, knowing what I know now about economics, ethics, and politics, would I be protesting the law that permits employers to fire young workers without cause during their first two years on the job? Absolutely not. (Just as I do not oppose repeal of minimum-wage laws in the U.S.) But I would be pointing out that this legal change doesn't begin to scratch the surface of the deeply entrenched French corporate state, which benefits an elite at the expense of everyone else. In other words, libertarians shouldn't hope that the new French law is repealed, but neither should we think this is a significant liberalization of the French economy. Thus I differ somewhat from Roderick Long's position here, in which he argues that in the current (corporate-state) context, removal of the firing restriction does not constitute a move toward liberty. This is not obvious to me. The order in which government restrictions are removed may be relevant to the justice of, or libertarian position on, any particular removal, but it is by no means easily determined what that order should be. I don't see the French case as one in which things are grossly out of order. As Mark Brady has pointed out, the restriction on firing has hurt people other than the privileged elite, so its removal will help others than that elite. Long's example of deregulating the S&Ls while the taxpayers were still on the hook for losses through deposit insurance is a much more clear-cut case where order mattered.

Economic theory teaches that repeal of the French restriction on firing will help young French workers find jobs, especially the youngest and those without work records. Barriers to firing are in themselves barriers to hiring. Moreover, this demonstrates that the interests of all workers are not identical. Obviously, the oldest among young workers and those with employment records are less harmed by a "no firing without cause" rule than the youngest ones with no records.

My bottom line: No libertarian should naively assume that freeing employers to fire without cause will liberate the French corporativist economy. It won't by a long shot. It may not even lead to a next step in that direction. But it will make it easier for young French workers to find jobs and earn incomes. Libertarians can be of help by pointing out what ought to be the target of protest in France: the myriad privileges that constitute the corporate state. Our message should be this: free and unprivileged competition maximizes workers' bargaining power.

George Bush's Afghanistan

Developments in the newly free and democratic Afghanistan are awe-inspiring. A man who converted from Islam to Christianity has (for now) escaped the death penalty for his offense, thanks to testimony from family members that he is mentally ill.

Words fail me.

Back from the (former) USSR

I made it home in one piece and will have more to say about my trip to Georgia and Armenia in due course. Meanwhile I urge everyone to read this excellent post by Roderick Long regarding the student protests in France. If I may sum it up thus: Never take your eye off the ball (the corporate state)!

Postscript: After something of a night's sleep, I want to add a couple of points.

1. The French law letting employers fire young workers without cause during their first two years on the job is a freeing of "the market" only on the surface. France is a cartellized and concentrated economy thanks to heavy goverment intervention on behalf of the country's elite. Whether we call it state capitalism or state socialism is a mere detail. Thus giving the beneficiaries of state privilege a bit more leeway in firing employees hardly constitutes freeing the market. Why is there no talk in France of removing the myriad deep restrictions on free competition? That is what would really give workers bargaining power.

2. The violence of the protesters should not be condoned, or even appear to be condoned. I do not believe that those who burn cars and shops have attempted to target only the property of their oppressors.

See more here and here. In the latter, Kevin Carson puts it well: "Start with a massively corporatist framework. Then tinker around the edges of the system to give more discretion to the usual suspects: landlords, employers, etc. And finally, call it 'free market reform.'"

Post Postscript: There's a good discussion of this issue over at Liberty & Power. It is here. As I commented there, policy issues are less than clear-cut, and people on both sides often have valid grounds. Take a look.

Yerevan, Armenia

We made it to Yerevan, after several hours along a bad road, two hours at the border (damn governments), and a great feast of a dinner. You can't take the new good road because it is close to the border with Azerbaijan and Azeris sometimes shoot at cars; the two countries have an old territorial dispute, and Armenia controls land that Azerbaijan claims.

