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Posts Tagged ‘Free Markets’

Having just done a blog post where I explained that government should stay neutral in fights between labor and management in the private sector, let’s look at a real-world example to understand why.

The millionaire owners and millionaire players from the National Football League are locked in a labor dispute. This is somewhat understandable since there are ten of millions of dollars of profit available and both sides obviously have an interest in getting the biggest slice of that income.

I don’t care who wins, but government has no role in this squabble (or in discussions about college football championships).

In a free society, people have the right to sign contracts. But freedom also means they have a right to not sign contracts. Indeed, these principle of self-ownership and control over property are key defining characteristic of liberty.

That’s why it is disappointing that the players are trying to get the government to tilt the playing field in their direction. Led by big-name stars (for PR value), the players are going to court in hopes of getting the government to use misguided and coercive antitrust laws to hamstring the negotiating position of owners.

The market should determine the outcome of this dispute, however, not the sordid world of government and politics. The players do not have a right to jobs with NFL teams, just as NFL teams do not have a right to force people into playing football.

Yes, it is a “restraint on trade” for NFL owners to not sign contracts, but it is also a “restraint of trade” for top athletes to choose not to play. But this simply illustrates why antitrust laws are so foolish and so inconsistent with the freedom of contract.

Here’s a blurb from the Associated Press report.

…quarterbacks Tom Brady, Peyton Manning and Drew Brees were among 10 players who sued the NFL in federal court Friday, accusing the league of conspiracy and anticompetitive practices that date back years. Their lawsuit asked the court to prevent a lockout. …They filed a request for an injunction that would keep the NFL and the teams from engaging in a lockout. Invoking the Sherman Act, a federal antitrust statute from 1890 that limits monopolies and restrictions on commerce, the players said they were entitled to triple the amount of any damages they’ve incurred. …The players accused the 32 NFL teams of conspiring to deny their ability to market their services “through a patently unlawful group boycott and price-fixing arrangement or, in the alternative, a unilaterally imposed set of anticompetitive restrictions on player movement, free agency and competitive market freedom.” The collective bargaining agreement with the league was expiring Friday.

One caveat. The title of this post says there is no role for government, but that’s not completely true. The courts have a role as neutral arbiters if there is a dispute about whether one side or the other has failed to live up to the terms of a voluntary contract. Though I suppose my caveat has a caveat since the two sides also could pick a private arbitration service to be the neutral judge of any dispute.

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Ronald Reagan would have been 100 years old on February 6, so let’s celebrate his life by comparing the success of his pro-market policies with the failure of Barack Obama’s policies (which are basically a continuation of George W. Bush’s policies, so this is not a partisan jab).

The Federal Reserve Bank of Minneapolis has a fascinating (at least for economic geeks) interactive webpage that allows readers to compare economic downturns and recoveries, both on the basis of output and employment.

The results are remarkable. Reagan focused on reducing the burden of government and the economy responded. Obama (and Bush) tried the opposite approach, but spending, bailouts, and intervention have not worked. This first chart shows economic output.

The employment chart below provides an equally stark comparison. If anything, this second chart is even more damning since employment has not bounced back from the trough. But that shouldn’t be too surprising. Why create jobs when government is subsidizing unemployment and penalizing production? And we already know the so-called stimulus has been a flop.

None of this should be interpreted to mean Reagan is ready for sainthood. He made plenty of compromises during his eight years in office, and some of them were detours in the wrong direction. But the general direction was positive, which is why he’s the best President of my lifetime.*

*Though he may not be the best President of the 20th Century.

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I prefer the Fraser Institute’s Economic Freedom of the World over the Heritage/WSJ Index of Economic Freedom, not because I’m an expert on the methodology of the two publications, but for the simple reason that I assume Economic Freedom of the World must be slightly more accurate because, unlike the Heritage Index,  it showed the U.S. score declining during the Bush years.

That being said, the Index of Economic Freedom is my favorite Heritage Foundation publication. It is a first-rate collection of data and analysis on international economic policy trends. Today, however, the latest version of the Index was released and it brings us bad news about the United States.

America’s score dropped by 0.2. Combined with what happened to other nations, that dropped the United States down to 9th place. Lots of fascinating material in the report. The very solid scores for Chile and Estonia (both just outside the top 10) are especially noteworthy. And a special shout out to North Korea for easily beating Cuba and Zimbabwe for the last prize honor.

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Thanks to the folks at the Mises Institute, Professor George Selgin of the University of Georgia (!) has a superb presentation on the failings of the Federal Reserve. George was one of my professors at George Mason University back in the 1980s and is one of the world’s experts on competing currencies. This video is 1,000-times more substantive than the famous “QE2″ video I posted last month. Fed bashing is fun, but watch this if you want to understand economics and history.

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The fight for financial freedom and limited government is global. The Center for Freedom and Prosperity recognizes Eduardo Morgan Jr., an individual whose work for his native Panama echoes much of our own efforts to defend fiscal sovereignty from the onslaught of anti-growth taxation and regulation.

