Friday, 27 November 2015

'I want to go back there and live': Eagles of Death Metal vow Bataclan return

The band targeted by barbarians at Bataclan say they want to go back there and finish the show.

“Our friends went there to see rock and roll and died. I want to go back there and live,” Eagles of Death Metal co-founder and vocalist Jesse Hughes said in this powerful interview:

[Hat tip Julian D.]

Quote of the Day: For our American friends …

“Thanksgiving is a typically American holiday. In spite of its religious form (giving thanks to God for a good harvest), its essential, secular meaning is a celebration of successful production. It is a producers’ holiday. The lavish meal is a symbol of the fact that abundant consumption is the result and reward of production. Abundance is (or was and ought to be) America’s pride—just as it is the pride of American parents that their children need never know starvation."
~ Ayn Rand

BONUS POST: The true but little-told story of how Thanksgiving very nearly didn’t happen . . .

Thursday, 26 November 2015

Nice line, sir.

“With Colin Craig asking for a fee of $3000 a month for the display of his poem ‘Two of Me’ on a blog, it begs the question - is it really that good?
”New Zealand's inaugural Poet Laureate, Bill Manhire says the poetry - penned by the former Conservative Party leader, which was allegedly written for his ex-press secretary Rachel MacGregor - is not the worst he's ever seen.
"’It's certainly better than
David Cunliffe's Harvard poem.’"

~ Bill Manhire in the Herald’s article, ‘NZ poet Bill Manhire on Colin Craig's poem: 'It's not the worst'

PS: Suzuki Samurai’s line immediately after the last election wasn’t bad either and, as it turns out, right on the button on a number of things…

Colin Craig: Still that school prefect who dobs in smokers. A wanker who doesn't wank. Showers in his 'Y Fronts'. He reminds me of the teeth-only smile one gets from the minister outside church after a funeral...makes me shudder. I am not at all sorry for his loss.

Housing market a regulatory disaster

Guest post by Affordable Auckland’s mayoral candidate Stephen Berry

With Auckland’s housing market becoming an international sensation following the sale of a state-house hovel in Devonport for over $1 million [read Bloomberg’s ‘London House Prices Have Nothing on Auckland’], it’s clear young people and low-income families are paying the price for the Council’s regulatory disaster.

Nosey NIMBYs, heritage preservation and zone rigidity are all contributors to the insane hyper-inflation that has afflicted Auckland’s housing market. Resource consent costs averaging fifteen- to thirty-thousand dollars per site don’t help.  However the biggest elephant in the room, which the left-wing council refuses to recognise, is that what is causing the artificial land shortage sending values skyrocketing are their very own policies.”

I refuse to accept the usual scapegoat of ‘foreign speculation’ as the cause of Auckland’s heated house market. Speculation is just a symptom of our problems, not the cause. In order to slow price inflation the city needs to abolish the urban boundary and allow the city to spread out, as well as intensifying.

High school economics textbooks are not the only place you can find the basic economic laws that demonstrate price inflation when supply is artificially prevented from meeting demand. A 2010 report from the Productivity Commission report was also able to illustrate this consequence when it showed land 2km inside council’s self-imposed urban limit is eight times the price of land 2km outside of it.

Centrally planning special zones where consents processes are streamlined, and where land-owners receive special favour, will attract headlines but is not going to make the slightest dent in prices. The fact only 102 houses have been built out of 30,000 projected proves this.

The Council needs to remove the regulatory distortions it has created to allow the market to begin behaving in a healthy manner. Centrally-planned growth must be replaced by organic growth respecting private property rights. The consequences of not doing so will be and are becoming catastrophic.

Stephen Berry is the Affordable Auckland mayoral candidate for 2016.
He was third place-getter in the 2103 Auckland mayoralty election.
Like Affordable Cities on Facebook.

For ‘living wage’ campaigners to be right, economic theory has to be wrong

Some economists and journalists claim that a "living wage" mandate would actually help businesses. Our guest poster Ryan Bourne says this is a prime example of motivated reasoning and half-baked economics, and gives four reasons why the claim is nonsense.

It is common for Living Wage campaigners to say that adoption of the Living Wage “would benefit staff and businesses.” Why? By increasing pay, it is claimed, firms can reduce turnover, reduce time that their workers take off sick and encourage greater worker effort. This in turn will raise productivity. Some pseudo-economists claim this is evidence of the "efficiency wage" phenomenon.

Unfortunately, this is the economics of motivated reasoning. It reminds me a bit of when environmentalists say “subsidising wind farms won’t just be good for the environment, it will create jobs too”. It implies there are no trade-offs — that the Living Wage imposition or increase is an unadulterated good.

There are big problems with this narrative, two of which Alex Tarrabok explains over at Marginal Revolution (making similar arguments as I have here before) and two which I’ll add below.

The first is that the "efficiency wage" theory has always been a theory of persistent unemployment. Yet the Living Wage campaigners also say that their policy will not cause unemployment. In the efficiency wage model, as Alex explains:

The question that motivated efficiency wage theory was not why firms should raise wages but why firms don’t cut wages when they should. The answer they gave was that firms don’t cut wages despite unemployment because they fear that workers will respond to lower wages with reduced productivity. ...
Instead of being desirable, the efficiency wage is a problem because lower wages would reduce unemployment and be better for the economy as a whole.

This would imply that efficiency wages entail trade-offs that can be welfare-reducing, through reducing employment — hardly the line Living Wagers are pushing.

Second, though, and importantly, efficiency wages in these models are set by profit-maximising firms — i.e. individual companies are assumed to operate according to what is best for them. The Living Wagers are implying that they know as campaigners what is best for companies — that firms are currently ignoring potentially large productivity improvements that campaigners are able to observe. It seems very unlikely to me that huge numbers of employers are this irrational given how firms track these things.

Third, the Living Wage campaigners assume that the "efficiency wage" effects that some companies can see in terms of improved productivity could be generalised across a whole sector or the whole economy. But whilst it might be true that at the firm level paying a higher wage may mean one is able to recruit and retain from a better (and at the low pay end more reliable) pool of people, this effect dissipates if everyone is paying more.

Finally, even if we were to assume that widespread or statutory adoption of the Living Wage lowered turnover of employees from firms operating in low-skilled industries, it is unclear why it is assumed that this would be good for productivity at an economy-wide level. The higher wage in these sectors might reduce the incentive for workers to move to higher-skilled, higher-paying sectors over time.

Again, we are left with the assumption that the Living Wage campaigners not only know better what is optimal for businesses in terms of profitability, but also what the optimal rate of turnover of jobs for strong productivity growth is.

In short, for the Living Wage campaigners to be right, economic theory has to be wrong: Living Wage campaigners have better knowledge of firms’ profitability than firms themselves, and the campaigners have a better grasp of optimum turnover rates for low-skilled workers than dynamic market processes.

To be honest, I highly doubt that many campaigning for a Living Wage have discovered a way to raise economy-wide productivity painlessly through firms increasing wages. Instead the productivity argument is an ex post rationalisation. Many like the idea of higher wages because, they say, they are "fairer," and so are drawn to arguments that support that these do not have negative effects.

Ryan BourneRyan Bourne is the Head of Public Policy at the UK’s Institute for Economic Affairs (IEA)
He is a co-author of "The Minimum Wage: silver bullet or poisoned chalice?" and "Smoking out red herrings."
This post previously appeared at the IEA’s blog, and at Anything Peaceful.

REPOST: Who needs great art?

[Icarus[3].jpg]    Icarus Landing, by Michael Newberry 

WE’VE ALL FELT IT. That moment when a piece of art has touched us.

Paintings, movies, literature, sculpture, music, architecture ... all have the ability to make us cry, make us laugh, and -- just occasionally -- to make us feel ten feet tall. Why is great art so powerful? – how does it acquire this profound ability to affect us? Simply, because it speaks personally to each of us. It is our shortcut to our very souls. When we experience art that truly touches us, we don’t just feel, “I like this;” if we have souls we feel “This is Me!”

