Last Sunday, YouGov conducted a survey, incorporation with The Danish Heart Foundation, regarding the Danish attitude towards smoking in cars where children are present. To my surprise, the survey showed that three out of four where in favor of a legislation that would make it illegal for anyone to some in a car where children is present. I am not astounded that people in Denmark are opposed to the idea of children exposed to second-hand smoking, I where astounded that people believe that we need a law, where common sense where suppose to be applied. But why is it, that it seems we in society now feels the need to regulate even the most basic social interactions?
In the summer of 1989, Francis Fukuyama wrote a famous article titled “The End of History?” In the magazine ‘The National Interest’. In this article he is questioning if history it self is dead, or more exactly if history has lost it’s meaning for sociality today, in the same way as had God lost his meaning when Nietzsche declared him dead in 1885. If Fukuyama is right and history has lost its meaning then one of the implication of such an event, would be a radical liberation of human kind. Because if history has lost its meaning then neither culture nor tradition would be able to dictate what is right what is wrong, nor what is good, or what is bad. And without any authoritarian source the individual can only make those judgments in the moment, despite any previous or further judgments. This is what I would call a radical freedom. But, freedom and judgment also require responsibility, for without responsibility freedom, and judgment becomes pointless. Therefor it would also reasonable to say that radical freedom requires radical responsibility. History is full with examples of human societies that have rebelled against authoritarian source, in the pursuit of freedom, and every time society have naturally moved towards a new authoritarian source to replace the old and discarded one. So it seems that humans have some difficulties managing the responsibilities that comes with freedom, and therefor goes looking for a new authoritarian source that can provide then with answers to what is right and wrong, good, and bad. This would also explain why it is that we today see a higher and higher cry for more and more regulation of even the most private and basic social interactions. We do not trust our neighbors to be able to make the right judgment. But, what is the alternative if we, as humans, cannot manage the responsibilities, and we will rebel against the next authoritarian source? The only logical solution would be to become the authoritarian source. But not in the sense of classical liberalism where individual is responsible for him or her own life, but to let one's voice be heard, and proclaim what is right and wrong, and what is good, and bad. So instead of asking the legislators to regulate your neighbor, YOU should walk over to him and tell him that smoking in the car with his child next to him, is wrong.
It seems like one of the big issues doing the Republican presidential that primaries are the super PACs, and the huge amount of money that they amass. Which made me wonder why does campaign spending go up at every presidential election? But before I start on my analysis, lets first look at what is a Super PAC? Super PACs are a new phenomenon in American politics; actuarially this year’s presidential election will be the first post-Super PACs. Super PAC is an “independent” committee that may raise an unlimited amount of money from corporations, unions, associations, and individuals. Before the change in 2010 the traditional PACs where limited to only receiving up to $5,000 per year per individual/company/etc. Many commentators have interpreted this change in campaign funding as the reason for why the presidential election 2012 looks to properly be the most expensive election yet. According to opensecrets.org $43,922,722 has already been spend, by outside sources such as the Super PACs, in the Republican presidential primaries. That is already 20 % of the aggregate outside spending in the 2008 presidential election. This might not sound like much, but we should remember that the twenty percent is Pre-Super Tuesday and this year we do only have the Republican primaries, with still four candidates in the race. If we consider the spending on the various presidential campaigns as the bidding sums for the presidency of the untied stats, then what economical reasoning can we find for this price increase? Well in economical theory the price that a given individual is willing to pay for a given commodity, is the subjective value of this commodity. What the individual is willing to pay for the commodity varies and is influenced by a wide range of factors, which include other individuals’ willingness to pay for the same commodity. This is essential the economical explanations for actions. Where the commodity is the same but where the price increases until the individual that values the commodity the most has been identified. Another reasoning for an increase in price could be that the perceived change in the commodity’s characteristics. But since that the president’s power has not changed over the last 12 years I do not think that the reason for the increase of 34.5 % between 2000 and 2004 and 27.4 % between 2004 and 2008 can be explained with a perception of the commodity. Which leaves us with the conjecture that the affirmative price of the presidency has not been found, and therefor the bidding-war must continue.