At the border, I met with Tom Palmer, my old friend and Cato Institute fellow, who was going from Armenia to Georgia. It was like a scene out of a Cold War movie, where the Russians and Americans make a prisoner exchange. It was quite a time and a nice reunion with Tom. We start another student seminar today, and return to Georgia on Thursday.

More later.

Taxation, Georgia-Style

Yesterday I gave a lecture on taxation (I'm against it) to students in the country of Georgia, which prompted my friend and Georgian liberal activist Gia Jandieri to point out an interesting clause in the Tax Code of Georgia. Article 6 states:

As provided by this Code, a tax is a mandatory, unconditional cash payment to the state, autonomous republics of Abkhazia and Osetia and local budgets of Georgia, which shall be paid by a taxpayer, having a mandatory, non-quid-pro-quo and gratuitous nature of payment.

In other words, the state takes but owes nothing in return. This of course is true in every state. But in Georgia, the rulers at least honest are enough to say so.

P.S.: I should point out that we had students from Georgia, Armenia, and Azerbaijan. It was a great group.

Made it to Tbilisi

After a day's layover in Amsterdam, we arrived in Tbilisi, Georgia, at 5 a.m. today. After sleeping till 1 p.m. we started our student seminar, sponsored by FEE and our liberal friends here. I will lecture tomorrow on taxation and the next day on the welfare state.

We are actually at a little hotel outside Tbilisi in the mountains. It is cold, damp, and overcast, and the climate has penetrated the hotel. Nevertheless, we have 50 eager students from Georgia, Armenia, and Azerbaijan. So it should be a good seminar.

More to come.

A-seminaring I Will Go

My blogging may be spotty over the next ten days. I'm off to Tbilisi, Georgia, and Yerevan, Armenia, to lecture at Foundation for Economic Education (FEE) seminars for students and businesspeople. I hope to have Internet access, so stay tuned. I also hope to have many opportunities to teach the Georgians and Armenians the virtues of America's enlightened patent and copyright laws--NOT!

Patent Oppression: We Don't Know the Half of It

On Liberty & Power Tom Palmer posted an informative comment regarding my anti-patent BlackBerry op-ed:

This is merely a public version of what is going on all over the country. I have talked to high-tech execs who cannot speak publicly because they had to sign non-disclosure agreements with these "patent mills" after being shaken down.

Even supporters of the patent system have to recognize that something is wrong here. For one thing, the patent examination process is woefully inadequate. To get a patent, you have to show that your invention is not obvious to someone skilled in the art; this one should never have been patented under current patent law in the first place. The result of inadequate patent examination is the issuing of patents that are now being used as innovation bottlenecks; they're bought up (or filed in the first place) by firms that specialize in patents, not in making anything, and that then go on to shake down companies that are actually innovating and producing useful products.

This is clear evidence that, at the least, the current system of patent protection in electronics (I'll set aside pharmaceuticals, which seems to be a different matter for a variety of reasons) is presenting disincentives, rather than incentives, for innovation.

I'm interested in reading Tom's case for a pharmecutical exception. I'll discuss it at some point.

Anti-Patents Op-Ed Published

My op-ed, "RIM Was Wronged," appears today in the Chicago Sun-Times. It was distributed by The Future of Freedom Founation.

I should put on the record that there are no heroes in this story. Research in Motion Ltd, the BlackBerry company, has "defended" its own patents in the past and says it will continue to do so.

The New Mercantilism

Michele Boldrin and David K. Levine's book, Against Intellectual Monopoly, is still in the draft stage, but it has the potential to be highly influential. These two self-described "conservative economists" believe in property rights, but blast "intellectual property" right out of the water. Neither the moral nor the utilitarian case survive. The historical insights are priceless in showing that patents and copyrights are not necessary for innovation and creativity. Quite the contrary.

