Power & Market
Diversity, Equity, and Inclusion Goals Are Illogical and Harmful
Does society really need, and can it benefit from goals designed to achieve statistical "Diversity, Equity, and Inclusion" metrics? The answer, of course, is "no" on both counts, i.e., society neither needs these goals and cannot benefit from attempting to achieve these goals. There are two illogical assumptions embedded in the DEI movement.
Illogic assumption number one: If superficial characteristics really are meaningless, then those individuals who possess these characteristics do not need goals for them to be fully included in society. For example, I am certain that a person's eye color has no bearing upon one's ability to function fully in society; therefore, there is no need for a goal to ensure that individuals with all possible eye coloring are represented on an equitable basis in whatever enterprise is being measured. The same undoubtedly is true for height, hair color, and other random characteristics of birth.
Ah, but you may say, the very fact that people with noticeable characteristics are in fact underrepresented in desirable societal classes is prima facie evidence that dark forces are at work. And here we have the crux of the matter, i.e., that government coercion is needed to defeat these dark forces.
That claim leads us to illogic assumption number two: If superficial characteristics are meaningless, then those enterprises who discriminate based upon these meaningless characteristics will fail. Those who discriminate AGAINST people with certain personal characteristics discriminate in FAVOR of lesser talented people who do not possess these characteristics. The iron rule is that discrimination always has a flip side. If an enterprise refuses to include people with brown eyes, then it must discriminate in favor of lesser talented people with blue, green, or grey eyes. Since the pool of talented people is roughly the same for brown eyed people, then very talented brown eyed people will outperform their lesser talented blue, green, and grey eyed competitors. In an open society with free entry for competition, the cream will always rise to the top.
In conclusion, discrimination based on superficial characteristics, if it really does exist, is self-correcting in a free labor market. Any perceived statistical aberrations are meaningless or there are other explanations at work. Insisting on fighting unnecessary battles are extremely harmful to society for the simple reason that there is nothing that society can do. DEI warriors will be persecuting the innocent, exactly the type of injustice they wish to stop. My advice is this: Instead of searching for dragons to slay, just mind your own business and set a good example. You will be happier, and you will accomplish more good for yourself and the society around you.
D.C.’s Dangerous Consensus: We Hate Iran!
With Republicans and Democrats in Congress having openly expressed their united opposition to the Biden administration reentering the nuclear agreement with Iran (the JCPOA), it should come as no surprise that negotiations have gone nowhere.
Beneath all the bluster about nefarious Iranian activities in the Middle East and the back and forth over lifting the sanctions Trump’s team imposed on Tehran after unilaterally ripping up the JCPOA in the first place, Joe Biden is a wimp afraid of facing political backlash for undoing one of Trump’s worst foreign policy decisions.
Afterall, it was Biden’s own current team of Malley, Blinken, and Sullivan who worked out the nuclear deal with Iran while working for Obama.
So even though Biden has admitted Trump pulling out of the deal was a "gigantic mistake," he won’t agree to lift sanctions neocon Trump officials like Elliot Abrams admitted were only put in place to try and prevent Biden from reentering the deal in the first place.
This includes the labeling of the Iranian Revolutionary Guard Corps as a terrorist organization, which though Biden had been using it as an excuse not to get back into the deal Tehran has recently dropped it as a demand in negotiations – this while the Wall Street Journal openly reports the Israeli military and intelligence services are assassinating Iranians left and right, including inside Iran itself.
The truth, unfortunately, is that Biden lacks the courage of his convictions and is no longer serious about getting back into the deal. As a consequence, war with Iran looks increasingly likely – and over nuclear weapons our own CIA director, William Burns, says publicly the Iranians aren’t pursuing making.
Despite the fact that every U.S. intervention in the Middle East over the past twenty years, from Afghanistan, to Iraq, to Syria, to Yemen, has strengthened Iran’s position in the region, the groundwork for the next disastrous war has already been laid – building on the foundation of the Abraham Accords to bring India on board with Israel, Egypt, the UAE, and Saudi Arabia to gird for direct conflict with Iran. Speaking in Israel, Biden has already gone so far as to threaten the use of force to prevent the Iranians from getting the bomb they aren’t pursuing, but which, if they were wise, Tehran would start building as a deterrent immediately.
Apart from the pressure from our “allies” in Riyadh and Jerusalem, the former a regime so despotic Freedom House ranks it lower than China, while the latter simply needs an enemy to keep the billions in annual U.S. aid flowing, the Abraham Accords already have their own caucus in Congress, and the military industrial complex salivates at the prospect of a Middle East NATO to buy even more of their products.
Poor Iran – not so bad as to prevent Ronald Reagan selling them weapons through Israel during the 1980s, as Gareth Porter has convincingly documented, after the first Cold War ended Tehran found itself picked out as one of the new threats that would continue to justify the empire.
So as increasingly delusional screeds by walking disasters like John Bolton populate the opinion pages of the major papers and Republican and Democrats unite to bully a weak President already inclined to serve the interests of our ostensible client states, who benefits from our Iran policy is as obvious as who doesn’t: the American people.
