There’s No Conflict Between Profit and “Social Responsibility”

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Estimated Reading Time: 6 minutes

The slogan People over Profits once again is being heard in Washington and elsewhere in the country. This time, however, the sloganeering doesn’t come from Jane Fonda or Bernie Sanders (although both have used that mantra for many years) but rather from business sources themselves. From the US Chamber of Commerce to the Business Roundtable, we are being told that private enterprise has “discovered” that “social responsibility” should be the key to running a business, not profitability:

“The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”

“This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

The new rhetoric we hear from business leaders such as Tim Cook from Apple and Jamie Dimon from JPMorgan Chase seems to be in line with the Build Back Better slogan of the Joe Biden presidential campaign and the Great Reset that seems to be the rage today with the Bilderberg crowd. The idea seems to be as follows: capitalism unleashes uncontrollable forces that while creating new wealth also create problems such as air and water pollution, along with climate change, and the process of making some people wealthy also means many others are thrown into poverty.

Profits themselves in this view are an extraction of wealth from the community, something that “responsible” businesses try to mitigate by ensuring that “stakeholders” are not neglected. (Defining “stakeholders” is a bit more difficult, as the list of people meeting that qualification seems to be ever expanding.) Thus, by seeking to do something other than just be profitable, businesses become “responsible corporate citizens.”

For all the self-congratulations members of the Business Roundtable are heaping upon themselves for this supposed newly discovered role for private enterprise, a few things are in order. First, business executives in 2021 are more than a century late in the “We want to be respectable” sweepstakes. The progressives more than a century ago sought to make “big business” respectable and shake the “robber baron” image that had been a staple in the press since the late 1800s.

Whether or not such descriptions were warranted is quite another matter. Burton W. Folsom dealt with that era effectively in his The Myth of the Robber Barons: A New Look at the Rise of Big Business in America and pointed out that there was a difference between the market entrepreneurs and the political entrepreneurs. Unfortunately, today’s climate of business “respectability” doesn’t make that distinction, assuming, instead, that all business success is the result of a firm exercising “power,” a term progressives don’t try to [define] accurately, confusing the power of the state with the so-called market power that business firms have. The former can have you killed without recourse; the latter is subject to the whims and decisions of consumers. Mises writes in Bureaucracy:

The capitalists, the enterprisers, and the farmers are instrumental in the conduct of economic affairs. They are at the helm and steer the ship. But they are not free to shape its course. They are not supreme, they are steersmen only, bound to obey unconditionally the captain’s orders. The captain is the consumer.

Mises’s words are important because they point away from the standard progressive belief that businesses can extract wealth from the community through normal business practices without possessing the legal privileges reserved for state actors. The simple acts of producing goods and selling them, according to progressives, can be interpreted as a forced extraction and, thus, coercive and violent. (Black activist Jesse Jackson, for example, often has referred to normal business practices as “economic violence.”)

Conversely, progressives refer to state action as democracy in action, implying that such action toward regulation of business firms is done to protect people from private sector predations. That “our democracy” is run by people with guns who are not afraid to use them on innocent people somehow does not register with them. The state is a manifestation of The Will of the People; private enterprise fosters violence upon us.

If one concludes that businesses in a market system (as opposed to what Randall Holcombe calls political capitalism) operate in a setting in which they cannot coerce buyers and suppliers, but must depend upon voluntary contracts and trust, then the popular descriptions of their activity using terms related to violence simply don’t fit. Nonetheless, our leading institutions, from education to media to religion to government, portray markets as coercive and exploitative, earning profits at the expense of the well-being of others.

While Karl Marx claimed that profits were unjust expropriations of wealth from labor, most of the modern criticism of private enterprise is less systematic and, frankly, less sophisticated than any analysis that Marx might have undertaken. Despite the lack of rigorous thought that characterizes much of today’s anticapitalism (and especially the anticapitalism held by American elites), one still needs to provide some answers that deal with their objections, even though we know that the usual suspects have no intention of honestly dealing with other systems of thinking.

So, what is the typical objection to profits? Some critics claim that profits create higher prices, which the Jimmy Carter administration believed when it laid out its wage-price-profit guidelines in the late 1970s. In fact, any firm that had profit margins of greater than 6 percent could be declared ineligible to receive federal government contracts. I dealt with that objection in 2004, writing:

Indeed, to “fight” against the inflation that plagued his presidential term, Carter’s “inflation czar” Alfred Kahn of Cornell University announced a “voluntary” wage/price/profit plan. Firms that wished to do business with the government first had to demonstrate their “anti-inflation” credentials by raising prices and wages by six percent or less annually and by earning six percent or less in profits. In other words, according to Kahn, “high” business profits significantly contributed to inflation.

The first thing to remember is that profits do not come about because businesses charge exorbitantly high prices but rather because entrepreneurs have successfully found ways to lower potential costs. Murray N. Rothbard writes in Man, Economy, and State:

What gave rise to this realized profit, this ex post profit fulfilling the producer’s ex ante expectations? The fact that the factors of production in this process were underpriced and undercapitalized—underpriced in so far as their unit services were bought, undercapitalized in so far as the factors were bought as wholes.