The concept of natural rights is a topic that I have wanted to address for some time now. It all started when my friend Jacob Hedegaard challenged me to address the rational behind the concept without referring to a deity in the end as the source for the natural rights. The quick and dirty definition of natural rights is the right that human beings have that are not contingent upon the laws, customs, or beliefs of any particular culture or government, and therefore universal and inalienable. Therefor natural rights are something that any given person can claim regardless their status in society. Some examples of classical natural rights would be ‘The right to not be enslaved’ and ‘ The right to not be killed’. Natural rights in contrast to legal rights should always be stated as negative rights because only then can they truly be universal and not contingent upon others. For example, if we sad that ‘All human being has a right to life’ instead for ‘the right not to be killed’, then it would be implicit that society then should preserve every human beings life or else they would violet their rights. In an effort to answer the question of where human beings does get those rights, philosophers tent to end up by pointing to either a deity or some type of social contract. But do we need a deity to argue for natural rights? Well Murray Rothbard tried to solve this “problem” by pointing too property rights. He’s reasoning goes to something like this: ‘I own my own body, and therefor it would be theft to either kill or enslave me’. At first glance, this only postpone the question to ‘Why do you own your own body?’ or to ‘Whom have given you your body?’ To the question of why Rothbard would say that ‘I own my own body because I am inalienable from my own body’. To the question of who bestowed human beings their body we again end up at either a deity or at Nature, and therefore not solving the dilemma. The reason for why we can’t solve this dilemma of the need of a deity, I believe, is because we deliberate the issue of natural rights as an ontology issue. When rights are analysed as an ontology issue rights become an object that can be transferred between subjects. One individual can give some rights to another individual. This might be the affirmative way of addressing rights when we are talking about legal rights, where society, thought the laws, provides individuals with rights. Therefore, I suggest that natural rights should not be considered form an ontological point of view but rather from an epistemological point of view. By doing this, natural rights become a matter of knowledge, a matter of something that can be judged to be either true or false. And we don’t need a deity to enlighten us with what is true and right, and therefore neither what our natural rights are. An epistemological reasoning for natural rights could be something like this:
‘I am a human being’ ‘I find it to be true that I have the right not to be killed’ ‘Therefor I find it to be true that all human beings have the right not to be killed.’
Over the last couple of days, I have been pondering over different aspects of what would happen if the united stats switched back to the gold standard. Especially I have played around with the thought experiment: ”What would the cost be to switch back to the gold standard?” So in this post, I will not past judgment on whether it would be a good idea for the united stats or the world economy if we where to go back to a gold standard, I am purely focused on identifying the practical perspective of the cost of such a switch. These reflections are prompted by the fact that Ron Paul presently is doing better, then ever before in the republican primaries. Meaning that for the first time there is actually a realistic probability that the united stats could consider a return to the gold standard. In doing this, I first have to identifying the two pars of this analysis: How much gold and how much US-currency are there in the world? According to howstuffworks.com there is extracted around 1.555.210 kilograms of gold every year, and if we assume that this correlates to an average every year and that we have extracted gold for 400 years there would be 622.084.000 kilograms of gold currently in the world. With the current gold price at 53.133,61 US$/kilogram the current marked value of all the gold currently above ground would then be US$ 33.053.568.643.240. If we then compare that to the latest data from the US Federal Reserve Statistical Releases there are US$ 9.641.700.000.000 in circulation. Let me just quickly says that I am using the seasonally adjusted M2 numbers from November 2011. So what does this tells us? First of all if the united stats where on the gold standard right now they would have to control 29% of all the gold existing. To my knowledge, there has never been any given country that at any single time in human history that has dominated almost a third of the world gold reserves. I might be wrong in this, but in any case to say anything significant about the cost we need to look at how much gold the U.S. Treasury presently holds. According to the U.S. Treasury’s Resource Center the U.S. International Reserve Position in gold is 7.413.372 kilogram, which means that they presently only covers 4,1% of their gold need, should they switch back to the gold standard. I the end if, we for a moment actually ignore the overt dilemma buying up all that gold or where the money to do this would come from, without having to devaluate the US$, it would take the US 112 years to extracting enough gold to implement the gold standard, without suffering any currency penalties in doing so. So even if Ron Paul where to become 45th President of the United States, it is unlikely that the US would return to the gold standard, the cost is simply to high.
