Social Cigar

As most people know I am an avid fan of Cigars. I think that some of the best thoughts in the world can come from relaxing with a Cigar or a Pipe. Einstein in fact smoked a pipe. There are many sites I recommend.

First to buy cigars I recommend and Cigar International. These both offer competitive rates with low cost of shipping. usually has a better selection of singles, while Cigar International is better with non-cigar things for humidification and so on.

A good facebook like social networking site is Social Cigar. This site though disturbs me with it’s them. It seems very “Che” revolutionary and communist. Either way, I encourage you to take up this get hobby and share one with your friends.

Of course, none of this can be complete without a little speech on smoking bans. They have been a plague to our nation and should be stopped. It is up to the freedom of the bar or food establishment owners to decide if they want to allow smoking. Next, it is up to the persons who want to get food or drink. If the owner finds out that the demand for a non-smoking environment is higher than a smoking environment then he will adjust accordingly.

I hope you enjoy these links as much as I do and support the cause.


Published in: on October 31, 2008 at 6:40 am  Leave a Comment  
Tags: , , , , ,

Book Review: Soul by Soul: Life Inside the Antebellum Slave Market

The book “Soul by Soul: Life Inside the Antebellum Slave Market” by Walter Johnson takes you through a tour of how slavery worked in the United States before the Civil War. Everyday we are faced with different types of goods and products when deciding on making a purchase. Most of these purchases do not talk and walk or except for pets they do not breath either. It can be almost impossible for us to imagine purchasing a person and going through this type of process.

This book takes us into the life of slave traders and slave buyers. This is a market in which we hopefully will never see in America. It tells the stories about how slave traders would buy slaves in which it thought its buyers would like. The would be like any other speculator buying low and selling high. It takes us in the world of the slave buyer. They want to make sure that the slave is healthy, strong, and skilled. They want to make sure they are not paying more than they should.

It even takes you into the world of the slave. The idea that you are worth a certain amount. This is the part of the book I found to be the most profound. Slaves could determine their own value. When slavebuyers would come around to look at slaves, they didn’t just look at scars and physical traits, they ask questions. They would try to evaluate what their skills were by what the slave thought his skills were. They found out about family. It was well known that the more you ripped a slave from it’s family the more of a chance you had that they would leave and run away.

Overall, I would say this book is interesting because it sheds light on a market that no longer exists in most peoples modern lives. The only downside is that his points to me could have been summarized better and put into much better order. I never really understood where the book was going. To me the book should have focused more on each person in a different chapter, like I highlighted before. If you are interested in slavery and the market process this would be a good book for you. If you are like me and need a well organized layout. This layout may distract you from the story telling.


Published in: on October 30, 2008 at 11:54 pm  Comments (2)  
Tags: , , , , ,

Is there “Free Trade Imperialism?” Part II

This is the final part of a two part series asking the question, “Can free trade be used for Imperialism?” So far, I have said that the over arching thesis of the article discussed (information can be found on the previous post) is probably true. Britain at this time was still imperialistic. The authors define two types of Imperialism, formal and informal. Formal is exactly Imperialism and at this time is being cash in an anti-Imperialistic shadow. Informal is what we are now going to talk about. Do these countries that are agreeing to trade with Britain becoming economically dependent, thus becoming apart of an informal empire?

My argument here is no. Free trade is not imperialism. When countries become more dependent on each other it happens pretty evenly. Once the countries are engaged in trade, it will only hurt both of them to remove themselves from it. Therefore, one country even if more developed will not have any power over the underdeveloped country.

For example, if under developed country ‘A’ trades bananas to developed country ‘B’ which invests into building factories there they both are benefiting. This also plays into the idea of “Comparative Advantage.” If country ‘A’ feels like it is being taken over and losing it sovereignty to country ‘B,’ then they have three choices, tariff, embargo, or do nothing.

Since this post has “free trade” in it, we will assume they will not tariff as these can act like marginal embargoing. If you tariff incoming goods or tax foreign direct investment then the marginal business or investor will stop sending goods and money to this country.

If country ‘A’ chooses to embargo, then they lose all foreign direct investment (FDI) to build these new factories. This would cause job loss and physical capital would have been wasted. If country ‘A’ is wealthy enough it is possible that they could nationalize these factories and keep both the human and physical capital useful. Even though the country would be getting the factories at a discounted rate, it would still costs a lot to run. You would have to hire bureaucrats and government officials to keep it going. These people would have to be very skilled businessmen and more than likely would come with a high price tag.