Peter Klein in The Capitalist and the Entrepreneur points out that uncertainty is necessary for profitability in a market system:

Profit … is a reward for anticipating the uncertain future more accurately than others (e.g., purchasing factors of production at market prices below the eventual selling price of the product), and exists only in a world of “true” uncertainty. In such a world, given that production takes time, entrepreneurs will earn either profits or losses based on the differences between factor prices paid and product prices received.

The anticapitalist critics would pounce here, claiming that the greedy capitalist had “underpaid” factor owners (especially labor) to gain profits. (Most likely, the critics would claim that the business owners also charged “unjust” prices, but they are going to make that claim no matter what the circumstances, with the assumption of “injustice” also being the conclusion, the classic “begging the question” informal fallacy.) There is a major weakness in that argument, however, and while the critics never will move past their own anticapitalist assumptions (since all progressives know that capitalism causes poverty), they assume that the entrepreneurs know that labor is “underpriced” ex ante. Yet, as Klein and Rothbard point out, because entrepreneurs operate within the arena of uncertainty, they only can surmise that at least some factors are underpriced, since they only can know for sure ex post.

Furthermore, since entrepreneurs also experience losses, factors owners are overpaid in those situations, and that includes labor. (One doubts that the progressive critics of capitalism will demand that workers give back their windfall should the entrepreneurial venture lose money.)

Note again that the critics of capitalism hold that it is naturally exploitative and that unless government steps in to force employers to pay “just” wages employers will force employees to work for substandard wages. Declares the Christian socialist publication Sojourners:

In the capitalist economy in which we live, the labor market and wages are matters of profound inequality, exploitation, and injustice. For example, according to the Economic Policy Institute, a nonpartisan organization committed to policies that benefit low-and middle-income workers, the current federal minimum wage is just $7.25 per hour and hasn’t been raised in over 10 years. Even raising the minimum wage modestly to $15 per hour would give more than 32 million Americans a raise. Black, Latinx, and Indigenous workers would be the biggest beneficiaries of raising the minimum wage.

If the above statement were correct, then most people would be employed at $7.25 an hour (unless state or local minimum wages were higher) and supply and demand for labor would have no effect upon what people are paid. In other words, they believe that wages are not connected to economic reality and are nothing more than mere numbers.

(One doubts that anyone at Sojourners would have their minds changed when confronted with the real and racist history of the minimum wage—that it was implemented precisely to make the abovementioned minority workers less employable. It is utterly ironic that the people at Sojourners believe that even though progressives in the first half of the twentieth century hated racial minorities and wanted them eliminated from American society, they somehow unwittingly imposed and demanded economic policies that benefitted the very people they hated.)

If one believes what clearly is obvious—that prices in unhampered markets send accurate signals to market participants—then profits are not gained by harming others. Markets by their very nature involve voluntary action by consenting parties, which by definition is nonexploitative. Profits in a free market system exist, because entrepreneurs have made correct predictions about future consumer choices and acted on their beliefs. This is not profits over people, but rather profits benefitting people.

*****

This article was published on May 27, 2021, and is reproduced with permission from the Ludwig von Mises Institute.

What Makes Biden and Yellen’s “Global Minimum Tax” Push So Hypocritical

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Estimated Reading Time: 2 minutes

Joe and Janet the robber barons

Imagine if oil companies got together and agreed to charge consumers no less than $3.50 per gallon for gas. Let’s call it a “global minimum price.” How long—in minutes—do you think it would take for the news media to cry foul and for the Justice Department to file an antitrust suit?

In recent days, President Joe Biden and Treasury Secretary Janet Yellen endorsed the identical concept—so long as the perpetrators are governments.

Yes, unbelievable as it may be to small children, governments and double standards go together like peanut butter and jelly.

Biden and Yellen are leading the charge for a “global minimum tax” on businesses. They want to get governments all over the world to agree to charge companies no less than 15 percent for the State’s wisdom and beneficence. No more of this competition stuff that might encourage firms to move to, say, Ireland where the government only charges them 12.5 percent! “That’s not fair!” cry the anti-competition “progressives” like Biden and Yellen.

If private firms connived to fix a minimum price for their goods, they would be branded “robber barons” and their CEOs would be vilified before congressional committees. Do not expect Biden, Yellen and the government price-fixers who endorse a global minimum tax to ever face so much as a tough question at a press conference.

To date, major media has not only been silent on this glaring hypocrisy, but it has also cheered on the price-fixers—which reminds me of something Adlai Stevenson said more than half a century ago: “The job of the journalist is to separate the wheat from the chaff, and then print the chaff.”

Poor old John D. Rockefeller of Standard Oil! He still catches Hell from armchair historians who claim he colluded with competitors to fix minimum prices for oil products, even though the evidence is scant at best. Unlike governments, Standard charged less and less for products that steadily improved in quality. (See my essay, “Witch-Hunting for Robber Barons: The Standard Oil Story”).