As Panama’s Ambassador to Washington from 1996 to 1998, Eduardo Morgan Jr. saw his country attacked by US political and economic leaders. Ever since, he has dedicated himself to exposing the hypocrisy of the OECD and its members for attacking other countries that want to compete for investment and capital.

Since the beginning of the year, Eduardo has also contributed factual analysis to the online discussion with his blog, which I highly recommend to our readers. His work on behalf of Panama should serve as an inspiration to all individuals and nations that seek freedom and prosperity.
http://www.eduardomorgan.com/blog/

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Here’s a cheerful story I saw linked on Drudge, which shows that sometimes rich people are not guilt-ridden statists and instead stand shoulder to shoulder with ordinary people to fight bad government policy. In Australia, the leftist government wants to impose a class-warfare tax on the mining industry, but the scheme is backfiring as opponents point out such a levy will undermine national competitiveness.

It was, by any measure, a most unusual rally. Many of the placard-waving protesters gathered in a Perth park wore suits and ties, and impassioned speeches were delivered from the back of a flat-bed truck by two billionaires, including Australia’s richest woman.

Gina Rinehart’s pearls glistened in the sunlight as she bellowed through a megaphone: “Axe the tax!” Ms Rinehart has a personal fortune of $4.8bn (£2.7bn). Andrew Forrest, in monogrammed worker’s overalls, told the well-mannered crowd that Australia was “turning Communist”. Mr Forrest is the country’s fourth richest person, worth an estimated $4.2bn.

…Now Kevin Rudd’s Labour government is planning to levy an extra tax on the mining industry, and the industry is furious. The issue has dominated the political agenda for weeks, and is even threatening to torpedo Mr Rudd’s chance of being returned to power at an election due to be held before the end of this year.

Labour, which had an unassailable lead over the conservative Liberal-National Party coalition six months ago, is now trailing by six percentage points, according to a poll this week. If that were translated into votes on election day, Mr Rudd would become the first prime minister for nearly 80 years to lose office after just one term.

…[T]he mining companies, led by the multi-nationals BHP Billiton and Rio Tinto, claim the tax will reduce their competitiveness and threaten thousands of jobs. Amid much fanfare, they have already shelved a number of projects. They have also launched a major advertising campaign. The government has responded with its own advertisements, using $38m of public money. Before coming to power, Mr Rudd promised to curb taxpayer-funded advertising on political issues.

So far, the miners appear to be winning the argument. A poll commissioned by the industry, and conducted in nine marginal seats, found 48 per cent of people opposed to the super tax, with 28 per cent in favour. Nearly one in three said they were less likely to vote for Labour because of it.

http://www.independent.co.uk/news/world/australasia/australian-billionaires-take-to-the-streets-for-tax-protest-1997284.html

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In a review of two new biographies about Ayn Rand, Charles Murray explains what made her books – particularly Atlas Shrugged – so powerful and persuasive:

In 1991, the book-of-the-month club conducted a survey asking people what book had most influenced their lives. The Bible ranked number one and Ayn Rand’s Atlas Shrugged was number two. In 1998, the Modern Library released two lists of the top 100 books of the 20th century. One was compiled from the votes of the Modern Library’s Board, consisting of luminaries such as Joyce Carol Oates, Maya Angelou, Edmund Morris, and Salman Rushdie. The two top-ranked books on the Board’s list were Ulysses and The Great Gatsby. The other list was based on more than 200,000 votes cast online by anyone who wanted to vote. The top two on that list were Atlas Shrugged (1957) and The Fountainhead (1943). The two novels have had six-figure annual sales for decades, running at a combined 300,000 copies annually during the past ten years. In 2009, Atlas Shrugged alone sold a record 500,000 copies and Rand’s four novels combined (the lesser two are We the Living [1936] and Anthem [1938]) sold more than 1,000,000 copies. And yet for 27 years after her death in 1982, we haven’t had a single scholarly biography of Ayn Rand. Who was this woman? How did she come to write such phenomenally influential novels? What are we to make of her legacy? These are the questions that finally have been asked and answered splendidly, with somewhat different emphases, in two new biographies published within weeks of each other: Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns, an assistant professor of history at the University of Virginia, and Ayn Rand and the World She Made by Anne C. Heller, a former executive editor at Condé Nast Publications. …Why then has reading these biographies of a deeply flawed woman—putting it gently—made me want to go back and reread her novels yet again? The answer is that Rand was a hedgehog who got a few huge truths right, and expressed those truths in her fiction so powerfully that they continue to inspire each new generation. They have only a loose relationship with Objectivism as a philosophy (which was formally developed only after the novels were written). Are selfishness and greed cardinal virtues in Objectivism? Who cares? Does Objectivist aesthetics denigrate Bach and Mozart? Who cares? Objectivism has nothing to do with what mesmerizes people about The Fountainhead or Atlas Shrugged. What does mesmerize us? Fans of Ayn Rand will answer differently. Part of the popularity of the books derives from the many ways their themes can be refracted. Here is what I saw in Rand’s fictional world that shaped my views as an adolescent and still shapes them 50 years later.
http://www.claremont.org/publications/crb/id.1708/article_detail.asp
http://www.reuters.com/article/idUSLDE64C0P020100513

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