By Chris Rossini
Today's Liberty Report focused on free trade vs. protectionism and how the latter has historically been a segue into war. Ron Paul and Daniel McAdams also discussed the heroic Richard Cobden and the political movement called the Anti-Corn Law League that was formed in 1838. See here for more on Cobden.
It's very easy to look at foreign trade on a superficial level. Those big American corporations go to China to exploit cheap labor, thus destroying "our jobs". That's about as far as most people are willing to contemplate the situation. Sadly that's a very naive perspective to hold.
Moving a company's operations (especially for a giant multi-national) is a big deal. It goes way beyond the "cheap labor" argument. Just imagine the legal implications of moving overseas. Now you have to deal with another set of laws in a totally different nation. There are foreign customs and language barriers that must be factored in as well. Then the foreign government itself must be considered. Will your assets be safe? Will the foreign government someday nationalize your business and take it all away from you? Will they strangle you with bureaucracy and red tape?
Amazingly enough, even with a laundry list of things to consider before moving your operations overseas, many American companies conclude that the pros outweigh the cons. If anything, it's not a testament to "exploiting cheap labor," as your average American will conclude, but that the U.S. business environment is so messed up that it's worth the move for many businesses.
Yet, how many Americans consider that they live under the largest government in the history of the world? How many consider that about 1,000 new regulations are created each day? America is swimming in oceans of red tape and bureaucracy. There are laws for everything. Who can you hire? How can you fire? Will you get sued if you fire? Are you discriminating? Are you "socially responsible"? Are you "green"? Are you following the edicts of more government agencies than you can keep track of?
Many business owners throw their hands up and say: "Forget it!"
They find greener pastures and governments that will welcome their businesses. Yet, the average American is well-trained to conclude only one thing: "cheap labor".
Unfortunately, American politicians that run for president don't look to roll back the biggest government in history. They perpetually campaign to take a bad situation and make it even worse.
Donald Trump is a prime example.
Trump likes to talk about trade as a zero sum game, as if there are "winners" and "losers". That's a fundamental misunderstanding of trade and exchange, but it works on the campaign trail, so he sticks with it. Trump boasts about how "we're" going to "beat China" and how he's going to slap tariffs on them.
Unfortunately, his audiences don't understand that when they cheer for tariffs, they're cheering for Trump to tax them! Yes, you read that correctly. Trump plans on "beating China" by taxing Americans!
Trump, as president, would have no power to tax the Chinese. But he can tax Americans, and that's what a tariff is. American consumers would be forced to pay higher prices for Chinese goods. The tariff would also raise revenues for the U.S. government. In other words, money out of your pocket and into the largest government pockets on earth. Trump, instead of shrinking the gargantuan U.S. government would, with tariffs, bloat it further.
In keeping with government tradition, Trump is essentially promising us "Always Higher Prices". Perhaps he can trademark that along with "Make America Great Again".
Protectionism is very dangerous. When governments get started in trade wars, they all too often lead to actual hot wars.
Trump's ideas must be thoroughly rejected.
Populist cries for trade protectionism are again ringing out, as politicians seek to blame China for bad US monetary and economic policy. But destroying trade will not only make us poorer, it is usually the harbinger of war.
By Ron Paul
While I'm very optimistic about the prospects for liberty, we live in dangerous times. It almost appears like the stage has been set for authoritarianism in America. Dictatorial types flourish in an environment of fear, and right now Americans are fearful for their economic futures, and (thanks to 24 hrs of propaganda) of numerous hobgoblins from overseas.
Authoritarianism is nothing new in mankind's history. Rather it is the ideas of liberty that are new. Freedom tends to appear in short and very powerful bursts, with America's founding years qualifying as one of those bursts. But tyranny and power do not sleep. Like weeds in a garden, they reappear to strangle everything in their path.