Despite Societal Collapse, Sri Lanka Reports Zero Covid Deaths and Launches Currency “Monitoring Unit”
Nothing is so permanent as a temporary government program. - Milton Friedman
Not only does Milton’s quote hold true in times of dire crisis, but worse, programs expand with even less scrutiny and oversight.
If you’re unfamiliar with the situation in Sri Lanka, here are a couple videos to give you an idea. Bad governance is to blame (or too much governance), namely an ill-advised fertilizer ban which stoked a severe food shortage and export drought. Combined with the debt servicing pains as central banks around the globe tighten policy, it’s nothing short of a disaster.
Inflation has risen to the highest on record, since the country gained independence in 1948. The Central Bank of Sri Lanka reports 54.6 percent YoY inflation with overall food inflation at 80.1 percent. In fact, this may be an understatement, as the NYT reported back in December 2021 that certain vegetables like tomatoes and carrots have seen 5-fold price increase annually. According to NPR, “the World Food Program's most recent analysis reported that 86 percent of families were either skipping meals, eating less or buying worse food.”
Thankfully, there is a silver lining: ZERO COVID DEATHS! That’s right, on Monday July 18, Sri Lanka’s Department of Government Information (which continues to publish daily covid death counts) announced that there was not a single Covid fatality the day prior:
Sri Lankan residents must be reassured to know their authorities are focusing on the essentials during a time when public debt servicing rates have risen 6-fold from 5.22 percent a year prior to 31.01 percent today. In this same period, the Central Bank of Sri Lanka’s balance sheet more than doubled from roughly $11 billion USD to over $27 billion USD. Apparently, owning over one fourth of their entire sovereign bond market was not enough QE to prevent rates from exploding nor was it enough to keep the Ministry of Finance from defaulting for the first time in its history. Surely, maintaining the Covid-tracking bureaucracy amid an unprecedented financing crisis is the kind of bold leadership that the IMF hoped to foster with their 16th bailoutfor the nation.
In the spirit of never letting a good crisis go to waste, the central bank has launchedan effort to create a “comprehensive data gathering system on cross border transactions and domestic foreign currency transactions”. Referred to as the International Transactions Reporting System (ITRS), the plan aims to fill a “multitude of existing data gaps”. Leaving civil liberty concerns aside, the timing of such an initiative is absurd! On top of subjecting private banks to additional compliance costs, which ultimately will be passed on to customers in the form of higher lending rates (rates that have already quadrupled since last July, see below), tax payers must also fund the ITRS Monitoring Unit to ensure they’re being properly spied upon.
Now that the president who oversaw this mess has fled the country, Prime Minister Ranil Wickremesinghe will fulfill the role. Protestors set his house ablaze to voice their excitement. When will the masses wise up and, instead of falling for the false promises that got them here, demand deregulation? When will we stop electing leaders like this:
Double masked. Didn’t he get the memo there are zero Covid deaths?
Zimbabwe’s hyperinflation problems are the stuff of economic legend. No matter how bad our inflation problem gets here, one can bet theirs will be a lot worse. Just last week, CNBC had a headline still beyond comprehension for most Americans:
Zimbabwe hikes key interest rate to 200% from 80% amid runaway inflation
To clarify, it does not say 200 basis points (i.e., 2%), rather 200 percent!
This is the destruction of a currency and the abandonment of free market principles. It is theft, socialism, and capital destruction. Given all that Austrian economists have offered when writing about inflation, it is absolutely unnecessary for any country to endure this Keynesian perpetual state of boom.
And what prompts a central bank to hike interest rates to 200%? Naturally, the country’s:
Annual inflation rate has been in triple digits for two straight months, rising to 191.6 percent in June from 131.7 percent in previous month.
The Zimbabwe dollar is also in freefall as it:
…has dropped 69 percent to $361 per US dollar.
Contrary to popular economic myth, a weak dollar doesn’t necessarily make exports more attractive. If that were the case, Zimbabwe would be one of the largest exporters in the world. Consider other problems such as how unattractive currency debasement is to anyone wanting to do a long-dated project, the unworkability of sky-high interest rates, and general uncertainty for multinational companies, foreign investors, or entrepreneurs wishing to do business in Zimbabwe…
Making matters worse, the Russian/COVID narrative rears its ugly head:
Surging commodity prices stemming from disrupted supply chains because of the Russia-Ukraine conflict and the lingering effects of COVID-19 lockdowns have compounded pressure on the local currency of Zimbabwe.
We’re even offered a glimpse of past government/reserve bank interventions:
Previous attempts to prevent the Zimbabwean currency’s collapse have included a 10-day ban on bank lending, restrictions on trades on the Zimbabwe Stock Exchange, allowing companies to pay taxes in the local unit and introduction of a new interbank rate.
It was then announced by finance minister Mthuli Ncube that they are going to “legalize” the use of US Dollars for the next five years in order to “steady” the Zimbabwe currency. What should be evident by now is that there really is little difference between the Reserve Bank of Zimbabwe and America’s Federal Reserve. They both seem to draw from the same textbooks, raising rates to fight inflation, ignoring the money supply and Austrian economists. Things are working better in America not because of monetary policies, but despite monetary policies.