Chapter one contains a particularly important point, namely, that globalization as it is today being implemented, rather than meaning real free trade, is a device to impose American patents and copyrights on the developing world. Given the expansiveness of IP protectionism today, this means that the developing world will have scant opportunity to progress economically without paying tribute to American firms for ideas, something which cannot be owned. The parallel with mercantilism is inescapable. They write:

Now that the intellectual and political battle over free trade of physical goods seems won, and an increasing number of less advanced countries are joining the progressive ranks of free-trading nations, pressure for making intellectual property protection stronger is mounting in those very same countries that advocate free trade. This is not a coincidence.

Most physical goods already are and, in the decades to come, will increasingly be, produced in the less developed countries. Most innovations and creations are taking place in the advanced world, and the IT and bio-engineering revolutions suggest this will continue for a while at least. It is not surprising then, that a new version of the eternal parasite of economic progress -- mercantilism -- is emerging in the rich countries of North America, Europe and Asia....

The contemporary variation of this economic pest is one in which our collective interest is best served if we buy goods cheap and sell ideas dear. In the mind of those preaching this new version of the mercantilist credo, the World Trade Organization should enforce as much free trade as possible, so we can buy "their" products at a low price. It should also protect our "intellectual property" as much as possible, so we can sell "our" movies, software, and medicines at a high price.

They go on to say that just as the anti-free-trade fallacies had to be smashed to defeat the original mercantilism, now the IP fallacies have to be smashed to defeat the new mercantilism. "Our goal here is to demolish that glass house."

"Globalization" based on U.S.-led IP protectionism and the heavy-handed corporate state is not worth fighting for. It is rank injustice. But globalization based on real free trade is worth fighting for. As long as the first prevails, the anti-free-trade anti-globalists will have the moral high ground. But that high ground rightfully belongs to the voluntarists. Let's make sure we occupy it.

RIM Was Wronged

My latest op-ed, "RIM Was wronged," is online at The Future of Freedom Foundation website. Here's a sample:

For the last few years we’ve been reading that Research in Motion’s popular mobile-email service, BlackBerry, may be shut down because the company “infringed the patents” of a company called NTP. That’s all the newspapers said.

Curious readers would want to know more. Did black-clad RIM operatives break into NTP’s office safe and steal the idea for mobile email? Did RIM spies tap the phones at NTP? Did RIM gumshoes tail NTP’s engineers and eavesdrop on confidential conversations?

No, nothing like that. “There was never any dispute that Research in Motion Ltd., the Canadian firm that introduced the world to the BlackBerry in 1999, came up with its own technology to power the wireless e-mail device,” the Washington Post writes. But the BlackBerry resembled something already patented by NTP. It doesn’t matter that RIM formulated its similar idea independently. Under the law, that’s enough to get RIM into trouble.

Read the rest here.

Newspaper Economics Reporting: What a Joke

Is it asking too much for economics writers at newspapers to understand economics? Ignorance of international trade issues is astounding. That would be bad enough. Passing along outright falsehoods to readers is outrageous. Paul Blustein in today's Washington Post reports that Arabs are investing in the United States at a high volume, not all of which is getting the bad reviews of the Dubai Ports World deal. He then says,

Behind such transactions are two powerful forces. One, of course, is the high price of energy, which has left several oil-producing Arab countries swimming in cash. The other is the burgeoning U.S. trade deficit -- $726 billion last year -- which means that the United States needs foreign capital; a country that imports more than it exports must cover the gap with money from abroad.

This is astoundingly wrong and idiotic. He makes it sound as though the difference between what Americans buy from foreigners and what foreigners buy from Americans has to be made up by foreign investment. That of course makes no sense whatsoever. It's like saying that since I buy groceries from Kroger, but Kroger buys nothing from me, I need to have Kroger invest in my property to close the trade gap. Pure gobbledygook.