So what gives art this enormous power?

Great art has enormous scope: it subsumes an enormous range of experience and thought and emotion; it offers insight into the deepest questions we can ask about our place in the universe and our own evaluation of that; it and it integrates it all into a mental unit that our particularly human consciousness is able to grasp. It might be a painting, a sculpture, or a play or a building, but if it is done well we can all look at it or walk through it and almost immediately know -- without even being able to put it completely into words -- how the artists see the world around them, and whether or not we agree. By experiencing the art they’ve produced, we should have a pretty fair idea of what they see as important in the world, and whether or not we too see the world in that same way, or not.

Think, for instance, of the lightning-like evaluation you make when you see this painting. Or this one. Or this collection of buildings. Or these. See what I mean? The integration involved in a good work of art subsumes all the experience, thought and emotion that goes into our own view of the world and, if we identify with it, allows us to point and say: “That’s Me!” or “That’s Not Me!” (So on that score, ask yourself about your reactions to those linked pieces, and what it tells you about the way that you see the world.)

San Marcos Water Gardens Proposal, sketch by Frank Lloyd Wright

    The point here is that art isn’t just a way to kick back after a difficult week -- which is one reason elevator music and abstract painting are so execrable. (The first is just background at best; the second might manage to be good interior decoration; but neither has little ability to offer much more.) The point is that great art offers us a shortcut to our very souls; a means whereby we can examine and understand our own implicit philosophy; a way to see and to experience our deepest values, and also to celebrate them.

Art -- good art -- shows us our way of seeing the world, while celebrating that that is the way we do see the world; more particularly, it celebrates our own individual way of seeing the world, and affirms it.

WHY DO WE NEED art to see the world when we’ve already got eyes and ears and fingers and hands with which to experience it ourselves, and a brain with which to organise those experiences? Answer: We need art precisely because of the nature of that brain, and because of the way it organises the experiences.

Look at the way our knowledge of the world is acquired and held: our knowledge of the world around us begins with our senses, which provide us with material that is then organised by our brain into concepts; those concepts in turn are then integrated into propositions and theories. We start with sensations, derived from particular experiences, and these form the basis for all our higher abstractions: all our ideas, from ideas of love, of justice, of rights, of value ... all high-order abstractions; all derived from earlier concretes which are subsumed into concepts, and then subsumed into even wider concepts, and so on.

This process of abstraction-leading-to-further-abstraction creates both the enormous power of the human mind, and its great weakness: both its power to think in vast abstractions, and its inability to see these abstractions as one unit. That’s what art does for us: it gives us each the power to see all of our important abstractions as a single unit.

To ‘fix’ each particular abstraction, as Ayn Rand points out in her Introduction to Objectivist Epistemology, we integrate the concept into a single mental unit: a word. Each word acts as a unit that integrates the constituent units of that particular concept, which brings together and holds for us in our minds the vast material referred to by the particular concept which that word is used to delineate.

But as we integrate these high-end abstractions into even wider abstractions, we run into a problem: the scope becomes too vast and too amorphous to grasp as a whole,even with a word. For that, we need art.  Think for example of the Statues of Justice and of Liberty, and of Delacroix’s “Liberty Leading the People.” These don’t just sum up the concepts of liberty and justice; they offer a dramatic evaluation of them to boot.

THE RELATIVE POSITION OF our higher abstractions works of art is analogous to the position of a poem to a word; or that of a book to its chapter; or that of a piece of furniture to a building: the greater work orders, makes understandable and gives context to all the units subsumed, and brings into existence a new mental unit integrating them all. In making a work of art, we are offering a new mental unit that is at once a higher abstraction than those it subsumes, and a more concrete one. In making our abstractions concrete, it takes us back to the concretes from whence they came, but in a much more powerful form.

Art allows us to see the totality of our worldview. If we follow Leonard Peikoff’s idea that philosophy is like a skyscraper, we can see that it is a rather oddly-shaped one. Peikoff's skyscraper begins at the lower levels with metaphysics, the nature of existence. It continues upwards with a few floors dedicated to epistemology, how we know what we know. On top of these lower floors and dependent on them are floors describing the nature of human beings and how we should live in the world as it is, i.e. ethics, and then how we should live together, i.e., the field of politics.

Now, if we understand the true nature of art we can see that art does fit on top of the other floors, since it requires all the other floors below to give it support. But in an important sense, the upper floors of art actually lead directly back to the basement, rather like one of those strange buildings in a science fiction story in which we keep going up, yet we end up in the basement instead of the penthouse. Good art is both penthouse -- in the sense that it is a glorious summation and culmination of all that is below it -- and it is also basement, because it is both fundamentally necessary to human survival (witness the cave scratchings of even primitive men, who sought to find meaning in his world) and also intensely explicative of our own deepest metaphysical value judgments.

Deep art really does go deep: right down to the bottom floor.

Why, then, is art so intensely personal? If it’s just a higher form of abstraction, why do we so readily get up in arms over it? Again, it is because of the nature of the human mind. We are endowed not just with a cognitive mechanism, but also with an emotional mechanism. “It is man’s cognitive faculty … that determines the content of both.” The premises and abstractions we form and accept are the programming for our subconscious: based on this ‘subconscious programming,’ our emotional faculty provides us inexorably with lightning-like evaluations of the things we see and experience around us -- the extent of our emotion at these experiences is the extent of the import and resonance they have for us.

We get a very real visceral pleasure when great art goes down and touches our own personal bottom floor.

As Ayn Rand said when identifying the nature of our emotions, they offer a lightning-like evaluation of the things around us. But our emotions do not spring from nowhere; they themselves are “an effect, not a cause.” Every single thing we see or experience is value-laden. It is our previous thinking (or lack thereof) that determines the nature of the evaluation.

If one has finished a hard day’s work and sees a beer, one might feel a fierce thirst and a yearning to sit down and enjoy it; if one’s a poor student and sees an exam paper, one might feel nausea and a desire to escape the classroom; but if one is a human being with a healthy soul, and one hears Beethoven’s Ninth or sees Frank Lloyd Wright’s Fallingwater, then one feels exalted. The difference in the feelings is determined by what it is we experience. The intensity of feeling is the measure of the extent of the intellectual and emotional abstractions subsumed.

Why does great art move us? Because it speaks to the whole of us, and to everything we know and stand for.

So who needs great art? Why, you do.

Wednesday, 25 November 2015

Fixing those fragile campus kids

“Safe spaces” on uni campuses where students’ delicate sensibilities are protected.

Sensitive wee flowers so terrified of being “micro-aggressed” they bully anyone their feelings tell them might “trigger” them.

Mob rule on campuses demanding “freedom” from ideas or even events that might challenge them.

Self-infantilising students everywhere are finding ideas so scary they're demanding you check your privilege and check out of their personal and public spaces:

  • A Colorado University anti-racism rally was recently cancelled because the organisers are white.
  • Free yoga classes at the University of Ottawa were recently cancelled  because yoga is now apparently inappropriate cultural appropriation.
  • Students at Yale spit on other students and try to get their professors ousted because said professors don’t believe it’s their job to police Halloween costumes for political correctness.
  • Cambridge University students demanding that anti-abortion speakers be barred from speaking on campus
  • University College London’s students’ union (UCLU) voted to ban Nietzsche reading groups on the grounds the ‘far-right, fascist ideology’ threatened the ‘safety of the UCL student body and UCLU members.’

So well-satirised in this wonderful short film, from the UK to the USA to Australia to little old NZ “University has become the place for teenagers to go when they wish to delay being an adult, rather than being the bridge to independence it was once considered to be.”

So what can be done?