In a May 27 editorial, The Wall Street Journal pointed out that Ireland is a superb example of the wisdom of tax competition between countries. For decades now, the previously over-taxed Emerald Isle has kept its flat-rate business income tax rate at 12.5 percent:

Ireland has reaped the benefits. Between 1986 and 2006, the economy grew to nearly 140% of the EU average from a mere two-thirds. Employment nearly doubled to two million, and the brain drain of the 1970s and 1980s reversed. Ireland became a destination for global capital.

If Ireland were to sign on to the Biden/Yellen global minimum tax proposal, it would have to impose a 20% tax hike. Its finance minister is no idiot. He’s against it.

So the next time your teacher or professor says that getting together with your competitors to fix minimum prices and reduce competition makes you an evil robber baron, raise your hand and ask, “You mean like Joe Biden and Janet Yellen?”

*****

This article was published on May 29, 2021 and is reproduced with permission from FEE, Foundation for Economic Education.

 

Dismisinfoganda

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Estimated Reading Time: 5 minutes

Misinformation, i.e., wrong claims innocently made, and disinformation, i.e., wrong claims willfully made, have long consorted to create propaganda, a distorted worldview designed to achieve some political goal.

The lines between those lies have so blurred that only a neologistic portmanteau, dismisinfoganda, fully captures recent reality.

Like an old hip-hip song, let’s break it down:

dis = intentionally wrong claims (lies)

mis = unintentionally wrong claims (error)

dismis(s) = denying a claim without empirically engaging it

info = a claim about the real world

(propa)ganda = that which is propagare, i.e., propagated or spread

Ergo, dismisinfoganda is the politicized spreading or squelching of claims without, or counter to, adequate empirical evidence.

Dismisinfoganda remains agnostic about motivation, which is often opaque even to the claim’s originator. Moreover, what matters most is not the creation of the claim but its propagation. People tend to believe, and pass along, claims that they believe substantiate their ideological views or further their material interests. The selective process (spread or ignore) occurs regardless of the claim originator’s intent.

A 1975 book by Tom Burnam updated in 1986 called The Dictionary of Misinformation (New York: Thomas Y. Crowell) now looks rather quaint. Most of its 302 undocumented pages the author used to explain proper usage of words like zeppelin, which, in addition to being in the name of one of the greatest rock-n-roll bands ever, was the only lighter-than-air airship that was both steerable and rigid. Some simply corrected common elisions of history, where phrases like the “Emancipation Proclamation” come to stand in for the Thirteenth Amendment, or misattribution of origins, like Charles Darwin being the first person to elucidate biological evolution. Important stuff for copy editors and fact checkers but harmless for the most part.

Mission-critical matters simply fail if they are erroneous. If an engineer denies that two plus two equals four and tries to launch a rocket into space, s/he isn’t even going to be able to build the rocket, much less provide others with the schadenfreude of watching the thing explode on the launch pad.

Specious commercial claims also tend to go down in flames, although only metaphorically and sometimes too slowly. Competitors and consumers have strong incentives to expose the truth that such-and-such company’s product claims are false or misleading and nobody else much cares, which keeps noise to a minimum. Of course companies may also try to spread disinformation about competitors but they have to do so surreptitiously or consumers would immediately discount it. The current mix of customer feedback (Yelp! and such), expert opinion (via Consumer Reports and the like), costly quality signaling (like UL and others), and product databases/aggregators (like CPID), remains imperfect but in normal times (which these are not), it works well enough. One hopes that any private attempt to “cancel” any such bona fide commercial information assessor or disseminator, the way that social media site Parler was shut down earlier this year, the departments of justice and commerce would meet with swift and sure retribution.

Parler, of course, was not a major source of commercial information but rather a forum for the sharing of political opinion and policy information, which one would think would be protected by the First Amendment, which states that “Congress shall pass no law … abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble.” While it is true that Congress did not directly shut down Parler, a panoply of laws and administrative policies made it lawfully possible for private parties to do so and some, including myself, have argued that regulations and taxes are so high that traditional public-private distinctions have broken down. If the government can essentially outsource its dirty business to corporations, the Bill of Rights becomes a dead letter.

Florida recently retaliated against what its governor terms “Big Tech Censorship” by passing a Transparency and Technology Act that tries to force social media companies to inform Floridians of their banning/blocking policies and to apply them to all users consistently. The legality of the measure has been questioned although many states, including ironically enough the one where Silicon Valley is located, regularly regulate out-of-state companies doing business within them.

At least the subject is being debated, probably because Big Tech Censorship of a law regarding Big Tech Censorship would be more than a little ironic. A much more important issue is dismisinfogandizing by federal officials, especially Anthony Fauci. AIER and others have repeatedly exposed his lies, half-truths, and flip-flops (and floppy pitching arm) and yet somehow this superannuated individual retains his job, power, and prestige.

The most recent revelation, however, may finally drive him from the policy scene. In case you haven’t heard, a consensus is now emerging that the hypothesis that the coronavirus that causes Covid-19 came out of the Wuhan Institute of Virology needs further study. That doesn’t mean that the CCP deliberately unleashed the virus on the world or even covered it up, just that for some reason earlier indications that lab workers experienced Covid-like sickness in November 2019 did not fully register until recently.