As a matter of fact, Blustein has the whole thing backward. The so-called trade deficit doesn't create the inflow of foreign capital or the need for such. On the contrary, it's the inflow of foreign capital that creates the so-called trade deficit. When foreigners sell products to Americans and, instead of spending their dollars on Americans' products, invest their dollars in productive endeavors here, a deficit in the current account results -- which is mirrored precisely by a surplus in the capital account. In other words, Arabs and other foreigners are choosing to invest their capital in the American economy rather take goods back to their home countries. This is bad? When a full accounting is done, everything balances. It has to!

I guess it is too much to expect an educated newspaperman to understand that.

The Upside of War

As I watched a CNN piece this morning about the amazing things being done with artificial legs for Iraq vet amputees, I couldn't help but think: Were it not for war we'd be much further along in this technological progress. It's about time the news media paid attention to the upside of war.

BlackBerry Case: Property Rights? Balderdash!

As if we needed a demonstration of the injustice of patents, RIM finally settled the patent-infringement suit against it by agreeing to surrender $612.5 million to NTP. BlackBerry will continue. But make no mistake about it: this is legal extortion.

NTP is a patent-holding company. It doesn't make things. Instead, it monopolizes ideas and sues others for infringing on its state-granted privileges. Here's how the Wall Street Journal describes the background of the case:

NTP was co-founded in 1992 by former patent examiner Don Stout and the late inventor Thomas Campana, who worked on ways to send emails wirelessly. In 2001, NTP sued RIM saying it held patents covering the "push" aspect of wireless email.

RIM wasn't accused of breaking into NTP's office and stealing something. It was accused simply of implementing an idea that Campana had "worked on" and had registered with the state.

This is (intellectual) property and protection of property rights? Balderdash! It is a license to extort. As the Washington Post reports: "Intellectual property attorney Donald R. Steinberg said the size of the settlement might spur more lawsuits from patent-holding companies, but that in most cases, a settlement is often desirable because it limits risk on all sides." What risk does the suit-filing patent-holder take? That his extortion might not succeed? This is "entrepreneurship in the Corporate State.

What great products aren't we seeing because of this corrupt system?

Patents are a key form of state-privilege by which people get rich at the expense of others. The patent system would have no place in a real free market. It is said that patents are needed to encourage innovation, but now the truth is clear for all to see. Patents suppress innovation. The notion of intellectual property rights has no justification. It fails both the natural-rights and "utilitarian" test. As Thomas Jefferson recognized long ago, ideas, lacking finitude, are not the kind of "things" to which the principles of property can be applied:

He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

Cross-posted at Liberty & Power.

The Myth of Social Efficiency

Apropos of whether certain land policies with respect to cottagers in England were "socially efficient," I commend this quotation from Frank van Dun: "There is no point in terming a real action by a real person inefficient because it does not match the predicted action of a theoretical construct in some economist's model of the world." ("Economics and the Limits of Value-Free Science," Reason Papers, Spring 1986)

And while I'm on the subject, here's another relevant quotation, from Murray Rothbard: "[I]ndividual ends are bound to conflict, and therefore any additive concept of social efficiency is meaningless. . . . Efficiency . . . can only be meaningful relative to a given goal. But if ends clash, the opposing group will favor maximum inefficiency in pursuit of the disliked goal. Efficiency, therefore, can never serve as a utilitarian touchstone for law or for public policy. . . . [C]osts, as Austrians have pointed out for a century, are subjective to the individual, and therefore can neither be measured quantitatively nor, a fortiori, can they be added or compared among individuals. But if costs, like utilities, are subjective, nonadditive, and noncomparable, then of course any concept of social costs, including transaction costs, becomes meaningless." ("The Myth of Efficiency," in Time, Uncertainty, and Disequilibrium, Mario Rizzo, ed.)

So let's hear no more about the social or economic efficiency of land policy.

These Troops I Support

"Nearly three out of four American troops serving in Iraq think U.S. forces should withdraw within a year, and more than one in four say the United States should leave immediately, according to a new poll published Tuesday."

--San Jose Mercury News

Harry Browne, R.I.P.