The stage seems to be set, not only for an authoritarian, but for a complete takeover by crony special interests as well. With a strong executive, motivated interests (like the military-industrial-complex) will cozy themselves up with the crown to an even greater degree.
Those of us that believe in free markets and liberty must contend with this environment. We cannot run away, nor shirk our responsibility to battle it intellectually. We must confront it head on, and with an expectation of victory.
The great Austrian economist Ludwig von Mises had to face the darkness of fascism and communism that was closing in on civilization. Yet he continued to speak and write the truth despite the odds that were staring him in the face. He left this wonderful quote that can help inspire us as dark clouds loom once again:
“Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping toward destruction. Therefore, everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interest of everyone hangs on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.”
We can turn this thing around.
The ideas of liberty are percolating beneath the surface. Washington DC and the media will never report it, nor do we need them to. We're extremely fortunate to have tools at our disposal that run circles around the gatekeepers of public opinion.
Our number one task is to use them with passion.
By Ryan McMaken
Lego — the company that makes stackable toy bricks — has become a toy powerhouse in recent years, even surpassing Mattel in toy sales during 2014. Lego has become so popular, in fact, that the company has problems avoiding “brick shortages.” Lego’s success has been helped along by the fact that — finally — Lego has managed to find success with girls.With the launch of the Lego Friends line, Lego has tapped into 50 percent of the child population:
according to research firm NPD Group, the market for girls’ construction toys in the U.S. and the main European countries tripled to $900 million in 2014 from $300 million in 2011, largely on the back of the Lego Friends sets. And Lego says the share of girls among Lego players, which stood below 10% in the U.S. before the launch of Lego Friends, has increased sharply.
The Feminist Controversy
Perhaps predictably, Lego has been condemned by feminists and culture warriors for making Lego too “girly.” Those familiar with the Friends line already know how, instead of red and blue bricks for making fire stations, the new line designed for girls features purple and pink blocks (among other colors) for constructing yachts, homes, and restaurants.
The Wall Street Journal recently examined the controversy, noting:
After five years of work, [Lego] was enthusiastic about launching Lego Friends. The new sets, however, immediately unleashed a torrent of criticism from feminist groups. A U.S. activist organization, the Spark Movement, gathered 50,000 signatures with an online petition in 2012 and requested a meeting with Lego executives. Another group, Feminist Frequency, also complained.
Ms. Edell, however, should probably aim her disappointment and disdain at seven-year-old girls rather than at Lego. After all, Lego’s success, or lack thereof, in marketing these products depends on the decisions of little girls.
Profit Seekers: Make Toys Girls Like
That is, Lego can only make money from the girl demographic if it makes toys little girls decide they want to play with. Following years of focus groups and surveys, Lego has produced toys that it thinks will attract their attention and demand.
Lego has said exactly this in interviews:
Our methods are simple; meet children’s needs by testing prototypes on them and getting their opinion. We have realized that girls like building too, so LEGO gave them the chance to customise their world, until then their needs were not met. We also realised that girls wanted to be able to identify with the figures and we therefore had to develop figures closer to their expectations: more feminine, less “square” than our standard mini-figurines. Since friendship is a core value for little girls, we created a universe which centred around a story of friendship between our 5 heroines.
Anyone who has daughters — and listens to what they say — can see this is a plausible scenario.
The Lego Friends line, which is just as rigorous in terms of construction difficulty as any other line, was designed to appeal to girls in ways that Legos did not before.
Lego wanted girls to buy their products, so it designed products that appealed to them, based on market research.
How Lego Became a Boy Brand
If Lego ignored what girls really wanted, and marketed something else, they would not make as much money. Or no money at all.
This explains how Lego became a “boy’s brand” in the first place.
After marketing its toys for years in a unisex manner, Lego found by the 1980s that all its best-selling sets were “boy” sets featuring pirates and knights and spacemen.
The company then began to market more aggressively to boys, since like most companies, it ended up focusing on the most profitable sector of its customer base.