Since country ‘A’ choose embargo, they also loose customers in their banana exporting. This would also cause a lost of jobs and domestic investment. Entrepreneurs would have seen that the market for bananas had opened up both with more customers and less tariffs. It could be easy to see how this would be a net loss for country ‘A.’ Country ‘B’ definitely loses here because they have lost all of their investments along with a stable and cheap importation of bananas.

Now if country ‘B’ wants to exert force upon country ‘A’ because they may be politically unstable. They could do the same three things, tariff, embargo, or do nothing. If country ‘B’ tariffs it would be the same as country ‘A’ by being a marginal embargo, so lets focus on that.

If country ‘B’ embargo’s country ‘A’ to try and gain political power then country ‘B’ must close down all the factories and stop buying bananas from country ‘A.’ If we assume that the investors of country ‘b’ were private, now country ‘b’ is going to have angry investors. Country ‘b’ has told them that they are no longer allowed to run their factories. Country ‘b’ citizens are not going to be very happy either because they are no longer provided bananas which could be a good and affordable food item. Country ‘A’ is losing here too. They have lost the factory jobs and the banana customers like in the previous example. In fact, country ‘B’ would feel more hostility towards country ‘A’ for doing this and would not cause them to beg country ‘B’ to come back. In fact, there would be more of a chance of war (Smoot-Hawley Tariff). The main reason why country ‘A’ could survive is because of the substitution effect. They could find foreign investors that would buy these factories and enter in the same agreement. Country ‘b’ would have to find a new substitute for bananas.

If country ‘a’ finds substitutes for their FDI then Britain did not gain any political power. In fact, one could imagine that they would lose much power. This is somewhat what we saw with Cuba and the United States. The United States has no more power than they had on Cuba before the embargo. If anything they have less and Fidel Castro has used the embargo as an excuse to his people to turn them against the United States. Japan on the other hand has had very open markets. Shouldn’t they be controlling the world?


Published in: on October 30, 2008 at 9:13 am  Leave a Comment  
Tags: , , , , ,


The East African nation of Somalia has seen some turbulence over the past quarter century, and recent years have been no exception. In the middle of a massive civil war, Islamic extremists are using piracy to finance their war for control of the nation. In September, the became an international stir when some of the pirates seized control of a Ukrainian ship carrying Soviet weaponry, including tanks and shells.

NATO responded with a US led coalition of several international warships to Somali waters. Even the Russians have a warship en route to the area. The coalition was hoping presence alone would deter the pirates, but several more attacks have come since September.

Using a strategy of proactive defense, 5 additional attacks have been thwarted Tuesday. It seems like the threat of pirate raids in Somali waters is diminishing, but $18-30 million dollars of ransom money is known to be used to finance the bloodshed.

Besides the glorious title of “defender of the world”, why would NATO and the US be so involved in Somalia after we’ve had so much failure their in the 90’s? It turns out the US is very much involved in the Somali conflict. Apparently US forces have been involved in the fighting since 2003, and are likely still maintaining stability in the region today.

I thought that after the failed efforts of the early nineties, our government would realize that foreign intervention would not work. It seems that no-one really gets this, but there must be a greater reason for Ethiopia and the rest of the world to be so interested in the outcome.

Obviously Somalia is a poor nation with a low GDP and what not, but clearly the US and others have more invested than their image. It would be nice though, to see the cargo ship owners spend for their own pirate defense, rather then have the international taxpayer front the bill.


Published in: on October 30, 2008 at 2:38 am  Comments (2)  
Tags: , , ,

The Fed Cuts Rates to Start A New Bubble

First, if you haven’t you should read my posts on the Austrian Business Cycle here and here. My very first discussion of recessions can be found here. I can only repeat myself so many times.

Now we have heard that the Fed is going to cut interest rates, this from The USA Today:

“The Federal Reserve slashed interest rates a half-percentage point to the lowest level in more than four years Wednesday as policymakers try to limit the pain of an economic downturn.

Lower interest rates should eventually encourage consumers and businesses to borrow money once the crisis in credit markets eases. That will help the economy recover as people buy homes, machinery, cars and other items, PMI Group chief economist David Berson says.”

Of course, what happened around four years ago? The housing boom. If you look at the graph you will see that the interest rate was low for people to buy these housing. It went up and people couldn’t afford them. The natural rate of interest went up even more than that.

So this is the final step and the connector of the Austrian Business Cycle. If the Austrian theory is true then we should expect these moves to start another boom to pull us out of this recession and in about 7 years we will have another bust. We will then do it all over again.


Some Good News for Small Government Activists: Massachusetts

Just when you though small government reforms were dead in America. On election day, Massachusetts voters will be voting to eliminate the income tax in their state. This is not uncommon of states but very uncommon of Massachusetts, which has born and breed some of the nations “finest” big government politicians. This from USA Today:

The initiative would cut the state income tax in half as of Jan. 1 and eliminate it completely a year later, allowing an average taxpayer to pocket an additional $3,700 a year, supporters say.