If this still does not resonate, then take a look at their M2 money supply:
Their belief that raising rates will cure inflation, or hyperinflation, is analogous to pouring a cup of water on a burning barn to put out a fire. Rates are important in many ways; but the secret behind Zimbabwe’s currency destruction lies in their ability to expand their money supply in unimaginable ways, not unlike America’s central bank which created $5 trillion (doubling of the balance sheet) in the same two-year period.
For over a century, numerous authors have written about this. Dating back to antiquity we’ve seen the problem of expanding the money supply. The Mises Institute has countless resources and books to read free online, such as What You Should Know About Inflation, The Mystery of Banking, and of course, The Theory of Money and Credit. A list of 100 books could easily be compiled, but those are some of my personal favorites. Just one of them should suffice to cure Zimbabwe’s lingering problem of hyperinflation.
The consequences that come from stopping the money creation process pales in comparison to the currency collapse that comes from continuing the money creation process. In the former scenario, there is short term pain, but the country will eventually be able to move forward due to having an honest currency; while in the latter, the country will never be able to.
I’m going to email this article to the Reserve Bank of Zimbabwe at firstname.lastname@example.org. Hopefully someone there will look to the free market to solve their problem rather than rely on more intervention and more money creation.
Democracy Dies of Democrats
“Democracy is under attack!” I wish I had a fiat nickel for every time I heard some variation of this panic-line these past half-dozen years.
Trump will destroy our democracy!
Our sacred democracy is under assault!
Mostly peaceful protesters are in the streets trying to protect our besieged democracy!
Rioters stormed the Capitol to take down our democracy!
We must have more democratic process in boardrooms—for Diversity, Inclusion, and Equity (DIE)!
We need a Disinformation Czar to approve citizens’ conversations so we can save democracy!
I don’t have any fiat nickels left, alas. I spent them all at the local gas station.
But I do have good news. Democracy is a political ideology. It’s not something that you should want to save in the first place. We can all relax and wish democracy a speedy death. I know you’ve read Hoppe and Rothbard. Democracy is a sham. It’s the same old organized crime as governments of old, except under democracy you get to “vote” (LOL—cf. the 2020 “election”) for the people who will rob you. So, be of good cheer, friends. Democracy is bunkum, and you don’t have to give a damn if it’s under assault. In fact, if someone is “attacking democracy,” my first thought is to ask myself how I can help him out. Because I know I will be much freer and happier the sooner democracy and all other ideologies disappear.
In fact, though, democracy doesn’t need any special attacking to keel over. It collapses of its own accord. Democracy doesn’t die in darkness, as the motto of a certain fake news emporium would have me believe. Democracy dies of democrats. Huzzah! All I have to do is sit back and wait, and democrats will kill and bury their own ideology for me. That’s something really worth celebrating.
And not just democracy. All political ideologies are destroyed by those who truly believe in those ideologies. The more feverish the believer, the faster that believer will lay the beloved ideology low. The more people double down on the political ideology of the hour, the faster that ideology collapses. Thank God in Heaven. If this is true, then all the talk we are hearing about democracy being in peril is very, very good news. Perhaps, soon, the thing really will die and leave us all in peace.
Democracy dies of democrats. Let us rejoice.
Consider just a few heartening signs of democracy’s imminent demise, and all from just one American newspaper which has made “democracy” the very reason for its ongoing existence. This past week, some members of the “democracy dies in darkness” crew at the Washington Post spent most of their time on Twitter sniping at one another for not being sufficiently democratic. It began when one person at that newspaper liked one tweet containing one off-color joke. Another person at the Washington Post responded on Twitter in the tone of innocent indignation which defines the Twitter brand—the social media equivalent of clutched pearls. A third Washington Post person jumped in to chide the pearl clutcher for calling out the tweet-liker in public. The Post’s executive editor then issued two memos to address the incident. The pearl-clutcher lashed out again online. Then others at the Post got involved and it turned into a dugout-clearing tweet brawl. (https://www.foxnews.com/media/washington-post-week-from-hell)
Now, democracy, I have been told since I was old enough to be brainwashed by democrats in an American public school, is about listening to other people’s opinions. It’s about honoring all views. You have to be able to have reasoned debate. You need to protect minority positions so that everyone can share their ideas and we can all decide together how to run our country.
I can’t remember when I stopped believing that any of that was true. I think it was probably around the time that I read Hans-Hermann Hoppe. But please let me recap the latest WaPo saga for anyone who still clings to the fiction that democracy is “the good ideology,” the one that’s “the worst except for all the others that have been tried.” The people who keep shouting at us that democracy is dying, that democracy is under attack, have proven incapable of acting democratically and resolving their differences through reasoned debate. In true democratic fashion, the person who found herself in the minority in the Twitter fracas was promptly fired. This was after the WaPo bigwigs tried clamping down on the debate using pure power of office.
Zoom out a little and you can see that the WaPo in microcosm is pretty much the same as the WaPo writ large. Honoring all views? Protecting minority positions? You may have noticed—at least I have—that when I don’t agree with the Washington Post or other democratic ideologues, I am branded a “fascist” or a “racist” or a “bigot” or a “denialist” or a “Republican.” I abhor all five, but never mind. Democracy has nothing to do with debate. Democracy is—has always been—about throwing your opponents into prison or, better yet, sentencing them to death.