Lego Finally Figures Out What Girls Want
Lego still attempted to market to girls, but failed, perhaps even due to genuine sexism. Thinking that girls did not want the same level of rigor in construction as boys, Lego in the 1970s and afterward marketed a variety of “simplified” types of Legos that failed. These included Lego jewelry sets known as “Scala” and easy-to-build sets based on mimicking doll houses.
If Lego was being sexist, it was punished by the market for it. Lego simply failed to cater to the wants and needs of girls. And it endured foregone profits because of it.
With Lego Friends, Lego finally found a line that girls actually like, and the market is rewarding them accordingly. Meanwhile, feminists attack Lego for making toys that children want to buy, but which feminists think girls should not want to buy.
The real problem the anti-Lego feminists have then, is not with Lego but with the fact that girls like to play with the sort of toys found in the Friends line. The blame for this lies with the girls themselves.
After all, Lego did not raise these girls or tell them what to like. Lego simply wants to make toys that they will buy based on their existing preferences.
Indeed, any competent toy executive will be agnostic as to the question of what girls should like. They must focus instead on what girls do like. Toy companies make money by selling toys that will be popular with as little effort (for the company) as possible. And, it turns out, much to the annoyance of some activists, girls like a Lego experience that includes pink and purple bricks.
Producers Don’t Dictate to Consumers
Now, the source of the misunderstanding here is apparent. The activists think that Lego is responsible for deciding what girls should want because — like many people who don’t understand how markets work — they think that producers dictate to consumers what to buy.
The idea at work here is that girls will buy and like whatever it is that Lego Corp. wants to market to them. Thus, by extension, it is Lego’s job to fight culture wars and tell girls what the “correct” play experience is.
But it doesn’t work that way. Companies make money by selling what people want. At the same time, companies that make products few people like will ultimately fail, no matter how many commercials they put on the television.
Consumers Decide What Is Produced
After all, if people will buy whatever they’re told to buy, then why not just spend nearly 100 percent of the toy company’s budget on marketing and advertising? The rest can go to making a low-quality product. If it breaks easily or turns out to be no fun, then that’s all the better because then they’ll just buy another one because an ad told them to.
If a slick ad campaign is all that is necessary to make someone like a product, just make a slick ad showing the sub-par product in a good light. People will just keep on buying it because the advertisements say so.
Everyone instinctively knows this is not true, though. McDonald’s can run TV commercials all day long, but that, apparently, isn’t enough to keep people buying Mickey D’s food at the price the company prefers. Subway can repeat the “eat fresh” mantra, but that won’t keep sales from slipping, as they have been doing for several years.
And if we’ll buy whatever toy makers tell us to buy, why aren’t children playing with the same toys they were playing with thirty years ago? It costs money to develop new toy lines and design new sets. Why go through the trouble of creating new toys, when it’s possible to make customers like your products by just running ads for existing ones?
The reason for this, as Murray Rothbard observed long ago, is that every consumer has the ability to simply refuse to purchase what she’s asked to buy for whatever reason or whim she deems important. Ludwig von Mises called this “consumer sovereignty.”
Even more frustrating to producers is the fact that consumer preferences change constantly due to a variety of — often inscrutable — factors far beyond the control of marketers and producers. Producers thus have a choice: adapt to changing customer preferences, or die.
This article was originally published at The Mises Institute.
According to a new survey, Donald Trump voters can be identified by their attraction to authoritarianism. That may be the case, but aren't many voters who support today's politicians attracted to authoritarianism over liberty? What are the real authoritarian traits?
By Ron Paul
This has been the most dramatic week in US/Iranian relations since 1979.
