Power & Market

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.”

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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:

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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.

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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:

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Double masked. Didn’t he get the memo there are zero Covid deaths?

“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.”

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.

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.