Plato had a serious problem with democracy, probably because he watched a gaggle of democrats run Athens into the ground during the Peloponnesian War and then execute the one man in that city who had refused to play political games with the warring factions. The Washington Post is not Athens, but you get the idea. Don’t like the fact that I liked a tweet? You’re gone! Fundamentally, absolutely nothing about democracy has changed in going on three thousand years.
All of this business about tweet-liking is to say nothing of the Washington Post’s other woes of recent days, such as yet another fake news scandal involving beleaguered Post reporter Taylor “Save Democracy!” Lorenz (https://www.washingtonexaminer.com/opinion/twitter-saga-obscures-the-washington-posts-taylor-lorenz-scandal), or the disturbing revelation that the defamatory material which the Post published in 2018 about Johnny Depp was not only false but also ghostwritten by the ACLU. (https://www.insider.com/aclu-wrote-amber-heard-washington-post-oped-johnny-depp-2022-6) It’s not just that democrats can’t debate and refuse to listen to other people’s views. It’s that democrats can’t stop feeding lies to the general public. Why? Because democracy must be protected at all costs.
Hmm. Doesn’t quite add up, but I’m not buying anyway so I don’t care.
Here’s the bottom line, the one that will never make it into your friendly neighborhood democratic newspaper. Democracy doesn’t die in darkness. It always dies in broad daylight. And it dies at the hands of democrats.
Why do democrats kill democracy? The reason is simple. Democracy is an ideology. Like all ideologies, it operates under magical assumptions. An ideology is an insistence that contingency can be controlled by ignoring certain facts and facets of lived reality. An ideology attempts to enclose the world within a cocoon of words and wishes. Ideologies, to put it bluntly, are elegant-sounding, actionable lies. The whole point of an ideology is to blind oneself, or others, to the way things really are.
Because ideologies are magic spells to make the real world turn into something that can be controlled, ideologies necessarily produce people incapable of making rational decisions. Ideologues—and that includes democrats—will almost always double down on the ideology when faced with clear and mounting evidence that it isn’t true. It must be true. That’s what makes it an ideology. And the more an ideology fails, the more, under the twisted logic which makes ideology possible in the first place, it must be infallible. The ideology crumbles, all while the ideologues keep insisting that only the ideology can save them. Robespierre and the guillotine were not aberrations of ideology. It’s always that scene in one form or another. Every ideology ends when that ideology’s ideologues take the ideology to its natural conclusion and declare war on reality.
The people who work at the Washington Post (or used to!) are among the most rabid democratic ideologues on the planet. If they can’t make democracy work, then nobody can. If the people who want to inflict democracy on all the rest of us can’t even sort out who gets to like a tweet and what should be done when someone else disagrees about it, then democracy is shown to be the farce that it is. In the event, even the WaPo democrats failed at democracy. That’s how ideology operates. Democracy dies of democrats.
The same can be said, mutatis mutandis, of any other ideology. Take communism, for instance. In the Soviet Union, communism worked just as the Austrian economists knew it would. Secret police, bread lines, gulags, personality cults, misery, death. No surprise there. Communism is a hateful ideology. Mises and Hayek tried telling us just that.
No one had more reason to understand this than the communists themselves. They were the ones standing in bread lines or rotting in gulags, after all, or else condemning others in their communist paradise to those fates. But what did the communists do? Just what the democrats at the Washington Post did. They ratcheted up the ideology.
We need price boards! What’s missing is more collectivization! What we really have to have is a purer Marxism than ever before!
And so on, as millions, and then millions more, starved to death or snitched on their mothers for a promotion at the Number Four Munitions Factory. Communism didn’t die in darkness. It died in broad daylight. And it died of communists.
I could extend the list, but you get the idea. Insert the name of any ideology into the blank and then run the program. Or just flip through the pages of a history book to see how the mechanism works in real life. An ideology is a vehicle to power at first. It’s what gets the worst people to the top of any government—Hoppe and Rothbard proven right again and again. Once in power, the ideology begins to work against its erstwhile masters. The ideology takes over, and ideologues work themselves into a sustained trance. The ideology must be true. The way to overcome apparent failures in the ideology is with more ideology. This scales up, the gearwheels of ideology and yet more ideology turning faster and faster, until total collapse comes.
How does one get out of an ideology? One simply walks away. One stops believing in it and therefore stops trying to prove to oneself and to others that it’s true.
But, truth be told, anti-ideology can itself feel like an ideology at times. It’s not so easy to free oneself from the grips of ideological thinking, I mean, and it’s even harder to shake others out of the trance. Try this experiment if you don’t agree with me. Ask an average American how to fix what’s wrong with the country. He or she is likely to say, “We have to wait until the next election. Then we can vote our way to a better democracy.”
Deconstructing the Myth of Social Democracy
Social democracy (or welfare state) may feel like the nice middle point between laissez faire capitalism and communism that many people feel comfortable with. Among the many arguments that proponents of social democracy espouse in favor of such a system there’s their concern for the poor, they ask, in a minimal state society who would help the poor?
The hidden premise in the argument is that the state really helps the poor and that it is part of the capitalist system to bring about poor people. They see a middle-sized state with moderate intervention in the market as the solution to such problem, they reject communism/socialism for well-known historical facts (authoritarianism, impoverishment, etc.).