Recently on Sam Harris’ podcast, Douglas Murray said something amazing. He said:

The surprising thing is not that young people would rebel. Young people have always rebelled. That’s what young people do. The surprising thing is why the adults give in.
    I think this is far more relevant today than in 1968. The amazing question that hovers over Yale University is why the adults take it and the kids run rampage over Yale University. And this is the really large problem which Islamists and other terrible people are simply taking advantage of.
    Somebody needs to say to the girl shrieking at her professor, 'If you cannot cope with Halloween costumes, then you’ve got no place at a university, because you’re going to have no chance at dealing with quantum physics or Shakespeare or Heidegger if Halloween spooks you out this much. You’re a useless person, and you’re going to go into a useless career, because if you’re a lawyer, and you’ve gone to Yale, but you’re too sensitive to hear about rape cases, you're not going to be able to represent anyone in a court of law. You’re no use to law. You’re no use for literature because you might read a novel that will trigger you. You’re no use for the sciences. You’re no use for anything.'
And that’s what the adults should be saying.

They should. But how do we fix the problem? And how do we find young folk who are any use to law, to literature, to science?

At root, “post-modernism, deconstructionism and progressive education have caused today's rebellion against the mind,” so in the end you have to blame the philosophers for the campus insanity. But fixing the philosophy requires new philosophers on campus ready and able to challenge the regressive post-modernists. Which means, independent young thinkers.

Where are they going to come from in our mollycoddled over-nannied world?

Here’s another answer. Jonathan Haidt, the NYU Professor who co-authored the explosive Atlantic piece,”The Coddling of the American Mind,” was asked “how to prevent another wave of kids on campus who can’t handle reading a disturbing book, or sharing the campus with a visiting speaker whose views contrast with their own.” In an article titled “Revenge of the Coddled” he responded that we have to “think young.” So obviously, education committed to encouraging independence in young children such as Montessori education is crucial. But there’s so much, says Haidt, that parents themselves can do:

Children are anti-fragile. They have to have many, many experiences of failure, fear, and being challenged. Then they have to figure out ways to get themselves through it. If you deprive children of those experiences for eighteen years and then send them to college, they cannot cope. They don’t know what to do. The first time a romantic relationship fails or they get a low grade, they are not prepared because they have been rendered fragile by their childhoods. So until we can change childhood in America, we won’t be able to roll this back and make room of open debate.
    My biggest prescription is that in every hospital delivery room, along with that first set of free diapers, should come the book: Free-Range Kids by Lenore Skenazy. If everyone in America read the book Free-Range Kids the problem would be over in 21 years, when the first set of tougher kids filled our universities.

Free-Range Kids author Lenore Skenazy reaffirms that

the way to raise resilient kids is to be sceptical about the message we get all the time that they are just moments from doom: An encounter that will haunt them, a loss that will derail them, or an unsupervised couple of minutes that will result in their disappearance. Our society obsesses about the way kids can die in an instant, and ignores the fact that 99.9999% of them won’t, and most of THOSE will emerge no worse (and possibly better) for the wear.
    Haidt’s premise is that by avoiding more and more of our “fear triggers” (like, “She’ll die if she goes around the corner without me!”) we give those fears more power. They grow, and so does our kids’ anxiety.
    I love safety, but it’s true that
once we let our kids do things on their own, the pride and confidence that they feel and that WE feel goes a long way to restoring “normal anxiety” back to its set point, instead of the red alert it is on today, all the time.
Including on campus.

[Hat tip Monica Beth]

Peronists Lose in Argentina after 12 Years of Populist Rule [update 2]

After years of disastrous economic performance, Argentinian voters this week threw out the Peronistas who have had a political stranglehold on the country for decades—and some commentators are suggesting (or hoping) it might be a permanent expulsion, not least for the economic basket-case they’ve made of the place.

Our guest poster Ryan McMaken explains below why the disastrous economic performance led to the ejection of the populist Kirchners, in favour of a relatively pro-market President to clean up the mess left by their 12-year rule. But if history is any indicator, he says, once the new president starts to do the unpleasant work of austerity and fiscal restraint, the Argentinians will sour on him and quickly elect someone new who will start the cycle of debt, inflation, and economic disaster all over again.

[UPDATE 1: New President-elect Mauricio Marci (right) was asked “what books he would take to a deserted island, and answered The Fountainhead, by Ayn Rand." (Translation here.) Hat tip David Prichard.]

[BONUS QUESTION: “What explains the dramatic differences in economic performance between the two Americas?” asks philosopher Stephen Hicks, and he has a surprising answer. If you’re not a philosopher. Long term, he says, “it’s the difference between philosophies that centre on rational individuals who produce and trade with each other to mutual benefit – and those philosophies that appeal to power conflicts between semi-irrational collectives who exploit each other. That clash of philosophical traditions goes far in explaining … the differences in economic performance.”]

Peronists Lose in Argentina after 12 Years of Populist Rule
by Ryan McMaken

The Peronists lost in Argentina after 12 years of populist rule, as voters, in a close election, opted for the economically liberal candidate who, according to USA Today, "promised to reduce the state's role in the economy and embrace more pro-business policies." "Pro-business" is most definitely not the same as being "pro-market," but we'll see how Mauricio Macri, the new president, proposes to end some of the crippling regulations and interventions that have hobbled the Argentinian economy over the past decade. 

Over the past 12 years, the rule of the Kirchners — first Nestor, then his wife Christina — ruled in the populist model of the Peronists. They committed to extravagant government spending programs, currency manipulation, and to a cronyist model of government favours for select corporations and industries. 

Prior to the most recent era of Peronism under the Kirchners, Argentina laboured under Peronist Carlos Menem, who set the stage for the 1998-2002 economic crisis in Argentina. 

As the economy headed down in the wake of Menem, the Argentinian voters opted for Fernando de la Rua who was faced with the unpleasant work of implementing cutbacks in government spending and attempting to bring inflation and government regulators under control. 

As is so often the case with those who have to clean up after the economic populists, Rua quickly became unpopular and was replaced by Peronist Nestor Kirchner in 2003. 

Kirchner set to work implementing the same policies that had led to the 1998 crises. He imposed high taxes on exports and imports, inflated the currency, and massively increased government spending from 14% of GDP to 25% of GDP. The Kirchners have imposed price controls, and under Christina, the economy took an especially ominous turn toward the authoritarian as Kirchner threatened lawsuits against critics of her economic policy and against those who attempted to provide alternative measures of the economy independent from the official government numbers. Christina imposed capital controls as capital fled the country, and by 2014, Argentina was said to have one of the highest inflation rates in the world. 

Needless to say, the economy has not been robust. 

With the election of Macri, however, Argentina may just be going through the same motions it went through when Menem left office. Argentina is following the familiar 4 Stages of Populism as described by Dornbusch and Edwards. We may be in Stage IV right now:

A new government is swept into office and is forced to engage in “orthodox” adjustments, possibly under the supervision of the IMF or an international organisation that provides the funds required to go through policy reforms. Because capital has been consumed and destroyed, real wages fall to levels even lower than those that existed at the beginning of the populist government’s election. The “orthodox” government is then responsible for picking up the pieces and covering the costs of failed policies left from the previous populist regime. The populists are gone, but the ravages of their policies continue to manifest themselves. In Argentina the expression “economic bomb” is used to describe the economic imbalances that government leaves for the next one.

The new anti-populists lay the groundwork for more economic growth, but they become unpopular when the reality of austerity sets in. 

So, new populists are voted in and the cycle begins all over again. 

Macri's time may be short lived when it becomes apparent that the way to fix Argentina's economy will involve pay cuts for government employees, less consumption, more work, and more saving. 

Ryan McMaken

Ryan W. McMaken is the editor of Mises Daily and The Free Market.

He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre. This article first appeared at the Mises Daily.

UPDATE 2: The Casey Daily Dispatch posted this frankly excited analysis of the news:

A New Day in Argentina

Is it a new day in Argentina?

Are contrarian investors in the country about to make multiples on their investments?

These are the major questions on the table after Mauricio Macri won the Argentine presidential election on Sunday.