The point here is that a politicized claim with major policy implications that Fauci adamantly dismissed as absurd in May 2020 he now says a year later needs investigation as he is “not convinced” that the virus emerged naturally. Far from a one-off mistake, Fauci’s outright dismissal of claims with empirical backing forms part of a pattern of behavior displayed across the federal and some state governments regarding election reforms and results, police brutality, urban rioting, fiscal and monetary policy, and other important policy areas.

While that pattern of dismisinfoganda hardly proves a Deep State or Blue State conspiracy, it should deeply trouble all Americans that high profile and highly paid members of its government cannot seem to reason correctly. A real scientist working in the public interest would have said a year ago what Fauci is now saying regarding the origins of the novel coronavirus: “Here is what we know, and here is what we still need to learn.” Instead, he leveraged his (undeserved) popularity and traditional journalist deference for authority, especially of the white lab coat variety, to stave off a line of inquiry that could have saved lives by speeding therapeutic and vaccine development.

Alas, I see no way of significantly reducing dismisinfoganda other than ideas that I have previously espoused:

  1. Improving the educational system so more Americans can reason correctly, ask the right questions, find disinterested sources of data, and more generally think for themselves. But it will take about two decades to slow the spread and flatten the curve of dismisinfoganda even if we magically improved education overnight, which is unlikely.
  2. Holding public officials much more accountable for their affirmative decisions and pronouncements, thus encouraging them to proceed more cautiously on the policy front and to speak more judiciously when acting in a policy or spokesperson capacity. Police officers are not the only public servants whose qualified immunity needs to be reconsidered, but such a fundamental reform also seems unlikely at present.
  3. Increasing transparency through floods of FOIA requests or, better yet, continuous automatic release of all but the most secret national security information. Police officers are not the only public servants who should be wearing body cams but, again, such a fundamental reform seems unlikely so long as the rulers get to make and enforce their own rules.
  4. Encouraging the formation of bonded news outlets that credibly commit to making payments to aggrieved parties if they refuse to retract mistakes as prominently as the original articles.

A glimmer of hope lies in the fact that some drastic people and institutions still have the incentive and wherewithal to expose dismisinfoganda, and they were the ones responsible for bringing the Wuhan lab story back into view with compelling new details. But the fact that a highly educated dear friend of mine recently refused to see me in person because I wouldn’t consent to wear an N95 mask for hours even though he was vaccinated and I have something at least as good, natural immunity, is telling.

The New York Times claims that natural immunity is no better than the mRNA “vaccines,” and NPR argues that Covid survivors should still get vaccinated, but who can believe them, or Fauci, on such matters anymore, especially when important policies with profound civil liberties implications, like vaccine passports, remain under consideration? Therein lies the true cost of runaway dismisinfoganda. Many Americans once believed government officials unless/until they had good reason to doubt them but increasingly they disbelieve officials unless/until they have reason to believe them. Maybe that is a good thing as it will eventually induce Americans to ask why they continue to pay the salaries of people they cannot implicitly trust to do their respective jobs.

*****

This article was published on May 27, 2021 and is reproduced with permission from AIER, American Institute for Economic Research.

Stop Protecting China’s Access To Oil

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Estimated Reading Time: 3 minutes

U.S. policies in the Middle East have wasted American blood and treasure and guaranteed China’s continued supply of oil

While polls show overwhelming majorities of Americans agree that the United States needs to end its many forever wars in Afghanistan, Iraq, and Syria, some in Washington’s elite foreign policy circles fear any military withdrawals, worrying about alleged vacuums our adversaries will fill. Substantial evidence, however, shows the American people have a far better grasp on what benefits our country than the so-called elite.

On Sunday, Gen. Frank McKenzie of United States Central Command said that as U.S. troops withdraw from Afghanistan—and potentially from Iraq and Syria in the near term—he worries that “Russia and China will be looking very closely to see if a vacuum opens that they can exploit.” One of the risks McKenzie cited was that Middle Eastern countries may stop buying American weapons and look to Moscow or Beijing instead.

This fear, shared by many in Washington, illustrates one of the central problems the United States has had for at least the past decade in establishing a proper balance between our interests in the Middle East and how we expend limited resources in support of them. There was a time not too long ago when securing the free flow of oil from the Middle East was a vital national security issue for the United States.

According to the Energy Information Administration, as recently as January 2007, the U.S. had a monthly net import of 12.2 million barrels of oil. By January 31 of this year, however, that number had been changed to a net export of .8 million barrels for the month. China, meanwhile, which only imported 3.2 million barrels of oil per day in 2007, has now significantly deepened its dependence on Middle Eastern oil and now imports more than 11 million barrels a day.

While global oil supplies remain an interest of the United States, without question the Middle East is far less critical to our security today than it was decades ago. Yet the dramatic changes in the relative importance of Middle Eastern oil for the United States and China has not been reflected in our foreign policy and military posture.