Although an easy response to the question maybe to say that charity would help to combat said poverty, there is a more definitive yet difficult answer. One must counter the premise that the state helps to reduce poverty in any way.
The first part of the answer is look at the nature of the state, but why? To see which type organization, we are dealing with. Why does the state exist and how is it that society is under it? The state is an organization you are part of or are under from the moment you are conceived, you don’t choose to be part of it, you just happen to be born somewhere within its borders and therefore under its rules.
The state is an organization that you have are part of without choosing to do so, no one is ever presented with a contract to accept the rules of the state. In other words the state regulates you without your consent. The question remains why is there a state in the part of the world you are born?
This is a historical question, the answer lays in there, if you look at every state in the world you will find that the territories under them where conquered by them at some point in time (For more on the subject see Oppenheimer The State 1908), no one in those territories was ever asked if they wanted to be part of this state or another (Even in the event of a referendum the ones that reject it are forced to stay in the territory they are).
Now, let’s assume that we are the government and there’s poverty in our lands, what can we do to at least try to help? Which tools does a social democratic government have to combat poverty?
Money is key, the government in a social democracy has a monopoly on the money supply so what happens if they try to use this tool to combat poverty. It can do three things either contract, fix or expand the money supply, these three things will affect the entire economy, and in this circumstance badly, since changes in the money supply that are not dictated by supply and demand distort relative prices and therefore the communication system that prices are. In other words, it will cause inflation or deflation (the bad one, that means the one not generated by an increase of supply of all goods in the market).
Welfare may be the next possible option, which means giving money to poor people, but this has its own problems. First, that money you are giving is being taken from somebody else by taxes so you would be making someone richer at the expense of making somebody else poorer. Plus, by giving money away, the people receiving the money will not have an incentive to work since they are getting money anyway by doing nothing, so production will decrease affecting everybody in the economy.
Even if this redistribution is made from up to down, that means taking from the rich to give to the poor, it will still create problems since the rich are basically people that saved. Thus, if you take money from them general investment will decrease therefore affecting the expansion and creation of business, businesses that otherwise would have created jobs and bid up wages. Note that as F.A Hayek said, the means by which the state redistributes the wealth to make a society more egalitarian, are the same methods by which a tyrant would benefit a racial elite (F.A Hayek - The Road to Serfdom 1944), which means taking from someone by force to give to somebody else.
What about lowering the price of products to make them cheaper so more people can afford them? This would again create problems. Let me illustrate it this way: if person A buys X amount of a product and then the price of that product is lowered then person A will buy more of that product, that means there will be less amount of X product in the shelfs than before. In other words whoever gets first to the product will get it, richer people will be able to buy more of it before more modest people get there. The other problem is that investment in the price-controlled product will also decrease since it is now cheap and not as profitable as before thus less people will want to produce it.
That illustrates how any price control will fail to help to combat poverty even minimum wage laws that the only thing they do is to make illegal hiring someone below certain price. Then the employer that values certain worker with a price that is below the minimum will simply not hire him.
Now, let’s come to one of the main features of a social democracy, to give services for free so people that cannot afford them on the market, can get them by the state. Of course, nothing is ever “free,” always somebody is paying for it, in this situation, everyone by means of taxes is paying for these services although many of them are not even using those services.
Even worse, low-income people that are supposedly being helped by these, are actually not, since they are being taxed before they use the state services therefore being impoverished and getting nothing in return. Instead, they are financing the people that have the time to go and actually get those services. This is true for state-run services like the public school system and healthcare.
Furthermore, the money that is being taken to finance these services would have been used (if people want) to create private schools or hospital that would be more efficient than state-controlled ones. The idea of a social democracy comes from the proposition that there is a third way between capitalism and socialism. Ludwig Von Mises already took on this position and showed that a third way always leads to socialism, since one intervention in the market distorts it, prompting the government to intervene again.
What then can a social democratic government do to combat poverty? At this point it is safe to say that government through its interventions is the source of poverty and nothing it can do will help, it’s no surprise since as I have mentioned that the state does not get its members voluntarily. Basically, what the government can do is to stop being a social democracy and embrace the free market, just let the people be free to create wealth.
Dave Mustaine's Crucial Lesson for Entrepreneurs
Listeners of The Human Action Podcast and Radio Rothbard sometimes remark on the intro and outro music from heavy metal band Megadeth.
Fans of this genre are very familiar with both the band and its founder, legendary guitarist Dave Mustaine. Mustaine is well-known among both fans and his musical colleagues as a highly skilled technical guitarist who composes remarkably complex and unique songs. Guitar World ranks Mustaine sixth in its listing of the top one hundred metal guitarists of all time. His talent and commercial success are undeniable, especially given his career of nearly forty years in a very tough and cutthroat industry.
Yet fans and even music critics might not know Mustaine is almost entirely self-taught. He has not studied music theory, and does not read music or use guitar tablatures. In fact, during a recent interview, Mustaine discussed his collaborative relationship with bandmate and fellow guitarist Kiko Loureiro. Loureiro, in contrast to Mustaine, studied music theory, piano, and classical guitar from a young age in his native Brazil. Thus, at a fan workshop they attended together, Loureiro was able to describe the dynamics, keys, tempos, and articulation of a particular Megadeth song using the specific language of music theory—to Mustaine's good-natured but somewhat bewildered amusement.