Longtime Casey Research readers know Argentina is one of Doug Casey’s favourite countries in the world. Doug, who founded our firm, has a home there and multiple Argentinian investments, including the spectacular La Estancia de Cafayate development.

La Estancia de Cafayate is located in the heart of northern Argentina’s wine country. It offers one of the world’s premier sporting and lifestyle experiences. It features miles of beautiful hiking trails, a world-class golf course, and a luxury athletic club and spa.

Doug and numerous other freethinking individuals call Cafayate home. It’s become a modern day “Galt’s Gulch.”

Macri’s victory could have major long-term implications for Argentina. To get a boots-on-the-ground take, we asked Doug for his opinion.

•  Here’s Doug Casey:

Sunday night, there was great rejoicing among the people I associate with here in Argentina. Mauricio Macri, the pro-business mayor of the city of Buenos Aires, defeated Daniel Scioli, the Kirchnerite governor of Buenos Aires province, by 52% to 48% of the vote. This was an important election for anyone who has money in this country (including myself).

Let me give you some brief background. For the last 12 years the country was ruled first by Néstor Kirchner (from 2003-2007), then by his wife Cristina, who was elected in 2007, then re-elected in 2011. Nestor died of a heart attack in 2010. Nestor had the good luck to come into office at the dead bottom of a horrendous crisis. From there, everything cyclically recovered, aided by higher commodity prices; the Argentine economy is based on agriculture. People, idiotically but predictably, attributed the better times to the Kirchners, as opposed to a commodity boom. Néstor was just a garden variety leftist. But Cristina turned out to be a raging statist ideologue, modelling herself on her idol, Eva Perón.

The Argentine economy has been in a steep decline since the accession of Juan Perón in 1952. Perón was an admirer of Mussolini and Hitler and, like them, instituted a regime of strict state control of the economy, enriching well-connected businessmen, while giving all manner of “free” goodies to the peons. The peons felt they were getting something for nothing, so subsequently always elected a politician who claimed to be a Peronist.

Cristina took it to another level. She nationalised Aerolíneas; and La Cámpora, her youth group, is said to extract about a billion dollars a year from the airline. She nationalised the country’s biggest oil company, so, of course, there’s been no energy development even though Argentina has some of the world’s biggest shale deposits. She put export duties ranging up to 40% on soybeans, corn, wheat and cattle; then farmers are expected to pay ordinary income tax on whatever profit is left. She nationalised the country’s pension funds, spent all the FX reserves, and filled the government with tens of thousands of her supporters. Meanwhile, it’s alleged she personally stole over $10 billion, not counting what subordinates and cronies have scammed.

So, back to Sunday’s election. If Scioli had won, it would have been more of the same, just on a lesser scale. But there’s a good chance that Macri will get rid of lots of gnocchis (as featherbedding government employees here are called), will repeal the export taxes, defang La Cámpora, reduce money printing, etc., etc. He’s no Ron Paul, but there’s reason to believe he has, at least, a basic understanding of economics.

He’ll be forced to take radical action since Cristina has run the country until its wheels have about come off. But if he does it, a couple hundred billion dollars Argentines have offshore could come home. And as much more from foreign investors. Sure, people in the government will still steal - that happens everywhere but maybe Singapore. But, as I’ve said for years, if the country gets a government that’s only not criminally insane, the place could, and should, boom. At a minimum, asset prices, which are now extremely low, should rise to world levels.

I came down here because I liked the lifestyle - and despite Cristina it remains one of the world’s best. But now, there’s also a good chance that those of us who put money here in the last decade, after years of being laughed at, could make a bundle. And the lifestyle will get even better…

Chart of the Day

Argentina has the world’s fourth largest shale oil supply...

Shale oil is trapped deep within rocks. About a decade ago, it was impractical to get out of the ground. However, recent advances in technology have made it economical to extract shale oil in some cases.

Today’s chart ranks the countries with the seven largest shale oil deposits. These numbers account for all oil that can be produced based on current technology and industry practices.

As you can see, Argentina has a huge supply of shale oil. Yet, because of misguided government policies, almost none of it has been tapped.

Doug Casey is hopeful Macri will create a more business-friendly environment in Argentina. If that happens, there could opportunities to make tremendous amounts of money in Argentina’s oil industry. We’ll let you know if these opportunities surface...


Justin Spittler
Delray Beach, Florida
November 24, 2015

Tuesday, 24 November 2015

Bonus Quote of the Day: On Auckland house prices . . .

"The average house price in New Zealand’s largest city is now higher than London’s. ‘It’s like the supermarket before it closes on Christmas Day —
everyone thinks they’d better get in or they’ll miss out’."

~ Emma O’Brien writing for BLOOMBERG: ‘London House Prices Have Nothing on Auckland

[Hat tip Ziv Du]

Q+A on Auckland’s densification [updated]

Yesterday’s Horrid reported on the horror of the Unitary Plan’s densification of Auckland with this headline and picture:


It inspired some questions …

Q: Are Auckland’s mountains about to get covered in multiple multi-storey apartments and townhouses?
A: No.

Q: So why would a newspaper struggling for circulation use that pic with that headline?
A: You just answered your own question.

Q: Oh. Right. But the rest of the best suburbs will soon be swarming with high-rise apartments and town houses that will virtually be blotting out the sun?
A: Three storeys.

Q: Pardon me?
A: The new rules would increase the densities in these suburbs, but the height allowed for is virtually what the current District Plan’s height limit allows for now. As even the Horrid’s report itself confirms, “New rules mean around a dozen suburbs will be rezoned to a ‘mixed-house’ zone to allow for townhouses, studios and apartments of up to three storeys.” See. Three storeys.

Q: Oh. So why would … ?
A: Yes. You just answered your own question again. Horror stories sell newspapers. (They hope.)

Q: But there is a real problem, isn’t there? This is all being done in secret. It’s being done by stealth!!!!
A: But you know about it, don’t you?

Q: Well, yes. But Richard Burton, of the Auckland 2040 community group, says Aucklanders “are blissfully unaware of the new rules that will change the city.” He says, “the Unitary Plan - a new planning rulebook for the Super City - was turning into a farce, with the council making fundamental changes without any public process.”
A: You got that from the Herald too, didn’t you.

Q: Yes. I did.
A: You don’t need to be a fan of the public process to recognise that there has been one. A slightly-skewed but still quite extensive one. The original proposed Unitary District Plan was issued with all sorts of proposals, allowing many more high-rises than this latest proposed Plan doe,s and anyone who wanted to submit was able to, and invited to; and anyone who did can still be part of that process now if they want to.

Q: But these changes weren’t part of the original Plan! So how could they be part of the process?
A: Well, no, but many of the changes were signalled in that first Draft Plan. So you could have commented if you want to. And this is the process required under all plans written under the Resource Management Act. So perhaps your problem is with this Act -- that takes away your property rights and essentially makes them subservient to some random faceless council planner?

Q: Yes, that’s it! That’s it exactly !!  I hate that Act!!!!
A: Do you. Do you really? So did you vote for either of the major parties last election?

Q: Yes. Yes, I always do. They keep us on the straight and narrow.
A: Then you voted for the very parties who wrote, introduced, and continue to support the Resource Management Act. So you voted, and keep voting, for planners to have that power over your property rights.
Suck it up, big boy.

Q: But I voted for them to have power over other people, so they wouldn’t fart in my backyard.
A: Karma’s a bitch, huh.

imageQ: And my wife voted for ACT’s David Seymour, and he reckons this is an abomination too. He says, “The proposed intensification programme has enormous implications for congestion, community character, and the shape of school zones.”
A: Well, yes it does. But no city is preserved in aspic, is it. As it grows and develops according to demand, it will and does always change. And you really think just because he’s Epsom MP and needs to talk to his base that the abomination of school zones should constrain the freeing up of housing zones?