According to a study published in 2018 by the energy think tank Securing America’s Future Energy, the U.S. military spent approximately $81 billion a year in protecting global oil supplies; Michael Klare, author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy, estimates the number could exceed $100 billion annually. Consider, then, the stark implications of what this level of American military support to the Middle East means.

The United States is spending exorbitant amounts of national treasure providing a military presence that helps guarantee the free flow of oil that benefits China. While we are at present a net exporter of petroleum, Beijing is dependent on the continued free flow of Middle Eastern oil for its survival—yet China spends virtually nothing to guarantee that flow while American taxpayers are left, every year, holding the bag. That needs to change.

America currently has combat troops on duty in Iraq, Syria, and in Afghanistan (until September), yet we have more than 50,000 troops in the greater Middle East on duty at any given time. This level of investment of troops and resources is clearly no longer appropriate and needs to change. It saps our country of power and prevents us from adequately funding and manning other, higher priorities.

One of the few things Washington is unified on is the need to update our policies on responding to a rising China. While there are disputes over whether to focus on containment or competition with Beijing, there should be complete agreement on the imperative to stop spending U.S. treasure and using American combat power that inadvertently protects China’s flow of oil from the Middle East. But the core reason we should get out of the Middle East is as simple as this: It is in our interests to do so; it strengthens our own security; and it ends the pointless bleeding of national treasure.

Rather than fearing withdrawals from unnecessary combat missions, American policymakers should place a high priority on reforming our entire foreign policy and military posture towards the Middle East and bringing it into conformity with existing realities.

*****

This article was published on May 28,2021 and is reproduced with permission from The American Conservative.

 

The NAACP’s Counterfactual Claim About Racial Inequity in Police Stops

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Estimated Reading Time: 3 minutes

In a recent Newsweek article, senior reporter Jason Lemon alleges there is “significant data showing” that the U.S. is plagued by “systemic racism.” As evidence of this, he claims the “NAACP found that from 2017 to 2020, Black men were five times more likely than white people to be stopped by law enforcement without a valid reason.”

The hyperlink Lemon uses to support that claim leads to another article by Lemon, which links to an earlier article by Lemon, which dead ends with no link or reference to an actual study or data.

A search of the NAACP website revealed a “Criminal Justice Fact Sheet“ that claims: “A Black person is five times more likely to be stopped without just cause than a white person.” The “fact sheet” contains no link or evidence for this claim.

Just Facts emailed the NAACP three weeks ago requesting proof of its statistic and then followed up a day later with a phone call and an email. The NAACP never replied.

This prompted Just Facts to search for a study of unjust police stops, which led to a 2016 paper in the Journal of Social Issues. It contains the results of a survey of undergraduate students in New York City who were asked if they were stopped by police “without a perceived justifiable reason” during the study period of six months.

Contrary to Newsweek and the NAACP’s phantom study, the primary results of this study undercut allegations of police bias. However, the authors of the paper excluded the findings from their overview, and the body of the study is locked behind a $42 paywall. The results—which have never before been reported in public—reveal the following about people of different races and ethnicities who said they were stopped by police without just cause:

  • “The percentages of those individuals who were stopped were comparable to the total sample for most of the groups.”
  • “Latina/os comprised 42.2% of the sample and 41.9% of Latina/os reported being stopped.”
  • “Black or African Americans comprised 24.7% of the sample [and] 25.8% reported being stopped.”
  • “Whites comprised 20.2% of the sample and 22.6% were stopped.”
  • “Asian Americans were the only group who had dissimilar percentages, in that, they comprised 11.7% of the sample, but only 6.5% of Asian Americans reported being stopped.”

The authors of the study acknowledge several limitations, including a “somewhat small” non-random sample, “which can be particularly problematic when accounting for between‐group differences.” Another limitation is that the study is based on people’s perceptions and claims, which may or may not be accurate. This is especially relevant given that the paper presents the results of another survey that found “Black participants were more likely than Whites and Latina/os to view police negatively.”

The study accords with the latest available national data on police traffic stops by race and ethnicity. A 2018 report by the U.S. Department of Justice shows that 7.6% of all Hispanic drivers were pulled over by police in 2015, as compared to 8.6% of all white drivers, and 9.8% of all black drivers.

While ignoring the fact that Latinos are pulled over at the lowest rate, many media outlets and activists have cited the higher traffic stop rates of blacks as proof of police discrimination. However, such statistics don’t account for the disparate rates that individuals of different races engage in behaviors that lead to traffic stops, such as speeding, driving with an expired license plate, or operating a vehicle with a broken headlight or blinker.

For example, a study conducted in NJ and published by the academic journal Justice Quarterly found that black drivers were more likely to be pulled over than white drivers, but “police stop rates matched very closely the rates at which drivers” of different races “exceeded the speed limit by 15 mph.”

Like other accusations of systemic racism, these claims of Newsweek and the NAACP about unjust police stops have no demonstrable basis in reality. Moreover, they are undercut by the research of scholars who buried vital results deep within their publications.