As Loureiro told Blabbermouth magazine:
You have to understand that people are different," he continued. "A creator can play something and just imagine the mountain, the sea, the hell, a war—imagine things, those sounds. He can relate that riff to a machine gun or can relate that riff to a bomb exploding, in the case of MEGADETH. But he can play a chord and imagine the mountain, the sun, sailing—whatever. So some people are like this. Some other people, they need the theory—they need the names, they need the things organized to make sense. So that's why some people really relate to the theory and love theory. I love theory. Some other people don't feel they need theory to compose, to create, because it's all about imagination. And, of course, the basic stuff they might know—"Oh, this is a major chord," "This is a minor chord," "This is the name of the notes, like E, A, D," but in the end, it really doesn't matter as well.
So, does Dave Mustaine use theory? No, he doesn't.
We all recognize this phenomenon from our own experience: some people have to know and understand the whys of any endeavor while some people focus on the hows. And often the latter group is far better at execution, in business or otherwise, simply because they focus more intently on end results. They get out of their own way and have a strong, demonstrated aptitude for action over introspection.
As Dave Mustaine puts it when describing his guitar playing and songwriting: "I know what I'm doing, but I don't know what it is that I'm doing."
This surely is true of countless entrepreneurs, musicians, artists, athletes, parents, and successful people in all walks of life! They may have no formal training, education, credentials, or theoretical grounding in their chosen professions but succeed by doing—through a bias for action. Mustaine's key insight, shared intuitively by such people, is a relentless focus on results rather than process. This is a vital trait common to all successful entrepreneurs.
The opposite is true of bureaucratic minds, whether in government or private companies. The work itself, rather than the end result or goals, becomes the whole focus. And so it expands to fill an allotted time, such as a forty-hour workweek or a preset product deadline. In bureaucracies, a managerial mindset grows and dominates. Credentialism and seniority become the path to advancement and raises, rather than demonstrated contributions to the bottom line. As a result of this process focus, both customers (or constituents) and employees are worse off in the long run.
The price and—more importantly—the value of any good or service are not determined by cost, labor, or some mysterious inherent quality. This key insight of Austrian economics—that value is subjective and marginal, something to be experienced by the consumer and facilitated by the entrepreneur—indirectly or subconsciously informs the work of all successful businesses. And thus a relentless customer focus—in keeping with Mises's concept of "consumer sovereignty"—is a mainstay of the business training available on our Economics for Business platform.
The value of Dave Mustaine's music ultimately is determined by fans, experiencing it through their own highly subjective and individual aesthetic preferences. Mustaine's genius, both from a musical and business perspective, lies in taking his talents and drive for musical expression and creating value through a focus on results. For Mr. Mustaine and countless successful entrepreneurs, how matters more than why.
Do You Want to Whip Inflation Now? Kill Bill Gates (Just Kidding)
By “kill,” I don’t mean murder. For this to work, you need to execute him for some “crime” and as the result of some “legal” process.
And by “Bill Gates,” I don’t mean him, as any sufficiently-wealthy and high-profile victim will do.
If you accept the proposition that inflation is the result of too much money, then you must admit that defeating inflation means that we need to shrink the money supply. Traditionally, the central bank has raised interest rates in order to reduce the supply of credit in the economy, thereby shrinking the money supply, but terror would work just as well – maybe even better.
That is, if the government started executing rich people for their “crimes,” then rich people would stop lending. And, as long as you limited your random killings to people who had perpetrated some well-defined and easily-definable act, the general economy wouldn’t need to suffer (very much). After all, what do I – or any other small business person – care if the government executes rich people who donate billions to vaccines (or some other highly-specific crime)? I can, in this scenario, become as rich as I like, as long as I don’t devote my wealth to similar charities.
And, even if there is some over deterrence, we’ve only deterred charitable activities, not business activities.
If all of this strikes you as abhorrent, good – you’re a decent human being, but a terrible politician. The easiest way to profit from inflation as a politician is to define your enemies in such a way that you can strip them of their wealth – and, potentially, their lives – without endangering anyone else. If, say, you declare all Trump supporters to be enemies of the state, then you can kill them quite legally without terrifying anybody else.
Of course, the problem with Trump supporters is that they aren’t particularly wealthy, and they’re hard to define in a way that others wouldn’t be afraid that they might be next, so you’d have to kill a bunch of them in order to make any real headway in shrinking the money supply, and the unintended consequences would be extreme. If, however, you could identify a group of extremely wealthy people who share the same political ideology…an ideology you could vilify in order to justify your ascent to power… then you’re in business!
And, of course, once you’re in power, the resulting economic boom is likely to keep you there. (Not to mention the fact that redistributing their wealth is likely to earn you a great deal of loyalty.)
In short, inflation isn’t likely to destroy the value of government fiat currency, but it is likely to destroy the value of the government that issues it. Inflation creates an economic incentive – aka a political opportunity – for unscrupulous people to solve inflation via violence, and, if economics teaches us anything, it’s that few opportunities are wasted.
