Nobody Knows How to Make a Pencil or Why Government Locks In Failure

Kevin Williamson has a great article over at National Review Online talking about how in the private sector everything gets better and cheaper all the time, e.g. mobile phones, and how

“We treat technological progress as though it were a natural process, and we speak of Moore’s law — computers’ processing power doubles every two years — as though it were one of the laws of thermodynamics. But it is not an inevitable, natural process. It is the outcome of a particular social order.”

He goes on to show how competitive markets allow for competitors to come and go, rise and fall, and how important it is for failure to be possible as contrasted with institutionalized failure when politics takes over and government tries to pick winners and losers:

“Politics creates the immortal corporation. Amtrak and the U.S. Postal Service are two institutions that would have failed long ago if not for government support — subsidies for Amtrak, the government-chartered monopoly on letter delivery for the postal service. The cost of their corporate immortality is not only the waste associated with maintaining them, but also the fact that their existence prevents the emergence of superior alternatives.”

It comes back to “the knowledge problem” or as Hayek put it, the fatal conceit that a small group of people or an individual can have all the knowledge necessary to direct an entire industry (think healthcare, e.g.) or an economy. This article is one of the best discussions of this I have seen.

Read the whole thing.

Daniel Hannan–Occupy Wall Street Debate at the Oxford Union

British MEP Daniel Hannan gave a speech in a debate before the Oxford Union earlier this week in which he defended capitalism and pointing out that the system we have now is not capitalism but corporatism. He also said that the Occupy Wall Street crowd were occupying the wrong places.  This man is one of the most eloquent speakers I’ve ever heard. Watch, listen and learn.

Whole Foods CEO John Mackey on the Moral Case for Capitalism

In this Reason TV video Whole Foods CEO John Mackey says we need to change the narrative on capitalism and make the moral case for why it is the best system for bettering humanity. He says the narrative has been hijacked by intellectuals who depict capitalism as being solely focused on profits and self-interest while ignoring the value it creates for not only businesses but everyone that touches that business from suppliers to employees to customers.

Let’s not forget Milton Friedman as well.

What Profit Represents

Quote of the Day:

" Profits are not deductions from the sum of the public good, but the real measure of the social value a firm creates."

Kevin D. Williamson at National Review, writing about  the late Steve Jobs' contribution to society.

Read the whole thing.

What Do You Get When Capital Is Absent? One Word: Haiti

Jeffrey Tucker at the Ludwig von Mises Institute examines why commerce and trade alone are not sufficient by themselves to create wealth using Haiti as an example. Both are necessary conditions and both occur there, so why isn't Haiti prosperous? It is the lack of capital which he defines as an institution. Capital is goods, not goods to be consumed but to be used in the production of other goods for consumption. It is a near certainty in Haiti that any capital anyone begins to accumulate will be systematically looted by the government. It's a very insightful article and you should definitely read the whole thing but here is the conclusion: 

Now, to be sure, there are plenty of Americans who are firmly convinced that we would all be better off if we grew our own food, bought only locally, kept firms small, eschewed modern conveniences like home appliances, went back to using only natural products, expropriated wealthy savers, harassed the capitalistic class until it felt itself unwelcome and vanished. This paradise has a name, and it is Haiti.

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