Q: Freeing up?
A: Well, you surely must agree that if you can do more with your property than the rules previously allowed, that that this represents a freeing up? There is a hell of a lot of garbage written about the Plan, and much to bitch about, not least the fact that the Resource Management Act does give planners the power to override your property rights. (As ACT’s previous leader eventually recognised.) But since property rights do give you the right to do what you wish on your own property—with only the ‘side constraints’ of recognising that your neighbours have the same rights, common-law rights to things like light, air, support and the like—this does represent a freeing up. Just a little. But it’s there.

Q: But Seymour says, “It’s a betrayal of young people in its assumption that they can never own a house and must live in apartments.”
A: It doesn’t make it compulsory to live in an apartment. But it makes it more possible for land-owners to build them should young people want to – or need to. And while there’s plenty more that could be in the Plan to help make houses more affordable – such as freeing up much more land around outside the Metropolitan Urban Limit, and making it possible to easily add a granny flat–oh, and just recognising property rights in general, if that were actually possible under the RMA—it would help to bring down the price of all accommodation at the margins, so all housing generally would be cheaper by virtue of these apartments (should they be built) than without.

Q: But Seymour says, “There's nothing free market about the council coming in and overriding your expectations about the character of your street to impose a grand plan on the city because it suits what planning schools were teaching 20 years ago.”
A: And it’s said that ACT’s David Seymour believes in property rights—that he understands the market process ...

Q: Excuse me?
A: Well, you do realise don’t you that these new rules don’t make it compulsory for land-owners to build three-story apartments on their property. It simply makes it possible for them to do so if they see demand for them.

Q: But nobody wants them!
A: Then nobody will buy them. So nobody would build more.

Q: …
A: So in this case an accident of planning lore has meant today’s Plan might free up land just a little from the iron grip under which planners have constrained it. Mind you, it’s not like they’re allowing people complete freedom of choice about where and how to live, more’s the pity. It’s not like they’re fixing the model for spec building, without which housing is never likely to be affordable ever again. And under this new plan you will now require a resource consent for anything more aggressive than mowing your lawn, so so-called “private planning consultants” graduating from those planning schools will be made independently (yet undeservedly) wealthy. Yet about these iniquities I hear no complaints at all from any direction.

Q: But I have rights in the existing character of my street!
A: Well, you do, in a sense. Yes. And there is a simple process by which those rights might be recognised even as the character changes. But as long as you keep voting for the Resource Management Act, that process is made all-but impossible.

Q: But, but … the value of my own house will plummet!! Ian Wishart says so!!!!
A: You’re taking advice from Mr Conspiracy now? How would the value of your land plummet if the new Plan allows you to build more on your site rather than less.

Q; But he says these multi-storey high-rises will block out the sun.
A: We’re back to that misreporting in the Horrid again, aren’t we. . .

UPDATE: Covering much the same territory as this Q+A, but from someone who does love planning, is this otherwise sensible piece at Transport Blog pointing out that Three Storeys Does Not Equal Highrise.

  • “Are we really down to the stage of scaremongering about three storey townhouses, a housing typology found frequently overseas and even in many parts of Auckland already? In fact for a city like Auckland three storey townhouses are perhaps the ideal missing middle of the housing.”
  • “So what’s really happening? The answer is much less secretive and much less alarmist than the herald like to make out.”
  • “The real betrayal of young people is by those who have opposed any change to the city, especially in the area of housing where prices have been pushed up or some people have been pushed out half way to Hamilton.”


Bonus ‘Stupid of the Day’: Obama edition

Sorry, I thought the previous Quote of the Day was going to be the stupidest thing I heard today.

But it turns out it’s not.

It turns out Obama thinks the Paris climate conference is going to send a message to ISIS . . .

It’s at times like this you realise why satire might be becoming extinct.

Thank goodness for cartoonists.

[Hat tip Steve Milloy. Cartoon by Rick McKee from the Augusta Chronicle]

Quote of the day: On stopping suicide bombers with cameras . . .

The former German Federal Minister of the Interior Hans-Peter Friedrich told Der Spiegel that surveillance cameras are effective in stopping suicide bombers . . .

[Translation]: DER SPIEGEL: Widespread video surveillance in the US could not prevent [the Boston Marathon] attacks. Rather, the perpetrators seem to have been fully aware of the monitoring.
Friedrich: A suicide bomber, who includes his own death in his planning of the attack won't be discouraged by surveillance cameras.
DER SPIEGEL: So the cameras are ineffective?
Friedrich: That'd be a wrong conclusion. If we catch the attacker after the first time, he can't act a second or third time.  That alone is already a success.

[Hat tip Felix Mueller]

Monday, 23 November 2015

Sea level hazards: You can’t repeal risk, but you can repeal section 71

Ask Parliamentary Commissioner for the Environment Jan Wright why, with the money made by peddling his warmist mantra, Al Gore purchases and enjoys sea-level property--despite his own claims that the apartments thereon will be rapidly underwater--and I’ll wager she’ll have no idea.

Nonetheless, this from last Friday’s news:

NZ urged to act on rising sea levels – RADIO NZ
Entire communities may need to be uprooted due to rising sea levels and the Minister of Finance should start preparing for the financial impact now, says the Parliamentary Commissioner for the Environment Jan Wright.
    The commissioner's latest
report 'Preparing New Zealand for rising seas: Certainty and Uncertainty' identified at least 9000 New Zealand homes that lie less than 50cm above spring high tides.
    There was no doubt sea levels were rising and it was certain the frequency of coastal flooding would increase as the sea level rises, Dr Wright said. …
    A standard process for council engagement with coastal communities should be included in central government direction and guidance on sea level rise, Dr Wright said. …
    Councils' planning for sea level rise was problematic … [so] the government was recommended to put direction on planning for sea level rise into a National Policy Statement, such as one envisaged for dealing with natural hazards.
    Officials were urged to address the issues the report raised in the upcoming revision of the 2008 MfE Guidance Manual - which provided direction and guidance to councils on how they should deal with sea level rise.

Here’s my own recommendation for “officials” providing “direction and guidance to councils on how they should deal with sea level rise”:

Direct them to keep the hell out of the way.

You may think that’s a frankly frivolous thing to say, but hear me out.

Let’s grant her claim that sea levels are rising and coastal flooding will increase. Let’s assume that she’s not just another one not letting a good climate crisis go to waste. Let’s agree with her that at least 9000 New Zealand homes are “at risk” when that happens. But let’s recognise that it’s about this point that Ms Wright begins wringing her hands and talking about “sending people letters” and uprooting entire communities –and that people are taking that prescription seriously.

But me ask you this: is this massively increased coastal flooding going to happen this week? Next month? Next year?

imageLet me answer it for you. No, it’s not. The “best estimates” on which she relies (and for the sake of argument let’s agree with them) are talking about these things happening over the course of a century, or even more. Yet the speed of this century-long accretion is allegedly urgent enough that “officials” must begin planning today to expel people from their homes some time tomorrow.

No other possibilities appear to be contemplated other than snail-paced action from officials to tell property-owners what action they must take.

But, well, let me just ask you: Do you know of any means whereby folk could sort out for themselves the risks associated with sea-levels threatening their property, and deal with it as expeditiously as they think necessary?

Think you there might be some process for engagement that didn’t require either central government “direction and guidance” or the bullying and bureaucracy that comes with it?

Any idea of some solution that might spontaneously emerge when folk go about their daily risk-taking business?

Yes, I know, it wholly eludes Ms Wright, council officials and all, none of whom appear to have heard of the phenomena for which Nobel Prizes are awarded, but the process by which supposedly marginal homes can so peacefully and undramatically end up in the hands of those who are satisfied the risk of ownership is worth it—and out of those whose hands are wringing wet with worry mark—is precisely the market process that deals with risks like this every day.  A process whereby those who discount risks in favour of perceived value can outbid and help compensate those who truly fear the worst.

