CRAIG'S SEVEN PREMISES

My first premise is that people are inherently selfish.

This was a necessary characteristic of each and every one of your ancestors, as proven by your existence. It is a good thing if not taken to the extremes of narcissism or aggressive pursuits that harm others. But, respect for others does not include allowing yourself to be manipulated, sacrificing yourself for others, or accepting other demands on your life without your consent. The Dutch philosopher Spinoza and others called this selfish struggle of life CONATUS.

Ayn Rand, in The Virtue of Selfishness, wrote:

Since nature does not provide man with an automatic form of survival, since he has to support his life by his own effort, the doctrine that concern with one's own self interest is evil means that man's desire to live is evil - that man's life, as such, is evil. No doctrine could be more evil than that.

I don't claim that all people act selfishly all the time, but it is a prudent, default assumption until proven wrong in individual cases. To clarify, I include mutual, non-monetary benefits that both parties to a friendship or association gain to be evidence of a healthy, selfish relationship, without contradiction. I do not distinguish between "selfish" and "self-interest," as some people do.

My second premise, as discussed in my mid-nineties LifePower articles SEEK JOY, CREATE VALUE  and LIFE IS EGOCENTRIC, is that honestly self-aware and self-motivated people make the most productive, supportive and happiest friends, neighbors, associates and yes, even citizens - when left alone to pursue their selfish interests - as long as they do not deny or restrict the equal right of others to pursue theirs.

My third premise is that people own themselves, which means they have a right to their lives, liberty and property, which deserve to be protected against aggressive force, theft or fraud. These rights are not granted by any human authority, but are inherent in human nature, as most powerfully described by the English philosopher John Locke in a section called OF PROPERTY in Chapter II of his TWO TREATISES OF GOVERNMENT. Locke's concept of human rights was one of the primary inspirations for the American Declaration of Independence. I draw a sharp distinction between aggressive and defensive force.

My fourth premise is that government as we know it (a legal but coercive monopoly of force against innocents) works against most of its citizens when it exceeds its proper authority to protect individual rights - the only legitimate justification for its collective force. Please read the section, WHAT IS LAW? in Frederic Bastiat's 1850 masterpiece, THE LAW. Government cannot protect your property by giving it to others.

My fifth premise is while coercive, monopolistic government exists, its purpose should be strictly limited to the protection of people and their property, including police and/or defensive military and impartial courts. For the federal government, other duties authorized by the U.S. Constitution would be included as part of necessary goals and limitations for much less oppressive government toward which the current government should gravitate. See my article SUBORDINATE ACTS.

My sixth premise is that coercive, monopolistic government should not be involved in the economy at all, except for adjudicating disputes in civil cases, since it almost always makes the economy worse, not better. See CHAPTER 1 of Henry Hazlitt's ECONOMICS IN ONE LESSON. Coercive government's complete ignorance of 1) market economics and 2) the productive nature of the unsubsidized private sector is both striking and unconscionable for an organization that claims to represent the people. See CHAPTER 3 of FOR A NEW LIBERTY by Murray Rothbard to understand the nature of coercive, monopolistic government.

My seventh premise is that about 90 percent of knowledge is dogma. This idea began as a joke several years ago, due to my frustration to make sense of large inconsistencies I found in so many fields, like philosophy, science, religion, law, politics, economics, dog training and both contemporary and alternative medicine. In every field of knowledge I have studied, there are far more unknowns than knowns. An honest search for more and better knowledge must include the attitude that what we know today is only our best current approximation, to be improved by further knowledge gained later. Please spend some time at the SIMANEK PAGES, for which you will be richly rewarded. The four points below are a sample of Donald Simanek's summary and conclusions page:

• Logic (and mathematics) alone tell us nothing about the natural world.
• Through our senses we form a mental picture of what we call the "real world". It's just a name, and inquiry into the "reality" of this world or our perceptions is futile philosophizing.
• This "real world" shows regular patterns and behavior, so we can express these as "things" and "laws", often with mathematical precision.
• The reliable regularity of natural laws allows us to do science. We can't even imagine a universe that had no regularity at all, or one whose behavior unexpectedly changed in unpredictable ways without warning of any kind.