The national DNA registry is something that has been debated here in Denmark over the last couple of years. It is strangely a system that is seen, by it supporters, as analogous to a magic bullet that would make us all safe from rape and other violent crimes. It will properly not come as a surprise that I am adamant averse to the whole idea of a national registry, a database that contains everyone’s genetic information is not only the ultimate Orwellian nightmare but in it self contains a series of possible problems. But before I dig in to that, I would like to first address the most comment counter argument averse to any opposition to a DNA registry the “If you do not have anything to hide”-argument. The underlying premise of that argument is that if you don’t have anything to hide, meaning that you haven’t done anything wrong, why would you mind voluntary giving the requested information, in this case your DNA – But, the premise is flawed; the issue of having once DNA registered is not an issue of what if I do any wrongdoing but an issue of what if the individuals in charge of the register did something wrong. Which leads me to the series of possible problems with the register? First, there is the issue of trust. On what grounds should the individuals registered in the DNA registry trust that the government would not use their access to other goals then the capture of violent criminals. I know that this makes me sound like a conspiracy theorist, but I would like to point out that the same utilitarian arguments that are used in support of the DNA registry could be used to use the DNA registry as a preventive measures. Because why should society wait for the criminals to actually cause someone harm, when a search in the DNA registry could identify those that with a high probability would at some point commit a violent crime. Another and more practical dilemma is the issue of expectation. If such a registry where to be created then society would expect that any violent crime will be solved swiftly, since the police would have access to the DNA information of everyone in society. Regardless, that it presently takes an estimated 4 weeks to process any DNA found at a crime scene, and with the increase of DNA need to be processed we can contemplate, with a high probability, that this estimation would increase. Both do increase in volume of DNA material and the numbers of false positive results. In the end, we return to the debate between freedom, the right to privacy (and what is more private then DNA?) and societies needs to feel safe. It is an age-old debate, and one we probably never will solve, not even with the creation of the Orwellian DNA database.
We all know the saying “don’t judge a book by its cover,” but can we judge a book by its first chapter? I have recently had the chance to read the first chapter of Nicolai J. Foss and Peter G. Klein’s forthcoming book “Organizing Entrepreneurial Judgment: A New Approach to the Firm” which is an attempt to combine Entrepreneurial theory with ‘Theory of the firm’.
The premises of the book are simple, Foss and Klein have taken it upon themselves to address, what they consider to be important connections between the theory of entrepreneurship and the theory of the firm. This they do though a Knightian perspective of entrepreneurship. Even though that Frank Hyneman Knight is not considered to be an Austrian economics it is clear form the way the author’s presents their arguments, the list of contents, and from previous work from both scholars that this is a theory strongly founded in an Austrian economical perspective. With the use of ‘the theory of the firm’ Foss and Klein are aiming to advance entrepreneurship research a field, within economical research that has over the last years become a hot topic, especially in all aspects of government, but still with surprisingly little advancement. It is therefore exciting when someone is attacking the thought questions of entrepreneurship and trying to address the questions of why, when, and how. Why do entrepreneurial opportunities arise? When do certain individuals and not others discover and exploit opportunities? And, How different modes of action are used to exploit those opportunities? Foss and Klein are addressing entrepreneurship, not as an abstract concept, but as the results of judgment and actions that are firmly founded in economical uncertainty. Which not only places Frank Knight centre stage, but also departs from more traditional scholars like Joseph Schumpeter and Israel Kirzner. Personally I do believe that the theory of entrepreneurship, will benefit from the lesson ascertain in work done within the theory of the firm. But that the theory of the firm can benefit from the perspectives in the theory of entrepreneurship, I am rather sceptical about. Theory of the firm is focused on controlling uncertainty, typical though governance, theory of entrepreneurship however is about exploiting the very same uncertainties. So, if you can judge a book by its first chapter, it looks like that ‘Organizing Entrepreneurial Judgment: A New Approach to the Firm’ will be an interesting read, not only for those interested in the Austrian school of economics but for anyone that has an interest in understanding entrepreneurship. But do not just take my word for it, you can read the first chapter here, free and legal. ‘Organizing Entrepreneurial Judgment: A New Approach to the Firm’ can be pre-ordered at amazon.com and will be shipped January 2012.