Another way to say this is that the former pick up a bargain from the latter. But if we’re speaking freely, and by this stage of the game we surely are, then how many existing property-owners would really and truly take Ms Wright’s views that seriously they would want to leave their paradise at a knock-down rate. (And putting it the other way, wouldn’t those who are convinced she is right, as well as Wright, be thinking they were the ones stealing from their buyers, since in their minds it is the buyers who are going to miss out—and soon!)

So. Simple.

Problem is that there are only two ways whereby this simple, free and peaceful process could be made to not work, and both are either contemplated or already exist today:

  • either public action to ban private action; or
  • laws to ensure that councils rather than land-owners assume the risk for any alleged natural hazards, and may bully land-owners into compliance with whatever “plans” for their property council sees fit, up to and including the effective nationalisation of their land for beachfront reserve.

Ms Wright proposes the former. The Building Act and Resource Management Act already enforce the latter.

I therefore suggest that the only public action necessary in the face of this alleged threat is to remove the sections of these two acts imposing the resulting risk on ratepayers.

imageLET’S RULE OUT ONE THING right from the bat. Landowners neither deserve nor should be paid compensation from any public trough. The only compensation these willing sellers need is that provided by a willing buyer. And have no fear they will exist.

But all that’s really necessary is the repeal of one simple section of the Building Act, section 71.

I can guarantee you’ve heard of this section before, or at least its results.

You heard about it a lot after the Christchurch earthquakes, often associated with red-zoned land.

You surely heard of its results when council goons trued to evict stroppy old Joe Bennett from his Lyttleton home because they were “concerned for his safety” after the Christchurch earthquakes because of two risky rocks they thought were threatening his home (the risk being entirely in the eyes of the councils'’ beholders):

Last August two goons marched up the drive and slapped a sticker on my house. The sticker threatened me with enormous fines if I didn't leave. I didn't leave. …
    In August, Mr Democracy Services issued a press release saying that the council was concerned for the safety of people in red-stickered houses. Nice of him, but irrelevant. My safety is not the council's concern, just as theirs isn't mine.
    As I said on radio at the time, I don't need another mother. The decision to live in my house was mine to make, and mine alone. And the consequences were for me to accept, and me alone.
    If the council considered my place to be dangerous, they could put a sign outside saying so. Duty done. The truth is that the council never cared about my safety. It cared only about its own legal liability.

Remove Section 71 and the council will have no legal liability, and then between ourselves and our insurance companies we can all safely (or at least peacefully) plan our own futures and look after our own risk. Even if it does mean a sign outside your house—or a tag on your certificate of title—saying that in council’s opinion, which we should all be free to express, the sky is about to fall on us.

That way, the council nannies don’t need to cover their arses.

You see, in the face of risks or alleged risks, Section 71 and its related sections do essentially make council wholly responsible for damage to your property, mandating a policy of “managed retreat” should “natural processes” impinge or appear to infringe upon some unlucky person’s land.

What that retreat means might be summed up in that sticker slapped on Joe’s house by the goons: Enormous fines if you don't leave. Except that in some places now the goons just refuse you your right to build on your own land because, they say, of the risk.

This means that in some parts of the country where the tides, sea levels sand dunes are alleged to be moving in such a risky fashion that almost the entire coastline is said to contain “natural hazards” (bucolic old Tauranga being one such place) you may not build at all in those parts of your land so designated by mother; you may build on other parts differently designated only if you have another site on which to move your house; and  if a sand dune is blown within a certain specified distance of your house, then mother says you may not even take out a shovel to move it – instead, you must move your house to that other site you’ve been keeping for that very purpose all these years.

New Zealand, this is your future under Jan Wright and her recommendations – and, while largely being unspoken about, it has been our present for at least the last twenty years. As I wrote way back in 2002, under the District Plans written in conformity with this policy, beachfront properties are essentially already being nationalised in order to create unpaid-for beachfront reserves.

You see -- trees, rocks, sand dunes and “natural processes” all have rights under the Building and Resource Management Acts. Human beings do not.

Repeal the section that makes it so, however, and you too can live like Al Gore.

Although maybe without the huge nest egg that allows him to purchase sea-level San Fran condos.

Why Socialism Causes Pollution

A reminder from 1992, by Thomas DiLorenzo, about what we discovered when the communist bloc collapsed …

Corporations are often accused of despoiling the environment in their quest for profit. Free enterprise is supposedly incompatible with environmental preservation, so that government regulation is required.

Such thinking is the basis for current proposals to expand environmental regulation greatly. So many new controls have been proposed and enacted that the late economic journalist Warren Brookes once forecast that the U.S. Environmental Protection Agency (EPA) could well become "the most powerful government agency on earth, involved in massive levels of economic, social, scientific, and political spending and interference.

But if the profit motive is the primary cause of pollution, one would not expect to find much pollution in socialist countries, such as the former Soviet Union, China, and in the former Communist countries of Eastern and Central Europe. That is, in theory. In reality exactly the opposite is true: The socialist world suffers from the worst pollution on earth. Could it be that free enterprise is not so incompatible with environmental protection after all?

I. Socialist Pollution

The Soviet Union

In the Soviet Union there was a vast body of environmental law and regulation that purportedly protected the public interest, but these constraints have had no perceivable benefit. The Soviet Union, like all socialist countries, suffered from a massive "tragedy of the commons," to borrow the term used by biologist Garrett Hardin in his classic 1968 article. Where property is communally or governmentally owned and treated as a free resource, resources will inevitably be overused with little regard for future consequences.

The Soviet government’s imperatives for economic growth, combined with communal ownership of virtually all property and resources, caused tremendous environmental damage. According to economist Marshall Goldman, who studied and travelled extensively in the Soviet Union, "The attitude that nature is there to be exploited by man is the very essence of the Soviet production ethic."

A typical example of the environmental damage caused by the Soviet economic system is the exploitation of the Black Sea. To comply with five-year plans for housing and building construction, gravel, sand, and trees around the beaches were used for decades as construction materials. Because there is no private property, "no value is attached to the gravel along the seashore. Since, in effect, it is free, the contractors haul it away. This practice caused massive beach erosion which reduced the Black Sea coast by 50 percent between 1920 and 1960. Eventually, hotels, hospitals, and of all things, a military sanitarium collapsed into the sea as the shoreline gave way. Frequent landslides–as many as 300 per year–have been reported.

Water pollution is catastrophic. Effluent from a chemical plant killed almost all the fish in the Oka River in 1965, and similar fish kills have occurred in the Volga, Ob, Yenesei, Ural, and Northern Dvina rivers. Most Russian factories discharge their waste without cleaning it at all. Mines, oil wells, and ships freely dump waste and ballast into any available body of water, since it is all one big (and tragic) "commons."

Only six of the 20 main cities in Moldavia had a sewer system by the late 1960s, and only two of those cities made any effort to treat the sewage. Conditions are far more primitive in the countryside.

The Aral and Caspian seas have been gradually disappearing as large quantities of their water have been diverted for irrigation. And since untreated sewage flows into feeder rivers, they are also heavily polluted.

Some Soviet authorities expressed fears that by the turn of the century the Aral Sea will be nothing but a salt marsh. One paper reported that because of the rising salt content of the Aral the remaining fish will rapidly disappear. It was recently revealed that the Aral Sea has shrunk by about a third. Its shore line "is arid desert and the wind blows dry deposits of salt thousands of miles away. The infant mortality rate [in that region] is four to five times the national average."

The declining water level in the Caspian Sea has been catastrophic for its fish population as spawning areas have turned into dry land. The sturgeon population has been so decimated that the Soviets have experimented with producing artificial caviar. Hundreds of factories and refineries along the Caspian Sea dump untreated waste into the sea, and major cities routinely dump raw sewage. It has been estimated that one-half of all the discharged effluent is carried in the Volga River, which flows into the Caspian Sea. The concentration of oil in the Volga is so great that steamboats are equipped with signs forbidding passengers to toss cigarettes overboard. As might be expected, fish kills along the Volga are a "common calamity."