I CALL THESE PREMISES BECAUSE human knowledge is so often dominated by arrogance, vanity, chauvinism, uncritical repetition and dishonesty. Premises sometimes called self-evident "truths" are just assumptions with which to begin investigations. Most philosophies, professions, religions, sciences and other bodies of knowledge are often dominated by dogma and blind conformity to authority or custom, which people adopt to avoid changing existing beliefs. Changing beliefs is often a sign of maturity, unless done in a haphazard, unthinking manner. As I understand the current science of sub-atomic particles, that big rock you and others see is mostly empty space.

Uncertainty is the beginning of knowledge.

Certainty is the end. - James Craig Green

Simplify - Eliminate the Non-Essential - Bruce Lee

Any sufficiently advanced technology is indistinguishable from magic - Arthur C. Clarke

  

As always, I welcome disagreements, criticism and alternative viewpoints. I frequently learn more from those with whom I disagree than those who pat me on the back. All I ask is that you are polite and show me the same respect you would like to receive.

UNCHAIN THE BUILDERS 8

by James Craig Green

Part 8 - Henry Hazlitt

Economics in One Lesson

Henry Hazlitt (1894-1993) was an economist, journalist, and educator. He cut through the confusion surrounding fiscal and monetary issues, stating elegant, timeless economic principles. Profoundly influenced by Frederic Bastiat, Hazlitt recognized the practical limits of the irrational decisions large collectives often make. The contribution of Hazlitt’s book was a wide focus on the consequences of public policies rather than the limited perspectives commonly used to promote and expand them.


In the introduction to Economics in One Lesson, Hazlitt packs a big punch with a handful of words to summarize what the book is about:

While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds (emphasis added) to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.


In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

After introducing his general thesis, Hazlitt proceeds to illustrate it with his first example, updated from Bastiat’s essay That Which is Seen, That Which is Not Seen.


Hazlitt uses the example of a brick thrown through a baker’s window. As often occurs in today’s short-sighted public policy discourse, it is easy to see that breaking the window creates new business for a glazier to fix it, plus additional spending by the glazier that would not have occurred without the broken window. From this, one could (incorrectly) conclude that the act of breaking the window stimulated the economy, since it resulted in more work for the glazier and others.


This common perspective, focusing on only what is seen, is only part of the picture, and the least important. Unseen is what the baker would have done with, say, the $300 he spent fixing the window, if he didn't pay the glazier to fix it. If, for example, the baker planned to buy a suit with the $300, the loss of the window would have reduced the tailor’s income by the same amount that the glazier gained. The gain to the glazier came out of the pocket of the baker, as did the second, third and further gains recycling the glazier’s new money. But, wouldn't these gains be offset by the second, third, and other lost opportunities from the baker’s spending on the suit, had the window not been broken? Since it is so easy to show the gains to the glazier and others after the window was broken but so difficult to say what would have happened had the window not been broken, the false conclusion that the economy is stimulated by breaking the window is easily sold to anyone who doesn’t consider the wider, unseen perspective.


In this example, the baker’s loss is a net loss to the economy because his choice to buy a suit was taken from him—no different than if the Commissar of Glaziers forced him to replace an unbroken window to help create jobs. Even if you assume that the glazier’s gain is equal to the tailor’s loss—and so on down the line—the baker still loses his choice to spend money, and the economy is worse off.


Hazlitt also explains how this fallacy is multiplied by other mistakes, such as the confusion of need and demand (demand requires purchasing power which may not exist). Another common fallacy pointed out by Hazlitt is that purchasing power doesn’t mean dollars, which can be created out of thin air by the Federal Reserve. All expanding the money supply does is to reduce the value of every dollar, without an increase in production (real wealth). Those who benefit from getting the first of the new dollars are seen, but the cost to everyone else whose dollars lose value is not seen.


Through such succinct examples, Hazlitt presents economic principles in plain English, hoping that the public at large will begin to take notice of the way so-called experts try to dupe the American people. For Hazlitt, economics is not about line graphs and calculus. It is about common sense. It does not take a PhD to understand supply and demand. It takes an engaged public willing to stand up to government and its tyranny.


Unchain the Builders - Again


This series of articles has celebrated the work of seven relatively unknown builders, pioneers all, each a champion for the cause of human freedom. I encourage you to read the books and other works by these authors to better understand the ideas that made the American Republic a unique and beneficial experiment in human action.