So Christmas is just around the corner, which means that millions of people the world over will be exchanging gifts. This has made me wonder, what constitutes a really good gift? If we look at the good gift from an economical point of view, it seems to me that all good gifts have at least one thing in common: A Good gift is more valuable for the receiver then for the giver of the gift. If person A goes out and buy something, for himself, he would evaluate the price of the product and compare it to his own evaluation of the product. We do this everyday, and it is second nature for most people regarding most products. But, the picture changes immediately after person A is going to find the perfect gift to person B. Now he can’t use his own evaluation of the products value since he now just acts as the middleman in the transaction between the sell and person B. Therefor he is forced to try an anticipate how person B will evaluate the value of the product and if that value is higher or lower than the actual price of the product. Since it is a gift, and the content of gifts are normally intended to be a secret he cannot just ask for the information from person B, so he is left with two options: either he can ask for a wishing list or use his imagination and risk not being able to anticipate the needs of Person B. These two different approaches to the art of gift buying are roughly comparable to two different approaches to how a company does product development. It can either do an existence market research, the wish list, or the company can approach the market as an entrepreneur and look for the gift that is equivalent to the creative destruction of the gift-giving-market. Another perspective, of the perfect gift, is how the gift is a medium in a communication between the giver and the receiver. The gift tells the receiver different things, such as how well the giver knows her. Finding the perfect gift is all about information and market signals. The more information the giver has about the receiver, the greater the chance is that he will be able to find that perfect gift. Creating some common rule for all gift-giving scenarios is of course, imposable but I would suggest that this year everyone should challenge him or herself and ignore the wish list, try something new and look for that perfect gift that will create more value for the receiver then what they paid for it.
… That is the question, or at least it should be. Last Friday most of the member of the EU-member stats signed a declaration of intent to follow the new and “improved” euro plus pact. And calling the new version of the Euro plus pact an improvement is really a stretch. What could have been the chance to redraw the Euro plus agreement and fix some of the dilemma inherent in the monetary union. Ended as not being the version 2.0 that everyone where hoping for, but in reality just a small patch. Instead of going back to the drawing board what the European heads of stats finished with an accordant that now limits the member states budget deficit to 0.5% instead of the earlier 3%. I am not pretending to know what would be the right solution to the current crises. But, if we look at how the market has reacted to the solutions that the different European institutions have come up with doing the last year, well they are not impressed. And to quote Mr Rahm Emanuel: “One should never let a good crisis go to waist.“ Meaning that this would have been the perfect situation for the European member stats to show their votes, and the market, that they are being serious about solving not only the current crises but also the inherent political problems within the monetary union. The dilemma is not an economical problem but a political problem. In a welfare state the politicians survives by reallocate funds in a way such as it satisfies as many voters as possible. Reallocating more funds to some voters, would normally mean that other voters would get less but with the lack of real sanctions in the Euro plus pact it has become opportune for politicians to borrow the money from outside of the economy, and this has not chance with the latest patch. Especially since that United Kingdom already have declared that they are not willing to sign the declaration presented last Friday, with effectively makes it impossible for the rest of European member stats to use the EU court or other EU Institution, should the want to actually utilizes any sanctions. Let me be clear, I am not advocating at stronger political union, and should the question about Denmark’s position regarding this “new” euro plus pact be put through a referendum, I would properly want Denmark to join the UK and vote no. But on the other side, every European economy is depended the economical development of the other European economies; therefor we all need the European Monetary Union to be fixed, and it properly needs to be fixed in a big way. Let me end with a video with one of my personal heroes Nigel Farage, and a link (in Danish sorry) to a paper written by Torben Mark Pedersen that does present such a solution that Mr. Farage is point to.