Massachusetts would join nine other states that have no income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, says the Tax Foundation, a non-partisan group that monitors fiscal policy.”

This is great for small government citizens in America and Massachusetts. Here are some other tax related ballot options to watch on election night:

• North Dakota has a ballot measure that would cut most state income tax rates in half and reduce corporate income tax rates by 15%.

• Maine will ask residents if they want to reject recent legislation that requires insurers to pay a surcharge on some claims, raises taxes for large producers of malt liquor and wine and puts new taxes on soda.

• Oregon, which now allows up to $5,600 in federal income taxes to be deducted on state tax returns, has a measure to remove the cap.

• Arizona has an initiative that would prohibit new taxes on the sale or transfer of property.

Even though our federal government is acting up and will probably be proposing new taxes or more inflation. At least the state are giving us some relief. Libertarians and Conservatives can be proud that we are winning on the state level, pending all of these pass. Of course, if you are in one of these states be sure to vote the small government way.

It is just surprising that we have to look at the home of Ted Kennedy and John Kerry to see what small government reforms look like.

The rest of this article is here.

Published in: on October 29, 2008 at 9:49 am  Leave a Comment  
Tags: , ,

Is there “Free Trade Imperialism”? Part I

After reading the famous article “The Imperialism of Free Trade” by John Gallagher and Ronald Robinson, which was published in The Economic History Review in 1953, I was upset to see that someone would even consider such a thing. This is a summary of their argument:

After the colonial age, most settlements were throwing British rule off. Britain used free trade agreements to continue to have influence upon these countries. The purpose of these agreements was to make the colonies dependent upon the home country. The have two different types of control, formal and informal. Free trade is an example of informal. This is the quote from the paper:

“By slackening the formal political bond at the appropriate time, it was possible to rely on economic dependence and mutual good-feeling to keep the colonies bound to Britain while still using them as agents for further expansion.”

Their over arching thesis that Britain wasn’t anti-imperialist nation at this time may have been true. This is not due to free trade and creating “economic dependence.” This would be due to government coercion that is just more stylized than direct invasion. They used India as an example and how the “laissez-faire” era was full of (British) government lead growth. They admit this and call this the “formal” version of Imperialism.

“Informal” Imperialism, to them, is the Latin America case. They believe this does the same thing by extending trade patterns overseas and migration of both investment and cultural things. I do not see where Britain got that much of an advantage here. They increased their trade and put more investment in the country. I see this as an all around good for both sides. Capital is being invested in Argentina and they are growing and creating jobs, while the investors in Britain are sitting back and receiving dividends.

In conclusion of this first part of the two part series, Britain at this time was still exerting imperial control over some countries. With other countries, it wanted to exert control but could not and took the commercial income instead. This does not discount that they had an incentive to keep the foreign country stable. In “Part II,” we will look at whether this trade and investment can create “economic dependence” and whether or not this is imperialism or not? If it is, then is it a more efficient way? And if it isn’t then what is it?

You can see it on Thursday. This is possibly a working paper for me to try and get published so if you have any comments or suggestions let me know.


The Airline Industry says “Deregulate Me!”

This from the Wall Street Journal:

“The International Air Transport Association invited top aviation officials from across the globe to Istanbul this weekend to discuss removing political barriers that prescribe everything from what routes carriers may fly, to mergers and acquisitions. International air travel is regulated by a web of some 3,500 bilateral treaties among governments.

Many airlines say these rules, which date from World War II, hurt their finances by constricting their marketing strategies, commercial development and ability to merge with or acquire rivals. Many labor unions and politicians, however, support the rules, saying they protect airlines — and therefore jobs — that might disappear in a more globalized and deregulated industry.”

Public Choice theory would be surprised to here that these past regulations haven’t benefited or protected the airline industry. So you know it is bad when the airline industry is asking for a deregulation themselves. Most of the time an industry would lobby the government to bring them protection.

Of course, that is all on first glance and once you look at the next sentence where labor unions support this it all makes sense now. Mergers and acquisitions are banned usually because the belief is one airline will dominate the industry and charge high prices. What is really funny is that they aren’t even making that argument.

Instead the argument is that the airlines would be more “globalized” and job would disappear. In Economic/ without the BS terms, this means that the airlines would use economies of scale and become more efficient. Next, the airlines might find that it doesn’t need all the workers it once had in two airlines when they combine to one. This is your average protectionist tariff argument.

Well I support the airline industry and believe deregulation will be good for the industry. It will make it more efficient and cheaper for the passengers.