False accusations of racism have a range of harmful and even deadly effects, including but not limited to:

  • strife and violence between people of different races
  • forging victim mentalities, which are associated with weak self-control and less ability to persist in challenging tasks.
  • misidentifying the causes of poverty an stoking d other social ills, which can impede their resolution or worsen them.

*****

This article was published on May 25, 2021 and is reproduced with permission by Just Facts.

Bitcoin Uses Half the Energy of the Banking System: New Paper

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Estimated Reading Time: 5 minutes

Editor’s Note:  This discussion of bitcoin or any other use of  electrical power  presupposes the existence of a connection between some types of power production and climate change.  We are not convinced of that connection.  Secondly, once gold is mined, no further energy is needed for it to  function.  Gold is created in nature.  We simply use energy to find it. Finally, we doubt government that is expanding as rapidly as ours will ever give up the power to print money, which is the power to fight wars, gain and maintain political power, and redistribute wealth.  We fully expect governments to move against the use of cryptocurrencies.

Bitcoin’s energy usage stacks up well to its competition—and then some—according to a new Galaxy Digital paper

Elon Musk recently sent bitcoin prices plummeting when he announced that Tesla would no longer accept the cryptocurrency, citing concerns over the environment.

“Energy usage trend over past few months is insane,” said Musk, one of bitcoin’s highest-profile supporters, in a May 12 tweet.

Musk’s about-face prompted criticism from the crypto community, with some stating that SpaceX would need to switch from rocket fuel to a “more sustainable energy” if Musk wished to not “look like a clueless big hypocrite.”

In the wake of Musk’s tweet, bitcoin underwent a selloff that saw prices plunge from $55,000 to $49,500 in about two hours—a slide that has continued since.

Is Bitcoin Bad for the Environment?

Musk isn’t the only person worried about the amount of energy bitcoin uses. During a February interview with CNBC’s Andrew Ross Sorkin, US Treasury Secretary Janet Yellen offered a similar sentiment.

“It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” Yellen said.

Microsoft founder Bill Gates offered a similar take.

“Bitcoin uses more electricity per transaction than any other method known to mankind,” the billionaire told Sorkin in a ClubHouse session.

Carol Alexander, a professor at the University of Sussex Business School, agreed. In a recent CNBC interview, Alexander said that crypto’s mining “difficulty” — a computational metric used to measure how much effort it takes to mine bitcoin — has been surging the last three years.

“More and more electricity is being used,” Alexander told CNBC. “That means that the network difficulty will also be going up (and) more miners are coming in because the hash rate’s going up.”

What the Numbers Say

There’s no question that bitcoin uses a lot of energy. Its defenders point out this is what makes the cryptocurrency so secure. But a recent study points out that bitcoin’s energy usage stacks up well to its competition—and then some.

In May, Galaxy Digital, a cryptocurrency firm founded by venture capitalist Michael Novogratz, released a paper that compared bitcoin’s energy usage to the industries that are considered its primary competitors—the traditional banking system (for savings and payments) and gold (as a value store).

Researchers at the mining arm of Galaxy Digital estimated Bitcoin’s annual electricity consumption to be roughly 113.89 terawatt hours annually (TWh/yr), a figure that includes everything from miner power consumption, pool power consumption, energy for miner demand, and node power consumption.

That’s a lot of energy, to be sure. But the authors point out there’s an important distinction many are missing.

“Given Bitcoin’s transparency, it is easy to estimate Bitcoin’s energy usage,” the study’s authors point out. “This results in frequent criticism of Bitcoin, but these critiques are rarely levied against other traditional industries. “

One of the reasons you hear much less about the energy consumption of the banking and gold sectors is that, unlike bitcoin, these industries do not disclose their energy footprints to the public, the researchers pointed out.

“If we want to have an honest conversation about Bitcoin’s energy use, it seems appropriate to consider it in light of the industries it is most often compared to,” the researchers said.

Indeed. And it turns out that bitcoin stacks up favorably to the gold and traditional banking sectors. Analyzing the four key areas of electricity consumption in banks—data centers, branches, ATMs, and card networks—the study estimates that the worldwide electricity consumption of the banking system is 263.72 TWh/yr.

Gold was slightly lower than banks, with an estimated 240.61 TWh/yr, but still roughly twice that of bitcoin. (You can learn more about the researchers’ methodology in the report.)

“These estimates may exclude key sources of energy use and emissions that are second order effects of the gold industry like the energy and carbon intensity of the tires used in gold mines,” Galaxy researchers noted.

One could reasonably ask, of course, if this favorable comparison would continue if bitcoin were to become adopted as widely as fiat moneys currently are. The answer appears to be yes for a couple of reasons.

First, the vast majority of electricity bitcoin uses is consumed in the miningprocess, so more exchanges of bitcoin will not result in a surge of electricity consumption.

Second, mining reward mechanisms and energy consumption are evolving. Bitcoin mining is complicated stuff, but one thing we know is that only 21 million bitcoins will be produced. Ever. About 18.7 million of these bitcoin have already been mined. Well before the last bitcoin is mined in 2140, however, the mining process is expected to shift. Crypto analysts say the process will likely be more efficient and less exhaustive as rewards for mining decrease and transaction fees play a larger role.