CSR is, like so many other things, a good idea that becomes a really bad one immediately after it is politicized. Basically, the concept of CSR - Corporate Social Responsibility, is a really simple one: Costumers, both in B2B and B2C settings, do have ethical consideration in their buying decision process. Some costumers don’t want to buy a given product that is produced with the use of child labor, or with production processes that are pollution intensive. Since CSR is a part of the consumers buying decision process it then becomes a part of the demands for “ethically” correct produced goods. I am placing ethically in quotation marks here because it is first of all up to the individual consumer what they consider to be ethical, and therefore it is not possible to address this in a normative, universal manner. But that is the beauty of the market, we don’t have to address the ethical dilemmas in a universal manner, as long as it are part of the demands that the consumers have, then the market will adjust accordingly. Secondly, the problems that CSR are dealing with will overtime be less and less important, why? Because the world generally becoming more and wealthier.A wealth that is created, based on an effective use of the resources (such as time, labor, and technology), and increasedinternational trade. And the wealthier the world gets, the more complex the buying decision process becomes, the more demands of ethical nature do the consumer have to the products.But, if the market responses to the consumers demand, and if the consumers focus on the ethical production, then why don’t we just all embrace CSR? Because, as adverted to earlier, CSR have been come politicized. In a democracy the politicians are tasked with the job of regulating society, and unfortunately also the market. I do not intent that this post should become a rant against market regulations, but if we can’t determine the universal “ethically” correct way to produce any given product, then why do we believe that we can create regulation that in the end is a moral judgment of what is right and wrong. It seems to me that what should have been a concept that could explain why wealthier consumers have started to demand more “ethically” correct produced goods, have been high jacked by politicians as a way to regulate et market in a more indirect way. By naming and shaming companies, all in the name of Social Responsibility, they are blurring the lines between their moral position as lawmakers and the individual ethical perspective any individual in the civic society has.In the act of blurring the lines between the ethical and moral, the politician is placing him in neither position and finishes in the vacuum in between, from where it no longer is possible for him to proclaim a superior position. In the end, what we end up with is the devaluation of what could have been a great concept of market self-regulation to a more ethical living.
A few days ago Chancellor Angela Merkel and President Nicolas Sarkozy announced that they would be seeking a new treaty for the EU/the Eurozone. The specifics of this treaty have not yet been discussed public and would of course also depend on whether the treaty would be for the whole of EU or only the Eurozone.
Recording to Bloomberg one element that they will seek to implement would be automatic sanctions averse to any country that violates the 3% national defect-rule. It is a directive that already is a part of the Eurozone, but famously has not been effectively enforced. That in it self is not really big news, if it where not for the comments made by the European Central Bank President Mr Mario Draghi, where he hinted the idea of a more Fiscal compacted European Union, or the first real step towards the for many dreaded ‘United States of Europe’.The two many areas of politics a country has to control is economy is the Monterey policies and Fiscal policies. With the creation of the Eurozone most countries in the EU forfeited the option of adjusting the economy with the help of Monterey policies. What they where left with where the ability to adjust the taxation, and expedites of the state. If the proposed treaty does contain elements of a more compact fiscal Union, this would mean that the nation government in realty also would lose the ability to control the national economies via fiscal policies.It is difficult to predict what the effects would be form this consolidation move, but it does not require must fantasy to imagine how this could reduce the competitiveness of Europe. When the EU member stats are facing increasingly bigger and bigger liabilities and what they are left with is the option of increasing taxes. What we will see is a Europe that in the end will end up strangling its industries and in the end it self. It is either that or that the European politicians by a miracle suddenly can reform all the economies in Europe.In realty when you have a monetary union you also need to have a fiscal union, we just have to look to the graveyards of the failed monetary unions history is filled with, both inside, and outside Europe. The common lecture of the failed unions seems to be that in the end it always falls apart when countries with different political cultures and systems tries to harmonize its monetary and fiscal policies, in realty we should by now have ascertained the lesion: What works is a free trade area and not politically motivated monetary unions.Personally I cannot shake the mental image of a EU that is drowning and simultaneously trying really hard to tie a really big stone to its own legs.