One does not have to believe that Bill Gates – or anyone else – deserves to be killed in order to warn against creating incentives to kill Bill Gates. To the contrary, it’s quite reasonable to believe that we need absolute prohibitions on certain governmental actions precisely because those actions lead to disaster. Like fiat currencies.
One of the great, and underestimated, advantages of the gold standard (or any other form of sound money) is that killing the king does not affect his pile of gold, thereby greatly reducing anyone’s incentive to kill the king. In contrast, fiat money means that the value of the king’s life is inextricably intertwined with the value of the king’s money, which is awfully dangerous for the king and his supporters.
Humanity’s capacity for political violence is unlimited, but that’s no excuse for facilitating and incentivizing our worst impulses through fiat currency. If anyone should recognize the importance of operating systems, it would be Bill Gates, and fiat currency is a very dangerous operating system indeed.
As believers in the subjective value of assets, we students of the Austrian school should never cease to warn others of the dangers inherent to granting the government a monopoly on an asset as important as money; namely, that violence is one of the most effective means to change subjective valuations ever invented. If anyone should be entrusted with the power to create assets, it shouldn’t be an institution that also entrusted with a monopoly on lawful violence as the temptation to use the one monopoly to alter the valuations in the other is too great for any mortal. Even Sauron, after all, didn’t claim a monopoly on magical rings.
Combining such monopolies into one, therefore, is the height of folly.
Democracy in Action
Democracy is held as the apotheosis of governance, the pinnacle of societal organization that replaced a long succession of failed predecessors (monarchy, oligarchies, dictatorships, etc). Its sine qua non is the peaceful exercise of power and authority. But that peaceful guise is an illusion. Those who submit to the majority’s wishes do so not out of a noble love for democracy, but rather out of fear of its enforcement. Democracy, after you strip away all the slogans and grade-school platitudes, is a proxy for violence.
When a country wages war against another (Russia vs Ukraine) this is democratic enforcement in action. Consider: Russia aggressively occupying Ukraine is no different than a newly elected political regime imposing its intentions upon resistant members of a populace who did not vote for them or who didn’t vote at all (a null vote being a vote against all candidates). Happens all the time. Don’t pay your taxes, sell products that are “illegal”, fail to close your business when ordered to do so – in comes the fully armed SWAT team, guns drawn. Those decrying Russia’s actions in Ukraine would nod approvingly had there been an election in Ukraine and Russia and the losing side just happened to be everyone in Ukraine (not too dissimilar to every US presidential election). Internalized violence against one’s own citizens (no offense Canada) is laudatory under democratic regimes. Externalized violence against another country’s citizens is condemned vociferously. There is no difference other than the existence of imaginary lines.
To be clear, the point here is not to suggest that one country invading another is “ok”. Quite the contrary. Aggression is reprehensible. Just as reprehensible as the mob rule otherwise known as “democracy.” Democracy is the veneer of civility that conceals the sociopath’s instinct to rule (libido dominandi). When the ruled resist, the veneer cracks, and the aggressive nature of the presumptive rulers is revealed.
Should we then, as outsiders, get involved in the Russia-Ukraine conflict? Quite simply, “no.” Not because it’s tolerable for bullies to get away with naked aggression, but rather because there is no “we” here. There is no United States. There is no Germany. There is no Canada. Only people. To say that “we” should intervene on behalf of Ukraine is to say that if your neighbor gets involved in a bar fight you should order your children to intercede. This is absurd. If YOU want to help then YOU are free to get on a plane and take up arms in Ukraine. Likewise you are free to welcome Ukrainian refugees into your home. However, you have no moral authority to compel anyone else to engage in these actions. This applies to sanctions as well. Sanctions are not “peaceful”. They are an act of war, and a stupid one at that. They never harm the leaders. They only harm third parties on both sides (to whit: Italy and Belgium are asking that proposed Russian sanctions not include luxury goods as it would harm their respective economies). US sanctions killed a million Iraqi children in the 1990s. Former Secretary of State Madeline Albright thought it was “worth it.” Tell me how that is not an act of war (and a hideous one at that)? Sanctions presuppose a paternalistic mindset on the part of a country’s rulers, as though harming citizens is like harming their children. They are not their children. They do not care. Sanctions always miss the mark. They punish the individual who has no power or culpability while those responsible easily work around it with their connections.
So what should be done? A good start would be dismantling NATO. The impending admission of Ukraine into NATO is Putin’s issue. This should not be surprising given the repeated broken promises of Bush, Clinton, Bush, and Obama to halt the eastward expansion of NATO. Had Soviet leaders promised stop the expansion of the Warsaw Pact in South America but instead allowed it to slowly creep over the decades up through Latin America and today Mexico was poised to join, does anyone honestly believe American leaders would not feel a demilitarization of Mexico was warranted?
NATO is an anachronism that serves no purpose other than to antagonize Russia and increase the odds of pulling the world into WWWIII (given NATO’s WWI-style defense pact wherein an attack on one member is considered an attack on all). Its entire mission is bellicose, in contrast to the UN (of which Russia is a member) whose mandate is one of only peace. Dissolving NATO or at a minimum renouncing any possibility of Ukrainian membership would undermine any pretext Putin has for continuing this current conflict. Or perhaps reconsider what a newly elected Putin suggested back in 2000 – Russia joins NATO.
