Monthly Archives: May 2009

GDP and a Culture of Consumption

Many have the misconception that a true advocate of the free market (a condition where individuals are free to exchange, invest, and economize without coercion) is necessarily an advocate of our consumer culture.  Nothing could be further from the truth.

Gross Domestic Product, or GDP, as it is commonly known, measures three indicators: consumption, investment, and government spending.  GDP is the most commonly used indicator of economic strength among the mainstream.  As consumption is a presumed sign of economic strength, governments around the world perpetually create schemes and concoct incentives to try and boost consumption, for according to this measurement system (which I strongly disagree with), as consumption increases, so does the overall economic health of the nation.

Our culture of consumption is not a product of the unfettered free market, but is largely a result of state interventionism, including unholy alliances between governments and businesses of all stripes.  This is nothing new: the Austrian School of Economics has been preaching this for decades.  Economists of various flavors have been preaching this for centuries, if not millenia.

I clearly do not support increased government spending as a measure of economic strength.  Quite the opposite.  Investment alone (this would include what we call “saving”) is the prime indicator of economic health, in my mind.  As the government can do nothing constructive to assist this (except to protect individuals from acts of aggression), there is really no constructive purpose to measuring GDP.

One argument against measuring investment alone is that investment is bad for the economy in the short-term.  In a sense, this is true.  A consumption-oriented culture and economic system has a capital structure centered around perpetual consumption.  When that ceases, it is true that jobs are lost and companies go under as the capital structure is modified.

As opposed to consumption, investment is a long-term, rather than a short-term objective.  In the long-term, investment leads to stable growth.

Money saved now (and not consumed) will one day be invested in some capital expenditure of value and benefit to society: a car, a house, an education, etc.  Unfortunately, our consumption-oriented corporatist culture diverts resources from where they are most useful (i.e. investment) and puts them in an area where they have short-term gains at the cost of long-term rewards.  That money is diverted from its proper use to purchase some expendable and often non-essential good.  (When such purchases are made on credit, the consequences are even worse.)

Would consumption exist in a country with a small government and no measurement of GDP?  Of course: people still need to eat, shower, brush their teeth, and enjoy recreation.  But there would be less frequent frivolous purchases and more long-term planning and saving.

In short, capitalism gets a bad rap for our government-encouraged corporatist, consumer-driven culture.  My advice: stop measuring GDP, get government out of the business of business, and let the market go to work. In other words, stop interfering with every transaction between individuals: and let them economize and exchange freely, rather than being bound and fettered by onerous regulation, heavy taxation, and myopic incentives.

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Filed under Austrian Economics, fiscal policy, Libertarian, Personal, politics, recession, role of government, Social Commentary

Bold Automotive Predictions

With President Obama’s proposed upgrade of car fuel efficiency standards (government-mandated standards, of course), I have a few bold predictions to make:

1. The administration’s estimate of an average increase of $1,400 per vehicle is far too low.  A more accurate estimate would be an extra $4,000 or $5,000, what one would pay extra (at least) for a hybrid car.

2. Materials in cars would move increasingly towards polymers (plastics) and aluminum and away from steel and cast iron.  Conventional illumination systems will be increasingly replaced by high-end, expensive LED systems.  This could be good news for some small companies in the South, West, and Northeast, but will probably hurt even more the rust belt, which still has a fair share of iron and steel plants which primarily serve the auto industry by producing low-cost, high-quality, ultra-reliable parts.  They will be driven out in a hurry.  Too swift a movement towards these lighter materials will likely mean a safety problem and almost certainly a quality compromise.

3. The value of some used cars will increase as their demand will as well.  A reliable gas guzzling vehicle purchased in 2014 may depreciate lower than one purchased in 2002.

Let it always be remembered that, as Henry Hazlitt would say, a good economist looks for all effects of a certain policy, and a poor economist looks at a narrow window of scope, ignoring the complete picture.  Sadly we have neglected wisdom and we continually look to our tunnel-vision minded political machine to set our course for us.

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Sunday Morning Thoughts on Nihilism and Transcendentalism, and Exaltation in Film

I recently have been persuading my four year-old to watch snippets of the Disney film Fantasia 2000 (one of my favorite all-time films) on youtube.  So far, he has been willing to do so.

I have a passion for classical music, and I find that the music featured on Fantasia 2000 (similar to the music featured on the original Fantasia) includes some of the greatest musical achievements of western civilization.  I have a desire to show my children that there is something valuable, something profound, something meaningful, something transcendent, and even something divine in these great orchestral works, and thus in life itself.

The stories told by the animators, too, are primal and transcendent.  Themes include pure romantic love, family love, the power of community, transcendent communal unity with the divine, individual strength, sacrifice, and timeless struggles of life vs. death and light vs. dark, among others.  Thus, the movie is moving, enjoyable, and profoundly meaningful.  I realize how far off the mainstream I am with this analysis: for instance, when watching this movie nine years ago with a friend and two siblings, I was the only one who thought the movie was better than a marginal “OK.”

And yet, when I compare these transcendent, timeless themes coupled with sublime music, I cannot help but compare this film presentation to that of the other extreme: nihilism, (or meaninglessness) as in The Dark Knight and The Fountain.