“That could eventually include a switch to a more environmentally-friendly consensus mechanism like proof of stake or another successor to proof of work,” Luka Boškin, CMO of crypto trading platform NewsCrypto, told Decrypt.

Moreover, engineers say the high electricity use becomes less of a concern as more and more mining is done in places where electricity is cheap and clean.

“Not all types of energy generation are equal in their impact on the environment,” wrote Katrina Kelly-Pitou, an energy systems strategist and University of Pittsburgh researcher, in a 2018 article for The Conversation; “nor does the world uniformly rely on the same types of generation across states and markets.”

She continued:

“In Europe, for example, Iceland is becoming a popular place for bitcoin mining. That nation relies on nearly 100 percent renewable energy for its production. An abundant supply of geothermal and hydropower energy makes bitcoiners’ power demand cheap and nearly irrelevant. Similarly, in the hydropower-driven Pacific Northwest, miners can still expect to turn a profit without contributing heavily to carbon emissions.”

Dreaming of ‘Good Money’

In his celebrated work Denationalisation of Money, F.A. Hayek argues that one of the most important lessons of human history is that governments inveterately debase currencies.

From Ancient Rome to the great powers of the twentieth century, Hayek saw that governments simply could not help themselves from manipulating currencies in ways that erode their value.

“[S]ince the function of government in issuing money is no longer one of merely certifying the weight and fineness of a certain piece of metal, but involves a deliberate determination of the quantity of money to be issued, governments have become wholly inadequate for the task and, it can be said without qualifications, have incessantly and everywhere abused their trust to defraud the people,” Hayek wrote.

The great economist dreamed of a day when governments no longer monopolized currencies.

“I don’t believe we shall ever have good money again before we take the thing out of the hands of government,” the Nobel Laureate observed in a 1984 interview with James U. Blanchard III. “Because we can’t take it violently out of the hands of government, all we can do is by some sly, roundabout way, introduce something they can’t stop.”

As fate would have it, we’ve found a way to do precisely what Hayek dreamed. There’s no question that bitcoin uses a lot of energy, though not nearly as much as its competitors.

But life, as any economist knows, is all about tradeoffs. The question is: do the benefits of bitcoin outweigh its costs?

If it can solve the problem of government monetary debasement, that answer is indeed a definitive yes. Herr Hayek would no doubt agree.

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This article was published on May 25, 2021 and is reproduced with permission from FEE, Foundation for Economic Education.

 

 

 

Buyers’ Strike? Amid Crazy Spiking Prices, Home Sales Sag for 3rd Month, Pent-Up Sellers Get Ready, New Listings & Inventories Rise

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This is a world of unprecedented Fed intervention, government stimulus, inflation that has turned red-hot this year amid a weird phenomenon of companies complaining about a labor shortage, while nearly 10 million people are deemed “unemployed” and 16 million people are claiming some sort of unemployment insurance. As 2.1 million mortgages are still in forbearance programs, investors have flooded the housing market, including individual buyers grabbing a second home in crazy bidding wars.

But sales have sagged for the third month in a row, while new listings and supply have started to rise from very low levels, and a lot more is coming on the market this year.

Sales of existing homes – single-family houses, condos, and co-ops – dropped by 2.7% in April from March, after the 3.7% drop in March, and the 6.3% drop in February, to a seasonally adjusted annual rate of 5.85 million homes, the lowest since July 2020, according to the National Association of Realtors today. Compared to April 2019, sales were up 11.8%, having now largely unwound the huge spike that started last summer (historic data via YCharts):

Investors are buying.

All-cash sales, usually a sign of investor activity, accounted for 25% of all transactions in April, up from 15% in April 2020. Individual investors and second-home buyers accounted for 17% of total home sales, up from 10% in April 2020.

Dallas Fed President Robert Kaplan pointed at the role of these investors in distorting the housing market, and named that as one of the reasons for “talking sooner rather than later” about tapering QE…..

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Continue reading this article at Wolf Street.

Armed Teacher Thwarts Kidnapping of 11-Year-Old Student at Utah School: Police

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A Utah teacher is being hailed a hero after police say he pulled his concealed firearm on a man who tried to kidnap an 11-year-old student.

Ogden police said officers were called to Lincoln Elementary School on Tuesday when Ira Cox-Berry, 41, walked up to an 11-year-old girl playing on the playground and tried to grab her.

Lt. Brian Eynon said a teacher who witnessed the situation from inside ran out and confronted the suspect and the girl was able to break free, ABC4 reported. The teacher was then able to get all 20 students off the playground and into the school, police said at that point, Mr. Cox-Berry reportedly approached the school building and was trying to force his way inside when the teacher, a licensed concealed gun carrier who was not named by police, pulled his firearm and held the suspect until police arrived.

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Continue reading this article at Washington Times.

Will France Stand Up to Critical Race Theory and Post-Colonial Movements?

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“You start out giving your hat, then you give your coat, then your shirt, then your skin and finally your soul.” So said famed French President and World War II hero Charles de Gaulle on the costs of dealing with the Soviet Union.