I note with sadness that Harry Browne died Wednesday, at 72, after after a long illness. I recall reading Harry's How You Can Profit from the Coming Devaluation when it was released in 1970 and learning a lot of good (Austrian) economics from it. Later I read How I Found Freedom in an Unfree World, which, again, taught me a lot. I lost confidence and, hence, interest in the Libertarian Party in 1983 (after a term as national vice chairman), and so I didn't keep tabs on Harry's presidential campaigns. Nevertheless, I know he continued to be an eloquent spokesman for liberty. Sorry to see him leave us.

See Brian Doherty's notice at Reason.com.

Yet More on the Factory Workers

I am happy to report that Kevin Carson at Mutualist Blog isn't letting up. He's got another informative post on enclosure and the willingness, or lack thereof, of people to work long hours in disgusting factories for strange bosses who have the power to ruin their lives on a whim. (Maybe it's me, but it seems like a no-brainer.) Read the post; I can't do it justice. But I will reproduce and comment on some material he passes along from historian David McNally (Against the Market):

Advocates of enclosure thus made much more than a narrowly economic case for enclosure of the commons; their argument was fully social, emphasizing that elimination of the means to economic independence was essential to creating a disciplined labour force. The campaign for enclosure of common lands was presented as a great moral crusade designed to eliminate idleness, intemperance and riotous behaviour, and to render the poor sober and respectable. (Emphasis added.)

And:

As the Poor Law Commissioners of 1834 stated in their Report, "we can do little or nothing to prevent pauperism; the farmers will have it: they prefer that the labourers should be slaves; they object to their having gardens saying, 'The more they work for themselves, the less they work for us.'" (Emphasis added.)

Let that sink in. "The more they work for themselves, the less they work for us." The material Carson presents gives one the sneaking suspicion that there were people in England who wanted to make sure they had an abundant supply of wage laborers, and that the way to do that was to close off all other options. This puts a different spin on the Industrial "Revolution," but not a Marxist spin, because what apparently took place was as unlibertarian as it possibly could have been. We are "brought up" to think that people went to unpleasant factories because that was their best choice under the circumstances. But what if those circumstances were contrived? What if that was their best choice because all the good choices were stolen away by those who wanted them to have only that choice?

Carson's book (chapter 4) points out that those in power went so far as to outlaw home-based textile manufacturing so that the new textile factories would have a ready supply of low-wage labor. (Kirkpatrick Sale: "Gradually, therefore, [cottage-centered textile machines] were eliminated, their manufacturers squeezed by being denied raw materials and financing, their operators suppressed by laws that, on various pretexts, made home-production illegal.") This sort of thing, along with the quotations by contemporaries establishing that enclosure was favored precisely in order to create a desperate wage-labor class, is something every libertarian needs to come to grips with. An immaculate-conception notion of industrialism leaves libertarians open to serious charges, with naivete being the mildest. We have nothing to fear from getting the facts straight. The truth will only strengthen our case for individual liberty and free markets. All we ask is the abolition of privilege and its replacement with freedom and honest, unrigged competition. History looks like a conspiracy against the independent industrious classes.

Rothbard's 80th

Murray Rothbard was born on this day 80 years ago. It's hard to believe we've been without his spirited, cheerful, liberty-loving self for over 11 years. Maybe that's because he is still such a presence in the lives of hardcore libertarians and voluntarists everywhere. I have many fond memories of Murray, and I treasure each of them. I can still hear the echo of his unmistakable laughter. I have learned so much from him that trying to express my gratitude only fills me with a sense of futility. Those who have been influenced by him, and there have been many, know what I mean. Thanks to the World Wide Web, Murray Rothbard's legacy is never more than a few clicks away -- ironic, since Murray was proudly, defiantly "low-tech."

I will toast his memory tonight. Meanwhile read what Roderick Long wrote on the occasion of Murray's death in 1995. Then Google "Rothbard" and have a ball.