Do We Really Need Big Corporations?
Big Tech. Big Pharma. Big food. Big banks. Big oil. We’ve got questions about all of them. Big Tech is surveilling us and stealing our privacy. Big Pharma is exploiting us and poisoning us. Big food is compromising our health and fitness. Big banks are destabilizing boom-and-bust machines. Big oil is destroying the planet.
Do we need them? In the past, they were necessary to tackle problems of scale—the accumulation and control of sufficient capital to undertake massive industrial-era projects like building railroads, oil fields, pipelines, energy grids, fleets of oceangoing ships or airplanes, and supplying every household in America with 1.88 vehicles.
These achievements—and many, many more—have delivered tremendous benefits and improvements in productivity and in the quality of life. They’ve opened up the globe to trade and eliminated most poverty. They were part of what Professor Deirdre McCloskey calls the Great Enrichment, the flowering of opportunity and economic growth since the nineteenth century that is unparalleled in human history.
But capital accumulation is not needed in the same way in the digital age as in the industrial age. To a large degree, scale can be downloaded from the internet and capital can be controlled by renting it by the minute. Amazon Web Services (AWS) is the epitome of capital rental. Companies don’t need their own server farms and specialized software to run their digital operations—they rent from AWS. Their storefronts, fulfillment, and customer service run on AWS.
According to Wikipedia, as of 2021, AWS comprises over two hundred products and services including computing, storage, networking, database, analytics, application services, deployment, management, machine learning, mobile, developer tools, RobOps, and tools for the Internet of Things.
As an even more specific example of distributed control over capital, consider AWS Ground Station. Do you need satellite capability to collect data? Check the website:
AWS Ground Station is a fully managed service that lets you control satellite communications, process data, and scale your operations without having to worry about building or managing your own ground station infrastructure.
…. you can use Amazon S3 to store the downloaded data, Amazon Kinesis Data Streams for managing data ingestion from satellites, and Amazon SageMaker for building custom machine learning applications that apply to your data sets. You can save up to 80% on the cost of your ground station operations by paying only for the actual antenna time used, and relying on the global footprint of ground stations to download data when and where you need it. There are no long-term commitments, and you gain the ability to rapidly scale your satellite communications on-demand when your business needs it.
This is the new age: capital on demand. Who needs big corporations?
This realization frees some brain capacity to think about some of the bad things that come with big corporations. There are plenty.
We want our corporations to create value, and to improve people’s lives through innovation and service. Parts of them do. But those parts are surrounded by, and sometimes suffocated by, bureaucracy. Bureaucracy was developed by corporations not for purposes of innovation, but for the opposite. It’s an engine of control, to limit the autonomy and creativity of people who work in the corporation and to impose rules, guidelines, methods, and processes. Compliance is a big word for corporate bureaucracies.
Loss of Speed
Big corporations are structured. They have hierarchies and layers, divisions, functional departments, regions, and subsidiaries. Structure is the enemy of speed. When any individual or team has to seek approval, ask for funding, submit for compliance, and check for authority before acting, time is used and wasted. Speed of action and speed of responsiveness to marketplace and competitive changes are imperative in the digital era. Losing speed is losing productivity. It’s a loss imposed on the firm and the economy.
Big corporations attract regulation, and in many cases initiate it. It’s called crony capitalism. By agreeing with government how to regulate their industry, corporations achieve three things: (1) a known environment in which to operate (the opposite of systems innovation); (2) employment for an expanding bureaucracy (big banks, for example, have huge compliance bureaucracies); and, consequently, (3) competitive insulation, since smaller entities can’t afford to divert resources into their own compliance bureaucracies.
Regulation, of course, is a huge drain on productivity and a huge barrier to innovation. It’s one of the major ways government undermines the economy, and big corporations are complicit.
The creation, maintenance, and profitability of big corporations often have more to do with financial engineering than serving customers and innovating. Financial engineering includes all activities that appear to strengthen financial reporting on paper without improving customer value. Stock buybacks are a perfect example. There is no customer purpose in stock buybacks. The activity is purely for changing pro forma “per share” ratios. The same is often true for mergers and acquisitions—most acquisitions do not improve customer value because they are not executed with customers in mind.
Generally, the financial-engineering mentality of today’s big corporation is not customer favorable.
Once corporations get big, they have something to defend: their size (investors insist they must grow), their revenues (the top line, as it is called, must slope upward), their market share (they must not “lose” share), and their influence (more lobbyists). Their focus is diverted from innovation and improved customer service to maintenance and “sustainability.” Defensiveness does not generate growth.
Big corporations are not anticapitalist. But they often get capitalism a bad name. Robert Bradley Jr. created the term contracapitalist when describing the corporate behavior of Enron (for whom he once worked). This company abandoned and subverted capitalist practices, often with the support of institutions like the Ex-Im Bank, and mostly stayed within the law. Freewheeling accounting practices, contorted debt structures, hyped projections, and hubristic imprudence all contributed to Bradley’s realization that his former employer practiced contracapitalism.
Do we need big corporations in the interconnected digital era of distributed control over capital? Not really. We should certainly never use big corporations as good examples of capitalism and free markets; they are far too often contracapitalist.
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