In de Gaulle’s time, many were content to let the Soviets be and to coexist with what President Ronald Reagan coined “the evil empire.” De Gaulle rightfully distrusted the USSR and fought tooth and nail to keep Soviet influence out of the French Republic.

Though the USSR collapsed in 1991, the anti-Western influence de Gaulle worked so hard to oppose has gained a foothold in France. Anti-racism and post-colonial movements, aimed at denigrating France as an oppressive and evil actor on the world stage, have seized control of the country’s social and academic institutions.

“Anti-racist” and post-colonial activists, like their comrades in America, frequently take to the streets and violently attempt to tear down statues and other symbols of “oppression.”

This has not escaped the notice of those in France who still view their home positively. French Education Minister Jean-Michel Blanquer cautioned back in February that “Islamo-leftism” and woke culture was infesting academia and “wreaking havoc.” President Emmanuel Macron has repeatedly rejected calls to cancel French history.

But on April 21, things took a decidedly darker turn. Twenty retired generals, along with 80 officers and 1,000 rank-and-file soldiers, published a letter in French journal Valeurs Actuelles warning Macron and his government that unless the threat of anti-racism and radical Islam was contained, the military would need to step in to prevent civil war.

“The hour is late, France is in peril, threatened by several mortal dangers,” reads the letter. “Though retired, we remain soldiers of France, and cannot, under the present circumstances, remain indifferent to the fate of our beautiful country.”

Penned by former officer Jean-Pierre Fabre-Bernadac and signed by notable officials, including former Commander of the French Foreign Legion Christian Piquemal, the letter caused a firestorm across the country, which was then exacerbated by a second letter published May 10.

The initial letter’s publication date was no coincidence. On that day 60 years prior was the Algiers putsch, a failed coup d’état by four French generals to keep Algeria under control of the French Republic after de Gaulle began negotiations to grant the colony independence. The letter, through its timing and content, was a thinly veiled threat against the civilian government: Restore order, or we will.

It must be made clear. The idea of a military-led overthrow of a civilian government is completely antithetical to the values of Western republics. We would expect these types of internal threats from a failed state, not a robust civilization like France. These threats must be taken seriously and denounced, as Macron has rightly done.

However, that is not to say the letter does not tap into a very real danger facing the French Republic.

“[Leftists] despise our country, her traditions, her culture, and want to watch her dissolve by tearing her away from her past and her history,” writes Fabre-Bernadac. He’s right, of course. And the French agree.

In a Harris Interactive poll conducted for French network LCI, 58% of respondents said they agreed with the sentiments expressed in the letter.  Additionally, 84% of respondents agreed that violence in the country was increasing day by day and 73% believed France was in decline.

America and France find themselves at a turning point. The rising tide of woke leftists who despise Western civilization must be countered, but we cannot allow our desire to protect our values destroy them in the process.

It is de Gaulle again who delivers a message of hope. In June 1940, the young general delivered a message from Britain to beleaguered French troops holding out against Nazi forces on the continent. The words resonate now as they did then.

“Has the last word been spoken? Must hope disappear? Is the defeat final? No. Believe me—nothing is lost for France … Whatever happens, the flame of French resistance must not go out and shall not go out.”

The flame of the Western civilization is flickering. It is on those of us who cherish traditional Western values and culture to tend the flame.

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This article was published on May 21, 2021 and is reproduced with permission from Daily Signal.

Senators Schooled on the Truth About ‘Ghost Guns’

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If U.S. senators were hoping to give a lift to the Department of Justice’s proposed rule to redefine a firearm, they underestimated Ashley Hlebinsky.

She’s a historical powerhouse when it comes to guns. Hlebinsky testified before the Senate Judiciary’s Subcommittee on the Constitution, in a hearing titled: Stop Gun Violence: Ghost Guns. Hlebinsky started by shredding any pretenses of false authority by those using loaded terms and ended her opening statement reminding senators whom they represent.

“Firstly, I will not be using the term ghost gun and that’s because as a historian I try to be as precise as possible and the term is used more as a rhetorical tool, a marketing tool and because of that, it can create a false sense of authority on the subject,” Hlebinsky told the senators.

Hlebinsky knows a thing or two about firearms. She’s the president of the consulting group The Gun Code and was formerly the Robert W. Woodruff Curator of the Buffalo Bill Center of the West’s Cody Firearms Museum, and is now Curator Emerita and Senior Firearms Scholar. Before that, she researched at the Smithsonian Institution’s National Firearms Collection.

That’s why Hlebinsky wouldn’t repeat the politically-charged term “ghost gun.” It’s too easy to conflate with something that is invisible, undetectable or untraceable. None of which is true.

“If a person commits a crime with a homemade gun, they will be prosecuted just the same as anyone else. If a felon makes a homemade gun, he’s a felon in possession of a firearm and will be prosecuted. If a person sells a homemade gun to a criminal, that person will be prosecuted.” Sen. Cruz.

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The article was published on May 13, 2021 and is reproduced with permission from Jews For the Preservation of Firearms Ownership.