Bastiat’s simple message in The Law shows why the American Republic has declined so much over the last century. Once the law started transferring wealth by force, its primary purpose – the protection of people and their property – was violated, and became secondary, even trivial. Since it is easy to vote for someone who will take others’ property and give it to you, the steady trend has been to avoid long term economic consequences, and give people what they want now – seemingly endless government programs at someone else’s expense.


If there were more people today like Locke, Paine, Madison, Bastiat, Thoreau, Lane and Hazlitt, the public debate on individual freedom and the purpose of government would take quite a different turn than it has since the New Deal socialism of the 1930's. Though some voices today praise the rights of the individual against the collective, few will stand up to the crowd, which is what each of these builders did. Government's most dangerous narcotic - easy money - must always be taken from someone else by force, whether immediately by taxes, or later by inflation and public debt. This always results in a net loss to the economy and produces increasing tyranny at the expense of freedom and responsibility.


If you paid attention to Rose Wilder Lane (The Discovery of Freedom), you now know a secret most people never learn. Builders don’t have to be unchained - they just have to unchain themselves.


Introduction

PREVIOUS - Rose Wilder Lane

Solar Jobs

The following article by Senior Fellow Craig Green was published by the Independence Institute, Denver Daily News, the Greeley Tribune and Pueblo Chieftan in July of 2009.


Solar Job Claims Rely on Exaggeration and Faulty Economics

In promoting Interior Secretary Salazar's plan to "expedite" solar energy projects on 670,000 acres in Colorado's San Luis Valley ("Solar farms could help U.S. to energy independence"), the Denver Post said the plan "has the potential to create much-needed jobs." This is a confused but popular promise, based on faulty economics and frequent exaggeration.


Creating new jobs by force of law instead of entrepreneurship often results in the loss of other jobs and increased costs; especially high wind and solar costs.


In his classic book, "Economics in One Lesson," Henry Hazlitt pointed out the common fallacy of counting new jobs created by money taken from taxpayers without considering how they would have spent that money on other things. He pointed out that many public projects are promoted without explaining the negative effects of penalizing productive, efficient enterprises by subsidizing their more costly, less efficient competitors. This results in a net LOSS to the economy, not a gain.


Hazlitt's theory was recently confirmed in Spain, a European leader in producing millions of new "renewal energy jobs" since 1997. Gabriel Calzada Alvarez, PhD of the Universidad Rey Juan Carlos, published a study in March of 2009 ("Study of the effects on employment of public aid to renewable energy resources") that shows more than two jobs lost for every new job created. Spain spent more than 500,000 Euros to create each "green job" since 2000, not counting an additional million Euros in subsidies per wind industry job. Also, two-thirds of these jobs were in construction – jobs that would be eliminated once the facilities are up and running. The study also found that customers' electricity rates will have to be increased by 31 percent to pay off more than 28 billion Euros of new debt to finance the projects.


Does this sound like an economic windfall, which is the impression the promoters of such projects want you to get?


Exaggeration of job numbers is also used to make losing projects look like winning ones. As Vince Carroll pointed out [in the Denver Post] last October, Governor Ritter's announcement of 90,000 new jobs in Colorado exceeds the total number of cops, firefighters, security guards and prison guards in the entire State, and twice the number of all waiters and waitresses in Colorado.


Ritter's figure came from Boulder's American Solar Energy Society and included all jobs in the "energy efficiency" industry, even non "green" jobs.


The deceptive way "green" jobs are promoted by politicians and the press is the political equivalent of selling your business by listing only revenues, without expenses. You can honestly tell a prospective buyer that your company takes in a million dollars a year, which might impress a novice. But, if it turns out that your expenses are two million dollars a year, you have a losing business, like so many public works projects that drain the public purse after promises of "new jobs" and other benefits without mentioning costs or tradeoffs.


Hazlitt summarized his theory by saying, The art of economics consists in… tracing the consequences of that policy not merely for one group but for all groups." Isn't this the essence of what public policy should be, instead of political manipulation in favor of special interests?


Markets are very good at creating wealth and maximizing its productive use because they are based on voluntary transactions in which both buyer and seller must consent before a deal is made. Government routinely takes money from some by force, giving it to others, which destroys essential price communication between supply and demand. Government-subsidized jobs are frequently promoted in clouds of confusion and exaggeration necessary for political success. Sound economics however, suggests a more careful investigation of tradeoffs for wiser public policy decisions.