Last weekend ten US Navy personnel were caught in Iranian waters, as the Pentagon kept changing its story on how they got there. It could have been a disaster for President Obama’s big gamble on diplomacy over conflict with Iran. But after several rounds of telephone diplomacy between Secretary of State John Kerry and his Iranian counterpart Javad Zarif, the Iranian leadership – which we are told by the neocons is too irrational to even talk to – did a most rational thing: weighing the costs and benefits they decided it made more sense not to belabor the question of what an armed US Naval vessel was doing just miles from an Iranian military base. Instead of escalating, the Iranian government fed the sailors and sent them back to their base in Bahrain.
Then on Saturday, the Iranians released four Iranian-Americans from prison, including Washington Post reporter Jason Rezaian. On the US side, seven Iranians held in US prisons, including six who were dual citizens, were granted clemency. The seven were in prison for seeking to trade with Iran in violation of the decades-old US economic sanctions.
This mutual release came just hours before the United Nations certified that Iran had met its obligations under the nuclear treaty signed last summer and that, accordingly, US and international sanctions would be lifted against the country.
How did the “irrational” Iranians celebrate being allowed back into the international community? They immediately announced a massive purchase of more than 100 passenger planes from the European Airbus company, and that they would also purchase spare parts from Seattle-based Boeing. Additionally, US oil executives have been in Tehran negotiating trade deals to be finalized as soon as it is legal to do so. The jobs created by this peaceful trade will be beneficial to all parties concerned. The only jobs that should be lost are the Washington advocates of re-introducing sanctions on Iran.
Events this week have dealt a harsh blow to Washington’s neocons, who for decades have been warning against any engagement with Iran. These true isolationists were determined that only regime change and a puppet government in Tehran could produce peaceful relations between the US and Iran. Instead, engagement has worked to the benefit of the US and Iran.
Proven wrong, however, we should not expect the neocons to apologize or even pause to reflect on their failed ideology. Instead, they will continue to call for new sanctions on any pretext. They even found a way to complain about the release of the US sailors – they should have never been confronted in the first place even if they were in Iranian waters. And they even found a way to complain about the return of the four Iranian-Americans to their families and loved ones – the US should have never negotiated with the Iranians to coordinate the release of prisoners, they grumbled. It was a show of weakness to negotiate! Tell that to the families on both sides who can now enjoy the company of their loved ones once again!
I have often said that the neocons’ greatest fear is for peace to break out. Their well-paid jobs are dependent on conflict, sanctions, and pre-emptive war. They grow wealthy on conflict, which only drains our economy. Let’s hope that this new opening with Iran will allow many other productive Americans to grow wealthy through trade and business ties. Let’s hope many new productive jobs will be created on both sides. Peace is prosperous!
By Ron Paul
Editor's Note: You can watch Dr. Paul deliver the following speech here.
The economic calamity, anticipated by free market advocates, is now at hand.
The current mantra is that the unfolding crisis is caused by deflationary forces, which must be reversed. Paul Krugman champions a solution of increasing government and consumer spending, ignoring debt as a problem, and continuing the Federal Reserve’s unrelenting inflation of the money supply with zero interest rates. Concern for any negative consequence that might arise from such a policy is nowhere to be found.
The other “Paul” -- yours truly -- along with all Austrian economists, strongly disagrees. Continuing and accelerating the policies that gave us this worldwide crisis can’t possibly be the solution.
Deflationary forces are indeed a major problem. They are, however, more a symptom than the cause. It must be understood that market forces and economic law ultimately prevail. Deflation is a market reaction to an inflationary monetary policy out of control. Seeing deflation as the entire problem will not help in finding a solution to the shrinking economy and the loss of real wealth over the past 15 years.
Markets demand a correction when excesses result from massive monetary inflation and zero interest rates. An economy overburdened with debt, overcapacity, mal-investments, and a government overly involved in all economic activity, cannot thrive. A problem of this sort would not exist without a Federal Reserve that accommodates the political demands of operating a welfare /warfare state.
There is a strong disagreement between the Paul Krugman Keynesians and those who believe in a free market economy on both the nature and definition of deflation. Keynesians and many others claim that falling prices define deflation. That is deliberately misleading. If computers and cell phone prices decline because of competition and advanced technology, lower prices are a benefit to the consumer.