Lake Baikal, which is believed to be the oldest freshwater lake in the world, is also one of the largest and deepest. It is five times as deep as Lake Superior and contains twice the volume of water. According to Marshall Goldman, it was also "the best known example of the misuse of water resources in the USSR."

Factories and pulp mills have been dumping hundreds of millions of gallons of effluent into Lake Baikal each year for decades. As a result, animal life in the lake has been cut by more than 50 percent over the past half century. Untreated sewage is dumped into virtually all tributaries to the lake.

Islands of alkaline sewage have been observed floating on the lake, including one that was 18 miles long and three miles wide. These "islands" have polluted the air around the lake as well as the water in it. Thousands of acres of forest surrounding the lake have been denuded, causing such erosion that dust storms have been reported. So much forest land in the Lake Baikal region has been destroyed that some observers reported shifting sands that link up with the Gobi Desert; there are fears that the desert may sweep into Siberia and destroy the lake.

In other regions the fact that no compensation has to be paid for land that is flooded by water projects has made it easy for government engineers to submerge large areas of land. "As much land has been lost through flooding and salination as has been added through irrigation and drainage in the Soviet Union."

These examples of environment degradation in the Soviet Union are not meant to be exhaustive but to illustrate the phenomenon of Communist pollution. As Goldman has observed, the great pollution problems in Russia stem from the fact that the government determined that economic growth was to be pursued at any cost. "Government officials in the USSR generally have a greater willingness to sacrifice their environment than government officials in a society with private enterprise where there is a degree of public accountability. There is virtually a political as well as an economic imperative to devour idle resources in the USSR."


In China, as in Russia, putting the government in charge of resource allocation has not had desirable environmental consequences. Information on the state of China’s environment is not encouraging.

According to the Worldwatch Institute, more than 90 percent of the trees in the pine forests in China’s Sichuan province have died because of air pollution. In Chungking, the biggest city in southwest China, a 4, 500-acre forest has been reduced by half. Acid rain has reportedly caused massive crop losses.

There also have been reports of waterworks and landfill projects severely hampering fish migration. Fish breeding was so seriously neglected that fish has largely vanished from the national diet. Depletion of government-owned forests has turned them into deserts, and millions of acres of grazing and farm land in the northern Chinese plains were made alkaline and unproductive during the "Great Leap Forward."

Central and Eastern Europe

With Communism’s collapse, word has begun to seep out about Eastern Europe’s environmental disasters. According to the United Nations Global Environment Monitoring Program, "pollution in that region is among the worst on the Earth’s surface." Jeffrey Leonard of the World Wildlife Fund concluded that "pollution was part and parcel of the system that molested the people [of Eastern Europe] in their daily lives." Evidence is mounting of "an environmental nightmare," the legacy of "decades of industrial development with little or no environmental control."


According to the Polish Academy of Sciences, "a third of the nation’s 38 million people live in areas of ecological disaster." In the heavily industrialized Katowice region of Poland, the people suffer 15 percent more circulatory disease, 30 percent more tumors, and 47 percent more respiratory disease than other Poles. Physicians and scientists believe pollution is a major contributor to these health problems.

Acid rain has so corroded railroad tracks that trains are not allowed to exceed 24 miles an hour. The air is so polluted in Katowice that there are underground "clinics" in uranium mines where the chronically ill can go to breathe clean air.

Continuous pumping of water from coal mines has caused so much land to subside that over 300,000 apartments were destroyed as buildings collapsed. The mine sludge has been pumped into rivers and streams along with untreated sewage which has made 95 percent of the water unfit for human consumption. More than 65 percent of the nation’s water is even unfit for industrial use because it is so toxic that it would destroy heavy metals used by industry. In Cracow, Poland’s ancient capital, acid rain "dissolved so much of the gold roof of the 16th century Sigismund Chapel that it recently had to be replaced."

Industrial dust rains down on towns, depositing cadmium, lead, zinc, and iron. The dust is so heavy that huge trucks drive through city streets daily spraying water to reduce it. By some accounts eight tons of dust fall on each square mile in and around Cracow each year. The mayor of Cracow recently stated that the Vistula River — the largest river in Poland — is "nothing but a sewage canal." The river has mercury levels that are three times what researchers say is safe, while lead levels are 25 times higher than deemed safe.

Half of Poland’s cities, including Warsaw, don’t even treat their wastes, and 41 animal species have reportedly become extinct in Poland in recent years. While health statistics are spotty — they were not a priority of the Communist government–available data are alarming. A recent study of the Katowice region found that 21 percent of the children up to 4 years old are sick almost constantly, while 41 percent of the children under 6 have serious health problems.

Life expectancy for men is lower than it was 20 years ago. In Upper Silesia, which is considered one of the most heavily industrialized regions in the world, circulatory disease levels are 15 percent higher, respiratory disease is 47 percent higher, and there has been "an appalling increase in the number of retarded children," according to the Polish Academy of Sciences. Although pollution cannot be blamed for all these health problems, physicians and scientists attach much of the blame to this source.


In a speech given on New Year’s Day of 1990, Czechoslovakian President Vaclav Havel said, "We have laid waste to our soil and the rivers and the forests…and we have the worst environment in the whole of Europe today." He was not exaggerating, although the competition for the title of "worst environment" is clearly fierce. Sulfur dioxide concentrations in Czechoslovakia are eight times higher than in the United Sates, and "half the forests are dead or dying."

Because of the overuse of fertilizers, farmland in some areas of Czechoslovakia is toxic to more than one foot in depth. In Bohemia, in northwestern Czechoslovakia, hills stand bare because their vegetation has died in air so foul it can be tasted. One report describes the Czech countryside as a place where "barren plateaus stretch for miles, studded with the stumps and skeletons of pine trees. Under the snow lie thousands of acres of poisoned ground, where for centuries thick forests had grown." There is a stretch of over 350 miles where more than 300,000 acres of forest have disappeared and the remaining trees are dying. A thick, brown haze hangs over much of northern Czechoslovakia for about eight months of the year. Sometimes it takes on the sting of tear gas, according to local officials. There are environmental laws, but they aren’t enforced. Sulfur in the air has been reported at 20 times the permissible level. Soil in some regions is so acidic that aluminum trapped in the clay is released. Scientists discovered that the aluminum has poisoned groundwater, killing tree and plant roots and filtering into the drinking water.

Severe erosion in the decimated forests has caused spring floods in which all the melted snow cascades down mountainsides in a few weeks, causing further erosion and leading to water shortages in the summer.

In its search for coal, the Communist government has used bulldozers on such a massive scale that they have "turned towns, farms and woodlands into coarse brown deserts and gaping hollows. Because open-pit mining is cheaper than underground mining, and has been practiced extensively, in some areas of Czechoslovakia "you have total devastation of the land."

East Germany

The new German government has claimed that nearly 40 percent of the East German populace suffers ill effects from pollutants in the air. In Leipzig, half the children are treated each year for illnesses believed to be associated with air pollution. Eighty percent of eastern Germany’s surface waters are classified as unsuitable for fishing, sports, or drinking, and one out of three lakes has been declared biologically dead because of decades of untreated dumping of chemical waste.

Much of the East German landscape has been devastated. Fifteen to 20 percent of its forests are dead, and another 40 percent are said to be dying. Between 1960 and 1980 at least 70 villages were destroyed and their inhabitants uprooted by the government, which wanted to mine high-sulphur brown coal. The countryside is now "pitted with moon-like craters" and "laced with the remains of what were once spruce and pine trees, nestled amid clouds of rancid smog." The air in some cities is so polluted that residents use their car headlights during the day, and visitors have been known to vomit from breathing the air.

Nearly identical problems exist in Bulgaria, Hungary, Romania, and Yugoslavia.