The rest of the article is here.


Stevens Convicted

Alaskan Senator and longest serving Republican Senator Ted Stevens was just found guilty of federal corruption charges. Although nobody really knows how the trial was run, the biases involved and the clarity and quality of the evidence, the verdict was no surprise.

Stevens was found guilty of seven counts of Senate ethics fraud on financial documents. Stevens tried to conceal hundreds of thousands of dollars in gifts provided by the states largest employer, oil contractor VECO. The charges are pretty solid, and will contain a sentence range of anywhere between 0 and 35 years in prison (don’t expect too many).

But here is the good part. Stevens is up for re-election in what is considered a fairly close race. And the Senator has decided to fight the charges and continue as a candidate! Wow. I’m not sure what to say. Either the Senator knows this was a truly unfair race and he is actually confident in fighting the charges, or he’s simply trying to cover the GOP’s butt with claims of innocence and injustice.

It was Sarah Palin who gave the “public sympathy” address to the people of Alaska. I bet it was heartfelt.


Published in: on October 27, 2008 at 8:16 pm  Leave a Comment  
Tags: , , ,

The Question That Still Hasn’t Been Answered.

How are we going to pay for all of this bailout? The only answer we have been getting is that it will pay for itself. Some have said we could even make money out of this. This is not a sure thing so what is the plan if we don’t? Even if we do, how do we get the money to front this bailout before we make the money back? Someone could start a business tomorrow and make millions but they need the initial funds to start this business, this works the same way.What are the ways our government can raise funds to pay for this?

First, they can raise taxes. President Bush and the Republican candidate John McCain have both talked about keeping the tax cuts. McCain has talked about decreasing spending, but he would have to decrease it a lot to make it down to the level to pay for this bailout. The Democratic candidate Barack Obama has talked about increasing taxes for the highest bracket, but at the same time is talking about increasing spending. It is unsure if this will even balance out his own spending, let alone the bailout.

Second, they could borrow. We have borrowed a lot so far for the war and other types of deficit spending, so it is possible that this could work. The problem with this is that it is future taxes. At some point, Americans will have to pay this back and the more we borrow the higher the interest rate probably.

Third, they can print money. This may seem like the most attractive option to government bureaucrats but is probably the most scary for Americans. Inflation has been popular for years with the populist movement. It is an issue that has only died in the past 40-50 years in America. The idea was that the more inflation you had, the easier it was for people to pay off their debts. As a government bureaucrat and these people that are in troubled mortgages, this is very attractive. Not only have you found a way for this to get paid for but you are allowing loans to be easier to be paid back.

So why is this a huge problem for taxpayers? First, because it devalues everyone’s property. The more money that is in the economy, the less you can buy with the money you currently own. Prices and wages may go up but it is possible that this is not a helicopter effect. The helicopter effect is the idea that when money is printed it is given out pretty much evenly. Since they are doing this during a “credit crunch” then only those who have very good credit ratings will get it first. This is in fact a regressive tax. We are devaluing everyone’s property and giving the new money to the rich. Not to mention that there is a cost in dealing with money that is inflating. You can no longer hold as much money in your pocket and savings accounts will not even been able to keep up.

The way our “democracy” is suppose to work is that we vote in the people we believe holds our values. If they want to bailout these homeowners then they tax us. After all, we were the ones who wanted them in office in the first place. If there is a problem and we do not believe this bailout should have happened, we vote out those who supported it and install new leaders who will stop the bailout and lower our taxes. Instead, politicians have figured out how to borrow and inflate so therefore nothing costs too much. We are not feeling the direct effect and we are not going to vote them out.

I could guarantee that if Congress was only allowed to tax, instead of borrow or inflate, there would have been a lot more ‘No’ votes on the bill. They would know that this would significantly raise people’s taxes and it is an election year. This would end up being a big loss for many Senators and Congressmen. This is why many states have adopted Constitutional amendments that make it a requirement to balance the budget. States cannot print money, but they can tax.

Economist Ludwig Von Mises fought with this very same issue over 70 years ago and here is what he had to say:

“A socialistic or semi-socialistic government needs money to operate unprofitable enterprises, to subsidize the unemployed and to provide the people with cheap food supplies. Yet, it cannot raise the funds through taxes. It dares not tell the people the truth. The pro-statist, pro-socialist doctrine calling for government operation of the railroads would lose its popularity very quickly if a special tax were levied to cover the operating losses of the government railroads.”

So how should we pay for this? Maybe we should make the Congressmen and Senators who voted “Yes” to raise the taxes in their area to pay for this. This way they would only vote for bills in which were very popular in their districts. If you do not like your new taxes, then you should vote you representative out.