True deflation occurred in the 1930s as a correction to the Federal Reserve’s inflation of the 1920s. This means that the money supply shrunk. If the government in the 1930s had taken a hands-off approach the market correction of prices and debt would have occurred much more quickly, as it did in the 1921 depression. It makes no sense to obsess over deflation. Deflation is a consequence of earlier inflation and as such is actually a market solution to problems caused by the excesses of Federal Reserve policy.
All the special interests that benefit from government spending and deficit financing for various reasons – and this includes most Republicans and Democrats – constantly misdefine inflation and deflation on purpose. They claim that prices going up or down is inflation or deflation in order to deflect criticism away from the Federal Reserve and its disastrous monetary policy. The complaint by those who argue for monetary inflation has always been that the real culprit is free markets and sound money – meaning commodity money. It’s never the Fed’s fault.
This then allows more lies to be told to justify runaway welfare spending and war profiteering in unconstitutional wars, while providing great benefits to the financial industries. Profits, wages, and consumer prices can be blamed for the inflation and then used to justify more government regulations. The crisis of 2008 did not result in limiting the Federal Reserve and its arbitrary powers to print money at will. Instead it gave us Dodd/Frank and delivered much greater powers to the Federal Reserve to practice central economic planning for the benefit of the special interests.
Concentrating only on deflation and ignoring the unlawful dangerous powers of the Fed to inflate and regulate will always result in a steady weakening of the economy – an economy which today is now facing total collapse. Deflationary pressures do exist. Some debt and mal-investment is being liquidated. But the correction is constantly impeded by the Federal Reserve’s monetary policy and congressional spending. Still the inexorable growth of the monetary base and the artificially low interest rates continue. As this is not going to change, expect our problems to be with us for a long time to come.
The monetary excesses so far have mostly found their way into the financial markets – stocks, bonds, government debt, government education activity, and medical care. In all these areas we have excessive price increases. Central banks can create credit out of thin air but they have no control over where it ultimately ends. The high cost of living is devastating to retirees and the middle class. We should expect this to get worse, and government manipulation of the CPI and the PPI numbers will not fool the millions of people currently living from hand to mouth and suffering from the insidious effect of constant inflation.
When we hear that the only economic problem we have to deal with is deflation, and that if the Fed could only get prices to rise at a two percent rate all would be well, we should dismiss such foolishness. When the argument is always for more inflation, question it. Challenge it. Study Austrian economics and its explanation of the business cycle. Find out why all paper money throughout history has collapsed and disappeared. Check and see how long commodity money has been chosen as the money of choice when the people have a chance to “vote” on it or be allowed to use it. Hint: it has been the case throughout all recorded history.
The economic calamity anticipated by free market advocates is now at hand. The Keynesians like Paul Krugman are the ones who got us into this mess -- again. Do not trust them to get us out of it. How can you understand what is really unfolding before us? Ron Paul provides several critical tips in his latest special report.
By Thomas DiLorenzo
From Frederic Bastiat, The Law (1850), p. 22:
“Socialism, like the old policy from which it emanates, confounds Government and society. And so, every time we object to a thing being done by Government, it [i.e., socialism and socialists] concludes that we object to its being done at all. We disapprove of education by the State — then we are against education altogether. We object to a State religion — then we would have no religion at all. We object to an equality which is brought about by the State then we are against equality, etc., etc. They might as well accuse us of wishing men not to eat because we object to the cultivation of corn by the State.”
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Ron Paul once again smashes the latest myths! -- Bernie Sanders has a fundamental misunderstanding of The Fed and sound money -- Hillary's anti-gun crusade gets more bizarre by the day -- Tom Cotton doesn't understand that Gitmo is a recruiter of terrorists -- Obama's pie-in-the-sky view of America, and much more!