Visiting scientists have concluded that pollution in Central and Eastern Europe "is more dangerous and widespread than anything they have seen in the Western industrial nations."

II. United States: Public Sector Pollution

The last refuge of those who advocate socialistic solutions to environmental pollution is the claim that it is the lack of democratic processes that prevents the Communist nations from truly serving the public interest. If this theory is correct, then the public sector of an established democracy such as the United States should be one of the best examples of environmental responsibility. But U.S. government agencies are among the most cavalier when it comes to environmental stewardship.

There is much evidence to dispute the theory that only private businesses pollute. In the United States, we need look no further than our own government agencies. These public sector institutions, such as the US Department of Defence, are among the worst offenders. The Department of Defence now generates more than 400,000 tons of hazardous waste a year — more than is produced by the five largest chemical companies combined. To make matters worse, the Environmental Protection Agency lacks the enforcement power over the public sector that it possesses over the private sector.

The lax situation uncovered by the General Accounting Office (GAO) at Tinker Air Force Base in Oklahoma is typical of the way in which many Federal agencies respond to the EPA’s directives. "Although Department of Defence policy calls for the military services to … implement EPA’s hazardous waste management regulations, we found that Tinker has been selling…waste oil, fuels, and solvents rather than recycling," reported the GAO.

One of the world’s most poisonous spots lies about 10 miles northeast of Denver in the Army’s Rocky Mountain Arsenal. Nerve gas, mustard shells, the anti-crop spray TX, and incendiary devices have been dumped into pits there over the past 40 years. Dealing with only one "basin" of this dump cost $40 million. Six hundred thousand cubic yards of contaminated soil and sludge had to be scraped and entombed in a 16-acre, double-lined waste pile.

There are plenty of other examples of US Defence Department facilities that need major clean-up. In fact, total costs of along-term Pentagon clean-up are hard to get a handle on. Some officials have conceded that the price tag could eventually exceed $20 billion.

Government-owned power plants are another example of public-sector pollution. These plants are a large source of sulphur dioxide emissions. The federal government’s Tennessee Valley Authority operates 59 coal-fired power plants in the Southeast, where it has had major legal confrontations with state governments who want the Federal agency to comply with state governments who want the Federal agency to comply with state environmental regulations. The TVA has fought the state governments for years over compliance with their clean air standards. It won a major Supreme Court victory when the Court ruled that, as a federal government enterprise, it could be exempt from environmental regulations with which private sector and local government power plants must comply.

Federal agricultural policy also has been a large source of pollution, in the past encouraging over utilization of land subject to erosion. Powerful farm lobbies have protected "non-point" sources of pollution from the heavy hand of regulation places on other private industries.

III. Policy Implications

These examples of environmental degradation throughout the world suggest some valuable lessons. First, it is not free enterprise per se that causes environmental harm; if so, the socialist world would be environmentally pristine.

The heart of the problem lies with the failure of our legal institutions, not the free enterprise system. Specifically, American laws were weakened more than a century ago by Progressive Era courts that believed economic progress was in the public interest and should therefore supersede individual rights.

The English common law tradition of the protection of private property rights — including the right to be free from pollution — was slowly overturned. In other words, many environmental problems are not caused by "market failure" but by government’s failure to enforce property rights. It is a travesty of justice when downstream residents, for example, cannot hold an upstream polluter responsible for damaging their properties. The common law tradition must be revived if we are to enjoy a healthy market economy and a cleaner environment. Potential polluters must know in advance that they will be held responsible for their actions.

The second lesson is that the plundering of the environment in the socialist world is a grand example of the tragedy of the commons. Under communal property ownership, where no one owns or is responsible for a natural resource, the inclination is for each individual to abuse or deplete the resource before someone else does. Common examples of this "tragedy" are how people litter public streets and parks much more than their own yards; private housing is much better maintained than public lands but maintain lush pastures on their own property; the national forests are carelessly over-logged, but private forests are carefully managed and reforested by lumber companies with "super trees"; and game fish are habitually overfished in public waterways but thrive in private lakes and streams. The tragedy of the commons is a lesson for those who believe that further nationalization and governmental control of natural resources is a solution to our environmental problems.

These two pillars of free enterprise — sound liability laws that hold people responsible for actions and the enforcement of private property rights — are important stepping stones to environmental protection.

Image result for "Thomas Di Lorenzo"Thomas Di Lorenzo is Professor of. Economics at Loyola College in Maryland and a research associate of the Competitive. Enterprise Institute in Washington.

This post first appeared in The Freeman.


  • “Unfortunately, a society which spurns private property — and hands resources over to government planners instead — often learns the terrible lessons of central planning and especially of the tragedy of the commons, i.e., that commonly-held resources will be plundered to extinction. After all, what real disincentive is there to me to take the last commonly-owned tree when I really, really need that tree to make a fire?”
    Why We Need Private Property to Deal with Scarce Resources – Patrick Barron, NOT PC
  • “Both the pope and Bill Gates believe that communists and central planners care for the environment.
    “They’ve clearly forgotten the black wastes of Magnitogorsk (above), the soviet engine of steel production, where no-one could even see the black ooze that filled streets and rivers because of the smoke. 
    “And Dzherzhinsk (right), the Soviet chemical capital, with its toxic waste of dumped chemical weapons that were all too visible after the Wall came down.
    “And they’ve clearly never seen the air in China, the last-unlamented home of the five-year plan…”
    Bill Gates: Communism & climate – NOT PC
  • “Because the incentives are all wrong. One look at the Soviet Union’s lethal legacy of filth or of logging and forest clearance in the Amazon is enough to show what happens when government owns everything, and is interested in extraction at all costs.”
    Property rights urgently needed to allow mineral riches to be safely exploited – NOT PC
  • “It gives meat processors a licence to dump their wastewater into rivers and oceans; it gifts farmers, pulp and paper mills and landfill sites to discharge their waste into lakes and rivers; it gifts councils a licence to dump sewage effluent directly into an ocean and river outfalls all over the country.  A license that, especially if you’re a council, you are able to flaunt at will – especially, as Ms Whaitiri points out, since they are frequently (and inappropriately) both developer and regulator. … 
    “So get this straight: whatever you might hear in your daily headlines, the RMA is not an Act that protects the environment*—partly because it has failed to recognise the property rights of those affected by this kind of pollution, and because it has removed almost every legal mechanism for them to protect their legitimate rights.  If we look at common law, however, we discover that common law offers precisely what both the environment and those affected most urgently need: i.e., a mechanism whereby their legitimate rights in the river are legally protected.”
    How the RMA continues to protect polluters – NOT PC
  • ”But there do appear to be two main issues: increased draw-offs for irrigation and resulting 'competition' for water in Canterbury and Southland; and the effect of farming on water quality in lakes and rivers. 
    “You won't be surprised to hear I've got something to say about both, nor that what I've got to say involves property rights.. As Jan Wright almost inadvertently pointed out in interviews yesterday, ‘the Resource Management Act is causing fundamental problems for water management.’   She's right, but not in the manner she thinks she is. The fundamental problem caused by the RMA is insufficiently secure property rights. The cure for both problems is more secure property rights.  Let's me tell you how.
    Dirty dairying and dodgy drafting – NOT PC
  • “Amongst ways to avoid the tragedy of the commons are to use administrative or economic tools that recognise the value of a resource, but even an advanced administrative system may not cope with demand for water in the absence of an economic instrument to measure its availability.   Once the resource is defined, it is necessary to allocate rights to it, typically based on historic or economic criteria, and to devise means to monitor its abundance and police its use.   Even assigning economic value through private ownership carries the difficulty of defining ownership.   There are also costs associated with the definition.   This chapter examines the concepts of water as a) an administered common resource, b) a private resource and c) an economic hybrid of those two.”
    Access to Irrigation Water: Private Property Rights Applied to NZ Water’ - Chapter 3: Ascribing Economic Value to Water – Craig Milmine