Discussing nihilism is pointless and contradictory: if everything is meaningless, then why put forth any effort to preach such a philosophy?  If there is meaning or purpose in preaching meaninglessness, then one does not truly believe in meaninglessness.

It does not take a brain surgeon to comprehend this: such is really the default philosophy of existence.  Just as failure is the default mode of success in life (if we do nothing, we fail to accomplish anything), so nihilism is the default mode of existence (if there is no meaning in anything we do, life must be meaningless).

Who is it that encourages us to adopt this philosophy, that life is dark and meaningless, that values bind us down, and that there is nothing else beyond this dark and dreary existence?  The answer is obvious: the adversary wants us to believe this.

In contrast, the Lord wants us to be happy and to find joy even in darkness and despair.  As we do so, we find the sublime fruits of progression, unity, love, and holiness.  Living the disciples’ life, we can find the good wherever we look and wherever we go, if we choose to do so, and use that knowledge and those experiences to our eternal benefit and our exaltation.

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Recession and the Austrian School

All is vanity. -Ecclesiastes 1:2

Who is right about the current recession?

Most economists from the Austrian School of Economics have been saying since the beginning (before most mainstream economists admitted we were even in a recession) that this economic downturn would be long and prolonged, likely a depression.  They are still saying this.  None of the failed Keynesian economic policies will change this for the better.  They will only prolong the agony, as Hoover and FDR’s interventions created and prolonged The Great Depression.

The Cold War taught us this: governments are not only unjust stewards of resources, but they are tragically inefficient as well.  Tens of millions died, for instance, due to Communist failures to allocate food properly.  If governments cannot even allocate food properly, the most basic of necessities, what makes us believe they are able to allocate capital, education, the environment, and health care (to name just four examples) more effectively than we as individuals are?

Mainstream economists have said, and some still say, that the recession will start to end this year.  This is tom-foolery.  We are already starting to see some mainstream shift in opinion (i.e. this news article).  This shift will only continue, validating the conclusions of the Austrian School of Economics.

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Filed under Austrian Economics, fiscal policy, Libertarian, monetary policy, politics, recession, role of government

300,000 Pounds and Ducks

I sometimes listen to Radio 2 Morning on CBC in the morning commute.  It’s the most entertaining radio show I have ever heard, both musically and in prose.  The songs are pure, simple, subtle, and sincere, both musically and lyrically, not overly sugary, forced, or over-the-top as I find some American music to be.

Prose is frequently entertaining.  Yesterday, radio host Tom Allen told about a scientific study, conducted by English scientists from the prestigious University of Oxford, which cost British taxpayers 300,000 pounds.  The study aimed to ascertain whether ducks preferred water in troughs, ponds, or rain.  The study pointed out that ducks preferred rain.

Many farmers in England, as you might imagine, have a difficult time with so much British taxpayer money being appropriated for such a silly purpose.  English farmers have known, colloquially, that ducks love the rain, for hundreds of years.  They did not need 300,000 pounds to tell them this.  They are understandably frustrated.

This is a silly story which brings up some important questions which are never discussed, but which should be:

Is it just to appropriate taxpayer money for scientific research?  Where in the U.S. Constitution is such explicity justified?  Did our Founding Fathers support such spending?  Why do taxpayers not have a say in where their money goes and how it gets spent?

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Steps Forward and Back

I served a mission in south Asia among Chinese people, and so I am interested in the spread of the Gospel to mainland China.

Regarding Mormonism, two recent developments are interesting.

Firstly, from this article, I see that Taiwan is down-sizing from three to two missions.  It is noteworthy that a similar event occurred roughly thirty years ago, when the Kaohsiung mission (which was actually the second created in Taiwan to my knowledge) was down-sized after the creation of the Taichung mission (the third created in Taiwan).

Secondly, there is the well-known story of Utah Governor John Huntsman being enlisted to serve as the U.S. Ambassador to China.  Huntsman, an active Mormon to my knowledge, would certainly be a friend to The Church of Jesus Christ of Latter-day Saints should they be interested in some sort of assistance from Uncle Sam in facilitating ecclesiastical or humanitarian efforts.

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Movie Review: Last Chance Harvey

I enjoyed “Last Chance Harvey.”  It’s a lightweight romantic film with some comedic elements.

The relationship is pretty virtuous: no sex and no super passionate kisses. No ridiculous compression of a healthy romantic relationship from months/years to hours.  Profanity is limited.  It’s a very lightweight PG-13 film.

It’s more of a drama about the power of human relationships than it is about romance.  Roughly thirty minutes into the film, the two main characters feel at rock bottom.  Both are incredibly lonely.  One tries to find solace in hard alcoholic beverages.  The other, in novels.  Neither of these routes result in fulfillment.  However, despite their disparate and isolated circumstances, these two forge a personal connection which results in a simple yet profound fulfillment, not crude and crass, nor transient and lustful.

In short, the film is a statement about the power of human relationships to heal, to change, to reconcile, and to bless.  At least that is how I see it through my own paleoconservative eyes.

Others may view it differently.

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